Goldman Sachs BDC (GSBD) 4 Nov 222022 Q3 Earnings call transcript

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

Third Quarter 2022 Earnings Conference Call. [Operator Instructions] Before we begin today's call, I would like to remind our listeners that today's remarks may include forward-looking statements. These statements represent the company's belief regarding future events that, by their nature, are uncertain and outside of the company's control. factors, and indicated may as the in of number results from possibly a company's actual from a is described what those of SEC company's filings. financial time differ, condition materially, result time The to those in including forward-looking statements This is consent. of copyrighted Goldman and BDC, Inc., our audio not rebroadcast be without cast may duplicated, material Sachs reproduced or which press can market Investor closed, includes found www.goldmansachsbdc.com, presentation, the release earnings and GAAP to measures the an earnings at posted of most after reconciliations homepage Yesterday, both Resources the directly measures. issued of be on website which of comparable supplemental a company non-GAAP the section, our and the under report XX-Q SEC. These with the on yesterday documents be company's Form in should filed reviewed conjunction with quarterly the being This today, conference X, Friday, purposes. replay XXXX, is recorded call for November call Chi, now to will Executive I BDC. over the Sachs of Officer turn Goldman Alex Co-Chief

it results. in our results, for to the through before line hand our we'll call of quarter David third I'll us current Good third Officer; Officer, more market I'll brief joining Gabriella Pessah call and finally, take financial then Pessah, Austin. Co-Chief the Executive our thank David you, to Miller conference everyone, Chief over Financial discussing activity, open to today our a we my portfolio David Q&A. begin by for here Operating before Chief earnings environment David detail. to overview I'm quarter over Skirnick, the providing you morning, turn with Thank And our and Miller; for Officer. the us describe call. our

share $X.XX. results. let's Net that, get third with to investment income quarter per was So our

an accretive This with net net XX.X%. of investment with yet during have yield quarter. to the in impact book income the uptick increases Nonetheless, $X.XX on in a income rates pronounced equating per MMLC, not reflection expect in seen impact this connection rates earnings. of is for the of the asset accounting, higher was quarter value the be base the and largely Excluding annualized adjusted to share, further investment returns acquisition full we merger of to

announced shareholders spreads. dividend as in the closed XX, September value quarter. market increases the from to This record and Board XX, to of per decrease to was XXXX. of markets, positions credit the to markdown payable attributable we as yesterday, per X.X% end primarily volatility a declared a of share Net $XX.XX December $X.XX decreased As second approximately the of after per share certain share asset decrease unrealized losses, of capital overall to reflecting our

shut, our their contributed exhibit largely capital private as Although borrowers wide have funnel has the the remained pleased ability syndicated finance continue market selectively, to loan of to with flow [poly] turned we to deploy market be increasingly credit market continues has benefiting to deal the from platform's we The conditions, a to volatile opportunities. only deals. that to which see

the Despite focused also with X enhanced companies existing on add-on and activity, able a significant which As CoreTrust. a been protections sponsors. in This platform's we have more have and while a was transactions highlights evident amount incumbency and and such our of during CSI strength ICIMS, in Intoxalock, quarter, we original deals. discounts issue deal been overall, result, to widened, our garner investor environment muted flow have spreads

ICIMS, departments, we to on growing lender been for company a XXXX. company since software HR solutions steadily have First, a the

solutions a investor. reflects having financial with to for This quarter, The with preferred company provider new along we provided attractive credit, top-tier position of minority advantage a a an the incumbent sponsors. the capitalization transaction in through being commitment lending concurrent an

new the company's sponsor/owner, of a we to XXXX. by a lender been interlock the role company. the meaningful And have LBO provider company leading since our ignition lender the continued we as during a Intoxalock, financing Second, to devices, recent

organization, group Loan are transactions a Fund Finally, partnered our bank with and X credit family sponsors let each and platform, enhanced With as clients Senior CSI, to it Miller. with financial software broader CoreTrust, processing over a our integrated my long-standing of reflected that co-invested our that, David capabilities the platform, me GSBD turn platform. purchasing alongside origination private Co-CEO,

Alex. Thanks,

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

Our X loans. first senior portfolio million, of in repayment of the focused new and by of companies. by primarily million senior structure investments capital activity $XXX the $XXX on most remain repayment driven the with secured Sales lien investments million $XXX parts the totaled capital full

Turning to composition. portfolio

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

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

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

credit asset on remained to average our in quality. where turning in weighted It's QX to quarter. would the at calculation, a And ratio coverage The of Turning X.Xx was X.Xx LTM the our X.Xx The quarter prior to our versus weighted end. the use calculate we to note LTM quarter coverage quarter then the trailing important our end rather X.Xx. metrics average or than basis, that portfolio we ratios current at be portfolio companies coverage from finally, interest based net of investment debt-to-EBITDA at quality. companies in flat investment

XXXX, cost, fair amortized respectively. September X.X% of investment As amounted status XX, to nonaccrual and total portfolio and value the X.X% on investments of at

nonaccruals is Importantly, walk primarily With that on to for the Pessah time. our financial our I'll call of to increase been focus slight David to some now list over have names that, turn a attributable period through in the results.

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

increased ratio Our X.XXx debt target which equity slightly quarter, of from net above level ending to is last X.XXx X.XXx. our to

market secured the amount company's and end, quarter debt. available down million $XXX outstanding of At was of total metrics our Our bring in facility. we of to targeted over XX% debt credit remains leverage principal under the leverage revolving intend same, subject profile was to our time, unsecured capacity conditions.

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

respectively, investment primarily quarter. QX, above compared were increased was million, $XX.X million investment respectively, our were resulting the our and $X.XX, fees to as net was benchmark The NII Moreover, $XX.X basis, $X.XX prior in also $XX.X increase to policy and as losses by $X.XX share due last GAAP to income unrealized floors. For comfortably benchmark adjusted to in income million, and quarter-over-quarter per On net million respectively, investment markdowns. compared rates, of limited incentive and due GAAP and income in $XX.X income enhanced GAAP usual adjusted $X.XX after-tax net from net which investment was the a was quarter.

was value QX, net price proceeds Distributions million. totaled that, of XX.XX, approximately to program last Net XX.XX at With underwriting asset of offering resulted $X.XX. on operating of in XXX,XXX the During share as at-the-market turn we our to $XX.X shares million, quarter. remarks. issued quarter average which and costs I'll an back share $X.X per XX.XX Alex of through net for XX compared during closing it September

joining Thanks, David. you for In call. conclusion, all us our on thank

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

we'll Instructions] Finian [Operator go And O'Shea Fargo. first with Wells to

do perspective, interest but them. share spend here fixed book, those that perhaps ratio. high-level push to First for for as there's holistically you current and on could software information from, companies question, charge David. wondering a I the a you coverage, color of appreciate. gave of or go up able pressure your including spend there, interest on sort not say, we'd And for you pull if bit are and Maybe more what I understanding particular? liquidity in was appreciate the would whatever rates up-to-date

the for Fin. question, the out break Yes, we it separately don't by portfolio. Thanks

break aggregate we So that's number an out. that

declined I lot is calculate it to as our perspective. think think way I we of coverage But the the X.X. point it trying X.X interest peers make that we LTM were from here an to used a

we in don't that individual X.X. But out the industry on we're put living. to perspective break wanted just it I So via

A nonaccruals. Fair enough. Okay. follow-up the on

and group, valuation list these idiosyncratic put valuation taken are or that quarter? was sort nonaccrual environment? Or sort were this operational mentioned Just it it it events guys watch operational? to a Is the grade or as sort therefore names. lower on of -- You piled down sort due was were or on they, of of of that there

absolutely are about it's for spoken. have your put time. quite ones time. been We've these some But that Fin, some The in I operational names to past. the this think we that on, has question, valuation right. for environment you're focused question. talked Alex. that Thanks the And quite experienced These the on names for have issues are

a just of the looks another is And then and conservative look at where those taking so going shake more this to environment taking us with out. what a are like just respect just to view function

really And so what that. that's drove

time, this questions. further at are there And no

forward well, updates and on future Okay. With the quarters. GSBD we that, the thank very much, look giving you in to

you. Thank