Gladstone Capital Reports Results for the First Quarter Ended December 31, 2006
-- Net Investment Income was $5.2 million or $0.42 per diluted common share
-- Net Increase in Net Assets was $4.2 million or $0.34 per diluted common share
MCLEAN, Va.--(BUSINESS WIRE)--
Gladstone Capital Corp. (NASDAQ:GLAD) (the "Company") today announced earnings for the first quarter ended December 31, 2006. All per share references are based on fully diluted weighted average common shares outstanding, unless otherwise noted.
Net Investment Income for the quarter ended December 31, 2006 was $5,162,926, or $0.42 per share, as compared to $4,442,414, or $0.38 per share, for the quarter ended December 31, 2005, an increase of 10.5% per share.
Net Increase in Net Assets Resulting from Operations for the quarter ended December 31, 2006 was $4,163,603, or $0.34 per share, as compared to $8,233,349, or $0.71 per share, for the quarter ended December 31, 2005, a decrease of 52.1% per share. The primary difference between the current and prior year periods is the result of net unrealized depreciation and appreciation on the Company's investment portfolio. The Company recorded net unrealized depreciation on its investments of $1,004,379 for the quarter ended December 31, 2006 as compared to net unrealized appreciation on its investments of $4,972,422 for the quarter ended December 31, 2005.
Total assets were $257,420,187 at December 31, 2006, as compared to $225,783,215 at September 30, 2006. Net asset value was $13.88 per actual common share outstanding at December 31, 2006, as compared to $14.02 per actual common share outstanding at September 30, 2006.
The annualized weighted average yield on the Company's portfolio for the quarter ended December 31, 2006 was 13.7% as compared to 12.6% for the quarter ended December 31, 2005.
For the first quarter ended December 31, 2006, the Company reported the following activity:
-- Funded approximately $52.3 million of new investments;
-- Received principal repayments of approximately $24.0 million,
which included scheduled principal repayments and full
repayments;
-- Received approximately $1.2 million of success fees in
connection with the full repayment of two investments; and
-- Implemented the amended and restated investment advisory and
management agreement with Gladstone Management Corporation and
an administration agreement with Gladstone Administration,
LLC.
At December 31, 2006, the Company had investments in debt and equity securities and syndicated loan participations in 48 private companies with an aggregate cost basis of approximately $244.5 million and a fair value of approximately $245.0 million.
"We are very pleased with our first quarter results, noting a 10.5% growth in per share net investment income over the prior year period. We continue to have a steady flow of investment opportunities and are pleased with our activity subsequent to the end of the first quarter," said Chip Stelljes, President and Chief Investment Officer. "We expect the strong portfolio performance to continue through our second quarter."
Subsequent to December 31, 2006, the Company:
-- Funded approximately $25.7 million of new investments;
-- Purchased approximately $21.6 million of syndicated loan
participations;
-- Refinanced an existing $13.3 million portfolio company
investment in exchange for a new $9.8 million investment and
received approximately $0.5 million of success fees; and
-- Declared monthly cash dividends of $0.14 per common share for
each of the months of January, February, and March 2007.
The financial statements below are without footnotes. We have filed a Form 10-Q today for the first quarter ended December 31, 2006 with the Securities and Exchange Commission (the "SEC"), which can be retrieved from the SEC's website at www.SEC.gov or from the Company's web site at www.GladstoneCapital.com. A paper copy can be obtained free of charge by writing to us at 1521 Westbranch Drive, Suite 200, McLean, VA 22102.
The Company will hold a conference call Wednesday, February 7, 2007 at 8:30 am EST to discuss first quarter earnings. Please call (877) 407-8031 to enter the conference. An operator will monitor the call and set a queue for the questions. The conference call replay will be available two hours after the call for approximately 30 days. To hear the replay, please dial (877) 660-6853, access playback account 286 and use conference ID code 229420.
The live audio broadcast of Gladstone Capital's quarterly conference call will be available online at www.GladstoneCapital.com and www.investorcalendar.com. The event will be archived and available for replay on the Company's website.
For further information contact Investor Relations at 703-287-5835.
This press release may include statements that may constitute "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, including statements with regard to the future performance of the Company. Words such as "should," "believes," "feel," "expects," "projects," "strive," "goals," and "future" or similar expressions are intended to identify forward-looking statements. These forward-looking statements inherently involve certain risks and uncertainties, although they are based on the Company's current plans that are believed to be reasonable as of the date of this press release. Factors that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements include, among others, those factors listed under the caption "Risk factors" of the Company's Form 10-K for the Fiscal Year Ended September 30, 2006, as filed with the Securities and Exchange Commission on December 6, 2006. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
GLADSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF ASSETS & LIABILITIES
(Unaudited)
December 31, September 30,
2006 2006
------------- -------------
ASSETS
Investments at fair value (Cost
12/31/2006: $244,537,584; 9/30/2006:
$216,202,986) $244,972,971 $217,642,750
Cash and cash equivalents 5,996,680 731,744
Interest receivable - investments in debt
securities 1,923,478 1,394,942
Interest receivable - employees 39,130 37,396
Due from custodian 3,884,561 3,587,152
Deferred financing fees 113,666 145,691
Prepaid assets 280,431 226,747
Due from employees - 1,803,283
Other assets 209,270 213,510
------------- -------------
TOTAL ASSETS $257,420,187 $225,783,215
============= =============
LIABILITIES
Accounts payable $ 10,931 $ 4,072
Interest payable 358,605 247,530
Administration fee due to Administrator 126,085 -
Fees due to Adviser 849,106 240,363
Borrowings under line of credit 85,186,000 49,993,000
Withholding taxes payable - 1,803,283
Accrued expenses and deferred liabilities 603,098 721,287
Funds held in escrow 203,240 203,193
------------- -------------
TOTAL LIABILITIES 87,337,065 53,212,728
------------- -------------
NET ASSETS $170,083,122 $172,570,487
============= =============
ANALYSIS OF NET ASSETS
Common stock, $0.001 par value, 50,000,000
shares authorized and 12,249,683 and
12,305,008 shares issued and outstanding,
respectively $ 12,250 $ 12,305
Capital in excess of par value 179,782,427 181,270,565
Notes receivable - employees (10,248,156) (10,248,308)
Net unrealized appreciation on investments 435,385 1,439,764
Unrealized depreciation on derivative (263,528) (253,716)
Realized loss on sale of investments (859,381) (861,695)
Realized gain on settlement of derivative 27,568 15,014
Accumulated undistributed net investment
income 1,196,557 1,196,558
------------- -------------
TOTAL NET ASSETS $170,083,122 $172,570,487
============= =============
NET ASSETS PER SHARE $ 13.88 $ 14.02
============= =============
GLADSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
December 31,
2006 2005
------------ ------------
INVESTMENT INCOME
Interest income - investments $ 7,898,600 $ 5,847,107
Interest income - cash and cash
equivalents 37,269 8,912
Interest income - notes receivable from
employees 138,191 107,093
Prepayment fees and other income 159,658 67,207
------------ ------------
Total investment income 8,233,718 6,030,319
------------ ------------
EXPENSES
Loan servicing 719,152 715,415
Base management fee 398,432 268,701
Incentive fee 1,148,483 -
Administration fee 126,085 -
Professional fees 110,920 122,466
Amortization of deferred financing fees 58,300 26,250
Interest expense 1,120,257 652,078
Stockholder related costs 63,728 128,935
Directors fees 54,250 24,000
Insurance expense 62,694 50,777
Stock option compensation - 43,257
Other expenses 88,485 55,789
------------ ------------
Expenses before credit from Adviser 3,950,786 2,087,668
------------ ------------
Credits to base management and incentive
fees (879,994) (550,000)
------------ ------------
Total expenses net of credits to base
management and incentive fees 3,070,792 1,537,668
------------ ------------
NET INVESTMENT INCOME BEFORE INCOME TAXES 5,162,926 4,492,651
------------ ------------
Income tax expense - 50,237
------------ ------------
NET INVESTMENT INCOME 5,162,926 4,442,414
------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on sale of
investments 2,314 (1,180,595)
Realized gain on settlement of derivative 12,554 -
Unrealized depreciation on derivative (9,812) (892)
Net unrealized (depreciation) appreciation
on investments (1,004,379) 4,972,422
------------ ------------
Net (loss) gain on investments (999,323) 3,790,935
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 4,163,603 $ 8,233,349
============ ============
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS PER COMMON SHARE:
Basic $ 0.34 $ 0.73
============ ============
Diluted $ 0.34 $ 0.71
============ ============
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:
Basic 12,294,340 11,306,510
Diluted 12,294,340 11,573,620
GLADSTONE CAPITAL CORPORATION
FINANCIAL HIGHLIGHTS
(Unaudited)
Three Months Ended December 31,
2006 2005
--------------- ---------------
Per Share Data (1)
--------------------------------------
Net asset value at beginning of
period $ 14.02 $ 13.41
--------------- ---------------
Income from investment operations:
Net investment income (2) 0.42 0.39
Realized gain (loss) on sale of
investments (2) - (0.10)
Net unrealized (loss) gain on
investments (2) (0.08) 0.44
--------------- ---------------
Total from investment operations 0.34 0.73
--------------- ---------------
Less distributions:
Distributions from net investment
income (0.42) (0.41)
--------------- ---------------
Total distributions (0.42) (0.41)
--------------- ---------------
Issuance of common stock under stock
option plan - 0.01
Dilutive effect of shares
surrendered (0.06) -
--------------- ---------------
Net asset value at end of period $ 13.88 $ 13.74
=============== ===============
Per share market value at beginning
of period $ 22.01 $ 22.55
Per share market value at end of
period 23.86 21.38
Total return (3)(4) 10.31% -3.44%
Shares outstanding at end of period 12,249,683 11,308,510
Ratios/Supplemental Data
--------------------------------------
Net assets at end of period $ 170,083,122 $ 155,417,011
Average net assets (5) $ 170,331,785 $ 150,961,590
Ratio of expenses to average net
assets-annualized (6) 9.28% 5.66%
Ratio of net expenses to average net
assets-annualized (7) 7.21% 4.21%
Ratio of net investment income to
average net assets 12.12% 11.77%
(1) Based on actual shares outstanding at the end of the corresponding period.
(2) Based on weighted average basic per share data.
(3) Total return equals the increase of the ending market value over the beginning market value plus monthly dividends divided by the monthly beginning market value, assuming monthly dividend reinvestment.
(4) Amounts were not annualized.
(5) Average net assets are computed using the average of the balance of net assets at the end of each month of the reporting period.
(6) Ratio of expenses to average net assets is computed using expenses before credits from Adviser to the base management and incentive fees and including income tax expense.
(7) Ratio of net expenses to average net assets is computed using total expenses net of credits from Adviser to the base management and incentive fees and including income tax expense.
Source: Gladstone Capital Corp.
Released February 6, 2007