Barings Bdc, Inc. · NYSE:BBDC
Barings Bdc — Q3 2019 Earnings Presentation
27 slides from Barings Bdc's earnings presentation, Nov 1, 2019
Slide 1: Barings BDC, Inc. Third Quarter 2019 Earnings Presentation
Barings BDC, Inc. Third Quarter 2019 Earnings Presentation October 29, 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 3Q 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: 3Q 2019 Highlights
3Q 2019 Highlights BARINGS
Slide 5: Third Quarter 2019 Highlights
Third Quarter 2019 Highlights Total middle-market originations during Net asset value (NAV) as of the quarter were $121 million (including NET ASSET VALUE September 30, 2019 was $11.58 ORIGINATIONS $14 million of add-ons and $5 million per share for Joint Venture), while sales and repayments totaled
Slide 6: Selected Financial Highlights
Selected Financial Highlights Balance Sheet Highlights 3Q 2019 2Q 2019 1Q 2019 4Q 2018 3Q 20181 Investment Portfolio, at Fair $1,158.2 $1,200.6 $1,189.4 $1,121.9 $1,081.2 Value Total Debt Outstanding $632.5 $633.8 $620.0 $570.0 $210.0 (Principal) Total Net Assets (Equity) $572.4 $583.1 $584.2 $563.0
Slide 7: BBDC Repurchase Plan Update
BBDC Repurchase Plan Update BBDC continued to execute 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
Slide 8: BBDC Investment Portfolio
BBDC Investment Portfolio BARINGS
Slide 9: Investment Activity
Investment Activity Summary of investment activity during the quarter ended September 30, 2019 • Middle-Market Loans1: • Net increase in investments of $74.9 million • Total MML fundings were $121.5 million • Includes $102.5 million in 10 new portfolio companies • Includes $14.0 million from six pre
Slide 10: Total Portfolio Composition
Total Portfolio Composition A diverse portfolio of 98% senior secured, first lien assets Aggregate Portfolio Characteristics (as of September 30, 2019) 1 Investment Portfolio BSL Middle Market Total Total Investments and Commitments ($mm) $675 $469 $1,194 Unfunded Commitments ($mm) $0 $47 $87 Total
Slide 11: Top 10 Investments
Top 10 Investments Top 10 Holdings (as of September 30, 2019) Principal % of Issuer Moody's Industry Segment Cost Fair Value Amount Portfolio BDP Buyer, LLC Transportation: Cargo MM $24,812,500 $24,369,577 $24,483,800 2.2% Accurus Aerospace Corporation Aerospace and Defense MM 24,812,500 24,490,333
Slide 12: The Middle-Market Landscape
The Middle-Market Landscape
Slide 13: MM Yield Premium
The Middle-Market Landscape The spread premium that non-regulated direct lenders have enjoyed over large corporate deals is the tightest since data tracking began in 2013. Thus far in 2019, this premium was 130 bps compared to being 200 bps or greater between 2016 and 2018 COMPARISON OF 1L TERM LOAN
Slide 14: The Middle-Market Landscape: Lending Spreads
The Middle-Market Landscape Lending spreads were generally flat quarter-over-quarter, while yields continued to trend lower due to lower base rates QUARTERLY MIDDLE-MARKET SPREADS ACROSS THE CAPITAL STRUCTURE 1,400 bps 1,300 bps 1,200 bps 1,100 bps 1,000 bps 900 bps 800 bps 700 bps 600 bps 500 bps 4
Slide 15: Leverage (Debt to EBITDA)
The Middle-Market Landscape Leverage is at post-crisis highs across all structures LEVERAGE BY CAPITAL STRUCTURE 6.5x 6.0x 5.5x 0.1 0.0 0.1 0.1 0.1 1.5 1.6 5.0x 1.4 0.1 1.3 1.5 1.5 4.5x 1.3 Leverage (Debt to EBITDA) 1.2 1.4 1.4 1.3 1.2 4.0x 1.3 1.2 3.5x 3.0x 5.2 5.4 2.5x 5.1 5.2 5.1 4.9 4.6 4.4 4.5
Slide 16: BBDC Financials
BBDC Financials BARINGS
Slide 17: Net Asset Value (NAV) Bridge – 2Q19 to 3Q19
Net Asset Value (NAV) Bridge – 2Q19 to 3Q19 Since June 30, 2019, BBDC’s NAV per share decreased to $11.58 from $11.59 due to net portfolio depreciation and net realized losses, partially offset by earnings exceeding the dividend and accretive purchases through the share repurchase program 17
Slide 18: BBDC Income Statement
BBDC Income Statement 3Q19 2Q19 1Q19 4Q18 3Q18 Period from August 3, 1 Three Months Ended Three Months Ended Three Months Ended Three Months Ended 2018 through September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 Investment income: Interest income $18,448,942 $19,074,
Slide 19: BBDC Balance Sheet
BBDC Balance Sheet September 30, June 30, March 31, December 31, September 30, 2019 2019 2019 2018 2018 Assets: Investments at fair value: Non-Control / Non-Affiliate investments $1,096,632,222 $1,161,189,262 $1,126,969,755 $1,076,631,804 $1,036,189,705 Affiliate investments 10,036,300 5,000,210 — —
Slide 20: Debt Summary and Maturity Profile
Debt Summary and Maturity Profile As BBDC continues to opportunistically sell BSL, it continues to reduce the size of its BSL revolving credit facility maturing in August 2020; the current size is $177 million, down from $750 million a year ago As of 9/30/2019 As of 6/30/2019 As of 3/31/2019 Princip
Slide 21: Quarterly Dividends
Quarterly Dividends BBDC has declared a fourth quarter dividend of $0.15 per share BBDC DIVIDENDS DECLARED PER SHARE $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 21
Slide 22: 4Q 2019 Origination Pipeline
4Q 2019 Origination Pipeline
Slide 23: Investment Activity Since Quarter End
Investment Activity Since Quarter End Below is a summary of BBDC’s investment activity since September 30, 2019 • From October 1, 2019 through October 28, 2019: • BBDC made approximately $69.4 million of new middle-market private debt commitments, of which approximately $24.7 million have closed and
Slide 24: Investment Pipeline
Investment Pipeline Below is a summary of Barings Global Private Finance probability-weighted pipeline • As of October 25, 2019, Barings Global Private Finance group had a probability-weighted pipeline of approximately $1.05 billion1 • 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 September 30, June 30, March 31, December 31, September 30, 2019 2019 2019 2018 2018 Total debt (principal) $632,548,859 $633,750,000 $620,000,000 $570,000,000 $210,000,000 minus: Cash (12,838,103) (12,926,602)
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