By Scott Kennedy, Produced with Colorado Wealth Management Fund Introduction Golub Capital BDC (NASDAQ:GBDC) had a quarter that went as we expected. The dividend is likely safe in 2025. GBDC is trading at a very slight discount to NAV, which puts them in our "hold" range. Commentary Quarterly NAV Fluctuation: Basically an Exact Match (Only a 0.3% Variance). Adjusted NII: Very Minor – Minor Outperformance ($0.013 Variance). An “as expected” quarter regarding Golub Capital BDC’s NAV, in my opinion. If anyth ...

By Scott Kennedy, Produced with Colorado Wealth Management Fund Introduction Golub Capital BDC (NASDAQ:GBDC) had a quarter that went as we expected. The dividend is likely safe in 2025. GBDC is trading at a very slight discount to NAV, which puts them in our "hold" range. Commentary Quarterly NAV Fluctuation: Basically an Exact Match (Only a 0.3% Variance). Adjusted NII: Very Minor – Minor Outperformance ($0.013 Variance). An “as expected” quarter regarding Golub Capital BDC’s NAV, in my opinion. If anyth ...

Core Insights - The article discusses the author's transition from a career in publishing to finance, emphasizing the importance of building an income portfolio using ETFs and CEFs [1]. Group 1 - The author graduated in Languages in 1988 and worked as an editor for 25 years before shifting focus to finance in 2005 [1]. - After losing a job in 2013, the author dedicated efforts to creating an income portfolio, highlighting the use of ETFs and CEFs as investment vehicles [1].

In this article, we catch up on the latest quarterly results of the Golub Capital BDC (NASDAQ: GBDC ). The company delivered another solid quarter with a 2.4% total NAV return. It trades at a 10.55% dividend yield (with the same adjusted NII yield Check out Systematic Income and explore our Income Portfolios, engineered with both yield and risk management considerations. Use our powerful Interactive Investor Tools to navigate the BDC, CEF, OEF, preferred, and baby bond markets. Read our Investor Guides: to ...

Summary of Golub BDC Q3 2025 Earnings Report Core Viewpoint - Golub BDC (NASDAQ: GBDC) has released its earnings report for fiscal Q3 2025, highlighting both positive and negative aspects of its performance, leading to a revised outlook for the company based on new data available. Financial Performance - The earnings report indicates a mixed performance for Golub BDC, with specific financial metrics that may influence investor sentiment and future projections [1]. Investment Strategy - The focus on dividend investing is emphasized as a key strategy for achieving financial freedom, suggesting that Golub BDC's dividend policy plays a significant role in its attractiveness to investors [1]. Analyst Background - The analysis is conducted by a finance professional with extensive experience in M&A and business valuation, indicating a thorough understanding of the financial landscape and the company's position within it [1]. Sector Focus - The analyst's coverage includes various sectors such as technology, real estate, software, finance, and consumer staples, which are also reflected in the investment portfolio [1].

Golub Capital Bdc (GBDC 0.48%), a business development company focused on lending to middle-market companies, reported its Q3 FY2025 earnings on August 4, 2025. Headline results showed adjusted net investment income per share holding steady at $0.39, in line with analyst expectations. The investment portfolio (GAAP, at fair value) was $8.96 billion. Overall, the quarter reflected steady earnings and active capital management, with continued portfolio expansion despite a cautious note on unrealized portfolio ...

Financial Data and Key Metrics Changes - Adjusted net investment income (NII) per share was $0.39, corresponding to a return on equity of 10.4% [5] - Adjusted net income per share was $0.34, with a return on equity of 9.1% [5] - The internal rate of return for GBDC shareholders since IPO is 9.6% over fifteen years [5] - Net asset value (NAV) per share decreased by $0.04 to $15 due to net unrealized losses [11][14] - Net debt to equity increased modestly to 1.26 turns, with average net leverage at 1.21 turns [12][20] Business Line Data and Key Metrics Changes - Investment portfolio grew by 4% quarter over quarter, reaching just under $9 billion at fair value [10] - New investment commitments totaled $557 million, with $411 million funded and $306 million in repayments [10] - Investments on nonaccrual status remained low at 60 basis points of the total investment portfolio [8][14] - The weighted average rate on new investments was 9.2%, while repaid investments had a rate of 9.8% [14] Market Data and Key Metrics Changes - The investment income yield was 10.6%, a sequential decline of 20 basis points [9][15] - The cost of debt decreased to 5.7%, reflecting a floating rate debt funding structure [15][20] - Nearly 90% of the investment portfolio remains in the highest performing internal rating categories [7][17] Company Strategy and Development Direction - GBDC focuses on providing first lien senior secured loans to middle market companies backed by strong private equity sponsors [4] - The company remains selective in underwriting, closing on just 3.1% of deals reviewed [10] - GBDC aims to minimize realized credit losses and proactively address borrower underperformance [32] Management's Comments on Operating Environment and Future Outlook - The management expects a protracted credit cycle to continue, with elevated default rates likely persisting [24][29] - There is optimism regarding the M&A environment improving slowly in the remainder of the year and more quickly next year [30][31] - Management emphasizes the importance of humility in forecasting due to the unpredictable nature of the current economic environment [22][32] Other Important Information - Total distributions paid in the quarter were $0.39 per share, representing an annualized dividend yield of 10.4% [12] - The liquidity position remains strong, with approximately $950 million available from unrestricted cash and undrawn commitments [20] Q&A Session Summary Question: Is it fair to say that you're expecting a significant wave of repayments to eventually lever down? - Management indicated that while there are some repayments in the pipeline, they do not anticipate significant deleveraging or further leveraging [35][36] Question: Do you think the lag time between liquid loan markets and BDC will remain the same? - Management acknowledged that private credit spreads are stickier, especially in the middle market, but significant spread compression has been observed in the broader market [41][42]

Financial Data and Key Metrics Changes - GBDC reported adjusted net investment income (NII) per share of $0.39, corresponding to a return on equity of 10.4% [4] - Adjusted net income per share was $0.34, with a return on equity of 9.1% [4] - The internal rate of return for GBDC shareholders since IPO is 9.6% over fifteen years [4] - The net asset value (NAV) per share decreased by $0.04 to $15, primarily due to net unrealized losses [10][12] Business Line Data and Key Metrics Changes - GBDC's investment portfolio grew by 4% quarter over quarter, reaching just under $9 billion at fair value [9] - New investment commitments totaled $557 million, with $411 million funded during the quarter [9] - The weighted average rate on new investments was 9.2%, while repaid investments had a weighted average rate of 9.8% [13] Market Data and Key Metrics Changes - GBDC's investment income yield was 10.6%, a sequential decline of about 20 basis points [7][16] - Nonaccrual investments remained low at 60 basis points of the total investment portfolio at fair value, below the industry average [7][18] - The median EBITDA for new originations was $79 million, indicating a focus on resilient middle-market companies [10] Company Strategy and Development Direction - GBDC's investment strategy focuses on providing first lien senior secured loans to middle-market companies backed by strong private equity sponsors [3] - The company remains selective in underwriting, closing on just 3.1% of deals reviewed, with a weighted average loan-to-value (LTV) of approximately 34% [9] - GBDC aims to minimize realized credit losses and proactively address borrower underperformance [34] Management's Comments on Operating Environment and Future Outlook - Management expects a protracted credit cycle to continue, with elevated default rates across public and private credit markets [25][30] - The M&A environment is anticipated to improve slowly in the remainder of the year and more quickly next year, despite ongoing tariff uncertainties [32] - Management emphasizes the importance of maintaining a humble approach to forecasting in the current unpredictable environment [24] Other Important Information - Total distributions paid in the quarter were $0.39 per share, representing an annualized dividend yield of 10.4% based on NAV [11] - GBDC's liquidity position remains strong, ending the quarter with approximately $950 million in liquidity [21] Q&A Session Summary Question: Regarding leverage, is it fair to say that you're expecting a significant wave of repayments to eventually lever down? - Management acknowledged that while there are some repayments in the pipeline, they do not anticipate significant deleveraging or further leveraging [37][38] Question: With spreads across floating rate markets being tight, do you think the lag time between liquid loan markets and BDC will remain the same? - Management confirmed that there has been significant spread compression in the broadly syndicated market, and while private credit spreads are stickier, they are not immune to these trends [42][43]

Financial Performance - The adjusted net investment income per share remained solid at $0.39, resulting in an adjusted NII ROE of 10.4%[10] - Adjusted earnings per share were $0.34, yielding an adjusted ROE of 9.1%[10] - The company declared a quarterly base distribution of $0.39 per share for FY 2025 Q3, with a distribution coverage of approximately 100%[10] - As of June 30, 2025, the dividend yield was 10.4% based on the NAV[10] Portfolio and Credit Quality - The investment portfolio modestly increased to $9.0 billion at fair value, with $305.8 million in exits/sales and $556.8 million in new investment commitments (of which $410.8 million were funded at close)[10] - Net funds increased by $340.3 million, representing a 4% increase in portfolio size from March 31, 2025[10] - Approximately 90% of the total investment portfolio had internal performance ratings of '4' or '5'[10, 40] - Non-accrual investments remained low, accounting for 0.6% of total investments at fair value[10, 40] Balance Sheet and Liquidity - The net asset value was $15.00 per share, a decrease of $0.04 per share from $15.04 as of March 31, 2025[10] - The company repurchased approximately 2.4 million shares of its common stock at an aggregate price of $13.99 per share[10] - The GAAP debt-to-equity ratio, net increased to 1.26x, with an average of 1.21x for the quarter; 42% of debt funding is unsecured debt, and 82% is floating rate debt funding[10] - The weighted average cost of debt was 5.7%[10] - Total available liquidity amounted to $947.1 million[10]

Earnings Performance - Golub Capital BDC reported quarterly earnings of $0.39 per share, exceeding the Zacks Consensus Estimate of $0.38 per share, but down from $0.48 per share a year ago, representing an earnings surprise of +2.63% [1] - The company posted revenues of $218.34 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.39%, compared to $171.27 million in the same quarter last year [2] Stock Performance and Outlook - Golub Capital BDC shares have declined approximately 2.9% since the beginning of the year, while the S&P 500 has gained 6.1% [3] - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimates at $0.38 for the upcoming quarter and $1.52 for the current fiscal year [4][7] Industry Context - The Financial - SBIC & Commercial Industry, to which Golub Capital BDC belongs, is currently ranked in the bottom 42% of over 250 Zacks industries, indicating potential challenges ahead [8] - CION Investment Corporation, another company in the same industry, is expected to report a quarterly earnings decline of -20.9% year-over-year, with revenues anticipated to drop by 11.9% [9][10]