Bain Capital Specialty Finance, Inc. (NYSE: BCSF, the “Company”,
“our” or “we”) today announced financial results for the third
quarter ended September 30, 2021, and that its Board of Directors
has declared a dividend of $0.34 per share for the fourth quarter
of 2021.
“Our positive third quarter earnings results were driven by
higher interest income and continued stable credit quality across
our diversified portfolio,” said Michael Ewald, Chief Executive
Officer of BCSF. “We also had a strong quarter of new origination
activity, demonstrating the strength of Bain Capital Credit’s
Private Credit Group in sourcing compelling new investment
opportunities in the middle market.”
QUARTERLY HIGHLIGHTS
- Net investment income per share was $0.34, as compared to $0.34
for the quarter ended June 30, 2021;
- Net income per share was $0.36, as compared to $0.66 for the
quarter ended June 30, 2021;
- Net asset value per share as of September 30, 2021 was $17.03,
as compared to $17.01 as of June 30, 2021;
- Gross and net investment fundings were $286.4 million and $31.5
million, respectively. Ending debt-to-equity (net of cash) ratio
was 1.15x, as compared to 1.12x as of June 30, 2021;
- No investments were on non-accrual status as of September 30,
2021;
- Subsequent to quarter-end, the Company’s Board of Directors
declared a dividend of $0.34 per share for the fourth quarter of
2021 payable to stockholders of record as of December 31, 2021(1);
and
- On October 13, 2021, the Company closed an offering of $300.0
million aggregate principal amount of 2.55% unsecured notes due
2026. The net proceeds of the offering were primarily used to pay
down debt under the Company’s revolving credit facilities.
SELECTED FINANCIAL HIGHLIGHTS
($ in millions, unless otherwise
noted)
Q3 2021
Q2 2021
Net investment income per share
$0.34
$0.34
Net investment income
$21.8
$21.9
Earnings per share
$0.36
$0.66
Dividends per share declared and
payable
$0.34
$0.34
($ in millions, unless otherwise
noted)
As of
September 30, 2021
As of
June 30, 2021
Total fair value of investments
$2,356.7
$2,319.5
Total assets
$2,498.7
$2,449.3
Total net assets
$1,099.7
$1,098.3
Net asset value per share
$17.03
$17.01
PORTFOLIO AND INVESTMENT ACTIVITY
For the three months ended September 30, 2021, the Company
invested $286.4 million in 39 portfolio companies, including $229.1
million in 10 new companies, $46.2 million in 28 existing companies
and $11.1 million in the ISLP. The Company had $254.9 million of
principal repayments and sales in the quarter. On a net basis, our
investments in the quarter totaled $31.5 million.
For the three months ended September 30, 2021, the ISLP invested
$63.5 million in five portfolio companies. The ISLP had $62.3
million of principal repayments and sales in the quarter. On a net
basis, ISLP’s investments in the quarter totaled $1.2 million.
Investment Activity for the Quarter Ended September 30,
2021:
($ in millions)
Q3 2021
Q2 2021
Investment Fundings
$286.4
$213.2
Sales and Repayments
$254.9
$257.7
Net Investment Activity
$31.5
$(44.5)
As of September 30, 2021, the Company’s investment portfolio had
a fair value of $2,356.7 million, comprised of investments in 105
portfolio companies operating across 29 different industries.
Investment Portfolio at Fair Value as of September 30,
2021:
Investment Type
$ in Millions
% of Total
First Lien Senior Secured Loans
$1,887.2
80.1%
Second Lien Senior Secured Loans
116.2
4.9
Subordinated Debt
16.8
0.7
Equity Interest
160.9
6.8
Preferred Equity
32.2
1.4
Warrants
0.1
0.0
Investment Vehicles
143.3
6.1
Subordinated Note in ISLP
105.9
4.5
Equity Interest in ISLP
37.4
1.6
Total
$2,356.7
100.0%
As of September 30, 2021, the weighted average yield on the
investment portfolio at amortized cost and fair value were 7.5% and
7.6%, respectively, as compared to 7.5% and 7.7%, respectively, as
of June 30, 2021.(2) 98.9% of the Company’s debt investments at
fair value were in floating rate securities.
As of September 30, 2021, no investments were on non-accrual
status.
As of September 30, 2021, ISLP’s investment portfolio had an
aggregate fair value of $395.8 million, comprised of investments in
23 portfolio companies operating across 10 different industries.
The investment portfolio on a fair value basis was comprised of
96.7% first lien senior secured loans and 3.3% 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 September 30, 2021 and June 30, 2021,
total investment income was $49.5 million and $46.5 million,
respectively. The increase in investment income was primarily due
to an increase in prepayment related income and other income.
Total expenses (before taxes), net of fee waivers for the three
months ended September 30, 2021 and June 30, 2021 were $27.8
million and $24.6 million, respectively. The increase was primarily
driven by an increase in investment advisory fees as a result of no
fee waivers by the Advisor given the Company’s net investment
income coverage of the dividend during the quarter ended September
30, 2021.
Net investment income for the three months ended September 30,
2021 and June 30, 2021 was $21.8 million or $0.34 per share and
$21.9 million or $0.34 per share, respectively.
During the three months ended September 30, 2021, the Company
had net realized and unrealized gains of $1.6 million.
Net increase in net assets resulting from operations for the
three months ended September 30, 2021 was $23.3 million, or $0.36
per share.
CAPITAL AND LIQUIDITY
As of September 30, 2021, the Company had total principal debt
outstanding of $1,356.7 million, including $179.7 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, $112.5 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 September 30, 2021, the weighted
average interest rate on debt outstanding was 3.0%, as compared to
3.2% for the three months ended June 30, 2021.
As of September 30, 2021, the Company had cash and cash
equivalents (including foreign cash) of $35.1 million, $270.3
million of capacity under its JPM Credit Facility and $50.0 million
of capacity under the Revolving Advisor Loan. As of September 30,
2021, the Company had $225.3 million of undrawn investment
commitments.
As of September 30, 2021, the Company’s debt-to-equity and
debt-to-equity (net of cash) ratios were 1.23x and 1.15x,
respectively, as compared to 1.20x and 1.12x, respectively, as of
June 30, 2021.
As of September 30, 2021, the Company was in compliance with all
terms under its secured credit facilities.
During the quarter, the Company repurchased $37.5 million of its
senior 8.50% unsecured notes due 2023 at a total cost of $39.5
million.
Endnotes
(1)
The fourth quarter dividend is payable on January 28, 2022 to
holders of record as of December 31, 2021.
(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.
CONFERENCE CALL INFORMATION
A conference call to discuss the Company’s financial results
will be held live at 8:00 a.m. Eastern Time on November 4, 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: 1-800-458-4121
- International: 1-323-794-2597
- Conference ID: 7785735
All participants will need to reference “Bain Capital Specialty
Finance - Third Quarter Ended September 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 November 11, 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: 7785735#
Bain Capital Specialty Finance, Inc. Consolidated
Statements of Assets and Liabilities (in thousands, except
share and per share data) As of As of
September 30, 2021 December 31, 2020
(Unaudited) Assets Investments at fair value:
Non-controlled/non-affiliate investments (amortized cost of
$2,023,858 and $2,281,809, respectively)
$
2,005,635
$
2,261,461
Non-controlled/affiliate investment (amortized cost of $99,438 and
$93,089, respectively)
107,576
92,915
Controlled affiliate investment (amortized cost of $256,766 and
$147,841, respectively)
243,460
130,112
Cash and cash equivalents
34,277
53,704
Foreign cash (cost of $1,033 and $976, respectively)
829
972
Restricted cash and cash equivalents
57,802
27,026
Collateral on forward currency exchange contracts
4,564
4,934
Deferred financing costs
864
3,131
Interest receivable on investments
20,943
15,720
Receivable for sales and paydowns of investments
3,850
5,928
Prepaid Insurance
376
-
Unrealized appreciation on forward currency exchange contracts
4,071
-
Dividend receivable
14,417
7,589
Total Assets
$
2,498,664
$
2,603,492
Liabilities Debt (net of unamortized debt issuance
costs of $10,500 and $7,147, respectively)
$
1,346,183
$
1,458,360
Interest payable
8,471
8,223
Payable for investments purchased
5,400
10,991
Unrealized depreciation on forward currency exchange contracts
-
22,614
Base management fee payable
8,776
6,289
Incentive fee payable
4,531
3,799
Accounts payable and accrued expenses
3,673
3,261
Distributions payable
21,951
21,951
Total Liabilities
1,398,985
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 outstandingas of
September 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 September 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)
(66,839)
(98,514)
Total Net Assets
1,099,679
1,068,004
Total Liabilities and Total Net assets
$
2,498,664
$
2,603,492
Net asset value per share
$
17.03
$
16.54
Bain Capital Specialty Finance, Inc. Consolidated
Statements of Operations (in thousands, except share and per
share data) (Unaudited) For the Three Months
Ended September 30 For the Three Months Ended September
30 For the Nine Months Ended September 30 For the
Nine Months Ended September 30
2021
2020
2021
2020
Income Investment income from non-controlled/non-affiliate
investments: Interest from investments
$
37,821
$
43,558
$
114,439
$
135,576
Dividend income
38
34
38
748
PIK income
1,046
-
3,108
-
Other income
1,181
607
5,512
1,106
Total investment income from non-controlled/non-affiliate
investments
40,086
44,199
123,097
137,430
Investment income from non-controlled/affiliate investments:
Interest from investments
455
56
1,355
56
PIK income
1,421
-
4,173
-
Total investment income from non-controlled/affiliate investments
1,876
56
5,528
56
Investment income from controlled affiliate investments:
Interest from investments
4,983
715
9,192
2,225
Dividend income
2,600
1,847
7,564
6,473
PIK income
-
-
483
-
Total investment income from controlled affiliate investments
7,583
2,562
17,239
8,698
Total investment income
49,545
46,817
145,864
146,184
Expenses Interest and debt financing expenses
12,265
14,426
37,115
49,614
Base management fee
8,776
8,885
26,096
26,250
Incentive fee
4,531
-
19,301
-
Professional fees
581
296
2,254
1,909
Directors fees
186
209
529
555
Other general and administrative expenses
1,445
1,545
4,075
3,878
Total expenses before fee waivers
27,784
25,361
89,370
82,206
Base management fee waiver
-
-
(4,837)
-
Incentive fee waiver
-
-
(4,519)
-
Total expenses, net of fee waivers
27,784
25,361
80,014
82,206
Net investment income
21,761
21,456
65,850
63,978
Net realized and unrealized gains (losses) Net
realized gain (loss) on non-controlled/non-affiliate investments
(668)
(24,263)
22,589
(34,667)
Net realized loss on controlled affiliate investments
(621)
-
(3,858)
-
Net realized gain (loss) on foreign currency transactions
(72)
(19)
(2,093)
(368)
Net realized gain (loss) on forward currency exchange contracts
(2,085)
(130)
(23,773)
6,472
Net realized loss on extinguishment of debt
(2,546)
-
(2,546)
-
Net change in unrealized appreciation (depreciation) on foreign
currency translation
(508)
194
(186)
89
Net change in unrealized appreciation (depreciation) on forward
currency exchange contracts
6,080
(11,177)
26,685
(7,921)
Net change in unrealized appreciation (depreciation) on
non-controlled/non-affiliate investments
922
73,892
2,125
(45,077)
Net change in unrealized appreciation on non-controlled/affiliate
investments
2,905
1,689
8,312
4,697
Net change in unrealized appreciation (depreciation) on controlled
affiliate investments
(1,826)
(10,185)
4,423
(18,421)
Total net gains (losses)
1,581
30,001
31,678
(95,196)
Net increase (decrease) in net assets resulting from
operations
$
23,342
$
51,457
$
97,528
$
(31,218)
Basic and diluted net investment income per common
share
$
0.34
$
0.33
$
1.02
$
1.13
Basic and diluted increase (decrease) in net assets resulting from
operations per common share
$
0.36
$
0.80
$
1.51
$
(0.55)
Basic and diluted weighted average common shares outstanding
64,562,265
64,562,265
64,562,265
56,692,267
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 September 30, 2021, BCSF has invested approximately $4.7
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/20211103006276/en/
Investor Contact: Katherine Schneider Tel. +1 212 803 9613
investors@baincapitalbdc.com
Media Contact: Charlyn Lusk Tel. +1 646 502 3549
clusk@stantonprm.com
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