KBDC Kayne Anderson Bdc Inc

Kayne Anderson BDC, Inc. (NYSE: KBDC) (“KBDC” or the “Company”), a business development company externally managed by its investment adviser, KA Credit Advisors, LLC, today announced its financial results for the second quarter ended June 30, 2024.

“We believe that the core middle market represents the most attractive risk / reward area of private credit and are pleased with the portfolio of senior secured first lien loans that we have constructed for KBDC,” said Ken Leonard, Co-Chief Executive Officer. “Our middle market loans have relatively low leverage and higher interest coverage while earning an attractive yield for our shareholders.”

“We are encouraged by the increase in origination activity that we have experienced in the first half of the year and are confident that KBDC will continue to grow its private credit portfolio over the remainder of the year to the benefit of our shareholders,” said Doug Goodwillie, Co-Chief Executive Officer.

Financial Highlights for the Quarter Ended June 30, 2024

• Net investment income of $34.4 million, or $0.51 per share;
• Net asset value of $16.57 per share, a decrease from $16.63 per share as of March 31, 2024, but an increase of $0.05 after considering $0.11 per share dilution from the Company’s Initial Public Offering (“IPO”);
• Amended the Revolving Funding Facility, increasing the commitment from $455 million to $600 million, extending the maturity date to April 3, 2029 and reducing the interest rate from daily SOFR plus 2.75% to SOFR plus 2.375%-2.50% depending on the mix of loans securing the facility;
• New private credit investment commitments of $141.8 million, fundings of $136.2 million and sales and repayments of $40.5 million, resulting in a net funded private credit portfolio increase of $95.7 million;
• Net repayments of broadly syndicated loans of $28.5 million; and
• The Company’s Board of Directors (the “Board”) declared a regular dividend of $0.40 per share, to be paid on October 15, 2024 to stockholders of record as of September 30, 2024.

Selected Financial Highlights

 

 

As of

(in thousands, expect per share data)

 

June 30, 2024

 

 

March 31, 2024

 

 

 

 

 

 

 

 

 

Investment portfolio, at fair value

 

$

1,847,058

 

 

 

$

1,784,045

Total assets

 

$

1,909,850

 

 

 

$

1,844,441

Total debt outstanding, at principal

 

$

622,000

 

 

 

$

659,000

Net assets

 

$

1,178,176

 

 

 

$

811,557

Net asset value per share

 

$

16.57

 

 

 

$

16.63

Total debt-to-equity ratio

 

 

0.53x

 

 

 

0.81x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the quarter ended

 

 

June 30, 2024

 

 

March 31, 2024

 

 

 

 

 

 

 

 

 

Net investment income per share

 

$

0.51

 

 

 

$

0.52

Net realized and unrealized gains (losses) per share

 

$

(0.05

)

 

 

$

0.09

Earnings per share

 

$

0.46

 

 

 

$

0.61

Regular dividend per share

 

$

0.40

 

 

 

$

0.40

Special dividend per share

 

$

-

 

 

 

$

-

Results of Operations

Total investment income for the quarter ended June 30, 2024 was $52.5 million, as compared to $46.5 million for the quarter ended March 31, 2024. The increase was driven by the additions to the portfolio during the second quarter and the full quarter impact of purchases made late in the first quarter.

Net investment income for the quarter ending June 30, 2024 was $34.4 million or $0.51 per share, compared to $23.8 million or $0.52 per share for the quarter ended March 31, 2024. Total expenses for the second quarter were $18.1 million compared to $22.7 million for the prior quarter. The decrease was due to lower interest expense resulting from using a portion of the proceeds from the Company’s IPO to repay revolver borrowings during the quarter. The decrease was also a result of a full waiver of income-based incentive fees during the quarter.

For the quarter ended June 30, 2024, the net change in unrealized losses was $3.1 million. The unrealized losses for the quarter were primarily driven by changes in the fair value of certain investments, particularly Trademark Global and Siegel Egg. Trademark Global was moved to non-accrual status as of June 30, 2024. For the quarter, realized losses were $0.1 million related to the disposition of a broadly syndicated loan position.

Portfolio and Investment Activity

 

As of

 

($ in thousands)

June 30, 2024

 

March 31, 2024

 

 

 

 

 

 

Investments at fair value

$

1,847,058

 

 

$

1,784,045

 

 

Number of portfolio companies

 

106

 

 

 

103

 

 

Average portfolio company investment size

$

17,425

 

 

$

17,321

 

 

 

 

 

 

 

 

 

Asset class:

 

 

 

 

 

 

First lien debt

 

97.8

%

 

 

97.7

%

 

Subordinated debt

 

1.2

%

 

 

1.2

%

 

Equity

 

1.0

%

 

 

1.1

%

 

 

 

 

 

 

 

 

Non-accrual debt investments:

 

 

 

 

 

 

Non-accrual investments at fair value

$

18,897

 

 

$

7,033

 

 

Non-accrual investments as a percentage of debt investments at fair value

 

1.0

%

 

 

0.4

%

 

Number of investments on non-accrual

 

2

 

 

 

1

 

 

 

 

 

 

 

 

 

Interest rate type:

 

 

 

 

 

 

Percentage floating-rate

 

100.0

%

 

 

100.0

%

 

Percentage fixed-rate

 

0.0

%

 

 

0.0

%

 

 

 

 

 

 

 

 

Yields (at fair value):

 

 

 

 

 

 

Weighted average yield on private middle market loans

 

12.3

%

 

 

12.4

%

 

Weighted average yield on broadly syndicated loans

 

8.3

%

 

 

8.4

%

 

Weighted average yield on total debt portfolio

 

11.7

%

 

 

11.7

%

 

 

 

 

 

 

 

 

Investment activity during the quarter ended:

 

 

 

 

 

 

Gross new investment commitments

$

171,836

 

(1)

$

463,753

 

(2)

Principal amount of investments funded

$

166,161

 

(1)

$

449,601

 

(2)

Principal amount of investments sold or repaid

$

(98,968

)

(1)

$

(32,381

)

(2)

Net principal amount of investments funded

$

67,193

 

 

$

417,220

 

 

_________________

 

 

 

 

 

 

(1) For the quarter ending June 30, 2024, broadly syndicated loans represent $30,000 of new investment commitments, $30,000 of investments funded and $58,500 of investments sold or repaid.

 

(2) For the quarter ending March 31, 2024, broadly syndicated loans represent $302,000 of new investment commitments, $302,000 of investments funded and zero investments sold or repaid.

 

Liquidity and Capital Resources

As of June 30, 2024, the Company had $75 million senior unsecured notes outstanding, $547 million borrowed under its credit facilities and cash and cash equivalents of $40.6 million (including short-term investments). As of that date, the Company had $603 million of undrawn commitments available on its credit facilities (subject to borrowing base restrictions and other conditions).

On April 3, 2024, the Company, and its wholly owned, special purpose financing subsidiary, Kayne Anderson BDC Financing, LLC, amended the senior secured revolving funding facility (the “Revolving Funding Facility”). Under the terms of the third amendment, the commitment amount was increased from $455 million to $600 million. The end of the reinvestment period was extended to April 2, 2027 and the maturity date was extended to April 3, 2029. The interest rate on the Revolving Funding Facility was reduced from daily SOFR plus 2.75% per annum to SOFR plus 2.375% - 2.50% per annum depending on the mix of loans securing the Revolving Funding Facility.

The Company received net cash proceeds of $92.4 million upon the completion of its IPO on May 24, 2024, and received net cash proceeds of $269.9 million on April 2, 2024 when it closed its final capital call with pre-IPO shareholders.

As of June 30, 2024, the Company’s debt-to-equity ratio was 0.53x and its asset coverage ratio was 289%. The Company targets a debt-to-equity ratio of 1.0x to 1.25x (which equates to asset coverage of 200% to 180%). The Company is currently below its target but expects to continue to grow its private credit portfolio over coming quarters to achieve its targeted leverage.

Recent Developments

• On August 7, 2024, the Board of Directors of the Company declared a regular dividend to common stockholders in the amount of $0.40 per share. The dividend will be paid on October 15, 2024 to stockholders of record as of the close of business on September 30, 2024.

Conference Call Information

KBDC will host a conference call at 10:00 am ET on Wednesday, August 14, 2024, to review its financial results. All interested parties are invited to participate using the following telephone dial-in or the webcast details:

Telephone Dial-in

• Domestic: 800-579-2543
• International: +1 785-424-1789
• Conference ID: KBDC2Q

Webcast Link

• https://events.q4inc.com/attendee/528656183

To avoid potential delays, please join at least 10 minutes prior to the start of the earnings call. A telephone replay will also be available by dialing 800-934-7612 (domestic) and +1 402-220-6980 (international). The replay will be available until August 28, 2024.

Kayne Anderson BDC, Inc.

Consolidated Statements of Assets and Liabilities

(amounts in 000’s, except share and per share amounts)

 

 

 

June 30, 2024

 

December 31, 2023

Assets:

 

(Unaudited)

 

 

Investments, at fair value:

 

 

 

 

Long-term investments (amortized cost of $1,825,906 and $1,343,223)

 

$

1,847,058

 

 

$

1,363,498

 

Short-term investments (amortized cost of $20,344 and $12,802)

 

 

20,344

 

 

 

12,802

 

Cash and cash equivalents

 

 

20,271

 

 

 

34,069

 

Receivable for principal payments on investments

 

 

5,280

 

 

 

104

 

Interest receivable

 

 

16,780

 

 

 

12,874

 

Prepaid expenses and other assets

 

 

117

 

 

 

319

 

Total Assets

 

$

1,909,850

 

 

$

1,423,666

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Corporate Credit Facility

 

$

75,000

 

 

$

234,000

 

Unamortized Corporate Credit Facility issuance costs

 

 

(1,321

)

 

 

(1,715

)

Revolving Funding Facility

 

 

389,000

 

 

 

306,000

 

Unamortized Revolving Funding Facility issuance costs

 

 

(5,808

)

 

 

(2,019

)

Revolving Funding Facility II

 

 

83,000

 

 

 

70,000

 

Unamortized Revolving Funding Facility II issuance costs

 

 

(1,571

)

 

 

(1,805

)

Subscription Credit Agreement

 

 

-

 

 

 

10,750

 

Unamortized Subscription Credit Facility issuance costs

 

 

-

 

 

 

(41

)

Notes

 

 

75,000

 

 

 

75,000

 

Unamortized notes issuance costs

 

 

(748

)

 

 

(851

)

Payable for investments purchased

 

 

72,322

 

 

 

-

 

Distributions payable

 

 

28,446

 

 

 

22,050

 

Management fee payable

 

 

3,780

 

 

 

2,996

 

Incentive fee payable

 

 

-

 

 

 

14,195

 

Accrued expenses and other liabilities

 

 

14,574

 

 

 

11,949

 

Accrued excise tax expense

 

 

-

 

 

 

101

 

Total Liabilities

 

$

731,674

 

 

$

740,610

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Assets:

 

 

 

 

 

 

Common Shares, $0.001 par value; 100,000,000 shares authorized; 71,116,459 and 41,603,666 as of June 30, 2024 and December 31, 2023, respectively, issued and outstanding

 

$

71

 

 

$

42

 

Additional paid-in capital

 

 

1,154,108

 

 

 

669,990

 

Total distributable earnings (deficit)

 

 

23,997

 

 

 

13,024

 

Total Net Assets

 

$

1,178,176

 

 

$

683,056

 

Total Liabilities and Net Assets

 

$

1,909,850

 

 

$

1,423,666

 

Net Asset Value Per Common Share

 

$

16.57

 

 

$

16.42

 

Kayne Anderson BDC, Inc.

Consolidated Statements of Operations

(amounts in 000’s, except share and per share amounts)

(Unaudited)

 

 

For the three months ended

 

For the six months ended

June 30, 2024

 

June 30, 2023

June 30, 2024

 

June 30, 2023

Income:

 

 

 

 

 

 

 

Investment income from investments:

 

 

 

 

 

 

 

Interest income

$

51,991

 

 

$

40,746

 

 

$

98,228

 

 

$

77,112

 

Dividend income

 

462

 

 

 

-

 

 

 

719

 

 

 

-

 

Total Investment Income

 

52,453

 

 

 

40,746

 

 

 

98,947

 

 

 

77,112

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Management fees

 

4,251

 

 

 

2,848

 

 

 

7,773

 

 

 

5,533

 

Incentive fees

 

4,109

 

 

 

2,420

 

 

 

6,740

 

 

 

4,558

 

Interest expense

 

13,239

 

 

 

13,002

 

 

 

28,895

 

 

 

24,525

 

Professional fees

 

375

 

 

 

143

 

 

 

639

 

 

 

293

 

Directors fees

 

158

 

 

 

178

 

 

 

305

 

 

 

317

 

Other general and administrative expenses

 

508

 

 

 

422

 

 

 

979

 

 

 

871

 

Total Expenses

 

22,640

 

 

 

19,013

 

 

 

45,331

 

 

 

36,097

 

Less: Management fee waiver

 

(471

)

 

 

-

 

 

 

(471

)

 

 

-

 

Less: Incentive fee waiver

 

(4,109

)

 

 

-

 

 

 

(4,109

)

 

 

-

 

Net Expenses

 

18,060

 

 

 

19,013

 

 

 

40,751

 

 

 

36,097

 

Net Investment Income (Loss)

 

34,393

 

 

 

21,733

 

 

 

58,196

 

 

 

41,015

 

 

 

 

 

 

 

 

 

 

 

 

 

Realized and unrealized gains (losses) on investments

 

 

 

 

 

 

 

 

 

 

 

Net realized gains (losses):

 

 

 

 

 

 

 

 

 

 

 

Investments

 

(138

)

 

 

-

 

 

 

(138

)

 

 

-

 

Total net realized gains (losses)

 

(138

)

 

 

-

 

 

 

(138

)

 

 

-

 

Net change in unrealized gains (losses):

 

 

 

 

 

 

 

 

 

 

 

Investments

 

(3,075

)

 

 

(731

)

 

 

877

 

 

 

(606

)

Total net change in unrealized gains (losses)

 

(3,075

)

 

 

(731

)

 

 

877

 

 

 

(606

)

Total realized and unrealized gains (losses)

 

(3,213

)

 

 

(731

)

 

 

739

 

 

 

(606

)

 

 

 

 

 

 

 

 

 

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

$

31,180

 

 

$

21,002

 

 

$

58,935

 

 

$

40,409

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Common Share Data:

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net investment income per common share

$

0.51

 

 

$

0.56

 

 

$

1.03

 

 

$

1.10

 

Basic and diluted net increase in net assets resulting from operations

$

0.46

$

0.54

 

 

$

1.05

$

1.08

Weighted Average Common Shares Outstanding - Basic and Diluted

67,426,904

 

 

38,905,173

 

 

56,386,161

 

 

37,425,525

 

About Kayne Anderson BDC, Inc.

Kayne Anderson BDC, Inc. is a business development company (“BDC”) that invests primarily in first lien senior secured loans, with a secondary focus on unitranche and split-lien loans to middle market companies. KBDC is externally managed by its investment adviser, KA Credit Advisors, LLC, an indirect controlled subsidiary of Kayne Anderson Capital Advisors, L.P., a prominent alternative investment management firm. KBDC has elected to be regulated as a BDC under the Investment Company Act of 1940, as amended (“1940 Act”). KBDC’s investment objective is to generate current income and, to a lesser extent, capital appreciation. For more information, please visit www.kaynebdc.com.

Forward-looking Statements

This press release may contain “forward-looking statements” that involve substantial risks and uncertainties. Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about KBDC, its current and prospective portfolio investments, its industry, its beliefs and opinions, and its assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond KBDC’s control and difficult to predict and 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 KBDC’s filings with the SEC. All forward-looking statements speak only as of the date of this press release. KBDC 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240812455635/en/

Investor Relations kaynebdc@kaynecapital.com