Goldman Sachs BDC (GSBD) 5 May 232023 Q1 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.

First Quarter 2023 Earnings Conference Call. Please note that all participants will be in listen-only mode until the end of the call when we open up the line 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

and materially Sachs from a This our copyrighted result not The may reproduced a SEC number may indicated and filings. results including of BDC, time those from those material or in factors, possibly company's described in as company's is is to duplicated, that of audio without statements financial forward-looking Inc. cast of Goldman what time actual be differ, rebroadcast condition the consent.

the conference Yesterday, to filed the measures after in which reviewed the on with issued Investor non-GAAP measures. which GAAP include most with XXXX, Relations today, comparable for yesterday page of press should market supplemental purposes. home both the closed, the is release Form a the and section, of These quarterly and earnings replay our be on presentation documents of company posted reconciliations This website Friday, May the under call earnings www.goldmansachsbdc.com, report XX-Q being found X, company's be can an recorded conjunction directly SEC. at

the BDC. Executive Chi, to over of Goldman Officer Sachs turn Alex now I'll call Co-Chief

Thank us call. quarter you XXXX Good everyone, earnings for you, Austin. for and thank conference morning, joining our first

Officer; today here Pessah, David and our Operating Gabriella with Chief Chief I'm my Officer. our Co-Chief Miller; Executive David Skirnick, Financial Officer,

portfolio open first us hand financial overview David David environment our for to turn take And brief through I'll describe call in then line a we I'll it Q&A. Pessah quarter finally, before results. to begin detail. the discussing Miller before to the by call we'll our current to our more the of results off the market providing activity over

with let's results. first get to that, quarter So our

the for share per income was quarter investment net $X.XX. Our

investment a of net rates income to MMLC, was the in net of with value in book of an share $X.XX yield increase per equating impact for in adjusted the during merger reflection acquisition quarter asset the income is annualized XX.X%. quarter. investment The largely increase connection Excluding the with accounting on the returns base

after record This our Board share of IPO, quarter special June closed announced declared XX, as shareholders dividend share we per a the per per paid XXXX in of the to of our MMLC. payable the company's XXrd the the since share XXXX. As merger totaling $X.XX $X.XX marks a dividend with excluding dividends we consecutive $XX.XX post yesterday, market

marketing share $XX.XX more approximately was in lien of current junior loans fair to share non-first the XX, of the per withstand value decrease which fourth assets of asset leaves a to of quarter. potential end X.X% from of per to This the decreased unrealized as Net XX, decrease losses headwinds first a March positions. basis, attributable in lean value as March XX.X% well-positioned On are us and environment. primarily

the we our have quarter, investments. within on secured stated we sourcing first As last senior pipeline lien an emphasis

opportunities also continue in originated participated dedicated loans. remain market and the for credit have syndicated to private We to directly secondary broadly not

public share, follow-on this on will at offering NAV more offering in above of price which below. in a an During completed detail per David expand common proceeds the cash quarter, we million. $XX.X net stock of resulted accretive

quarter, banking the quarters further This Goldman take Sachs view increasing transactions likely as with is environment from continued strategic have divestitures, informed as increased as a coming corporate the crisis may the believe Despite as or headwinds our dialogue recent well actions, secondary banking colleagues. such we macroeconomic as well more pipeline LBOs. activity through investment private regional the by we close as with media deal deal coupled witness volumes the of uncertainty the that result during

David Miller. me With over let my Co-CEO, turn to that,

Thanks, Alex.

commitments, portfolio amount part half primarily investment one During half existing in one in to a portfolio investments of the to new as investment quarter, we of company, new and follow-on originated finance the to new million company activity. $X.X M&A

loans. in new commitments Our lien secured a senior investment were XXX% first

repayment full million, Company. the repayment primarily activity by by one Portfolio $XX.X investments totaled and of driven Sales

full was We position are pleased was was was and Tronair at us repayment as on December par. XX for quarter watchlist three XX matrix. a previously to Of at risk a by was and note note, that this name a end of which that our repaid Tronair marked

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

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

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

X.Xx to to our slight end decrease The of Turning investment debt the quarter. quarter fourth the weighted of EBITDA in average at net portfolio X.Xx quality. from the at had end to a companies credit

anticipate Given reflect and future lower we of metrics. would leverage base rates, transactions the originations should level that existing

both portfolio response on growth quarters, some have to companies Just past and as had you had in and with of year-over-year quarter-over-quarter headwinds EBITDA basis. macro a your regard and to few importantly, the top-line questions our over

earlier, in management deal expect future coupled we and seize dry throughout activity shareholder activity. muted current quarter. Nonetheless, sponsored discussed powder was pipeline to with the Alex drive the to As activity active marketplace opportunities

credit coverage at companies quarter to The was our and We remain return view the our to risk risk. was lien investment that credit flat quarter. average by maintain and X.Xx, long-term portfolio first strategic deployment interest end selected on perspective adjusted in insulated a prior from which a weighted relative capital is orientation our of

based calculate than It's important current of investment to metrics a to note Were an in on quarter ratios basis. trailing LTM portfolio use the ratio would be coverage that rather companies X.Xx. LTM coverage our we or our our then calculation, we

asset to quality. turning finally, And

December amortized As amortized of X.X% value on and XX, fair XXXX, X.X% position position. we one of status March investments portfolio non-accrual We non-accrual and ended XX, one exited had of removed on Company to the respectively lien junior the amounted as non-accrual X.X% fair cost placed from respectively investment XXXX. non-first as status quarter Portfolio and total versus at the and and value X.X% at cost

I to through Pessah now over turn call to the will walk results. David our financial

you, David. Thank

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

quarter. Our X.XXx ending equity net X.Xx to debt last to from ratio decrease

on opportunities of $XX.X opportunistically cash public risk in used offering reduce follow-on attractive offering current into market. completed NAV which million, The to stock above lowered the adjusted As in offering price X, Alex The our we proceeds resulted an deploy capital a at us allow mentioned to levels common accretive of we net March per share. leverage leverage.

million of XX.X% At and under secured available company's debt credit unsecured our of facility. quarter total capacity in amount end $XXX revolving outstanding principal was of the debt was

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

the in $XX and in million top-line investment due income For QX, was GAAP was increase $XX.X million, the and increase in million the our due rates. to fee. and quarter. were investment primarily as prior to after-tax adjusted compared respectively The respectively, income investment million, incentive in income The net net in decrease increase benchmark $XX.X quarter-over-quarter $XX.X to

our fee offset reminder, investment back is resulting markdowns fee calculation any based unrealized incentive on quarter inclusive a losses total limiter from look pre-incentive a a income. XX where return of net As

which could results from removed the For amount earned limited quarter impact fees XXXX the meaningfully be COVID-XX were from initial of calculation, the of incentive included the results voluntarily that period. XX, and orientation during period current to XXXX, including we from being March quarter trailing and commitment waived friendly. shareholder during our XX ended our exemplifying that of the portion same quarter fees QX a the Further,

GAAP basis, share to $X.XX per $X.XX, and investment income last investment a income net adjusted as $X.XX net respectively quarter. On was and compared was $X.XX

which stability basis, income $XX a share Our consistent continuous on inception. dividend provides or is since we per spillover taxable believe $X.XX million on approximately our

to $X.XX. share as Distributions value asset during last $XX.XX XXXX the Net XX, $XX.XX on was March totaled compared quarter. quarter per

With to Alex that, for I'll back it closing remarks. turn

David. Thanks,

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

encouraged opportunities by transaction are this While us leverage Moreover, pipeline as profile environment was again green the improved time muted today. as to evolve. quarter, begins developing your we capitalize improve. to deal shoots on and appreciate new attention We our some allows volumes our

that, line open the With for Q&A. let's

Instructions]. [Operator

first we will from Hughes Mark our ahead. Truist. take And with go Please question

on maturity facility changes wonder your sheet? me you credit refresh to balance your could on very if there you Thank of much. kind any you I your schedule Yes. on motivation your make on debt, any

Mark. morning, is Dave This Yes. Pessah. Good

secured Looking maturity a have debt facility of at our revolving XXXX. a credit senior stack, we has date that

our we're we'll our given market the January between due On assess a want we two notes At market is, XXXX come They be in to notes, the I the the we'll reenter XXXX we one, don't I event, think and Where again to secured of really unsecured. to think market where in continue want side, but of and will. a to levels of at liquidity mix and unsecured profiles needs. anything, this Right the right do and where and have now, the opportunistically, liquidity we XXXX. point is notes. unsecured XXXX assess February time, going in we

any obviously sense spreads, QX. now Makes activity of then, sense. in And low was deal

little building. you leverage, spreads? How when things lower, I both described but what might we characterize I mentioned think anticipate start on you you the a look would you to would be just to here. think more happen pipeline

joining fact and for as described, for have Mark, it’s as elevated environment leverage also attractive the the know, base attractive just Hey, levels thanks leverage gone given deals And come up and levels to up. on while hold Thanks continued the Look, at to continues Alex. very on you average very multiple that call. enterprise down have the down, be all levels. value have have rates question come we the

they so amounts And debt of in have down. the companies that certainly those terms service to can come load these have

pressure part in very into for out attractive spreads. back on At spreads spreads very quite moment quite time; spreads. will hold most some the still to low attractive. attractive point, to start just some point, say the well not we're XXXs. go the deals deal the for your I I seeing terms there healthy low me up of levered, in to giving be They're I a are surprised over very, you to all But would again, are pipeline would Look, that the that still spreads still can we're extent there, well. moment. see continue to but levels, know normalized more very LTB some

assets to add I It's are just XX.X. that look even attractive OID spread to you out there, slight might down attractive seeing the Yes. perspective, XX what XX was from plus an going from very David. for compression really

that talk So year M&A hopefully we market credit. very can opportunities bankers, they've a and and you advantage stay up private picks they attractive as where M&A of when got of investment are our pipeline for spreads take we do into go decent we an anticipate OID, the to

anywhere, any of coverage one in you've And final growth -- deceleration have so seen that non-obvious portfolio, within interest anything obvious that that if market portfolio? are some of end maybe sort one, you performance a a a curious if up different the may perhaps seeing your signs be showing not little within little is or more -- where just

don't we notice and broad our market themes side look say Yes. from be first take Look, it's at But specific. I wouldn't any there. when slowdown activity. portfolio, noticeable very there's a end trends specific very a any company we going to

companies with well and perform continued to year-over-year, growing continue top-line -- EBITDA quarter-over-quarter. portfolios Our both

feel about we So that. good

and revenues one And growing that are year-over-year. quarter-over-quarter, trend potential we're is still although other seeing the fact EBITDA

companies margin think face not I to is as as as EBITDA just top-line some quickly pressure. growing continue

the seeing across we're slight than of portfolio, no just so And other that, trends. compression but a notable margin bit

Instructions]. [Operator

go We ahead. Arren will go to Please next Citi. with Cyganovich

Thanks.

the of Your interest something prior with of quarter I moving non-accrual there would've income a reversal increased bit Is elevated? or in slightly interest there quarter-over-quarter, in somewhat base expected the the more given one-time -- there, but rates. that anything little nature was kind was

names non-recurring quarter from quarter quarter quarter quarter-over-quarter. did really terms some current a non-accrual was this income Repayment prepayment Nothing last That from Last activity. $X that's repayment in sizable. couple have this of muted. about was reversal of from of million change was activity pretty that the activity that, in

If at $X.X about current by increase quarter-over-quarter look did you our levels million. that

So that's flat it's side non-recurring making really the it change period. in period the over look

they then green any you're be -- for investment these clients kind these Got it. how that are shoots And would normally banking or what seeing terms finance? they All to Are M&A pipeline, traditional right. of Thanks. pull-back from how kind of natural of or seeing you in might normal, your looking arising? more alternatives just the in are follow-ons where relative

a question. good That's

I couple think that's a things.

M&A. you sponsor as driven activity, First, large by know, it's with to part in respect our

certainly say more we're from levels deal the green are we're seeing muted community. the year that prior seeing the shoots flow overall fact are still that Although, sponsor versus

powder to and know, the sponsors amount you As at of levels. sit that record dry have continue

I there's stability that think market. a now bit in the more

think activity as more going unleash that's M&A more out I there. confidence there's that's to

factors starting see we're activity. to and some And and for -- so more those

activity. I skew I more more some towards to private going the think as larger see you're side, think take we

value You're going out to also liquidity that are are for see of some creation. companies more more that divestitures looking coming public

So going flow. we're for reasons, see all I those some to deal additional think

portfolio addition, add-on companies see In opportunities. to the existing attractive very continue

to more from So flow we're see that starting deal perspective.

starting given I activity, more platform as shoots our the that tell some us backlog investment given dialogue to broader to institution, we're reasons, those our green and that just all even continue for we their know, of we're you our given they continues part have So think increase. with see that to seeing bankers,

for flow half. I so that second And better environment deal in sets up the think and a that well

Yes.

seen there, from of As we've far as some issues regional and few a on the banks the opportunities that. going

opportunity I the middle taking around think some which we for early of we're set -- days, in regional banks, about in at the are the standards well bode opportunities credit optimistic should credit market. some

Instructions]. [Operator

it appears for remarks. questions I turn And this to additional back we closing the at no or any today's will time. conference over have further speakers now

weekend. for our very and attending Thank much you great call have a

concludes this you for participation call. And Thank your disconnect. may now you and today's