Form 8-K - Current report

GLADSTONE CAPITAL CORP false 0001143513 0001143513 2023-11-13 2023-11-13 0001143513 us-gaap:CommonStockMember 2023-11-13 2023-11-13 0001143513 glad:A775NotesDue2028Member 2023-11-13 2023-11-13

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event Reported): November 13, 2023

 

 

Gladstone Capital Corporation

(Exact Name of Registrant as Specified in Charter)

 

 

 

Maryland		814-00237		54-2040781
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(I.R.S. Employer Identification Number)

 

1521 Westbranch Drive, Suite 100 McLean, Virginia		22102
(Address of Principal Executive Offices)		(Zip Code)

[phone]

(Registrant’s telephone number, including area code)

 

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading symbol		Name of each exchange on which registered
Common Stock, $0.001 par value per share		GLAD		The Nasdaq Stock Market LLC
7.75% notes due 2028		GLADZ		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 

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Item 2.02

Results of Operations and Financial Condition.

On November 13, 2023, Gladstone Capital Corporation issued a press release announcing its financial results for the fiscal quarter and year ended September 30, 2023. The text of the press release is included as an exhibit to this Current Report on Form 8-K. The information in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Exhibit No.		Description
99.1		Press Release of Gladstone Capital Corporation, dated November 13, 2023.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

				Gladstone Capital Corporation
Date: November 13, 2023				By:		/s/ Nicole Schaltenbrand
						Nicole Schaltenbrand
						Chief Financial Officer & Treasurer

Exhibit 99.1

 

Gladstone Capital Corporation Reports Financial Results for its

Fourth Quarter and Fiscal Year Ended September 30, 2023

 

 

McLean, VA, November 13, 2023: Gladstone Capital Corporation (Nasdaq: GLAD) (the “Company”) today announced earnings for its fourth quarter and fiscal year ended September 30, 2023. Please read the Company’s Annual Report on Form 10-K filed today with the U.S. Securities and Exchange Commission (the “SEC”), which is available on the SEC’s website at www.sec.gov, and the investors section of the Company’s website at www.GladstoneCapital.com.

Summary Information (dollars in thousands, except per share data) (unaudited):

 

For the Quarter Ended:		September 30, 2023				June 30, 2023				Change				% Change
Total investment income		$	23,756			$	22,823			$	933				4.1	%
Total expenses, net of credits			(12,769	)			(11,147	)			(1,622	)			14.6
Net investment income			10,987				11,676				(689	)			(5.9	)
Net investment income per common share			0.28				0.31				(0.03	)			(9.7	)
Cash distribution per common share(A)			0.2675				0.24				0.0275				11.5
Net realized gain (loss)			(291	)			2,955				(3,246	)			(109.8	)
Net unrealized appreciation (depreciation)			2,404				(2,747	)			5,151				(187.5	)
Net increase (decrease) in net assets resulting from operations			13,100				11,884				1,216				10.2
Weighted average yield on interest-bearing investments			13.8	%			13.6	%			0.2	%			1.5
Total invested		$	27,393			$	70,615			$	(43,222	)			(61.2	)
Total repayments and net proceeds			41,017				35,230				5,787				16.4
As of:		September 30, 2023				June 30, 2023				Change				% Change
Total investments, at fair value		$	704,815			$	715,324			$	(10,509	)			(1.5	)%
Fair value, as a percent of cost			97.6	%			97.3	%			0.3	%			0.3
Net asset value per common share		$	9.39			$	9.27			$	0.12				1.3

 

(A)	Includes a $0.02 per common share supplemental distribution paid to common stockholders in September 2023.

 

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For the Year Ended:		September 30, 2023				September 30, 2022				Change				% Change
Total investment income		$	86,434			$	63,150			$	23,284				36.9	%
Total expenses, net of credits			(45,414	)			(30,871	)			(14,543	)			47.1
Net investment income			41,020				32,279				8,741				27.1
Net investment income per common share			1.10				0.94				0.16				17.0
Cash distribution per common share(A)			0.9425				0.795				0.1475				18.6
Net realized gain (loss)			12,664				5,173				7,491				144.8
Net unrealized appreciation (depreciation)			(11,016	)			(17,538	)			6,522				(37.2	)
Net increase (decrease) in net assets resulting from operations			42,668				19,914				22,754				114.3
Weighted average yield on interest-bearing investments			13.3	%			10.4	%			2.9	%			27.9
Total invested		$	175,477			$	274,898			$	(99,421	)			(36.2	)
Total repayments and proceeds			125,191				175,750				(50,559	)			(28.8	)
As of:		September 30, 2023				September 30, 2022				Change				% Change
Total investments, at fair value		$	704,815			$	649,615			$	55,200				8.5	%
Fair value as a percent of cost			97.6	%			99.0	%			(1.4	)%			(1.4	)
Net asset value per common share		$	9.39			$	9.08			$	0.31				3.4

 

(A)	Includes a $0.02 per common share supplemental distribution paid to common stockholders in September 2023.

Fourth Fiscal Quarter 2023 Highlights:

 

•

Portfolio Activity: Invested $27.4 million in existing portfolio companies.

•

Equity Issuance: Issued 4,908,211 shares of common stock at a weighted-average price of $10.01 per share through our at-the-market program, generating net proceeds of $48.3 million.

•

Debt Issuance: Completed an offering of $57.0 million aggregate principal amount of 7.75% Notes due 2028.

Fourth Fiscal Quarter 2023 Results:

Total investment income increased by $0.9 million, or 4.1%, for the quarter ended September 30, 2023, compared to the prior quarter ended June 30, 2023, primarily due to a $1.5 million increase in interest income. The increase in interest income was driven by increases in both the weighted average yield and weighted average principal balance of our interest-bearing investments.

Total expenses increased by $1.6 million, quarter over quarter, primarily due to a $1.7 million increase in the net base management fee, driven mainly by a decrease in portfolio company fee credits from new deal originations quarter over quarter.

Net investment income for the quarter ended September 30, 2023 was $11.0 million, or $0.28 per share, and covered distributions paid of $0.2675 by 105%.

The net increase in net assets resulting from operations was $13.1 million, or $0.33 per share, for the quarter ended September 30, 2023, compared to $11.9 million, or $0.32 per share, for the quarter ended June 30, 2023. The current quarter increase was primarily driven by $2.4 million of net unrealized appreciation recognized during the quarter.

Fiscal Year Ended 2023 Results:

Total investment income during the years ended September 30, 2023 and 2022 was $86.4 million and $63.2 million, respectively. The year over year increase was primarily due to a $29.0 million increase in interest income, driven by an increase in the weighted average principal balance of our interest-bearing investment portfolio of $109.5 million, or 21.2%, year over year, and an increase in the weighted average yield from 10.4% during the year ended September 30, 2022 to 13.3% during the year ended September 30, 2023.

 

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Expenses, net of any non-contractual, unconditional and irrevocable credits to fees from the Adviser, increased $14.5 million, or 47.1%, for the year ended September 30, 2023, as compared to the prior year. This increase was primarily due to a $7.9 million increase in interest expense on borrowings and a $3.2 million increase in the net incentive fee.

Net investment income for the year ended September 30, 2023 was $41.0 million, an increase of 27.1%, as compared to the prior year, or $1.10 per share.

The net increase in net assets resulting from operations was $42.7 million, or $1.14 per share, for the year ended September 30, 2023, compared to $19.9 million, or $0.58 per share, for the year ended September 30, 2022. The current year increase was driven by net investment income of $41.0 million and $12.7 million in net realized gains, partially offset by $11.0 million in net unrealized depreciation.

Subsequent Events: Subsequent to September 30, 2023, the following significant events occurred:

 

•

Portfolio Activity: In November 2023, we invested $11.0 million in Quality Environmental Midco, Inc. (“Quality”) through secured first lien debt and preferred equity. We also extended Quality a $2.0 million line of credit commitment, which was unfunded at close.

•

Distributions and Dividends Declared: In October 2023, our Board of Directors declared the following distributions to common and preferred stockholders:

 

Record Date		Payment Date		Distribution per Common Share
October 20, 2023		October 31, 2023		$	0.0825
November 20, 2023		November 30, 2023			0.0825
December 18, 2023		December 29, 2023			0.0825
		Total for the Quarter		$	0.2475

 

Record Date		Payment Date		Distribution per Series A Preferred Stock (A)
October 25, 2023		November 3, 2023		$	0.130208
November 28, 2023		December 5, 2023			0.130208
December 27, 2023		January 5, 2024			0.130208
		Total for the Quarter		$	0.390624

(A)

There are no shares of Series A Preferred Stock currently outstanding.

Comments from Gladstone Capital’s President, Bob Marcotte: “While net originations moderated last quarter negatively impacting fee income, the underlying portfolio continued to perform well generating an 8% increase in net interest income and ROE of 13.7% for the period. These results capped a strong fiscal 2023 for GLAD where we achieved 9% asset growth and 27% NII growth which supported the 22% increase in the common distribution rate and NAV growth of 3.4%. We ended fiscal 2023 with a conservate leverage profile and ample borrowing capacity to capitalize on the growing private credit opportunity across the lower middle market and grow our earning assets, net interest income and shareholder distributions in the coming quarters.”

Conference Call for Stockholders: The Company will hold its earnings release conference call on Tuesday, November 14, 2023, at 8:30 a.m. Eastern Time. Please call [phone] to enter the conference call. An operator will monitor the call and set a queue for any questions. A replay of the conference call will be available through November 21, 2023. To hear the replay, please dial [phone] and use playback conference number 13740895. The replay of the conference call will be available beginning approximately one hour after the call concludes. The live audio broadcast of the Company’s quarterly conference call will also be available online at www.GladstoneCapital.com. The event will be archived and available for replay on the investors section of the Company’s website.

 

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About Gladstone Capital Corporation: Gladstone Capital Corporation is a publicly-traded business development company that invests in debt and equity securities, consisting primarily of secured first and second lien term loans to lower middle market businesses in the United States. Information on the business activities of Gladstone Capital and the other publicly-traded Gladstone funds can be found at www.GladstoneCompanies.com.

To obtain a paper copy of the Company’s most recent Form 10-K, please contact the Company at 1521 Westbranch Drive, Suite 100, McLean, VA 22102, ATTN: Investor Relations. The financial information above is not comprehensive and is without notes, so readers should obtain and carefully review the Company’s Form 10-K for the year ended September 30, 2023, including the notes to the consolidated financial statements contained therein.

Investor Relations Inquiries: Please visit www.gladstonecompanies.com or [phone].

Forward-looking Statements:

The statements in this press release about future growth and shareholder returns are “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 inherently involve certain risks and uncertainties in predicting future results and conditions. Although these statements are based on our current plans that are believed to be reasonable as of the date of this press release, a number of factors could cause actual results and conditions to differ materially from these forward-looking statements, including those factors described from time to time in our filings with the U.S. Securities and Exchange Commission. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or otherwise, except as required by law.

 

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Document and Entity Information	Nov. 13, 2023
Document And Entity Information [Line Items]
Entity Registrant Name	GLADSTONE CAPITAL CORP
Amendment Flag	false
Entity Central Index Key	0001143513
Document Type	8-K
Document Period End Date	Nov. 13, 2023
Entity Incorporation State Country Code	MD
Entity File Number	814-00237
Entity Tax Identification Number	54-2040781
Entity Address, Address Line One	1521 Westbranch Drive
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	McLean
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	22102
City Area Code	(703)
Local Phone Number	287-5800
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common Stock [Member]
Document And Entity Information [Line Items]
Security 12b Title	Common Stock, $0.001 par value per share
Trading Symbol	GLAD
Security Exchange Name	NASDAQ
A 775 Notes Due 2028 [Member]
Document And Entity Information [Line Items]
Security 12b Title	7.75% notes due 2028
Trading Symbol	GLADZ
Security Exchange Name	NASDAQ

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