Barings(BBDC) - 2024 Q3 - Quarterly Results

Barings BDC, Inc. Third Quarter 2024 Results Financial & Operational Highlights Barings BDC reported Q3 2024 net investment income of $0.29 per share, exceeding dividends, with NAV at $11.32 Q3 2024 Key Financial Results (per share) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Jun 30, 2024 | | :--- | :--- | :--- | | Net Investment Income | $0.29 | $0.40 | | Net Realized Loss on Investments | $(0.10) | $0.08 | | Net Unrealized Appreciation (Depreciation) | $0.02 | $(0.29) | | Net Increase in Net Assets | $0.21 | $0.18 | | Dividend Declared | $0.26 | $0.26 | Key Balance Sheet and Portfolio Metrics (in millions) | Metric | As of Sep 30, 2024 | As of Jun 30, 2024 | | :--- | :--- | :--- | | Investment Portfolio (Fair Value) | $2,416.7 M | $2,395.7 M | | Total Net Assets (Equity) | $1,194.4 M | $1,201.9 M | | Net Asset Value (NAV) per Share | $11.32 | $11.36 | | Debt-to-Equity Ratio | 1.15x | 1.14x | | Net Debt-to-Equity Ratio | 1.09x | 1.07x | - CEO Eric Lloyd stated that the company continues to deliver attractive returns through its disciplined investment strategy, with net investment income well above the dividend, strong credit metrics, and a resilient portfolio[4] Detailed Financial Results Q3 2024 total investment income was $70.9 million, net investment income $30.2 million, and NAV per share decreased to $11.32 Q3 2024 Financial Performance (in millions, except per share data) | Metric | Amount | Per Share | | :--- | :--- | :--- | | Total Investment Income | $70.9 | N/A | | Net Investment Income | $30.2 | $0.29 | | Net Increase in Net Assets | $22.0 | $0.21 | - The decrease in NAV per share from $11.36 to $11.32 was primarily attributed to: - $(0.10) per share from net realized loss on investments and currency transactions - +$0.03 per share from net investment income exceeding the dividend - +$0.02 per share from net unrealized appreciation - +$0.01 per share from the accretive impact of share repurchases[6] Portfolio and Capital Management Q3 saw $125.0 million in investments and $111.9 million in repayments, alongside strong liquidity and share repurchases Recent Portfolio Activity Q3 portfolio activity involved significant investments and repayments, leading to both realized losses and unrealized appreciation - New Investments: Made 11 new investments totaling $88.4 million - Follow-on Investments: Invested $36.6 million in existing portfolio companies - Repayments/Sales: Received $111.9 million from loan repayments and principal payments, recognizing a net realized loss of $13.2 million on these transactions - Equity Sales: Received $5.9 million from equity sales, recognizing a net realized gain of $4.3 million[7] - The company recorded net unrealized appreciation of $2.7 million. This was primarily driven by a $21.6 million positive impact from foreign currency exchange rates on investments, which was partially offset by negative credit/fundamental performance of $11.1 million and unrealized depreciation on currency and forward contracts[8] Liquidity and Capitalization The company maintained $66.0 million in cash and $1.37 billion in total debt, later amending its credit facility to extend maturity Liquidity Position as of September 30, 2024 (in millions) | Item | Amount | | :--- | :--- | | Cash and Foreign Currencies | $66.0 | | Borrowings under Credit Facility | $347.8 | | Unsecured Notes Outstanding | $1,025.0 | - On November 5, 2024, the company amended its credit facility, extending the revolving period to November 2028 and the maturity date to November 2029, while reducing total commitments from $1,065 million to $825 million[10] - The CFO highlighted over $540.0 million of available capital and a net leverage level below 1.10x, positioning the company for new origination activity[11] Share Repurchase Program The company repurchased 199,054 shares at $9.84 per share in Q3 2024 under its $30.0 million program - The Board authorized a 12-month, $30.0 million share repurchase program effective March 1, 2024, for open market purchases at prices below the current NAV per share[12] - During Q3 2024, the company repurchased 199,054 shares at an average price of $9.84 per share. As of November 6, 2024, a total of 508,132 shares have been repurchased under the program[13] Shareholder Information The Board declared a Q4 2024 cash dividend of $0.26 per share, payable December 11, 2024, with a DRIP option Fourth Quarter 2024 Dividend A Q4 2024 cash dividend of $0.26 per share was declared, with a December 4 record date and December 11 payment | Item | Detail | | :--- | :--- | | Amount per share | $0.26 | | Record date | December 4, 2024 | | Payment date | December 11, 2024 | Dividend Reinvestment Plan (DRIP) The company offers a Dividend Reinvestment Plan (DRIP) for automatic reinvestment of cash dividends into shares - Stockholders who have not opted out of the DRIP will have their cash dividends automatically reinvested in additional shares of the Company's common stock[15] Subsequent Events & Conference Call Subsequent to Q3, Barings BDC made $117.1 million in new commitments, with $95.8 million funded, and scheduled a Q3 results conference call - After September 30, 2024, the Company made new commitments of ~$117.1 million, with $95.8 million funded. The funded amount consisted primarily of $91.2 million in first lien senior secured debt with a weighted average yield of 9.6%[17] - A conference call to discuss Q3 2024 results is scheduled for Thursday, November 7, 2024, at 9:00 a.m. ET[18] Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for periods ended September 30, 2024, covering assets, operations, and cash flows Consolidated Statements of Assets and Liabilities As of September 30, 2024, total assets were $2.61 billion, with net assets of $1.19 billion and an investment portfolio of $2.42 billion Balance Sheet Summary (in thousands) | Account | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total investments at fair value | $2,416,714 | $2,488,715 | | Total assets | $2,605,078 | $2,677,453 | | Total liabilities | $1,410,637 | $1,480,894 | | Total net assets | $1,194,441 | $1,196,559 | | Net asset value per share | $11.32 | $11.28 | Consolidated Statements of Operations Q3 2024 total investment income was $70.9 million, yielding $30.2 million net investment income and a $22.0 million net increase in net assets Statement of Operations Summary - Three Months Ended (in thousands) | Account | Sep 30, 2024 | Sep 30, 2023 | | :--- | :--- | :--- | | Total investment income | $70,851 | $70,846 | | Total operating expenses | $39,633 | $37,125 | | Net investment income after taxes | $30,185 | $33,309 | | Net realized/unrealized loss | $(8,165) | $(15,250) | | Net increase in net assets | $22,020 | $18,321 | Consolidated Statements of Cash Flows Nine months ended September 30, 2024: operating activities provided $167.3 million cash, financing used $171.9 million, resulting in a $4.5 million net cash decrease Cash Flow Summary - Nine Months Ended (in thousands) | Activity | Sep 30, 2024 | Sep 30, 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $167,318 | $(62,060) | | Net cash provided by (used in) financing activities | $(171,852) | $(27,597) | | Net increase (decrease) in cash | $(4,534) | $(89,657) | Non-GAAP Financial Measures The company provides a reconciliation for its non-GAAP net debt-to-equity ratio, 1.09x as of September 30, 2024, used to monitor leverage - The company uses non-GAAP measures such as net debt and net debt-to-equity ratio to supplement GAAP financial information, as management believes these measures enhance investors' ability to analyze leverage and financial condition[22] Reconciliation of Net Debt-to-Equity Ratio (in millions) | Metric | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total debt (principal) | $1,372.8 M | $1,375.8 M | $1,465.4 M | $1,444.9 M | | Total net debt | $1,298.2 M | $1,285.9 M | $1,412.8 M | $1,374.2 M | | Total net assets | $1,194.4 M | $1,201.9 M | $1,211.9 M | $1,196.6 M | | Total net debt-to-equity ratio | 1.09x | 1.07x | 1.17x | 1.15x |