Goldman Sachs BDC, Inc. (“GS BDC” or the “Company”) (NYSE:GSBD) today announced its financial results for the second quarter ended June 30, 2017 and filed its Form 10-Q with the U.S. Securities and Exchange Commission.

QUARTERLY HIGHLIGHTS

  • Net investment income for the quarter ended June 30, 2017 was $0.64 per share, as compared to $0.49 per share for the quarter ended March 31, 2017;
  • The Company announced a third quarter dividend of $0.45 per share payable to shareholders of record as of September 29, 2017, equating to an annualized dividend yield of 9.9% on quarter end net asset value per share;1
  • Net asset value per share for the quarter ended June 30, 2017 was stable at $18.23, as compared to $18.26 for the quarter ended March 31, 2017;
  • New investment commitments and fundings were $124.0 million and $120.3 million, respectively, while sales and repayments totaled $160.4 million; the yield on new investment commitments was 10.1%, while the yield on investments repaid was 9.1%;2,3
  • The Senior Credit Fund (“SCF”) produced a 14.2% return on investment to the Company; the Company’s investment in the SCF grew by approximately 4% during the quarter and continues to represent the Company’s largest investment at 8.5% of total investments at fair value;2,3,4
  • Investments on non-accrual represented 0.2% and 0.7% of the total investments at fair value and amortized cost, respectively;2
  • In May, the Company completed an offering of 3,737,500 shares of common stock at a public offering price of $22.50 per share. Total net proceeds were $80.3 million.

SELECTED FINANCIAL HIGHLIGHTS

             
(in $ millions, except per share data)    

As of

June 30, 2017

   

As of

March 31, 2017

 
Investment portfolio, at fair value2 $1,111.8 $1,164.0
Total debt outstanding5 412.3 506.0
Net assets 730.7 663.6
Net asset value per share $18.23 $18.26
 

Three Months Ended

June 30, 2017

Three Months Ended

March 31, 2017

 
Total investment income $36.0 $32.2
Net investment income after taxes 24.1 18.0
Net increase in net assets resulting from operations 4.6 14.6
 
Net investment income per share (basic and diluted) 0.64 0.49
Earnings per share (basic and diluted) 0.12 0.40
Regular distribution per share     0.45     0.45
 

INVESTMENT ACTIVITY2

During the three months ended June 30, 2017, new investment commitments and fundings were $124.0 million and $120.3 million, respectively, which includes net fundings of $2.1 million of previously unfunded commitments. The new investment commitments were across six new portfolio companies and three existing portfolio companies. The Company had sales and repayments of $160.4 million, primarily resulting from the full repayment of investments in three portfolio companies. During the quarter, the weighted average yield on new debt investment commitments and the Company’s additional investment in the SCF was 10.1%, while the weighted average yield on debt investments sold or repaid was 9.1%.3

Summary of Investment Activity for the Three Months Ended June 30, 2017:

             
      New Investment Commitments     Sales and Repayments
Investment Type     $ Millions     % of Total     $ Millions     % of Total
1st Lien/Senior Secured Debt     $53.5     43.1%     $81.6     50.9%
1st Lien/Last-Out Unitranche 17.5 14.1% 26.2 16.3%
2nd Lien/Senior Secured Debt 48.3 39.0% 52.6 32.8%
Unsecured Debt - -% - -%
Preferred Stock - -% - -%
Common Stock 1.3 1.1% - -%
Investment Funds & Vehicles (SCF)     3.4     2.7%     -     -%
Total     $124.0     100.0%     $160.4     100.0%
 

During the three months ended June 30, 2017, the SCF made new investment commitments and fundings of $65.0 million and $61.0 million, respectively. The new investment commitments were across three new portfolio companies and two existing portfolio companies. The SCF also had sales and repayments of $79.4 million, resulting in net funded portfolio change of $(18.4) million during the quarter. As of June 30, 2017, the SCF’s investment portfolio at fair value was $502.4 million, a decrease of 3.8% quarter over quarter. During the six months ended June 30, 2017, the weighted average yield on new investment commitments was 7.1% while the yield on investments repaid was 6.5%.3 The weighted average yield on the total investment portfolio at amortized cost increased from 6.9% to 7.2% since year-end. The Company increased its investment at cost in the SCF from $91.0 million to $94.3 million during the quarter. The SCF represents the Company’s largest investment at both cost and fair value.

PORTFOLIO SUMMARY2

As of June 30, 2017, the Company’s investment portfolio had an aggregate fair value of $1,111.8 million, comprised of investments in 45 portfolio companies operating across 27 different industries. The investment portfolio on a fair value basis was comprised of 88.8% secured debt investments (60.3% in first lien debt (including 27.6% in first lien/last-out unitranche debt) and 28.5% in second lien debt), 0.3% in unsecured debt, 1.0% in preferred stock, 1.4% in common stock, and 8.5% in the SCF.

Summary of Investment Portfolio as of June 30, 2017:

       
      Investments at Fair Value
Investment Type     $ Millions     % of Total
1st Lien/Senior Secured Debt     $363.8     32.7%
1st Lien/Last-Out Unitranche 306.5 27.6%
2nd Lien/Senior Secured Debt 317.2 28.5%
Unsecured Debt 3.3 0.3%
Preferred Stock 11.2 1.0%
Common Stock 15.0 1.4%
Senior Credit Fund (contains 97.3% 1st lien debt; 2.7% second lien debt)     94.8     8.5%
Total     $1,111.8     100.0%
 

As of June 30, 2017, the weighted average yield of the Company’s total investment portfolio at amortized cost and fair value was 10.8% and 12.5%, respectively, as compared to 10.5% and 11.8%, respectively, as of March 31, 2017.

On a fair value basis, the percentage of the Company’s debt investments bearing interest at a floating rate was 95.9%.6

As of June 30, 2017, the weighted average net debt/EBITDA of the companies in the Company’s investment portfolio was 5.0x versus 4.6x as of March 31, 2017. The weighted average interest coverage of interest-bearing companies in the investment portfolio was 2.6x versus 2.7x from the previous quarter. The median EBITDA of the portfolio companies was $26.6 million.7

As of June 30, 2017, investments on non-accrual status represented 0.2% and 0.7% of the total investment portfolio at fair value and amortized cost, respectively.

The Company’s investment in the SCF returned 14.2% and 14.0% at amortized cost and fair value, respectively, over the trailing four quarters ended June 30, 2017. The SCF’s investment portfolio had an aggregate fair value of $502.4 million, comprised of investments in 35 portfolio companies operating across 20 different industries. The SCF’s investment portfolio on a fair value basis was comprised of 100.0% secured debt investments (95.4% in first lien debt, 1.9% in a first-out portion of a unitranche loan and 2.7% in second lien debt). All of the investments in the SCF were invested in debt bearing a floating interest rate with an interest rate floor.

As of June 30, 2017, the weighted average net debt/EBITDA and interest coverage of the companies in the SCF investment portfolio were 4.1x and 3.1x, respectively. The median EBITDA of the SCF’s portfolio companies was $44.0 million. None of the SCF’s investments were on non-accrual status as of June 30, 2017.

RESULTS OF OPERATIONS

Total investment income for the three months ended June 30, 2017 and March 31, 2017 was $36.0 million and $32.2 million, respectively. The increase in investment income over the quarter was primarily driven by higher interest income, including higher prepayment related income and other income. The $36.0 million of total investment income was comprised of $31.1 million from interest income, original issue discount accretion and dividend income, $1.0 million from other income and $3.9 million from prepayment related income.8

Total expenses before taxes for the three months ended June 30, 2017 and March 31, 2017 were $11.6 million and $13.9 million, respectively. The $2.3 million decrease in expenses was primarily driven by a decrease in incentive fees, partially offset by an increase in interest and credit facility expenses. The $11.6 million of total expenses were comprised of $4.8 million of interest and credit facility expenses, $5.6 million of management and incentive fees, and $1.2 million of other operating expenses.

Net investment income after taxes for the three months ended June 30, 2017 was $24.1 million, or $0.64 per share, compared with $18.0 million, or $0.49 per share for the three months ended March 31, 2017.

During the three months ended June 30, 2017, the Company had net realized and unrealized depreciation of $(19.5) million.

Net increase in net assets resulting from operations for the three months ended June 30, 2017 was $4.6 million, or $0.12 per share.

LIQUIDITY AND CAPITAL RESOURCES

In May 2017, the Company completed a public offering of 3,737,500 shares of common stock at a public offering price of $22.50 per share. Net proceeds were $80.3 million after offering and underwriting costs.

As of June 30, 2017, the Company had $412.3 million of total principal amount of debt outstanding, comprised of $297.3 million of outstanding borrowings under its revolving credit facility and $115.0 million of convertible notes. The combined weighted average interest rate on debt outstanding was 3.33% for the six months ended June 30, 2017. As of June 30, 2017, the Company had $307.8 million of availability under its revolving credit facility and $39.6 million in cash and cash equivalents.

The Company’s average and ending debt to equity leverage ratio was 0.70x and 0.56x, respectively, for the three months ended June 30, 2017, as compared with 0.70x and 0.76x, respectively, for the three months ended March 31, 2017.9

CONFERENCE CALL

The Company will host an earnings conference call on Friday, August 4, 2017 at 10:00 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 49411973. 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 1:00 pm Eastern Time on August 4 through September 4. To hear the replay, participants should dial (855) 859-2056; international callers should dial +1 (404) 537-3406; conference ID 49411973. 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 obtaining access to 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 October 16, 2017 to holders of record as of September 29, 2017.

2 The discussion of the investment portfolio of both the Company and the SCF excludes the investment in a money market fund managed by an affiliate of The Goldman Sachs Group, Inc.

3 Computed based on the (a) annual stated interest rate or yield earned plus amortization of fees and discounts on the performing debt and other income producing investments, divided by (b) the total performing debt and other income producing investments (excluding investments on non-accrual) at amortized cost. The yield on the SCF has been computed based on the net investment income earned from the SCF for the trailing twelve months ended June 30, 2017, which may include dividend income and loan origination and structuring fees, divided by GS BDC’s average member’s equity at cost and fair value, adjusted for equity contributions.

4 The SCF’s return to the Company was measured at amortized cost over the trailing four quarters.

5 Total debt outstanding excluding netting of debt issuance costs of $4.2 million and $4.4 million, respectively, for the quarter ended June 30, 2017 and March 31, 2017.

6 The fixed versus floating composition has been calculated as a percentage of performing debt investments, including income producing stock investments.

7 For a particular portfolio company, EBITDA typically represents net income before net interest expense, income tax expense, depreciation and amortization. The net debt to EBITDA represents the ratio of a portfolio company’s total debt (net of cash) and excluding debt subordinated to the Company’s investment in a portfolio company, to a portfolio company’s EBITDA. The interest coverage ratio represents the ratio of a portfolio company’s EBITDA as a multiple of a portfolio company’s interest expense. Weighted average net debt to EBITDA is weighted based on the fair value of the Company’s debt investments, including the Company’s exposure to underlying debt investments in the SCF 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. Weighted average interest coverage is weighted based on the fair value of the Company’s performing debt investments, including the Company’s exposure to underlying debt investments in the SCF and excluding investments where 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. Median EBITDA is based on the Company’s debt investments, including the Company’s exposure to underlying debt investments in the SCF and excluding investments where 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. As of June 30, 2017, investments where EBITDA may not be the appropriate measure of credit risk represented 6.7% of total debt investments, including the Company’s investment in the SCF, at fair value. Portfolio company statistics are derived from the most recently available financial statements 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.

8 Interest income excludes accelerated accretion/amortization of $3.4 million. Prepayment related income includes prepayment premiums and accelerated accretion of upfront loan origination fees and unamortized discounts.

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 ratio excludes unfunded commitments.

       

Goldman Sachs BDC, Inc.

Consolidated Statements of Assets and Liabilities

(in thousands, except share and per share amounts)

 

June 30, 2017
(Unaudited)

December 31, 2016
Assets
Investments, at fair value
Non-controlled/non-affiliated investments (cost of $951,462 and $1,055,203, respectively) $ 926,267 $ 1,004,793
Non-controlled affiliated investments (cost of $105,884 and $89,715, respectively) 90,756 84,103
Controlled affiliated investments (cost of $94,342 and $77,592, respectively) 94,823 78,394
Investments in affiliated money market fund (cost of $2,123 and $1, respectively)   2,123     1  
Total investments, at fair value (cost of $1,153,811 and $1,222,511, respectively) 1,113,969 1,167,291
Cash 37,493 4,565
Interest and dividends receivable from non-controlled/affiliated investments and non-controlled/non-affiliated investments 6,769 7,841
Dividend receivable from controlled affiliated investments 2,450 1,925
Other income receivable from controlled affiliated investments 746 2,212
Deferred financing costs 5,418 6,018
Deferred offering costs — 605
Other assets   178     76  
Total assets $ 1,167,023   $ 1,190,533  
 
Liabilities
Debt (net of debt issuance costs of $4,165 and $4,598, respectively) $ 408,085 $ 498,152
Interest and other debt expenses payable 2,067 1,569
Management fees payable 4,351 4,406
Incentive fees payable 1,238 1,474
Distribution payable 18,041 16,349
Accrued offering costs 490 518
Directors’ fees payable 176 8
Accrued expenses and other liabilities   1,877     2,920  
Total liabilities $ 436,325   $ 525,396  
 
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, 40,091,488 and 36,331,662 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively) 40 36
Paid-in capital in excess of par 800,649 719,847
Accumulated net realized gain (loss) (62,005 ) (23,729 )
Accumulated undistributed net investment income 33,277 25,624
Net unrealized appreciation (depreciation) on investments (39,842 ) (55,220 )
Allocated income tax expense   (1,421 )   (1,421 )
TOTAL NET ASSETS $ 730,698   $ 665,137  
TOTAL LIABILITIES AND NET ASSETS $ 1,167,023   $ 1,190,533  
 
Net asset value per share $ 18.23 $ 18.31
 
   

Goldman Sachs BDC, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(Unaudited)

 

For the three months ended
June 30,

    

For the six months ended
June 30,

2017     2016 2017     2016
Investment Income:
From non-controlled/non-affiliated investments:
Interest income $ 30,213 $ 26,489   $ 57,179 $ 55,620
Dividend income — 630 — 1,257
Other income   300     204     835     397  
Total investment income from non-controlled/non-affiliated investments 30,513 27,323 58,014 57,274
From non-controlled affiliated investments:
Interest income 2,282 — 4,494 —
Dividend income 20 11 43 22
Other income   6     —     12     —  
Total investment income from non-controlled affiliated investments 2,308 11 4,549 22
From controlled affiliated investments:
Dividend income 2,450 1,550 4,900 2,825
Other income   746     437     746     544  
Total investment income from controlled affiliated investments   3,196     1,987     5,646     3,369  
Total investment income $ 36,017   $ 29,321   $ 68,209   $ 60,665  
 
Expenses:
Interest and other debt expenses $ 4,839 $ 3,246 $ 9,351 $ 6,281
Management fees 4,351 4,188 8,812 8,314
Incentive fees 1,238 2,085 4,971 3,489
Professional fees 473 585 934 1,181
Administration, custodian and transfer agent fees 195 215 389 441
Directors’ fees 175 256 348 480
Other expenses   285     327     623     635  
Total expenses $ 11,556   $ 10,902   $ 25,428   $ 20,821  
NET INVESTMENT INCOME (LOSS) BEFORE TAXES $ 24,461   $ 18,419   $ 42,781   $ 39,844  
Excise tax expense $ 368   $ 221   $ 733   $ 434  
NET INVESTMENT INCOME (LOSS) AFTER TAXES $ 24,093   $ 18,198   $ 42,048   $ 39,410  
 
Net realized and unrealized gains (losses) on investment transactions:
Net realized gain (loss) from:
Non-controlled/non-affiliated investments $ (38,108 ) $ — $ (38,276 ) $ —
Net change in unrealized appreciation (depreciation) from:
Non controlled/non-affiliated investments 26,002 (12,400 ) 25,215 (27,715 )
Non controlled affiliated investments (6,652 ) (94 ) (9,516 ) (489 )
Controlled affiliated investments   (750 )   1,296     (321 )   1,195  
Net realized and unrealized gains (losses) $ (19,508 ) $ (11,198 ) $ (22,898 ) $ (27,009 )
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 4,585   $ 7,000   $ 19,150   $ 12,401  
 
Net investment income (loss) per share (basic and diluted) $ 0.64 $ 0.50 $ 1.13 $ 1.09
Earnings per share (basic and diluted) $ 0.12 $ 0.19 $ 0.52 $ 0.34
Weighted average shares outstanding 37,902,018 36,311,582 37,125,726 36,309,232
Distributions declared per share $ 0.45 $ 0.45 $ 0.90 $ 0.90
 

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. We believe that it is important to communicate our future expectations to our investors. There are likely to be events in the future, however, that we are not able to predict accurately or 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.