Golub Capital BDC, Inc. · NASDAQ:GBDC
Golub Capital BDC — Investor Presentation (September 2024)
45 slides from Golub Capital BDC's investor presentation, September 2024
Slide 1: Golub Capital BDC, Inc. Investor Presentation September 2024
GOLUB CAPITAL BDC, INC. (Nasdaq: GBDC) INVESTOR PRESENTATION SEPTEMBER 2024 © 2024 G OL UB CAP IT AL L L C
Slide 2: Disclaimer
Disclaimer Some of the statements in this presentation constitute forward-looking statements, stock markets; the impact on our business of the Dodd-Frank Wall Street Reform and which relate to future events or our future performance or financial condition. The Consumer Protection Act and the rules a
Slide 3: At a Glance: Golub Capital BDC, Inc. (Nasdaq: GBDC)
At a Glance: Golub Capital BDC, Inc. (Nasdaq: GBDC) GBDC’s Investment Focus GBDC Highlights − First lien first out senior secured floating rate loans Investment $7.9 billion, 380 portfolio − Private equity-backed companies with $10–100 million of EBITDA Portfolio companies, 0.3% average − “Core” mid
Slide 4: The Golub Capital Advantage and GBDC Market Positioning
The Golub Capital Advantage and GBDC Market Positioning 01
Slide 5: Overview of Golub Capital
Overview of Golub Capital Firm Overview − Founded in 1994 $70+ billion − Over 950 employees with over 210 investment professionals Capital Under Management1 − Award-winning middle market lending franchise2 30 − Top 3 middle market bookrunner for each of the last 10 years3 − Office locations across N
Slide 6: Differentiated Core Middle Market Focus v. Peers
Differentiated Core Middle Market Focus v. Peers Golub Capital’s lending focus spans from the lower middle market to the upper middle market Ability to finance upper middle market borrowers Blackstone Secured Lending Fund: $206 million Wtd. Avg. EBITDA Golub Capital BDC, Inc. (Nasdaq: GBDC): Oaktree
Slide 7: Ability to Work with Borrowers Across the Middle Market
Ability to Work with Borrowers Across the Middle Market We provide a wide range of financing solutions across the entire middle market spectrum which allows us to see more deal flow, be more selective, grow with our borrowers over time, and improve risk-adjusted returns based upon how demand for cap
Slide 8: Broad Sponsor Finance Platform
Broad Sponsor Finance Platform 390+ 270+ $25–700MM Sponsor Relationships1 Repeat Sponsor Relationships Hold Size Range Golub Capital Advantages for Private Equity Sponsors Origination Volume with Repeat Sponsors2,3 % of retained commitments − Reliability 92% 94% 92% 96% − Product breadth and flexibi
Slide 9: Attractive Opportunities From Existing Borrowers
Attractive Opportunities From Existing Borrowers As the incumbent lender to over 360 middle market companies, we believe we are well positioned to capture attractive deal flow from our existing borrowers − We believe financings with existing borrowers generally have attractive risk-return characteri
Slide 10: Our Capabilities Enable Us To Lead Approximately 90% of Our Deals
Our Capabilities Enable Us To Lead Approximately 90% of Our Deals We believe acting as a lead lender provides distinct advantages relative to a participating role Advantages Origination Volume with Golub Capital as a Lead Lender* % of retained commitments − Lead lenders control pricing, deal structu
Slide 11: Extensive Investment Team With Deep Industry Expertise
Extensive Investment Team With Deep Industry Expertise Golub Capital’s 210+ investment professionals have in-depth knowledge and experience across a variety of industry sub-sectors Software & Technology Healthcare 800+ $74+ Billion 500+ $37+ Billion Transactions closed Capital committed Transactions
Slide 12: Long-Standing Track Record of Low Default Rates
Long-Standing Track Record of Low Default Rates1 Our strong, long-term track record benefits from low defaults and credit losses over multiple market cycles* Golub Capital vs. Leveraged Loan Index Default Rate 2004 – Q2 2024 114 bps 152 bps 2.03% 0.00% Payment Default Rate4 during COVID-19 dislocati
Slide 13: Affiliation with Golub Capital Positions GBDC for Success in the Public BDC Sector
Affiliation with Golub Capital Positions GBDC for Success in the Public BDC Sector GBDC’s affiliation with Golub Capital results in a risk-adjusted return profile that is differentiated in the public BDC sector Attractive Dividend Yield Long-Term Track Record of 1. 2. 1st Lien Oriented Portfolio 3.
Slide 14: GBDC Business Highlights
GBDC Business Highlights O 2 GOLUB CAPITAL
Slide 15: FY 2024 Q3 Earnings Review (Quarter Ended 6/30/24)
FY 2024 Q3 Earnings Review (Quarter Ended 6/30/24) − Adjusted net investment income per share of $0.48, or an Adjusted NII ROE of 12.7%1,2 Earnings Summary • Decrease of $0.03 from $0.51 per share for the quarter ended March 31, 2024 • Increase of $0.04 from $0.44 per share for the quarter ended Jun
Slide 16: GBDC's Investment Portfolio is Conservatively Positioned
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 Portfolio Composition by Seniority Portfolio Composition by Interest Rate Type on Loans2 0%* 7% 7% First Lien T
Slide 17: Higher First Lien Composition, Greater Portfolio Diversity Than Peer Averages
Higher First Lien Composition, Greater Portfolio Diversity Than Peer Averages Portfolio Composition by Seniority1 Diversification by Obligor GBDC’s portfolio is more conservatively positioned than the GBDC’s portfolio is almost twice as diversified by obligor as the BDC BDC peer average peer average
Slide 18: Golub Capital Portfolio Company Fundamentals Outpace the Average Private Credit Borrower
Golub Capital Portfolio Company Fundamentals Outpace the Average Private Credit Borrower Year-over-Year LTM EBITDA Growth (%) LTM EBITDA Margin (%) Golub Capital portfolio companies have demonstrated stronger Golub Capital portfolio companies have demonstrated greater growth relative to the average
Slide 19: GBDC's Portfolio Company Credit Profiles are Stronger than the Average Private Credit Borrower
GBDC’s Portfolio Company Credit Profiles are Stronger than the Average Private Credit Borrower % of Portfolio with Interest Coverage >1.0x % of Investment Income from PIK Sources Non-Accrual Rate v. BDC Peers3 Golub Capital portfolio companies have GBDC’s total investment income is less GBDC’s portf
Slide 20: Strong, Long-Term Track Record of Low Credit Losses and Low Volatility
Strong, Long-Term Track Record of Low Credit Losses and Low Volatility of Credit Losses… Realized & Unrealized Net Gain/(Loss) Rate Since Inception Volatility of Quarterly Loss Rates Since Inception Annualized, % of portfolio at cost1 Standard deviation, % of portfolio at cost GBDC has earned an ann
Slide 21: Gold Standard in Public BDC Fee Structures & High Degree of Shareholder Alignment
Gold Standard in Public BDC Fee Structures & High Degree of Shareholder Alignment GBDC’s fee structure positions it to deliver market-leading risk-adjusted returns across different economic and interest rate environments while keeping its investment strategy focused at the top of the capital structu
Slide 22: GBDC Debt Funding Structure and Liquidity Management
GBDC Debt Funding Structure and Liquidity Management 03
Slide 23: Conservative Financial Leverage With a Durable and Diverse Funding Structure
Conservative Financial Leverage With a Durable and Diverse Funding Structure GBDC Debt Capital Structure* Debt Undrawn Funding Source Commitment Outstanding Par Commitment Reinvestment Period Stated Maturity Interest Rate1 Securitizations: 2018 Debt Securitization $307,994 $307,994 $— January 20, 20
Slide 24: Laddered Debt Funding Structure with Long-Dated Maturities
Laddered Debt Funding Structure with Long-Dated Maturities Long Tenured Debt Securities Staggered Maturities Amount Outstanding as of June 30, 2024 ($ in millions) Amount Outstanding as of June 30, 2024 $1,600 $1,400 0-3 years 22% 5+ years 47% $1,200 $1,000 $800 3-5 years $600 31% $400 $200 $0 2024
Slide 25: Highly Flexible Funding Structure and Significant Available Liquidity
Highly Flexible Funding Structure and Significant Available Liquidity Funding Sources by Type and Available Liquidity 46% of debt funding from long-date, fixed Amount Outstanding as of June 30, 2024 ($ in millions) ✓ rate unsecured notes $1,413 Total Available Liquidity1 $0.1 Cash & Cash Equivalents
Slide 26: Credit Rating Highlights – GBDC v. BDC Sector
Credit Rating Highlights – GBDC v. BDC Sector Golub Capital and GBDC are committed to a differentiated investment grade ratings profile Asset 1st Lien % Non-Accrual % Asset Coverage Total Asset of Total Coverage Ratio Investment Unsecured % Coverage of Investment 1 2 3 4 Business Development Company
Slide 27: GBDC Dividend Policy and Capital Allocation
GBDC Dividend Policy and Capital Allocation 04
Slide 28: GBDC's Distribution Policy
GBDC’s Distribution Policy GBDC maintains a quarterly base distribution and a variable supplemental distribution for a collective policy that seeks (i) to maximize distributions to GBDC shareholders, (ii) to minimize excise tax, and (iii) to maintain and potentially grow NAV over time Quarterly Base
Slide 29: Quarterly Variable Supplemental Distribution Framework
Quarterly Variable Supplemental Distribution Framework FY 2024 Q3 Quarterly Variable Supplemental Distribution Quarter Ended Quarter Ended March 31, 2024 June 30, 2024 Quarterly Variable Supplemental Distribution Adjusted net investment income per share $0.51 $0.48 (-) Quarterly distribution paid (0
Slide 30: Dividend Coverage in Declining Interest Rate Scenarios
Dividend Coverage in Declining Interest Rate Scenarios Amongst BDC peers, GBDC maintains one of the highest dividend coverage ratios from Net Investment Income, and its current base distribution of $0.39 per share is relatively well insulated against a decline in interest rates Coverage of Current B
Slide 31: NAV Accretion from Affiliated BDC Mergers
NAV Accretion from Affiliated BDC Mergers Mergers between GBDC and Golub Capital affiliated private-to-public BDCs have represented a highly effective capital raising alternative for GBDC. GBDC’s acquisition by merger of GCIC in 2019 and GBDC 3 in 2024 each resulted in NAV accretion for GBDC investo
Slide 32: Key Takeaways – GBDC Returns and Value Proposition
Key Takeaways – GBDC Returns and Value Proposition 05
Slide 33: GBDC's Return Drivers
GBDC’s Return Drivers We believe GBDC is positioned to deliver one of the most attractive risk-adjusted return profiles in the public BDC sector Attractive Asset Yields w/ 1st Lien Focus Quarter Ended 1. - 1st lien focused investment portfolio, ~100% floating rate portfolio, June 30, 2024 sponsor-ba
Slide 34: GBDC's Long History of Strong Shareholder Returns
GBDC’s Long History of Strong Shareholder Returns Investors in GBDC’s 2010 IPO have achieved a 9.6% IRR on NAV1 As of June 30, 2024 $34.36 $0.24 $0.63 $18.17 $14.63 $15.32 1. The 9.6% internal rate of return (“IRR”) on NAV is calculated using beginning of period NAV, distributions paid during the pe
Slide 35: Since IPO, GBDC has Delivered Outsized Returns with Lower Volatility
Since IPO, GBDC has Delivered Outsized Returns with Lower Volatility GBDC has outperformed BDC peers with lower volatility Annualized IRR on NAV Volatility of Annualized IRR on NAV As of June 30, 2024 As of June 30, 2024 GBDC BDC Peer Average¹ GBDC BDC Peer Average¹ 14.1% 9.6% 6.9% 8.3% Since GBDC I
Slide 36: GBDC Has Outperformed Competing Asset Classes
GBDC Has Outperformed Competing Asset Classes Since its inception in 2010, GBDC has performed in line with broad-based equity market indices while delivering significant outperformance relative to relevant leveraged loan and bank market indices Annualized Total Returns Since GBDC’s Inception April 1
Slide 37: GBDC's Value Proposition
GBDC’s Value Proposition GBDC is a premier BDC that primarily invests in first lien senior secured loans to middle market companies sponsored by private equity firms − GBDC is managed by an affiliate of Golub Capital, an industry-leading lender to U.S. middle market Golub Capital Affiliation compani
Slide 38: Appendix
Appendix O 6 GOLUB CAPITAL
Slide 39: The Sponsor Advantage
The Sponsor Advantage We believe lending to sponsor-backed companies helps us select better credits, maintain better portfolio performance and achieve better problem resolution than lending to non-sponsored companies Credit Selection − Sponsors specialize in creating equity value and implementing cr
Slide 40: Leading Provider of One-Stop Loans and Buy-and-Hold Solutions
Leading Provider of One-Stop Loans and Buy-and-Hold Solutions One-stop loans and buy-and-hold solutions provide a win-win for investors and sponsors Win-Win of the One-Stop Senior/Mezzanine Structure One-Stop Structure − For investors First lien, first-out senior secured debt 45% Senior 50% One-St
Slide 41: Our Broad Sponsor Finance Platform Leads to Extensive Deal Flow
Our Broad Sponsor Finance Platform Leads to Extensive Deal Flow We believe our direct origination strategy, scale and market position create a wide deal funnel, allowing us to be selective and disciplined Historical Selectivity Golub Capital Middle Market Lending Opportunities 2,824 2,543 2,388 2,38
Slide 42: Common Stock and Distribution Information
Common Stock and Distribution Information Common Stock Price Data1 Fiscal Year Ending September 30, 2023 High Low End of Period First Quarter $14.25 $12.46 $13.16 Second Quarter $14.09 $12.38 $13.56 Third Quarter $13.55 $13.02 $13.50 Fourth Quarter $15.02 $13.37 $14.67 Fiscal Year Ending September 3
Slide 43: Endnotes
Endnotes At a Glance: Golub Capital BDC, Inc. (Nasdaq: GBDC) 1. Multi-year winner of “Senior Lender of the Year, Americas” (2015, 2016, 2017, 2019, 2020, 3. We believe our Default definition most closely aligns with the Morningstar LSTA US Leveraged Loan 2023) and “Lender of the Year, Americas” (201
Slide 44: Endnotes (Continued)
Endnotes (Continued) GBDC’s Investment Portfolio is Conservatively Positioned 1. Junior Debt consists of subordinated debt and second lien loans. 2. The percentage of fixed rate loans and floating rate loans is calculated using total investments at fair value. 3. Please see Internal Performance Rati
Slide 45: Important Investor Information
Important Investor Information Golub Capital (including its various affiliates) creates and manages multiple investment funds. Two Because many of the loans or other investments are not actively traded, this determination of of its control affiliates, GC Advisors LLC (“GC Advisors”) and GC OPAL Advi
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