Golub Capital BDC, Inc. Announces Fiscal Year 2021 Fourth Quarter Financial Results and Declares Fiscal Year 2022 First Quarter Distribution of $0.30 Per Share

NEW YORK, Nov. 29, 2021 /PRNewswire/ -- Golub Capital BDC, Inc., a business development company (Nasdaq: GBDC), today announced its financial results for its fourth fiscal quarter ended September 30, 2021.

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.

As a supplement to U.S. generally accepted accounting principles ("GAAP") financial measures, the Company is providing the following non-GAAP financial measures that it believes are useful for the reasons described below:

• "Adjusted Net Investment Income" and "Adjusted Net Investment Income Per Share" – excludes the amortization of the purchase premium and the accrual for the capital gain incentive fee required under GAAP (including the portion of such accrual that is not payable under the Company's investment advisory agreement) from net investment income calculated in accordance with GAAP.
• "Adjusted Net Realized and Unrealized Gain/(Loss)" and "Adjusted Net Realized and Unrealized Gain/(Loss) Per Share" – excludes the unrealized loss resulting from the purchase premium write-down and the corresponding reversal of the unrealized loss from the amortization of the premium from the determination of realized and unrealized gain/(loss) in accordance with GAAP.
• "Adjusted Net Income/(Loss)" and "Adjusted Earnings/(Loss) Per Share" – calculates net income and earnings per share based on Adjusted Net Investment Income and Adjusted Net Realized and Unrealized Gain/(Loss). "Adjusted earnings per share" also excludes the impact of the retroactive adjustment to the weighted average shares calculation due to the bonus element of the rights offering and the resulting impact on earnings per share.

The Company believes that excluding the financial impact of the purchase premium write down in the above non-GAAP financial measures is useful for investors as it is a non-cash expense/loss resulting from the acquisition of GCIC and is one method the Company uses to measure its financial condition and results of operations. In addition, the Company believes excluding the accrual of the capital gain incentive fee in the above non-GAAP financial measures is useful as it includes the portion of such accrual that is not contractually payable under the terms of the Company's investment advisory agreement with GC Advisors.  Finally, the Company believes excluding the impact of the retroactive adjustment to the weighted average shares calculation due to the bonus element of the rights offering and the resulting impact on per share data is useful for investors as it presents per share financial data that is consistent with what was previously reported.

Fourth Fiscal Quarter 2021 Highlights

• Net investment income per share for the quarter ended September 30, 2021 was $0.27 as compared to $0.25 for the quarter ended June 30, 2021. Excluding $0.03 per share in purchase premium amortization from the GCIC acquisition, Adjusted Net Investment Income Per Share¹ for the quarter ended September 30, 2021 was $0.30. This compares to Adjusted Net Investment Income Per Share¹ of $0.29 for the quarter ended June 30, 2021 when excluding $0.04 per share in purchase premium amortization from the GCIC acquisition.
• Net realized and unrealized gain per share for the quarter ended September 30, 2021 was $0.15. Adjusted Net Realized and Unrealized Gain Per Share¹ was $0.12 when excluding the $0.03 per share reversal of net realized loss and unrealized depreciation resulting from the amortization of the purchase premium. The Adjusted Net Realized and Unrealized Gain Per Share¹ for the quarter ended September 30, 2021 primarily resulted from a continued reversal in unrealized depreciation in the fair value of some of our portfolio company investments that was recognized during the quarter ended March 31, 2020, primarily due to the adverse economic effects of the COVID-19 pandemic. The partial reversal in unrealized depreciation for the quarter ended September 30, 2021 was primarily attributable to portfolio companies that generally continued to perform well. Strong performance across the portfolio was reflected in our internal performance ratings that have largely returned to pre-COVID levels. For additional analysis, please refer to the Quarter Ended 09.30.21 Investor Presentation available on the Investor Resources link on the homepage of the Company's website (www.golubcapitalbdc.com) under Events/Presentations. The Investor Presentation was also filed with the Securities and Exchange Commission as an Exhibit to a Form 8-K. These results compare to net realized and unrealized gain per share of $0.24 during the quarter ended June 30, 2021. Adjusted Net Realized and Unrealized Gain Per Share¹ for the quarter ended June 30, 2021 was $0.20 when excluding the $0.04 per share reversal of net realized loss and unrealized loss resulting from the amortization of the purchase premium.
• Earnings per share for the quarter ended September 30, 2021 was $0.42 as compared to $0.49 for the quarter ended June 30, 2021. Adjusted Earnings Per Share¹ for the quarter ended September 30, 2021 was $0.42 as compared to $0.49 for the quarter ended June 30, 2021.
• Net asset value per share increased to $15.19 at September 30, 2021 from $15.06 at June 30, 2021.
• On September 29, 2021, we paid a quarterly distribution of $0.29 per share and on November 19, 2021, our board of directors declared a quarterly distribution of $0.30 per share, which is payable on December 30, 2021 to stockholders of record as of December 10, 2021.

Portfolio and Investment Activities

As of September 30, 2021, the Company had investments in 296 portfolio companies with a total fair value of $4,894.9 million.  This compares to the Company's portfolio as of June 30, 2021, as of which date the Company had investments in 275 portfolio companies with a total fair value of $4,439.5 million. Investments in portfolio companies as of September 30, 2021 and June 30, 2021 consisted of the following:

The following table shows the asset mix of our new investment commitments for the three months ended September 30, 2021:

Total investments in portfolio companies at fair value were $4,894.9 million at September 30, 2021.  As of September 30, 2021, total assets were $5,164.9 million, net assets were $2,582.7 million and net asset value per share was $15.19. 

Consolidated Results of Operations

For the fourth fiscal quarter of 2021, the Company reported GAAP net income and Adjusted Net Income¹ of $71.6 million or $0.42 per share. GAAP net investment income was $46.3 million or $0.27 per share and Adjusted Net Investment Income¹ was $51.7 million or $0.30 per share.  GAAP net realized and unrealized gain was $25.3 million or $0.15 per share and Adjusted Realized and Unrealized Gain/(Loss)¹ was $20.2 million or $0.12 per share.

Net income can vary substantially from period to period due to various factors, including the level of new investment commitments, the recognition of realized gains and losses and unrealized appreciation and depreciation, including as a result of the effects of the COVID-19 pandemic. As a result, quarterly comparisons of net income may not be meaningful. 

Liquidity and Capital Resources

The Company's liquidity and capital resources are derived from the Company's debt securitizations (also known as collateralized loan obligations, or CLOs), unsecured notes, revolving credit facilities and cash flow from operations. The Company's primary uses of funds from operations include investments 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 securitizations, unsecured notes, revolving credit facilities, proceeds from its investment portfolio and proceeds from offerings of its securities and its dividend reinvestment plan to finance its investment objectives.

As of September 30, 2021, we had cash, cash equivalents and foreign currencies of $181.1 million, restricted cash, cash equivalents and foreign currencies of $63.3 million and $2,569.2 million of debt outstanding. As of September 30, 2021, subject to leverage and borrowing base restrictions, we had approximately $77.9 million of remaining commitments and $77.9 million of availability, in the aggregate, on our revolving credit facilities with various banks. In addition, as of September 30, 2021, we had $100.0 million of remaining commitments and availability on our unsecured line of credit with GC Advisors.

On August 3, 2021, we issued $350.0 million of unsecured notes, which bear a fixed interest rate of 2.050% (yield to maturity of 2.274%) and mature on February 15, 2027 (the "2027 Unsecured Notes").

On August 26, 2021, we redeemed all of the $189.0 million of notes issued under the $330.5 million term debt securitization that we completed on August 26, 2020 (the "2020 Debt Securitization") which were priced at 3-month LIBOR + 2.44%.

On September 1, 2021, we redeemed all $97.0 million of outstanding U.S. Small Business Administration (the "SBA") debentures issued by our consolidated subsidiary, GC SBIC VI, L.P ("SBIC VI") and on September 21, 2021, SBIC VI surrendered its license to operate as a small business investment company to the SBA.

On October 13, 2021, we issued an additional $200.0 million in aggregate principal amount of our unsecured notes due 2026 (the "2026 Unsecured Notes"), which bear a fixed interest rate of 2.500%, and the new 2026 Unsecured Notes have a yield to maturity of 2.667%. The new 2026 Unsecured Notes have the same terms as the original issuance of the 2026 Unsecured Notes. Upon issuance of the new 2026 Unsecured Notes, the outstanding aggregate principal amount of the 2026 Unsecured Notes is $600.0 million.

On October 15, 2021, we issued an additional $100.0 million in aggregate principal amount of our unsecured notes due 2024 (the "2024 Unsecured Notes"), which bear a fixed interest rate of 3.375%, and the new 2024 Unsecured Notes have a yield to maturity of 1.809%. The new 2024 Unsecured Notes have the same terms as the original issuance of the 2024 Unsecured Notes. Upon issuance of the new 2024 Unsecured Notes, the outstanding aggregate principal amount of the 2024 Unsecured Notes is $500.0 million.

On November 19, 2021, we amended our revolving credit facility with JP Morgan Chase Bank N.A., as administrative agent, to, among other things, increase the accordion feature that allows us to increase the total facility size to $1.5 billion from $712.5 million. In addition, we entered into agreements on October 14, 2021 and November 23, 2021 to increase the aggregate commitments outstanding under the credit facility to $687.5 million and $1.0375 billion, respectively, from $475.0 million as of September 30, 2021.

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 ratings:

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.  For additional analysis on the Company's internal performance ratings as of September 30, 2021 and the impact from COVID-19, please refer to the Quarter Ended 09.30.21 Investor Presentation available on Investors Resources link on the homepage of the Company's website (www.golubcapitalbdc.com) under Events/Presentations.  

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 September 30, 2021 and June 30, 2021:

Conference Call

The Company will host an earnings conference call at 1:00 p.m. (Eastern Time) on Tuesday, November 30, 2021 to discuss the quarterly financial results. All interested parties may participate in the conference call by dialing (833) 900-2240 approximately 10-15 minutes prior to the call; international callers should dial +1 (236) 714-2752. 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 Resources link on the homepage of our website (www.golubcapitalbdc.com) and click on the Quarter Ended 09.30.21 Investor Presentation under Events/Presentations. An archived replay of the call will be available shortly after the call until 11:59 p.m. (Eastern Time) on December 14, 2021. To hear the replay, please dial (800) 585-8367. International dialers, please dial +1 (416) 621-4642. For all replays, please reference program ID number 1294235.

ABOUT GOLUB CAPITAL BDC, INC.

Golub Capital BDC, Inc. ("GBDC") is an externally-managed, non-diversified closed-end management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. GBDC invests primarily in one stop and other senior secured loans to middle market companies that are often sponsored by private equity investors. GBDC's investment activities are managed by its investment adviser, GC Advisors LLC, an affiliate of the Golub Capital LLC group of companies ("Golub Capital").

ABOUT GOLUB CAPITAL

Golub Capital is a market-leading, award-winning direct lender and credit asset manager, with over $40 billion of capital under management. Golub Capital specializes in delivering reliable, creative and compelling financing solutions to companies backed by private equity sponsors. The firm's sponsor finance expertise also forms the foundation of its Late Stage Lending, Broadly Syndicated Loan and Opportunistic Credit investment programs. Across its activities, Golub Capital nurtures long-term, win-win partnerships that inspire repeat business from private equity sponsors and investors. Founded over 25 years ago, Golub Capital today has over 550 employees and lending offices in Chicago, New York, San Francisco and London. For more information, please visit 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.

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SOURCE Golub Capital BDC, Inc.