Golub Capital BDC, Inc. Declares Fourth Fiscal Quarter of 2012 Distribution of $0.32 Per Share and Announces Third Fiscal Quarter Ended June 30, 2012 Financial Results
CHICAGO, Aug. 6, 2012 /PRNewswire/ — Golub Capital BDC, Inc., a business development company (NASDAQ: GBDC), today announced its financial results for the third fiscal quarter ended June 30, 2012.
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.
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SELECTED FINANCIAL HIGHLIGHTS |
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(in thousands, expect per share data) |
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June 30, 2012 |
March 31, 2012 |
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Investment portfolio |
$ 636,632 |
$ 613,797 |
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Total assets |
$ 711,522 |
$ 719,279 |
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NAV per share |
$ 14.58 |
$ 14.69 |
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Quarter Ended |
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June 30, 2012 |
March 31, 2012 |
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Investment income |
$ 14,811 |
$ 14,352 |
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Net investment income |
$ 6,678 |
$ 7,065 |
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Net (loss) gain on investments and derivative instruments |
$ (1,285) |
$ 4,366 |
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Net increase in net assets resulting from operations |
$ 5,393 |
$ 11,431 |
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Net investment income per share |
$ 0.26 |
$ 0.29 |
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Net (loss) gain on investments and derivative instruments per share |
$ (0.05) |
$ 0.19 |
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Net earnings per share |
$ 0.21 |
$ 0.48 |
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Third Fiscal Quarter 2012 Highlights
- Net investment income for the quarter ended June 30, 2012 was $6.7 million, or $0.26 per share, as compared to $7.1 million, or $0.29 per share, for the quarter ended March 31, 2012;
- Net (loss) gain on investments and derivative instruments for the quarter ended June 30, 2012 was $(1.3) million, or $(0.05) per share, as compared to $4.4 million, or $0.19 per share, for the quarter ended March 31, 2012;
- Net increase in net assets resulting from operations for the quarter ended June 30, 2012 was $5.4 million, or $0.21 per share, as compared to $11.4 million, or $0.48 per share, for the quarter ended March 31, 2012;
- Our board of directors declared a quarterly distribution on August 2, 2012 of $0.32 per share, payable on September 27, 2012 to stockholders of record as of September 13, 2012; and
- On April 11, 2012, we terminated the total return swap ("TRS") that we had entered into with Citibank, N.A. ("Citibank"). Realized gains on the TRS for the three months ended June 30, 2012 were $2.2 million, which consisted of spread interest income of $1.0 million and a realized gain of $1.2 million on the referenced loans of the TRS. Upon termination, cash collateral of $19.9 million that had secured the obligations to Citibank under the TRS was returned to the Company and is being used to fund new middle-market debt and equity investments.
Portfolio and Investment Activities
At June 30, 2012, the Company had investments in 116 portfolio companies with a total fair value of $636.6 million. The investments in these portfolio companies consisted of $258.8 million of senior secured loans, $236.8 million of one stop loans, $48.4 million of second lien loans, $74.6 million of subordinated debt and $18.0 million of equity investments. The Company also had derivative instruments with a total fair value of $0.1 million. This compares to the Company's portfolio as of March 31, 2012, at which the Company had investments in 109 portfolio companies with a total fair value of $613.8 million. The investments in these portfolio companies consisted of $225.9 million of senior secured loans, $251.1 million of one stop loans, $45.7 million of second lien loans, $73.3 million of subordinated debt and $17.8 million of equity investments. The Company also had derivative instruments with a total fair value of $1.8 million as of March 31, 2012.
For the quarter ended June 30, 2012, the Company originated $25.6 million in new middle-market investment commitments and $26.8 million in broadly syndicated loans held for short term investment purposes. Approximately 10% of the new middle-market investment commitments were one stop loans, 6% were subordinated debt/second lien investments, 83% were senior secured loans and 1% were equity securities. Sales and repayments on investments for the same period totaled $34.1 million.
For the quarter ended June 30, 2012, the weighted average annualized investment income yield (which includes interest income and amortization of fees and discounts) and the weighted average annualized interest income yield (which excludes income resulting from amortization of fees and discounts) on the fair value of earning investments in the Company's portfolio was 10.0% and 9.3%, respectively.
Consolidated Results of Operations
Total investment income for the three months ended June 30, 2012 and March 31, 2012 was $14.8 million and $14.4 million, respectively. This $0.4 million increase was primarily attributable to higher average invested assets during the three months ended June 30, 2012.
Total expenses for the three months ended June 30, 2012 and March 31, 2012 were $8.1 million and $7.3 million, respectively. This $0.8 million increase was primarily due to an increase in interest expense as a result of higher average debt outstanding and a higher effective yield, increased incentive fees due to higher net investment income and increased management fees due to higher average assets.
During the three months ended June 30, 2012 and March 31, 2012, the Company had $1.2 million and $(2.1) million of net realized gains (losses) on investments and derivative instruments, respectively. The realized gain for the quarter ended June 30, 2012 was primarily related to gains on the quarterly settlement of the TRS, partially offset by losses on the ten-year U.S. Treasury futures contracts. During the three months ended June 30, 2012 and March 31, 2012, the Company recorded net unrealized (depreciation) appreciation on investments and derivative instruments of $(2.4) million and $6.5 million, respectively. Unrealized depreciation on derivative instruments during the three months ended June 30, 2012 was due to the reversal of unrealized gains upon termination of the TRS as well as a decrease in the ten-year U.S. Treasury rate resulting in depreciation on the Company's ten-year U.S. Treasury futures contracts. Unrealized depreciation on investments was primarily a result of a write-down on one new non-earning asset.
Liquidity and Capital Resources
The Company's liquidity and capital resources are derived from the Company's debt securitization, Small Business Administration ("SBA") debentures, revolving credit facility and cash flow from operations. The Company's primary use of funds from operations includes investment in portfolio companies and payments of fees and other expenses that the Company incurs. The Company has used, and expects to continue to use, its debt securitization, SBA debentures, revolving credit facility, proceeds from its investment portfolio and proceeds from public offerings of its securities to finance its investment objectives.
As of June 30, 2012, the Company had cash and cash equivalents of $18.1 million, restricted cash of $45.1 million and $329.8 million of total debt outstanding. As of June 30, 2012, the Company had $42.7 million available for additional borrowings on its revolving credit facility, subject to leverage and borrowing base restrictions.
On February 2, 2012, we received a "Green Light" letter from the SBA allowing us to proceed with an application for a second SBIC license and we submitted such an application to the SBA on April 19, 2012. On May 18, 2012, we received an "Acceptance Letter" from the SBA notifying us that the application had been accepted by the SBA for further processing. The application process is anticipated to take six to twelve months. If approved, the additional license will provide us with an incremental source of attractive long-term capital.
On July 26, 2012, GC SBIC IV, L.P. received a $20 million debenture capital commitment from the SBA. The commitment may be drawn upon subject to customary SBA procedures.
On August 6, 2012, we announced an At the Market ("ATM") program to sell up to $50 million of shares of our common stock over a one year time period. An ATM offering is a registered offering by a publicly traded issuer of its listed equity securities selling shares directly into the market at market prices. We engaged Wells Fargo Securities and UBS Investment Bank as our placement agents under the ATM program. ATM programs are more cost-effective than traditional follow-on offerings and enable us to obtain "just-in-time" capital, which will reduce potential drag from undeployed capital.
On August 2, 2012, the Company's board of directors declared a quarterly distribution of $0.32 per share payable on September 27, 2012 to holders of record as of September 13, 2012.
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 the following categories:
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Risk Ratings Definition |
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Rating |
Definition |
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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. |
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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. |
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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. |
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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). |
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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. |
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The following table shows the distribution of the Company's investments on the 1 to 5 investment performance rating scale at fair value as of June 30, 2012 and March 31, 2012:
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June 30, 2012 |
March 31, 2012 |
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Investment |
Investments |
Percentage of |
Investments |
Percentage of |
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Performance |
at Fair Value |
Total |
at Fair Value |
Total |
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Rating |
(In thousands) |
Investments |
(In thousands)(1) |
Investments |
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5 |
$ 138,479 |
21.7% |
$ 94,481 |
15.3% |
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4 |
437,319 |
68.7 |
463,855 |
75.4 |
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3 |
56,168 |
8.8 |
54,140 |
8.8 |
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2 |
341 |
0.1 |
– |
– |
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1 |
4,325 |
0.7 |
2,801 |
0.50 |
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Total |
$ 636,632 |
100.0% |
$ 615,277 |
100.0% |
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(1) As of March 31, 2012, the TRS was included in the above table with an investment performance rating of 4. The fair value of the TRS as of March 31, 2012 was $1.5 million. |
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Conference Call
The Company will host an earnings conference call at 1:00 p.m. (Eastern Time) on Monday, August 6, 2012 to discuss the quarterly financial results. All interested parties may participate in the conference call by dialing (800) 272-9104 approximately 10-15 minutes prior to the call; international callers should dial (303) 223-2688. 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 Events and Presentations link on the homepage of our website (www.golubcapitalbdc.com) and scroll down to the Investor Presentations section to find the Quarter Ended 6.30.12 Investor Presentation. An archived replay of the call will be available shortly after the call until 3:00 p.m. (Eastern Time) on August 31, 2012. To hear the replay, please dial (800) 633-8284. International dialers, please dial (402) 977-9140. For all replays, please reference program ID number 21598929.
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Golub Capital BDC, Inc. and Subsidiaries |
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Consolidated Statements of Financial Condition |
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(In thousands, except share and per share data) |
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June 30, 2012 |
March 31, 2012 |
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Assets |
(unaudited) |
(unaudited) |
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Investments, at fair value (cost of $635,252 and $611,622, respectively) |
$ 636,632 |
$ 613,797 |
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Cash and cash equivalents |
18,070 |
30,121 |
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Restricted cash and cash equivalents |
45,059 |
42,525 |
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Interest receivable |
3,893 |
3,716 |
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Unrealized appreciation on derivative instruments |
149 |
1,798 |
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Cash collateral on deposit with custodian |
1,287 |
20,809 |
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Deferred financing costs |
6,082 |
6,457 |
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Receivable for investments sold |
– |
– |
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Other assets |
350 |
56 |
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Total Assets |
$ 711,522 |
$ 719,279 |
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Liabilities |
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Debt |
$ 329,800 |
$ 331,700 |
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Interest payable |
2,269 |
1,310 |
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Management and incentive fees payable |
4,070 |
3,464 |
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Payable for investments purchased |
– |
5,010 |
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Accounts payable and accrued expenses |
1,172 |
1,070 |
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Total Liabilities |
337,311 |
342,554 |
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Net Assets |
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Preferred stock, par value $0.001 per share, 1,000,000 shares authorized, |
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zero shares issued and outstanding as of June 30, 2012 and |
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March 31, 2012 |
– |
– |
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Common stock, par value $0.001 per share, 100,000,000 shares authorized, 25,663,009 |
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and 25,639,371 shares issued and outstanding as of June 30, 2012 and |
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March 31, 2012, respectively |
26 |
26 |
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Paid in capital in excess of par |
376,292 |
375,994 |
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Capital distributions in excess of net investment income |
(3,660) |
(2,133) |
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Net unrealized appreciation (depreciation) on investments and derivative instruments |
4,197 |
6,640 |
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Net realized (loss) gain on investments and derivative instruments |
(2,644) |
(3,802) |
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Total Net Assets |
374,211 |
376,725 |
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Total Liabilities and Total Net Assets |
$ 711,522 |
$ 719,279 |
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Number of common shares outstanding |
25,663,009 |
25,639,371 |
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Net asset value per common share |
$ 14.58 |
$ 14.69 |
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Golub Capital BDC, Inc. and Subsidiaries |
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Consolidated Statements of Operations (unaudited) |
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(In thousands, except share and per share data) |
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Three months ended |
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June 30, 2012 |
March 31, 2012 |
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Investment income |
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Interest income |
$ 14,811 |
$ 14,352 |
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Dividend income |
– |
– |
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Total investment income |
14,811 |
14,352 |
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Expenses |
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Interest and other debt financing expenses |
2,865 |
2,580 |
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Base management fee |
2,220 |
2,093 |
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Incentive fee |
1,917 |
1,434 |
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Professional fees |
538 |
559 |
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Administrative service fee |
489 |
455 |
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General and administrative expenses |
104 |
166 |
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Total expenses |
8,133 |
7,287 |
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Net investment income |
6,678 |
7,065 |
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Net gain (loss) on investments |
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Net realized loss on investments |
(70) |
(2,817) |
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Net realized gain on derivative instruments |
1,228 |
724 |
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Net change in unrealized appreciation on investments |
(795) |
4,032 |
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Net change in unrealized appreciation on derivative instruments |
(1,648) |
2,427 |
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Net gain (loss) on investments |
(1,285) |
4,366 |
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Net increase in net assets resulting from operations |
$ 5,393 |
$ 11,431 |
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Per Common Share Data |
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Basic and diluted earnings per common share |
$ 0.21 |
$ 0.48 |
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Dividends and distributions declared per common share |
$ 0.32 |
$ 0.32 |
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Basic and diluted weighted average common shares outstanding |
25,639,680 |
24,059,623 |
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ABOUT GOLUB CAPITAL BDC, INC.
Golub Capital BDC, Inc. principally invests in senior secured, one stop, mezzanine and second lien loans of 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 $6 billion in capital under management, Golub Capital is a leading provider of financing solutions for the middle market, including one-loan financings, senior, second lien and subordinated debt, preferred stock and co-investment equity. The firm underwrites and syndicates senior credit facilities up to $250 million and offers hold positions up to $150 million per transaction. Golub Capital has been ranked a "Top 3" Traditional Middle Market Bookrunner every year from 2008 through the first quarter of 2012 by Thomson Reuters LPC for senior secured loans of up to $100 million for leveraged buyouts (based on number of deals completed). In 2012, Golub Capital was awarded the ACG New York Champion's Award for "Senior 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.