Goldman Sachs BDC, Inc. Q1 FY2025 earnings call

• Macro-economic conditions: Conducted in-depth analysis of portfolio for tax exposure, with only 4 out of 163 companies (3% fair value) having high China supply chain exposure. Deal flow affected by tariffs, with M&A activity pushed back but service-related deals still active. New investments focus on low to mid 9% yields, spreads of new investments widened to 510 basis points quarter-over-quarter.
• First quarter results: Net investment income per share $0.42, NAV $13.20. Dividend structure: Base dividend $0.32, first quarter supplemental dividend $0.05, and base and special dividends declared for June. Adjusted NAV per share $13.15. Portfolio activity: New investments of $87.8 million across 14 companies, 100% first lien. Portfolio composition: $3.38 billion fair value, 96.1% senior secured. Credit quality: EBITDA growth, weighted average net debt to EBITDA decreased to 5.8x, interest coverage increased to 1.9x, non-accrual investments decreased to 1.9% of portfolio.

Net investment income per share for the quarter was $0.42, and net asset value per share was $13.20 as of quarter end, a decrease of 1.6% from the fourth quarter due to a $0.16 per share special dividend and net realized and unrealized losses. Portfolio composition at March 31, 2025: total investments at fair value were $3.38 billion, with 96.1% in senior secured loans (90.7% first lien, 5.4% first lien last out unit tranche), 2% in preferred and common stock, 1.4% in second lien debt, and negligible unsecured debt. Weighted average yield of debt and income producing investments at amortized cost was 10.8% at quarter end, down from 11.2% in the fourth quarter. Net debt to equity ratio was 1.16 times as of March 31, 2025.

• Environment for new M&A activity not as fervent as expected, but encouraged by backlog of transactions, resilience of portfolio, and commitment to refreshed dividend structure.

• Tariff impact: Potential supply chain issues for some portfolio companies, though only 3% fair value currently affected. Market volatility affecting deal flow.

Q: The portfolio yield declined about 40 basis points on a cost basis quarter-over-quarter. Could you talk about that?

A: With respect to repricings, most borrowers who wanted to reprice their loans took advantage of prior quarters' environment. New activity is more heavily weighted towards buyouts and refinancings. Spreads for deals this year widened by about 25 basis points. Also, exit of non-accrual positions with very high coupons contributed to the yield decline.

Q: Was the five identified loans with direct tariff exposure reflected in the fair value of those investments as of the first quarter?

A: We took a prospective look at exposure, but no immediate performance deterioration was reflected yet. More clarity on tariffs post quarter end will provide further insight.