Goldman Sachs BDC, Inc. (“GS BDC” or the “Company”) (NYSE:GSBD)
today announced its financial results for the third quarter ended
September 30, 2018 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, 2018 was $0.54 per share, equating to an
annualized net investment income yield on book value of 11.9%;
- The Company announced a fourth quarter
dividend of $0.45 per share payable to shareholders of record as of
December 31, 2018;1
- Net asset value per share for the
quarter ended September 30, 2018 was $18.13, an increase from
$18.08 as of June 30, 2018;
- The Company amended its senior secured
revolving credit facility to, among other things, reduce the
Company’s minimum asset coverage ratio financial covenant to 150%,
as further described below. As a result of this amendment, the
Company has obtained all of the necessary approvals and is
positioned to benefit from the reduced asset coverage requirement
following the passage of the Small Business Credit Availability
Act;
- Gross and net originations during the
quarter were $205.6 million and $93.9 million, respectively. As a
result, the Company’s investment portfolio increased by 7%
quarter-over-quarter. Investments in first lien debt constituted
89% of gross originations during the quarter;2 and
- During the quarter, the Company closed
a $40.0 million upsize of its aggregate principal amount of 4.50%
unsecured convertible notes due April 2022.
SELECTED FINANCIAL HIGHLIGHTS
(in $ millions,
except per share data) As of
September 30, 2018
As of
June 30, 2018
Investment portfolio, at fair value2 $1,318.3 $1,237.3 Total
debt outstanding3 578.9 508.0 Net assets 728.6 726.5 Net asset
value per share $18.13 $18.08 Three Months Ended
September 30, 2018
Three Months Ended
June 30, 2018
Total investment income $38.0 $37.2 Net investment income
after taxes 21.6 20.2 Net increase in net assets resulting from
operations 19.0 17.5 Net investment income per share (basic
and diluted) 0.54 0.50 Earnings per share (basic and diluted) 0.47
0.43 Regular distribution per share 0.45
0.45
INVESTMENT ACTIVITY2
During the three months ended September 30, 2018, new investment
commitments and fundings were $205.6 million and $190.1 million,
respectively. The new investment commitments were across seven new
portfolio companies and eight existing portfolio companies. New
investment commitments were comprised of 99.7% secured debt
investments, including 88.7% first lien debt and 11.0% second lien
debt, and 0.3% in unsecured debt. The Company had sales and
repayments of $111.7 million primarily driven by the full repayment
of investments in two portfolio companies.
Summary of Investment Activity for the Three Months Ended
September 30, 2018:
New Investment Commitments Sales and
Repayments Investment Type $
Millions % of Total $
Millions % of Total 1st Lien/Senior
Secured Debt $182.3 88.7%
$7.9 7.1% 1st Lien/Last-Out Unitranche - -% 57.3
51.3% 2nd Lien/Senior Secured Debt 22.7 11.0% 46.5 41.6% Unsecured
Debt 0.6 0.3% - -% Preferred Stock - -% - -% Common Stock - -% - -%
Investment Funds & Vehicles (SCF) -
-% - -%
Total
$205.6 100.0%
$111.7 100.0%
During the three months ended September 30, 2018, the SCF made
new investment commitments and fundings of $63.7 million and $58.8
million, respectively. The new investment commitments were across
three new portfolio companies and three existing portfolio
companies. The SCF had sales and repayments of $62.7 million,
resulting in net funded portfolio change of $(3.9) million during
the quarter. As of September 30, 2018, the SCF’s investment
portfolio at fair value was $488.0 million. The weighted average
yield on the SCF’s total investment portfolio at amortized cost was
7.5% versus 7.6% from the prior quarter.4 The SCF represents the
Company’s largest investment at both cost and fair value.
PORTFOLIO SUMMARY2
As of September 30, 2018, the Company’s investment portfolio had
an aggregate fair value of $1,318.3 million, comprised of
investments in 66 portfolio companies operating across 32 different
industries. The investment portfolio on a fair value basis was
comprised of 89.6% secured debt investments (56.3% in first lien
debt (including 10.0% in first lien/last-out unitranche debt) and
33.3% in second lien debt), 0.5% in unsecured debt, 1.3% in
preferred stock, 1.6% in common stock, and 7.0% in the SCF.
Summary of Investment Portfolio as of September 30, 2018:
Investments at Fair Value
Investment Type $ Millions
% of Total 1st Lien/Senior Secured Debt
$609.8 46.3% 1st Lien/Last-Out Unitranche 132.1 10.0%
2nd Lien/Senior Secured Debt 438.4 33.3% Unsecured Debt 6.4 0.5%
Preferred Stock 17.6 1.3% Common Stock 21.4 1.6% Senior Credit Fund
(contains 96.9% 1st Lien Debt; 3.1% 2nd Lien Debt)
92.6 7.0%
Total $1,318.3
100.0%
As of September 30, 2018, the weighted average yield of the
Company’s total investment portfolio at amortized cost and fair
value was 10.8% and 11.7%, respectively, as compared to 10.9% and
11.7% respectively, as of June 30, 2018. The weighted average yield
of the Company’s total debt and income producing investments at
amortized cost and fair value was 11.3% and 12.1%, respectively,
versus 11.5% and 12.1%, respectively, as of June 30, 2018.4
On a fair value basis, as of September 30, 2018, 96.4% of the
Company’s debt investments bore interest at a floating rate.5
As of September 30, 2018, the weighted average net debt/EBITDA
of the companies in the Company’s investment portfolio was 5.3x
versus 5.2x as of June 30, 2018. The weighted average interest
coverage of companies comprising interest-bearing investments in
the investment portfolio was 2.2x which was unchanged versus the
prior quarter. The median EBITDA of the portfolio companies was
$36.5 versus $36.7 million as of June 30, 2018.6
As of September 30, 2018, investments on non-accrual status
represented 0.6% and 0.7% of the total investment portfolio at fair
value and amortized cost, respectively.
The Company’s investment in the SCF produced a return of 11.2%
and 11.4%, at amortized cost and fair value, respectively, over the
trailing four quarters ended September 30, 2018.7 The SCF’s
investment portfolio had an aggregate fair value of $488.0 million,
comprised of investments in 35 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 (96.9%
in first lien debt and 3.1% in second lien debt). All of the
investments in the SCF were debt investments bearing a floating
interest rate.
As of September 30, 2018, the weighted average net debt/EBITDA
and interest coverage of the companies in the SCF investment
portfolio were 4.8x and 2.5x, respectively. The median EBITDA of
the SCF’s portfolio companies was $50.6 million. 8 As of September
30, 2018, the SCF had one investment on non-accrual status.
RESULTS OF OPERATIONS
Total investment income for the three months ended September 30,
2018 and June 30, 2018 was $38.0 million and $37.2 million,
respectively. The increase in investment income over the
quarter was primarily driven by higher dividend income distributed
by the SCF. The $38.0 million of total investment income was
comprised of $35.6 million from interest income, original issue
discount accretion, payment-in-kind income and dividend income,
$0.5 million from other income and $1.9 million from prepayment
related income.9
Total expenses for the three months ended September 30, 2018 and
June 30, 2018 were $16.0 million and $16.8 million,
respectively. The $0.8 million decrease in expenses was
primarily driven by a decrease in investment advisory fees and
other operating expenses which was partially offset by an increase
in interest and other debt expenses. The $16.0 million of total
expenses were comprised of $6.4 million of interest and credit
facility expenses, $8.2 million of management and incentive fees,
and $1.4 million of other operating expenses.
Net investment income after taxes for the three months ended
September 30, 2018 was $21.6 million, or $0.54 per share, compared
with $20.2 million, or $0.50 per share per share for the three
months ended June 30, 2018.
During the three months ended September 30, 2018, the Company
had net realized and unrealized losses of $(2.4) million and had
provision for taxes on unrealized gains on investments of $(0.1)
million.
Net increase in net assets resulting from operations for the
three months ended September 30, 2018 was $19.0 million, or $0.47
per share.
LIQUIDITY AND CAPITAL RESOURCES
During the quarter, the Company closed an offering of $40.0
million aggregate principal amount of 4.50% convertible notes due
April 2022. The convertible notes have identical terms to, are
fungible with, and are part of the Company’s pre-existing $115.0
million convertible notes. In addition, the Company amended its
senior secured revolving credit facility agreement (the “Revolving
Credit Facility”) to, among other things, (i) reduce the Company’s
minimum asset coverage ratio financial covenant to 150% and (ii)
establish a new financial covenant requiring the Company to
maintain a minimum asset coverage ratio of 200% with respect to the
consolidated assets of the Company to the secured debt of the
Company excluding any secured debt at financing subsidiaries. There
was no fee or change in borrowing cost under the Revolving Credit
Facility in connection with the amendment. For further information,
please see the Company’s current report on Form 8-K filed with the
Securities and Exchange Commission on September 17, 2018.
As of September 30, 2018, the Company had $578.9 million of
total principal amount of debt outstanding, comprised of $423.9
million of outstanding borrowings under its revolving credit
facility and $155.0 million of convertible notes. The combined
weighted average interest rate on debt outstanding was 4.03% for
the nine months ended September 30, 2018 as compared to 3.97% for
the six months ended June 30, 2018. As of September 30, 2018, the
Company had $271.1 million of availability under its revolving
credit facility and $4.7 million in cash and cash equivalents.
The Company’s average and ending debt to equity leverage ratio
was 0.70x and 0.79x, respectively, for the three months ended
September 30, 2018, as compared with 0.72x and 0.70x, respectively,
for the three months ended June 30, 2018.10
CONFERENCE CALL
The Company will host an earnings conference call on Friday,
November 2, 2018 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 4849738. 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 2 through December 2. To hear the replay,
participants should dial (855) 859-2056; international callers
should dial +1 (404) 537-3406; conference ID 4849738. 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 15, 2019 to
holders of record as of December 31, 2018. 2 The discussion of the
investment portfolio of both the Company and the SCF excludes their
respective investment in a money market fund managed by an
affiliate of The Goldman Sachs Group, Inc. 3 Total debt outstanding
excluding netting of debt issuance costs of $5.6 million and $3.3
million, respectively, as of September 30, 2018 and June 30, 2018.
4 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. 5 The fixed versus
floating composition has been calculated as a percentage of
performing debt investments, including income producing stock
investments and excludes investments, if any, placed on
non-accrual. 6 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,
including our 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. For a particular portfolio company, we also
calculate the level of contractual interest expense owed by the
portfolio company, and compare that amount to EBITDA (“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, including our
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 our debt investments, including
our 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. 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 September 30,
2018 and June 30, 2018, investments where net debt to EBITDA may
not be the appropriate measure of credit risk represented 15.5% and
10.5%, respectively, of total debt investments, including our
investment in the SCF, at fair value. Portfolio company statistics
are derived from the financial statements most recently available
to us 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. 7
Computed based on the net investment income earned from the SCF for
the trailing twelve months ended September 30, 2018, which may
include dividend income and loan origination and structuring fees,
divided by GS BDC’s average member’s equity at cost and fair value,
adjusted for equity contributions. 8 For a particular portfolio
company of the SCF, we calculate the level of 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 the SCF, but exclude debt that is legally and
contractually subordinated in ranking to the debt owned by the
Senior Credit Fund. We believe this calculation method assists in
describing the risk of the SCF’s portfolio investments, as it takes
into consideration contractual rights of repayment of the tranche
of debt owned by the SCF 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 EBITDA
for the trailing twelve month period. For a particular portfolio
company of the SCF, we also calculate the interest coverage ratio.
We believe this calculation method assists in describing the risk
of the SCF’s portfolio investments, as it takes into consideration
contractual interest obligations of the portfolio company. Median
EBITDA is based on the SCF’s debt investments. Portfolio company
statistics are derived from the financial statements most recently
available to us of each portfolio company of the SCF as of the
respective reported end date. Statistics of the SCF’s portfolio
companies have not been independently verified by us and may
reflect a normalized or adjusted amount. 9 Interest income excludes
prepayment premiums, accelerated accretion of upfront loan
origination fees and unamortized discounts. Prepayment related
income includes prepayment premiums and accelerated accretion of
upfront loan origination fees and unamortized discounts. 10 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 ratios exclude unfunded commitments.
Goldman Sachs BDC, Inc.
Consolidated Statements of Assets and
Liabilities
(in thousands, except share and per
share amounts)
September 30,
2018(Unaudited)
December 31, 2017 Assets Investments, at fair
value Non-controlled/non-affiliated investments (cost of $1,082,170
and $1,053,226, respectively) $ 1,076,354 $ 1,050,179
Non-controlled affiliated investments (cost of $143,138 and
$109,528, respectively) 126,676 95,468 Controlled affiliated
investments (cost of $119,065 and $114,911, respectively) 115,290
112,666 Investments in affiliated money market fund (cost of $4 and
$11,539, respectively) 4 11,539 Cash 4,648 11,606 Receivable for
investments sold 268 – Unrealized appreciation on foreign currency
forward contracts 2 – Interest and dividends receivable from
non-controlled/affiliated investments and
non-controlled/non-affiliated investments 10,815 8,302 Dividend
receivable from controlled affiliated investments 3,000 2,400 Other
income receivable from controlled affiliated investments - 1,308
Deferred financing costs 5,773 4,847 Deferred offering costs 145
275 Other assets 228 2
Total assets $
1,343,203 $ 1,298,592
Liabilities Debt
(net of debt issuance costs of $5,644 and $3,724, respectively) $
573,292 $ 542,526 Interest and other debt expenses payable 4,594
1,688 Management fees payable 3,255 4,647 Incentive fees payable
4,962 3,180 Distribution payable 18,088 18,059 Payable for
investments purchased 5,465 – Directors’ fees payable 107 – Accrued
offering costs 362 289 Accrued expenses and other liabilities
4,438 2,373
Total liabilities $ 614,563
$ 572,762
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, 40,196,049 and 40,130,665 shares issued and outstanding
as of September 30, 2018 and December 31, 2017, respectively) 40 40
Paid-in capital in excess of par 802,046 799,936 Accumulated net
realized gain (loss) (84,304) (85,451 ) Accumulated undistributed
net investment income 38,305 32,078 Net unrealized appreciation
(depreciation) (26,026) (19,352 ) Allocated income tax expense
(1,421) (1,421 )
TOTAL NET ASSETS $
728,640 $ 725,830
TOTAL LIABILITIES AND NET ASSETS $
1,343,203 $ 1,298,592 Net asset value per share $
18.13 $ 18.09
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, 2018 2017 2018 2017
Investment Income: From non-controlled/non-affiliated
investments: Interest income $ 30,322 $ 28,204 $ 91,340 $ 85,383
Payment-in-kind 672 – 672 – Other income 508
1,255 1,481 2,090 Total
investment income from non-controlled/non-affiliated investments
31,502 29,459 93,493 87,473 From non-controlled affiliated
investments: Payment-in-kind 2,028 1,885 5,931 5,287 Interest
income 889 354 1,936 1,476 Dividend income 86 7 103 20 Other income
11 7 26 19
Total investment income from non-controlled affiliated
investments 3,014 2,253 7,996 6,802 From controlled affiliated
investments: Payment-in-kind 467 – 1,273 – Dividend income 3,000
2,350 8,000 7,250 Other income - 350
- 1,096 Total investment income
from controlled affiliated investments 3,467
2,700 9,273 8,346
Total investment income $ 37,983 $ 34,412 $
110,762 $ 102,621
Expenses: Interest
and other debt expenses $ 6,432 $ 4,884 $ 18,328 $ 14,235
Management fees 3,255 4,369 12,537 13,181 Incentive fees 4,962
4,624 13,988 9,595 Professional fees 580 509 2,308 1,443
Administration, custodian and transfer agent fees 230 219 693 608
Directors’ fees 118 177 336 525 Other expenses 412
302 1,091 925
Total expenses $ 15,989 $ 15,084 $ 49,281
$ 40,512
NET INVESTMENT INCOME (LOSS)
BEFORE TAXES $ 21,994 $ 19,328 $ 61,481 $
62,109 Excise tax $ 428 $ 383 $ 1,017
$ 1,116
NET INVESTMENT INCOME (LOSS) AFTER
TAXES $ 21,566 $ 18,945 $ 60,464 $ 60,993
Net realized and unrealized gains
(losses): Net realized gain (loss) from:
Non-controlled/non-affiliated investments $ (1 ) $ 138 $ 1,766 $
(38,138 ) Non-controlled affiliated investments - (2,495 ) 9 (2,495
) Foreign currency transactions (182 ) – (182 ) – Net change in
unrealized appreciation (depreciation) from: Non
controlled/non-affiliated investments (1,985 ) (341 ) (2,769 )
24,874 Non-controlled affiliated investments 75 1,574 (2,402 )
(7,942 ) Controlled affiliated investments (481 ) 291 (1,530 ) (30
) Foreign currency forward contracts 2 – 2 – Foreign currency
translations 171 – 171
–
Net realized and unrealized gains
(losses) $ (2,401 ) $ (833 ) $ (4,935 ) $ (23,731 )
(Provision) benefit for taxes on realized gain/loss on investments
$ - $ – $ (446 ) $ – (Provision) benefit for taxes on unrealized
appreciation/depreciation on investments (146 ) –
(146 ) –
NET INCREASE IN NET
ASSETS RESULTING FROM OPERATIONS $ 19,019 $ 18,112
$ 54,937 $ 37,262 Net investment
income (loss) per share (basic and diluted) $ 0.54 $ 0.47 $ 1.51 $
1.60 Earnings per share (basic and diluted) $ 0.47 $ 0.45 $ 1.37 $
0.98 Weighted average shares outstanding 40,192,683 40,106,702
40,171,874 38,130,304 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. 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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version on businesswire.com: https://www.businesswire.com/news/home/20181101006185/en/
Goldman Sachs BDC, Inc.Investors: Katherine Schneider,
212-902-3122orMedia: Patrick Scanlan, 212-902-6164
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