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Bain Capital Specialty Finance, Inc. Declares Third Quarter 2019 Dividend of $0.41 per Share and Announces June 30, 2019 Financial Results
[August 07, 2019]

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


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

  1. The $0.41 per share dividend is payable on October 30, 2019 to holders of record as of September 30, 2019.
  2. 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.


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