Gladstone Investment Corp.

For the first quarter ended June 30, 2026, Gladstone Investment reported net investment income of $15.9 million, or $0.40 per share, versus a net investment loss of $10.6 million in the prior quarter. Adjusted net investment income was $10.4 million, or $0.26 per share, versus $7.9 million, or $0.20 per share previously, and total investment income was $28.4 million versus $25.2 million. Net expenses declined to $12.4 million from $35.8 million, while portfolio valuations declined by $18.8 million and NAV fell to $16.24 per share from $16.78. The company said adjusted NII covered the monthly distribution, and it ended with spillover income of $22.5 million, or $0.56 per share, and total distributable income of $160.4 million, or $4.03 per share. Looking ahead, management did not give formal quarterly or full-year EPS guidance, but said the portfolio is positioned for continued strong earnings, with more investment activity expected and SFEG likely to produce a meaningful realized gain when it closes.

David Dullum emphasized that the quarter reflected active portfolio management, new deal activity, and an ongoing buyout strategy that combines debt and equity to support monthly distributions and potential capital gains. He said the company has a strong liquid balance sheet, a good pipeline, and expects continued earnings and distributions over the next year, while acknowledging the uncertain economic backdrop. His tone was confident but cautious, especially around the timing and treatment of the SFEG exit proceeds.

Taylor Ritchie said earnings were supported by higher investment income and lower expenses, including the reversal of $5.6 million of accrued capital gains-based incentive fees, which helped bring net investment income to $15.9 million. He noted the portfolio yield was 12.9%, the weighted average principal balance was about $706 million, and a 50 to 150 basis point rise in SOFR would add approximately $0.02 to $0.09 per share in annual NII. On capital structure, he highlighted the amended credit facility, which lowered the spread over SOFR by 40 basis points, increased commitment to $405 million, and extended maturity to 2031; quarter-end borrowings were approximately $158 million, asset coverage was 209%, and debt-to-equity was 0.88x. He also pointed to spillover income of $22.5 million and said the company intends to make supplemental distributions as it realizes capital gains.

Analysts focused on the $5.6 million other income line, which management said was success fee income from SFEG paid in advance of its pending exit, not the incentive fee reversal. They also pressed on SFEG’s valuation and expected gain; management said the current valuation approximates what they expect to collect, though it is discounted for transaction costs and escrows, and they have not yet decided how much of the gain to distribute versus retain. Questions on Detroit Defense drew a response that the company is fundamentally performing well, but valuation was pressured by delayed contract funding in Washington; management said those contracts are now starting to come through and should support a reversal. On the broader economy, management said most portfolio companies are trending up, defense spending appears to be flowing into the sector, and deal sourcing in aerospace and defense is picking up.