Market Measures

Earnings In The U.S. Middle Market Grew By 16% In First Two Months Of Q1 2021

Early insight into the financial performance of public companies and GDP in advance of earnings season

The Golub Capital Middle Market Report demostrates ‘very meaningful economic strength’.

NEW YORK, April 13, 2021 /PRNewswire/ — Middle market private companies in the Golub Capital Altman Index experienced year-over-year earnings growth of 16.3% and revenue growth of 3.2% during the first two months of the first quarter of 2021. This compares to year-over-year earnings growth of 14.9% and revenue growth of 2.9% in the fourth quarter of 2020. This is the last comparison of post-Covid profit performance to a completely pre-Covid period, and the growth rate demonstrates very meaningful economic strength in the U.S. middle market.

Lawrence E. Golub, CEO of Golub Capital, said, “The U.S. economy is booming outside of directly Covid-damaged sectors. Earnings growth in the first quarter was the strongest in the history of the Golub Capital Altman Index. Profit growth accelerated even though revenue growth was soft in aggregate and slightly negative in the Consumer and Healthcare sectors. This remarkable margin expansion suggests that companies made smart decisions in cutting costs and adapting strategically to Covid.”

Dr. Edward I. Altman said, “This quarter’s Golub Capital Middle Market Report is the last time we’ll have a clean comparison between current conditions, in January and February 2021, and the pre-Covid economy in January and February 2020. Our data likely understates the strength of the first quarter of 2021 as a whole; it doesn’t capture the negative impact of shutdowns in March 2020. While profit growth was robust across all sectors of the Golub Capital Altman Index, the results for Industrials stand out. Strong demand and a weaker U.S. dollar led to the second-strongest quarter for Industrial sector profit growth since inception of the Index in 2013. Our data suggests that the U.S. middle market, outside of heavily Covid-impacted sectors, has powerful momentum.”

Measuring ‘ Median Revenue and Earnings Growth’

The Golub Capital Altman Index (“GCAI”), which is produced by Golub Capital in collaboration with renowned credit expert Dr. Edward I. Altman, is the first and longest-running index based on actual revenue and earnings (defined as earnings before interest, taxes, depreciation and amortization, or “EBITDA”) for middle market companies. It measures the median revenue and earnings growth of more than 150 private U.S. companies in the loan portfolio of Golub Capital, a leading middle market lender. Reported shortly before public company quarterly earnings season, the GCAI has served as a reliable indicator of the overall growth rates in revenue and earnings of public companies in market indexes such as the S&P 500 and S&P SmallCap 600 (“S&P 600”), as well as quarterly Gross Domestic Product (“GDP”), according to statistical back-testing dating back to 2012, when data began to be tracked.

Data suggests that the U.S. middle market, outside of heavily Covid-impacted sectors, has powerful momentum...

The size and diversity of the Golub Capital loan portfolio ensure that the confidentiality of all company-specific information used in the index is maintained in both the aggregate and industry segment data.

We believe the results (1) are representative of the general performance of middle market companies, which are a major contributor to U.S. private sector employment; (2) can be easily compared to the performance of the public companies that make up major stock indexes; (3) are relevant to the aggregate economic performance of the U.S. economy and (4) provide timely information for the investment community.

The companies in the GCAI operate in a wide range of industries. Results are provided for the total universe of GCAI constituents and by industry segment. Given the index’s limited exposure to Financials, Utilities, Energy and Materials, comparisons are made to the S&P 500 and S&P 600 as well as to “adjusted” versions of those indexes that exclude the aforementioned sectors.

 

 

 

About the Golub Capital Middle Market Report
The Golub Capital Middle Market Report analyzes the results of the Golub Capital Altman Index (“GCAI”), which measures the median revenue and earnings growth of more than 150 privately owned companies in the Golub Capital loan portfolio for the first two months of each calendar quarter. It compares these results to the U.S. gross domestic product, and the financial performance of well-known market indexes, including the S&P 500 and S&P SmallCap 600. The GCAI is produced by Golub Capital in collaboration with credit expert Dr. Edward I. Altman.
About Golub Capital
Golub Capital is a market-leading, award-winning direct lender and credit asset manager, with over $35 billion of capital under management. Golub Capital specializes in delivering reliable, creative and compelling financing solutions to middle market companies backed by private equity sponsors. The firm’s credit expertise also forms the foundation of its Late Stage Lending business and its Broadly Syndicated Loan investment program. Across its activities, Golub Capital nurtures long-term, win-win partnerships that inspire repeat business from its private equity sponsor clients and investors. Founded over 25 years ago, Golub Capital today has over 500 employees and lending offices in Chicago, New York, San Francisco and London. For more information, please visit golubcapital.com.