Goldman Sachs BDC Q2 2026 Earnings Call: Complete Transcript

Goldman Sachs BDC (NYSE: GSBD ) released second-quarter financial results and hosted an earnings call on Friday. Read the complete transcript below. This content is powered APIs. 6%.

06 per share. 54 per share. Significant management changes were announced, with Co-CEO David Miller stepping down by year-end, and Justin Betson and Tucker Green taking on new leadership roles. M&A activity and deal flow have been subdued, but the company expects a pickup in the latter half of the year, benefiting from wider spreads and stronger deal terms.

35 times, providing capacity for new investments and potential stock repurchases. Credit quality remains a focus, with non-accruals decreasing slightly. The workout team's proactive engagement has resulted in successful recoveries in distressed cases. The strategic focus includes reducing leverage, making high conviction investments, and maintaining strong dividend coverage.

Full Transcript Hayley Nevin, Head of Investor Relations Good morning and thank you for joining us. My name is Hayley Nevin, Head of the Investor Relations Team for Goldman Sachs BDC, and I would like to welcome everyone to the Goldman Sachs BDC 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 and may not be duplicated, recorded, 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 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 Bandwal, Co-Chief Executive Officer of Goldman Sachs BDC.

Vivek Bandwal, Co-Chief Executive Officer Thank you, Hayley. 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 Americas Direct Lending Platform, David Miller, has decided to step down as Co-CEO of GSBD effective December 31st 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 Betson has stepped into the role of Co-President and Co-COO alongside Tucker Green. 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, and 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.

David Miller, Co-Chief Executive Officer 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.

Vivek Bandwal, Co-Chief Executive Officer Now let's discuss GSBD's second quarter results along with David. I'm here today with Tucker Green, 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. Then I will discuss our portfolio positioning and how the scale of Goldman Sachs's 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. 6%. This increase reflects both higher total investment income and lower total expenses, which benefited from our shareholder-aligned incentive fee structure.

Stan will discuss this in more detail later on. 17 in the first quarter. 03 per share as of August 31, 2026. 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.

But 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, and 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. David Miller, Co-Chief Executive Officer 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. , 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, and 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. And the spread environment today means the economics on these opportunities are more attractive than what was available in prior quarters.

But we remain patient and disciplined, investing only into the highest conviction opportunities while we focus on bringing leverage towards the lower end of our target range. Vivek Bandwal, Co-Chief Executive Officer Thanks, David. Private credit has drawn significant attention in the first half of this year, and we are not immune to the headlines. But this is the environment where the actions managers take create the largest differentiation in outcomes.

How you underwrite, how you manage workouts, the stability of your capital base, and the discipline of your deployment are what will ultimately separate outcomes as this cycle plays out. The steps we've taken are designed to put GSBD on the right side of that divide. With that, Tucker, could you walk us through our deployment activity, the opportunities we're seeing in the market, and how these dynamics are reflected in our portfolio composition? Tucker Green (President and Chief Operating Officer) Yes, sure.

So our deployment approach this quarter was intentionally selective, not because of a lack of opportunity, but because we are prioritizing balance sheet management and credit selection. As our leverage comes down and we create additional capacity, we expect to deploy more actively into this attractive spread environment. To elaborate on Vivek's comments regarding new deployment opportunities, we are seeing a meaningful shift in sectors where deal activity is concentrated. Software originations have slowed across the industry, while we've seen increased activity in healthcare, business services and industrials.

All of our new commitments this quarter were outside of software, not because we are avoiding the sector, but because the most compelling risk-adjusted opportunities this quarter were elsewhere. We continue to actively evaluate software deals and remain confident in our ability to underwrite the sector when the right opportunity presents itself. Under the right terms, we will invest. Goldman Sachs BDC's portfolio companies span across 39 industries and 173 borrowers, giving us the breadth to invest across the full opportunity set rather than depending on any single sector.

9 million across nine portfolio companies, two of which are new borrowers. We also funded approximately 114 million of previously unfunded commitments. While the commitment level in the second quarter was modest, the quality and economics of what we deployed were improved. The weighted average spread on our second quarter originations was 511 basis points wider than what we were originating six months ago.

4%, reflecting conservative entry points in the current valuation environment. On the repayment and sales side, we received 146 million in total proceeds during the quarter. Net repayments exceeded new deployments, allowing us to use excess proceeds to reduce leverage. 25 times, primarily due to repayment and sales activity since quarter end.

This is a meaningful shift that creates capacity for new deployment and positions us to reactivate our stock repurchase program. 6% in senior secured loans with the residual asset mix in the form of preferred and common stock as well as unsecured debt. 5% compared to the first quarter. 9, respectively.

2% in the prior quarter. The number of companies on non-accrual decreased from 11 to 10 during the quarter as one portfolio company was restored to accrual status. As mentioned on previous calls, we believe these non-accrual names are idiosyncratic situations; they don't share a single cause and they are not indicative of a broader portfolio trend. The large majority of our portfolio companies continue to perform well with continued revenue and EBITDA growth quarter over quarter and year over year across our borrower base.

What we believe differentiates managers in this environment is the ability to identify problems early and manage through them effectively. Within our Direct Lending Americas platform, workout and restructuring efforts are supported by a dedicated team that is embedded within the broader investment group. This includes select investment professionals supported by several senior professionals with extensive workout experience who are actively involved in managing complex situations.

Critically, when faced with portfolio company distress, original deal captains remain closely engaged throughout the restructuring process, leveraging their long-standing knowledge of the borrower and the investment thesis from origination. They work in coordination with the dedicated restructuring team to ensure continuity, alignment and accountability. These team members are engaged proactively and frequently with sponsors and co-lenders to help maximize recoveries. David, let me hand it to you on a couple of situations that played out this quarter.

David Miller, Co-Chief Executive Officer Let me share two examples that demonstrate our workout team's capabilities in action. First is Thrasio, an Amazon e-commerce aggregator, which I'm sure is a name many of you recognize. Following its emergence from bankruptcy in 2024, our workout team has remained highly engaged through engagement with the board, working closely with co-lenders, engaging deeply with management and leveraging the broader Goldman Sachs platform.