Gladstone Investment Corporation — Second Quarter 2026 Earnings Summary

Financial Performance:

• Total investment income was $24.2 million for the quarter ended September 30, 2026, a 14.8% decrease from $28.4 million in the quarter ended June 30, 2026.
• Net investment income was $4.8 million ($0.12 per weighted-average share), a 69.6% decrease from $15.9 million ($0.40 per share) in the prior quarter.
• Total expenses, net, increased 55.4% to $19.3 million from $12.4 million in the prior quarter, driven by an $8.0 million increase in accrued capital gains-based incentive fees and a $1.0 million increase in interest expense.
• Net unrealized appreciation was $12.2 million, compared to a net unrealized depreciation of $18.8 million in the prior quarter.
• Net increase in net assets resulting from operations was $17.1 million, reversing a net decrease of $11.9 million in the prior quarter.
• Net asset value per common share increased 1.2% to $16.43 as of September 30, 2026, from $16.24 as of June 30, 2026.
• Total distributable earnings were $167.6 million ($4.21 per share) as of September 30, 2026, up 4.5% from $160.4 million ($4.03 per share) in the prior quarter.
• Weighted-average yield on interest-bearing investments was 13.0%, up 0.1% from 12.9% in the prior quarter.
• Adjusted net investment income was $7.3 million ($0.18 per share), a 30.8% decrease from $10.4 million ($0.26 per share) in the prior quarter.

Guidance and Future Outlook:

• Proceeds from the remaining equity investment in SFEG Holdings, Inc., including capital return and related capital gains, are expected to be distributed during the third or fourth quarter of the current fiscal year.
• The company continues to invest in lower middle market businesses, with significant capital deployed in new and existing portfolio companies during the quarter and subsequent period.

Business Segments and Product Lines:

• Portfolio companies increased from 29 to 31 during the quarter.
• Total investments at fair value increased 11.6% to $1,430.9 million from $1,282.0 million in the prior quarter.
• New investments included $56.4 million in DHE Computer Systems Acquisition, Inc. and $58.6 million in Extrude Hone LLC.
• Additional investments were made in Global GRAB Technologies, Inc. ($20.9 million total) and Detroit Defense, Inc. ($18.6 million).
• Subsequent to the quarter, the company invested $56.1 million in McFarlane Toys, Inc. and $3.7 million in Smart Chemical Solutions, LLC.
• The company received $54.6 million from the repayment at par of its debt investment in SFEG Holdings, Inc. and $0.5 million in success fee income.
• Total dollars invested during the quarter were $156.5 million, while $19.9 million was repaid and collected.

Market and Competitive Landscape:

• The portfolio consists of secured debt and equity investments in lower middle market businesses in the United States.
• 100% of debt investments are variable rates with a floor indexed to 30-day SOFR.
• The weighted average interest rate of debt investments was 13.1%, with a weighted average interest rate floor of 12.3%.
• 59.6% of debt investments were currently at their interest rate floor as of September 30, 2026.
• Fair value as a percent of cost was 121.1% as of September 30, 2026, compared to 122.7% in the prior quarter.

Risks and Challenges:

• Total investment income is subject to variability, particularly regarding the timing of success fee income.
• Expenses are subject to fluctuations based on the net impact of realized and unrealized gains and losses, which drive capital gains-based incentive fee accruals.
• Interest expense increased due to higher borrowings on the Credit Facility.
• Forward-looking statements regarding future distributions and operations involve risks and uncertainties that could cause actual results to differ materially.

Management Commentary and Tone:

• The decrease in net investment income was attributed to an increase in accrued capital gains-based incentive fees and a decrease in total investment income.
• The increase in net asset value was driven by net unrealized appreciation and net investment income, partially offset by distributions paid.
• The company utilizes Adjusted Net Investment Income as a non-GAAP measure to evaluate ongoing results exclusive of capital gains-based incentive fees.

Other Key Points:

• Cash distributions of $0.08 per common share were paid in July, August, and September 2026, totaling $0.24 for the quarter.
• The Board of Directors declared monthly distributions of $0.08 per common share for October, November, and December 2026.
• Walter H. Wilkinson Jr. resigned from the Board of Directors on October 22, 2026, and was succeeded as Lead Independent Director by George "Chip" Stelljes, III.
• The number of directors was fixed at seven following the resignation.
• The Credit Facility had $299.8 million in borrowings outstanding at cost with $105.2 million in availability (adjusted availability of $80.4 million).
• Total Notes Payable amounted to $421.1 million with interest rates ranging from 4.875% to 7.875%.
• 58.4% of borrowings were at fixed rates and 41.6% at floating rates as of September 30, 2026.
• A conference call was scheduled for November 10, 2026, at 8:30 a.m. Eastern Time.