Bain Capital Specialty Finance, Inc. (NYSE: BCSF, the “Company”,
“our” or “we”) today announced financial results for the fourth
quarter and fiscal year ended December 31, 2021, and that its Board
of Directors has declared a dividend of $0.34 per share for the
first quarter of 2022.
“We are pleased with our solid fourth quarter results, where we
saw robust new origination activity and continued stable credit
performance across our portfolio of high-quality middle market
loans,” said Michael Ewald, Chief Executive Officer of BCSF.
“During the quarter, we further strengthened the Company’s balance
sheet and funding profile through increasing the amount of
unsecured debt in our capital structure while lowering our overall
cost of capital to better position BCSF to drive attractive returns
for its shareholders.”
QUARTERLY HIGHLIGHTS
- Net investment income per share was $0.34, as compared to $0.34
for the quarter ended September 30, 2021;
- Net income per share was $0.35, as compared to $0.36 for the
quarter ended September 30, 2021;
- Net asset value per share as of December 31, 2021 was $17.04,
as compared to $17.03 as of September 30, 2021;
- Gross and net investment fundings were $291.1 million and
$(78.4) million, respectively. Ending debt-to-equity (net of cash)
ratio was 1.12x, as compared to 1.15x as of September 30,
2021;
- The International Senior Loan Program’s (“ISLP”) investment
portfolio at fair value grew by 27% quarter-over-quarter. The
Company’s investment in the ISLP represents 7.4% of the total
investment portfolio at fair value, up from 6.1% as of September
30, 2021;
- No investments were on non-accrual status as of December 31,
2021;
- In October 2021, the Company closed an offering of $300.0
million aggregate principal amount of 2.55% unsecured notes due
2026; the Company’s funding mix at the end of the fourth quarter
was comprised of 50% in unsecured debt and 50% in secured debt, as
compared to 30% in unsecured debt and 70% in secured debt as of
September 30, 2021;
- In November 2021, the Company refinanced its BCC Middle Market
CLO 2019-1 LLC to, among other things, reduce the blended net
interest rate from LIBOR plus 2.30% to LIBOR plus 1.62% and extend
the final maturity date from October 15, 2031 to October 15,
2033;
- In December 2021, the Company entered into a senior secured
revolving credit facility agreement with Sumitomo Mitsui Banking
Corporation and MUFG Union Bank, N.A. (the “Sumitomo Credit
Facility”). The facility amount under the Sumitomo Credit Facility
is $300.0 million with an accordion provision to permit increases
to the total facility amount up to $1.0 billion. The maturity date
is December 24, 2026. Interest under the Sumitomo Credit Facility
is at the applicable reference rate plus 1.75%, subject to certain
requirements and elections at the Company’s discretion;
- Subsequent to quarter-end, the Company’s Board of Directors
declared a dividend of $0.34 per share for the first quarter of
2022 payable to stockholders of record as of March 31, 2022(1);
and
- In February 2022, the Company announced the formation of Bain
Capital Senior Loan Program, LLC (“SLP”). The SLP will provide BCSF
with greater balance sheet flexibility to capitalize on senior
middle market loan opportunities to borrowers in North
America.
SELECTED FINANCIAL HIGHLIGHTS
($ in millions, unless otherwise
noted)
Q4 2021
Q3 2021
Net investment income per share
$0.34
$0.34
Net investment income
$21.9
$21.8
Earnings per share
$0.35
$0.36
Dividends per share declared and
payable
$0.34
$0.34
($ in millions, unless otherwise
noted)
As of
December 31, 2021
As of
September 30, 2021
Total fair value of investments
$2,289.1
$2,356.7
Total assets
$2,571.2
$2,498.7
Total net assets
$1,100.0
$1,099.7
Net asset value per share
$17.04
$17.03
PORTFOLIO AND INVESTMENT ACTIVITY
For the three months ended December 31, 2021, the Company
invested $291.1 million in 39 portfolio companies, including $173.4
million in nine new companies, $92.1 million in 29 existing
companies and $25.6 million in the ISLP. The Company had $369.5
million of principal repayments and sales in the quarter. On a net
basis, our investments in the quarter totaled $(78.4) million.
For the three months ended December 31, 2021, the ISLP invested
$129.8 million in seven portfolio companies. The ISLP had $23.2
million of principal repayments and sales in the quarter. On a net
basis, ISLP’s investments in the quarter totaled $106.6
million.
Investment Activity for the Quarter Ended December 31,
2021:
($ in millions)
Q4 2021
Q3 2021
Investment Fundings
$291.1
$286.4
Sales and Repayments
$369.5
$254.9
Net Investment Activity
$(78.4)
$31.5
As of December 31, 2021, the Company’s investment portfolio had
a fair value of $2,289.1 million, comprised of investments in 106
portfolio companies operating across 29 different industries.
Investment Portfolio at Fair Value as of December 31,
2021:
Investment Type
$ in Millions
% of Total
First Lien Senior Secured Loans
$1,774.7
77.5%
Second Lien Senior Secured Loans
118.6
5.2
Subordinated Debt
20.0
0.9
Equity Interest
151.8
6.6
Preferred Equity
54.0
2.4
Warrants
0.2
0.0
Investment Vehicles
169.8
7.4
Subordinated Note in ISLP
125.4
5.5
Equity Interest in ISLP
44.4
1.9
Total
$2,289.1
100.0%
As of December 31, 2021, the weighted average yield on the
investment portfolio at amortized cost and fair value were 7.6% and
7.8%, respectively, as compared to 7.5% and 7.6%, respectively, as
of September 30, 2021.(2) 97.8% of the Company’s debt investments
at fair value were in floating rate securities.
As of December 31, 2021, no investments were on non-accrual
status.
As of December 31, 2021, ISLP’s investment portfolio had an
aggregate fair value of $501.5 million, comprised of investments in
27 portfolio companies operating across 12 different industries.
The investment portfolio on a fair value basis was comprised of
99.7% first lien senior secured loans and 0.3% 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 December 31, 2021 and September 30,
2021, total investment income was $51.5 million and $49.5 million,
respectively. The increase in investment income was primarily due
to an increase in dividend income.
Total expenses (before taxes), net of fee waivers for the three
months ended December 31, 2021 and September 30, 2021 were $29.5
million and $27.8 million, respectively. The increase was primarily
driven by an increase in interest and debt financing expenses.
Net investment income for the three months ended December 31,
2021 and September 30, 2021 was $21.9 million or $0.34 per share
and $21.8 million or $0.34 per share, respectively.
During the three months ended December 31, 2021, the Company had
net realized and unrealized gains of $0.4 million.
Net increase in net assets resulting from operations for the
three months ended December 31, 2021 was $22.3 million, or $0.35
per share.
CAPITAL AND LIQUIDITY
As of December 31, 2021, the Company had total principal debt
outstanding of $1,430.7 million, including $365.7 million
outstanding of the notes issued through BCC Middle Market CLO
2018-1 LLC, $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 December 31, 2021, the weighted
average interest rate on debt outstanding was 2.9%, as compared to
3.0% for the three months ended September 30, 2021.
As of December 31, 2021, the Company had cash and cash
equivalents (including foreign cash) of $117.4 million, $300.0
million of capacity under its Sumitomo Credit Facility and $50.0
million of capacity under the Revolving Advisor Loan. As of
December 31, 2021, the Company had $234.0 million of undrawn
investment commitments.
As of December 31, 2021, the Company’s debt-to-equity and
debt-to-equity (net of cash) ratios were 1.30x and 1.12x,
respectively, as compared to 1.23x and 1.15x, respectively, as of
September 30, 2021.
In October 2021, the Company closed an offering of $300.0
million aggregate principal amount of 2.55% unsecured notes due
2026 (the “October 2026 Notes”). The October 2026 Notes mature on
October 13, 2026 and may be redeemed in whole or in part at the
Company’s option at any time at par plus a “make-whole” premium,
provided that the October 2026 Notes may be redeemed at par one
month prior to their maturity.
In November 2021, the Company refinanced its BCC Middle Market
CLO 2019-1 LLC to, among other things, (a) reduce the blended net
interest rate from LIBOR plus 2.30% to LIBOR plus 1.62%; (b) extend
the reinvestment period from October 15, 2023 to October 15, 2025;
and (c) extend the final maturity date from October 15, 2031 to
October 15, 2033.
In December, 2021, the Company entered into a senior secured
revolving credit facility agreement (the “Sumitomo Credit
Agreement”) as Borrower, with Sumitomo Mitsui Banking Corporation,
as Administrative Agent and Sole Book Runner, and with Sumitomo
Mitsui Banking Corporation and MUFG Union Bank, N.A., as Joint Lead
Arrangers. The facility amount under the Sumitomo Credit Agreement
is $300.0 million with an accordion provision to permit increases
to the total facility amount up to $1.0 billion. The maturity date
is December 24, 2026. Interest under the Sumitomo Credit Agreement
is at the applicable reference rate plus 1.75%, subject to certain
requirements and elections at the Company’s discretion.
In December 2021, the Company terminated its JPM Credit
Facility.
As of December 31, 2021, the Company was in compliance with all
terms under its secured credit facilities.
Endnotes
(1)
The first quarter dividend is
payable on April 29, 2022 to holders of record as of March 31,
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.
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 February 24, 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: 1-800-289-0720
- International: 1-323-701-0160
- Conference ID: 6015066
All participants will need to reference “Bain Capital Specialty
Finance - Fourth Quarter and Fiscal Year Ended December 31, 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 March 3, 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: 6015066#
Bain Capital Specialty
Finance, Inc.
Consolidated Statements of
Assets and Liabilities
(in thousands, except share
and per share data
As of December 31,
2021
2020
Assets
Investments at fair value:
Non-controlled/non-affiliate investments
(amortized cost of $1,921,970 and $2,281,809, respectively)
$
1,901,054
$
2,261,461
Non-controlled/affiliate investment
(amortized cost of $100,888 and $93,089, respectively)
113,290
92,915
Controlled affiliate investment (amortized
cost of $288,526 and $147,841, respectively)
274,761
130,112
Cash and cash equivalents
87,443
53,704
Foreign cash (cost of $30,877 and $976,
respectively)
29,979
972
Restricted cash and cash equivalents
86,159
27,026
Collateral on forward currency exchange
contracts
2,815
4,934
Deferred financing costs
2,178
3,131
Interest receivable on investments
19,269
15,720
Receivable for sales and paydowns of
investments and other investment transactions
30,334
5,928
Prepaid Insurance
193
-
Unrealized appreciation on forward
currency exchange contracts
5,321
-
Dividend receivable
18,397
7,589
Total Assets
$
2,571,193
$
2,603,492
Liabilities
Debt (net of unamortized debt issuance
costs of $15,718 and $7,147, respectively)
$
1,414,982
$
1,458,360
Interest payable
7,058
8,223
Payable for investments purchased
7,594
10,991
Unrealized depreciation on forward
currency exchange contracts
-
22,614
Base management fee payable
8,792
6,289
Incentive fee payable
4,727
3,799
Accounts payable and accrued expenses
6,083
3,261
Distributions payable
21,951
21,951
Total Liabilities
1,471,187
1,535,488
Commitments and Contingencies
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 December 31,
2021 and December 31, 2020, respectively
65
65
Paid in capital in excess of par value
1,168,384
1,166,453
Total distributable earnings (loss)
(68,443
)
(98,514
)
Total Net Assets
1,100,006
1,068,004
Total Liabilities and Total Net
assets
$
2,571,193
$
2,603,492
Net asset value per share
$
17.04
$
16.54
Bain Capital Specialty
Finance, Inc.
Consolidated Statements of
Operations
(in thousands, except share
and per share data)
(Unaudited)
For the Year Ended December
31
2021
2020
2019
Income
Investment income from
non-controlled/non-affiliate investments:
Interest from investments
$
153,703
$
170,914
$
178,122
Dividend income
514
787
62
PIK income
4,475
7,272
464
Other income
6,173
1,955
805
Total investment income from
non-controlled/non-affiliate investments
164,865
180,928
179,453
Investment income from
non-controlled/affiliate investments:
Interest from investments
1,818
639
-
PIK income
5,622
1,227
-
Other income
-
202
-
Total investment income from
non-controlled/affiliate investments
7,440
2,068
-
Investment income from controlled
affiliate investments:
Interest from investments
11,822
2,644
1,795
Dividend income
12,601
8,537
16,679
PIK income
666
279
14
Other income
-
4
4
Total investment income from controlled
affiliate investments
25,089
11,464
18,492
Total investment income
197,394
194,460
197,945
Expenses
Interest and debt financing expenses
51,345
63,309
66,330
Base management fee
34,888
35,215
32,702
Incentive fee
24,028
4,473
17,418
Professional fees
2,854
2,626
2,297
Directors fees
725
726
546
Other general and administrative
expenses
5,038
5,398
4,772
Total expenses before fee
waivers
118,878
111,747
124,065
Base management fee waiver
(4,837
)
(2,676
)
(8,242
)
Incentive fee waiver
(4,519
)
(674
)
(2,745
)
Total expenses, net of fee
waivers
109,522
108,397
113,078
Net investment income before
taxes
87,872
86,063
84,867
Excise tax expense
134
232
-
Net investment income
87,738
85,831
84,867
Net realized and unrealized gains
(losses)
Net realized gain (loss) on
non-controlled/non-affiliate investments
25,084
(33,824
)
(3,487
)
Net realized gain (loss) on controlled
affiliate investments
(3,858
)
-
265
Net realized gain (loss) on foreign
currency transactions
(3,496
)
130
(36
)
Net realized gain (loss) on forward
currency exchange contracts
(23,773
)
6,472
11,043
Net realized loss on extinguishment of
debt
(4,859
)
-
-
Net change in unrealized appreciation
(depreciation) on foreign currency translation
(936
)
108
(130
)
Net change in unrealized appreciation
(depreciation) on forward currency exchange contracts
27,935
(22,396
)
(9,540
)
Net change in unrealized appreciation
(depreciation) on non-controlled/non-affiliate investments
(568
)
(6,744
)
13,308
Net change in unrealized appreciation
(depreciation) on non-controlled/affiliate investments
12,576
(174
)
-
Net change in unrealized appreciation
(depreciation) on controlled affiliate investments
3,964
(21,125
)
1,795
Total net gains (losses)
32,069
(77,553
)
13,218
Net increase in net assets resulting
from operations
$
119,807
$
8,278
$
98,085
Basic and diluted net investment income
per common share
$
1.36
$
1.46
$
1.64
Basic and diluted increase in net assets
resulting from operations per common share
$
1.86
$
0.14
$
1.90
Basic and diluted weighted average common
shares outstanding
64,562,265
58,670,518
51,603,415
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 December 31, 2021, BCSF has invested approximately $5.1
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/20220223006186/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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