Goldman Sachs BDC (GSBD) 9 Aug 24 2024 Q2 Earnings call transcript

In a recent earnings call, Goldman Sachs BDC, Inc. reported a solid second quarter, showcasing a significant increase in net investment income per share, along with a strategic focus on selective investments and a robust originations pipeline. Despite a few challenges in portfolio performance, the company's management team outlined a clear path forward, underpinned by a strong balance sheet and strategic partnerships.

Strong Quarterly Performance and Strategic Focus

Goldman Sachs BDC, Inc. reported a net investment income per share of $0.59 for the quarter, marking a 7.3% increase from the previous quarter. This positive performance is a testament to the company's strategic focus on selective investments and its ability to capitalize on a healthy deal flow. The company's management team, led by Co-Chief Executive Officer Alex Chi, emphasized their commitment to investing in borrowers with highly profitable, scaled businesses and best-in-class technology. This approach is aimed at maximizing returns and minimizing risks.

Portfolio Performance and Challenges

The earnings call also highlighted some challenges in portfolio performance, with investments in Pluralsight, Lithium Technologies, and Zipari being placed on nonaccrual status. These nonperforming loans accounted for a significant portion of the company's unrealized losses during the quarter. However, management expressed optimism about the ongoing restructuring efforts, particularly with Pluralsight, and their commitment to maximizing recoveries for investors.

Robust Originations Pipeline and Strategic Partnerships

One of the standout highlights from the earnings call was the company's robust originations pipeline. Goldman Sachs BDC, Inc. originated more investments in the second quarter than in all of 2023, marking the highest level of origination activity since the integration of the Goldman Sachs private credit platform. These origination efforts have been bolstered by strategic partnerships, including the direct lending platform and the Investment Bank, which have contributed to a significant increase in deal flow.

Financial Health and Outlook

Financially, Goldman Sachs BDC, Inc. remains in a strong position, with a net debt to equity ratio below its target leverage of 1.25x. The company's portfolio yield on a cost basis experienced a slight decrease, primarily due to the reduction in income from nonaccrual investments. However, management remains confident in their ability to recycle capital, bolster the portfolio with compelling new originations, and navigate any challenges that may arise.

Conclusion

In conclusion, Goldman Sachs BDC, Inc.'s second quarter earnings call painted a picture of a company that is strategically focused, financially sound, and well-positioned for the future. While there have been challenges in portfolio performance, management's proactive approach to restructuring and recovery efforts, along with a robust origination pipeline, bode well for the company's long-term prospects. With a strong balance sheet, strategic partnerships, and a commitment to selective investments, Goldman Sachs BDC, Inc. is poised for continued growth and success.