Goldman Sachs BDC, Inc. (GSBD) Q1 2022 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2022. Goldman Sachs BDC, Inc. is a closed-end management investment company regulated as a Business Development Company (BDC) and a Regulated Investment Company (RIC). The Company focuses on lending to middle-market companies, primarily through secured debt (first lien, unitranche, second lien) and select equity investments. As of the reporting date, the portfolio consisted of 124 portfolio companies.
Key Financial Metrics
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Total Investment Income | $78.3 million | $82.6 million |
| Net Investment Income (After Tax) | $50.2 million | $57.6 million |
| Net Realized and Unrealized Gains (Losses) | ($9.8 million) | $3.0 million |
| Net Increase in Net Assets from Operations | $40.2 million | $60.5 million |
| Net Asset Value (NAV) per Share | $15.80 | $16.00 |
| Earnings Per Share (Basic & Diluted) | $0.39 | $0.60 |
| Total Debt (Carrying Value) | $1.87 billion | $1.86 billion |
| Asset Coverage Ratio | 186% | 186% |
| Portfolio Weighted Average Yield (Fair Value) | 8.0% | 8.0% |
Material Changes vs. Prior Period
- Investment Income Decline: Total investment income decreased by approximately $4.3 million compared to Q1 2021. This was primarily driven by a reduction in accelerated accretion of upfront loan origination fees and unamortized discounts ($3.4 million in Q1 2022 vs. $7.7 million in Q1 2021).
- Unrealized Depreciation: The Company recorded a net unrealized depreciation of $8.2 million, compared to $8.6 million in the prior year. This was attributed to increased market volatility and widening credit spreads, partially offset by unrealized appreciation in specific portfolio companies (e.g., Convene, Zarya Intermediate).
- Realized Losses: The Company recognized a net realized loss of $2.7 million, contrasting with a $7.5 million realized gain in Q1 2021. The prior year gain was largely due to the exit of Wrike, Inc. The current quarter loss included a $2.0 million loss on Bolttech Mannings, Inc.
- Expense Management: Net expenses increased to $27.3 million from $24.7 million. However, the Investment Adviser voluntarily waived $7.5 million in incentive fees, significantly reducing the net expense ratio.
Guidance, Outlook, and Risks
- Fee Waiver Commitment: Goldman Sachs Asset Management (GSAM) intends to voluntarily waive a portion of its incentive fee, if necessary, to ensure adjusted net investment income per share is at least $0.45 per share through the quarter ended December 31, 2022.
- Market Risks: Management highlighted risks associated with the Russian invasion of Ukraine, including supply chain disruptions, inflation, and increased macroeconomic uncertainty. The Company also noted the ongoing impact of the COVID-19 pandemic, particularly in China.
- Interest Rate Sensitivity: Approximately 99.4% of performing debt bears floating interest rates. While rising rates generally increase interest income, they also increase borrowing costs. The Company noted that rising rates could adversely affect portfolio companies' ability to service debt.
- Portfolio Quality: Non-accrual investments increased slightly to 2.8% of total investments at amortized cost. Investments graded as "Grade 4" (substantial risk of loss) increased to 2.4% of the portfolio fair value.
Key Facts for Investor Verification
- Convertible Notes Maturity: The $155 million Convertible Notes matured on April 1, 2022, and were repaid in full using proceeds from the Revolving Credit Facility.
- Credit Facility Amendment: On May 5, 2022, the Company amended its Revolving Credit Facility to extend the maturity to May 5, 2027, remove certain financial covenants, and transition from LIBOR to SOFR benchmarks.
- Unfunded Commitments: The Company held $453.5 million in unfunded commitments as of March 31, 2022, representing potential future capital deployment.
- Dividend Reinvestment: A quarterly distribution of $0.45 per share was declared for Q1 2022. The Company maintains a dividend reinvestment plan, though GS Group Inc. has opted out.
- Non-GAAP Measures: Investors should note the Company reports "Adjusted Net Investment Income" excluding purchase discount amortization from the 2020 merger, which was $45.8 million for the quarter.