Goldman Sachs BDC(US:GSBD)2024-05-07 20:40Investment Performance - The company has originated approximately $7.69 billion in aggregate principal amount of debt and equity investments from its formation in 2012 through March 31, 2024[223]. - As of March 31, 2024, the total investments amounted to $3,602.65 million, with a fair value of $3,440.11 million[240]. - The weighted average yield of the total portfolio at amortized cost was 11.9% as of March 31, 2024, compared to 11.8% at the end of 2023[240]. - The company’s first lien/senior secured debt had a weighted average yield of 12.2% at amortized cost as of March 31, 2024[240]. - The company’s unsecured debt had a significantly higher weighted average yield of 19.9% at amortized cost as of March 31, 2024[240]. - As of March 31, 2024, the total portfolio weighted average yield at amortized cost was 12.7% and at fair value was 14.1%, compared to 12.6% and 13.8% as of December 31, 2023[242]. - The median EBITDA for portfolio companies was $57.60 million as of March 31, 2024, compared to $53.98 million as of December 31, 2023[242]. - The total investments amounted to $3,602.65 million as of March 31, 2024, with performing investments at $3,484.03 million (96.7%) and non-accrual investments at $118.62 million (3.3%)[248]. - The grading system for investments showed that Grade 1 investments decreased to 0.8% of total fair value as of March 31, 2024, down from 1.4% as of December 31, 2023[247]. Revenue and Income - The company generates revenue mainly through interest income from investments, along with various fees and capital gains[232]. - Total investment income for the three months ended March 31, 2024, was $111.54 million, an increase of 3.3% from $107.40 million in the same period of 2023[254]. - Net investment income after taxes rose to $60.86 million for the three months ended March 31, 2024, compared to $47.99 million in 2023, reflecting a 27% increase[253]. - Adjusted net investment income after taxes for the three months ended March 31, 2024, was $59.54 million, up from $47.07 million in 2023, representing a 26.4% increase[253]. - Interest income from investments decreased to $97.57 million for the three months ended March 31, 2024, from $98.64 million in 2023, a decline of 1.1%[256]. - Payment-in-kind (PIK) income increased significantly to $12.70 million for the three months ended March 31, 2024, compared to $7.76 million in 2023, an increase of 63%[254]. Expenses and Losses - Net expenses decreased to $49.60 million for the three months ended March 31, 2024, down from $58.64 million in 2023, marking a reduction of 15.5%[255]. - Net realized losses on investments were $16.99 million for the three months ended March 31, 2024, compared to losses of $36.26 million in the same period of 2023[256]. - The net change in unrealized appreciation (depreciation) on investments was a loss of $3.07 million for the three months ended March 31, 2024, compared to a gain of $18.22 million in 2023[260]. - Incentive fees decreased to $10.88 million for the three months ended March 31, 2024, down from $22.30 million in 2023, a reduction of 51%[257]. Investment Strategy and Commitments - The company primarily invests in U.S. middle-market companies, which are defined as those with annual EBITDA between $5 million and $200 million[226]. - The company’s origination strategy focuses on leading negotiations and structuring loans, often being the sole investor in its portfolio[227]. - The company committed $360.22 million in new investments during the three months ended March 31, 2024, significantly up from $2.10 million in the same period of 2023[249]. - The company had 7 new portfolio companies with new investment commitments totaling $203.71 million for the three months ended March 31, 2024[249]. - The weighted average yield on new debt and income-producing investment commitments was 11.5% for the three months ended March 31, 2024, compared to 11.1% for the same period in 2023[249]. - The company has unfunded commitments totaling $514.66 million as of March 31, 2024, up from $307.52 million as of December 31, 2023[283]. Leverage and Financing - The company’s leverage strategy includes a senior secured revolving credit agreement and various notes, allowing it to borrow money to enhance yield[238]. - The company has a Revolving Credit Facility with a committed borrowing amount of $1,695.00 million, which can be increased to $2,542.50 million under certain conditions[277]. - The company issued $360.00 million of 3.75% unsecured notes due 2025, with interest payable semi-annually[280]. - The company issued $500.00 million of 2.875% unsecured notes due 2026, with interest payable semi-annually[281]. - The company issued $400.00 million of 6.375% unsecured notes due 2027, with interest payable semi-annually starting September 11, 2024[282]. - The company may enter into credit facilities secured by certain assets, depending on market conditions and business performance[264]. Market and Economic Conditions - A significant change in market interest rates could materially adversely affect net investment income, as the company expects to fund a portion of investments with borrowings[291]. - The annual impact on net income from a 300 basis point increase in interest rates would result in an income of $63.41 million, while a decrease of 300 basis points would lead to a loss of $63.39 million[294]. - The company regularly measures its exposure to interest rate risk and manages it by comparing interest rate sensitive assets to liabilities[293]. - Heightened inflation may persist in the near to medium-term, potentially affecting profit margins of portfolio companies[295]. Corporate Governance and Policies - The company has a voluntary dividend reinvestment plan (DRIP) for automatic reinvestment of cash distributions, with certain stockholders opting out[272]. - The Board of Directors declared a quarterly distribution of $0.45 per share, payable on July 26, 2024, to holders of record as of June 28, 2024[288]. - The SEC adopted final rules requiring climate-related disclosures, which are to be phased in starting fiscal year 2025, but implementation is currently stayed pending litigation[289]. - The company operates as a "limited derivatives user," which may limit its ability to use derivatives and enter into certain financial contracts[285]. - Management's estimates and assumptions in financial statements could lead to material differences in reported amounts due to changes in the economic environment[286]. - The most significant accounting policies include those related to investments, revenue recognition, and income taxes[287]. Asset Management - As of March 31, 2024, the company's asset coverage ratio was 188%, indicating strong leverage management[264]. - The weighted average leverage (net debt/EBITDA) remained stable at 6.1x as of March 31, 2024[242]. - The company completed a follow-on offering on March 9, 2023, issuing 6,500,000 shares at $15.09 per share, resulting in net cash proceeds of $97.58 million[268]. - The amortized cost of the investment portfolio decreased from $3,681.51 million as of March 31, 2023, to $3,602.65 million as of March 31, 2024[256]. - As of March 31, 2024, approximately 0.6% of performing debt investments bore interest at a fixed rate, while 99.4% bore interest at a floating rate[292].