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

CHICAGO, Aug. 7, 2014 /PRNewswire/ — Golub Capital BDC, Inc., a business development company (NASDAQ: GBDC), today announced its financial results for the third fiscal quarter ended June 30, 2014.

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, 2014

 

March 31, 2014

Investment portfolio, at fair value

$                   1,324,890

 

$              1,253,597

Total assets

$                   1,462,113

 

$              1,321,644

Net asset value per share

$                          15.44

 

$                     15.41

       
 

Quarter Ended

 

June 30, 2014

 

March 31, 2014

Investment income

$                       28,029

 

$                   25,260

Net investment income

$                       15,073

 

$                   13,352

Net gain on investments and secured borrowings

$                         1,207

 

$                        737

Net increase in net assets resulting from operations

$                       16,280

 

$                   14,089

       

Net investment income per share

$                           0.32

 

$                       0.31

Net gain on investments and secured borrowings per share

$                           0.03

 

$                       0.01

Net earnings per share

$                           0.35

 

$                       0.32

Third Fiscal Quarter 2014 Highlights

  • Net investment income for the quarter ended June 30, 2014 was $15.1 million, or $0.32 per share, as compared to $13.3 million, or $0.31 per share, for the quarter ended March 31, 2014;
  • Net gain on investments and secured borrowings for the quarter ended June 30, 2014 was $1.2 million, or $0.03 per share, as compared to $0.7 million, or $0.01 per share, for the quarter ended March 31, 2014;
  • Net increase in net assets resulting from operations for the quarter ended June 30, 2014 was $16.3 million, or $0.35 per share, as compared to $14.1 million, or $0.32 per share, for the quarter ended March 31, 2014; and
  • Our board of directors declared a quarterly distribution on August 5, 2014 of $0.32 per share, payable on September 26, 2014 to stockholders of record as of September 16, 2014.

Portfolio and Investment Activities

As of June 30, 2014, the Company had investments in 146 portfolio companies with a total fair value of $1,290.5 million and had investments in subordinated notes and limited liability company ("LLC") interests in Senior Loan Fund LLC ("SLF") with a total fair value of $34.4 million.  This compares to the Company's portfolio as of March 31, 2014, as of which date the Company had investments in 139 portfolio companies with a total fair value of $1,211.9 million and had investments in subordinated notes and LLC interests in SLF with a total fair value of $41.7 million.  Investments in portfolio companies as of June 30, 2014 and March 31, 2014 consisted of the following:

   

Investments at Fair Value

   

(In thousands)

Investment

 

As of

 

As of

Type

 

June 30, 2014

 

March 31, 2014

Senior secured

 

$               289,390

 

$               282,229

One stop

 

866,413

 

773,625

Second lien

 

86,784

 

111,799

Subordinated debt

 

4,164

 

4,164

Equity

 

43,742

 

40,071

         

Total

 

$            1,290,493

 

$            1,211,888

For the quarter ended June 30, 2014, the Company originated $155.7 million in new middle-market investment commitments and invested $3.0 million in SLF, making total new investment commitments $158.7 million for the quarter.  Approximately 18% of the new total investment commitments were senior secured loans, 79% were one stop loans, 1% was equity securities and 2% were investments in SLF.  Overall, total investments at fair value increased by $71.3 million during the quarter ended June 30, 2014 after factoring in debt repayments, sales of securities, net fundings on revolvers and net change in unrealized gains (losses).

For the quarter ended June 30, 2014, 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 investments in the Company's portfolio were 8.9% and 8.3%, respectively.

Consolidated Results of Operations

Total investment income for the quarter ended June 30, 2014 and March 31, 2014 was $28.0 million and $25.2 million, respectively.  This $2.8 million increase was primarily attributable to an increase in the average earning investment balance, higher fee income from prepayments and higher dividend income in the quarter ended June 30, 2014. 

Total expenses for the quarter ended June 30, 2014 and March 31, 2014 were $13.0 million and $11.9 million, respectively.  This $1.1 million increase was primarily due to a $1.1 million increase in interest and other debt financing expenses resulting from an increase in the average outstanding borrowing balance and an increase in the amortization of capitalized debt issuance costs.  The increase in amortization of capitalized debt issuance costs is primarily due to additional capitalized debt issuance costs associated with the Company's $402.6 million term debt securitization completed on June 5, 2014 and the acceleration of capitalized debt issuance costs resulting from the downsize of our senior secured revolving credit facility.

During the quarter ended June 30, 2014, the Company recorded a net realized gain of less than $0.1 million and recorded net unrealized appreciation of $1.2 million.  The net unrealized appreciation was primarily related to 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, 2014, the Company had cash and cash equivalents of $11.4 million, restricted cash and cash equivalents of $109.8 million and $723.6 million of debt and secured borrowings outstanding.   As of June 30, 2014, the Company had $131.5 million of commitments and $52.8 million available for additional borrowings on its revolving credit facilities, subject to leverage and borrowing base restrictions.  As of June 30, 2014, the Company had $16.2 million of additional SBA debentures available, subject to customary SBA regulatory requirements.

On August 5, 2014, the Company's board of directors declared a quarterly distribution of $0.32 per share, payable on September 26, 2014 to holders of record as of September 16, 2014.

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, 2014 and March 31, 2014:

                   
   

June 30, 2014

 

March 31, 2014

 

Internal

 

Investments

 

Percentage of

 

Investments

 

Percentage of

 

Performance

 

at Fair Value

 

Total

 

at Fair Value

 

Total

 

Rating

 

(In thousands)

 

Investments

 

(In thousands)

 

Investments

 

5

 

$           305,316

 

23.0

%

$           251,829

 

20.1

%

4

 

949,643

 

71.7

 

937,477

 

74.8

 

3

 

65,257

 

4.9

 

61,918

 

4.9

 

2

 

4,459

 

0.4

 

1,857

 

0.2

 

1

 

215

 

*

516

 

*

Total

 

$        1,324,890

 

100.0

%

$        1,253,597

 

100.0

%

                   

* Represents an amount less than 0.1%.

         
                   

Conference Call

The Company will host an earnings conference call at 12:30 p.m. (Eastern Time) on Thursday, August 7, 2014 to discuss the quarterly financial results.  All interested parties may participate in the conference call by dialing (800) 891-8257 approximately 10-15 minutes prior to the call; international callers should dial (212) 231-2929.  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 06.30.14 Investor Presentation under Events and Presentations.  An archived replay of the call will be available shortly after the call until 2:30 p.m. (Eastern Time) on September 6, 2014.  To hear the replay, please dial (800) 633-8284. International dialers, please dial (402) 977-9140.  For all replays, please reference program ID number 21727461.

 

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Statements of Financial Condition

(In thousands, except share and per share data)

       
 

June 30, 2014

 

March 31, 2014

Assets

(unaudited)

 

(unaudited)

Investments, at fair value (cost of $1,309,706 and $1,239,603, respectively)

$ 1,324,890

 

$ 1,253,597

Cash and cash equivalents

11,392

 

12,810

Restricted cash and cash equivalents

109,818

 

41,261

Interest receivable

5,222

 

4,958

Deferred financing costs

10,514

 

8,712

Other assets

277

 

306

Total Assets

$ 1,462,113

 

$ 1,321,644

       

Liabilities

     

Debt

$ 703,300

 

$ 572,150

Secured borrowings, at fair value (proceeds of $20,064 and $18,008, respectively)

20,264

 

18,222

Interest payable

3,689

 

1,691

Management and incentive fees payable

5,897

 

5,736

Accounts payable and accrued expenses

2,140

 

1,842

Accrued trustee fees

49

 

73

Total Liabilities

735,339

 

599,714

       

Net Assets

     

Preferred stock, par value $0.001 per share, 1,000,000 shares authorized,
 
zero shares issued and outstanding as of June 30, 2014 and March 31, 2014

     

 

Common stock, par value $0.001 per share, 100,000,000 shares authorized, 47,065,030
 
and 46,857,608 shares issued and outstanding as of June 30, 2014 and March 31, 2014,
 
respectively

     
     

47

 

47

Paid in capital in excess of par

718,760

 

715,148

Undistributed net investment income

1,647

 

1,622

Net unrealized appreciation (depreciation) on investments, derivative instruments
 
and secured borrowings

     

17,652

 

16,446

Net realized gain (loss) on investments and derivative instruments

(11,332)

 

(11,333)

Total Net Assets

726,774

 

721,930

Total Liabilities and Total Net Assets

$ 1,462,113

 

$ 1,321,644

       

Number of common shares outstanding

47,065,030

 

46,857,608

Net asset value per common share

$ 15.44

 

$ 15.41

 

 

Consolidated Statements of Operations

(In thousands, except share and per share data)

   

Three months ended

   

June 30, 2014

 

March 31, 2014

   

(unaudited)

Investment income

   

  Interest income

 

$                          26,035

 

$                          24,977

  Dividend income

 

952

 

262

  Fee income

 

1,042

 

21

         

Total investment income

 

28,029

 

25,260

         

Expenses

       

  Interest and other debt financing expenses

 

5,609

 

4,540

  Base management fee

 

4,394

 

4,185

  Incentive fee 

 

1,607

 

1,656

  Professional fees

 

578

 

640

  Administrative service fee

 

655

 

742

  General and administrative expenses

 

113

 

145

         

Total expenses

 

12,956

 

11,908

         

Net investment income

 

15,073

 

13,352

         

Net gain (loss) on investments

       

  Net realized gain (loss) on investments

 

1

 

87

  Net change in unrealized appreciation (depreciation) on investments

       

 and secured borrowings

 

1,206

 

650

         

Net gain (loss) on investments and secured borrowings

 

1,207

 

737

         

Net increase in net assets resulting from operations

 

$                          16,280

 

$                          14,089

         

Per Common Share Data

       

  Basic and diluted earnings per common share

 

$                               0.35

 

$                               0.32

  Dividends and distributions declared per common share

 

$                               0.32

 

$                               0.32

  Basic and diluted weighted average common shares outstanding

 

46,985,908

 

43,754,776

 

 

ABOUT GOLUB CAPITAL BDC, INC.

Golub Capital BDC, Inc. invests primarily in senior secured, one stop, second lien and subordinated loans of, and warrants and minority equity securities in, middle-market companies that are, in most cases, sponsored by private equity investors. Golub Capital BDC, Inc.'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

With over $10 billion of capital under management, Golub Capital is a leading provider of financing solutions for the middle market, including one-loan financings (through the firm's proprietary MiniGOLD, GOLD, and MegaGOLD facilities), senior, second lien, and subordinated debt, preferred stock and co-investment equity. The firm underwrites and syndicates senior credit facilities up to $300 million. Golub Capital's hold sizes range up to $200 million per transaction.

Golub Capital has been a top 3 Traditional Middle Market Bookrunner each year from 2008 through 1Q 2014 for senior secured loans of up to $100 million for leveraged buyouts (according to Thomson Reuters LPC and internal data; based on number of deals). In 2013, Golub Capital was awarded Finance Monthly's Global Awards 2013 "Credit Asset Manager of the Year," and DealMakers M&A Awards 2013 "Middle Market Lender of the Year." In 2012, Golub Capital was awarded ACG New York Champion's Award for "Senior Lender Firm of the Year" and the M&A Advisor award for "Lender Firm of the Year." Golub Capital is a national firm with principal offices in Chicago and New York. 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.

CONTACT: Ross Teune, 312-284-0111, rteune@golubcapital.com