BBDC Barings BDC Inc

Barings BDC, Inc. (NYSE: BBDC) (“Barings BDC” or the “Company”) today reported its financial and operating results for the first quarter of 2024 and announced that the Company’s Board of Directors (the “Board”) declared a quarterly cash dividend of $0.26 per share.

Highlights

Income Statement

Three Months Ended

March 31, 2024

Three Months Ended

December 31, 2023

(dollars in millions, except per share data)

Total Amount

Per

Share(1)

Total Amount

Per

Share(2)

Net investment income

$29.4

$0.28

$33.4

$0.31

Net realized gains (losses)

$(21.5)

$(0.20)

$12.8

$0.12

Net unrealized appreciation (depreciation)

$36.1

$0.34

$(16.4)

$(0.15)

Net increase (decrease) in net assets resulting from operations

$44.0

$0.41

$29.9

$0.28

Dividends paid

 

$0.26

 

$0.26

(1) Based on weighted average shares outstanding during the period of 106,038,873.

(2) Based on weighted average shares outstanding during the period of 106,371,835.

Investment Portfolio and Balance Sheet

 

 

(dollars in millions, except per share data)

As of

March 31, 2024

As of

December 31, 2023

Investment portfolio at fair value

$2,527.5

$2,488.7

Weighted average yield on performing debt investments (at principal amount)

10.7 %

10.5 %

 

 

 

Total assets

$2,698.7

$2,677.5

Debt outstanding (principal)

$1,465.4

$1,444.9

Total net assets (equity)

$1,211.9

$1,196.6

Net asset value per share

$11.44

$11.28

Debt-to-equity ratio

1.21x

1.21x

Net debt-to-equity ratio (adjusted for unrestricted cash and net unsettled transactions)

1.17x

1.15x

First Quarter 2024 Results

Commenting on the quarter, Eric Lloyd, Chief Executive Officer of Barings BDC, stated, “We are proud of the strong results generated in the first quarter, including delivering our highest NAV since 2022, which was primarily driven by investment appreciation, highlighting our focus on protecting and growing the value of our investors’ capital. In addition, we continue to meaningfully out-earn our dividend while making strong progress on monetizing non-core investments and adding attractive, high-quality direct lending assets to the portfolio.”

During the three months ended March 31, 2024, the Company reported total investment income of $69.8 million, net investment income of $29.4 million, or $0.28 per share, and a net increase in net assets resulting from operations of $44.0 million, or $0.41 per share.

Net asset value (“NAV”) per share as of March 31, 2024 was $11.44, as compared to $11.28 as of December 31, 2023. The increase in NAV per share from December 31, 2023 to March 31, 2024 was primarily attributed to net unrealized appreciation on the Company’s investment portfolio, credit support agreements, foreign currency transactions and forward currency contracts of approximately $0.34 per share and net investment income exceeding the Company’s first quarter dividend by $0.02 per share, partially offset by a net realized loss on investments, foreign currency transactions and forward currency contracts of $0.20 per share.

Recent Portfolio Activity

During the three months ended March 31, 2024, the Company made 10 new investments totaling $63.5 million and made investments in existing portfolio companies totaling $78.9 million. The Company had nine loans repaid totaling $72.2 million, received $23.3 million of portfolio company principal payments and received $4.3 million of return of capital from joint ventures and equity investments. The Company received $12.5 million for the sale of loans, recognizing a net realized loss on these transactions of $0.8 million. In addition, investments in two portfolio companies were restructured, which resulted in a loss of $12.7 million. Lastly, the Company received proceeds related to the sale of equity investments totaling $6.5 million and recognized a net realized gain on such sales totaling $0.8 million.

During the three months ended March 31, 2024, the Company recorded net unrealized appreciation totaling $36.1 million, consisting of net unrealized appreciation reclassification adjustments of $12.6 million related to the net realized losses on the sales / repayments and restructures of certain investments, net unrealized appreciation on its current portfolio of $10.5 million, net unrealized appreciation related to foreign currency transactions of $3.5 million and net unrealized appreciation related to forward currency contracts of $15.8 million, partially offset by unrealized depreciation of $1.2 million on the MVC credit support agreement with Barings and unrealized depreciation of $5.1 million on the Sierra credit support agreement with Barings. The net unrealized appreciation on the Company’s current portfolio of $10.5 million was driven primarily by broad market moves for investments of $13.9 million and credit or fundamental performance of investments of $6.9 million, partially offset by the impact of foreign currency exchange rates on investments of $10.3 million.

Liquidity and Capitalization

As of March 31, 2024, the Company had cash and foreign currencies of $64.1 million (including restricted cash of $13.4 million), $440.4 million of borrowings outstanding under its $1,065.0 million senior secured revolving credit agreement, $1,025.0 million aggregate principal amount of unsecured notes outstanding and a net receivable from unsettled transactions of $1.8 million.

On February 12, 2024, the Company issued $300.0 million in aggregate principal amount of senior unsecured notes that mature on February 15, 2029 and bear interest at a rate of 7.000% per annum (the “February 2029 Notes”). The February 2029 Notes pay interest semi-annually and all principal is due upon maturity. The February 2029 Notes may be redeemed in whole or in part at any time at the Company’s option at a redemption price set forth in the indenture governing the February 2029 Notes. The February 2029 Notes were issued at a public offering price of 98.948% of the principal amount thereof.

Share Repurchase Program

On February 22, 2024, the Board authorized a new 12-month share repurchase program. Under the program, the Company may repurchase, during the 12-month period commencing on March 1, 2024, up to $30.0 million in the aggregate of its outstanding common stock in the open market at prices below the then-current NAV per share. The timing, manner, price and amount of any share repurchases will be determined by the Company, in its discretion, based upon the evaluation of economic and market conditions, the Company’s stock price, applicable legal, contractual and regulatory requirements and other factors. The program is expected to be in effect until March 1, 2025, unless extended or until the aggregate repurchase amount that has been approved by the Board has been expended. The program does not require the Company to repurchase any specific number of shares, and the Company cannot assure stockholders that any shares will be repurchased under the program. The program may be suspended, extended, modified or discontinued at any time. During the three months ended March 31, 2024, the Company repurchased a total of 115,911 shares of its common stock in the open market under the authorized program at an average price of $9.56 per share, including brokerage commissions.

Dividend Information

The Board declared a quarterly cash dividend of $0.26 per share.

The Company’s second quarter dividend is payable as follows:

Second Quarter 2024 Dividend:

Amount per share:

$0.26

Record date:

June 5, 2024

Payment date:

June 12, 2024

Dividend Reinvestment Plan

Barings BDC has adopted a dividend reinvestment plan (“DRIP”) that provides for reinvestment of dividends and distributions on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, when the Company declares a cash dividend or distribution, stockholders who have not opted out of the DRIP will have their cash dividends or distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving cash.

When the Company declares and pays dividends and distributions, it determines the allocation of the distribution between current income, accumulated income, capital gains and return of capital on the basis of accounting principles generally accepted in the United States (“GAAP”). At each year end, the Company is required for tax purposes to determine the allocation based on tax accounting principles. Due to differences between GAAP and tax accounting principles, the portion of each dividend distribution that is ordinary income, capital gain or return of capital may differ for GAAP and tax purposes. The tax status of the Company’s distributions can be found on the Investor Relations page of its website.

Subsequent Events

Subsequent to March 31, 2024, the Company made approximately $11.7 million of new commitments, of which $6.1 million closed and funded. The $6.1 million of investments consists of $6.1 million of first lien senior secured debt investments and $46.9 thousand of equity investments. The weighted average yield of the debt investments was 11.3%. In addition, the Company funded $4.8 million of previously committed revolvers and delayed draw term loans.

Conference Call to Discuss First Quarter 2024 Results

Barings BDC has scheduled a conference call to discuss first quarter 2024 financial and operating results for Wednesday, May 8, 2024, at 9:00 a.m. ET.

To listen to the call, please dial 877-407-8831 or 201-493-6736 approximately 10 minutes prior to the start of the call. A taped replay will be made available approximately two hours after the conclusion of the call and will remain available until May 15, 2024. To access the replay, please dial 877-660-6853 or 201-612-7415 and enter conference ID 13745722.

This conference call will also be available via a live webcast on the investor relations section of Barings BDC’s website at https://ir.barings.com/ir-calendar. Access the website 15 minutes prior to the start of the call to download and install any necessary audio software. An archived webcast replay will be available on the Company's website until May 15, 2024.

Forward-Looking Statements

Statements included herein or on the webcast/conference call may constitute “forward-looking statements,” which relate to future events or Barings BDC’s future performance or financial condition. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made, which reflect management’s current estimates, projections, expectations or beliefs, and which are subject to risks and uncertainties that may cause actual results to differ materially. Forward-looking statements include, but are not limited to, the Company’s projected net investment income and earnings, the Company’s distribution levels and frequency of distributions, the Company’s share repurchase activity and investment activity, and the ability of Barings LLC to manage Barings BDC and identify investment opportunities, all of which are subject to change at any time based upon economic, market or other conditions, and may not be relied upon as investment advice or an indication of Barings BDC’s trading intent. More information on the risks and other potential factors that could affect Barings BDC’s financial results and future events, including important factors that could cause actual results or events to differ materially from plans, estimates or expectations included herein or discussed on the webcast/conference call, is included in Barings BDC’s filings with the Securities and Exchange Commission, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Barings BDC’s most recently filed annual report on Form 10-K, as well as in subsequent filings, including Barings BDC’s quarterly reports on Form 10-Q. In addition, there is no assurance that Barings BDC or any of its affiliates will purchase additional shares of Barings BDC at any specific discount levels or in any specific amounts. There is no assurance that the market price of Barings BDC’s shares, either absolutely or relative to NAV, will increase as a result of any share repurchases, or that any repurchase plan will enhance stockholder value over the long term.

Non-GAAP Financial Measures

To provide additional information about the Company’s results, the Company’s management has discussed in this press release the Company’s net debt (calculated as (i) total debt less (ii) unrestricted cash and foreign currencies (excluding restricted cash) net of net payables/receivables from unsettled transactions) and its net debt-to-equity ratio (calculated as net debt divided by total net assets), which are not prepared in accordance with GAAP. These non-GAAP measures are included to supplement the Company’s financial information presented in accordance with GAAP and because the Company uses such measures to monitor and evaluate its leverage and financial condition and believes the presentation of these measures enhances investors’ ability to analyze trends in the Company’s business and to evaluate the Company’s leverage and ability to take on additional debt. However, these non-GAAP measures have limitations and should not be considered in isolation or as a substitute for analysis of the Company’s financial results as reported under GAAP.

These non-GAAP measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. These measures should only be used to evaluate the Company’s results of operations in conjunction with their corresponding GAAP measures. Pursuant to the requirements of Item 10(e) of Regulation S-K, as promulgated under the Securities Exchange Act of 1934, as amended, the Company has provided a reconciliation of these non-GAAP measures in the last table included in this press release.

About Barings BDC

Barings BDC, Inc. (NYSE: BBDC) is a publicly traded, externally managed investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Barings BDC seeks to invest primarily in senior secured loans in middle-market companies that operate across a wide range of industries. Barings BDC’s investment activities are managed by its investment adviser, Barings LLC, a leading global asset manager based in Charlotte, NC with $406+ billion* of AUM firm-wide. For more information, visit www.baringsbdc.com.

About Barings LLC

Barings is a $406+ billion* global investment manager sourcing differentiated opportunities and building long-term portfolios across public and private fixed income, real estate, and specialist equity markets. With investment professionals based in North America, Europe and Asia Pacific, the firm, a subsidiary of MassMutual, aims to serve its clients, communities and employees, and is committed to sustainable practices and responsible investment. Learn more at www.barings.com.

*Assets under management as of March 31, 2024

Barings BDC, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

 

 

March 31, 2024

 

December 31, 2023

 

(Unaudited)

 

 

Assets:

 

 

 

Investments at fair value:

 

 

 

Non-Control / Non-Affiliate investments (cost of $2,065,014 and $2,053,548 as of March 31, 2024 and December 31, 2023, respectively)

$

2,015,336

 

 

$

1,995,372

 

Affiliate investments (cost of $382,732 and $378,865 as of March 31, 2024 and December 31, 2023, respectively)

 

409,085

 

 

 

402,423

 

Control investments (cost of $103,553 and $103,163 as of March 31, 2024 and December 31, 2023, respectively)

 

103,116

 

 

 

90,920

 

Total investments at fair value

 

2,527,537

 

 

 

2,488,715

 

Cash (restricted cash of $13,373 and $0 as of March 31, 2024 and December 31, 2023, respectively)

 

48,777

 

 

 

57,187

 

Foreign currencies (cost of $15,572 and $13,023 as of March 31, 2024 and December 31, 2023, respectively)

 

15,336

 

 

 

13,341

 

Interest and fees receivable

 

41,672

 

 

 

51,598

 

Prepaid expenses and other assets

 

3,254

 

 

 

3,564

 

Credit support agreements (cost of $58,000 as of both March 31, 2024 and December 31, 2023)

 

51,450

 

 

 

57,800

 

Derivative assets

 

5,011

 

 

 

1

 

Deferred financing fees

 

3,490

 

 

 

3,948

 

Receivable from unsettled transactions

 

2,159

 

 

 

1,299

 

Total assets

$

2,698,686

 

 

$

2,677,453

 

Liabilities:

 

 

 

Accounts payable and accrued liabilities

$

2,156

 

 

$

2,950

 

Interest payable

 

12,452

 

 

 

8,450

 

Administrative fees payable

 

582

 

 

 

536

 

Base management fees payable

 

8,279

 

 

 

8,347

 

Incentive management fees payable

 

8,167

 

 

 

7,737

 

Derivative liabilities

 

3,675

 

 

 

11,265

 

Payable from unsettled transactions

 

336

 

 

 

1,112

 

Borrowings under credit facilities

 

440,352

 

 

 

719,914

 

Notes payable (net of deferred financing fees)

 

1,010,811

 

 

 

720,583

 

Total liabilities

 

1,486,810

 

 

 

1,480,894

 

Commitments and contingencies

 

 

 

Net Assets:

 

 

 

Common stock, $0.001 par value per share (150,000,000 shares authorized, 105,951,159 and 106,067,070 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively)

 

106

 

 

 

106

 

Additional paid-in capital

 

1,853,350

 

 

 

1,854,457

 

Total distributable earnings (loss)

 

(641,580

)

 

 

(658,004

)

Total net assets

 

1,211,876

 

 

 

1,196,559

 

Total liabilities and net assets

$

2,698,686

 

 

$

2,677,453

 

Net asset value per share

$

11.44

 

 

$

11.28

 

Barings BDC, Inc.

Unaudited Consolidated Statements of Operations

(in thousands, except share and per share data)

 

 

Three Months

Ended

 

Three Months

Ended

 

March 31, 2024

 

March 31, 2023

Investment income:

 

 

 

Interest income:

 

 

 

Non-Control / Non-Affiliate investments

$

53,190

 

$

51,168

Affiliate investments

 

957

 

 

380

Control investments

 

386

 

 

342

Total interest income

 

54,533

 

 

51,890

Dividend income:

 

 

 

Non-Control / Non-Affiliate investments

 

1,322

 

 

826

Affiliate investments

 

7,155

 

 

7,048

Total dividend income

 

8,477

 

 

7,874

Fee and other income:

 

 

 

Non-Control / Non-Affiliate investments

 

3,388

 

 

3,082

Affiliate investments

 

69

 

 

167

Control investments

 

17

 

 

51

Total fee and other income

 

3,474

 

 

3,300

Payment-in-kind interest income:

 

 

 

Non-Control / Non-Affiliate investments

 

2,482

 

 

3,535

Affiliate investments

 

251

 

 

203

Control investments

 

391

 

 

204

Total payment-in-kind interest income

 

3,124

 

 

3,942

Interest income from cash

 

199

 

 

198

Total investment income

 

69,807

 

 

67,204

Operating expenses:

 

 

 

Interest and other financing fees

 

21,082

 

 

19,316

Base management fee

 

8,279

 

 

7,853

Incentive management fees

 

8,167

 

 

9,604

General and administrative expenses

 

2,676

 

 

2,736

Total operating expenses

 

40,204

 

 

39,509

Net investment income before taxes

 

29,603

 

 

27,695

Income taxes, including excise tax expense

 

250

 

 

195

Net investment income after taxes

 

29,353

 

 

27,500

Barings BDC, Inc.

Unaudited Consolidated Statements of Operations — (Continued)

(in thousands, except share and per share data)

 

Three Months

Ended

 

Three Months

Ended

 

March 31, 2024

 

March 31, 2023

Realized gains (losses) and unrealized appreciation (depreciation) on investments, credit support agreements, foreign currency transactions and forward currency contracts:

 

 

 

Net realized gains (losses):

 

 

 

Non-Control / Non-Affiliate investments

$

(12,608

)

 

$

771

 

Net realized gains (losses) on investments

 

(12,608

)

 

 

771

 

Foreign currency transactions

 

241

 

 

 

3,701

 

Forward currency contracts

 

(9,086

)

 

 

(14,218

)

Net realized gains (losses)

 

(21,453

)

 

 

(9,746

)

Net unrealized appreciation (depreciation):

 

 

 

Non-Control / Non-Affiliate investments

 

8,502

 

 

 

7,437

 

Affiliate investments

 

2,795

 

 

 

10,841

 

Control investments

 

11,805

 

 

 

(7,269

)

Net unrealized appreciation (depreciation) on investments

 

23,102

 

 

 

11,009

 

Credit support agreements

 

(6,350

)

 

 

5,586

 

Foreign currency transactions

 

3,516

 

 

 

(8,127

)

Forward currency contracts

 

15,833

 

 

 

13,502

 

Net unrealized appreciation (depreciation)

 

36,101

 

 

 

21,970

 

Net realized gains (losses) and unrealized appreciation (depreciation) on investments, credit support agreements, foreign currency transactions and forward currency contracts

 

14,648

 

 

 

12,224

 

Benefit from (provision for) income taxes

 

—

 

 

 

(73

)

Net increase (decrease) in net assets resulting from operations

$

44,001

 

 

$

39,651

 

Net investment income per share — basic and diluted

$

0.28

 

 

$

0.25

 

Net increase (decrease) in net assets resulting from operations per share — basic and diluted

$

0.41

 

 

$

0.37

 

Dividends/distributions per share:

 

 

 

Total dividends/distributions per share

$

0.26

 

 

$

0.25

 

Weighted average shares outstanding — basic and diluted

 

106,038,873

 

 

 

107,916,166

 

Barings BDC, Inc.

Unaudited Consolidated Statements of Cash Flows

(in thousands)

 

 

Three Months Ended

 

Three Months Ended

 

March 31, 2024

 

March 31, 2023

Cash flows from operating activities:

 

 

 

Net increase (decrease) in net assets resulting from operations

$

44,001

 

 

$

39,651

 

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:

 

 

 

Purchases of portfolio investments

 

(143,128

)

 

 

(179,634

)

Repayments received / sales of portfolio investments

 

118,008

 

 

 

69,515

 

Loan origination and other fees received

 

2,520

 

 

 

2,420

 

Net realized (gain) loss on investments

 

12,608

 

 

 

(771

)

Net realized (gain) loss on foreign currency transactions

 

(241

)

 

 

(3,701

)

Net realized (gain) loss on forward currency contracts

 

9,086

 

 

 

14,218

 

Net unrealized (appreciation) depreciation on investments

 

(23,102

)

 

 

(11,009

)

Net unrealized (appreciation) depreciation of CSAs

 

6,350

 

 

 

(5,586

)

Net unrealized (appreciation) depreciation on foreign currency transactions

 

(3,516

)

 

 

8,127

 

Net unrealized (appreciation) depreciation on forward currency contracts

 

(15,833

)

 

 

(13,502

)

Payment-in-kind interest / dividends

 

(5,800

)

 

 

(5,419

)

Amortization of deferred financing fees

 

1,041

 

 

 

764

 

Accretion of loan origination and other fees

 

(2,419

)

 

 

(2,017

)

Amortization / accretion of purchased loan premium / discount

 

(261

)

 

 

(303

)

Payments for derivative contracts

 

(11,265

)

 

 

(15,482

)

Proceeds from derivative contracts

 

2,178

 

 

 

1,264

 

Changes in operating assets and liabilities:

 

 

 

Interest and fees receivable

 

10,729

 

 

 

(3,424

)

Prepaid expenses and other assets

 

313

 

 

 

348

 

Accounts payable and accrued liabilities

 

(388

)

 

 

8,955

 

Interest payable

 

4,010

 

 

 

3,566

 

Net cash provided by (used in) operating activities

 

4,891

 

 

 

(92,020

)

Cash flows from financing activities:

 

 

 

Borrowings under credit facilities

 

24,500

 

 

 

35,000

 

Repayments of credit facilities

 

(300,000

)

 

 

—

 

Proceeds from notes

 

300,000

 

 

 

—

 

Financing fees paid

 

(7,122

)

 

 

(21

)

Purchases of shares in repurchase plan

 

(1,107

)

 

 

—

 

Cash dividends / distributions paid

 

(27,577

)

 

 

(26,979

)

Net cash provided by (used in) financing activities

 

(11,306

)

 

 

8,000

 

Net increase (decrease) in cash and foreign currencies

 

(6,415

)

 

 

(84,020

)

Cash and foreign currencies, beginning of period

 

70,528

 

 

 

139,415

 

Cash and foreign currencies, end of period

$

64,113

 

 

$

55,395

 

Supplemental Information:

 

 

 

Cash paid for interest

$

15,580

 

 

$

14,662

 

Excise taxes paid during the period

$

1,700

 

 

$

800

 

Barings BDC, Inc.

Unaudited Reconciliation of Debt to Net Debt and Calculation of Net Debt-to-Equity Ratio

(in thousands, except ratios)

 

 

March 31, 2024

 

December 31, 2023

Total debt (principal)

 

$

1,465,352

 

 

$

1,444,914

 

minus: Cash and foreign currencies (excluding restricted cash)

 

 

(50,740

)

 

 

(70,528

)

plus: Payable from unsettled transactions

 

 

336

 

 

 

1,112

 

minus: Receivable from unsettled transactions

 

 

(2,159

)

 

 

(1,299

)

Total net debt(1)

 

$

1,412,789

 

 

$

1,374,199

 

 

 

 

 

 

Total net assets

 

$

1,211,876

 

 

$

1,196,559

 

 

 

 

 

 

Total net debt-to-equity ratio(1)

 

1.17 x

 

1.15 x

(1) See the “Non-GAAP Financial Measures” section of this press release.

 

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Media Contact: MediaRelations@barings.com Investor Relations: BDCinvestorrelations@barings.com, 888-401-1088