Barings BDC Brands, Inc. (NYSE:BBDC) Q3 2021 Earnings Conference Call November 10, 2021 9:00 AM ET Company Participants Eric Lloyd - Chairman & CEO Ian Fowler - President Jonathan Bock - CFO Conference Call Participants Kyle Joseph - Jefferies Ryan Lynch - KBW Leon Cooperman - Omega Advisors Robert Dodd - Raymond James & Associates Operator Greetings. At this time, I would like to welcome everyone to the Barings BDC, Inc. conference call for the quarter ended September 30, 2021. [Operator Instructions]. Tod ...

Financial Data and Key Metrics Changes - The net asset value (NAV) per share increased by $1 or 10.8% to $10.23, primarily driven by unrealized appreciation in the investment portfolio [8][19] - The total investment portfolio was carried at 93% of cost at June 30, compared to 87.4% at March 31 [9] - The net investment income per share was $0.14, which was $0.02 below the second quarter dividend of $0.16 per share [9][10] - The net debt-to-equity ratio decreased from 1.2 to 1.0x due to lower net debt and higher NAV [11][21] Business Line Data and Key Metrics Changes - Net middle market deployments during the quarter totaled $21 million, while the broadly syndicated loan (BSL) portfolio saw a net decrease of $67 million [10][13] - The funded middle market portfolio was spread across 64 companies and 18 industries, while the BSL portfolio was spread across 81 companies and 26 industries [14] - The top 10 investments represented only 21% of the total portfolio, indicating strong diversification [14] Market Data and Key Metrics Changes - The Credit Suisse B Leveraged Loan Index tightened considerably in the second quarter, although it remained above middle market levels [16] - Direct lending spreads were generally wider in the second quarter, reflecting a smaller sample size and a bias towards companies with minimal COVID impact [16][17] Company Strategy and Development Direction - The company received an investment-grade rating of Baa3 with a stable outlook from Moody's, which is expected to provide a distinct advantage during market volatility [6][7] - The company plans to continue rotating out of broadly syndicated loans and focus on middle market investments, with a significant increase in the investment pipeline to approximately $937 million [24][25] - The management emphasized a defensive capital structure while remaining opportunistic in asset composition [22][54] Management's Comments on Operating Environment and Future Outlook - Management noted that the middle market portfolio has weathered the COVID-19 situation well, with no payment defaults or material modifications [30][31] - The outlook remains cautious, with management acknowledging potential challenges in the next 6 to 18 months [31] - The company is not looking to time the market but will continue to underwrite investments assuming economic cycles will occur during the life of each asset [75][76] Other Important Information - The company repurchased approximately 2% of shares year-to-date under its share repurchase plan, generating $0.05 of NAV per share accretion [11] - The company announced a third quarter 2020 dividend of $0.16 per share, to be paid on September 16, 2020 [24] Q&A Session Summary Question: On portfolio improvement and liquidity outlook - Management indicated that some management teams were overly pessimistic about their market outlook, and many took aggressive actions in terms of cost reductions [28][30] Question: On Moody's rating and leverage ratios - Management confirmed that the investment-grade rating does not constrain their strategic outlook or approach [32][33] Question: On BSL sales and market conditions - Management expects the current quarter run rate for BSL reductions to be similar to the previous quarter, focusing on NAV-neutral sales [36] Question: On modifications in the middle market book - Management noted that while there were some requests for modifications, they were not significant, and most companies managed to avoid material changes [38] Question: On the investment pipeline and due diligence process - Management highlighted that the pipeline has improved significantly, but due diligence is being conducted remotely due to social distancing measures [44][46] Question: On the nature of new investments and risk appetite - Management clarified that they are not changing their core strategy but selectively investing in special situations when risk-adjusted returns are attractive [70] Question: On share repurchase program and market conditions - Management expressed commitment to share repurchases, aligning with their capital allocation philosophy, subject to liquidity constraints [72]

Barings BDC Inc (NYSE:BBDC) Q1 2021 Earnings Conference Call May 7, 2021 9:00 AM ET Company Participants Eric Lloyd - Chief Executive Officer Ian Fowler - President & Co-Head-Global Private Finance Jonathan Bock - Chief Financial Officer Conference Call Participants Finian O'Shea - Wells Fargo Kyle Joseph - Jefferies Robert Dodd - Raymond James Casey Alexander - Compass Point Paul Johnson - KBW Operator Greetings. At this time, I would like to welcome everyone to the Barings BDC, Inc. Conference Call for th ...

Financial Data and Key Metrics Changes - The net asset value (NAV) per share increased by $0.02 to $10.99 in Q4 2020, driven by net unrealized appreciation in the investment portfolio, partially offset by dilution from the MVC Capital acquisition [7][25] - The actual net asset value rose from approximately $526 million at September 30 to almost $718 million at December 31, providing increased leverage and investment capacity [8] - Net investment income increased from $0.17 per share in Q3 to $0.19 per share in Q4, attributed to net new Barings originated investments totaling $332 million [9][29] Business Line Data and Key Metrics Changes - Net new middle market investments totaled $393 million in Q4, with gross fundings of $528 million, partially offset by sales repayments of $135 million [15] - The investment portfolio at fair value grew to almost $1.5 billion at year-end, with a $380 million increase that included a $140 million decrease in short-term cash investments [11] - The portfolio was diversified, with no single investment exceeding 2.5% of the total portfolio, and the top 10 investments representing only 21% of the total [23] Market Data and Key Metrics Changes - Broadly syndicated loan prices continued to increase, returning to pre-COVID levels, while BDC equities ended 2020 with a 21% decline [6] - Direct lending spreads tightened across different lending subsectors as volumes increased, with over 70% of middle market fundings occurring in Q4 2020 [19] - The company reported a weighted average first lien leverage of 5.2x, consistent with previous quarters [21][55] Company Strategy and Development Direction - The company aims to rotate its portfolio from broadly syndicated loans to directly originated assets, believing this will lead to long-term NAV per share accretion [7][12] - The focus on maintaining a diverse capital structure with a mix of secured and unsecured debt is intended to provide flexibility during market volatility [30][32] - The company is positioned to take advantage of a wide investment frame of reference, allowing it to participate in differentiated deal flow across public and private markets [13][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience and performance of the portfolio, noting that most businesses were deemed essential and performed well during COVID [54] - The expectation for 2021 includes a high likelihood of increased prepayment velocity, which could provide a near-term earnings lift from the recognition of unamortized fees [35] - The company anticipates continued strong activity in both the U.S. and European markets, with a focus on maintaining credit quality and leveraging its international presence [62] Other Important Information - The company completed the MVC Capital acquisition, which is expected to enhance its investment capacity and portfolio quality [5][12] - The company plans to initiate a stock repurchase program for up to $15 million of common stock once regulatory requirements are met [26] - The total investment portfolio is now composed of 82% first lien investments, down from 92% at the end of Q3, primarily due to the MVC Capital acquisition [22] Q&A Session Summary Question: Context on portfolio rotation benefits - Management highlighted that the current MVC Capital assets are performing as expected, and liquidity generation through transactions will support future rotation opportunities [44] Question: Revenue and EBITDA growth trends - Management noted that the portfolio's revenue and EBITDA trends are flat to up, with no non-accruals, indicating strong credit performance across the portfolio [54][55] Question: Expectations for cross-platform investments - Management indicated that cross-platform investments represent about 15% of the portfolio, and the focus will remain on maximizing illiquidity and complexity premiums [60] Question: Dividend expectations from the JV, Jocassee - Management acknowledged that while Jocassee has performed well, it has not yet generated dividends, and future expectations will depend on the JV's performance [66]