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Goldman Sachs BDC, Inc. Reports September 30, 2019 Financial Results and Announces Quarterly Dividend of $0.45 Per Share
[November 07, 2019]

Goldman Sachs BDC, Inc. Reports September 30, 2019 Financial Results and Announces Quarterly Dividend of $0.45 Per Share


Goldman Sachs BDC, Inc. ("GS BDC" or the "Company") (NYSE: GSBD) today reported financial results for the third quarter ended September 30, 2019 and filed its Form 10-Q with the U.S. Securities and Exchange Commission.

QUARTERLY HIGHLIGHTS

  • Net investment income for the quarter ended September 30, 2019 was $0.47 per share, equating to an annualized net investment income yield on book value of 11.1%;
  • The Company announced a fourth quarter dividend of $0.45 per share payable to shareholders of record as of December 31, 2019;1
  • Net asset value per share for the quarter ended September 30, 2019 was $16.98 as compared to $17.21 as of June 30, 2019;
  • Gross originations were $172.5 million, comprised almost exclusively of first lien debt investments. Sales and repayments activity totaled $240.7 million, including $82.3 million from junior debt investments;
  • As a result, the Company continued its multi-quarter trend of improving its asset mix by increasing exposure to first lien debt investments, while reducing exposure to junior debt investments. As of September 30, 2019, first lien debt investments comprised 72% of total investments at fair value.2

SELECTED FINANCIAL HIGHLIGHTS





 

 

 

(in $ millions, except per share data)

As of

September 30, 2019

As of

June 30, 2019

 

 

 

Investment portfolio, at fair value2

$1,430.2

$1,533.7

Total debt outstanding3

$731.8

$847.3

Net assets

$684.8

$693.4

Net asset value per share

$16.98

$17.21

 

 

 

 

Three Months Ended

September 30, 2019

Three Months Ended

June 30, 2019

 

 

 

Total investment income

$36.9

$38.4

Net investment income after taxes

$19.0

$19.1

Net increase in net assets resulting from operations

$8.9

$16.1

 

 

 

Net investment income per share (basic and diluted)

$0.47

$0.47

Earnings per share (basic and diluted)

$0.22

$0.40

Regular distribution per share

$0.45

$0.45


INVESTMENT ACTIVITY2

During the three months ended September 30, 2019, new investment commitments and fundings were $172.5 million and $145.5 million, respectively, including net fundings of $6.5 million in unfunded prior commitments. The new investment commitments were across ten new portfolio companies and seven existing portfolio companies. New investment commitments were comprised of 98.7% first lien debt investments. The Company had sales and repayments of $240.7 million primarily driven by the full repayment of investments in nine portfolio companies.

Summary of Investment Activity for the Three Months Ended September 30, 2019:

 

New Investment Commitments

Sales and Repayments

Investment Type

$ Millions

% of Total

$ Millions

% of Total

1st Lien/Senior Secured Debt

$170.3

98.7%

$158.4

65.8%

1st Lien/Last-Out Unitranche

0.6

0.4%

56.1

23.3%

2nd Lien/Senior Secured Debt

1.6

0.9%

26.2

10.9%

Unsecured Debt

-

-%

-

-%

Preferred Stock

-

-%

-

-%

Common Stock

-

-%

-

-%

Total

$172.5

100.0%

$240.7

100.0%

PORTFOLIO SUMMARY2

As of September 30, 2019, the Company's investment portfolio had an aggregate fair value of $1,430.2 million, comprised of investments in 102 portfolio companies operating across 35 different industries. The investment portfolio on a fair value basis was comprised of 92.5% in senior secured debt investments (74.9% in first lien debt (including 2.5% in first lien/last-out unitranche debt) and 17.6% in second lien debt), 0.5% in unsecured debt, 3.5% in preferred stock and 3.5% in common stock.

Summary of Investment Portfolio as of September 30, 2019:

 

Investments at Fair Value

Investment Type

$ Millions

% of Total

1st Lien/Senior Secured Debt

$1,036.8

72.4%

1st Lien/Last-Out Unitranche

35.3

2.5%

2nd Lien/Senior Secured Debt

251.2

17.6%

Unsecured Debt

7.1

0.5%

Preferred Stock

49.7

3.5%

Common Stock

50.1

3.5%

Total

$1,430.2

100.0%

As of September 30, 2019, the weighted average yield of the Company's total investment portfolio at amortized cost and fair value was 8.3% and 8.9%, respectively, as compared to 8.7% and 9.4%, respectively, as of June 30, 2019. The weighted average yield of the Company's total debt and income producing investments at amortized cost and fair value was 9.1% and 9.7%, respectively, versus 9.8% and 10.5%, respectively, as June 30, 2019.4

As of September 30, 2019, 97.9% of the Company's debt investments on a fair value basis bore interest at a floating rate.5

As of September 30, 2019, the weighted average net debt/EBITDA of the companies in the Company's investment portfolio was 5.4x versus 5.5x as of June 30, 2019. The weighted average interest coverage of companies comprising interest-bearing investments in the investment portfolio was 2.4x versus 2.3x as of June 30, 2019. The median EBITDA of the portfolio companies was $37.7 million versus $35.9 million as of June 30, 2019.6

As of September 30, 2019, investments on non-accrual status represented 1.0% and 1.4% of the total investment portfolio at fair value and amortized cost, respectively.

RESULTS OF OPERATIONS

Total investment income for the three months ended September 30, 2019 and June 30, 2019 was $36.9 million and $38.4 million, respectively. The decrease in investment income was primarily driven by a decrease in prepayment-related income. The $36.9 million of total investment income was comprised of $35.1 million from interest income, original issue discount accretion, payment-in-kind income and dividend income, $1.3 million from prepayment-related income and $0.5 million from other income.7

Total expenses before taxes for the three months ended September 30, 2019 and June 30, 2019 were $17.4 million and $18.9 million, respectively. The $1.5 million decrease in expenses was primarily driven by a decrease in incentive fees. The $17.4 million of total expenses before taxes were comprised of $9.9 million of interest and other debt expenses, $3.8 million of management fees, $2.3 million of incentive fees and $1.4 million of other operating expenses.

Net investment income after taxes for the three months ended September 30, 2019 was $19.0 million, or $0.47 per share, as compared with $19.1 million, or $0.47 per share per share for the three months ended June 30, 2019.

During the three months ended September 30, 2019, the Company had net realized and unrealized gains (losses) of $(10.1) million.

Net increase in net assets resulting from operations for the three months ended September 30, 2019 was $8.9 million, or $0.22 per share.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2019, the Company had $731.8 million of total principal amount of debt outstanding, comprised of $576.8 million of outstanding borrowings under its revolving credit facility and $155.0 million of convertible notes. The combined weighted average interest rate on debt outstanding was 4.35% for the nine months ended September 30, 2019. As of September 30, 2019, the Company had $216.2 million of availability under its revolving credit facility and $11.1 million in cash and cash equivalents.3,8

The Company's average and ending debt to equity leverage ratio was 1.22x and 1.07x, respectively, for the three months ended September 30, 2019, as compared with 1.11x and 1.22x, respectively, for the three months ended June 30, 2019.9

CONFERENCE CALL

The Company will host an earnings conference call on Friday, November 8, 2019 at 9:00 am Eastern Time. All interested parties are invited to participate in the conference call by dialing (866) 884-8289; international callers should dial +1 (631) 485-4531; conference ID 6266975. All participants are asked to dial in approximately 10-15 minutes prior to the call, and reference "Goldman Sachs BDC, Inc." when prompted. For a slide presentation that the Company may refer to on the earnings conference call, please visit the Investor Resources section of the Company's website at www.goldmansachsbdc.com. The conference call will be webcast simultaneously on the Company's website. An archived replay of the call will be available from approximately 12:00pm Eastern Time on November 8, 2019 through December 8, 2019. To hear the replay, participants should dial (855) 859-2056; international callers should dial +1 (404) 537-3406; conference ID 6266975. An archived replay will also be available on the Company's webcast link located on the Investor Resources section of the Company's website.

Please direct any questions regarding the conference call to Goldman Sachs BDC, Inc. Investor Relations, via e-mail, at gsbdc-investor-relations@gs.com.

ENDNOTES

1 The $0.45 per share dividend is payable on January 15, 2020 to holders of record as of December 31, 2019.
2 The discussion of the investment portfolio of the Company excludes its investment in a money market fund managed by an affiliate of The Goldman Sachs Group, Inc. As of September 30, 2019, the Company did not have an investment in the money market fund.
3 Total debt outstanding excludes netting of debt issuance costs of $4.1 million and $4.5 million, respectively, as of September 30, 2019 and June 30, 2019.
4 Computed based on the (a) annual actual interest rate or yield earned plus amortization of fees and discounts on the performing debt and other income producing investments as of the reporting date, divided by (b) the total performing debt and other income producing investments (excluding investments on non-accrual) at amortized cost or fair value, respectively. This calculation excludes exit fees that are receivable upon repayment of the loan.
5 The fixed versus floating composition has been calculated as a percentage of performing debt investments measured on a fair value basis, including income producing stock investments and excludes investments, if any, placed on non-accrual.
6 For a particular portfolio company, we calculate the level of contractual indebtedness net of cash ("net debt") owed by the portfolio company and compare that amount to measures of cash flow available to service the net debt. To calculate net debt, we include debt that is both senior and pari passu to the tranche of debt owned by us but exclude debt that is legally and contractually subordinated in ranking to the debt owned by us. We believe this calculation method assists in describing the risk of our portfolio investments, as it takes into consideration contractual rights of repayment of the tranche of debt owned by us relative to other senior and junior creditors of a portfolio company. We typically calculate cash flow available for debt service at a portfolio company by taking net income before net interest expense, income tax expense, depreciation and amortization ("EBITDA") for the trailing twelve month period. Weighted average net debt to EBITDA is weighted based on the fair value of our debt investments and excluding investments where net debt to EBITDA may not be the appropriate measure of credit risk, such as cash collateralized loans and investments that are underwritten and covenanted based on recurring revenue.
For a particular portfolio company, we also calculate the level of contractual interest expense owed by the portfolio company, and compare that amount to EBITDA ("interest coverage ratio"). We believe this calculation method assists in describing the risk of our portfolio investments, as it takes into consideration contractual interest obligations of the portfolio company. Weighted average interest coverage is weighted based on the fair value of our performing debt investments and excluding investments where interest coverage may not be the appropriate measure of credit risk, such as cash collateralized loans and investments that are underwritten and covenanted based on recurring revenue.
Median EBITDA is based on our debt investments and excluding investments where net debt to EBITDA may not be the appropriate measure of credit risk, such as cash collateralized loans and investments that are underwritten and covenanted based on recurring revenue.
Portfolio company statistics are derived from the financial statements most recently provided to us of each portfolio company as of the reported end date. Statistics of the portfolio companies have not been independently verified by us and may reflect a normalized or adjusted amount. As of September 30, 2019 and June 30, 2019, investments where net debt to EBITDA may not be the appropriate measure of credit risk represented 23.0% and 18.4%, respectively, of total debt investments at fair value. Portfolio company statistics are derived from the financial statements most recently available to us of each portfolio company as of the respective reported end date. Portfolio company statistics have not been independently verified by us and may reflect a normalized or adjusted amount.
7 Interest income excludes prepayment premiums, accelerated accretion of upfront loan origination fees and unamortized discounts. Prepayment related income includes prepayment premiums and accelerated accretion of upfront loan origination fees and unamortized discounts.
8 The Company's revolving credit facility has debt outstanding denominated in currencies other than U.S. Dollars ("USD"). These balances have been converted to USD using applicable foreign currency exchange rates as of September 30, 2019. As a result, the revolving credit facility's outstanding borrowings and the available debt amounts may not sum to the total debt commitment amount.
9 The average debt to equity leverage ratio has been calculated using the average daily borrowings during the quarter divided by average net assets, adjusted for equity contributions. The ending and average debt to equity leverage ratios exclude unfunded commitments.

 

Goldman Sachs BDC, Inc.

Consolidated Statements of Assets and Liabilities

(in thousands, except share and per share amounts)

 

 

September 30,
2019

(unaudited)

 

 

December 31,
2018

 

Assets

 

 

 

 

 

 

 

 

Investments, at fair value

 

 

 

 

 

 

 

 

Non-controlled/non-affiliated investments (cost of $1,309,829 and $1,155,641, respectively)

 

$

1,279,441

 

 

$

1,129,036

 

Non-controlled affiliated investments (cost of $77,073 and $143,700, respectively)

 

 

71,379

 

 

 

126,089

 

Controlled affiliated investments (cost of $87,500 and $126,217, respectively)

 

 

79,335

 

 

 

120,319

 

Cash

 

 

11,102

 

 

 

6,113

 

Receivable for investments sold

 

 

94

 

 

 

47

 

Unrealized appreciation on foreign currency forward contracts

 

 

179

 

 

 

89

 

Interest and dividends receivable from non-controlled/affiliated investments and non-

controlled/non-affiliated investments

 

 

7,575

 

 

 

6,969

 

Dividend receivable from controlled affiliated investments

 

 

-

 

 

 

2,550

 

Deferred financing costs

 

 

4,790

 

 

 

5,436

 

Deferred offering costs

 

 

248

 

 

 

165

 

Other assets

 

 

566

 

 

 

163

 

Total assets

 

$

1,454,709

 

 

$

1,396,976

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Debt (net of debt issuance costs of $4,094 and $5,318, respectively)

 

$

727,742

 

 

$

659,101

 

Interest and other debt expenses payable

 

 

3,987

 

 

 

2,428

 

Management fees payable

 

 

3,766

 

 

 

3,434

 

Incentive fees payable

 

 

2,339

 

 

 

-

 

Distribution payable

 

 

18,152

 

 

 

18,102

 

Payable for investments purchased

 

 

10,830

 

 

 

-

 

Directors' fees payable

 

 

109

 

 

 

-

 

Accrued offering costs

 

 

39

 

 

 

2

 

Accrued expenses and other liabilities

 

 

2,906

 

 

 

4,017

 

Total liabilities

 

$

769,870

 

 

$

687,084

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

Net Assets

 

 

 

 

 

 

 

 

Preferred stock, par value $0.001 per share (1,000,000 shares authorized, no shares issued

and outstanding)

 

$

-

 

 

$

-

 

Common stock, par value $0.001 per share (200,000,000 shares authorized, 40,337,930 and 40,227,625 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively)

 

 

40

 

 

 

40

 

Paid-in capital in excess of par

 

 

804,326

 

 

 

802,216

 

Distributable earnings

 

 

(118,106

)

 

 

(90,943

)

Allocated income tax expense

 

 

(1,421

)

 

 

(1,421

)

TOTAL NET ASSETS

 

$

684,839

 

 

$

709,892

 

TOTAL LIABILITIES AND NET ASSETS

 

$

1,454,709

 

 

$

1,396,976

 

Net asset value per share

 

$

16.98

 

 

$

17.65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goldman Sachs BDC, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

For the Three Months Ended

For the Nine Months Ended

 

 

 

September 30,
2019

 

 

September 30,
2018

 

 

September 30,
2019

 

 

September 30,
2018

 

Investment Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From non-controlled/non-affiliated investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

34,246

 

 

$

30,322

 

 

$

100,528

 

 

$

91,340

 

Payment-in-kind

 

 

284

 

 

 

672

 

 

 

760

 

 

 

672

 

Other income

 

 

499

 

 

 

508

 

 

 

2,020

 

 

 

1,481

 

Total investment income from non-controlled/non-affiliated investments

 

 

35,029

 

 

 

31,502

 

 

 

103,308

 

 

 

93,493

 

From non-controlled affiliated investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payment-in-kind

 

 

181

 

 

 

2,028

 

 

 

926

 

 

 

5,931

 

Interest income

 

 

871

 

 

 

889

 

 

 

2,065

 

 

 

1,936

 

Dividend income

 

 

58

 

 

 

86

 

 

 

143

 

 

 

103

 

Other income

 

 

18

 

 

 

11

 

 

 

40

 

 

 

26

 

Total investment income from non-controlled affiliated investments

 

 

1,128

 

 

 

3,014

 

 

 

3,174

 

 

 

7,996

 

From controlled affiliated investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payment-in-kind

 

 

594

 

 

 

467

 

 

 

1,694

 

 

 

1,273

 

Interest Income

 

 

105

 

 

 

-

 

 

 

168

 

 

 

-

 

Dividend income

 

 

-

 

 

 

3,000

 

 

 

3,450

 

 

 

8,000

 

Total investment income from controlled affiliated investments

 

 

699

 

 

 

3,467

 

 

 

5,312

 

 

 

9,273

 

Total investment income

 

$

36,856

 

 

$

37,983

 

 

$

111,794

 

 

$

110,762

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other debt expenses

 

$

9,896

 

 

$

6,432

 

 

$

27,850

 

 

$

18,328

 

Management fees

 

 

3,766

 

 

 

3,255

 

 

 

11,044

 

 

 

12,537

 

Incentive fees

 

 

2,339

 

 

 

4,962

 

 

 

6,976

 

 

 

13,988

 

Professional fees

 

 

735

 

 

 

580

 

 

 

2,066

 

 

 

2,308

 

Administration, custodian and transfer agent fees

 

 

249

 

 

 

230

 

 

 

728

 

 

 

693

 

Directors' fees

 

 

117

 

 

 

118

 

 

 

344

 

 

 

336

 

Other expenses

 

 

323

 

 

 

412

 

 

 

1,092

 

 

 

1,091

 

Total expenses

 

$

17,425

 

 

$

15,989

 

 

$

50,100

 

 

$

49,281

 

NET INVESTMENT INCOME BEFORE TAXES

 

$

19,431

 

 

$

21,994

 

 

$

61,694

 

 

$

61,481

 

Income tax expense, including excise tax

 

$

459

 

 

$

428

 

 

$

1,350

 

 

$

1,017

 

NET INVESTMENT INCOME AFTER TAXES

 

$

18,972

 

 

$

21,566

 

 

$

60,344

 

 

$

60,464

 

Net realized and unrealized gains (losses) on investment transactions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized gain (loss) from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliated investments

 

$

22

 

 

$

(1)

 

 

$

(33,270)

 

 

$

1,766

 

Non-controlled affiliated investments

 

 

(7,217

)

 

 

-

 

 

 

(7,217)

 

 

 

9

 

Controlled affiliated investments

 

 

12

 

 

 

-

 

 

 

(661)

 

 

 

-

 

Foreign currency forward contracts

 

 

39

 

 

 

-

 

 

 

91

 

 

 

-

 

Foreign currency transactions

 

 

(12

)

 

 

(182)

 

 

 

(28)

 

 

 

(182)

 

Net change in unrealized appreciation (depreciation) from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non controlled/non-affiliated investments

 

 

(9,554

)

 

 

(1,985

)

 

 

(3,783)

 

 

 

(2,769

)

Non-controlled affiliated investments

 

 

8,833

 

 

 

75

 

 

 

11,917

 

 

 

(2,402

)

Controlled affiliated investments

 

 

(3,813

)

 

 

(481

)

 

 

(2,267)

 

 

 

(1,530

)

Foreign currency forward contracts

 

 

57

 

 

 

2

 

 

 

90

 

 

 

2

 

Foreign currency translations

 

 

1,561

 

 

 

171

 

 

 

1,856

 

 

 

171

 

Net realized and unrealized gains (losses)

 

$

(10,072

)

 

$

(2,401

)

 

$

(33,272)

 

 

$

(4,935

)

(Provision) benefit for taxes on realized gain/loss on investments

 

 

-

 

 

 

-

 

 

 

121

 

 

 

(446

)

(Provision) benefit for taxes on unrealized appreciation/depreciation on investments

 

 

-

 

 

 

(146)

 

 

 

52

 

 

 

(146)

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

 

$

8,900

 

 

$

19,019

 

 

$

27,245

 

 

$

54,937

 

Net investment income per share (basic and diluted)

 

$

0.47

 

 

$

0.54

 

 

$

1.50

 

 

$

1.51

 

Earnings per share (basic and diluted)

 

$

0.22

 

 

$

0.47

 

 

$

0.68

 

 

$

1.37

 

Weighted average shares outstanding

 

 

40,332,542

 

 

 

40,192,683

 

 

 

40,297,158

 

 

 

40,171,874

 

 

ABOUT GOLDMAN SACHS BDC, INC.

Goldman Sachs BDC, Inc. is a specialty finance company that has elected to be regulated as a business development company under the Investment Company Act of 1940. GS BDC was formed by The Goldman Sachs Group, Inc. ("Goldman Sachs") to invest primarily in middle-market companies in the United States, and is externally managed by Goldman Sachs Asset Management, L.P., an SEC-registered investment adviser and a wholly-owned subsidiary of Goldman Sachs. GS BDC seeks to generate current income and, to a lesser extent, capital appreciation primarily through direct originations of secured debt, including first lien, first lien/last-out unitranche and second lien debt, and unsecured debt, including mezzanine debt, as well as through select equity investments. For more information, visit www.goldmansachsbdc.com. Information on the website is not incorporated by reference into this press release and is provided merely for convenience.

FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "project," "target," "estimate," "intend," "continue," or "believe" or the negatives thereof or other variations thereon or comparable terminology. You should read statements that contain these words carefully because they discuss our plans, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. These statements represent the Company's belief regarding future events that, by their nature, are uncertain and outside of the Company's control. Any forward-looking statement made by us in this press release speaks only as of the date on which we make it. Factors or events that could cause our actual results to differ, possibly materially from our expectations, include, but are not limited to, the risks, uncertainties and other factors we identify in the sections entitled "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements" in filings we make with the Securities and Exchange Commission, and it is not possible for us to predict or identify all of them. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.


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