UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________

Form 8-K
______________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event Reported): November 14, 2018  

Gladstone Capital Corporation
(Exact Name of Registrant as Specified in Charter)

Maryland814-00237
54-2040781
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification Number)

 

1521 Westbranch Drive, Suite 100
McLean, Virginia
22102
(Address of Principal Executive Offices) (Zip Code)

(703) 287-5800
(Registrant's telephone number, including area code)


(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 [ ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 [ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 [ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 [ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [ ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

 
 

Item 2.02. Results of Operations and Financial Condition.

On November 14, 2018, Gladstone Capital Corporation issued a press release announcing its financial results for the year ended September 30, 2018. The text of the press release is included as an exhibit to this Current Report on Form 8-K. The information in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No. Description
   
99.1 Press Release of Gladstone Capital Corporation, dated November 14, 2018.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 Gladstone Capital Corporation
   
   
Date: November 14, 2018By: /s/ Nicole Schaltenbrand        
  Nicole Schaltenbrand
  Chief Financial Officer
  


EXHIBIT INDEX

Exhibit No. Description
   
99.1 Press Release of Gladstone Capital Corporation, dated November 14, 2018.

EdgarFiling

EXHIBIT 99.1

Gladstone Capital Corporation Reports Financial Results for its Fourth Quarter and Fiscal Year Ended September 30, 2018

MCLEAN, Va., Nov. 14, 2018 (GLOBE NEWSWIRE) -- Gladstone Capital Corporation (NASDAQ:GLAD) (the “Company”) today announced earnings for its fourth quarter and fiscal year ended September 30, 2018.  Please read the Company’s Annual Report on Form 10-K filed today with the U.S. Securities and Exchange Commission (the “SEC”), which is available on the SEC’s website at www.sec.gov, and the Company’s website at www.GladstoneCapital.com. 

Summary Information (dollars in thousands, except per share data) (unaudited):

 
For the Quarter Ended:
 September 30,
2018
 June 30,
2018
  Change % Change 
          
Total investment income $11,257 $12,379 $(1,122)(9.1)%
Total expenses, net of credits (5,355)(6,383)1,028 16.1 
Net investment income 5,902 5,996 (94)(1.6)
Net investment income per common share 0.21 0.22 (0.01)(4.5)
Cash distribution per common share 0.21 0.21   
Net realized (loss) gain (27,160)199 (27,359)NM 
Net unrealized appreciation  11,349 5,898 5,451 92.4 
Net (decrease) increase in net assets resulting from operations (9,909)12,093 (22,002)(181.9)
Weighted average yield on interest-bearing investments 11.9%11.8%0.1%0.8 
Total invested $10,095 $20,143 $(10,048)(49.9)
Total repayments and net proceeds 9,547 24,356 (14,809)(60.8)
          
As of: September 30,
2018
 June 30,
2018
 Change % Change 
Total investments, at fair value $ 

390,046
 $404,888 $(14,842)(3.7)%
Fair value, as a percent of cost 91.2%89.2%2.0%2.2 
Net asset value per common share $8.32 $8.86 $(0.54)(6.1)


For the Year Ended: September 30,
2018
 September 30,
2017
 Change %Change 
          
Total investment income $45,581 $39,233 $6,348 16.2%
Total expenses, net of credits (22,493)(17,800)(4,693)26.4 
Net investment income 23,088 21,433 1,655 7.7 
Net investment income per common share 0.85 0.84 0.01 1.2 
Cash distribution per common share 0.84 0.84   
Total net realized loss (26,196)(4,763)(21,433)(450.0)
Total net unrealized appreciation 21,756 510 21,246 NM 
Net increase in net assets resulting from operations 18,648 17,180 1,468 8.5 
Weighted average yield on interest-bearing investments 11.8%11.6%0.2%1.7 
Total invested $106,615 $112,092 $(5,477)(4.9)
Total repayments and proceeds 67,944 83,444 (15,500)(18.6)
          
As of: September 30,
2018
 September 30,
2017
 Change % Change 
Total investments, at fair value $390,046 $352,373 $37,673 10.7 
Fair value as a percent of cost 91.2%85.6%5.6%6.6 
Net asset value per common share $8.32 $8.40 $(0.08)(1.0)

Fourth Fiscal Quarter 2018 Highlights:

Fourth Fiscal Quarter 2018 Results:

Interest income decreased by $0.6 million, or 5.1%, primarily due to one investment being placed on non-accrual during the quarter. Other income decreased by $0.5 million, or 57.2%, quarter over quarter due to a decrease in success fees and prepayment fees, which we received in the prior quarter associated with the payoff of one of our investments. Total expenses decreased by $1.0 million, or 16.1%, primarily due to a decrease in net incentive fees quarter over quarter. 

Net Investment Income for the quarter ended September 30, 2018 was $5.9 million, or $0.21 per share, a decrease of 1.6% as compared to the prior quarter.   

The Net Decrease in Net Assets Resulting from Operations for the quarter ended September 30, 2018 was $9.9 million, or $0.35 per share, compared to the Net Increase in Net Assets Resulting from Operations for the quarter ended June 30, 2018 of $12.1 million, or $0.45 per share. The decrease was driven primarily by unrealized depreciation recognized on the investment that was placed on non-accrual during the quarter.

Fiscal Year Ended 2018 Results: 

Total investment income increased by 16.2% during the fiscal year ended September 30, 2018, compared to the prior year, due to an increase in interest income, partially offset by a decrease in other income.  Interest income increased by $6.9 million, or 18.6%, due to an increase in the average investment portfolio balance as well as an increase in the weighted average yield year over year.  Other income decreased by $0.5 million primarily due to a decline in success fees recognized compared to the prior year, as there were lower repayments in the current year.  Total expenses increased 26.4% year over year, primarily due to a $2.9 million increase in our net base management and incentive fees and a $2.8 million increase in our interest expense on borrowings.

Net Investment Income for the years ended September 30, 2018 and 2017, was $23.1 million, or $0.85 per share, and $21.4 million, or $0.84 per share, respectively. 

Net Increase in Net Assets Resulting from Operations for the years ended September 30, 2018 and 2017, was $18.6 million, or $0.69 per share, compared to $17.2 million, or $0.67 per share, respectively.  The year over year change was driven by the increase in net investment income compared to the prior year. 

Subsequent Events:  Subsequent to September 30, 2018, the following significant events occurred:

Record Date Payment Date Distribution per Common Share Distribution per Series 2024 Term Preferred Share 
October 19, 2018 October 31, 2018 $0.07 $0.125 
November 20, 2018 November 30, 2018 0.07 0.125 
December 20, 2018 December 31, 2018 0.07 0.125 
  Total for the Quarter $0.21 $0.375 

Comments from Gladstone Capital’s President, Bob Marcotte: “Fiscal year 2018 results were driven by a strong 18.6% increase in interest income as our higher average investment portfolio more than offset lower fee income and  spread compression associated with the more competitive lending market conditions over the past year.  We ended last year with a strong capital base and a record backlog of investment opportunities which position us well to enhance returns to our shareholders in the coming quarters.”

Conference Call for Stockholders: The Company will hold its earnings release conference call on Thursday, November 15, 2018, at 8:30 a.m. EST.  Please call (855) 465-0177 to enter the conference.  An operator will monitor the call and set a queue for any questions. A replay of the conference call will be available through November 22, 2018.  To hear the replay, please dial (855) 859-2056 and use conference number 1799486.  The replay of the conference call will be available beginning approximately one hour after the call concludes. The live audio broadcast of the Company’s quarterly conference call will also be available online at www.GladstoneCapital.com.  The event will be archived and available for replay on the Company’s website through January 15, 2019.

About Gladstone Capital Corporation: Gladstone Capital Corporation is a publicly traded business development company that invests in debt and equity securities, consisting primarily of secured first and second lien term loans to lower middle market businesses in the United States.  Including distributions through today, the Company has paid 189 consecutive monthly or quarterly cash distributions on its common stock.  Information on the business activities of all the Gladstone funds can be found at www.GladstoneCompanies.com.   

To obtain a paper copy of the Company’s most recent Form 10-K, please contact the Company at 1521 Westbranch Drive, Suite 100, McLean, VA 22102, ATTN:  Investor Relations.  The financial information above is not comprehensive and is without notes, so readers should obtain and carefully review the Company’s Form 10-K for the year ended September 30, 2018, including the notes to the consolidated financial statements contained therein.

Investor Relations Inquiries: Please visit www.gladstonecompanies.com or +1-703-287-5893.

Forward-looking Statements:
The statements in this press release about future growth and shareholder returns are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These forward-looking statements inherently involve certain risks and uncertainties in predicting future results and conditions. Although these statements are based on our current plans that are believed to be reasonable as of the date of this press release, a number of factors could cause actual results and conditions to differ materially from these forward-looking statements, including those factors described from time to time in our filings with the U.S. Securities and Exchange Commission. The Company undertakes no obligation to publicly release the result of any revisions to these forward looking statements that may be made to reflect any future events or otherwise, except as required by law.