Gladstone Investment Corporation (NASDAQ:GAIN) Q2 2025 Earnings Call Transcript

Gladstone Investment Corporation (NASDAQ:GAIN) Q2 2025 Earnings Call Transcript November 8, 2024

Gladstone Investment Corporation misses on earnings expectations. Reported EPS is $0.24 EPS, expectations were $0.25.

Operator: Greetings. Welcome to Gladstone Investment Corporation’s Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce David Gladstone, Chief Executive Officer. Thank you, Mr. Gladstone, you may begin.

David Gladstone: Okay, Sherry, thank you very much. This is David Gladstone, Chairman of Gladstone Investment, and this is the second quarter of fiscal year ending 2025. It ends on September 30th, 2024. Earnings conference calls for shareholders and analysts are our chance to talk with you and tell you about what we’re doing and where we’re going. But before we get started, I’m going to turn it over to our Chief Counsel. What else do you do, Mike?

Michael LiCalsi: That’s enough.

David Gladstone: Okay, let’s hear from Michael. Good morning, everybody. Today’s call may include forward-looking statements under the Securities Act of 1933 and the Securities Exchange Act of 1934, including those regarding our future performance. These forward-looking statements involve certain risks and uncertainties and other factors, and they’re based on our current plans, which we believe to be reasonable. The many factors may cause our actual results to be materially different from any future results expressed or implied by these forward-looking statements, including all the risk factors listed on Forms 10-Q, 10-K, and various other documents we file with the SEC. Find all these documents on the Investors page of our website at gladstoneinvestment.com or the SEC’s website, which is www.sec.gov.

And we undertake no obligation to publicly update or revise any of these forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Please also note, past performance or market information is not a guarantee of future results. We ask that you visit our website, gladstoneinvestment.com, sign up for our email notification service. You can also find us on Facebook. Keyword to Gladstone Company is now on Twitter, which is now X. The handle there is Gladstone Comps, @GladstoneComps on X. Today’s call is simply an overview of our results through September 30, 2024. So we ask that you review our press release and Form 10-Q, both issued yesterday for more detailed information. With that, I’ll turn it over to Dave Dullum, President of Gladstone Investment.

Dave Dullum: Mike, thank you very much and good morning. Welcome to all our shareholders and analysts. For this second quarter of fiscal year ‘25, I’m pleased to report that the GAIN team has continued to produce consistent and positive quarter-over-quarter results. We ended the second quarter of this fiscal ‘25 on 09/30/24 with adjusted NII of $0.24 per share and total assets of $869 million, which is a bit down from prior quarter, but we’ll explain that in a minute. We are in an extremely active investing period, and I believe this will continue for a while. We have been and continue to review and conduct due diligence on a significant number of new investment opportunities. At the same time, we’ve been managing various activities within our 22 existing portfolio companies.

We invested about $18.5 million in the form of a secured first lien debt, which was to help fund an add-on acquisition for one of our existing portfolio companies, Nocturne Luxury Villas. As I’ve mentioned in prior calls, this follows some of our other significant add-on activities at a few of our other portfolio companies over the past year, where these add-on opportunities will allow us to increase our investment, build value in companies where we have confidence in the management team, have a strong belief in its future, and enhancing the opportunity for future equity gains. This quarter, we also had a very successful exit of our portfolio company Nth Degree where we generated a meaningful realized capital gains of around $42.3 million. We maintained our monthly distribution shareholders at $0.08 per share or $0.96 per share on an annual basis.

We also declared a supplemental distribution of $0.70 per share during the quarter that was paid in October. Now this large supplemental distribution is a direct result of our buyout strategy and our ability to reward our shareholders with meaningful supplemental distributions from the realized capital gains generated on the equity portion of our exits, further reinforcing our model of a bio-focused fund. It remains our intent to continue rewarding our shareholders with meaningful supplemental distributions from the realized capital gains on exits. And as our portfolio continues to mature and equity values increase, we will constructively harvest these gains for the benefit of shareholders. It is important here, though, to emphasize that we will always be investing in new portfolio companies and strive to balance the timing of exits without sacrificing the level of debt assets that produce the income to support and grow our monthly dividends, which is extremely important to our shareholders.

Now our balance sheet continues to be strong with low leverage, a positive liquidity position, with additional availability on our credit facility. We continue providing support to our portfolio companies for add-on acquisitions, as I mentioned, and interim financing if the need arises while actively growing our assets to new buyouts. Looking forward, and obviously, there are many uncertainties as we look over the next number of years, but we feel very good about where we are, and as I mentioned, we are seeing an increase in opportunities for new acquisitions, and there seems to be growing momentum in new deals coming to market. There is significant liquidity in the M&A market, which makes for a very competitive environment with upward pressure on valuations.

We will have to aggressively compete and acquire new companies that we believe fit our financial model by investing a combination of debt and equity, maintaining our principles of being a value investor, and generating income on a current basis with upside to capital appreciation. With the current level of analysis and due diligence we’re doing on our number of new buyouts. I’m encouraged that we’ll be adding to our assets with new portfolio companies in the very near term. In summing up the quarter and looking forward, we believe the state of our portfolio is very good. We have a strong liquid balance sheet, a positive level of buyer activity, and the prospect of continued very good earnings and distributions over the next year. So with that, I’d like to turn it over to Rachael Easton, our CFO, and have her elaborate on more detail on the financial results.

Rachael?

Rachael Easton: Thank you, Dave, and good morning. Looking at our operating performance in the second quarter of fiscal year ‘25, we generated total investment income of $22.6 million, up from $22.2 million in the prior quarter. Net expenses for the quarter were $15.3 million, up from $9.8 million in the prior quarter. This increase was primarily due to a $5.4 million increase in accrued capital gains based incentive fees due to the net impact of realized and unrealized gains and losses during the quarter as required under US GAAP. This resulted in net investment income for the quarter of $7.3 million compared to $12.4 million in the prior quarter. Adjusted net investment income, which is net investment income or loss, exclusive of any accrued capital gains based incentive fees for the quarter was $8.9 million or $0.24 per share, up slightly but remaining consistent on a per share basis from $8.6 million or $0.24 per share in the prior quarter.

We continue to believe that adjusted net investment income is a useful and representative indicator of our ongoing operations. Consistent with the prior quarter, at September 30, 2024, we continue to have four portfolio companies that are on non-accrual status. Overall, there are no portfolio-wide credit concerns. We continue working closely with these companies to get back on accrual status when possible. We continue to see improvement at one of the companies in particular that has been on non-accrual for some time as they are back to generating a profit and we continue to work closely with them. Valuations in the aggregate were up $3.9 million across the portfolio excluding the reversal of unrealized appreciation related to the exit of Nth Degree.

This unrealized appreciation was driven by higher valuation multiples across the portfolio and increased performance at a number of our portfolio companies, which was partially offset by decreased performance at other portfolio companies. Our NAV decreased to $12.49 per share compared to $13.01 per share at the end of the prior quarter. The decrease was primarily driven by $0.94 per share of distributions declared to common shareholders during the quarter, of which $0.70 per share was a supplemental distribution paid in October. Our NAV was also impacted by $0.93 per share of net unrealized depreciation on investments, which was comprised of $0.11 per share of unrealized appreciation experienced across the portfolio and $1.04 per share of unrealized depreciation due to that reversal of unrealized appreciation on the exit, as previously mentioned.

These amounts were partially offset by increases in NAV of $1.15 per share of realized gains on investment and $0.20 per share of net investment income. We believe that maintaining liquidity and flexibility to support and grow our portfolio are key elements of our success. With our three public note issuances, we have long-term fixed-rate capital in place. And as of yesterday’s release, we had approximately $160 million available on our $200 million credit facility. Overall, our leverage remains relatively low with an asset coverage ratio at September 30th of 229.3%, providing us plenty of cushion to the required 150% coverage. Consistent with prior quarters, distributable book earnings to shareholders remains strong. We started the fiscal year with $20 million or $0.55 per share in spillover, and our monthly distribution remains consistent at $0.08 per share for an annual run rate of $0.96 per share.

In September, as mentioned, we declared a $0.70 per share supplemental distribution, which was paid in October. And we will look to continue funding future supplemental distributions as we recognize realized capital gains on the equity portion of future exits. Using the monthly distribution run rate of $0.96 per share per year and $0.70 per share in supplemental distributions paid so far in fiscal year 2025, our aggregate estimated fiscal year distributions would yield about 12% using yesterday’s closing price of $13.80. This covers my part of today’s call. Before turning the call back over to David to wrap us up, I would like to take a moment to mention that as announced last month, today will be my last earnings call and my last day with Gladstone Investment.

I’m proud of the work I’ve done for the past three years with Dave, David, and the team as I pursue a personal change. I’d also like to introduce everyone on the call to Taylor Ritchie, who has been with Gladstone Investments for the past six years in the role of Controller and Director of Financial Reporting. We are all very excited to have him step into the CFO role, in what we believe will be a seamless transition. I’ll now hand it over to you David to wrap us up.

David Gladstone: All right. Thank you, Rachel. I don’t like to see you go, but I’m glad you’re replaced by a really strong accounting guy. And the good information that you’ve given us over the years has just been wonderful. This call, the 10-Q file — this call, the 10-Q we filed at the SEC yesterday, should bring everybody up to date. The team has reported solid results for the quarter ending September 30th, 2024, and we believe the team is in a great position to continue these successes through the rest of the fiscal year that ends in March 30. Gladstone Investment is, if you think about it, an attractive investment for people. Once read an interview of Berkshire Hathaway and they ask him, would you like to have something that pays a dividend just every quarter, forever and a day, or would you rather have more income but have it come in at variable times as we do in our company?

He selected that one. He always likes to get the most money out of any company that he’s invested in. So we believe Gladstone Investment is a very attractive investment firm. It has to seek in continuous monthly distributions. We meet that one because we’ve been doing it forever. And then there’s supplemental distributions that come from capital gains in one of our portfolio companies goes public or is sold, team hopes to continue to show you strong returns on your investments in this fund. Now, let’s stop here and ask for questions. Sherry, if you’ll come on, that would be good.

Operator: [Operator Instructions] Our first question is from Mickey Schleien with Ladenburg Thalmann. Please proceed.

Q&A Session

Mickey Schleien: Hi, yes, good morning, everyone. Dave, a couple of questions today. I’ve noticed that the fee credits from the external manager for their portfolio company managerial assistants have been running much lower quarterly this year than last fiscal year. Can you give us some insight into what’s causing that decline? And what’s the outlook for that line item?

David Gladstone: Rachael?

Rachael Easton: Sure. Hi, Mickey, good morning. So when looking at — that’s going to be correlated to the deal activity that takes place during the quarter. So it’s a little bit challenging to project that out. But I think you can look at the last couple of quarters have been a little bit quieter from an investment perspective. So that’s why it’s a little bit lower.

Dave Dullum: There’s no fundamental — Mickey, there’s not a fundamental change in anything we do or whatever, just the timing as much as anything, as Rachael pointed out.

Mickey Schleien: Yeah, I understand. I just thought that some of that was also due to sort of ongoing assistance. But I do understand your answer. My follow-up question relates to Hobbs, which has been on nonaccrual for more than two years, which would seem like more than enough time to address whatever its issues are. Can you update us on what the company has done over that two years to get back on track? And when do you expect it to go back on accrual? And if it’s not possible, have you thought about selling it?

Dave Dullum: Sure. So yeah, as I think we alluded to in the script, I think Rachael mentioned in her part that one of those companies is actually now profitable, indeed, that would be Hobbs. And the answer to your question is two things. One, we — I think I’ve mentioned actually in prior calls, we’ve made change to the senior management team and we’re really excited about the team that’s there now, both the CEO and also the CFO, which is actually — he has been relatively new to the company, but now about six months or so. So we’ve got a really solid management team. That’s the first thing. From the business perspective, keeping in mind that the nature of the business and where it a bit got off track to be perfectly honest, is they do contracting with general contractors who are building initially single-family homes, multifamily homes, and they’ve been actually expanding into some industrial commercial type projects.

The problem that occurred back — going back a couple of years now is always long-term contract. Truthfully, we’re either not very well priced, not very well managed. And so as a result of that, and recognizing that most of that accounting is done on a percentage of completion basis that we would end up with jobs that have what they — in that — in their terminology called job phase. So they actually are not being able to recoup some of their expenses as the job potentially would go along, recognizing some of these jobs could go on for over a year, right? So that — we finally got a grasp to be truthful on that aspect of it, number one. Number two, also, they were able to then start taking jobs where they have a much higher margin, a much higher reliability of being able to manage and reduce and eliminate frankly, job fade, property pricing and proper project management going forward.

That also allowed for, believe it or not, a slightly lower revenue. This company is over $100 million plus in revenues, getting it down to a level that we’re actually taking business only at a certain margin level and sticking with it. So that’s all starting to come through the system currently. So therefore, that’s kind of what we have done, how we work with the business and how we’ve helped get it to the level it is at. My hope would be, and it’s just that, that coming back on accrual status could occur frankly, probably not within the next six months, but sometime, hopefully, shortly after that, we might start being able to bring some of it, maybe not all of it back on accrual. So it’s a long answer to your question, but again, it’s a good, solid business, good management team, making money now and also, frankly, not requiring any additional cash or support from us, which is a good thing.

Mickey Schleien: That’s really good to hear, Dave. And in terms of the profitability you’ve mentioned, are they generating enough cash flow to service the debt at this point or are we not there yet?

Dave Dullum: No. As I mentioned, looking forward and to getting back on quote, a cruel, and sorry to say, it’s probably going to be a six, nine month time frame, and they started again some because right now, they’re generating cash, but it’s obviously flowing back into the business from a working capital perspective.

Mickey Schleien: Okay. I understand. Those are my questions for this morning. Thanks for your time. And Rachael, good luck on your future endeavors.

Dave Dullum: Thanks very much.

Rachael Easton: Thanks, Mickey.

David Gladstone: Bye-bye. Can we have — who’s up next, Bryce?

Operator: Yes. Our next question is from Bryce Rowe with B. Riley Securities. Please proceed.

Bryce Rowe: Thank you and good morning. Congrats to Rachael and to Taylor. It’s exciting stuff. I wanted to start, Dave, with — you made this comment about an extremely active kind of opportunities out there. I don’t know if I’ve heard you describe it like that before. Can you talk about or give us maybe a little detail around that comment? And if you could size up the opportunity in terms of the pipeline, I don’t know if you can, but that would certainly be helpful for us to kind of rightsize that comment.

Dave Dullum: No, I did use that word, and it’s an adjective that I’m going to — going forward, probably not use again, Bryce? But no, seriously, I don’t want to obviously say anything here that we shouldn’t say, but I can only tell you that we are running very hard at all levels. One of my partners and senior Managing Director is actually sitting next to me here in this call this morning. She very active on stuff that she is doing in terms of a couple of deals that, frankly, are going to hopefully close within the next, I don’t know, a month or two, alongside of new deals that we’re working on. It just truly is all of a sudden, over the last, I would say, few months are leading up to it that the number of deals that we’ve been actually putting not only indications of interest on, LOIs on that we like as good businesses, a number of which, by the way, we’ve also — I think I mentioned in there that valuations are also seeing a pretty high we’re seeing some pretty high valuation.

So we’ve lost some opportunities because we were maybe two, three turns of EBITDA lower than where the next level is going to be. So that’s really — it’s just overall, just a lot of positive activity. We’re not looking at stuff that’s wasting over time. It’s really good, high-quality stuff. So the quantity is higher. The quality I would also say is higher. And I think also the — and the third part, frankly, the size of the companies we’re looking at and are willing and able to now bid on and work through is a bit higher than we’ve historically done as well. So that’s why I’m extremely enthusiastic about where we are. And of course, we got to keep just slogging. And I mentioned we’re doing the due diligence. And that, obviously, as you know, we are very careful in how we do that.

So that’s why there’s a lot of activity going on right now within the overall team and the portfolio.

Bryce Rowe: Okay. And, Dave, I mean, how do you handicap — you made the comment about some transactions being a little more higher price than you’d like from a multiple EBITDA perspective. What gives you confidence that the deals that are getting closer to the finish line aren’t running into that same issue?

Dave Dullum: Yeah, only because of the way our process works. If — let me define, if it’s alright with you, getting close to the finish line. For us, there are two levels. One would be when we do what we call an indication of interest, which means we’re putting out what we say we’re willing to do. That leads generally then to an opportunity, as you would know, to go and meet the management team, et cetera, if we sort of made that first cut, right? So after we’ve done that, we then think this is worthy of moving to the next level, we do some work. We then would put together what we call a letter of intent, which now pretty much solidifies for us what we’re willing to pay. That LOI has to get approved by our investment committee.

And if that is the case, we then submit that back. So at that point, that’s getting close to the finish line, right? So when we do that, we generally have a relatively high degree of confidence that we are going to probably get selected. We don’t always do. If we get selected then, frankly, and that’s kind of in a stage we’re in with a number of companies right now, it’s really up to us in terms of finalizing the due diligence and unless we find something that really, in our preliminary work, so it comes out of the woodwork that we don’t think really fits, we’re going to get that deal done. And that’s why I’d say those that I would put into that category, we have a reasonably high degree of confidence we’re going to get closed here in the next number of months.

So I don’t know if that helps you, but I don’t think I can be any more really specific than that. But I’ve got folks sitting around the table that would probably hit me all in the head if I got more specific.

Bryce Rowe: That’s fine, Dave. And kind of in that context, as we think about funding new deals, I mean, obviously, you’ve got plenty of room on the credit facility at this point? How do you kind of weigh that relative to maybe raising equity by the ATM or looking at the unsecured market for another debt raise?

Dave Dullum: Yeah, that’s a great question. It’s something, obviously, we’re looking at doing it. But I’ll turn it over to Rachael, I’d like to have her address that.

Rachael Easton: Yeah, absolutely. I think we historically have kept a very conservative balance sheet, and it’s kind of for this reason, right? It’s — so we have the flexibility and the liquidity available to be nimble when the team has the opportunities in place that need funding. So obviously, utilizing the large capacity we have available on our credit facility is something where we consider to be very important. And then two quarters ago, [or I mean] (ph) the last quarter, excuse me, we kicked off our new $75 million ATM program, and we have not tapped into that yet. So we consider that to be a very meaningful kind of lever within our capital raising mechanism. And also, we are — we remain open to the potential of other future debt issuances as well, whether that might be in the near term or further out into the future. But I think we kind of look at it all holistically and what makes sense in order to fund the pipeline.

Dave Dullum: Okay. I think another way to briefly add to that is we are in a position where as we need to, and there’s a good likelihood we might, obviously, as we hopefully continue growing, we will go and access certainly, the ATM market, if we need to, if the stock is trading above NAV. And likewise, more long-term permanent capital which is a positive thing for us. So yeah, we feel reasonably good around where we are today about the ability to raise capital as we need it for the new deals that we’re looking at doing, including working with our line of credit that we currently have. Obviously, we do a new deal, we’ll use a line of credit. We get to that point. And then we think, okay, let’s go raise long-term permanent capital and use that capital and then pay down the line of credit and so on and so forth. So with the conversations we’ve certainly had with bankers and others, we feel pretty good about that.

Bryce Rowe: Okay. Two more questions for me, kind of housekeeping. Number one, the dividend income in the quarter, I assume that was just one portfolio company. Any detail around that?

Rachael Easton: That’s correct. Yeah. It was just one portfolio company. Really no additional detail. They were in the position to be able to pay us some dividend income. So as you know, that can be kind of volatile quarter-over-quarter and is a little bit challenging to project out, but you have just one company there.

Bryce Rowe: Okay. And then the portfolio, the debt yield was steady in the quarter. Certainly, haven’t really seen that across the space. We’ve seen a lot of yield compression so far with earnings season. When do your debt investments — when does the interest rate reset for those that are floating rate?

Rachael Easton: So, 100% of our portfolio is variable rate debt. So they’re actually — there’s some ins and outs kind of in that number. So while it remains consistent quarter-over-quarter, obviously, we did see the impact of decreasing so far in there. It was just generally offset by changes within the portfolio. So specifically, Nth Degree, that exit during the quarter, it just had a yield that was a little bit lower than the total average. So by removing that, it kind of was an offsetting increase.

Dave Dullum: And remember, Bryce, we also have floors that even though we have the floating we’ve benefited some extent by that, obviously, the SOFR being up where it is. We don’t — I guess I may be thinking about this too much the wrong way, but I don’t feel too strong about this issue of compression of yield because of the way in which we think about and certainly new deals we do and deals we’ve done in the past where we think very carefully about the floors that we want to have to achieve relative to the total dollars that we invest. And we may have talked about this in the past and what have you. When we look at yield on our total dollar investment, which means both the equity and the debt, we have a level that we want to strive to get to. So we either will set the floor on the debt pieces so that we can blend that yield around the assets that we’re putting on. So yeah, I think we feel like we’re in pretty decent shape. Would you agree with that?

Rachael Easton: Yes. And so in reference to what Dave’s discussing in the floors, looking at our debt portfolio on a weighted average basis overall, it’s about 12% floors in place. So that’s going to be the minimum we’ll ever get to.

Bryce Rowe: Okay. All right. I think that’s it for me. Appreciate your time.

Dave Dullum: Thanks, Bryce. Take care.

David Gladstone: Next, please.

Operator: Our next question is from Matthew Hurwit with Jefferies. Please proceed.

Matthew Hurwit: Hi, good morning, everyone. First question is, I noticed in your Q, it looks like the weighted average revenue of the portfolio on the first lien decreased about 9%, but then EBITDA was up 7% quarter-on-quarter. So was that mostly Nth Degree or portfolio mix? Or was there some sort of cost efficiency in the portfolio? Or I’m just curious about that movement.

Rachael Easton: So I think from a revenue perspective, that’s just going to be for the portfolio companies that are being valued using a revenue multiple. So that’s only a small part of the portfolio as a whole. When we look at kind of performance across the portfolio as it impacted fair value this quarter, we had a pretty good amount that was up in performance. So then you’ll see that in the increasing EBITDA range. And then that was sort of offset by a handful of companies that saw a decreased performance, whether that is EBITDA or revenue. So the company is using a revenue multiple, just a slight decrease this quarter.

Matthew Hurwit: I see. Okay, great. And then could you just walk through some of the puts and takes again on the net unrealized depreciation in the quarter. I noticed the portfolio fair value percent of cost went from 105% to 102% quarter-on-quarter. I’m kind of curious if there’s some conservatism being baked into fair value estimates or yeah, it’s a multipart, but that would be helpful. Thanks.

Rachael Easton: So from a fair value perspective, we had the exit of Nth Degree, which is a very — it’s a $42 million realized gain. So for our portfolio, that was a fairly outsized unrealized appreciation that we have been carrying until exit when it was realized. So that’s really responsible for the overall, I’d say, portfolio decrease when you’re looking at that fair value percentage. Overall, excluding that reversal of any unrealized appreciation related to Nth Degree when it was exited, we did experience about $0.11 per share of unrealized appreciation across the portfolio in the aggregate. So excluding that, we did see fair values across the board go up. And then were you asking — your sorry, asking just to go through kind of the NAV changes again?

Matthew Hurwit: Yeah. It was just some of the puts and takes on the net unrealized depreciation, which I think you mostly covered.

Rachael Easton: Okay.

Matthew Hurwit: And then if I could ask — sorry, go ahead.

David Gladstone: No. What’s your next question?

Matthew Hurwit: The last one is not asking to be policy experts, but do you see any high-level impact from the election outcome at this point on your business or portfolio businesses in particular that are worth calling out, they’re positive or negative?

Dave Dullum: Yeah. So, Matthew, we’re not policy experts either. And again, only taking a quick look, obviously, things will settle down. We’ll see things go up, go down, et cetera. The obvious one, perhaps, and it’s something we are looking at all the time. We’ve been living with it for a number of years, obviously, would be issues around tariffs and some of our companies that actually do have products produced overseas, China to some extent. Now I would say that most of those companies that we have a couple of things. One, we’ve already been living in somewhat of a tariff oriented environment for a number of years with those companies. Some of them have also shifted their production knowingly to other countries where it works, some of them come back to United States.

But I would say, as of right now, I don’t honestly say that I can tell you that I see any major issue based on as a result of any changes that might be coming over the next — we’ll start hearing about sometime, I guess, in the next six months or so. But we’re obviously aware of it and we’ll take a look at it.

Matthew Hurwit: Okay, great. That’s helpful. Thanks very much.

David Gladstone: Okay, next question.

Operator: And we do have a follow-up with Mickey from Ladenburg Thalmann. Please proceed.

Mickey Schleien: So, just Rachael, just one sort of modeling question. The income based incentive fee was lower than I anticipated based on your pre-incentive fee NII. Is there some noise in that number? Or any explanation as to why it’s probably lower than we would expect?

Rachael Easton: Nothing that to call out. There was nothing unusual in there. I think it’s just a result of the calculation. So yeah, ends coming out, reduce the asset base. Yeah, I can’t think of anything else that would have impacted your modeling.

Mickey Schleien: Does the dividend payable have any impact on that calculation?

Rachael Easton: No.

Mickey Schleien: No, I didn’t think so. Okay, that’s it for me. Thanks.

Rachael Easton: Thanks.

David Gladstone: Okay, next question.

Operator: There are no further questions at this time. I would like to hand it back off to management. Actually, we just got one. Mark Farone, he’s a private investor. Please proceed.

Unidentified Analyst: I don’t know if you all can hear me, but I just wanted to thank Rachael for all her years of service. She’s a clear-headed, no-nonsense advocate but her insights have been really, really great for us, individual investors and a big shout-out to Dave and Michael and Dave, and you guys just do a fantastic job taking care of us, individual investors. So thank you very much.

Dave Dullum: Thank you for being a shareholder.

David Gladstone: And how much do we owe you for that discussion?

Dave Dullum: You already paid him with that special dividend.

Unidentified Analyst: You guys have paid me over and over again.

David Gladstone: Okay. Thank you again for saying that. We’ll move on now to say goodbye to all of you for this quarter, and we’ll see you again next quarter. That’s the end of this conference.

Operator: Thank you. This will conclude today’s conference. You may disconnect at this time, and thank you for your participation.