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 third quarter of 2019 and announced its financial results for the second quarter ended June 30, 2019.
“We are pleased with our positive second quarter results driven by the stable performance of a highly diversified portfolio across industries,” said Michael Ewald, President and Chief Executive Officer of BCSF. “Investment originations for the quarter totaled $403 million, including 14 investments in new portfolio companies. We are encouraged by our robust pipeline of attractive opportunities and remain focused on growing our platform with a thoughtfully constructed portfolio.”
QUARTERLY HIGHLIGHTS
- The Company announced a dividend of $0.41 per share for the third quarter of 2019 payable to shareholders of record as of September 30, 2019 (1).
- Net investment income for the quarter ended June 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 March 31, 2019.
- Net income for the quarter ended June 30, 2019, was $19.2 million or $0.37 per share, as compared to $39.3 million or $0.76 per share for the quarter ended March 31, 2019.
- Net asset value per share was $19.77 as of June 30, 2019, as compared to $19.81 as of March 31, 2019.
- On April 30, 2019, the Company completed the balance sheet consolidation of ABC Complete Financing Solution LLC (“ABCS”), receiving its proportionate share of all assets of ABCS. These assets included unitranche loans to 25 portfolio companies with a fair market value of $919.0 million. In conjunction with this transaction, the Company entered into a loan and security agreement with JPMorgan Chase Bank for $666.6 million with a maturity date of November 29, 2022.
- On July 19, 2019, the Company announced the appointment of Amy Butte and Clare Richer as independent directors, thereby expanding the size of the Board of Directors from five to seven members. The Board also appointed Ms. Butte and Ms. Richer to the Nominating and Corporate Governance Committee, the Audit Committee and the Compensation Committee. The appointments were effective August 1, 2019.
Selected Financial Highlights
(dollar amounts in thousands) |
Q2 2019 |
Q1 2019 |
||
Net investment income per share |
$0.41 |
$0.41 |
||
Net investment income |
$21,155 |
$21,243 |
||
Earnings per share |
$0.37 |
$0.76 |
||
Dividends declared and payable |
$0.41 |
$0.41 |
|
As of June 30, |
As of March 31, |
||
(dollar amounts in thousands) |
2019 |
2019 |
||
Total fair value of investments |
$2,427,415 |
$1,829,940 |
||
Total assets |
$2,589,822 |
1,995,944 |
||
Total net assets |
$1,021,202 |
1,019,834 |
||
Net asset value per share |
$19.77 |
$19.81 |
PORTFOLIO AND INVESTMENT ACTIVITY
- For the three months ended June 30, 2019, BCSF invested $403.1 million in 42 new and existing portfolio companies across 20 different industries. BCSF had $378.1 million of principal repayments and sales in the quarter. On a net basis, our investments in the quarter totaled $25.0 million.
(dollar amounts in millions) |
Q2 2019 |
Q1 2019 |
||
Investment Fundings |
$403.1 |
$275.5 |
||
Sales and Repayments |
378.1 |
192.2 |
||
Net Investment Activity |
25.0 |
83.3 |
- As of June 30, 2019, the Company’s investment portfolio had a fair value of $2,427.4 million.
- As of June 30, 2019 the investment portfolio based on fair value consisted of:
Investment Portfolio at FV |
$ in Millions |
% of Total |
||
First lien senior secured |
$2,112.7 |
87.0% |
||
First lien last out |
28.2 |
1.2 |
||
Second lien senior secured |
192.0 |
7.9 |
||
Subordinated debt |
14.8 |
0.6 |
||
Corporate bonds |
28.1 |
1.2 |
||
Equity interest |
31.5 |
1.3 |
||
Preferred equity |
20.0 |
0.8 |
||
Warrants |
0.1 |
0.0 |
||
Total |
$2,427.4 |
100.0% |
- As of June 30, 2019, the weighted average gross yield on the investment portfolio was 8.0% (2) and 98.5% of total investments at fair value were in floating rate securities.
- As of June 30, 2019, there were no investments on non-accrual status.
SECOND QUARTER 2019 OPERATING RESULTS
- For the three months ended June 30, 2019, and March 31, 2019, total investment income was $50.6 million and $39.9 million, respectively.
- Total expenses before taxes for the three months ended June 30, 2019, and March 31, 2019, were $29.4 million and $18.6 million, respectively.
- Net investment income after taxes for the three months ended June 30, 2019, was $21.2 million or $0.41 per share, compared with $21.2 million or $0.41 per share for the three months ended March 31, 2019.
- During the three months ended June 30, 2019, the Company had net realized and unrealized losses of $1.9 million, compared to net realized and unrealized gains of $18.1 million during the three months ended March 31, 2019.
- Net increase in net assets resulting from operations for the three months ended June 30, 2019 was $19.2 million, or $0.37 per share.
CAPITAL and LIQUIDITY
- At June 30, 2019, BCSF had cash and cash equivalents and foreign cash of $101.0 million.
- BCSF had total principal debt outstanding of $1,507.1 million including $361.9 million outstanding in the BCSF Revolving Credit Facility with Goldman Sachs, $192.1 million outstanding in the Citi Revolving Credit Facility, $587.4 million outstanding in the JPM Credit Facility, and $365.7 million outstanding of the 2018-1 Notes.
- Undrawn capacity in our BCSF Revolving Credit Facility totaled $138.1 million, undrawn capacity in our Citi Revolving Credit Facility totaled $157.9 million, and undrawn capacity in our JPM Credit Facility totaled $79.2 million as of June 30, 2019.
- For the three months ended June 30, 2019, the weighted average interest rate on debt outstanding was 4.9%.
CONFERENCE CALL INFORMATION
A conference call to discuss the Company’s financial results will be held live at 9:00 a.m. Eastern Time on August 8, 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: 13692082
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 August 15, 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: 13692082
ENDNOTES
- The $0.41 per share dividend is payable on October 30, 2019 to holders of record as of September 30, 2019.
- Information through June 30, 2019. Computed for debt investments based upon the annual interest rate as of June 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 June 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 | |||||||||
| June 30, 2019 | December 31, 2018 | |||||||||
| (Unaudited) | ||||||||||
| Assets | ||||||||||
| Investments at fair value: | ||||||||||
| Non-controlled/non-affiliate investments (amortized cost of $2,372,619 and $1,449,749, respectively) | $ |
2,360,349 |
|
$ |
1,422,837 |
|
||||
| Controlled affiliate investment (amortized cost of $57,630 and $296,648, respectively) |
|
60,346 |
|
|
298,249 |
|
||||
| Non-controlled/affiliate investment (amortized cost of $6,720 and $6,720, respectively) |
|
6,720 |
|
|
6,720 |
|
||||
| Cash and cash equivalents |
|
100,358 |
|
|
14,693 |
|
||||
| Foreign cash (cost of $545 and $589, respectively) |
|
599 |
|
|
591 |
|
||||
| Restricted Cash |
|
27,946 |
|
|
17,987 |
|
||||
| Collateral on forward currency exchange contracts |
|
1,984 |
|
|
4 |
|
||||
| Deferred financing costs |
|
3,868 |
|
|
4,018 |
|
||||
| Interest receivable on investments |
|
13,529 |
|
|
6,249 |
|
||||
| Prepaid insurance |
|
- |
|
|
1 |
|
||||
| Receivable for sales and paydowns of investments |
|
12,016 |
|
|
1,634 |
|
||||
| Other assets |
|
1,484 |
|
|
- |
|
||||
| Unrealized appreciation on forward currency exchange contracts |
|
331 |
|
|
9,322 |
|
||||
| Dividend receivable |
|
292 |
|
|
8,709 |
|
||||
| Total Assets | $ |
2,589,822 |
|
$ |
1,791,014 |
|
||||
| Liabilities | ||||||||||
| Revolving credit facilities | $ |
1,141,351 |
|
$ |
271,265 |
|
||||
| 2018-1 Notes (net of unamortized debt issuance costs of $1,955 and $2,040, respectively) |
|
363,745 |
|
|
363,660 |
|
||||
| Offering costs payable |
|
1,731 |
|
|
1,820 |
|
||||
| Interest payable |
|
10,893 |
|
|
4,835 |
|
||||
| Payable for investments purchased |
|
15,241 |
|
|
119,166 |
|
||||
| Unrealized depreciation on forward currency exchange contracts |
|
158 |
|
|
- |
|
||||
| Base management fee payable |
|
6,366 |
|
|
2,950 |
|
||||
| Incentive fee payable |
|
4,490 |
|
|
3,300 |
|
||||
| Accounts payable and accrued expenses |
|
3,469 |
|
|
1,281 |
|
||||
| Distributions payable |
|
21,176 |
|
|
21,108 |
|
||||
| Total Liabilities |
|
1,568,620 |
|
|
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 June 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 June 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) |
|
(16,427 |
) |
|
(32,677 |
) |
||||
| Total Net Assets |
|
1,021,202 |
|
|
1,001,629 |
|
||||
| Total Liabilities and Total Net assets | $ |
2,589,822 |
|
$ |
1,791,014 |
|
||||
| Net asset value per share | $ |
19.77 |
|
$ |
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 June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||||||||
| Income | |||||||||||||||||||||
| Investment income from non-controlled/non-affiliate investments: | |||||||||||||||||||||
| Interest from investments | $ |
44,938 |
|
$ |
15,821 |
|
$ |
75,326 |
|
$ |
28,436 |
|
|||||||||
| Dividend income |
|
- |
|
|
- |
|
|
16 |
|
|
- |
|
|||||||||
| Other income |
|
369 |
|
|
94 |
|
|
391 |
|
|
208 |
|
|||||||||
| Total investment income from non-controlled/non-affiliate investments |
|
45,307 |
|
|
15,915 |
|
|
75,733 |
|
|
28,644 |
|
|||||||||
| Investment income from controlled affiliate investments: | |||||||||||||||||||||
| Interest from investments |
|
135 |
|
|
77 |
|
|
242 |
|
|
99 |
|
|||||||||
| Dividend income |
|
5,152 |
|
|
5,433 |
|
|
14,510 |
|
|
10,141 |
|
|||||||||
| Other income |
|
4 |
|
|
- |
|
|
4 |
|
|
- |
|
|||||||||
| Total investment income from controlled affiliate investments |
|
5,291 |
|
|
5,510 |
|
|
14,756 |
|
|
10,240 |
|
|||||||||
| Total investment income |
|
50,598 |
|
|
21,425 |
|
|
90,489 |
|
|
38,884 |
|
|||||||||
| Expenses | |||||||||||||||||||||
| Interest and debt financing expenses |
|
16,619 |
|
|
5,325 |
|
|
27,165 |
|
|
9,614 |
|
|||||||||
| Base management fee |
|
7,983 |
|
|
3,756 |
|
|
14,734 |
|
|
7,004 |
|
|||||||||
| Incentive fee |
|
4,490 |
|
|
911 |
|
|
8,575 |
|
|
2,916 |
|
|||||||||
| Professional fees |
|
275 |
|
|
316 |
|
|
826 |
|
|
840 |
|
|||||||||
| Directors fees |
|
106 |
|
|
67 |
|
|
211 |
|
|
135 |
|
|||||||||
| Other general and administrative expenses |
|
1,587 |
|
|
450 |
|
|
2,430 |
|
|
624 |
|
|||||||||
| Total expenses before fee waivers |
|
31,060 |
|
|
10,825 |
|
|
53,941 |
|
|
21,133 |
|
|||||||||
| Base management fee waiver |
|
(1,617 |
) |
|
(1,878 |
) |
|
(3,867 |
) |
|
(3,502 |
) |
|||||||||
| Incentive fee waiver |
|
- |
|
|
(1,004 |
) |
|
(1,982 |
) |
|
(1,004 |
) |
|||||||||
| Total expenses, net of fee waivers |
|
29,443 |
|
|
7,943 |
|
|
48,092 |
|
|
16,627 |
|
|||||||||
| Net investment income |
|
21,155 |
|
|
13,482 |
|
|
42,397 |
|
|
22,257 |
|
|||||||||
| Net realized and unrealized gains (losses) | |||||||||||||||||||||
| Net realized loss on non-controlled/non-affiliate investments |
|
(571 |
) |
|
(2,104 |
) |
|
(1,421 |
) |
|
(1,846 |
) |
|||||||||
| Net realized gain on controlled affiliate investments |
|
265 |
|
|
- |
|
|
265 |
|
|
- |
|
|||||||||
| Net realized loss on foreign currency transactions |
|
(318 |
) |
|
(544 |
) |
|
(312 |
) |
|
(265 |
) |
|||||||||
| Net realized gain (loss) on forward currency exchange contracts |
|
7,063 |
|
|
444 |
|
|
10,696 |
|
|
(2,873 |
) |
|||||||||
| Net change in unrealized appreciation (depreciation) on foreign currency translation |
|
499 |
|
|
(8 |
) |
|
300 |
|
|
(26 |
) |
|||||||||
| Net change in unrealized appreciation (depreciation) on forward currency exchange contracts |
|
(5,866 |
) |
|
|
6,653 |
|
|
|
(9,149 |
) |
|
|
7,594 |
|
|
|||||
| Net change in unrealized appreciation (depreciation) on non-controlled/non-affiliate investments |
|
275 |
|
|
|
(11,896 |
) |
|
|
14,642 |
|
|
|
(9,320 |
) |
|
|||||
| Net change in unrealized appreciation (depreciation) on controlled affiliate investments |
|
(3,280 |
) |
|
|
140 |
|
|
|
1,116 |
|
|
|
2,005 |
|
|
|||||
| Total net gains (losses) |
|
(1,933 |
) |
|
(7,315 |
) |
|
16,137 |
|
|
(4,731 |
) |
|||||||||
| Net increase in net assets resulting from operations | $ |
19,222 |
|
$ |
6,167 |
|
$ |
58,534 |
|
$ |
17,526 |
|
|||||||||
| Per Common Share Data | |||||||||||||||||||||
| Basic and diluted net investment income per common share | $ |
0.41 |
|
$ |
0.38 |
|
$ |
0.82 |
|
$ |
0.69 |
|
|||||||||
| Basic and diluted increase in net assets resulting from operations per common share | $ |
0.37 |
|
$ |
0.17 |
|
$ |
1.14 |
|
$ |
0.54 |
|
|||||||||
| Basic and diluted weighted average common shares outstanding |
|
51,629,544 |
|
|
35,379,436 |
|
|
51,556,248 |
|
|
32,273,765 |
|
|||||||||
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 June 30, 2019, BCSF has invested approximately $2,899.6 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.
