Golub Capital BDC, Inc. Q4 FY2025 earnings call

• Credit performance: Approximately 90% of portfolio in highest performing internal rating categories, nonaccrual status at 0.3% of portfolio. - Earnings drivers: Declining but attractive spreads, lower borrowing costs, lower operating expenses. - Portfolio changes: Decrease due to repayments and exits, net of new investments. - Borrowing costs: Reduced to industry-leading 5.6% annualized via syndicated revolver repricing and early repayment of securitization. - Operating expenses: Benefited from market-leading fee structure.

For the quarter, adjusted NII per share was $0.39, translating to an adjusted NII ROE of 10.4%. Adjusted net income per share was $0.36 for an adjusted ROE of 9.6%. For fiscal year 2025, GBDC paid $1.65 per share of cumulative distributions, representing 10.9% of end-of-year net asset value per share, and ended with a net asset value per share of $14.97. The investment portfolio decreased modestly to just under $8.8 billion at fair value, with 90% of the portfolio in highest performing internal rating categories. New investments had a weighted average rate of 8.9%, a decline from prior quarter, and borrowing costs decreased to 5.6% annualized.

GBDC declared a $0.39 per share distribution for the first fiscal quarter of 2026. The Board will revisit dividend policy early next year to assess rates, spreads, and financing costs. Guided by maintaining NAV, minimizing excise taxes, infrequent base distribution changes, and sustainable dividend yield.

• Market headwinds: Tighter spreads, decreasing base rates, credit cycle with elevated defaults and stress. - Dispersion in performance: Significant variation among direct lending managers, with some producing solid returns and others poor results.

Q: Jordan Wathen asked about equity co-invest availability and continuation funds.

A: David Golub stated no meaningful change in equity co-invest approach or availability.

Q: Robert Dodd inquired about economic themes and spread risks.

A: David Golub discussed mixed economy, subprime consumer stress, and need for sentiment change to affect spreads