Middle market private companies in the Golub Capital Altman Index grew earnings by 11% during the first two months of the first quarter of 2024. Revenue grew 5% during the same period.

Lawrence E. Golub, CEO of Golub Capital, said, “Growth in Q1 2024 was solid and consistent with our expectations. A third consecutive quarter of double-digit EBITDA growth shows the continued strength and adaptability of private equity-owned middle market companies in today’s uncertain environment. The consistent fundamental earnings growth we’ve seen is giving companies valuable flexibility as they manage through this period of high interest rates. The strong performance reflected in the Golub Capital Altman Index for Q1 2024 offers investors an encouraging sign as they recalibrate their expectations for the trajectory of interest rates in the coming period. Resilient private equity-backed companies are attractively positioned even if the pace and magnitude of rate cuts fall short of the prevailing consensus.”

Dr. Edward I. Altman said, “The middle market showed strength in Q1 2024, with positive revenue and EBITDA growth in aggregate and across all subsectors of the Golub Capital Altman Index. Healthcare and Industrial businesses in our sample posted revenue and earnings growth of around 10% year-over-year, which suggests that well-managed businesses are weathering the ongoing tightness in labor markets. It isn’t surprising to see a fourth consecutive quarter of Technology earnings growth in excess of 20%, as mission-critical providers of productivity-enhancing enterprise software remain in high demand in this environment. In our view, the Golub Capital Altman Index for Q1 2024 is consistent with current consensus expectations of a ‘soft landing.’ That said, we believe investors would do well to focus on strategies designed to perform well across a range of scenarios.”

The Golub Capital Altman Index (“GCAI”), which is produced by Golub Capital in collaboration with 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 approximately 110–150 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.