Goldman Sachs BDC(GSBD) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The net investment income per share for Q3 2024 was $0.58, and the net asset value per share was$ 13.54, a decrease of approximately 1% from the previous quarter due to net realized and unrealized losses [8] - GAAP and adjusted after-tax net investment income for Q3 2024 were $68.2 million and$ 67.2 million respectively, compared to $67 million and$ 65.2 million in the prior quarter [24] - Total investment income for Q3 2024 was $110.4 million, an increase from$ 108.6 million in Q2 2024, primarily due to incremental deployment [25] Business Line Data and Key Metrics Changes - Gross originations more than doubled year-over-year, totaling approximately $376.6 million in 34 new investment commitments [11][13] - Sales and repayments activity increased by 45% from the prior quarter, totaling$ 329 million, with 72% of repayments coming from 2021 and older vintages [12] Market Data and Key Metrics Changes - Sponsor M&A volumes grew by 17.5% year-over-year in Q3 2024, driven by $1.4 trillion of private equity dry powder [9] - The weighted average yield of the investment portfolio at amortized cost was 10.9%, down from 11% in the prior quarter [18] Company Strategy and Development Direction - The company is focused on recycling older vintage investments into new originations, with a proactive portfolio management strategy [12][15] - The management anticipates a rebound in M&A activity in 2025, supported by the Goldman Sachs ecosystem [10][15] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about M&A activity post-election, indicating a positive sentiment in the market [31] - The company expects to be busy assessing new opportunities in Q1 2025, with actual deployment likely occurring in Q2 or later [36] Other Important Information - The company declared a fourth-quarter dividend of$ 0.45 per share, marking the 39th consecutive quarter of this dividend [8] - Investments on non-accrual status decreased to 2.2% of the total investment portfolio at fair value from 3.4% in the previous quarter [21] Q&A Session Summary Question: Recycling opportunities in the portfolio - Management noted a strong quarter of sales and repayments, with full exits in at least four portfolio companies from 2021 or earlier, indicating a positive pace of repayments and recycling [28] Question: Re-pricing activity in the portfolio - Management observed a stabilization in spreads during the quarter, with expectations for a slowdown in re-pricing activity [30] Question: Outlook for M&A activity post-election - Management reported an energetic and optimistic sentiment regarding M&A activity, particularly from the sponsor community, expected to increase in 2025 [31] Question: Credit quality and risk rating changes - A slight increase in risk-rated 3 and 4 categories was attributed to one underperforming name in the business services sector [33][34]