Goldman Sachs BDC, Inc. (“GS BDC” or the “Company”) (NYSE:GSBD)
today reported financial results for the first quarter ended March
31, 2019 and filed its Form 10-Q with the U.S. Securities and
Exchange Commission.
QUARTERLY HIGHLIGHTS
- Net investment income for the quarter
ended March 31, 2019 was $0.55 per share, equating to an annualized
net investment income yield on book value of 12.8%;
- The Company announced a second quarter
dividend of $0.45 per share payable to shareholders of record as of
June 28, 2019;1
- Net asset value per share as of March
31, 2019 was $17.25 as compared to $17.65 as of December 31,
2018;
- Gross and net originations were $155.5
million and $77.7 million, respectively, primarily driven by gross
originations of first lien debt investments;
- Over the past four quarters following
the passage of the Small Business Credit Availability Act, the
Company’s proportion of its first lien debt investments within its
aggregate investment portfolio increased by 74% and second lien
debt investments decreased by 44%. In addition, single name
portfolio diversification has increased by 39%;
- The Company increased the amount of
commitments to its revolving credit facility to $795.0 million;
and
- Effective May 8, 2019, the Company and
its partner in the Senior Credit Fund, LLC (“SCF”), a joint venture
focused on first lien debt investments, commenced the dissolution
of the joint venture partnership. In connection with this, the
Company received its pro rata portion of the SCF investments on
balance sheet.2
SELECTED FINANCIAL HIGHLIGHTS
(in $
millions, except per share data) As of
March 31, 2019
As of
December 31, 2018
Investment portfolio, at fair value3 $1,405.1 $1,375.4 Total
debt outstanding4 709.3 664.4 Net assets 694.7 709.9 Net asset
value per share $17.25 $17.65 Three Months Ended
March 31, 2019
Three Months Ended
December 31, 2018
Total investment income $36.5 $36.0 Net investment income
after taxes 22.3 22.4 Net increase in net assets resulting from
operations 2.2 (1.3) Net investment income per share (basic
and diluted) 0.55 0.56 Earnings per share (basic and diluted) 0.06
(0.03) Regular distribution per share 0.45
0.45
INVESTMENT ACTIVITY3
During the three months ended March 31, 2019, new investment
commitments and fundings were $155.5 million and $124.9 million,
respectively. The new investment commitments were across seven new
portfolio companies and four existing portfolio companies. New
investment commitments were comprised of 87.8% secured debt
investments, including 81.5% first lien debt, and 6.3% second lien
debt, and 12.2% in preferred stock. The Company had sales and
repayments of $77.8 million primarily driven by the full repayment
of two second lien debt investments.
Summary of Investment Activity for the
Three Months Ended March 31, 2019:
New Investment Commitments
Sales and Repayments Investment Type
$ Millions % of Total
$ Millions % of Total 1st
Lien/Senior Secured Debt $126.6
81.5% $13.1 16.9% 1st Lien/Last-Out
Unitranche - -% 0.1 0.1% 2nd Lien/Senior Secured Debt 9.9 6.3% 64.6
83.0% Unsecured Debt - -% - -% Preferred Stock 19.0 12.2% - -%
Common Stock - -% - -% Investment Funds & Vehicles (SCF)
- -% - -%
Total $155.5
100.0% $77.8
100.0%
PORTFOLIO SUMMARY3
As of March 31, 2019, the Company’s investment portfolio had an
aggregate fair value of $1,405.1 million, comprised of investments
in 78 portfolio companies operating across 33 different industries.
The investment portfolio on a fair value basis was comprised of
85.9% secured debt investments (65.2% in first lien debt (including
7.2% in first lien/last-out unitranche debt) and 20.7% in second
lien debt), 0.5% in unsecured debt, 3.2% in preferred stock, 3.6%
in common stock and 6.8% in the SCF. Within the SCF, 98.8% of the
investment portfolio was invested in first lien senior secured
loans.
Summary of Investment Portfolio as of
March 31, 2019:
Investments at Fair Value Investment Type
$ Millions % of Total 1st
Lien/Senior Secured Debt $814.5
58.0% 1st Lien/Last-Out Unitranche 101.1 7.2% 2nd Lien/Senior
Secured Debt 291.1 20.7% Unsecured Debt 6.7 0.5% Preferred Stock
44.9 3.2% Common Stock 50.9 3.6% Senior Credit Fund (contained
98.8% 1st Lien Debt; 1.1% 2nd Lien Debt; and 0.1% Common Stock)
95.9 6.8%
Total
$1,405.1 100.0%
As of March 31, 2019, the weighted average yield of the
Company’s total investment portfolio at amortized cost and fair
value was 9.3% and 9.9%, respectively, as compared to 9.5% and
10.1%, respectively, as of December 31, 2018. The weighted average
yield of the Company’s total debt and income producing investments
at amortized cost and fair value was 10.7% and 11.1%, respectively,
versus 10.9% and 11.3%, respectively, as of December 31, 2018.5
On a fair value basis, as of March 31, 2019, 96.3% of the
Company’s debt investments bore interest at a floating rate.6
As of March 31, 2019, the weighted average net debt/EBITDA of
the companies in the Company’s investment portfolio was 5.3x versus
5.6x as of December 31, 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
$25.5 million versus $26.9 million as of December 31, 2018.7
As of March 31, 2019, investments on non-accrual status
represented 3.5% and 4.5% of the total investment portfolio at fair
value and amortized cost, respectively. As previously disclosed,
the Company’s first lien, last-out unitranche debt investment in
NTS Communications, Inc. (“NTS”) was placed on non-accrual status
during the quarter ended December 31, 2018. This investment
represents 3.5% and 3.8% of the total investment portfolio at fair
value and amortized cost, respectively. The Company currently
expects that this investment will be repaid during the quarter
ending June 30, 2019, in connection with the sale of NTS. However,
the exact timing is dependent on the satisfaction of certain
closing conditions to the sale transaction, including receipt of
Federal Communications Commission approval. Excluding this
investment, non-accruals represented less than 0.1% 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 10.6%
and 10.9%, at amortized cost and fair value, respectively, over the
trailing four quarters ended March 31, 2019.8 The SCF’s investment
portfolio had an aggregate fair value of $431.5 million, comprised
of investments in 31 portfolio companies operating across 19
different industries. The SCF’s investment portfolio on a fair
value basis was comprised of 99.9% secured debt investments (98.8%
in first lien debt and 1.1% in second lien debt) and 0.1% in common
stock. All of the debt investments in the SCF bore interest at a
floating rate.
As of March 31, 2019, 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 $48.1 million.9 As of March 31, 2019, the
SCF had one investment on non-accrual status.
RESULTS OF OPERATIONS
Total investment income for the three months ended March 31,
2019 and December 31, 2018 was $36.5 million and $36.0 million,
respectively. The increase in investment income over the
quarter was primarily driven by an increase in prepayment fees and
accelerated accretion. The $36.5 million of total investment income
was comprised of $34.1 million from interest income, original issue
discount accretion, payment-in-kind income and dividend income,
$0.7 million from other income and $1.7 million from prepayment
related income.10
Total expenses for the three months ended March 31, 2019 and
December 31, 2018 were $13.8 million and $13.0 million,
respectively. The $0.8 million increase in expenses was
primarily driven by an increase in incentive fees and an increase
in interest and other debt expenses due to a higher average daily
borrowing during the quarter. The $13.8 million of total expenses
were comprised of $8.5 million of interest and other debt expenses,
$3.5 million of management fees, $0.5 million of incentive fees and
$1.3 million of other operating expenses.
Net investment income after taxes for the three months ended
March 31, 2019 was $22.3 million, or $0.55 per share, compared with
$22.4 million, or $0.56 per share per share for the three months
ended December 31, 2018.
During the three months ended March 31, 2019, the Company had
net realized and unrealized gains (losses) of $(20.3) million and
had benefit for taxes on unrealized appreciation on investments of
$0.2 million.
Net increase in net assets resulting from operations for the
three months ended March 31, 2019 was $2.2 million, or $0.06 per
share.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2019, the Company had $709.3 million of total
principal amount of debt outstanding, comprised of $554.3 million
of outstanding borrowings under its revolving credit facility and
$155.0 million of convertible notes.11 The combined weighted
average interest rate on debt outstanding was 4.42% for the three
months ended March 31, 2019. As of March 31, 2019, the Company had
$240.7 million of availability under its revolving credit facility
and $5.9 million in cash and cash equivalents.
The Company’s average and ending debt to equity leverage ratio
was 0.98x and 1.02x, respectively, for the three months ended March
31, 2019, as compared with 0.90x and 0.94x, respectively, for the
three months ended December 31, 2018.12
CONFERENCE CALL
The Company will host an earnings conference call on Friday, May
10, 2019 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 2894376. 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 May 10, 2019 through June 10, 2019. To hear the replay,
participants should dial (855) 859-2056; international callers
should dial +1 (404) 537-3406; conference ID 2894376. 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 July 15, 2019 to
holders of record as of June 28, 2019.2 The SCF distributed each
member’s pro rata share of all of its assets (other than cash and
cash equivalents), primarily consisting of senior secured loans, to
the members. After the satisfaction of all remaining liabilities
and the distribution of any remaining assets (including any amounts
owed to it and not yet received), the SCF will be wound up and
terminated.3 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.4 Total debt outstanding excluding netting of debt issuance
costs of $4.9 million and $5.3 million, respectively, as of March
31, 2019 and December 31, 2018.5 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 loan.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 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 March 31, 2019 and December 31, 2018, investments where net debt
to EBITDA may not be the appropriate measure of credit risk
represented 20.0% and 18.3%, 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.8 Computed based on the net
investment income earned from the SCF for the trailing twelve
months ended March 31, 2019, 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.9 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.10 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.11 Debt outstanding
denominated in currencies other than U.S. Dollars (“USD”) have been
converted to USD using applicable foreign currency exchange rate as
of March 31, 2019.12 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) March
31,
2019
(unaudited)
December 31,
2018
Assets Investments, at fair value
Non-controlled/non-affiliated investments (cost of $1,131,280 and
$1,155,641, respectively) $ 1,111,881 $ 1,129,036 Non-controlled
affiliated investments (cost of $139,396 and $143,700,
respectively) 119,029 126,089 Controlled affiliated investments
(cost of $180,979 and $126,217, respectively) 174,187 120,319 Cash
5,891 6,113 Receivable for investments sold 12 47 Unrealized
appreciation on foreign currency forward contracts 167 89
Interest and dividends receivable from
non-controlled/affiliated investments and non-
controlled/non-affiliated investments 8,828 6,969 Dividend
receivable from controlled affiliated investments 2,450 2,550
Deferred financing costs 5,512 5,436 Deferred offering costs 165
165 Other assets 138 163
Total assets $
1,428,260 $ 1,396,976
Liabilities Debt (net of debt
issuance costs of $4,915 and $5,318, respectively) $ 704,395 $
659,101 Interest and other debt expenses payable 3,923 2,428
Management fees payable 3,536 3,434 Incentive fees payable 493 -
Distribution payable 18,120 18,102 Directors’ fees payable 113 -
Accrued offering costs 2 2 Accrued expenses and other liabilities
2,932 4,017
Total liabilities $ 733,514 $
687,084
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, 40,267,216 and 40,227,625 shares issued and
outstanding as of March 31, 2019 and December 31, 2018,
respectively) 40 40 Paid-in capital in excess of par 802,975
802,216 Distributable earnings (106,848 ) (90,943 ) Allocated
income tax expense (1,421 ) (1,421 )
TOTAL NET
ASSETS $ 694,746 $ 709,892
TOTAL LIABILITIES AND NET
ASSETS $ 1,428,260 $ 1,396,976 Net asset value per share $
17.25 $ 17.65
Goldman
Sachs BDC, Inc. Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(Unaudited)
For the ThreeMonths
EndedMarch 31, 2019
For the ThreeMonths
EndedMarch 31, 2018
Investment Income: From non-controlled/non-affiliated
investments: Interest income $ 31,569 $ 29,790 Payment-in-kind 302
- Other income 651 236 Total investment income from
non-controlled/non-affiliated investments 32,522 30,026 From
non-controlled affiliated investments: Payment-in-kind 369 1,941
Interest income 618 388 Dividend income 32 7 Other income 11
6 Total investment income from non-controlled affiliated
investments 1,030 2,342 From controlled affiliated investments:
Payment-in-kind 535 373 Dividend income 2,450 2,800
Total investment income from controlled affiliated investments
2,985 3,173
Total investment income $ 36,537 $
35,541
Expenses: Interest and other debt expenses $
8,453 $ 5,723 Management fees 3,536 4,803 Incentive fees 493 4,684
Professional fees 642 670 Administration, custodian and transfer
agent fees 240 231 Directors’ fees 113 101 Other expenses
336 309
Total expenses $ 13,813 $ 16,521
NET
INVESTMENT INCOME BEFORE TAXES $ 22,724 $ 19,020 Income tax
expense, including excise tax $ 439 $ 285
NET INVESTMENT INCOME
AFTER TAXES $ 22,285 $ 18,735
Net realized and unrealized
gains (losses) on investment transactions: Net realized gain
(loss) from: Non-controlled/non-affiliated investments $ (24,722) $
1,667 Non-controlled affiliated investments - 9 Foreign currency
forward contracts 18 - Foreign currency transactions (6 ) - Net
change in unrealized appreciation (depreciation) from: Non
controlled/non-affiliated investments 7,206 (303) Non-controlled
affiliated investments (2,756 ) (985 ) Controlled affiliated
investments (894 ) (225 ) Foreign currency forward contracts 78 -
Foreign currency translations 802 -
Net realized
and unrealized gains (losses) $ (20,274 ) $ 163 (Provision)
benefit for taxes on realized gain/loss on investments - (447)
(Provision) benefit for taxes on unrealized
appreciation/depreciation on investments 204 -
NET
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,215 $
18,451 Net investment income per share (basic and diluted) $ 0.55 $
0.47 Earnings per share (basic and diluted) $ 0.06 $ 0.46 Weighted
average shares outstanding 40,261,057 40,150,518
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190509005971/en/
Goldman Sachs BDC, Inc.Investors: Katherine Schneider,
212-902-3122Media: Patrick Scanlan, 212-902-6164
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