Middle market private companies in the Golub Capital Altman Index experienced year-over-year revenue growth of 8.94% and earnings (defined as earnings before interest, taxes, depreciation and amortization, or EBITDA) growth of 2.29% during the first two months of the second quarter of 2017. This compares to an increase of 8.45% in revenue and a decline of 1.64% in earnings year-over-year in the first quarter of 2017.

Lawrence E. Golub, CEO of Golub Capital said, “Middle market companies showed strong profit growth in the second quarter of 2017, after three quarters of modest year-over-year declines. Although a tight labor market continues to put pressure on margins, the improvement in earnings suggests that the middle market firms in our sample were more effective at cost control than in prior quarters. Across sectors, revenue growth was consistent with the healthy pace of growth in the first quarter of 2017. The Technology sector once again led revenue growth, benefiting from continued demand for productivity-enhancing technology. In aggregate, the Golub Capital Altman Index results for the second quarter of 2017 are consistent with a 2-3% rate of U.S. GDP growth.”

Altman said, “The rebound in the Consumer sector stands out. Consumer sector earnings increased by more than 6% year-over-year, after several lackluster quarters and an unusually negative first quarter of 2017. Businesses have had to adapt to increases in wages and other operating costs; challenges remain, but the improvement in second quarter earnings is a welcome sign of progress.”

The Golub Capital Altman Index, 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 sales and earnings data for middle market companies. It measures median revenue and earnings performance from the data 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 index 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, as well as quarterly Gross Domestic Product (“GDP”), according to statistical back-testing dating back to 2012, when data began to be tracked.

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.

Importantly, the size and diversity of the Golub Capital loan portfolio ensures that the confidentiality of all company-specific information used in the report is maintained in both the aggregate and industry segment data.

The companies in the Golub Capital Altman Index operate in a wide range of industries, and aggregate results are provided for the total universe and by industry segment. Given the index’s limited exposure to Financials, Utilities, Energy and Materials, calculations are made for the public indexes both including and excluding these sectors (for the latter, see charts marked “S&P 500 Adjusted” and “S&P 600 Adjusted”).