NEW YORK, Feb. 6, 2019
/PRNewswire/ -- Golub Capital BDC, Inc., a business
development company (NASDAQ: GBDC), today announced its financial
results for its first fiscal quarter ended December 31,
2018.
Except where the context suggests otherwise, the terms
"we," "us," "our," and "Company" refer to Golub Capital BDC, Inc.
and its consolidated subsidiaries. "GC Advisors" refers to GC
Advisors LLC, our investment adviser.
SELECTED FINANCIAL
HIGHLIGHTS
|
|
|
|
|
|
|
|
(in thousands, expect
per share data)
|
|
|
|
|
December 31,
2018
|
|
September 30,
2018
|
Investment portfolio,
at fair value
|
$
|
1,918,479
|
|
|
$
|
1,782,841
|
|
Total
assets
|
$
|
1,979,807
|
|
|
$
|
1,835,552
|
|
Net asset value per
share
|
$
|
15.97
|
|
|
$
|
16.10
|
|
|
|
|
|
|
Quarter
Ended
|
|
December 31,
2018
|
|
September 30,
2018
|
Investment
income
|
$
|
39,411
|
|
|
$
|
40,428
|
|
Net investment
income
|
$
|
19,817
|
|
|
$
|
20,266
|
|
Net gain (loss) on
investments and foreign currency
|
$
|
(1,378)
|
|
|
$
|
(4,363)
|
|
Net increase in net
assets resulting from operations
|
$
|
18,439
|
|
|
$
|
15,903
|
|
|
|
|
|
Earnings per
share
|
$
|
0.31
|
|
|
$
|
0.26
|
|
Net gain (loss) on
investments and foreign currency transactions per share
|
$
|
(0.02)
|
|
|
$
|
(0.08)
|
|
Net investment income
per share
|
$
|
0.33
|
|
|
$
|
0.34
|
|
Accrual for capital
gain incentive fee per share
|
$
|
(0.01)
|
|
|
$
|
(0.02)
|
|
Net investment income
before capital gain incentive fee accrual per share
(1)
|
$
|
0.32
|
|
|
$
|
0.32
|
|
|
|
|
|
(1) As a
supplement to U.S. generally accepted accounting principles
("GAAP") financial measures, the Company has provided this non-GAAP
financial measure. The Company believes that this non-GAAP
financial measure is useful as it excludes the accrual of the
capital gain incentive fee, including the portion of such accrual
that is not contractually payable under the terms of the Company's
investment advisory agreement with GC Advisors (the "Investment
Advisory Agreement"). As of December 31, 2018, the capital gain
incentive fee accrued by the Company in accordance with GAAP is
$6.7 million, of which $1.6 million was payable as a capital gain
incentive fee pursuant to the Investment Advisory Agreement as of
December 31, 2018. Any payment due under the terms of the
Investment Advisory Agreement is calculated in arrears as of the
end of each calendar year or upon termination of the Investment
Advisory Agreement. The Company paid a capital gain incentive fee
in the amount of $1.2 million, calculated in accordance with the
Investment Advisory Agreement as of December 31, 2017. The Company
did not pay any capital gain incentive fee under the Investment
Advisory Agreement for any period ended prior to December 31, 2017.
Although this non-GAAP financial measure is intended to enhance
investors' understanding of the Company's business and performance,
this non GAAP financial measure should not be considered an
alternative to GAAP.
|
First Fiscal Quarter 2019 Highlights
- Net increase in net assets resulting from operations for the
quarter ended December 31, 2018 was
$18.4 million, or $0.31 per share, as compared to $15.9 million, or $0.26 per share, for the quarter ended
September 30, 2018;
- Net investment income for the quarter ended December 31, 2018 was $19.8 million, or $0.33 per share, as compared to $20.3 million, or $0.34 per share, for the quarter ended
September 30, 2018;
- Net investment income for the quarter ended December 31, 2018, excluding a $0.5 million reversal for the capital gain
incentive fee under GAAP, was $19.3
million, or $0.32 per share,
as compared to $19.5 million, or
$0.32 per share, excluding a
$0.8 million reversal for the capital
gain incentive fee under GAAP, for the quarter ended September 30, 2018;
- Net loss on investments and foreign currency for the quarter
ended December 31, 2018 was
$1.4 million, or $0.02 per share, as compared to a net loss of
$4.4 million, or $0.08 per share, for the quarter ended
September 30, 2018; and
- Our board of directors declared on February 5, 2019 a quarterly distribution of
$0.32 per share which is payable on
March 28, 2019 to stockholders of
record as of March 7, 2019.
Portfolio and Investment Activities
As of December 31, 2018, the Company had investments in 212
portfolio companies with a total fair value of $1,849.6 million and had investments in Senior
Loan Fund LLC ("SLF") with a total fair value of $68.9 million. This compares to the Company's
portfolio as of September 30, 2018, as of which date the
Company had investments in 199 portfolio companies with a total
fair value of $1,711.8 million and
investments in SLF with a total fair value of $71.1 million. Investments in portfolio companies
as of December 31, 2018 and September 30, 2018 consisted
of the following:
|
|
As of December 31,
2018
|
|
As of September
30, 2018
|
|
|
Investments
|
|
Percentage
of
|
|
Investments
|
|
Percentage
of
|
Investment
|
|
at Fair
Value
|
|
Total
|
|
at Fair
Value
|
|
Total
|
Type
|
|
(In
thousands)
|
|
Investments
|
|
(In
thousands)
|
|
Investments
|
Senior
secured
|
|
$
|
256,796
|
|
|
13.4
|
%
|
|
$
|
231,169
|
|
|
13.0
|
%
|
One stop
|
|
1,537,583
|
|
|
80.1
|
|
|
1,430,196
|
|
|
80.2
|
|
Second
lien
|
|
9,434
|
|
|
0.5
|
|
|
9,435
|
|
|
0.5
|
|
Subordinated
debt
|
|
652
|
|
|
0.0
|
*
|
|
251
|
|
|
0.0
|
*
|
LLC equity interests
in SLF
|
|
68,915
|
|
|
3.6
|
|
|
71,084
|
|
|
4.0
|
|
Equity
|
|
45,099
|
|
|
2.4
|
|
|
40,706
|
|
|
2.3
|
|
Total
|
|
$
|
1,918,479
|
|
|
100.0
|
%
|
|
$
|
1,782,841
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
*
|
Represents an amount
less than 0.1%.
|
The following table shows the asset mix of our new investment
commitments for the three months ended December 31, 2018:
|
For the three
months ended December 31, 2018
|
|
New
Investment
|
|
|
|
Commitments
|
|
Percentage
of
|
|
(In
thousands)
|
|
Commitments
|
|
|
|
|
Senior
secured
|
$
|
40,956
|
|
|
20.2
|
%
|
One stop
|
157,017
|
|
|
77.3
|
|
Equity
|
5,098
|
|
|
2.5
|
|
Total new investment
commitments
|
$
|
203,071
|
|
|
100.0
|
%
|
|
|
|
|
Overall, total investments at fair value increased by 7.6%, or
$135.6 million, during the three
months ended December 31, 2018 after factoring in debt
repayments, sales of securities, net fundings on revolvers and net
change in unrealized gain (loss).
For the three months ended December 31, 2018, the weighted
average annualized investment income yield (which includes interest
and fee income and amortization of capitalized fees and discounts)
and the weighted average annualized income yield (which excludes
income resulting from amortization of capitalized fees and
discounts) on the fair value of earning portfolio investments in
the Company's portfolio were 9.1% and 8.6%, respectively.
Consolidated Results of Operations
Total investment income for the quarters ended December 31,
2018 and September 30, 2018 was $39.4
million and $40.4 million,
respectively. This $1.0 million
decrease was primarily attributable to a decline in SLF dividend
income for the first fiscal quarter, which was partially offset by
an increase in interest income from an increase in average
investments.
Total expenses for the quarters ended December 31, 2018 and
September 30, 2018 were $19.6
million and $20.2 million,
respectively. This $0.6 million
decrease was primarily attributable to a decrease in incentive fee
expense, which was partially offset by higher interest and other
debt financing expenses caused by an increase in the weighted
average of outstanding borrowings.
During the quarter ended December 31, 2018, the Company
recorded a net realized loss of $2.0
million and recorded net unrealized appreciation of
$0.6 million. The net realized loss
was primarily due to the loss on the sale of one equity investment
and the write-off on a separate equity investment. The net
unrealized depreciation was primarily due to the reversal of
unrealized appreciation associated with the sale and write-off of
the two portfolio company equity investments coupled with the
decrease in market prices on several middle-market debt and equity
investments.
Liquidity and Capital Resources
The Company's liquidity and capital resources are derived from
the Company's debt securitizations (also known as collateralized
loan obligations, or CLOs), U.S. Small Business Administration
("SBA") debentures, revolving credit facilities and cash flow from
operations. The Company's primary uses of funds from operations
include investments in portfolio companies and payment of fees and
other expenses that the Company incurs. The Company has used, and
expects to continue to use, its debt securitizations, SBA
debentures, revolving credit facilities, proceeds from its
investment portfolio and proceeds from offerings of its securities
and its dividend reinvestment plan to finance its investment
objectives.
As of December 31, 2018, the Company had cash, cash
equivalents and foreign currencies of $13.0
million, restricted cash, cash equivalents and foreign
currencies of $40.7 million and
$993.5 million of debt and other
short-term borrowings outstanding. As of December 31, 2018,
the Company had $72.8 million of
remaining commitments and $44.8
million available for additional borrowings on its senior
secured revolving credit facility with Wells Fargo Bank, N.A. (the
"Wells Fargo Credit Facility"), as lender and administrative agent,
subject to leverage and borrowing base restrictions. As of
December 31, 2018, through our small business investment
company licensees, we had $37.5
million of SBA debenture commitments, of which $9.5 million was available to be drawn, subject
to customary SBA regulatory requirements.
On November 1, 2018, the Company
entered into an amendment to the documents governing its credit
facility with Morgan Stanley Bank, N.A., which increased the
borrowing capacity from $300 million
to $450 million (the "MS Credit
Facility I"). The other material terms of the MS Credit Facility I
were unchanged. On November 16,
2018, we issued $408.2 million
in notes through a debt securitization that were structured as
follows:
Tranche
|
Rating
(S&P/Fitch)
|
Par
Amount
($mm)
|
Interest
Rate
|
Class A
Notes
|
AAA/AAA
|
$
|
327.0
|
|
3-Month LIBOR +
1.48%
|
Class B
Notes
|
AA/NR
|
61.2
|
|
3-Month LIBOR +
2.10%
|
Class C-1
Notes
|
A/NR
|
20.0
|
|
3-Month LIBOR +
2.80%
|
Total Notes
Issued(1)
|
|
$
|
408.2
|
|
|
|
|
|
|
|
|
(1)
|
Term debt
securitization are also known as CLOs and are a form of secured
financing incurred by the Company, which is consolidated by the
Company and subject to the Company's overall asset coverage
requirements. The Class C-2 Notes, Class D Notes, and Subordinated
Notes issued in the debt securitization were retained by the
Company and are eliminated in consolidation.
|
The reinvestment period for the debt securitization ends on
January 20, 2023 and the notes mature
on January 20, 2031. A portion of the
proceeds were used to repay all outstanding borrowings on the MS
Credit Facility I in full and the agreements governing this
facility were terminated.
On February 1, 2019, Golub Capital
BDC Funding II LLC ("Funding II"), a direct, wholly-owned,
consolidated subsidiary of the Company, entered into a new credit
facility, (the "MS Credit Facility II"), with Morgan Stanley Senior
Funding, Inc., as the administrative agent, in which the lenders
have agreed to extend credit to Funding II in an
aggregate principal amount of up to $200.0 million. The scheduled maturity date
of the MS Credit Facility II is February 1,
2024 unless there is an earlier termination or event of
default.
During the revolving period of the MS Credit Facility II, which
will continue through February 1,
2021 unless there is an earlier termination or event of
default, borrowings under the MS Credit Facility II will bear
interest at the applicable base rate plus 2.05%. Following
expiration of the revolving period, the interest rate on
outstanding borrowings under the MS Credit Facility II will reset
to the applicable base rate 2.55% for the remaining term of the MS
Credit Facility II. The base rate under the MS Credit Facility II
is (i) the one-month LIBOR, with respect to any advances
denominated in U.S. dollars or U.K. pound sterling, (ii) the
one-month Euro Interbank Offered Rate with respect to any advances
denominated in euros, and (iii) the one-month Canadian Dollar
Offered Rate with respect to any advances denominated in Canadian
dollars.
In connection with entry into the MS Credit Facility II, all
outstanding borrowings under the Wells Fargo Credit Facility were
repaid on February 4, 2019, following
which the Wells Fargo Credit Facility was terminated. Obligations
under the Wells Fargo Credit Facility would have otherwise matured
on September 21, 2023.
On February 5, 2019, our board of directors declared a
quarterly distribution of $0.32 per
share which is payable on March 28, 2019 to holders of record
as of March 7, 2019.
Portfolio and Asset Quality
GC Advisors regularly assesses the risk profile of each of the
Company's investments and rates each of them based on an internal
system developed by Golub Capital and its affiliates. This system
is not generally accepted in our industry or used by our
competitors. It is based on the following categories, which we
refer to as GC Advisors' internal performance ratings:
|
|
|
Internal
Performance Ratings
|
Rating
|
|
Definition
|
5
|
|
Involves the least
amount of risk in our portfolio. The borrower is performing above
expectations, and the trends and risk factors are generally
favorable.
|
|
|
|
4
|
|
Involves an
acceptable level of risk that is similar to the risk at the time of
origination. The borrower is generally performing as expected, and
the risk factors are neutral to favorable.
|
|
|
|
3
|
|
Involves a borrower
performing below expectations and indicates that the loan's risk
has increased somewhat since origination. The borrower may be out
of compliance with debt covenants; however, loan payments are
generally not past due.
|
|
|
|
2
|
|
Involves a borrower
performing materially below expectations and indicates that the
loan's risk has increased materially since origination. In addition
to the borrower being generally out of compliance with debt
covenants, loan payments may be past due (but generally not more
than 180 days past due).
|
|
|
|
1
|
|
Involves a borrower
performing substantially below expectations and indicates that the
loan's risk has substantially increased since origination. Most or
all of the debt covenants are out of compliance and payments are
substantially delinquent. Loans rated 1 are not anticipated to be
repaid in full and we will reduce the fair market value of the loan
to the amount we anticipate will be recovered.
|
Our internal performance ratings do not constitute any rating of
investments by a nationally recognized statistical rating
organization or represent or reflect any third-party assessment of
any of our investments.
The following table shows the distribution of the Company's
investments on the 1 to 5 internal performance rating scale at fair
value as of December 31, 2018 and September 30, 2018:
|
|
December 31,
2018
|
|
September 30,
2018
|
Internal
|
|
Investments
|
|
Percentage
of
|
|
Investments
|
|
Percentage
of
|
Performance
|
|
at Fair
Value
|
|
Total
|
|
at Fair
Value
|
|
Total
|
Rating
|
|
(In
thousands)
|
|
Investments
|
|
(In
thousands)
|
|
Investments
|
5
|
|
$
|
107,807
|
|
|
5.6
|
%
|
|
$
|
113,873
|
|
|
6.4
|
%
|
4
|
|
1,612,115
|
|
|
84.0
|
|
|
1,455,754
|
|
|
81.6
|
|
3
|
|
178,529
|
|
|
9.3
|
|
|
195,414
|
|
|
11.0
|
|
2
|
|
20,012
|
|
|
1.1
|
|
|
17,250
|
|
|
1.0
|
|
1
|
|
16
|
|
|
0.0
|
*
|
|
550
|
|
|
0.0
|
*
|
Total
|
|
$
|
1,918,479
|
|
|
100.0
|
%
|
|
$
|
1,782,841
|
|
|
100.0
|
%
|
|
|
*
|
Represents an amount
less than 0.1%.
|
Conference Call
The Company will host an earnings conference call at
2:00 p.m. (Eastern Time) on Thursday,
February 7, 2019 to discuss the quarterly financial results.
All interested parties may participate in the conference call by
dialing (800) 909-4147 approximately 10-15 minutes prior to the
call; international callers should dial (212) 231-2938.
Participants should reference Golub Capital BDC, Inc. when
prompted. For a slide presentation that we intend to refer to on
the earnings conference call, please visit the Investor Resources
link on the homepage of our website (www.golubcapitalbdc.com) and
click on the Quarter Ended 12.31.18
Investor Presentation under Events/Presentations. An archived
replay of the call will be available shortly after the call until
4.00 p.m. (Eastern Time) on
March 9, 2019. To hear the replay, please dial (800) 633-8284.
International dialers, please dial (402) 977-9140. For all replays,
please reference program ID number 21914687.
Golub Capital BDC,
Inc. and Subsidiaries
|
|
|
|
Consolidated
Statements of Financial Condition
|
|
|
|
(In thousands,
except share and per share data)
|
|
|
|
|
December 31,
2018
|
|
September 30,
2018
|
Assets
|
(unaudited)
|
|
(audited)
|
Total investments at
fair value (amortized cost of $1,915,841 and $1,780,652,
respectively)
|
$
|
1,918,479
|
|
|
$
|
1,782,841
|
|
Cash and cash
equivalents
|
12,706
|
|
|
5,878
|
|
Foreign currencies
(cost of $296 and $159, respectively)
|
296
|
|
|
159
|
|
Restricted cash, cash
equivalents and foreign currencies
|
40,703
|
|
|
39,668
|
|
Interest
receivable
|
6,349
|
|
|
6,664
|
|
Other
assets
|
1,274
|
|
|
342
|
|
Total
Assets
|
$
|
1,979,807
|
|
|
$
|
1,835,552
|
|
|
|
|
|
Liabilities
|
|
|
|
Debt
|
$
|
971,814
|
|
|
$
|
845,683
|
|
Less unamortized debt
issuance costs
|
3,796
|
|
|
2,934
|
|
Debt less unamortized
debt issuance costs
|
968,018
|
|
|
842,749
|
|
Other short-term
borrowings (proceeds of $21,719 and $0, respectively)
|
21,687
|
|
|
—
|
|
Interest
payable
|
7,128
|
|
|
4,135
|
|
Management and
incentive fees payable
|
15,494
|
|
|
17,671
|
|
Accounts payable and
accrued expenses
|
2,456
|
|
|
2,069
|
|
Accrued trustee
fees
|
70
|
|
|
74
|
|
Total
Liabilities
|
1,014,853
|
|
|
866,698
|
|
|
|
|
|
Net
Assets
|
|
|
|
Preferred stock, par
value $0.001 per share, 1,000,000 shares authorized, zero shares
issued and outstanding as of December 31, 2018 and September 30,
2018
|
—
|
|
|
—
|
|
Common stock, par
value $0.001 per share, 100,000,000 shares authorized, 60,422,239
and 60,165,454 shares issued and outstanding as of December 31,
2018 and September 30, 2018, respectively
|
60
|
|
|
60
|
|
Paid in capital in
excess of par
|
953,681
|
|
|
949,552
|
|
Distributable
earnings
|
11,213
|
|
|
19,242
|
|
Total Net
Assets
|
964,954
|
|
|
968,854
|
|
Total Liabilities
and Total Net Assets
|
$
|
1,979,807
|
|
|
$
|
1,835,552
|
|
|
|
|
|
Number of common
shares outstanding
|
60,422,239
|
|
|
60,165,454
|
|
Net asset value per
common share
|
$
|
15.97
|
|
|
$
|
16.10
|
|
Golub Capital BDC,
Inc. and Subsidiaries
|
|
|
|
|
Consolidated
Statements of Operations
|
|
|
|
|
(In thousands,
except share and per share data)
|
|
|
|
|
|
|
Three months
ended
|
|
|
December 31,
2018
|
|
September 30,
2018
|
|
|
(unaudited)
|
|
(unaudited)
|
Investment
income
|
|
|
Interest
income
|
|
$
|
38,850
|
|
|
$
|
37,334
|
|
Dividend
income
|
|
39
|
|
|
2,235
|
|
Fee income
|
|
522
|
|
|
859
|
|
|
|
|
|
|
Total investment
income
|
|
39,411
|
|
|
40,428
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
Interest and other
debt financing expenses
|
|
9,784
|
|
|
8,998
|
|
Base management
fee
|
|
6,439
|
|
|
6,230
|
|
Incentive
fee
|
|
1,983
|
|
|
3,655
|
|
Professional
fees
|
|
588
|
|
|
553
|
|
Administrative
service fee
|
|
699
|
|
|
616
|
|
General and
administrative expenses
|
|
101
|
|
|
110
|
|
|
|
|
|
|
Total
expenses
|
|
19,594
|
|
|
20,162
|
|
|
|
|
|
|
Net investment
income
|
|
19,817
|
|
|
20,266
|
|
|
|
|
|
|
Net gain (loss) on
investments
|
|
|
|
|
Net realized gain
(loss) on investments and foreign currency transactions
|
|
(1,978)
|
|
|
2,834
|
|
Net change in
unrealized appreciation (depreciation) on investments and foreign
currency translation
|
|
600
|
|
|
(7,197)
|
|
|
|
|
|
|
Net gain (loss) on
investments
|
|
(1,378)
|
|
|
(4,363)
|
|
|
|
|
|
|
Net increase in
net assets resulting from operations
|
|
$
|
18,439
|
|
|
$
|
15,903
|
|
|
|
|
|
|
Per Common Share
Data
|
|
|
|
|
Basic and diluted
earnings per common share
|
|
$
|
0.31
|
|
|
$
|
0.26
|
|
Dividends and
distributions declared per common share
|
|
$
|
0.44
|
|
|
$
|
0.32
|
|
Basic and diluted
weighted average common shares outstanding
|
|
60,176,619
|
|
|
60,011,707
|
|
ABOUT GOLUB CAPITAL BDC, INC.
Golub Capital BDC, Inc. ("Golub Capital BDC") is an
externally-managed, non-diversified closed-end management
investment company that has elected to be treated as a business
development company under the Investment Company Act of 1940. Golub
Capital BDC invests primarily in one-stop and other senior secured
loans of U.S. middle market companies that are often sponsored by
private equity investors. Golub Capital BDC's investment activities
are managed by its investment adviser, GC Advisors LLC, an
affiliate of the Golub Capital group of companies ("Golub
Capital").
ABOUT GOLUB CAPITAL
Golub Capital is a nationally recognized, award-winning private
debt platform with over $30 billion
of capital under management. Golub Capital's Middle Market Lending
business seeks to deliver reliable, creative and compelling
financing solutions to U.S. middle market companies backed by
private equity sponsors. The Middle Market Lending team has
particular domain expertise in select industries, including
software, technology services, healthcare, consumer and restaurant
and retail. The firm's credit expertise also forms the foundation
of its Late Stage Lending business and its Broadly Syndicated Loan
investment program. Across its activities, Golub Capital seeks
long-term, win-win partnerships that it believes will inspire
repeat business from its private equity sponsor clients and
investors. Founded in 1994, Golub Capital today has over 350
employees and lending offices in Chicago, New
York and San Francisco. For
more information, please visit golubcapital.com.
FORWARD-LOOKING STATEMENTS
This press release may contain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. Statements other than statements of historical facts
included in this press release may constitute forward-looking
statements and are not guarantees of future performance or results
and involve a number of risks and uncertainties. Actual results may
differ materially from those expressed or implied in the
forward-looking statements as a result of a number of factors,
including those described from time to time in filings with the
Securities and Exchange Commission. Golub Capital BDC, Inc.
undertakes no duty to update any forward-looking statement made
herein. All forward-looking statements speak only as of the date of
this press release.
View original
content:http://www.prnewswire.com/news-releases/golub-capital-bdc-inc-declares-fiscal-year-2019-second-quarter-distribution-of-0-32-per-share-and-announces-fiscal-year-2019-first-quarter-financial-results-300791181.html
SOURCE Golub Capital BDC, Inc.