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8-K - GOLDMAN SACHS BDC, INC. - Goldman Sachs BDC, Inc.d571640d8k.htm

EXHIBIT 99.1

 

LOGO

 

Goldman Sachs BDC, Inc. Reports Second Quarter 2018 Financial Results and Announces Quarterly Dividend of $0.45 Per Share

Company Release – August 2, 2018

NEW YORK — (BUSINESS WIRE) — Goldman Sachs BDC, Inc. (“GS BDC” or the “Company”) (NYSE: GSBD) today announced its financial results for the second quarter ended June 30, 2018 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, 2018 was $0.50 per share, equating to an annualized net investment income yield on book value of 11.1%;

 

The Company announced a third quarter dividend of $0.45 per share payable to shareholders of record as of September 28, 2018;1

 

The Company received stockholder approval to reduce its asset coverage requirement to 150%, which provides the Company with added investment flexibility;

 

New investment commitments and fundings were $92.6 million and $58.9 million, respectively; sales and repayments totaled $79.6 million;2

 

Investments on non-accrual represented 0.7% and 0.8% of the total investments at fair value and amortized cost, respectively;2 and

 

Subsequent to quarter-end, the Company closed $40.0 million aggregate principal amount of 4.50% convertible notes due April 2022.

SELECTED FINANCIAL HIGHLIGHTS

 

(in $ millions, except per share data)

    

As of

June 30, 2018


 

             

As of

March 31, 2018

 

 

   

Investment portfolio, at fair value2

     $1,237.3           $1,256.7  

Total debt outstanding3

     508.0           530.0  

Net assets

     726.5           726.7  

Net asset value per share

     $18.08           $18.10  
   
      

Three Months Ended

June 30, 2018

 

 

       

Three Months Ended

March 31, 2018

 

 

   

Total investment income

     $37.2           $35.5  

Net investment income after taxes

     20.2           18.7  

Net increase in net assets resulting from operations

     17.5           18.5  
   

Net investment income per share (basic and diluted)

     0.50           0.47  

Earnings per share (basic and diluted)

     0.43           0.46  

Regular distribution per share

     0.45                 0.45  

INVESTMENT ACTIVITY2

During the three months ended June 30, 2018, new investment commitments and fundings were $92.6 million and $58.9 million, respectively. The new investment commitments were across seven new portfolio companies and four existing portfolio companies. The Company had sales and repayments of $79.6 million, comprised of $62.7 million from the full repayment of investments in three portfolio companies, $11.0 million from the sale of an investment in one portfolio company and $5.9 million from scheduled amortization across various portfolio companies.


Summary of Investment Activity for the Three Months Ended June 30, 2018:

 

     
      New Investment Commitments      Sales and Repayments  
   
Investment Type    $ Millions      % of Total          $ Millions      % of Total    

    1st Lien/Senior Secured Debt

     $72.0        77.8%            $6.4        8.0%    

    1st Lien/Last-Out Unitranche

     6.8        7.3%            44.0        55.3%    

    2nd Lien/Senior Secured Debt

     8.3        8.9%            29.2        36.7%    

    Unsecured Debt

     0.1        0.1%            -        -%    

    Preferred Stock

     3.2        3.5%            -        -%    

    Common Stock

     2.2        2.4%            -        -%    

    Investment Funds & Vehicles (SCF)

     -        -%            -        -%    

            Total

     $92.6        100.0%            $79.6        100.0%    

During the three months ended June 30, 2018, the SCF made new investment commitments and fundings of $60.8 million and $54.9 million, respectively. The new investment commitments were across five new portfolio companies. The SCF had sales and repayments of $11.9 million, resulting in net funded portfolio change of $43.0 million during the quarter. As of June 30, 2018, the SCF’s investment portfolio at fair value was $490.5 million. The weighted average yield on the total investment portfolio at amortized cost was 7.6% which was unchanged from the previous quarter.4 The SCF represents the Company’s largest investment at both cost and fair value.

PORTFOLIO SUMMARY2

As of June 30, 2018, the Company’s investment portfolio had an aggregate fair value of $1,237.3 million, comprised of investments in 59 portfolio companies operating across 31 different industries. The investment portfolio on a fair value basis was comprised of 88.9% secured debt investments (52.8% in first lien debt (including 16.6% in first lien/last-out unitranche debt) and 36.1% in second lien debt), 0.5% in unsecured debt, 1.3% in preferred stock, 1.8% in common stock, and 7.5% in the SCF.

Summary of Investment Portfolio as of June 30, 2018:

 

     

 

Investments at Fair Value

 

 

Investment Type

   $
Millions
     % of Total    

    1st Lien/Senior Secured Debt

     448.5        36.2%    

    1st Lien/Last-Out Unitranche

     205.0        16.6%    

    2nd Lien/Senior Secured Debt

     446.6        36.1%    

    Unsecured Debt

     5.8        0.5%    

    Preferred Stock

     16.8        1.3%    

    Common Stock

     22.3        1.8%    

    Senior Credit Fund (contains 96.9% 1st Lien Debt; 3.1% 2nd Lien Debt)

     92.3        7.5%    

    Total

     $1,237.3        100.0%    

As of June 30, 2018, the weighted average yield of the Company’s total debt and income producing investments at amortized cost and fair value was 11.5% and 12.1%, respectively, which was unchanged from the previous quarter.4 The weighted average yield of the Company’s total investment portfolio at amortized cost and fair value was 10.9% and 11.7%, respectively, as compared to 11.1% and 11.7% respectively, as of March 31, 2018.

On a fair value basis, as of June 30, 2018, 96.1% of the Company’s debt investments bore interest at a floating rate.5

As of June 30, 2018, the weighted average net debt/EBITDA of the companies in the Company’s investment portfolio was 5.2x versus 5.1x as of March 31, 2018. The weighted average interest coverage of companies comprising interest-bearing investments in the investment portfolio was 2.2x as compared to 2.3x in the prior quarter. The median EBITDA of the portfolio companies was $36.7 versus $39.7 million as of March 31, 2018.6

As of June 30, 2018, investments on non-accrual status represented 0.7% and 0.8% of the total investment portfolio at fair value and amortized cost, respectively.

The Company’s investment in the SCF produced a return of 10.9% and 11.0%, at amortized cost and fair value, respectively, over the trailing four quarters ended June 30, 2018. The SCF’s investment portfolio had an aggregate fair value of $490.5 million, comprised of investments in 36 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 (96.9% in first lien debt, and 3.1% in second lien debt). All of the investments in the SCF were debt investments bearing a floating interest rate.


As of June 30, 2018, the weighted average net debt/EBITDA and interest coverage of the companies in the SCF investment portfolio were 4.6x and 2.6x, respectively. The median EBITDA of the SCF’s portfolio companies was $49.8 million. As of June 30, 2018, the SCF had one investment on non-accrual status.7

RESULTS OF OPERATIONS

Total investment income for the three months ended June 30, 2018 and March 31, 2018 was $37.2 million and $35.5 million, respectively. The increase in investment income over the quarter was primarily driven by higher interest income, including prepayment fees, and other income. The $37.2 million of total investment income was comprised of $34.6 million from interest income, original issue discount accretion, payment-in-kind and dividend income, $0.7 million from other income and $1.9 million from prepayment related income.8

Total expenses before taxes for the three months ended June 30, 2018 and March 31, 2018 were $16.8 million and $16.5 million, respectively. The $0.3 million increase in expenses was primarily driven by an increase in interest and other debt expenses and other operating expenses which was partially offset by a decrease in investment advisory fees. The $16.8 million of total expenses were comprised of $6.2 million of interest and credit facility expenses, $8.8 million of management and incentive fees, and $1.8 million of other operating expenses.

Net investment income after taxes for the three months ended June 30, 2018 was $20.2 million, or $0.50 per share, compared with $18.7 million, or $0.47 per share per share for the three months ended March 31, 2018.

During the three months ended June 30, 2018, the Company had net realized and unrealized losses of $(2.7) million.

Net increase in net assets resulting from operations for the three months ended June 30, 2018 was $17.5 million, or $0.43 per share.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2018, the Company had $508.0 million of total principal amount of debt outstanding, comprised of $393.0 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 3.97% for the six months ended June 30, 2018 as compared to 3.83% for the three months ended March 31, 2018. As of June 30, 2018, the Company had $302.0 million of availability under its revolving credit facility and $9.2 million in cash and cash equivalents.

The Company’s average and ending debt to equity leverage ratio was 0.72x and 0.70x, respectively, for the three months ended June 30, 2018, as compared with 0.72x and 0.73x, respectively, for the three months ended March 31, 2018.9

CONFERENCE CALL

The Company will host an earnings conference call on Friday, August 3, 2018 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 1584433. 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 August 3 through September 3. To hear the replay, participants should dial (855) 859-2056; international callers should dial +1 (404) 537-3406; conference ID 1584433. 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 15, 2018 to holders of record as of September 28, 2018.

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 Total debt outstanding excluding netting of debt issuance costs of $3.3 million and $3.5 million, respectively, as of June 30, 2018 and March 31, 2018.

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.

5 The fixed versus floating composition has been calculated as a percentage of performing debt investments, 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, 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 June 30, 2018 and March 31, 2018, investments where net debt to EBITDA may not be the appropriate measure of credit risk represented 10.5% and 11.1%, 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.

7 For a particular portfolio company of the SCF, we calculate the level 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.

8 Interest income excludes accelerated accretion of upfront loan origination fees and unamortized discounts of $0.5 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 ratios exclude unfunded commitments.


Goldman Sachs BDC, Inc.

Consolidated Statements of Assets and Liabilities

(in thousands, except share and per share amounts)

 

         June 30, 2018    
    (Unaudited)    
      December 31, 2017    

Assets

 

Investments, at fair value

 

Non-controlled/non-affiliated investments (cost of $1,001,942 and $1,053,226, respectively)

   $ 998,111     $ 1,050,179  

Non-controlled affiliated investments (cost of $140,962 and $109,528, respectively)

     124,425       95,468  

Controlled affiliated investments (cost of $118,107 and $114,911, respectively)

     114,813       112,666  

Investments in affiliated money market fund (cost of $2 and $11,539, respectively)

     2       11,539  

Cash

     9,206       11,606  

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

     7,948       8,302  

Dividend receivable from controlled affiliated investments

     2,200       2,400  

Other income receivable from controlled affiliated investments

           1,308  

Deferred financing costs

     6,039       4,847  

Deferred offering costs

     501       275  

Other assets

     129       2  
  

 

 

   

 

 

 

Total assets

   $             1,263,374     $             1,298,592  
  

 

 

   

 

 

 

Liabilities

 

Debt (net of debt issuance costs of $3,288 and $3,724, respectively)

   $ 504,712     $ 542,526  

Interest and other debt expenses payable

     1,842       1,688  

Management fees payable

     4,479       4,647  

Incentive fees payable

     4,342       3,180  

Distribution payable

     18,079       18,059  

Directors’ fees payable

     98        

Accrued offering costs

     314       289  

Accrued expenses and other liabilities

     3,022       2,373  
  

 

 

   

 

 

 

Total liabilities

   $ 536,888     $ 572,762  
  

 

 

   

 

 

 

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, 40,175,405 and 40,130,665 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively)

     40       40  

Paid-in capital in excess of par

     800,822       799,936  

Accumulated net realized gain (loss)

     (84,121     (85,451

Accumulated undistributed net investment income

     34,828       32,078  

Net unrealized appreciation (depreciation) on investments

     (23,662     (19,352

Allocated income tax expense

     (1,421     (1,421
  

 

 

   

 

 

 

TOTAL NET ASSETS

   $ 726,486     $ 725,830  
  

 

 

   

 

 

 

TOTAL LIABILITIES AND NET ASSETS

   $ 1,263,374     $ 1,298,592  
  

 

 

   

 

 

 

Net asset value per share

   $ 18.08     $ 18.09  


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,
 
     2018      2017      2018      2017  

Investment Income:

 

From non-controlled/non-affiliated investments:

 

Interest income

   $ 31,228      $ 30,213      $ 61,018      $ 57,179  

Other income

     737        300        973        835  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total investment income from non-controlled/non-affiliated

investments

     31,965        30,513        61,991        58,014  

From non-controlled affiliated investments:

 

Payment-in-kind

     1,962        1,730        3,903        3,402  

Interest income

     659        567        1,047        1,122  

Dividend income

     10        5        17        13  

Other income

     9        6        15        12  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total investment income from non-controlled affiliated investments

     2,640        2,308        4,982        4,549  

From controlled affiliated investments:

 

Payment-in-kind

     433               806         

Dividend income

     2,200        2,450        5,000        4,900  

Other income

            746               746  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total investment income from controlled affiliated investments

     2,633        3,196        5,806        5,646  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total investment income

   $ 37,238      $ 36,017      $ 72,779      $ 68,209  
  

 

 

    

 

 

    

 

 

    

 

 

 

Expenses:

 

Interest and other debt expenses

   $ 6,173      $ 4,839      $ 11,896      $ 9,351  

Management fees

     4,479        4,351        9,282        8,812  

Incentive fees

     4,342        1,238        9,026        4,971  

Professional fees

     1,058        473        1,728        934  

Administration, custodian and transfer agent fees

     232        195        463        389  

Directors’ fees

     117        175        218        348  

Other expenses

     370        285        679        623  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses

   $ 16,771      $ 11,556      $ 33,292      $ 25,428  
  

 

 

    

 

 

    

 

 

    

 

 

 

NET INVESTMENT INCOME (LOSS) BEFORE TAXES

   $ 20,467      $ 24,461      $ 39,487      $ 42,781  
  

 

 

    

 

 

    

 

 

    

 

 

 

Excise tax

   $ 304      $ 368      $ 589      $ 733  
  

 

 

    

 

 

    

 

 

    

 

 

 

NET INVESTMENT INCOME (LOSS) AFTER TAXES

   $             20,163      $             24,093      $             38,898      $             42,048  
  

 

 

    

 

 

    

 

 

    

 

 

 

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

 

Net realized gain (loss) from:

 

Non-controlled/non-affiliated investments

   $ 100      $ (38,108)      $ 1,767      $ (38,276)  

Non-controlled affiliated investments

                   9         

Net change in unrealized appreciation (depreciation) from:

 

Non controlled/non-affiliated investments

     (481)        26,002        (784)        25,215  

Non-controlled affiliated investments

     (1,492)        (6,652)        (2,477)        (9,516)  

Controlled affiliated investments

     (824)        (750)        (1,049)        (321)  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net realized and unrealized gains (losses)

   $ (2,697)      $ (19,508)      $ (2,534)      $ (22,898)  
  

 

 

    

 

 

    

 

 

    

 

 

 

Provision for taxes on realized gain on investments

   $ 1      $      $ (446)      $  
  

 

 

    

 

 

    

 

 

    

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

   $ 17,467      $ 4,585      $ 35,918      $ 19,150  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income (loss) per share (basic and diluted)

   $ 0.50      $ 0.64      $ 0.97      $ 1.13  

Earnings per share (basic and diluted)

   $ 0.43      $ 0.12      $ 0.89      $ 0.52  

Weighted average shares outstanding

     40,171,957        37,902,018        40,161,297        37,125,726  

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. 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.

Goldman Sachs BDC, Inc.

Investor Contact: Katherine Schneider, 212-902-3122

Media Contact: Patrick Scanlan, 212-902-6164

Source: Goldman Sachs BDC, Inc.