NYSE:BCSF Bain Capital Specialty Finance Q3 2023 Earnings Report C$1.56 +0.08 (+5.41%) As of 04/17/2025 04:00 PM Eastern Earnings HistoryForecast Northern Dynasty Minerals EPS ResultsActual EPSC$0.55Consensus EPS C$0.57Beat/MissMissed by -C$0.02One Year Ago EPSN/ANorthern Dynasty Minerals Revenue ResultsActual Revenue$72.39 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/ANorthern Dynasty Minerals Announcement DetailsQuarterQ3 2023Date11/6/2023TimeN/AConference Call DateTuesday, November 7, 2023Conference Call Time8:30AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Northern Dynasty Minerals Q3 2023 Earnings Call TranscriptProvided by QuartrNovember 7, 2023 ShareLink copied to clipboard.There are 8 speakers on the call. Operator00:00:00Good day, and welcome to the Bain Capital Specialty Finance Third Quarter Ended September 30, 2023 Earnings Conference Call. All participants will be in the listen only mode. Followed by 0. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. Operator00:00:39I would now like to turn the conference over to Katherine Schneider. Please go ahead. Speaker 100:00:45Thanks, Niko. Good morning, everyone, and welcome to the Bain Capital Specialty Finance Third Quarter Ended September 30, 2023 Conference Call. Yesterday, after market closed, we issued our earnings press release and investor presentation of our quarterly results, a copy of which is available on Bain Capital's Specialty Finance's Investor Relations website. Following our remarks today, we will hold a question and answer session for analysts and investors. This call is being web This call and the webcast are property of Bain Capital Specialty Finance and any unauthorized broadcast in any form is strictly prohibited. Speaker 100:01:22Any forward looking statements made today do not guarantee future performance and actual results may differ materially. These statements are based on current management expectations, which include risks and uncertainties, which are identified in the Risk Factors section of our Form 10 Q that could cause actual results to differ materially from those indicated. Bain Capital Specialty Finance assumes no obligation to update any forward looking statements Lastly, test performance does not guarantee future results. And with that, I'd like to turn the call over to our Chief Executive Officer, Michael Ewald. Speaker 200:01:58Thanks, Catherine, and good morning and thank you everyone for joining us I'm joined by Mike Boyle, President and our Chief Financial Officer, Sally Dornis. Start with an overview of our Q3 ended September 30, 2023 results and then provide some thoughts on our performance, the overall market environment and our positioning. Thereafter, Mike and Sally will discuss our investment portfolio and financial results in greater detail. Yesterday, after market close, We delivered strong Q3 results. Q3 net investment income per share was $0.55 driven by the continued benefits of higher interest rates across our portfolio. Speaker 200:02:38Our net investment income return represented an annualized yield of 12.6 percent on book value and covered our dividend by 131%. Q3 earnings per share were $0.52 driven by stable credit quality across our portfolio investments during the quarter. Our net income produced an annualized return on book value of 12.0%. These results led to another consecutive quarter of growth in our net asset value to $17.54 reflecting a 60 basis point increase from our $17.44 NAV as of June 30. Subsequent to quarter end, our Board declared a 4th quarter dividend equal to $0.42 per share and payable to record date holders as of December 29, 2023. Speaker 200:03:22We believe our regular dividend amount represents an attractive yield for our shareholders at a 9.6% annualized yield on ending book value as of September 30. Our spillover income per share is approximately $0.79 or 1.9 times our We believe this is a healthy amount of undistributed income and provides for increased dividend and NAV stability. Our management team alongside our Board continues to evaluate the potential for any additional distributions as we near the end of the year. Turning to the market environment, new loan volumes in the private credit market saw a modest increase during the Q3 from Q2 levels, But volumes remain low overall. Driving the higher activity levels in this quarter was the return of large unit tranche loans as Credit continues to take share away from broadly syndicated loan markets, particularly during periods where new CLO creation remains challenged as the BSL market is largely dependent on this. Speaker 200:04:20While we observe these trends taking place in the private credit market, we continue to favor middle sized companies versus large corporate borrowers as many of the core tenants that we value for our direct lenders provides Greater value within this segment of the market in our view. Particularly, we prefer investing in debt structures that benefit from strong lender controls through loan credit Documentation containing financial covenants and having control positions among a small lender group. Our focus on these structures allows us to drive eventual And we have majority control positions in 75% of our debt tranches. For the new companies in which our Private Credit Group platform invested during the Q3, we were the lead investor driving terms and structure as we leveraged our in house industry expertise and partner with high quality sponsors. The investing environment for middle market lenders continues to be attractive As demonstrated by favorable terms and structures that are more lender friendly. Speaker 200:05:28For example, the weighted average spread on our new portfolio Company's 1st lien debt investments was approximately 6.50 basis points this quarter, which produced a weighted average yield of 12% when factoring in current base rates and amortization of original discounts. And the weighted average net debt to EBITDA leverage on these new loans was 4.0 times, reflecting conservative capital structures in the current market environment. Our portfolio companies continue to perform well and have proven to be Durable thus far in the light of the higher interest rate environment as demonstrated by stable credit quality trends across our portfolio. Our non accrual rates continue to be low, which is 1% of the portfolio at fair value, and we had an overall improvement in our watch list investments within our risk ratings. Notwithstanding the solid portfolio metrics, our team remains vigilant monitoring our portfolio companies closely, particularly given the expectation for a more sustained higher interest rate environment and any potential for an economic slowdown. Speaker 200:06:28I'll now turn the call over to Mike Boyle, our President, walk through our investment portfolio in greater detail. Speaker 300:06:35Thanks, Mike. Good morning, everyone. I'll start with our investment activity for the Q3 and then provide an update on our portfolio. New investment fundings during the Q3 were approximately $110,000,000 across 40 portfolio companies, including $52,000,000 in 2 new companies and $57,000,000 in add ons to existing investments. Sales and repayment activity totaled approximately $103,000,000 resulting in a net funded portfolio growth of $7,000,000 quarter over quarter. Speaker 300:07:08This quarter, we remain focused on investing in 1st lien senior secured loans with 93% of our new investment fundings within 1st lien structures and 7% in equity investments. Our new investment fundings were comprised of a mix between new and existing representing 48% 52% respectively. Across our new portfolio companies this quarter, We leveraged Bain Capital's in house industry knowledge and expertise. Our largest new investment was the 1st lien senior secured loan to ForwardSlope, a provider of mission critical software and surveillance solutions to the defense industry. We sourced this investment from a sponsor who has a value oriented approach with strong in aerospace and defense and who valued our prior experience working with them in this sector. Speaker 300:07:56Aerospace and defense is our largest sector exposure one that we continue to favor in the current environment, given it does not generally cycle with the macro economy. Another notable new investment this quarter was the 1st lien senior secured loan and equity co investment to HelpDrive, a provider of a comprehensive We have on-site medical services to patients in skilled nursing facilities. While we have shied away from many of the healthcare physician practice management roll ups in recent years, we are now focused on finding attractive spots in the healthcare sector. Our investment thesis for Health Drive centered on the solid fundamental industry dynamics, which are underpinned by non discretionary services. The company's attractive financial profile demonstrating higher retention rates and partnering with a well capitalized healthcare focused sponsor. Speaker 300:08:44Turning now to the investment portfolio. At the end of the Q3, the size of our investment portfolio at fair value was approximately $2,400,000,000 Speaker 100:08:53across a highly diversified set Speaker 300:08:53of 143 5 set of 143 portfolio companies operating across 30 different industries. Our portfolio primarily consists Investments in 1st lien senior secured loans given our focus on downside management and investing in the top of the capital structure. As of September 30, 64% of the investment portfolio at fair value was invested in 1st lien debt, 4% in 2nd lien debt, 2% in subordinated debt, 4% in preferred equity, 11% in equity and other interests and 15% across our joint ventures. As we have highlighted to our shareholders in prior earnings calls, The decline in our stated 1st lien exposure is driven by the growth in our joint ventures. Notably, 94% of the underlying investments held in these investment vehicles consists of 1st lien loans, resulting in a look through 1st lien exposure of approximately 82% of the portfolio. Speaker 300:09:52As of September 30, 2023, the weighted average yield on the investment portfolio at amortized cost and fair value were 12.9% and 13.1% respectively as compared to 12.8% 13% as of June 30, 2023. The increase was primarily driven by higher reference rates on our loans. And as a reminder, 94% of our debt investments Bear interest at a floating rate. Moving on to portfolio credit quality trends. They were stable quarter over quarter. Speaker 300:10:26Within our internal risk rating scale, we saw an improvement within our risk rating 1 and 2 investment, which indicates that a company was performing in line or better than expectations relative to our initial underwrite. As of September 30, these investments comprised 95% of our portfolio at fair value, up from 91% as of the prior quarter end. Risk rating 3 and 4 investments comprised 5% of our Our 1.5% and 1.0% of the total investment portfolio at amortized cost and fair value respectively, as compared to 2.1% and 0% as of June 30. We believe our non accrual rates are among the lowest level across the BDC sector. Credit fundamentals remain solid in our portfolio with the median leverage of 5.0 turns as of September 30, as compared to 5.1 turns as of June 30. Speaker 300:11:28Sally will now provide a more detailed financial review. Speaker 400:11:32Thank you, Mike, and good morning, everyone. I'll start the review of our Q3 2023 results with our income statement. Total investment income was $72,400,000 for the 3 months ended September 30, 2023, as compared to $75,700,000 for the 3 months ended June 30, 2023. The decrease in investment income was primarily driven by largely driven by contractual cash income across its investments. Interest income and dividend income represent 99% of our total investment income in Q3 with no prepayment related income this quarter. Speaker 400:12:21Other income comprised only 1% of our total investment income. Total expenses for the Q3 were $36,100,000 as compared to $35,700,000 in the 2nd quarter. Net investment income for the quarter was $35,600,000 or $0.55 per share as compared to $38,900,000 or $0.60 per share for the prior During the 3 months ended September 30, 2023, the company had net realized and unrealized losses of $1,800,000 Net income for the 3 months ended September 30, 2023 was $33,900,000 or $0.52 per share. Moving over to our balance sheet. As of September 30, our investment portfolio at fair value totaled $2,400,000,000 and total assets of 2,600,000,000 Total net assets were $1,100,000,000 as of September 30. Speaker 400:13:14NAV per share was $15.54 up from $17.44 at the end of the second quarter, representing a 0.6% increase quarter over quarter. The increase in our NAV was driven by the over earnings of our dividend, coupled with the relative stability and the value of our investments during the quarter. At the end of Q3, our debt to equity ratio was 1.22 times as compared to 1.33 times from the end of Q2. Our net leverage ratio, which represents principal debt outstanding, less cash and unsettled trades was 1.12x at the end of Q3 as compared to 1.13 times at the end of Q2. We remain comfortable operating in the middle of our net target leverage ratio of between 1 and 1.25 times. Speaker 400:14:01As of September 30, approximately 56% of our outstanding debt was in floating rate debt and 44% in fixed rate debt. The company does not have any debt maturities until 2026 and the weighted average maturity across our total debt commitments was 4.5 years at September 30. Our debt funding continues to benefit from low fixed rate debt structures as we access the unsecured markets during a period of low interest rates. The weighted average interest rate on our unsecured notes is 2.75%. For the 3 months ended September 30, 23, The weighted average interest rate on our debt outstanding was 5.4% as compared to 5.2% as of the prior quarter end. Speaker 400:14:43The increase was driven by higher SOFA rates on our floating rate debt structures. Liquidity at quarter end totaled $329,000,000 including $224,000,000 of undrawn capacity on our revolving credit facility With that, I will turn the call back over to Mike for closing remarks. Speaker 200:15:13Thanks, Ali. In closing, we're pleased to deliver another quarter of strong earnings for our shareholders, demonstrated by high levels net investment income that are well in excess of our dividend and modest NAV growth as our underlying borrowers continue to perform well. Bain Capital Credit remains well positioned We remain committed to delivering value for our shareholders and thank you for the privilege of managing our shareholders' capital. Zico, please open the line for questions. Operator00:15:50Thank you. We will now begin the question and answer session. And you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Thank you. Operator00:16:29The first question comes from Arren Cygnovich with Citi. Please go ahead. Speaker 500:16:37Thanks. If you could talk a little bit about the investing environment, you mentioned attractive Characteristics today, you're seeing wider spreads and lower leverage. Are you seeing any kind of pickup in activity from sponsors? And What does your pipeline look like these days for new investments? Speaker 200:16:59Yes. Thanks Aaron. Look, I think it kind of varies a little bit, maybe Week to week or maybe month to month. We do continue to have busy months, not so busy months. Sponsors are definitely showing us things. Speaker 200:17:15There might be a little bit of going through the motions and just trying to see whether they can maybe pick up Some value plays, but we're not necessarily seeing a wholesale change from the current, I'd say stable level. That's still a little bit depressed from kind of pre COVID and certainly 2021, but it's Qualified is fine, not great from a deal flow perspective. Speaker 500:17:40Okay. And how does it look from an international perspective versus The U. Speaker 200:17:49S? It's still pretty balanced right now. I definitely say, last year we were in 2022, we were more U. S. Heavy, more Europe heavy in 2021. Speaker 200:18:00But I'd say this year, we're probably a little bit more balanced With Australia and New Zealand being a smaller piece and that just kind of being steady. So I don't know if there's any notable differences between the two markets right now. Operator00:18:13Okay. Thank you. Thank you. Our next question comes from Paul Johnson with KBW. Please go ahead. Speaker 600:18:29Yes, good morning. Thanks for taking my questions. I was just wondering if you can kind of comment on, I guess, the EBITDA growth trends that you're Seeing in your portfolio, I guess both domestically as well as internationally, I know it's kind of hard to generalize maybe All of international, but just in general kind of Europe versus U. S, what's been the performance like in the portfolio? Speaker 300:18:57Sure. So performance has been quite strong across both markets, referring to U. S. And Europe broadly. I do think top lines have held in, particularly in the industries we've selected to invest in. Speaker 300:19:10And so as we noted, 95% of our Portfolio is in line with our original underwrite and most of those original underwrites include some sort of EBITDA growth in the 15% to 20% Sort of CAGRs on the EBITDA line. So we've seen much of the portfolio perform in line with that sort of 15% to 20% year over year EBITDA growth, But that's largely driven by again the sectors we've chosen to invest in and we've really been able to shy away from many more cyclical sectors that might not Show the same amount of growth in this type of market environment. Speaker 600:19:48Thanks for that. And Just kind of generally, I guess, what are your thoughts on where the portfolio or where the BDC is today from a leverage standpoint? I believe we're around 1.2 times kind of gross levels as of the Q3, within obviously the target range That you guys run with, but just kind of given the uncertainty running into next year, potentially the higher for longer scenario, do you guys have any thoughts Around where you'd like leverage to be in the BDC? Sure. Speaker 300:20:26So I do look at The net level, more specifically when I think about where we're running our leverage versus at 1.12 times, Which is really right in that center of the range. I do think given the market environment, the fact that interest rates are likely to be higher for longer, Operating at the lower end of our leverage range while we wait for new deal activity to pick up and as Ewold commented earlier, the pipeline to get A little bit better than good and go back to great. I think we think about bringing the leverage back up, but in the near term, I do think we'd probably trend For the lower end of our range, so that we have dry powder to take advantage of future market opportunity. Speaker 600:21:07Thanks for that. That's helpful. And Last one from me. Was there anything specific driving, I guess, the credit, the internal credit rating sort of increased During the quarter, there's a big jump in that rated 2 category from 91% to 95%. Was that due to any sort of markups or markdowns Or any sort of activity in the portfolio that drove that? Speaker 300:21:31It was really driven by 2 companies that we had previously had on our watch list. They were companies that had been impacted by COVID and were really recovering, took a few years to recover back to pre COVID earnings levels. And so it was really 2 companies That performed better, that were taken off the watch list that drove that change. Speaker 600:21:51Appreciate it. Thanks. That's all for me. Operator00:21:53Thank you, Paul. Thank you. The next question is from Derek Hewett with Bank of America, please go ahead. Speaker 700:22:05Good morning, everyone. Could you talk a little bit about the mechanics of the incentive fee since it declined on Speaker 400:22:20We talked about that on the last couple of quarters calls because of the lower levels of incentive fees Versus prior, we had our COVID quarter that dropped off And the mechanics of the fee caused this kind of lower incentive level, but should go back to normal In the next 1 or 2 quarters. So I would expect the run rate to be a bit higher than that. Speaker 700:22:52Okay. Thank you for that. And then in regards to the dividends, you're significantly over earning it. If you adjust For the lower incentive fee, you're still materially over earning the dividend. What are your thoughts on an additional increase In the core dividend versus or potentially implementing kind of a supplemental Formulaic type of special dividend? Speaker 400:23:22Yes. That's something that we talk about often and we've talked about with our management team and our Board. Obviously, The spillover gives us some good NAV stability, but we do have this ability to either Do possibly an additional dividend or increase the dividend, both of those things are being considered. Speaker 700:23:50Okay. Thank you. That's all for me. Operator00:23:55Thank Speaker 300:24:00you. Operator00:24:05This concludes our question and answer session. I would like to turn the conference back over to Mike Leivold for closing remarks. Speaker 200:24:13Great. Thanks, Iko. I just wanted to thank everyone again for your time today and we certainly appreciate your continued support and look forward to bringing you more news We're executing our middle market investing strategy through BCSF in the future. Hope everyone has a good day. Thanks again. Operator00:24:30Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallNorthern Dynasty Minerals Q3 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K) Northern Dynasty Minerals Earnings HeadlinesTrump to fast-track U.S. critical mineral productionMarch 24, 2025 | msn.comNorthern Dynasty notes Trump executive order on American mineral productionMarch 24, 2025 | markets.businessinsider.comTrump and Musk fight backIs there more to the Musk–Trump relationship than meets the eye? Jeff Brown thinks so — and he believes it has to do with a top-level initiative to build the ultimate military-grade AI system. He’s calling it the “AI Superweapon,” and he says it could soon become the center of global tech dominance. At the core of this initiative? 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Email Address About Northern Dynasty MineralsNorthern Dynasty Minerals (TSE:NDM) Ltd is a Canadian mineral exploration company. It has a single operating segment of acquisition, exploration, and development of mineral properties. Its core asset is the Pebble Project located in Alaska, USA. 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There are 8 speakers on the call. Operator00:00:00Good day, and welcome to the Bain Capital Specialty Finance Third Quarter Ended September 30, 2023 Earnings Conference Call. All participants will be in the listen only mode. Followed by 0. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. Operator00:00:39I would now like to turn the conference over to Katherine Schneider. Please go ahead. Speaker 100:00:45Thanks, Niko. Good morning, everyone, and welcome to the Bain Capital Specialty Finance Third Quarter Ended September 30, 2023 Conference Call. Yesterday, after market closed, we issued our earnings press release and investor presentation of our quarterly results, a copy of which is available on Bain Capital's Specialty Finance's Investor Relations website. Following our remarks today, we will hold a question and answer session for analysts and investors. This call is being web This call and the webcast are property of Bain Capital Specialty Finance and any unauthorized broadcast in any form is strictly prohibited. Speaker 100:01:22Any forward looking statements made today do not guarantee future performance and actual results may differ materially. These statements are based on current management expectations, which include risks and uncertainties, which are identified in the Risk Factors section of our Form 10 Q that could cause actual results to differ materially from those indicated. Bain Capital Specialty Finance assumes no obligation to update any forward looking statements Lastly, test performance does not guarantee future results. And with that, I'd like to turn the call over to our Chief Executive Officer, Michael Ewald. Speaker 200:01:58Thanks, Catherine, and good morning and thank you everyone for joining us I'm joined by Mike Boyle, President and our Chief Financial Officer, Sally Dornis. Start with an overview of our Q3 ended September 30, 2023 results and then provide some thoughts on our performance, the overall market environment and our positioning. Thereafter, Mike and Sally will discuss our investment portfolio and financial results in greater detail. Yesterday, after market close, We delivered strong Q3 results. Q3 net investment income per share was $0.55 driven by the continued benefits of higher interest rates across our portfolio. Speaker 200:02:38Our net investment income return represented an annualized yield of 12.6 percent on book value and covered our dividend by 131%. Q3 earnings per share were $0.52 driven by stable credit quality across our portfolio investments during the quarter. Our net income produced an annualized return on book value of 12.0%. These results led to another consecutive quarter of growth in our net asset value to $17.54 reflecting a 60 basis point increase from our $17.44 NAV as of June 30. Subsequent to quarter end, our Board declared a 4th quarter dividend equal to $0.42 per share and payable to record date holders as of December 29, 2023. Speaker 200:03:22We believe our regular dividend amount represents an attractive yield for our shareholders at a 9.6% annualized yield on ending book value as of September 30. Our spillover income per share is approximately $0.79 or 1.9 times our We believe this is a healthy amount of undistributed income and provides for increased dividend and NAV stability. Our management team alongside our Board continues to evaluate the potential for any additional distributions as we near the end of the year. Turning to the market environment, new loan volumes in the private credit market saw a modest increase during the Q3 from Q2 levels, But volumes remain low overall. Driving the higher activity levels in this quarter was the return of large unit tranche loans as Credit continues to take share away from broadly syndicated loan markets, particularly during periods where new CLO creation remains challenged as the BSL market is largely dependent on this. Speaker 200:04:20While we observe these trends taking place in the private credit market, we continue to favor middle sized companies versus large corporate borrowers as many of the core tenants that we value for our direct lenders provides Greater value within this segment of the market in our view. Particularly, we prefer investing in debt structures that benefit from strong lender controls through loan credit Documentation containing financial covenants and having control positions among a small lender group. Our focus on these structures allows us to drive eventual And we have majority control positions in 75% of our debt tranches. For the new companies in which our Private Credit Group platform invested during the Q3, we were the lead investor driving terms and structure as we leveraged our in house industry expertise and partner with high quality sponsors. The investing environment for middle market lenders continues to be attractive As demonstrated by favorable terms and structures that are more lender friendly. Speaker 200:05:28For example, the weighted average spread on our new portfolio Company's 1st lien debt investments was approximately 6.50 basis points this quarter, which produced a weighted average yield of 12% when factoring in current base rates and amortization of original discounts. And the weighted average net debt to EBITDA leverage on these new loans was 4.0 times, reflecting conservative capital structures in the current market environment. Our portfolio companies continue to perform well and have proven to be Durable thus far in the light of the higher interest rate environment as demonstrated by stable credit quality trends across our portfolio. Our non accrual rates continue to be low, which is 1% of the portfolio at fair value, and we had an overall improvement in our watch list investments within our risk ratings. Notwithstanding the solid portfolio metrics, our team remains vigilant monitoring our portfolio companies closely, particularly given the expectation for a more sustained higher interest rate environment and any potential for an economic slowdown. Speaker 200:06:28I'll now turn the call over to Mike Boyle, our President, walk through our investment portfolio in greater detail. Speaker 300:06:35Thanks, Mike. Good morning, everyone. I'll start with our investment activity for the Q3 and then provide an update on our portfolio. New investment fundings during the Q3 were approximately $110,000,000 across 40 portfolio companies, including $52,000,000 in 2 new companies and $57,000,000 in add ons to existing investments. Sales and repayment activity totaled approximately $103,000,000 resulting in a net funded portfolio growth of $7,000,000 quarter over quarter. Speaker 300:07:08This quarter, we remain focused on investing in 1st lien senior secured loans with 93% of our new investment fundings within 1st lien structures and 7% in equity investments. Our new investment fundings were comprised of a mix between new and existing representing 48% 52% respectively. Across our new portfolio companies this quarter, We leveraged Bain Capital's in house industry knowledge and expertise. Our largest new investment was the 1st lien senior secured loan to ForwardSlope, a provider of mission critical software and surveillance solutions to the defense industry. We sourced this investment from a sponsor who has a value oriented approach with strong in aerospace and defense and who valued our prior experience working with them in this sector. Speaker 300:07:56Aerospace and defense is our largest sector exposure one that we continue to favor in the current environment, given it does not generally cycle with the macro economy. Another notable new investment this quarter was the 1st lien senior secured loan and equity co investment to HelpDrive, a provider of a comprehensive We have on-site medical services to patients in skilled nursing facilities. While we have shied away from many of the healthcare physician practice management roll ups in recent years, we are now focused on finding attractive spots in the healthcare sector. Our investment thesis for Health Drive centered on the solid fundamental industry dynamics, which are underpinned by non discretionary services. The company's attractive financial profile demonstrating higher retention rates and partnering with a well capitalized healthcare focused sponsor. Speaker 300:08:44Turning now to the investment portfolio. At the end of the Q3, the size of our investment portfolio at fair value was approximately $2,400,000,000 Speaker 100:08:53across a highly diversified set Speaker 300:08:53of 143 5 set of 143 portfolio companies operating across 30 different industries. Our portfolio primarily consists Investments in 1st lien senior secured loans given our focus on downside management and investing in the top of the capital structure. As of September 30, 64% of the investment portfolio at fair value was invested in 1st lien debt, 4% in 2nd lien debt, 2% in subordinated debt, 4% in preferred equity, 11% in equity and other interests and 15% across our joint ventures. As we have highlighted to our shareholders in prior earnings calls, The decline in our stated 1st lien exposure is driven by the growth in our joint ventures. Notably, 94% of the underlying investments held in these investment vehicles consists of 1st lien loans, resulting in a look through 1st lien exposure of approximately 82% of the portfolio. Speaker 300:09:52As of September 30, 2023, the weighted average yield on the investment portfolio at amortized cost and fair value were 12.9% and 13.1% respectively as compared to 12.8% 13% as of June 30, 2023. The increase was primarily driven by higher reference rates on our loans. And as a reminder, 94% of our debt investments Bear interest at a floating rate. Moving on to portfolio credit quality trends. They were stable quarter over quarter. Speaker 300:10:26Within our internal risk rating scale, we saw an improvement within our risk rating 1 and 2 investment, which indicates that a company was performing in line or better than expectations relative to our initial underwrite. As of September 30, these investments comprised 95% of our portfolio at fair value, up from 91% as of the prior quarter end. Risk rating 3 and 4 investments comprised 5% of our Our 1.5% and 1.0% of the total investment portfolio at amortized cost and fair value respectively, as compared to 2.1% and 0% as of June 30. We believe our non accrual rates are among the lowest level across the BDC sector. Credit fundamentals remain solid in our portfolio with the median leverage of 5.0 turns as of September 30, as compared to 5.1 turns as of June 30. Speaker 300:11:28Sally will now provide a more detailed financial review. Speaker 400:11:32Thank you, Mike, and good morning, everyone. I'll start the review of our Q3 2023 results with our income statement. Total investment income was $72,400,000 for the 3 months ended September 30, 2023, as compared to $75,700,000 for the 3 months ended June 30, 2023. The decrease in investment income was primarily driven by largely driven by contractual cash income across its investments. Interest income and dividend income represent 99% of our total investment income in Q3 with no prepayment related income this quarter. Speaker 400:12:21Other income comprised only 1% of our total investment income. Total expenses for the Q3 were $36,100,000 as compared to $35,700,000 in the 2nd quarter. Net investment income for the quarter was $35,600,000 or $0.55 per share as compared to $38,900,000 or $0.60 per share for the prior During the 3 months ended September 30, 2023, the company had net realized and unrealized losses of $1,800,000 Net income for the 3 months ended September 30, 2023 was $33,900,000 or $0.52 per share. Moving over to our balance sheet. As of September 30, our investment portfolio at fair value totaled $2,400,000,000 and total assets of 2,600,000,000 Total net assets were $1,100,000,000 as of September 30. Speaker 400:13:14NAV per share was $15.54 up from $17.44 at the end of the second quarter, representing a 0.6% increase quarter over quarter. The increase in our NAV was driven by the over earnings of our dividend, coupled with the relative stability and the value of our investments during the quarter. At the end of Q3, our debt to equity ratio was 1.22 times as compared to 1.33 times from the end of Q2. Our net leverage ratio, which represents principal debt outstanding, less cash and unsettled trades was 1.12x at the end of Q3 as compared to 1.13 times at the end of Q2. We remain comfortable operating in the middle of our net target leverage ratio of between 1 and 1.25 times. Speaker 400:14:01As of September 30, approximately 56% of our outstanding debt was in floating rate debt and 44% in fixed rate debt. The company does not have any debt maturities until 2026 and the weighted average maturity across our total debt commitments was 4.5 years at September 30. Our debt funding continues to benefit from low fixed rate debt structures as we access the unsecured markets during a period of low interest rates. The weighted average interest rate on our unsecured notes is 2.75%. For the 3 months ended September 30, 23, The weighted average interest rate on our debt outstanding was 5.4% as compared to 5.2% as of the prior quarter end. Speaker 400:14:43The increase was driven by higher SOFA rates on our floating rate debt structures. Liquidity at quarter end totaled $329,000,000 including $224,000,000 of undrawn capacity on our revolving credit facility With that, I will turn the call back over to Mike for closing remarks. Speaker 200:15:13Thanks, Ali. In closing, we're pleased to deliver another quarter of strong earnings for our shareholders, demonstrated by high levels net investment income that are well in excess of our dividend and modest NAV growth as our underlying borrowers continue to perform well. Bain Capital Credit remains well positioned We remain committed to delivering value for our shareholders and thank you for the privilege of managing our shareholders' capital. Zico, please open the line for questions. Operator00:15:50Thank you. We will now begin the question and answer session. And you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Thank you. Operator00:16:29The first question comes from Arren Cygnovich with Citi. Please go ahead. Speaker 500:16:37Thanks. If you could talk a little bit about the investing environment, you mentioned attractive Characteristics today, you're seeing wider spreads and lower leverage. Are you seeing any kind of pickup in activity from sponsors? And What does your pipeline look like these days for new investments? Speaker 200:16:59Yes. Thanks Aaron. Look, I think it kind of varies a little bit, maybe Week to week or maybe month to month. We do continue to have busy months, not so busy months. Sponsors are definitely showing us things. Speaker 200:17:15There might be a little bit of going through the motions and just trying to see whether they can maybe pick up Some value plays, but we're not necessarily seeing a wholesale change from the current, I'd say stable level. That's still a little bit depressed from kind of pre COVID and certainly 2021, but it's Qualified is fine, not great from a deal flow perspective. Speaker 500:17:40Okay. And how does it look from an international perspective versus The U. Speaker 200:17:49S? It's still pretty balanced right now. I definitely say, last year we were in 2022, we were more U. S. Heavy, more Europe heavy in 2021. Speaker 200:18:00But I'd say this year, we're probably a little bit more balanced With Australia and New Zealand being a smaller piece and that just kind of being steady. So I don't know if there's any notable differences between the two markets right now. Operator00:18:13Okay. Thank you. Thank you. Our next question comes from Paul Johnson with KBW. Please go ahead. Speaker 600:18:29Yes, good morning. Thanks for taking my questions. I was just wondering if you can kind of comment on, I guess, the EBITDA growth trends that you're Seeing in your portfolio, I guess both domestically as well as internationally, I know it's kind of hard to generalize maybe All of international, but just in general kind of Europe versus U. S, what's been the performance like in the portfolio? Speaker 300:18:57Sure. So performance has been quite strong across both markets, referring to U. S. And Europe broadly. I do think top lines have held in, particularly in the industries we've selected to invest in. Speaker 300:19:10And so as we noted, 95% of our Portfolio is in line with our original underwrite and most of those original underwrites include some sort of EBITDA growth in the 15% to 20% Sort of CAGRs on the EBITDA line. So we've seen much of the portfolio perform in line with that sort of 15% to 20% year over year EBITDA growth, But that's largely driven by again the sectors we've chosen to invest in and we've really been able to shy away from many more cyclical sectors that might not Show the same amount of growth in this type of market environment. Speaker 600:19:48Thanks for that. And Just kind of generally, I guess, what are your thoughts on where the portfolio or where the BDC is today from a leverage standpoint? I believe we're around 1.2 times kind of gross levels as of the Q3, within obviously the target range That you guys run with, but just kind of given the uncertainty running into next year, potentially the higher for longer scenario, do you guys have any thoughts Around where you'd like leverage to be in the BDC? Sure. Speaker 300:20:26So I do look at The net level, more specifically when I think about where we're running our leverage versus at 1.12 times, Which is really right in that center of the range. I do think given the market environment, the fact that interest rates are likely to be higher for longer, Operating at the lower end of our leverage range while we wait for new deal activity to pick up and as Ewold commented earlier, the pipeline to get A little bit better than good and go back to great. I think we think about bringing the leverage back up, but in the near term, I do think we'd probably trend For the lower end of our range, so that we have dry powder to take advantage of future market opportunity. Speaker 600:21:07Thanks for that. That's helpful. And Last one from me. Was there anything specific driving, I guess, the credit, the internal credit rating sort of increased During the quarter, there's a big jump in that rated 2 category from 91% to 95%. Was that due to any sort of markups or markdowns Or any sort of activity in the portfolio that drove that? Speaker 300:21:31It was really driven by 2 companies that we had previously had on our watch list. They were companies that had been impacted by COVID and were really recovering, took a few years to recover back to pre COVID earnings levels. And so it was really 2 companies That performed better, that were taken off the watch list that drove that change. Speaker 600:21:51Appreciate it. Thanks. That's all for me. Operator00:21:53Thank you, Paul. Thank you. The next question is from Derek Hewett with Bank of America, please go ahead. Speaker 700:22:05Good morning, everyone. Could you talk a little bit about the mechanics of the incentive fee since it declined on Speaker 400:22:20We talked about that on the last couple of quarters calls because of the lower levels of incentive fees Versus prior, we had our COVID quarter that dropped off And the mechanics of the fee caused this kind of lower incentive level, but should go back to normal In the next 1 or 2 quarters. So I would expect the run rate to be a bit higher than that. Speaker 700:22:52Okay. Thank you for that. And then in regards to the dividends, you're significantly over earning it. If you adjust For the lower incentive fee, you're still materially over earning the dividend. What are your thoughts on an additional increase In the core dividend versus or potentially implementing kind of a supplemental Formulaic type of special dividend? Speaker 400:23:22Yes. That's something that we talk about often and we've talked about with our management team and our Board. Obviously, The spillover gives us some good NAV stability, but we do have this ability to either Do possibly an additional dividend or increase the dividend, both of those things are being considered. Speaker 700:23:50Okay. Thank you. That's all for me. Operator00:23:55Thank Speaker 300:24:00you. Operator00:24:05This concludes our question and answer session. I would like to turn the conference back over to Mike Leivold for closing remarks. Speaker 200:24:13Great. Thanks, Iko. I just wanted to thank everyone again for your time today and we certainly appreciate your continued support and look forward to bringing you more news We're executing our middle market investing strategy through BCSF in the future. Hope everyone has a good day. Thanks again. Operator00:24:30Thank you. The conference has now concluded. Thank you for attending today's presentation. 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