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GOLUB CAPITAL BDC, Inc. (GBDC)·Q4 2025 Earnings Summary

Executive Summary

  • Solid quarter with adjusted NII per share of $0.39 and GAAP EPS of $0.36; total investment income was $217.8M. Credit quality remained strong with non-accruals at 0.3% of fair value and net investment spread of 4.8%.
  • Versus estimates: slight revenue miss ($217.8M vs $220.5M*) and slight NII/EPS miss ($0.38 vs $0.384*), reflecting spread compression and lower base rates partially offset by lower borrowing costs and higher fee/dividend income.
  • Dividend maintained at $0.39 per share; board will revisit dividend policy early next year given the outlook for rates/spreads/financing costs, a potential stock reaction catalyst.
  • Active capital allocation: $5.2M buybacks in quarter; $34.8M repurchased post-quarter through Nov 18 at $13.69 average, alongside $8.1M Trust purchases for employee program.
  • Liquidity robust: ~$899M JPM revolver availability and $260.8M unsecured adviser line; $250M of 2028 notes issued and swapped to floating, keeping ~81% of funding floating to mitigate rate changes.

What Went Well and What Went Wrong

What Went Well

  • Credit quality: Non-accruals declined to 0.3% of fair value; ~90% of investments rated 4–5. “Investments on non-accrual status decreased to a very low level, 0.3% ... well below the BDC peer industry average.”
  • Funding cost management: Effective borrowing costs fell to 5.6% driven by revolver repricing and calling legacy securitization; asset-liability matched with ~81% floating-rate debt funding.
  • Portfolio diversification/granularity: 417 portfolio companies; largest borrower is 1.5% of debt portfolio; top-10 are 12%.
  • Quote: “GBDC had a solid quarter ... bolstered by solid credit results across our portfolio.” – CEO David Golub.

What Went Wrong

  • Spread compression/base-rate decline: Investment income yield fell ~20 bps to 10.4% due to modest declines in base rates and spreads, pressuring revenue relative to consensus.
  • Realized/unrealized losses: Adjusted net realized/unrealized loss per share was ($0.03) driven by restructurings and write-downs on underperformers (partly offset by FX gains).
  • NAV drift: NAV/share ticked down to $14.97 from $15.00, reflecting distributions and modest net losses.
  • Analyst concern: Headline credit cycle persists with elevated defaults across markets; management expects dispersion to continue and stresses caution.

Financial Results

MetricQ4 2024Q2 2025Q3 2025Q4 2025
Total Investment Income ($USD Millions)$224.406 $213.892 $218.344 $217.841
GAAP EPS ($)$0.36 $0.30 $0.34 $0.36
Net Investment Income per Share ($)$0.45 $0.37 $0.38 $0.38
Adjusted NII per Share ($)$0.47 $0.39 $0.39 $0.39
Adjusted Net Realized/Unrealized Gain (Loss) per Share ($)($0.11) ($0.09) ($0.05) ($0.03)
NAV per Share ($)$15.19 $15.04 $15.00 $14.97

Segment mix (fair value and %):

Investment TypeQ3 2025 (FV, %)Q4 2025 (FV, %)
Senior secured$480.6M, 5.4% $442.5M, 5.0%
One stop$7,785.1M, 86.9% $7,615.8M, 86.8%
Junior debt$66.0M, 0.7% $64.8M, 0.8%
Equity$629.8M, 7.0% $646.3M, 7.4%
Total$8,961.5M, 100% $8,769.4M, 100%

Key KPIs:

KPIQ2 2025Q3 2025Q4 2025
Portfolio companies (#)393 401 417
Investments at fair value ($USD Millions)$8,621.2 $8,961.5 $8,769.4
Total assets ($USD Millions)$8,949.9 $9,236.5 $8,978.3
Debt outstanding ($USD Millions)$4,833.2 $5,154.0 $4,926.8
GAAP leverage ratio (x)1.21x 1.30x 1.25x
GAAP debt-to-equity, net (x)1.16x 1.26x 1.23x
Cash, cash equivalents & foreign currencies ($USD Millions)$116.9 $99.8 $23.6
Non-accruals (% FV)——0.3%
Investment income yield (%)——10.4%
Cost of debt (%)——5.6%
Net investment spread (%)——4.8%
JPM revolver availability ($USD Millions)$887.4 $547.3 $899.1
Unsecured adviser line availability ($USD Millions)$200.0 $300.0 $260.8
Distribution declared/paid per share ($)$0.39 $0.39 $0.39 (paid Sep 29; declared payable Dec 30)
Share repurchases (quarter)~2.5M shares; $35.0M ~2.4M shares; $34.3M 368,333 shares; $5.2M; plus 2.5M shares post-quarter, $34.8M

Non-GAAP adjustments: “Adjusted NII” excludes amortization of acquisition purchase premium; “Adjusted Net Realized/Unrealized Gain (Loss)” excludes non-cash write-down and reversal effects; “Adjusted EPS” uses these adjustments.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quarterly dividend per shareQ1 FY2026$0.39 $0.39 Maintained
Dividend policy reviewEarly 2026n/aBoard to revisit policy given rates/spreads/financing costs New disclosure
Formal revenue/NII guidanceFY2026None disclosedNone disclosedMaintained (no formal guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025)Previous Mentions (Q3 2025)Current Period (Q4 2025)Trend
Spreads & base ratesNII $0.37; unrealized losses driven by underperformance; leverage declined; liquidity strong. NII $0.38; spreads still attractive; unrealized losses; revolver amended; unsecured line increased. Spreads narrowed; base rates declining; investment yield 10.4% (-20 bps). Tightening spreads / lower base rates pressuring income
Credit quality/non-accrualsUnderperformance caused unrealized depreciation; restructuring losses. Underperformance caused unrealized depreciation; partial FX gains. Non-accruals down to 0.3% FV; ~90% rated 4–5. Improving non-accruals; strong ratings mix
Borrowing costs/funding mixRevolver terms amended (Apr 4); 80%+ floating funding; leverage to asset-liability match. Full-quarter revolver repricing; calling legacy securitization. Effective cost 5.6%; 81% floating/swapped; $250M 2028 notes issued and swapped. Declining borrowing costs; well-laddered/floating funding
Origination selectivity/activityNew commitments $299M; portfolio 393 companies. New commitments $557M; portfolio 401 companies. New commitments $86.5M; closed 3.8% of deals; median origination EBITDA $61M; 90% led/sole. Highly selective; leaning into core middle market
Dividend policyQuarterly $0.39; specials in FY2024. Quarterly $0.39 maintained. $0.39 declared; board to revisit policy early next year. Stable near-term; potential adjustment review ahead
Private credit narrative—“Winners and whiners” dispersion noted. Elevated credit cycle; caution; media narratives addressed; no exposure to cited bankruptcies. Continued emphasis on prudence and differentiation

Management Commentary

  • “GBDC had a solid quarter and a strong end to fiscal year 2025 ... overall credit performance remained solid, and earnings were supported by decreasing but still attractive portfolio spreads and attractive borrowing costs.” – David Golub, CEO.
  • “Adjusted NII per share of $0.39 was in line with the $0.39 distribution; adjusted net realized and unrealized losses were $0.03 per share, driving NAV/share to $14.97.” – Chris Ericson, CFO.
  • “Our effective borrowing costs declined to 5.6% annualized ... reflecting revolver repricing and early repayment of the final legacy GBDC-3 securitization.” – Tim Topicz, COO.
  • “We expect the gap between winners and [‘whiners’] to widen; winners will be those with proven competitive advantages and a long track record of low credit losses across cycles.” – David Golub.
  • “Consistent with our asset liability matching principle, 81% of total debt funding is floating rate or swapped to floating ... positioning GBDC well to modulate the impacts of lower interest rates.” – Chris Ericson.

Q&A Highlights

  • Equity co-invest: Golub has done ~400 equity co-invests over 20 years with top-tier IRR-equivalent performance; no meaningful change in approach or availability noted.
  • Macro bifurcation: Optimism around capital spending stimulus (beyond AI), concern around subprime consumer stress (delinquencies rising across credit card, mortgages, autos).
  • Spread dynamics: Compression is broad-based across debt categories; reflects investor confidence. A change would require broad sentiment reset, not necessarily credit catastrophe.
  • Dividend policy: Board intends to revisit early next year in light of outlook for rates/spreads/financing; balancing stable NAV, excise taxes, infrequent distribution changes, and sustainable yield.

Estimates Context

Metric (Q4 2025)Consensus*Actual
Primary EPS (likely NII/share for BDCs)$0.384*$0.38
Revenue (Total investment income)$220.541M*$217.841M
Primary EPS – # of Estimates5*—
Revenue – # of Estimates3*—
Target Price Consensus Mean$15.25*—
  • Results vs consensus: slight revenue miss (~$2.7M; 1.2%) and slight EPS miss ($0.004), driven by lower base rates and modest spread compression; partially offset by lower borrowing costs and higher fee/dividend income.
  • Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Resilient credit quality (non-accruals 0.3%) and strong diversification provide downside protection in a protracted credit cycle; supports medium-term stability in NII.
  • Near-term earnings headwinds from spread compression and declining base rates are being mitigated by proactive funding cost management (5.6% effective rate; 81% floating).
  • Dividend at $0.39 maintained, but policy review ahead could catalyze stock—either via right-sizing in a lower-rate world or reaffirmation if spreads stabilize.
  • Active buybacks ($40.6M FY repurchases; $34.8M post-quarter) and Trust purchases signal confidence and capital discipline; supportive for NAV and per-share metrics.
  • Liquidity remains strong (JPM revolver ~$899M; unsecured adviser line $261M); capacity to flex originations and support incumbencies through cycle.
  • Watch estimate revisions: modest misses plus management commentary on spreads/base rates suggest consensus NII and revenue may drift lower; monitor SPGI updates. *
  • The narrative: differentiation matters—GBDC positioning (first-lien, sponsor-backed, granular exposures) should drive relative outperformance versus peers in a cycle with elevated defaults and dispersion.

Additional materials:

  • Q4 press release and financials (8-K 2.02, Exhibit 99.1).
  • Earnings call transcript (themes, quotes, outlook).
  • Prior quarters for trend analysis (Q3 and Q2 press releases).
  • Other relevant Q4 press items: earnings schedule release; firm-level GP-led secondaries strategy launch (context for equity co-invest capabilities).