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Bain Capital Specialty Finance, Inc. Announces June 30, 2021 Financial Results and Declares Third Quarter 2021 Dividend of $0.34 per Share

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BOSTON, August 04, 2021--(BUSINESS WIRE)--Bain Capital Specialty Finance, Inc. (NYSE: BCSF, the "Company", "our" or "we") today announced its financial results for the second quarter ended June 30, 2021, and that its Board of Directors has declared a dividend of $0.34 per share for the third quarter of 2021.

"We delivered another strong quarter of earnings and NAV growth to our shareholders as our highly diversified portfolio of primarily middle market senior secured loans continues to benefit from the continued strong performance of our underlying portfolio companies," said Michael Ewald, Chief Executive Officer of BCSF. "Our positive results also reflect an active quarter of origination activity. Looking forward, we remain well-positioned to capitalize on compelling opportunities and to continue to increase shareholder value."

QUARTERLY HIGHLIGHTS

  • Net investment income per share was $0.34, as compared to $0.34 for the quarter ended March 31, 2021;

  • Net income per share was $0.66, as compared to $0.49 for the quarter ended March 31, 2021;

  • Net asset value per share as of June 30, 2021 was $17.01, as compared to $16.69 as of March 31, 2021;

  • Gross and net investment fundings were $213.2 million and $(44.5) million, respectively. Ending debt-to-equity (net of cash) ratio was 1.12x, as compared to 1.15x as of March 31, 2021;

  • The International Senior Loan Program’s ("ISLP") investment portfolio at fair value grew by 23% quarter-over-quarter;

  • The investment portfolio yield at amortized cost was 7.5%, as compared to 7.6% as of March 31, 2021(1);

  • No investments were on non-accrual status as of June 30, 2021; and

  • Subsequent to quarter-end, the Company’s Board of Directors declared a dividend of $0.34 per share for the third quarter of 2021 payable to stockholders of record as of September 30, 2021(2).

SELECTED FINANCIAL HIGHLIGHTS

($ in millions, unless otherwise noted)

Q2 2021

Q1 2021

Net investment income per share

$0.34

$0.34

Net investment income

$21.9

$22.2

Earnings per share

$0.66

$0.49

Dividends per share declared and payable

$0.34

$0.34

($ in millions, unless otherwise noted)

As of
June 30, 2021

As of
March 31, 2021

Total fair value of investments

$2,319.5

$2,335.7

Total assets

$2,449.3

$2,491.3

Total net assets

$1,098.3

$1,077.8

Net asset value per share

$17.01

$16.69

PORTFOLIO AND INVESTMENT ACTIVITY

For the three months ended June 30, 2021, the Company invested $213.2 million in 32 portfolio companies, including $110.9 million in eight new companies and $102.3 million in 24 existing companies. The Company had $257.7 million of principal repayments and sales in the quarter, including $60.0 million of investments that were contributed to ISLP. On a net basis, our investments in the quarter totaled $(44.5) million.

Investment Activity for the Quarter Ended June 30, 2021:

($ in millions)

Q2 2021

Q1 2021

Investment Fundings

$213.2

$383.9

Sales and Repayments

$257.7

$549.4

Net Investment Activity

$(44.5)

$(165.5)

As of June 30, 2021, the Company’s investment portfolio had a fair value of $2,319.5 million, comprised of investments in 104 portfolio companies operating across 28 different industries.

Investment Portfolio at Fair Value as of June 30, 2021:

Investment Type

$ in Millions

% of Total

First Lien Senior Secured Loans

$1,881.5

81.1%

Second Lien Senior Secured Loans

115.2

5.0

Subordinated Debt

16.5

0.7

Equity Interest

136.6

5.9

Preferred Equity

37.0

1.6

Warrants

0.0

0.0

Investment Vehicles

132.7

5.7

Subordinated Note in ISLP

97.4

4.2

Equity Interest in ISLP

35.3

1.5

Total

$2,319.5

100.0%

As of June 30, 2021, the weighted average yield on the investment portfolio at amortized cost and fair value were 7.5% and 7.7%, respectively, as compared to 7.6% and 7.8%, respectively, as of March 31, 2021.(1) 98.3% of the Company’s debt investments at fair value were in floating rate securities.

As of June 30, 2021, no investments were on non-accrual status.

As of June 30, 2021, ISLP’s investment portfolio had an aggregate fair value of $394.5 million, comprised of investments in 21 portfolio companies operating across 12 different industries. The investment portfolio on a fair value basis was comprised of 89.3% first lien senior secured loans and 10.7% second lien senior secured loans. 100% of ISLP’s debt investments at fair value were in floating rate securities.

RESULTS OF OPERATIONS

For the three months ended June 30, 2021 and March 31, 2021, total investment income was $46.5 million and $49.8 million, respectively. The decrease in investment income was primarily due to a decrease in other income and prepayment related income.

Total expenses (before taxes), net of fee waivers for the three months ended June 30, 2021 and March 31, 2021 were $24.6 million and $27.7 million, respectively. The decrease was primarily driven by an increase in incentive fee waivers by the Advisor, partially offset by higher interest and debt financing expenses.

Net investment income for the three months ended June 30, 2021 and March 31, 2021 was $21.9 million or $0.34 per share and $22.2 million or $0.34 per share, respectively.

During the three months ended June 30, 2021, the Company had net realized and unrealized gains of $20.5 million.

Net increase in net assets resulting from operations for the three months ended June 30, 2021 was $42.4 million, or $0.66 per share.

CAPITAL AND LIQUIDITY

As of June 30, 2021, the Company had total principal debt outstanding of $1,317.7 million, including $103.2 million outstanding in the Company’s credit facility with JPMorgan Chase Bank, National Association (the "JPM Credit Facility"), $365.7 million outstanding of the notes issued through BCC Middle Market CLO 2018-1 LLC, $398.8 million outstanding of the debt issued through BCC Middle Market CLO 2019-1 LLC, $150.0 million outstanding in the Company’s senior unsecured notes due 2023 and $300.0 million outstanding in the Company’s senior unsecured notes due 2026.

For the three months ended June 30, 2021, the weighted average interest rate on debt outstanding was 3.2%, as compared to 3.2% for the three months ended March 31, 2021.

As of June 30, 2021, the Company had cash and cash equivalents (including foreign cash) of $31.6 million, $346.8 million of capacity under its JPM Credit Facility and $50.0 million of capacity under the Revolving Advisor Loan. As of June 30, 2021, the Company had $212.9 million of undrawn investment commitments.

As of June 30, 2021, the Company’s debt-to-equity and debt-to-equity (net of cash) ratios were 1.20x and 1.12x, respectively, as compared to 1.26x and 1.15x, respectively, as of March 31, 2021.

As of June 30, 2021, the Company was in compliance with all terms under its secured credit facilities.

Subsequent to quarter-end, the Company repurchased $37.5 million of its senior unsecured notes due 2023 at a total cost of $39.5 million.

Endnotes

(1)

The weighted average yield is computed as (a) the annual stated interest rate or yield earned on the relevant accruing debt and other income producing securities plus amortization of fees and discounts on the performing debt and other income producing investments, divided by (b) the total relevant investments at amortized cost. The weighted average yield does not represent the total return to our stockholders.

(2)

The third quarter dividend is payable on October 29, 2021 to holders of record as of September 30, 2021.

CONFERENCE CALL INFORMATION

A conference call to discuss the Company’s financial results will be held live at 8:30 a.m. Eastern Time on August 5, 2021. Please visit BCSF’s webcast link located on the Events & Presentations page of the Investor Resources section of BCSF’s website at http://www.baincapitalbdc.com for a slide presentation that complements the Earnings Conference Call.

Participants are also invited to access the conference call by dialing one of the following numbers:

  • Domestic: 1-888-254-3590

  • International: 1-323-994-2082

  • Conference ID: 8880299

All participants will need to reference "Bain Capital Specialty Finance - Second Quarter Ended June 30, 2021 Earnings Conference Call" once connected with the operator. All participants are asked to dial in 10-15 minutes prior to the call.

Replay Information:

An archived replay will be available approximately three hours after the conference call concludes through August 12, 2021 via a webcast link located on the Investor Resources section of BCSF’s website, and via the dial-in numbers listed below:

  • Domestic: 1-844-512-2921

  • International: 1-412-317-6671

  • Conference ID: 8880299#

Bain Capital Specialty Finance, Inc.

Consolidated Statements of Assets and Liabilities

(in thousands, except share and per share data)

(Unaudited)

As of

As of

June 30, 2021

December 31, 2020

(Unaudited)

Assets

Investments at fair value:

Non-controlled/non-affiliate investments (amortized cost of $1,967,244 and $2,281,809, respectively)

$

1,948,098

$

2,261,461

Non-controlled/affiliate investment (amortized cost of $97,567 and $93,089, respectively)

102,800

92,915

Controlled affiliate investment (amortized cost of $280,122 and $147,841, respectively)

268,642

130,112

Cash and cash equivalents

29,869

53,704

Foreign cash (cost of $1,366 and $976, respectively)

1,707

972

Restricted cash and cash equivalents

57,144

27,026

Collateral on forward currency exchange contracts

3,754

4,934

Deferred financing costs

930

3,131

Interest receivable on investments

20,118

15,720

Receivable for sales and paydowns of investments

3,853

5,928

Prepaid Insurance

558

-

Dividend receivable

11,818

7,589

Total Assets

$

2,449,291

$

2,603,492

Liabilities

Debt (net of unamortized debt issuance costs of $11,654 and $7,147, respectively)

$

1,306,029

$

1,458,360

Interest payable

8,855

8,223

Payable for investments purchased

-

10,991

Unrealized depreciation on forward currency exchange contracts

2,010

22,614

Base management fee payable

5,899

6,289

Incentive fee payable

3,523

3,799

Accounts payable and accrued expenses

2,736

3,261

Distributions payable

21,951

21,951

Total Liabilities

1,351,003

1,535,488

Commitments and Contingencies

Net Assets

Preferred stock, $0.001 par value per share, 10,000,000,000 shares authorized, none issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

$

-

$

-

Common stock, par value $0.001 per share, 100,000,000,000 and 100,000,000,000 shares authorized, 64,562,265 and 64,562,265 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

65

65

Paid in capital in excess of par value

1,166,453

1,166,453

Total distributable earnings (loss)

(68,230

)

(98,514

)

Total Net Assets

1,098,288

1,068,004

Total Liabilities and Total Net assets

$

2,449,291

$

2,603,492

Net asset value per share

$

17.01

$

16.54

See Notes to Consolidated Financial Statements

Bain Capital Specialty Finance, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share data)

(Unaudited)

For the Three Months
Ended June 30,

For the Three Months
Ended June 30,

For the Six Months
Ended June 30,

For the Six Months
Ended June 30,

2021

2020

2021

2020

Income

Investment income from non-controlled/non-affiliate investments:

Interest from investments

$

36,706

$

44,147

$

76,619

$

92,018

Dividend income

-

681

-

714

PIK income

1,082

-

2,062

-

Other income

875

59

4,331

499

Total investment income from non-controlled/non-affiliate investments

38,663

44,887

83,012

93,231

Investment income from non-controlled/affiliate investments:

Interest from investments

477

-

900

-

PIK income

1,366

-

2,752

-

Total investment income from non-controlled/affiliate investments

1,843

-

3,652

-

Investment income from controlled affiliate investments:

Interest from investments

2,572

738

4,209

1,510

Dividend income

2,929

2,246

4,964

4,626

PIK income

483

-

483

-

Total investment income from controlled affiliate investments

5,984

2,984

9,656

6,136

Total investment income

46,490

47,871

96,320

99,367

Expenses

Interest and debt financing expenses

13,017

17,312

24,850

35,188

Base management fee

8,623

8,639

17,320

17,365

Incentive fee

8,042

-

14,771

-

Professional fees

714

643

1,673

1,613

Directors fees

171

171

343

346

Other general and administrative expenses

1,241

1,084

2,629

2,333

Total expenses before fee waivers

31,808

27,849

61,586

56,845

Base management fee waiver

(2,723

)

-

(4,837

)

-

Incentive fee waiver

(4,519

)

-

(4,519

)

-

Total expenses, net of fee waivers

24,566

27,849

52,230

56,845

Net investment income

21,924

20,022

44,090

42,522

Net realized and unrealized gains (losses)

Net realized gain (loss) on non-controlled/non-affiliate investments

4,845

52

23,258

(10,404

)

Net realized loss on controlled affiliate investments

-

-

(3,237

)

-

Net realized gain (loss) on foreign currency transactions

1,005

66

(2,021

)

(349

)

Net realized gain (loss) on forward currency exchange contracts

(18,396

)

5,097

(21,688

)

6,602

Net change in unrealized appreciation (depreciation) on foreign currency translation

(65

)

104

322

(105

)

Net change in unrealized appreciation (depreciation) on forward currency exchange contracts

16,028

(9,865

)

20,604

3,256

Net change in unrealized appreciation (depreciation) on non-controlled/non-affiliate investments

4,426

10,418

1,202

(118,969

)

Net change in unrealized appreciation on non-controlled/affiliate investments

5,780

3,008

5,407

3,008

Net change in unrealized appreciation (depreciation) on controlled affiliate investments

6,886

(7,130

)

6,249

(8,236

)

Total net gains (losses)

20,509

1,750

30,096

(125,197

)

Net increase (decrease) in net assets resulting from operations

$

42,433

$

21,772

$

74,186

$

(82,675

)

Basic and diluted net investment income per common share

$

0.34

$

0.37

$

0.68

$

0.81

Basic and diluted increase (decrease) in net assets resulting from operations per common share

$

0.66

$

0.40

$

1.15

$

(1.57

)

Basic and diluted weighted average common shares outstanding

64,562,265

53,778,239

64,562,265

52,714,025

See Notes to Consolidated Financial Statements

About Bain Capital Specialty Finance, Inc.

Bain Capital Specialty Finance, Inc. is an externally managed specialty finance company focused on lending to middle market companies. BCSF is managed by BCSF Advisors, LP, an SEC-registered investment adviser and a subsidiary of Bain Capital Credit, LP. Since commencing investment operations on October 13, 2016, and through June 30, 2021, BCSF has invested approximately $4.4 billion in aggregate principal amount of debt and equity investments prior to any subsequent exits or repayments. BCSF’s investment objective is to generate current income and, to a lesser extent, capital appreciation through direct originations of secured debt, including first lien, first lien/last out, unitranche and second lien debt, investments in strategic joint ventures, equity investments and, to a lesser extent, corporate bonds. BCSF has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended.

Forward-Looking Statements

This letter may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this letter may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the U.S. Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this letter.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210804006135/en/

Contacts

Investor Contact:
Katherine Schneider
Tel. +1 212 803 9613
investors@baincapitalbdc.com

Media Contact:
Charlyn Lusk
Tel. +1 646 502 3549
clusk@stantonprm.com