Executive Summary
Gladstone Investment Corporation (GAIN) reported QQ1 2025 operating metrics that demonstrate resilience in a challenging credit environment, supported by a liquid balance sheet and an active deal pipeline. Total investment income was $22.2 million, with net investment income of $12.4 million and adjusted net investment income of $8.6 million ($0.24 per share), while net income declined to a loss of $6.526 million and earnings per share landed at -$0.18. The quarter featured four portfolio companies on non-accruals (two newly added), representing about 7.8% of the fair value of debt investments; management emphasizes these are not portfolio-wide indicators and expects near-term accrual status restoration for at least two of the affected credits. NAV per share fell to $13.01 from $13.43, driven by $0.52 of net unrealized depreciation per share and $0.24 per share of distributions, offset by $0.34 per share of net investments.
Key Performance Indicators
QoQ: 1 781.36% | YoY:33.50%
QoQ: -98.03% | YoY:-96.54%
QoQ: -128.90% | YoY:-174.28%
QoQ: -128.57% | YoY:-169.23%
Key Insights
Revenue: $22.18 million (YoY +3.38%, QoQ +146.47% as per reported metrics) | Gross Profit: $21.471 million (margin ~96.8%) | Operating Income: $0.585 million (margin ~2.64%) | EBITDA: $0.585 million (EBITDA Margin ~2.64%) | Net Income: -$6.526 million (EPS -$0.18) | NAV per share: $13.01 (down from $13.43 prior quarter) | Net Debt: $392.195 million | Total Assets: $914.206 million | Leverage / Coverage: Asset coverage 216% vs 150% minimum; cash facility availability ~$113 million on a $200 milli...
Financial Highlights
Revenue: $22.18 million (YoY +3.38%, QoQ +146.47% as per reported metrics) | Gross Profit: $21.471 million (margin ~96.8%) | Operating Income: $0.585 million (margin ~2.64%) | EBITDA: $0.585 million (EBITDA Margin ~2.64%) | Net Income: -$6.526 million (EPS -$0.18) | NAV per share: $13.01 (down from $13.43 prior quarter) | Net Debt: $392.195 million | Total Assets: $914.206 million | Leverage / Coverage: Asset coverage 216% vs 150% minimum; cash facility availability ~$113 million on a $200 million facility | Distributions: Monthly $0.08 per share, annual run rate $0.96; spillover $0.55 per share; estimated FY distributions ~7.3% yield at $13.19 price | Cash Flow: Operating cash flow $9.919 million; Free cash flow $9.919 million | Non-accruals: 4 on non-accrual; two new; approximately 7.8% of debt fair value on non-accrual; two are expected to return to accrual
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
22.18M |
3.38% |
146.47% |
| Gross Profit |
21.47M |
33.50% |
1 781.36% |
| Operating Income |
585.00K |
-96.54% |
-98.03% |
| Net Income |
-6.53M |
-174.28% |
-128.90% |
| EPS |
-0.18 |
-169.23% |
-128.57% |
Key Financial Ratios
operatingProfitMargin
2.64%
operatingCashFlowPerShare
$0.27
freeCashFlowPerShare
$0.27
dividendPayoutRatio
-134.9%
priceEarningsRatio
-19.76
Management Commentary
Management themes from the earnings call: 1) Strategy and growth: 'we are aggressively competing for new acquisitions that fit our model of providing debt and equity, while maintaining our principles of being a value investor and generating income on a current basis with upside through capital appreciation.' 2) Portfolio health and credits: 'we currently have four companies on non-accrual, two of which we just put on non-accrual, representing about 7.8% of the fair value of the debt investments in our portfolio' and 'we anticipate bringing this company back on accrual in the near-term.' 3) Income framework and NII durability: 'we do not see a decline in that spread where we would be looking to cut our dividend' and 'our debt portfolio has floored generally in the 11.5% to 12% range, providing protection in a lower-rate environment.' 4) Liquidity and capital markets: 'we have over $113 million available on our $200 million credit facility' and 'we entered into a new ATM program to sell up to 75 million shares of common stock.' 5) Deal cadence and outlook: 'our goal is to close three to five new deals in a 12-month period' and 'deal flow is picking up with significant liquidity in the M&A market.'
"we don't see, frankly, a decline in that spread where we would be looking to cut our dividend. And as you point out, this is not something that we consider doing."
â David Gladstone
"Our debt portfolio has floored generally in the 11.5% to 12% range. And we look at that as protection in a lower interest rate environment."
â Rachael Easton
Forward Guidance
Outlook is cautiously constructive. Management notes an uptick in new acquisition opportunities and ongoing add-ons to build value and income, with a target of closing roughly 3-5 new deals per year and maintaining a strong, liquid balance sheet. They expect to continue generating current income with potential upside from exits and to fund supplementary distributions from realized capital gains. Key factors to monitor include: (1) progression of non-accruals back to accrual status and the overall credit environment, (2) trajectory of NII versus the dividend as rate expectations evolve, (3) deal flow quality and closing timelines for new investments, and (4) utilization of the ATM and facility liquidity as a liquidity cushion for growth and distributions.