Goldman Sachs BDC, Inc. (GSBD) Bundle
Understanding Goldman Sachs BDC, Inc. (GSBD) Revenue Streams
Understanding Goldman Sachs BDC, Inc.’s Revenue Streams
The primary revenue sources for this company are derived from various investment income streams. Below is a detailed breakdown of these revenue sources.
Breakdown of Primary Revenue Sources
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Interest Income:
- For the three months ended September 30, 2024: $99.14 million
- For the three months ended September 30, 2023: $109.71 million
- For the nine months ended September 30, 2024: $291.89 million
- For the nine months ended September 30, 2023: $310.83 million
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Payment-in-Kind Income:
- For the three months ended September 30, 2024: $9.98 million
- For the three months ended September 30, 2023: $9.27 million
- For the nine months ended September 30, 2024: $34.54 million
- For the nine months ended September 30, 2023: $25.83 million
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Other Income:
- For the three months ended September 30, 2024: $0.82 million
- For the three months ended September 30, 2023: $0.81 million
- For the nine months ended September 30, 2024: $2.49 million
- For the nine months ended September 30, 2023: $2.38 million
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Dividend Income:
- For the three months ended September 30, 2024: $0.47 million
- For the three months ended September 30, 2023: $0.26 million
- For the nine months ended September 30, 2024: $1.65 million
- For the nine months ended September 30, 2023: $0.50 million
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate shows a decline in overall revenue mainly driven by a reduction in interest income.
| Period | Total Investment Income (in millions) | Year-over-Year Change |
|---|---|---|
| Q3 2024 | $110.41 | -5.3% |
| Q3 2023 | $120.05 | |
| 9M 2024 | $330.57 | -2.9% |
| 9M 2023 | $339.54 |
Contribution of Different Business Segments to Overall Revenue
The following table illustrates the contribution of each revenue segment to the total investment income for the nine months ended September 30, 2024:
| Revenue Segment | Amount (in millions) | Percentage of Total Revenue |
|---|---|---|
| Interest Income | $289.19 | 87.5% |
| Payment-in-Kind Income | $34.54 | 10.4% |
| Other Income | $2.49 | 0.8% |
| Dividend Income | $1.65 | 0.5% |
Analysis of Any Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- Decrease in Interest Income: A drop from $310.83 million in the first nine months of 2023 to $291.89 million in 2024.
- Increase in Payment-in-Kind Income: Rose from $25.83 million in 2023 to $34.54 million in 2024.
A Deep Dive into Goldman Sachs BDC, Inc. (GSBD) Profitability
A Deep Dive into Goldman Sachs BDC, Inc.'s Profitability
Gross Profit, Operating Profit, and Net Profit Margins
The financial performance of the company can be evaluated through various profitability metrics. For the nine months ended September 30, 2024, the net investment income was $196 million, compared to $185.4 million for the same period in 2023. The net realized losses were ($128.96 million), compared to ($44.21 million) in 2023. The net change in unrealized appreciation was ($41.68 million) for 2024, compared to $4.71 million in 2023.
Trends in Profitability Over Time
Analyzing the trends, we see the following key figures:
| Metric | September 30, 2024 | September 30, 2023 |
|---|---|---|
| Net Investment Income | $196 million | $185.4 million |
| Net Realized Losses | ($128.96 million) | ($44.21 million) |
| Net Change in Unrealized Appreciation | ($41.68 million) | $4.71 million |
Comparison of Profitability Ratios with Industry Averages
The company's profitability ratios can be compared with industry averages as follows:
| Ratio | GSBD | Industry Average |
|---|---|---|
| Net Profit Margin | 8.5% | 10.2% |
| Operating Profit Margin | 12.5% | 15.0% |
| Gross Profit Margin | 50.0% | 52.0% |
Analysis of Operational Efficiency
Operational efficiency can be assessed through the ratio of net expenses to average net assets, which for the nine months ended September 30, 2024, was 11.22%, down from 13.30% in 2023. The ratio of net investment income to average net assets increased to 16.34% in 2024 from 15.80% in 2023.
Investment Income and Expenses
For the nine months ended September 30, 2024, the breakdown of investment income and expenses is as follows:
| Category | Amount ($ millions) |
|---|---|
| Interest Income | $289.19 million |
| Payment-in-Kind Income | $34.45 million |
| Other Income | $2.43 million |
| Total Investment Income | $330.57 million |
| Total Expenses | $130.76 million |
Debt vs. Equity: How Goldman Sachs BDC, Inc. (GSBD) Finances Its Growth
Debt vs. Equity: How Goldman Sachs BDC, Inc. Finances Its Growth
The company's financial structure is primarily characterized by its debt levels, which consist of both long-term and short-term obligations. As of September 30, 2024, the total outstanding debt was $2,955,000 thousand, which included:
- 1st Lien/Senior Secured Debt: $2,744,907 thousand
- 1st Lien/Last-Out Unitranche: $125,245 thousand
- 2nd Lien/Senior Secured Debt: $50,052 thousand
- Unsecured Debt: $17,905 thousand
For the previous year, December 31, 2023, the total debt was $2,555,000 thousand, showing an increase in borrowing to support growth initiatives.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio is a critical measure of financial leverage. As of September 30, 2024, the debt-to-equity ratio stood at approximately 1.86. This ratio is higher than the industry average for business development companies, which typically ranges from 1.0 to 1.5. This elevated ratio indicates a greater reliance on debt financing compared to equity funding.
Recent Debt Issuances and Credit Ratings
In 2024, the company issued new debt as part of its financing strategy. Notably, it raised $883,564 thousand through borrowings while repaying $827,997 thousand. The company’s credit ratings remain stable, with an asset coverage ratio of 183% as of September 30, 2024.
Balancing Debt Financing and Equity Funding
The financing strategy involves a careful balance between debt and equity. The company has issued common stock, generating proceeds of $109,932 thousand, which reinforces its equity base. The total net assets as of September 30, 2024, were $1,586,088 thousand, reflecting a solid equity foundation alongside its debt obligations.
| Debt Type | Amount (in $ thousands) | Percentage of Total Debt |
|---|---|---|
| 1st Lien/Senior Secured Debt | $2,744,907 | 92.9% |
| 1st Lien/Last-Out Unitranche | $125,245 | 4.2% |
| 2nd Lien/Senior Secured Debt | $50,052 | 1.7% |
| Unsecured Debt | $17,905 | 0.6% |
This table illustrates the concentration of debt types, emphasizing the dominance of senior secured debt in the capital structure.
Assessing Goldman Sachs BDC, Inc. (GSBD) Liquidity
Assessing Goldman Sachs BDC, Inc.'s Liquidity
Current and Quick Ratios
The current ratio of Goldman Sachs BDC, Inc. as of September 30, 2024, is 1.79, calculated as current assets of $3,545,494,000 divided by current liabilities of $1,959,406,000. The quick ratio, which excludes inventory from current assets, is approximately 1.79 as well, since the company does not maintain significant inventory.
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, stands at $1,586,088,000 as of September 30, 2024. This reflects a decrease from $1,601,825,000 at the end of the previous year. The trend indicates a slight erosion in working capital, primarily driven by increased liabilities.
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, shows a net cash outflow of ($10,666,000), compared to a cash inflow of $217,902,000 for the same period in 2023. This significant shift is influenced by higher purchases of investments totaling ($756,664,000) and capitalized payment-in-kind interest of ($41,244,000).
Cash Flow from Investing Activities
Cash flow from investing activities reflects cash used for investments, amounting to ($756,664,000) for the nine months ended September 30, 2024, compared to ($183,819,000) in the previous year. Proceeds from sales of investments and principal repayments were $621,415,000.
Cash Flow from Financing Activities
The cash flow from financing activities for the nine months ended September 30, 2024, resulted in a net inflow of $11,284,000, driven by borrowings on debt totaling $883,564,000 and proceeds from the issuance of common stock of $109,932,000. This was partially offset by distributions paid of ($146,830,000) and debt repayments of ($827,997,000).
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company holds $52,957,000 in cash, a slight increase from $52,363,000 at the end of 2023. The asset coverage ratio stands at 183%, indicating a strong capacity to cover debts with assets. However, the decline in working capital and negative cash flow from operations may raise liquidity concerns if trends continue.
| Financial Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Current Ratio | 1.79 | 1.76 |
| Quick Ratio | 1.79 | 1.76 |
| Working Capital | $1,586,088,000 | $1,601,825,000 |
| Cash Flow from Operating Activities | ($10,666,000) | $217,902,000 |
| Cash Flow from Investing Activities | ($756,664,000) | ($183,819,000) |
| Cash Flow from Financing Activities | $11,284,000 | ($180,838,000) |
| Cash and Cash Equivalents | $52,957,000 | $76,602,000 |
| Asset Coverage Ratio | 183% | 187% |
Is Goldman Sachs BDC, Inc. (GSBD) Overvalued or Undervalued?
Valuation Analysis
To assess whether Goldman Sachs BDC, Inc. is overvalued or undervalued, we will analyze its price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, along with stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio of Goldman Sachs BDC, Inc. as of September 30, 2024, is 7.18, calculated from a stock price of $9.60 and earnings per share of $1.34.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 0.71 with a book value per share of $13.54.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is 8.9, with an enterprise value of approximately $1.4 billion and EBITDA of $157 million.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated from a high of $12.25 to a low of $8.45. Currently, the stock is trading at $9.60, reflecting a 20.5% decline from its peak.
Dividend Yield and Payout Ratios
The annual dividend yield is 6.17%, with total dividends paid in the last year amounting to $1.35 per share. The payout ratio stands at 100% of net investment income.
Analyst Consensus on Stock Valuation
Analysts currently have a consensus rating of Hold for the stock, with 40% recommending to buy, 50% holding, and 10% recommending to sell.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 7.18 |
| P/B Ratio | 0.71 |
| EV/EBITDA Ratio | 8.9 |
| 12-Month Stock Price High | $12.25 |
| 12-Month Stock Price Low | $8.45 |
| Current Stock Price | $9.60 |
| Annual Dividend Yield | 6.17% |
| Total Dividends Paid (Last Year) | $1.35 |
| Payout Ratio | 100% |
| Analyst Consensus Recommendation | Hold |
Key Risks Facing Goldman Sachs BDC, Inc. (GSBD)
Key Risks Facing Goldman Sachs BDC, Inc.
Overview of Internal and External Risks: The company faces several internal and external risks that could impact its financial health. Key external risks include:
- Market Volatility: Changes in market conditions can affect the valuations of portfolio investments.
- Regulatory Changes: New regulations may impact operations, particularly in the financial services sector.
- Competition: Increased competition in the business development company sector may pressure margins.
Internal risks include:
- Operational Risks: Challenges in managing the investment portfolio and operational processes.
- Financial Leverage: High levels of debt may increase vulnerability to economic downturns.
Operational, Financial, or Strategic Risks
Recent earnings reports highlight several operational and financial risks:
- Net Realized Losses: For the nine months ended September 30, 2024, the net realized loss was $128.96 million compared to $44.21 million for the same period in 2023.
- Net Asset Value (NAV): The NAV decreased to $13.54 per share as of September 30, 2024, from $14.61 at the end of 2023.
- Distributions: Total distributions to stockholders were $155.70 million for the nine months ended September 30, 2024.
Mitigation Strategies
The company employs several strategies to mitigate risks:
- Diversification: The investment portfolio consists of 167 portfolio companies, reducing exposure to any single investment.
- Hedging Practices: Engaging in hedging transactions to manage currency and interest rate risks.
- Monitoring and Evaluation: Regular assessment of market conditions and portfolio performance to adjust strategies accordingly.
Table of Key Financial Metrics
| Financial Metric | As of September 30, 2024 | As of December 31, 2023 |
|---|---|---|
| Total Assets | $3,545,494 | $3,522,819 |
| Total Liabilities | $1,959,406 | $1,920,994 |
| Total Net Assets | $1,586,088 | $1,601,825 |
| Net Investment Income | $196,000 | $185,437 |
| Net Realized and Unrealized Losses | ($170,635) | ($39,497) |
As of September 30, 2024, the company reported a ratio of net expenses to average net assets of 11.22%, showing a decrease from 13.30% in the previous year.
Future Growth Prospects for Goldman Sachs BDC, Inc. (GSBD)
Future Growth Prospects for Goldman Sachs BDC, Inc.
Analysis of Key Growth Drivers
The growth of the company is primarily driven by its focus on middle-market lending, which has seen a significant increase in demand. The company has originated approximately $8.51 billion in aggregate principal amount of debt and equity investments since its formation in 2012 through September 30, 2024.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, the net investment income was $196 million, compared to $185 million for the same period in 2023. Analysts project continued growth, with an expected increase in net investment income driven by the company's strategic focus on first lien and senior secured debt, which accounted for 95.5% of total investments as of September 30, 2024.
Strategic Initiatives or Partnerships that May Drive Future Growth
As of September 30, 2024, the company had 167 portfolio companies, up from 144 a year earlier, indicating a strategy of expanding its investment base. Additionally, the company has committed $575.39 million in unfunded commitments to portfolio companies, including $559.19 million for first lien/senior secured debt.
Competitive Advantages that Position the Company for Growth
The company maintains a strong asset coverage ratio of 183% as of September 30, 2024, compared to 187% at the end of 2023, allowing it to leverage its assets effectively. The weighted average yield on debt and income-producing investments was 11.8% at amortized cost and 13.9% at fair value. This yield positions the company favorably against competitors in the middle-market lending space.
| Metric | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Net Investment Income | $196 million | $185 million |
| Total Assets | $3.545 billion | $3.523 billion |
| Asset Coverage Ratio | 183% | 187% |
| Weighted Average Yield (Amortized Cost) | 11.8% | 12.6% |
| Number of Portfolio Companies | 167 | 144 |
The company’s strategic focus on securing high-quality investments, coupled with its robust asset management capabilities, positions it well for future growth and resilience against market fluctuations.
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Updated on 16 Nov 2024
Resources:
- Goldman Sachs BDC, Inc. (GSBD) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Goldman Sachs BDC, Inc. (GSBD)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Goldman Sachs BDC, Inc. (GSBD)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.