BCSF Bain Capital Specialty Finance Inc

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

“BCSF delivered another strong quarter of earnings driven by high net investment income, net asset value growth, and continued healthy credit performance,” said Michael Ewald, Chief Executive Officer of BCSF. “We also had an active quarter of new origination activity supported by our dedicated Private Credit Group’s global and longstanding presence in the core middle market. Looking forward, we believe the Company remains well-positioned to capitalize on attractive investment opportunities.”

QUARTERLY HIGHLIGHTS

• Net investment income (NII) per share was $0.53, equating to an annualized NII yield on book value of 11.9%(1);
• Net income per share was $0.51, equating to an annualized return on book value of 11.5%(1);
• Net asset value per share as of September 30, 2024 was $17.76, as compared to $17.70 as of June 30, 2024;
• Gross and net investment fundings were $413.1 million and $165.1 million, respectively; ending net debt-to-equity was 1.09x, as compared to 0.95x as of June 30, 2024(2);
• Investments on non-accrual represented 1.9% and 1.1% of the total investment portfolio at amortized cost and fair value, respectively, as of September 30, 2024; and
• Subsequent to quarter-end, the Company’s Board of Directors declared a dividend of $0.42 per share for the fourth quarter of 2024 payable to stockholders of record as of December 31, 2024. The Board of Directors previously announced an additional dividend of $0.03 per share payable to stockholders of record as of December 31, 2024.(3)

SELECTED FINANCIAL HIGHLIGHTS

($ in millions, unless otherwise noted)

Q3 2024

 

Q2 2024

 

Net investment income per share

$

0.53

 

$

0.51

 

Net investment income

$

34.0

 

$

33.1

 

Earnings per share

$

0.51

 

$

0.45

 

Dividends per share declared and payable

$

0.45

 

$

0.45

 

($ in millions, unless otherwise noted)

As of September 30, 2024

 

As of June 30, 2024

 

Total fair value of investments

$

2,408.0

 

$

2,237.5

 

Total assets

$

2,543.7

 

$

2,414.8

 

Total net assets

$

1,146.6

 

$

1,142.5

 

Net asset value per share

$

17.76

 

$

17.70

 

PORTFOLIO AND INVESTMENT ACTIVITY

For the three months ended September 30, 2024, the Company invested $413.1 million in 83 portfolio companies, including $330.9 million in 16 new companies and $82.2 million in 67 existing companies. The Company had $248.0 million of principal repayments and sales in the quarter, resulting in net investment fundings of $165.1 million.

Investment Activity for the Quarter Ended September 30, 2024:

($ in millions)

Q3 2024

 

Q2 2024

 

Investment Fundings

$

413.1

 

$

306.7

 

Sales and Repayments

$

248.0

 

$

473.7

 

Net Investment Activity

$

165.1

 

$

(167.0

)

As of September 30, 2024, the Company’s investment portfolio had a fair value of $2,408.0 million, comprised of investments in 159 portfolio companies operating across 31 different industries.

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

Investment Type

$ in Millions

 

% of Total

 

First Lien Senior Secured Loan

$

1,521.5

 

 

63.2

%

Second Lien Senior Secured Loan

 

55.3

 

 

2.3

 

Subordinated Debt

 

47.0

 

 

2.0

 

Preferred Equity

 

171.3

 

 

7.1

 

Equity Interest

 

220.2

 

 

9.1

 

Warrants

 

0.8

 

 

0.0

 

Investment Vehicles

 

391.9

 

 

16.3

 

Subordinated Note in ISLP

 

190.7

 

 

7.9

 

Equity Interest in ISLP

 

56.5

 

 

2.3

 

Subordinated Note in SLP

 

146.5

 

 

6.2

 

Preferred and Equity Interest in SLP

 

(1.8

)

 

(0.1

)

Total

$

2,408.0

 

 

100.0

%

As of September 30, 2024, the weighted average yield on the investment portfolio at amortized cost and fair value were 12.1% and 12.1%, respectively, as compared to 13.1% and 13.2%, respectively, as of June 30, 2024(4). 90.8% of the Company’s debt investments at fair value were in floating rate securities.

As of September 30, 2024, five portfolio companies were on non-accrual status, representing 1.9% and 1.1% of the total investment portfolio at amortized cost and fair value, respectively.

As of September 30, 2024, ISLP’s investment portfolio had an aggregate fair value of $691.7 million, comprised of investments in 37 portfolio companies operating across 15 different industries. The investment portfolio on a fair value basis was comprised of 95.1% first lien senior secured loans, 0.7% second lien senior secured loans and 4.2% equity interests. 100% of ISLP’s debt investments at fair value were in floating rate securities.

As of September 30, 2024, SLP’s investment portfolio had an aggregate fair value of $1,132.9 million, comprised of investments in 85 portfolio companies operating across 26 different industries. The investment portfolio on a fair value basis was comprised of 98.4% first lien senior secured loans, 1.4% second lien senior secured loans and 0.2% equity interests. 99.9% of SLP’s debt investments at fair value were in floating rate securities.

RESULTS OF OPERATIONS

For the three months ended September 30, 2024 and June 30, 2024, total investment income was $72.5 million and $72.3 million, respectively.

Total expenses (before taxes) for the three months ended September 30, 2024 and June 30, 2024 were $37.5 million and $38.0 million, respectively.

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

During the three months ended September 30, 2024, the Company had net realized and unrealized losses of $0.9 million.

Net increase in net assets resulting from operations for the three months ended September 30, 2024 was $33.1 million, or $0.51 per share.

CAPITAL AND LIQUIDITY

As of September 30, 2024, the Company had total principal debt outstanding of $1,306.2 million, including $353.7 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.

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

As of September 30, 2024, the Company had cash and cash equivalents (including foreign cash) of $30.5 million, restricted cash and cash equivalents of $29.3 million, $0.6 million of unsettled trades, net of receivables and payables of investments, and $501.3 million of capacity under its Sumitomo Credit Facility. As of September 30, 2024, the Company had $432.2 million of undrawn investment commitments.

As of September 30, 2024, the Company’s debt-to-equity and net debt-to-equity ratios were 1.14x and 1.09x, respectively, as compared to 1.03x and 0.95x, respectively, as of June 30, 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 fourth quarter dividend is payable on January 31, 2025 to stockholders of record as of December 31, 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 9:30 a.m. Eastern Time on November 6, 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 - Third Quarter Ended September 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 November 13, 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: 11157443

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, 2024

 

 

December 31, 2023

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Investments at fair value:

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate investments (amortized cost of $1,759,021 and $1,615,061, respectively)

 

$

 

1,754,245

 

 

$

 

1,593,360

 

Non-controlled/affiliate investment (amortized cost of $75,517 and $132,650, respectively)

 

 

 

80,035

 

 

 

 

147,971

 

Controlled affiliate investment (amortized cost of $578,475 and $554,123, respectively)

 

 

 

573,670

 

 

 

 

557,012

 

Cash and cash equivalents

 

 

 

25,336

 

 

 

 

42,995

 

Foreign cash (cost of $4,657 and $6,865, respectively)

 

 

 

5,125

 

 

 

 

6,405

 

Restricted cash and cash equivalents

 

 

 

29,292

 

 

 

 

63,084

 

Collateral on forward currency exchange contracts

 

 

 

9,675

 

 

 

 

7,613

 

Deferred financing costs

 

 

 

4,855

 

 

 

 

2,802

 

Interest receivable on investments

 

 

 

34,520

 

 

 

 

37,169

 

Receivable for sales and paydowns of investments

 

 

 

17,873

 

 

 

 

4,310

 

Prepaid insurance

 

 

 

383

 

 

 

 

210

 

Dividend receivable

 

 

 

8,673

 

 

 

 

9,417

 

Total Assets

 

$

 

2,543,682

 

 

$

 

2,472,348

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Debt (net of unamortized debt issuance costs of $5,592 and $7,567, respectively)

 

$

 

1,300,607

 

 

$

 

1,255,933

 

Interest payable

 

 

 

13,170

 

 

 

 

13,283

 

Payable for investments purchased

 

 

 

17,280

 

 

 

 

11,453

 

Unrealized depreciation on forward currency exchange contracts

 

 

 

6,549

 

 

 

 

2,260

 

Base management fee payable

 

 

 

8,897

 

 

 

 

8,929

 

Incentive fee payable

 

 

 

7,020

 

 

 

 

7,327

 

Accounts payable and accrued expenses

 

 

 

14,518

 

 

 

 

9,581

 

Distributions payable

 

 

 

29,053

 

 

 

 

27,116

 

Total Liabilities

 

 

 

1,397,094

 

 

 

 

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 September 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

 

 

 

(18,668

)

 

 

 

(31,983

)

Total Net Assets

 

 

 

1,146,588

 

 

 

 

1,136,466

 

Total Liabilities and Total Net Assets

 

$

 

2,543,682

 

 

$

 

2,472,348

 

 

 

 

 

 

 

 

 

 

Net asset value per share

 

$

 

17.76

 

 

$

 

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 September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest from investments

 

$

 

45,135

 

 

$

 

45,418

 

 

$

 

134,193

 

 

$

 

140,588

 

Dividend income

 

 

 

826

 

 

 

 

—

 

 

 

 

1,261

 

 

 

 

62

 

PIK income

 

 

 

5,231

 

 

 

 

4,926

 

 

 

 

15,941

 

 

 

 

15,015

 

Other income

 

 

 

5,704

 

 

 

 

1,008

 

 

 

 

14,100

 

 

 

 

8,178

 

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

 

 

 

56,896

 

 

 

 

51,352

 

 

 

 

165,495

 

 

 

 

163,843

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment income from non-controlled/affiliate investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest from investments

 

 

 

120

 

 

 

 

2,412

 

 

 

 

2,980

 

 

 

 

7,375

 

Dividend income

 

 

 

85

 

 

 

 

950

 

 

 

 

906

 

 

 

 

3,955

 

PIK income

 

 

 

—

 

 

 

 

655

 

 

 

 

458

 

 

 

 

1,677

 

Total investment income from non-controlled/affiliate investments

 

 

 

205

 

 

 

 

4,017

 

 

 

 

4,344

 

 

 

 

13,007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment income from controlled affiliate investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest from investments

 

 

 

10,165

 

 

 

 

9,403

 

 

 

 

28,948

 

 

 

 

24,320

 

Dividend income

 

 

 

5,274

 

 

 

 

7,618

 

 

 

 

20,523

 

 

 

 

21,672

 

Total investment income from controlled affiliate investments

 

 

 

15,439

 

 

 

 

17,021

 

 

 

 

49,471

 

 

 

 

45,992

 

Total investment income

 

 

 

72,540

 

 

 

 

72,390

 

 

 

 

219,310

 

 

 

 

222,842

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and debt financing expenses

 

 

 

18,117

 

 

 

 

20,775

 

 

 

 

53,804

 

 

 

 

60,784

 

Base management fee

 

 

 

8,897

 

 

 

 

9,140

 

 

 

 

26,484

 

 

 

 

27,166

 

Incentive fee

 

 

 

7,020

 

 

 

 

3,011

 

 

 

 

24,176

 

 

 

 

18,129

 

Professional fees

 

 

 

870

 

 

 

 

760

 

 

 

 

2,700

 

 

 

 

1,792

 

Directors fees

 

 

 

173

 

 

 

 

182

 

 

 

 

521

 

 

 

 

535

 

Other general and administrative expenses

 

 

 

2,454

 

 

 

 

2,234

 

 

 

 

7,374

 

 

 

 

5,386

 

Total expenses, net of fee waivers

 

 

 

37,531

 

 

 

 

36,102

 

 

 

 

115,059

 

 

 

 

113,792

 

Net investment income before taxes

 

 

 

35,009

 

 

 

 

36,288

 

 

 

 

104,251

 

 

 

 

109,050

 

Income tax expense, including excise tax

 

 

 

1,025

 

 

 

 

640

 

 

 

 

3,200

 

 

 

 

2,332

 

Net investment income

 

 

 

33,984

 

 

 

 

35,648

 

 

 

 

101,051

 

 

 

 

106,718

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized and unrealized gains (losses)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized gain (loss) on non-controlled/non-affiliate investments

 

 

 

245

 

 

 

 

(50,873

)

 

 

 

(7,631

)

 

 

 

(61,753

)

Net realized gain on non-controlled/affiliate investments

 

 

 

3,008

 

 

 

 

—

 

 

 

 

7,727

 

 

 

 

—

 

Net realized loss on foreign currency transactions

 

 

 

(465

)

 

 

 

(673

)

 

 

 

(888

)

 

 

 

(5,207

)

Net realized gain (loss) on forward currency exchange contracts

 

 

 

20

 

 

 

 

(221

)

 

 

 

1,916

 

 

 

 

(2,606

)

Net change in unrealized appreciation on foreign currency translation

 

 

 

998

 

 

 

 

(279

)

 

 

 

967

 

 

 

 

3,615

 

Net change in unrealized appreciation on forward currency exchange contracts

 

 

 

(5,693

)

 

 

 

7,107

 

 

 

 

(4,289

)

 

 

 

5,792

 

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

 

 

 

(2,135

)

 

 

 

41,509

 

 

 

 

16,925

 

 

 

 

35,972

 

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

 

 

 

2,534

 

 

 

 

(1,067

)

 

 

 

(10,803

)

 

 

 

1,960

 

Net change in unrealized appreciation on controlled affiliate investments

 

 

 

600

 

 

 

 

2,705

 

 

 

 

(7,694

)

 

 

 

7,821

 

Total net losses

 

 

 

(888

)

 

 

 

(1,792

)

 

 

 

(3,770

)

 

 

 

(14,406

)

Net increase in net assets resulting from operations

 

$

 

33,096

 

 

$

 

33,856

 

 

$

 

97,281

 

 

$

 

92,312

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net investment income per common share

 

$

 

0.53

 

 

$

 

0.55

 

 

$

 

1.57

 

 

$

 

1.65

 

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

 

$

 

0.51

 

 

$

 

0.52

 

 

$

 

1.51

 

 

$

 

1.43

 

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 September 30, 2024, BCSF has invested approximately $8,132.9 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/20241105984992/en/

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

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