BCSF Bain Capital Specialty Finance Inc

Bain Capital Specialty Finance, Inc. (NYSE: BCSF, the “Company”, “our” or “we”) today announced financial results for the second quarter ended June 30, 2024, and that its Board of Directors (the “Board”) has declared a dividend of $0.42 per share for the third quarter of 2024 and an additional dividend of $0.03 per share that was previously announced.

“BCSF delivered another quarter of solid earnings driven by high net investment income and continued stable credit quality across our diversified portfolio,” said Michael Ewald, Chief Executive Officer of BCSF. “We further strengthened our capital position through increasing commitments to our revolving credit facility and extending the maturity date, as we execute our longstanding strategy of investing in senior secured loans to middle market companies.”

QUARTERLY HIGHLIGHTS

• Net investment income (NII) per share was $0.51, equating to an annualized NII yield on book value of 11.6%(1);
• Net income per share was $0.45, equating to an annualized return on book value of 10.2%(1);
• Net asset value per share as of June 30, 2024 was $17.70, as compared to $17.70 as of March 31, 2024;
• Gross and net investment fundings were $306.7 million and $(167.0) million, respectively; ending net debt-to-equity was 0.95x, as compared to 1.09x as of March 31, 2024(2);
• Investments on non-accrual declined to 1.2% and 1.0% of the total investment portfolio at amortized cost and fair value, respectively, as of June 30, 2024, as compared to 1.7% and 1.0% of the total investment portfolio at amortized cost and fair value, respectively, as of March 31, 2024;
• During the quarter, the Company increased commitments under its senior secured revolving credit facility with Sumitomo Mitsui Banking Corporation as administrative agent (the "Sumitomo Credit Facility") to $855.0 million from $665.0 million and extended the maturity date to May 18, 2029 from December 24, 2026; and
• Subsequent to quarter-end, the Company’s Board of Directors declared a dividend of $0.42 per share for the third quarter of 2024 payable to stockholders of record as of September 30, 2024. The Board of Directors previously announced an additional dividend of $0.03 per share payable to stockholders of record as of September 30, 2024(3).

SELECTED FINANCIAL HIGHLIGHTS

($ in millions, unless otherwise noted)

Q2 2024

 

Q1 2024

Net investment income per share

$

0.51

 

$

0.53

Net investment income

$

33.1

 

$

34.0

Earnings per share

$

0.45

 

$

0.55

Dividends per share declared and payable

$

0.45

 

$

0.45

($ in millions, unless otherwise noted)

As of June 30, 2024

 

As of March 31, 2024

Total fair value of investments

$

2,237.5

 

$

2,406.0

Total assets

$

2,414.8

 

$

2,580.1

Total net assets

$

1,142.5

 

$

1,142.5

Net asset value per share

$

17.70

 

$

17.70

PORTFOLIO AND INVESTMENT ACTIVITY

For the three months ended June 30, 2024, the Company invested $306.7 million in 77 portfolio companies, including $143.4 million in 11 new companies, $123.8 million in 59 existing companies, $12.0 million in 6 companies to be contributed to SLP and $27.5 million in SLP. The Company had $473.7 million of principal repayments and sales in the quarter, resulting in net investment fundings of $(167.0) million.

Investment Activity for the Quarter Ended June 30, 2024:

($ in millions)

Q2 2024

 

Q1 2024

Investment Fundings

$

306.7

 

$

403.1

Sales and Repayments

$

473.7

 

$

296.0

Net Investment Activity

$

(167.0

)

$

107.1

As of June 30, 2024, the Company’s investment portfolio had a fair value of $2,237.5 million, comprised of investments in 154 portfolio companies operating across 32 different industries.

Investment Portfolio at Fair Value as of June 30, 2024:

Investment Type

$ in Millions

 

% of Total

 

First Lien Senior Secured Loan

$

1,411.4

 

 

63.0

%

Second Lien Senior Secured Loan

 

59.5

 

 

2.7

 

Subordinated Debt

 

46.7

 

 

2.1

 

Preferred Equity

 

123.0

 

 

5.5

 

Equity Interest

 

206.2

 

 

9.2

 

Investment Vehicles

 

390.7

 

 

17.5

 

Subordinated Note in ISLP

 

190.7

 

 

8.5

 

Equity Interest in ISLP

 

55.2

 

 

2.5

 

Subordinated Note in SLP

 

146.5

 

 

6.6

 

Preferred and Equity Interest in SLP

 

(1.7

)

 

(0.1

)

Total

$

2,237.5

 

 

100

%

As of June 30, 2024, the weighted average yield on the investment portfolio at amortized cost and fair value were 13.1% and 13.2%, respectively, as compared to 12.9% and 13.0%, respectively, as of March 31, 2024(4). 92.9% of the Company’s debt investments at fair value were in floating rate securities.

As of June 30, 2024, three portfolio companies were on non-accrual status, representing 1.2% and 1.0% of the total investment portfolio at amortized cost and fair value, respectively.

As of June 30, 2024, ISLP’s investment portfolio had an aggregate fair value of $655.9 million, comprised of investments in 35 portfolio companies operating across 16 different industries. The investment portfolio on a fair value basis was comprised of 95.3% first lien senior secured loans, 0.7% second lien senior secured loans and 4.0% equity interests. 100% of ISLP’s debt investments at fair value were in floating rate securities.

As of June 30, 2024, SLP’s investment portfolio had an aggregate fair value of $983.4 million, comprised of investments in 72 portfolio companies operating across 25 different industries. The investment portfolio on a fair value basis was comprised of 98.4% first lien senior secured loans and 1.6% second lien senior secured loans. 99.9% of SLP’s debt investments at fair value were in floating rate securities.

RESULTS OF OPERATIONS

For the three months ended June 30, 2024 and March 31, 2024, total investment income was $72.3 million and $74.5 million, respectively. The decrease in investment income was primarily due to a decrease in other income.

Total expenses (before taxes) for the three months ended June 30, 2024 and March 31, 2024 were $38.0 million and $39.5 million, respectively.

Net investment income for the three months ended June 30, 2024 and March 31, 2024 was $33.1 million or $0.51 per share and $34.0 million or $0.53 per share, respectively.

During the three months ended June 30, 2024, the Company had net realized and unrealized losses of $4.0 million.

Net increase in net assets resulting from operations for the three months ended June 30, 2024 was $29.1 million, or $0.45 per share.

CAPITAL AND LIQUIDITY

As of June 30, 2024, the Company had total principal debt outstanding of $1,180.2 million, including $227.7 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, $300.0 million outstanding in the Company’s senior unsecured notes due March 2026 and $300.00 million outstanding in the Company’s senior unsecured notes due October 2026.

In May 2024, the Company increased commitments under its Sumitomo Credit Facility to $855.0 million from $665.0 million and extended the maturity date to May 18, 2029 from December 24, 2026. The total number of lenders to the Sumitomo Credit Facility increased to 14. There was no change in borrowing costs in connection with the amendment of the Sumitomo Credit Facility. The stated interest rate on the facility with respect to term benchmark loans denominated in Dollars is (i) SOFR, plus (ii) a 0.10% credit spread adjustment, plus (iii) depending on debt outstanding and subject to borrowing base conditions, (a) 1.875% per annum or (b) 1.75% per annum.

For the three months ended June 30, 2024, the weighted average interest rate on debt outstanding was 5.1%, as compared to 5.2% for the three months ended March 31, 2024.

As of June 30, 2024, the Company had cash and cash equivalents (including foreign cash) of $31.1 million, restricted cash and cash equivalents of $67.0 million, $(3.2) million of unsettled trades, net of receivables and payables of investments, and $616.6 million of capacity under its Sumitomo Credit Facility. As of June 30, 2024, the Company had $405.4 million of undrawn investment commitments.

As of June 30, 2024, the Company’s debt-to-equity and net debt-to-equity ratios were 1.03x and 0.95x, respectively, as compared to 1.19x and 1.09x, respectively, as of March 31, 2024(2).

Endnotes

1. Net investment income yields and net income returns are calculated on average net assets, or book value, for the respective periods shown.
2. Net debt-to-equity represents principal debt outstanding less cash and cash equivalents and unsettled trades, net of receivables and payables of investments.
3. The third quarter dividend is payable on October 31, 2024 to stockholders of record as of September 30, 2024.
4. 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 or fair value. 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 August 7, 2024. Please visit BCSF’s webcast link located on the Events & Presentations page of the Investor Resources section of BCSF’s website at http://www.baincapitalspecialtyfinance.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: 1-800-343-4849
• International: 1-203-518-9848
• Conference ID: BAIN

All participants will need to reference “Bain Capital Specialty Finance - Second Quarter Ended June 30, 2024 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 14, 2024 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: 11156499

 

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, 2024

 

 

December 31, 2023

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Investments at fair value:

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate investments (amortized cost of $1,632,191 and $1,615,061, respectively)

 

$

 

1,629,550

 

 

$

 

1,593,360

 

Non-controlled/affiliate investment (amortized cost of $34,328 and $132,650, respectively)

 

 

 

36,312

 

 

 

 

147,971

 

Controlled affiliate investment (amortized cost of $577,034 and $554,123, respectively)

 

 

 

571,629

 

 

 

 

557,012

 

Cash and cash equivalents

 

 

 

18,417

 

 

 

 

42,995

 

Foreign cash (cost of $13,141 and $6,865, respectively)

 

 

 

12,716

 

 

 

 

6,405

 

Restricted cash and cash equivalents

 

 

 

66,993

 

 

 

 

63,084

 

Collateral on forward currency exchange contracts

 

 

 

7,066

 

 

 

 

7,613

 

Deferred financing costs

 

 

 

5,119

 

 

 

 

2,802

 

Interest receivable on investments

 

 

 

34,369

 

 

 

 

37,169

 

Receivable for sales and paydowns of investments

 

 

 

24,179

 

 

 

 

4,310

 

Prepaid insurance

 

 

 

570

 

 

 

 

210

 

Unrealized appreciation on forward currency exchange contracts

 

 

 

651

 

 

 

 

—

 

Dividend receivable

 

 

 

7,276

 

 

 

 

9,417

 

Total Assets

 

$

 

2,414,847

 

 

$

 

2,472,348

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Debt (net of unamortized debt issuance costs of $6,256 and $7,567, respectively)

 

$

 

1,173,944

 

 

$

 

1,255,933

 

Interest payable

 

 

 

11,555

 

 

 

 

13,283

 

Payable for investments purchased

 

 

 

27,332

 

 

 

 

11,453

 

Unrealized depreciation on forward currency exchange contracts

 

 

 

1,507

 

 

 

 

2,260

 

Base management fee payable

 

 

 

8,768

 

 

 

 

8,929

 

Incentive fee payable

 

 

 

7,924

 

 

 

 

7,327

 

Accounts payable and accrued expenses

 

 

 

12,219

 

 

 

 

9,581

 

Distributions payable

 

 

 

29,053

 

 

 

 

27,116

 

Total Liabilities

 

 

 

1,272,302

 

 

 

 

1,335,882

 

 

 

 

 

 

 

 

 

 

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, 2024 and December 31, 2023, respectively

 

 

 

65

 

 

 

 

65

 

Paid in capital in excess of par value

 

 

 

1,165,191

 

 

 

 

1,168,384

 

Total distributable loss

 

 

 

(22,711

)

 

 

 

(31,983

)

Total Net Assets

 

 

 

1,142,545

 

 

 

 

1,136,466

 

Total Liabilities and Total Net Assets

 

$

 

2,414,847

 

 

$

 

2,472,348

 

 

 

 

 

 

 

 

 

 

Net asset value per share

 

$

 

17.70

 

 

$

 

17.60

 

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 Six Months Ended June 30,

 

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest from investments

 

$

 

45,209

 

 

$

 

47,101

 

 

$

 

89,058

 

 

$

 

95,170

 

Dividend income

 

 

 

435

 

 

 

 

61

 

 

 

 

435

 

 

 

 

62

 

PIK income

 

 

 

5,643

 

 

 

 

6,249

 

 

 

 

10,710

 

 

 

 

10,089

 

Other income

 

 

 

3,141

 

 

 

 

1,922

 

 

 

 

8,396

 

 

 

 

7,170

 

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

 

 

 

54,428

 

 

 

 

55,333

 

 

 

 

108,599

 

 

 

 

112,491

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment income from non-controlled/affiliate investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest from investments

 

 

 

279

 

 

 

 

2,525

 

 

 

 

2,860

 

 

 

 

4,963

 

Dividend income

 

 

 

—

 

 

 

 

1,630

 

 

 

 

821

 

 

 

 

3,005

 

PIK income

 

 

 

143

 

 

 

 

628

 

 

 

 

458

 

 

 

 

1,022

 

Total investment income from non-controlled/affiliate investments

 

 

 

422

 

 

 

 

4,783

 

 

 

 

4,139

 

 

 

 

8,990

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment income from controlled affiliate investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest from investments

 

 

 

9,618

 

 

 

 

8,562

 

 

 

 

18,783

 

 

 

 

14,917

 

Dividend income

 

 

 

7,803

 

 

 

 

7,037

 

 

 

 

15,249

 

 

 

 

14,054

 

Total investment income from controlled affiliate investments

 

 

 

17,421

 

 

 

 

15,599

 

 

 

 

34,032

 

 

 

 

28,971

 

Total investment income

 

 

 

72,271

 

 

 

 

75,715

 

 

 

 

146,770

 

 

 

 

150,452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and debt financing expenses

 

 

 

17,631

 

 

 

 

20,459

 

 

 

 

35,687

 

 

 

 

40,009

 

Base management fee

 

 

 

8,769

 

 

 

 

9,116

 

 

 

 

17,587

 

 

 

 

18,026

 

Incentive fee

 

 

 

7,924

 

 

 

 

4,008

 

 

 

 

17,156

 

 

 

 

15,118

 

Professional fees

 

 

 

1,029

 

 

 

 

451

 

 

 

 

1,830

 

 

 

 

1,032

 

Directors fees

 

 

 

174

 

 

 

 

179

 

 

 

 

348

 

 

 

 

353

 

Other general and administrative expenses

 

 

 

2,477

 

 

 

 

1,493

 

 

 

 

4,920

 

 

 

 

3,152

 

Total expenses, net of fee waivers

 

 

 

38,004

 

 

 

 

35,706

 

 

 

 

77,528

 

 

 

 

77,690

 

Net investment income before taxes

 

 

 

34,267

 

 

 

 

40,009

 

 

 

 

69,242

 

 

 

 

72,762

 

Income tax expense, including excise tax

 

 

 

1,150

 

 

 

 

1,097

 

 

 

 

2,175

 

 

 

 

1,692

 

Net investment income

 

 

 

33,117

 

 

 

 

38,912

 

 

 

 

67,067

 

 

 

 

71,070

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized and unrealized gains (losses)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized loss on non-controlled/non-affiliate investments

 

 

 

(5,340

)

 

 

 

(229

)

 

 

 

(7,876

)

 

 

 

(10,880

)

Net realized gain on non-controlled/affiliate investments

 

 

 

—

 

 

 

 

—

 

 

 

 

4,719

 

 

 

 

—

 

Net realized loss on foreign currency transactions

 

 

 

(446

)

 

 

 

(321

)

 

 

 

(423

)

 

 

 

(4,534

)

Net realized gain (loss) on forward currency exchange contracts

 

 

 

169

 

 

 

 

—

 

 

 

 

1,896

 

 

 

 

(2,385

)

Net change in unrealized appreciation on foreign currency translation

 

 

 

177

 

 

 

 

127

 

 

 

 

(31

)

 

 

 

3,894

 

Net change in unrealized appreciation on forward currency exchange contracts

 

 

 

163

 

 

 

 

(1,476

)

 

 

 

1,404

 

 

 

 

(1,315

)

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

 

 

 

8,502

 

 

 

 

(6,925

)

 

 

 

19,060

 

 

 

 

(5,537

)

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

 

 

 

21

 

 

 

 

(432

)

 

 

 

(13,337

)

 

 

 

3,027

 

Net change in unrealized appreciation on controlled affiliate investments

 

 

 

(7,273

)

 

 

 

(485

)

 

 

 

(8,294

)

 

 

 

5,116

 

Total net losses

 

 

 

(4,027

)

 

 

 

(9,741

)

 

 

 

(2,882

)

 

 

 

(12,614

)

Net increase in net assets resulting from operations

 

$

 

29,090

 

 

$

 

29,171

 

 

$

 

64,185

 

 

$

 

58,456

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net investment income per common share

 

$

 

0.51

 

 

$

 

0.60

 

 

$

 

1.04

 

 

$

 

1.10

 

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

 

$

 

0.45

 

 

$

 

0.45

 

 

$

 

1.00

 

 

$

 

0.91

 

Basic and diluted weighted average common shares outstanding

 

 

 

64,562,265

 

 

 

 

64,562,265

 

 

 

 

64,562,265

 

 

 

 

64,562,265

 

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, 2024, BCSF has invested approximately $7.8 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/20240806157497/en/

Investor: Katherine Schneider Tel. (212) 803-9613 investors@baincapitalbdc.com

Media: Charlyn Lusk Tel. (646) 502-3549 clusk@stantonprm.com