Golub Capital BDC, Inc. Declares Second Fiscal Quarter Dividend of $0.32 Per Share and Announces Quarter Ended December 31, 2010 Financial Results

CHICAGO, Feb. 10, 2011 /PRNewswire/ — Golub Capital BDC, Inc., a business development company (Nasdaq: GBDC), today announced its financial results for the first fiscal quarter ended December 31, 2010.  

Except where the context suggests otherwise, the terms "we," "us," "our," and "Company," refer to Golub Capital BDC, Inc. and its Subsidiaries.  "GC Advisors" refers to GC Advisors LLC, our investment adviser.

SELECTED FINANCIAL HIGHLIGHTS

 

(in thousands, expect per share data)

 
         
 

December 31, 2010

 

September 30, 2010

 

Investment portfolio

$                                382,414

 

$                           344,869

 

Total assets

$                                460,314

 

$                           442,763

 

NAV per share

$                                    14.74

 

$                               14.71

 
         
 

Quarter Ended

December 31, 2010

 

Quarter Ended

September 30, 2010

 

Investment income

$                                    9,137

 

$                               7,431

 

Net investment income

$                                    5,233

 

$                               4,351

 

Net realized and unrealized gain

$                                       729

 

$                               1,896

 

Net increase in net assets resulting from operations

$                                    5,962

 

$                               6,247

 
         

Net earnings per share

$                                      0.34

 

$                                 0.35

 

Net investment income per share

$                                      0.30

 

$                                 0.25

 

Net realized and unrealized gain per share

$                                      0.04

 

$                                 0.10

 
       

 

FIRST FISCAL QUARTER 2011 HIGHLIGHTS

  • Net investment income for the quarter ended December 31, 2010 was $5.2 million, or $.30 per share, as compared to $4.4 million, or $0.25 per share, for the quarter ended September 30, 2010;
  • Net realized and unrealized gains on investments for the quarter ended December 31, 2010 was $0.7 million, or $.04 per share, as compared to $1.9 million, or $0.10 per share, for the quarter ended September 30, 2010;
  • Net increase in net assets resulting from operations for the quarter ended December 31, 2010 was $6.0 million, or $0.34 per share, as compared to $6.3 million, or $0.35 per share, for the quarter ended September 30, 2010;
  • Our board of directors declared a second quarter distribution on February 8, 2011 of $0.32 per share, payable on March 30, 2011.

 

PORTFOLIO AND INVESTMENT ACTIVITIES

At December 31, 2010, the Company had investments in 98 portfolio companies, with a total fair value of $382.4 million.  The portfolio consisted of $226.8 million of senior secured loans, $98.1 million of unitranche loans, $26.3 million of second lien loans, $24.8 million of subordinated debt and $6.4 million of common equity investments.   For the three months ended December 31, 2010, the Company originated $113.7 million in new investment commitments of which 40% were senior secured loans, 30% were unitranche loans, 17% were second lien loans, 10% were subordinated loans and 3% were equity securities.  Sales and repayments on investments for the same period totaled $64.1 million. The Company expects to continue to invest in a mix of mezzanine and senior secured loans to obtain a high level of current income and to preserve capital.

For the quarter ended December 31, 2010, 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 investments in the Company's portfolio was 10.6% and 8.1% , respectively.  As of December 31, 2010, 65.3% of the Company's portfolio at fair value had interest rate floors that limit minimum interest rates on such loans.

CONSOLIDATED RESULTS OF OPERATIONS

Total investment income for the three months ended December 31, 2010 and September 30, 2010 was $9.1 million and $7.4 million, respectively.  Investment income increased by $1.7 million, or 23.0%, for the three months ended December 31, 2010 as compared to the three months ended September 30, 2010. This increase was primarily attributable to higher average invested assets during the three months ended December 31, 2010.

Total expenses for the three months ended December 31, 2010 and September 30, 2010 were $3.9 million and $3.1 million, respectively.  Total expenses increased by $0.8 million, or 25.8%, for the three months ended December 31, 2010 as compared to the three months ended September 30, 2010. This increase was primarily due to an increase in management fees, incentive fees, interest expense, and professional fees.  Management and incentive fees increased due to higher average invested assets and higher net investment income.  The increase in interest expense was driven by a higher effective interest rate during the three months ended December 31, 2010.  Professional fees increased due to increased consulting expenses related to our Sarbanes Oxley implementation as well as other costs associated with being a public entity.    

During the three months ended December 31, 2010 and September 30, 2010, the Company had $0.9 million of net realized gains and $(40,000) of net realized losses on investments, respectively.  During the three months ended December 31, 2010 and September 30, 2010, the Company recorded net unrealized depreciation of $(0.1) million and net unrealized appreciation of $1.9 million, respectively.  

"I am pleased to report that we had a solid quarter with very strong origination volume," said Golub Capital BDC, Inc. CEO David Golub.  "We also made progress toward our goal of shifting the asset mix of the portfolio to more unitranche, second lien and mezzanine investments."  

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2010, the Company had cash and cash equivalents of $41.4 million, restricted cash of $27.6 million and $194.0 million of total debt outstanding.

On February 8, 2011, the Company's board of directors declared a quarterly distribution of $0.32 per share, payable on March 30, 2011 to holders of record as of March 18, 2011.

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:

Risk Ratings Definition

 

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

Indicates that the borrower is performing substantially below expectations and the loan risk has substantially increased since origination. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. Loans graded 1 are not anticipated to be repaid in full, and we reduce the fair market value of the loan to the amount we anticipate recovering.

 
   

 

The following table shows the distribution of our investments on the 1 to 5 investment performance rating scale at fair value as of December 31, 2010 and September 30, 2010:

     

December 31, 2010

 

September 30, 2010

 
 

Investment
Performance
Rating

 

Investments
at Fair Value
(in thousands)

 

Percentage of
Total
Investments

 

Investments
at Fair Value
(in thousands)

 

Percentage of
Total
Investments

 
           
           
 

5

 

$            75,836

 

19.9%

 

$            98,307

 

28.5%

 
 

4

 

277,356

 

72.5%

 

199,876

 

58.0%

 
 

3

 

24,908

 

6.5%

 

41,948

 

12.1%

 
 

2

 

4,314

 

1.1%

 

4,738

 

1.4%

 
 

1

 

 

0.0%

 

 

0.0%

 
 

Total

 

$          382,414

 

100.0%

 

$          344,869

 

100.0%

 
                   

 

CONFERENCE CALL

The Company will host an earnings conference call at 1:00 p.m. (Eastern Time) on Thursday, February 10, 2011.  All interested parties may participate in the conference call by dialing (800) 897-4057 approximately 10-15 minutes prior to the call; international callers should dial (212) 231-2919. 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 (http://www.golubcapitalbdc.com/) and click on the Investor Presentations link to find the December 31, 2010 Investor Presentation.  An archived replay of the call will be available shortly after the call until 3:00 p.m. (Eastern Time) on February 25, 2011. To hear the replay, please dial (800) 633-8284. International dialers, please dial (402) 977-9140. For all replays, please reference program ID number 21508409.

Golub Capital BDC, Inc. and Subsidiaries

 

Consolidated Statements of Financial Condition (unaudited)

 

(In thousands, except share and per share data)

 
   
 

December 31, 2010

 

September 30, 2010

 

Assets

       

Investments, at fair value (cost of $383,507 and $345,536 respectively)

$                382,414

 

$                   344,869

 

Cash and cash equivalents

41,389

 

61,219

 

Restricted cash and cash equivalents

27,618

 

31,771

 

Interest receivable

2,194

 

1,956

 

Receivable for investments sold

2,895

 

 

Deferred financing costs

3,548

 

2,748

 

Other assets

256

 

200

 

Total Assets

$                460,314

 

$                   442,763

 
         

Liabilities

       

Debt

$                194,000

 

$                   174,000

 

Payable for investments purchased

 

5,328

 

Interest payable

2,576

 

1,167

 

Management and incentive fees payable

1,693

 

1,008

 

Accounts payable and accrued expenses

570

 

719

 

Total Liabilities

198,839

 

182,222

 
         

Net Assets

       

Preferred stock, par value $0.001 per share, 1,000,000 shares authorized,
zero shares issued and outstanding as of December 31, 2010 and September 30, 2010

       

$                           –

 

$                             –

 

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

       

17,738,197 and 17,712,444 shares issued and outstanding, respectively

18

 

18

 

Paid in capital in excess of par

260,152

 

259,690

 

Over distributed net investment income

(1,379)

 

(1,122)

 

Net unrealized appreciation on investments

1,848

 

1,995

 

Net realized gains (losses) on investments

836

 

(40)

 

Total Net Assets

261,475

 

260,541

 

Total Liabilities and Total Net Assets

$                460,314

 

$                   442,763

 
         

Number of common shares outstanding

17,738,197

 

17,712,444

 

Net asset value per common share

$                    14.74

 

$                       14.71

 
       

 

Golub Capital BDC, Inc. and Subsidiaries

     

Consolidated Statements of Operations (unaudited)

     

(In thousands, except share and per share data)

     
   

Three months ended

 
   

December 31, 2010

 

September 30, 2010

 

Investment income

         

Interest

 

$                      9,137

 

$                       7,431

 
           

Total investment income

 

9,137

 

7,431

 
           

Expenses

         

Interest and other debt financing expenses

 

1,577

 

1,381

 

Base management fee

 

1,284

 

1,091

 

Incentive fee

 

190

 

 

Professional fees

 

567

 

315

 

Administrative service fee

 

174

 

141

 

General and administrative expenses

 

112

 

152

 
           

Total expenses

 

3,904

 

3,080

 
           

Net investment income

 

5,233

 

4,351

 
           

Net gain (loss) on investments

         

Net realized gains (losses) on investments

 

876

 

(40)

 

Net change in unrealized (depreciation) appreciation on investments

 

(147)

 

1,936

 
           

Net gain on investments

 

729

 

1,896

 
           

Net increase in net assets resulting from operations

 

$                      5,962

 

$                       6,247

 
           

Per Common Share Data

         

Basic and diluted earnings per common share

 

$                        0.34

 

$                         0.35

 

Dividends and distributions declared per common share

 

$                        0.31

 

$                         0.31

 

Basic and diluted weighted average common shares outstanding

 

17,712,724

 

17,712,444

 
         

 

ABOUT GOLUB CAPITAL BDC, INC.

Golub Capital BDC, Inc., (NASDAQ: GBDC, www.golubcapitalbdc.com), a business development company, principally invests in senior secured, unitranche, 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

Golub Capital, founded in 1994, is a leading lender to middle-market companies. In 2009, Golub Capital was named "Middle Market Lender of the Year" by Buyouts Magazine and "Debt Financing Agent of the Year" and "Mezzanine Financing Agent of the Year" by M&A Advisor.  As of December 31, 2010, Golub Capital managed over $4.0 billion of capital, with a team of investment professionals in New York, Chicago and Atlanta.

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 in the forward-looking statements as a result of a number of factors, including those described from time to time in the Company's filings with the Securities and Exchange Commission. The Company 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.

 

CONTACT: Ross Teune, +1-312-284-0111, rteune@golubcapital.com