US mid-market earnings soar compared with pre-pandemic

Tech sector earnings in Q2 surged by more than 52% on the same period in 2019, according to the Golub Capital Altman Index.

The US mid-market is thriving and is even stronger than it was pre-covid. Earnings for mid-market private companies jumped 31 percent in April-May of this year, compared with the same period in 2019, according to a report published by the Golub Capital Altman Index in July. Technology companies had the largest increase in earnings by sector, surging by 52.6 percent.

The earnings during the second quarter are not the only sign of a healthy market. Mid-market private companies’ revenues also grew by 21 percent over the two-month period compared with two years ago. Tech revenues, like earnings, posted the biggest sector increase at 27 percent. The index also covers the consumer, healthcare and industrials sectors.

“The US economic boom continues in Q2,” said Lawrence Golub, chief executive of mid-market lender Golub Capital, in the Golub Capital Middle Market Report. The firm believes the high percentage increases from pre- to post-covid directly reflect the US economy bouncing back, even if there was uncertainty in shutdowns as a part of the pandemic.

“The 21 percent revenue growth compared to the pre-covid period is striking because we had been seeing soft year-over-year revenue growth rates for the last several quarters. This indicates that growth in the second quarter is not just a recovery from covid; it’s a reflection of a booming economy.”

No surprises

The earnings are not much of a surprise for the firm, though. In June, the Golub Capital Altman Index reported that earnings of mid-market private companies during the first two months of the year, compared with the same period in 2020, had spiked to a record 16.3 percent. The index also reported that first-quarter earnings growth had surpassed the 14.9 percent year-on-year increase reported during the fourth quarter of 2020.

Both earnings and revenue in the US mid-market grew consecutively this year, as reported by Golub’s index, which shows the signs of healthy private companies in a thriving economy.

The Golub Capital Altman Index, produced by Golub Capital and credit expert Edward Altman, measures the median revenue and earnings growth of more than 150 private US companies in Golub Capital’s loan portfolio.

The comparison of data from April-May 2021 and April-May 2019 is based on the median performance of 130 companies that were in the index over both periods.