Overall, Index revenue grew by 8% during the first two months of the fourth quarter.

The Golub Capital Altman Index can provide early insight into financial performance of public companies and GDP in advance of earnings season.

Middle market private companies in the Golub Capital Altman Index experienced approximate year-over-year earnings growth of 10% and revenue growth of 8.3% during the first two months of the fourth quarter of 2019. This compares to approximate year-over-year earnings growth of 13.2% and revenue growth of 9.6% in the third quarter of 2019.

Lawrence E. Golub, CEO of Golub Capital, said, “The consensus view at the end of 2018 was that the U.S. economy was at material risk of a recession in 2019. Our data said otherwise. The strong revenue and earnings growth in our portfolio of U.S. middle market companies showed that the domestically oriented half of the U.S. economy was in great shape at the start of 2019—and remained in great shape throughout the year. The fourth quarter of 2019 was another solid quarter for U.S. businesses selling primarily to U.S. customers. The Golub Capital Altman Index posted a ninth consecutive quarter of revenue growth and a seventh consecutive quarter of earnings growth at or near double-digit rates. The strong performance of domestically focused U.S. businesses in the fourth quarter of 2019 shows the U.S. economy has momentum going into 2020.”

Dr. Edward I. Altman said, “Revenue and earnings growth remain robust, although we are not surprised to see a modest deceleration after two years of remarkable growth. Our view on the Industrial sector continues to diverge from mainstream expectations. While we acknowledge potential headwinds from weak manufacturing data, trade uncertainties and soft expectations for global growth, domestically focused U.S. industrials continue to thrive. Earnings growth accelerated and margins expanded in the fourth quarter of 2019—despite rising costs and a strong labor market. Our data indicates that domestically focused U.S. industrial businesses remain resilient despite the challenges facing industrials that compete in global markets.”

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.

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.