Golub Capital Bdc, Inc. · NASDAQ:GBDC
Golub Capital Bdc — Q3 2020 Earnings Presentation
36 slides from Golub Capital Bdc's earnings presentation, Aug 10, 2020
Slide 1: Golub Capital BDC, Inc. Investor Presentation
GOLUB CAPITAL BDC, INC. INVESTOR PRESENTATION QUARTER ENDED JUNE 30, 2020
Slide 2: Disclaimer
Disclaimer Some of the statements in this presentation constitute forward-looking statements, Such forward-looking statements may include statements preceded by, followed by which relate to future events or our future performance or financial condition. The or that otherwise include the words “may,”
Slide 3: Summary of Financial Results vs. Preliminary Estimates
Summary of Financial Results vs. Preliminary Estimates 01
Slide 4: Summary of Financial Results vs. Preliminary Estimates
Summary of Financial Results vs. Preliminary Estimates Q3 2020 Preliminary Estimate Range Q3 2020 Actual (Filed July 15, 2020) Net Investment Income Per Share Net investment income per share $0.23 $0.22 $0.24 Amortization of purchase premium per share1 0.05 0.05 0.05 Adjusted net investment income p
Slide 5: GBDC Performance Drivers
GBDC Performance Drivers O Wi, GOLUB CAPITAL
Slide 6: Drivers of GBDC's Strong FQ3 2020 Earnings
Drivers of GBDC’s Strong FQ3 2020 Earnings Key Themes from FQ3 2020 Impact on GBDC U.S. economy began reopening sooner than Improved internal performance ratings1 anticipated Low new non-accruals2 GBDC portfolio companies generally performed better than expected, especially those in COVID-im
Slide 7: Improved Borrower Performance Drove Positive Trends in Risk Ratings
Earlier U.S. Reopening, Improved Borrower Performance and Increased Sponsor Support Drove Positive Trends in GBDC’s Risk Ratings Internal Performance Rating Migration % of Portfolio at Fair Value Decrease driven by better than 71.5% expected portfolio company Increase driven by investments performan
Slide 8: Low Net Realized Losses and Strong Unrealized Gains Drove NAV Increase
Low Net Realized Losses and Strong Unrealized Gains Drove a NAV Per Share Increase from March 31 NAV Pro Forma for Rights Offering NAV Per Share Bridge Net Realized & Unrealized Gain: $0.71 $14.62 ($1.13) ($0.05) ($0.09) $14.05 $0.74 $0.28 ($0.29) $13.49 ($0.03) $0.23 NII + $0.05 Reversal of Amortiz
Slide 9: Navigating COVID-19: Strategic Response Update
Navigating COVID-19: Strategic Response Update 03
Slide 10: COVID-19 Strategic Response Update
COVID-19 Strategic Response Update GBDC continues to execute on its three key goals for navigating the COVID-19 crisis: 1. Proactively manage its highly diversified, first lien, senior secured investment portfolio 2. Support existing portfolio company investments 3. Fortify the balance sheet and pre
Slide 11: Diversified Portfolio Focused on Recession-Resistant Industries
GBDC’s Diversified Portfolio Is Focused on Recession-Resistant Industries Expected to be More Insulated from COVID-19 Key Portfolio Statistics COVID-19 Portfolio Risk Exposure Summary1 As of June 30, 2020 At Fair Value as of June 30, 2020 $4.3 billion At Fair Value <20% >80% 254 Investments <1% <0.4
Slide 12: Proactive Portfolio Management to Minimize Net Realized Credit Losses
Proactive Portfolio Management to Minimize Net Realized Credit Losses Golub Capital has taken measures to address the economic and market impact of COVID-19 on GBDC’s portfolio companies Phase 3 Goals Phase 3 Update ✓ • Design and execute game plans • Executed 50+ credit-enhancing Phase 1: for each
Slide 13: Increasing Opportunity Set for Credit-Enhancing Incremental Investments
Increasing Opportunity Set for Credit-Enhancing Incremental Investments We expect to have significant opportunities to credit-enhance our portfolio through amendments and incremental investments Illustrative Examples Company A Company B Situation Overview Situation Overview ― Company was seeking con
Slide 14: GBDC's Balance Sheet is Well-Positioned for the Current Environment
GBDC’s Balance Sheet is Well-Positioned for the Current Environment − GAAP leverage under 0.90x (regulatory leverage of less than 0.75x) − Substantial liquidity (cash and borrowing capacity) of $435 million − Enhanced debt capital structure with recent upsize of Morgan Stanley facility1 and retireme
Slide 15: Balance Sheet Flexibility Will Allow GBDC to Capitalize on Opportunities
Balance Sheet Flexibility Will Allow GBDC to Capitalize on Attractive Opportunities We believe recent market events will likely lead to a sustained lender-friendly environment—much like we saw after the last recession Global Financial Crisis Today Debt to EBITDA: Institutional Middle Market (“MM”) v
Slide 16: GBDC Is Well-Positioned to Navigate COVID-19
GBDC Is Well-Positioned to Navigate COVID-19 1. Managed by Golub Capital, a platform with over $30 billion of capital under management and over a 25-year history of successful investing in the middle market 2. Conservative investment strategy focused on first lien, senior secured loans to resilient
Slide 17: Summary of Financial Results for the Quarter Ended June 30, 2020
Summary of Financial Results for the Quarter Ended June 30, 2020 04
Slide 18: Summary of Quarterly Results
Summary of Quarterly Results Pre-Acquisition Post-Acquisition1 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Net Investment Income Per Share Net investment income per share $0.32 $0.37 $0.24 $0.24 $0.23 Amortization of purchase premium per share2 - 0.02 0.09 0.09 0.05 Accrual for (reversal of) capital gai
Slide 19: Portfolio Highlights – New Originations
Portfolio Highlights – New Originations New Originations Data and Net Funds Growth − Total investments at fair value increased by approximately 1.0%, or $40.2 million, during the quarter ended June 30, 2020. − As of June 30, 2020, we had $28.3 million of undrawn revolver commitments to portfolio com
Slide 20: Portfolio Highlights – Portfolio Diversity as of June 30, 2020
Portfolio Highlights – Portfolio Diversity as of June 30, 2020 Pre-Acquisition Post-Acquisition Investment Portfolio Statistics Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Investments in Portfolio Companies at Fair Value (000s) $1,851,079 $4,169,287 $4,329,238 $4,210,215 $4,250,370 Investments in Senior
Slide 21: Portfolio Highlights – Portfolio Diversity as of June 30, 2020
Portfolio Highlights – Portfolio Diversity as of June 30, 2020 Investment Portfolio $4,250mm // 254 Investments – Average Size <0.4% Portfolio Composition by Seniority Diversification by Obligor Top 10 1% 2% Investments 18% 14% First Lien Traditional Senior First Lien 97% One Stop Top 25 First Lien
Slide 22: Portfolio Highlights – Economic Analysis
Portfolio Highlights – Economic Analysis Economic Analysis 10.00% 9.3% 9.2% 9.2% 9.1% 8.8% 9.00% 8.4% 8.2% 8.1% 8.8% 8.8% 8.00% 8.6% 8.6% 8.4% 8.0% 7.8% 7.7% 7.00% 6.00% 5.0% 5.0% 5.0% 4.9% 4.8% 4.8% 5.00% 4.5% 4.5% 4.00% 4.3% 4.3% 4.2% 4.2% 4.0% 3.9% 3.7% 3.00% 3.2% 2.8% 2.00% 2.6% 2.4% 2.3% 2.1% 1
Slide 23: Portfolio Highlights – Credit Quality
Portfolio Highlights – Credit Quality Credit Quality – Investment Portfolio − Non-accrual investments at June 30, 2020 as a percentage of total investments at cost and fair value were 2.8% and 2.0%, respectively. During the quarter ended June 30, 2020, the number of non-accrual investments remained
Slide 24: Portfolio Highlights – Portfolio Ratings
Portfolio Highlights – Portfolio Ratings Credit Quality – Investment Portfolio − Due to better than expected borrower performance, the percentage of risk rated “3” investments decreased to 22.3% of the portfolio at fair value as of June 30, 2020 from 26.5% as of March 31, 2020. Internal Performance
Slide 25: Quarterly Statements of Financial Condition
Quarterly Statements of Financial Condition Pre-Acquisition Post-Acquisition June 30, 2019 September 30, 2019 December 31, 2019 March 31, 2020 June 30, 2020 (Dollar amounts in 000s, except per share data) (unaudited) (audited) (unaudited) (unaudited) (unaudited) Assets Investments, at fair value $1,
Slide 26: Quarterly Operating Results
Quarterly Operating Results For the three months ended Pre-Acquisition Post Acquisition June 30, September 30, December 31, March 31, June 30, 2019 2019 2019 2020 2020 (Dollar amounts in 000s, except share and per share data) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Investment Inc
Slide 27: Financial Performance Highlights
Financial Performance Highlights Quarterly Return on Equity and Quarterly Distributions (Last 5 Years) 6.7% 2.3% 2.4% 2.5% 1.8% 2.3% 1.9% 2.2% 2.4% 2.2% 2.3% 2.2% 2.4% 2.3% 1.9% 1.9% 2.0% 2.2% 2.1% 1.6% $0.57 -10.5% $0.46 $0.44 $0.40 $0.32 $0.32 $0.32 $0.32 $0.32 $0.32 $0.32 $0.32 $0.32 $0.32 $0.32
Slide 28: Long History of Strong Shareholder Returns
Long History of Strong Shareholder Returns Investors in GBDC’s 2010 IPO have achieved a 9.6% IRR on NAV1 $31.23 $0.58 $13.01 $14.63 $3.592 $14.05 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Apr-10 Jun-10
Slide 29: Liquidity and Investment Capacity
Liquidity and Investment Capacity Cash and Cash Equivalents − Unrestricted cash and cash equivalents and foreign currencies totaled $30.4 million as of June 30, 2020. − Restricted cash, cash equivalents and foreign currencies totaled $89.7 million as of June 30, 2020. Restricted cash is held in our
Slide 30: Debt Capital Structure
Debt Capital Structure * Key Funding Vehicles Debt Outstanding Undrawn Funding Source Commitment Par Commitment Reinvestment Period Stated Maturity Interest Rate1 Securitizations: 2014 Debt Securitization $ 80,527 $ 80,527 $ - April 28, 2018 April 25, 2026 3 Month LIBOR + 1.08% 2018 Debt Securitizat
Slide 31: Common Stock and Distribution Information
Common Stock and Distribution Information Common Stock Data1 Fiscal Year Ended September 30, 2019 High Low End of Period First Quarter $19.01 $16.38 $16.49 Second Quarter $18.65 $16.62 $17.88 Third Quarter $18.43 $17.34 $17.80 Fourth Quarter $18.97 $17.72 $18.84 Fiscal Year Ending September 30, 2020
Slide 32: Appendix: Endnotes and Illustration of the Purchase Accounting for the GCIC Acquisition
A Appendix: Endnotes and Illustration of the Purchase Accounting for the GCIC Acquisition
Slide 33: Endnotes – Non-GAAP Financial Measures
Endnotes – Non-GAAP Financial Measures 1. On September 16, 2019, the Company completed its acquisition of GCIC. The merger was accounted for under the asset acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805-50, Business Combinations — Related Issues. U
Slide 34: Endnotes – NAV Per Share Bridge
Endnotes – NAV Per Share Bridge 1. On May 15, 2020, the Company completed a transferable rights offering, issuing 33,451,902 shares at a subscription price of $9.17 per share. Net proceeds after deducting dealer manager fees and other offering expenses were approximately $300,426. 2. Due to the purc
Slide 35: Accounting Treatment of the Purchase Premium
Accounting Treatment of the Purchase Premium Recognize One- Acquisition of Determine GBDC’s Time Write-Down GCIC Assets at a Cost Basis in of Purchase Premium Acquired Assets Premium Write Down to Fair Value One-Time Purchase Unrealized Loss Premium on Purchase Premium GBDC Cost Basis = Purchase Pre
Slide 36: Illustrative Income Statement Impact and Supplemental Non-GAAP Financial Measures
Illustrative Income Statement Impact and Supplemental Non- GAAP Financial Measures As a supplement to U.S. generally accepted accounting principles (“GAAP”) financial measures, the Company is providing the following non- GAAP financial measures: A B Expected to be equal and offsetting amounts A Purc