Goldman Sachs BDC, Inc.

Good morning, this is Austin Neary, 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. third 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 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, November 4th, 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 our third quarter earnings conference call. I'm here today with my Co-Chief Executive Officer, David Miller, Gabriella Skernick, our Chief Operating Officer, and David Pessa, our Chief Financial Officer. I'll begin the call by providing a brief overview of our third quarter results before discussing the current market environment in more detail. I'll then turn the call over to David Miller to describe our portfolio activity before we hand it off to David Pessa 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 third quarter results. Net investment income per share was $0.60. Excluding the impact of asset acquisition accounting in connection with the merger with MMLC, adjusted net investment income for the quarter was $0.56 per share, equating to an annualized net investment income yield on book value of 14.9%. This uptick in returns is largely a reflection of the pronounced increases in base rates during the quarter. Nonetheless, we have not yet seen the full impact of higher rates and expect this to be further creative to earnings. As we announced after the market closed yesterday, our board declared a 45 cent per share dividend payable to shareholders of record as of December 30th, 2022. And asset value per share decreased to $15.02 per share as of September 30th, a decrease of approximately 3.3% from the end of the second quarter. This decrease was primarily attributable to unrealized losses reflecting volatility in the capital markets, markdowns of certain positions, and increases to overall credit spreads. Although the market continues to exhibit volatile conditions, we continue to be pleased by our platform's ability to deploy capital selectively, benefiting from a wide funnel of opportunities. The broadly syndicated loan market has remained largely shut, which has only contributed to the deal flow that we see as borrowers have increasingly turned to the private credit market to finance their deals. As a result, while spreads and original issue discounts have widened, we have also been able to garner enhanced investor protections in our deals. Despite a more muted deal flow environment overall, we have been focused on a significant amount of add-on activity, which highlights our platform's incumbency and strength with existing companies and sponsors. This is evident in four such transactions during the quarter, iSIMS, Intoxalock, CSI, and CoreTrust. First on iSIMS, a steadily growing software solutions company for HR departments, We have been a lender to the company since 2018. This quarter, we provided a commitment for the company through capitalization concurrent with a new minority investor. The transaction reflects the advantage of having an incumbent position in an attractive credit along with being a preferred lending solutions provider to top-tier financial sponsors. Second, on Intoxalock, a leading provider of ignition interlock devices, we have been a lender to the company since 2017, and during the company's recent LBO financing by a new sponsor owner, we continued our role as a meaningful lender to the company. Finally, our transactions with CSI, a bank processing software platform, and CoreTrust, a group purchasing organization, Each reflected our integrated platform's enhanced origination capabilities as GSBD co-invested alongside our senior loan fund family and partnered with two financial sponsors that are longstanding clients of the broader private credit platform. With that, let me turn it over to my co-CEO, David Miller.

Thanks, Alex. During the quarter, we originated $205 million in new investment commitments, $136 million in new investments to six new portfolio companies, and 69 million of follow-on investments to 10 existing portfolio companies, primarily to finance M&A activity. Our new capital investments remain focused on the most senior parts of the capital structure with 203 million out of the 205 million in first lien senior secured loans. Sales and repayment activity totaled 212 million, primarily driven by the full repayment of investments by two portfolio companies. Turning to portfolio composition, as of September 30th, total investments in our portfolio were $3.6 billion at fair value, comprised of 97.7% in senior secured loans, including 88.4% in first lien, 3.3% in first lien last out unit tranche, and 6% in second lien debt, as well as a negligible amount of unsecured debt. and 2.1% in a combination of preferred and common stock and warrants. We also had $436 million of unfunded commitments as of September 30th, bringing total investments and commitments to $4.1 billion. As of quarter end, the company held investments in 133 portfolio companies operating across 38 different industries. The weighted average yield of our investment portfolio at cost at the end of Q3 was 9.9%, as compared to 8.6% in the prior quarter. The weighted average yield of our total debt and income-producing investments at amortized cost increased to 10.4% at the end of Q3 from 9.0% at the end of Q2. Turning to credit quality, the weighted average net debt to EBITDA of the companies in our investment portfolio remained flat from Q2 at 6.0 times at quarter ends. The weighted average interest coverage of the companies in our investment portfolio at quarter end was 1.8 times versus 2.1 times in the prior quarter. It's important to note that we calculate our coverage ratios based on current quarter metrics rather than a trailing or LTM basis. Were we to use the LTM calculation, then our coverage ratio would be 2.4 times. And finally, turning to asset quality, as of September 30, 2022, Investments on non-accrual status amounted to 0.4% and 1.4% of the total investment portfolio at fair value and amortized cost, respectively. Importantly, the slight increase in non-accruals is primarily attributable to some names that have been on our focus list for a period of time. With that, I'll now turn the call over to David Pessa to walk through our financial results.