Gladstone Capital Reports Results for the Third Quarter Ended June 30, 2007
-- Net Investment Income was $5.7 million, or $0.42 per diluted common share
-- Net Increase in Net Assets was $6.0 million, or $0.44 per diluted common share
MCLEAN, Va.--(BUSINESS WIRE)--
Gladstone Capital Corp. (NASDAQ:GLAD) (the "Company") today announced earnings for the third quarter and nine months ended June 30, 2007. All per share references are based on fully diluted weighted average common shares outstanding, unless otherwise noted.
Net Investment Income for the third quarter ended June 30, 2007 was $5,704,867, or $0.42 per share, as compared to $4,788,082, or $0.41 per share, for the third quarter ended June 30, 2006, an increase of 2.4% per share. Net Investment Income for the nine months ended June 30, 2007 was $16,592,150, or $1.31 per share, as compared to $14,434,312, or $1.25 per share, for the nine months ended June 30, 2006, an increase of 4.8%.
Net Increase in Net Assets Resulting from Operations for the quarter ended June 30, 2007 was $5,964,600, or $0.44 per share, as compared to $5,543,076, or $0.48 per share, for the quarter ended June 30, 2006, a decrease of 8.3% per share. Net Increase in Net Assets Resulting from Operations for the nine months ended June 30, 2007 was $14,213,054, or $1.12 per share, as compared to $19,366,806, or $1.68 per share, for the nine months ended June 30, 2006, a decrease of 33.3% per share. The primary difference between the current and prior year periods is the result of net unrealized appreciation and depreciation on the Company's investment portfolio. The Company recorded net unrealized appreciation on its investments of $256,613 for the quarter ended June 30, 2007, and net unrealized depreciation of $2,465,915 for the nine months ended June 30, 2007, as compared to net unrealized appreciation on its investments of $812,991 and $5,769,820 for the quarter and nine months ended June 30, 2006, respectively.
Total assets were $378,610,750 at June 30, 2007, as compared to $225,783,215 at September 30, 2006. Net asset value was $15.11 per actual common share outstanding at June 30, 2007, 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 June 30, 2007 was 11.8% as compared to 11.7% for the quarter ended June 30, 2006.
For the third quarter ended June 30, 2007, the Company reported the following activity:
-- Purchased a portfolio of media and communication loans for
approximately $63.3 million;
-- Funded approximately $62.8 million of additional new
investments;
-- Received principal repayments of approximately $37.6 million,
which included scheduled principal repayments, full
repayments, and syndicate sales;
-- Received approximately $515,000 of success fees;
-- Completed a public offering of 2,000,000 shares of common
stock at a price of $24.25 per share for net proceeds, after
underwriting discounts and offering expenses, of approximately
$45.7 million, all of which were used to repay outstanding
borrowings on the Company's line of credit; and
-- Paid monthly cash dividends of $0.14 per common share for each
of the months of April, May and June.
At June 30, 2007, the Company had investments in debt and equity securities and syndicated loan participations in 59 private companies with an aggregate cost basis of approximately $370.0 million and a fair value of approximately $368.9 million.
"We were successful in building our assets during the third quarter and nine months ended June 30, 2007. We are excited about our purchase of loans to media and broadcasting companies and the results of our direct origination business," said Chip Stelljes, President and Chief Investment Officer. "We expect the increase in assets to yield positive results for the remainder of fiscal year 2007."
Subsequent to June 30, 2007, the Company:
-- Declared monthly cash dividends of $0.14 per common share for
each of the months of July, August and September 2007; and
-- Completed an offering of 400,000 shares of common stock at a
price of $20.41 per share for proceeds of approximately $8.2
million, all of which were used to repay outstanding
borrowings on the Company's line of credit.
The financial statements below are without footnotes. We have filed a Form 10-Q today for the third quarter ended June 30, 2007 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 Tuesday, August 7, 2007 at 8:30 am EDT to discuss third 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 249395.
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 until November 8, 2007.
For further information contact Rob Johnson at 703-287-5835.
This press release may include statements that may constitute "forward-looking statements," 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 prospectus dated July 5, 2007, as filed with the Securities and Exchange Commission on July 5, 2007. 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)
June 30, September 30,
2007 2006
------------- -------------
ASSETS
Investments at fair value (Cost 6/30/2007:
$369,975,398; 9/30/2006: $216,202,986) $368,949,247 $217,642,750
Cash and cash equivalents 3,491,495 731,744
Interest receivable - investments in debt
securities 2,221,606 1,394,942
Interest receivable - employees 32,739 37,396
Due from custodian 3,129,891 3,587,152
Deferred financing fees 246,333 145,691
Prepaid assets 186,643 226,747
Due from employees - 1,803,283
Other assets 352,796 213,510
------------- -------------
TOTAL ASSETS $378,610,750 $225,783,215
============= =============
LIABILITIES
Accounts payable $ 5,160 $ 4,072
Interest payable 516,780 247,530
Administration fee due to Administrator 186,895 -
Fees due to Adviser 404,240 240,363
Borrowings under line of credit 161,188,000 49,993,000
Withholding taxes payable - 1,803,283
Accrued expenses and deferred liabilities 854,322 721,287
Funds held in escrow 202,433 203,193
------------- -------------
TOTAL LIABILITIES 163,357,830 53,212,728
------------- -------------
NET ASSETS $215,252,920 $172,570,487
============= =============
ANALYSIS OF NET ASSETS
Common stock, $0.001 par value, 50,000,000
shares authorized and 14,249,683 and
12,305,008 shares issued and outstanding,
respectively $ 14,250 $ 12,305
Capital in excess of par value 225,449,718 181,270,565
Notes receivable - employees (9,947,366) (10,248,308)
Net unrealized appreciation on investments (1,026,151) 1,439,764
Unrealized depreciation on derivative (279,593) (253,716)
Realized loss on sale of investments (780,197) (861,695)
Realized gain on settlement of derivative 46,212 15,014
Accumulated undistributed net investment
income 1,776,047 1,196,558
------------- -------------
TOTAL NET ASSETS $215,252,920 $172,570,487
============= =============
NET ASSETS PER SHARE $ 15.11 $ 14.02
============= =============
GLADSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended June 30,
2007 2006
------------- -------------
INVESTMENT INCOME
Interest income - investments $ 8,911,643 $ 5,775,522
Interest income - cash and cash
equivalents 109,269 8,178
Interest income - notes receivable from
employees 132,795 108,877
Prepayment fees and other income 47,572 630,239
------------- -------------
Total investment income 9,201,279 6,522,816
------------- -------------
EXPENSES
Interest expense 1,762,249 702,449
Loan servicing 897,634 693,965
Base management fee 727,259 334,814
Incentive fee 1,166,529 -
Administration fee 186,895 -
Professional fees 148,609 166,405
Amortization of deferred financing fees 72,133 36,036
Stockholder related costs 39,434 28,371
Directors fees 56,250 27,500
Insurance expense 66,246 50,589
Stock option compensation - 202,296
Other expenses 82,062 35,083
------------- -------------
Expenses before credit from Adviser 5,205,300 2,277,508
------------- -------------
Credit to base management and incentive
fees from Adviser (1,708,888) (542,774)
------------- -------------
Total expenses net of credits to
base management and incentive fees 3,496,412 1,734,734
------------- -------------
NET INVESTMENT INCOME 5,704,867 4,788,082
------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Realized loss on sale of investments (5,021) (100,850)
Realized gain on settlement of
derivative 8,405 1,367
Unrealized (depreciation) appreciation
on derivative (264) 41,486
Net unrealized appreciation on
investments 256,613 812,991
------------- -------------
Net gain on investments 259,733 754,994
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 5,964,600 $ 5,543,076
============= =============
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS PER COMMON SHARE:
Basic $ 0.44 $ 0.49
============= =============
Diluted $ 0.44 $ 0.48
============= =============
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:
Basic 13,561,511 11,337,291
Diluted 13,561,511 11,570,425
GLADSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended June 30,
2007 2006
------------ -------------
INVESTMENT INCOME
Interest income - investments $25,064,702 $ 18,497,893
Interest income - cash and cash
equivalents 178,183 21,714
Interest income - notes receivable from
employees 403,917 323,003
Prepayment fees and other income 431,973 711,225
------------ -------------
Total investment income 26,078,775 19,553,835
------------ -------------
EXPENSES
Interest expense 4,693,525 2,302,693
Loan servicing 2,377,409 2,144,024
Base management fee 1,806,075 955,894
Incentive fee 3,474,007 -
Administration fee 481,746 -
Professional fees 368,610 399,758
Amortization of deferred financing fees 198,633 94,572
Stockholder related costs 190,450 273,170
Directors fees 167,470 81,712
Insurance expense 191,338 151,956
Stock option compensation - 279,618
Other expenses 219,522 151,663
------------ -------------
Expenses before credit from Adviser 14,168,785 6,835,060
------------ -------------
Credit to base management and incentive
fees from Adviser (4,682,160) (1,765,774)
------------ -------------
Total expenses net of credits to base
management and incentive fees 9,486,625 5,069,286
------------ -------------
NET INVESTMENT INCOME BEFORE INCOME TAXES 16,592,150 14,484,549
------------ -------------
Income tax expense - 50,237
------------ -------------
NET INVESTMENT INCOME 16,592,150 14,434,312
------------ -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on sale of
investments 81,498 (903,945)
Realized gain on settlement of derivative 31,198 1,367
Unrealized (depreciation) appreciation on
derivative (25,877) 65,252
Net unrealized (depreciation)
appreciation on investments (2,465,915) 5,769,820
------------ -------------
Net (loss) gain on investments (2,379,096) 4,932,494
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $14,213,054 $ 19,366,806
============ =============
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS PER COMMON SHARE:
Basic $ 1.12 $ 1.71
============ =============
Diluted $ 1.12 $ 1.68
============ =============
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:
Basic 12,701,845 11,317,437
Diluted 12,701,845 11,549,054
GLADSTONE CAPITAL CORPORATION
FINANCIAL HIGHLIGHTS
(Unaudited)
Three Months Ended June 30,
2007 2006
------------- -------------
Per Share Data (1)
------------------------------------------
Net asset value at beginning of period $ 13.82 $ 13.84
------------- -------------
Income from investment operations:
Net investment income (2) 0.42 0.42
Realized gain (loss) on sale of
investments (2) - (0.01)
Net unrealized gain on investments (2) 0.02 0.07
Net unrealized gain on derivatives (2) - 0.01
------------- -------------
Total from investment operations 0.44 0.49
------------- -------------
Less distributions:
Distributions from net investment
income (0.42) (0.41)
------------- -------------
Total distributions (0.42) (0.41)
------------- -------------
Issuance of common stock under shelf
offering 1.50 -
Offering costs and underwriting discount (0.23) -
Issuance of common stock under stock
option plan - 0.10
Repayment of principal on notes
receivable - 0.01
Dilutive effect of share issuance - (0.08)
------------- -------------
Net asset value at end of period $ 15.11 $ 13.95
============= =============
Per share market value at beginning of
period $ 23.68 $ 21.55
Per share market value at end of period 21.46 21.39
Total return (3)(4) -7.69% 1.11%
Shares outstanding at end of period 14,249,683 11,384,363
Ratios/Supplemental Data
------------------------------------------
Net assets at end of period $215,252,920 $158,785,756
Average net assets (5) $197,994,217 $156,053,816
Ratio of expenses to average net assets-
annualized (6) 10.52% 5.83%
Ratio of net expenses to average net
assets-annualized (7) 7.06% 4.45%
Ratio of net investment income to
average net assets-annualized 11.53% 12.27%
Nine Months Ended June 30,
2007 2006
------------- -------------
Per Share Data (1)
------------------------------------------
Net asset value at beginning of period $ 14.02 $ 13.41
------------- -------------
Income from investment operations:
Net investment income (2) 1.31 1.28
Realized loss on sale of investments
(2) - (0.08)
Net unrealized (loss) gain on
investments (2) (0.19) 0.51
------------- -------------
Total from investment operations 1.12 1.71
------------- -------------
Less distributions:
Distributions from net investment
income (1.26) (1.22)
------------- -------------
Total distributions (1.26) (1.22)
------------- -------------
Issuance of common stock under shelf
offering 1.50 -
Offering costs and underwriting discount (0.23) -
Issuance of common stock under stock
option plan - 0.10
Repayment of principal on notes
receivable 0.02 0.01
Stock surrendered to settle withholding
tax obligation (0.06) -
Dilutive effect of share issuance - (0.06)
------------- -------------
Net asset value at end of period $ 15.11 $ 13.95
============= =============
Per share market value at beginning of
period $ 22.01 $ 22.55
Per share market value at end of period 21.46 21.39
Total return (3)(4) 2.92% 0.35%
Shares outstanding at end of period 14,249,683 11,384,363
Ratios/Supplemental Data
------------------------------------------
Net assets at end of period $215,252,920 $158,785,756
Average net assets (5) $179,127,176 $153,804,303
Ratio of expenses to average net assets-
annualized (6) 10.55% 5.97%
Ratio of net expenses to average net
assets-annualized (7) 7.06% 4.44%
Ratio of net investment income to
average net assets-annualized 12.35% 12.51%
(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 August 6, 2007