Goldman Sachs BDC, Inc. (“GS BDC” or the “Company”) (NYSE:GSBD)
today announced its financial results for the third quarter ended
September 30, 2017 and filed its Form 10-Q with the U.S. Securities
and Exchange Commission.
QUARTERLY HIGHLIGHTS
- Net investment income for the quarter
ended September 30, 2017 was $0.47 per share, equating to an
annualized net investment income yield on book value of 10.3%;
- The Company announced a fourth quarter
dividend of $0.45 per share payable to shareholders of record as of
December 29, 2017, equating to an annualized dividend yield of 9.9%
on quarter end net asset value per share;1
- Earnings for the quarter ended
September 30, 2017 were $0.45 per share;
- Net asset value per share for the
quarter ended September 30, 2017 was $18.23, unchanged from the
quarter ended June 30, 2017;
- New investment commitments and fundings
were $254.4 million and $253.5 million, respectively, while sales
and repayments totaled $190.4 million;2
- The Senior Credit Fund (“SCF”) produced
a 12.7% return on investment to the Company; this investment
continues to represent the Company’s largest investment at 8.1% of
total investments at fair value;2,3
- Investments on non-accrual represented
1.5% and 3.4% of the total investments at fair value and amortized
cost, respectively.2
SELECTED FINANCIAL HIGHLIGHTS
(in $
millions, except per share data) As of
September 30, 2017
As of
June 30, 2017
Investment portfolio, at fair value2 $1,178.7 $1,111.8 Total
debt outstanding4 447.8 412.3 Net assets 731.2 730.7 Net asset
value per share $18.23 $18.23 Three Months Ended
September 30, 2017
Three Months Ended
June 30, 2017
Total investment income $34.4 $36.0 Net investment income
after taxes 18.9 24.1 Net increase in net assets resulting from
operations 18.1 4.6 Net investment income per share (basic
and diluted) 0.47 0.64 Earnings per share (basic and diluted) 0.45
0.12 Regular distribution per share 0.45
0.45
INVESTMENT ACTIVITY2
During the three months ended September 30, 2017, new investment
commitments and fundings were $254.4 million and $253.5 million,
respectively, which includes net fundings of $0.7 million of
previously unfunded commitments. The new investment commitments
were across eight new portfolio companies and three existing
portfolio companies. The Company had sales and repayments of $190.4
million, comprised of $119.9 million from the full repayment of
investments in three portfolio companies, $66.9 million from a
syndication of investments in two portfolio companies and $3.6
million from scheduled amortization paydowns across various
portfolio companies.
Summary of Investment Activity for the Three Months Ended
September 30, 2017:
New Investment Commitments
Sales and Repayments Investment Type
$ Millions % of Total
$ Millions % of Total 1st
Lien/Senior Secured Debt $43.0
16.9% $46.5 24.4% 1st Lien/Last-Out
Unitranche 11.6 4.6% 45.5 23.9% 2nd Lien/Senior Secured Debt 199.2
78.3% 98.4 51.7% Unsecured Debt - -% - -% Preferred Stock 0.6 0.2%
- -% Common Stock - -% - -% Investment Funds & Vehicles (SCF)
- -% -
-%
Total $254.4
100.0% $190.4
100.0%
During the three months ended September 30, 2017, the SCF made
new investment commitments and fundings of $49.4 million and $48.5
million, respectively. The new investment commitments were across
two new portfolio companies and three existing portfolio companies.
The SCF also had sales and repayments of $80.0 million, resulting
in net funded portfolio change of $(31.5) million during the
quarter. As of September 30, 2017, the SCF’s investment portfolio
at fair value was $471.5 million, a decrease of 6.1% quarter over
quarter. During the three months ended September 30, 2017, the
weighted average yield on new investment commitments was 7.4% while
the yield on investments repaid was 6.9%.5 The weighted average
yield on the total investment portfolio at amortized cost increased
from 7.2% to 7.3%. quarter-over-quarter. The SCF represents the
Company’s largest investment at both cost and fair value.
PORTFOLIO SUMMARY2
As of September 30, 2017, the Company’s investment portfolio had
an aggregate fair value of $1,178.7 million, comprised of
investments in 51 portfolio companies operating across 28 different
industries. The investment portfolio on a fair value basis was
comprised of 89.1% secured debt investments (53.5% in first lien
debt (including 23.3% in first lien/last-out unitranche debt) and
35.6% in second lien debt), 0.3% in unsecured debt, 1.0% in
preferred stock, 1.5% in common stock, and 8.1% in the SCF.
Summary of Investment Portfolio as of September 30, 2017:
Investments at Fair Value Investment Type
$ Millions % of Total 1st
Lien/Senior Secured Debt $355.7
30.2% 1st Lien/Last-Out Unitranche 274.4 23.3% 2nd Lien/Senior
Secured Debt 419.4 35.6% Unsecured Debt 3.3 0.3% Preferred Stock
12.4 1.0% Common Stock 18.4 1.5%
Senior Credit Fund (contains 96.6% 1st
lien debt;3.4% second lien debt)
95.1 8.1%
Total
$1,178.7 100.0%
As of September 30, 2017, the weighted average yield of the
Company’s total debt and income producing investments at amortized
cost and fair value was 11.0% and 11.5%, respectively, as compared
to 11.2% and 12.8%, respectively, as of June 30, 2017.5 The
weighted average yield of the Company’s total investment portfolio
at amortized cost and fair value was 10.3% and 11.1%, respectively,
as compared to 10.8% and 12.5%, respectively, as of June 30,
2017.
On a fair value basis, the percentage of the Company’s debt
investments bearing interest at a floating rate was 96.0%.6
As of September 30, 2017, the weighted average net debt/EBITDA
of the companies in the Company’s investment portfolio was 5.3x
versus 5.0x as of June 30, 2017. The weighted average interest
coverage of interest-bearing companies in the investment portfolio
was 2.5x versus 2.6x from the previous quarter. The median EBITDA
of the portfolio companies was $39.5 million.7
As of September 30, 2017, investments on non-accrual status
represented 1.5% and 3.4% of the total investment portfolio at fair
value and amortized cost, respectively.
The Company’s investment in the SCF returned 12.7% and 12.6% at
amortized cost and fair value, respectively, over the trailing four
quarters ended September 30, 2017. The SCF’s investment portfolio
had an aggregate fair value of $471.5 million, comprised of
investments in 34 portfolio companies operating across 20 different
industries. The SCF’s investment portfolio on a fair value basis
was comprised of 100.0% secured debt investments (94.6% in first
lien debt, 2.0% in a first-out portion of a unitranche loan and
3.4% in second lien debt). All of the investments in the SCF were
invested in debt bearing a floating interest rate with an interest
rate floor.
As of September 30, 2017, the weighted average net debt/EBITDA
and interest coverage of the companies in the SCF investment
portfolio were 4.5x and 2.9x, respectively. The median EBITDA of
the SCF’s portfolio companies was $43.3 million. None of the SCF’s
investments were on non-accrual status as of September 30,
2017.
RESULTS OF OPERATIONS
Total investment income for the three months ended September 30,
2017 and June 30, 2017 was $34.4 million and $36.0 million,
respectively. The decrease in investment income over the
quarter was primarily driven by lower prepayment related income.
The $34.4 million of total investment income was comprised of $31.4
million from interest income, original issue discount accretion,
payment-in-kind and dividend income, $1.6 million from other income
and $1.4 million from prepayment related income.8
Total expenses before taxes for the three months ended September
30, 2017 and June 30, 2017 were $15.1 million and $11.6 million,
respectively. The $3.5 million increase in expenses was
primarily driven by an increase in incentive fees. The $15.1
million of total expenses were comprised of $4.9 million of
interest and credit facility expenses, $9.0 million of management
and incentive fees, and $1.2 million of other operating
expenses.
Net investment income after taxes for the three months ended
September 30, 2017 was $18.9 million, or $0.47 per share, compared
with $24.1 million, or $0.64 per share for the three months ended
June 30, 2017.
During the three months ended September 30, 2017, the Company
had net realized and unrealized depreciation of $(0.8) million.
Net increase in net assets resulting from operations for the
three months ended September 30, 2017 was $18.1 million, or $0.45
per share.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2017, the Company had $447.8 million of
total principal amount of debt outstanding, comprised of $332.8
million of outstanding borrowings under its revolving credit
facility and $115.0 million of convertible notes. The combined
weighted average interest rate on debt outstanding was 3.42% for
the nine months ended September 30, 2017. As of September 30, 2017,
the Company had $272.2 million of availability under its revolving
credit facility and $12.0 million in cash and cash equivalents.
The Company’s average and ending debt to equity leverage ratio
was 0.61x and 0.61x, respectively, for the three months ended
September 30, 2017, as compared with 0.70x and 0.56x, respectively,
for the three months ended June 30, 2017.9
CONFERENCE CALL
The Company will host an earnings conference call on Friday,
November 3, 2017 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 96541038. 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 12:00 pm Eastern
Time on November 3 through December 3. To hear the replay,
participants should dial (855) 859-2056; international callers
should dial +1 (404) 537-3406; conference ID 96541038. 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 obtaining access to the conference
call to Goldman Sachs BDC, Inc. Investor Relations, via e-mail, at
gsbdc-investor-relations@gs.com.
ENDNOTES
1 The $0.45 per share dividend is payable on January 16, 2018 to
holders of record as of December 29, 2017.
2 The discussion of the investment portfolio of both the Company
and the SCF excludes the investment in a money market fund managed
by an affiliate of The Goldman Sachs Group, Inc.
3 The SCF’s return to the Company was measured at amortized cost
over the trailing four quarters.
4 Total debt outstanding excluding netting of debt issuance
costs of $3.9 million and $4.2 million, respectively, for the
quarter ended September 30, 2017 and June 30, 2017.
5 Computed based on the (a) annual stated interest rate or yield
earned plus amortization of fees and discounts on the performing
debt and other income producing investments, divided by (b) the
total performing debt and other income producing investments
(excluding investments on non-accrual) at amortized cost.
6 The fixed versus floating composition has been calculated as a
percentage of performing debt investments, including income
producing stock investments.
7 For a particular portfolio company, EBITDA typically
represents net income before net interest expense, income tax
expense, depreciation and amortization. The net debt to EBITDA
represents the ratio of a portfolio company’s total debt (net of
cash) and excluding debt subordinated to the Company’s investment
in a portfolio company, to a portfolio company’s EBITDA. The
interest coverage ratio represents the ratio of a portfolio
company’s EBITDA as a multiple of a portfolio company’s interest
expense. Weighted average net debt to EBITDA is weighted based on
the fair value of the Company’s debt investments, including the
Company’s exposure to underlying debt investments in the SCF and
excluding 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. Weighted average interest coverage is weighted
based on the fair value of the Company’s performing debt
investments, including the Company’s exposure to underlying debt
investments in the SCF 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
the Company’s debt investments, including the Company’s exposure to
underlying debt investments in the SCF and excluding 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. As of
September 30, 2017, investments where EBITDA may not be the
appropriate measure of credit risk represented 7.2% of total debt
investments, including the Company’s investment in the SCF, at fair
value. Portfolio company statistics are derived from the most
recently available financial statements of each portfolio company
as of the respective reported end date. Portfolio company
statistics have not been independently verified by us and may
reflect a normalized or adjusted amount.
8 Interest income excludes accelerated accretion/amortization of
$0.7 million. Prepayment related income includes prepayment
premiums and accelerated accretion of upfront loan origination fees
and unamortized discounts.
9 The average debt to equity leverage ratio has been calculated
using the average daily borrowings during the quarter divided by
average net assets, adjusted for equity contributions. The ending
and average debt to equity leverage ratio excludes unfunded
commitments.
Goldman Sachs BDC, Inc.
Consolidated Statements of Assets and
Liabilities
(in thousands, except share and per
share amounts)
September 30,
2017(Unaudited)
December 31, 2016 Assets
Non-controlled/non-affiliated investments, at fair value (cost of
$1,015,440 and $1,055,203, respectively) $ 989,904 $ 1,004,793
Non-controlled affiliated investments, at fair value (cost of
$107,223 and $89,715, respectively) 93,669 84,103 Controlled
affiliated investments, at fair value (cost of $94,342 and $77,592,
respectively) 95,114 78,394 Investments in affiliated money market
fund (cost of $3 and $1, respectively) 3 1 Cash 11,967 4,565
Interest and dividends receivable from non-controlled/affiliated
investments and non-controlled/non-affiliated investments 7,617
7,841 Dividend receivable from controlled affiliated investments
2,350 1,925 Other income receivable from controlled affiliated
investments 1,096 2,212 Deferred financing costs 5,107 6,018
Deferred offering costs 160 605 Other assets 699
76
Total assets $ 1,207,686 $ 1,190,533
Liabilities Debt (net of debt issuance costs
of $3,945 and $4,598, respectively) $ 443,805 $ 498,152 Interest
and other debt expenses payable 2,842 1,569 Management fees payable
4,369 4,406 Incentive fees payable 4,624 1,474 Distribution payable
18,049 16,349 Accrued offering costs 527 518 Directors’ fees
payable 175 8 Accrued expenses and other liabilities 2,136
2,920
Total liabilities $ 476,527
$ 525,396
Commitments and Contingencies
Net Assets Preferred stock, par value $0.001 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, 40,109,905 and 36,331,662
sharesissued and outstanding at September 30, 2017 and December 31,
2016, respectively)
40 36 Paid-in capital in excess of par 801,048 719,847 Accumulated
net realized gain (loss) (64,362
)
(23,729 ) Accumulated undistributed net investment income 34,172
25,624 Net unrealized appreciation (depreciation) on investments
(38,318
)
(55,220 ) Allocated income tax expense (1,421
)
(1,421 )
TOTAL NET ASSETS $ 731,159 $ 665,137
TOTAL LIABILITIES AND NET ASSETS $ 1,207,686 $
1,190,533 Net asset value per share $ 18.23 $ 18.31
Goldman Sachs BDC, Inc.
Consolidated Statements of
Operations
(in thousands, except share and per
share amounts)
(Unaudited)
For the three months endedSeptember 30,
For the nine months ended September 30, 2017
2016 2017 2016 Investment Income: From
non-controlled/non-affiliated investments: Interest income $ 28,204
$ 29,259 $ 85,383 $ 84,879 Dividend income — 633 — 1,890 Other
income 1,255 756 2,090
1,153 Total investment income from
non-controlled/non-affiliated investments 29,459 30,648 87,473
87,922 From non-controlled affiliated investments: Payment-in-kind
1,885 54 5,287 54 Interest income 354 333 1,476 333 Dividend income
7 10 20 32 Other income 7 6 19
6 Total investment income from non-controlled
affiliated investments 2,253 403 6,802 425 From controlled
affiliated investments: Dividend income 2,350 1,825 7,250 4,650
Other income 350 1,074 1,096
1,618 Total investment income from controlled
affiliated investments 2,700 2,899
8,346 6,268
Total investment
income $ 34,412 $ 33,950 $ 102,621 $
94,615
Expenses: Interest and other debt
expenses $ 4,884 $ 3,628 $ 14,235 $ 9,909 Management fees 4,369
4,292 13,181 12,606 Incentive fees 4,624 5,459 9,595 8,948
Professional fees 509 637 1,443 1,818 Administration, custodian and
transfer agent fees 219 213 608 654 Directors’ fees 177 263 525 743
Other expenses 302 487 925
1,122
Total expenses $ 15,084 $
14,979 $ 40,512 $ 35,800
NET INVESTMENT
INCOME (LOSS) BEFORE TAXES $ 19,328 $ 18,971 $
62,109 $ 58,815 Excise tax expense $ 383 $ 294
$ 1,116 $ 728
NET INVESTMENT INCOME (LOSS)
AFTER TAXES $ 18,945 $ 18,677 $ 60,993 $
58,087
Net realized and unrealized gains (losses)
on investment transactions: Net realized gain (loss) from:
Non-controlled/non-affiliated investments $ 138 $ (21,993 ) $
(38,138 ) $ (21,993 ) Non-controlled affiliated investments (2,495
) — (2,495 ) — Net change in unrealized appreciation (depreciation)
from: Non controlled/non-affiliated investments (341 ) 23,891
24,874 (3,824 ) Non controlled affiliated investments 1,574 1,353
(7,942 ) 864 Controlled affiliated investments 291
735 (30 ) 1,930
Net realized
and unrealized gains (losses) $ (833 ) $ 3,986 $ (23,731
) $ (23,023 )
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 18,112 $ 22,663 $ 37,262 $
35,064 Net investment income (loss) per share (basic
and diluted) $ 0.47 $ 0.51 $ 1.60 $ 1.60 Earnings per share (basic
and diluted) $ 0.45 $ 0.62 $ 0.98 $ 0.97 Weighted average shares
outstanding 40,106,702 36,320,014 38,130,304 36,312,852
Distributions declared per share $ 0.45 $ 0.45 $ 1.35 $ 1.35
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. GS BDC 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.
GS BDC 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. 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. We believe that it is
important to communicate our future expectations to our investors.
There are likely to be events in the future, however, that we are
not able to predict accurately or 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.
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Goldman Sachs BDC, Inc.Investors:Katherine Schneider,
212-902-3122orMedia:Andrew Williams, 212-902-5400
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