Barings Bdc, Inc. · NYSE:BBDC
Barings Bdc — Q1 2019 Earnings Presentation
28 slides from Barings Bdc's earnings presentation, May 10, 2019
Slide 1: Barings BDC, Inc. First Quarter 2019 Earnings Presentation
Barings BDC, Inc. First Quarter 2019 Earnings Presentation May 9, 2019
Slide 2: Forward-Looking Statements
Forward-Looking Statements Cautionary Notice: Certain statements contained in this presentation may be "forward-looking" statements. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made and which reflect management'
Slide 3: Agenda
Agenda ERIC LLOYD 1Q 2019 HIGHLIGHTS (Lloyd) What were the summary points of the quarter? BBDC INVESTMENT PORTFOLIO (Fowler) Update on the portfolio ramp. IAN FOWLER THE MIDDLE-MARKET LANDSCAPE (Fowler) What are the current conditions in the middle market? BBDC FINANCIALS (Bock) A walk through the b
Slide 4: 1Q 2019 Highlights
1Q 2019 Highlights BARINGS
Slide 5: An Update on Credit Spreads and BDC Equity Prices
An Update on Credit Spreads and BDC Equity Prices Loan spreads (and, therefore, BDC equity prices) staged a meaningful recovery in 1Q following the late-2018 technical sell-off BROADLY-SYNDICATED LOAN BROADLY-SYNDICATED LOAN BDC EQUITY PRICES SPREADS PRICES 700 $100 $900 650 $850 $98 600 $800 $96 55
Slide 6: First Quarter 2019 Highlights
First Quarter 2019 Highlights Investments during the quarter were Net asset value (NAV) as of March $65 million (including $2 million of add- NET ASSET VALUE ORIGINATIONS 31st, 2019 was $11.52 per share ons), while sales and repayments totaled $40 million The weighted average portfolio yield at Net
Slide 7: Selected Financial Highlights
Selected Financial Highlights Balance Sheet Highlights 1Q 2019 4Q 2018 3Q 20181 Investment Portfolio, at Fair Value $1,189.4 $1,121.9 $1,081.2 Total Debt Outstanding $620.0 $570.0 $210.0 Net Assets $584.2 $563.0 $611.0 Debt-to-Equity Ratio 1.06x 1.01x 0.34x Net Debt-to-Equity Ratio2 0.94x 0.92x 0.69
Slide 8: BBDC Repurchase Plan Update
BBDC Repurchase Plan Update In 1Q19, BBDC executed on its announced share repurchase plan as we believe share repurchases remain an important part of any long-term capital allocation philosophy • Under the 2019 repurchase plan, BBDC aims to repurchase (i) up to 2.5% of the outstanding shares when BB
Slide 9: BBDC Investment Portfolio
BBDC Investment Portfolio BARINGS
Slide 10: Investment Activity
Investment Activity Summary of investment activity during the quarter ended March 31st, 2019 • Middle-Market Loans: • Net increase in investments of $59.2 million • New investment commitments1 were $73.6 million • Total MML fundings were $64.6 million • Includes $1.7 million from two previously-comm
Slide 11: Total Portfolio Composition
Total Portfolio Composition A diverse portfolio of 99% senior secured, first lien assets Aggregate Portfolio Characteristics (as of March 31, 2019) Investment Portfolio BSL Middle Market Total Total Investments and Commitments ($mm) $838 $317 $1,154 Unfunded Delayed Draw Commitments ($mm) $0 $27 $27
Slide 12: Top Investments
Top 10 Investments Top 10 Holdings (as of March 31, 2019) Principal % of Issuer Moody's Industry Segment Amount ($) Cost ($) Fair Value ($) Portfolio BDP International, Inc. Transportation: Cargo MML $24,937,500 $24,457,944 $24,200,193 2.1% Accurus Aerospace Corporation Aerospace and Defense MML 24,
Slide 13: The Middle-Market Landscape
The Middle-Market Landscape
Slide 14: The Middle-Market Landscape
The Middle-Market Landscape Modest spread widening was felt across much of the middle-market landscape in 1Q, led by Mezzanine and MM Institutional TL. Second lien spreads tightened slightly, though had witnessed the most widening in 4Q QUARTERLY MIDDLE-MARKET SPREADS ACROSS THE CAPITAL STRUCTURE 14
Slide 15: Leverage (Debt to EBITDA)
The Middle-Market Landscape On an annual basis, leverage moved to a new high for all senior and 1st / 2nd lien deals ANNUAL LEVERAGE BY CAPITAL STRUCTURE 6.5x 6.0x 5.5x 0.0 0.1 0.1 0.1 0.1 1.6 1.5 5.0x 1.4 0.1 1.5 1.5 4.5x 1.2 1.3 1.3 Leverage (Debt to EBITDA) 1.4 1.4 1.3 1.2 2.1 2.2 4.0x 1.3 1.2 2.
Slide 16: Average Leverage by Industry: 1Q18 to 1Q19
Leverage (Debt to EBITDA) 3.00x 3.25x 3.50x 3.75x 4.00x 4.25x 4.50x 4.75x 5.00x 5.25x 5.50x 5.75x 6.00x 1Q18 2Q18 Source: LPC Business 3Q18 Services 4Q18 1Q19 1Q18 2Q18 Chemicals / 3Q18 Plastics 4Q18 1Q19 1Q18 2Q18 Construction 3Q18 4Q18 1Q19 1Q18 2Q18 Consumer 3Q18 Services 4Q18 1Q19 1Q18 The Middl
Slide 17: BBDC Financials
BBDC Financials BARINGS
Slide 18: Net Asset Value (NAV) Bridge – 4Q18 to 1Q19
Net Asset Value (NAV) Bridge – 4Q18 to 1Q19 Since December 31st, 2018, BBDC’s NAV per share increased to $11.52 from $10.98 primarily due to a meaningful reversal of the unrealized depreciation on investments witnessed in 4Q18 1 1. Represents the impact of the different share amounts used in calcula
Slide 19: BBDC Income Statement
BBDC Income Statement 1Q19 4Q18 3Q18 1 Period from August 3, 2018 Three Months Ended Three Months Ended through March 31, 2019 December 31, 2018 September 30, 2018 Investment income: Interest income $18,034,014 $16,355,639 $3,876,365 Dividend income — — 200,777 Fee and other income 301,057 233,606 8
Slide 20: BBDC Balance Sheet
BBDC Balance Sheet March 31, December 31, September 30, 2019 2018 2018 Assets: Investments at fair value: Non-Control / Non-Affiliate investments $1,126,969,755 $1,076,631,804 $1,036,189,705 Short-term investments 62,414,373 45,223,941 45,000,000 Total investments at fair value 1,189,384,128 1,121,8
Slide 21: Debt Summary
Debt Summary On May 9th, 2019, BBDC closed a Static CLO with $348.3 million 8-year AAA/AA notes, and subsequently reduced total commitments under the BSF1 credit facility to $300.0 million Pro Forma for CLO As of 3/31/2019 As of 12/31/2018 Principal Principal Principal Principal Principal Principal
Slide 22: Quarterly Dividends
Quarterly Dividends Barings BDC has declared a second quarter dividend of $0.13 per share BARINGS BDC DIVIDENDS DECLARED PER SHARE $0.14 $0.13 $0.12 $0.12 $0.10 $0.10 $0.08 $0.06 $0.04 $0.03 $0.02 $0.00 3Q18 4Q18 1Q19 2Q19 22
Slide 23: 2Q 2019 Origination Pipeline
2Q 2019 Origination Pipeline
Slide 24: Investment Activity Since Quarter End
Investment Activity Since Quarter End Below is a summary of Barings BDC’s investment activity since March 31st, 2019 • From April 1st, 2019 through May 8th, 2019, Barings BDC made approximately $66.1 million of new middle-market private debt commitments, of which approximately $54.6 million closed a
Slide 25: Investment Pipeline
Investment Pipeline Below is a summary of Barings North America Private Finance probability-weighted pipeline • As of May 8th, 2019, Barings North America Private Finance group had a probability-weighted pipeline of approximately $440 million1 • The following is a breakdown of the pipeline by senior
Slide 26: Appendix
Appendix
Slide 27: Reconciliation of Debt to Net Debt and Net Debt-to-Equity Ratio
Appendix: Reconciliation of Debt to Net Debt and Calculation of Net Debt-to- Equity Ratio March 31, December 31, September 30, 2019 2018 2018 Borrowings under credit facility (debt) $620,000,000 $570,000,000 $210,000,000 minus: Cash (3,056,609) (12,426,982) (116,678,976) minus: Short-term investment
Slide 28: Appendix: Barings BDC Corporate Data
Appendix: Barings BDC Corporate Data Board of Directors Investment Committee Corporate Officers Research Coverage Corporate Headquarters MICHAEL FRENO ERIC LLOYD ERIC LLOYD BANK OF AMERICA 300 South Tryon Street Chairman of BBDC Board, Chief Executive Officer Chief Executive Officer MERRILL LYNCH Su