Attached files
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| 8-K - FORM 8-K - Bain Capital Specialty Finance, Inc. | tm2031118-3_8k.htm |
Exhibit 99.1
Bain Capital Specialty Finance, Inc. Declares First Quarter 2020 Dividend of $0.41 per Share and Announces December 31, 2019 Financial Results
BOSTON — February 26, 2020 — 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 first quarter of 2020 and announced its financial results for the fourth quarter and year ended December 31, 2019.
“Our positive results reflect an active quarter which included originating $341.4 million of new investments in 36 portfolio companies across 18 different industries,” said Michael Ewald, President and Chief Executive Officer of BCSF. “We are also pleased to have recently closed on an amendment and extension of our credit facilities which is consistent with our focus on identifying attractive opportunities to increase shareholder value while continuing to grow our portfolio in a disciplined manner where we have strong lender controls.”
QUARTERLY HIGHLIGHTS
| · | The Company announced a dividend of $0.41 per share for the first quarter of 2020 payable to shareholders of record as of March 31, 2020 (1). |
| · | Net investment income for the quarter ended December 31, 2019 was $21.3 million or $0.41 per share, as compared to $21.2 million or $0.41 per share for the quarter ended September 30, 2019. |
| · | Net income for the quarter ended December 31, 2019 was $21.4 million or $0.41 per share, as compared to $18.2 million or $0.35 per share for the quarter ended September 30, 2019. |
| · | Net asset value per share was $19.72 as of December 31, 2019, an increase from $19.71 as of September 30, 2019. |
| · | On January 8, 2020, the Company entered into an amended and restated credit agreement (the “Amendment”) of its BCSF Revolving Credit Facility with Goldman Sachs Bank USA, as Sole Lead Arranger, Syndication Agent and Administrative Agent, and U.S. Bank National Association as Collateral Administrator, Collateral Agent and Collateral Custodian (collectively, the “Credit Facility Parties”), which amended and restated the terms of the Existing Credit Facility. The Amendment amends the Existing Credit Facility to, among other things, modify various financial covenants, including removing a liquidity covenant and adding a net asset value covenant with respect to the Company, as sponsor. |
| · | On January 29, 2020, the Company entered into an amended and restated loan and security agreement (the “JPM Credit Agreement” or the “JPM Credit Facility”) as Borrower, with JPMorgan Chase Bank, National Association, as Administrative Agent, and Wells Fargo Bank, National Association as Collateral Administrator, Collateral Agent, Securities Intermediary and Bank. The Amended and Restated Loan and Security Agreement amends the Existing Loan and Security Agreement to, among other things, (1) decrease the financing limit under the agreement from $666.6 million to $500.0 million; (2) decrease the minimum facility amount from $466.6 million to $300.0 million period from January 29, 2020 to July 29, 2020 (the minimum facility amount will increase to $350.0 million after July 29, 2020 until the end of the reinvestment period); (3) decrease the interest rate on financing from 2.75% per annum over the applicable London Interbank Offered Rate (“LIBOR”) to 2.375% per annum over the applicable LIBOR; (4) extend the scheduled termination date of the agreement from November 29, 2022 to January 29, 2025; and (5) increase the advance rate from 62.5% to 63.5%. |
Selected Financial Highlights
| (dollar amounts in thousands) | Q4 2019 | Q3 2019 | ||||||
| Net investment income per share | $ | 0.41 | $ | 0.41 | ||||
| Net investment income | $ | 21,292 | $ | 21,175 | ||||
| Earnings per share | $ | 0.41 | $ | 0.35 | ||||
| Dividends declared and payable | $ | 0.41 | $ | 0.41 | ||||
| As of December 31, | As of September 30, | |||||||
| (dollar amounts in thousands) | 2019 | 2019 | ||||||
| Total fair value of investments | $ | 2,527,055 | $ | 2,506,734 | ||||
| Total assets | $ | 2,645,554 | $ | 2,727,462 | ||||
| Total net assets | $ | 1,018,400 | $ | 1,018,225 | ||||
| Net asset value per share | $ | 19.72 | $ | 19.71 | ||||
PORTFOLIO AND INVESTMENT ACTIVITY
| · | For the three months ended December 31, 2019, BCSF invested $341.4 million in 36 portfolio companies across 18 different industries. BCSF had $333.5 million of principal repayments and sales in the quarter. On a net basis, our investments in the quarter totaled $7.9 million. |
| (dollar amounts in millions) | Q4 2019 | Q3 2019 | ||||||
| Investment Fundings | $ | 341.4 | $ | 274.8 | ||||
| Sales and Repayments | 333.5 | 184.2 | ||||||
| Net Investment Activity | 7.9 | 90.6 | ||||||
| · | As of December 31, 2019, the Company’s investment portfolio had a fair value of $2,527.1 million. |
| · | As of December 31, 2019 the investment portfolio based on fair value consisted of: |
| Investment Portfolio at FV | $ in Millions | % of Total | ||||||
| First lien senior secured | $ | 2,165.9 | 85.7 | % | ||||
| First lien last out | 29.3 | 1.2 | ||||||
| Second lien senior secured | 175.7 | 7.0 | ||||||
| Subordinated debt | 15.0 | 0.5 | ||||||
| Corporate bonds | 17.5 | 0.7 | ||||||
| Equity interest | 99.3 | 3.9 | ||||||
| Preferred equity | 24.3 | 1.0 | ||||||
| Warrants | 0.1 | 0.0 | ||||||
| Total | $ | 2,527.1 | 100.0 | % | ||||
| · | As of December 31, 2019, the weighted average yield on the investment portfolio at amortized cost and fair value was 7.8% (2) and 99.0% of total investments at fair value were in floating rate securities. |
| · | As of December 31, 2019, there was one portfolio company on non-accrual status. |
FOURTH QUARTER 2019 OPERATING RESULTS
| · | For the three months ended December 31, 2019 and September 30, 2019, total investment income was $54.8 million and $52.7 million, respectively. |
| · | Total expenses before taxes for the three months ended December 31, 2019 and September 30, 2019, were $33.5 million and $31.5 million, respectively. |
| · | Net investment income after taxes for the three months ended December 31, 2019 and September 30, 2019 was $21.3 or $0.41 per share and $21.2 million or $0.41 per share, respectively. |
| · | Net increase in net assets resulting from operations for the three months ended December 31, 2019 was $21.3 million, or $0.41 per share. |
CAPITAL and LIQUIDITY
| · | At December 31, 2019, BCSF had cash and cash equivalents and foreign cash of $37.3 million. |
| · | BCSF had total principal debt outstanding of $1,579.2 million including $268.0 million outstanding in the Company’s revolving credit facility with Goldman Sachs Bank USA (the “BCSF Revolving Credit Facility”), $546.7 million outstanding in the Company’s credit facility with JPMorgan Chase Bank, National Association (the “JPM Credit Facility”), $365.7 million outstanding of the notes issued through BCC Middle Market CLO 2018-1 LLC, and $398.8 million outstanding of the 2019-1 Debt. |
| · | Undrawn capacity in our BCSF Revolving Credit Facility totaled $232.0 million, and undrawn capacity in our JPM Credit Facility totaled $119.8 million as of December 31, 2019. |
| · | For the three months ended December 31, 2019, the weighted average interest rate on debt outstanding was 4.5%. |
CONFERENCE CALL INFORMATION
A conference call to discuss the Company’s financial results will be held live at 8:30 a.m. Eastern Time on February 27, 2020. 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: 13697794 |
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 March 5, 2020 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: 13697794 |
ENDNOTES
| (1) | The $0.41 per share dividend is payable on April 30, 2020 to holders of record as of March 31, 2020. |
| (2) | Information through December 31, 2019. Weighted average yields are computed as (a) the annual stated interest rate or yield earned on the relevant accruing debt and other income producing securities, divided by (b) the total relevant investments at amortized cost or at fair value, as applicable. |
Bain Capital Specialty Finance, Inc.
Consolidated Statements of Assets and Liabilities
(in thousands, except share and per share data)
| As of | As of | |||||||
| December 31, 2019 | December 31, 2018 | |||||||
| Assets | ||||||||
| Investments at fair value: | ||||||||
| Non-controlled/non-affiliate investments (amortized cost of $2,416,854 and $1,449,749, respectively) | $ | 2,403,250 | $ | 1,422,837 | ||||
| Non-controlled/affiliate investment (amortized cost of $6,720 and $6,720, respectively) | 6,720 | 6,720 | ||||||
| Controlled affiliate investment (amortized cost of $113,689 and $296,648, respectively) | 117,085 | 298,249 | ||||||
| Cash and cash equivalents | 36,531 | 14,693 | ||||||
| Foreign cash (cost of $854 and $589, respectively) | 810 | 591 | ||||||
| Restricted cash and cash equivalents | 31,505 | 17,987 | ||||||
| Collateral on forward currency exchange contracts | - | 4 | ||||||
| Deferred financing costs | 3,182 | 4,018 | ||||||
| Interest receivable on investments | 22,482 | 6,249 | ||||||
| Prepaid insurance | - | 1 | ||||||
| Receivable for sales and paydowns of investments | 21,994 | 1,634 | ||||||
| Unrealized appreciation on forward currency exchange contracts | 1,034 | 9,322 | ||||||
| Dividend receivable | 961 | 8,709 | ||||||
| Total Assets | $ | 2,645,554 | $ | 1,791,014 | ||||
| Liabilities | ||||||||
| Debt (net of unamortized debt issuance costs of $4,584 and $2,040, respectively) | $ | 1,574,635 | $ | 634,925 | ||||
| Offering costs payable | - | 1,820 | ||||||
Interest payable | 15,534 | 4,835 | ||||||
| Payable for investments purchased | 293 | 119,166 | ||||||
| Collateral payable on forward currency exchange contracts | 331 | - | ||||||
| Unrealized depreciation on forward currency exchange contracts | 1,252 | - | ||||||
| Base management fee payable | 7,265 | 2,950 | ||||||
| Incentive fee payable | 4,513 | 3,300 | ||||||
| Accounts payable and accrued expenses | 2,155 | 1,281 | ||||||
| Distributions payable | 21,176 | 21,108 | ||||||
| Total Liabilities | 1,627,154 | 789,385 | ||||||
| Commitments and Contingencies (See Note 11) | ||||||||
| Net Assets | ||||||||
Preferred stock, $0.001 par value per share, 10,000,000,000 shares authorized, none issued and outstanding as of December 31, 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 December 31, 2019 and December 31, 2018, respectively | 52 | 51 | ||||||
| Paid in capital in excess of par value | 1,038,343 | 1,034,255 | ||||||
| Total distributable earnings (loss) | (19,995 | ) | (32,677 | ) | ||||
| Total Net Assets | 1,018,400 | 1,001,629 | ||||||
| Total Liabilities and Total Net assets | $ | 2,645,554 | $ | 1,791,014 | ||||
| Net asset value per share | $ | 19.72 | $ | 19.46 | ||||
Bain Capital Specialty Finance, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share data)
| For the Year Ended December | For the Year Ended December | For the Year Ended December | ||||||||||
| 2019 | 2018 | 2017 | ||||||||||
| Income | ||||||||||||
| Investment income from non-controlled/non-affiliate investments: | ||||||||||||
| Interest from investments | $ | 178,586 | $ | 73,049 | $ | 24,380 | ||||||
| Dividend income | 62 | - | - | |||||||||
| Other income | 805 | 545 | 129 | |||||||||
| Total investment income from non-controlled/non-affiliate investments | 179,453 | 73,594 | 24,509 | |||||||||
| Investment income from controlled affiliate investments: | ||||||||||||
| Interest from investments | 1,809 | 314 | 55 | |||||||||
| Dividend income | 16,679 | 25,386 | - | |||||||||
| Other income | 4 | - | 41 | |||||||||
| Total investment income from controlled affiliate investments | 18,492 | 25,700 | 96 | |||||||||
| Total investment income | 197,945 | 99,294 | 24,605 | |||||||||
| Expenses | ||||||||||||
| Interest and debt financing expenses | 66,330 | 24,011 | 3,615 | |||||||||
| Amortization of deferred offering costs | - | - | 330 | |||||||||
| Base management fee | 32,702 | 17,544 | 5,898 | |||||||||
| Incentive fee | 17,418 | 8,670 | 764 | |||||||||
| Professional fees | 2,297 | 2,639 | 1,777 | |||||||||
| Directors fees | 546 | 278 | 275 | |||||||||
| Other general and administrative expenses | 4,772 | 902 | 686 | |||||||||
| Total expenses before fee waivers | 124,065 | 54,044 | 13,345 | |||||||||
| Base management fee waiver | (8,242 | ) | (8,772 | ) | (2,949 | ) | ||||||
| Incentive fee waiver | (2,745 | ) | (1,908 | ) | - | |||||||
| Total expenses, net of fee waivers | 113,078 | 43,364 | 10,396 | |||||||||
| Net investment income before taxes | 84,867 | 55,930 | 14,209 | |||||||||
| Excise tax expense | - | - | 5 | |||||||||
| Net investment income | 84,867 | 55,930 | 14,204 | |||||||||
| Net realized and unrealized gains (losses) | ||||||||||||
| Net realized gain (loss) on non-controlled/non-affiliate investments | (3,487 | ) | (3,345 | ) | 55 | |||||||
| Net realized gain on controlled affiliate investments | 265 | - | - | |||||||||
| Net realized gain (loss) on foreign currency transactions | (36 | ) | (489 | ) | 115 | |||||||
| Net realized gain (loss) on forward currency exchange contracts | 11,043 | (2,651 | ) | (222 | ) | |||||||
| Net change in unrealized appreciation (depreciation) on foreign currency translation | (130 | ) | - | 28 | ||||||||
| Net change in unrealized appreciation (depreciation) on forward currency exchange contracts | (9,540 | ) | 12,826 | (3,505 | ) | |||||||
| Net change in unrealized appreciation (depreciation) on non-controlled/non-affiliate investments | 13,308 | (36,334 | ) | 7,732 | ||||||||
| Net change in unrealized appreciation on controlled affiliate investments | 1,795 | 708 | 893 | |||||||||
| Total net gains (losses) | 13,218 | (29,285 | ) | 5,096 | ||||||||
| Net increase in net assets resulting from operations | $ | 98,085 | $ | 26,645 | $ | 19,300 | ||||||
| Per Common Share Data | ||||||||||||
| Basic and diluted net investment income per common share | $ | 1.64 | $ | 1.45 | $ | 0.73 | ||||||
| Basic and diluted increase in net assets resulting from operations per common share | $ | 1.90 | $ | 0.69 | $ | 0.99 | ||||||
| Basic and diluted weighted average common shares outstanding | 51,603,415 | 38,567,001 | 19,548,037 | |||||||||
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 December 31, 2019, BCSF has invested approximately $3,546.4 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.
Investor Contact:
investors@baincapitalbdc.com
Media Contact:
Charlyn Lusk
Tel. +1 646 502 3549
clusk@stantonprm.com