Goldman Sachs BDC (GSBD) 4 Aug 232023 Q2 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.

Second 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

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

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

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

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

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

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

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

from of net investment an was share quarter. XX.X% income for per quarter prior the increase the $X.XX, Our

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

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

share loans approximately portfolio of a to per an basis, focus our per was June the fair This lien to increase as attributable portfolio. increase quality investment gains quarter. well the of a as end first XXXX, increased $XX.XX for a as first Net to higher On share of XX.X% in June net quarter. the continued asset value investment on XXXX, XX, primarily as income increase XX, of of value modest X% the the increase unrealized from are of which speaks maintaining

markets resurgence progresses deal as increased of green year in see will the markets, address secured senior syndicated M&A privates to to continue in the with upcoming for private participation we reengage only we directly lien with quarter, visible first as the debt sponsors that broadly confidence shoots we volumes market refinancings, secondary a quarter, and take first This maturities. expressed invest In no originated in loans.

as the quarter, GSBD end year-to-date. XXXX, borrower. an of platform the quarter, has to part was since credit been broader involved XXXX. of towards in Fullsteam, of The In the repaid a the Of participated recapitalization second the of participated. and some company GSBD half and as activity, came the Goldman company saw level fruition, expectations which During the of with deal in note, activity initial second higher private continued tail a refinancing existing of the has GSBD increased Sachs we recapitalization investment into mainly our those of

GSBD that small business expected example quarter. software reset provide as us software this of close the the capabilities to recapitalization to Holding payment $X incumbency, match is market customers. to our environment. is businesses again and of most current and serves This billion recent to and in participated management allowing a an company's terms Fullsteam verticalized medium-sized that economics Company core

second able general, a an financial the of our by to new had where financing through credit Environmental higher is and buyout that equity and Sachs business GSBD Solutions able the common in Superior of In the the participate during the quarter. March was past offering second Goldman additional activity of advantage the quarter, take a origination repayment to another platform example in existing private capacity new was this created we're sponsor. we're that pleased investment position,

will We're now as continue to dry to look and more grow persist, deploy volumes of despite opportunities that strategic more companies than economic to what’s confident grown to that powder. seek more deal sponsors trillion continue overall $X uncertainties

me my So Co-CEO, turn it Miller. over with to let David that,

Alex. Thanks,

the in five During to four and new quarter, we existing investment new portfolio companies. million originated commitments XX.X

Our in million, senior Sales two by in full investments driven new companies. repayment investment portfolio and loans. were XX.X repayment XXX% primarily first activity of lien secured commitments the totaled

more allow new positions anticipated portfolio the with junior visibility in the within our leverage further lien of pleased half portfolio, of while date a in capital oriented first we of reduce a the across to Two to well companies. importantly, lien will additional redeploy opportunities, remaining year and targets. us currently in our these second handful the particularly repayments are have We of

composition. Turning to portfolio

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

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

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

Turning the declined to in the our X.Xx debt credit compared quarter. portfolio of quality. quarter-over-quarter weighted to average to net investment to EBITDA The companies X.Xx in first slightly

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

regard view on capital a have our our over We maintain deployment by risk and adjusted EBITDA to is insulated Just and importantly, had to credit top weighted in as lien to had return the that remain line companies basis. and year-over-year headwinds questions a average some and long-term both of first few credit you quarters, quarter-over-quarter growth selective macro in strategic perspective portfolio response past a orientation from risk. in and

coverage as The interest on our of to our curve. to a important weighted we QX or trailing our increase portfolio X.Xx, coverage to despite the in Were is calculate would use was rather the average calculation, compared yet metrics we then than that coverage basis. QX current ratios companies X.Xx. in which quarter based yield flat in quarter 'XX It investment LTM LTM companies our interest the note be and of SOFR again overall investment was at portfolio [ph] end 'XX, the an

asset turning quality. finally, to And

at at XX, as and portfolio positions last an the status As investment during placed XXXX, of total X of and costs, on amortized versus amounted non-accrual QX, fair and X.X% grade quarter X.X% that June two on as amortized costs, X.X% despite respectively, and of fair XXXX. were accrual X.X% March being XX, respectively, investments designated value to value

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

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

equity ratio of Our end ending QX same leverage be remained X.XXx. range the to debt continues at the our X.Xx, of level net of target below which at to

of remaining of capital ratios of us credit under allow the capacity facility. repayments, revolving adjusted principal will approximately unsecured in XXX opportunities end, leverage powder our facility secured company's and below available deploy debt, risk quarter our dry had range, our million With At attractive outstanding total was the in and XX% amount our debt in market. this targeted into current to aforementioned the credit

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

the in was as and increase top income was prior compared rates. after-tax net investment adjusted primarily in and $X.XX were and increase the million, million, respectively, share income basis, The XX.X in adjusted as GAAP quarter. investment million income QX, $X.XX line base and was last XX.X per $X.XX, net On XX GAAP $X.XX and respectively, compared to due to XX.X respectively, a net For quarter. investment quarter-over-quarter million to investment income

quarter impact our that to calculation. limited could due incentive the being QX be elevated and amount the a of included Those the reminder, meaningfully XX-quarter during trailing As last COVID-XX incentive was period. XXXX from removed initial fee fees the results results from earned of

XX-quarter the XXXX, quarter, impact period. removed inverse rebound effect COVID-XX the QX trailing current from which the saw we which For results the the from during of the included

the remain at consistent quarter during Distributions $X.XX.

Our continuous as million approximately we share asset XXX.X June per to our spillover provides income or XXXX inception. compared was $X.XX dividend $XX.XX on basis, $XX.XX Net a stability per which last on X, quarter. believe share taxable since is on consistent value

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

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

As continue time will new us along encouraged attention appreciate your activity today. and allow to with investment mentioned, attractive increased the repayments deal capturing opportunities. We we're

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

with Thank first Instructions]. America. you. Bank go we'll Derek of Hewett [Operator to And

the looking run rates, or record suggest factor could on plus everyone, at the rate half near be first in this most kind the have you year my earlier that morning, you about to earnings. core question of of good accelerating for the and It would quite originations? earnings now remind earnings, described you Good time dividend quarter. the flat dividend and because me at peers has is core increased in first some rise when some terms Maybe policy, additional the been could given that just tailwinds congrats dividend degree, the especially of

thanks morning for the Good and question.

in of what we is. our maintain we policy, about to dividend fixed As terms think like our stability

inception. remained since we've $X.XX So at

we think how work. in does to certainty that level policy I want our dividend of maintain terms of

special, and that is the opportunistic to evaluating be we're with it extent a we’ll a special long-term future sense and looking accordingly, that will to the manage taking how our the rates, issue the sheet terms what makes In sense balance makes shareholders. at potentially view balance we're to and of but our from a the road, spillover of best shareholder for sheet perspective continuously assess and down something what run

then, And about risk the there Slide on migration it a basis. looked a like a level was to X X prospect at at talk Could significant you of looking from potential or X versus risk that quarter-over-quarter category move X, further somewhat category? sizable least Okay. and of that migration

Sure, and thanks for the question.

by discussions really couple So were with pressures were facing the active we the driven in names a during that sponsors during that liquidity the some quarter. quarter. migration And of was

gotten we to thought meeting respect category our you've unresolved, downgrade X. category them how categories. investments X look was to we was ratings these for because I at us, prudent conservative companies. those to with And we to We quite support it think were But to know expect it

So them hopefully resolved are shortly, appropriately. reflect on as as those soon situations we'll

what have terms my it It in just just the terms terms like And more book. is in legacy the leverage last your of Okay. to describe of How then currently are you today terms existing attractive than portfolio? pipeline. relative the even would yield in the and seems question you

is Yes. Certainly, in comparison. the attractive credit book, a we're seeing XXXs. very now compared today the terms seeing market on still The we're to in private right legacy average are that that spreads

driven credit companies. private We spread the the have the tick sponsors higher continue legacy their lower that, versus borrowing dynamics given you some the costs said that quarter-to-quarter, just as But still levels with really supply-demand leverage having the to market. leverage are levels that's saw seen compression in down. face portfolio by book, And

created yields that, said And is position capacity legacy very excited so having we've our now, investments the which book, are make right overall new we're current about the in why attractive where environment. quite versus to the

enough that activity activity. of saw, due repayments increased of visibility you saw are As And we amount significant we quarter. an level into a in already payment coming to have the

probably see from of put can You into that category the that companies we rating number increased X.

to reinvest yielding be investments going opportunities. into attractive legacy we're and more repay to much them those So able

that, pick of of our on quarter at add into Particularly the picked that we're And quarter, activity pretty just end third pipeline up. top the dramatically. I up picking seeing the up, pipeline second has would going the is

of a number reinvest that capital we over So we’re the attractive very look opportunities seeing investment into forward quarter. as to

you. Thank Okay.

you. Thank

Truist We’ll go Securities. next to Fritscher Maxwell with

I’m in BDCs? I had if any increased or I appetite the a lenders. calling their Mark broad been have to about has experience maintained question facility. Good living morning. with Hughes. banks what today credit was for that And wondering your recently you've noticed just towards

you question. good and for morning. Thank Yes, the

facilities. in credit same terms and We've about then As across how repeat all who's we and banks we that syndicate launch kind our corporate a think in four book wide platform had involved have with it revolvers relates bank we our leading associated the underlying of different are with to it, our it. of facility,

dialogue we've we’re our using across the feel and comfortable us with and long-term have fostering and active dialogue with who's a who So platform. continued financial active with to involved been board that and continue providers have allow our relationship with them and pretty relationships to the

wondering you. interest Xx the ratio. Thank And the I portfolio for X.Xx. could coverage the that companies under if ratio percentage interest that mentioned was for the were weighted of the provide companies average coverage you you

X%. Yes. it And for weighted was average, roughly

have. I Thank Okay. all you. That's

We’ll Raymond go James. Adams with next to Sean-Paul

and little your already interest the a on to have joined higher? call said. I percentage as of your morning. Xx, the of portfolio a companies an trading total and the of you But late. rate apologize views I number is Good environment that coverage can little generally below interest the shed trend bit coverage if light this bit guys. on continues guys Hi,

Yes.

first the question, part your roughly X%. under is of for So around X

the calculated, which which stable, right current the it's of remained part we've prior On driven coverage X.Xx the second just part And is by quarter. with the flat at is interest that way is was quarter.

we coverage costs. to That's So underlying an a interest line the look expect both EBITDA companies, also you on a forward to top in conjunction increased going on take quarter-over-quarter continue change a and perspective. from if much at grow wouldn't basis borrowing basis portfolio support they

Thank it. you. I appreciate Got it.

Thank you.

further no are there time, this at And questions.

and for weekend. our everyone, have joining great you, Thank call, a

everyone. you, Thank