Golub Capital BDC, Inc.

Hello, everyone, and welcome to GBDC's earnings call for the fiscal year and quarter-ended September 30, 2023. Before we begin, I'd like to take a moment to remind our listeners that remarks made during this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts made during this call may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in GBDC's SEC filings. For materials we intend to refer to on today's earnings call, please visit the Investor Resources tab on the homepage of our website, which is www.gollupcapitalbdc.com, and click on the Events Presentations link. Our earnings release is also available on our website in the Investor Resources section. As a reminder, this call is being recorded. With that, I'm pleased to turn the call over to David Golub, Chief Executive Officer of GBDC.

Hello, everybody, and thanks for joining us today. I'm joined today by Chris Erickson, our Chief Financial Officer, and by Matt Benton, our Chief Operating Officer. For those of you who are new to GBDC, let me start with a quick recap on our investment strategies. Our investment strategy is, and since inception it has been, to focus on providing first lien senior secured loans to healthy, resilient middle market companies, generally companies that are backed by strong partnership-oriented private equity sponsors. Yesterday, we issued our earnings press release for the quarter and fiscal year ended September 30th, and we posted an earnings presentation on our website. We'll be referring to this presentation during today's call. I'm going to start, as usual, with some headlines, and I'm going to then lead into a summary of performance for the quarter. Then Matt and Chris are going to go through financial results for the quarter in more detail. And finally, I'll wrap up with our outlook for the coming period. After that, we'll take some questions. The headline is that GBDC had an excellent fiscal fourth quarter. You got a glimpse of this in the preliminary fiscal Q4 results that GBDC announced on October 17th. Let me touch on some of the highlights. Adjusted net investment income per share was 50 cents, a record. Also of note, this represented an adjusted NII return on average equity of 13.3%. Adjusted earnings per share came to 60 cents. This corresponds to an adjusted return on equity of 16%. Credit results were very strong. We had net realized and unrealized gains for the quarter of 10 cents per share. We saw a decrease in non-accruals, and we saw stable internal performance ratings. These factors altogether drove a 19-cent increase quarter over quarter in NAV per share, a sequential increase of 1.3 percent, bringing NAV per share to $15.02 as of September 30th. GBDC's excellent results for the quarter capped off a very strong fiscal 2023. Over the year, we saw $1.73 of adjusted NII per share, $1.52 of adjusted earnings per share, A $1.40 per share of distributions paid, you'll recall that GBDC increased our base quarterly distribution by 7 cents per share during the fiscal year and introduced a new variable supplemental distribution framework. We saw strong credit results. I view fiscal 2023 as one of GBDC's best years ever from a credit perspective. And GBDC's investment manager during the year permanently reduced its base management fee rate from 1.375% to 1.0% per annum. That was effective July 1. In short, we executed on our investment strategy, we leveraged the competitive advantages of the Golub Capital platform, and we raised the bar for shareholders. With that, let me hand the floor to Matt to walk through our results in more detail.

Thanks, David. I'm going to start on slide four. As David just previewed, GBDC's earnings for the quarter ended September 30th for record setting. Adjusted NII per share was 50 cents, a 13 percent switchable increase from the prior quarter's 44 cents per share of adjusted NII. This corresponds to an adjusted NII ROAE of 13.3 percent. Net income per share increased to 60 cents from 43 cents per share in the prior quarter and represented an adjusted ROAE of 16 percent. GBDC's record profitability was driven by three key factors. First and foremost, credit. GBDC had a net realized and unrealized gain on investments of $0.10 per share. This gain was due to both strong credit fundamentals and tightening credit spreads in the market. The second key driver was continued higher base rates. Finally, fiscal Q4 benefited from the previously announced reduction of GBDC's base management fee rate to 1% per annum. The portfolio and balance sheet update generally reflects a continuation of trend from the June 30, 2023 quarter. Net funds declined by $8.4 million sequentially. While we saw a modest uptick in deal activity in calendar Q3 relative to the first half of the year, the pace of new investments remained muted. This is perfectly fine for GBDC. Its model doesn't depend on fee income from new originations or repayments to drive strong returns. The overall credit performance of GBDC's investment portfolio remains strong. Non-accruals continued to decrease. Non-accruals as a percentage of total debt investments at cost decreased to 1.6% from 1.8% at 6-30-2023. As a percentage of total debt investments at fair value, non-accruals decreased to 1.2% from 1.5% at 6-30-2023. To put this in context, non-accruals are now back where they were in March and June of 2022. Turning to internal performance ratings, these also remain strong. Investments in rating categories one and two represented 30 basis points of the total portfolio at their value. This is the lowest level of ones and twos since March 2018. NAV per share increased by 130 basis points on a sequential basis to $15.02. NAV per share is now more than 200 basis points higher than at the start of the year, even as GBDC delivered higher distributions to shareholders during this period. Higher profitability and higher NAV, we obviously think this is a good combo. And finally, net leverage declined modestly to 1.21 times. Turning now to distributions, the board declared a regular quarterly distribution of 37 cents per share payable on December 29th 2023 to shareholders of record as of December 8, 2023. You'll recall that the Board increased GBDC's base distribution from $0.33 per share to $0.37 per share in the quarter ended 6-30-23. Adjusted NII per share significantly exceeded the company's regular quarterly distribution, resulting in a distribution coverage ratio of 135%. Moreover, based on the new variable supplemental distribution framework we discussed last quarter, the Board also authorized a supplemental distribution of $0.07 per share, payable on December 15, 2023, to shareholders of record as of December 1, 2023. As a reminder, the goal of the variable supplemental distribution framework is to give shareholders a clear line of sight into how we plan to balance the likelihood the GBDC will continue to generate excess income, all else equal on the one hand, with our focus on NAV growth and resilience on the other hand. You can find additional detail about the variable supplemental distribution framework on page 23 of the earnings presentation. In total, the board approved 44 cents per share of distributions in respect of fiscal Q4 performance. This corresponds to an annualized dividend yield of approximately 11.7% based on GBDC's NAV per share as of September 30th, 2023. I'm going to turn it over to Chris now to provide more detail on our results.