Barings(BBDC) - 2025 Q2 - Quarterly Results

Executive Summary and Key Highlights This section provides an overview of the Company's Q2 2025 performance, highlighting key financial metrics, investment portfolio status, and the CEO's strategic commentary Highlights This section presents key financial and operational highlights for the second quarter of 2025, including income statement metrics, investment portfolio details, and balance sheet figures, providing a quick overview of the Company's performance and financial position Income Statement Highlights (dollars in millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Per Share (1) | Three Months Ended March 31, 2025 | Per Share (2) | | :----------------------------------- | :------------------------------- | :------------ | :-------------------------------- | :------------ | | Net investment income | $29.8 | $0.28 | $26.4 | $0.25 | | Net realized gains (losses) | $(15.2) | $(0.14) | $(1.1) | $(0.01) | | Net unrealized appreciation (depreciation) | $5.9 | $0.06 | $7.3 | $0.07 | | Net increase in net assets resulting from operations | $20.6 | $0.20 | $32.6 | $0.31 | | Regular dividends paid | | $0.26 | | $0.26 | | Special dividends paid | | $0.05 | | $0.05 | Investment Portfolio and Balance Sheet Highlights (dollars in millions, except per share data) | Metric | As of June 30, 2025 | As of March 31, 2025 | As of December 31, 2024 | | :----------------------------------- | :------------------ | :------------------- | :-------------------- | | Investment portfolio at fair value | $2,623.9 | $2,571.2 | $2,449.3 | | Weighted average yield on performing debt investments (at principal amount) | 9.8% | 9.9 % | 10.2 % | | Total assets | $2,793.3 | $2,791.3 | $2,695.7 | | Debt outstanding (principal) | $1,572.3 | $1,522.3 | $1,463.6 | | Total net assets (equity) | $1,175.8 | $1,188.8 | $1,190.4 | | Net asset value per share | $11.18 | $11.29 | $11.29 | | Debt-to-equity ratio | 1.34x | 1.28x | 1.23x | | Net debt-to-equity ratio (adjusted for unrestricted cash and net unsettled transactions) | 1.29x | 1.24x | 1.16x | CEO Commentary CEO Eric Lloyd highlighted strong portfolio performance in the second quarter of 2025, delivering sequential net investment income growth that fully covered the regular dividend. He emphasized the disciplined investment approach, low non-accruals, and strategic capital deployment into high-quality, income-producing opportunities, noting the Company's strong position with significant dry powder - Net investment income was $0.28 per share, fully covering the regular dividend[5] - Non-accruals stood at a low 0.5% of the portfolio on a fair value basis, indicating superior credit performance[5] - Deployed almost $200 million into new and existing investments during Q2 2025, aligning with the strategy to invest in high-quality, income-producing opportunities[5] - The Company maintains over $322 million of dry powder, positioning it well to generate attractive risk-adjusted returns[5] Operating and Financial Review This section provides a detailed analysis of the Company's financial performance, investment activities, liquidity, capitalization, share repurchase program, and dividend information for the second quarter of 2025 Detailed Financial Results For the second quarter of 2025, Barings BDC reported total investment income of $74.4 million and net investment income of $29.8 million, or $0.28 per share. The net asset value (NAV) per share decreased to $11.18 from $11.29, primarily due to net realized losses on investments and a special dividend payment, partially offset by net unrealized appreciation Second Quarter 2025 Financial Performance (in millions) | Metric | Amount (in millions) | Per Share | | :----------------------------------- | :------------------- | :-------- | | Total investment income | $74.4 | | | Net investment income | $29.8 | $0.28 | | Net increase in net assets resulting from operations | $20.6 | $0.20 | - Net asset value (NAV) per share decreased to $11.18 as of June 30, 2025, from $11.29 as of March 31, 2025[7] - The decrease in NAV per share was primarily attributed to a net realized loss on investments ($0.14 per share) and a special dividend payment ($0.05 per share), partially offset by net unrealized appreciation ($0.06 per share) and net investment income exceeding the regular dividend ($0.02 per share)[7] Investment Portfolio Activity During Q2 2025, the Company actively managed its portfolio by making $137.3 million in new investments and $61.7 million in existing companies. It experienced $59.1 million in loan repayments, recognizing a net realized loss of $17.6 million, while also generating various realized gains from other portfolio activities. The quarter concluded with a net unrealized appreciation of $5.9 million, largely influenced by foreign currency exchange rates - Made 19 new investments totaling $137.3 million and invested $61.7 million in existing portfolio companies[8] - Experienced 14 loan repayments totaling $59.1 million, resulting in a net realized loss of $17.6 million[8] - Recognized net realized gains of $0.3 million from portfolio company principal payments/sales, $2.5 million from a royalty rights investment exit, $0.7 million from sales to joint ventures, and $5.4 million from equity investment sales/exits[8] - Recorded net unrealized appreciation totaling $5.9 million, primarily driven by the impact of foreign currency exchange rates on investments ($34.2 million), partially offset by credit/fundamental performance ($13.0 million) and broad market moves ($6.5 million)[9] Liquidity and Capitalization As of June 30, 2025, Barings BDC maintained $49.3 million in cash and foreign currencies. The Company had $547.3 million outstanding under its senior secured credit agreement and $1,025.0 million in unsecured notes, indicating its current leverage and available borrowing capacity - Cash and foreign currencies totaled $49.3 million as of June 30, 2025 (including $4.7 million restricted cash)[10] - Borrowings outstanding under its $825.0 million senior secured credit agreement were $547.3 million[10] - The Company had $1,025.0 million aggregate principal amount of unsecured notes outstanding[10] Share Repurchase Program The Board authorized a new 12-month share repurchase program on February 20, 2025, allowing the Company to repurchase up to $30.0 million of common stock at prices below NAV per share. During Q2 2025, 100,000 shares were repurchased at an average price of $8.88 per share, with total repurchases reaching 250,000 shares at an average of $9.35 per share as of August 7, 2025 - A new 12-month share repurchase program was authorized on February 20, 2025, for up to $30.0 million of common stock at prices below NAV per share, effective March 1, 2025, until March 1, 2026[11] - During the three months ended June 30, 2025, the Company repurchased 100,000 shares at an average price of $8.88 per share[11] - As of August 7, 2025, a total of 250,000 shares have been repurchased under the program at an average price of $9.35 per share[11] Dividend Information The Board declared a quarterly cash dividend of $0.26 per share, which, combined with a previously announced special dividend of $0.05 per share, totals $0.31 per share for the third quarter of 2025. This dividend is payable on September 10, 2025, to shareholders of record on September 3, 2025 Third Quarter 2025 Dividend Details | Metric | Value | | :-------------------- | :------ | | Amount per share | $0.31 | | Record date | September 3, 2025 | | Payment date | September 10, 2025 | - The total dividend of $0.31 per share comprises a regular quarterly cash dividend of $0.26 per share and a special dividend of $0.05 per share[12] Dividend Reinvestment Plan Barings BDC offers a Dividend Reinvestment Plan (DRIP) that automatically reinvests dividends and distributions into additional common stock shares for participating stockholders. The tax classification of these distributions may vary between GAAP and tax accounting principles, with further details available on the Company's investor relations website - The Dividend Reinvestment Plan (DRIP) allows for automatic reinvestment of dividends and distributions into additional shares of common stock, unless a stockholder elects to receive cash[13] - The allocation of dividend distributions between current income, accumulated income, capital gains, and return of capital may differ for GAAP and tax purposes due to varying accounting principles[14] Subsequent Events Subsequent to June 30, 2025, Barings BDC made new commitments totaling $59.3 million, with $38.6 million already funded, primarily in first lien senior secured debt with a weighted average yield of 9.4%. Additionally, $22.6 million of previously committed revolvers and delayed draw term loans were funded, and the Company fully repaid its 4.66% Series A senior unsecured notes due August 2025 - Made approximately $59.3 million of new commitments subsequent to June 30, 2025, of which $38.6 million closed and funded[15] - The $38.6 million funded investments consist of $28.9 million of first lien senior secured debt, $9.4 million of subordinated debt, and $0.3 million of equity investments, with a weighted average yield of 9.4% for the debt investments[15] - Funded an additional $22.6 million of previously committed revolvers and delayed draw term loans[15] - On August 4, 2025, the Company repaid in full its 4.66% Series A senior unsecured notes due August 2025[16] Corporate Information and Disclosures This section provides details on the upcoming conference call, important forward-looking statement disclaimers, explanations of non-GAAP financial measures, and background information on Barings BDC and its investment manager, Barings LLC Conference Call Details Barings BDC has scheduled a conference call for Friday, August 8, 2025, at 9:00 a.m. ET to discuss its second quarter 2025 financial and operating results. Details for live access via dial-in or webcast, along with replay information, are provided - Conference call to discuss Q2 2025 results is scheduled for Friday, August 8, 2025, at 9:00 a.m. ET[17] - Access is available via dial-in (877-407-8831 or 201-493-6736) or a live webcast on the investor relations section of Barings BDC's website[18][19] - A taped replay will be available until August 15, 2025, via dial-in (877-660-6853 or 201-612-7415, conference ID 13750211) and an archived webcast replay on the Company's website[18][19] Forward-Looking Statements This section cautions investors that the report contains forward-looking statements, which are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. These statements reflect management's current estimates and should not be unduly relied upon as investment advice. Further risk information is available in the Company's SEC filings - Statements in the report may constitute 'forward-looking statements' relating to future events or Barings BDC's future performance or financial condition[20] - Investors are cautioned not to place undue reliance on these statements, as they are subject to risks and uncertainties that may cause actual results to differ materially[20] - More information on risks and potential factors affecting financial results is included in Barings BDC's filings with the SEC, including the 'Risk Factors' and 'Management's Discussion and Analysis' sections of its Form 10-K and 10-Q[21] Non-GAAP Financial Measures The Company utilizes non-GAAP financial measures, specifically net debt and net debt-to-equity ratio, to provide additional insights into its leverage and financial condition. These measures are intended to supplement GAAP information and enhance investor analysis but are not substitutes for GAAP results and should be evaluated in conjunction with them. A reconciliation to GAAP is provided - The Company discusses non-GAAP measures such as net debt and net debt-to-equity ratio to supplement GAAP financial information[22] - These non-GAAP measures are used to monitor and evaluate leverage and financial condition and are believed to enhance investors' ability to analyze trends[22] - Non-GAAP measures have limitations, are not GAAP alternatives, and should be considered in conjunction with corresponding GAAP measures. A reconciliation is provided in the press release[22][23] About Barings BDC Barings BDC, Inc. is a publicly traded, externally managed business development company (BDC) that primarily invests in senior secured loans of middle-market companies across various industries. Its investment activities are managed by Barings, a global asset manager with over $456 billion in assets under management - Barings BDC, Inc. (NYSE: BBDC) is a publicly traded, externally managed investment company treated as a business development company (BDC)[24] - The Company primarily invests in senior secured loans in middle-market companies across a wide range of industries[24] - Investment activities are managed by Barings, a global asset manager with over $456 billion in AUM[24] About Barings LLC Barings is a global investment manager with over $456 billion in assets under management, specializing in public and private fixed income, real estate, and specialist equity markets. As a subsidiary of MassMutual, Barings operates globally and is committed to sustainable practices and responsible investment - Barings is a global investment manager with over $456 billion in assets under management as of June 30, 2025[25][26] - The firm sources differentiated opportunities and builds long-term portfolios across public and private fixed income, real estate, and specialist equity markets[25] - Barings is a subsidiary of MassMutual and is committed to sustainable practices and responsible investment[25] Consolidated Financial Statements This section presents the Company's consolidated balance sheets, statements of operations, and statements of cash flows, providing a comprehensive view of its financial position, performance, and liquidity for the reported periods Consolidated Balance Sheets The consolidated balance sheets provide a snapshot of Barings BDC's financial position as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and net assets. Key figures include total investments at fair value, total assets, total liabilities, and the net asset value per share Consolidated Balance Sheet (in thousands) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :----------------------------------- | :-------------------------- | :---------------- | | Total investments at fair value | $2,623,882 | $2,449,272 | | Total assets | $2,793,307 | $2,695,660 | | Total liabilities | $1,617,463 | $1,505,306 | | Total net assets | $1,175,844 | $1,190,354 | | Net asset value per share | $11.18 | $11.29 | Unaudited Consolidated Statements of Operations The unaudited consolidated statements of operations present the Company's financial performance for the three and six months ended June 30, 2025, and June 30, 2024. It details investment income, operating expenses, net investment income, and the impact of realized and unrealized gains/losses on investments, credit support agreements, and currency transactions Unaudited Consolidated Statements of Operations (Three Months Ended June 30, in thousands, except per share data) | Metric | 2025 | 2024 | YoY Change | | :----------------------------------- | :----- | :----- | :--------- | | Total investment income | $74,398 | $74,886 | -0.65% | | Total operating expenses | $43,780 | $32,429 | +35.00% | | Net investment income after taxes | $29,810 | $42,142 | -29.26% | | Net realized gains (losses) | $(15,157) | $8,074 | Shift from gain to loss | | Net unrealized appreciation (depreciation) | $5,906 | $(30,776) | Shift from depreciation to appreciation | | Net increase in net assets resulting from operations | $20,559 | $19,440 | +5.76% | | Net investment income per share | $0.28 | $0.40 | -30.00% | | Total dividends / distributions per share | $0.31 | $0.26 | +19.23% | Unaudited Consolidated Statements of Operations (Six Months Ended June 30, in thousands, except per share data) | Metric | 2025 | 2024 | YoY Change | | :----------------------------------- | :------- | :------- | :--------- | | Total investment income | $138,837 | $144,692 | -4.05% | | Total operating expenses | $81,428 | $72,633 | +12.11% | | Net investment income after taxes | $56,201 | $71,494 | -21.39% | | Net realized gains (losses) | $(16,227) | $(13,379) | -21.29% (larger loss) | | Net unrealized appreciation (depreciation) | $13,161 | $5,326 | +147.11% | | Net increase in net assets resulting from operations | $53,135 | $63,441 | -16.25% | | Net investment income per share | $0.53 | $0.67 | -20.90% | | Total dividends / distributions per share | $0.62 | $0.52 | +19.23% | Unaudited Consolidated Statements of Cash Flows The unaudited consolidated statements of cash flows detail the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025, and June 30, 2024. For H1 2025, the Company reported net cash used in operating activities and a net decrease in cash and foreign currencies, contrasting with net cash provided by operating activities and an increase in cash in H1 2024 Unaudited Consolidated Statements of Cash Flows (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | | :----------------------------------- | :------- | :------- | | Net cash provided by (used in) operating activities | $(60,462) | $143,203 | | Net cash provided by (used in) financing activities | $18,384 | $(129,368) | | Net increase (decrease) in cash and foreign currencies | $(42,078) | $13,835 | | Cash and foreign currencies, end of period | $49,261 | $84,363 | Non-GAAP Financial Reconciliations This section provides a reconciliation of the Company's non-GAAP financial measures, specifically net debt and the net debt-to-equity ratio, to their most directly comparable GAAP measures, offering enhanced transparency into leverage Reconciliation of Debt to Net Debt and Net Debt-to-Equity Ratio This section provides a reconciliation of total debt to net debt and calculates the net debt-to-equity ratio, which are non-GAAP financial measures. The net debt-to-equity ratio increased to 1.29x as of June 30, 2025, from 1.24x as of March 31, 2025, and 1.16x as of December 31, 2024, indicating an increase in leverage Reconciliation of Debt to Net Debt and Net Debt-to-Equity Ratio (in thousands, except ratios) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :------------- | :---------------- | | Total debt (principal) | $1,572,313 | $1,522,268 | $1,463,590 | | Total net debt | $1,516,433 | $1,475,648 | $1,376,697 | | Total net assets | $1,175,844 | $1,188,803 | $1,190,354 | | Total net debt-to-equity ratio | 1.29x | 1.24x | 1.16x | - The net debt-to-equity ratio increased sequentially from 1.16x at December 31, 2024, to 1.29x at June 30, 2025[35]