Goldman Sachs BDC, Inc. (“GS BDC” or the “Company”) (NYSE: GSBD)
today reported financial results for the second quarter ended June
30, 2019 and filed its Form 10-Q with the U.S. Securities and
Exchange Commission.
QUARTERLY HIGHLIGHTS
- Net investment income for the quarter ended June 30, 2019 was
$0.47 per share, equating to an annualized net investment income
yield on book value of 10.9%;
- The Company announced a third quarter dividend of $0.45 per
share payable to shareholders of record as of September 30,
2019;1
- Net asset value per share for the quarter ended June 30, 2019
was $17.21, as compared to $17.25 as of March 31, 2019;
- Gross and net originations were $117.3 million and $(37.3)
million, respectively, driven by 100% of gross originations in
first lien debt investments;2 and
- The Company and its partner in the Senior Credit Fund, LLC
(“SCF”) dissolved their joint venture partnership, resulting in a
distribution of the SCF’s assets on a pro-rata basis to the
partners following repayment of the SCF’s debt obligations. In
connection with this dissolution, the Company received $215.1
million of assets at amortized cost comprised primarily of first
lien loans from the SCF. This transaction resulted in net balance
sheet growth of $115.1 million at amortized cost.
SELECTED FINANCIAL HIGHLIGHTS
(in $ millions, except per share data)
As of
June 30, 2019
As of
March 31, 2019
Investment portfolio, at fair value2
$1,533.7
$1,405.1
Total debt outstanding3
$847.3
$709.3
Net assets
$693.4
$694.7
Net asset value per share
$17.21
$17.25
Three Months Ended
June 30, 2019
Three Months Ended
March 31, 2019
Total investment income
$38.4
$36.5
Net investment income after taxes
$19.1
$22.3
Net increase in net assets resulting from
operations
$16.1
$2.2
Net investment income per share (basic and
diluted)
$0.47
$0.55
Earnings per share (basic and diluted)
$0.40
$0.06
Regular distribution per share
$0.45
$0.45
INVESTMENT ACTIVITY2
During the three months ended June 30, 2019, new investment
commitments and fundings were $117.3 million and $165.5 million,
respectively. The new investment commitments were across five new
portfolio companies and seven existing portfolio companies. New
investment commitments were comprised of 100.0% first lien debt
investments. The Company had sales and repayments of $154.6 million
primarily driven by the full repayment of investments in six
portfolio companies.
Summary of Investment Activity for the Three Months Ended June
30, 2019:
New Investment
Commitments
Sales and Repayments
Investment Type
$ Millions
% of Total
$ Millions
% of Total
1st Lien/Senior Secured Debt
$117.3
100.0%
$151.1
97.7%
1st Lien/Last-Out Unitranche
-
-%
0.1
0.1%
2nd Lien/Senior Secured Debt
-
-%
3.4
2.2%
Unsecured Debt
-
-%
-
-%
Preferred Stock
-
-%
-
-%
Common Stock
-
-%
-
-%
Total
$117.3
100.0%
$154.6
100.0%
PORTFOLIO SUMMARY2
As of June 30, 2019, the Company’s investment portfolio had an
aggregate fair value of $1,533.7 million, comprised of investments
in 101 portfolio companies operating across 37 different
industries. The investment portfolio on a fair value basis was
comprised of 92.9% secured debt investments (74.4% in first lien
debt (including 6.6% in first lien/last-out unitranche debt) and
18.5% in second lien debt), 0.5% in unsecured debt, 3.1% in
preferred stock and 3.5% in common stock.
Summary of Investment Portfolio as of June 30, 2019:
Investments at Fair
Value
Investment Type
$ Millions
% of Total
1st Lien/Senior Secured Debt
$1,040.3
67.8%
1st Lien/Last-Out Unitranche
101.2
6.6%
2nd Lien/Senior Secured Debt
283.4
18.5%
Unsecured Debt
7.1
0.5%
Preferred Stock
47.8
3.1%
Common Stock
53.9
3.5%
Total
$1,533.7
100.0%
As of June 30, 2019, the weighted average yield of the Company’s
total investment portfolio at amortized cost and fair value was
8.7% and 9.4%, respectively, as compared to 9.3% and 9.9%,
respectively, as of March 31, 2019. The weighted average yield of
the Company’s total debt and income producing investments at
amortized cost and fair value was 9.8% and 10.5%, respectively,
versus 10.7% and 11.1%, respectively, as March 31, 2019.4
As of June 30, 2019, 96.8% of the Company’s debt investments on
a fair value basis bore interest at a floating rate.5
As of June 30, 2019, the weighted average net debt/EBITDA of the
companies in the Company’s investment portfolio was 5.5x versus
5.3x as of March 31, 2019. The weighted average interest coverage
of companies comprising interest-bearing investments in the
investment portfolio was 2.3x versus 2.2x as of March 31, 2019. The
median EBITDA of the portfolio companies was $35.9 million versus
$25.5 million as of March 31, 2019.6
As of June 30, 2019, investments on non-accrual status
represented 3.5% and 3.9% 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 3.2% and 3.5% 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 September 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 the Company’s investment in NTS, non-accruals
represented 0.3% and 0.4% of the total investment portfolio at fair
value and amortized cost, respectively.
RESULTS OF OPERATIONS
Total investment income for the three months ended June 30, 2019
and March 31, 2019 was $38.4 million and $36.5 million,
respectively. The increase in investment income was primarily
driven by an increase in prepayment fees and accelerated accretion.
The $38.4 million of total investment income was comprised of $34.8
million from interest income, original issue discount accretion,
payment-in-kind income and dividend income, $0.9 million from other
income and $2.7 million from prepayment related income.7
Total expenses before taxes for the three months ended June 30,
2019 and March 31, 2019 were $18.9 million and $13.8 million,
respectively. The $5.1 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 $18.9 million of total expenses before
taxes were comprised of $9.5 million of interest and other debt
expenses, $3.7 million of management fees, $4.1 million of
incentive fees and $1.6 million of other operating expenses.
Net investment income after taxes for the three months ended
June 30, 2019 was $19.1 million, or $0.47 per share, compared with
$22.3 million, or $0.55 per share per share for the three months
ended March 31, 2019.
During the three months ended June 30, 2019, the Company had net
realized and unrealized (losses) of $(2.9) million and had benefit
for taxes on unrealized depreciation on investments of $(0.1)
million.
Net increase in net assets resulting from operations for the
three months ended June 30, 2019 was $16.1 million, or $0.40 per
share.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2019, the Company had $847.3 million of total
principal amount of debt outstanding, comprised of $692.3 million
of outstanding borrowings under its revolving credit facility and
$155.0 million of convertible notes.8 The combined weighted average
interest rate on debt outstanding was 4.42% for the six months
ended June 30, 2019. As of June 30, 2019, the Company had $102.7
million of availability under its revolving credit facility and
$10.1 million in cash and cash equivalents.
The Company’s average and ending debt to equity leverage ratio
was 1.11x and 1.22x, respectively, for the three months ended June
30, 2019, as compared with 0.98x and 1.02x, respectively, for the
three months ended March 31, 2019.9
CONFERENCE CALL
The Company will host an earnings conference call on Friday,
August 2, 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 2489089. 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 August 2, 2019 through September 2, 2019. To hear the
replay, participants should dial (855) 859-2056; international
callers should dial +1 (404) 537-3406; conference ID 2489089. 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 The $0.45 per share dividend is payable on October 15, 2019 to
holders of record as of September 30, 2019. 2 The discussion of the
investment portfolio of the Company excludes its investment in a
money market fund managed by an affiliate of The Goldman Sachs
Group, Inc. As of June 30, 2019, the Company did not have an
investment in the money market fund. 3 Total debt outstanding
excluding netting of debt issuance costs of $4.5 million and $4.9
million, respectively, as of June 30, 2019 and March 31, 2019. 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. This calculation
excludes exit fees that are receivable upon repayment of the loan.
5 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. 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 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. The
weighted average net debt to EBITDA calculation for the Company as
of March 31, 2019 includes its exposure to underlying debt
investments in the SCF. 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 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. The weighted average interest coverage calculation for the
Company as of March 31, 2019 includes its exposure to underlying
debt investments in the SCF. Median EBITDA is based on our debt
investments 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. The median EBITDA
calculation for the Company as of March 31, 2019 includes its
exposure to underlying debt investments in the SCF. 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 June 30, 2019 and March 31, 2019,
investments where net debt to EBITDA may not be the appropriate
measure of credit risk represented 18.4% and 20.0%, respectively,
of total debt investments, including, as of March 31, 2019, our
investment in the Senior Credit Fund, 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 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. 8 Debt outstanding
denominated in currencies other than U.S. Dollars (“USD”) have been
converted to USD using applicable foreign currency exchange rate as
of June 30, 2019. 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
ratios exclude unfunded commitments.
Goldman Sachs BDC, Inc. Consolidated
Statements of Assets and Liabilities (in thousands, except
share and per share amounts)
June 30,
2019
(unaudited)
December 31,
2018
Assets
Investments, at fair value
Non-controlled/non-affiliated investments
(cost of $1,348,177 and $1,155,641, respectively)
$
1,327,343
$
1,129,036
Non-controlled affiliated investments
(cost of $139,938 and $143,700, respectively)
125,411
126,089
Controlled affiliated investments (cost of
$85,308 and $126,217, respectively)
80,956
120,319
Cash
10,122
6,113
Receivable for investments sold
9,058
47
Unrealized appreciation on foreign
currency forward contracts
122
89
Interest and dividends receivable from
non-controlled/affiliated investments and non-
controlled/non-affiliated investments
7,642
6,969
Dividend receivable from controlled
affiliated investments
-
2,550
Deferred financing costs
5,153
5,436
Deferred offering costs
225
165
Other assets
1,653
163
Total assets
$
1,567,685
$
1,396,976
Liabilities
Debt (net of debt issuance costs of $4,507
and $5,318, respectively)
$
842,820
$
659,101
Interest and other debt expenses
payable
2,597
2,428
Management fees payable
3,742
3,434
Incentive fees payable
4,144
-
Distribution payable
18,136
18,102
Payable for investments purchased
9
-
Directors’ fees payable
110
-
Accrued offering costs
202
2
Accrued expenses and other liabilities
2,498
4,017
Total liabilities
$
874,258
$
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, 40,302,522 and 40,227,625 shares
issued and outstanding as of June 30, 2019 and December 31, 2018,
respectively)
40
40
Paid-in capital in excess of par
803,662
802,216
Distributable earnings
(108,854
)
(90,943
)
Allocated income tax expense
(1,421
)
(1,421
)
TOTAL NET ASSETS
$
693,427
$
709,892
TOTAL LIABILITIES AND NET
ASSETS
$
1,567,685
$
1,396,976
Net asset value per share
$
17.21
$
17.65
Goldman Sachs BDC, Inc. Consolidated
Statements of Operations (in thousands, except share and per
share amounts) (Unaudited)
For the Three Months
Ended
For the Six Months
Ended
June 30,
2019
June 30,
2018
June 30,
2019
June 30,
2018
Investment Income:
From non-controlled/non-affiliated
investments:
Interest income
$
34,713
$
31,228
$
66,282
$
61,018
Payment-in-kind
174
—
476
—
Other income
870
737
1,521
973
Total investment income from
non-controlled/non-affiliated investments
35,757
31,965
68,279
61,991
From non-controlled affiliated
investments:
Payment-in-kind
376
1,962
745
3,903
Interest income
576
659
1,194
1,047
Dividend income
53
10
85
17
Other income
11
9
22
15
Total investment income from
non-controlled affiliated investments
1,016
2,640
2,046
4,982
From controlled affiliated
investments:
Payment-in-kind
565
433
1,100
806
Interest Income
63
—
63
—
Dividend income
1,000
2,200
3,450
5,000
Total investment income from controlled
affiliated investments
1,628
2,633
4,613
5,806
Total investment income
$
38,401
$
37,238
$
74,938
$
72,779
Expenses:
Interest and other debt expenses
$
9,501
$
6,173
$
17,954
$
11,896
Management fees
3,742
4,479
7,278
9,282
Incentive fees
4,144
4,342
4,637
9,026
Professional fees
689
1,058
1,331
1,728
Administration, custodian and transfer
agent fees
239
232
479
463
Directors’ fees
114
117
227
218
Other expenses
433
370
769
679
Total expenses
$
18,862
$
16,771
$
32,675
$
33,292
NET INVESTMENT INCOME BEFORE
TAXES
$
19,539
$
20,467
$
42,263
$
39,487
Income tax expense, including excise
tax
$
452
$
304
$
891
$
589
NET INVESTMENT INCOME AFTER
TAXES
$
19,087
$
20,163
$
41,372
$
38,898
Net realized and unrealized gains
(losses) on investment transactions:
Net realized gain (loss) from:
Non-controlled/non-affiliated
investments
$
(8,570
)
$
100
$
(33,292)
$
1,767
Non-controlled affiliated investments
—
—
—
9
Controlled affiliated investments
(673
)
—
(673)
—
Foreign currency forward contracts
34
—
52
—
Foreign currency transactions
(10
)
—
(16)
—
Net change in unrealized appreciation
(depreciation) from:
—
Non controlled/non-affiliated
investments
(1,435
)
(481
)
5,771
(784
)
Non-controlled affiliated investments
5,840
(1,492
)
3,084
(2,477
)
Controlled affiliated investments
2,440
(824
)
1,546
(1,049
)
Foreign currency forward contracts
(45
)
—
33
—
Foreign currency translations
(507
)
—
295
—
Net realized and unrealized gains
(losses)
$
(2,926)
$
(2,697
)
$
(23,200)
$
(2,534
)
(Provision) benefit for taxes on realized
gain/loss on investments
121
1
121
(446
)
(Provision) benefit for taxes on
unrealized appreciation/depreciation on investments
(152)
—
52
—
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS
$
16,130
$
17,467
$
18,345
$
35,918
Net investment income per share (basic and
diluted)
$
0.47
$
0.50
$
1.03
$
0.97
Earnings per share (basic and diluted)
$
0.40
$
0.43
$
0.46
$
0.89
Weighted average shares outstanding
40,297,090
40,171,957
40,279,173
40,161,297
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/20190801006065/en/
Goldman Sachs BDC, Inc. Investors: Katherine Schneider,
212-902-3122 Media: Patrick Scanlan, 212-902-6164
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