Goldman Sachs BDC, Inc. (“GSBD” or the “Company”) (NYSE: GSBD)
today reported financial results for the fourth quarter ended
December 31, 2020 and filed its Form 10-K with the U.S. Securities
and Exchange Commission.
QUARTERLY HIGHLIGHTS
- Net investment income per share for the quarter ended December
31, 2020 was $0.59. Excluding purchase discount amortization per
share of $0.11 from the Merger (as defined below), adjusted net
investment income per share was $0.48 for the quarter ended
December 31, 2020, equating to an annualized net investment income
yield on book value of 12.1%;1
- Earnings per share for the quarter ended December 31, 2020 was
$1.83. Adjusted earnings per share for the quarter ended December
31, 2020 was $0.94;1
- Net asset value per share for the quarter ended December 31,
2020 increased 2.7% to $15.91 from $15.49 as of September 30, 2020.
The Company’s net debt to equity ratio declined to 1.00x as of
December 31, 2020 from 1.29x as of September 30, 2020;
- The Board declared a regular first quarter dividend of $0.45
per share payable to shareholders of record as of March 31,
2021;2
- The Company had record originations during the quarter with new
investment commitments of $423.0 million. Fundings of previously
unfunded commitments for the quarter were $9.1 million and sales
and repayments activity totaled $252.7 million, resulting in a net
funded portfolio growth of $64.5 million;3
- On October 12, 2020, the Company completed its previously
announced merger (the “Merger”) with Goldman Sachs Middle Market
Lending Corp. (“MMLC”) which more than doubled the Company’s asset
base.
- As of December 31, 2020, the Company’s total investments at
fair value and commitments were $3,485.7 million, comprised of
investments in 123 portfolio companies across 39 industries. The
investment portfolio was comprised of 96.5% senior secured debt,
including 82.4% in first lien investments;4
- As of December 31, 2020, investments on non-accrual status
represented 0.3% and 0.7% of the total investment portfolio at fair
value and amortized cost, respectively, compared to 0.1% and 0.9%
as of September 30, 2020;
- On November 24, 2020, the Company closed a public offering of
$500.0 million aggregate principal amount of unsecured notes due
2026 (the “2026 Notes”). The 2026 Notes bear interest at a fixed
rate of 2.875%. The proceeds from the sale of the 2026 Notes were
used to repay the Secured Revolving Credit Facility.
- As of December 31, 2020, 62% of the Company’s approximately
$1,644.4 million of total debt outstanding was in unsecured debt
and 38% in secured debt;
- Subsequent to quarter-end, Fitch’s reaffirmed the Company’s
investment grade (IG) rating of BBB- and revised the outlook to
stable from negative.
SELECTED FINANCIAL HIGHLIGHTS
(in $ millions, except per share data)
As of December 31, 2020
As of September 30, 2020
Investment portfolio, at fair value4
$
3,242.8
$
1,431.2
Total debt outstanding5
$
1,644.4
$
920.1
Net assets
$
1,615.1
$
626.4
Net asset value per share
$
15.91
$
15.49
Net debt to equity
1.00x
1.29x
(in $ millions, except per share data)
Three Months Ended December 31,
2020
Three Months Ended September 30,
2020
Total investment income
$
78.9
$
31.5
Net investment income after taxes
$
55.3
$
18.2
Less: Purchase discount amortization
10.1
—
Adjusted net investment income after
taxes1
$
45.2
$
18.2
Net realized and unrealized gains
(losses)
$
117.4
$
14.2
Less: Realized/Unrealized gains from the
purchase discount
73.9
—
Adjusted net realized and unrealized gains
(losses)1
$
43.5
$
14.2
Net increase in net assets resulting from
operations
$
172.6
$
32.4
Less: Purchase discount amortization
10.1
—
Less: Realized/Unrealized gains from the
purchase discount
73.9
—
Adjusted net increase in net assets
resulting from operations1
$
88.6
$
32.4
Net investment income per share (basic and
diluted)
$
0.59
$
0.45
Less: Purchase discount amortization per
share
0.11
—
Adjusted net investment income per
share1
$
0.48
$
0.45
Earnings per share (basic and diluted)
$
1.83
$
0.80
Less: Purchase discount amortization per
share
0.11
—
Less: Realized/Unrealized gains from
purchase discount per share
0.78
—
Adjusted earnings per share1
$
0.94
$
0.80
Weighted Average Shares Outstanding
94.2
40.4
Regular distribution per share
$
0.45
$
0.45
Total investment income for the three months ended December 31,
2020 and September 30, 2020 was $78.9 million and $31.5 million,
respectively. The increase in investment income was primarily
driven by the interest-bearing investments acquired as part of the
Merger and the amortization of the purchase discount from the
Merger.
Net expenses before taxes for the three months ended December
31, 2020 and September 30, 2020 were $23.4 million and $12.9
million, respectively. Net expenses increased by $10.5 million as a
result of an increase in borrowings, as well as an increase in
management fees and net incentive fees.
INVESTMENT ACTIVITY4
Summary of Investment Activity for the three months ended
December 31, 2020 was as follows:
New
Investment Commitments
Sales
and Repayments
Investment
Type
$
Millions
% of
Total
$
Millions
% of
Total
1st Lien/Senior Secured Debt
$
415.4
97.8
%
$
181.3
71.7
%
1st Lien/Last-Out Unitranche
9.0
2.1
0.2
0.1
2nd Lien/Senior Secured Debt
0.4
0.1
49.3
19.5
Unsecured Debt
—
—
6.5
2.6
Preferred Stock
0.09
0.09
15.4
6.1
Total
$
424.8
100.0
%
$
252.7
100.0
%
During the three months ended December 31, 2020, new investment
commitments and fundings were across thirteen new portfolio
companies and nine existing portfolio companies. Sales and
repayments were primarily driven by the full repayment of
investments in six portfolio companies.3
PORTFOLIO SUMMARY4
As of December 31, 2020, the Company’s investments consisted of
the following:
Investments at Fair Value
Investment
Type
$
Millions
% of
Total
1st Lien/Senior Secured Debt
$
2,527.0
78.0
%
1st Lien/Last-Out Unitranche
143.2
4.4
2nd Lien/Senior Secured Debt
457.8
14.1
Unsecured Debt
0.3
0.0
Preferred Stock
48.1
1.5
Common Stock
65.4
2.0
Warrants
1.0
0.0
Total
$
3,242.8
100.0
%
The following table presents certain selected information
regarding the Company’s investments:
As of
December
31, 2020
September 30, 2020
Number of portfolio companies
123
110
Percentage of performing debt bearing a
floating rate6
99.1
%
98.6
%
Percentage of performing debt bearing a
fixed6
0.9
%
1.4
%
Weighted average yield on debt and income
producing investments, at amortized cost7
8.7
%
8.3
%
Weighted average yield on debt and income
producing investments, at fair value7
8.9
%
10.4
%
Weighted average leverage (net
debt/EBITDA)8
6.0x
5.7x
Weighted average interest coverage8
2.6x
2.6x
Median EBITDA8
$
34.2 million
$
34.7 million
As of December 31, 2020, investments on non-accrual status
represented 0.3% and 0.7% of the total investment portfolio at fair
value and amortized cost, respectively.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2020, the Company had $1,644.4 million of
total principal amount of debt outstanding, comprised of $629.4
million of outstanding borrowings under its Secured Revolving
Credit Facility, $155.0 million of convertible notes, $360.0
million of unsecured notes due 2025, and $500.0 million of
unsecured notes due 2026. The combined weighted average interest
rate on debt outstanding was 3.17% for the year ended December 31,
2020. As of December 31, 2020, the Company had $1,066.3 million of
availability under its revolving credit facility and $32.1 million
in cash and cash equivalents.5,10
The Company’s average and ending net debt to equity leverage
ratio was 1.01x and 1.00x, respectively, for the three months ended
December 31, 2020, as compared with 1.33x and 1.29x, respectively,
for the three months ended September 30, 2020.11
CONFERENCE CALL
The Company will host an earnings conference call on Friday,
February 26, 2021 at 9:00 am Eastern Time. All interested parties
are invited to participate in the conference call by dialing (866)
884-8289; international callers should dial +1 (631) 485-4531;
conference ID 8066959. All participants are asked to dial in
approximately 10-15 minutes prior to the call, and reference
“Goldman Sachs BDC, Inc.” when prompted. For a slide presentation
that the Company may refer to on the earnings conference call,
please visit the Investor Resources section of the Company’s
website at www.goldmansachsbdc.com. The conference call will be
webcast simultaneously on the Company’s website. An archived replay
of the call will be available from approximately 12:00pm Eastern
Time on February 26, 2021 through March 26, 2021. To hear the
replay, participants should dial (855) 859-2056; international
callers should dial +1 (404) 537-3406; conference ID 8066959. An
archived replay will also be available on the Company’s webcast
link located on the Investor Resources section of the Company’s
website.
Please direct any questions regarding the conference call to
Goldman Sachs BDC, Inc. Investor Relations, via e-mail, at
gsbdc-investor-relations@gs.com.
ENDNOTES
(1)
On October 12, 2020, we completed
our Merger with MMLC. The Merger was accounted for as an asset
acquisition in accordance with ASC 805-50, Business Combinations —
Related Issues. The consideration paid to MMLC’s stockholders was
less than the aggregate fair values of the assets acquired and
liabilities assumed, which resulted in a purchase discount (the
“purchase discount”). The purchase discount was allocated to the
cost of MMLC investments acquired by us on a pro-rata basis based
on their relative fair values as of the closing date. Immediately
following the Merger with MMLC, we marked the investments to their
respective fair values and, as a result, the purchase discount
allocated to the cost basis of the investments acquired was
immediately recognized as unrealized appreciation on our
Consolidated Statement of Operations. The purchase discount
allocated to the loan investments acquired will amortize over the
life of each respective loan through interest income, with a
corresponding adjustment recorded as unrealized appreciation on
such loan acquired through its ultimate disposition. The purchase
discount allocated to equity investments acquired will not amortize
over the life of such investments through interest income and,
assuming no subsequent change to the fair value of the equity
investments acquired and disposition of such equity investments at
fair value, we will recognize a realized gain with a corresponding
reversal of the unrealized appreciation on disposition of such
equity investments acquired.
As a supplement to our financial
results reported in accordance with GAAP, we have provided, as
detailed below, certain non-GAAP financial measures to our
operating results that exclude the initial recognition of the
aforementioned purchase discount and the ongoing amortization
thereof, as determined in accordance with GAAP. The non-GAAP
financial measures include i) Adjusted net investment income after
taxes, ii) Adjusted net realized and unrealized gains (losses); and
iii) Adjusted net increase in net assets resulting from operations.
We believe that the adjustment to exclude the full effect of the
purchase discount is meaningful because it is a measure that we and
investors use to assess our financial condition and results of
operations. Although these non-GAAP financial measures are intended
to enhance investors’ understanding of our business and
performance, these non-GAAP financial measures should not be
considered an alternative to GAAP. The aforementioned non-GAAP
financial measures may not be comparable to similar non-GAAP
financial measures used by other companies.
(2)
The $0.45 per share dividend is
payable on April 27, 2021 to stockholders of record as of March 31,
2021.
(3)
Amounts exclude assets acquired
from the Merger.
(4)
The discussion of the investment
portfolio excludes the investment in a money market fund managed by
an affiliate of The Goldman Sachs Group, Inc. As of December 31,
2020, the Company did not have an investment in the money market
fund.
(5)
Total debt outstanding includes
netting of debt issuance costs of $17.3 million and $8.5 million,
respectively, as of December 31, 2020 and September 30, 2020.
(6)
The fixed versus floating
composition has been calculated as a percentage of performing debt
investments measured on a fair value basis, including income
producing stock investments and excludes investments, if any,
placed on non-accrual.
(7)
Computed based on the (a) annual
actual interest rate or yield earned plus amortization of fees and
discounts on the performing debt and other income producing
investments as of the reporting date, divided by (b) the total
performing debt and other income producing investments (excluding
investments on non-accrual) at amortized cost or fair value,
respectively. This calculation excludes exit fees that are
receivable upon repayment of the investment. Excludes the purchase
discount and amortization related to the Merger.
(8)
For a particular portfolio
company, we calculate the level of contractual indebtedness net of
cash (“net debt”) owed by the portfolio company and compare that
amount to measures of cash flow available to service the net debt.
To calculate net debt, we include debt that is both senior and pari
passu to the tranche of debt owned by us but exclude debt that is
legally and contractually subordinated in ranking to the debt owned
by us. We believe this calculation method assists in describing the
risk of our portfolio investments, as it takes into consideration
contractual rights of repayment of the tranche of debt owned by us
relative to other senior and junior creditors of a portfolio
company. We typically calculate cash flow available for debt
service at a portfolio company by taking net income before net
interest expense, income tax expense, depreciation and amortization
(“EBITDA”) for the trailing twelve month period. Weighted average
net debt to EBITDA is weighted based on the fair value of our debt
investments and excludes investments where net debt to EBITDA may
not be the appropriate measure of credit risk, such as cash
collateralized loans and investments that are underwritten and
covenanted based on recurring revenue.
For a particular portfolio
company, we also compare that amount to EBITDA to the portfolio
company’s contractual interest expense (“interest coverage ratio”).
We believe this calculation method assists in describing the risk
of our portfolio investments, as it takes into consideration
contractual interest obligations of the portfolio company. Weighted
average interest coverage is weighted based on the fair value of
our performing debt investments and excluding investments where
interest coverage may not be the appropriate measure of credit
risk, such as cash collateralized loans and investments that are
underwritten and covenanted based on recurring revenue.
Median EBITDA is based on our
debt investments and excludes investments where net debt to EBITDA
may not be the appropriate measure of credit risk, such as cash
collateralized loans and investments that are underwritten and
covenanted based on recurring revenue.
Portfolio company statistics are
derived from the financial statements most recently provided to us
of each portfolio company as of the reported end date. Statistics
of the portfolio companies have not been independently verified by
us and may reflect a normalized or adjusted amount. As of December
31, 2020 and September 30, 2020, investments where net debt to
EBITDA may not be the appropriate measure of credit risk
represented 33.1% and 29.1%, respectively, of total debt
investments at fair value. Portfolio company statistics have not
been independently verified by us and may reflect a normalized or
adjusted amount.
(9)
Amount rounds to $0.0
million.
(10)
The Company’s revolving credit
facility has debt outstanding denominated in currencies other than
U.S. Dollars (“USD”). These balances have been converted to USD
using applicable foreign currency exchange rates as of December 31,
2020. As a result, the revolving credit facility’s outstanding
borrowings and the available debt amounts may not sum to the total
debt commitment amount.
(11)
The ending net debt to equity
leverage ratios exclude unfunded commitments.
Goldman Sachs BDC, Inc.
Consolidated Statements of Assets and
Liabilities
(in thousands, except share and per
share amounts)
December 31, 2020
December 31, 2019
Assets
Investments, at fair value
Non-controlled/non-affiliated investments
(cost of $3,089,481 and $1,338,268)
$
3,135,745
$
1,298,133
Non-controlled affiliated investments
(cost of $64,699 and $83,460)
87,211
82,580
Controlled affiliated investments (cost of
$28,400 and $88,119)
19,810
73,539
Total investments, at fair value (cost of
$3,182,580 and $1,509,847)
$
3,242,766
$
1,454,252
Cash
32,137
9,409
Receivable for investments sold
2,600
93
Unrealized appreciation on foreign
currency forward contracts
—
32
Interest and dividends receivable
21,593
5,702
Deferred financing costs
11,350
4,427
Other assets
1,916
1,360
Total assets
$
3,312,362
$
1,475,275
Liabilities
Debt (net of debt issuance costs of
$17,323 and $3,680)
$
1,627,060
$
769,727
Interest and other debt expenses
payable
10,163
2,304
Management fees payable
5,945
3,653
Incentive fees payable
2,665
1,850
Distribution payable
45,690
18,165
Unrealized depreciation on foreign
currency forward contracts
355
—
Accrued expenses and other liabilities
5,343
3,451
Total liabilities
$
1,697,221
$
799,150
Commitments and Contingencies
Net Assets
Preferred stock, par value $0.01 per share
(1,000,000 shares authorized, no shares issued and outstanding)
$
—
$
—
Common stock, par value $0.001 per share
(200,000,000 shares authorized, 101,534,370 and 40,367,071 shares
issued and outstanding as of December 31, 2020 and December 31,
2019)
102
40
Paid-in capital in excess of par
1,621,813
778,132
Distributable earnings
(5,353
)
(100,626
)
Allocated income tax expense
(1,421
)
(1,421
)
TOTAL NET ASSETS
$
1,615,141
$
676,125
TOTAL LIABILITIES AND NET
ASSETS
$
3,312,362
$
1,475,275
Net asset value per share
$
15.91
$
16.75
Goldman Sachs BDC, Inc.
Consolidated Statements of
Operations
(in thousands, except share and per
share amounts)
For the Years Ended December
31,
2020
2019
2018
Investment Income:
From non-controlled/non-affiliated
investments:
Interest income
$
157,610
$
133,550
$
122,600
Payment-in-kind
4,864
1,052
761
Other income
1,081
2,527
2,064
From non-controlled affiliated
investments:
Interest income
4,931
2,766
2,545
Payment-in-kind
1,127
1,107
6,235
Dividend income
198
178
148
Other income
1,311
49
37
From controlled affiliated
investments:
Payment-in-kind
1,605
2,311
1,791
Interest income
232
271
—
Dividend income
—
3,450
10,550
Total investment income
$
172,959
$
147,261
$
146,731
Expenses:
Interest and other debt expenses
$
39,900
$
36,313
$
26,232
Management fees
16,846
14,696
15,971
Incentive fees
35,845
9,220
13,988
Professional fees
2,512
2,954
3,083
Directors’ fees
640
465
461
Other general and administrative
expenses
2,877
2,469
2,578
Total expenses
$
98,620
$
66,117
$
62,313
Fee waivers
(36,986
)
(394
)
—
Net expenses
$
61,634
$
65,723
$
62,313
NET INVESTMENT INCOME BEFORE
TAXES
$
111,325
$
81,538
$
84,418
Income tax expense, including excise
tax
$
1,429
$
1,819
$
1,582
NET INVESTMENT INCOME AFTER
TAXES
$
109,896
$
79,719
$
82,836
Net realized and unrealized gains
(losses) on investment transactions:
Net realized gain (loss) from:
Non-controlled/non-affiliated
investments
$
(6,611
)
$
(31,278
)
$
1,722
Non-controlled affiliated investments
3,545
(7,226
)
9
Controlled affiliated investments
(40,688
)
(629
)
—
Foreign currency forward contracts
82
151
7
Foreign currency transactions
63
(47
)
(189
)
Net change in unrealized appreciation
(depreciation) from:
Non-controlled/non-affiliated
investments
86,400
(13,530
)
(23,558
)
Non-controlled affiliated investments
23,391
16,731
(3,551
)
Controlled affiliated investments
5,990
(8,682
)
(3,653
)
Foreign currency forward contracts
(388
)
(57
)
89
Foreign currency translations
(5,563
)
823
688
Net realized and unrealized gains
(losses)
$
66,221
$
(43,744
)
$
(28,436
)
(Provision) benefit for taxes on realized
gain/loss on investments
(96
)
121
(446
)
(Provision) benefit for taxes on
unrealized appreciation/depreciation on investments
92
52
(276
)
NET INCREASE IN NET ASSETS FROM
OPERATIONS
$
176,113
$
36,148
$
53,678
Weighted average shares outstanding
53,940,573
40,313,662
40,184,715
Net investment income per share (basic and
diluted)
$
2.04
$
1.98
$
2.06
Earnings per share (basic and diluted)
$
3.26
$
0.90
$
1.34
ABOUT GOLDMAN SACHS BDC, INC.
Goldman Sachs BDC, Inc. is a specialty finance company that has
elected to be regulated as a business development company under the
Investment Company Act of 1940. GSBD was formed by The Goldman
Sachs Group, Inc. (“Goldman Sachs”) to invest primarily in
middle-market companies in the United States, and is externally
managed by Goldman Sachs Asset Management, L.P., an SEC-registered
investment adviser and a wholly-owned subsidiary of Goldman Sachs.
GSBD seeks to generate current income and, to a lesser extent,
capital appreciation primarily through direct originations of
secured debt, including first lien, first lien/last-out unitranche
and second lien debt, and unsecured debt, including mezzanine debt,
as well as through select equity investments. For more information,
visit www.goldmansachsbdc.com. Information on the website is not
incorporated by reference into this press release and is provided
merely for convenience.
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements that
involve substantial risks and uncertainties, including the impact
of COVID-19 on the business, future operating results, access to
capital and liquidity of the Company and its portfolio companies.
You can identify these statements by the use of forward-looking
terminology such as “may,” “will,” “should,” “expect,”
“anticipate,” “project,” “target,” “estimate,” “intend,”
“continue,” or “believe” or the negatives thereof or other
variations thereon or comparable terminology. You should read
statements that contain these words carefully because they discuss
our plans, strategies, prospects and expectations concerning our
business, operating results, financial condition and other similar
matters. These statements represent the Company’s belief regarding
future events that, by their nature, are uncertain and outside of
the Company’s control. Any forward-looking statement made by us in
this press release speaks only as of the date on which we make it.
Factors or events that could cause our actual results to differ,
possibly materially from our expectations, include, but are not
limited to, the risks, uncertainties and other factors we identify
in the sections entitled “Risk Factors” and “Cautionary Statement
Regarding Forward-Looking Statements” in filings we make with the
Securities and Exchange Commission, and it is not possible for us
to predict or identify all of them. We undertake no obligation to
update or revise publicly any forward-looking statements, whether
as a result of new information, future events or otherwise, except
as required by law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210225006244/en/
Goldman Sachs BDC, Inc. Investor Contact: Itai Baron,
212-855-9892 Media Contact: Patrick Scanlan, 212-902-6164
Goldman Sachs BDC (NYSE:GSBD)
Historical Stock Chart
From Mar 2024 to Apr 2024
Goldman Sachs BDC (NYSE:GSBD)
Historical Stock Chart
From Apr 2023 to Apr 2024