Golub Capital BDC, Inc. Declares Third Fiscal Quarter Distribution of $0.32 Per Share and Announces Second Fiscal Quarter Financial Results
CHICAGO, May 8, 2014 /PRNewswire/ — Golub Capital BDC, Inc., a business development company (NASDAQ: GBDC), today announced its financial results for the second fiscal quarter ended March 31, 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) |
|||
|
March 31, 2014 |
December 31, 2013 |
||
|
Investment portfolio, at fair value |
$ 1,253,597 |
$ 1,179,919 |
|
|
Total assets |
$ 1,321,644 |
$ 1,264,827 |
|
|
Net asset value per share |
$ 15.41 |
$ 15.23 |
|
|
Quarter Ended |
|||
|
March 31, 2014 |
December 31, 2013 |
||
|
Investment income |
$ 25,260 |
$ 25,579 |
|
|
Net investment income |
$ 13,352 |
$ 13,260 |
|
|
Net gain on investments and secured borrowings |
$ 737 |
$ 1,577 |
|
|
Net increase in net assets resulting from operations |
$ 14,089 |
$ 14,837 |
|
|
Net investment income per share |
$ 0.31 |
$ 0.31 |
|
|
Net gain on investments and secured borrowings per share |
$ 0.01 |
$ 0.03 |
|
|
Net earnings per share |
$ 0.32 |
$ 0.34 |
|
Second Fiscal Quarter 2014 Highlights
- Net investment income for the quarter ended March 31, 2014 was $13.3 million, or $0.31 per share, as compared to $13.3 million, or $0.31 per share, for the quarter ended December 31, 2013;
- Net gain on investments and secured borrowings for the quarter ended March 31, 2014 was $0.7 million, or $0.01 per share, as compared to $1.6 million, or $0.03 per share, for the quarter ended December 31, 2013;
- Net increase in net assets resulting from operations for the quarter ended March 31, 2014 was $14.1 million, or $0.32 per share, as compared to $14.8 million, or $0.34 per share, for the quarter ended December 31, 2013; and
- Our board of directors declared a quarterly distribution on May 6, 2014 of $0.32 per share, payable on June 27, 2014 to stockholders of record as of June 16, 2014.
Portfolio and Investment Activities
As of March 31, 2014, 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 limited liability company ("LLC") interests in Senior Loan Fund LLC ("SLF") with a total fair value of $41.7 million. The investments in portfolio companies as of March 31, 2014 consisted of $282.2 million of senior secured loans, $773.6 million of one stop loans, $111.8 million of second lien loans, $4.2 million of subordinated debt and $40.1 million of equity investments. This compares to the Company's portfolio as of December 31, 2013, as of which date the Company had investments in 139 portfolio companies with a total fair value of $1,147.2 million and had investments in subordinated notes and LLC interests in SLF with a total fair value of $32.7 million. The investments in portfolio companies as of December 31, 2013 consisted of $290.6 million of senior secured loans, $702.0 million of one stop loans, $111.0 million of second lien loans, $5.9 million of subordinated debt and $37.7 million of equity investments.
For the quarter ended March 31, 2014, the Company originated $173.5 million in new middle-market investment commitments and invested $9.0 million in SLF, making total new investment commitments $182.5 million for the quarter. Approximately 14% of the new total investment commitments were senior secured loans, 80% were one stop loans, 1% was equity securities and 5% were investments in SLF. Overall, total investments at fair value increased by $73.7 million during the three months ended March 31, 2014 after factoring in debt repayments, sales of securities, net fundings on revolvers and net change in unrealized gains (losses).
For the quarter ended March 31, 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 8.6% and 8.0%, respectively.
Consolidated Results of Operations
Total investment income for the quarter ended March 31, 2014 and December 31, 2013 was $25.2 million and $25.6 million, respectively. This $0.4 million decrease was primarily attributable to a decline in fee income attributable to a decline of prepayment fees in the quarter ended March 31, 2014 that was partially offset by an increase in dividend income and an increase in the yield on the SLF subordinated notes. The yield on the SLF subordinated notes increased from the London Interbank Offered Rate ("LIBOR") plus four percent to LIBOR plus eight percent at the time SLF entered into its senior secured revolving credit facility with Wells Fargo Bank, N.A. during the quarter ended March 31, 2014.
Total expenses for the quarter ended March 31, 2014 and December 31, 2013 were $11.9 million and $12.3 million, respectively. This $0.4 million decrease was primarily due to a $1.4 million decrease in incentive fees primarily attributable to a decline in net investment income. The decline in net investment income was primarily the result of lower prepayment fee income and yield compression on new investments.
During the quarter ended March 31, 2014, the Company recorded a net realized gain of $0.1 million and recorded net unrealized appreciation of $0.6 million. The net realized gain was primarily attributable to a small cash collection on a previously written-off investment. 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 securitization, 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 securitization, SBA debentures, revolving credit facilities, proceeds from its investment portfolio and proceeds from offerings of its securities to finance its investment objectives.
As of March 31, 2014, the Company had cash and cash equivalents of $12.8 million, restricted cash and cash equivalents of $41.3 million and $590.4 million of debt and secured borrowings outstanding. As of March 31, 2014, the Company had $110.2 million of commitments and $70.6 million available for additional borrowings on its revolving credit facilities, subject to leverage and borrowing base restrictions. As of March 31, 2014, the Company had $22.6 million of additional SBA debentures available, subject to customary SBA regulatory requirements.
On May 6, 2014, the Company's board of directors declared a quarterly distribution of $0.32 per share, payable on June 27, 2014 to holders of record as of June 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 March 31, 2014 and December 31, 2013:
|
March 31, 2014 |
December 31, 2013 |
||||||||
|
Internal |
Investments |
Percentage of |
Investments |
Percentage of |
|||||
|
Performance |
at Fair Value |
Total |
at Fair Value |
Total |
|||||
|
Rating |
(In thousands) |
Investments |
(In thousands) |
Investments |
|||||
|
5 |
$ 251,829 |
20.1 |
% |
$ 161,868 |
13.7 |
% |
|||
|
4 |
937,477 |
74.8 |
946,309 |
80.2 |
|||||
|
3 |
61,918 |
4.9 |
68,726 |
5.8 |
|||||
|
2 |
1,857 |
0.2 |
2,414 |
0.2 |
|||||
|
1 |
516 |
0.0 |
* |
602 |
0.1 |
||||
|
Total |
$ 1,253,597 |
100.0 |
% |
$ 1,179,919 |
100.0 |
% |
|||
|
* Represents an amount less than 0.1%. |
|||||||||
Conference Call
The Company will host an earnings conference call at 12:00 p.m. (Eastern Time) on Thursday, May 8, 2014 to discuss the quarterly financial results. All interested parties may participate in the conference call by dialing (800) 667-9916 approximately 10-15 minutes prior to the call; international callers should dial (303) 223-4391. 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 03.31.14 Investor Presentation under Events and Presentations. An archived replay of the call will be available shortly after the call until 2:00 p.m. (Eastern Time) on June 7, 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 21714165.
|
Golub Capital BDC, Inc. and Subsidiaries |
|||
|
Consolidated Statements of Financial Condition |
|||
|
(In thousands, except share and per share data) |
|||
|
March 31, 2014 |
December 31, 2013 |
||
|
Assets |
(unaudited) |
(unaudited) |
|
|
Investments, at fair value (cost of $1,239,603 and $1,166,589, respectively) |
$ 1,253,597 |
$ 1,179,919 |
|
|
Cash and cash equivalents |
12,810 |
31,891 |
|
|
Restricted cash and cash equivalents |
41,261 |
39,792 |
|
|
Interest receivable |
4,958 |
4,178 |
|
|
Deferred financing costs |
8,712 |
8,884 |
|
|
Other assets |
306 |
163 |
|
|
Total Assets |
$ 1,321,644 |
$ 1,264,827 |
|
|
Liabilities |
|||
|
Debt |
$ 572,150 |
$ 577,200 |
|
|
Secured borrowings, at fair value (proceeds of $18,008 and $14,164, respectively) |
18,222 |
14,366 |
|
|
Interest payable |
1,691 |
3,159 |
|
|
Management and incentive fees payable |
5,736 |
6,751 |
|
|
Payable for open trades |
– |
1,657 |
|
|
Accounts payable and accrued expenses |
1,842 |
1,713 |
|
|
Accrued trustee fees |
73 |
– |
|
|
Total Liabilities |
599,714 |
604,846 |
|
|
Net Assets |
|||
|
Preferred stock, par value $0.001 per share, 1,000,000 shares authorized, zero shares issued and outstanding as of March 31, 2014 and December 31, 2013 |
– |
– |
|
|
Common stock, par value $0.001 per share, 100,000,000 shares authorized, 46,857,608 and 43,325,575 shares issued and outstanding as of March 31, 2014 and December 31, 2013, respectively |
47 |
43 |
|
|
Paid in capital in excess of par |
715,148 |
653,427 |
|
|
Undistributed net investment income |
1,622 |
2,135 |
|
|
Net unrealized appreciation on investments, derivative instruments and secured borrowings |
16,446 |
15,796 |
|
|
Net realized loss on investments and derivative instruments |
(11,333) |
(11,420) |
|
|
Total Net Assets |
721,930 |
659,981 |
|
|
Total Liabilities and Total Net Assets |
$ 1,321,644 |
$ 1,264,827 |
|
|
Number of common shares outstanding |
46,857,608 |
43,325,575 |
|
|
Net asset value per common share |
$ 15.41 |
$ 15.23 |
|
|
Consolidated Statements of Operations |
||||
|
(In thousands, except share and per share data) |
||||
|
Three months ended |
||||
|
March 31, 2014 |
December 31, 2013 |
|||
|
(unaudited) |
||||
|
Investment income |
||||
|
Interest income |
$ 24,977 |
$ 24,479 |
||
|
Dividend income |
262 |
16 |
||
|
Fee income |
21 |
1,084 |
||
|
Total investment income |
25,260 |
25,579 |
||
|
Expenses |
||||
|
Interest and other debt financing expenses |
4,540 |
4,092 |
||
|
Base management fee |
4,185 |
3,824 |
||
|
Incentive fee |
1,656 |
3,032 |
||
|
Professional fees |
640 |
658 |
||
|
Administrative service fee |
742 |
582 |
||
|
General and administrative expenses |
145 |
131 |
||
|
Total expenses |
11,908 |
12,319 |
||
|
Net investment income |
13,352 |
13,260 |
||
|
Net gain (loss) on investments |
||||
|
Net realized gain (loss) on investments |
87 |
(4,994) |
||
|
Net change in unrealized appreciation on investments and secured borrowings |
650 |
6,571 |
||
|
Net gain (loss) on investments and secured borrowings |
737 |
1,577 |
||
|
Net increase in net assets resulting from operations |
$ 14,089 |
$ 14,837 |
||
|
Per Common Share Data |
||||
|
Basic and diluted earnings per common share |
$ 0.32 |
$ 0.34 |
||
|
Dividends and distributions declared per common share |
$ 0.32 |
$ 0.32 |
||
|
Basic and diluted weighted average common shares outstanding |
43,754,776 |
43,285,250 |
||
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 2013 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.