Goldman Sachs BDC Q1 2025 Earnings Report

Goldman Sachs BDC EPS Results

• Actual EPS: $0.41
• Consensus EPS: $0.43
• Beat/Miss: Missed by -$0.02
• One Year Ago EPS: N/A

Goldman Sachs BDC Revenue Results

• Actual Revenue: $96.94 million
• Expected Revenue: $101.12 million
• Beat/Miss: Missed by -$4.18 million
• YoY Revenue Growth: N/A

Goldman Sachs BDC Announcement Details

• Quarter: Q1 2025
• Date: 5/8/2025
• Time: After Market Closes
• Conference Call Date: Friday, May 9, 2025
• Conference Call Time: 9:00AM ET

Goldman Sachs BDC (NYSE:GSBD) is a business development company specializing in middle market and mezzanine investment in private companies. It seeks to make capital appreciation through direct originations of secured debt, senior secured debt, junior secured debt, including first lien, first lien/last-out unitranche and second lien debt, unsecured debt, including mezzanine debt and, to a lesser extent, investments in equities. The fund primarily invests in United States. It seeks to invest between $10 million and $75 million in companies with EBITDA between $5 million and $75 million annually.

Goldman Sachs BDC Q1 2025 Earnings Call Transcript

Key Takeaways

• Management’s in‐depth tariff analysis found only 4 of 163 portfolio companies (approximately 3% of fair value) have high exposure, reflecting the portfolio’s focus on U.S. service-oriented, asset-light businesses.
• The Board approved a refreshed dividend policy with a $0.32 base dividend per share plus supplemental distributions, declaring a 5¢ Q1 supplemental dividend and a $0.16 special dividend.
• For Q1, net investment income was $0.42 per share, NAV per share was $13.20, and the company maintained a net debt-to-equity ratio of 1.16x, below its 1.25x target.
• New investment commitments totaled $87.8 million across 14 companies, 100% in first-lien loans, with average new spreads widening to 510 basis points, and the firm retaining a top-of-capital-stack bias.
• Credit fundamentals strengthened: portfolio yield was 10.8% at cost, weighted average net debt/EBITDA fell to 5.8x, interest coverage rose to 1.9x, and nonaccruals decreased to 1.9% of fair value.

Presentation

[Austin Neri, Investor Relations at Goldman Sachs BDC]

Good morning. This is Austin Eery, a member of the Investor Relations team for Goldman Sachs BDC, Inc. And I would like to welcome everyone to the Goldman Sachs BDC, Inc. First Quarter twenty twenty five Earnings Conference Call. Please note that all participants will be in listen only mode until the end of the call when we will open up the line for questions.

[Austin Neri, Investor Relations at Goldman Sachs BDC]

Before we begin today's call, I would like to remind our listeners that today's remarks may include forward looking statements. These statements represent the company's belief regarding future events that, by their nature, are uncertain and outside of the company's control. The company's actual results and financial condition may differ, possibly materially, from what is indicated in those forward looking statements as a result of a number of factors, including those described from time to time in the company's SEC filings. This audiocast is copyrighted material of Goldman Sachs BDC, Inc. And may not be duplicated, reproduced, or rebroadcast without our consent.

[Austin Neri, Investor Relations at Goldman Sachs BDC]

Yesterday, after the market closed, the company issued an earnings press release and posted a supplemental earnings presentation, both of which can be found on the homepage of our website at www.goldmansachsbdc.com under the Investor Resources section and which include reconciliations of non GAAP measures to the most directly comparable GAAP measures. These documents should be reviewed in conjunction with the company's quarterly report on Form 10 Q filed yesterday with the SEC. This conference call is being recorded today, Friday, 05/09/2025, for replay purposes. I'll now turn the call over to Alex Chi, Co Chief Executive Officer of Goldman Sachs BDC, Inc.

[Alex Chi, Co-CEO and Co-President at Goldman Sachs BDC]

Thank you, Austin. Good morning, everyone, and thank you for joining us for our first quarter twenty twenty five earnings conference call. I'm here today with our Co CEO, David Miller our COO, Tucker Green and our CFO, Stan Medischewski. We'll start the call with our thoughts on recent performance in light of a challenging macro environment, then pivot to our investing activity while framing how GSBD is positioned heading into the second quarter. I'll then turn the call over to David and Tucker to describe our portfolio activity and performance in more detail before handing it over to Stan to take us through our financial results.

[Alex Chi, Co-CEO and Co-President at Goldman Sachs BDC]

And then finally, we'll open the line for Q and A. Let's start by addressing macroeconomic conditions, tariffs and their potential impact on the portfolio and deal flow. With respect to the portfolio, as mentioned on our previous call, we've conducted an in-depth company by company analysis across our entire direct lending portfolio with respect to tariff exposure and a potential recessionary or even stagflationary environment. While the second and third order effects remain difficult to quantify, the initial diagnosis is that only four out of our 163 companies within GSBD, or approximately 3% of fair value, are considered to have high exposure, primarily due to their supply chain dependencies in China. The results of our analysis are not surprising as the vast majority of our portfolio companies are asset light with minimal exposure to international supply chains, are domiciled in The U.

[Alex Chi, Co-CEO and Co-President at Goldman Sachs BDC]

S, serving predominantly U. S. Customers, and operate primarily within service based industries such as software, health care, and mission critical business services. In addition, we find comfort in where the GSBD portfolio sits in the capital stack with over 96% of the investments in first lien risk and an attractive loan to value. With respect to deal flow, as a result of the tariff induced market volatility, the long awaited resurgence of new M and A activity has been further pushed back.

[Alex Chi, Co-CEO and Co-President at Goldman Sachs BDC]

However, the deals that were already in process generally pivoted their financing back from the public syndicated market to direct lending. In addition, we continue to see deal flow for businesses that are shielded from tariff exposure, again, primarily in services related industries where private equity buyers are still prepared to pay healthy multiples. We've continued to use our proximity to our investment banking franchise as a competitive advantage for origination. In addition, market fundamentals continue to suggest the current lack of deal flow will eventually change as sponsors face mounting DPI pressure. With respect to all in yields, our focus for new investments is in the low to mid 9% range with weighted average spreads of our broader platforms new investments widening modestly quarter over quarter from four seventy nine basis points to five ten basis points.

[Alex Chi, Co-CEO and Co-President at Goldman Sachs BDC]

Now turning to our first quarter results. Our net investment income per share for the quarter was $0.42 and net asset value per share was $13.2 as of quarter end, a decrease of 1.6% relative to the fourth quarter NAV, which was largely due to the $0.16 per share special dividend and net realized and unrealized losses in the quarter. On the topic of dividends, as you'll recall from the last quarter, the Board of GSBD enacted a revised dividend structure consisting of a base dividend of $0.32 per share with upside via supplemental variable distributions of at least 50% of net investment income in excess of the amount of base dividend, an incentive fee reduction from 20% to 17 and a half percent over a 7% hurdle in the interest of aligning the long term earnings power of the portfolio to increase shareholder value. And over the subsequent three quarters, including the quarter ended 03/31/2025, the Board authorized a special dividend of $0.16 per share. The board declared a first quarter twenty twenty five supplemental dividend of 5¢ per share payable on or about 06/13/2025 to shareholders of record as of 05/30/2025.

[Alex Chi, Co-CEO and Co-President at Goldman Sachs BDC]

Adjusted for the impact of the supplemental dividend related to the first quarter's earnings, the company's first quarter adjusted NAV per share is $13.15, which to note is a non GAAP financial measure introduced as a result of the dividend policy change. The board also declared a base dividend per share of $0.32 and a special dividend of $0.16 per share to shareholders of record as of 06/30/2025. As anticipated, we made these distributions while remaining below our targeted debt to equity leverage ratio of one and a quarter times. We ended the quarter with a net debt to equity ratio of 1.16 times as of 03/31/2025 as compared to 1.17 times as of 12/31/2024. We remain focused on delivering on our new dividend structure, the core earnings power of the portfolio, and realizing exits of legacy portfolio companies while rotating into new vintage credits.

[Alex Chi, Co-CEO and Co-President at Goldman Sachs BDC]

With that, let me turn it over to my co CEO, David Miller.

[David Miller, Co-President & Co-CEO at Goldman Sachs BDC]

Thanks, Alex. During the quarter, we made new investment commitments of approximately $87,800,000 across 14 portfolio companies comprised of six new and eight existing portfolio companies. Of the six new portfolio companies, we served as lead on five or 72% at fair value. 100% of our originations during the quarter were in first lien loans, which reflects our continued bias in maintaining exposure to the top of the capital stack. We believe our platform thrives in times of market volatility through the unique opportunities that channels through the Goldman Sachs ecosystem, which is beneficial to GSBD shareholders.

[David Miller, Co-President & Co-CEO at Goldman Sachs BDC]

One notable investment during the quarter that illustrated how our strong sponsor relationship secured us the role of admin agent, jointly into Rager, and cemented us as the largest lender of the company, admits a competitive consortium with supporting the acquisition of Vermont Information Processing. The company provides mission critical, vertical specific software and data services to distributors, suppliers, and retailers in the regulated beverage industry. While maintaining long standing relationship with sponsors shows its worth in choppy markets, so does retaining our position as an incumbent and admin agency in a high quality company, which was the case with Solero Commerce. Solero is a provider of integrated payment processing and business management solutions to small and midsized businesses across The United States. The GS private credit platform has invested in the company since October 2020, and their business has grown both organically and inorganically through acquisitions.

[David Miller, Co-President & Co-CEO at Goldman Sachs BDC]

Sales and repayment activity totaled $179,300,000 during the quarter, down slightly quarter over quarter despite stagnant capital markets, primarily driven by the full repayment and refinancing of six portfolio companies. It's also worth noting that 88% of the repayment amount was with existing legacy portfolio companies and will be redeployed into new originations post q one. For our portfolio composition, as of 03/31/2025, total investments in our portfolio were $3,380,000,000 at fair value, comprised of 96.1% senior secured loans, including 90.7% in first lien, 5.4% in first lien last out unit tranche, 2% in a combination of preferred and common stock, one point four percent second lien debt, as well as a negligible amount in unsecured debt. With that, let me turn it over to Tucker to discuss portfolio fundamentals and credit quality.

[Tucker Greene, Chief Operating Officer at Goldman Sachs BDC]

Thanks, David. At the end of the first quarter, the company held investments in 163 portfolio companies operating across 38 different industries. The weighted average yield of our debt and income producing investments at amortized cost and at the end of the first quarter was 10.8% as compared to 11.2% at the end of the fourth quarter. Despite a modest tightening in portfolio yield quarter over quarter, our portfolio companies have both top line growth and EBITDA growth quarter over quarter and year over year on a weighted average basis. The EBITDA growth of the portfolio combined with repayments of investments to companies with higher leverage levels drove a decrease in the weighted average net debt to EBITDA of the companies in our investment portfolio to 5.8 times during the first quarter from 6.2 times during the fourth quarter.

[Tucker Greene, Chief Operating Officer at Goldman Sachs BDC]

At the same time, the current weighted average interest coverage of the companies in our investment portfolio at quarter end increased to 1.9 times in the first quarter compared to 1.8 times during the fourth quarter. And finally, turning to asset quality. During the quarter, the Pluralsight first lien senior secured debt position was restored back to accrual due to performance since restructure. Additionally, Animal Supply Intermediate LLC's second lien senior secured debt position, which was on nonaccrual since Q3 twenty twenty two, was exited. On the other hand, NPI Engineered Technologies' second lien senior secured debt position and ATX Networks' first lien senior secured debt position was placed on nonaccrual.

[Tucker Greene, Chief Operating Officer at Goldman Sachs BDC]

At the end of the first quarter, investments on nonaccrual status decreased to 1.9% of the total investment portfolio at fair value from 2% as of 12/31/2024. I will now turn the call over to Stan to walk through our financial results.

[Stanley Matuszewski, CFO & Treasurer at Goldman Sachs BDC]

Thank you, Tucker. We ended the first quarter of twenty twenty five with total portfolio investments at fair value of $3,400,000,000 outstanding debt of $1,900,000,000 and net assets of 1,500,000,000.0 Our ending net debt to equity ratio as of the end of the first quarter was 1.16x, which continues to be below our target leverage ratio of 1.25x. At quarter end, approximately 48% of our total principal amount of debt outstanding was in unsecured debt. As of 03/31/2025, the company had approximately $720,000,000 of borrowing capacity remaining under the revolving credit facility. Before continuing to the income statement, as a reminder, in addition to GAAP financial measures, we also reference certain non GAAP or adjusted measures.

[Stanley Matuszewski, CFO & Treasurer at Goldman Sachs BDC]

This is intended to make our financial results easier to compare to results prior to our October 2020 merger with Goldman Sachs Middle Market Lending Corp, or MMLC. These non GAAP measures remove the purchase discount amortization impact from our financial results. For the first quarter, GAAP and adjusted after tax net investment income were $49,600,000 and $48,800,000 respectively, as compared to $56,600,000 and $55,600,000 respectively, in the prior quarter. On a per share basis, GAAP net investment income was $0.42 Excluding the impact of asset acquisition accounting in connection with the merger with MMLC, adjusted net investment income for the quarter was $0.41 per share, equating to an annualized net investment income yield on book value of 12.4 percent. Total investment income for the three months ended 03/31/2025, and 12/31/2024, was $96,900,000 and $103,800,000 respectively.

[Stanley Matuszewski, CFO & Treasurer at Goldman Sachs BDC]

We observed PIK as a percentage of total investment income decreased to 11% for the first quarter ended 03/31/2025, from 15% in the fourth quarter of twenty twenty four. As a reminder, excluding onetime adjustments for two portfolio companies, Q4 twenty twenty four PIK income as a percentage of total investment income would have been 12%, representing a 1% decrease from Q4 twenty twenty four to Q1 twenty twenty five. With that, I'll turn

[Stanley Matuszewski, CFO & Treasurer at Goldman Sachs BDC]

it back to Alex for closing remarks.

[Alex Chi, Co-CEO and Co-President at Goldman Sachs BDC]

Thanks, Dan, and thanks, everyone, for joining our earnings call. Although the environment for new M and A activity and deployment has not exhibited the fervor we all expected coming into the year, we're all encouraged by the backlog of transactions, resilience of our portfolio and our commitment to delivering on a refreshed dividend structure. With that, let's open the line for Q and A.

[Operator]

Thank If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal. And we can take our first question from Derek Hewitt with Bank of America.

[Derek Hewett, Analyst at Bank of America]

Good morning, everyone, and thanks for taking my question. The portfolio yield declined about 40 basis points on a cost basis quarter over quarter. I was expecting that to maybe stabilize a little kind of relative to what we've seen thus far for the first quarter for the BDC earning season. So could you talk about that, the 40 basis point decline? And has the portfolio largely kind of repriced now based off of the base rate cuts in the back half of last year?

[Alex Chi, Co-CEO and Co-President at Goldman Sachs BDC]

Hey, Derek. Good morning. Thanks for the question. With respect to repricings, I think that's largely subsided. Most of the borrowers who wanted to reprice their loans took advantage of a more robust environment, in the prior quarters.

[Alex Chi, Co-CEO and Co-President at Goldman Sachs BDC]

And so with respect to it's more of the new activity that we're seeing, It's it's, again, more heavily weighted towards, you know, buyouts and and refinancings. And so, I don't think you're gonna see that. What you did see, though, was, within the spreads for the deals that we did this year, it actually widened out by about 25 basis points. And we we took advantage of the incumbency within our portfolio in order to get a bit more spread. So that's why you saw our average spreads go up a bit this quarter.

[Alex Chi, Co-CEO and Co-President at Goldman Sachs BDC]

But Yeah.

[David Miller, Co-President & Co-CEO at Goldman Sachs BDC]

I mean, the other thing I would just add on there is when you see overall portfolio, the yield coming down, that was driven by the exit a couple of the non accrual positions that had very high coupons on them. But we were happy to see those goes as evidenced by our non accruals going down.

[Derek Hewett, Analyst at Bank of America]

Okay. Thank you. And then in regards to the I believe it was five, identified identifiable loans that had direct tariff exposure. Was that reflected in the fair value of those investments as of the first quarter? Or will that be determined in the in subsequent quarters?

[Alex Chi, Co-CEO and Co-President at Goldman Sachs BDC]

And when we when we looked at the exposure, it it doesn't necessarily mean that those companies were immediately impacted by tariffs. We just look, we took a prospective look with respect to where there could be impacts and just from high exposure. Example, we have a a couple of companies who have supply chain exposure to to China and to to Mexico, and and therefore, that's why we just, for conservative purposes, just put in that category. That's the extent we do see any performance deterioration that would be reflected in the mark, but, we have not seen it yet.

[David Miller, Co-President & Co-CEO at Goldman Sachs BDC]

Keep in mind, we have a lot more clarity on what potential tariffs could be post quarter end, right, on on April 2 versus on on March 31 as well. So there there there could be more to come when we get some certainty on what the final tariffs are gonna be.

[Derek Hewett, Analyst at Bank of America]

Okay. Thank you.

[Alex Chi, Co-CEO and Co-President at Goldman Sachs BDC]

Thank you.

[Operator]

Thank you. And another reminder to our audience. If you would like to ask a question, please press star one on your touch tone telephone. All right. It does appear that there are no further questions at this time.

[Operator]

Mr. Shi, I will turn the conference back to you for any closing remarks.

[Alex Chi, Co-CEO and Co-President at Goldman Sachs BDC]

Thank you. Well, thanks, everyone, for joining our call. We look forward to executing the second quarter, continue to navigate this environment. Have a great weekend.

Participants

Executives

• Austin Neri, Investor Relations
• Alex Chi, Co-CEO and Co-President
• David Miller, Co-President & Co-CEO
• Tucker Greene, Chief Operating Officer
• Stanley Matuszewski, CFO & Treasurer

Analysts

• Derek Hewett, Analyst at Bank of America