Bain Capital Specialty Finance, Inc. Declares First Quarter 2019 Dividend of $0.41 Per Share and Announces December 31, 2018 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 first quarter of 2019 and announced
its financial results for the fourth quarter and year ended December 31,
2018.

We are pleased with the results our well-diversified portfolio
generated during our first quarter as a publicly traded company,” said
Michael Ewald, Chief Executive Officer of Bain Capital Specialty
Finance, Inc. “As evidenced by our recent closing of a $350 million
credit agreement, we remain focused on identifying attractive
marketplace opportunities to drive enhanced shareholder value while
continuing to grow our platform in a disciplined and consistent manner.”

QUARTERLY HIGHLIGHTS

  • The Company announced a dividend of $0.41 per share for the first
    quarter of 2019 payable to shareholders of record as of March 29, 2019 (1).
  • Net investment income for the quarter ended December 31, 2018 was
    $19.8 million or $0.41 per share, which compares to $4.8 million or
    $0.19 per share for the quarter ended December 31, 2017.
  • Net asset value per share was $19.46 at December 31, 2018 and the
    weighted average gross yield of the portfolio was 8.7% (2).
  • On November 19, 2018, BCSF closed its initial public offering (“IPO”)
    of 7.5 million shares of common stock at $20.25 per share, which
    generated gross proceeds of $151.9 million. Shares began trading on
    the New York Stock Exchange under the symbol “BCSF” on November 15,
    2018.
  • On November 28, 2018 the Board approved the reduction of the Company’s
    asset coverage requirements to 150% to become effective the earlier or
    (i) the day following stockholder approval of the reduced asset
    coverage ratio or (ii) one year after the Board’s approval. At the
    special stockholder meeting on February 1, 2019, the Company’s
    stockholders approved the application of the reduced asset coverage,
    effective February 2, 2019.
  • 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 investment
    period. The interest rate will reset to LIBOR plus 2.60% after the
    reinvestment period through maturity date, February 19, 2022.

Selected Financial Highlights

       
(dollar amounts in thousands) Q4 2018 Q4 2017
Net investment income per share $0.41 $0.19
Net investment income $19,774 $4,818
Earnings per share ($0.21) $0.28
Dividends declared and payable $0.41 $0.31
 
    As of December 31,
(dollar amounts in thousands) 2018       2017
Total fair value of investments $1,727,806 $831,578
Total assets 1,791,014 988,251
Total net assets 1,001,629 506,963
Net asset value per share $19.46 $20.30
 

PORTFOLIO AND INVESTMENT ACTIVITY

  • For the three months ended December 31, 2018, BCSF invested $451.8
    million in 65 portfolio companies across 25 different industries,
    including investments in the Antares Bain Capital Complete Financing
    Solution LLC (“ABCS JV”). BCSF had $42.7 million of principal
    repayments and sales in the quarter. On a net basis, our investments
    in the quarter totaled $409.1 million.
(dollar amounts in millions)                     Q4 2018       Q4 2017
Investment Fundings $451.8 $394.7
Sales and Repayments 42.7 49.6
Net Investment Activity 409.1 345.1
  • As of December 31, 2018, the Company’s investment portfolio had a fair
    value of $1,727.8 million. As of December 31, 2018, the total
    portfolio at fair value included ABCS JV’s value of $279.4 million.
  • As of December 31, 2018 the investment portfolio based on fair value
    consisted of:
Investment Portfolio at FV               $ in Millions       % of Total
First lien senior secured $1,058.8 61.3%
First lien last out 27.5 1.6
Second lien senior secured 258.2 14.9
Subordinated debt 39.6 2.3
Corporate bonds 35.0 2.0
Investment vehicle 279.4 16.2
Equity interest 26.5 1.5
Preferred equity 2.8 0.2
Warrants  
Total $1,727.8 100.0%
  • As of December 31, 2018, the weighted average gross yield on the
    investment portfolio was 8.7% (2) and 95.5% of total
    investments at fair value were in floating rate securities.
  • As of December 31, 2018, there were no investments on non-accrual
    status.

FOURTH QUARTER 2018 OPERATING RESULTS

  • For the three months ended December 31, 2018 and 2017, total
    investment income was $33.7 million and $10.0 million, respectively.
    For the year ended December 31, 2018 and 2017, total investment income
    totaled $99.3 million and $24.6 million, respectively. The increase is
    attributable to the growth of the investment portfolio due to
    investment fundings of $451.8 million and $1,168.7 million,
    respectively for the three and twelve months ended December 31, 2018.
  • Total expenses before taxes for the three months ended December 31,
    2018 and 2017, were $14.0 million and $5.2 million, respectively. For
    the year ended December 31, 2018 and 2017, total expenses before taxes
    were $43.4 million and $10.4 million, respectively.
  • Net investment income after taxes for the three months ended December
    31, 2018 was $19.8 million or $0.41 per share, compared with $4.8
    million or $0.19 per share for the three months ended December 31,
    2017.
  • During the three months ended December 31, 2018, the Company had net
    realized and unrealized gain (losses) of $(29.6) million.
  • Net decrease in net assets resulting from operations for the three
    months ended December 31, 2018 was ($9.9) million, or ($0.21) per
    share.

CAPITAL and LIQUIDITY

  • At December 31, 2018, BCSF had cash and cash equivalents and foreign
    cash of $15.3 million.
  • BCSF had total principal debt outstanding of $637.0 million including
    $271.3 million outstanding in the BCSF Revolving Credit Facility with
    Goldman Sachs and $365.7 million outstanding of the 2018-1 Notes.
  • Undrawn capacity in our BCSF Revolving Credit Facility totaled $228.7
    million as of December 31, 2018.
  • The Company retired the Revolving Credit Facility with Sumitomo Mitsui
    Banking Corporation (“SMBC”) Facility as a result of the November 15,
    2018 initial public offering of BCSF.
  • 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
    reinvestment period, the period from the closing date until February
    19, 2020. The interest rate will reset to LIBOR plus 2.60% after the
    reinvestment period through maturity date, February 19, 2022.
  • For the three months ended December 31, 2018, 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 5:30 p.m. Eastern Time on February 28, 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: 13687167

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 7, 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: 13687167

ENDNOTES

      (1)   The $0.41 per share dividend is payable on April 12, 2019 to holders
of record as of March 29, 2019.
(2) Information through December 31, 2018. Computed for debt investments
based upon the annual interest rate as of December 31, 2018, 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 December 31, 2018. 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
December 31, 2018. 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
December 31, 2018 December 31, 2017
 
Assets
Investments at fair value:
Non-controlled/non-affiliate investments (amortized cost of
$1,449,749,445 and $633,645,701, respectively)
$ 1,422,837,431 $ 643,067,956
Controlled affiliate investment (amortized cost of $296,647,530 and
$187,617,223, respectively)
298,248,240 188,510,115
Non-controlled/affiliate investment (amortized cost of $6,720,000
and $0, respectively)
6,720,000
Cash and cash equivalents 14,692,877 139,506,289
Foreign cash (cost of $588,622 and $1,383,845, respectively) 591,113 1,411,855
Restricted Cash 17,986,541
Collateral on forward currency exchange contracts 3,790 4,421,968
Deferred financing costs 4,017,802 5,808,726
Interest receivable on investments 6,250,621 2,888,847
Prepaid insurance 1,517 137,785
Receivable for sales and paydowns of investments 1,633,739 2,497,769
Unrealized appreciation on forward currency exchange contracts 9,321,758
Dividend receivable   8,708,670    
Total Assets $ 1,791,014,099   $ 988,251,310
 
Liabilities
Revolving credit facilities $ 271,264,902 $ 451,000,000
2018-1 Notes (net of unamortized debt issuance costs of $2,040,320
and $0, respectively)
363,659,680
Offering costs payable 1,819,892
Interest payable 4,835,339 815,402
Payable for investments purchased 119,165,882 14,814,984
Unrealized depreciation on forward currency exchange contracts 3,504,814
Base management fee payable 2,950,412 1,244,033
Incentive fee payable 3,300,398 1,017,919
Accounts payable and accrued expenses 1,280,770 1,143,946
Excise tax payable 4,882
Distributions payable   21,107,677     7,742,502
Total Liabilities   789,384,952     481,288,482
 
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,
2018 and December 31, 2017, respectively

$ $

Common stock, par value $0.001 per share, 100,000,000,000 and
100,000,000,000
shares authorized, 51,482,137 and 24,975,812 shares
issued
and outstanding as of December 31, 2018 and December 31, 2017,
respectively

51,482 24,976
Paid in capital in excess of par value 1,034,255,352 503,533,321
Total distributable earnings (loss)   (32,677,687 )   3,404,531
Total Net Assets   1,001,629,147     506,962,828
Total Liabilities and Total Net assets $ 1,791,014,099   $ 988,251,310
 
Net asset value per share $ 19.46   $ 20.30
 
 
Bain Capital Specialty Finance, Inc.
       
Consolidated Statements of Operations
 
 

For the Year Ended
December 31,

For the Year Ended
December 31,

For the Year Ended
December 31,

2018 2017 2016
Income
Investment income from non-controlled/non-affiliate investments:
Interest from investments $ 73,049,110 $ 24,380,362 $ 868,550
Other income   545,248     128,848      
Total investment income from non-controlled/non-affiliate investments 73,594,358 24,509,210 868,550
Investment income from controlled affiliate investments:
Interest from investments 313,543 55,308
Other income 29 40,616
Dividend income   25,386,052          
Total investment income from controlled affiliate investments   25,699,624     95,924      
Total investment income   99,293,982     24,605,134     868,550  
 
Expenses
Interest and debt financing expenses $ 24,011,185 $ 3,614,734 $ 27,015
Amortization of deferred offering costs 329,995 91,152
Base management fee 17,543,592 5,898,018 356,408
Incentive fee 8,670,069 764,343 253,576
Organizational costs 797,593
Professional fees 2,638,941 1,776,863 301,997
Directors fees 278,182 275,461 137,732
Other general and administrative expenses   900,969     685,524     162,815  
Total expenses before fee waivers 54,042,938 13,344,938 2,128,288
Base management fee waiver (8,771,796 ) (2,949,009 ) (178,204 )
Incentive fee waiver   (1,907,861 )        
Total expenses, net of fee waivers   43,363,281     10,395,929     1,950,084  
Net investment income (loss) before taxes   55,930,701     14,209,205     (1,081,534 )
Excise tax expense   309     4,882      
Net investment income (loss) after taxes   55,930,392     14,204,323     (1,081,534 )
Net realized and unrealized gains (losses)
Net realized gain (loss) on non-controlled/non-affiliate investments (3,344,720 ) 54,404
Net realized gain (loss) on foreign currency transactions (489,296 ) 115,025
Net realized loss on forward currency exchange contracts (2,651,412 ) (221,928 )
Net change in unrealized appreciation on foreign currency translation 109 28,294
Net change in unrealized appreciation (depreciation) on forward
currency exchange contracts
12,826,572 (3,504,814 )
Net change in unrealized appreciation (depreciation) on
non-controlled/non-affiliate investments
(36,334,269 ) 7,731,746 1,690,509
Net change in unrealized appreciation on controlled affiliate
investments
  707,818     892,892      
Total net gains (losses)   (29,285,198 )   5,095,619     1,690,509  
 
Net increase in net assets resulting from operations $ 26,645,194   $ 19,299,942   $ 608,975  
 
Per Common Share Data
Basic and diluted net investment income per common share $ 1.45 $ 0.73 $ (0.90 )
Basic and diluted increase in net assets resulting from operations
per common share
$ 0.69 $ 0.99 $ 0.51
Basic and diluted weighted average common shares outstanding 38,567,001 19,548,037 1,200,974
 

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 September 30, 2018, BCSF has
invested approximately $1,727.9 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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