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.

Goldman Sachs BDC, Inc. Investor Contact: Itai Baron, 212-902-1000 Media Contact: Avery Reed, 212-902-5400

Goldman Sachs BDC (NYSE:GSBD)
Historical Stock Chart
From Jan 2023 to Feb 2023 Click Here for more Goldman Sachs BDC Charts.
Goldman Sachs BDC (NYSE:GSBD)
Historical Stock Chart
From Feb 2022 to Feb 2023 Click Here for more Goldman Sachs BDC Charts.