NEW YORK–(BUSINESS WIRE)–Goldman Sachs BDC, Inc. (“GS BDC” or the “Company”) (NYSE:GSBD) today
reported financial results for the first quarter ended March 31, 2019
and filed its Form 10-Q with the U.S. Securities and Exchange Commission.
QUARTERLY HIGHLIGHTS
-
Net investment income for the quarter ended March 31, 2019 was $0.55
per share, equating to an annualized net investment income yield on
book value of 12.8%; -
The Company announced a second quarter dividend of $0.45 per share
payable to shareholders of record as of June 28, 2019;1 -
Net asset value per share as of March 31, 2019 was $17.25 as compared
to $17.65 as of December 31, 2018; -
Gross and net originations were $155.5 million and $77.7 million,
respectively, primarily driven by gross originations of first lien
debt investments; -
Over the past four quarters following the passage of the Small
Business Credit Availability Act, the Company’s proportion of its
first lien debt investments within its aggregate investment portfolio
increased by 74% and second lien debt investments decreased by 44%. In
addition, single name portfolio diversification has increased by 39%; -
The Company increased the amount of commitments to its revolving
credit facility to $795.0 million; and -
Effective May 8, 2019, the Company and its partner in the Senior
Credit Fund, LLC (“SCF”), a joint venture focused on first lien debt
investments, commenced the dissolution of the joint venture
partnership. In connection with this, the Company received its pro
rata portion of the SCF investments on balance sheet.2
|
SELECTED FINANCIAL HIGHLIGHTS |
|||||||
| (in $ millions, except per share data) |
As of
March 31, 2019 |
As of
December 31, 2018 |
|||||
| Investment portfolio, at fair value3 | $1,405.1 | $1,375.4 | |||||
| Total debt outstanding4 | 709.3 | 664.4 | |||||
| Net assets | 694.7 | 709.9 | |||||
| Net asset value per share | $17.25 | $17.65 | |||||
|
Three Months Ended
March 31, 2019 |
Three Months Ended
December 31, 2018 |
||||||
| Total investment income | $36.5 | $36.0 | |||||
| Net investment income after taxes | 22.3 | 22.4 | |||||
| Net increase in net assets resulting from operations | 2.2 | (1.3) | |||||
| Net investment income per share (basic and diluted) | 0.55 | 0.56 | |||||
| Earnings per share (basic and diluted) | 0.06 | (0.03) | |||||
| Regular distribution per share | 0.45 | 0.45 | |||||
INVESTMENT ACTIVITY3
During the three months ended March 31, 2019, new investment commitments
and fundings were $155.5 million and $124.9 million, respectively. The
new investment commitments were across seven new portfolio companies and
four existing portfolio companies. New investment commitments were
comprised of 87.8% secured debt investments, including 81.5% first lien
debt, and 6.3% second lien debt, and 12.2% in preferred stock. The
Company had sales and repayments of $77.8 million primarily driven by
the full repayment of two second lien debt investments.
|
Summary of Investment Activity for the Three Months Ended March |
|||||||||||||
| New Investment Commitments | Sales and Repayments | ||||||||||||
| Investment Type | $ Millions | % of Total | $ Millions | % of Total | |||||||||
| 1st Lien/Senior Secured Debt | $126.6 | 81.5% | $13.1 | 16.9% | |||||||||
| 1st Lien/Last-Out Unitranche | – | -% | 0.1 | 0.1% | |||||||||
| 2nd Lien/Senior Secured Debt | 9.9 | 6.3% | 64.6 | 83.0% | |||||||||
| Unsecured Debt | – | -% | – | -% | |||||||||
| Preferred Stock | 19.0 | 12.2% | – | -% | |||||||||
| Common Stock | – | -% | – | -% | |||||||||
| Investment Funds & Vehicles (SCF) | – | -% | – | -% | |||||||||
| Total | $155.5 | 100.0% | $77.8 | 100.0% | |||||||||
PORTFOLIO SUMMARY3
As of March 31, 2019, the Company’s investment portfolio had an
aggregate fair value of $1,405.1 million, comprised of investments in 78
portfolio companies operating across 33 different industries. The
investment portfolio on a fair value basis was comprised of 85.9%
secured debt investments (65.2% in first lien debt (including 7.2% in
first lien/last-out unitranche debt) and 20.7% in second lien debt),
0.5% in unsecured debt, 3.2% in preferred stock, 3.6% in common stock
and 6.8% in the SCF. Within the SCF, 98.8% of the investment portfolio
was invested in first lien senior secured loans.
|
Summary of Investment Portfolio as of March 31, 2019: |
|||||||
| Investments at Fair Value | |||||||
| Investment Type | $ Millions | % of Total | |||||
| 1st Lien/Senior Secured Debt | $814.5 | 58.0% | |||||
| 1st Lien/Last-Out Unitranche | 101.1 | 7.2% | |||||
| 2nd Lien/Senior Secured Debt | 291.1 | 20.7% | |||||
| Unsecured Debt | 6.7 | 0.5% | |||||
| Preferred Stock | 44.9 | 3.2% | |||||
| Common Stock | 50.9 | 3.6% | |||||
|
Senior Credit Fund (contained 98.8% 1st Lien Debt; 1.1% 2nd Lien Debt; and 0.1% Common Stock) |
95.9 | 6.8% | |||||
| Total | $1,405.1 | 100.0% | |||||
As of March 31, 2019, the weighted average yield of the Company’s total
investment portfolio at amortized cost and fair value was 9.3% and 9.9%,
respectively, as compared to 9.5% and 10.1%, respectively, as of
December 31, 2018. The weighted average yield of the Company’s total
debt and income producing investments at amortized cost and fair value
was 10.7% and 11.1%, respectively, versus 10.9% and 11.3%, respectively,
as of December 31, 2018.5
On a fair value basis, as of March 31, 2019, 96.3% of the Company’s debt
investments bore interest at a floating rate.6
As of March 31, 2019, the weighted average net debt/EBITDA of the
companies in the Company’s investment portfolio was 5.3x versus 5.6x as
of December 31, 2018. The weighted average interest coverage of
companies comprising interest-bearing investments in the investment
portfolio was 2.2x which was unchanged versus the prior quarter. The
median EBITDA of the portfolio companies was $25.5 million versus $26.9
million as of December 31, 2018.7
As of March 31, 2019, investments on non-accrual status represented 3.5%
and 4.5% of the total investment portfolio at fair value and amortized
cost, respectively. As previously disclosed, the Company’s first lien,
last-out unitranche debt investment in NTS Communications, Inc. (“NTS”)
was placed on non-accrual status during the quarter ended December 31,
2018. This investment represents 3.5% and 3.8% of the total investment
portfolio at fair value and amortized cost, respectively. The Company
currently expects that this investment will be repaid during the quarter
ending June 30, 2019, in connection with the sale of NTS. However, the
exact timing is dependent on the satisfaction of certain closing
conditions to the sale transaction, including receipt of Federal
Communications Commission approval. Excluding this investment,
non-accruals represented less than 0.1% and 0.7% of the total investment
portfolio at fair value and amortized cost, respectively.
The Company’s investment in the SCF produced a return of 10.6% and
10.9%, at amortized cost and fair value, respectively, over the trailing
four quarters ended March 31, 2019.8 The SCF’s investment
portfolio had an aggregate fair value of $431.5 million, comprised of
investments in 31 portfolio companies operating across 19 different
industries. The SCF’s investment portfolio on a fair value basis was
comprised of 99.9% secured debt investments (98.8% in first lien debt
and 1.1% in second lien debt) and 0.1% in common stock. All of the debt
investments in the SCF bore interest at a floating rate.
As of March 31, 2019, the weighted average net debt/EBITDA and interest
coverage of the companies in the SCF investment portfolio were 4.8x and
2.5x, respectively. The median EBITDA of the SCF’s portfolio companies
was $48.1 million.9 As of March 31, 2019, the SCF had one
investment on non-accrual status.
RESULTS OF OPERATIONS
Total investment income for the three months ended March 31, 2019 and
December 31, 2018 was $36.5 million and $36.0 million, respectively. The
increase in investment income over the quarter was primarily driven by
an increase in prepayment fees and accelerated accretion. The $36.5
million of total investment income was comprised of $34.1 million from
interest income, original issue discount accretion, payment-in-kind
income and dividend income, $0.7 million from other income and $1.7
million from prepayment related income.10
Total expenses for the three months ended March 31, 2019 and December
31, 2018 were $13.8 million and $13.0 million, respectively. The $0.8
million increase in expenses was primarily driven by an increase in
incentive fees and an increase in interest and other debt expenses due
to a higher average daily borrowing during the quarter. The $13.8
million of total expenses were comprised of $8.5 million of interest and
other debt expenses, $3.5 million of management fees, $0.5 million of
incentive fees and $1.3 million of other operating expenses.
Net investment income after taxes for the three months ended March 31,
2019 was $22.3 million, or $0.55 per share, compared with $22.4 million,
or $0.56 per share per share for the three months ended December 31,
2018.
During the three months ended March 31, 2019, the Company had net
realized and unrealized gains (losses) of $(20.3) million and had
benefit for taxes on unrealized appreciation on investments of $0.2
million.
Net increase in net assets resulting from operations for the three
months ended March 31, 2019 was $2.2 million, or $0.06 per share.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2019, the Company had $709.3 million of total principal
amount of debt outstanding, comprised of $554.3 million of outstanding
borrowings under its revolving credit facility and $155.0 million of
convertible notes.11 The combined weighted average interest
rate on debt outstanding was 4.42% for the three months ended March 31,
2019. As of March 31, 2019, the Company had $240.7 million of
availability under its revolving credit facility and $5.9 million in
cash and cash equivalents.
The Company’s average and ending debt to equity leverage ratio was 0.98x
and 1.02x, respectively, for the three months ended March 31, 2019, as
compared with 0.90x and 0.94x, respectively, for the three months ended
December 31, 2018.12
CONFERENCE CALL
The Company will host an earnings conference call on Friday, May 10,
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
2894376. 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 12:00 pm Eastern Time on May 10, 2019 through June 10,
2019. To hear the replay, participants should dial (855) 859-2056;
international callers should dial +1 (404) 537-3406; conference ID
2894376. 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 [email protected].
ENDNOTES
1 The $0.45 per share dividend is payable on July 15, 2019 to
holders of record as of June 28, 2019.
2 The SCF
distributed each member’s pro rata share of all of its assets (other
than cash and cash equivalents), primarily consisting of senior secured
loans, to the members. After the satisfaction of all remaining
liabilities and the distribution of any remaining assets (including any
amounts owed to it and not yet received), the SCF will be wound up and
terminated.
3 The discussion of the investment portfolio
of both the Company and the SCF excludes their respective investment in
a money market fund managed by an affiliate of The Goldman Sachs Group,
Inc.
4 Total debt outstanding excluding netting of debt
issuance costs of $4.9 million and $5.3 million, respectively, as of
March 31, 2019 and December 31, 2018.
5 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.
6 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.
7 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, including our 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.
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, including our exposure to underlying debt
investments in the SCF 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, including our 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.
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
March 31, 2019 and December 31, 2018, investments where net debt to
EBITDA may not be the appropriate measure of credit risk represented
20.0% and 18.3%, respectively, of total debt investments, including our
investment in the SCF, 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.
8 Computed
based on the net investment income earned from the SCF for the trailing
twelve months ended March 31, 2019, 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.
9 For a particular portfolio company of
the SCF, we calculate the level of 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 the SCF, but
exclude debt that is legally and contractually subordinated in ranking
to the debt owned by the Senior Credit Fund. We believe this calculation
method assists in describing the risk of the SCF’s portfolio
investments, as it takes into consideration contractual rights of
repayment of the tranche of debt owned by the SCF 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 EBITDA for the trailing twelve month period. For a particular
portfolio company of the SCF, we also calculate the interest coverage
ratio. We believe this calculation method assists in describing the risk
of the SCF’s portfolio investments, as it takes into consideration
contractual interest obligations of the portfolio company. Median EBITDA
is based on the SCF’s debt investments. Portfolio company statistics are
derived from the financial statements most recently available to us of
each portfolio company of the SCF as of the respective reported end
date. Statistics of the SCF’s portfolio companies have not been
independently verified by us and may reflect a normalized or adjusted
amount.
10 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.
11 Debt outstanding denominated in currencies
other than U.S. Dollars (“USD”) have been converted to USD using
applicable foreign currency exchange rate as of March 31, 2019.
12
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) | |||||||||||
|
March 31,
2019 (unaudited) |
December 31,
2018 |
||||||||||
| Assets | |||||||||||
| Investments, at fair value | |||||||||||
|
Non-controlled/non-affiliated investments (cost of $1,131,280 and $1,155,641, respectively) |
$ | 1,111,881 | $ | 1,129,036 | |||||||
|
Non-controlled affiliated investments (cost of $139,396 and $143,700, respectively) |
119,029 | 126,089 | |||||||||
|
Controlled affiliated investments (cost of $180,979 and $126,217, respectively) |
174,187 | 120,319 | |||||||||
| Cash | 5,891 | 6,113 | |||||||||
| Receivable for investments sold | 12 | 47 | |||||||||
| Unrealized appreciation on foreign currency forward contracts | 167 | 89 | |||||||||
|
Interest and dividends receivable from non-controlled/affiliated |
|||||||||||
| controlled/non-affiliated investments | 8,828 | 6,969 | |||||||||
| Dividend receivable from controlled affiliated investments | 2,450 | 2,550 | |||||||||
| Deferred financing costs | 5,512 | 5,436 | |||||||||
| Deferred offering costs | 165 | 165 | |||||||||
| Other assets | 138 | 163 | |||||||||
| Total assets | $ | 1,428,260 | $ | 1,396,976 | |||||||
| Liabilities | |||||||||||
| Debt (net of debt issuance costs of $4,915 and $5,318, respectively) | $ | 704,395 | $ | 659,101 | |||||||
| Interest and other debt expenses payable | 3,923 | 2,428 | |||||||||
| Management fees payable | 3,536 | 3,434 | |||||||||
| Incentive fees payable | 493 | – | |||||||||
| Distribution payable | 18,120 | 18,102 | |||||||||
| Directors’ fees payable | 113 | – | |||||||||
| Accrued offering costs | 2 | 2 | |||||||||
| Accrued expenses and other liabilities | 2,932 | 4,017 | |||||||||
| Total liabilities | $ | 733,514 | $ | 687,084 | |||||||
| Commitments and Contingencies | |||||||||||
| Net Assets | |||||||||||
|
Preferred stock, par value $0.001 per share (1,000,000 shares |
|||||||||||
|
and outstanding) |
$ | — | $ | — | |||||||
|
Common stock, par value $0.001 per share (200,000,000 shares authorized, 40,267,216 and 40,227,625 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively) |
40 | 40 | |||||||||
| Paid-in capital in excess of par | 802,975 | 802,216 | |||||||||
| Distributable earnings | (106,848 | ) | (90,943 | ) | |||||||
| Allocated income tax expense | (1,421 | ) | (1,421 | ) | |||||||
| TOTAL NET ASSETS | $ | 694,746 | $ | 709,892 | |||||||
| TOTAL LIABILITIES AND NET ASSETS | $ | 1,428,260 | $ | 1,396,976 | |||||||
| Net asset value per share | $ | 17.25 | $ | 17.65 | |||||||
| Goldman Sachs BDC, Inc. | |||||||||||
| Consolidated Statements of Operations | |||||||||||
| (in thousands, except share and per share amounts) | |||||||||||
| (Unaudited) | |||||||||||
|
For the Three |
For the Three |
||||||||||
| Investment Income: | |||||||||||
| From non-controlled/non-affiliated investments: | |||||||||||
| Interest income | $ | 31,569 | $ | 29,790 | |||||||
| Payment-in-kind | 302 | – | |||||||||
| Other income | 651 | 236 | |||||||||
|
Total investment income from non-controlled/non-affiliated investments |
32,522 | 30,026 | |||||||||
| From non-controlled affiliated investments: | |||||||||||
| Payment-in-kind | 369 | 1,941 | |||||||||
| Interest income | 618 | 388 | |||||||||
| Dividend income | 32 | 7 | |||||||||
| Other income | 11 | 6 | |||||||||
| Total investment income from non-controlled affiliated investments | 1,030 | 2,342 | |||||||||
| From controlled affiliated investments: | |||||||||||
| Payment-in-kind | 535 | 373 | |||||||||
| Dividend income | 2,450 | 2,800 | |||||||||
| Total investment income from controlled affiliated investments | 2,985 | 3,173 | |||||||||
| Total investment income | $ | 36,537 | $ | 35,541 | |||||||
| Expenses: | |||||||||||
| Interest and other debt expenses | $ | 8,453 | $ | 5,723 | |||||||
| Management fees | 3,536 | 4,803 | |||||||||
| Incentive fees | 493 | 4,684 | |||||||||
| Professional fees | 642 | 670 | |||||||||
| Administration, custodian and transfer agent fees | 240 | 231 | |||||||||
| Directors’ fees | 113 | 101 | |||||||||
| Other expenses | 336 | 309 | |||||||||
| Total expenses | $ | 13,813 | $ | 16,521 | |||||||
| NET INVESTMENT INCOME BEFORE TAXES | $ | 22,724 | $ | 19,020 | |||||||
| Income tax expense, including excise tax | $ | 439 | $ | 285 | |||||||
| NET INVESTMENT INCOME AFTER TAXES | $ | 22,285 | $ | 18,735 | |||||||
|
Net realized and unrealized gains (losses) on investment transactions: |
|||||||||||
| Net realized gain (loss) from: | |||||||||||
| Non-controlled/non-affiliated investments | $ | (24,722) | $ | 1,667 | |||||||
| Non-controlled affiliated investments | – | 9 | |||||||||
| Foreign currency forward contracts | 18 | – | |||||||||
| Foreign currency transactions | (6 | ) | – | ||||||||
| Net change in unrealized appreciation (depreciation) from: | |||||||||||
| Non controlled/non-affiliated investments | 7,206 | (303) | |||||||||
| Non-controlled affiliated investments | (2,756 | ) | (985 | ) | |||||||
| Controlled affiliated investments | (894 | ) | (225 | ) | |||||||
| Foreign currency forward contracts | 78 | – | |||||||||
| Foreign currency translations | 802 | – | |||||||||
| Net realized and unrealized gains (losses) | $ | (20,274 | ) | $ | 163 | ||||||
| (Provision) benefit for taxes on realized gain/loss on investments | – | (447) | |||||||||
|
(Provision) benefit for taxes on unrealized appreciation/depreciation on investments |
204 | – | |||||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 2,215 | $ | 18,451 | |||||||
| Net investment income per share (basic and diluted) | $ | 0.55 | $ | 0.47 | |||||||
| Earnings per share (basic and diluted) | $ | 0.06 | $ | 0.46 | |||||||
| Weighted average shares outstanding | 40,261,057 | 40,150,518 | |||||||||
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-LO
Contacts
Goldman Sachs BDC, Inc.
Investors: Katherine Schneider,
212-902-3122
Media: Patrick Scanlan, 212-902-6164
