Gladestone's CEO Discusses F1Q12 Results - Earnings Call Transcript
Gladestone Capital Corporation (
)
F1Q12 Earnings Call
February 1, 2012, 8:30 a.m. ET
Executives
David Gladstone – Chairman and CEO
Chip Stelljes – Chief Investment Officer
David Watson – Chief Financial Officer
Analysts
Greg Manson – Stifel Nicolaus & Co., Inc.
Dave West – Davenport & Co., LLC
Brian (Burn) – Private Investor
J.T. Rogers – Janney Montgomery Scott
Jeff Rudner – UBS
Presentation
Operator
Compare to:
Previous Statements by GLAD
»
Gladstone Capital's CEO Hosts Stockholder's Proxy Call (Transcript)
»
Gladstone's CEO Discusses Q4 2011 Results - Earnings Call Transcript
»
Gladstone Capital's CEO Discusses F3Q11 Results - Earnings Call Transcript
Good morning, and welcome to the Gladstone Capital Corporation first quarter, ended December 31, 2011 Shareholder’s Conference Call. All participants will be in listen-only mode. (Operator Instructions)
Please note, this event is being recorded. I’d now like to turn the conference over to Mr. David Gladstone, Chairman. Please go ahead, sir.
David J. Gladstone
All right. Thank you, Denise, for that nice introduction and those instructions. And hello, and good morning to all of you out there. This is David Gladstone, Chairman, and this is the quarterly conference call to shareholders and analyst for Gladstone Capital, trading symbol GLAD. Thanks for all of you for calling in, and we’re always happy to talk to shareholders about our company, and wish there were many more opportunities to do so.
We hope to take this opportunity - we hope you take the opportunity to visit our website at www.gladstonecapital.com, where you can sign up for e-mail notices and you can receive information about the time – in a timely fashion. And please remember that if you’re in the Washington DC area, you have an open invitation to visit us here in McLean, Virginia. Please stop by and say hello.
Now I’m going to read the statement about forward-looking statements. This conference call may include statements that may constitute forward-looking statements within the meaning of the Securities Act of 1933 and Securities Exchange Act of 1934, including statements with regard to the future performance of the company. These forward-looking statements inherently involve certain risks and uncertainties, even though they are based on our current plans and we believe those plans to be reasonable.
There are many factors that may cause our actual results to be materially different from any future results that are expressed and implied in these forward-looking statements, including those factors under the caption “Risk Factors” in our 10-K and 10-Q filings, and our perspectives that’s filed with the Security Exchange Commission. Those can all be found on our website at
and also on the SEC website. 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.
We always start with our President, Chip Stelljes. Chip is the Chief Investment Officer of all three of the Gladstone companies, and he’ll cover a lot of ground here. Chip, go forward please.
Chip Stelljes
Good morning. This quarter the first quarter of our fiscal year, we focused on managing our existing portfolio and renewing our revolving line of credit. We closed one new proprietary investment during the quarter totally 1.6 million, which resulted from the sale of KNDQ, which was one of our non-performing borrows through Ohana Media. And we invested 9.7 million in existing portfolio companies in the form of additional invested or withdrawals of revolving facilities, including an additional 4.75 million to support the acquisition of a competitor by our portfolio company, NAP.
Also during the quarter we received three payments of approximately 10.8 million, primarily comprised of the early payoff at PAR of Northern Contours, Inc. for 6.1 million as well as normal amortization, pay down on revolvers. So in total in we had a net production increase in our portfolio of approximately .50 million for the quarter ended December 31, 2011, and we funded the net increase in production from operating income and draws at our credit facility.
Since the end of the quarter we invested $3.1 million in investments to eight existing portfolio companies and we received $2.9 million in repayments, which mainly consisted of the early payoff at PAR of our investment in Global Materials Technologies. And as part of this payoff, we received $1 million in success fees, which will be reflected in our quarter ended March 31, 2012.
At subsequent to quarter end we extended the maturity date on our $137 million revolving line of credit by nearly three years from the original maturity date of March 15, 2012 to January 18, 2015. The amendment credit facility may be expanded to a maximum of 237 million through the addition of other committed lenders to the facility.
The interest rate remained unchanged in the amendment and all in rate of 5.25%, and all of the terms of the facility were substantially unchanged. We continue to see attractive investment opportunities although there seems to be a good deal of capital in competition in the market for the most attractive deals. We’re actively searching for new solid investments and believe our portfolio production will increase in the next quarter or two, in accordance for our investment objectives.
We’re very pleased we were able to raise long-term capital to our firm preferred stock offering in November, and to extend our credit facility for a three-year term. Combined, this capital should facilitate us growing the portfolio and increasing our net investment income over the long term.
At the end of the first quarter 2012, our investment portfolio was valued at approximately $293 million, versus the cost basis of $370 million or approximately 79% of cost. This fair value to cost percentages is consistent with the last quarter, which was 79% as well.
Read the rest of this transcript for free on seekingalpha.com
