Barings BDC, Inc. Reports Third Quarter 2019 Results And Announces Quarterly Cash Dividend Of $0.15 Per Share

CHARLOTTE, N.C., Oct. 29, 2019 /PRNewswire/ -- Barings BDC, Inc. BBDC ("Barings BDC" or the "Company") today reported its financial and operating results for the third quarter of 2019 and announced that the Company's Board of Directors declared a quarterly cash dividend of $0.15 per share.

(PRNewsfoto/Barings)

Highlights

Income Statement

Three Months Ended

September 30, 2019

Three Months Ended

June 30, 2019

(dollars in millions, except per share data)

Total Amount

Per

Share(1)

Total Amount

Per

Share(2)

Net investment income

$

8.0



$

0.16



$

7.4



$

0.15



Net realized gains (losses)

$

(1.0)



$

(0.02)



$

0.1



$



Net unrealized appreciation (depreciation)

$

(1.8)



$

(0.04)



$

1.9



$

0.04



Net increase in net assets resulting from operations

$

5.2



$

0.10



$

9.2



$

0.18



Dividends paid



$

0.14





$

0.13





(1) Based on weighted average shares outstanding during the period of 49,987,312.

(2) Based on weighted average shares outstanding during the period of 50,473,640.

 

Investment Portfolio and Balance Sheet









(dollars in millions, except per share data)

As of

September 30,

2019

As of

June 30,

2019

As of

March 31,

2019

As of

December 31,

2018

Investment portfolio at fair value

$1,158.2

$1,200.6

$1,189.4

$1,121.9

Weighted average yield on debt investments, excluding

short-term investments (at principal amount)

5.9%

6.2%

6.3%

6.2%











Total assets

$1,214.2

$1,226.2

$1,211.2

$1,167.6

Debt outstanding (principal)

$632.5

$633.8

$620.0

$570.0

Total net assets (equity)

$572.4

$583.1

$584.2

$563.0

Net asset value per share

$11.58

$11.59

$11.52

$10.98

Debt-to-equity ratio

1.10x

1.09x

1.06x

1.01x

Third Quarter 2019 Results

Commenting on the quarter, Eric Lloyd, Chief Executive Officer, stated, "The third quarter saw us continue our steady and deliberate middle-market investment ramp, rotating out of $130 million of broadly-syndicated loans and investing $116 million in middle-market loans. These new middle-market investments included three European investments, providing additional diversity with the goal of generating attractive risk-adjusted returns. In today's competitive environment, Barings' wide investment frame of reference across global markets and multiple asset classes, further enabled by our joint venture with the South Carolina Retirement System, allows us to find attractive investment opportunities while maintaining an appropriate balance between risk and current income."

During the three months ended September 30, 2019, the Company reported total investment income of $19.3 million, net investment income of $8.0 million, or $0.16 per share, and a net increase in net assets resulting from operations of $5.2 million, or $0.10 per share.

Net asset value ("NAV") per share as of September 30, 2019 was $11.58, as compared to $11.59 as of June 30, 2019. The change in NAV per share from June 30, 2019 to September 30, 2019 was primarily attributable to net unrealized depreciation on the Company's investment portfolio and foreign currency transactions of approximately $0.04 per share and a net realized loss of $0.02 per share, partially offset by net investment income exceeding the second quarter dividend by $0.02 per share and the impact of accretive share repurchases of $0.03 per share.

Share Repurchase Plan

On February 25, 2019, the Company adopted a share repurchase plan, pursuant to Board approval, for the purpose of repurchasing shares of the Company's common stock in the open market (the "Share Repurchase Plan"). The Board authorized the Company to repurchase in 2019 up to a maximum of 5.0% of the amount of shares outstanding under the following targets:

  • a maximum of 2.5% of the amount of shares of the Company's common stock outstanding if shares trade below NAV per share but in excess of 90% of NAV per share; and
  • a maximum of 5.0% of the amount of shares of the Company's common stock outstanding if shares trade below 90% of NAV per share.

As of October 29, 2019, the Company had repurchased a total 1,998,835 shares of its common stock in the open market under the Share Repurchase Plan at an average price of $9.95 per share, including broker commissions. The shares of common stock purchased under the Share Repurchase Plan represent approximately 3.9% of the Company's issued and outstanding shares as of February 25, 2019.

Liquidity and Capitalization

As of September 30, 2019, the Company had cash of $12.8 million, short-term money market fund investments of $51.6 million, $169.0 million of borrowings outstanding under the Barings BDC Senior Funding I, LLC credit agreement ("BSF Credit Agreement"), $122.8 million of borrowings outstanding under its $800.0 million senior secured revolving credit agreement and $340.8 million outstanding under its term debt securitization. During the third quarter, the Company elected to reduce total commitments under the BSF Credit Agreement from $250.0 million to $177.0 million.

Dividend Information

The Board has declared a quarterly cash dividend of $0.15 per share. This represents a $0.01 increase from the third quarter dividend of 2019 and a dividend yield of approximately 6%.

The Company's fourth quarter dividend will be payable as follows:

Fourth Quarter 2019 Dividend:



Amount per share:          

$0.15

Record date:                      

December 11, 2019

Payment date:                  

December 18, 2019

Dividend Reinvestment Plan

Barings BDC has adopted a dividend reinvestment plan ("DRIP") that provides for reinvestment of dividends and distributions on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, when the Company declares a cash dividend or distribution, stockholders who have not opted out of the DRIP will have their cash dividends or distributions automatically reinvested in additional shares of the Company's common stock, rather than receiving cash.

When the Company declares and pays dividends and distributions, it determines the allocation of the distribution between current income, accumulated income and return of capital on the basis of accounting principles generally accepted in the United States ("GAAP"). At each year end, the Company is required for tax purposes to determine the allocation based on tax accounting principles. Due to differences between GAAP and tax accounting principles, the portion of each dividend distribution that is ordinary income, capital gain or return of capital may differ for GAAP and tax purposes. The tax status of the Company's distributions can be found on the Investor Relations page of its website.

Recent Portfolio Activity

During the three months ended September 30, 2019, the Company purchased $1.0 million in syndicated senior secured loans, made ten new senior secured private middle-market debt investments totaling $102.5 million, made additional debt investments in six existing middle-market portfolio companies totaling $14.0 million and made an additional investment in its joint venture totaling $5.0 million. The Company had three syndicated senior secured loans repaid at par totaling $10.4 million, had two middle-market portfolio company loans repaid at par totaling $34.1 million, received $5.8 million of syndicated senior secured loan principal payments and received $2.2 million of middle-market portfolio company debt principal payments. In addition, the Company sold $114.7 million of syndicated senior secured loans, recognizing a net realized loss on these transactions of $0.5 million, and sold $10.2 million of middle-market portfolio company debt investments to its joint venture. In addition, the Company recognized a realized loss of $0.5 million related to royalty payments due from a legacy Triangle Capital portfolio company.

Subsequent Events

From October 1, 2019 through October 28, 2019, Barings BDC made approximately $69.4 million of new middle-market private debt commitments, of which approximately $24.7 million have closed. The $24.7 million of middle-market investments consists of first lien senior secured debt with a weighted average yield of 7.1%. In addition, as of October 25, 2019, Barings Global Private Finance group had a probability weighted pipeline of approximately $1.05 billion, in which Barings BDC may have the ability to participate. Not all deals may be suitable for Barings BDC and the Company's allocations will be determined in accordance with the Barings Global Private Finance allocation policy.

Conference Call to Discuss Third Quarter 2019 Results

Barings BDC has scheduled a conference call to discuss third quarter 2019 financial and operating results for Wednesday, October 30, 2019, at 9:00 a.m. ET.

To listen to the call, please dial 877-407-8831 or 201-493-6736 approximately 10 minutes prior to the start of the call. A taped replay will be made available approximately two hours after the conclusion of the call and will remain available until November 13, 2019. To access the replay, please dial 877-660-6853 or 201-612-7415 and enter conference ID 13695058.

Barings BDC's quarterly results conference call will also be available via a live webcast on the investor relations section of its website at https://ir.barings.com/ir-calendar. Access the website 15 minutes prior to the start of the call to download and install any necessary audio software. An archived webcast replay will be available on the Company's website until November 13, 2019.

Forward-Looking Statements

Statements included herein or on the webcast/conference call may constitute "forward-looking statements," which relate to future events or Barings BDC's future performance or financial condition. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made, which reflect management's current estimates, projections, expectations or beliefs, and which are subject to risks and uncertainties that may cause actual results to differ materially. Forward-looking statements include, but are not limited to, the ability of Barings LLC to manage Barings BDC and identify investment opportunities, are subject to change at any time based upon economic, market or other conditions, and may not be relied upon as investment advice or an indication of the Company's trading intent. More information on these risks and other potential factors that could affect the Company's financial results, including important factors that could cause actual results to differ materially from plans, estimates or expectations included herein or on the webcast/conference call, is included in the Company's filings with the SEC, including in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. In addition, there is no assurance that Barings BDC or any of its affiliates will purchase additional shares of Barings BDC at any specific discount levels or in any specific amounts. There is no assurance that the market price of Barings BDC's shares, either absolutely or relative to net asset value, will increase as a result of any share repurchases, or that any repurchase plan will enhance stockholder value over the long term. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

About Barings BDC

Barings BDC, Inc. BBDC is a publicly traded, externally managed investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Barings BDC seeks to invest primarily in senior secured loans to private U.S. middle-market companies that operate across a wide range of industries. Barings BDC's investment activities are managed by its investment adviser, Barings LLC, a leading global asset manager based in Charlotte, NC with over $335 billion* of AUM firm-wide. For more information, visit www.baringsbdc.com.

About Barings LLC

Barings is a $335+ billion* global financial services firm dedicated to meeting the evolving investment and capital needs of our clients and customers. Through active asset management and direct origination, we provide innovative solutions and access to differentiated opportunities across public and private capital markets. A subsidiary of MassMutual, Barings maintains a strong global presence with business and investment professionals located across North America, Europe and Asia Pacific. Learn more at www.Barings.com.

*As of September 30, 2019

Media Contact:

Rachel White, Media Relations, Barings, (980) 417-5886, rachel.white@barings.com

 

 

Barings BDC, Inc.

Consolidated Balance Sheets



September 30,

2019
 



December 31,

2018
 



(Unaudited)  





Assets:







Investments at fair value:







Non-Control / Non-Affiliate investments (cost of $1,123,493,075 and $1,128,694,715

as of September 30, 2019 and December 31, 2018, respectively)

$

1,096,632,222





$

1,076,631,804



Affiliate investments (cost of $10,158,270 as of September 30, 2019)

10,036,300







Short-term investments (cost of $51,552,247 and $45,223,941 as of September 30,

2019 and December 31, 2018, respectively)

51,552,247





45,223,941



Total investments at fair value

1,158,220,769





1,121,855,745



Cash

12,838,103





12,426,982



Interest and fees receivable

5,413,193





6,008,700



Prepaid expenses and other assets

1,702,920





4,123,742



Deferred financing fees

5,654,274





251,908



Receivable from unsettled transactions

30,322,297





22,909,998



Total assets

$

1,214,151,556





$

1,167,577,075



Liabilities:







Accounts payable and accrued liabilities

$

5,393,118





$

5,327,249



Interest payable

2,893,316





749,525



Payable from unsettled transactions

2,621,367





28,533,014



Borrowings under credit facilities

291,767,549





570,000,000



Debt securitization

339,031,226







Total liabilities

641,706,576





604,609,788



Commitments and contingencies







Net Assets:







Common stock, $0.001 par value per share (150,000,000 shares authorized, 49,418,542

and 51,284,064 shares issued and outstanding as of September 30, 2019 and December 31,

2018, respectively)

49,419





51,284



Additional paid-in capital

866,351,909





884,894,249



Total distributable earnings (loss)

(293,956,348)





(321,978,246)



Total net assets

572,444,980





562,967,287



Total liabilities and net assets

$

1,214,151,556





$

1,167,577,075



Net asset value per share

$

11.58





$

10.98



 

 

Barings BDC, Inc.

Unaudited Consolidated Statements of Operations





Three Months

Ended



Three Months

Ended



Nine Months

Ended



Nine Months

Ended



September 30,

 2019



September 30,

 2018



September 30,

 2019



September 30,

 2018

Investment income:















Interest income:















Non-Control / Non-Affiliate investments

$

18,169,034





$

8,769,282





$

54,853,833





$

45,282,969



Affiliate investments





669,553









5,580,051



Control investments





91,678









644,805



Short-term investments

279,908





535,153





703,947





535,153



Total interest income

18,448,942





10,065,666





55,557,780





52,042,978



Dividend income:















Non-Control / Non-Affiliate investments

4,221









8,932





252,369



Affiliate investments





303,062









642,187



Total dividend income

4,221





303,062





8,932





894,556



Fee and other income:















Non-Control / Non-Affiliate investments

848,792





304,835





1,669,819





4,225,905



Affiliate investments





72,891









601,571



Control investments













107,819



Total fee and other income

848,792





377,726





1,669,819





4,935,295



Payment-in-kind interest income:















Non-Control / Non-Affiliate investments





366,344









2,814,474



Affiliate investments





136,603









962,080



Total payment-in-kind interest income





502,947









3,776,554



Interest income from cash

2,152





822,995





9,022





1,972,591



Total investment income

19,304,107





12,072,396





57,245,553





63,621,974



Operating expenses:















Interest and other financing fees

6,727,780





4,369,994





19,598,992





19,304,877



Base management fee (Note 2)

3,263,803





1,546,675





8,845,753





1,546,675



Compensation expenses

107,779





29,435,834





334,869





37,371,342



General and administrative expenses (Note 2)

1,217,570





8,766,516





5,108,595





14,659,656



Total operating expenses

11,316,932





44,119,019





33,888,209





72,882,550



Base management fee waived (Note 2)





(993,317)









(993,317)



Net operating expenses

11,316,932





43,125,702





33,888,209





71,889,233



Net investment income (loss)

7,987,175





(31,053,306)





23,357,344





(8,267,259)



Realized and unrealized gains (losses) on investments and foreign currency

transactions:















Net realized gains (losses):















Non-Control / Non-Affiliate investments

(1,066,536)





(92,881,851)





(1,146,287)





(134,191,161)



Affiliate investments





7,586,818









9,939,330



Control investments





(31,916,157)









(38,542,704)



Net realized losses on investments

(1,066,536)





(117,211,190)





(1,146,287)





(162,794,535)



Foreign currency transactions

83,037









83,037





1,081,211



Net realized losses

(983,499)





(117,211,190)





(1,063,250)





(161,713,324)



Net unrealized appreciation (depreciation):















Non-Control / Non-Affiliate investments

(2,209,225)





50,825,657





25,202,059





82,978,562



Affiliate investments

40,119





(15,887,729)





(121,970)





3,197,568



Control investments





22,717,499









24,387,532



Net unrealized appreciation (depreciation) on investments

(2,169,106)





57,655,427





25,080,089





110,563,662



Foreign currency transactions

374,278









374,278





(863,980)



Net unrealized appreciation (depreciation)

(1,794,828)





57,655,427





25,454,367





109,699,682



Net realized losses and unrealized appreciation (depreciation) on investments and

foreign currency transactions

(2,778,327)





(59,555,763)





24,391,117





(52,013,642)



Loss on extinguishment of debt

(13,357)





(10,507,183)





(143,108)





(10,507,183)



Provision for taxes





(274,132)





(499)





(813,767)



Net increase (decrease) in net assets resulting from operations

$

5,195,491





$

(101,390,384)





$

47,604,854





$

(71,601,851)



Net investment income (loss) per share—basic and diluted

$

0.16





$

(0.59)





$

0.46





$

(0.17)



Net increase (decrease) in net assets resulting from operations per share—basic and

diluted

$

0.10





$

(1.94)





$

0.94





$

(1.45)



Dividends/distributions per share:















Total dividends/distributions per share

$

0.14





$

0.03





$

0.39





$

0.33



Weighted average shares outstanding—basic and diluted

49,987,312





52,300,269





50,535,246





49,429,678



 

 

Barings BDC, Inc.

Unaudited Consolidated Statements of Cash Flows





Nine Months

Ended



Nine Months

Ended



September 30,

2019



September 30,

2018

Cash flows from operating activities:







Net increase (decrease) in net assets resulting from operations

$

47,604,854





$

(71,601,851)



Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net

cash provided by (used in) operating activities:







Purchases of portfolio investments

(294,160,380)





(789,746,110)



Repayments received/sales of portfolio investments

251,057,329





314,112,490



Proceeds from sale of portfolio to Asset Buyer





793,281,722



Purchases of short-term investments

(577,451,108)





(730,233,448)



Sales of short-term investments

571,122,802





685,233,448



Loan origination and other fees received

5,118,390





1,212,914



Net realized loss on investments

1,146,287





162,794,535



Net realized gain on foreign currency transactions

(83,037)





(1,081,211)



Net unrealized appreciation of investments

(25,080,089)





(109,232,129)



Net unrealized (appreciation) depreciation of foreign currency transactions

(374,278)





863,980



Payment-in-kind interest accrued, net of payments received





120,933



Amortization of deferred financing fees

951,134





1,710,047



Loss on extinguishment of debt

143,108





10,507,183



Loss on disposal of property and equipment





22,236



Accretion of loan origination and other fees

(1,254,234)





(3,205,327)



Amortization/accretion of purchased loan premium/discount

(187,967)





(37,486)



Depreciation expense





27,414



Stock-based compensation





14,229,633



Changes in operating assets and liabilities:







Interest and fees receivables

595,826





(4,098,768)



Prepaid expenses and other assets

2,421,921





(2,085,170)



Accounts payable and accrued liabilities

65,869





(8,579,273)



Interest payable

2,141,975





(3,845,616)



Net cash provided by (used in) operating activities

(16,221,598)





260,370,146



Cash flows from investing activities:







Proceeds from sales of property and equipment





31,499



Net cash provided by investing activities





31,499



Cash flows from financing activities:







Repayments of SBA-guaranteed debentures payable





(250,000,000)



Borrowings under credit facilities

188,225,262





214,100,000



Repayments of credit facilities

(466,000,000)





(159,953,253)



Proceeds from debt securitization

348,250,000







Repayment of debt securitization

(7,468,690)







Redemption of notes





(166,750,000)



Financing fees paid

(8,246,692)





(47,900)



Net proceeds related to issuance of common stock





99,839,845



Purchases of shares in repurchase plan

(18,544,205)





(50,796,324)



Common stock withheld for payroll taxes upon vesting of restricted stock





(6,018,828)



Cash dividends/distributions paid

(19,582,956)





(15,945,906)



Net cash provided by (used in) financing activities

16,632,719





(335,572,366)



Net increase (decrease) in cash

411,121





(75,170,721)



Cash, beginning of period

12,426,982





191,849,697



Cash, end of period

$

12,838,103





$

116,678,976



Supplemental disclosure of cash flow information:







Cash paid for interest

$

14,398,249





$

19,845,947



 

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SOURCE Barings BDC, Inc.

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