Gladstone Capital Corporation · NASDAQ:GLAD

Gladstone Capital — Investor Presentation (June 2020)

16 slides from Gladstone Capital's investor presentation, Jun 30, 2020

  1. Slide 1: Financial and Portfolio Overview for the Fiscal Quarter Ended June 30, 2020

    Financial and Portfolio Overview for the Fiscal Quarter Ended June 30, 2020 WASHINGTON NEW FINANCING FOR LOWER MIDDLE-MARKET COMPANIES DC YORK DALLAS

  2. Slide 2: Legal Disclaimer

    Legal Disclaimer Forward-Looking Statements: This presentation may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may include commen

  3. Slide 3: Gladstone Capital Overview

    Gladstone Capital Overview Background: − Founded in 2001, Gladstone Capital was one of the first business development companies (BDC) focused on making loans to lower middle market U.S. businesses ($3-15MM of EBITDA) − As a BDC, the Company enables investors to participate in potentially high yieldi

  4. Slide 4: Why Invest in a BDC?

    Why Invest in a BDC? BDCs are regulated by the SEC, which mandates asset diversity, transparency via annual and quarterly SEC filings and fair value adjustments and limits financial leverage to a maximum of 2:1 debt leverage. BDCs typically operate as regulated investment companies for tax purposes

  5. Slide 5: Strategy and Risk Management

    Gladstone Capital Strategy and Risk Management Investment Strategy:  Originate secured debt investments in lower middle market companies with sustainable margins/cash flows and favorable growth characteristics, which can support a leveraged capital structure  Target companies with operating cash f

  6. Slide 6: Attractive Lower Middle Market Dynamics

    Attractive Lower Middle Market Dynamics Why we target lower middle market companies  Lower middle market companies typically sell for lower cash flow multiples, which translate into reduced debt financing requirements and lower leverage levels  Greater industry diversity and more consistent flow o

  7. Slide 7: 6/30/2020 Quarter Summary

    Gladstone Capital 6/30/2020 Quarter Summary Originations/Portfolio Activity:  Invested $56.5 million during the quarter, including $30.0 million of second lien debt and $23.5 million of first lien debt in two new proprietary investments.  Exits and repayments totaled $17.1 million, including the r

  8. Slide 8: 6/30/2020 Quarter Summary

    Gladstone Capital 6/30/2020 Quarter Summary Capital Base and Liquidity  Liabilities rose to $231.0 million as of 6/30/2020, consisting of $133.5 million in borrowings on our credit facility, $57.5 million of our 6.125% 2023 senior notes, and $38.8 million of our 5.375% 2024 senior notes.  Leverage

  9. Slide 9: Origination Activity

    Gladstone Capital Origination Activity  Q3 2020 saw strong net new investment growth, driven by new proprietary investment origination and lower exits & repayments over the quarter.  Weighted average yield was unchanged at 10.9% given interest rate floors in effect on floating rate assets. Gladsto

  10. Slide 10: Portfolio Trends

    Gladstone Capital Portfolio Trends  Net originations over the last four quarters have averaged almost $20 million per quarter supporting an increase in the core interest income and improved expense efficiencies.  Originations have also supported a gradual increase in total investments except for t

  11. Slide 11: Portfolio Composition

    Portfolio Composition Portfolio Characteristics As Of: June 30, 2019 September 30, 2019 December 31, 2019 March 31, 2020 June 30, 2020 Total Portfolio - FV $ 407,559 $ 402,875 $ 429,007 $ 398,316 $ 446,676 # of Portfolio Companies 53 53 51 48 48 Average Investment Size - FV $ 7,690 $ 7,601 $ 8,412 $

  12. Slide 12: Industry and Deal Sources Are Diversified

    Industry and Deal Sources Are Diversified Portfolio Diversification Across 18 Deal Source Composition - Industries - At 6/30/2020 Fair Value At 6/30/2020 Fair Value Page 12

  13. Slide 13: Representative Portfolio Investments

    Representative Portfolio Investments Page 13

  14. Slide 14: Quarterly Financial Summary

    Quarterly Financial Summary Three Months Ended In Thousands, except per share data June 30, 2019 September 30, 2019 December 31, 2019 March 31, 2020 June 30, 2020 Income: Interest Income $ 11,162 $ 11,818 $ 11,456 $ 11,002 $ 11,628 Other Investment Income 1,724 900 703 490 101 Total Investment Incom

  15. Slide 15: Why Own Gladstone Capital Stock?

    Why Own Gladstone Capital Stock? Well established lender in attractive lower middle market arena – Dedicated investment team focus on LMM opportunities supported by an advisor team of more than 60 experienced professionals – Attraction of lower middle market debt investment profile as less competiti

  16. Slide 16: Corporate Data

    Corporate Data Executive Officers Research Coverage Websites David Gladstone Janney Montgomery Scott Gladstone Capital: Chairman & CEO Mitchel Penn www.gladstonecapital.com Terry Lee Brubaker Investment Adviser: Vice Chairman & COO Ladenburg Thalmann www.gladstonemanagement.com Mickey Schleien Bob M

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