Form: 8-K

Current report filing

August 7, 2024


                                                 Exhibit 99.1    
        
baringslogofinalrgba19a.jpg

BARINGS BDC, INC. REPORTS SECOND QUARTER 2024 RESULTS AND
ANNOUNCES QUARTERLY CASH DIVIDEND OF $0.26 PER SHARE
CHARLOTTE, N.C., August 7, 2024 - Barings BDC, Inc. (NYSE: BBDC) (“Barings BDC” or the “Company”) today reported its financial and operating results for the second quarter of 2024 and announced that the Company’s Board of Directors (the “Board”) declared a quarterly cash dividend of $0.26 per share.
Highlights
Income Statement
Three Months Ended
June 30, 2024
Three Months Ended
March 31, 2024
(dollars in millions, except per share data) Total Amount
Per
Share(1)
Total Amount
Per
Share(2)
Net investment income $42.1 $0.40 $29.4 $0.28
Net realized gains (losses) $8.1 $0.08 $(21.5) $(0.20)
Net unrealized appreciation (depreciation) $(30.8) $(0.29) $36.1 $0.34
Net increase (decrease) in net assets resulting from operations $19.4 $0.18 $44.0 $0.41
Dividends paid $0.26 $0.26
(1) Based on weighted average shares outstanding during the period of 105,898,271.
(2) Based on weighted average shares outstanding during the period of 106,038,873.
Investment Portfolio and Balance Sheet
(dollars in millions, except per share data) As of
June 30,
 2024
As of
March 31, 2024
As of
December 31, 2023
Investment portfolio at fair value $2,395.7 $2,527.5 $2,488.7
Weighted average yield on performing debt investments (at principal amount) 10.9  % 10.7  % 10.5  %
Total assets $2,603.6 $2,698.7 $2,677.5
Debt outstanding (principal) $1,375.8 $1,465.4 $1,444.9
Total net assets (equity) $1,201.9 $1,211.9 $1,196.6
Net asset value per share $11.36 $11.44 $11.28
Debt-to-equity ratio 1.14x 1.21x 1.21x
Net debt-to-equity ratio (adjusted for unrestricted cash and net unsettled transactions) 1.07x 1.17x 1.15x
Second Quarter 2024 Results
Commenting on the quarter, Eric Lloyd, Chief Executive Officer of Barings BDC, stated, “We continued to deliver strong, stable results for our shareholders this quarter, demonstrated by net investment income that was meaningfully higher than our dividend and industry leading non-accrual rates. We made further meaningful progress this quarter reducing our non-core positions, providing us with capital to recycle into attractively structured and priced, first lien, middle market loans in what we believe will be an accelerating deal environment in the second half of the year.”
During the three months ended June 30, 2024, the Company reported total investment income of $74.9 million, net investment income of $42.1 million, or $0.40 per share, and a net increase in net assets resulting from operations of $19.4 million, or $0.18 per share.



Net asset value (“NAV”) per share as of June 30, 2024 was $11.36, as compared to $11.44 as of March 31, 2024. The decrease in NAV per share from March 31, 2024 to June 30, 2024 was primarily attributed to net unrealized depreciation on the Company’s investment portfolio, credit support agreements, foreign currency transactions and forward currency contracts of approximately $0.29 per share, partially offset by net investment income exceeding the Company’s second quarter dividend by $0.14 per share and a net realized gain on investments, foreign currency transactions and forward currency contracts of $0.07 per share.
Recent Portfolio Activity
During the three months ended June 30, 2024, the Company made nine new investments totaling $38.5 million and made investments in existing portfolio companies totaling $40.0 million. The Company had 15 loans repaid totaling $116.2 million, received $21.8 million of portfolio company principal payments and received $3.8 million of return of capital from joint ventures and equity investments. The Company received $28.2 million for the sale of loans, recognizing a net realized gain on these transactions of $0.5 million. Lastly, the Company received proceeds related to the sale of equity investments totaling $24.9 million and recognized a net realized gain on such sales totaling $3.0 million.
During the three months ended June 30, 2024, the Company recorded net unrealized depreciation totaling $30.8 million, consisting of net unrealized depreciation on its current portfolio of $30.1 million, unrealized depreciation of $2.8 million on the Sierra credit support agreement with Barings and net unrealized depreciation related to forward currency contracts of $4.5 million, partially offset by net unrealized appreciation reclassification adjustments of $3.6 million related to the net realized losses on the sales / repayments and restructures of certain investments, unrealized appreciation of $1.9 million on the MVC credit support agreement with Barings and net unrealized appreciation related to foreign currency transactions of $1.0 million. The net unrealized depreciation on the Company’s current portfolio of $30.1 million was driven primarily by the credit or fundamental performance of investments of $21.6 million, broad market moves for investments of $7.7 million and the impact of foreign currency exchange rates on investments of $0.8 million.
Liquidity and Capitalization
As of June 30, 2024, the Company had cash and foreign currencies of $84.4 million (including restricted cash of $15.0 million), $350.8 million of borrowings outstanding under its $1,065.0 million senior secured revolving credit agreement, $1,025.0 million aggregate principal amount of unsecured notes outstanding and a net receivable from unsettled transactions of $20.6 million.
Share Repurchase Program
On February 22, 2024, the Board authorized a new 12-month share repurchase program. Under the program, the Company may repurchase, during the 12-month period commencing on March 1, 2024, up to $30.0 million in the aggregate of its outstanding common stock in the open market at prices below the then-current NAV per share. The timing, manner, price and amount of any share repurchases will be determined by the Company, in its discretion, based upon the evaluation of economic and market conditions, the Company’s stock price, applicable legal, contractual and regulatory requirements and other factors. The program is expected to be in effect until March 1, 2025, unless extended or until the aggregate repurchase amount that has been approved by the Board has been expended. The program does not require the Company to repurchase any specific number of shares, and the Company cannot assure stockholders that any shares will be repurchased under the program. The program may be suspended, extended, modified or discontinued at any time. During the three months ended June 30, 2024, the Company repurchased a total of 193,167 shares of its common stock in the open market under the authorized program at an average price of $9.88 per share, including brokerage commissions. As of August 7, 2024, the Company had repurchased a total of 309,078 shares of its common stock in the open market under the authorized program at an average price of $9.76 per share, including brokerage commissions.
Dividend Information
The Board declared a quarterly cash dividend of $0.26 per share.
The Company’s third quarter dividend is payable as follows:
Third Quarter 2024 Dividend:
Amount per share:         $0.26
Record date:             September 4, 2024
Payment date:             September 11, 2024



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, capital gains 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.
Subsequent Events
Subsequent to June 30, 2024, the Company made approximately $55.9 million of new commitments, of which $45.6 million closed and funded. The $45.6 million of investments consists of $45.3 million of first lien senior secured debt investments and $0.3 million of equity investments. The weighted average yield of the debt investments was 10.7%. In addition, the Company funded $8.5 million of previously committed revolvers and delayed draw term loans.
Conference Call to Discuss Second Quarter 2024 Results
Barings BDC has scheduled a conference call to discuss second quarter 2024 financial and operating results for Thursday, August 8, 2024, at 9:00 a.m. ET.
To listen to the call, please dial 888-428-7458 or 862-298-0702 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 15, 2024. To access the replay, please dial 877-660-6853 or 201-612-7415 and enter conference ID 13747692.
This conference call will also be available via a live webcast on the investor relations section of Barings BDC’s 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 15, 2024.
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 Company’s projected net investment income and earnings, the Company’s distribution levels and frequency of distributions, the Company’s share repurchase activity and investment activity, and the ability of Barings LLC to manage Barings BDC and identify investment opportunities, all of which 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 Barings BDC’s trading intent. More information on the risks and other potential factors that could affect Barings BDC’s financial results and future events, including important factors that could cause actual results or events to differ materially from plans, estimates or expectations included herein or discussed on the webcast/conference call, is included in Barings BDC’s filings with the Securities and Exchange Commission, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Barings BDC’s most recently filed annual report on Form 10-K, as well as in subsequent filings, including Barings BDC’s quarterly reports on Form 10-Q. 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 NAV, will increase as a result of any share repurchases, or that any repurchase plan will enhance stockholder value over the long term.



Non-GAAP Financial Measures
To provide additional information about the Company’s results, the Company’s management has discussed in this press release the Company’s net debt (calculated as (i) total debt less (ii) unrestricted cash and foreign currencies (excluding restricted cash) net of net payables/receivables from unsettled transactions) and its net debt-to-equity ratio (calculated as net debt divided by total net assets), which are not prepared in accordance with GAAP. These non-GAAP measures are included to supplement the Company’s financial information presented in accordance with GAAP and because the Company uses such measures to monitor and evaluate its leverage and financial condition and believes the presentation of these measures enhances investors’ ability to analyze trends in the Company’s business and to evaluate the Company’s leverage and ability to take on additional debt. However, these non-GAAP measures have limitations and should not be considered in isolation or as a substitute for analysis of the Company’s financial results as reported under GAAP.
These non-GAAP measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. These measures should only be used to evaluate the Company’s results of operations in conjunction with their corresponding GAAP measures. Pursuant to the requirements of Item 10(e) of Regulation S-K, as promulgated under the Securities Exchange Act of 1934, as amended, the Company has provided a reconciliation of these non-GAAP measures in the last table included in this press release.
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 in 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 $409+ billion* of AUM firm-wide. For more information, visit www.baringsbdc.com.
About Barings LLC
Barings is a $409+ billion* global investment manager sourcing differentiated opportunities and building long-term portfolios across public and private fixed income, real estate, and specialist equity markets. With investment professionals based in North America, Europe and Asia Pacific, the firm, a subsidiary of MassMutual, aims to serve its clients, communities and employees, and is committed to sustainable practices and responsible investment. Learn more at www.barings.com.
*Assets under management as of June 30, 2024
Media Contact:
MediaRelations@barings.com
Investor Relations:
BDCinvestorrelations@barings.com, 888-401-1088























Barings BDC, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)
June 30,
2024
December 31, 2023
(Unaudited)
Assets:
Investments at fair value:
Non-Control / Non-Affiliate investments (cost of $1,969,097 and $2,053,548 as of June 30, 2024 and December 31, 2023, respectively)
$ 1,911,585  $ 1,995,372 
Affiliate investments (cost of $372,603 and $378,865 as of June 30, 2024 and December 31, 2023, respectively)
393,922  402,423 
Control investments (cost of $104,162 and $103,163 as of June 30, 2024 and December 31, 2023, respectively)
90,153  90,920 
Total investments at fair value 2,395,660  2,488,715 
Cash (restricted cash of $15,018 and $0 as of June 30, 2024 and December 31, 2023, respectively)
66,093  57,187 
Foreign currencies (cost of $18,220 and $13,023 as of June 30, 2024 and December 31, 2023, respectively)
18,270  13,341 
Interest and fees receivable 37,120  51,598 
Prepaid expenses and other assets 2,942  3,564 
Credit support agreements (cost of $58,000 as of both June 30, 2024 and December 31, 2023)
50,546  57,800 
Derivative assets 4,350 
Deferred financing fees 3,031  3,948 
Receivable from unsettled transactions 25,631  1,299 
Total assets $ 2,603,643  $ 2,677,453 
Liabilities:
Accounts payable and accrued liabilities $ 2,875  $ 2,950 
Interest payable 14,322  8,450 
Administrative fees payable 400  536 
Base management fees payable 8,190  8,347 
Incentive management fees payable 1,122  7,737 
Derivative liabilities 9,869  11,265 
Payable from unsettled transactions 5,081  1,112 
Borrowings under credit facility 350,823  719,914 
Notes payable (net of deferred financing fees) 1,009,085  720,583 
Total liabilities 1,401,767  1,480,894 
Commitments and contingencies
Net Assets:
Common stock, $0.001 par value per share (150,000,000 shares authorized, 105,757,992 and 106,067,070 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively)
106  106 
Additional paid-in capital 1,851,442  1,854,457 
Total distributable earnings (loss) (649,672) (658,004)
Total net assets 1,201,876  1,196,559 
Total liabilities and net assets $ 2,603,643  $ 2,677,453 
Net asset value per share $ 11.36  $ 11.28 




Barings BDC, Inc.
Unaudited Consolidated Statements of Operations
(in thousands, except share and per share data)
Three Months
Ended
Three Months
Ended
Six Months
Ended
Six Months
Ended
June 30,
2024
June 30,
2023
June 30,
2024
June 30,
2023
Investment income:
Interest income:
Non-Control / Non-Affiliate investments $ 54,084  $ 54,561  $ 107,273  $ 105,729 
Affiliate investments 792  459  1,749  839 
Control investments 51  404  437  746 
Total interest income 54,927  55,424  109,459  107,314 
Dividend income:
Non-Control / Non-Affiliate investments 1,324  831  2,645  1,658 
Affiliate investments 10,410  9,419  17,565  16,466 
Total dividend income 11,734  10,250  20,210  18,124 
Fee and other income:
Non-Control / Non-Affiliate investments 3,552  4,232  6,939  7,314 
Affiliate investments 200  37  269  204 
Control investments 17  32  34  83 
Total fee and other income 3,769  4,301  7,242  7,601 
Payment-in-kind interest income:
Non-Control / Non-Affiliate investments 3,246  4,782  5,728  8,317 
Affiliate investments 268  48  519  251 
Control investments 684  292  1,076  496 
Total payment-in-kind interest income 4,198  5,122  7,323  9,064 
Interest income from cash 258  205  458  403 
Total investment income 74,886  75,302  144,692  142,506 
Operating expenses:
Interest and other financing fees 20,774  20,811  41,856  40,127 
Base management fee 8,190  8,134  16,469  15,987 
Incentive management fees 1,122  10,086  9,289  19,691 
General and administrative expenses 2,343  2,447  5,019  5,183 
Total operating expenses 32,429  41,478  72,633  80,988 
Net investment income before taxes 42,457  33,824  72,059  61,518 
Income taxes, including excise tax expense 315  200  565  395 
Net investment income after taxes $ 42,142  $ 33,624  $ 71,494  $ 61,123 



Barings BDC, Inc.
Unaudited Consolidated Statements of Operations — (Continued)
(in thousands, except share and per share data)
Three Months
Ended
Three Months
Ended
Six Months
Ended
Six Months
Ended
June 30,
2024
June 30,
2023
June 30,
2024
June 30,
2023
Realized gains (losses) and unrealized appreciation (depreciation) on investments, credit support agreements, foreign currency transactions and forward currency contracts:
Net realized gains (losses):
Non-Control / Non-Affiliate investments $ 7,685  $ (46,218) $ (4,922) $ (45,446)
Affiliate investments (4,179) —  (4,179) — 
Net realized gains (losses) on investments 3,506  (46,218) (9,101) (45,446)
Foreign currency transactions 153  372  393  4,074 
Forward currency contracts 4,415  (2,692) (4,671) (16,911)
Net realized gains (losses) 8,074  (48,538) (13,379) (58,283)
Net unrealized appreciation (depreciation):
Non-Control / Non-Affiliate investments (7,831) 45,334  672  52,771 
Affiliate investments (5,034) 2,722  (2,239) 13,563 
Control investments (13,572) 5,602  (1,766) (1,667)
Net unrealized appreciation (depreciation) on investments (26,437) 53,658  (3,333) 64,667 
Credit support agreements (904) 1,978  (7,254) 7,564 
Foreign currency transactions 1,025  (2,839) 4,541  (10,966)
Forward currency contracts (4,460) 2,262  11,372  15,764 
Net unrealized appreciation (depreciation) (30,776) 55,059  5,326  77,029 
Net realized gains (losses) and unrealized appreciation (depreciation) on investments, credit support agreements, foreign currency transactions and forward currency contracts (22,702) 6,521  (8,053) 18,746 
Benefit from (provision for) income taxes —  (28) —  (101)
Net increase (decrease) in net assets resulting from operations $ 19,440  $ 40,117  $ 63,441  $ 79,768 
Net investment income per share — basic and diluted $ 0.40  $ 0.31  $ 0.67  $ 0.57 
Net increase (decrease) in net assets resulting from operations per share — basic and diluted $ 0.18  $ 0.37  $ 0.60  $ 0.74 
Dividends / distributions per share:
Total dividends / distributions per share $ 0.26  $ 0.25  $ 0.52  $ 0.50 
Weighted average shares outstanding — basic and diluted 105,898,271  107,381,276  105,968,572  107,647,243 
        




Barings BDC, Inc.
Unaudited Consolidated Statements of Cash Flows 
(in thousands)
Six Months Ended
Six Months Ended
June 30, 2024 June 30, 2023
Cash flows from operating activities:
Net increase (decrease) in net assets resulting from operations $ 63,441  $ 79,768 
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 (216,878) (255,744)
Repayments received / sales of portfolio investments 289,310  188,422 
Loan origination and other fees received 3,768  2,876 
Net realized (gain) loss on investments 9,101  45,446 
Net realized (gain) loss on foreign currency transactions (393) (4,074)
Net realized (gain) loss on forward currency contracts 4,671  16,911 
Net unrealized (appreciation) depreciation on investments 3,333  (64,667)
Net unrealized (appreciation) depreciation of CSAs 7,254  (7,564)
Net unrealized (appreciation) depreciation on foreign currency transactions (4,541) 10,966 
Net unrealized (appreciation) depreciation on forward currency contracts (11,372) (15,764)
Payment-in-kind interest / dividends (10,331) (11,567)
Amortization of deferred financing fees 2,251  1,565 
Accretion of loan origination and other fees (5,473) (4,094)
Amortization / accretion of purchased loan premium / discount (412) (946)
Payments for derivative contracts (11,586) (19,437)
Proceeds from derivative contracts 6,914  2,526 
Changes in operating assets and liabilities:
Interest and fees receivable 14,625  (2,730)
Prepaid expenses and other assets 628  651 
Accounts payable and accrued liabilities (6,984) 9,702 
Interest payable 5,877  558 
Net cash provided by (used in) operating activities 143,203  (27,196)
Cash flows from financing activities:
Borrowings under credit facility 24,500  35,000 
Repayments of credit facility (388,539) — 
Proceeds from notes 300,000  — 
Financing fees paid (7,205) (2,389)
Purchases of shares in repurchase plan (3,015) (10,854)
Cash dividends / distributions paid (55,109) (53,646)
Net cash provided by (used in) financing activities (129,368) (31,889)
Net increase (decrease) in cash and foreign currencies 13,835  (59,085)
Cash and foreign currencies, beginning of period 70,528  139,415 
Cash and foreign currencies, end of period $ 84,363  $ 80,330 
Supplemental Information:
Cash paid for interest $ 32,855  $ 37,354 
Excise taxes paid during the period $ 1,700  $ 800 




Barings BDC, Inc.
Unaudited Reconciliation of Debt to Net Debt and Calculation of Net Debt-to-Equity Ratio
(in thousands, except ratios)

June 30,
2024
March 31, 2024 December 31, 2023
Total debt (principal) $ 1,375,823  $ 1,465,352  $ 1,444,914 
minus: Cash and foreign currencies (excluding restricted cash) (69,345) (50,740) (70,528)
plus: Payable from unsettled transactions 5,081  336  1,112 
minus: Receivable from unsettled transactions (25,631) (2,159) (1,299)
Total net debt(1)
$ 1,285,928  $ 1,412,789  $ 1,374,199 
Total net assets $ 1,201,876  $ 1,211,876  $ 1,196,559 
Total net debt-to-equity ratio(1)
1.07x 1.17x 1.15x
(1) See the “Non-GAAP Financial Measures” section of this press release.