Goldman Sachs BDC, Inc. Q3 FY2024 earnings call

• Net investment income per share for the quarter was $0.58, and net asset value per share was $13.54, down 1% from Q2 due to net realized and unrealized losses.
• Board declared a fourth quarter dividend of $0.45 per share.
• M&A recovered in Q3 with 17.5% YoY growth in sponsor M&A volumes.
• Gross originations more than doubled YoY, second largest deployment quarter since integration.
• Sales and repayments activity increased 45% to $329 million, with 72% of repayments from 2021 older vintages.
• Originated $376.6 million in 34 new investment commitments, 98.1% in first lien loans.
• Portfolio yield, interest coverage improved, and non-accrual investments decreased from 3.4% to 2.2% of fair value.

For the third quarter, total investments at fair value were $3.44 billion. The portfolio composition was 97.6% in senior secured loans, including 91.6% first lien, 4.7% in first lien last out unit tranche, 1.3% in second lien debt, 1.9% in a combination of preferred and common stock, and negligible unsecured debt. Net investment income per share was $0.58, with net asset value per share at $13.54, a decrease of approximately 1% relative to the second quarter.

• Anticipate M&A volumes to continue enhancing in 2025.
• Q4 expected to be muted due to election, but 2025 M&A volumes likely to be strong.
• Expect first quarter 2025 to be busy with assessing new opportunities, but actual deployment likely in Q2 or later.

• Adverse selection risk with recycling of older vintage investments.
• Credit risk in specific sectors, e.g., a business services sector name had underperformance leading to a risk rating change.

Q: How much more opportunity do you have to recycle and improve the portfolio?

A: We had a strong quarter of sales and repayments, with full exits in at least four portfolio companies originated in 2021 or earlier, and feel good about the pace of repayments and recycling.

Q: Could you provide color on negative credit migration and specific sectors?

A: Aggregate Risk Rated 3 and 4 buckets ticked up ~1% due to one business services sector name underperforming.

Q: Should we expect 2025 to be unusual in terms of pipeline?

A: Optimistic about 2025 M&A volumes, but deployment likely in Q2 or later as it takes time for deals to transact and fund.