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

  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 January 27, 2023 to stockholders of record as of December 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.
  4. 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.
  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 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.
  8. 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.
  9. 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.

Goldman Sachs BDC, Inc. Investors: Austin Neri, 917-343-7745 Media: Avery Reed, 212-902-5400

Goldman Sachs BDC (NYSE:GSBD)
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