Goldman Sachs BDC, Inc.

Good morning. This is Austin Neary, a member of the IR team for Goldman Sachs BDC, Inc., and I would like to welcome everyone to the Goldman Sachs BDC, Inc. second quarter 2022 earnings conference call. Please note that all participants will be in listen-only mode until the end of the call, and we will open up the line for questions. 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 audio cast is copyrighted material of Goldman Sachs BDC, Inc., and may not be duplicated, reproduced, or rebroadcast without our consent. 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.goldmansaxbdc.com under the Investor Relations section, and which include reconciliations of non-GAAP measures to the most directly comparable GAAP measures. These documents should be viewed 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, August 5th, 2022, for replay purposes. I'll now turn the call over to Alex Chee, Co-Chief Executive Officer of Goldman Sachs BDC.

Thank you, Austin. Good morning, everyone, and thank you for joining us for a second quarter earnings conference call. I'm here today with my Co-Chief Executive Officer, David Miller, Gabriella Skernick, our Chief Operating Officer, and Carmine Rossetti, our Chief Financial Officer. I'll begin the call by providing a brief overview of our second quarter results before discussing the current market environment in more detail. I'll then turn the call over to David to describe our portfolio activity before we hand it to Carmine to take us through our financial results. And finally, we'll open the line for Q&A. So with that, let's get to our second quarter results. Net investment income per share was 49 cents. Excluding the impact of asset acquisition accounting in connection with the merger with MMLC, Adjusted net investment income for the quarter was $0.45 per share. As we announced after the market closed yesterday, our board declared a $0.45 per share dividend payable to shareholders of record as of September 30, 2022. Net asset value per share decreased slightly to $15.53 per share as of June 30, a decrease of approximately 1.7% from the end of the first quarter. This decrease was primarily attributable to overall credit spread widening that reflects the current market dislocation and more volatile investment environment and not any significant credit events within the portfolio. With respect to the market environment in the second quarter, we continue to navigate market volatility highlighted by higher rates as a result of dramatic tightening by the Federal Reserve in response to inflationary forces. Nonetheless, Our portfolio has some defining characteristics that help insulate it against the impact of these macroeconomic forces. GSBD is characterized by high selectivity, resulting from a stringent due diligence process that is biased toward investing in non-cyclical businesses that have strong pricing power, coupled with the management capabilities and expertise to navigate an economic slowdown. While mark-to-market changes are reflected in our failure value calculations this quarter, We want to remind investors that our portfolio is predominantly floating rate in nature. In contrast to the broadly syndicated loan market, the vast majority of our book has financial maintenance covenant protections. In addition, the pressures of significant food and gas price inflation have been especially pronounced for individual consumers, but we are focused on lending to more non-cyclical business-to-business sectors. It's now been nearly five months since the BDC platform was integrated into the broader direct lending business within the asset management division of Goldman Sachs. The benefits of this integrated private platform were especially highlighted this quarter at a time when general M&A volume and capital markets activity faced headwinds. Access to a larger funnel of potential transactions while being viewed as a natural capital solutions provider is especially important at a time when financing exits are limited and the broadly syndicated loan market is largely shut. We had a few deals this quarter that we sourced through our contacts in the Goldman Sachs investment banking franchise, including EnterpriseDB and Rubrik. To highlight one of those transactions, Rubrik is a software company that had no debt on the balance sheet and was contemplating an IPO until public equity market conditions led to the deferral of those plans. The Goldman Sachs Investment Banking team, which has a close relationship with the company, referred management to us, and we were able to provide a loan that provided additional liquidity for growth at an exceptionally low loan-to-value. This example not only speaks to the power of our platform, but the broader theme of volatile macro conditions making IPOs and exits difficult, which is driving borrowers to direct lenders like us to help fund growth. Fidelity Payment is another transaction that we sourced through the broader Goldman Sachs private credit platform and demonstrated the breadth of relationships that we have built over time with both the sponsor and the company. Additionally, the long-standing relationship with Fidelity's sell-side advisor was instrumental in getting our team initially involved in the transaction. The sponsor and the company agreed quickly to use us as a financing partner due to our team's knowledge of the business and the payments industry. We were able to deliver a tailored financing solution at a low loan-to-value in order to support the acquisition of the company and help fund future growth during volatile market conditions. This example points to the platform's ability to leverage industry expertise and relationships across the barter team in order to execute on a transaction within a short time frame. We again supported our shareholders through this period of volatility by waiving a portion of our investment advisory fees. As previously stated, while we intend to voluntarily waive income-based incentive fees through and including the fourth quarter in an amount necessary to achieve at least 45 cents of quarterly adjusted net investment income per share, we believe that in the second half of this year, we may be able to achieve this level of earnings without additional waivers. With that, let me turn it over to my co-CEO, David Miller.

Thanks, Alex. During the quarter, we originated $366 million in new investment commitments, $197 million in new investments to six new portfolio companies, and $169 million of follow-on investments to 12 existing portfolio companies, primarily to finance M&A activity. Our new investment commitments remain mainly focused on the most senior parts of the capital structure, with $358 million out of the $366 million in first lien senior secured loans. Sales and repayment activity totaled $106 million driven by the full repayment of investments by two portfolio companies. The sales and repayment activity was more muted this quarter as overall capital markets activity slowed in line with the increased volatility we've seen in the capital markets. Turning to portfolio composition. As of June 30, 2022, total investments in our portfolio were $3.6 billion at fair value. comprised of 97.4% in senior secured loans, including 88% in first lien, 2.8% in first lien last out unit tranche, and 6.7% in secured second lien, as well as a negligible amount of unsecured debt, and 2.4% in a combination of preferred and common stock and warrants. We also had 300 I'm sorry, $569 million of unfunded commitments as of June 30th, bringing total investments and commitments to $4.2 billion. As of quarter end, the company held investments in 129 portfolio companies operating across 38 different industries. The weighted average yield of our investment portfolio at cost at the end of Q2 was 8.6% as compared to 7.9% in the prior quarter. The weighted average yield of our total debt and income-producing investments at amortized cost increased to 9% at the end of Q2 from 8.5% at the end of Q1. Turning to credit quality. The weighted average net debt to EBITDA of the companies in our investment portfolio decreased to 6.0 times at quarter end as compared to 6.2 times from the prior quarter. The weighted average interest coverage of the companies in our investment portfolio at quarter end was 2.1 times versus 2.5 times in the prior quarter. Nonetheless, we continue to see both healthy quarterly sequential growth in LTM revenue and EBITDA. And finally, turning to asset quality, two investments were moved out of non-accrual during the quarter due to repayment. And as of June 30th, 2022, Investments on non-accrual status amounted to 0.4% and 0.9% of the total investment portfolio at fair value and amortized cost, respectively. I will now turn the call over to Carmine to walk through our financial results.