Goldman Sachs BDC, Inc. (“GSBD” or the “Company”) (NYSE: GSBD)
today reported financial results for the first quarter ended March
31, 2022 and filed its Form 10-Q with the U.S. Securities and
Exchange Commission.
QUARTERLY HIGHLIGHTS
- Net investment income per share for the quarter ended March 31,
2022 was $0.49. Excluding purchase discount amortization per share
of $0.04 from the Merger (as defined below), adjusted net
investment income per share was $0.45, equating to an annualized
net investment income yield on book value of 11.4%.1 Earnings per
share for the quarter ended March 31, 2022 was $0.39;
- The Company’s Board of Directors declared a regular second
quarter dividend of $0.45 per share payable to shareholders of
record as of June 30, 20222;
- Net asset value per share for the quarter ended March 31, 2022
decreased 0.4% to $15.80 from $15.86 as of December 31, 2021;
- During the quarter, the Company made new investment commitments
of $131.7 million, funded new investment commitments of $46.8
million, and had fundings of previously unfunded commitments of
$67.2 million. Sales and repayments activity totaled $120.3
million, resulting in a net funded portfolio change of $(6.2)
million;
- The Company’s net debt to equity ratio was 1.15x as of March
31, 2022 and 1.14x as of December 31, 2021;
- As of March 31, 2022, the Company’s total investments at fair
value and commitments were $3,930.2 million, comprised of
investments in 124 portfolio companies across 38 industries. The
investment portfolio was comprised of 97.2% senior secured debt,
including 89.3% in first lien investments;3
- As of March 31, 2022, investments on non-accrual status
amounted to 2.2% and 2.8% of the total investment portfolio at fair
value and amortized cost, respectively;
- As of March 31, 2022, 54.1% of the Company’s approximately
$1,876.5 million of total principal amount of debt outstanding was
in unsecured debt and 45.9% was in secured debt.
SELECTED FINANCIAL HIGHLIGHTS
(in $ millions, except per share data)
As of March 31, 2022
As of December 31, 2021
Investment portfolio, at fair value3
$
3,476.7
$
3,478.4
Total debt outstanding4
$
1,876.5
$
1,873.7
Net assets
$
1,610.0
$
1,614.4
Net asset value per share
$
15.80
$
15.86
Net debt to equity
1.15x
1.14x
(in $ millions, except per share data)
Three Months Ended March 31,
2022
Three Months Ended December 31,
2021
Total investment income
$
78.3
$
83.8
Net investment income after taxes
$
50.2
$
57.3
Less: Purchase discount amortization
4.3
8.4
Adjusted net investment income after
taxes1
$
45.9
$
48.9
Net realized and unrealized gains
(losses)
$
(9.8
)
$
(18.3
)
Add: Realized/Unrealized depreciation from
the purchase discount
4.3
8.4
Adjusted net realized and unrealized gains
(losses)1
$
(5.5)
$
(9.9
)
Net investment income per share (basic and
diluted)
$
0.49
$
0.56
Less: Purchase discount amortization per
share
0.04
0.08
Adjusted net investment income per
share1
$
0.45
$
0.48
Weighted average shares outstanding
101.9
101.8
Regular distribution per share
$
0.45
$
0.45
Total investment income for the three months ended March 31,
2022 and December 31, 2021 was $78.3 million and $83.8 million,
respectively. The decrease in investment income was primarily
driven by a decrease in accelerated accretion related to
repayments.
Net expenses before taxes for the three months ended March 31,
2022 and December 31, 2021 were $27.3 million and $26.1 million,
respectively. Net expenses increased by $1.2 million primarily as a
result of an increase in interest expense and management fees.
Goldman Sachs Asset Management intends to voluntarily waive a
portion of its Incentive Fee based on income, if necessary, in an
amount sufficient to ensure that the Company's adjusted net
investment income per weighted average share outstanding (excluding
the impact from the purchase discount) is at least $0.45 per share
on a quarterly basis, through and including the quarter ended
December 31, 2022.
INVESTMENT ACTIVITY3
Summary of Investment Activity for the three months ended March
31, 2022 was as follows:
New
Investment Commitments
Sales
and Repayments
Investment
Type
$
Millions
% of
Total
$
Millions
% of
Total
1st Lien/Senior Secured Debt
$
129.9
98.6
%
$
59.3
49.3
%
1st Lien/Last-Out Unitranche
—
—
61.0
50.7
2nd Lien/Senior Secured Debt
1.8
1.4
—
—
Unsecured Debt
—
—
—
—
Preferred Stock
—
—
—
—
Common Stock
—
—
—
—
Warrants
—
—
—
—
Total
$
131.7
100.0
%
$
120.3
100.0
%
During the three months ended March 31, 2022, new investment
commitments were across four new portfolio companies and eleven
existing portfolio companies. Sales and repayments were primarily
driven by the full repayment of investments in two portfolio
companies and a partial exit in one portfolio company.3
PORTFOLIO SUMMARY3
As of March 31, 2022, the Company’s investments consisted of the
following:
Investments at Fair Value
Investment
Type
$
Millions
% of
Total
1st Lien/Senior Secured Debt
$
3,004.5
86.4
%
1st Lien/Last-Out Unitranche
100.9
2.9
2nd Lien/Senior Secured Debt
274.0
7.9
Unsecured Debt
1.9
—
Preferred Stock
52.5
1.5
Common Stock
40.7
1.2
Warrants
2.2
0.1
Total
$
3,476.7
100.0
%
The following table presents certain selected information
regarding the Company’s investments:
As of
March
31, 2022
December
31, 2021
Number of portfolio companies
124
121
Percentage of performing debt bearing a
floating rate4
99.4
%
99.4
%
Percentage of performing debt bearing a
fixed4
0.6
%
0.6
%
Weighted average yield on debt and income
producing investments, at amortized cost6
8.5
%
8.4
%
Weighted average yield on debt and income
producing investments, at fair value6
8.5
%
8.4
%
Weighted average leverage (net
debt/EBITDA)7
6.2x
6.4x
Weighted average interest coverage7
2.5x
2.5x
Median EBITDA7
$
41.3 million
$
39.0 million
As of March 31, 2022, investments on non-accrual status
represented 2.2% and 2.8% of the total investment portfolio at fair
value and amortized cost, respectively. Pro forma for the Convene
transaction as if it happened prior to March 31, 2022, non-accrual
status would represent 0.4% and 0.9% of the portfolio fair value
and cost, respectively8.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2022, the Company had $1,876.5 million of total
principal amount of debt outstanding, comprised of $861.5 million
of outstanding borrowings under its senior secured revolving credit
facility (“Secured Revolving Credit Facility”), $155.0 million of
convertible notes, $360.0 million of unsecured notes due 2025, and
$500.0 million of unsecured notes due 2026. The combined weighted
average interest rate on debt outstanding was 2.82% for the quarter
ended March 31, 2022. As of March 31, 2022, the Company had $833.3
million of availability under its Senior Revolving Credit Facility
and $31.4 million in cash.4,9
The Company’s average net and ending net debt to equity leverage
ratio was 1.16x and 1.15x, respectively, for the three months ended
March 31, 2022, as compared with 1.02x and 1.14x respectively, for
the three months ended December 31, 2021. 10
CONFERENCE CALL
The Company will host an earnings conference call on Friday, May
6, 2022 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
2489346. 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
May 6, 2022 through June 6, 2022. To hear the replay, participants
should dial (855) 859-2056; international callers should dial +1
(404) 537-3406; conference ID 2489346. 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)
On October 12, 2020, we completed our
merger (the “Merger”) with Goldman Sachs Middle Market Lending
Corp. (“MMLC”). The Merger was accounted for as an asset
acquisition in accordance with ASC 805-50, Business Combinations —
Related Issues. The consideration paid to MMLC’s stockholders was
less than the aggregate fair values of the assets acquired and
liabilities assumed, which resulted in a purchase discount (the
“purchase discount”). The purchase discount was allocated to the
cost of MMLC investments acquired by us on a pro-rata basis based
on their relative fair values as of the closing date. Immediately
following the Merger with MMLC, we marked the investments to their
respective fair values and, as a result, the purchase discount
allocated to the cost basis of the investments acquired was
immediately recognized as unrealized appreciation on our
Consolidated Statement of Operations. The purchase discount
allocated to the loan investments acquired will amortize over the
life of each respective loan through interest income, with a
corresponding adjustment recorded as unrealized appreciation on
such loan acquired through its ultimate disposition. The purchase
discount allocated to equity investments acquired will not amortize
over the life of such investments through interest income and,
assuming no subsequent change to the fair value of the equity
investments acquired and disposition of such equity investments at
fair value, we will recognize a realized gain with a corresponding
reversal of the unrealized appreciation on disposition of such
equity investments acquired.
As a supplement to our financial results
reported in accordance with GAAP, we have provided, as detailed
below, certain non-GAAP financial measures to our operating results
that exclude the aforementioned purchase discount and the ongoing
amortization thereof, as determined in accordance with GAAP. The
non-GAAP financial measures include i) Adjusted net investment
income per share; ii) Adjusted net investment income after taxes;
and iii) Adjusted net realized and unrealized gains (losses). We
believe that the adjustment to exclude the full effect of the
purchase discount is meaningful because it is a measure that we and
investors use to assess our financial condition and results of
operations. Although these non-GAAP financial measures are intended
to enhance investors’ understanding of our business and
performance, these non-GAAP financial measures should not be
considered an alternative to GAAP. The aforementioned non-GAAP
financial measures may not be comparable to similar non-GAAP
financial measures used by other companies.
2)
The $0.45 per share dividend is payable on
July 27, 2022 to stockholders of record as of June 30, 2022.
3)
The discussion of the investment portfolio
excludes the investment in a money market fund managed by an
affiliate of The Goldman Sachs Group, Inc. As of March 31, 2022,
the Company did not have an investment in the money market
fund.
4)
Total debt outstanding excludes netting of
debt issuance costs of $11.2 million and $12.3 million,
respectively, as of March 31, 2022 and December 31, 2021.
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
preferred stock investments and excludes investments, if any,
placed on non-accrual.
6)
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 investment. Excludes the purchase
discount and amortization related to the Merger.
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 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 compare that amount of EBITDA to the portfolio company’s
contractual interest expense (“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 excludes 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 March 31, 2022
and December 31, 2021, investments where net debt to EBITDA may not
be the appropriate measure of credit risk represented 38.1% and
40.3%, respectively, of total debt investments at fair value.
8)
Subsequent to the first quarter of 2022,
the Company monetized and fully exited its investment in
Convene.
9)
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 March 31, 2022. As
a result, the revolving credit facility’s outstanding borrowings
and the available debt amounts may not sum to the total debt
commitment amount. Subsequent to the first quarter of 2022, the
Company amended and extended the maturity date of its secured
revolving credit facility from August 2026 to May 2027 with the
base rate converting to SOFR from LIBOR.
10)
The ending net 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, 2022
(Unaudited)
December 31, 2021
Assets
Investments, at fair value
Non-controlled/non-affiliated investments
(cost of $3,422,231 and $3,416,195)
$
3,421,911
$
3,427,249
Non-controlled affiliated investments
(cost of $58,430 and $58,221)
35,531
32,819
Controlled affiliated investments (cost of
$33,545 and $33,374)
19,262
18,375
Total investments, at fair value (cost of
$3,514,206 and $3,507,790)
$
3,476,704
$
3,478,443
Cash
31,413
33,764
Receivable for investments sold
235
89
Unrealized appreciation on foreign
currency forward contracts
124
100
Interest and dividends receivable
20,721
23,278
Deferred financing costs
11,971
12,631
Other assets
2,366
2,686
Total assets
$
3,543,534
$
3,550,991
Liabilities
Debt (net of debt issuance costs of
$11,225 and $12,296)
$
1,865,307
$
1,861,426
Interest and other debt expenses
payable
9,447
14,936
Management fees payable
8,817
8,370
Incentive fees payable
645
760
Distribution payable
45,848
45,818
Directors’ fees payable
201
—
Accrued expenses and other liabilities
3,318
5,281
Total liabilities
$
1,933,583
$
1,936,591
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, 101,885,413 and 101,818,811 shares
issued and outstanding as of March 31, 2022 and December 31, 2021,
respectively)
102
102
Paid-in capital in excess of par
1,671,983
1,670,742
Distributable earnings
(60,713
)
(55,023
)
Allocated income tax expense
(1,421
)
(1,421
)
Total net assets
$
1,609,951
$
1,614,400
Total liabilities and net
assets
$
3,543,534
$
3,550,991
Net asset value per share
$
15.80
$
15.86
Goldman Sachs BDC, Inc. Consolidated
Statements of Operations (in thousands, except share and per share
amounts)
For the Three Months
Ended
March 31, 2022
March 31, 2021
Investment income:
From non-controlled/non-affiliated
investments:
Interest income
$
71,599
$
78,165
Payment-in-kind
4,746
2,136
Other income
1,217
995
From non-controlled affiliated
investments:
Dividend income
69
765
Interest income
159
76
Payment-in-kind
240
149
From controlled affiliated
investments:
Payment-in-kind
259
309
Interest income
16
23
Total investment income
$
78,305
$
82,618
Expenses:
Interest and other debt expenses
$
15,667
$
14,966
Incentive fees
8,190
12,055
Management fees
8,817
8,200
Professional fees
878
725
Directors’ fees
203
232
Other general and administrative
expenses
1,112
1,098
Total expenses
$
34,867
$
37,276
Fee waivers
(7,545
)
(12,555
)
Net expenses
$
27,322
$
24,721
Net investment income before
taxes
$
50,983
$
57,897
Income tax expense, including excise
tax
$
833
$
314
Net investment income after
taxes
$
50,150
$
57,583
Net realized and unrealized gains
(losses) on investment transactions:
Net realized gain (loss) from:
Non-controlled/non-affiliated
investments
$
(623
)
$
7,508
Controlled affiliated investments
(2,035
)
—
Foreign currency forward contracts
30
(114
)
Foreign currency and other
transactions
(779
)
68
Net change in unrealized appreciation
(depreciation) from:
Non-controlled/non-affiliated
investments
(11,374
)
(3,966
)
Non-controlled affiliated investments
2,503
(3,239
)
Controlled affiliated investments
716
(1,377
)
Foreign currency forward contracts
25
247
Foreign currency translations and other
transactions
1,778
3,872
Net realized and unrealized gains
(losses)
$
(9,760
)
$
2,999
(Provision) benefit for taxes on realized
gain/loss on investments
—
—
(Provision) benefit for taxes on
unrealized appreciation/depreciation on investments
(232
)
(114
)
Net increase in net assets from
operations
$
40,158
$
60,468
Weighted average shares outstanding
101,866,172
101,584,473
Net investment income per share (basic and
diluted)
$
0.49
$
0.57
Earnings per share (basic and diluted)
$
0.39
$
0.60
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: Itai Baron,
212-902-1000 Media Contact: Avery Reed, 212-902-5400
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