Financial Data and Key Metrics Changes - The net investment income per share for Q2 2024 was 13.67, a decline of approximately 6% [5] - The total investment income for Q2 2024 was 111.5 million in Q1 2024 [16] - The weighted average yield of the investment portfolio decreased to 11% from 11.9% in the prior quarter [13] - The weighted average net debt-to-EBITDA ratio remained flat at 6.1 times [13] Business Line Data and Key Metrics Changes - The company originated 3.52 billion, with 98% in senior secured loans [13] - Investments on nonaccrual status increased to 3.4% of the total investment portfolio at fair value from 1.6% as of March 31, 2024 [14] Market Data and Key Metrics Changes - The company experienced significant growth in originations, with investment activity up nearly four times on a dollar basis compared to the first half of 2023 [12] - The current weighted average interest coverage of the companies in the investment portfolio remained flat at 1.5 times [13] Company Strategy and Development Direction - The company aims to continue recycling capital and bolstering the portfolio with compelling new originations [8] - The focus remains on highly profitable borrowers with strong growth and best-in-class technology, particularly in recurring revenue loans [6][20] - The company is leveraging its integration into the broader Goldman Sachs private credit platform to enhance origination capabilities [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about maximizing shareholder value despite markdowns in the quarter [18] - The improving M&A environment is expected to contribute positively to future origination opportunities [9] - Management acknowledged the challenges faced by certain portfolio companies but emphasized a selective approach to new investments [20] Other Important Information - The Board declared a third-quarter dividend of 1 billion of capacity available under its secured revolving credit facility [15] Q&A Session Summary Question: On ARR loans, is the EBITDA flip a catalyst for credit events? - Management indicated that EBITDA flips could be a factor in underperformance, as companies may cut back on essential spending to generate EBITDA [19] Question: What is the target leverage profile? - The target leverage remains around 1.25 times, with the company finishing the quarter at 1.09 times, indicating capacity for new loans [21] Question: Are there changes in the approach to recurring revenue loans? - Management confirmed that the approach to recurring revenue loans has not changed, focusing on companies with best-in-class technology and sustainable growth [23] Question: Can you clarify the deal flow increase? - Management noted that both the quantity and quality of deals have improved, with a significant increase in originations compared to the previous year [24] Question: What is the comfort level with PIK income? - Management expressed comfort with current PIK levels, noting a slight decrease but indicating it would normalize below 10% [26] Question: What caused the decline in portfolio yield? - The decline in yield was primarily due to the impact of nonaccruals on income [27]
Goldman Sachs BDC(GSBD) - 2024 Q2 - Earnings Call Transcript