Gladstone Investment Corporation - Business Development Company · NASDAQ:GAIN
Gladstone Investment Corporation - Business Development — Gladstone Investment — Investor Day (September 2023)
31 slides from Gladstone Investment Corporation - Business Development's investor day presentation, Sep 20, 2023
Slide 1: Investor Day Presentation
GLADSTONE INVESTMENT Investor Day Presentation September 20, 2023
Slide 2: Legal Disclaimer
Legal Disclaimer This presentation may include forward-looking statements. These forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any futu
Slide 3: Investor Day Presentation Agenda
Investor Day Presentation Agenda Investor Day I. Who We Are – Overview and Objectives II. Portfolio & Investment Strategy III. Financial Highlights, Shareholder Value & Capital Structure IV. Outlook 3
Slide 4: I. Who We Are – Overview and Objectives
Investor Day Presentation Investor Day I. Who We Are – Overview and Objectives ______________________________________________________ 4
Slide 5: Gladstone Investment | Who We Are
Gladstone Investment | Who We Are (1) The Gladstone Companies were founded in 2001 and are comprised of two publicly traded BDCs and two publicly traded REITs. Gladstone Capital Gladstone Investment 2001 2005 Gladstone Commercial Gladstone Land 2003 2013 Significant capital raised and deployed Exper
Slide 6: Gladstone Investment | Overview
Gladstone Investment | Overview(1) GAIN is differentiated from other BDCs through its buyout investment strategy • Primary equity investor – Lead majority of prospective transactions, often partnering with existing management teams • Differentiated approach – turnkey provider of equity & secured deb
Slide 7: Gladstone Investment | Overview
Gladstone Investment | Overview Delivering to investors consistent and increasing distributions • Senior secured debt provides downside protection, along with the upside potential of GAIN’s equity investments Investment structure creates • No third-party sponsor risk as GAIN is the sponsor attractiv
Slide 8: Upside Potential Driven by Focus on Equity Securities
Upside Potential Driven by Focus on Equity Securities • GAIN’s equity ownership provides further upside potential to shareholders through prospective capital gains and other income from successful exits which support supplemental distributions from time to time. • Since inception, GAIN has generated
Slide 9: Growing Portfolio
Growing Portfolio From 4/1/2010 to 6/30/2023, we have: • Made investments in 43 new companies of approximately $1.2 billion(1) • Exited 29 companies for a return of proceeds of $842.5 million(1)(2) FYE March 31 $900.0 $800.1 $800.0 $753.5 $714.4 $700.0 Total investments, at fair value ($MM) $624.2 $
Slide 10: History of Strong Monthly and Supplemental Distributions
History of Strong Monthly and Supplemental Distributions • From inception through 6/30/23, GAIN has paid 216 consecutive monthly distributions to common shareholders • GAIN’s regular annual distribution run-rate has increased 100% from $0.48 per common share in FY11 to $0.96 per common share for FY2
Slide 11: II. Portfolio & Investment Strategy
Investor Day Presentation Investor Day II. Portfolio & Investment Strategy ______________________________________________________ 11
Slide 12: Portfolio is Broad and Diversified
Portfolio is Broad and Diversified Manufacturing Business/Consumer Services Consumer Products 12
Slide 13: Historical Exits
Historical Exits Manufacturing Business/Consumer Services Consumer Products 13
Slide 14: Geographic Diversification
Geographic Diversification 14
Slide 15: Investment Focus and Process
Investment Focus and Process Driving performance with a focused and diligent approach to investment selections • Target stable lower middle market companies with EBITDA of $4 – $15 million • Investment size (debt & equity) generally up to $75 million (typically 25% equity & 75% debt) Investment Focu
Slide 16: Risk Management and Value Creation
Risk Management and Value Creation GAIN takes a long-term approach with a strategy to deploy debt & equity designed to streamline post-close value creation 1 2 Certainty and Speed to Close Investment Horizon No third-party capital required to Long term investment horizon as a close transactions, as
Slide 17: Value Creation Across the Portfolio
Value Creation Across the Portfolio Equity ownership allows GAIN to effect change with its investments GAIN helps to establish an effective At the outset of its investment, GAIN, board governance structure at the along with company management, onset of each investment develop a strategic plan • Enab
Slide 18: New Buyout Investments
New Buyout Investments We continue to actively invest in new buyout opportunities and strategic investments in existing portfolio companies. Our most recent new buyouts are detailed below: Dema/Mai Holdings, Inc. • Acquired: June/July 2022 • Investment Size: $60.1MM ($39.1MM debt & $21.0MM equity) •
Slide 19: Add-on and Platform Investments
Add-on and Platform Investments We continue to actively pursue and invest in strategic add-on opportunities for our existing portfolio companies. Three portfolio companies with recent add-on and platform acquisition investments are highlighted below: Nocturne Luxury Villas, Inc. • Platform Acquisiti
Slide 20: III. Financial Highlights, Shareholder Value & Capital Structure
Investor Day Presentation Investor Day III. Financial Highlights, Shareholder Value & Capital Structure ______________________________________________________ 20
Slide 21: Continuous NAV Growth Since FY 2011
Continuous NAV Growth Since FY 2011 • Continuous growth in overall NAV since FY 2011, driven by diligent growth and value creation in investment portfolio • Significant NAV per share growth to $12.99 at 6/30/2023 from $9.00 at 3/31/2011 FYE March 31 $800.0 $700.0 $600.0 $500.0 $MM $400.0 $300.0 $200
Slide 22: Investment Income Growth Since FY 2011
Investment Income Growth Since FY 2011 • Significant growth in Investment Income since FY 2011, driven by growth in investment portfolio, increased yields and other income. • Other income is comprised of dividends on preferred investments and success fees from our portfolio companies. FYE March 31 $
Slide 23: Successful Realizations Enhance Shareholder Value
Successful Realizations Enhance Shareholder Value History of exits generating significant capital gains. GAIN’s target investment mix of 75% debt and 25% equity provides potential for high returns through consistent current yield and capital appreciation at exit. Since inception, total equity procee
Slide 24: Financial Highlights
Financial Highlights (1) Three Months Ended Fiscal Year Ended June 30, 2023 March 31, 2023 March 31, 2022 March 31, 2021 March 31, 2020 Net investment income (loss) (NII/NIL) $ 8,440 $ 37,000 $ 14,990 $ 17,938 $ 36,362 (+) Capital gains-based incentive fee 67 (296) 18,286 5,032 (6,718) Adjusted NII(
Slide 25: History of Driving High Shareholder Returns
History of Driving High Shareholder Returns Long-term Return on Equity Outperforming Compared to Industry Peer Group(1) ROE - 1, 3, 5 and 10 Years as of 6/30/2023 16.0% 15% 14.0% 13% 13% 12% 12% 12.0% 10.0% 9% 8% 8% 8% 8% 8.0% 7% 7% 6.0% 4.0% 2.0% 0.0% 1 Year 3 Years 5 Years 10 Years GAIN Mean BDC M
Slide 26: History of Driving High Shareholder Returns
History of Driving High Shareholder Returns Greater Long-term Total Return Compared to BDC Peer Group(1) 5 and 10-year total returns of 72% and 312% vs. BDC industry peers of 49% and 73% 1 Year Total Return 3 Year Total Return 120% 15% 200% 73% 175% 110% 150% 100% 67% 3% 125% 90% 100% 80% 75% Jun-22
Slide 27: Capital Structure: Conservative Approach
Capital Structure: Conservative Approach • GAIN maintains a conservative balance sheet with low leverage and available liquidity to support needs of the business. o Asset coverage ratio on senior securities representing indebtedness of 211% compared to the required 150%. o Focus on long-term fixed r
Slide 28: IV. Outlook
Investor Day Presentation Investor Day IV. Outlook ______________________________________________________ 28
Slide 29: Buyout Market Update
Buyout Market Update Increased deal flow leading to more actionable opportunities • GAIN primarily targets two sets of intermediaries to obtain deal flow: – Investment Banks – increasingly focused on running specialized bidding processes that target Deal Sourcing a narrow set of buyers with specific
Slide 30: Continue to Execute on Strategy
Continue to Execute on Strategy Disciplined underwriting and continued portfolio performance allows GAIN to historically outperform peer group Execute on Buyout Maximize • Maintain and grow regular Strategy distribution to shareholders Shareholder Value • Continue making • Expand portfolio through s
Slide 31: Corporate Data
Corporate Data Key Executive Officers Research Coverage Websites David Gladstone B. Riley Securities Gladstone Investment: Chairman & CEO Bryce Rowe www.gladstoneinvestment.com Terry Lee Brubaker Janney COO Investment Adviser: John Rowan David Dullum www.gladstonemanagement.com President Jefferies &