Golub Capital BDC, Inc. Declares Fiscal Year 2017 First Quarter Distribution of $0.32 Per Share, a Special Distribution of $0.25 Per Share and Announces Fiscal Year 2016 Fourth Quarter Financial Results
CHICAGO, Nov. 16, 2016 /PRNewswire/ -- Golub Capital BDC, Inc., a business development company (NASDAQ: GBDC), today announced its financial results for its fourth fiscal quarter ended September 30, 2016.
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) |
|||||||
| September 30, 2016 |
June 30, 2016 |
||||||
| Investment portfolio, at fair value |
$ |
1,660,612 |
$ |
1,628,509 |
|||
| Total assets |
$ |
1,756,509 |
$ |
1,696,696 |
|||
| Net asset value per share |
$ |
15.96 |
$ |
15.88 |
|||
| Quarter Ended |
|||||||
| September 30, 2016 |
June 30, 2016 |
||||||
| Investment income |
$ |
34,503 |
$ |
32,106 |
|||
| Net investment income |
$ |
17,228 |
$ |
15,885 |
|||
| Net gain (loss) on investments and secured borrowings |
$ |
(1,129) |
$ |
2,404 |
|||
| Net increase in net assets resulting from operations |
$ |
16,099 |
$ |
18,289 |
|||
| Net earnings per share |
$ |
0.30 |
$ |
0.35 |
|||
| Net gain (loss) on investments and secured borrowings per share |
$ |
(0.02) |
$ |
0.04 |
|||
| Net investment income per share |
$ |
0.32 |
$ |
0.31 |
|||
| Accrual for capital gain incentive fee per share |
$ |
— |
$ |
0.01 |
|||
| 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 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. |
Fourth Fiscal Quarter 2016 Highlights
- Net increase in net assets resulting from operations for the quarter ended September 30, 2016 was $16.1 million or $0.30 per share, as compared to $18.3 million, or $0.35 per share, for the quarter ended June 30, 2016;
- Net investment income for the quarter ended September 30, 2016 was $17.2 million, or $0.32 per share, as compared to $15.9 million, or $0.31 per share, for the quarter ended June 30, 2016;
- Net investment income for the quarter ended September 30, 2016 excluding a $0.1 million reversal in the accrual for the capital gain incentive fee under GAAP was $17.1 million, or $0.32 per share, as compared to $16.4 million, or $0.32 per share, when excluding a $0.5 million accrual for the capital gain incentive fee under GAAP, for the quarter ended June 30, 2016;
- Net loss on investments and secured borrowings for the quarter ended September 30, 2016 was $1.1 million, or $0.02 per share, as compared to a gain of $2.4 million, or $0.04 per share, for the quarter ended June 30, 2016; and
- Our board of directors declared on November 14, 2016 a quarterly distribution of $0.32 per share and a special distribution of $0.25 per share both of which are payable on December 29, 2016 to stockholders of record as of December 12, 2016.
Portfolio and Investment Activities
As of September 30, 2016, the Company had investments in 183 portfolio companies with a total fair value of $1,556.4 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 $104.2 million. This compares to the Company's portfolio as of June 30, 2016, as of which date the Company had investments in 185 portfolio companies with a total fair value of $1,517.4 million and had investments in subordinated notes and LLC equity interests in SLF with a total fair value of $111.1 million. Investments in portfolio companies as of September 30, 2016 and June 30, 2016 consisted of the following:
| As of September 30, 2016 |
As of June 30, 2016 |
|||||||||||||
| Investments |
Percentage of |
Investments |
Percentage of |
|||||||||||
| Investment |
at Fair Value |
Total |
at Fair Value |
Total |
||||||||||
| Type |
(In thousands) |
Investments |
(In thousands) |
Investments |
||||||||||
| Senior secured |
$ |
162,849 |
9.8 |
% |
$ |
174,608 |
10.7 |
% |
||||||
| One stop |
1,304,467 |
78.5 |
1,235,496 |
75.9 |
||||||||||
| Second lien |
27,909 |
1.7 |
37,461 |
2.3 |
||||||||||
| Subordinated debt |
1,427 |
0.1 |
1,966 |
0.1 |
||||||||||
| Subordinated notes in SLF (1) |
77,301 |
4.7 |
81,292 |
5.0 |
||||||||||
| LLC equity interests in SLF (1) |
26,927 |
1.6 |
29,772 |
1.8 |
||||||||||
| Equity |
59,732 |
3.6 |
67,914 |
4.2 |
||||||||||
| Total |
1,660,612 |
100.0 |
% |
1,628,509 |
100.0 |
% |
||||||||
| (1) 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 September 30, 2016:
| For the three months ended September 30, 2016 |
|||||||
| New Investment |
|||||||
| Commitments |
Percentage of |
||||||
| (In thousands) |
Commitments |
||||||
| Senior secured |
$ |
24,972 |
13.9 |
% |
|||
| One stop |
152,392 |
85.0 |
|||||
| Equity securities |
1,999 |
1.1 |
|||||
| Total new investment commitments |
$ |
179,363 |
100.0 |
% |
|||
Overall, total investments at fair value increased by 2.0%, or $32.1 million, during the three months ended September 30, 2016 after factoring in debt repayments, sales of securities, net fundings on revolvers and net change in unrealized gain (loss). Total investments at fair value held by SLF decreased by 7.7%, or $27.1 million, after factoring in debt repayments, sales of securities, net fundings on revolvers and net change in unrealized gain (loss).
For the three months ended September 30, 2016, 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 8.5% and 7.8%, respectively.
Consolidated Results of Operations
Total investment income for the quarters ended September 30, 2016 and June 30, 2016 was $34.5 million and $32.1 million, respectively. This $2.4 million increase was primarily attributable to an increase in the average earning investment balance in the quarter ended September 30, 2016.
Total expenses for the quarters ended September 30, 2016 and June 30, 2016 were $17.3 million and $16.2 million, respectively. This $1.1 million increase was primarily attributable to an increase in the incentive fee due to higher investment income.
During the quarter ended September 30, 2016, the Company recorded a net realized gain of $6.5 million and recorded net unrealized depreciation of $7.6 million. The net realized gain was primarily due to the sale of an equity investment. The net unrealized depreciation was due to the reversal of the unrealized appreciation on the equity investment that was sold and net unrealized depreciation on several middle market debt and equity securities.
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 facility, proceeds from its investment portfolio and proceeds from offerings of its securities and its dividend reinvestment plan to finance its investment objectives.
As of September 30, 2016, the Company had cash and cash equivalents of $10.9 million, restricted cash and cash equivalents of $78.6 million and $865.2 million of debt and secured borrowings outstanding. As of September 30, 2016, the Company had $73.3 million of remaining commitments and $30.8 million available for additional borrowings on its revolving credit facility, subject to leverage and borrowing base restrictions. As of September 30, 2016, the Company had $23.0 million of additional SBA debentures available, subject to customary SBA regulatory requirements.
On August 15, 2016, the Company priced a public offering of 1,750,000 shares of its common stock at a public offering price of $18.35 per share, raising approximately $31.1 million in net proceeds after underwriting discounts and commissions. On September 19, 2016, the Company sold an additional 136,970 shares of its common stock at a public offering price of $18.35 per share pursuant to the underwriters' partial exercise of the option to purchase additional shares granted in connection with the public offering in August 2016.
On November 14, 2016, the Company's Board of Directors declared a quarterly distribution of $0.32 per share and a special distribution of $0.25 per share both of which are payable on December 29, 2016 to holders of record as of December 12, 2016.
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 September 30, 2016 and June 30, 2016:
| September 30, 2016 |
June 30, 2016 |
||||||||||||||
| Internal |
Investments |
Percentage of |
Investments |
Percentage of |
|||||||||||
| Performance |
at Fair Value |
Total |
at Fair Value |
Total |
|||||||||||
| Rating |
(In thousands) |
Investments |
(In thousands) |
Investments |
|||||||||||
| 5 |
$ |
93,768 |
5.7 |
% |
$ |
93,519 |
5.7 |
% |
|||||||
| 4 |
1,380,274 |
83.1 |
1,374,463 |
84.4 |
|||||||||||
| 3 |
176,464 |
10.6 |
158,788 |
9.8 |
|||||||||||
| 2 |
9,950 |
0.6 |
1,739 |
0.1 |
|||||||||||
| 1 |
156 |
0.0 |
* |
— |
— |
||||||||||
| Total |
$ |
1,660,612 |
100.0 |
% |
$ |
1,628,509 |
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, November 17, 2016 to discuss the quarterly financial results. All interested parties may participate in the conference call by dialing (800) 624-3491 approximately 10-15 minutes prior to the call; international callers should dial (303) 223-4376. 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 9.30.16 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 December 17, 2016. To hear the replay, please dial (800) 633-8284. International dialers, please dial (402) 977-9140. For all replays, please reference program ID number 21820091.
| Golub Capital BDC, Inc. and Subsidiaries |
|||||
| Consolidated Statements of Financial Condition |
|||||
| (In thousands, except share and per share data) |
|||||
| September 30, |
June 30, |
||||
| Assets |
(audited) |
(unaudited) |
|||
| Investments, at fair value (cost of $1,650,173 and $1,610,427, respectively) |
$ |
1,660,612 |
$ |
1,628,509 |
|
| Cash and cash equivalents |
10,947 |
3,167 |
|||
| Restricted cash and cash equivalents |
78,593 |
58,727 |
|||
| Interest receivable |
5,935 |
5,707 |
|||
| Other assets |
422 |
586 |
|||
| Total Assets |
$ |
1,756,509 |
$ |
1,696,696 |
|
| Liabilities |
|||||
| Debt |
$ |
864,700 |
$ |
862,050 |
|
| Less unamortized debt issuance costs |
5,627 |
6,051 |
|||
| Debt less unamortized debt issuance costs |
859,073 |
855,999 |
|||
| Secured borrowings, at fair value (proceeds of $471 and $323, |
475 |
326 |
|||
| Interest payable |
3,229 |
5,300 |
|||
| Management and incentive fees payable |
12,763 |
11,335 |
|||
| Payable for open trades |
— |
1,949 |
|||
| Accounts payable and accrued expenses |
2,072 |
1,750 |
|||
| Accrued trustee fees |
72 |
56 |
|||
| Total Liabilities |
877,684 |
876,715 |
|||
| Net Assets |
|||||
| Preferred stock, par value $0.001 per share, 1,000,000 shares |
|||||
| — |
— |
||||
| Common stock, par value $0.001 per share, 100,000,000 shares respectively |
|||||
| 55 |
52 |
||||
| Paid in capital in excess of par |
855,998 |
796,060 |
|||
| Undistributed net investment income |
18,832 |
2,640 |
|||
| Net unrealized appreciation (depreciation) on investments and |
13,104 |
20,747 |
|||
| Net realized gain (loss) on investments and secured borrowings |
(9,164) |
482 |
|||
| Total Net Assets |
878,825 |
819,981 |
|||
| Total Liabilities and Total Net Assets |
$ |
1,756,509 |
$ |
1,696,696 |
|
| Number of common shares outstanding |
55,059,067 |
51,623,325 |
|||
| Net asset value per common share |
$ |
15.96 |
$ |
15.88 |
|
| Golub Capital BDC, Inc. and Subsidiaries |
|||||||
| Consolidated Statements of Operations |
|||||||
| (In thousands, except share and per share data) |
|||||||
| Three months ended |
|||||||
| September 30, |
June 30, |
||||||
| (unaudited) |
(unaudited) |
||||||
| Investment income |
|||||||
| Interest income |
$ |
32,615 |
$ |
30,867 |
|||
| Dividend income |
1,274 |
1,179 |
|||||
| Fee income |
614 |
60 |
|||||
| Total investment income |
34,503 |
32,106 |
|||||
| Expenses |
|||||||
| Interest and other debt financing expenses |
7,141 |
7,019 |
|||||
| Base management fee |
5,734 |
5,567 |
|||||
| Incentive fee |
3,004 |
2,311 |
|||||
| Professional fees |
691 |
692 |
|||||
| Administrative service fee |
566 |
531 |
|||||
| General and administrative expenses |
139 |
101 |
|||||
| Total expenses |
17,275 |
16,221 |
|||||
| Net investment income |
17,228 |
15,885 |
|||||
| Net gain (loss) on investments and secured borrowings |
|||||||
| Net realized gain (loss) on investments |
6,514 |
(5,416) |
|||||
| Net change in unrealized appreciation (depreciation) on investments |
(7,643) |
7,820 |
|||||
| Net gain (loss) on investments and secured borrowings |
(1,129) |
2,404 |
|||||
| Net increase in net assets resulting from operations |
$ |
16,099 |
$ |
18,289 |
|||
| Per Common Share Data |
|||||||
| Basic and diluted earnings per common share |
0.30 |
0.35 |
|||||
| Dividends and distributions declared per common share |
0.32 |
0.32 |
|||||
| Basic and diluted weighted average common shares outstanding |
53,583,490 |
51,513,685 |
|||||
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 and one stop 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 credit asset manager with over $18 billion of capital under management. For over 20 years, the firm has provided credit to help medium-sized U.S. businesses grow. The firm's award-winning middle market lending business helps provide financing for middle market companies and their private equity sponsors. Golub Capital's credit expertise also forms the foundation of its Late Stage Lending and Broadly Syndicated Loan businesses. Golub Capital has worked hard to build a reputation as a fast, reliable provider of compelling financing solutions, and we believe this has inspired repeat clients and investors. Today, the firm has over 300 employees with lending offices in Chicago, New York and San Francisco. For more information, please visit 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.
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