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Golub Capital: Is A Dividend Cut In The Cards In 2025? (Rating Downgrade)
Seeking Alpha· 2025-02-23 03:43
Group 1 - The dividend pay-out ratio of Golub Capital BDC increased to 123% in 4Q24 due to the payment of a special dividend to distribute excess portfolio income along with a variable dividend [1]
Golub Capital(GBDC) - 2025 Q1 - Earnings Call Transcript
2025-02-05 19:13
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 10.1% [6][7] - Adjusted net income per share was $0.42, which included $0.03 of adjusted net realized and unrealized gains [7][8] - NAV per share decreased by $0.06 to $15.13, primarily due to distributions exceeding earnings [21][33] Business Line Data and Key Metrics Changes - Gross originations increased to $1.2 billion, with net funds increasing by $450 million, representing a 5.5% growth quarter-over-quarter [15][34] - The weighted average rate on new investments was 9.4%, while repayments had a weighted average rate of 11.3% [34] - Non-accrual investments decreased to 0.5% of total investments at fair value, the lowest level since September 2019 [41] Market Data and Key Metrics Changes - The lending environment has become more borrower-friendly, particularly in the large market segment, leading to spread compression and looser deal documentation [16][49] - Investments rated 4 and 5 increased to nearly 90% of the portfolio at fair value, indicating improved credit quality [19] Company Strategy and Development Direction - GBDC's strategy focuses on providing first lien senior secured loans to resilient middle market companies backed by strong private equity sponsors [4] - The company aims to maintain a conservative approach, primarily focusing on the core middle market despite increased competition [17][85] - GBDC executed a series of debt funding-related transactions to drive down its weighted average cost of debt, enhancing profitability [23][24] Management's Comments on Operating Environment and Future Outlook - Management noted a strong U.S. economy with solid revenue and EBITDA growth, but also highlighted elevated credit stress across the market [52][55] - The company remains cautious about potential impacts from tariffs and foreign exchange movements, emphasizing the resilience of its portfolio [62][66] - Management expects to see increased transaction volume and deal activity through 2025, driven by private equity sponsors [54] Other Important Information - GBDC was upgraded by Moody's to a Baa2 rating with a stable outlook, enhancing its ability to issue low-cost unsecured debt [24][46] - The company ended the quarter with approximately $1.1 billion of liquidity from unrestricted cash and undrawn commitments [47] Q&A Session Summary Question: How will the portfolio respond to current economic changes? - Management indicated that the portfolio is relatively insulated from foreign exchange and tariff movements due to its focus on U.S. borrowers and service companies [62][66] Question: What is the expected loss rate in the direct lending asset class? - Management noted that while credit stress is evident in the broadly syndicated market, it is less pronounced in private credit, with a focus on the core middle market to mitigate risks [74][78] Question: How is GBDC responding to increased competition? - Management stated that GBDC is not changing its strategy in response to competition but is focused on building competitive advantages in the core middle market [85][86] Question: What are the potential cost savings from recent funding initiatives? - Management explained that the current weighted average cost of debt is expected to decrease significantly as the benefits from recent funding initiatives take full effect [94][95] Question: Will there be significant portfolio churn due to increased M&A activity? - Management anticipates that higher M&A activity will lead to both increased originations and repayments, making the period of higher portfolio turnover manageable [104][105]
Golub Capital(GBDC) - 2025 Q1 - Earnings Call Presentation
2025-02-05 19:09
Financial Performance - Adjusted net investment income per share was $0.39, resulting in an Adjusted NII ROE of 10.1%[8] - Adjusted earnings per share reached $0.42, translating to an Adjusted ROE of 11.0%[8] - A quarterly base distribution of $0.39 per share was declared for FY 2025 Q1, with a strong coverage ratio of 103%[8] - Total announced distributions amounted to $0.39 per share, yielding a 10.3% dividend based on the December 31, 2024 NAV[8] Portfolio and Investment Activities - The investment portfolio expanded to $8.7 billion at fair value, with new investment commitments totaling $1.2 billion, of which $750.1 million were funded at close[8] - Net funds increased by $449.8 million, representing a 5.5% growth in portfolio size quarter-over-quarter[8] - Internal performance ratings improved, with nearly 90% of the portfolio at fair value rated '4' or '5'[8] - Non-accrual investments decreased to 0.5% of total investments at fair value following the restructuring of three portfolio companies[8] Balance Sheet and Liquidity - Net asset value stood at $15.13 per share, a slight decrease of $0.06 per share from the previous quarter[8] - Total available liquidity reached $1.1 billion[8] - GAAP debt-to-equity ratio, net increased to 1.19x[8]
Golub Capital BDC (GBDC) Lags Q1 Earnings and Revenue Estimates
ZACKS· 2025-02-04 23:51
分组1 - Golub Capital BDC reported quarterly earnings of $0.39 per share, missing the Zacks Consensus Estimate of $0.43 per share, and down from $0.50 per share a year ago, representing an earnings surprise of -9.30% [1] - The company posted revenues of $220.7 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 2.52%, and an increase from year-ago revenues of $164.77 million [2] - Over the last four quarters, Golub Capital BDC has surpassed consensus EPS estimates only once and has topped consensus revenue estimates just once [2] 分组2 - The stock has gained about 3.8% since the beginning of the year, outperforming the S&P 500's gain of 1.9% [3] - The current consensus EPS estimate for the coming quarter is $0.43 on revenues of $225.02 million, and for the current fiscal year, it is $1.69 on revenues of $886.61 million [7] - The Financial - SBIC & Commercial Industry, to which Golub Capital BDC belongs, is currently in the top 14% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]
Golub Capital(GBDC) - 2025 Q1 - Quarterly Report
2025-02-04 21:14
Portfolio Performance - As of December 31, 2024, the total fair value of the company's portfolio was $8,685.2 million, an increase from $8,235.4 million as of September 30, 2024, representing a growth of approximately 5.5%[451] - The company's one stop loans accounted for 86.8% of total investments at fair value as of December 31, 2024, up from 86.3% as of September 30, 2024[451] - The company had debt and equity investments in 386 portfolio companies as of December 31, 2024, an increase from 381 companies as of September 30, 2024[453] - Recurring revenue loans within the one stop loans amounted to $1,104.2 million as of December 31, 2024, up from $1,021.3 million as of September 30, 2024[452] - Total investment income for the three months ended December 31, 2024, was $220.7 million, a decrease of $3.7 million from the previous quarter and an increase of $55.9 million compared to the same period last year[481] - Net investment income after taxes for the three months ended December 31, 2024, was $96.6 million, down from $119.6 million in the previous quarter and up from $83.5 million year-over-year[479] - Average earning debt investments at fair value increased to $7.73 billion as of December 31, 2024, up by $347.2 million from the previous quarter and $2.59 billion from the same period last year[481] - The portfolio median EBITDA for portfolio companies was $62.7 million as of December 31, 2024, slightly down from $63.7 million as of September 30, 2024[541] Revenue and Income - The weighted average income yield for the three months ended December 31, 2024, was 10.9%, a decrease from 11.7% in the previous quarter[457] - The total return based on average net asset value for the three months ended December 31, 2024, was 11.0%, compared to 9.4% in the previous quarter[457] - Interest income for the three months ended December 31, 2024, was $200.0 million, a decrease of $0.9 million from the previous quarter and an increase of $55.5 million year-over-year[481] - Adjusted Net Investment Income for the three months ended December 31, 2024, was $102.3 million, down from $125.8 million in the previous quarter and up from $85.2 million year-over-year[479] Expenses and Fees - The company expects general and administrative expenses to remain stable or decline as a percentage of total assets during periods of asset growth[459] - Total net expenses for the three months ended December 31, 2024, were $124.6 million, an increase of $19.8 million from the previous quarter and $43.9 million from the same period last year[486] - The base management fee increased due to a rise in average adjusted gross assets, largely attributed to the acquisition of GBDC 3 in June 2024[490][491] - The Income Incentive Fee increased by $5.0 million from Q3 2024 to Q4 2024, but decreased by $3.2 million compared to Q4 2023 due to a reduction in the incentive fee rate from 20% to 15% after the GBDC 3 acquisition[493] Debt and Financing - The outstanding debt under the JPM Credit Facility increased to $1,191.3 million as of December 31, 2024, from $956.6 million as of September 30, 2024, reflecting an increase of about 24.5%[509] - The company had $806.2 million of remaining commitments and availability on the JPM Credit Facility as of December 31, 2024, compared to $865.9 million as of September 30, 2024, indicating a decrease of approximately 6.9%[509] - The total outstanding debt under the 2024 Debt Securitization was $1,364.0 million as of December 31, 2024[518] - The company had outstanding debt under the GBDC 3 2022 Debt Securitization of $232.5 million as of December 31, 2024, down from $236.8 million as of September 30, 2024, a decrease of approximately 1.4%[516] - The company had outstanding debt under the GBDC 3 2021 Debt Securitization of $298.0 million as of September 30, 2024[515] Mergers and Acquisitions - The GBDC 3 Merger resulted in the issuance of 92,115,308 shares of common stock to former stockholders of GBDC 3[471] - The company completed acquisitions of GCIC and GBDC 3, which were accounted for under the asset acquisition method, impacting the financial results[476] - The GBDC 3 Merger Agreement replaced the previous Investment Advisory Agreement, effective upon the merger[472] - The company completed the acquisition of GBDC 3 on June 3, 2024, enhancing its market position and operational scale[554] Cash Flow and Liquidity - Cash used in operating activities for Q4 2024 was $374.7 million, driven by $450.2 million from principal payments and sales of portfolio investments, and cash provided by financing activities was $238.1 million[506] - The company experienced a net decrease in cash and cash equivalents of $136.6 million for Q4 2024, compared to a net increase of $32.8 million in Q4 2023[506][507] - As of December 31, 2024, the company had cash and cash equivalents of $103.5 million, down from $123.1 million as of September 30, 2024, representing a decrease of approximately 16.0%[508] Valuation and Risk Management - The valuation designee is responsible for determining the fair value of investments not publicly traded, with a multi-step valuation process conducted quarterly[562] - The primary method for determining enterprise value uses a multiple analysis applied to the portfolio company's EBITDA[569] - The company monitors the risk profile of its investments and assigns internal performance ratings, with a focus on increasing monitoring intensity for investments rated 1, 2, or 3[542] - The company’s investments are subject to market risk, which is directly impacted by volatility and liquidity in the markets[572] - The company utilizes standard hedging instruments such as interest rate swaps, futures, options, and forward contracts to mitigate interest rate fluctuations[588] Future Outlook - The company expects to fund the growth of its investment portfolio through net proceeds from future securities offerings and borrowings, but cannot assure success in raising capital[534] - The company intends to make quarterly distributions to stockholders, although future distributions may be limited by operating results and asset coverage requirements[549] - The company expects that future loans could also have floating interest rates, typically based on floating SOFR or another base rate[585]
OBDC & GBDC: Two Income Investments That Offer A Great Value Position
Seeking Alpha· 2025-02-02 11:00
Core Insights - Dividends are highlighted as a significant form of passive income, requiring no physical labor or specific time commitment [1] - The article emphasizes the importance of a diversified investment strategy that includes high-quality dividend stocks, Business Development Companies, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds [1] Investment Strategy - A hybrid investment system is proposed, combining growth and income strategies to achieve total returns on par with the S&P 500 [1] - The focus is on utilizing various investment vehicles to maximize long-term growth potential and income generation [1]
Golub Capital(GBDC) - 2025 Q1 - Quarterly Results
2025-02-04 21:11
[Form 8-K Current Report](index=1&type=section&id=Form%208-K%20Current%20Report) [Announcement of Earnings Release Date](index=3&type=section&id=Item%202.02.%20Results%20of%20Operations%20and%20Financial%20Condition.) Golub Capital BDC, Inc. announced the release date for its Q4 2024 financial results via a press release - The company will release its financial results for the quarter ended December 31, 2024[4](index=4&type=chunk) - The earnings release is scheduled for Tuesday, February 4, 2025, after the close of the financial markets[4](index=4&type=chunk) - The announcement was made via a press release, which is attached as Exhibit 99.1[4](index=4&type=chunk) [Exhibits](index=3&type=section&id=Item%209.01.%20Financial%20Statements%20and%20Exhibits.) This section details the exhibits accompanying the report, including the January 6, 2025 press release - Exhibit 99.1: Press release of Golub Capital BDC, Inc., dated as of January 6, 2025[6](index=6&type=chunk)
Golub Capital(GBDC) - 2024 Q4 - Earnings Call Transcript
2024-11-21 04:39
Financial Data and Key Metrics Changes - Adjusted net investment income (NII) per share was $0.47 for the quarter, with an adjusted NII return on equity of 12.4% [8][14] - Adjusted net income per share for the quarter was $0.36, corresponding to an adjusted return on equity of 9.4% [8][14] - NAV per share decreased by $0.13 sequentially to $15.19, but is $0.17 higher than the previous year [26][33] Business Line Data and Key Metrics Changes - Gross originations were nearly $1 billion, up from the previous quarter, with net funds increasing by $368 million sequentially, representing a 5% net portfolio growth [17][34] - The weighted average rate on new investments decreased to 10.7% [35] - Nonaccruals increased slightly to 1.2% of total debt investments at fair value [45] Market Data and Key Metrics Changes - The underwriting environment has shifted to be more borrower-friendly across all credit markets, with increased spread compression and looser deal documentation [18][60] - Investments in rating Category 3 increased from 10.1% to 11.6% of the portfolio at fair value [22] Company Strategy and Development Direction - The company focuses on providing first lien senior secured loans to resilient middle-market companies backed by strong private equity sponsors [5] - The company aims to maintain a conservative approach by being selective in its origination strategy, focusing on core middle-market transactions [19][61] - The company has implemented a new supplemental variable distribution framework, leading to $0.29 per share of supplemental distributions [7] Management's Comments on Operating Environment and Future Outlook - Management anticipates increased credit stress, which they view positively as it may lead to more lender-friendly conditions [56][58] - The company expects a potential pickup in M&A activity in 2025 due to falling interest rates and less political uncertainty [62] - Management believes GBDC is well-positioned to outperform in the current environment due to its competitive advantages [64] Other Important Information - The company declared total distributions of $0.43 per share, including a regular quarterly distribution of $0.39 and a supplemental distribution of $0.04 [29] - The company has a strong liquidity position with approximately $1.4 billion available from unrestricted cash and undrawn commitments [54] Q&A Session Summary Question: What is the current state of documentation terms in the market? - Management indicated that documentation terms are currently more borrower-friendly, especially in the large market segment, but they maintain strong protections in the core middle market [70][74] Question: What are the expectations for M&A activity in 2025? - Management expressed caution but noted significant tailwinds for M&A activity, including lower rates and political stability, while acknowledging uncertainty remains [76][78] Question: How is the balance sheet optimization progressing? - Management stated that they are continuously optimizing the balance sheet and have made significant improvements post-merger, but will keep looking for opportunities [79][80] Question: Can you provide details on the recent originations and deployment strategy? - Management clarified that the $1 billion in originations was consistent across the Golub platform and emphasized the importance of relationships with repeat sponsors [82][87] Question: What is the impact of noncash interest expense related to swaps? - The noncash interest expense from swaps was approximately $0.02 per share [88]
Golub Capital BDC (GBDC) Beats Q4 Earnings, Misses Revenue Estimates (Revised)
ZACKS· 2024-11-20 11:01
Company Performance - Golub Capital BDC reported quarterly earnings of $0.47 per share, exceeding the Zacks Consensus Estimate of $0.45 per share, but down from $0.50 per share a year ago, indicating a 6% year-over-year decline [1] - The company posted revenues of $224.41 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 5.16%, compared to $164.54 million in the same quarter last year, reflecting a 36.4% year-over-year increase [2] - Over the last four quarters, Golub Capital BDC surpassed consensus EPS estimates once and topped consensus revenue estimates two times [2] Stock Performance and Outlook - Golub Capital BDC shares have increased by approximately 2.8% since the beginning of the year, while the S&P 500 has gained 23.6%, indicating underperformance relative to the broader market [3] - The current consensus EPS estimate for the upcoming quarter is $0.45 on revenues of $233.12 million, and for the current fiscal year, it is $1.73 on revenues of $864.6 million [7] Industry Context - The Financial - SBIC & Commercial Industry, to which Golub Capital BDC belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Golub Capital BDC's stock performance [5][6]
Golub Capital BDC (GBDC) Misses Q4 Earnings and Revenue Estimates
ZACKS· 2024-11-19 23:31
Golub Capital BDC (GBDC) came out with quarterly earnings of $0.36 per share, missing the Zacks Consensus Estimate of $0.45 per share. This compares to earnings of $0.50 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -20%. A quarter ago, it was expected that this business development company would post earnings of $0.49 per share when it actually produced earnings of $0.48, delivering a surprise of -2.04%.Over the last four q ...