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Earnings in U.S. Middle Market Grew By 9 Percent in First Two Months of Q1 2022

Updated: Aug 8, 2022

Revenue growth of middle market private companies in the Golub Capital Altman Index (GCAI) was 18 percent the first two months of 2022, and earnings increased 9 percent in the two-month period year-over-year, as inflation creates headwinds for borrower companies and margins compress further.

The economy is still strong, and the 18 percent nominal growth in revenue year-over-year is good but it is not great,” said Golub Capital CEO Lawrence Golub. “Earnings growth of 9 percent was closer to flat in real dollars after adjusting for the nearly 8 percent increase in consumer prices during the same period.”


Higher input costs and labor costs are weighing down profitability, even in our portfolio of market-leading businesses in resilient industries. Demand remains robust, and companies will continue to adapt if inflation remains high,” Golub said.

By sector, consumer companies in the GCAI showed the most earnings and revenue growth in the two-month period, with earnings before interest, taxes, depreciation, and amortization (EBITDA) climbing 14.2 percent and revenue rising 20.3 percent. The technology sector followed, with those companies’ earnings increasing 9.4 percent, and revenue climbing 18.7 percent.

Margin compression in the recent three quarters “marks a reversal of trend from the considerable margin expansion during the recovery from Covid lockdowns,” said Edward Altman, credit expert and co-collaborator of the Index produced by Golub Capital.

Technology companies that improve companies operating efficiencies could stand to benefit.

Although the acceleration in labor costs and employee turnover is a headwind for most companies, it is also an opportunity for technology firms that deliver productivity-enhancing solutions,” said Altman.

Looking forward, with the Fed on track to raise interest rates, probably substantially, in the coming quarters, our data suggests that investors would do well to prepare for a possible scenario of stagflation. We will continue to monitor our data for early economic signs of recovery or recession.”


The GCAI tracks revenue and earnings growth quarterly of more than 150 private U.S. companies in Golub Capital’s loan portfolio. It is the first and longest-running index based on revenue and earnings of private middle market companies, according to Golub Capital.


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