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spk_0: ratings and welcome to gladstone capital first quarter earnings launched from school at this time all participants are in a listen only mode question and answer session will follow the formal presentation if anyone should require operated assistance during the conference please spare star zero on your telephone keypad as a reminder this conference is being recorded i would know like to turn the conference over to your host mr david gladstone chief executive officer thank you and or do you sir
spk_1: all right thank you yeah month this is a as nice introduction and this is the first quarter earnings call for gladstone capital border and in december thirty first twenty twenty one and thank you for calling in we're always happy to talk to shareholders and analyst and more from the opportunity to provide further update of the information that was filed yesterday with the se see that first i'll turn it over to the general counsel michael the calcio make a statement resign sir
spk_2: forward looking statements michael the thanks david a good morning everybody today's reports for include forward looking statements and the securities act of like to thirty three i'm a secured a stranger to making thirty four during those are joining our future performance of these forward looking statements about certain risks and uncertainties that are based on our current plans which we believe to be a reasonable so many factors may cause or actual results to be materially different from any future result expressed or implied but he's for looking statements including all risk factors reforms tend to ten came over documents we followed us seem to find these on the investors page or website www dot gladstone capital dot com it also sign up for email notification service they're also find the time to take chase on the as he sees website which is se si dot jovi we undertake no obligation to publicly update or revise their these forward looking statements with her as a result of no information future events or otherwise except as required by law that today's call calls an overview of our results so yes the reviewer a press release and for tend you both issued yesterday for more detailed information again to find the money investors page of our website now turn recall over a glass on capitals president bob market buff
spk_3: good morning all and thank you for dialing in this morning last quarter was the busy one for us all cover the highlights for the syrian provide some comments on the state of the portfolio and market outlook the for turning the call to the cold shoulder brand glad some capital see a third review our financial results for the period and our capital and liquidity position
spk_2: the beginning with last quarter's results originations for the quarter came in at a record one hundred and eleven million which included six new proprietary investments which represented approximately one hundred and forty million of total commitments
spk_3: as covered in our last call we also suspended a number of exits and repayments which came in at a total of ninety seven million so net originations were fourteen million dollars for the period exits for the period include the previously discussed sailed lunatics which represented just under fifty percent of the total access for the period and include as a net realized gain of thirteen point four million interesting come for the quarter decline three percent for four hundred thousand dollars as the average interest bearing investment portfolio increase of one point four percent did not offset the six hundred thousand dollars of past do interest we received in the prior period other income surged with the one point six million dollar exit be generated by the magnetic sale and other prepayments he's to three point three million which is an increase of two point two million over the prior quarter and contributed to the twelve point six percent increase in total investment income to sixteen point two
spk_4: million for the quarter
spk_3: borrowing costs were unchanged and administrative costs rose slightly with new debt issuance however net management fees declined by twenty percent to two point seven million as the increase in new deal closing fees remitted to the management company and credited against the be
spk_1: his management fees results in a seven hundred thousand dollars decline in the net management fees compared to last quarter
spk_3: with investment income up on expenses down net investment income rose two point three million to nine point two million or twenty seven cents a share net assets from operations came in a twelve point one million or thirty five cents a share which included the realize games and linux the kinetic sale as well as five million i'm that unrealized portfolio appreciation on the quarter largely related to the improve performance of several credits negatively impacted at the early stage
spk_1: ages of the covert pandemic for the period now rose sixteen cents a share or one point seven percent to nine dollars and forty four cents per share as of december thirty first
spk_2: despite our modest leverage we're pleased to report the cumin of return over the past two years for glad has risen to seventeen point six percent
spk_3: with respect to the portfolio a portfolio continues to perform well and for the quarter we did not experience any payment the faults in addition to pull a good skein improved operating performance in several energy and communication businesses supported the reduction in the depreciation of these investments and the bulk of the unrealized pre
spk_2: sheesh for the period
spk_3: this quarter's portfolio performance and equity investments appreciation bring the net and ab appreciation to thirty nine point eight million since december thirty first two thousand and nineteen prior to the pandemic which represents a one dollar and thirty six cents per share or sixteen point eight percent increase in nav over the last two years the asset max as the end the quarter continue to shift and favor firstly loans as eighty percent of the exits last quarter were second lien or equity investments and sixty five percent of the new originations were senior loans so firstly assets rose to sixty nine percent of assets it fair value with the into the quarter the weighted average yield and the new debt investments was nine point seven percent which trail the ten point three percent weighted average yield on the exit investments however by reinvesting last quarter's equity gain into yielding investments the overall yield on the new investments was approximately fifty five be since points higher than the net than the accident vestments and for reference the yield on are running out overall was unchanged to ten point three percent from the prior for rent looking over the balance of fiscal twenty two there a couple a connoisseur like to leave you with we've received fourteen million dollars of repayments since the end of the quarter anticipate several others in the near term but anticipate will be able to maintain or grow our investment portfolio as we did last quarter as you may know a number of our recent estimates are growth or to growth oriented p platform companies and include future funding commitments which we anticipate to make up a larger portion of our investment activity going forward and consistent with our investment strategy for of the sixth investments made last quarter included small equity congressman we are well positioned to absorb any impending increase in short term rates as only twenty one percent of our debt was subject to floating rates and given the modest spread between are borrowing rates and the average floor and investments of one one point one seven percent the average floor
spk_5: on our floating rate assets exceeds
spk_3: the average florida flowing right assets exceed the floating rate deaths by substantial margin while we're able to generate one time fee income last quarter to see the current dividend we are focused on increasing and i threw some combination of earning as a growth higher leverage sustained margins or increase in interest rates to support sustaining any adjustments his current shareholder distributions
spk_1: at the now would like to turn over to nicole cells brand the cf of for gladstone capital to provide some details of the funds financial performance for the quarter nicole and and morning everyone
spk_6: during the december quarter total interesting can declined four hundred thousand and three percent to twelve point nine million which is driven by the receipt as six hundred thousand and past to into during the prior quarter whereas we receive no such amounts during the current quarter yeah that's him for fully a weighted average balance did increased slightly by seven million or one point four percent to four hundred ninety four million compared to the september thirtieth quarter and the weighted average yield and are interfering portfolio and son changed at ten point three percent to spicy increase a portion of first same laws other income rose by two point two million to three point three nine and drove the twelve point six percent increase in total investment income to sixteen twenty million for the quarter total access has declined by five hundred thousand acquire a reporter german by a decline in that management fees associated with the surge in new deal origination see press nevertheless an income for the quarter ended december thirty first at nine point two million which was an increase of two point three million compared to the prior fire or twenty seven cents per cent per share and covered one hundred and thirty seven percent of our shareholder distribution the net increase in net assets resulting from operations of twelve point one million or thirty five cents per share for the quarter ended december thirty first compared to thirty two point seven or porter their current quarter increase is driven by the increase in earning as well as the net unrealized portfolio appreciation of cover five off earlier moving over to the balance sheet as of december thirty first total assets rose to five hundred eighty seven million consisting of five hundred and seventy six million and investments that fair value and eleven million in cash another asset hi abilities rose to two hundred and sixty three million december thirty first and consisted primarily about one hundred and fifty million of five it in a senior notes to twenty twenty six fifty million of three and three and three quarter senior notes do may have twenty twenty seven and as of the end of the quarter advances under our line of credit were fifty three point nine million as of december thirty first net assets rose by five point four million from the prior quarter and with a net realize and unrealized are fully appreciation as well as earnings in excess of distribution nav rose one point seven percent from nine dollars and twenty eight cents per share of september thirtieth to nine dollars and forty four cents per share as of december thirty first our leverage as of the end of the quarter increased slightly with the increase in total assets from the prior quarter and stands at eighty one percent of net assets we currently have in excess of one hundred million of borrowing availability under line of credit or evolving period of which ends in october twenty twenty three with respect to distributions we have remained committed to paying our stuff or stockholders the cash distribution and and in october our board of directors the third monthly distributions to common stock holders of sixty of six and a half cents per common share per month for january february and march which is an annual rate of seventy eight cents per share the board will meet again in april determine the monthly distribution to stock holders for the following quarter at the current distribution ray for a common stock and with the common stock price at about eleven dollars and six cents per share yesterday the distribution run rate is now producing a yield as about seven point one percent distributions in addition to the nav go with over the past year of a dollar and seventy four cents per share have resulted in a total return of two dollars and fifty two cents
spk_1: for share or thirty three percent over the past year and now will turn it back to david to conclude or i thank you know colin farm and michael you all did a great job of informing shareholders analysts the follower company and summary another solid quarter for gladstone capital company close six new proprietary investments representing about a hundred and eleven million dollars of new and desmond during this period these investments represent nice diversity of industry sectors and several new private equity sponsors and relationships and include a small equity cohen best and worthies growing businesses the company realize that gains of thirty point four million now dollars to one point six million see and income associated with the sale of league medics which represented a blend of return about eighteen point five percent over the seven year investment period the combination of investment activity and exits lifted net investment income by thirty four percent as a very good number about nine point two million for the quarter the brings a distribution net asset value appreciation of about thirty three percent over the past year i think that's absolutely fantastic in summary the company continues to invest in growth oriented middle market businesses with a good management many of these investments are supported of medicines private equity funds and are looking for experience partners to support their acquisition growth is a business they've invested in this gives us an opportunity to make an attractive
spk_7: the interest paying loan to support their ongoing commitment and to pay cash distributions to our stockholders it was by all accounts are very good quarter and now operator would you please come on and tell people how they can ask some questions
spk_0: thank you at this time we will be conducting a question and answer session if you would like to ask questions please press star one on your telephone keep that a confirmation to will indicate your mind is into question do you may press also to if you would like to remove your questions from the que four five distance using speaker recruitment may be necessary to pick up your handset before pressing the stark
spk_1: one moment please widely full of questions
spk_0: we have some questions
spk_1: again
spk_8: if we have of questions please press start one on your telephone
spk_0: well as disappointing somebody should ask a question
spk_9: except except that process
spk_1: the first question comes from adrian days with adrian day asset management please go ahead yeah thank you little isn't a that could you just say a little bit more maybe or somebody about the equity investments you know how hi my to go and could you just us a little bit more about that place
spk_3: well from my standpoint i like the idea with not done it as much in the past year but as you remember our capital always picked up some equity some warrants or something every time it made alone so bombed is move on the little bit in that direction now there's got a little more flexibility in his balance sheet mob you want to comment on that
spk_1: sure i'm generally speaking we're still holding to the ten percent of the overall portfolio now that swings for two reasons one
spk_3: as things appreciate that certainly increases it over ten percent said ten percent threshold but with some of the liquidations it made sense to add to to reap to reinvest in a number of the recent companies generally speaking i look at a ten percent of cost is kind of the target
spk_2: also be mindful we don't invest in all of the companies certainly private equity sponsors sometimes are receptive and other times or not were also selective in the companies that that we invest in
spk_3: so overall i would say ten percent are adjusted for appreciation at the current time i think we have a significant number of investments that have appreciated so that's probably driving the current percentage more than historically i would expect that number to continue to go up a little bit but also specs
spk_9: some additional liquidation of those investments over the common core so i know that's not specific but generally speaking are probably are our where we'd like to be
spk_10: with some with some variants around that number based on liquidations an activity
spk_1: okay so for thank you
spk_11: other questions
spk_0: oh we got one good question i yes we'll have the way to guess we'll have to wait until next quarter to get some good questions thank you very much thank you
spk_1: so ah ladies and gentlemen
spk_0: we have reached the end of question and answer sessions and i would like to turn to fall back to mr david gladstone for closing remarks thank you
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