GSBD - Earnings call transcript Q4 2024

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John Silas

Good morning. This is John Silas, a member of the Investor Relations team for Goldman Sachs BDC, Inc., and I would like to welcome everyone to the Goldman Sachs BDC, Inc. Fourth Quarter and Fiscal Year-end 2024 Earnings Conference Call. [Operator Instructions]

Before we begin today's call, I would like to remind our listeners that today's remarks may include forward-looking statements. company's uncertain future company's and the their that control. represent are nature, outside statements belief events regarding by These of the materially to of a The may of factors, in and results described number the statement from from company's those possibly filings. time forward-looking result company's indicated in what a financial as including is time actual differ condition SEC material cast Goldman Sachs is copyrighted of audio This Inc. BDC, reproduced duplicated, may rebroadcasted our consent. be and without or not

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

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

Alex Chi

here you, Officer, -- morning, John. you I'm Thank joining our for Officer. Thank our our -- quarter Co-Chief everyone. us Executive Chief -- Tucker fourth Greene for Financial Good today

by and I'll we to our portfolio run. this long describe took quarter I'll more the brief performance overview position providing strategic actions for and and in detail. turn call activity, the David begin of the to results call a to -- discussing activity our fourth Tucker then quarter then GSBD over best

for we'll financial to us open off take the it through handing results. And Before to then finally, Q&A. line Stan

benefited Platform XXXX, which Lending GSBD. year in Direct had strong Our another directly

while our M&A in billion, in is the a Direct Americas in For selective $XX.X of than billion, $XX of total tepid and market. and spite the XXXX, our more double all which approach deployed remaining activity disciplined approximately committed the approximately platform year, Lending

are competition. also experiencing in seek opportunities part and our of which differentiated other cap origination from increased Goldman of given platform larger robust on public benefits for risk-adjusted breadth attractive spreads and origination allows to The GSBD terms our greater capabilities, market While and middle pressure vehicles through the the of market capacity Sachs. returns conditions credit us being

Along another quarter investments those GSBD new respect both and the lines, harvest fourth activity. quarter effective marked for to with

second loans. to and of lien continue reducing positions the increase We the preferred while from exposure in percentage lien debt revenue recurring portfolio annual moving first dramatically equity, unsecured away to

the positions to recycle vintages, year-end unitranche percentage increased lien at XXXX. As in lien/last-out of including XX.X% we first we've XXXX older first from positions XX.X% December

quarter fourth our results. to Turning

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

our continued dividend Now was with -- the past our quarter a for income took, that set fee environment. spread share and $X.XX and per adapt policy We've structure dividend our evaluated incentive exceed at investment we over actions respect -- rate credit dynamics, to the has our market distribution. and paid to base strategic current been the recently to including to changes to

to Directors dividend our these changes During approved following Board and factors, of our the fee. structure have incentive

XX, from dividend XX.X% XXXX. the of XX% the $X.XX to a reduced of share, ending capital quarter -- to gains income the on fee first supplemental quarterly introducing base the with -- for both quarter XXXX and per beginning the beginning with calculation periods First, permanently dividend for incentive March

driven in rate targeted to to our vantage increase deployment by expect XXXX deal muted while distributions of point, do capital pressure from aiming powder equity of and remain GPs unfolds, we LPs. leverage our below dry we -- Importantly, private continued to these anticipate distribute by volumes an making as debt-to-equity relatively

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

David Miller

prepayment In complex X $X.X new commitments new Xx during ago Alex. in Not approximately highest older year million. of billion commitments in or exited, the XXXX. new originations. Thanks, older the vintage XXXX commitments portfolio XX% vintages, of XXXX, allowed for investment Of new and to investments portfolio made totaling years GSBD we $XXX.X approximately GS the had played spotlight, BD is new of were since investment the Of us $XXX since investments the committed that fully commitments. only This with XX% deals. in year, capital role but to also level lead are in which million recycle more repaid integration, companies the harvest its were highest of approximately than to made of the integration companies into a

quarter portfolio the commitments companies. investments originations During maintaining loans, million our and in XX.X% are our higher first structure. approximately of up of primarily investment portfolio in the quarter, capital during comprising to of $XXX new we new X to made were lien exposure which that across continues companies, and existing reflect XX bias XX the

and precision Arcline's as During of the [ in aerospace, rotating a lender components and of the to acquisition acquisition the semiconductor acted is ] machinery Pressamac co-lead largest [ manufacturer in medium leading Centerbridge ]. the industries of arranger to services. defense industries quarter, Presomac -- we by high in

quarter. platform investments and engineered in during exit Rotating of sponsor This is of companies. portfolio an by equipment. illustration relationships full provider $XXX.X Sales is generate deep Primarily and independent an for machinery X repayment the and activity repeat driven our the flow. repairs services that turbomachinery of repayment aftermarket solutions million the deal the the credit totaled

composition. portfolio to Turning

and status of investments fourth end portfolio XX, of Pro remained As at X.X% debt nonaccrual position investment XX.X% the this At LLC, in amortized lien cost, lien turning at doing quarter, of as performance. same first total the business of the quarter, the -- status -- due senior Bayside fair comprised and the on during accrual which first quarter. XXXX as is value loans, to XX.X% restored asset to X% at including secured senior December PT finally, to to -- improvement was decreased OpCo, secured

We have headlines been are investors. tariffs for countries recent line top cognizant that various on

there of ultimate or analysis potential customers limited global While majority our basis. tariffs, our implementation serve plenty exposure and in with the a low of the and supply portfolio impact U.S. on muted borrower preliminary dollar GSBD a are domiciled of reflects chains. U.S. companies uncertainties to exposure in of A vast regarding the portfolio are exposure

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

Katherine Schneider

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

the were obligation Our under matured The revolving facility. principal $XXX full of principal to accrued senior in as below proceeds which satisfaction The million of fourth its company's was under ending XXXX. debt continues resulted million interest senior approximately our net February to unsecured aggregate GSBD repay the used secured be February outstanding in amount end X, At quarter debt. of notes, the amount ratio target its debt X.XX% on on $XXX credit XX, of notes. plus and X.XXx, which repayment the unpaid was of On total end, leverage in XX.X% of our to equity brought quarter X.XXx. XXXX, outstanding

of credit has Following borrowing capacity company this approximately facility. the million remaining $XXX drawdown, under revolving the

issued you in the unsecured to If XXXX attractive diversify sources. note GSBD recall, take rate to and a our advantage of X-year financing March environment of further

conditions. for market future Given assess to issuances based the on opportunities current active potential market, we continue

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

September in million quarter investment with and Non-GAAP net million, income annualized as yield -- QX undistributed -- -- the accounting basis, on the asset compared MMLC, investment impact $XX.X -- including income $XX.X fair investment on the million investment to per XXXX XX.X%. spillover an adjustments, income or a adjusted $XX.X taxable of equating were income million months prior to net GAAP and of or basis. income XX, $X.XX $XX.X value million share December $X.XX On book the XXXX, a our $XXX.X of XXXX, income investment net onetime million million for and XXXX Excluding acquisition was approximately XX/XX share was these quarter. respectively as XX, respectively, for X $XXX -- and per Total ended $XX.X was is

in of next the Alex quarters. per in the we call, each share $X.XX distribute earlier mentioned to plan X As

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

Alex Chi

attractive environment about the [ opportunities in for joining our everyone, breadth call. thanks, full testing more in the focused ]. new and and Stan, Goldman a year remain active the We're Thanks, using Sachs platform of optimistic earnings

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

Operator

Instructions] Finian We'll with Securities. our Wells [Operator go O'shea from question to first Fargo

Finian O'Shea

can you Can reducing Alex, why -- that how and much? running target a had expand you I a of comment while. think leverage you sort or the for lower your on on

Alex Chi

to sure in that it leverage, was make Look, closely we're with our to spillover. respect there reference my monitoring context just the of

we finished as X.XXx the leverage, X.XXx. there. been any and meaningful target you has at don't Our from always quarter increases We know, anticipate

Finian O'Shea

to think probably $X.XX, yes, to that. a little guess, run I You trying new just with But the headroom right? of I Okay. -- about bit

little bit run of Your target leverage, anyway. headroom you've to generally kind too a that of with

become to conservative going way. meaningfully say, and should than earnings if that that that think more leverage drive, we that is at getting it's seeing $X.XX closer So target to

Alex Chi

anticipate to our that meet That's our a good question, Fin. We increase feel meaningfully We we order don't that. leverage in to dividend. need don't

we a our environment be And just base to we new restructured current time. reflecting with $X.XX that I that's share, rates think over respect will spreads. base dividend and the per dividend a stable again, with believe of

we'll have X And over. And as supplementals then that supplement with quarters we we the described. spill so next

some planning we're coverage X leverage it. you just also additional having so with payments additional capacity is to that our the We'll also increase and just with all. again, at to capacity as And continue said. meet of not with But edge component

Finian O'Shea

Okay. you portion how Can exit? are seeking on or to No, book a like, that's names what of the picture helpful. or that of rotate say, you give out many

Alex Chi

to XX% With portfolio be -- the just about respect Yes. overall just of will portfolio, our

Operator

[indiscernible]

Unknown Analyst

can -- into [ any taken color -- is when always ask not mean of all I that it's But give account -- ] dividends. you people

Stanley Matuszewski

to fund some we the in ability the when portfolio, cover, model for for example that Yes, recycling It's to model in assess we Stan. did our --

Unknown Executive

modeled any again, including we time in the have -- also all some additional significant a the the different considerations, additional that next extent year. to But maturity of some flexibility additional amount factoring losses. spent realized/unrealized we -- we

Robert Dodd

Got it.

there of gave think Obviously, direct, I thoughts so that cetera? want -- those -- et now? mean, a do the software of contracting, policy to businesses have exposure is tariffs. exposure any potential some separate color you you from in you to I have those little bit ever you ] tariffs? on On don't right Do you [ of changes and in Do -- on to D.C. but side

Unknown Executive

It's a very It's been focused question. something that we've on. great

platform. So order lending entire contract for at to exposure, effect supply analysis first we to any is percentage did portfolio across exact has portfolio of a Look, order to or second analysis at specific is what our direct impact. meaningful government chains, potentially name-by-name did it's our to the impact of impossible mid-single-digit our of a look low going exposure any be. our conduct We sure know

U.S. reminder, doing business Just portfolio, U.S. with services-oriented is as this a businesses. customers. predominantly Primarily software, a

countries significant any have contracts. to the we the significant government don't any spotlight have we nor chain supply exposure exposure into do So on

Robert Dodd

X Got then And quick it. one. just

is On third an things. the a still ] lot that's [ originated we quarter normalize things to not in one. some X% of assume increase. from XX%, in from we if the PIK PIK, increase or But up that fourth XX%,

imply loan would that modifications. So that's

EBITDA can -- us on give there and So what color average you weighted the Is revenue any growing?

Unknown Executive

improvements coverage, at X X both seen from leverage down has slight around as actually X.X% metrics, and and And quarter-over-quarter buckets if those in some come we've you to interest X.X%. for well. the Rating look as such

improving. say, I'd of broadly to health portfolio the So is credit generally, stable

where just restructurings there the I'd of even well. we instances is thing point other either these in to be -- The see that PIK as may where

Operator

We'll next to Mark with go Truist. Hughes

Mark Hughes

some reduce desire had missed exposure but Yes. calls, Thank and I so said to loans. think the you apologize, you. This is you earlier I related to to your a question ARR I of

you of the exposure about you go software. in and about talk what where the XX% think that Can portfolio to ARR I like is now would to?

Unknown Executive

platform. disclose integrated we mean the over I what don't exactly, or it's less year when we but that than it's -- it the was Yes. exposure last half X,

focus it's So ours. a of

very selective continue basis very being example, average the say, last participants you rule a In X we platform, but and companies, these to say of chain what over are on rule did I'd the active the addition of space, from be recurring on do going-forward we that, when a perspective XX, platform to in we're only that for high-quality would choose to plus. bar XX is we well, And that of on year. certainly what across revenue them we

bias, a much which recurring lower exposure is in in from GSBD perspective. very selective So a it's revenue resulting a

Mark Hughes

And market good. more just the Very spread any the BSL competition lenders or you other last to et broader over when X quarters, new that more of spreads, compression from or look cetera? X, at direct maybe market, is that is forces, due

Unknown Executive

ongoing large cap in more spread more M&A have the space, into we compression But supply-demand said the year, M&A then activity branding without we clearly, in split that all with had And say you dynamic a to middle remain the but about in BSL private significant flow. into we've yes, whether going the credit help there. corresponding robust think capital it flow, -- imbalance that the much activity no large market its space. later in of would that, will seen seen pickup the with gap having I space optimistic question, the

Mark Hughes

the repricing activity repricing? And you about then for prospects talk could --

David Miller

that block, sort has mean basis instances XX repricing down where happened I forward company you've the the repriced. last be think activity at the seeing stuff bulk of the there select look credit-enhancing is going either XX but And some where over the of division portfolio months, they're down debt. could selling the as on in perform some you're seen paying to that generally, has gets of to today event, a we the continued well, come the

But think exchange that, it bulk repricing. So the happened they're I leverage going down. is for of In has today. in book asking for the

Unknown Executive

deals, look leveraged look of more at repricings. activity, was financing fourth the X/X new quarter and just and acquisition it our than actually were and of which proceeds related you in was if it deployment to from And refinancings for half about of the were use buyouts

Operator

Derek with Bank go America. [Operator next Hewett Instructions] We'll to of

Derek Hewett

the could the Most of kind if the incentive from my in full load about questions talk But were quarter already numbers? fee and incentive stable here addressed. remains the credit of you relatively fee the with of first

Unknown Executive

Yes.

in fee, So from I that's would we say our in think look are press are as reducing we in back the also terms but of our you've release, right, XX% a we noted the and remarks maintaining as incentive shareholder-friendly. that down to XX.X%,

And so over there's with well the right, look time. back, variability as aware, you're

you're over think as or the right, fee with the time subject I But that back or to of the we look have time kind will certainly, cap future I'm aware quarters well obviously a well. So as fluctuate, -- earn upcoming result as ability any to the sure of over losses gains it as that

Operator

call. conference today's conclude does this And

now may disconnect. You

Goldman Sachs BDC (GSBD) 28 Feb 252024 Q4 Earnings call transcript