Goldman Sachs BDC, Inc. (“GSBD” or the “Company”) (NYSE: GSBD)
today reported financial results for the third quarter ended
September 30, 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 September
30, 2022 was $0.60. Excluding purchase discount amortization per
share of $0.04 from the Merger (as defined below), adjusted net
investment income per share was $0.56, equating to an annualized
net investment income yield on book value of 14.9%.1 Earnings per
share for the quarter ended September 30, 2022 was $(0.07).
- The Company’s Board of Directors declared a regular fourth
quarter dividend of $0.45 per share payable to shareholders of
record as of December 30, 20222.
- Net asset value per share for the quarter ended September 30,
2022 decreased 3.3% to $15.02 from $15.53 as of June 30, 2022.
- The Company's ending net debt to equity ratio increased to
1.34x as of September 30, 2022 from 1.25x as of June 30, 2022.
- During the quarter, the Company had gross originations of
$205.3 million of which $134.1 million were funded. Fundings of
previously unfunded commitments for the quarter were $149.7 million
and sales and repayments activity totaled $(211.9) million,
resulting in a net funded portfolio change of $71.9 million.
- As of September 30, 2022, the Company’s total investments at
fair value and commitments were $4,054.0 million, comprised of
investments in 133 portfolio companies. The investment portfolio
was comprised of 97.7% senior secured debt, including 91.7% in
first lien investments3.
- During the quarter, four additional investments across three
portfolio companies were put on the non-accrual status. As of
September 30, 2022, investments on non-accrual status amounted to
0.4% and 1.4% of the total investment portfolio at fair value and
amortized cost, respectively.
- As of September 30, 2022, 40.8% of the Company’s approximately
$2,106.3 million of total principal amount of debt outstanding was
in unsecured debt and 59.2% in secured debt.
- On May 26, 2022, the Company entered into equity distribution
agreements to issue up to $200.0 million in aggregate offering
price of shares of its common stock through at-the-market
offerings. During the three months ended September 30, 2022, the
Company issued and sold 616,975 shares of common stock for net
proceeds of approximately $10.6 million, after deducting
underwriting and offering costs of approximately $0.2 million.
SELECTED FINANCIAL HIGHLIGHTS
(in $ millions, except per share data)
As of September 30, 2022
As of June 30, 2022
Investment portfolio, at fair value3
$
3,618.1
$
3,591.9
Total debt outstanding4
$
2,106.3
$
2,030.2
Net assets
$
1,543.9
$
1,585.7
Net asset value per share
$
15.02
$
15.53
Ending net debt to equity
1.34x
1.25x
(in $ millions, except per share data)
Three Months Ended September 30,
2022
Three Months Ended June 30,
2022
Total investment income
$
95.2
$
77.5
Net investment income after taxes
$
61.2
$
49.6
Less: Purchase discount amortization
4.5
3.7
Adjusted net investment income after
taxes1
$
56.7
$
45.9
Net realized and unrealized gains
(losses)
$
(68.8
)
$
(31.0
)
Add: Realized/Unrealized depreciation from
the purchase discount
4.5
3.7
Adjusted net realized and unrealized gains
(losses)1
$
(64.3
)
$
(27.3
)
Net investment income per share (basic and
diluted)
$
0.60
$
0.49
Less: Purchase discount amortization per
share
0.04
0.04
Adjusted net investment income per
share1
$
0.56
$
0.45
Weighted average shares outstanding
102.4
102.0
Regular distribution per share
$
0.45
$
0.45
Total investment income for the three months ended September 30,
2022 and June 30, 2022 was $95.2 million and $77.5 million,
respectively. The increase in investment income was primarily
driven by an increase in interest rates.
Net expenses before taxes for the three months ended September
30, 2022 and June 30, 2022 were $33.2 million and $27.0 million,
respectively. Net expenses increased by $6.2 million, primarily as
a result of an increase in interest and other debt expenses.
INVESTMENT ACTIVITY3
Summary of Investment Activity for the three months ended
September 30, 2022 was as follows:
New
Investment Commitments
Sales
and Repayments
Investment
Type
$
Millions
% of
Total
$
Millions
% of
Total
1st Lien/Senior Secured Debt
$
203.2
99.0
%
$
211.8
99.9
%
1st Lien/Last-Out Unitranche
—
—
0.1
0.0
%
2nd Lien/Senior Secured Debt
1.0
0.5
—
—
Unsecured Debt
—
—
—
—
Common Stock
1.1
0.5
—
—
Total
$
205.3
100.0
%
$
211.9
100.0
%
During the three months ended September 30, 2022, new investment
commitments were across six new portfolio companies and ten
existing portfolio companies. Sales and repayments were primarily
driven by the full repayment of investments in two portfolio
companies.3
PORTFOLIO SUMMARY3
As of September 30, 2022, the Company’s investments consisted of
the following:
Investments at Fair Value
Investment
Type
$
Millions
% of
Total
1st Lien/Senior Secured Debt
$
3,199.6
88.4
%
1st Lien/Last-Out Unitranche
118.1
3.3
2nd Lien/Senior Secured Debt
217.1
6.0
Unsecured Debt
7.7
0.2
Preferred Stock
41.9
1.2
Common Stock
33.2
0.9
Warrants
0.5
—
Total
$
3,618.1
100.0
%
The following table presents certain selected information
regarding the Company’s investments:
As of
September 30, 2022
June 30,
2022
Number of portfolio companies
133
129
Percentage of performing debt bearing a
floating rate5
99.6
%
99.4
%
Percentage of performing debt bearing a
fixed5
0.4
%
0.6
%
Weighted average yield on debt and income
producing investments, at amortized cost6
10.4
%
9.0
%
Weighted average yield on debt and income
producing investments, at fair value6
10.9
%
9.3
%
Weighted average leverage (net
debt/EBITDA)7
6.0x
6.0x
Weighted average interest coverage7
1.8x
2.1x
Median EBITDA7
$
45.3 million
$
43.9 million
As of September 30, 2022, investments on non-accrual status
represented 0.4% and 1.4% of the total investment portfolio at fair
value and amortized cost, respectively.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2022, the Company had $2,106.3 million of
total principal amount of debt outstanding, comprised of $1,246.3
million of outstanding borrowings under its senior secured
revolving credit facility (“Secured Revolving Credit Facility”),
$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 3.19% for the quarter ended September
30, 2022. As of September 30, 2022, the Company had $449.3 million
of availability under its Senior Revolving Credit Facility and
$32.7 million in cash.4,8
The Company’s ending net debt to equity leverage ratio was 1.34x
for the three months ended September 30, 2022, as compared to 1.25x
for the three months ended June 30, 2022.9
CONFERENCE CALL
The Company will host an earnings conference call on Friday,
November 4, 2022 at 9:00 am Eastern Time. All interested parties
are invited to participate in the conference call by dialing (800)
289-0459; international callers should dial +1 (929) 477-0443;
conference ID 427709. 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 on our webcast link located in the
Investor Resources section of our website
www.goldmansachsbdc.com.
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
- 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.
- The $0.45 per share dividend is payable on January 27, 2023 to
stockholders of record as of December 30, 2022.
- The discussion of the investment portfolio excludes the
investment in a money market fund managed by an affiliate of The
Goldman Sachs Group, Inc.
- Total debt outstanding excludes netting of debt issuance costs
of $9.6 million and $10.4 million, respectively, as of September
30, 2022 and June 30, 2022.
- 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.
- 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.
- 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 September 30, 2022 and June
30, 2022, investments where net debt to EBITDA may not be the
appropriate measure of credit risk represented 38.6% and 35.7%,
respectively, of total debt investments at fair value.
- 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 September 30, 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.
- The ending net debt to equity leverage ratio is calculated by
using the total borrowings net with cash and cash equivalents
divided by equity as of September 30, 2022.
Goldman Sachs BDC, Inc.
Consolidated Statements of Assets and
Liabilities
(in thousands, except share and per
share amounts)
September 30, 2022
(Unaudited)
December 31, 2021
Assets
Investments, at fair value
Non-controlled/non-affiliated investments
(cost of $3,664,754 and $3,416,195)
$
3,586,780
$
3,427,249
Non-controlled affiliated investments
(cost of $58,267 and $58,221)
31,280
32,819
Controlled affiliated investments (cost of
$34,745 and $33,374)
—
18,375
Total investments, at fair value (cost of
$3,757,766 and $3,507,790)
$
3,618,060
$
3,478,443
Cash
32,670
33,764
Receivable for investments sold
12,508
89
Unrealized appreciation on foreign
currency forward contracts
111
100
Interest and dividends receivable
31,800
23,278
Deferred financing costs
13,513
12,631
Other assets
744
2,686
Total assets
$
3,709,406
$
3,550,991
Liabilities
Debt (net of debt issuance costs of $9,571
and $12,296)
$
2,096,709
$
1,861,426
Interest and other debt expenses
payable
6,783
14,936
Management fees payable
9,157
8,370
Incentive fees payable
—
760
Distribution payable
46,250
45,818
Accrued offering costs
340
—
Accrued expenses and other liabilities
6,264
5,281
Total liabilities
$
2,165,503
$
1,936,591
Commitments and contingencies (Note
8)
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, 102,778,441 and 101,818,811 shares
issued and outstanding as of September 30, 2022 and December 31,
2021, respectively)
103
102
Paid-in capital in excess of par
1,686,942
1,670,742
Distributable earnings
(141,721
)
(55,023
)
Allocated income tax expense
(1,421
)
(1,421
)
Total net assets
$
1,543,903
$
1,614,400
Total liabilities and net
assets
$
3,709,406
$
3,550,991
Net asset value per share
$
15.02
$
15.86
Goldman Sachs BDC, Inc.
Consolidated Statements of
Operations
(in thousands, except share and per
share amounts)
(Unaudited)
For the Three Months
Ended
For the Nine Months
Ended
September 30, 2022
September 30, 2021
September 30, 2022
September 30, 2021
Investment income:
From non-controlled/non-affiliated
investments:
Interest income
$
88,326
$
90,043
$
231,605
$
246,570
Payment-in-kind
5,154
4,768
14,266
11,179
Other income
1,384
1,101
3,550
2,717
From non-controlled affiliated
investments:
Dividend income
133
90
258
916
Interest income
120
119
469
282
Payment-in-kind
101
175
553
478
From controlled affiliated
investments:
Payment-in-kind
—
365
259
1,008
Interest income
—
23
16
69
Total investment income
$
95,218
$
96,684
$
250,976
$
263,219
Expenses:
Interest and other debt expenses
$
21,979
$
14,449
$
53,823
$
43,953
Incentive fees
—
9,326
12,023
32,551
Management fees
9,157
7,962
26,933
24,241
Professional fees
814
724
2,559
2,257
Directors’ fees
209
234
616
698
Other general and administrative
expenses
1,041
793
3,301
2,691
Total expenses
$
33,200
$
33,488
$
99,255
$
106,391
Fee waivers
$
—
$
(1,441
)
$
(11,724
)
$
(24,192
)
Net expenses
$
33,200
$
32,047
$
87,531
$
82,199
Net investment income before
taxes
$
62,018
$
64,637
$
163,445
$
181,020
Income tax expense, including excise
tax
$
829
$
305
$
2,494
$
929
Net investment income after
taxes
$
61,189
$
64,332
$
160,951
$
180,091
Net realized and unrealized gains
(losses) on investment transactions:
Net realized gain (loss) from:
Non-controlled/non-affiliated
investments
$
—
$
(1,606
)
$
(5,054
)
$
4,628
Non-controlled affiliated investments
—
35,916
—
35,916
Controlled affiliated investments
—
—
(2,035
)
—
Foreign currency forward contracts
90
(49
)
171
(220
)
Foreign currency and other
transactions
(1,565
)
69
(2,413
)
113
Net change in unrealized appreciation
(depreciation) from:
Non-controlled/non-affiliated
investments
(50,069
)
(21,412
)
(89,028
)
(20,534
)
Non-controlled affiliated investments
(3,529
)
(39,257
)
(1,585
)
(47,279
)
Controlled affiliated investments
(18,685
)
(1,391
)
(19,746
)
(3,566
)
Foreign currency forward contracts
(35
)
122
11
396
Foreign currency translations and other
transactions
4,974
1,392
10,051
4,234
Net realized and unrealized gains
(losses)
$
(68,819
)
$
(26,216
)
$
(109,628
)
$
(26,312
)
(Provision) benefit for taxes on realized
gain/loss on investments
$
—
$
—
$
—
$
(53
)
(Provision) benefit for taxes on
unrealized appreciation/depreciation on investments
130
(83
)
12
(253
)
Net increase (decrease) in net assets
from operations
$
(7,500
)
$
38,033
$
51,335
$
153,473
Weighted average shares outstanding
102,367,005
101,727,464
102,069,593
101,654,241
Net investment income per share (basic and
diluted)
$
0.60
$
0.63
$
1.58
$
1.77
Earnings (loss) per share (basic and
diluted)
$
(0.07
)
$
0.37
$
0.50
$
1.51
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221103006262/en/
Goldman Sachs BDC, Inc. Investors: Austin Neri,
917-343-7745 Media: Avery Reed, 212-902-5400
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