US Middle Market Experienced 11% Revenue Growth in Early Q1/23

According to the Golub Capital Altman Index produced by Golub Capital in collaboration with credit expert Dr. Edward I. Altman, middle-market private companies experienced year-over-year earnings growth of 11% and revenue growth of 11% during the first two months of Q1/23.

“Revenue and profit growth again were positive surprises, building on the strength we highlighted in last quarter’s report,” Lawrence E. Golub, CEO of Golub Capital, said. “Our data suggests that many analysts continue to underestimate the health of the U.S. economy and the resilience of private equity-owned businesses. Profit margins on average expanded as our sample of companies continued to adapt to a challenging operating environment. Although the data in this report doesn’t capture the impact of banking system stress in March 2023, we believe the strength of our January and February data is encouraging for the upcoming earnings season.”

“Growth exceeded our expectations across all four sectors we track. The acceleration of revenue growth in the consumer sector suggests that the tailwind of falling energy prices more than offset the headwind of rising interest rates on mortgage and credit card debt,” Altman said. “While consumer revenue continued its strong growth, we do observe some softness in consumer profit and cash flow growth compared to prior quarters. Moreover, profit margins expanded even as the labor market remained strong, which suggests that cost-control measures are having an effect. That said, we’d advise caution in extrapolating from our data given the uncertainty about the potential economic impact of recent bank failures.”  

The Golub Capital Altman Index 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.