Gladstone Investment Corporation — First Quarter 2026 Earnings Summary

Financial Performance

• Total investment income was $28.4 million for the quarter ended June 30, 2026, a 12.6% increase from $25.2 million in the quarter ended March 31, 2026.
• Total expenses, net, decreased to $12.4 million from $35.8 million in the prior quarter, a 65.3% reduction driven primarily by a $24.1 million decrease in accrued capital gains-based incentive fees.
• Net investment income was $15.9 million ($0.40 per weighted-average share), compared to a net investment loss of $10.6 million ($0.27 per share) in the prior quarter.
• Net realized loss was $9.0 million, compared to a net realized gain of $0.2 million in the prior quarter.
• Net unrealized depreciation was $18.8 million, compared to net unrealized appreciation of $92.8 million in the prior quarter.
• Net decrease in net assets resulting from operations was $11.9 million, compared to a net increase of $82.4 million in the prior quarter.
• Adjusted net investment income was $10.4 million ($0.26 per share), up 30.0% from $7.9 million ($0.20 per share) in the prior quarter.
• Net asset value per common share was $16.24 as of June 30, 2026, down 3.2% from $16.78 as of March 31, 2026.
• Total investments at fair value were $1,282.0 million, a 2.1% decrease from $1,309.2 million in the prior quarter.
• Fair value as a percent of cost was 122.7% as of June 30, 2026, down from 124.4% in the prior quarter.
• Weighted-average yield on interest-bearing investments remained stable at 12.9%.
• Total distributable earnings were $160.4 million ($4.03 per share), a 11.6% decrease from $181.5 million ($4.56 per share) in the prior quarter.
• Estimated spillover was $22.5 million ($0.56 per share), up 5.6% from $21.3 million ($0.53 per share) in the prior quarter.

Guidance and Future Outlook

• The company expects to close the acquisition of Extrude Hone LLC in the second fiscal quarter.
• The company expects to receive full repayment of its debt investment and realize a significant capital gain on its equity interest in portfolio company SFEG Holdings, Inc. following the sale of its subsidiary Specialized Fabrication Equipment Group LLC, expected to close in the third or fourth quarter of the calendar year.
• No specific forward-looking financial guidance or revenue targets were provided in the press release.

Business Segments and Product Lines

• The portfolio consists of 29 portfolio companies as of June 30, 2026.
• In June 2026, the company entered into a new $3.0 million secured first lien term loan with Home Concepts Acquisition, Inc., restructuring a previous $12.0 million loan, resulting in a $9.0 million realized loss.
• In July 2026, the company invested $56.5 million in DHE Computer Systems Acquisition, Inc., comprising $40.3 million in secured first lien debt and $16.1 million in preferred equity.
• In July 2026, the company invested an additional $5.1 million in Global GRAB Technologies, Inc., comprising $1.5 million in secured first lien debt and $3.6 million in preferred equity.
• 100.0% of debt investments are variable rates with a floor indexed to 30-day SOFR.
• 51.8% of debt investments were at their interest rate floor as of June 30, 2026.

Market and Competitive Landscape

• The company invests in lower middle market businesses in the United States in connection with acquisitions, changes in control, and recapitalizations.
• No specific market share data or direct competitor analysis was included in the press release.

Risks and Challenges

• The press release notes that actual results could differ materially from forward-looking statements due to various risks and uncertainties, including those described in the Company's filings with the SEC.
• The company experienced significant volatility in unrealized gains and losses, with a shift from $92.8 million appreciation in the prior quarter to $18.8 million depreciation in the current quarter.
• The company incurred a $9.0 million realized loss due to the restructuring of a loan with Home Concepts Acquisition, Inc.

Management Commentary and Tone

• The increase in net investment income was attributed to a decrease in total expenses, primarily due to lower accruals for capital gains-based incentive fees, partially offset by an increase in total investment income.
• The decrease in net asset value was primarily driven by net unrealized depreciation, distributions paid to shareholders, and net realized losses.
• Management highlighted the successful amendment of the credit facility to extend maturity and increase capacity.

Other Key Points

• The company repaid the 5.00% Notes due 2026 with an aggregate principal amount of $127.9 million at maturity in May 2026.
• The credit facility was amended to extend the maturity date to June 8, 2031, increase the total facility size from $300.0 million to $405.0 million, and reduce the base spread rate.
• As of June 30, 2026, the company had $157.6 million in borrowings outstanding on the credit facility, with $247.4 million available (subject to constraints, adjusted availability was $163.2 million).
• The company declared monthly distributions of $0.08 per common share for July, August, and September 2026.
• Total dollars invested during the quarter were $0.6 million, compared to $2.3 million in the prior quarter.
• Total dollars repaid and collected from sales and recapitalization were $0 in the current quarter, compared to $8.5 million in the prior quarter.
• The company has four outstanding notes payable totaling $421.1 million with interest rates ranging from 4.875% to 7.875%.