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Bain Capital Specialty Finance, Inc. Announces June 30, 2022 Financial Results and Declares Third Quarter 2022 Dividend of $0.34 per Share

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BOSTON, August 03, 2022--(BUSINESS WIRE)--Bain Capital Specialty Finance, Inc. (NYSE: BCSF, the "Company", "our" or "we") today announced financial results for the second quarter ended June 30, 2022, and that its Board of Directors has declared a dividend of $0.34 per share for the third quarter of 2022.

"We remain focused on executing our strategy of investing in senior secured loans to high-quality middle-market companies, which generated higher net investment income for our shareholders this quarter," said Michael Ewald, Chief Executive Officer of BCSF. "We believe the Company is well positioned to continue to deliver attractive earnings and shareholder value over the long-term driven by our diversified portfolio of senior secured, floating rate loans and the strength of our capital structure."

QUARTERLY HIGHLIGHTS

  • Net investment income per share was $0.41, as compared to $0.34 for the quarter ended March 31, 2022;

  • Net income per share was $0.27, as compared to $0.52 for the quarter ended March 31, 2022;

  • Net asset value per share as of June 30, 2022 was $17.15, as compared to $17.22 as of March 31, 2022;

  • During the quarter, the Company made new investment fundings of $481.9 million. Sales and repayment activity totaled $332.4 million, resulting in net investment fundings of $149.5 million;

  • Ending debt-to-equity and debt-to-equity (net of cash) ratios were 1.14x and 1.07x, respectively, as compared to 0.99x and 0.89x, respectively, as of March 31, 2022;

  • As of June 30, 2022, the Company had one portfolio company on non-accrual status, representing 1.4% of the total investment portfolio at fair value;

  • Subsequent to quarter-end, the Company’s Board of Directors declared a dividend of $0.34 per share for the third quarter of 2022 payable to stockholders of record as of September 30, 2022(1); and

  • In July, the Company increased the total commitments to its Sumitomo Credit Facility to $485.0 million, up from $300.0 million.

SELECTED FINANCIAL HIGHLIGHTS

($ in millions, unless otherwise noted)

Q2 2022

Q1 2022

Net investment income per share

$0.41

$0.34

Net investment income

$26.7

$21.7

Earnings per share

$0.27

$0.52

Dividends per share declared and payable

$0.34

$0.34

($ in millions, unless otherwise noted)

As of

June 30, 2022

As of

March 31, 2022

Total fair value of investments

$2,287.0

$2,154.7

Total assets

$2,426.0

$2,310.6

Total net assets

$1,107.0

$1,111.7

Net asset value per share

$17.15

$17.22

PORTFOLIO AND INVESTMENT ACTIVITY

For the three months ended June 30, 2022, the Company invested $481.9 million in 50 portfolio companies, including $253.7 million in 11 new companies, $216.8 million in 38 existing companies and $11.4 million in International Senior Loan Program, LLC ("ISLP"). The Company had $332.4 million of principal repayments and sales in the quarter, resulting in net investment fundings of $149.5 million.

For the three months ended June 30, 2022, ISLP invested $74.5 million in six portfolio companies. ISLP had $27.7 million of principal repayments and sales in the quarter. On a net basis, ISLP’s investments in the quarter totaled $46.8 million.

For the three months ended June 30, 2022, SLP invested $82.3 million in 12 portfolio companies. SLP had $17.6 million of principal repayments and sales in the quarter. On a net basis, SLP’s investments in the quarter totaled $64.7 million.

Investment Activity for the Quarter Ended June 30, 2022:

($ in millions)

Q2 2022

Q1 2022

Investment Fundings

$481.9

$371.0

Sales and Repayments

$332.4

$521.0

Net Investment Activity

$149.5

$(150.0)

As of June 30, 2022, the Company’s investment portfolio had a fair value of $2,287.0 million, comprised of investments in 122 portfolio companies operating across 31 different industries.

Investment Portfolio at Fair Value as of June 30, 2022:

Investment Type

$ in Millions

% of Total

First Lien Senior Secured Loans

$1,632.1

71.4%

Second Lien Senior Secured Loans

95.3

4.2

Subordinated Debt

39.3

1.7

Equity Interest

216.0

9.4

Preferred Equity

75.9

3.3

Warrants

0.5

0.0

Investment Vehicles

227.9

10.0

Subordinated Note in ISLP

142.4

6.2

Equity Interest in ISLP

45.3

2.0

Subordinated Note in SLP

35.8

1.6

Preferred and Equity Interest in SLP

4.4

0.2

Total

$2,287.0

100.0%

As of June 30, 2022, the weighted average yield on the investment portfolio at amortized cost and fair value were 8.5% and 8.8%, respectively, as compared to 7.9% and 8.1%, respectively, as of March 31, 2022.(2) 94.8% of the Company’s debt investments at fair value were in floating rate securities.

As of June 30, 2022, one portfolio company was on non-accrual status, representing 2.2% and 1.4% of the total investment portfolio at amortized cost and fair value, respectively.

As of June 30, 2022, ISLP’s investment portfolio had an aggregate fair value of $541.3 million, comprised of investments in 31 portfolio companies operating across 14 different industries. The investment portfolio on a fair value basis was comprised of 96.4% first lien senior secured loans and 3.6% second lien senior secured loans. 100% of ISLP’s debt investments at fair value were in floating rate securities.

As of June 30, 2022, SLP’s investment portfolio had an aggregate fair value of $433.1 million, comprised of investments in 45 portfolio companies operating across 20 different industries.(3) The investment portfolio on a fair value basis was comprised of 95.0% first lien senior secured loans and 5.0% second lien senior secured loans. 100% of SLP’s debt investments at fair value were in floating rate securities.

RESULTS OF OPERATIONS

For the three months ended June 30, 2022 and March 31, 2022, total investment income was $52.4 million and $46.0 million, respectively. The increase in investment income was primarily due to an increase in other income and dividend income.

Total expenses (before taxes) for the three months ended June 30, 2022 and March 31, 2022 were $25.6 million and $24.3 million, respectively. The increase was primarily driven by an increase in incentive fees and interest and debt financing expenses.

Net investment income for the three months ended June 30, 2022 and March 31, 2022 was $26.7 million or $0.41 per share and $21.7 million or $0.34 per share, respectively.

During the three months ended June 30, 2022, the Company had net realized and unrealized gains (losses) of $(9.5) million.

Net increase in net assets resulting from operations for the three months ended June 30, 2022 was $17.2 million, or $0.27 per share.

CAPITAL AND LIQUIDITY

As of June 30, 2022, the Company had total principal debt outstanding of $1,256.7 million, including $191.7 million outstanding in the Company’s Sumitomo Credit Facility, $352.5 million outstanding of the debt issued through BCC Middle Market CLO 2019-1 LLC, $112.5 million outstanding in the Company’s senior unsecured notes due 2023, $300.0 million outstanding in the Company’s senior unsecured notes due March 2026 and $300.0 million outstanding in the Company’s senior unsecured notes due October 2026.

For the three months ended June 30, 2022, the weighted average interest rate on debt outstanding was 3.2%, as compared to 2.9% for the three months ended March 31, 2022.

As of June 30, 2022, the Company had cash and cash equivalents (including foreign cash) of $43.0 million, $108.3 million of capacity under its Sumitomo Credit Facility and $50.0 million of capacity under the Revolving Advisor Loan. As of June 30, 2022, the Company had $283.3 million of undrawn investment commitments.

As of June 30, 2022, the Company’s debt-to-equity and debt-to-equity (net of cash) ratios were 1.14x and 1.07x, respectively, as compared to 0.99x and 0.89x, respectively, as of March 31, 2022.

Subsequent to quarter-end, the Company increased its total commitments to the Sumitomo Credit Facility from $300.0 million to $485.0 million.

Endnotes

(1)

The third quarter dividend is payable on October 28, 2022 to holders of record as of September 30, 2022.

(2)

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.

(3)

SLP acquired 70% of the member equity interests of the Company’s 2018-1 portfolio ("2018-1"). The Company retained 30% of the 2018-1 membership interests as a non-controlling equity interest.

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 4, 2022. 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: 1-800-289-0571

  • International: 1-323-794-2093

  • Conference ID: 9543241

All participants will need to reference "Bain Capital Specialty Finance - Second Quarter Ended June 30, 2022 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 11, 2022 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: 9543241#

Bain Capital Specialty Finance, Inc.

Consolidated Statements of Assets and Liabilities

(in thousands, except share and per share data)

As of

As of

June 30, 2022

December 31, 2021

(Unaudited)

Assets

Investments at fair value:

Non-controlled/non-affiliate investments (amortized cost of $1,837,653 and $1,921,970, respectively)

$

1,784,423

$

1,901,054

Non-controlled/affiliate investment (amortized cost of $124,564 and $100,888, respectively)

151,735

113,290

Controlled affiliate investment (amortized cost of $357,458 and $288,526, respectively)

350,880

274,761

Cash and cash equivalents

38,013

87,443

Foreign cash (cost of $8,902 and $30,877, respectively)

5,003

29,979

Restricted cash and cash equivalents

25,910

86,159

Collateral on forward currency exchange contracts

-

2,815

Deferred financing costs

1,961

2,178

Interest receivable on investments

27,776

19,269

Receivable for sales and paydowns of investments

13,863

30,334

Prepaid Insurance

559

193

Unrealized appreciation on forward currency exchange contracts

15,095

5,321

Dividend receivable

10,826

18,397

Total Assets

$

2,426,044

$

2,571,193

Liabilities

Debt (net of unamortized debt issuance costs of $12,440 and $15,718, respectively)

$

1,244,283

$

1,414,982

Interest payable

7,164

7,058

Payable for investments purchased

27,052

7,594

Base management fee payable

8,451

8,792

Incentive fee payable

4,069

4,727

Collateral on forward currency exchange contracts

2,743

-

Accounts payable and accrued expenses

3,317

6,083

Distributions payable

21,951

21,951

Total Liabilities

1,319,030

1,471,187

Commitments and Contingencies (See Note 10)

Net Assets

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, 2022 and December 31, 2021, respectively

65

65

Paid in capital in excess of par value

1,168,384

1,168,384

Total distributable earnings (loss)

(61,435

)

(68,443

)

Total Net Assets

1,107,014

1,100,006

Total Liabilities and Total Net assets

$

2,426,044

$

2,571,193

Net asset value per share

$

17.15

$

17.04

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

2022

2021

2022

2021

Income

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

Interest from investments

$

29,769

$

36,706

$

64,056

$

76,619

Dividend income

-

-

108

-

PIK income

2,375

1,082

4,883

2,062

Other income

7,690

875

8,155

4,331

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

39,834

38,663

77,202

83,012

Investment income from non-controlled/affiliate investments:

Interest from investments

1,901

477

2,225

900

Dividend income

1,851

-

1,851

-

PIK income

45

1,366

1,449

2,752

Total investment income from non-controlled/affiliate investments

3,797

1,843

5,525

3,652

Investment income from controlled affiliate investments:

Interest from investments

4,214

2,572

7,636

4,209

Dividend income

4,519

2,929

8,012

4,964

PIK income

-

483

-

483

Total investment income from controlled affiliate investments

8,733

5,984

15,648

9,656

Total investment income

52,364

46,490

98,375

96,320

Expenses

Interest and debt financing expenses

11,027

13,017

21,670

24,850

Base management fee

8,451

8,623

16,820

17,320

Incentive fee

4,069

8,042

7,380

14,771

Professional fees

446

714

836

1,673

Directors fees

179

171

354

343

Other general and administrative expenses

1,477

1,241

2,897

2,629

Total expenses before fee waivers

25,649

31,808

49,957

61,586

Base management fee waiver

-

(2,723

)

-

(4,837

)

Incentive fee waiver

-

(4,519

)

-

(4,519

)

Total expenses, net of fee waivers

25,649

24,566

49,957

52,230

Net investment income

26,715

21,924

48,418

44,090

Net realized and unrealized gains (losses)

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

(2,576

)

4,845

(1,159

)

23,258

Net realized gain (loss) on controlled affiliate investments

-

-

-

(3,237

)

Net realized gain (loss) on foreign currency transactions

3,166

1,005

2,678

(2,021

)

Net realized gain (loss) on forward currency exchange contracts

2,018

(18,396

)

3,261

(21,688

)

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

(2,051

)

(65

)

(1,705

)

322

Net change in unrealized appreciation on forward currency exchange contracts

8,124

16,028

9,775

20,604

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

(27,206

)

4,426

(32,314

)

1,202

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

9,102

5,780

14,769

5,407

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

(63

)

6,886

7,187

6,249

Total net gains

(9,486

)

20,509

2,492

30,096

Net increase in net assets resulting from operations

$

17,229

$

42,433

$

50,910

$

74,186

Basic and diluted net investment income per common share

$

0.41

$

0.34

$

0.75

$

0.68

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

$

0.27

$

0.66

$

0.79

$

1.15

Basic and diluted weighted average common shares outstanding

64,562,265

64,562,265

64,562,265

64,562,265

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, 2022, BCSF has invested approximately $5.8 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/20220803005971/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