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Investor Presentation for the Quarter Ended March 31, 2025 FINANCING FOR LOWER MIDDLE MARKET COMPANIES Investing Since 2001 NASDAQ: GLAD
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Page 2 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 comments with respect to our objectives and strategies, and the results of our operations and our business. These forward-looking statements inherently involve numerous risks, assumptions, and uncertainties, both general and specific. The risk exists that these statements may not be fulfilled. Although these statements are based on information available to us as of the date of this presentation, which we believe is reasonable, we caution readers of this presentation not to place undue reliance on these forward-looking statements as a number of known and unknown factors could cause future results to differ materially from these statements, including those factors listed under the caption “Risk Factors” in our Form 10-K and Form 10-Q filings, our registration statement, and other filings we may make with the Securities and Exchange Commission, all of which can be found on the investors section of our web site at www.GladstoneCapital.com or the SEC’s web site, www.SEC.gov. Forward-looking statements may be influenced in particular by factors such as the overall impact of public health emergencies, fluctuations in interest rates and stock indices, the effects of competition in the areas in which we operate, and changes in economic, political, regulatory and technological conditions. We caution that the foregoing list is not exhaustive. When considering forward-looking statements when making decisions, investors should carefully consider the aforementioned factors as well as other uncertainties and events. Past or Present Performance Disclaimer: This presentation includes information regarding our past or present performance. Please note, past or present performance is not a guarantee of future performance or future results. We undertake no obligation to update the information contained herein to reflect subsequently occurring events or circumstances, except as required by applicable securities laws and regulations. **Amounts in tables and charts in thousands, except for share and per share amounts and as otherwise stated.
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Page 3 Gladstone Capital Quarterly Highlights (as of 3/31/2025) 1 Actual yields earned over the life of investments could be materially different from the yields presented herein. 2 Both exclude certain investments on the watchlist and investments with TTM EBITDA greater than $25 million. Net Investment Income Per Share: $0.50 Net Asset Value Per Share: $21.41 (-$0.10 over prior quarter-end) LTM ROE: 18.6% per GAAP and 9.8% on net investment income Monthly dividends per share: $0.165 or annualized dividend yield on NAV of 9.25% Financial Results Portfolio Debt & Liquidity Recent Events Total investments at fair value of $762.6 million invested in 51 companies $46 million of fundings in Q2 (2 new portfolio companies) did not offset anticipated exits and prepayments of $81 million from 2 portfolio company exits Weighted average yield on debt investments of 12.6% down from 13.1% with lower SOFR Rates(1) 71% of portfolio in first-lien loans and 90% in secured loans Weighted average and median borrower EBITDA of $11.0 million and $9.2 million(2), respectively Average investment by obligor of $15.5 million or 2% investment portfolio at fair value Four obligors on non-accrual representing $29.8 million or 4.3% of debt investments (fair value) Outstanding debt balance was $280 million; quarter-end debt-to-equity ratio was 0.60x Current investment capacity: $251 million under undrawn committed bank lines Declared regular distribution of $0.165/share per month for Apr., May., and Jun. ($0.495 total) In 2Q25, received ~$42 million repayment from SpaceCo (Karman Aerospace) following the IPO Completed the bankruptcy restructuring of investment in Eegee’s
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Page 4 Gladstone Capital Investment Highlights Lending focused on growth-oriented lower middle market businesses Experienced, long-tenured leadership and investment team Proprietary sourcing and execution model with high degree of selectivity Diversified, conservative portfolio with focus on senior secured, first lien loans Active portfolio management and risk monitoring Focus on shareholder alignment
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Page 5 Gladstone Capital Overview Background: Founded in 2001 with the purpose of making loans to lower middle market U.S. businesses, Gladstone Capital’s investment team is exclusively focused on this segment of the private capital market Gladstone Capital is funded through publicly traded common stock (Nasdaq: GLAD) and is leveraged via various senior unsecured note issues and a bank revolving credit facility Managed by Gladstone Management Corporation, an SEC registered investment adviser managing $4.0+ billion in assets across four publicly traded yield-oriented funds and one newly-formed private interval fund Investment Strategy: Target direct originated secured debt investments in growth-oriented companies with revenue visibility and free cash flow to support organic deleveraging and where capital structure flexibility and lender support are valued Target companies with operating cash flow (EBITDA) of $3-25 million and investments of $8-40 million which are below the investment threshold of most of the large-scale private capital funds Majority of investments are backed by private equity sponsors (~85% of the portfolio at 3/31/25), which provide governance oversight, strategic sector insight, experience managing leveraged capital structures and access to additional investment capacity to support growth Deal Sourcing/Diligence/Risk Management: Leverage experienced origination team to source, structure, undertake “equity level” diligence and pro-actively manage investments via ongoing board level participation to mitigate credit losses Highly selective screening process where under 5% of deals reviewed ultimately close and all deals require financial maintenance covenants All investments undergo ongoing senior management review, quarterly third-party expert investment valuations in support of SEC filed financials which are subject to quarterly oversight by Gladstone Capital’s audit committee and independent board members
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Page 6 Attractive Lower Middle Market Dynamics Why focus on lower middle market (“LMM”) companies Greater industry diversity and more consistent flow of growth-oriented investment opportunities Lower cash flow purchase multiples in the LMM translate to reduced financial leverage, better asset collateral coverage, and the ability for lenders to structure and control entire debt financing solutions Smaller investment threshold attracts less competition from larger private debt funds or commercial banks, supporting more attractive investment returns at lower relative leverage levels, often with more lender-friendly documentation LMM companies and PE Sponsors are more receptive to equity co-investments, offering opportunities to selectively participate in anticipated growth and equity appreciation Proprietary origination and lead lender solution approach provide elevated diligence insight and management team access, leading to greater visibility and influence over strategy & risk mitigation Trends Enhancing Opportunity for Non-Bank/Private Credit Lenders PE Sponsors aiming to scale LMM platform investments rely upon flexible financing solutions, often requiring future funding to support growth efforts, which demands a more experienced and responsive lender capable of underwriting long-term equity strategies with the agility to respond to changing conditions and new opportunities Providing streamlined “one-stop” financing solutions accelerates transaction closings, provides GLAD access to primary diligence and control over documentation, and simplifies future growth funding or facility modifications for the borrower Shifting capital market conditions and regulatory or internal leverage lending constraints continue to hamper the commercial bank participation in as cashflow lenders to the LMM PE sponsor community Over 90% of private debt funds raised exceed $1B, with multi-billion-dollar firms prioritizing larger borrowers (>$25 million EBITDA), aligning with institutional capital deployment objectives and lower-fee structures LMM is a less competitive segment of the leveraged finance market, offering a more attractive risk reward profile that aligns well with the investment flexibilities of Gladstone Capital’s non-bank investment platform
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Page 7 Gladstone Capital 3/31/2025 Quarter Summary Originations/Portfolio Activity: New investments totaled $45.6 million during the quarter, comprised of $38.3 million into two new portfolio companies, and $7.3 million of add-on investments in support of existing portfolio companies. Portfolio exits, amortization payments, and prepayments were $81.3 million, resulting in net originations of ($35.7) million. We have absorbed the bulk of the anticipated surge in portfolio exits and our current deal pipeline of expected fundings should easily outpace anticipated repayments to put us back on track to grow the portfolio. Portfolio Yield / Net Investment Income (NII): Average SOFR rates declined 36bp in the quarter which accounted for the majority of the decline in the portfolio’s weighted average yield which fell to 12.6% from 13.1% last quarter, however interest income was unchanged at $21.3 million due to the 6.3% increase in the average earning assets for the period. Other investment income declined $0.4 million from the prior quarter which dropped total investment income by $0.4 million, to $21.6 million. Total expenses declined by $0.4 million as interest expenses rose $0.3 million with higher average bank borrowings, however the total declined due to lower professional fees, other expenses, and net management fees. Net investment income for the quarter was unchanged at ~$11.2 million or $0.50 per share and covered common distributions. Portfolio Performance and Valuation: Our portfolio continues to perform well with modest leverage metrics and favorable liquidity. We ended the quarter with four non-earning debt investments (unchanged) representing 4.3% of debt investments at fair value. Conservative asset mix with 90% of investments in secured loans, 71% in lower risk 1st lien loans and weighted average leverage across core proprietary loan portfolio of 3.8x. Net realized gains came in at $7.7 million for the quarter with equity investment exits, and the net unrealized depreciation on the balance of the portfolio was $2.2 million, bringing our ROE to 18.6% for the TTM period.
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Page 8 Gladstone Capital Origination Activity Gladstone Capital Quarterly Net Investment 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 3/31/2025 New Investments at Cost 53,500$ -$ 11,000$ 15,000$ 27,250$ -$ 107,159$ 38,265$ Disbursements to Existing Portfolio Companies 17,115 27,393 46,998 29,735$ 19,139$ 28,527$ 44,457$ 7,330$ Sales, Repayments, Other Exits at Cost (35,230) (41,017) (22,066) (15,146) (86,420) (12,638) (165,343) (81,274) Net New Investments at Cost 35,385$ (13,624)$ 35,932$ 29,589$ (40,031)$ 15,889$ (13,727)$ (35,679)$ Number of New Portfolio Company Investments 3 0 1 1 2 0 6 2 Number of Portfolio Company Exits 2 1 1 1 2 2 4 2 Total Portfolio Companies 52 51 51 51 51 49 51 51
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Page 9 Gladstone Capital Portfolio Trends While new deal buyout activity has been volatile in the past several quarters, we have absorbed significant refinancings of larger and mature credits while seeding a new vintage of growth oriented LMM platform investments to maintain our AUM and portfolio diversity. 1st lien investments decreased to 71% of the portfolio driven by recent debt position repayments. Approximately 90.8% of our loan portfolio is subject to floating rates with minimum SOFR floors. We continue to make minority equity co- investments in approximately half of our new originations to selectively capitalize on the most attractive buyout opportunities. The current portfolio valuation of $762.6 million represents ~97% of cost as of 3/31/2025. 12/31/23 3/31/24 6/30/24 9/30/24 First Lien Debt 72.9% 71.2% 71.6% 69.7% Second Lien Debt 16.9% 17.8% 15.5% 14.3% Equity / Other 10.2% 11.0% 12.9% 16.0% 12/31/24 73.4% 15.9% 10.7% 3/31/25 71.0% 19.0% 10.0%
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Page 10 Portfolio Metrics Consistent with GLAD’s LMM focus, the core loan portfolio continues to represent companies with an average EBITDA of approx. $11.0 million and an average leverage attachment point of 3.84x EBITDA *For the purposes of this presentation, certain investments have been excluded from the data used to develop the above analysis. Those exclusions include investments: (i) originated as Syndications; (ii) co-investments with GAIN; (iii) residual investments under $5 million; (iv) equity only investments; (v) investments with TTM EBITDA greater than $25 million; and (vi) two investments with a de minimis TTM EBITDA relative to total debt skewing weighted average leverage. Additionally, investment EBITDA and Leverage are weighted based on the size of the principal outstanding.
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Page 11 Industry and Deal Sources Are Diversified Portfolio Diversification Across 13 Industries - At 3/31/2025 Fair Value Deal Source Composition - At 3/31/2025 Fair Value
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Page 12 Portfolio Composition **Weighted average yield on interest bearing debt investments (excludes non-accruals and reserves on interest receivables) Note: $’s are in (000’s) Portfolio Characteristics As Of: June 30, 2024 September 30, 2024 Total Portfolio - FV $ $ 757,745 $ 796,260 $ # of Portfolio Companies 51 49 Average Investment Size - FV $ $ 14,858 $ 16,250 $ Top 5 Investments % FV 27.3% 29.2% WAVG Investment Yield** 13.9% 14.0% 1st Lien FV $ $ 542,283 $ 554,937 $ 2nd Lien FV 117,875 113,716 Equity / Other FV 97,587 127,607 Proprietary % of FV 98.9% 99.6% Syndicated % of FV 1.1% 0.4% Fixed Rate Debt % Cost 6.2% 6.1% Variable Rate Debt % of Cost 93.8% 93.9% Performing % FV (Debt) 97.9% 98.1% Non-Performing % FV (Debt) 2.1% 1.9% December 31, 2024 799,497 51 15,676 23.8% 13.1% 586,409 127,234 85,854 99.6% 0.4% 8.9% 91.1% 96.0% 4.0% March 31, 2025 762,636 51 14,954 24.5% 12.6% 541,524 144,970 76,142 99.5% 0.5% 9.2% 90.8% 95.7% 4.3%
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Page 13 Representative Portfolio Investments WINGS ‘N MORE RESTAURANTS LLC. is a proud Texas tradition and restaurant chain that offers a diverse, value-oriented menu centered around the “buffalo style” chicken wing. FIX-IT GROUP LLC is a provider of residential maintenance, repair, and replacement services. ENCORE DREDGING PARTNERS, LLC is a premier mid-sized cutter suction and mechanical dredging services provider focusing on navigable waterways throughout the U.S. HH-INSPIRE ACQUISITION, INC. is a plastic surgery and aesthetic center offering a comprehensive range of cosmetic surgeries and aesthetics treatments CAFÉ ZUPAS is a healthy fast casual restaurant brand that serves house-made soups, salads and sandwiches from over 200 fresh ingredients. ITEN DEFENSE, LLC is a leading provider of advanced composites and armor solutions used in personal protective equipment, aircraft, tactical vehicles, and maritime vessels. AXIOS INDUSTRIAL GROUP is a provider of scaffolding, insulation, coatings, surface preparation and specialty solutions for a broad range of industrial customers in support of turnaround, maintenance and capital projects. KARMAN MISSILE & SPACE SYSTEMS is a premier manufacturer of flight-critical and high temperature assemblies and components for space and defense end-markets with significant content on the industry’s most coveted platforms. WORKFORCEQA LLC is a leading tech-enabled Third-Party Administrator (“TPA”) of employee compliance solutions focused on regulated and safety-sensitive industries. ENGINEERING MANUFACTURING TECHNOLOGIES, LLC is a precision manufacturer of close tolerance metal components used in defense, industrial, and other end markets and applications. PAN-AM DENTAL LABORATORY is a full-service manufacturer and distributor of high-quality custom dental products. FREEDOM DENTAL HEALTH is Dental Support Organization offering a wide range of services, including general and pediatric dentistry, orthodontics and periodontal surgery. TORRENT PHOTONICS HOLDCO LLC provides an integrated suite of technologies to serve the security and defense, medical, industrial, semiconductor, commercial, and science and technology markets. QUALITY ENVIRONMENTAL SERVICES, INC. is a leading provider of environmental remediation services to private, state, and federal customers in the greater Midwest region.
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Page 14 Quarterly Financial Summary *Total Shares outstanding total at 3/31/25 was 22,329,852 (following the 1:2 reverse share split executed April 2024) **Return on Equity (NII) defined as: LTM net investment income divided by LTM average net assets ***Debt includes Line of Credit and Long Term Debt Note: The financial information above is not comprehensive and is without notes, so readers should obtain and carefully review GLAD’s Forms 10-K and 10-Q for the corresponding reporting periods as filed with the SEC. Three Months Ended In Thousands, except per share data March 31, 2024 June 30, 2024 September 30, 2024 Income: Interest Income $ $ 23,715 $ 23,199 $ 23,384 $ Other Investment Income 282 2,490 330 Total Investment Income 23,997 25,689 23,714 Expenses: Fees to Advisor & Admin 6,131 6,412 6,174 Interest Expense 5,732 5,509 5,442 Operating Expense 1,357 1,375 1,143 Total Expenses 13,220 13,296 12,759 Net Investment Income (NII) $ $ 10,777 $ 12,393 $ 10,955 $ Weighted Average Shares* 43,509 21,754 March 31, 2025 21,338 231 21,569 4,164 5,019 1,141 10,324 11,245 December 31, 2024 21,320 640 21,960 4,385 4,743 1,608 10,736 11,224 21,860 NII Per WAVG Share $ $ 0.248 $ 0.570 $ 0.493 $ Realized/Unrealized Gains (Loss) per Share $ $ 0.296 $ 0.310 $ 0.944 $ Dividend Per WAVG Share $ $ 0.248 $ 0.570 $ 0.500 $ NAV Per Share $ $ 9.90 $ 20.18 $ 21.18 $ LTM Return on Equity (NII)** 11.2% 10.9% 10.5% Portfolio at Fair Value 791,588 757,745 796,260 Debt*** 370,815 319,674 324,610 Net Asset Value 430,791 439,078 470,895 Debt-to-Equity 88.1% 75.3% 70.9% 22,330 0.504 (0.101) 0.495 21.41 9.8% 762,636 279,678 478,059 60.0% 22,312 0.503 0.714 0.900 21.51 10.0% 799,497 315,761 480,316 67.7%
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Page 15 Gladstone Capital 3/31/2025 Quarter Summary Capital Base and Liquidity Total Assets decreased to $777 million as of March 31, 2025, consisting of ~$763 million in investments at fair value and ~$14 million in cash and other assets. We ended the quarter with a conservative leverage position of 60.0% of NAV, which is well below the BDC industry average of 117%. Liabilities declined slightly to $287 million as of March 31, 2025, and consisted primarily of $254 million of Senior Notes including the $57 million 7.75% “GLADZ” baby bond due September 2028, and advances under our $293 million line of credit decreased to $25.1 million. ROE Performance Between higher rates and the performance of the portfolio, GLAD achieved an ROE of ~18.6% for the twelve months ended March 2025. With ample availability under our bank credit facility, GLAD is well positioned to grow our earning assets and fee income to continue to support our shareholder distributions in the coming year. Monthly distributions to our common stockholders of $0.165 per common share was announced for the months of April, May and June which is an annual run rate of $1.98 per share. (1) BDC Mean/Median Source: Raymond James BDC Industry Weekly Newsletters (05/01/2025) (2) BDC Averages Source: Oppenheimer & Co. Financial Institutions/Business Development Companies Equity Research Industry Update (12/31/2025)
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Page 16 Corporate Data Janney Montgomery Scott LLC John Rowan Jefferies Matt Hurwit Ladenburg Thalmann Mickey Schleien Lucid Capital Markets Erick Zwick Oppenheimer & Co. Mitchel Penn Raymond James Robert Dodd Executive Officers David Gladstone Chairman & CEO Bob Marcotte President Nicole Schaltenbrand CFO & Treasurer Gladstone Capital: www.gladstonecapital.com Investment Adviser: www.gladstonemanagement.com Information on all Funds: www.gladstonecompanies.com Websites Research Coverage Common Stock Ticker: GLAD 7.75% Notes Ticker: GLADZ Nasdaq Listings 1521 Westbranch Drive, Ste. 100 McLean, VA 22102 (703) 287-5800 Other Locations: Dallas & Los Angeles Corporate Headquarters Michael LiCalsi General Counsel & Secretary Jack Dellafiora Chief Compliance Officer 1521 Westbranch Drive, Suite 100 McLean, VA 22102 (703) 287-5893 capital@gladstone.com Corporate Counsel: Kirkland & Ellis LLP Transfer Agent: Computershare Inc. Auditors: PricewaterhouseCoopers LLP Other Officers Other Investor Relations