Golub Capital Altman Index: U.S. Middle Market Grew Earnings and Revenue in Q1/24

Middle-market private companies in the Golub Capital Altman Index grew earnings by 11% during the first two months of Q1/24, with the same companies growing revenue by 5% during the same period.

“Growth in Q1 2024 was solid and consistent with our expectations,” Lawrence E. Golub, CEO of Golub Capital, said. “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.”

“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,” credit expert Dr. Edward I. Altman said. “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 is produced by Golub Capital in collaboration with Altman and is 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 to 150 private U.S. companies in the loan portfolio of Golub Capital.

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