Goldman Sachs BDC, Inc. 2026 Q2 Earnings Call

Good morning, and thank you for joining us. My name is Haley Neven, Head of the Investor Relations Team for Goldman Sachs BDC, Inc. I would like to welcome everyone to the Goldman Sachs BDC, Inc. Second Quarter 2026 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 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 audiocast 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.goldmansachsbdc.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, August 7, 2026, for replay purposes. I'll now turn the call over to Vivek Bantwal, Co-Chief Executive Officer of Goldman Sachs BDC, Inc.

Thank you, Haley. Good morning, everyone, and thank you for joining us for our second quarter earnings conference call. Before we begin today, I have an announcement. My Co-CEO of GSBD and Head of America's Direct Lending Platform, David Miller, has decided to step down as Co-CEO of GSBD effective December 31 of this year. At that point, I will become the sole CEO. David has worked at Goldman Sachs for 22 years and has 34 years in the private credit industry. Since co-founding the Specialty Lending Group in 2004, David has been an integral part of the private credit platform we have built at Goldman Sachs. David will remain in his current role as Co-CEO through the end of this year and then will be appointed an advisory director of Goldman Sachs.

He will continue to serve as a member of the Private Credit Investment Committee, so we can continue to benefit from his years of experience. We want to thank David for his many years of leadership and contributions. In connection with this transition, Justin Betzen has stepped into the role of Co-President and Co-COO alongside Tucker Greene. Justin is currently a Vice President of GSBD and has held several positions within GSAM and he is currently a Managing Director and Senior Underwriter in GSAM Private Credit in the Americas. Justin initially joined Goldman Sachs in 2006. The platform will also continue to be supported by a deep bench of experienced investment professionals with significant industry and firm tenure.

Our Head of Underwriting and Portfolio Management, Greg Watts, and Head of Originations, Steven Buddig, will be elevated to co-heads of Americas Direct Lending. David will become chairman of the GSAM Private Credit Direct Lending Group in the Americas. Collectively, Greg and Steven have over 45 years' experience in the industry and 33 years at Goldman Sachs.

Thanks, Vivek. I'm incredibly proud of what we've accomplished together and what this broader platform has achieved over the years. Looking back, I've seen the industry navigate multiple credit cycles, the ups and the downs, and I've watched the resiliency of the Goldman Sachs platform prove itself time and again. I've had the privilege of working alongside an exceptionally talented group of people. I know this fund and this platform are in great hands, and I have full confidence in my colleagues' leadership and continued success. I also want to thank the board of directors for their partnership and support, our investors for their continued trust, and finally, my colleagues and team for their hard work and dedication in making this platform the best place to work throughout these years. It has been an honor to work with you all, and I'm excited to see your future success.

I'll now turn the call back over to Vivek.

Let's discuss GSBD's second quarter results. Along with David, I'm here today with Tucker Greene, our President and Chief Operating Officer, and Stan Matuszewski, our Chief Financial Officer. We'll start by offering our perspective on the current market environment. I will discuss our portfolio positioning and how the scale of Goldman Sachs' private credit ecosystem continues to translate into a competitive advantage for our shareholders. David and Tucker will walk you through portfolio activity and credit quality, and Stan will cover the financial results. We will then open the line for some Q&A. In the second quarter, GSBD generated net investment income of $0.38 per share, representing an annualized yield on book value of approximately 12.6%. This increase reflects both higher total investment income and lower total expenses, which benefited from our shareholder-aligned incentive fee structure. Dan will discuss this in more detail later on.

We ended the quarter with net asset value of $12.06 per share, down modestly just under 1% from $12.17 in the first quarter. Given these results, the board has declared a third quarter 2026 base dividend of $0.32 per share, payable to shareholders of record as of September 30th, 2026, as well as a second quarter 2026 supplemental dividend of $0.03 to shareholders of record as of August 31st, 2026. This brings our trailing 12-month total dividends to $1.54 per share and the annualized yield on our quarterly base dividend to approximately 14.1%, based on yesterday's closing price of $9.09. Our board continues to evaluate the dividend each quarter based on the earnings power of the portfolio, the rate environment, and our overall financial position. Taking a step back to contextualize these results, let me start with the M&A environment.

Deal activity has remained subdued during the second quarter of 2026, with overall private equity deal volumes down 38% quarter-over-quarter and sponsored loan issuance down 33%. For our business, that means the pace of new deployment opportunities has been slower. What matters most is the quality of the deals coming to market and the terms available to lenders. As available capital in the direct lending market has contracted, driven in part by BDC redemptions and tighter fundraising conditions, borrowers and sponsors are accepting wider spreads, lower leverage, and stronger documentation. That dynamic is directly benefiting the economics on every new investment we underwrite. Simultaneously, AI disruption concerns and geopolitical uncertainty have added complexity to the backdrop. We continue to monitor how these dynamics are affecting business models across our portfolio. Tucker will discuss how our borrowers are navigating this when he covers credit quality.

I'd also point out that uncertainty means lenders are being compensated more for providing capital. We are capitalizing on that. Post quarter end, we have also seen a pickup in M&A activity and deal flow, which positions us well to deploy into this attractive spread environment as we move through the second half of this year. Across our borrower base, performance is differentiated. The majority of our portfolio continues to perform as anticipated. Companies with pricing power, mission-critical products, and manageable leverage are executing well. Where we see stress is in a small number of companies carrying elevated leverage or facing sector-specific headwinds. These are the complex situations where our workout capabilities become most important. Tucker and David will walk you through a few recent outcomes that demonstrate what our platform and our process are designed to produce.

David, let me turn it over to you for some perspective on what this means for our business.

Thanks, Vivek. This evolving landscape you just described is creating the kind of environment where our advantages are most pronounced. To put this in context, our platform manages over $150 billion in private credit, supported by more than 250 dedicated investment professionals and the relationships of over 3,000 Goldman Sachs investment bankers across our global M&A and capital markets franchise. Goldman Sachs has been investing in private credit for over 30 years. That depth of experience across multiple credit cycles informs every underwriting decision we make. We're focused on deploying capital selectively into the best risk-adjusted opportunities available. When deal flow is abundant and capital is plentiful, every lender looks similar. When deal flow slows and capital becomes scarcer, the differentiation becomes clear and the competitive landscape shifts.

Borrowers need lenders who can provide certainty of execution, underwrite complex situations quickly, and have the scale to deliver full capital structure solutions. That's where our platform stands out. In June, our private credit platform closed a $455 million senior secured first-lien term loan to Burgess Pigment Company, a leading specialty minerals processor. Goldman Sachs served as both agent and sole lender on this transaction. Given its scale, the borrower required a financing partner capable of underwriting the full commitment without the need for syndication. GSBD participated alongside other vehicles in our private credit ecosystem. That multi-vehicle capacity is exactly what allowed us to win this on a bilateral basis. It is a clear illustration of how the breadth of our platform translates into differentiated deal flow for GSBD shareholders. Transactions like Burgess reflect the type of selective deployment we are prioritizing.