GLADSTONE INVESTMENT CORPORATION\DE Q3 FY2024 earnings call

• Invested $65 million in the quarter to fund an add-on acquisition in an existing portfolio company.
• Had a successful exit generating $43.5 million realized capital gain.
• Maintained monthly distribution to shareholders at $0.08 per share and paid an aggregate supplemental distribution of $1 per share in November and December 2023.
• Balance sheet is strong with low leverage and positive liquidity; amended and expanded credit facility to $200 million with over $120 million available.
• Successful common stock ATM program raised approximately $21 million in net proceeds in Q3 and an additional $7.7 million in Jan 2024, with sales accretive and above then current NAV.
• 3 portfolio companies are on nonaccrual status, and the company is working to get them back on accrual.

In the third quarter of fiscal year 2024, Gladstone Investment Corporation generated total investment income of $23.1 million, up from $20.3 million in the prior quarter. Net expenses were $13.3 million, down from $22 million prior quarter. Net investment income for the quarter was $9.7 million compared to a net investment loss of $1.7 million in the prior quarter. Adjusted net investment income was $9.1 million or $0.26 per share, up from $8.1 million or $0.24 per share in the prior quarter. The company invested $65 million, had a $43.5 million realized capital gain from an exit, maintained a monthly distribution of $0.08 per share, and paid a $1 supplemental distribution in November and December 2023. Total assets were $918 million at the end of the third quarter.

• Deal flow appears to be picking up as sellers test the market, with backlog of new opportunities building.
• Working on new buyout deals in the early phase.
• Anticipate continuing to be active in the ATM program to support growth and new investments.
• Will continue providing support to portfolio companies for add-on acquisitions and interim financing as needed.

• Forward-looking statements involve risks and uncertainties due to factors in Forms 10-Q, 10-K and other SEC filings that could cause actual results to differ.
• Competitive environment in the lower middle market private equity could impact deal sourcing and valuation.
• Refinancing risk for portfolio companies exists, though not currently overly concerned as the company is competitive and has strong relationships with portfolio companies.

Q: Mickey Schleien from Ladenburg Capital asked how portfolio companies outside consumer are progressing.

A: Fairly stable, moderate growth, with some consumer products companies doing reasonably well despite consumer headwinds.

Q: Mickey Schleien asked about considering dividend recaps.

A: Not currently, but always looking at it as a good way to extract value for shareholders and management teams in sync with portfolio company management.

Q: Mickey Schleien asked about refinancing risk.

A: Not overly concerned, as the company is competitive with effective yield, has strong relationships with portfolio companies, and availability of capital isn't suddenly flooded.

Q: Kyle Joseph from Jefferies asked about leverage and deal flow.

A: Leverage is conservative, a function of market and deals, and the ATM program provides flexibility to support new deal flow while maintaining coverage ratio.

Q: Bryce Rowe from B. Riley Securities asked about the upsized credit facility.

A: Expanded to $200 million by adding Fifth Third and increasing commitments from other banks to provide flexibility for future deal flow.

Q: Bryce Rowe asked about add-on opportunities.

A: Did an add-on to an existing portfolio company, integrating well and enhancing value, and continuing to look for such opportunities in existing portfolio companies