Golub Capital BDC, Inc. Declares Fiscal Year 2015 Fourth Quarter Distribution of $0.32 Per Share and Announces Fiscal Year 2015 Third Quarter Financial Results

Aug 05, 2015, 16:15 ET from Golub Capital BDC, Inc.

CHICAGO, Aug. 5, 2015 /PRNewswire/ -- Golub Capital BDC, Inc., a business development company (NASDAQ: GBDC), today announced its financial results for its third fiscal quarter ended June 30, 2015.

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)

June 30, 2015

March 31, 2015

Investment portfolio, at fair value

$                  1,570,687

$             1,423,063

Total assets

$                  1,645,806

$             1,503,603

Net asset value per share

$                         15.74

$                    15.61

Quarter Ended

June 30, 2015

March 31, 2015

Investment income

$                      30,410

$                  28,461

Net investment income

$                      15,205

$                  13,754

Net gain on investments and secured borrowings

$                        3,083

$                    4,107

Net increase in net assets resulting from operations

$                      18,288

$                  17,861

Net earnings per share

$                          0.36

$                      0.38

Net gain on investments and secured borrowings per share

$                          0.06

$                      0.09

Net investment income per share

$                          0.30

$                      0.29

Accrual for capital gain incentive fee per share

$                          0.02

$                      0.02

Net investment income before capital gain incentive fee accrual per share (1)

$                          0.32

$                      0.31

(1)

As a supplement to U.S. GAAP financial measures, the Company has provided this non-GAAP performance result. The Company believes that this non-GAAP financial measure is useful as it excludes the accrual of the capital gain incentive fee, which is not contractually payable under the terms of the investment advisory agreement with GC Advisors. 

 

Third Fiscal Quarter 2015 Highlights

  • Net increase in net assets resulting from operations for the quarter ended June 30, 2015 was $18.3 million, or $0.36 per share, as compared to $17.9 million, or $0.38 per share, for the quarter ended March 31, 2015;
  • Net gain on investments and secured borrowings for the quarter ended June 30, 2015 was $3.1 million, or $0.06 per share, as compared to $4.1 million, or $0.09 per share, for the quarter ended March 31, 2015;
  • Net investment income for the quarter ended June 30, 2015 was $15.2 million, or $0.30 per share, as compared to $13.8 million, or $0.29 per share, for the quarter ended March 31, 2015;
  • Net investment income for the quarter ended June 30, 2015, excluding a $0.7 million, or $0.02 per share, accrual under U.S. GAAP for a capital gain incentive fee, was $15.9 million, or $0.32 per share; and
  • Our board of directors declared a quarterly distribution on August 4, 2015 of $0.32 per share, payable on September 29, 2015 to stockholders of record as of September 7, 2015.

Portfolio and Investment Activities

As of June 30, 2015, the Company had investments in 157 portfolio companies with a total fair value of $1,482.8 million and had investments in subordinated notes and limited liability company ("LLC") equity interests in Senior Loan Fund LLC ("SLF") with a total fair value of $87.9 million. This compares to the Company's portfolio as of March 31, 2015, as of which date the Company had investments in 146 portfolio companies with a total fair value of $1,366.0 million and had investments in subordinated notes and LLC equity interests in SLF with a total fair value of $57.0 million. Investments in portfolio companies as of June 30, 2015 and March 31, 2015 consisted of the following:

As of June 30, 2015

 As of March 31, 2015 

Investments

Percentage of

Investments

Percentage of

Investment

at Fair Value

Total

at Fair Value

Total

Type

(In thousands)

Investments

(In thousands)

Investments

Senior secured

$         224,140

14.3

%

$         212,370

14.9

%

One stop

1,161,970

74.0

1,042,534

73.3

Second lien

39,934

2.5

59,708

4.2

Subordinated debt

1,625

0.1

3,523

0.2

Subordinated notes in SLF(1)

65,864

4.2

41,557

2.9

LLC equity interests in SLF(1)

22,001

1.4

15,458

1.1

Equity

55,153

3.5

47,913

3.4

Total

$      1,570,687

$            100.0

%

$      1,423,063

$            100.0

%

(1)

SLF's proceeds from the subordinated notes and LLC equity interests invested in SLF were utilized by SLF to invest in senior secured loans.

 

The following table shows the asset mix of our new investment commitments for the three months ended June 30, 2015:

For the three months ended June 30, 2015

New Investment

Commitments

Percentage of

(In thousands)

Commitments

Senior secured

$                              53,593

13.3

%

One stop

314,127

78.3

Subordinated notes in SLF

24,307

6.1

LLC equity interests in SLF

6,562

1.6

Equity securities

2,810

0.7

Total new investment commitments

$                            401,399

100.0

%

 

Overall, total investments at fair value increased by $147.6 million during the three months ended June 30, 2015 after factoring in debt repayments, sales of securities, net fundings on revolvers and net change in unrealized gains (losses). Total investments at fair value held by SLF increased by $66.4 million after factoring in debt repayments, sales of securities, net fundings on revolvers, and net change in unrealized gains (losses).

For the three months ended June 30, 2015, 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 income producing investments in the Company's portfolio were 8.4% and 7.6%, respectively.

Consolidated Results of Operations

Total investment income for the quarters ended June 30, 2015 and March 31, 2015 was $30.4 million and $28.5 million, respectively. This $1.9 million increase was primarily attributable to an increase in the average earning investment balance in the quarter ended June 30, 2015.

Total expenses for the quarters ended June 30, 2015 and March 31, 2015 were $15.2 million and $14.7 million, respectively. This $0.5 million increase was primarily attributable to an increase in base management fees due to higher average assets.

During the quarter ended June 30, 2015, the Company recorded a net realized loss of $1.7 million and recorded net unrealized appreciation of $4.8 million. The realized loss mainly related to the write-off of one non-accrual portfolio company investment. The net unrealized appreciation included the reversal of the net unrealized depreciation on one non-accrual portfolio company investment that was written off during the quarter and net unrealized appreciation 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, 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 investment 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 to finance its investment objectives.

As of June 30, 2015, the Company had cash and cash equivalents of $6.5 million, restricted cash and cash equivalents of $50.2 million and $823.5 million of debt and secured borrowings outstanding. As of June 30, 2015, the Company had $23.7 million of remaining commitments and $12.7 million available for additional borrowings on its revolving credit facilities, subject to leverage and borrowing base restrictions. As of June 30, 2015, the Company had $4.2 million of additional SBA debentures available, subject to customary SBA regulatory requirements.

On August 4, 2015, the Company's board of directors declared a quarterly distribution of $0.32 per share, payable on September 29, 2015 to holders of record as of September 7, 2015.

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 rating:

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 June 30, 2015 and March 31, 2015:

June 30, 2015

March 31, 2015

Internal

Investments

Percentage of

Investments

Percentage of

Performance

at Fair Value

Total

at Fair Value

Total

Rating

(In thousands)

Investments

(In thousands)

Investments

5

$           203,990

13.0

%

$           152,434

10.7

%

4

1,274,300

81.1

1,167,998

82.1

3

81,529

5.2

91,513

6.4

2

10,868

0.7

11,113

0.8

1

-

-

5

0.0

*

Total

$        1,570,687

100.0

%

$        1,423,063

100.0

%

* Represents an amount less than 0.1%.

 

Conference Call

The Company will host an earnings conference call at 1:00 p.m. (Eastern Time) on Thursday, August 6, 2015 to discuss the quarterly financial results. All interested parties may participate in the conference call by dialing (800) 381-7839 approximately 10-15 minutes prior to the call; international callers should dial (212) 231-2902. 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 Relations link on the homepage of our website (www.golubcapitalbdc.com) and click on the Quarter Ended 6.30.15 Investor Presentation under Events/Presentations. An archived replay of the call will be available shortly after the call until 3:00 p.m. (Eastern Time) on September 5, 2015. To hear the replay, please dial (800) 633-8284. International dialers, please dial (402) 977-9140. For all replays, please reference program ID number 21772091.

 

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Statements of Financial Condition

(In thousands, except share and per share data)

June 30, 2015

March 31, 2015

Assets

(unaudited)

(unaudited)

Investments, at fair value (cost of $1,557,354 and $1,414,559, respectively)

$                1,570,687

$                  1,423,063

Cash and cash equivalents

6,487

3,068

Restricted cash and cash equivalents

50,200

54,470

Interest receivable

5,468

5,947

Deferred financing costs

7,772

8,348

Receivable for open trades

4,626

8,232

Other assets

566

475

Total Assets

$                1,645,806

$                  1,503,603

Liabilities

Debt

$                  823,100

$                    754,450

Secured borrowings, at fair value (proceeds of $359 and $368, respectively)

363

372

Interest payable

4,602

2,611

Management and incentive fees payable

8,682

7,158

Accounts payable and accrued expenses

1,942

1,552

Accrued trustee fees

73

68

Total Liabilities

838,762

766,211

Net Assets

Preferred stock, par value $0.001 per share, 1,000,000 shares authorized, 

zero shares issued and outstanding as of June 30, 2015 and March 31, 2015.

-

-

Common stock, par value $0.001 per share, 100,000,000 shares authorized, 51,259,434

and 47,225,212 shares issued and outstanding as of June 30, 2015 and March 31, 2015,

respectively

51

47

Paid in capital in excess of par

790,025

722,272

Undistributed net investment income

577

1,765

Net unrealized appreciation (depreciation) on investments and secured borrowings

15,996

11,167

Net realized gain (loss) on investments

395

2,141

Total Net Assets

807,044

737,392

Total Liabilities and Total Net Assets

$                1,645,806

$                  1,503,603

Number of common shares outstanding 

51,259,434

47,225,212

Net asset value per common share

$                     15.74

$                       15.61

 

 

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except share and per share data)

Three months ended

June 30, 2015

March 31, 2015

(unaudited)

Investment income

Interest income

$                  29,838

$                  27,489

Dividend income

492

377

Fee income

80

595

Total investment income

30,410

28,461

Expenses

Interest and other debt financing expenses

6,142

6,017

Base management fee

5,226

4,855

Incentive fee 

2,383

2,258

Professional fees

741

840

Administrative service fee

575

584

General and administrative expenses

138

153

Total expenses

15,205

14,707

Net investment income

15,205

13,754

Net gain (loss) on investments and secured borrowings

Net realized gain (loss) on investments

(1,746)

4,523

Net change in unrealized appreciation (depreciation) on investments

and secured borrowings

4,829

(416)

Net gain (loss) on investments and secured borrowings

3,083

4,107

Net increase in net assets resulting from operations

$                  18,288

$                  17,861

Per Common Share Data

Basic and diluted earnings per common share

$                      0.36

$                      0.38

Dividends and distributions declared per common share

$                      0.32

$                      0.32

Basic and diluted weighted average common shares outstanding

50,491,035

47,174,501

 

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 senior secured, one stop, second lien and subordinated loans of 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 credit asset manager with over $15 billion of capital under management. The firm has an award-winning middle market lending business. Golub Capital has four highly complementary business lines led by experienced teams of credit professionals: Middle Market Lending, Late Stage Lending, Broadly Syndicated Loans and Opportunistic Credit. Golub Capital's lending offices are located in Chicago, New York and San Francisco. For more information, please visit the firm's website at www.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.

SOURCE Golub Capital BDC, Inc.