Golub Capital(US:GBDC)2025-08-04 20:07Part I. Financial Information Financial Statements This section presents the unaudited consolidated financial statements for Golub Capital BDC, Inc. for the period ended June 30, 2025, including statements of financial condition, operations, changes in net assets, cash flows, and a detailed schedule of investments Consolidated Statements of Financial Condition As of June 30, 2025, total assets increased to $9.24 billion from $8.70 billion, with total liabilities rising to $5.24 billion from $4.69 billion, resulting in a slight decrease in total net assets to $3.995 billion and a decline in NAV per share to $15.00 Consolidated Statements of Financial Condition (in thousands) | Metric | June 30, 2025 (unaudited) | September 30, 2024 | | :--- | :--- | :--- | | Total Investments, at fair value | $8,961,549 | $8,235,411 | | Total Assets | $9,236,513 | $8,703,756 | | Total Liabilities | $5,241,184 | $4,689,227 | | Total Net Assets | $3,995,329 | $4,014,529 | | Net asset value per common share | $15.00 | $15.19 | Consolidated Statements of Operations For the three months ended June 30, 2025, total investment income was $218.3 million, with a net increase in net assets of $90.1 million, while the nine-month period saw total investment income of $652.9 million and a net increase in net assets of $280.4 million Three Months Ended June 30 (in thousands, except per share data) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total investment income | $218,344 | $171,271 | | Net expenses | $117,082 | $78,424 | | Net investment income - after tax | $101,262 | $92,722 | | Net increase in net assets from operations | $90,058 | $9,252 | | Basic and diluted earnings per common share | $0.34 | $0.05 | Nine Months Ended June 30 (in thousands, except per share data) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total investment income | $652,936 | $500,271 | | Net expenses | $356,897 | $236,286 | | Net investment income - after tax | $296,514 | $262,790 | | Net increase in net assets from operations | $280,356 | $178,586 | | Basic and diluted earnings per common share | $1.05 | $0.99 | Consolidated Statements of Changes in Net Assets For the nine months ended June 30, 2025, total net assets decreased by $19.2 million, as the $280.4 million net increase from operations was offset by $335.2 million in distributions and net decreases from stock repurchases and issuances - Net assets decreased from $4.01 billion at September 30, 2024, to $3.99 billion at June 30, 202514 - Key changes for the nine months ended June 30, 2025, include a $280.4 million net increase from operations, offset by $335.2 million in distributions and $35.5 million in common stock repurchases14 Consolidated Statements of Cash Flows For the nine months ended June 30, 2025, the company experienced a net cash outflow of $179.0 million, with operating activities using $379.7 million primarily for new investments, while financing activities provided $200.7 million from net borrowings Cash Flow Summary - Nine Months Ended June 30 (in thousands) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | ($379,713) | $543,942 | | Net cash provided by (used in) financing activities | $200,724 | ($217,913) | | Net change in cash and equivalents | ($178,989) | $326,029 | Consolidated Schedules of Investments As of June 30, 2025, the investment portfolio had a fair value of $8.96 billion, primarily in one-stop and senior secured loans across various industries, with a detailed breakdown provided for each investment Total Investments by Type (in thousands) | Investment Type | Fair Value as of June 30, 2025 | Fair Value as of Sept 30, 2024 | | :--- | :--- | :--- | | Senior secured | $480,592 | $502,386 | | One stop | $7,785,066 | $7,110,258 | | Second lien | $28,625 | $14,054 | | Subordinated debt | $37,419 | $30,175 | | Equity | $629,847 | $578,538 | | Total | $8,961,549 | $8,235,411 | Top 5 Industry Concentrations by Fair Value (as of June 30, 2025) | Industry | Fair Value (in thousands) | % of Total | | :--- | :--- | :--- | | Software | $2,374,281 | 26.5% | | Healthcare Providers & Services | $675,526 | 7.5% | | Insurance | $534,375 | 6.0% | | Specialty Retail | $435,905 | 4.9% | | Automobiles | $414,744 | 4.6% | Notes to Consolidated Financial Statements This section details significant accounting policies and provides context on financial statements, including the GBDC 3 Merger, reduced incentive fees, specifics on debt facilities and securitizations, and details on stock repurchase and equity offerings - On June 3, 2024, the company completed its acquisition of Golub Capital BDC 3, Inc. ("GBDC 3 Merger")228 - Effective June 3, 2024, the Investment Advisory Agreement was amended, reducing incentive fee rates from 20.0% to 15.0% and the incentive fee cap from 20.0% to 15.0%280 - The company utilizes multiple borrowing facilities, including a $2.0 billion JPM Credit Facility, a $300 million Adviser Revolver, and several debt securitizations, with some older securitizations redeemed during the period359366393 - For the nine months ended June 30, 2025, the company repurchased 2.5 million shares for $35.5 million under its share repurchase program and issued 2.4 million shares for $38.0 million under its ATM Program437439 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, highlighting increased investment income driven by the GBDC 3 acquisition, portfolio composition, investment activity, expenses, and liquidity, noting a debt-to-equity ratio of 1.30x within the target range Overview GBDC's investment objective is to generate current income and capital appreciation by investing primarily in one-stop and senior secured loans to U.S. middle-market companies, with a $9.0 billion portfolio across 401 companies as of June 30, 2025 - The company's investment strategy focuses on one-stop and senior secured loans to U.S. middle-market companies, often sponsored by private equity firms452 Portfolio Composition by Fair Value | Investment Type | As of June 30, 2025 | As of Sept 30, 2024 | | :--- | :--- | :--- | | Senior secured | 5.4% | 6.1% | | One stop | 86.9% | 86.3% | | Second lien | 0.3% | 0.2% | | Subordinated debt | 0.4% | 0.4% | | Equity | 7.0% | 7.0% | | Total | 100.0% | 100.0% | Consolidated Results of Operations For the quarter ended June 30, 2025, total investment income was $218.3 million and net income was $90.1 million, with the nine-month period showing a $152.7 million increase in investment income due to the GBDC 3 acquisition, alongside higher net expenses from increased debt and management fees - Investment income for the nine months ended June 30, 2025, increased by $152.7 million year-over-year, mainly due to the GBDC 3 acquisition which expanded the average earning debt investments balance by $2.8 billion486 - Net expenses for the nine months ended June 30, 2025, increased by $120.6 million year-over-year, driven by higher interest expense on increased average debt and a larger base management fee491 - For the nine months ended June 30, 2025, net realized losses were $38.9 million, and net unrealized appreciation was $22.4 million505506 Liquidity and Capital Resources As of June 30, 2025, the company had $91.9 million in cash and $547.3 million available under its JPM Credit Facility, with a GAAP debt-to-equity ratio of 1.30x, while actively managing debt securitizations and equity programs - As of June 30, 2025, the company's asset coverage ratio was 176.8%, and its GAAP debt-to-equity ratio was 1.30x540 - The company had $547.3 million of availability on its JPM Credit Facility and $300.0 million on its Adviser Revolver as of June 30, 2025518519 - Outstanding commitments to fund investments totaled $996.1 million as of June 30, 2025542 Portfolio Composition, Investment Activity and Yield The investment portfolio grew to $9.0 billion at fair value across 401 companies, with new commitments of $556.8 million for the quarter, a weighted average income yield of 9.8%, and strong portfolio quality with non-accrual investments decreasing to 0.6% Internal Performance Ratings (at Fair Value) | Rating | As of June 30, 2025 | As of Sept 30, 2024 | | :--- | :--- | :--- | | 5 (Least Risk) | 2.9% | 1.9% | | 4 (As Expected) | 86.8% | 85.2% | | 3 (Below Expectations) | 9.0% | 11.6% | | 2 (Materially Below) | 1.3% | 1.3% | | 1 (Substantially Below) | 0.0% | 0.0% | - Non-accrual investments as a percentage of total investments at fair value decreased to 0.6% as of June 30, 2025, from 1.1% as of September 30, 2024549 - The weighted average income yield of total investments for the quarter ended June 30, 2025, was 9.8%459 Quantitative and Qualitative Disclosures about Market Risk The company is primarily exposed to valuation risk for Level 3 investments and interest rate risk, with a hypothetical 100 basis point increase in base rates estimated to increase annual net investment income by $41.8 million Interest Rate Sensitivity Analysis (Annualized Impact, in thousands) | Change in Interest Rates | Net Increase (Decrease) in Investment Income | | :--- | :--- | | Down 200 basis points | ($81,623) | | Down 100 basis points | ($41,784) | | Up 100 basis points | $41,820 | | Up 200 basis points | $83,640 | - As of June 30, 2025, 97.8% of the company's debt portfolio at fair value had interest rate floors, providing partial insulation from falling rates550 Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the period covered by the report596 - No material changes in internal controls over financial reporting occurred during the quarter597 Part II. Other Information Legal Proceedings The company reports that it is not currently subject to any material legal proceedings - The company is not currently subject to any material legal proceedings598 Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended September 30, 2024 - No material changes to risk factors were reported for the nine months ended June 30, 2025599 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None600 Defaults Upon Senior Securities The company reported no defaults upon its senior securities - None601 Other Information The company reported no other information for the period and stated that no directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the quarter - None of the company's directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the fiscal quarter ended June 30, 2025604 Exhibits This section lists all exhibits filed with the Form 10-Q, including amended bylaws, credit agreements, officer certifications, and XBRL data files - Exhibits filed include amendments to the Senior Secured Revolving Credit Agreement, the Equity Distribution Agreement, and the Revolving Loan Agreement with GC Advisors LLC606