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Bain Capital Specialty Finance, Inc. Declares Fourth Quarter 2019 Dividend of $0.41 per Share and Announces September 30, 2019 Financial Results

November 06, 2019
Click here to read the press release

BOSTON--Bain Capital Specialty Finance, Inc. (“BCSF” or the “Company” ) (NYSE:BCSF) today announced that its Board of Directors has declared a dividend of $0.41 per share for the fourth quarter of 2019 and announced its financial results for the third quarter ended September 30, 2019.

“We are pleased with this quarter’s portfolio growth, which increased 3.3% in market value over last quarter and positively contributed to our earnings results,” said Michael Ewald, President and Chief Executive Officer of BCSF. “As evidenced by the successful issuance of our second middle market CLO, we remain focused on identifying attractive marketplace opportunities to increase shareholder value while continuing to be highly selective and thoughtful with our portfolio construction across industries.”

QUARTERLY HIGHLIGHTS

  • The Company announced a dividend of $0.41 per share for the fourth quarter of 2019 payable to shareholders of record as of December 31, 2019 (1).
  • Net investment income for the quarter ended September 30, 2019 was $21.2 million or $0.41 per share, as compared to $21.2 million or $0.41 per share for the quarter ended June 30, 2019.
  • Net income for the quarter ended September 30, 2019 was $18.2 million or $0.35 per share, as compared to $19.2 million or $0.37 per share for the quarter ended June 30, 2019.
  • Net asset value per share was $19.71 as of September 30, 2019, a decrease from $19.77 as of June 30, 2019.
  • On August 28, 2019, the Company, through BCC Middle Market CLO 2019-1 LLC (the “2019-1 Issuer”), and BCC Middle Market CLO 2019-1 Co-Issuer, LLC (the “Co-Issuer” and, together with the Issuer, the “Co-Issuers”), completed its $501.0 million term debt securitization. The transaction was executed through a private placement. The notes and loans (“2019-1 Debt”) issued in connection with the transaction are secured by a diversified portfolio consisting primarily of middle market loans and participation interests in middle market loans, a majority of which are senior secured loans. The 2019-1 Debt is scheduled to mature on October 15, 2031.
  • On August 28, 2019, the Company terminated its revolving credit facility with Citibank, N.A.. The proceeds from the 2019-1 Debt were used to repay that total outstanding debt.
Selected Financial Highlights
 
(dollar amounts in thousands) Q3 2019 Q2 2019
Net investment income per share $0.41 $0.41
Net investment income $21,175 $21,155
Earnings per share $0.35 $0.37
Dividends declared and payable $0.41 $0.41
 
  As of September 30, As of June 30,
(dollar amounts in thousands) 2019 2019
Total fair value of investments $2,506,734 $2,427,415
Total assets $2,727,462 2,589,822
Total net assets $1,018,225 1,021,202
Net asset value per share $19.71 $19.77
 

PORTFOLIO AND INVESTMENT ACTIVITY

  • For the three months ended September 30, 2019, BCSF invested $274.8 million in 38 portfolio companies across 18 different industries. BCSF had $184.2 million of principal repayments and sales in the quarter. On a net basis, our investments in the quarter totaled $90.6 million.
(dollar amounts in millions) Q3 2019 Q2 2019
Investment Fundings $274.8 $403.1
Sales and Repayments 184.2 378.1
Net Investment Activity 90.6 25.0
  • As of September 30, 2019, the Company’s investment portfolio had a fair value of $2,506.7 million.
  • As of September 30, 2019 the investment portfolio based on fair value consisted of:
Investment Portfolio at FV $ in Millions % of Total
First lien senior secured $2,179.0 86.9%
First lien last out 27.3 1.1
Second lien senior secured 192.2 7.7
Subordinated debt 15.0 0.6
Corporate bonds 26.0 1.0
Equity interest 45.7 1.8
Preferred equity 21.4 0.9
Warrants 0.1 0.0
Total $2,506.7 100.0%
  • As of September 30, 2019, the weighted average gross yield on the investment portfolio was 7.7% (2) and 98.7% of total investments at fair value were in floating rate securities.
  • As of September 30, 2019, there were no investments on non-accrual status.

THIRD QUARTER 2019 OPERATING RESULTS

  • For the three months ended September 30, 2019 and June 30, 2019, total investment income was $52.7 million and $50.6 million, respectively.
  • Total expenses before taxes for the three months ended September 30, 2019 and June 30, 2019, were $31.5 million and $29.4 million, respectively.
  • Net investment income after taxes for the three months ended September 30, 2019 and June 30, 2019 was $21.2 million or $0.41 per share, respectively.
  • During the three months ended September 30, 2019, the Company had net realized and unrealized losses of $3.0 million, compared to net realized and unrealized losses of $1.9 million during the three months ended June 30, 2019.
  • Net increase in net assets resulting from operations for the three months ended September 30, 2019 was $18.2 million, or $0.35 per share.

CAPITAL and LIQUIDITY

  • At September 30, 2019, BCSF had cash and cash equivalents and foreign cash of $71.6 million.
  • BCSF had total principal debt outstanding of $1,662.3 million including $316.0 million outstanding in the Company’s revolving credit facility with Goldman Sachs Bank USA (the “BCSF Revolving Credit Facility”), $581.8 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 in September 2018, and $398.8 million outstanding of the 2019-1 Debt.
  • Undrawn capacity in our BCSF Revolving Credit Facility totaled $184.0 million, and undrawn capacity in our JPM Credit Facility totaled $84.8 million as of September 30, 2019.
  • For the three months ended September 30, 2019, the weighted average interest rate on debt outstanding was 4.7%.

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 November 7, 2019. Please visit BCSF’s webcast link located on the Events & Presentation page of the Investor Resources section of BCSF’s website 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: 1-877-407-4018
  • International: 1-201-689-8471
  • Conference ID: 13695114

All callers will need to enter the Conference ID followed by the # sign and reference “Bain Capital Specialty Finance” once connected with the operator. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected.

Replay Information:

An archived replay will be available approximately three hours after the conference call concludes through November 14, 2019 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: 13695114

ENDNOTES

  1. The $0.41 per share dividend is payable on January 30, 2020 to holders of record as of December 31, 2019.
  2. Information through September 30, 2019. Computed for debt investments based upon the annual interest rate as of September 30, 2019, divided by the total par amount of investments. For investments with floating interest rates, the yield calculation is computed using the contract rate data as of September 30, 2019.
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, 2019 December 31, 2018
(Unaudited)
Assets
Investments at fair value:
Non-controlled/non-affiliate investments (amortized cost of $2,456,038 and $1,449,749, respectively) $ 2,431,395   $ 1,422,837  
Non-controlled/affiliate investment (amortized cost of $6,720 and $6,720, respectively)   6,720     6,720  
Controlled affiliate investment (amortized cost of $66,298 and $296,648, respectively)   68,619     298,249  
Cash and cash equivalents   70,637     14,693  
Foreign cash (cost of $1,066 and $589, respectively)   992     591  
Restricted cash   86,402     17,987  
Collateral on forward currency exchange contracts   64     4  
Deferred financing costs   3,471     4,018  
Interest receivable on investments   18,600     6,249  
Prepaid insurance   -     1  
Receivable for sales and paydowns of investments   28,070     1,634  
Other assets   2,147     -  
Unrealized appreciation on forward currency exchange contracts   9,308     9,322  
Dividend receivable   1,037     8,709  
Total Assets $ 2,727,462   $ 1,791,014  
 
Liabilities
Debt (net of unamortized debt issuance costs of $4,685 and $2,040, respectively) $ 1,657,578   $ 634,925  
Offering costs payable   1,731     1,820  
Interest payable   12,381     4,835  
Payable for investments purchased   3,033     119,166  
Base management fee payable   6,328     2,950  
Incentive fee payable   3,567     3,300  
Accounts payable and accrued expenses   3,443     1,281  
Distributions payable   21,176     21,108  
Total Liabilities   1,709,237     789,385  
 
Commitments and Contingencies (See Note 10)
 
Net Assets
Preferred stock, $0.001 par value per share, 10,000,000,000 shares authorized, none issued and outstanding as of September 30, 2019 and December 31, 2018, respectively $ -   $ -  
Common stock, par value $0.001 per share, 100,000,000,000 and 100,000,000,000 shares authorized, 51,649,812 and 51,482,137 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively   52     51  
Paid in capital in excess of par value   1,037,577     1,034,255  
Total distributable earnings (loss)   (19,404 )   (32,677 )
Total Net Assets   1,018,225     1,001,629  
Total Liabilities and Total Net assets $ 2,727,462   $ 1,791,014  
 
Net asset value per share $ 19.71   $ 19.46  
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 Nine
Months Ended
September 30,

 

2019    

 

2018  

 

2019    

 

2018  
Income    
Investment income from non-controlled/non-affiliate investments:    
Interest from investments $ 50,710     $ 20,271   $ 126,037     $ 48,707  
Dividend income   46       -     62       -  
Other income   236       92     627       300  
Total investment income from non-controlled/non-affiliate investments   50,992       20,363     126,726       49,007  
Investment income from controlled affiliate investments:    
Interest from investments   781       96     1,023       195  
Dividend income   915       6,204     15,425       16,345  
Other income   -       -     4       -  
Total investment income from controlled affiliate investments   1,696       6,300     16,452       16,540  
Total investment income   52,688       26,663     143,178       65,547  
     
Expenses    
Interest and debt financing expenses   19,427       6,524     46,592       16,138  
Base management fee   8,910       4,639     23,644       11,643  
Incentive fee   4,330       3,242     12,905       6,158  
Professional fees   789       900     1,615       1,740  
Directors fees   159       68     370       203  
Other general and administrative expenses   1,243       330     3,672       954  
Total expenses before fee waivers   34,858       15,703     88,798       36,836  
Base management fee waiver   (2,582 )     (2,319 )   (6,450 )     (5,821 )
Incentive fee waiver   (763 )     (620 )   (2,745 )     (1,624 )
Total expenses, net of fee waivers   31,513       12,764     79,603       29,391  
Net investment income   21,175       13,899     63,575       36,156  
     
Net realized and unrealized gains (losses)    
Net realized gain (loss) on non-controlled/non-affiliate investments   27       (3,175 )   (1,394 )     (5,021 )
Net realized gain on controlled affiliate investments   -       -     265       -  
Net realized gain (loss) on foreign currency transactions   122       (103 )   (190 )     (367 )
Net realized gain (loss) on forward currency exchange contracts   346       177     11,042       (2,696 )
Net change in unrealized appreciation (depreciation) on foreign currency translation   162       (17 )   461       (43 )
Net change in unrealized appreciation (depreciation) on forward currency exchange contracts   9,135       1,529     (14 )     9,123  
Net change in unrealized appreciation (depreciation) on non-controlled/non-affiliate investments   (12,373 )     7,124     2,269       (2,197 )
Net change in unrealized appreciation (depreciation) on controlled affiliate investments   (395 )     (443 )   720       1,562  
Total net gains (losses)   (2,976 )     5,092     13,159       361  
     
Net increase in net assets resulting from operations $ 18,199     $ 18,991   $ 76,734     $ 36,517  
     
Per Common Share Data    
Basic and diluted net investment income per common share $ 0.41     $ 0.33   $ 1.23     $ 1.02  
Basic and diluted increase in net assets resulting from operations per common share $ 0.35     $ 0.46   $ 1.49     $ 1.03  
Basic and diluted weighted average common shares outstanding   51,649,812       41,733,013     51,587,779       35,461,497  

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, L.P., an SEC-registered investment adviser and a subsidiary of Bain Capital Credit, L.P. Since commencing investment operations on October 13, 2016, and through September 30, 2019, BCSF has invested approximately $3,213.8 million 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

Certain information contained herein may constitute “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “seek,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” “target,” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events may differ materially from those reflected or contemplated in such forward-looking statements. These statements are not guarantees of future events and are subject to risks, uncertainties, and other factors, some of which are beyond BCSF’s control and are difficult to predict, that could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation, the risks, uncertainties and other factors identified in BCSF’s filings with the SEC. Investors should not place undue reliance on these forward-looking statements, which apply only as of the date on which BCSF makes them. BCSF does not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law.

Contacts

Investors:
[email protected]

Media:
Charlyn Lusk
Tel. +1 646 502 3549
[email protected]