Barings BDC, Inc. Reports Second Quarter 2019 Results And Announces Quarterly Cash Dividend Of $0.14 Per Share

CHARLOTTE, N.C., July 30, 2019 /PRNewswire/ -- Barings BDC, Inc. (NYSE: BBDC) ("Barings BDC" or the "Company") today reported its financial and operating results for the second quarter of 2019 and announced that the Company's Board of Directors declared a quarterly cash dividend of $0.14 per share.

(PRNewsfoto/Barings)

Highlights

Income Statement

Three Months Ended
June 30, 2019

Three Months Ended
March 31, 2019

(dollars in millions, except per share data)

Total Amount

Per

Share(1)

Total Amount

Per

Share(2)

Net investment income

$

7.4


$

0.15


$

8.0


$

0.16















Net realized gains (losses)

$

0.1


$


$

(0.1)


$















Net unrealized appreciation

$

1.9


$

0.04


$

25.4


$

0.50















Net increase in net assets resulting from operations

$

9.2


$

0.18


$

33.2


$

0.65


Dividends paid


$

0.13



$

0.12



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

(2) Based on weighted average shares outstanding during the period of 51,157,646.

 

Investment Portfolio and Balance Sheet




(dollars in millions, except per share data)

As of

June 30, 2019

As of

March 31, 2019

As of

December 31, 2018

Investment portfolio at fair value

$1,200.6

$1,189.4

$1,121.9

Weighted average yield on debt investments, excluding short-
term investments (at principal amount)

6.2%

6.3%

6.2%





Total assets

$1,226.2

$1,211.2

$1,167.6

Debt outstanding (principal)

$633.8

$620.0

$570.0

Total net assets (equity)

$583.1

$584.2

$563.0

Net asset value per share

$11.59

$11.52

$10.98

Debt-to-equity ratio

1.09x   

1.06x   

1.01x   

 

Second Quarter 2019 Results

Commenting on the quarter, Eric Lloyd, Chief Executive Officer, stated, "We are pleased with our performance and the solid quarter of growth we had in our middle-market investment portfolio. Investment activity for the quarter was highlighted by seven new senior secured private debt investments totaling $67.1 million and the $5.2 million initial investment in Joccasee Partners, the joint venture we entered into with South Carolina Retirement Systems Group Trust. In addition, we earned net investment income of $0.15 per share, which exceeded our second quarter dividend by $0.02 per share. These earnings, along with our share repurchase plan, have contributed to our second quarter positive results."

During the three months ended June 30, 2019, the Company reported total investment income of $19.6 million, net investment income of $7.4 million, or $0.15 per share, and a net increase in net assets resulting from operations of $9.2 million, or $0.18 per share.

Net asset value ("NAV") per share as of June 30, 2019 was $11.59, as compared to $11.52 as of March 31, 2019. The increase in NAV per share from March 31, 2019 to June 30, 2019 was primarily attributable to net unrealized appreciation on the Company's investment portfolio of approximately $0.04 per share, net investment income exceeding the second quarter dividend by $0.02 per share and the impact of accretive share repurchases of $0.01 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 July 29, 2019, the Company had repurchased a total 969,789 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 1.9% of the Company's issued and outstanding shares as of February 25, 2019.

Liquidity and Capitalization

On May 9, 2019, the Company completed a term debt securitization (the "Debt Securitization") through a private placement of eight-year notes, with $348.25 million issued to third parties. Proceeds from the Debt Securitization were primarily used to repay borrowings under the Barings BDC Senior Funding I, LLC credit agreement (the "BSF Credit Agreement"). In addition, total commitments under the BSF Credit Agreement were reduced from $600.0 million to $250.0 million during the second quarter.

As of June 30, 2019, the Company had cash of $12.9 million, short-term money market fund investments of $34.4 million, $210.5 million of borrowings outstanding under the BSF Credit Agreement, $75.0 million of borrowings outstanding under its $800.0 million senior secured revolving credit agreement and $348.25 million outstanding under the Debt Securitization.

Dividend Information

The Board has declared a quarterly cash dividend of $0.14 per share. This represents a $0.01 increase from the second quarter dividend of 2019 and a dividend yield of approximately 6%.

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

Third Quarter 2019 Dividend:
Amount per share:               $0.14
Record date:                        September 11, 2019
Payment date:                      September 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 June 30, 2019, the Company purchased $2.9 million in syndicated senior secured loans, made seven new senior secured private middle-market debt investments totaling $67.1 million, made one joint venture equity investment totaling $5.2 million and made additional debt investments in four existing portfolio companies totaling $5.2 million. In addition, the Company sold $28.0 million, net, in money market fund investments during the three months ended June 30, 2019. The Company had four portfolio company loans repaid at par totaling $26.6 million, received $15.3 million of principal payments and sold $0.3 million of syndicated secured loans, recognizing a net realized loss on these transactions of $0.1 million. In addition, the Company received a $0.2 million escrow distribution from one portfolio company, which was recognized as a realized gain.

Subsequent Events

From July 1, 2019 through July 29, 2019, Barings BDC made approximately $70.1 million of new middle-market private debt and equity commitments, of which approximately $33.0 million have closed. The $33.0 million of middle-market investments consists of first lien senior secured debt with a weighted average yield of 8.9%. In addition, as of July 29, 2019, Barings North American Private Finance group had a probability weighted pipeline of approximately $419.7 million, 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 Second Quarter 2019 Results

Barings BDC has scheduled a conference call to discuss second quarter 2019 financial and operating results for Wednesday, July 31, 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 August 14, 2019. To access the replay, please dial 877-660-6853 or 201-612-7415 and enter conference ID 13691940.

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 August 14, 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. (NYSE: 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 $325 billion* of AUM firm-wide. For more information, visit www.baringsbdc.com.

About Barings LLC

Barings is a $325+ 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.

*As of June 30, 2019

Media Contact:
Kelly Smith, Media Relations, Barings, (980) 417-5648, kelly.smith@barings.com

Investor Relations:
BDCinvestorrelations@barings.com, (888) 401-1088

 

Barings BDC, Inc.

Consolidated Balance Sheets



June 30,
2019


December 31,
2018


(Unaudited)



Assets:




Investments at fair value:




Non-Control / Non-Affiliate investments (cost of $1,185,840,891 and $1,128,694,715
as of June 30, 2019 and December 31, 2018, respectively)

$

1,161,189,262



$

1,076,631,804



Affiliate investments (cost of $5,162,299 as of June 30, 2019)

5,000,210










Short-term investments (cost of $34,423,491 and $45,223,941 as of June 30, 2019 and
December 31, 2018, respectively)

34,423,491



45,223,941


Total investments at fair value

1,200,612,963



1,121,855,745


Cash

12,926,602



12,426,982


Interest and fees receivable

5,208,059



6,008,700


Prepaid expenses and other assets

1,318,240



4,123,742


Deferred financing fees

6,001,589



251,908


Receivable from unsettled transactions

115,302



22,909,998


Total assets

$

1,226,182,755



$

1,167,577,075


Liabilities:




Accounts payable and accrued liabilities

$

5,852,451



$

5,327,249


Interest payable

2,339,146



749,525


Payable from unsettled transactions

2,970,000



28,533,014


Borrowings under credit facilities

285,500,000



570,000,000


Debt securitization

346,441,453




Total liabilities

643,103,050



604,609,788


Commitments and contingencies




Net Assets:








Common stock, $0.001 par value per share (150,000,000 shares authorized, 50,314,275
and 51,284,064 shares issued and outstanding as of June 30, 2019 and December 31,
2018, respectively)

50,314



51,284


Additional paid-in capital

875,245,919



884,894,249


Total distributable earnings (loss)

(292,216,528)



(321,978,246)


Total net assets

583,079,705



562,967,287


Total liabilities and net assets

$

1,226,182,755



$

1,167,577,075


Net asset value per share

$

11.59



$

10.98


 

 

Barings BDC, Inc.

Unaudited Consolidated Statements of Operations



Three Months
Ended


Three Months
Ended


Six Months
Ended


Six Months
Ended


June 30,
 2019


June 30,
 2018


June 30,
 2019


June 30,
 2018

Investment income:








Interest income:








Non-Control / Non-Affiliate investments

$

18,823,480



$

17,507,637



$

36,684,799



$

36,513,687


Affiliate investments



2,250,311





4,910,498


Control investments



278,091





553,127


Short-term investments

251,344





424,039




Total interest income

19,074,824



20,036,039



37,108,838



41,977,312


Dividend income:








Non-Control / Non-Affiliate investments

4,711



66,657



4,711



252,369


Affiliate investments



334,575





339,125


Total dividend income

4,711



401,232



4,711



591,494


Fee and other income:








Non-Control / Non-Affiliate investments

519,970



2,627,353



821,027



3,921,070


Affiliate investments



134,407





528,680


Control investments



7,819





107,819


Total fee and other income

519,970



2,769,579



821,027



4,557,569


Payment-in-kind interest income:








Non-Control / Non-Affiliate investments



1,141,549





2,448,130


Affiliate investments



403,337





825,477


Total payment-in-kind interest income



1,544,886





3,273,607


Interest income from cash

2,183



721,755



6,870



1,149,596


Total investment income

19,601,688



25,473,491



37,941,446



51,549,578


Operating expenses:








Interest and other financing fees

7,027,040



7,344,335



12,871,212



14,934,883


Base management fee

3,130,955





5,581,950




Compensation expenses

108,646



3,842,656



227,090



7,935,508


General and administrative expenses

1,922,165



4,224,631



3,891,025



5,893,140


Total operating expenses

12,188,806



15,411,622



22,571,277



28,763,531


Net investment income

7,412,882



10,061,869



15,370,169



22,786,047














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
















Net realized gains (losses):








Non-Control / Non-Affiliate investments

50,024



(29,369,826)



(79,751)



(41,309,310)


Affiliate investments



(904,686)





2,352,512


Control investments



(6,630,547)





(6,626,547)


Net realized gains (losses) on investments

50,024



(36,905,059)



(79,751)



(45,583,345)


Foreign currency borrowings



(341,915)





1,081,211


Net realized gains (losses)

50,024



(37,246,974)



(79,751)



(44,502,134)


Net unrealized appreciation (depreciation):








Non-Control / Non-Affiliate investments

2,014,096



22,220,521



27,411,284



32,152,905


Affiliate investments

(162,089)



17,629,966



(162,089)



19,085,297


Control investments



3,040,908





1,670,033


Net unrealized appreciation on investments

1,852,007



42,891,395



27,249,195



52,908,235


Foreign currency borrowings



99,435





(863,980)


Net unrealized appreciation

1,852,007



42,990,830



27,249,195



52,044,255














Net realized and unrealized appreciation on investments and foreign currency
borrowings

1,902,031



5,743,856



27,169,444



7,542,121


Loss on extinguishment of debt

(85,356)





(129,751)




Benefit from (provision for) taxes

17,493



(488,845)



(499)



(539,635)


Net increase in net assets resulting from operations

$

9,247,050



$

15,316,880



$

42,409,363



$

29,788,533


Net investment income per share—basic and diluted

$

0.15



$

0.21



$

0.30



$

0.48


Net increase in net assets resulting from operations per share—basic and diluted

$

0.18



$

0.32



$

0.83



$

0.62


Dividends/distributions per share:








Total dividends/distributions per share

$

0.13



$



$

0.25



$

0.30


Weighted average shares outstanding—basic and diluted

50,473,640



48,041,540



50,813,753



47,970,594


 

 

BARINGS BDC, INC.

Unaudited Consolidated Statements of Cash Flows



Six Months
Ended


Six Months
Ended


June 30, 2019


June 30, 2018

Cash flows from operating activities:




Net increase in net assets resulting from operations

$

42,409,363



$

29,788,533










Adjustments to reconcile net increase in net assets resulting from operations to net cash
provided by (used in) operating activities:




Purchases of portfolio investments

(171,350,190)



(29,087,262)


Repayments received/sales of portfolio investments

104,431,586



196,625,451


Purchases of short-term investments

(317,480,389)




Sales of short-term investments

328,280,839




Loan origination and other fees received

2,420,157



292,999


Net realized loss on investments

79,751



45,583,345


Net realized gain on foreign currency borrowings



(1,081,211)


Net unrealized appreciation of investments

(27,249,195)



(53,257,297)


Net unrealized depreciation of foreign currency borrowings



863,980


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



623,880


Amortization of deferred financing fees

558,712



1,333,044


Loss on extinguishment of debt

129,751




Accretion of loan origination and other fees

(543,501)



(2,890,048)


Amortization/accretion of purchased loan premium/discount

(114,594)



(12,131)


Depreciation expense



27,414


Stock-based compensation



2,933,454


Changes in operating assets and liabilities:




Interest and fees receivables

800,641



(3,588,400)


Prepaid expenses and other assets

2,805,502



(75,446)


Accounts payable and accrued liabilities

525,202



(1,628,061)


Interest payable

1,589,621



(270,034)


Net cash provided by (used in) operating activities

(32,706,744)



186,182,210


Cash flows from financing activities:




Borrowings under credit facilities

120,000,000



4,100,000


Repayments of credit facilities

(404,500,000)



(149,953,253)


Proceeds from debt securitization

348,250,000




Financing fees paid

(8,246,691)




Purchases of shares in repurchase plan

(9,649,300)




Common stock withheld for payroll taxes upon vesting of restricted stock



(1,283,484)


Cash dividends/distributions paid

(12,647,645)



(14,407,384)


Net cash provided by (used in) financing activities

33,206,364



(161,544,121)


Net increase in cash

499,620



24,638,089


Cash, beginning of period

12,426,982



191,849,697


Cash, end of period

$

12,926,602



$

216,487,786


Supplemental disclosure of cash flow information:




Cash paid for interest

$

9,451,297



$

12,690,524


 

 

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