Oct 28, 2025 4:30 PM Eastern Daylight Time BOSTON--(BUSINESS WIRE)--Bain Capital Specialty Finance, Inc. (NYSE: BCSF, the "Company†) today announced it will report its financial results for the third quarter ended September 30, 2025 on Monday, November 10, 2025 after market close. Management will host a conference call on Tuesday, November 11, 2025 at 8:30 a.m. Eastern Time to discuss the Company's financial results. Conference Call Information: A conference call to discuss the Company's financial results ...

Financial Results Announcement - Bain Capital Specialty Finance, Inc. will release its financial results for the quarter ended September 30, 2025, on November 10, 2025, after market close[4] - The press release regarding the financial results was issued on October 28, 2025[4] Conference Call - A conference call to discuss the financial results is scheduled for November 11, 2025, at 8:30 a.m. Eastern Time[4]

Group 1 - The BDC sector is currently underperforming compared to the market, with many companies reaching new lows despite the S&P 500's rise [2] - Historically, BDC prices have been influenced more by market sentiment rather than intrinsic value [2] - The company Trade With Beta focuses on identifying directional and arbitrage opportunities in closed-end funds, emphasizing the importance of timing in these trades [1]

Group 1 - The BDC sector is currently underperforming compared to the market, with many companies reaching new lows despite the S&P 500's rise [2] - Historically, BDC prices have been influenced more by market sentiment rather than intrinsic value [2] - The company Trade With Beta focuses on identifying directional and arbitrage opportunities in closed-end funds, emphasizing the importance of timing in these trades [1]

Core Viewpoint - Investors should focus on shareholders' yield, which encompasses dividend yield, net buyback yield, and debt reduction yield, to gain a comprehensive understanding of how companies return value to shareholders [2][3]. Shareholders' Yield Calculation - Shareholders' yield is calculated as: - Shareholder's Yield = Dividend Yield + Net Buyback Yield + Debt Reduction Yield [3][9]. - This metric provides a more holistic view of a company's capital allocation compared to just dividend payments [3]. Benefits of Shareholders' Yield - Focusing on shareholders' yield allows investors to identify companies that effectively reward their shareholders, leading to more informed investment decisions [3][5]. - A higher shareholders' yield often indicates steady income streams and potential capital appreciation, contributing to superior long-term performance [5]. Company Examples - **Canadian Natural Resources Limited (CNQ)**: - Offers a competitive dividend yield of approximately 5.28% and has increased its dividend payout 17 times in the past five years, reflecting an annualized growth rate of 23.3% [8][10]. - Reduced long-term debt from $16.02 billion in 2020 to $13.74 billion in December 2024 and repurchased $2.66 billion worth of common stock in 2024 [11]. - **Bain Capital Specialty Finance (BCSF)**: - Provides a high dividend yield of 11.59% and has increased its dividend payout four times in the past five years, with an annualized growth rate of 6.4% [13]. - Reduced its debt from $1.46 billion in 2020 to $1.39 billion in 2024, indicating a focus on long-term financial stability [14]. - **CSX**: - Has a dividend yield of approximately 1.57% and has increased its dividend payout five times over the past five years, resulting in an annualized growth rate of 8.9% [15]. - Repurchased shares worth $2.2 billion in 2024 and had $2.6 billion in total repurchase authority remaining as of December 31, 2024 [16]. - **Verizon Communications (VZ)**: - Offers a dividend yield of around 6.28% and has increased its dividend payout six times in the past five years, reflecting an annualized growth rate of almost 2% [17]. - Reduced long-term debt from $123.17 billion in 2020 to $121.38 billion in December 2024, maintaining a solid balance sheet [18].

Core Viewpoint - Bain Capital Specialty (BCSF) has been upgraded to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with near-term stock price movements, making it a valuable tool for investors [2][4]. - The recent upgrade for Bain Capital Specialty indicates a positive outlook on its earnings, likely leading to increased buying pressure and a rise in stock price [3][5]. Impact of Institutional Investors - Institutional investors utilize earnings estimates to determine the fair value of stocks, and changes in these estimates can lead to significant buying or selling activity, affecting stock prices [4]. Earnings Estimate Revisions - For the fiscal year ending December 2025, Bain Capital Specialty is expected to earn $1.85 per share, with a 3.4% increase in the Zacks Consensus Estimate over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade of Bain Capital Specialty to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [10].

Group 1 - The private equity giant Carlyle Group is nearing a significant deal to sell its Dutch tech services company HSO to Bain Capital, with an estimated valuation of approximately $1 billion [1][2] - HSO's management plans to reinvest in the business through this transaction, indicating a commitment to the company's future development [1] - The deal reflects a resurgence in the private equity market after a prolonged period of inactivity, driven by investor demands for accelerated capital deployment and cash flow [1] Group 2 - HSO specializes in designing, implementing, and operating business application systems based on Microsoft cloud technologies, serving around 1,200 clients globally with approximately 2,800 employees [2] - Carlyle Group made a strategic investment in HSO in 2019 and has since expanded its business through multiple acquisitions, including the purchase of cloud transformation service provider Motion10 in 2022 [2] - If the transaction proceeds, it will mark another landmark deal in the private equity sector, enhancing Bain Capital's influence in the cloud computing and enterprise services space [2]

Group 1 - The author has adopted a conservative stance towards Business Development Company (BDC) investments while maintaining a structural bullish outlook on the sector [1] - The author has a significant portion of their portfolio allocated to BDC investments, indicating a strong belief in the long-term potential of the sector [1] Group 2 - Roberts Berzins has over a decade of experience in financial management, focusing on helping top-tier corporates with financial strategies and large-scale financings [1] - Berzins has contributed to institutionalizing the Real Estate Investment Trust (REIT) framework in Latvia to enhance liquidity in pan-Baltic capital markets [1] - His policy-level work includes developing national State-Owned Enterprise (SOE) financing guidelines and frameworks to channel private capital into affordable housing [1]

Financial Data and Key Metrics Changes - Q2 net investment income per share was $0.47, representing an annualized yield on book value of 10.7%, exceeding regular dividend payout by 12% [6][7] - Q2 earnings per share were $0.37, reflecting an annualized return on book value of 8.3% [7] - Net asset value per share was $17.56, down $0.08 from the prior quarter [7][24] - Total investment income increased to $71 million from $66.8 million in the previous quarter [22] - Net investment income for the quarter was $30.6 million, down from $32.1 million in the prior quarter [24] Business Line Data and Key Metrics Changes - New investment fundings during Q2 totaled $530 million, with $242 million into 12 new companies and $273 million into 81 existing companies [15] - 93% of new fundings were in first lien senior secured loans, indicating a focus on downside management [16] - The investment portfolio at fair value was approximately $2.5 billion across 185 portfolio companies [18] Market Data and Key Metrics Changes - Gross originations were $530 million, up 73% year over year [9] - The weighted average spread of new originations was over 580 basis points [11] - 62% of outstanding debt was in floating rate debt, positioning the company favorably in a higher interest rate environment [25] Company Strategy and Development Direction - The company remains focused on investing in the middle market to drive attractive returns for investors [28] - The strategy includes leveraging Bain Capital's platform advantage to source investment opportunities [10] - The company aims to maintain a disciplined underwriting approach while navigating competitive market conditions [11] Management's Comments on Operating Environment and Future Outlook - Management noted increased market volatility due to higher tariffs but observed a return to normalized deal volume [8] - The company is well-positioned to navigate the current market environment despite spread compression [11] - Dividend coverage remains strong, with a focus on maintaining an attractive dividend policy [13] Other Important Information - The company declared a third-quarter dividend of $0.42 per share, with total dividends for the third quarter amounting to $0.45 per share [7] - Non-accrual investments represented 1.7% of the total investment portfolio, with a slight uptick due to one new addition [12][21] Q&A Session Summary Question: What drove the decision to refinance the 2019 middle market securitization? - The refinancing was driven by attractive pricing opportunities in the market, allowing the company to issue at a lower cost compared to the previous securitization [31][32] Question: How would you characterize the origination activity for the quarter? - The activity was roughly 50% new company originations and 50% existing company add-ons, driven by strong relationships and expanded outreach in the middle market [34][35] Question: Can those investments eventually be sold down into the JVs? - Yes, the investments are primarily first lien loans that fit well into the joint ventures if the company decides to move them in future quarters [36]

Financial Performance - The company's net investment income (NII) per share was $0.47, resulting in an annualized NII yield on book value of 10.7%[15] - Net income per share was $0.37, equating to an annualized return on book value of 8.3%[15] - The net asset value (NAV) per share decreased slightly to $17.56 as of June 30, 2025, compared to $17.64 as of March 31, 2025[15] - The Board of Directors declared a dividend of $0.42 per share for the third quarter of 2025, along with an additional dividend of $0.03 per share[15] Portfolio Composition and Activity - The total investment portfolio at fair value reached $2,501.8 million, primarily consisting of senior secured, floating-rate loans[15] - Gross investment fundings amounted to $529.6 million, while net investment fundings were $27.3 million[15] - The investment portfolio is diversified across 185 portfolio companies operating in 29 different industries[15] - The weighted average yield at amortized cost on the investment portfolio was 11.4%[15] - Investments on non-accrual represented 1.7% of the total investment portfolio at amortized cost and 0.6% at fair value[15] Liquidity and Funding - The company reported strong liquidity totaling $796 million, including $592 million of undrawn capacity on a revolving credit facility[15] - Unsecured debt represents 61% of the total debt outstanding at quarter-end[15]