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29.11.2021 22:15:00
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Golub Capital BDC, Inc. Announces Fiscal Year 2021 Fourth Quarter Financial Results and Declares Fiscal Year 2022 First Quarter Distribution of $0.30 Per Share
NEW YORK, Nov. 29, 2021 /PRNewswire/ -- Golub Capital BDC, Inc., a business development company (Nasdaq: GBDC), today announced its financial results for its fourth fiscal quarter ended September 30, 2021.
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, 2021 | June 30, 2021 | ||||||
Investment portfolio, at fair value | $ | 4,894,886 | $ | 4,439,547 | |||
Total assets | $ | 5,164,915 | $ | 4,698,609 | |||
Net asset value per share | $ | 15.19 | $ | 15.06 | |||
Quarter Ended | |||||||
September 30, 2021 | June 30, 2021 | ||||||
Net investment income per share | $ | 0.27 | $ | 0.25 | |||
Amortization of purchase premium per share | $ | 0.03 | $ | 0.04 | |||
Adjusted net investment income per share1 | $ | 0.30 | $ | 0.29 | |||
Net realized/unrealized gain/(loss) per share | $ | 0.15 | $ | 0.24 | |||
Reversal of realized / unrealized loss resulting from the amortization of the purchase | $ | (0.03) | $ | (0.04) | |||
Adjusted net realized/unrealized gain/(loss) per share1 | $ | 0.12 | $ | 0.20 | |||
Earnings/(loss) per share | $ | 0.42 | $ | 0.49 | |||
Adjusted earnings/(loss) per share1 | $ | 0.42 | $ | 0.49 | |||
Net asset value per share | $ | 15.19 | $ | 15.06 | |||
Distributions paid per share | $ | 0.29 | $ | 0.29 | |||
1 | On September 16, 2019, the Company completed its acquisition of Golub Capital Investment Corporation ("GCIC"). The merger was accounted for under the asset acquisition method of accounting in accordance with Accounting Standards Codification 805-50, Business Combinations — Related Issues. Under asset acquisition accounting, where the consideration paid to GCIC's stockholders exceeded the relative fair values of the assets acquired, the premium paid by the Company was allocated to the cost of the GCIC assets acquired by the Company pro-rata based on their relative fair value. Immediately following the acquisition of GCIC, the Company recorded its assets at their respective fair values and, as a result, the purchase premium allocated to the cost basis of the GCIC assets acquired was immediately recognized as unrealized depreciation on the Company's Consolidated Statement of Operations. The purchase premium allocated to investments in loan securities acquired from GCIC will amortize over the life of the loans through interest income with a corresponding reversal of the unrealized depreciation on such loans acquired through their ultimate disposition. The purchase premium allocated to investments in equity securities will not amortize over the life of the equity securities through interest income and, assuming no subsequent change to the fair value of the GCIC equity securities acquired and disposition of such equity securities at fair value, the Company will recognize a realized loss with a corresponding reversal of the unrealized depreciation upon disposition of the GCIC equity securities acquired. |
As a supplement to U.S. generally accepted accounting principles ("GAAP") financial measures, the Company is providing the following non-GAAP financial measures that it believes are useful for the reasons described below:
- "Adjusted Net Investment Income" and "Adjusted Net Investment Income Per Share" – excludes the amortization of the purchase premium and the accrual for the capital gain incentive fee required under GAAP (including the portion of such accrual that is not payable under the Company's investment advisory agreement) from net investment income calculated in accordance with GAAP.
- "Adjusted Net Realized and Unrealized Gain/(Loss)" and "Adjusted Net Realized and Unrealized Gain/(Loss) Per Share" – excludes the unrealized loss resulting from the purchase premium write-down and the corresponding reversal of the unrealized loss from the amortization of the premium from the determination of realized and unrealized gain/(loss) in accordance with GAAP.
- "Adjusted Net Income/(Loss)" and "Adjusted Earnings/(Loss) Per Share" – calculates net income and earnings per share based on Adjusted Net Investment Income and Adjusted Net Realized and Unrealized Gain/(Loss). "Adjusted earnings per share" also excludes the impact of the retroactive adjustment to the weighted average shares calculation due to the bonus element of the rights offering and the resulting impact on earnings per share.
The Company believes that excluding the financial impact of the purchase premium write down in the above non-GAAP financial measures is useful for investors as it is a non-cash expense/loss resulting from the acquisition of GCIC and is one method the Company uses to measure its financial condition and results of operations. In addition, the Company believes excluding the accrual of the capital gain incentive fee in the above non-GAAP financial measures is useful as it includes the portion of such accrual that is not contractually payable under the terms of the Company's investment advisory agreement with GC Advisors. Finally, the Company believes excluding the impact of the retroactive adjustment to the weighted average shares calculation due to the bonus element of the rights offering and the resulting impact on per share data is useful for investors as it presents per share financial data that is consistent with what was previously reported.
Fourth Fiscal Quarter 2021 Highlights
- Net investment income per share for the quarter ended September 30, 2021 was $0.27 as compared to $0.25 for the quarter ended June 30, 2021. Excluding $0.03 per share in purchase premium amortization from the GCIC acquisition, Adjusted Net Investment Income Per Share1 for the quarter ended September 30, 2021 was $0.30. This compares to Adjusted Net Investment Income Per Share1 of $0.29 for the quarter ended June 30, 2021 when excluding $0.04 per share in purchase premium amortization from the GCIC acquisition.
- Net realized and unrealized gain per share for the quarter ended September 30, 2021 was $0.15. Adjusted Net Realized and Unrealized Gain Per Share1 was $0.12 when excluding the $0.03 per share reversal of net realized loss and unrealized depreciation resulting from the amortization of the purchase premium. The Adjusted Net Realized and Unrealized Gain Per Share1 for the quarter ended September 30, 2021 primarily resulted from a continued reversal in unrealized depreciation in the fair value of some of our portfolio company investments that was recognized during the quarter ended March 31, 2020, primarily due to the adverse economic effects of the COVID-19 pandemic. The partial reversal in unrealized depreciation for the quarter ended September 30, 2021 was primarily attributable to portfolio companies that generally continued to perform well. Strong performance across the portfolio was reflected in our internal performance ratings that have largely returned to pre-COVID levels. For additional analysis, please refer to the Quarter Ended 09.30.21 Investor Presentation available on the Investor Resources link on the homepage of the Company's website (www.golubcapitalbdc.com) under Events/Presentations. The Investor Presentation was also filed with the Securities and Exchange Commission as an Exhibit to a Form 8-K. These results compare to net realized and unrealized gain per share of $0.24 during the quarter ended June 30, 2021. Adjusted Net Realized and Unrealized Gain Per Share1 for the quarter ended June 30, 2021 was $0.20 when excluding the $0.04 per share reversal of net realized loss and unrealized loss resulting from the amortization of the purchase premium.
- Earnings per share for the quarter ended September 30, 2021 was $0.42 as compared to $0.49 for the quarter ended June 30, 2021. Adjusted Earnings Per Share1 for the quarter ended September 30, 2021 was $0.42 as compared to $0.49 for the quarter ended June 30, 2021.
- Net asset value per share increased to $15.19 at September 30, 2021 from $15.06 at June 30, 2021.
- On September 29, 2021, we paid a quarterly distribution of $0.29 per share and on November 19, 2021, our board of directors declared a quarterly distribution of $0.30 per share, which is payable on December 30, 2021 to stockholders of record as of December 10, 2021.
Portfolio and Investment Activities
As of September 30, 2021, the Company had investments in 296 portfolio companies with a total fair value of $4,894.9 million. This compares to the Company's portfolio as of June 30, 2021, as of which date the Company had investments in 275 portfolio companies with a total fair value of $4,439.5 million. Investments in portfolio companies as of September 30, 2021 and June 30, 2021 consisted of the following:
As of September 30, 2021 | As of June 30, 2021 | |||||||||||||
Investments | Percentage of | Investments | Percentage of | |||||||||||
at Fair Value | Total | at Fair Value | Total | |||||||||||
Investment Type | (In thousands) | Investments | (In thousands) | Investments | ||||||||||
Senior secured | $ | 784,805 | 16.0 | % | $ | 687,622 | 15.5 | % | ||||||
One stop | 3,882,314 | 79.3 | 3,563,521 | 80.3 | ||||||||||
Junior debt* | 42,029 | 0.9 | 33,991 | 0.8 | ||||||||||
Equity | 185,738 | 3.8 | 154,413 | 3.4 | ||||||||||
Total | $ | 4,894,886 | 100.0 | % | $ | 4,439,547 | 100.0 | % | ||||||
* | Junior debt is comprised of second lien and subordinated debt. |
The following table shows the asset mix of our new investment commitments for the three months ended September 30, 2021:
For the three months ended September 30, 2021 | ||||||
New Investment | ||||||
Commitments | Percentage of | |||||
(In thousands) | Commitments | |||||
Senior secured | $ | 134,212 | 13.8 | % | ||
One stop | 786,244 | 81.0 | ||||
Junior debt* | 21,886 | 2.2 | ||||
Equity | 29,106 | 3.0 | ||||
Total new investment commitments | $ | 971,448 | 100.0 | % | ||
* | Junior debt is comprised of second lien and subordinated debt. |
Total investments in portfolio companies at fair value were $4,894.9 million at September 30, 2021. As of September 30, 2021, total assets were $5,164.9 million, net assets were $2,582.7 million and net asset value per share was $15.19.
Consolidated Results of Operations
For the fourth fiscal quarter of 2021, the Company reported GAAP net income and Adjusted Net Income1 of $71.6 million or $0.42 per share. GAAP net investment income was $46.3 million or $0.27 per share and Adjusted Net Investment Income1 was $51.7 million or $0.30 per share. GAAP net realized and unrealized gain was $25.3 million or $0.15 per share and Adjusted Realized and Unrealized Gain/(Loss)1 was $20.2 million or $0.12 per share.
Net income can vary substantially from period to period due to various factors, including the level of new investment commitments, the recognition of realized gains and losses and unrealized appreciation and depreciation, including as a result of the effects of the COVID-19 pandemic. As a result, quarterly comparisons of net income may not be meaningful.
1 See footnote 1 to 'Selected Financial Highlights' above. |
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), unsecured notes, 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, unsecured notes, 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 September 30, 2021, we had cash, cash equivalents and foreign currencies of $181.1 million, restricted cash, cash equivalents and foreign currencies of $63.3 million and $2,569.2 million of debt outstanding. As of September 30, 2021, subject to leverage and borrowing base restrictions, we had approximately $77.9 million of remaining commitments and $77.9 million of availability, in the aggregate, on our revolving credit facilities with various banks. In addition, as of September 30, 2021, we had $100.0 million of remaining commitments and availability on our unsecured line of credit with GC Advisors.
On August 3, 2021, we issued $350.0 million of unsecured notes, which bear a fixed interest rate of 2.050% (yield to maturity of 2.274%) and mature on February 15, 2027 (the "2027 Unsecured Notes").
On August 26, 2021, we redeemed all of the $189.0 million of notes issued under the $330.5 million term debt securitization that we completed on August 26, 2020 (the "2020 Debt Securitization") which were priced at 3-month LIBOR + 2.44%.
On September 1, 2021, we redeemed all $97.0 million of outstanding U.S. Small Business Administration (the "SBA") debentures issued by our consolidated subsidiary, GC SBIC VI, L.P ("SBIC VI") and on September 21, 2021, SBIC VI surrendered its license to operate as a small business investment company to the SBA.
On October 13, 2021, we issued an additional $200.0 million in aggregate principal amount of our unsecured notes due 2026 (the "2026 Unsecured Notes"), which bear a fixed interest rate of 2.500%, and the new 2026 Unsecured Notes have a yield to maturity of 2.667%. The new 2026 Unsecured Notes have the same terms as the original issuance of the 2026 Unsecured Notes. Upon issuance of the new 2026 Unsecured Notes, the outstanding aggregate principal amount of the 2026 Unsecured Notes is $600.0 million.
On October 15, 2021, we issued an additional $100.0 million in aggregate principal amount of our unsecured notes due 2024 (the "2024 Unsecured Notes"), which bear a fixed interest rate of 3.375%, and the new 2024 Unsecured Notes have a yield to maturity of 1.809%. The new 2024 Unsecured Notes have the same terms as the original issuance of the 2024 Unsecured Notes. Upon issuance of the new 2024 Unsecured Notes, the outstanding aggregate principal amount of the 2024 Unsecured Notes is $500.0 million.
On November 19, 2021, we amended our revolving credit facility with JP Morgan Chase Bank N.A., as administrative agent, to, among other things, increase the accordion feature that allows us to increase the total facility size to $1.5 billion from $712.5 million. In addition, we entered into agreements on October 14, 2021 and November 23, 2021 to increase the aggregate commitments outstanding under the credit facility to $687.5 million and $1.0375 billion, respectively, from $475.0 million as of September 30, 2021.
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 could 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 could 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. For additional analysis on the Company's internal performance ratings as of September 30, 2021 and the impact from COVID-19, please refer to the Quarter Ended 09.30.21 Investor Presentation available on Investors Resources link on the homepage of the Company's website (www.golubcapitalbdc.com) under Events/Presentations.
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, 2021 and June 30, 2021:
September 30, 2021 | June 30, 2021 | ||||||||||||
Internal | Investments | Percentage of | Investments | Percentage of | |||||||||
Performance | at Fair Value | Total | at Fair Value | Total | |||||||||
Rating | (In thousands) | Investments | (In thousands) | Investments | |||||||||
5 | $ | 499,241 | 10.2 | % | $ | 467,201 | 10.5 | % | |||||
4 | 3,951,870 | 80.7 | 3,498,537 | 78.9 | |||||||||
3 | 395,208 | 8.1 | 423,972 | 9.5 | |||||||||
2 | 47,836 | 1.0 | 49,163 | 1.1 | |||||||||
1 | 731 | 0.0 | * | 674 | 0.0 | * | |||||||
Total | $ | 4,894,886 | 100.0 | % | $ | 4,439,547 | 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 Tuesday, November 30, 2021 to discuss the quarterly financial results. All interested parties may participate in the conference call by dialing (833) 900-2240 approximately 10-15 minutes prior to the call; international callers should dial +1 (236) 714-2752. 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 09.30.21 Investor Presentation under Events/Presentations. An archived replay of the call will be available shortly after the call until 11:59 p.m. (Eastern Time) on December 14, 2021. To hear the replay, please dial (800) 585-8367. International dialers, please dial +1 (416) 621-4642. For all replays, please reference program ID number 1294235.
Golub Capital BDC, Inc. and Subsidiaries | |||||||
Consolidated Statements of Financial Condition | |||||||
(In thousands, except share and per share data) | |||||||
September 30, 2021 | June 30, 2021 | ||||||
Assets | (audited) | (unaudited) | |||||
Investments, at fair value (cost of $4,895,397 and $4,452,027, respectively) | $ | 4,894,886 | $ | 4,439,547 | |||
Cash and cash equivalents | 175,593 | 154,323 | |||||
Unrestricted foreign currencies (cost of $5,145 and $2,525, respectively) | 5,497 | 2,607 | |||||
Restricted cash and cash equivalents | 61,824 | 76,141 | |||||
Restricted foreign currencies (cost of $1,442 and $1,779, respectively) | 1,429 | 1,774 | |||||
Interest receivable | 18,261 | 17,199 | |||||
Other assets | 7,425 | 7,018 | |||||
Total Assets | $ | 5,164,915 | $ | 4,698,609 | |||
Liabilities | |||||||
Debt | $ | 2,569,228 | $ | 2,133,390 | |||
Less unamortized debt issuance costs | 17,850 | 18,155 | |||||
Debt less unamortized debt issuance costs | 2,551,378 | 2,115,235 | |||||
Unrealized depreciation on forward currency contracts | — | 4,381 | |||||
Interest payable | 12,516 | 12,133 | |||||
Management and incentive fees payable | 12,247 | 15,131 | |||||
Accounts payable and accrued expenses | 6,082 | 4,818 | |||||
Total Liabilities | 2,582,223 | 2,151,698 | |||||
Net Assets | |||||||
Preferred stock, par value $0.001 per share, 1,000,000 shares authorized, zero | — | — | |||||
Common stock, par value $0.001 per share, 200,000,000 shares authorized, | 170 | 169 | |||||
Paid in capital in excess of par | 2,664,251 | 2,652,474 | |||||
Distributable earnings | (81,729) | (105,732) | |||||
Total Net Assets | 2,582,692 | 2,546,911 | |||||
Total Liabilities and Total Net Assets | $ | 5,164,915 | $ | 4,698,609 | |||
Number of common shares outstanding | 170,028,584 | 169,151,857 | |||||
Net asset value per common share | $ | 15.19 | $ | 15.06 | |||
Golub Capital BDC, Inc. and Subsidiaries | ||||||||
Consolidated Statements of Operations | ||||||||
(In thousands, except share and per share data) | ||||||||
Three months ended | ||||||||
September 30, 2021 | June 30, 2021 | |||||||
(unaudited) | (unaudited) | |||||||
Investment income | ||||||||
Interest income | $ | 83,600 | $ | 81,694 | ||||
GCIC acquisition purchase price premium amortization | (5,405) | (7,436) | ||||||
Dividend income | 1,440 | 78 | ||||||
Fee income | 1,474 | 1,433 | ||||||
Total investment income | 81,109 | 75,769 | ||||||
Expenses | ||||||||
Interest and other debt financing expenses | 19,343 | 15,125 | ||||||
Base management fee | 12,254 | 15,298 | ||||||
Incentive fee | 268 | — | ||||||
Professional fees | 920 | 1,034 | ||||||
Administrative service fee | 1,769 | 1,856 | ||||||
General and administrative expenses | 263 | 391 | ||||||
Total expenses | 34,817 | 33,704 | ||||||
Net investment income | 46,292 | 42,065 | ||||||
Net gain (loss) on investment transactions | ||||||||
Net realized gain (loss) from: | ||||||||
Investments | 7,762 | 6,005 | ||||||
Foreign currency transactions | (3,126) | (398) | ||||||
Net realized gain (loss) in investment transactions | 4,636 | 5,607 | ||||||
Net change in unrealized appreciation (depreciation) from: | ||||||||
Investments | 11,965 | 36,660 | ||||||
Translation of assets and liabilities in foreign currencies | 4,812 | (893) | ||||||
Forward currency contracts | 4,471 | (546) | ||||||
Net change in unrealized appreciation (depreciation) on investment | 21,248 | 35,221 | ||||||
Net gain (loss) on investments | 25,884 | 40,828 | ||||||
Provision for taxes on unrealized appreciation on investments | (543) | — | ||||||
Net increase (decrease) in net assets resulting from operations | $ | 71,633 | $ | 82,893 | ||||
Per Common Share Data | ||||||||
Basic and diluted earnings (loss) per common share | $ | 0.42 | $ | 0.49 | ||||
Dividends and distributions declared per common share | $ | 0.29 | $ | 0.29 | ||||
Basic and diluted weighted average common shares outstanding | 169,170,916 | 168,251,930 | ||||||
ABOUT GOLUB CAPITAL BDC, INC.
Golub Capital BDC, Inc. ("GBDC") 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. GBDC invests primarily in one stop and other senior secured loans to middle market companies that are often sponsored by private equity investors. GBDC's investment activities are managed by its investment adviser, GC Advisors LLC, an affiliate of the Golub Capital LLC group of companies ("Golub Capital").
ABOUT GOLUB CAPITAL
Golub Capital is a market-leading, award-winning direct lender and credit asset manager, with over $40 billion of capital under management. Golub Capital specializes in delivering reliable, creative and compelling financing solutions to companies backed by private equity sponsors. The firm's sponsor finance expertise also forms the foundation of its Late Stage Lending, Broadly Syndicated Loan and Opportunistic Credit investment programs. Across its activities, Golub Capital nurtures long-term, win-win partnerships that inspire repeat business from private equity sponsors and investors. Founded over 25 years ago, Golub Capital today has over 550 employees and lending offices in Chicago, New York, San Francisco and London. 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.
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