Bain Capital Specialty Finance, Inc. Declares Second Quarter 2019 Dividend of $0.41 per Share and Announces March 31, 2019 Financial Results

BOSTON–(BUSINESS WIRE)–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 second quarter of 2019 and announced
its financial results for the first quarter ended March 31, 2019.

We’re pleased with the company’s results in the first quarter, driven
by the performance of our underlying portfolio companies, which reflects
our rigorous underwriting approach and the deep experience of our
broader investment platform,” said Michael Ewald, Chief Executive
Officer of the Company. “At the same time, we also continue to focus on
structuring our liabilities as efficiently as possible to help drive the
future success of the company.”

QUARTERLY HIGHLIGHTS

  • The Company announced a dividend of $0.41 per share for the second
    quarter of 2019 payable to shareholders of record as of June 28, 2019 (1).
  • Net investment income for the quarter ended March 31, 2019 was $21.2
    million or $0.41 per share, as compared to $19.8 million or $0.41 per
    share for the quarter ended December 31, 2018.
  • Net income for the quarter ended March 31, 2019 was $39.3 million or
    $0.76 per share, as compared to ($9.9) million or ($0.21) per share
    for the quarter ended December 31, 2018.
  • Net asset value per share was $19.81 as of March 31, 2019, an increase
    of 1.8% from $19.46 as of December 31, 2018.
  • As announced on February 19, 2019, the Company entered into a new
    $350.0 million credit facility with Citibank. Borrowings will bear
    interest at rate to three-month LIBOR plus 1.60% during the one year
    investment period. The interest rate will reset to LIBOR plus 2.60%
    after the reinvestment period through maturity date, February 19, 2022.
  • As announced on May 6, 2019, the Company and Antares Capital LP
    (“Antares”), its joint venture partner, have restructured the ABC
    Complete Financing Solution LLC (“ABCS”). The Company formed BCSF
    Complete Financing Solution LLC (“BCSF Unitranche”), which received
    44.737%, its proportionate share, of all assets previously held by
    ABCS. In addition as part of the restructure, the Company entered into
    $666.6 million credit agreement with JP Morgan Chase Bank. The
    maturity date of the facility is November 29, 2022.
  • On May 7, 2019, the Company’s Board of Directors authorized the
    Company to repurchase up to $50 million of its outstanding common
    stock in accordance with safe harbor rules under the Securities
    Exchange Act of 1934. Any such repurchases will depend upon market
    conditions and there is no guarantee that the Company will repurchase
    any particular number of shares or any shares at all.

Selected Financial Highlights

(dollar amounts in thousands)       Q1 2019     Q4 2018
Net investment income per share $ 0.41 $ 0.41
Net investment income $ 21,243 $ 19,774
Earnings per share $ 0.76 ($0.21 )
Dividends declared and payable $ 0.41 $ 0.41
 
      As of March 31,     As of December 31,
(dollar amounts in thousands) 2019 2018
Total fair value of investments $ 1,829,940 $ 1,727,806
Total assets 1,995,944 1,791,014
Total net assets 1,019,834 1,001,629
Net asset value per share $ 19.81 $ 19.46
 

PORTFOLIO AND INVESTMENT ACTIVITY

  • For the three months ended March 31, 2019, BCSF invested $273.9
    million in 45 portfolio companies across 21 different industries,
    including investments in the Antares Bain Capital Complete Financing
    Solution LLC (“ABCS JV”). BCSF had $190.6 million of principal
    repayments and sales in the quarter. On a net basis, our investments
    in the quarter totaled $83.3 million.
(dollar amounts in millions)       Q1 2019     Q4 2018
Investment Fundings $ 273.9 $ 451.8
Sales and Repayments 190.6 42.7
Net Investment Activity 83.3 409.1
 
  • As of March 31, 2019, the Company’s investment portfolio had a fair
    value of $1,829.9 million, which included the ABCS JV fair value of
    $335.4 million.
  • As of March 31, 2019 the investment portfolio based on fair value
    consisted of:
         
Investment Portfolio at FV $ in Millions % of Total
First lien senior secured $ 1,131.8 61.9 %
First lien last out 28.4 1.6
Second lien senior secured 232.6 12.7
Subordinated debt 39.6 2.2
Corporate bonds 27.8 1.5
Investment vehicle 335.4 18.3
Equity interest 26.5 1.4
Preferred equity 7.7 0.4
Warrants   0.1      
Total $ 1,829.9 100.0 %
 
  • As of March 31, 2019, the weighted average gross yield on the
    investment portfolio was 8.8% (2) and 96.1% of total
    investments at fair value were in floating rate securities.
  • As of March 31, 2019, there were no investments on non-accrual status.

FIRST QUARTER 2019 OPERATING RESULTS

  • For the three months ended March 31, 2019 and December 31, 2018, total
    investment income was $39.9 million and $33.7 million, respectively.
  • Total expenses before taxes for the three months ended March 31, 2019
    and December 31, 2018, were $18.6 million and $14.0 million,
    respectively.
  • Net investment income after taxes for the three months ended March 31,
    2019 was $21.2 million or $0.41 per share, compared with $19.8 million
    or $0.41 per share for the three months ended December 31, 2018.
  • During the three months ended March 31, 2019, the Company had net
    realized and unrealized gains of $18.1 million, compared to net
    realized and unrealized losses of $29.6 million during the three
    months ended December 31, 2018.
  • Net increase in net assets resulting from operations for the three
    months ended March 31, 2019 was $39.3 million, or $0.76 per share.

CAPITAL and LIQUIDITY

  • At March 31, 2019, BCSF had cash and cash equivalents and foreign cash
    of $80.6 million.
  • BCSF had total principal debt outstanding of $916.9 million including
    $358.3 million outstanding in the BCSF Revolving Credit Facility with
    Goldman Sachs, $192.9 million outstanding in the Citi Revolving Credit
    Facility and $363.7 million outstanding of the 2018-1 Notes.
  • Undrawn capacity in our BCSF Revolving Credit Facility totaled $141.7
    million and undrawn capacity in our Citi Revolving Credit Facility
    totaled $157.1 million as of March 31, 2019.
  • For the three months ended March 31, 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 May 9, 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: 13689623

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 May 16, 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: 13689623
ENDNOTES
 
(1) The $0.41 per share dividend is payable on July 29, 2019 to holders
of record as of June 28, 2019.
(2) Information through March 31, 2019. Computed for debt investments
based upon the annual interest rate as of March 31, 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 March 31, 2019. Weighted average yield for the
Company’s Equity Interest in ABCS (Antares Bain Capital Complete
Financing Solution LLC) represents the weighted average levered
yield of the Company’s proportionate investment in ABCS at March 31,
2019. Weighted average yield for Equity Interest in ABCS is computed
based upon the sum of (i) the weighted average of the interest rate
of investments held by ABCS less (ii) the weighted average interest
rate of the ABCS Facility, divided by the Company’s par amount in
ABCS. Total weighted average gross yield is the weighted average of
the yields of the Company’s debt investments and its Equity Interest
in ABCS. The weighted average gross yield does not represent the
total return to our stockholders. Gross yield does not reflect fees
and expenses of the Company and does not represent the return a
stockholder would receive. If fees and expenses were included in the
calculation, the yield would be lower.
 
         
Bain Capital Specialty Finance, Inc.
   
Consolidated Statements of Assets and Liabilities
 
As of As of
March 31, 2019 December 31, 2018
(Unaudited)
Assets
Investments at fair value:
Non-controlled/non-affiliate investments (amortized cost of
$1,481,673,496 and $1,449,749,445, respectively)
$ 1,469,128,402 $ 1,422,837,431
Controlled affiliate investment (amortized cost of $348,095,945 and
$296,647,530, respectively)
354,091,548 298,248,240
Non-controlled/affiliate investment (amortized cost of $6,720,000
and $6,720,000, respectively)
6,720,000 6,720,000
Cash and cash equivalents 79,140,512 14,692,877
Foreign cash (cost of $1,657,573 and $588,622, respectively) 1,478,627 591,113
Restricted Cash 14,009,400 17,986,541
Collateral on forward currency exchange contracts 403,790 3,790
Deferred financing costs 3,872,902 4,017,802
Interest receivable on investments 7,973,786 6,250,621
Prepaid insurance 1,517
Receivable for sales and paydowns of investments 40,235,589 1,633,739
Other assets 3,701,001
Unrealized appreciation on forward currency exchange contracts 6,038,508 9,321,758
Dividend receivable   9,150,109     8,708,670  
Total Assets $ 1,995,944,174   $ 1,791,014,099  
 
Liabilities
Revolving credit facilities $ 551,194,090 $ 271,264,902
2018-1 Notes (net of unamortized debt issuance costs of $1,997,725
and $2,040,320, respectively)
363,702,275 363,659,680
Offering costs payable 1,730,959 1,819,892
Interest payable 5,095,949 4,835,339
Payable for investments purchased 24,370,068 119,165,882
Base management fee payable 4,500,941 2,950,412
Incentive fee payable 2,103,341 3,300,398
Accounts payable and accrued expenses 2,304,869 1,280,770
Distributions payable   21,107,677     21,107,677  
Total Liabilities   976,110,169     789,384,952  
 
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 March 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,

51,482,137 and 51,482,137 shares issued and outstanding as of
March 31, 2019 and December 31, 2018, respectively

51,482 51,482
Paid in capital in excess of par value 1,034,255,352 1,034,255,352
Total distributable earnings (loss)   (14,472,829 )   (32,677,687 )
Total Net Assets   1,019,834,005     1,001,629,147  
Total Liabilities and Total Net assets $ 1,995,944,174   $ 1,791,014,099  
 
Net asset value per share $ 19.81   $ 19.46  
 
Bain Capital Specialty Finance, Inc.
           
Consolidated Statements of Operations
(Unaudited)
 

For the Three Months Ended
March 31,

For the Three Months Ended
March 31,

  2019     2018  
Income
Investment income from non-controlled/non-affiliate investments:
Interest from investments $ 30,387,622 $ 12,615,297
Dividend income 15,533
Other income   21,731     114,004  
Total investment income from non-controlled/non-affiliate investments 30,424,886 12,729,301
Investment income from controlled affiliate investments:
Interest from investments 107,293 21,288
Dividend income   9,357,644     4,707,978  
Total investment income from controlled affiliate investments   9,464,937     4,729,266  
Total investment income   39,889,823     17,458,567  
 
Expenses
Interest and debt financing expenses $ 10,545,687 $ 4,288,897
Base management fee 6,751,412 3,247,562
Incentive fee 4,085,628 2,004,548
Professional fees 550,432 523,677
Directors fees 105,140 68,250
Other general and administrative expenses   841,177     174,692  
Total expenses before fee waivers 22,879,476 10,307,626
Base management fee waiver (2,250,471 ) (1,623,781 )
Incentive fee waiver   (1,982,287 )    
Total expenses, net of fee waivers   18,646,718     8,683,845  
Net investment income before taxes   21,243,105     8,774,722  
Excise tax expense       309  
Net investment income after taxes   21,243,105     8,774,413  
 
 
Net realized and unrealized gains (losses)
Net realized gain (loss) on non-controlled/non-affiliate investments (849,933 ) 257,702
Net realized gain on foreign currency transactions 5,885 279,145
Net realized gain (loss) on forward currency exchange contracts 3,633,076 (3,317,385 )
Net change in unrealized depreciation on foreign currency translation (198,161 ) (17,344 )
Net change in unrealized appreciation (depreciation) on forward
currency exchange contracts
(3,283,250 ) 941,491
Net change in unrealized appreciation on
non-controlled/non-affiliate investments
14,366,920 2,575,854
Net change in unrealized appreciation on controlled affiliate
investments
  4,394,893     1,865,229  
Total net gains   18,069,430     2,584,692  
 
Net increase in net assets resulting from operations $ 39,312,535   $ 11,359,105  
 
Per Common Share Data
Basic and diluted net investment income per common share $ 0.41 $ 0.30
Basic and diluted increase in net assets resulting from operations
per common share
$ 0.76 $ 0.39
Basic and diluted weighted average common shares outstanding 51,482,137 29,133,586
 

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 March 31, 2019, BCSF has
invested approximately $2,463.5 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.

Contacts

Investors:
investors@baincapitalbdc.com

Media:
Charlyn
Lusk
Tel. +1 646 502 3549
clusk@stantonprm.com

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