Gladstone Capital Corp. Reports Operating Results (10-Q)
Gladstone Capital Corp. has a market cap of $155.63 million; its shares were traded at around $7.38 with a P/E ratio of 7.38 and P/S ratio of 3.65. The dividend yield of Gladstone Capital Corp. stocks is 11.38%. Gladstone Capital Corp. had an annual average earning growth of 10.9% over the past 5 years.GLAD is in the portfolios of Chuck Royce of ROYCE & ASSOCIATES.
Highlight of Business Operations: Purchases: During the three months ended December 31, 2009, we extended $180 of investments to a new portfolio company and $1,991 of investments to existing portfolio companies through revolver draws or the additions of new term notes, for total investments of $2,171.
Repayments: During the three months ended December 31, 2009, one borrower made an unscheduled payoff of $12,104, one borrower made an unscheduled partial payoff of $950, and we experienced contractual amortization, revolver repayments and some principal payments received ahead of schedule for an aggregate of $2,350, for total principal repayments of $15,404.
On May 15, 2009, through our wholly-owned subsidiary, Gladstone Business Loan, LLC (Business Loan), we entered into a third amended and restated credit agreement which initially provided for a $127,000 revolving line of credit( the KEF Facility). During the three months ended December 31, 2009, we reduced the size of the KEF Facility by $25,000 from $127,000 to $102,000. Under the KEF Facility, the first $50,000 of commitment reductions are applied against Key Equipment Finance Inc.s (KEFs) commitment. Therefore, the entire $25,000 was subtracted from KEFs commitment, reducing it from $100,000 to $75,000 and leaving Branch Banking and Trust Companys (BB&Ts) commitment unchanged at $27,000. As a result of the manner in which our borrowing base is calculated under the KEF Facility, the reduction did not affect our availability under the KEF Facility.
During the three months ended December 31, 2009, we applied Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 825, Financial Instruments, specifically to our KEF Facility, which requires us to apply a fair value methodology to the KEF Facility as of December 31, 2009. The KEF Facility was fair valued at $73,531 as of December 31, 2009, and the outstanding balance was $73,400.
Investment income for the three months ended December 31, 2009 was $9,804, as compared to $11,808 for the three months ended December 31, 2008. Interest income from our aggregate investment portfolio decreased for the three months ended December 31, 2009, as compared to the prior year period. The level of interest income from investments is directly related to the balance, at cost, of the interest-bearing investment portfolio outstanding during the period multiplied by the weighted average yield. The weighted average yield varies from period to period based on the current stated interest rate on interest-bearing investments and the amounts of loans for which interest is not accruing. Interest income from our investments decreased primarily due to the overall reduction in the cost basis of our investments, resulting from the exit of loans subsequent to December 31, 2008 partially offset by an increase in the weighted average yield on our portfolio. The annualized weighted average yield on our portfolio, excluding cash and cash equivalents, was 10.6% for the three months ended December 31, 2009 as compared to 9.8% for the prior year period. During the three months ended December 31, 2009, five investments were on non-accrual, for an aggregate of approximately $10,056 at cost, or 2.9% of the aggregate cost of our investment portfolio, and during the prior year period, three investments were on non-accrual, for an aggregate of approximately $9,227 at cost, or 2.0% of the aggregate cost of our investment portfolio.
Interest income from Non-Control/Non-Affiliate investments decreased for the three months ended December 31, 2009, as compared to the prior year period. The decrease was primarily attributable to an overall decrease in the aggregate Non-Control/Non-Affiliate investments held at December 31, 2009 compared to the prior year period. In addition, we reversed previously recorded interest of approximately $508 during the three months ended December 31, 2009. The success fees earned during the three months ended December 31, 2009 and December 31, 2008, included in interest income, were $538 and $0, respectively. Success fees earned during the three months ended December 31, 2009 resulted from a refinancing by Tulsa Welding and an amendment to senior term debt issued to Doe & Ingalls.
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