Goldman Sachs BDC (GSBD) 8 Nov 24 2024 Q3 Earnings call transcript
AInvestFriday, Nov 8, 2024 7:43 pm ET
2min read
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Goldman Sachs BDC, Inc. recently held its third quarter 2024 earnings conference call, providing a comprehensive overview of the company's performance and market environment. The call, led by Co-CEOs Alex Chi and David Miller, along with Chief Operating Officer Tucker Greene and Chief Financial Officer Stanley Matuszewski, offered valuable insights into the company's financial health and growth prospects.

Market Environment and Performance

The call began with a discussion on the market environment, with particular focus on the recovery of mergers and acquisitions (M&A) in the third quarter. With M&A volumes growing by 17.5% year-over-year, Goldman Sachs BDC has benefited significantly from the trend, thanks to its strategic positioning within the Goldman Sachs ecosystem. The company's net investment income per share for the quarter stood at $0.58, with a net asset value per share at $13.54, reflecting a decrease of approximately 1% from the second quarter. This decrease was mainly due to net realized and unrealized losses in the quarter.

Portfolio Activity and Performance

David Miller, Co-CEO, highlighted the company's impressive third quarter gross originations, which more than doubled year-over-year. This marked the second largest deployment quarter since the integration of Goldman Sachs BDC into the broader Goldman Sachs private credit platform. The company's portfolio companies have shown positive growth in both top line and EBITDA, with a current weighted average interest coverage of 1.7x. This strong performance was further underscored by the company's sales and repayment activity, which increased by 45% from the prior quarter, totaling $329 million.

Financial Results

Stanley Matuszewski, Chief Financial Officer, provided a detailed breakdown of the company's financial results. With total portfolio investments at fair value at $3.4 billion, outstanding debt at $1.9 billion, and net assets at $1.6 billion, the company's financial health is evident. The ending net debt to equity ratio was 1.16x, below the target leverage of 1.25x. The company also had $1.1 billion of capacity available under its secured revolving credit facility.

Credit Quality and Portfolio Composition

Tucker Greene, Chief Operating Officer, discussed the company's credit quality and portfolio composition. The weighted average yield of the investment portfolio to amortized cost decreased slightly to 10.9% from 11%, reflecting the company's ability to maintain sound credit fundamentals and low leverage. The company's asset quality also improved, with investments on nonaccrual status decreasing to 2.2% of the total investment portfolio at fair value from 3.4% as of the second quarter.

Future Outlook

Looking ahead, the company is optimistic about the rebound in M&A activity volumes into 2025, given the $1.4 trillion of private equity dry powder and the need for private equity firms to return capital to LP investors. With its strong performance and strategic positioning, Goldman Sachs BDC is well-positioned to benefit from this trend.

In conclusion, Goldman Sachs BDC's third quarter 2024 earnings call painted a picture of a company that is not only navigating the current market recovery effectively but also positioning itself for future growth. With a focus on sound credit fundamentals, strategic portfolio management, and a proactive approach to market opportunities, Goldman Sachs BDC is poised to capitalize on the anticipated rebound in M&A activity volumes.

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