Goldman Sachs BDC (GSBD) 5 Aug 222022 Q2 Earnings call transcript

Good morning. This is Austin Neri, a member of the IR team for Goldman Sachs BDC, Inc. and I would like to welcome everyone to the Goldman Sachs BDC, Inc.

Second Quarter 2022 Earnings Conference Call. Please note that all participants will be in a listen-only mode until the end of the call, when we will open up the line for questions.

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

our describe Carmine Good everyone, Executive I'll begin our I'm Operating and detail. for Financial for us conference joining earnings portfolio then results of Gabriela activity. quarter our turn before and providing second today call you morning Miller. Chief Skurnik, second David or with I'll the more a the Officer, Officer. to my quarter environment market here discussing Thank by call brief Officer Rossetti, thank Co-Chief to David our in overview the over you Austin. Chief call. current

open finally, our to financial I Q&A. us And take for line it through hand Before the we'll Carmine to results.

net asset income $X.XX, impact quarter let's excluding was that, with adjusted connection merger investment investment a of second in share income for was quarter Net $X.XX share. accounting, the the MMLC get per with per with the So results. acquisition through

inflationary and help environment by in dramatic rates to against we of as quarter, June the second has September the share to of payable Nonetheless, announced defining value forces. forces. asset the an due characteristics some that environment was capabilities shareholders XX, macroeconomic diligence higher to our decrease resulting overall Reserve as the per market per a approximately board investment of dividend XXXX. market share characterized reflects decreased closed portfolio to non-cyclical management more the these to is of credit power, With market businesses continue and of events market biased a a the share of that volatility tightening XX, not volatile $X.XX coupled we selectivity that per to the by record the invest result navigate significant credit pricing our Federal Net X.X% yesterday, after slightly economic with As response dislocation any impact highlighted declared the stringent by a portfolio. end the of quarter. from attributable slowdown. toward high from in and primarily current This in spread it to strong within that process first as is widening have navigate respect insulate $XX.XX GSBD expertise decrease

the covenant are changes our nature reflected of book want protections. mark-to-market majority our the predominantly floating is that vast filler quarter, financial this value contrast remind rate to While we investors in in our portfolio to has market, syndicated maintenance calculations in loan broadly

platform, of growth. payment making is we team, broader integrated It's The to equity theme Division business especially private had the and contemplating public an sponsor and five quarter time conditions, consumers. those a General deferral debt of was that the which the we were the of lenders investment fund highlighted shut. at conditions this the especially M&A headwinds. benefits capital and breadth our that referred of has power balance non-cyclical of in lending and gas Fidelity capital on and markets both Goldman market price company for a of when viewed loan those difficult, months the volatile able growth faced addition, not software provider especially few macro speaks now Sachs transactions, the as DB have platform a lending volume is another focused to potential provided been since with exits we were us, funnel driving was natural at IPOs a within management BDC borrowers we relationships into had integrated while us business deals platform The is broader, this company to at to when Goldman which exceptionally is Goldman that solutions limited, being our exits and broadly the to investment example sourced Management pronounced to But direct sectors. inflation we Sachs. a transactions, the low including in the are this contacts and of the additional and Asset larger broader to a help has provide only to transaction a important loan business but Access value. liquidity of banking Rubric to the Sachs led quarter over nearly close an the To been the through We market sheet significant is highlight In until direct food activity pressures to to IPO more like built demonstrated individual time largely sourced Goldman that franchise, a no platform, banking on Rubric. for company. one plans. private the syndicated of loan This enterprise relationship Sachs financing are that with time, credit

due the the sell the industry. our agreed team Additionally, partner our and and in The financing to this was advisor knowledge involved side use as the a long of quickly fidelity sponsor in the instrumental payments standing with initially relationship transaction. team's getting company to business

a leverage fund volatile platform's during to solution low acquisition loan of market financing company to on through ability the conditions. a to and industry a execute at This are advisory team in short growth by We deliver tailored our a We shareholders volatility period investment points of timeframe. in this bar to future the example transaction order within value the across and order waiving relationships support of supported expertise our again fees. portion the to able help a

may quarterly based As incentive voluntarily this level per additional the Co-CEO of through me to necessary fourth this previously in achieve believe over and stated, earnings we share, my achieve of waivers. waive to net be able With we that, second investment to that an intend income without of Miller. while income $X.XX quarter fees at adjusted least in we let the including half it amount David year, to turn

Thanks, Alex.

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

Sales capital activity XXX capital mainly markets. Our capital the investments by in in two line loans. sales the activity in most under volatility was of markets with increased overall focused portfolio repayment activity quarter, investment secured structure, repayment million million, lien as the commitments the full more with on new and slowed The we've muted of parts this the companies. seen first driven senior repayment senior remain million by totaled the and XXX XXX

commitments out as last to Total In at XX in XX.X% In X.X% X.X and Turning of of our investments fair XX as senior lien, including XXXX. unit lien composition, and unsecured negligible bringing unfunded a also portfolio were value, commitments warrants, portfolio X.X%. first sorry, common of of lane secured well million first debt June X.X total preferred X.X XXX in June and second as a and in loans, investments had of of combination comprised unsecured amount billion in three XX% to billion. tranche we as stock

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

and to to X.X times interest to sequential XXXX credit see the in repayment, investments moved quarter finally, turning to average at asset amortized amounted quarter weighted both coverage and and weighted X.X of debt-to-EBITDA to of will two non-accrual turn results. June continue The X.X% quarterly at as to end quarter. XX, revenue compared net The investment the our to investment non-accrual cost portfolio was respectively. the And average [ph] the at to status quarter. companies quality. call decreased portfolio financial versus investments to X.X as of company's prior our healthy, and in investment we the total the due Turning X.X% Nonetheless, in during from quarter portfolio ALTM over growth end, at walk value EBITDA. prior on Carmine I times times through X.X were and quality, times now fair the

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

X.XX X.XX debt was our quarter Our Average to the from of total was line target At revolving for under increased squarely X.XX debt quarter. outstanding times end, with quarter debt-to-equity facility. times to of XX% $XXX secured principal was capacity the net ratio last an times as ratio. compared company's quarter, X.XX amount unsecured credit times debt to ending in the equity our net leverage prior million in of and available

secured May which certain an the the August Remove closed amendment and date a we facility, quarter, benchmark. During extended replace XXXX covenants LIBOR revolving SOFR credit benchmark the from with to maturity our financial to XXXX. second

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

GAAP income from per we the investment expense. basis, launch net share On quarter. $X.XX investment adjusted and was unchanged XX, On income was May announced both prior $X.XX net a the prior repayment at and net may up price offering investment time to as For offering after program million, XX.X in respectively, XX.X levels income decrease XX.X the QX, GAAP fees reduction investment to due income result million to compared tax as The accelerated an quarter. interest well were and of increase GAAP million, adjusted a in million company respectively, XX.X sell the market an of and quarter-over-quarter and million. from lower an ATM net $XXX and the time issue aggregate primarily accretion having as prepayment in to in as common whereby a or was equity shares

net the During expenses million. we totaled to quarter $XX.XX asset back Distributions net proceeds it June quarter and during the With was X.X value an of per to ended that, and $XX.XX resulting XX in for remarks. June share compared shares approximately turn price $X.XX March issued at XXX,XXX as share, of Alex XXXX, as average offering closing XX of on I'll XX XXXX. $XX.XX per underwriting of XXXX,

Thanks, Carmine.

CFO that maybe We in quarter for over a effective was David of to another welcome XX for all internal the same and known his service pursuit to the you As Sachs, of Accounting career his joining the opportunity. thank him recently, responsible pursue as as years. financial thank wish [ph] for fund after most the professional conclusion, At we're In time, CFO position Pessah for from XX controls oversight accounting, success the during call. company's here to resigning Goldman August GSBD his we years Officer, next spending reporting, announced us to the regretfully Carmine position and our GSBD. at in lot Carmine Principal delighted past of

line ahead environment and the provide today. in your and for unique volatility, may differentiated appreciate that, many for open confident in ahead. let's attention private we're the further quarters Sachs and think Goldman Q&A. platform exciting credit exhibit we opportunities With the time We to GSBD While our investment

We'll Securities. our with from you. Fargo take O’Shea Wells Thank first Instructions] [Operator Finian question

most or good and Thanks cross everyone. percent you terms quarter the cross the has of touch gave this I'm quantum number, not sure in Hi, your if deals platform morning. Can as on platform you Co-investing? certain at that but thing you'll pick us, desire covenants, remind yield, there outside you that also that And such of maybe kind the parameters BDC? adjusted origination? look risk absolute yield, of in that are

for question. Thanks the

on across we So this discussed did in have any we that did allocated quarter, as quarter, have We not the cross first the call. deals earnings one platform.

way we that now BDC, are did BDC would able that know to of I deals BDC a of platform, what funnel is in full additive simply is deals the are the that, the have increases a have firm number the the originated is the company. because available the into sourcing engine However, say to draw from of to you it we cross that which

did deals a we of like were originated to do the we be number And to we to so see because going company allocate those to were happy to feel able happy and over they we to And time. deals. the portfolio cross be quite accretive are BDC,

cash typically around squarely Hey Fin, covenants complex about I maintenance the looking they I would the have that flows. look, appetite. in have to industries it's like protected orient is for morning, asked middle the BDC mean, we're we David defensive further you good investment in companies, what say market in

kind about other or some the funds various vehicles. appropriate that's other of think what's BDC vehicles we drawdown versus for so And how or

helpful. specifically, unprofitable recurring up those, in we lot you. has just of bit. sold Thank the tech a stock on software, that's see off the what revenue Sure, follow a And market, public the a sphere, software,

Are good an challenge a any retention, trajectory, above the I into like higher historical on category? any or crack DK? any spend BDC. that sort pretty emerging And in costs, of acquisition this seeing lens underwriting stuff the of of you for think you the have there of that's sort business is focus

on very a know Thank loans basis. Look, selective We we at we question. have Fin. revenue that it's look great as a recurring the about you, been you

fact, you percentage overall the given at have lens declined has in if of the portfolio actually quarter, portfolio we the In a a as our just look that in landscape.

highly also structures. so cost And you have these businesses these, remember, variable

types in we've how cases, that given seen selective the pivot revenue companies so we of to. been And these about we’ve recurring again, a companies But just went some bit.

any not in our have seen issues portfolio. We

Can how actually helpful That's touch program? the commenced you bonus your market the question final on Thanks. One one. plans I quarter. view offering if you think at may. I you this

at the market past started the this we Yes, offering quarter.

We it's to million window when given expect the BDC. XX open anywhere from to accredited any in trading XX

helpful. Thanks much. Okay, so that's

I'd over questions queue. like or this back no time, are there any turn additional speakers our remarks. At additional closing in to to the for call

future look for to quarters. Thank much support. forward and And you very reporting very time your Thanks we for your much. in

you. Thank

appreciate conclude participation. will That your We today's call.