Gladstone Investment Q4 2026 Earnings Report

Gladstone Investment EPS Results

• Actual EPS: $0.20
• Consensus EPS: $0.22
• Beat/Miss: Missed by -$0.02
• One Year Ago EPS: N/A

Gladstone Investment Revenue Results

• Actual Revenue: $25.19 million
• Expected Revenue: $25.80 million
• Beat/Miss: Missed by -$609.00 thousand
• YoY Revenue Growth: N/A

Gladstone Investment Announcement Details

• Quarter: Q4 2026
• Date: 5/12/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, May 13, 2026
• Conference Call Time: 8:30AM ET

Gladstone Investment (NASDAQ:GAIN) (NASDAQ: GAIN) is a business development company that provides financing and equity capital to established lower middle-market businesses in the United States. The company invests in companies across a range of industries and generally seeks businesses with stable operations, experienced management teams and opportunities for growth or operational improvement.

Gladstone Investment’s activities include originating and investing in secured debt, subordinated debt and equity securities. It may also pursue control-oriented investments, including management-supported buyouts, recapitalizations and acquisitions, and works with portfolio company management teams to support long-term business development.

Founded in 2005, Gladstone Investment is externally managed by Gladstone Management Corporation, an affiliate of the Gladstone family of investment companies. Its portfolio is focused primarily on privately held U.S. companies, with investments intended to generate current income from debt holdings and potential capital appreciation from equity investments.

Gladstone Investment Q4 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Gladstone Investment reported solid fiscal 2026 results, with adjusted NII of $0.88 per share, total investment income of $99.1 million, and portfolio fair value rising to $1.3 billion, up 34% year over year.
• Positive Sentiment: The company kept its $0.08 monthly dividend intact and paid $0.54 per share in supplemental distributions during the year, supported by gains from its equity-oriented buyout strategy.
• Neutral Sentiment: Management said the balance sheet remains strong, with 214% asset coverage and a 0.84x debt-to-equity ratio, and it refinanced its 5% notes with $100 million of 2.125% five-year notes.
• Neutral Sentiment: The portfolio showed a mix of improvement and risk: three investments remain on non-accrual, but management said one may come off non-accrual and another is performing well despite being worked through.
• Positive Sentiment: Leadership highlighted a healthy pipeline of new acquisitions and said Gladstone’s ability to provide both debt and equity gives it a competitive advantage in the M&A market. Erika Highland will also become President on October 1.

Presentation

[Operator]

Greetings, welcome to Gladstone Investment Corporation fourth quarter and year-end earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David Gladstone. Thank you. Please go ahead.

[David Gladstone, Chairman of the Board of Directors at Gladstone Investment]

All right. Thank you all for calling in. This is the earnings conference call for the fourth quarter as well as the fiscal year ending March 31st, 2026. For shareholders and analysts of Gladstone Investment listed on Nasdaq under the symbol GAIN for common stock. We have several others that, GAIN Z, GAIN I, and GAIN G registered notes that we've sold in the past. Thank you for all calling in. It's always happy to provide you updates to the shareholders and to the analysts that are following us. We're trying to tell you about the current business environment. The two goals for this call is to have you understand what has happened and give you some current view on the future, although we're all in the same boat trying to figure out what's gonna happen in the future.

[David Gladstone, Chairman of the Board of Directors at Gladstone Investment]

I'll hear from Catherine Gerkis, our Director of Investor Relations and ESG, to provide a brief disclosure regarding the certain regulatory matters concerning the call today. Catherine, go ahead, please.

[Catherine Gerkis, Director of Investor Relations and ESG at Gladstone Investment]

Thank you, and good morning, everyone. Today's call may include forward-looking statements, which are based on management's estimates, assumptions, and projections. There are no guarantees of future performance, and actual results may differ materially from those expressed or implied in these statements due to various uncertainties, including the risk factors set forth in our SEC filings, which you can find on the Investors page of our website, gladstoneinvestment.com. We assume no obligation to update any of these statements unless required by law. Please visit our website for a copy of our Form 10-K and earnings press release for more detailed information. You can also sign up for our email notification service and find information on how to contact our investor relations department. We are also on X at Gladstone Companies, as well as Facebook and LinkedIn. Keyword for both is The Gladstone Companies.

[Catherine Gerkis, Director of Investor Relations and ESG at Gladstone Investment]

Now I will turn the call over to David Dullum, CEO and President of Gladstone Investment.

[David Dullum, CEO and President at Gladstone Investment]

Thank you, Catherine. Good morning, everyone, and I'm very pleased to report that GAIN again produced solid results for this fourth quarter and the fiscal year ended March 31, 2026. We also continue to see growth in our investment portfolio through new buyout investments and the improving performance at a number of our existing portfolio companies. In addition, for the fiscal year, we generated adjusted NII of $0.88 per share, and we increased the total fair value of our portfolio up to $1.3 billion as of March 31, 2026, which is a 34% increase from the $979 million that we reported in the prior year. This increase year-over-year in assets resulted from a couple of things.

[David Dullum, CEO and President at Gladstone Investment]

One, we had four new buyout investments, along with appreciation of our existing investment portfolio and indeed increase in our NAV per share fairly significantly. We currently have 29 operating companies and a very healthy pipeline for new acquisitions. Just quickly reviewing, for 2026, we invested approximately $163 million in the four new portfolio companies I mentioned, and this compares to about $221 million, which we invested in the prior year. These new investments are consistent with our buyout strategy, growing the portfolio through the acquisition of operating companies at attractive valuations, where we generally are the majority economic owner. We also make acquisitions through a combination of the equity and the debt investments, with the equity providing the potential upside through capital gains upon exit, and the debt securities are generating this operating income to support our monthly distributions to shareholders.

[David Dullum, CEO and President at Gladstone Investment]

At this point, I'd just like to note here that we do set floors on the debt securities that we use when we make these acquisitions. That gives us the opportunity to maintain a level of income above our cost of capital so that we are really not susceptible to as much of a spread compression as others might exhibit in this environment. Our equity investments represent a significant ownership position in our portfolio companies, and we look to the capital gains as major contributors to the additional dividend payouts to shareholders, which we have demonstrated pretty significantly in the past. This is also one factor that does differentiate us from other traditional credit BDCs. From our operating income, we maintained our monthly distribution to shareholders of $0.08 per share or $0.96 per share on an annual basis.

[David Dullum, CEO and President at Gladstone Investment]

We also made supplemental distributions during fiscal 2026 to shareholders of $0.54 per share, which came from these capital gains that I mentioned earlier and which again are a fairly important part of our overall model. Since inception, in fact, in 2005 and through this time of 3/31/2026, we've invested in 66 buyout portfolio companies for an aggregate of approximately $2.2 billion, and we exited 33 of these companies. This has resulted in total investments currently valued at $1.3 billion, while generating approximately $354 million in net realized gains and $45 million in other income on exit.

[David Dullum, CEO and President at Gladstone Investment]

Again, this is our plan, our strategy, which we hope to continue in the future. At this point, it's very important, I'd like to make an introduction to Erika Highland, who will become our President on October 1st. I'm very honored to do this. Erika has been a managing director of GAIN for a number of years. Recently was promoted to Executive Vice President. She has been instrumental in managing a number of our successful investments, very active in our outreach and investment generation programs. Erika will become President in October 1st, as mentioned, and we're very much looking forward to that, and I'm looking forward to working with her as we continue growing. With that, I'm going to ask Erika to have a discussion on our outlook and a few other comments. Erika.

[Erika Highland, EVP at Gladstone Investment]

Thank you, Dave, and I am proud to partner with you to help lead our fund going forward. There continues to be liquidity in the M&A market, creating a competitive environment for new acquisitions at reasonable valuations. While challenging, we are able to compete effectively for acquisitions that fit our model. This is where we provide both equity and debt to complete the transaction with a meaningful fixed charge coverage and an interest income yield on our total investment in excess of our cost of capital. As mentioned earlier, we closed on four new investments during the fiscal year. We continue to be in varying stages of diligence on possible new opportunities, including accretive add-on acquisitions to existing portfolio companies, and we are in review and negotiation with a number of other new opportunities.

[Erika Highland, EVP at Gladstone Investment]

This activity could lead to closing on new buyout investments and accretive add-on acquisitions as we begin fiscal year 2027. As to our existing portfolio, most of the companies have experienced positive results to date, as reflected in our NAV increase. Though we continue to be cautious due to macroeconomic landscape and therefore the impact on demand and margin. We are working with all of our portfolio companies in evaluating supply chain alternatives and cost efficiencies as we continue to navigate the current environment. Back to you, Dave.

[David Dullum, CEO and President at Gladstone Investment]

Thanks, Erika. In summing up the year, our current portfolio is in solid shape. We have a strong and liquid balance sheet, which you'll hear about in a few minutes, and a very good level of potential portfolio activity with the prospect of continued strong earnings and distributions over the next year while we continue to navigate the challenges, as Erika mentioned, of this macroeconomic landscape that we find ourselves in. With that, I'll turn it over to our CFO, Taylor Ritchie, to go into some more detail. Taylor.

[Taylor Ritchie, CFO and Treasurer at Gladstone Investment]

Thank you, Dave and Erika, good morning, everyone. I'm happy to share that we ended fiscal year 2026 with our 5th consecutive year of earned total investment income, generating $99.1 million compared to $93.7 million in the prior fiscal year. The increase was primarily driven by higher interest income resulting from continued growth in our debt investment portfolio, partially offset by lower dividend and success fee income, the timing of which can vary from period to period. The weighted average principal balance of our interest-bearing investments was $672 million during the fiscal year, representing an increase of approximately $70 million over the prior year. For the year, our portfolio's weighted average yield declined modestly from 13.9% to 13.3%.

[Taylor Ritchie, CFO and Treasurer at Gladstone Investment]

Importantly, the interest rate floors embedded in each of our debt investments helped mitigate the impact of declining benchmark rates, as the 63 basis point decrease in portfolio yield was less than the 82 basis point decline in SOFR during the year. Excluding non-accrual investments and revolving lines of credit, the weighted average interest rate floor for our debt portfolio was 12.1% as of March 31st. We continue to underwrite our new debt investments with elevated interest rate floors in the 13.5%-14% range to mitigate potential declines in SOFR. With more than half of our debt portfolio currently under interest rate floors, we believe our portfolio yield is well protected against future rate declines. In addition, these floors should help support earnings as we refinance portions of our existing lower cost long-term debt over time.

[Taylor Ritchie, CFO and Treasurer at Gladstone Investment]

Turning to fourth quarter results, total investment income was $25.2 million, modestly higher than the $25.1 million in the prior quarter. The increase was primarily driven by higher dividend and success fee income, partially offset by lower interest income with our quarterly portfolio yield remaining stable at 12.9%. As a reminder, dividend income from our equity investments depends on the portfolio company's ability to make distributions while also maintaining sufficient earnings and profits. Additionally, success fee income is derived from an interest rate associated with our debt investments that accrues off balance sheet and is not contractually due until a change of control event occurs. Because the realization of both dividend income and success fee income depends on multiple factors, the timing of these income streams will be variable.

[Taylor Ritchie, CFO and Treasurer at Gladstone Investment]

Net expenses for the quarter were $35.8 million, compared to $31.6 million in the prior quarter. The increase was primarily driven by a $3.8 million increase in the accrual of capital gains incentive fees and a $0.4 million dollar increase of base management fee expense, both of which were largely attributable to continued unrealized appreciation in our portfolio. As a result, net investment loss for the quarter was $10.6 million compared to $6.5 million in the prior quarter. Adjusted net investment income, which excludes the accrual of capital gains-based incentive fees, was $7.9 million, or $0.20 per share, compared to $8.2 million or $0.21 per share in the prior quarter. Overall, portfolio valuations increased $92.5 million during the quarter.

[Taylor Ritchie, CFO and Treasurer at Gladstone Investment]

This unrealized appreciation was driven by improved operating performance in several portfolio companies, along with higher valuation multiples at cost the portfolio. These increases were partially offset by decreased performance in certain other portfolio companies. We continue to have three portfolio companies on non-accrual status. We remain actively engaged with each company and their respective management teams to support operational improvement initiatives, a potential return to accrual status, or strategic exits where appropriate. Our non-accrual investments represent 3.8% of our total portfolio at cost and 0.7% at fair value. Our NAV increased to $16.78 per share as of March 31st, 2026, compared to $14.95 per share at the end of the prior quarter. The increase was primarily a result of $2.32 per share of net unrealized appreciation of investments.

[Taylor Ritchie, CFO and Treasurer at Gladstone Investment]

This increase was partially offset by $0.27 per share of net investment loss and $0.24 per share of distributions to common shareholders. As we look to our balance sheet, maintaining strong liquidity and financial flexibility remains essential to supporting and growing our portfolio. In anticipation of the main maturity of our 5% notes, we issued $100 million at 2.125% 5-year notes in February. Subsequent to quarter end, we repaid the outstanding balance of the 5% notes using proceeds from the new issuance along with borrowings on our credit facilities. We'll continue to monitor liquidity needs and be strategic on raising debt capital at suitable interest rates. While we were not active under the common stock ATM program during the quarter or subsequent to quarter end, we will remain opportunistic and will utilize the program when prices are accretive to NAV.

[Taylor Ritchie, CFO and Treasurer at Gladstone Investment]

We continue to believe that we're in a strong liquidity position with our ability to access the debt capital market and when possible, the equity market to support both the refinancing of long-term debt and our pipeline of new buyout opportunities. Overall, our leverage remains conservative in position with an asset coverage ratio of 214% and a debt-to-equity ratio of 0.84 times as of March 31, 2026. Turning to distributions, we ended the fiscal year with $21.3 million or $0.53 per share in spillover income, which is sufficient to cover our current monthly distribution rate of $0.08 per share for approximately six months. We ended the year with total distributable income of $181.5 million or $4.56 per share.

[Taylor Ritchie, CFO and Treasurer at Gladstone Investment]

Because total distributable income primarily reflects net unrealized appreciation within the portfolio, we expect this value to support monthly and supplemental distributions as appreciated investments are monetized over time. Including the $0.54 supplemental distribution in the current fiscal year, we paid an aggregate of $3.26 per share across 13 supplemental distributions over the last five fiscal years, in addition to $4.58 per share of monthly distributions during this time. We believe this track record demonstrates our ability to maintain a stable monthly distribution while also delivering incremental shareholder returns, highlighting the strength and consistency of our value-focused, equity-oriented investment strategy. Looking ahead, we expect supplemental distributions to remain an important component of our overall shareholder return strategy, with the amount and timing of future payments driven by realized capital gains on our equity investments along with other capital allocation considerations.

[Taylor Ritchie, CFO and Treasurer at Gladstone Investment]

This concludes my remarks for today's call. I'll now hand it back over to you, David, to wrap us up.

[David Gladstone, Chairman of the Board of Directors at Gladstone Investment]

Very nice, Taylor, and good report, Dave and Erika and Catherine. Lots of good information. Hopefully, our shareholders are now up to date. This call, based on our 10-K, should bring everyone up to date. The team has reported solid results for the quarter ending March 31st, 2026, including new investment activity and strong liquidity position to grow the portfolio through the upcoming fiscal year. I believe Gladstone Investment is an attractive investment for investors seeking continuous monthly distributions and supplemental distributions from capital gains and other income. Team hopes to continue to show you strong returns going forward. Operator, would you come on now? Let's have some questions from our analysts and shareholders and people on the line.

[Operator]

Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Again, that's star one to register a question at this time. Our first question is coming from Erik Zwick of Lucid Capital Markets. Please go ahead.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets]

Thanks. Good morning, everyone. Wanted to start with a question just on the kind of relative adjusted NII per share the last 2Q it's come in below the dividend level. I know I think my phone cut out a little bit, Taylor. If you could repeat just where the spillover income stands today and just your thoughts on the dividend level and if the expectation is that, you know, some of the gains that you typically harvest will help support that going forward.

[Taylor Ritchie, CFO and Treasurer at Gladstone Investment]

Sure. We ended the year with $21.3 million or $0.53 per share in spillover income. Based on our $0.08 per share monthly distribution rate, that would be spillover sufficient for six months. Half of the next fiscal year would be covered by spillover already. We do look to increase our adjusted NII per share going forward. That will be dependent on deal origination, timing of new investments, where SOFR rate's headed, as well as additional fee credits that we collect from time to time from our portfolio companies. Our adjusted NII per share will move around quarter-to-quarter, but we still feel confident in our $0.08 per share monthly distribution rate and don't really envision that changing.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets]

Excellent. Thanks, Taylor. Just looking at the-- so some changes in fair values in the SOI this quarter. Noticed that Diligent Delivery Systems, the second lead position was marked down materially from about 76% across down to four. Just curious if you could provide any update of, you know, what transpired there during the quarter?

[David Dullum, CEO and President at Gladstone Investment]

Hi, Erik, it's Dave. Pretty much the business is continuing, I would say, on a fairly stable basis. We had a bit of a decline in the EBITDA, but still positive and still servicing our interest. It's a function you probably remember of providing service to rent a car, companies at airports and so on, and there's been some

[Taylor Ritchie, CFO and Treasurer at Gladstone Investment]

Diligent. He's asking about Diligent.

[David Dullum, CEO and President at Gladstone Investment]

I'm sorry. I was thinking about something else. Diligent, it's actually improving even though the valuation is down. Believe it or not, the business is actually improving, that's one that is currently on non-accrual, which we anticipate might indeed be coming off of non-accrual as we move through the year. No direct expectation on timing, I believe we might get there. I feel better about Diligent today, even though we did have it, you know, marked down, was more a function of where the trailing EBITDA was relative to where the actual business is operating. We're in a better shape with that today, frankly, than we were even six, nine months ago.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets]

Great. Thanks for that, for the update there. Then on a more positive note, just noticed the preferred equity position in Schylling was marked up materially, and having some young kids, I'm guessing maybe that's in part due to the kind of recent surge in popularity of the NeeDoh toy. Maybe a two-part question. One, you know, what are you seeing in terms of the business trends for that company? Then, I guess I have the opportunity to be the most popular person at the dinner table tonight, in the eyes of my kids, if you have any insight to when those NeeDohs might be back in stock on the website or local store shelves.

[David Dullum, CEO and President at Gladstone Investment]

Yeah. I think Erika Highland will take that one. She is involved directly with Schylling and been involved with for a number of years. Erika.

[Erika Highland, EVP at Gladstone Investment]

Yeah, I can, I'd love to be able to tell you I could offer you some product, that's the question of the hour right now from everybody. Yeah, no, they are diligently working on expanding their production capacity with their third-party suppliers and trying to meet all of the demand, which as you point out, you know, that product has certainly gone viral in the last several months. You know, they're very much aware of the demand and trying to ramp up capacity as quickly as possible. I think what you see reflected in the fair market value is directly attributable to that and their increased financial performance over the last several months due to that product.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets]

Makes sense. Thanks, Erika. I will say, I was able to pick up one toy each for both of my kids at your investor day back in the fall. They are very grateful for that.

[Erika Highland, EVP at Gladstone Investment]

Oh, good.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets]

Thank you.

[Erika Highland, EVP at Gladstone Investment]

Great.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets]

That's all for me today. Thank you.

[David Dullum, CEO and President at Gladstone Investment]

Thanks, Erik.

[David Gladstone, Chairman of the Board of Directors at Gladstone Investment]

Next question.

[Operator]

Thank you. Once again, that is star one if you would like to register a question at this time. The next question is coming from Christopher Nolan of Ladenburg Thalmann. Please go ahead.

[Christopher Nolan, SVP, Equity Research at Ladenburg Thalmann]

Hi, good morning. This is the second quarter where you have unusually strong unrealized gains. Should we expect that to happen in this quarter?

[David Gladstone, Chairman of the Board of Directors at Gladstone Investment]

Taylor?

[Taylor Ritchie, CFO and Treasurer at Gladstone Investment]

We're still working through, obviously, what the 6/30 valuation will look like. It's only the middle of May, so the multiples could move one way or the other, and that would obviously drive the fair value changes, or be a significant component. We will have to see where EBITDA metrics are moving on a company-by-company basis, and we do feel confident that our portfolio companies are doing well, will continue to do well. As David mentioned, a couple of them that are marked down right now, we do feel optimistic that they will begin to turn around. That might not be this quarter, but it could be quarters coming forward or going forward, rather.

[Christopher Nolan, SVP, Equity Research at Ladenburg Thalmann]

Great. I guess as a follow-up question, are you finding it to be a strong competitive advantage in the current market where you can invest both debt and equity? Because, you know, my sense is, private equity investments are not as plentiful as they might have been a couple of years ago. Just trying to see how this is working in your favor or against or no real effect.

[Erika Highland, EVP at Gladstone Investment]

Christopher, this is Erika Highland. I'll take that one. I'd say yes. The fact that we are able to offer both debt and equity for all of our buyout transactions is indeed a competitive advantage in today's market. Even though there's a lot of liquidity out there is still a lot of uncertainty, and private equity firms have had challenges deploying capital and raising capital, due to, you know, just some of their structural issues with fundraising. Our ability to provide all the capital for a transaction, it provides that level of certainty to close to sellers, and that's probably been one of the driving factors for how we've been able to be competitive over the last several years, frankly.

[Christopher Nolan, SVP, Equity Research at Ladenburg Thalmann]

Okay. Thank you. Oh, congratulations on your promotion.

[Erika Highland, EVP at Gladstone Investment]

Thank you.

[David Dullum, CEO and President at Gladstone Investment]

All right. Do we have another question from the group?

[Operator]

We're showing no additional questions at this time. Mr. Gladstone, do you have any additional or closing comments?

[David Gladstone, Chairman of the Board of Directors at Gladstone Investment]

Yeah, I'm very disappointed. We wanted lots of questions, and we didn't get them this time. We've done a good job, but maybe next quarter you will have some really solid questions for us. That's the end of the question and answer period, and we're gonna sign off.

[Taylor Ritchie, CFO and Treasurer at Gladstone Investment]

Sorry, we got one more.

[David Gladstone, Chairman of the Board of Directors at Gladstone Investment]

We got one more coming? Oh, okay. Who's next?

[Operator]

Okay. We did have a late entry. Our next question is coming from Sean-Paul Adams of B. Riley. Please go ahead.

[Sean-Paul Adams, Research Analyst at B. Riley Securities]

Hey, guys. Good morning. Congrats on the quarter. Just really quickly, you touched a little bit earlier on the call about, you know, one possible non-accrual kind of going through a work through. You know, without any concrete timelines could be, you know, coming off that non-accrual. The remaining two, can you provide just a little bit more color on, you know, if there's any expected workouts coming? It seems like they have some pretty severe markdowns in the portfolio. You know, just a little bit more color on that.

[David Dullum, CEO and President at Gladstone Investment]

Yeah, Sean, hi, it's Dave. On the other two, one is quite small investment, and probably gonna take some action with that that will, frankly, probably eliminate the, you know, the issue. That's one. The other company, B&T, is actually performing fairly well. We're working through with the management and so on as to what to frankly do with the business. Nothing drastic, we're on top of it. I don't expect to see much change with those two companies, probably within the next six months at this point. As I mentioned on the other one, Diligent, there is a reasonable probability that that will actually come off a non-accrual. I'm not concerned about our non-accrual situation.

[David Dullum, CEO and President at Gladstone Investment]

It's, you know, relative to the overall total cost of our portfolio and the value of our portfolio. As Taylor mentioned earlier, I feel like we're in pretty decent shape there. Nothing that I could really add that would be of any significance on those. Erika, did you agree with that?

[Erika Highland, EVP at Gladstone Investment]

Nothing else to add.

[David Gladstone, Chairman of the Board of Directors at Gladstone Investment]

Okay. Any further questions?

[Operator]

We do have a follow-up question coming from Erik Zwick of Lucid Capital. Please go ahead.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets]

Thanks for taking the follow-up as well. Just another kind of portfolio position question. The other, you know, large write-up I noticed was the SEG Holding that the common there was marked up quite material. Curious if you could provide us an update on the trends you're seeing there and what led to the valuation change.

[David Gladstone, Chairman of the Board of Directors at Gladstone Investment]

Taylor, why don't you take it?

[Taylor Ritchie, CFO and Treasurer at Gladstone Investment]

Well, I think that's one where we continue to see the returns from the add-on acquisitions we've done, the strategic initiatives that the company's put in place that have really been able to move EBITDA in a meaningful way. Based on market analysis and valuations that we're receiving from third parties, the multiple increased by a meaningful amount as well this quarter.

[David Gladstone, Chairman of the Board of Directors at Gladstone Investment]

Yeah.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets]

Great.

[David Dullum, CEO and President at Gladstone Investment]

Erik, fundamentally is a really, really well-managed, very good business. It's got a broad swath of products in a number of somewhat related industry categories, I would say. It's, it's international in scope. And again, the valuation, frankly, is purely a function of very solid EBITDA, certainly over the last 12 months and continuing to grow. You know, multiples, we don't have a crazy multiple on it that's really causing the valuation to be where it is. It's just that it's fundamentally, it's a really good business.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets]

It sounds like something, you know, kind of given those trends, you put a lot of working capital into it'd be something that you'd prefer to continue holding at this point as opposed to monetizing in the kind of the near to midterm.

[David Dullum, CEO and President at Gladstone Investment]

You know, you never know. You know, as you know, and you watched this and certainly over the years, we exit companies when not only we think it might make sense, but frankly, when the management teams are in favor of doing that. We've always done it that way. We don't rush to the exits. If companies are performing well and importantly paying our interest, we like to keep them in the portfolio. You know, you never know sometimes when there are opportunities that you just cannot ignore, and we'll always keep evaluating those as we move forward.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets]

Yep, makes sense. Opportunity dependent. Great. Thanks for taking my question again.

[David Dullum, CEO and President at Gladstone Investment]

Any other questions?

[Operator]

We're showing no additional questions at this time.

[David Gladstone, Chairman of the Board of Directors at Gladstone Investment]

Okay. We'll close it up. Sounds like we ran out of questions. We had more people than questions this time. Lots of fun in the business these days, and the market's getting hotter. Tune in next time, and we'll tell you some more stories. That's the end of this. Thank you very much.

[Operator]

Ladies and gentlemen, this concludes today's event. You may disconnect your lines and log off the webcast at this time, and enjoy the rest of your day.

Participants

Executives

• Catherine Gerkis, Director of Investor Relations and ESG
• David Dullum, CEO and President
• David Gladstone, Chairman of the Board of Directors
• Erika Highland, EVP
• Taylor Ritchie, CFO and Treasurer

Analysts

• Christopher Nolan, SVP, Equity Research at Ladenburg Thalmann
• Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets
• Sean-Paul Adams, Research Analyst at B. Riley Securities