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| 8-K - FORM 8-K - Bain Capital Specialty Finance, Inc. | tm2124120d1_8k.htm |
Exhibit 99.1
Bain Capital Specialty Finance, Inc. Announces June 30, 2021 Financial Results and Declares Third Quarter 2021 Dividend of $0.34 per Share
BOSTON – August 4, 2021 – Bain Capital Specialty Finance, Inc. (NYSE: BCSF, the “Company”, “our” or “we”) today announced its financial results for the second quarter ended June 30, 2021, and that its Board of Directors has declared a dividend of $0.34 per share for the third quarter of 2021.
“We delivered another strong quarter of earnings and NAV growth to our shareholders as our highly diversified portfolio of primarily middle market senior secured loans continues to benefit from the continued strong performance of our underlying portfolio companies,” said Michael Ewald, Chief Executive Officer of BCSF. “Our positive results also reflect an active quarter of origination activity. Looking forward, we remain well-positioned to capitalize on compelling opportunities and to continue to increase shareholder value.”
QUARTERLY HIGHLIGHTS
| · | Net investment income per share was $0.34, as compared to $0.34 for the quarter ended March 31, 2021; |
| · | Net income per share was $0.66, as compared to $0.49 for the quarter ended March 31, 2021; |
| · | Net asset value per share as of June 30, 2021 was $17.01, as compared to $16.69 as of March 31, 2021; |
| · | Gross and net investment fundings were $213.2 million and $(44.5) million, respectively. Ending debt-to-equity (net of cash) ratio was 1.12x, as compared to 1.15x as of March 31, 2021; |
| · | The International Senior Loan Program’s (“ISLP”) investment portfolio at fair value grew by 23% quarter-over-quarter; |
| · | The investment portfolio yield at amortized cost was 7.5%, as compared to 7.6% as of March 31, 2021(1); |
| · | No investments were on non-accrual status as of June 30, 2021; and |
| · | Subsequent to quarter-end, the Company’s Board of Directors declared a dividend of $0.34 per share for the third quarter of 2021 payable to stockholders of record as of September 30, 2021(2). |
SELECTED FINANCIAL HIGHLIGHTS
| ($ in millions, unless otherwise noted) | Q2 2021 | Q1 2021 | ||||||
| Net investment income per share | $ | 0.34 | $ | 0.34 | ||||
| Net investment income | $ | 21.9 | $ | 22.2 | ||||
| Earnings per share | $ | 0.66 | $ | 0.49 | ||||
| Dividends per share declared and payable | $ | 0.34 | $ | 0.34 | ||||
| ($ in millions, unless otherwise noted) | As
of June 30,2021 | As of March 31, 2021 | ||||||
| Total fair value of investments | $ | 2,319.5 | $ | 2,335.7 | ||||
| Total assets | $ | 2,449.3 | $ | 2,491.3 | ||||
| Total net assets | $ | 1,098.3 | $ | 1,077.8 | ||||
| Net asset value per share | $ | 17.01 | $ | 16.69 |
PORTFOLIO AND INVESTMENT ACTIVITY
For the three months ended June 30, 2021, the Company invested $213.2 million in 32 portfolio companies, including $110.9 million in eight new companies and $102.3 million in 24 existing companies. The Company had $257.7 million of principal repayments and sales in the quarter, including $60.0 million of investments that were contributed to ISLP. On a net basis, our investments in the quarter totaled $(44.5) million.
Investment Activity for the Quarter Ended June 30, 2021:
| ($ in millions) | Q2 2021 | Q1 2021 | ||||||
| Investment Fundings | $ | 213.2 | $ | 383.9 | ||||
| Sales and Repayments | $ | 257.7 | $ | 549.4 | ||||
| Net Investment Activity | $ | (44.5 | ) | $ | (165.5 | ) | ||
As of June 30, 2021, the Company’s investment portfolio had a fair value of $2,319.5 million, comprised of investments in 104 portfolio companies operating across 28 different industries.
Investment Portfolio at Fair Value as of June 30, 2021:
| Investment Type | $ in Millions | % of Total | ||||||
| First Lien Senior Secured Loans | $ | 1,881.5 | 81.1 | % | ||||
| Second Lien Senior Secured Loans | 115.2 | 5.0 | ||||||
| Subordinated Debt | 16.5 | 0.7 | ||||||
| Equity Interest | 136.6 | 5.9 | ||||||
| Preferred Equity | 37.0 | 1.6 | ||||||
| Warrants | 0.0 | 0.0 | ||||||
| Investment Vehicles | 132.7 | 5.7 | ||||||
| Subordinated Note in ISLP | 97.4 | 4.2 | ||||||
| Equity Interest in ISLP | 35.3 | 1.5 | ||||||
| Total | $ | 2,319.5 | 100.0 | % | ||||
As of June 30, 2021, the weighted average yield on the investment portfolio at amortized cost and fair value were 7.5% and 7.7%, respectively, as compared to 7.6% and 7.8%, respectively, as of March 31, 2021.(1) 98.3% of the Company’s debt investments at fair value were in floating rate securities.
As of June 30, 2021, no investments were on non-accrual status.
As of June 30, 2021, ISLP’s investment portfolio had an aggregate fair value of $394.5 million, comprised of investments in 21 portfolio companies operating across 12 different industries. The investment portfolio on a fair value basis was comprised of 89.3% first lien senior secured loans and 10.7% second lien senior secured loans. 100% of ISLP’s debt investments at fair value were in floating rate securities.
RESULTS OF OPERATIONS
For the three months ended June 30, 2021 and March 31, 2021, total investment income was $46.5 million and $49.8 million, respectively. The decrease in investment income was primarily due to a decrease in other income and prepayment related income.
Total expenses (before taxes), net of fee waivers for the three months ended June 30, 2021 and March 31, 2021 were $24.6 million and $27.7 million, respectively. The decrease was primarily driven by an increase in incentive fee waivers by the Advisor, partially offset by higher interest and debt financing expenses.
Net investment income for the three months ended June 30, 2021 and March 31, 2021 was $21.9 million or $0.34 per share and $22.2 million or $0.34 per share, respectively.
During the three months ended June 30, 2021, the Company had net realized and unrealized gains of $20.5 million.
Net increase in net assets resulting from operations for the three months ended June 30, 2021 was $42.4 million, or $0.66 per share.
CAPITAL AND LIQUIDITY
As of June 30, 2021, the Company had total principal debt outstanding of $1,317.7 million, including $103.2 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, $398.8 million outstanding of the debt issued through BCC Middle Market CLO 2019-1 LLC, $150.0 million outstanding in the Company’s senior unsecured notes due 2023 and $300.0 million outstanding in the Company’s senior unsecured notes due 2026.
For the three months ended June 30, 2021, the weighted average interest rate on debt outstanding was 3.2%, as compared to 3.2% for the three months ended March 31, 2021.
As of June 30, 2021, the Company had cash and cash equivalents (including foreign cash) of $31.6 million, $346.8 million of capacity under its JPM Credit Facility and $50.0 million of capacity under the Revolving Advisor Loan. As of June 30, 2021, the Company had $212.9 million of undrawn investment commitments.
As of June 30, 2021, the Company’s debt-to-equity and debt-to-equity (net of cash) ratios were 1.20x and 1.12x, respectively, as compared to 1.26x and 1.15x, respectively, as of March 31, 2021.
As of June 30, 2021, the Company was in compliance with all terms under its secured credit facilities.
Subsequent to quarter-end, the Company repurchased $37.5 million of its senior unsecured notes due 2023 at a total cost of $39.5 million.
Endnotes
| (1) | 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. The weighted average yield does not represent the total return to our stockholders. |
| (2) | The third quarter dividend is payable on October 29, 2021 to holders of record as of September 30, 2021. |
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 August 5, 2021. Please visit BCSF’s webcast link located on the Events & Presentations page of the Investor Resources section of BCSF’s website at 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: 1-888-254-3590 |
| · | International: 1-323-994-2082 |
| · | Conference ID: 8880299 |
All participants will need to reference “Bain Capital Specialty Finance - Second Quarter Ended June 30, 2021 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 August 12, 2021 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: 8880299# |
Bain Capital Specialty Finance, Inc.
Consolidated Statements of Assets and Liabilities
(in thousands, except share and per share data)
(Unaudited)
| As of | As of | |||||||
| June 30, 2021 | December 31, 2020 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Investments at fair value: | ||||||||
| Non-controlled/non-affiliate investments (amortized cost of $1,967,244 and $2,281,809, respectively) | $ | 1,948,098 | $ | 2,261,461 | ||||
| Non-controlled/affiliate investment (amortized cost of $97,567 and $93,089, respectively) | 102,800 | 92,915 | ||||||
| Controlled affiliate investment (amortized cost of $280,122 and $147,841, respectively) | 268,642 | 130,112 | ||||||
| Cash and cash equivalents | 29,869 | 53,704 | ||||||
| Foreign cash (cost of $1,366 and $976, respectively) | 1,707 | 972 | ||||||
| Restricted cash and cash equivalents | 57,144 | 27,026 | ||||||
| Collateral on forward currency exchange contracts | 3,754 | 4,934 | ||||||
| Deferred financing costs | 930 | 3,131 | ||||||
| Interest receivable on investments | 20,118 | 15,720 | ||||||
| Receivable for sales and paydowns of investments | 3,853 | 5,928 | ||||||
| Prepaid Insurance | 558 | - | ||||||
| Dividend receivable | 11,818 | 7,589 | ||||||
| Total Assets | $ | 2,449,291 | $ | 2,603,492 | ||||
| Liabilities | ||||||||
| Debt (net of unamortized debt issuance costs of $11,654 and $7,147, respectively) | $ | 1,306,029 | $ | 1,458,360 | ||||
| Interest payable | 8,855 | 8,223 | ||||||
| Payable for investments purchased | - | 10,991 | ||||||
| Unrealized depreciation on forward currency exchange contracts | 2,010 | 22,614 | ||||||
| Base management fee payable | 5,899 | 6,289 | ||||||
| Incentive fee payable | 3,523 | 3,799 | ||||||
| Accounts payable and accrued expenses | 2,736 | 3,261 | ||||||
| Distributions payable | 21,951 | 21,951 | ||||||
| Total Liabilities | 1,351,003 | 1,535,488 | ||||||
| Commitments and Contingencies | ||||||||
| Net Assets | ||||||||
| Preferred stock, $0.001 par value per share, 10,000,000,000 shares authorized, none issued and outstanding as of June 30, 2021 and December 31, 2020, respectively | $ | - | $ | - | ||||
| 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 June 30, 2021 and December 31, 2020, respectively | 65 | 65 | ||||||
| Paid in capital in excess of par value | 1,166,453 | 1,166,453 | ||||||
| Total distributable earnings (loss) | (68,230 | ) | (98,514 | ) | ||||
| Total Net Assets | 1,098,288 | 1,068,004 | ||||||
| Total Liabilities and Total Net assets | $ | 2,449,291 | $ | 2,603,492 | ||||
| Net asset value per share | $ | 17.01 | $ | 16.54 | ||||
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 Three Months Ended June 30, | For the Six Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||
| Income | |||||||||||||||||
| Investment income from non-controlled/non-affiliate investments: | |||||||||||||||||
| Interest from investments | $ | 36,706 | $ | 44,147 | $ | 76,619 | $ | 92,018 | |||||||||
| Dividend income | - | 681 | - | 714 | |||||||||||||
| PIK income | 1,082 | - | 2,062 | - | |||||||||||||
| Other income | 875 | 59 | 4,331 | 499 | |||||||||||||
| Total investment income from non-controlled/non-affiliate investments | 38,663 | 44,887 | 83,012 | 93,231 | |||||||||||||
| Investment income from non-controlled/affiliate investments: | |||||||||||||||||
| Interest from investments | 477 | - | 900 | - | |||||||||||||
| PIK income | 1,366 | - | 2,752 | - | |||||||||||||
| Total investment income from non-controlled/affiliate investments | 1,843 | - | 3,652 | - | |||||||||||||
| Investment income from controlled affiliate investments: | |||||||||||||||||
| Interest from investments | 2,572 | 738 | 4,209 | 1,510 | |||||||||||||
| Dividend income | 2,929 | 2,246 | 4,964 | 4,626 | |||||||||||||
| PIK income | 483 | - | 483 | - | |||||||||||||
| Total investment income from controlled affiliate investments | 5,984 | 2,984 | 9,656 | 6,136 | |||||||||||||
| Total investment income | 46,490 | 47,871 | 96,320 | 99,367 | |||||||||||||
| Expenses | |||||||||||||||||
| Interest and debt financing expenses | 13,017 | 17,312 | 24,850 | 35,188 | |||||||||||||
| Base management fee | 8,623 | 8,639 | 17,320 | 17,365 | |||||||||||||
| Incentive fee | 8,042 | - | 14,771 | - | |||||||||||||
| Professional fees | 714 | 643 | 1,673 | 1,613 | |||||||||||||
| Directors fees | 171 | 171 | 343 | 346 | |||||||||||||
| Other general and administrative expenses | 1,241 | 1,084 | 2,629 | 2,333 | |||||||||||||
| Total expenses before fee waivers | 31,808 | 27,849 | 61,586 | 56,845 | |||||||||||||
| Base management fee waiver | (2,723 | ) | - | (4,837 | ) | - | |||||||||||
| Incentive fee waiver | (4,519 | ) | - | (4,519 | ) | - | |||||||||||
| Total expenses, net of fee waivers | 24,566 | 27,849 | 52,230 | 56,845 | |||||||||||||
| Net investment income | 21,924 | 20,022 | 44,090 | 42,522 | |||||||||||||
| Net realized and unrealized gains (losses) | |||||||||||||||||
| Net realized gain (loss) on non-controlled/non-affiliate investments | 4,845 | 52 | 23,258 | (10,404 | ) | ||||||||||||
| Net realized loss on controlled affiliate investments | - | - | (3,237 | ) | - | ||||||||||||
| Net realized gain (loss) on foreign currency transactions | 1,005 | 66 | (2,021 | ) | (349 | ) | |||||||||||
| Net realized gain (loss) on forward currency exchange contracts | (18,396 | ) | 5,097 | (21,688 | ) | 6,602 | |||||||||||
| Net change in unrealized appreciation (depreciation) on foreign currency translation | (65 | ) | 104 | 322 | (105 | ) | |||||||||||
| Net change in unrealized appreciation (depreciation) on forward currency exchange contracts | 16,028 | (9,865 | ) | 20,604 | 3,256 | ||||||||||||
| Net change in unrealized appreciation (depreciation) on non-controlled/non-affiliate investments | 4,426 | 10,418 | 1,202 | (118,969 | ) | ||||||||||||
| Net change in unrealized appreciation on non-controlled/affiliate investments | 5,780 | 3,008 | 5,407 | 3,008 | |||||||||||||
| Net change in unrealized appreciation (depreciation) on controlled affiliate investments | 6,886 | (7,130 | ) | 6,249 | (8,236 | ) | |||||||||||
| Total net gains (losses) | 20,509 | 1,750 | 30,096 | (125,197 | ) | ||||||||||||
| Net increase (decrease) in net assets resulting from operations | $ | 42,433 | $ | 21,772 | # | $ | 74,186 | $ | (82,675 | ) | |||||||
| Basic and diluted net investment income per common share | $ | 0.34 | $ | 0.37 | $ | 0.68 | $ | 0.81 | |||||||||
| Basic and diluted increase (decrease) in net assets resulting from operations per common share | $ | 0.66 | $ | 0.40 | $ | 1.15 | $ | (1.57 | ) | ||||||||
| Basic and diluted weighted average common shares outstanding | 64,562,265 | 53,778,239 | 64,562,265 | 52,714,025 | |||||||||||||
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 June 30, 2021, BCSF has invested approximately $4.4 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.
Investor Contact:
Katherine Schneider
Tel. +1 212 803 9613
investors@baincapitalbdc.com
Media Contact:
Charlyn Lusk
Tel. +1 646 502 3549
clusk@stantonprm.com