Goldman Sachs BDC(US:GSBD)2024-02-29 17:40Financial Data and Key Metrics Changes - As of December 31, 2023, net asset value was $14.62 per share, an increase from $14.61 in the previous quarter, primarily due to net investment income exceeding the quarterly dividend, partially offset by net realized and unrealized losses [11][35] - GAAP net investment income for the quarter was $0.56 per share, while adjusted net investment income was $0.55 per share, resulting in an annualized net investment income yield on book value of 15% [18][35] - Total portfolio investments at fair value were $3.4 billion, with outstanding debt of $1.8 billion and net assets of $1.6 billion [17][35] Business Line Data and Key Metrics Changes - The portfolio quality has improved significantly, with 95.3% of investments in first lien senior secured loans as of Q4 2023, up from 89.3% in Q4 2021 [8] - The weighted average yield of the investment portfolio at cost increased to 11.8% from 11.6% in the prior quarter [30] - The weighted average net debt-to-EBITDA ratio increased to 6.1x from 5.9x, primarily due to a single position experiencing a dip in EBITDA [31] Market Data and Key Metrics Changes - The company originated $166.2 million in new investment commitments during the quarter, with sales and repayment activity totaling $224 million [13] - Investments on non-accrual status remained consistent at 2.3% of the total investment portfolio at fair value [32] - The company noted that while the broadly syndicated loan market has reopened, it primarily impacts the upper middle market, whereas the company focuses on the core middle market [12] Company Strategy and Development Direction - The integration of the Goldman Sachs private credit platform has allowed the company to enhance its origination capabilities and improve underwriting [7] - The company aims to capitalize on proprietary and unique direct lending opportunities, particularly in the middle market [9] - The company anticipates that as the overall deal environment improves, supply and demand for private credit will align to support spread premiums and tighter lending terms [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the performance of the portfolio and the outlook for deployment into attractive opportunities [36] - The company noted continued EBITDA growth among portfolio companies, with a weighted average EBITDA growth of 7.5% year-over-year [74] - Management highlighted that the backlog of companies to be sold remains near record levels, which could drive future activity [112] Other Important Information - The company declared a first-quarter dividend of $0.45 per share, marking the 36th consecutive quarter of this dividend [27] - The PIK percentage of total investment income decreased slightly quarter-over-quarter, remaining in the single digits [35] - The company has $724 million of capacity available under its secured revolving credit facility [34] Q&A Session Summary Question: Integration of private credit platform - Management confirmed that GSBD continues to focus on the core middle market while benefiting from the broader Goldman Sachs ecosystem for sourcing and origination [64] Question: Competitive landscape and deal sourcing - Management noted that while there is increased competition in the direct lending space, GSBD has not seen banks reentering the core middle market, which remains its focus [72] Question: Portfolio performance and EBITDA growth - Management reported continued EBITDA growth across portfolio companies, with a weighted average top-line growth of 16.5% and EBITDA margin expansion of 130 basis points [74] Question: Future leverage and market conditions - Management indicated that leverage is expected to approach the target level of 1.25x, depending on market activity and conditions [104] Question: Unsecured debt strategy - Management stated that they would evaluate market conditions for potential unsecured debt issuance, considering fixed versus floating rates based on investor benefits [117]