Goldman Sachs BDC (GSBD) 8 Nov 242024 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 2024 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 of copyrighted Goldman BDC, Inc. audio cast material Sachs may duplicated, or reproduced and rebroadcast without not be our consent.

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

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

Austin. Good morning, third Executive for our Tucker Co-Chief for conference Miller, Chief you, XXXX our Officer; and David our thank Operating Matuszewski, Chief and Greene, Financial earnings with us I'm quarter joining call. Officer; you our Stan here everyone, today Thank Officer.

then call to the and And financial David activity off to environment more to it detail. in describe through overview the take finally, of turn then Q&A. market line current we'll call for performance us our our to by over and brief begin providing a handing our and I'll I'll the third Stan open quarter results. before discuss results Tucker the portfolio then

our results. get third let's to that, With quarter

X% income net quarter in per largely to the and to share was due quarter. relative per asset approximately the realized a $XX.XX, was investment losses and value $X.XX decrease quarter second which the of net NAV, Our share was net for unrealized

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

and election. Now sponsor M&A in second that further capabilities. this investors. with the LP in this drive XXXX. trillion in market higher GSBD respect third third private anticipate from these given broader facing in the M&A in participants of the of was platform anticipated pressure to equity trend, although factors volumes. to which took to quarter certainly M&A market dynamic a We has our overall with we conditions, and pause powder capital M&A We be will dry continue somewhat recover XX.X% the by to And activity growth the expect DPI by the as return muted benefited saw quarter. we driven $X.X that continued enhanced enhance fourth We volumes rebound private the year sponsor firms in earlier are a noted that quarter, to year-over-year equity to

platform Our quarter of Goldman the quarter XXXX. since second third the this quarter more and year-over-year past of GSBD than into private gross the is second largest integration Sachs originations doubled credit being deployment the broader highest with

credit fundamentals and We continue LTVs. new originate to low investments sound with

of end, $XXX XX% XXXX on quarter, originations. recycling and and the We're from in Finally, older our investments totaling older that million. harvesting XX% prior into To increased vintages. were payments activity our repayment sales new focused vintage

of and private to our opportunities. recycling consistently and Our by portfolio proactive new platform efforts originate our management are investment breadth attractive enhanced credit the

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

Thanks, Alex.

XX existing investment new we million new and $XXX.X approximately commitments of During portfolio originated XX companies. and the XX quarter, comprised

originations this that to mentioned, of XXXX. indeed first million, $XXX.X our reflect primarily of of the structure. was in XX continues investments platform activity the our to loans, since for in Sales in early portfolio capital highest XX.X% integration higher second and up Alex are originations As the our bias were quarterly GSBD lien level and and repayment investments maintaining the our companies. in driven primarily repayment of exposure totaled by refinancing which

rotate selectively we majority with also the their received book we and When an the sought quarter, portfolio legacy the in all attractive on recycling names, with mark. into or originations. a above to During sold out at of bid focus names new

within rebound over, in position the we into Goldman volume M&A will As believe lean for turn should the ecosystem we into activity continues Sachs our what portfolio to a be XXXX.

composition. portfolio to Turning

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

let our quality. quarter Tucker credit me investments it to over discuss and overall our this that, Chief Officer, With new to Operating turn Green,

Thanks, David.

to September to quarter investments average quarter compared debt-to-EBITDA the across of the The the companies XX the XXX net income-producing second slightly the our end amortized third XX.X% was QX. prior company average our during industries. companies cost compared the at our as and of weighted XX.X% of in was at X.Xx portfolio the investment increased from quarter. third end of yield compared XX, X.Xx weighted XXXX, during different cost at XX.X% as third portfolio weighted the and at portfolio debt at total of to operating The The amortize the As of of XX% the end held in to investment average quarter. investments yield quarter

year-over-year portfolio Importantly, growth a both EBITDA our and growth companies top have average weighted basis. line quarter-over-quarter on and

the of second during asset time, quarter. X.Xx X.Xx same quarter investment in current And in to quarter compared the increased companies finally, end average the at coverage turning weighted At third portfolio our interest the to to quality. the

accrual was restored were restructured to status the was [ another Earl remained During there portfolio position lien on companies. and ] Sight status on X accrual to for status. nonaccrual first and position lien first quarter, changes

we exited Apri the on of [ Additionally, previously nonaccrual which sale ], Intermediate, status also been had known company. through as a Zodiac

XX, of total of nonaccrual As XXXX, X.X% from to as X.X% investment at investments June September the and value X.X% of of portfolio total from fair portfolio to investment X.X% XXXX. to XXXX, June decreased on status amortize costs of XX, as XX, the

to walk I Stan turn over financial the will now through results. to our Matuszewski call

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

net of capacity the our of had to under $X.X debt end quarter target our of third ratio company's billion was principal amount of quarter available secured facility. equity revolving in X.XXx. we debt, X.XXx, credit which Our as of the end, debt outstanding continues was total XX.X% the leverage to At of and approximately ending be below unsecured

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

$XX.X GAAP $XX.X the $XX million million, million respectively, million, For the quarter. compared net investment prior and quarter, third as after-tax income in respectively, adjusted and to were and $XX.X

to GAAP equating for investment merger share X $X.XX per asset net QX due XX, was a in income of book Total connection the investment $X.XX, months an quarter XXXX, with net $XXX.X to was the income income primarily on $XXX.X the acquisition and QX. value On the the MMLC, share respectively. of total in incremental XX, million, adjusted The per investment increase investment XXXX, impact was deployment yield for ended net The basis, accounting income during million September investment excluding with income XX.X%. and and was June annualized

also we in at note of investment PIK XX, XX% second saw quarter as ended that a total income would during September per X% $X.XX the XXXX, recurring Distributions the the percent to consistent quarter XXXX. remained of third share. for decreased quarter We

Our income or share on approximately per $X.XX $XXX.X spillover is basis. taxable million a

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

prospects call. attractive pipeline using on Thanks of portfolio new opportunities the our by the excited Satan, focused into and turning Goldman earnings breadth over thanks, full everyone, our for the We're remain and Sachs joining platform.

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

question our [Operator Mark with first will from take We Hughes Instructions] Truist.

Thank recycling Alex, about you. effort. there do portfolio? Yes. the have you your spoken How improve more to opportunity much recycle,

we sales Yes. repayments. strong quarter We and -- a so had very of

had in we've quarter a year. largest over the it's heard, you As

of to able have in companies, portfolio in were XXXX earlier. all which were we full X at least or So originated exits

[indiscernible] the new of just M&A you the XX originations names repayments about well, further the we and recycling. just portfolio. diversified the portfolio, And we also coming. and outlook shift added good have strong about we in as So feel just very net We a which saw of had the also the we quarter good feel that's as given also pace

Understood. perhaps? have more much activity? portfolio? How expect How much about you in we seen repricing can the the How

repricing versus pretty saw in spreads quarter, activity so down across just of the came we the in as decent a just saw compress. earlier we also level But wave industry Well, saw that saw the we the flurry we spreads the and year. stabilize

to said may the still slow And would there having pricing we go. But of some that, to room expect so be pace down.

it immediately your to subjective the following air last anything just deal pertains you of impressions? like activity, Vibe Yes. as potential last feel energy curious And there's then election view, of do days sort the the in more your couple

obviously from circling been within community energetic participants We've in the And again, particularly and XXXX. Sachs bankers Post-election. talking the Look, the about in and been has optimistic M&A, all quite our feel people to pretty industry. sponsor the going market that's come of level and just exciting. to Goldman up other

think I to just speaking, be broadly continues optimism. just there So

our question with take will Hewett Derek of America. We next Bank from

of nonaccruals. credit, at on the on that looking question X. and totals what specifically a X X have that increased risk kind in shows saw with I it meaningful rated And despite reduction we Slide

some then kind credit where that decline? additional you seeing that you sectors So negative saw were any there and of on where color specific were could you provide migration

X thought risk reassign you underperformance the at And up look the that X rating continued some we rating due really, buckets, had throughout to a of it period-over-period. [indiscernible] ticked and to aggregate that name that our X X% to prudent X. it's quarter And really if around

provide the And you sector that was of could in?

the was business sector. services in It

was ARR or it to not health So related care.

next Robert Raymond with our James. Dodd take will from We question

normal like 'XX QX, to relatively the i.e., now election to be early kind the an of point a to soft maybe First, be going we're the on -- is for being muted, being mean, pipeline. 'XX that going and XXXX we expect still the early happen it be unusual. ? going to optimistic strong and it first about but because waiting that should you Instead is QX I it's [indiscernible] mean be of I 'XX? going in to the to or is half deals and

Thanks a really the good and joining Robert. It's for thanks question, question, again. for

look, up to would highly correlated pop M&A the it is a overall they're then that, for that processes so these volumes the as bit of expect out, deal that you said takes that, optimistic having get at quarter. to you actually to and going sponsor of to little And private Having opportunities play credit, we're companies transact we if deployment how first look But to any And time to be fund. a said absolutely activity. cycle in these know, about XXXX. M&A in

real our had activity. actual you when team in busy quarter. we expect going be to But deployment, quarter would to or of new if later likely assessing terms the pickup be it's to second guess, start the So first to in we a in opportunities see very

And it. on recycling XX ] older. then and recycling Got the [ you're

So assets I older the the as selection, a vintage, asset your about haven't we because adverse know be by good when question look more of more I been is those a right? than asset. how, hard portfolio as at concerned Should tricky really rid get is remaining it

vintages selection occur? are on -- some to you the adverse assets, recycling of the there with risk those the the that's going risk and older of if in how is concentration in dealing So

look, I of couple mean, the in No. very healthy activity Yes. of quarters, we saw last that. a

companies some will of next address continue as as when. M&A think earn those to We're you of these to those they'll Look, continue XX activity I know, line continuing the top as private higher some see earn back way they we'll see well out selection to and valuations then sell either some paid as the these valuations. growth now. EBITDA adverse pretty into months as concerned I'm not see issue the to equity multiples too kind should their that refinanced in from those I nice or it. you portfolio. firms we way over mean of get of with high play into

to do any back closing Chi have I call further remarks. questions. We for Alex to turn not would like the

joining Thanks, everyone, our the with quarter. end and speaking we at call, you of look for forward the to next

This Good concludes bye. you call. your for today's participation. Thank

You disconnect. may now