Overall, Index revenue grew by 10% during the first two months of the second 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 12.5% and revenue growth of 10.3% during the first two months of the second quarter of 2019. This compares to approximate year-over-year earnings growth of 9.5% and revenue growth of 9.3% in the first quarter of 2019.

Lawrence E. Golub, CEO of Golub Capital, said, “We continue to see very strong growth in the U.S. middle market, especially among domestically focused companies. The Golub Capital Altman Index for the second quarter of 2019 posted a seventh consecutive quarter of revenue growth at or near double-digit rates, and a fifth consecutive quarter of earnings growth at or near double-digit rates. We see ample momentum in the economy to offset the potential impact of tariffs. The labor market is strong, inflation is tame, fiscal policy and monetary policy are expansionary; in short, the U.S. economy does not look to us like it currently needs additional support from the Fed.”

Dr. Edward I. Altman said, “Revenue and earnings growth remain strong in our sample of U.S. middle market companies, showing a modest acceleration from the healthy pace of the first quarter of 2019. Earnings growth outpaced revenue growth in aggregate and in most of our sector indices, suggesting that labor costs had limited impact on profit margins despite a very strong labor market. We are not surprised to see a moderate deceleration of earnings growth in our sample of Technology companies year-over-year; the second quarter of 2018 was exceptionally strong. Overall, our data highlights the fundamental strength of U.S. middle market companies focused on the domestic market.”

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 only 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.