Spectrum Brands Holdings, Inc. Q3 FY2026 earnings call

Leadership Transition • Co-CEO David Miller will step down effective December 31, 2026, after 22 years at Goldman Sachs, and will become Advisory Director and remain on the Private Credit Investment Committee • Vivek Bhantwal will become sole CEO; Justin Bettson is appointed co-president/co-COO alongside Tucker Green; Greg Watts and Stephen Budig will become co-heads of Americas Direct Lending; Miller will become chairman of GSAM Private Credit Direct Lending Group Americas

Portfolio Activity & Market Environment • Overall Q2 2026 private equity M&A volume was down 38% quarter-over-quarter, with sponsored loan issuance down 33%, leading to slower new deployment for the firm; M&A activity and deal flow have picked up post-quarter end • Tighter market capital conditions have led to wider spreads, lower leverage, and stronger contract terms for lenders, improving the economics of new originations • Deployment was intentionally selective in Q2: $12.9 million in new commitments across 9 borrowers (2 new), $114 million drawn on prior unfunded commitments; $146 million in total repayment proceeds was received, leading to net negative new investment that reduced leverage • New deal activity has shifted away from software to healthcare, business services, and industrials; weighted average spread on Q2 originations was 511 bps, wider than 6 months prior, with a conservative weighted average loan-to-value of 37.4% • Net debt to equity was 1.35x at quarter end, and has fallen below the 1.25x target post-quarter due to repayments, creating capacity for new deployment and the reactivation of the stock repurchase program

Credit Quality & Workout Performance • Non-accrual count fell from 11 to 10 in Q2; non-accrual positions are idiosyncratic with no broad systemic portfolio trend, and the majority of portfolio companies continue to deliver quarter-over-quarter revenue and EBITDA growth • The firm has a dedicated embedded workout team that leverages original deal team knowledge and the broader Goldman Sachs platform to maximize recoveries; two successful Q2 examples: full paydown of the senior loan to Thrasio (an e-commerce aggregator) with 75% par paydown of a second lien position, and Seneca Holdings was returned to accrual status after a successful maturity extension that improved GSBD's position in the capital structure

Balance Sheet Strength • The firm has a committed long-dated revolving credit facility with 12 bank lenders, no mark-to-market provisions, with $796 million in remaining borrowing capacity at quarter end; total outstanding debt was $1.9 billion, 64% of which is unsecured • The board approved a $75 million share repurchase program that is now eligible for reactivation following leverage reduction • A Q3 2026 base dividend of $0.32 per share and a Q2 2026 supplemental dividend of $0.03 per share were declared, bringing the trailing 12-month total dividend to $1.54 per share, with an annualized base dividend yield of 14.1% based on the prior day closing price of $9.09

Goldman Sachs BDC operates as a single-segment private credit investment vehicle focused on middle-market direct lending. Total fair value of the investment portfolio was $3.2 billion at quarter end, with 98.6% of assets allocated to senior secured loans, and the remaining 1.4% in preferred/common stock and unsecured debt. For Q2 2026: GAAP net investment income was $42.2 million, adjusted after-tax net investment income was $41.5 million, representing a material increase from $24.8 million and $24.7 million respectively in Q1 2026. Net investment income per share was $0.38, generating an annualized yield on book value of 12.6%. Total investment income for the quarter was $83.7 million, up from $78.8 million in Q1. Ending net asset value per share was $12.06, a modest 1% decrease from $12.17 in the prior quarter. Weighted average yield on amortized cost of total income-producing debt investments was 9.5%, down slightly from Q1. Non-accrual investments represented 2.9% of fair value, down from 3.2% in Q1.

• Management expects to increase deployment activity in H2 2026, supported by a post-quarter pickup in M&A deal flow and leverage now falling below the firm's 1.25x net debt to equity target • Full repayment of the remaining Thrasio second lien position is expected in H2 2026 • The firm will pursue a mixed capital allocation strategy between new investment deployment and share repurchases now that leverage is at target • Management intends to maintain the current $0.32 per share base dividend in the near term, with quarterly assessments tied to portfolio earnings power, base rate trends, and new origination spreads • Incentive fee expenses are expected to be muted over the next several quarters due to the firm's three-year total return lookback compensation structure

• Overall M&A and deal activity remains muted compared to prior periods, creating near-term pressure on net investment income growth from new deployment • AI disruption and geopolitical uncertainty create added complexity for portfolio company business models, particularly impacting valuation expectations for software sector companies • A small subset of portfolio companies with elevated leverage or sector-specific headwinds continue to face performance stress • Bid-ask valuation disconnects in the software sector have suppressed new deal activity in that space

Q: With post-quarter M&A activity picking up, when can we expect a pickup in GSBD origination activity? / A: Earlier year M&A weakness created a lag that slowed Q2 origination, and leverage was above target coming out of Q1 which also reduced deployment. Now that leverage has fallen to target and M&A activity has picked up, new originations will increase gradually, over time diluting the share of legacy portfolio holdings. New deals will have wider spreads that improve overall portfolio economics.

Q: Is the bar for software sector investments higher now, and are there green shoots for software activity? / A: New large software deal activity remains slow largely due to bid-ask valuation gaps driven by AI-related terminal value uncertainty, but smaller tuck-in add-on transactions are starting to emerge. The market has begun differentiating between software sub-sectors: verticalized incumbents with high customer switching costs and proprietary data are performing well, and the firm will invest in software when the right risk-adjusted opportunities arise.

Q: How much one-time interest income came from restoring non-accrual assets to accrual status in Q2? / A: There was approximately $5 million in one-time income from accelerated original issue discount and catch-up interest tied to the restoration of Thrasio and another name to accrual status, which will not recur regularly, though similar one-time items can occur with future repayments.

Q: What is the target leverage range, and how aggressive will share repurchases be? / A: The firm is now at ~1.2x net debt to equity, below the 1.25x target, which is a comfortable level that the firm intends to maintain going forward. Capital will be allocated to a mix of new originations and share repurchases, supported by continued elevated repayment activity that provides capacity for both.