GOLUB CAPITAL BDC, INC.
INVESTOR PRESENTATION
MARCH 2024
© 2024 GOLUB CAPITAL LLC
Disclaimer
Some of the statements in this presentation constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained in this presentation involve risks and uncertainties, including statements as to: our future operating results; our business prospects and the prospects of our portfolio companies, including our and their ability to achieve our respective objectives due to disruptions, including those caused by global health pandemics, such as the COVID-19 pandemic, or other large scale events; the effect of investments that we expect to make and the competition for those investments; our contractual arrangements and relationships with third parties; actual and potential conflicts of interest with GC Advisors LLC ("GC Advisors"), our investment adviser, and other affiliates of Golub Capital LLC (collectively, "Golub Capital"); the dependence of our future success on the general economy and its effect on the industries in which we invest; the ability of our portfolio companies to achieve their objectives; the use of borrowed money to finance a portion of our investments; the adequacy of our financing sources and working capital; the timing of cash flows, if any, from the operations of our portfolio companies; general economic and political trends and other external factors, including the COVID-19 pandemic; changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets that could result in changes to the value of our assets; elevating levels of inflation, and its impact on us, on our portfolio companies and on the industries in which we invest; the ability of GC Advisors to locate suitable investments for us and to monitor and administer our investments; the ability of GC Advisors or its affiliates to attract and retain highly talented professionals; the ability of GC Advisors to continue to effectively manage our business due to disruptions, including those caused by global health pandemics, such as the COVID-19 pandemic or other large scale events; turmoil in Ukraine and Russia, including sanctions related to such turmoil, and the potential for volatility in energy prices and other supply chain issues and any impact on the industries in which we invest; our ability to qualify and maintain our qualification as a regulated investment company, or RIC, and as a business development company; the impact of information technology systems and systems failures including data security breaches, data privacy compliance, network disruptions, and cybersecurity
attacks; general price and volume fluctuations in the stock markets; the impact on our business of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations issued thereunder and any actions toward repeal thereof; and the effect of changes to tax legislation and our tax position.
Such forward-looking statements may include statements preceded by, followed by or that otherwise include the words "may," "might," "will," "intend," "should," "could," "can," "would," "expect," "believe," "estimate," "anticipate," "predict," "potential," "plan" or similar words. The forward-looking statements contained in this presentation involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth as "Risk Factors" in our annual reports on our Form 10-K, registration statements on Form N-2, and quarterly reports on Form 10-Q.
We have based the forward-looking statements included in this presentation on information available to us on the date of this presentation. Actual results could differ materially from those anticipated in our forward-looking statements and future results could differ materially from historical performance. You are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future file with the Securities and Exchange Commission ("SEC"), including annual reports on Form 10-K, registration statements on Form N-2, quarterly reports on Form 10-Q and current reports on Form 8-K.
This presentation contains statistics and other data that have been obtained from or compiled from information made available by third-party service providers. We have not independently verified such statistics or data.
In evaluating prior performance information in this presentation, you should remember that past performance is not a guarantee, prediction, or projection of future results, and there can be no assurance that we will achieve similar results in the future.
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We Believe GBDC is Well Positioned For the Current Environment
GBDC Value Proposition:
1 | 2 |
The Right Strategy | The Right Manager |
We Believe GBDC is Well Positioned Against:
Inflation |
- Invests in first lien first outsenior secured floating rateloans
- Borrowers in resilient industries backed by partnership-oriented, top- quality private equity firms
- Golub Capital has a history of strong underwriting and low credit losses
- We believe Golub Capital has meaningful competitive advantages from its scale, relationships and incumbencies
Rising Interest Rates |
3 | The Right Structure | 4 | The Right Time |
Asset Valuation Volatility |
- Durable leverage structure with 62% unsecured funding ratio
- Leading fee structure with among the highest industry hurdle rates
- Strong alignment with manager and lifetime cumulative incentive fee lookback
- Enhanced dividend yield profile on quarterly distribution increase and variable supplemental distribution framework
- Designed for resiliency across a wide range of potential economic scenarios
Potential for Muddling | ||
| ||
Growth or Recession |
Note: As of December 31, 2023.
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The Right Strategy | 01 |
GBDC's Investment Portfolio is Conservatively Positioned
Predominantly First Lien, First Out Senior Secured Loan Portfolio Mitigates Credit Risk
Preponderance of Portfolio is Floating Rate, Mitigating Interest Rate Risk
Portfolio Composition by Seniority
1%
5% 8%
94%
First Lien
86%
First Lien Traditional
Senior
First Lien
One Stop
Junior Debt1
Equity
Portfolio Composition by Interest Rate Type on Loans2
Internal Performance Ratings3 Are Back Near Pre-Covid Levels, Highlighting Our Focus on Resilient Companies and Industries
Highly Granular and Diversified Portfolio Limits the Potential Impact of Idiosyncratic Risks
Internal Performance Rating Migration
% of Portfolio at Fair Value
Pre-COVID | Today | |
85.9% | ||
90.9% | ||
71.5% |
26.5% | 13.7% | |
7.9% | 2.0% | |
1.2% | 0.4% |
September 30, March 31, 2020 December 31, 2023 2019
Internal Performance Ratings 4-5
(Performing At or Above Expectations)
Internal Performance Rating 3
(Performing Below Expectations)
Internal Performance Ratings 1-2
(Performing Materially Below Expectations)
Diversification by Industry4 | Granular Portfolio: |
0.3% Average Investment Size
40industries below 3%
Software 27%
Healthcare Providers and | ||
Services 8% | ||
Commercial Services | ||
and Supplies 3% | Specialty Retail 6% | |
Health Care Technology 4% | Diversified Consumer | |
IT Services 4% | ||
Services 5% | ||
Insurance 5% | ||
Automobiles 5% |
Note: This page is accompanied by the footnotes on the page titled Additional Footnotes at the end of this section, which are an integral part of this presentation. As of December 31, 2023.
Source: Golub Capital.
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Higher First Lien Composition, Greater Portfolio Diversity Than Peer
Averages
Portfolio Composition by Seniority1
GBDC's portfolio is more conservatively positioned than the
BDC peer average
94% First Lien
75% First Lien
Diversification by Obligor
GBDC's portfolio is almost twice as diversified by obligor as the BDC
peer average
357 Portfolio Companies
(0.28% Average Investment Size1)
185 Portfolio Companies2
(0.54% Average Investment Size)
GBDC | Peer Average³ | GBDC | Peer Average³ |
- Based on fair value of investments as of December 31, 2023.
- Calculated based on each BDC's total investment portfolio size and average portfolio company investment size at fair value as presented in SEC filings.
- The BDC peer group utilized by Golub Capital is the 15 largest publicly traded, externally managed BDCs by total balance sheet assets, excluding GBDC, as of December 31, 2023. Golub Capital has selected this group of BDCs for comparison because the Firm believes that the group represents companies that have a similar structure and size as GBDC.
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Strong, Long-Term Track Record of Low Credit Losses and Low Volatility of Credit Losses…
Realized & Unrealized Net Gain/(Loss) Rate Since Inception
Annualized, % of portfolio at cost1
GBDC has earned an annualized net investment gainrate
since inception
0.22%
(0.11%)
(0.90%)
(1.59%)
GBDC | Peer Group | Peer Group | Peer Group |
Top Quartile | Median | Bottom Quartile |
Volatility of Quarterly Loss Rates Since Inception
Standard deviation, % of portfolio at cost
GBDC has the lowest volatility of quarterly loss rates
as compared to the BDCs in the peer group
2.09%
1.72%
1.32%
0.95%
GBDC | Peer Group | Peer Group | Peer Group |
Top Quartile | Median | Bottom Quartile |
1. Represents the geometric average of quarterly gain/(loss) rates since inception (December 31, 2009), where quarterly gain/(loss) rate represents (i) the sum of unrealized appreciation/(depreciation) and realized gain/(loss) on investments excluding the impact of foreign currency translation and the impact of unrealized appreciation/(depreciation) on investments from the GCIC purchase premium, divided by (ii) the investment portfolio value at cost at the end of the respective measurement period.
Note: The BDC peer group utilized by Golub Capital is the 15 largest publicly traded, externally managed BDCs by total balance sheet assets, excluding GBDC, as of December 31, 2023. Golub Capital has selected this group of BDCs for comparison because the Firm believes that the group represents companies that have a similar structure and size as GBDC. Past performance does not guarantee future results.
Source: SNL Financial and SEC filings.
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…Including Through the COVID Period
CQ2 2020 - CQ1 2021 Realized Net Gains (Losses)
Annualized, % of portfolio at cost1
GBDC delivered leading sector performancethrough the
COVID-impacted period
(0.22%) (0.16%)
(0.58%)
(2.23%) | |||
GBDC | Peer Group | Peer Group | Peer Group |
Top Quartile | Median | Bottom Quartile |
CQ2 2020 - CQ1 2021 Volatility of Quarterly Loss Rates
Standard Deviation, % of portfolio at cost
GBDC has the lowest volatility of quarterly realized loss rates through
the COVID-impacted period
0.78%
0.55%
0.14%
0.05%
GBDC | Peer Group | Peer Group | Peer Group |
Top Quartile | Median | Bottom Quartile |
1. Calculated as a compound annual growth rate using quarterly data.
Note: The BDC peer group utilized by Golub Capital is the 15 largest publicly traded, externally managed BDCs by total balance sheet assets, excluding GBDC, as of June 30, 2023. Golub Capital has selected this group of BDCs for comparison because the Firm believes that the group represents companies that have a similar structure and size as GBDC.
Source: SNL Financial and SEC filings.
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Additional Footnotes
GBDC's Investment Portfolio is Conservatively Positioned
- Junior Debt consists of subordinated debt and second lien loans.
- The percentage of fixed rate loans and floating rate loans is calculated using total investments at fair value.
- Please see Internal Performance Ratings set forth in the section captioned "Portfolio Composition, Investment Activity and Yield" in our quarterly report on our Form 10-Q.
- Based on S&P 2018 industry code. The largest industries represented as a percentage of the portfolio at fair value are labeled. All other industry segments are each below 3%.
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The Right Manager | 02 |
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Disclaimer
Golub Capital BDC Inc. published this content on 22 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 March 2024 20:40:05 UTC.