Goldman Sachs BDC, Inc. Reports September 30, 2022 Financial Results and Announces Quarterly Dividend of $0.45 Per Share

NEW YORK--(BUSINESS WIRE)--Goldman Sachs BDC, Inc. (“GSBD” or the “Company”) (NYSE: GSBD) today reported financial results for the third quarter ended September 30, 2022 and filed its Form 10-Q with the U.S. Securities and Exchange Commission.

QUARTERLY HIGHLIGHTS

• Net investment income per share for the quarter ended September 30, 2022 was $0.60. Excluding purchase discount amortization per share of $0.04 from the Merger (as defined below), adjusted net investment income per share was $0.56, equating to an annualized net investment income yield on book value of 14.9%.¹ Earnings per share for the quarter ended September 30, 2022 was $(0.07).
• The Company’s Board of Directors declared a regular fourth quarter dividend of $0.45 per share payable to shareholders of record as of December 30, 2022².
• Net asset value per share for the quarter ended September 30, 2022 decreased 3.3% to $15.02 from $15.53 as of June 30, 2022.
• The Company's ending net debt to equity ratio increased to 1.34x as of September 30, 2022 from 1.25x as of June 30, 2022.
• During the quarter, the Company had gross originations of $205.3 million of which $134.1 million were funded. Fundings of previously unfunded commitments for the quarter were $149.7 million and sales and repayments activity totaled $(211.9) million, resulting in a net funded portfolio change of $71.9 million.
• As of September 30, 2022, the Company’s total investments at fair value and commitments were $4,054.0 million, comprised of investments in 133 portfolio companies. The investment portfolio was comprised of 97.7% senior secured debt, including 91.7% in first lien investments³.
• During the quarter, four additional investments across three portfolio companies were put on the non-accrual status. As of September 30, 2022, investments on non-accrual status amounted to 0.4% and 1.4% of the total investment portfolio at fair value and amortized cost, respectively.
• As of September 30, 2022, 40.8% of the Company’s approximately $2,106.3 million of total principal amount of debt outstanding was in unsecured debt and 59.2% in secured debt.
• On May 26, 2022, the Company entered into equity distribution agreements to issue up to $200.0 million in aggregate offering price of shares of its common stock through at-the-market offerings. During the three months ended September 30, 2022, the Company issued and sold 616,975 shares of common stock for net proceeds of approximately $10.6 million, after deducting underwriting and offering costs of approximately $0.2 million.

SELECTED FINANCIAL HIGHLIGHTS

(in $ millions, except per share data)	As of September 30, 2022		As of June 30, 2022
Investment portfolio, at fair value^3	$	3,618.1	$	3,591.9
Total debt outstanding^4	$	2,106.3	$	2,030.2
Net assets	$	1,543.9	$	1,585.7
Net asset value per share	$	15.02	$	15.53
Ending net debt to equity	1.34x		1.25x

(in $ millions, except per share data)	Three Months Ended September 30, 2022			Three Months Ended June 30, 2022
Total investment income	$	95.2		$	77.5
Net investment income after taxes	$	61.2		$	49.6
Less: Purchase discount amortization		4.5			3.7
Adjusted net investment income after taxes^1	$	56.7		$	45.9
Net realized and unrealized gains (losses)	$	(68.8	)	$	(31.0	)
Add: Realized/Unrealized depreciation from the purchase discount		4.5			3.7
Adjusted net realized and unrealized gains (losses)^1	$	(64.3	)	$	(27.3	)
Net investment income per share (basic and diluted)	$	0.60		$	0.49
Less: Purchase discount amortization per share		0.04			0.04
Adjusted net investment income per share^1	$	0.56		$	0.45
Weighted average shares outstanding		102.4			102.0
Regular distribution per share	$	0.45		$	0.45

Total investment income for the three months ended September 30, 2022 and June 30, 2022 was $95.2 million and $77.5 million, respectively. The increase in investment income was primarily driven by an increase in interest rates.

Net expenses before taxes for the three months ended September 30, 2022 and June 30, 2022 were $33.2 million and $27.0 million, respectively. Net expenses increased by $6.2 million, primarily as a result of an increase in interest and other debt expenses.

INVESTMENT ACTIVITY³

Summary of Investment Activity for the three months ended September 30, 2022 was as follows:

	New Investment Commitments					Sales and Repayments
Investment Type	$ Millions		% of Total			$ Millions		% of Total
1st Lien/Senior Secured Debt	$	203.2		99.0	%	$	211.8		99.9	%
1st Lien/Last-Out Unitranche		—		—			0.1		0.0	%
2nd Lien/Senior Secured Debt		1.0		0.5			—		—
Unsecured Debt		—		—			—		—
Common Stock		1.1		0.5			—		—
Total	$	205.3		100.0	%	$	211.9		100.0	%

During the three months ended September 30, 2022, new investment commitments were across six new portfolio companies and ten existing portfolio companies. Sales and repayments were primarily driven by the full repayment of investments in two portfolio companies.³

PORTFOLIO SUMMARY³

As of September 30, 2022, the Company’s investments consisted of the following:

	Investments at Fair Value
Investment Type	$ Millions		% of Total
1st Lien/Senior Secured Debt	$	3,199.6		88.4	%
1st Lien/Last-Out Unitranche		118.1		3.3
2nd Lien/Senior Secured Debt		217.1		6.0
Unsecured Debt		7.7		0.2
Preferred Stock		41.9		1.2
Common Stock		33.2		0.9
Warrants		0.5		—
Total	$	3,618.1		100.0	%

The following table presents certain selected information regarding the Company’s investments:

		As of
		September 30, 2022			June 30, 2022
Number of portfolio companies		133				129
Percentage of performing debt bearing a floating rate^5		99.6	%			99.4	%
Percentage of performing debt bearing a fixed^5		0.4	%			0.6	%
Weighted average yield on debt and income producing investments, at amortized cost^6		10.4	%			9.0	%
Weighted average yield on debt and income producing investments, at fair value^6		10.9	%			9.3	%
Weighted average leverage (net debt/EBITDA)^7		6.0x			6.0x
Weighted average interest coverage^7		1.8x			2.1x
Median EBITDA^7	$	45.3 million		$	43.9 million

As of September 30, 2022, investments on non-accrual status represented 0.4% and 1.4% of the total investment portfolio at fair value and amortized cost, respectively.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2022, the Company had $2,106.3 million of total principal amount of debt outstanding, comprised of $1,246.3 million of outstanding borrowings under its senior secured revolving credit facility (“Secured Revolving Credit Facility”), $360.0 million of unsecured notes due 2025, and $500.0 million of unsecured notes due 2026. The combined weighted average interest rate on debt outstanding was 3.19% for the quarter ended September 30, 2022. As of September 30, 2022, the Company had $449.3 million of availability under its Senior Revolving Credit Facility and $32.7 million in cash.^4,8

The Company’s ending net debt to equity leverage ratio was 1.34x for the three months ended September 30, 2022, as compared to 1.25x for the three months ended June 30, 2022.⁹

CONFERENCE CALL

The Company will host an earnings conference call on Friday, November 4, 2022 at 9:00 am Eastern Time. All interested parties are invited to participate in the conference call by dialing [phone]; international callers should dial [phone]; conference ID 427709. 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 on our webcast link located in the Investor Resources section of our website www.goldmansachsbdc.com.

Please direct any questions regarding the conference call to Goldman Sachs BDC, Inc. Investor Relations, via e-mail, at [e-mail].

ENDNOTES

1. On October 12, 2020, we completed our merger (the “Merger”) with Goldman Sachs Middle Market Lending Corp. (“MMLC”). The Merger was accounted for as an asset acquisition in accordance with ASC 805-50, Business Combinations — Related Issues. The consideration paid to MMLC’s stockholders was less than the aggregate fair values of the assets acquired and liabilities assumed, which resulted in a purchase discount (the “purchase discount”). The purchase discount was allocated to the cost of MMLC investments acquired by us on a pro-rata basis based on their relative fair values as of the closing date. Immediately following the Merger with MMLC, we marked the investments to their respective fair values and, as a result, the purchase discount allocated to the cost basis of the investments acquired was immediately recognized as unrealized appreciation on our Consolidated Statement of Operations. The purchase discount allocated to the loan investments acquired will amortize over the life of each respective loan through interest income, with a corresponding adjustment recorded as unrealized appreciation on such loan acquired through its ultimate disposition. The purchase discount allocated to equity investments acquired will not amortize over the life of such investments through interest income and, assuming no subsequent change to the fair value of the equity investments acquired and disposition of such equity investments at fair value, we will recognize a realized gain with a corresponding reversal of the unrealized appreciation on disposition of such equity investments acquired.
   As a supplement to our financial results reported in accordance with GAAP, we have provided, as detailed below, certain non-GAAP financial measures to our operating results that exclude the aforementioned purchase discount and the ongoing amortization thereof, as determined in accordance with GAAP. The non-GAAP financial measures include i) Adjusted net investment income per share; ii) Adjusted net investment income after taxes; and iii) Adjusted net realized and unrealized gains (losses). We believe that the adjustment to exclude the full effect of the purchase discount is meaningful because it is a measure that we and investors use to assess our financial condition and results of operations. Although these non-GAAP financial measures are intended to enhance investors’ understanding of our business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. The aforementioned non-GAAP financial measures may not be comparable to similar non-GAAP financial measures used by other companies.
2. The $0.45 per share dividend is payable on January 27, 2023 to stockholders of record as of December 30, 2022.
3. The discussion of the investment portfolio excludes the investment in a money market fund managed by an affiliate of The Goldman Sachs Group, Inc.
4. Total debt outstanding excludes netting of debt issuance costs of $9.6 million and $10.4 million, respectively, as of September 30, 2022 and June 30, 2022.
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 preferred stock investments and excludes investments, if any, placed on non-accrual.
6. 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 investment. Excludes the purchase discount and amortization related to the Merger.
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 and excludes 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 compare that amount of EBITDA to the portfolio company’s contractual interest expense (“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 excludes 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 excludes 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, 2022 and June 30, 2022, investments where net debt to EBITDA may not be the appropriate measure of credit risk represented 38.6% and 35.7%, respectively, of total debt investments at fair value.
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, 2022. 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 ending net debt to equity leverage ratio is calculated by using the total borrowings net with cash and cash equivalents divided by equity as of September 30, 2022.

Goldman Sachs BDC, Inc.
Consolidated Statements of Assets and Liabilities
(in thousands, except share and per share amounts)
	September 30, 2022 (Unaudited)			December 31, 2021
Assets
Investments, at fair value
Non-controlled/non-affiliated investments (cost of $3,664,754 and $3,416,195)	$	3,586,780		$	3,427,249
Non-controlled affiliated investments (cost of $58,267 and $58,221)		31,280			32,819
Controlled affiliated investments (cost of $34,745 and $33,374)		—			18,375
Total investments, at fair value (cost of $3,757,766 and $3,507,790)	$	3,618,060		$	3,478,443
Cash		32,670			33,764
Receivable for investments sold		12,508			89
Unrealized appreciation on foreign currency forward contracts		111			100
Interest and dividends receivable		31,800			23,278
Deferred financing costs		13,513			12,631
Other assets		744			2,686
Total assets	$	3,709,406		$	3,550,991
Liabilities
Debt (net of debt issuance costs of $9,571 and $12,296)	$	2,096,709		$	1,861,426
Interest and other debt expenses payable		6,783			14,936
Management fees payable		9,157			8,370
Incentive fees payable		—			760
Distribution payable		46,250			45,818
Accrued offering costs		340			—
Accrued expenses and other liabilities		6,264			5,281
Total liabilities	$	2,165,503		$	1,936,591
Commitments and contingencies (Note 8)
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, 102,778,441 and 101,818,811 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively)		103			102
Paid-in capital in excess of par		1,686,942			1,670,742
Distributable earnings		(141,721	)		(55,023	)
Allocated income tax expense		(1,421	)		(1,421	)
Total net assets	$	1,543,903		$	1,614,400
Total liabilities and net assets	$	3,709,406		$	3,550,991
Net asset value per share	$	15.02		$	15.86

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, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Investment income:
From non-controlled/non-affiliated investments:
Interest income	$	88,326		$	90,043		$	231,605		$	246,570
Payment-in-kind		5,154			4,768			14,266			11,179
Other income		1,384			1,101			3,550			2,717
From non-controlled affiliated investments:
Dividend income		133			90			258			916
Interest income		120			119			469			282
Payment-in-kind		101			175			553			478
From controlled affiliated investments:
Payment-in-kind		—			365			259			1,008
Interest income		—			23			16			69
Total investment income	$	95,218		$	96,684		$	250,976		$	263,219
Expenses:
Interest and other debt expenses	$	21,979		$	14,449		$	53,823		$	43,953
Incentive fees		—			9,326			12,023			32,551
Management fees		9,157			7,962			26,933			24,241
Professional fees		814			724			2,559			2,257
Directors’ fees		209			234			616			698
Other general and administrative expenses		1,041			793			3,301			2,691
Total expenses	$	33,200		$	33,488		$	99,255		$	106,391
Fee waivers	$	—		$	(1,441	)	$	(11,724	)	$	(24,192	)
Net expenses	$	33,200		$	32,047		$	87,531		$	82,199
Net investment income before taxes	$	62,018		$	64,637		$	163,445		$	181,020
Income tax expense, including excise tax	$	829		$	305		$	2,494		$	929
Net investment income after taxes	$	61,189		$	64,332		$	160,951		$	180,091
Net realized and unrealized gains (losses) on investment transactions:
Net realized gain (loss) from:
Non-controlled/non-affiliated investments	$	—		$	(1,606	)	$	(5,054	)	$	4,628
Non-controlled affiliated investments		—			35,916			—			35,916
Controlled affiliated investments		—			—			(2,035	)		—
Foreign currency forward contracts		90			(49	)		171			(220	)
Foreign currency and other transactions		(1,565	)		69			(2,413	)		113
Net change in unrealized appreciation (depreciation) from:
Non-controlled/non-affiliated investments		(50,069	)		(21,412	)		(89,028	)		(20,534	)
Non-controlled affiliated investments		(3,529	)		(39,257	)		(1,585	)		(47,279	)
Controlled affiliated investments		(18,685	)		(1,391	)		(19,746	)		(3,566	)
Foreign currency forward contracts		(35	)		122			11			396
Foreign currency translations and other transactions		4,974			1,392			10,051			4,234
Net realized and unrealized gains (losses)	$	(68,819	)	$	(26,216	)	$	(109,628	)	$	(26,312	)
(Provision) benefit for taxes on realized gain/loss on investments	$	—		$	—		$	—		$	(53	)
(Provision) benefit for taxes on unrealized appreciation/depreciation on investments		130			(83	)		12			(253	)
Net increase (decrease) in net assets from operations	$	(7,500	)	$	38,033		$	51,335		$	153,473
Weighted average shares outstanding		102,367,005			101,727,464			102,069,593			101,654,241
Net investment income per share (basic and diluted)	$	0.60		$	0.63		$	1.58		$	1.77
Earnings (loss) per share (basic and diluted)	$	(0.07	)	$	0.37		$	0.50		$	1.51

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. GSBD 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. GSBD 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, including the impact of COVID-19 on the business, future operating results, access to capital and liquidity of the Company and its portfolio companies. 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.