Barings Bdc, Inc. · NYSE:BBDC
Barings Bdc — Q4 2019 Earnings Presentation
27 slides from Barings Bdc's earnings presentation, Feb 28, 2020
Slide 1: Barings BDC, Inc. Fourth Quarter 2019 Earnings Presentation
Barings BDC, Inc. Fourth Quarter 2019 Earnings Presentation February 27, 2020
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 4Q 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: 4Q 2019 Highlights
4Q 2019 Highlights BARINGS
Slide 5: Fourth Quarter 2019 Highlights
Fourth Quarter 2019 Highlights Total middle-market originations during Net asset value (NAV) as of the quarter were $165 million (including NET ASSET VALUE December 31, 2019 was $11.66 ORIGINATIONS $12 million of add-ons), while sales and per share repayments totaled $28 million The weighted average
Slide 6: Selected Financial Highlights
Selected Financial Highlights Balance Sheet Highlights 4Q 2019 3Q 2019 2Q 2019 1Q 2019 4Q 2018 Investment Portfolio, at Fair Value $1,173.6 $1,158.2 $1,200.6 $1,189.4 $1,121.9 Total Debt Outstanding (Principal) $670.7 $632.5 $633.8 $620.0 $570.0 Total Net Assets (Equity) $570.9 $572.4 $583.1 $584.2
Slide 7: BBDC Repurchase Plan Update
BBDC Repurchase Plan Update BBDC completed its 2019 share repurchase plan and announced a new program for 2020, as we believe share repurchases remain an important part of any long-term capital allocation philosophy • In 4Q19, BBDC repurchased a total of 467,739 shares at an average price of $10.29/
Slide 8: BBDC Investment Portfolio
BBDC Investment Portfolio BARINGS
Slide 9: Investment Activity
Investment Activity Summary of investment activity during the quarter ended December 31, 2019 • Middle-Market Loans: • Net increase in investments of $137.5 million • Total MML fundings were $165.3 million • Includes $153.5 million in 15 new portfolio companies • Includes $11.8 million from eight pr
Slide 10: Total Portfolio Composition
Total Portfolio Composition A diverse portfolio of 98% senior secured, first lien assets, with middle-market loans now >50% of the portfolio Aggregate Portfolio Characteristics (as of December 31, 2019) Investment Portfolio BSL Middle Market Total1 Total Investments and Commitments ($mm) $510 $606 $
Slide 11: Top 10 Investments
Top 10 Investments Top 10 Holdings (as of December 31, 2019) Principal % of Issuer Moody's Industry Segment Cost Fair Value Amount Portfolio BDP International, Inc. Transportation: Cargo MM $24,750,000 $24,326,180 $24,449,263 2.3% Jade Bidco Limited Aerospace and Defense MM 24,682,099 23,945,108 24,
Slide 12: The Middle-Market Landscape
The Middle-Market Landscape
Slide 13: Direct Lending Volumes & Spread Differential
The Middle-Market Landscape: Direct Lending Volumes & Spread Differential 4Q19 was the worst quarter of the year for the bank-led syndicated middle market at only $11.4bn, but it was the best quarter of the year for the direct lending market at $27.8bn. Additionally, volatility in the 1L/2L institut
Slide 14: Unitranche Executions
The Middle-Market Landscape: Unitranche Executions Volatility in the liquid markets led many capital-heavy managers to focus on very large unitrache executions, resulting in unitranche volumes hitting all-time highs QUARTERLY UNITRANCHE VOLUME ($ BILLIONS) 20 300 18 250 16 Average Loan Deal Size ($m
Slide 15: Senior Spreads
The Middle-Market Landscape: Senior Spreads Pricing stayed relatively stable in the direct lending world, though the gap between unitranche and traditional first lien continued to narrow QUARTERLY MIDDLE-MARKET SPREADS ACROSS THE CAPITAL STRUCTURE 750 700 650 600 Loan Spread (bps) 550 500 450 400 35
Slide 16: BBDC Financials
BBDC Financials BARINGS
Slide 17: NAV Bridge – 3Q19 to 4Q19
NAV Bridge – 3Q19 to 4Q19 Since September 30, 2019, BBDC’s NAV per share increased to $11.66 from $11.58 primarily due to portfolio appreciation and accretive purchases through the share repurchase program, partially offset by net realized losses Total may not foot due to rounding. 17
Slide 18: BBDC Income Statement
BBDC Income Statement 4Q19 3Q19 2Q19 1Q19 4Q18 Investment income: Interest income $17,913,613 $18,448,942 $19,074,824 $18,034,014 $16,355,639 Dividend income 35,812 4,221 4,711 — — Fee and other income 447,001 848,792 519,970 301,057 233,606 Payment-in-kind interest income 5,413 — — — — Interest inc
Slide 19: BBDC Balance Sheet
BBDC Balance Sheet December 31, September 30, June 30, March 31, December 31, 2019 2019 2019 2019 2018 Assets: Investments at fair value: Non-Control / Non-Affiliate investments $1,066,845,054 $1,096,632,222 $1,161,189,262 $1,126,969,755 $1,076,631,804 Affiliate investments 10,229,813 10,036,300 5,0
Slide 20: Debt Summary and Maturity Profile
Debt Summary and Maturity Profile As BBDC opportunistically sells BSLs, it also continues to periodically reduce the size of its BSL revolver line; effective January 21, 2020, the size was reduced to $80 million As of 12/31/2019 As of 9/30/2019 As of 6/30/2019 Principal Principal Principal Principal
Slide 21: Quarterly Dividends
Quarterly Dividends BBDC has declared a first quarter dividend of $0.16 per share BBDC DIVIDENDS DECLARED PER SHARE $0.18 $0.16 $0.16 $0.15 $0.14 $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 3Q19 4Q19 1Q20 21
Slide 22: 1Q 2020 Origination Pipeline
1Q 2020 Origination Pipeline
Slide 23: Investment Activity Since Quarter End
Investment Activity Since Quarter End Below is a summary of BBDC’s investment activity since December 31, 2019 • From January 1, 2020 through February 26, 2020, BBDC made approximately $107.5 million of new middle-market private debt commitments, of which approximately $73.4 million closed and funde
Slide 24: Investment Pipeline
Investment Pipeline Below is a summary of Barings Global Private Finance probability-weighted pipeline • As of February 26, 2020, Barings Global Private Finance group had a probability-weighted pipeline of approximately $609 million1 • The following is a breakdown of the pipeline by seniority and by
Slide 25: Appendix
Appendix
Slide 26: 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 December 31, September 30, June 30, March 31, December 31, 2019 2019 2019 2019 2018 Total debt (principal) $670,698,595 $632,548,859 $633,750,000 $620,000,000 $570,000,000 minus: Cash (21,991,565) (12,838,103)
Slide 27: 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