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U.S. Middle Market Grows Nearly 10% in Q1/19 - Report

April 17, 2019, 09:05 AM
Filed Under: Economy

Middle market private companies in the Golub Capital Altman Index experienced approximate year-over-year earnings growth of 9.5% and revenue growth of 9.3% during the first two months of the first quarter of 2019. This compares to approximate year-over-year earnings growth of 13.4% and revenue growth of 10.6% in the fourth quarter of 2018.

Lawrence E. Golub, CEO of Golub Capital, said, "U.S. businesses selling primarily in the domestic market are in great shape. The Golub Capital Altman Index posted nearly double-digit revenue and earnings growth in Q1, despite the U.S. government shutdown for most of January. The Technology sector, which for us consists primarily of business-to-business software companies, remains the standout, extending a nine-quarter streak of double-digit revenue growth and a four-quarter streak of double-digit earnings growth. These signs of fundamental strength, together with low unemployment, stable inflation and a moderating pace of wage growth, suggest the U.S. economy may not need additional support from the Fed in 2019."

Dr. Edward I. Altman said, "Revenue and earnings growth remain strong in our sample of U.S. middle market companies, although growth has decelerated moderately from the record pace of 2018. The turnaround we identified last year in the Healthcare sector continued in the first quarter of 2019, as the Healthcare companies in our sample maintained solid growth while increasing margins. Although the Industrial companies in our sample reported relatively modest growth, their focus on the U.S. domestic market appears to have insulated them from concerns about growth and trade in the global economy. In sum, our data suggests the U.S. economy has retained much of its momentum from 2018."

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.

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