Goldman Sachs BDC, Inc. (“GSBD” or the “Company”) (NYSE: GSBD)
today reported financial results for the second quarter ended June
30, 2020 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, 2020 was
$0.45 per share, equating to an annualized net investment income
yield on book value of 11.9%;
- The Company announced a third quarter dividend of $0.45 per
share payable to shareholders of record as of September 30,
2020;1
- No new investments were added to non-accrual status during the
quarter. As of June 30, 2020, investments on non-accrual status
were 0.1% and 0.9% of the total investment portfolio at fair value
and amortized cost, respectively;
- Net asset value per share for the quarter ended June 30, 2020
increased to $15.14 from $14.72 as of March 31, 2020, primarily
reflecting an improvement in market credit spreads; and
- During the quarter, Moody’s reaffirmed the Company’s investment
grade (IG) rating of Baa3 and stable outlook. In addition, Fitch
affirmed the Company's IG rating of BBB-.
UPDATES TO PREVIOUSLY ANNOUNCED MERGER
- On June 11, 2020, the Company and Goldman Sachs Middle Market
Lending Corp. (“MMLC”) entered into and announced that they had
amended and restated the Agreement and Plan of Merger. The
Company’s amended registration statement on Form N-14, which
includes a joint proxy statement of the Company and MMLC and a
prospectus of the Company, was declared effective by the Securities
Exchange Commission (“SEC”) on July 31, 2020. Special shareholder
meetings for the Company’s and MMLC’s shareholders are scheduled
for October 2, 2020 to vote on the matters described in the joint
proxy statement/prospectus.
- As described previously, GSAM believes the merger of the
Company and MMLC will result in significant benefits for each set
of shareholders and the Company will benefit from accretion to net
investment income, improved portfolio metrics, balance sheet
deleveraging, and economies of scale.
- The merger is expected to close shortly after the special
shareholder meetings in October 2020, subject to shareholder
approval and other customary closing conditions.
SELECTED FINANCIAL HIGHLIGHTS
(in $ millions, except per share data)
As of June 30, 2020
As of March 31, 2020
Investment portfolio, at fair value2
$
1,424.5
$
1,422.7
Total debt outstanding3
$
918.5
$
917.8
Net assets
$
611.5
$
594.9
Net asset value per share
$
15.14
$
14.72
Three Months Ended June 30,
2020
Three Months Ended March 31,
2020
Total investment income
$
30.6
$
32.0
Net investment income after taxes
$
18.2
$
18.2
Net increase in net assets resulting from
operations
$
34.8
$
(63.8)
Net investment income per share (basic and
diluted)
$
0.45
$
0.45
Earnings (loss) per share (basic and
diluted)
$
0.86
$
(1.58)
Regular distribution per share
$
0.45
$
0.45
INVESTMENT ACTIVITY2
During the three months ended June 30, 2020, new investment
commitments and fundings were $0.5 million and $0.0 million,
respectively, including net fundings of $(0.6) million in unfunded
prior commitments. The new investment commitments were across one
new portfolio company and one existing portfolio company. New
investment commitments were comprised of 100% first lien debt
investments. The Company had sales and repayments of $18.3 million
primarily driven by the full repayment of an investment in one
portfolio company.
Summary of Investment Activity for the three months ended June
30, 2020 was as follows:
New
Investment Commitments
Sales
and Repayments
Investment
Type
$
Millions
% of
Total
$
Millions
% of
Total
1st Lien/Senior Secured Debt
$
0.5
100.0
%
$
7.7
42.1
%
1st Lien/Last-Out Unitranche
—
—
0.1
0.6
2nd Lien/Senior Secured Debt
—
—
10.0
54.6
Unsecured Debt
—
—
0.5
2.7
Total
$
0.5
100.0
%
$
18.3
100.0
%
PORTFOLIO SUMMARY2
As of June 30, 2020, the Company’s investment portfolio
consisted of the following:
Investments at Fair Value
Investment
Type
$
Millions
% of
Total
1st Lien/Senior Secured Debt
$
1,080.7
75.9
%
1st Lien/Last-Out Unitranche
34.8
2.4
2nd Lien/Senior Secured Debt
205.4
14.4
Unsecured Debt
7.2
0.5
Preferred Stock
59.8
4.2
Common Stock
36.6
2.6
Total
$
1,424.5
100.0
%
The following table presents certain selected information
regarding the Company’s investment portfolio:
As of
June 30, 2020
March 31, 2020
Number of portfolio companies
107
107
Percentage of performing debt bearing a
floating rate4
98.7
%
98.5
%
Percentage of performing debt bearing a
fixed rate4
1.3
%
1.5
%
Weighted average yield on debt and income
producing investments, at amortized cost5
8.3
%
8.5
%
Weighted average yield on debt and income
producing investments, at fair value5
10.2
%
10.7
%
Weighted average leverage (net
debt/EBITDA)6
5.4x
5.6x
Weighted average interest coverage6
2.7x
2.6x
Median EBITDA6
$
37.92 million
$
37.83 million
As of June 30, 2020, investments on non-accrual status
represented 0.1% and 0.9% 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, 2020
and March 31, 2020 was $30.6 million and $32.0 million,
respectively. The decrease in investment income was primarily
driven by a decrease in interest income due to a decrease in LIBOR.
The $30.6 million of total investment income was comprised of $30.0
million from interest income, original issue discount accretion,
payment-in-kind income and dividend income, $0.3 million from
prepayment-related income and $0.3 million from other income.7
Net expenses before taxes for the three months ended June 30,
2020 and March 31, 2020 were $12.0 million and $13.4 million,
respectively. The $1.4 million decrease in expenses was primarily
driven by the voluntary management fee waiver. The $12.0 million of
net expenses before taxes were comprised of $9.1 million of
interest and other debt expenses, $1.5 million of net management
fees, and $1.4 million of other operating expenses.
Net investment income after taxes for the three months ended
June 30, 2020 was $18.2 million, or $0.45 per share, as compared
with $18.2 million, or $0.45 per share for the three months ended
March 31, 2020.
During the three months ended June 30, 2020, the Company had net
realized and unrealized gains (losses) of $16.6 million, primarily
driven by credit spread tightening.
Net increase in net assets resulting from operations for the
three months ended June 30, 2020 was $34.8 million, or $0.86 per
share.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2020, the Company had $918.5 million of total
principal amount of debt outstanding, comprised of $403.5 million
of outstanding borrowings under its senior secured revolving credit
facility, $155.0 million of unsecured convertible notes and $360.0
million of unsecured notes. The combined weighted average interest
rate on debt outstanding was 3.29% for the three months ended June
30, 2020. As of June 30, 2020, the Company had $391.7 million of
availability under its senior secured revolving credit facility and
$105.8 million in cash and cash equivalents.3,8
The Company’s ending net debt to equity leverage ratio was 1.33x
as of June 30, 2020, as compared to 1.40x as of March 31,
2020.9
CONFERENCE CALL
The Company will host an earnings conference call on Tuesday,
August 11, 2020 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 3895223. 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 11, 2020 through September 11, 2020. To hear the
replay, participants should dial (855) 859-2056; international
callers should dial +1 (404) 537-3406; conference ID 3895223. 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
- The $0.45 per share dividend is payable on October 15, 2020 to
shareholders of record as of September 30, 2020.
- 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, 2020, the
Company’s investment in the money market fund was $89.5
million.
- Total debt outstanding excludes netting of debt issuance costs
of $9.2 million and $9.7 million, respectively, as of June 30, 2020
and March 31, 2020.
- 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.
- 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.
- For a particular portfolio company, we calculate the level of
contractual indebtedness net of cash (“net debt”) owed by the
portfolio company and compare that amount to measures of cash flow
available to service the net debt. To calculate net debt, we
include debt that is both senior and pari passu to the tranche of
debt owned by us but exclude debt that is legally and contractually
subordinated in ranking to the debt owned by us. We believe this
calculation method assists in describing the risk of our portfolio
investments, as it takes into consideration contractual rights of
repayment of the tranche of debt owned by us relative to other
senior and junior creditors of a portfolio company. We typically
calculate cash flow available for debt service at a portfolio
company by taking net income before net interest expense, income
tax expense, depreciation and amortization (“EBITDA”) for the
trailing twelve month period. Weighted average net debt to EBITDA
is weighted based on the fair value of our debt investments and
excludes investments where net debt to EBITDA may not be the
appropriate measure of credit risk, such as cash collateralized
loans and investments that are underwritten and covenanted based on
recurring revenue. For a particular portfolio company, we also
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. Median EBITDA is based on our debt investments and
excludes investments where net debt to EBITDA may not be the
appropriate measure of credit risk, such as cash collateralized
loans and investments that are underwritten and covenanted based on
recurring revenue. Portfolio company statistics are derived from
the financial statements most recently provided to us of each
portfolio company as of the reported end date. Statistics of the
portfolio companies have not been independently verified by us and
may reflect a normalized or adjusted amount. As of June 30, 2020
and March 31, 2020, investments where net debt to EBITDA may not be
the appropriate measure of credit risk represented 29.2% and 29.2%,
respectively, of total debt investments at fair value. Portfolio
company statistics have not been independently verified by us and
may reflect a normalized or adjusted amount.
- 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.
- The Company’s revolving credit facility has debt outstanding
denominated in currencies other than U.S. Dollars (“USD”). These
balances have been converted to USD using applicable foreign
currency exchange rates as of June 30, 2020. As a result, the
revolving credit facility’s outstanding borrowings and the
available debt amounts may not sum to the total debt commitment
amount.
- The ending net debt to equity leverage ratios excludes unfunded
commitments.
Goldman Sachs BDC,
Inc.
Consolidated Statements of
Assets and Liabilities
(in thousands, except share
and per share amounts)
June 30, 2020
(Unaudited)
December 31, 2019
Assets
Investments, at fair value
Non-controlled/non-affiliated investments
(cost of $1,364,946 and $1,338,268)
$
1,283,565
$
1,298,133
Non-controlled affiliated investments
(cost of $83,410 and $83,460)
94,492
82,580
Controlled affiliated investments (cost of
$85,603 and $88,119)
46,410
73,539
Investments in affiliated money market
fund (cost of $89,470 and $—)
89,470
—
Cash
16,318
9,409
Receivable for investments sold
153
93
Unrealized appreciation on foreign
currency forward contracts
33
32
Interest and dividends receivable
8,406
5,702
Deferred financing costs
8,618
4,427
Deferred offering costs
—
276
Other assets
3,139
1,084
Total assets
$
1,550,604
$
1,475,275
Liabilities
Debt (net of debt issuance costs of $9,229
and $3,680)
$
909,263
$
769,727
Interest and other debt expenses
payable
7,659
2,304
Management fees payable
1,467
3,653
Incentive fees payable
—
1,850
Distribution payable
18,181
18,165
Directors’ fees payable
135
—
Accrued offering costs
—
28
Accrued expenses and other liabilities
2,403
3,423
Total liabilities
$
939,108
$
799,150
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, 40,401,637 and 40,367,071 shares
issued and outstanding as of June 30, 2020 and December 31,
2019)
40
40
Paid-in capital in excess of par
778,827
778,132
Distributable earnings
(165,950
)
(100,626
)
Allocated income tax expense
(1,421
)
(1,421
)
TOTAL NET ASSETS
$
611,496
$
676,125
TOTAL LIABILITIES AND NET
ASSETS
$
1,550,604
$
1,475,275
Net asset value per share
$
15.14
$
16.75
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, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Investment Income:
From non-controlled/non-affiliated
investments:
Interest income
$
28,509
$
34,713
$
58,024
$
66,282
Payment-in-kind
535
174
1,149
476
Other income
245
870
492
1,521
Total investment income from
non-controlled/non-affiliated investments
29,289
35,757
59,665
68,279
From non-controlled affiliated
investments:
Interest income
423
576
1,088
1,194
Payment-in-kind
385
376
575
745
Dividend income
38
53
43
85
Other income
41
11
46
22
Total investment income from
non-controlled affiliated investments
887
1,016
1,752
2,046
From controlled affiliated
investments:
Payment-in-kind
366
565
996
1,100
Interest income
60
63
161
63
Dividend income
—
1,000
—
3,450
Total investment income from controlled
affiliated investments
426
1,628
1,157
4,613
Total investment income
$
30,602
$
38,401
$
62,574
$
74,938
Expenses:
Interest and other debt expenses
$
9,114
$
9,501
$
18,008
$
17,954
Management fees
3,617
3,742
7,283
7,278
Incentive fees
—
4,144
—
4,637
Professional fees
623
689
1,337
1,331
Administration, custodian and transfer
agent fees
228
239
469
479
Directors’ fees
139
114
278
227
Other expenses
462
433
834
769
Total expenses
$
14,183
$
18,862
$
28,209
$
32,675
Fee waiver
(2,150
)
—
(2,810
)
—
Net expenses
$
12,033
$
18,862
$
25,399
$
32,675
NET INVESTMENT INCOME BEFORE
TAXES
$
18,569
$
19,539
$
37,175
$
42,263
Income tax expense, including excise
tax
$
389
$
452
$
816
$
891
NET INVESTMENT INCOME AFTER
TAXES
$
18,180
$
19,087
$
36,359
$
41,372
Net realized and unrealized gains
(losses) on investment transactions:
Net realized gain (loss) from:
Non-controlled/non-affiliated
investments
$
(1,182
)
$
(8,570
)
$
(6,616
)
$
(33,292
)
Non-controlled affiliated investments
(211
)
—
(211
)
—
Controlled affiliated investments
—
(673
)
(4,704
)
(673
)
Foreign currency forward contracts
52
34
80
52
Foreign currency transactions
(23
)
(10
)
(18
)
(16
)
Net change in unrealized appreciation
(depreciation) from:
Non controlled/non-affiliated
investments
31,798
(1,435
)
(41,246
)
5,771
Non-controlled affiliated investments
8,169
5,840
11,962
3,084
Controlled affiliated investments
(21,214
)
2,440
(24,613
)
1,546
Foreign currency forward contracts
(81
)
(45
)
1
33
Foreign currency translations
(670
)
(507
)
(55
)
295
Net realized and unrealized gains
(losses)
$
16,638
$
(2,926
)
$
(65,420
)
$
(23,200
)
(Provision) benefit for taxes on realized
gain/loss on investments
—
121
—
121
(Provision) benefit for taxes on
unrealized appreciation/depreciation on investments
—
(152
)
99
52
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
$
34,818
$
16,130
$
(28,962
)
$
18,345
Weighted average shares outstanding
40,401,637
40,297,090
40,398,978
40,279,173
Net investment income per share (basic and
diluted)
$
0.45
$
0.47
$
0.90
$
1.03
Earnings (loss) per share (basic and
diluted)
$
0.86
$
0.40
$
(0.72
)
$
0.46
ABOUT GOLDMAN SACHS BDC, INC.
Goldman Sachs BDC, Inc. is a specialty finance company that has
elected to be regulated as a business development company under the
Investment Company Act of 1940. GSBD was formed by The Goldman
Sachs Group, Inc. (“Goldman Sachs”) to invest primarily in
middle-market companies in the United States, and is externally
managed by Goldman Sachs Asset Management, L.P., an SEC-registered
investment adviser and a wholly-owned subsidiary of Goldman Sachs.
GSBD seeks to generate current income and, to a lesser extent,
capital appreciation primarily through direct originations of
secured debt, including first lien, first lien/last-out unitranche
and second lien debt, and unsecured debt, including mezzanine debt,
as well as through select equity investments. For more information,
visit www.goldmansachsbdc.com. Information on the website is not
incorporated by reference into this press release and is provided
merely for convenience.
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements that
involve substantial risks and uncertainties, including the impact
of COVID-19 on the business, future operating results, access to
capital and liquidity of the Company and its portfolio companies.
You can identify these statements by the use of forward-looking
terminology such as “may,” “will,” “should,” “expect,”
“anticipate,” “project,” “target,” “estimate,” “intend,”
“continue,” or “believe” or the negatives thereof or other
variations thereon or comparable terminology. You should read
statements that contain these words carefully because they discuss
our plans, strategies, prospects and expectations concerning our
business, operating results, financial condition and other similar
matters. These statements represent the Company’s belief regarding
future events that, by their nature, are uncertain and outside of
the Company’s control. Any forward-looking statement made by us in
this press release speaks only as of the date on which we make it.
Factors or events that could cause our actual results to differ,
possibly materially from our expectations, include, but are not
limited to, the risks, uncertainties and other factors we identify
in the sections entitled “Risk Factors” and “Cautionary Statement
Regarding Forward-Looking Statements” in filings we make with the
Securities and Exchange Commission, and it is not possible for us
to predict or identify all of them. We undertake no obligation to
update or revise publicly any forward-looking statements, whether
as a result of new information, future events or otherwise, except
as required by law.
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Goldman Sachs BDC, Inc. Investor Contact: Florina Mendez,
917-343-7823 Media Contact: Patrick Scanlan, 212-902-6164
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