Gladstone Investment Corporation - Business Development Company · NASDAQ:GAIN
Gladstone Investment Corporation - Business Development — Gladstone Investment — Q2 2025 Earnings Presentation
30 slides from Gladstone Investment Corporation - Business Development's earnings presentation, Sep 30, 2024
Slide 1: Quarterly Overview
QUARTERLY OVERVIEW September 30, 2024
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: Table of Contents
Table of Contents QUARTERLY UPDATE Company Overview and Objectives Investment Strategy & Value Creation Current Portfolio, Successful Exits & Market Update Financial Highlights, Shareholder Value & Capital Structure Closing and Q&A 3 3
Slide 4: Who We Are – Overview & Objectives
Quarterly Presentation WHO WE ARE – OVERVIEW & OBJECTIVES 4
Slide 5: Gladstone Investment | Who We Are
WHO WE ARE – OVERVIEW & OBJECTIVES Gladstone Investment | Who We Are The Gladstone Companies were founded in 2001 and are comprised of two publicly traded BDCs and two publicly traded REITs. SIGNIFICANT CAPITAL EXPERIENCED MANAGEMENT TEAM SUCCESSFUL LAUNCH OF RAISED AND DEPLOYED (1) WITH PROVEN TRAC
Slide 6: Gladstone Investment | Overview
WHO WE ARE – OVERVIEW & OBJECTIVES Gladstone Investment | Overview Differentiated buyout structure • Primary equity investor – lead sponsor in majority of prospective transactions, often partnering with existing management teams • Differentiated approach – turnkey provider of the equity & secured de
Slide 7: Gladstone Investment | Overview
WHO WE ARE – OVERVIEW & OBJECTIVES Gladstone Investment | Overview Evergreen fund structure creates alignment with management • Investment decisions not guided by fundraising or end-of-fund deadlines versus a traditional buy-out fund GAIN is differentiated • Provides portfolio company boards and man
Slide 8: Gladstone Investment | Overview
WHO WE ARE – OVERVIEW & OBJECTIVES 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 ri
Slide 9: Upside Potential Driven by Focus on Equity Securities
WHO WE ARE – OVERVIEW & OBJECTIVES Upside Potential Driven by Focus on Equity Securities • GAIN’s equity ownership provides further upside potential to shareholders through prospective Meaningful Equity Component in GAIN Portfolio1 capital gains and other income from successful exits which support s
Slide 10: Growing Portfolio
WHO WE ARE – OVERVIEW & OBJECTIVES Growing Portfolio From 4/1/2010 to 9/30/2024, we have: • Made investments in 45 new companies of approximately $1.3 billion1 • Exited 31 companies for a return of proceeds of $994.3 million1,2 $1,000.0 $920.5 $900.0 $853.3 $800.0 $753.5 $714.4 Total investments, at
Slide 11: History of Strong Monthly and Supplemental Distributions
WHO WE ARE – OVERVIEW & OBJECTIVES History of Strong Monthly and Supplemental Distributions • From inception through 9/30/24, GAIN has paid 231 consecutive monthly distributions to common shareholders • GAIN’s regular annual distribution run-rate has increased 100% from $0.48 per common share in FY1
Slide 12: Investment Strategy & Value Creation
Quarterly Presentation INVESTMENT STRATEGY & VALUE CREATION 12
Slide 13: Investment Focus and Process
INVESTMENT STRATEGY & VALUE CREATION Investment Focus and Process Investment Focus • 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) • Lead or co-lead prospective transactions
Slide 14: Investment Focus and Process
INVESTMENT STRATEGY & VALUE CREATION Investment Focus and Process Deal Sourcing • Source opportunities from investment banks, M&A advisory firms, and industry executives Driving performance with • Regionally focused sourcing strategy, spearheaded by senior member of the investment team a focused and
Slide 15: Risk Management and Value Creation
INVESTMENT STRATEGY & 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 INVESTMENT HORIZON SPEED TO CLOSE No third-party capital required to Long-term investmen
Slide 16: Value Creation Across the Portfolio
INVESTMENT STRATEGY & VALUE CREATION Value Creation Across the Portfolio Equity ownership allows GAIN to effect change with its investments. EXPERIENCED SALES AND STRATEGIC PLANNING ADD-ON AND PLATFORM STRATEGIES GOVERNANCE STRUCTURE OPERATIONAL INITIATIVES GAIN helps to establish an effective At th
Slide 17: Current Portfolio, Successful Exits & Market Update
Quarterly Presentation CURRENT PORTFOLIO, SUCCESSFUL EXITS & MARKET UPDATE 17
Slide 18: Portfolio is Broad and Diversified
CURRENT PORTFOLIO, SUCCESSFUL EXITS & MARKET UPDATE Portfolio is Broad and Diversified 1 MANUFACTURING BUSINESS/CONSUMER SERVICES CONSUMER PRODUCTS 1 Portfolio companies as of 9/30/2024 as well as Pyrotek Special Effects, Inc. which was acquired in November 2024. 18
Slide 19: Geographic Diversification
CURRENT PORTFOLIO, SUCCESSFUL EXITS & MARKET UPDATE Geographic Diversification 1 1 Portfolio companies as of 9/30/2024 as well as Pyrotek Special Effects, Inc. which was acquired in November 2024. 19
Slide 20: Buyout Market Update
CURRENT PORTFOLIO, SUCCESSFUL EXITS & MARKET UPDATE Buyout Market Update Increased deal flow leading to more actionable opportunities • GAIN primarily targets two sets of intermediaries to obtain deal flow: o Investment Banks – increasingly focused on running specialized bidding processes that targe
Slide 21: Financial Highlights, Shareholder Value & Capital Structure
Quarterly Presentation FINANCIAL HIGHLIGHTS, SHAREHOLDER VALUE & CAPITAL STRUCTURE 21
Slide 22: Continuous NAV Growth Since FY 2011
FINANCIAL HIGHLIGHTS, SHAREHOLDER VALUE & CAPITAL STRUCTURE 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 $12.49 at 9/30/2024 from $9.00 at 3/31/2011 $1,
Slide 23: Investment Income Growth Since FY 2011
FINANCIAL HIGHLIGHTS, SHAREHOLDER VALUE & CAPITAL STRUCTURE 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 a
Slide 24: Successful Realizations Enhance Shareholder Value
FINANCIAL HIGHLIGHTS, SHAREHOLDER VALUE & CAPITAL STRUCTURE 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 capita
Slide 25: Financial Highlights
FINANCIAL HIGHLIGHTS, SHAREHOLDER VALUE & CAPITAL STRUCTURE Financial Highlights1 SIX MONTHS ENDED FISCAL YEAR ENDED JUNE 30, 2024 MARCH 31, 2024 MARCH 31, 2023 MARCH 31, 2022 MARCH 31, 2021 Net investment income (NII) $ 19,705 $ 21,777 $ 37,000 $ 14,990 $ 17,938 (+) Capital gains-based incentive fe
Slide 26: History of Driving High Shareholder Returns
FINANCIAL HIGHLIGHTS, SHAREHOLDER VALUE & CAPITAL STRUCTURE History of Driving High Shareholder Returns Long-term return on equity outperforming compared to industry peer group.1 Return on Equity 9/30/2024 16% 14% 14% 12% 12% 12% 10% 10% 10% 10% 10% 9% 9% 9% 8% 8% 8% 6% 4% 2% 0% 1-Year 3-Years 5-Yea
Slide 27: History of Driving High Shareholder Returns
FINANCIAL HIGHLIGHTS, SHAREHOLDER VALUE & CAPITAL STRUCTURE History of Driving High Shareholder Returns Greater long-term total return compared to BDC peer group.1 5- AND 10-YEAR TOTAL RETURNS OF 94% AND 428% VS. BDC INDUSTRY PEERS OF 65% AND 120% 5-Year Total Return 10-Year Total Return 240% 550% 4
Slide 28: Capital Structure: Conservative Approach
FINANCIAL HIGHLIGHTS, SHAREHOLDER VALUE & CAPITAL STRUCTURE Capital Structure: Conservative Approach PUBLICLY TRADED NOTES • GAINN: $127.9MM of 5.00% 2026 Notes • GAIN maintains a conservative balance sheet with low leverage and available liquidity to support needs of the • GAINZ: $134.6MM of 4.875%
Slide 29: Continue to Execute on Strategy
OUTLOOK Continue to Execute on Strategy EXECUTE ON BUYOUT STRATEGY • Expand portfolio through attractive investments • Drive portfolio company value creation through active ownership Disciplined underwriting and continued portfolio performance allows GAIN to PROVIDE STRONG AND GROWING DISTRIBUTIONS
Slide 30: Corporate Data
Corporate Data Key Executive Officers Research Coverage Websites Independent Directors David Gladstone B. Riley Securities Gladstone Investment: Michela A. English Chairman & CEO Bryce Rowe www.gladstoneinvestment.com Katharine C. Gorka Janney David Dullum John Rowan Investment Adviser: John Outland