Goldman Sachs BDC, Inc.

Good morning. This is John Silos, 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. fourth quarter and fiscal year end 2024 earnings conference call. Please note that all participants will be in listen only mode until the end of the call when we will open 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 disbelief 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 rebroadcasted 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 annual report on Form 10-K filed yesterday with the SEC. This conference call is being recorded today, Friday, February 28th, 2025, for replay purposes. I'll now turn the call over to Alex Gee, Co-Chief Executive Officer of Goldman Sachs BDC, Inc.

Thank you, John. Good morning, everyone, and thank you for joining us for our fourth quarter and fiscal year-end 2024 Earnings Conference Call. I'm here today with David Miller, our Co-Chief Executive Officer, Tucker Green, our Chief Operating Officer, and Stan Maszewski, our Chief Financial Officer. I'll begin the call by discussing our 2024 activity, providing a brief overview of our fourth quarter results, and then discussing strategic actions we took this quarter to best position GSBD for the long run. I'll then turn the call over to David and Tucker to describe our portfolio activity and performance in more detail, before handing it off to Stan to take us through our financial results. And then finally, we'll open the line for Q&A. Our direct lending platform had another strong year in 2024, which directly benefited GSBD. For the year, our direct lending in America's platform committed a total of approximately $13 billion and deployed approximately $10.8 billion, which is more than double the activity in 2023, all the while remaining selective and disciplined in our approach in spite of a tepid M&A market. While larger cap opportunities are experiencing greater pressure on spreads and terms, given robust conditions in the public credit markets and increased competition, the breadth of our platform allows us to seek attractive, risk-adjusted returns for GSBD and other vehicles through our middle market origination capabilities, which also benefits from the differentiated origination capacity of being part of Goldman Sachs. Along those lines, the fourth quarter marked another effective quarter for GSBD with respect to both new investment commitments and harvest activity. We continue to increase the percentage of first lien positions in the portfolio, moving away from second lien, unsecured debt, and preferred equity, while dramatically reducing exposure to annual recurring revenue loans. As we recycle older vintages, we've increased the percentage of first lien positions, including first lien, last dot, unit tranche positions, from 89.4% in December 2021 to 96.3% at year end 2024. Turning to our first quarter results. Our net investment income per share for the quarter was 48 cents, and net asset value per share was $13.41 as of quarter end, a decrease of approximately 1% relative to the third quarter NAV, which is largely due to net realized and unrealized losses in the quarter. Now, with respect to the strategic actions that we took, our dividend has been set at a fixed 45 cent per share rate since our IPO in 2015 and was paid consistently over the past 39 quarters. While our net investment income for the quarter continues to exceed our 45 cent per share distribution, we've evaluated changes to our dividend policy and incentive fee structure to adapt to market dynamics, including the current base rate and credit spread environment. Considering these factors, our Board of Directors have approved the following changes to our dividend structure and incentive fee. First, beginning with the first quarter dividend of 2025 and on an ongoing basis, we are resetting the quarterly dividend to a base of 32 cents per share and introducing supplemental variable distributions each quarter in an amount of at least 50% of the company's NII in excess of the amount of the base dividend. Moreover, With an approximate current balance of $152 million in undistributed taxable income or spillover as of the end of the fourth quarter, the Board of Directors has declared a special dividend of $0.16 per share payable to shareholders of record as of March 31, 2025, and has authorized two additional $0.16 per share special dividends, which you expect to pay in the second and third quarter of this year. This results in a per-share dividend of at least $0.48 per share for the next three quarters before any supplemental dividends. Second, we will continue to maintain a shareholder-friendly incentive fee structure, including the current three-year look-back. However, we are amending the incentive fee to permanently reduce the quarterly incentive fee and cap on both income and capital gains from 20% to 17.5% for periods beginning with a calculation for the quarter ending March 31, 2025. Importantly, we anticipate making these distributions while aiming to remain below our targeted debt-to-equity leverage ratio of 1.25 times. Looking ahead, while first quarter deal activity overall has remained relatively muted from our vantage point, we do expect an increase in deal volumes as 2025 unfolds, driven by continued deployment of private equity dry powder and pressure by GPs to distribute capital to LPs. With that, Let me turn it over to my co-CEO, David Miller.

Thanks, Alex. In 2024, GSBD committed its highest level of capital since integration of the BDC complex three years ago, with approximately $1.3 billion in new commitments. This is three times more than new investment commitments of $423 million made in 2023. Of the commitments made to new portfolio companies during the year, GS played a lead role in approximately 71% of the deals. Not only were new investment commitments the spotlight, but we also had the highest repayment years since integration, totaling $858.8 million. Of the investments in the portfolio companies that were fully repaid or exited, approximately 82% were 2021 or older vintages, which allowed us to harvest older vintage investments and recycle into new originations. During the quarter, we made new investment commitments of approximately $173 million across 18 portfolio companies, comprising of six new and 12 existing portfolio companies. 99.9% of our originations during the quarter were in first lien loans, which continues to reflect our bias in primarily maintaining exposure to investments that are higher up in the capital structure. During the quarter, we acted as co-leader ranger in the acquisition of Pressimac by Centerbridge. Pressimac is a leading manufacturer of medium to high-precision components to industries in the aerospace, defense, and semiconductor industries. We also served as administrative agent, leader ranger, and the largest lender in ArcLine's acquisition of rotating machinery services. This is an illustration of the credit platform's deep sponsor relationships that generate repeat deal flow. Rotating Machinery Services is an independent provider of aftermarket repairs and engineered solutions for the turbo machinery equipment. Sales and repayment activity totaled $187.5 million during the quarter, primarily driven by the full repayment and exit of our investments in nine portfolio companies. Turning to portfolio composition, as of December 31st, 2024, Total investments in our portfolio were $3.48 billion at fair value, comprised of 97.6% senior secured loans, including 91.5% first lien, 4.8% first lien last out unit tranche, 1.9% in a combination of preferred and common stock, 1.3% second lien debt, as well as a negligible amount upon secured debt. With that, let me turn it over to our Chief Operating Officer, Tucker, to discuss portfolio fundamentals and credit quality.