Goldman Sachs BDC(US:GSBD)2021-08-05 20:32Investment Strategy and Portfolio - Goldman Sachs BDC, Inc. has originated over $4.77 billion in aggregate principal amount of debt and equity investments since its formation in 2012 through June 30, 2021[193]. - The company primarily invests in U.S. middle-market companies, defined as those with annual EBITDA between $5 million and $200 million[195]. - The investment strategy focuses on secured debt, including first lien, unitranche, and second lien debt, as well as unsecured debt and select equity investments[193]. - The company completed a merger with GS MMLC on October 12, 2020, issuing 61,037,311 shares of common stock to former GS MMLC stockholders[199]. - The company has a focus on industries expected to be more durable during economic cycles, monitoring exposures to sectors negatively impacted by COVID-19[201]. - As of June 30, 2021, the total portfolio amounted to $3,105.60 million, with a fair value of $3,156.46 million, compared to $3,182.58 million and $3,242.77 million as of December 31, 2020[213]. - The number of portfolio companies decreased from 123 as of December 31, 2020, to 114 as of June 30, 2021[217]. - The median EBITDA for portfolio companies increased to $37.64 million as of June 30, 2021, compared to $34.20 million previously[217]. - Performing investments accounted for 99.7% of total amortized cost, with non-accrual investments at 0.3% as of June 30, 2021[228]. Financial Performance - Revenue generation is primarily through interest income from investments, with additional income from fees related to loan origination and management[207]. - Total investment income increased to $83.92 million for the three months ended June 30, 2021, compared to $30.60 million for the same period in 2020, representing a growth of 174%[234]. - Net investment income after taxes rose to $58.18 million for the three months ended June 30, 2021, up from $18.18 million in the prior year, marking an increase of 219%[238]. - The company committed $369.19 million in new investments during the three months ended June 30, 2021, a significant increase from $0.49 million in the same period of 2020[229]. - Interest income from investments surged to $78.48 million for the three months ended June 30, 2021, compared to $28.99 million in the same period of 2020, reflecting a growth of 171%[240]. - Total expenses for the three months ended June 30, 2021, were $35.63 million, up from $14.18 million in the same period of 2020, indicating a rise of 151%[242]. - The company reported a net realized loss on investments of $1.27 million for the three months ended June 30, 2021, compared to a loss of $1.39 million in the same period of 2020[234]. - Adjusted net investment income after taxes was $48.79 million for the three months ended June 30, 2021, compared to $18.18 million in the same period of 2020, reflecting a growth of 168%[238]. Debt and Financing - The Revolving Credit Facility and various notes allow the company to leverage its investment portfolio, with an asset coverage ratio requirement of at least 150%[211]. - As of June 30, 2021, the company had total contractual obligations of $1,598.57 million, with $155.00 million due within one year, $360.00 million due in 3-5 years, and $583.57 million under the Revolving Credit Facility[260]. - The company has a Revolving Credit Facility with a committed borrowing amount of $1,695.00 million, which can be increased to $2,250.00 million under certain conditions[262]. - The company’s Convertible Notes total $155.00 million, with an interest rate of 4.50% per year, maturing on April 1, 2022[265][266]. - The 2025 Notes amount to $360.00 million, bearing an interest rate of 3.75% per year, maturing on February 10, 2025[267]. - The 2026 Notes total $500.00 million, with an interest rate of 2.875% per year, maturing on January 15, 2026[269]. - Approximately 99.1% of the company's performing debt investments bore interest at a floating rate as of June 30, 2021[277]. - A 300 basis point increase in interest rates could result in a net income increase of $37.98 million, while a 300 basis point decrease could lead to a net income decrease of $1.77 million[278]. Economic and Market Conditions - The economic recovery from the COVID-19 pandemic has been uneven, impacting portfolio companies and potentially reducing interest and dividend income[200]. - The company may need to restructure investments in portfolio companies due to business disruptions caused by the pandemic, which could affect cash flows and distributions[201]. - The weighted average yield of the total portfolio at amortized cost and fair value was 8.4% as of June 30, 2021, unchanged from December 31, 2020, but down from 8.6% at fair value[216]. - The weighted average leverage (net debt/EBITDA) was 5.9x as of June 30, 2021, slightly improved from 6.0x[217]. - Investments graded as Grade 1 increased to 10.8% of total fair value, up from 2.0% at the end of 2020, driven by upgrades from Grade 2[227]. - The total investments in Grade 3 decreased due to upgrades to Grade 2, reflecting financial improvements in certain portfolio companies[227]. Corporate Governance and Compliance - The company has a dividend reinvestment plan that automatically reinvests cash distributions unless stockholders opt out[258]. - There have been no changes in the internal control over financial reporting that materially affected the company during the fiscal quarter ended June 30, 2021[281]. - The management has concluded that the disclosure controls and procedures were effective as of June 30, 2021[280]. - The company has not experienced any material legal proceedings as of the report date, nor is it aware of any threatened material legal proceedings[282].