Goldman Sachs BDC (GSBD) 25 Feb 222021 Q4 Earnings call transcript

Good morning. This is Gemaria (ph), and I will be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs BDC Incorporated Fourth Quarter and Year-End 2021 Earnings Conference Call. Please note that all participants will be in listen-only mode until the end of the call, when we will open the line up for questions.

Before we begin today's call, I would like to remind our listeners that today's remarks may include forward-looking statements. company's uncertain future company's and the their that control. represent are nature outside statements belief events regarding by These of the materially time-to-time result of The may number of in and results those a company's forward-looking from described SEC including possibly from those a company's indicated the what as financial statements factors, is in actual differ condition filings. be our cast Sachs BDC may not Goldman consent. copyrighted without Incorporated, rebroadcast of duplicated, material is or This audio reproduced, and company found issued Investor a website the directly earnings homepage Yesterday press both reconciliations posted after closed, under Resources the our and an supplemental include most which comparable of of release market GAAP the of and www.goldmansachsbdc.com at which on non-GAAP measures. presentation, section, the earnings measures can be the to be in report SEC. the company's should XX-K yesterday documents with reviewed with annual filed conjunction the Form on These recorded call replay is conference XXXX, XXth, This for being Friday, purposes. today, February call Goldman now Chief will McGovern, turn the over BDC. Sachs to Brendan I of Officer Executive

through before discussing activity fourth-quarter financial we the I results. will hand call line environment to our then our before and brief for the you, Yoder, our our portfolio I'm Carmine open in the it Jon by will Good with Thank begin Officer. Gemaria. results to conference today Financial turn Operating describe And to over a here the market thank current morning more Officer, Chief quarter you earnings us Rossetti, providing take our Q&A. detail. fourth and Chief finally, us to overview I call. we'll for of Carmine joining for our call everyone Jon

a decrease with as per XX acquisition to slightly of for was decreased Net XXst, merger in report per quarter we of end connection Net from income value the to get quarter. the share of the asset let's solid with $XX.XX net $X.XX accounting investment was share of basis share. fourth our that, Overall, points to generation quarter QX another excluding of income per December per are MMLC. portfolio. investment adjusted third impact income $X.XX, the asset share approximately pleased the with results. So

we yesterday, March dividend XXXX. our $X.XX of closed to share record a XXst, per payable the of shareholders announced As Board as after market declared

year Looking was broadly with many respects back, XXXX a and remarkable credit in specifically. space private GSBDs

record As policy the a loose monetary fueled economic investment a and strong recovery activity. environment

turnover team value the we company's managed the X% XX% grow more to activity the at over recurring saw past platforms year quarters, marked which past company the portfolio as extensively activity, As repayment origination several year. of last a than was investments over unusual by Despite and a fair to year-over-year, the in the capabilities this is outstanding hustle XXXX. by testament over XXXX year-end its discussed from record

of investment highly exposure our about addition, first-lien points In about top the focused XXX capital in X.XX activity on portfolio by believe increased about structure. at to target end a the from of And debt-to-equity funded it's of XXXX. as improvement was XXXX, ending our year-end basis a prudent type, times. total the this With we at XX% of ratio lien the result,

ratio just investment under pleased the to long as competitive focus company debt-to-equity ending QX, stayed of medium as respectively. times, well wave the focus with the we well kick one our of in In an on at balance our much at serve elevated and target of the investing overall million. origination in For We and this about been with on times repayments with will logbook XXXX, we a We maintain believe were quality ratio $XX repayment has below high term. company's maintaining average environments. higher credit historical characteristics, environment book our leverage EBITDA times this year the attractive sensible activity, of relatively the in which X.XX hovered see X.XX middle-market constant activity leverage the the

reflecting the during Our follow-on only has for since performed focus which on market to QX loan made in due smaller assets. within combination turnover was year, companies said, of origination seasoned allow yields portfolio us which high-quality has compares were the higher investments of environment, current pressure coupled the X.X% portfolio. first-lien maintain the the with course as the standards of company year. strong a yields well the on to That covenant-light one X.X%, document assets continued competitive XXXX, and competition mix our over high we during

addition, debt times X.X XXXX, ratio Compared portfolio companies of at during to end reflecting the portfolio a to weighted moved quarter. In lower EBITDA towards being average into times at year-end XXXX. to our leverage trend exposures of refinanced company deals the new the net higher six

significant believe we continue stress multi-comm companies, last that that companies portfolio have the in pricing trends our power far focus in we services environment. Our quarter's thus which call, environment. mark value-added of is our the on to high-quality a inflationary pressures provide inflationary discussed of with the caused and And not reflection products current current

however, are pressures interest pronounced are rate observing, macroeconomic creating insert volatility. inflationary We that

to LIBOR we by projecting nine Most of predicting coming few year. the And to changing year. are With X-Month XX basis note the at In highlight forward XX versus seven end Fed than at over hikes from beginning the of the more a time, saw basis we at of has At the the rate to economists points curve X-Month points by the yield doubled light the interest X.X% X% the the of at X.X% XX-year points. year. environment, currently the LIBOR year. the stands almost on want is same beginning the

of around of the in end LIBOR assets of portfolio floors as floating-rate was year, our with XX.X% X%. typically the First, of

debt was of Next, half notes. structure fixed at And liability SAC. we have our rate more year-end, been managing our actively in than

LIBOR margins assets, because as on the and floors interest profile, contractual As front of remain net expect a higher, kicks result our yields liability curve this initially some of on would the of asset but the stable. we pressure

However, interest the yields net margins a exceeds things environment being majority higher, equal, of asset costs asset increase to once while our rising respectively. those should Non-accrual and investments rate remain liability our fair a value, in convene all tailwind result and of the as LIBOR to finally, investment floors, was other of the And fixed. list. The be of costs to quality. addition portfolio one X.X% X.X% increased non-accrual the turning the to move of

capital convene recycle proceeds quarter, discount clean his Replacing at by loan a has back Jon we Yoder. investments producing on expect don't over this As monetize other on With in position to from his income have demand a shared will discussed in COVID let value. into from we the previously, meeting expect meaningful the quarter to to impacted impact the reduction benefited for been environment support owners. then this we our as that, non-accrual space me it We to this and assets. see to turn that, monetization have

continued environment Great. Thanks, team the markets the active strong The enabled to on be the quarter Brendan. new again during front. capital origination

remain investment secured Our new we remains commitments loans. focused first lien on senior elevate --

to companies commitments and finance follow-on portfolio in million. loans portfolio made we During the We made new XX companies, quarter, investment primarily investments originated to activity. new to M&A existing million amounting $XXX million $XXX to $XXX XX of

portfolio last record, full seven the $XXX million As quarter's driven repayments remained elevated, Brendan by totaling mentioned, while sales investments activity, below and in companies. of repayment

portfolio to Turning composition.

debt X.X% XXst, first-lien in second-lien our value, $X,XXX and negligible total unsecured debt, As in last-out X.X% X.X% were XX.X% XX.X% of portfolio And in of December fair XXXX, a million secured loans, unitranche, comprised investments and in including in at in well common of warrants. a combination stock first-lien, and preferred as as senior in amount

of had commitments also billion. investments to of We bringing total commitments $X.XXX XXst, and $XXX million as unfunded December

of at was at quarter-end, the weighted investment end investments and of total producing the weighted to The as decreased compared X.X% third end the yield to the QX, of portfolio income company companies cost from our at the industries. yield XX across X.X% end in of operating at at different XXX debt the of portfolio end of QX X.X% QX. average As our held of X.X%, average quarter. of investments The cost

six stable underlying debt our was net overall portfolio our times the to in from companies portfolio quarter-end performance credit investment the our investment to average prior was X.X quarter-end quarter. X.X weighted The in at weighted at of quality. The companies the compared of EBITDA quarter. Turning of which as quarter-over-quarter. times coverage to is The times, average the was companies prior interest with portfolio flat

investments non-accrual amortized of over call X.X% and XXXX, from X.X% financial putting the end turn status. to mentioned, of increased through the this total Brendan on walk status respectively, As I value will to December convene and at portfolio is the to as results. to and X.XX% fair up third XXst, investment X.X% cost non-accrual of now the Again, quarter. due Carmine on our as of

the quarter billion, net We fourth of of John. portfolio billion, with assets Thank billion. $X.XX you, XXXX of investments value debt of at fair and $X.XX outstanding $X.X ended total

X.XX in We the X, notes secured due. $XXX capacity of of X.X% a of first of available convertible X.XX and XXXX, as the the outstanding times, At credit with ratio April QX several was company's borrowings unsecured company's facility. the quarter-end, come net our which an million fourth On debt-to-equity $XXX were increase XX% repayments under quarters. revolving at an exceeded also ended million, for debt, times the will quarter investment is time from end fundings

facility at fund is our our structure current forward maturity, secured our the other the the but to maturity that look optimizing with expectation liability we we term conditions X.X%, of alternatives liability, to use assess convertible the and for continue to these under our I notes expensive revolving note out are to Our notes. debt. most market capacity credit to

to income financial a reference company's discount measures. the GAAP compare remove October MMLC. of to the XXXX with This results. -- non-GAAP we our to measure to also merger to results certain results financial in continuing the reminder, is Before as the our purchase from make non-GAAP measures will addition intended easier prior measures, impact or financial These statement, to adjusted

$XX.X million $XX.X accelerated net as in The For due a in respectively compared in adjusted GAAP the decrease and QX, reduction and million to accretion. GAAP prior quarter-over-quarter was after-tax to million income respectively $XX.X investment investment primarily million quarter. income $XX.X were net and

With GAAP compared was QX. repayments of a as net both basis, quarter. third result On quarter repayment in special with the was levels share that, Adjusted per compared QX $XX.XX I'll high as quarter, of income the in investment share normalized per was MMLC were XXXX. that and -X a $X.XX net to included investment Brendan remarks. following $X.XX per-share share to for per $XX.XX asset last income back As QX XX, Distributions during compared net $X.XX to quarter. $X.XX it this as totaled of last in implemented $X.XX XXXX closing of distributions to turn value $X.XX quarter historically the XXXX, the December last more compared which merger September on as XX, to

Carmine. Thanks,

are As aware, many Goldman I recently of I'm announced mid-March. you effective retiring that Sachs from

duties announced BDC our we of Officer giving last is vehicles. addition, In that up as Chief Operating John night Yoder his

capable very GSBD Xth. GSBD, who co and G John to be reigns giving other will Sachs CEO Skirnick Going effective vehicles of since the Xth, led who inception. Goldman forward, which exclusively he on I effective platform, its renewable - over and David Alex of power great of become will the March to hands success the become BXC be delighted John has CEOs our and Gabriella to focusing Miller with the are March

call GSBD, I across far bear new day BDC. blessed and people As been Jon opportunity firm the banking approximately respectively. team. in all leadership But having Alex each the are of XX work - women too with positions, suffice Together to to and a all upon collectively doubt to capabilities to and the no stewardship In Gabriella, CEOs, Sachs results individually. with consistently years leadership David bring for our many debt out at served improve and GSBD. of Jon the with and middle-market talented have Goldman are in and Goldman Sachs of every experience the Sachs top-notch many There wealth decade Alex the and have the an to who David with investment the with and Goldman co of delivered to will persistently say, and amazing helm I men stakeholders lending will platform, and bring in of

that, shareholders wish for Q&A. let's the over and the Over behalf enjoyed turn and these to a With I've capital best. years, ending of you, of to calls the of business and each years, the it back you all conference line the team, rest thanking has of Gemaria On GSBD. been the the manage by John open your privilege call

a take roster. will with Ladies we Your and gentlemen, James. question first Raymond [Operator moment come Instructions] the from Dodd will compile Q&A Robert to now

in might but future since forward once Brendan, Hi, odd guys. question strategy, you luck I leaving, changes, this are but little just It want terms forward endeavors. of it. -- -- you in on got presume And maintenance good seem asking to a no but to there's good etc. be with but like would get the a asset, say of call, type I to going just to clarify strategy

I of look Yeah, Robert, right. will you're course

anything Alex context go-forward will of think, speaking those and can we've plans. over the I this of should for and David you about be don't been years. in of and think different spending you at shareholders than doing Robert, the And all a I and and broader time you I've lot and transition team. with bracing Alex I right those dramatically David be the that what the tell been specifically you with time Gabriella

Sachs information our course and Just with had to as firm. and investment very, And leadership core here banking for as since a world leverage well Alex the David you investment the in coverage. division, focused in as has transactions now my middle-market have been been that worked on been platform Alex been the with within been banking. finance sponsored his And merchant context, December, a years, origination. prior Alex of sponsored for firm originations of long a doing sponsor positions including departure bit sheet has lending long Goldman community. has the little he's the that time in relationships the for Sachs we very leading which biographical the on has with what very from and in lot the on focused there's an time as XXXX career, benefiting investment deep for when both long, as called division, the preeminent both over Goldman bigger our know, what That's the David; cap put within [Indiscernible]. a balance we banking has past two he's of we Goldman announced out been historically of franchise partners part of is asset release management combined and long and within press

continued regular shareholder and capabilities broadly we'll expect, So expect will speaking, can where I leadership can think what Sachs and we excellence manage. you to originate hope to certainly for the as bring really be the BDCs the to a vehicles that bear full of Goldman transactions

I think specifically lots you'll and sure opportunities it to David now. a with have I'm leave on Alex for at we engage basis. go-forward that can of

Thank you. that. appreciate I

-- possible more went interesting XX. as Now, were said, to Debt-to-EBITDA, some up you question. there

equity there loans when there we enterprise perhaps, look leverage has up. XX there how is then mean loan the any compressing of been going lower Some us multiples can enterprise to equity paid that somebody value in public color buckets or right that that same shift names more you the LTV? markets, well, so businesses values Is of doesn't that? been any is the in the private as the around techie at any give and terms value now are, --

a highlighted we on you detail Yeah. I conversation last been we quarter. Look, the just detailed significant. has I repayments specifically I for first because and the this and think as worth it's have Robert, know market just The more math environment think on I had

high. been GSBD really, I think unusually it's specifically, for really

significant in amount. of As over is of were course the that I with XXXX, the really to in which first remarks, XX% a January came repaid book said the we

think book out make document replaced in you loan, activity, deleverage market of be about you talked getting of a structures, that's a origination. new like deals it we so its see repayment normal There's over lowered deleveraging that are the you the loan, course cadence good of to of course coming to on when those the focused so a lifetime. naturally tends levered been going your by And standards. that about We've

I the a means to lot business quarter original underwrite. the investing this bit was we had follow-on I So think which tell back activity, that you a little math typically of also re-leveraging stark. will you're

still cyclical at in market our has orientation industries And mark-to-market very the LTV value are of big numbers to you and don't stable leverage services tend see despite We've multiple To industries, would well. multiples away underwrite be technology in revenues a of historical multiples so LTV moving which a high when question, been the not heavy aside that IT and generate and enterprise current down on you attract part actual focus healthcare those to your companies trending moment, we measuring put tended reflective that to higher, focus and healthcare, our and companies, we'll and the context tended up book, manufacturing tell as the know, environment. produce has software for I industries, services you're industries, the as capital-intensive higher there. invested capital from recurring therefore

again, notwithstanding the So at in tick-up coming down. that metric, have underwrites, other looking been leverage LTVs

equities, at loan the months, to over in if you course beneath before the tech portfolio. that our capital that is to a it there's you significant those XX% is looking tremendous in probably just fair down. loan-to-value exposure loss cushion private starting think -- past what's I of at when you to several But see you're and space say were junior range, within gone the the mark-to-market

I you. me, for if one Last it. Got Thank can.

we March dividend half. And committed level already reaching presumably is $X.XX is, to Obviously, second waivers? disclosed, so of of None the XX? that quarter Obviously, to the XX, with you've quarter curve expecting anymore the it where last the adjusted on good not. waivers rate should the comfort but get pretty be what's were This declared of NII. in

Yeah.

me that. hit Let

the you the the So or pressure two, current changes environment, script, look, as about over think in clearly we talked about last on there's been year yields. if the overall

XXXX, also early the this look specifically if had reduction think to of of compared we I therefore (ph). OID of acceleration quarter you those the rest the repayments at dynamic a in

those think headwind. continue And to say fair be I so to

that on calculus, experience. will the stabilize portion our been things the think yield I of has

of running over numbers, see past couple that safe it's years, lower say environments. a over I the through think been the yield You but building to

also leverage look was if the of at in most stuck year, basically I times you at talked year. prepared As last the remarks, about one for

other you And the so side, power you've what forward, company the got we I range, on quarter. will all company think happens the about into leverage think of as couple tools earnings well, start up the to see way think that target and a you'll this back repayment toolkits than see probably environment within the I there's moving is not which happen, rate but of getting those there the going which headwinds

firm. I think that's a you've normalizing. that got are possibility for I Again, think yields the

we expect non-accrual do assets the of -- got convene million that for that go-forward a income, this we about talked a monetized bucks quarter quarter, of as that's back couple and a put You've earning being basis. on will into be

below of per waiver, we've that share. $X.XX that in think actually per the as at you amounts [Indiscernible] number. you the the total the waiving we're when dollar I to -- look all XX% you together share $X.XX think cents been of know, that I absence But still fee-waiver,

between delta $X.XX the versus that keep well. waiver, mind think as in dividend I the that so And

environment. wildcard that company [Indiscernible] big forward the the think going becomes I for

got of around the one a Mathematically, rate think And floor. what the given be: the happens again, -- will so And with the curve the queue loans which the and lot we've to about here? front-end virtually talked floating question profile I it in given this. of XXX% disclosure is business, the of I the

notes. move probably in As we half And a in about, running company. LIBOR a on you see there'll fixed once up active into through also to you'll initially liabilities of our fixed-rate termed-out headwind. get But than management we a becomes be I rates. the QX talked start benefit floor, liability And more it to front. the think significant as we've We've to that been

Goldman appropriate to there's So a but of fee about departure of yes, approach And not to for I I different the I seen is perspective. about think forward, in think waiver talk my lot years over thoughtful think Sachs be certainly me fiduciary you've pull. going levers -- a from really the context its

when the We a year. will foundation which in over really company, book, develop you Alex see a generally structure to good take from and But at The bodes how David the look is mode the good All the course the at quality liability of spot. for asset things here. good. you is when next I look well for really think business

good appreciate over everything, you. luck I the years. a Brendan Okay. in future. that. all comments lot. Thanks I Thank again, appreciate the your And

Sure. Thanks, Robert.

[Operator this a further closing do Instructions] at time, appears in remarks. Actually, we queue Please from no any question Finian Fargo. proceed. with Please in queue. questions there Wells the O'Shea And be have to continue with

(ph). Hey, Fin

And morning. coming well. Actually, IOG and coming the good moving Jon as question new is with matter Brendan, else and on Robert's that Mr. elsewhere. on follow-on, to the Yoder banking leadership changes platform and in the group, from Hey, everyone congratulations,

that moving Brendan? of thinking high comment will level, pieces the architecture the be style, different, say in it whether a things in doesn't and a lot origination does at the a good. writing have it different? provide at your on like so of then about bit to the But if things on be obviously that why folks wall the are departure, or I'd can feel wake same, the be management bad, are can going So how be were completely you there's to here Any style GCM

too and structure. that strategy into Fin, the the changes, the Yeah, you're read in describing of wouldn't context look, I much broader

endeavors. this personal know, I on And now there offline, to talked was I I just my how as was, leg time business. me reason like for me, As some are next you Jon, different here. who good architect felt a we're natural for for see of a about inception, the power decision this really -- that just career been a a personally, that me, beyond implications this think key move on based and pursue broader has since you business a don't that. successfully of to

continues of continues spent business. in in I like like forward all I these to feels the be it when having that be I things together, group business, quite lot time the talked lot think from focused teams. a kind having time. at while in And there just on of are I be think there's the about, place this the time, stability point really been within And approach respective look group the of their a of tell David have with good you coming firm. credit this I a for been for actually might you're -- good Obviously, So commonality can overall What quite here and you has is the culture. of company scenes at some in to well taking terms David, behind and the a long the for time without

things In on all the service disciplined terms the really we good GSBD to think focus over years. and success having contributed of client the of a have that

resources going I is, see if to tremendously otherwise, changes So I like significant time. bear get of to company over anything, new said, I benefit the strategically, don't wholesale brought there to day or think you're one that the think

in start through and engage see you coming without states. team, and to as you'll and meet [Indiscernible] spend that so time some I some think And

and I in conclusion. the can tell company so I've the come sure the lot to platform and go-forward confidence of And I'm the you, team and same the a of you'll

institutional -- private to the are ATMs, pretty in And And side. That offerings, on helpful. public way, there capital you've with with, The cannibalizing your a by are debatedly been forth. by seems and such. unrelated professional MMLC a emphasized successful s, There way are of private so style to retail strategy BDC follow-up channel. and the very be fundraising raising unrelated but the strategy, of retail Absolutely public lot obviously, to they are newer non-traded others. [Indiscernible], the which peers

on if Just -- that any sorry. thoughts ahead. Go high-level you

Sure.

pools Fin, on to I years broadly, space. -- just assets whether confidently certainly a being Having to those more Alex this when Goldman Here's capital cap the scale lending to scaled ability topic. launched would that speak you participant is the say, the for XX market bear what of When within are David table private more or stakes credit I bespoke I for middle-market could we tranche think key. look the compete and relative different in bring at to be and opportunities, unit this opportunities larger is space platform, and

an And source is and underwrite be regulatory investors investor and BDC. a risk-manage that loans. so as certain There planners; trying to who and insurance the be portfolio accomplish investors capabilities, over there be to a who approach it's is agnostic the that a our and think proprietary Alex might other ability want shared might to [Indiscernible] are to how Goldman, to of they access institutions, is this investors core separately investors on fund. approach asset -- other with issues asset I with manager, access have the that they might had I've liquidity as by are class. There our manage that which And David going the how want accounts associated single to public to prefer might be they're be

manager Our those job create on-ramps clients. to is for different asset all as

and later we means a go in this to I success have doing investors really attractive privately be that on continues platform for that to -- public observation I Investors good is on. so have there want that think who might really really opportunity And into think the invest had good that that. returns a BDC

are Like day the changes one I all that where -- be And well. prefer the your can who there anything if firm forward that want that investors has a significant I we'll profile successful. create fund of access of and think think of on-ramps don't gone be quite tool, is capital offered strategically for or think any other many of capabilities will simplicity continuously Sachs. liquidity the way, form. that your the that, get said, is suspect all invest I you I Goldman as in very we'll I goal the do a for But to who clients to as platform we And shape, really but

you endeavor. Again and next congratulations. best hopeful. of Awesome, your and on luck Thank

Fin. Thanks,

questions. And Please at time further remarks. closing any there with this are no continue

Thank always for you, as in. Thank Gemaria. all listening you

hope bye. have hesitate us If weekend. and questions, great we to don't please out you Bye, reach And you any still directly. have to great day a

gentlemen, this conclude BDC you participation. for Thank does and XXXX Ladies fourth Sachs earnings your the quarter Incorporated call. and Goldman conference year-end

may You disconnect. now