Barings Bdc, Inc. · NYSE:BBDC
Barings Bdc — Q2 2019 Earnings Presentation
28 slides from Barings Bdc's earnings presentation, Aug 3, 2019
Slide 1: Barings BDC, Inc. Second Quarter 2019 Earnings Presentation
Barings BDC, Inc. Second Quarter 2019 Earnings Presentation July 30, 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 2Q 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: 2Q 2019 Highlights
20 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 were little changed quarter-over-quarter as June widening offset the tightening that occurred in April BROADLY-SYNDICATED LOAN BROADLY-SYNDICATED LOAN BDC EQUITY PRICES SPREADS PRICES 700 $100 $900 650 $850 $98 600 $800 $96 550 $750 $94
Slide 6: Second Quarter 2019 Highlights
Second Quarter 2019 Highlights Investments during the quarter were Net asset value (NAV) as of June $80 million (including $5 million of add- NET ASSET VALUE ORIGINATIONS 30, 2019 was $11.59 per share ons), while sales and repayments totaled $42 million The weighted average portfolio yield at Net in
Slide 7: Selected Financial Highlights
Selected Financial Highlights Balance Sheet Highlights 2Q 2019 1Q 2019 4Q 2018 3Q 20181 Investment Portfolio, at Fair Value $1,200.6 $1,189.4 $1,121.9 $1,081.2 Total Debt Outstanding (Principal) $633.8 $620.0 $570.0 $210.0 Total Net Assets (Equity) $583.1 $584.2 $563.0 $611.0 Debt-to-Equity Ratio 1.
Slide 8: 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 9: BBDC Investment Portfolio
BBDC Investment Portfolio BARINGS
Slide 10: Investment Activity
Investment Activity Summary of investment activity during the quarter ended June 30, 2019 • Middle-Market Loans1: • Net increase in investments of $66.1 million • New investment commitments2 were $135.7 million • Total MML fundings were $77.5 million • Includes $5.2 million from four previously-comm
Slide 11: Total Portfolio Composition
Total Portfolio Composition A diverse portfolio of 99% senior secured, first lien assets Aggregate Portfolio Characteristics (as of June 30, 2019) 1 Investment Portfolio BSL Middle Market Total Total Investments and Commitments ($mm) $809 $388 $1,247 Unfunded Commitments ($mm) $0 $36 $81 Total Inves
Slide 12: Top 10 Investments
Top 10 Investments Top 10 Holdings (as of June 30, 2019) Principal % of Issuer Moody's Industry Segment Cost Fair Value Amount Portfolio BDP Buyer, LLC Transportation: Cargo MM $24,937,500 $24,474,847 $24,373,790 2.1% Accurus Aerospace Corporation Aerospace and Defense MM 24,875,000 24,538,750 24,36
Slide 13: The Middle-Market Landscape
The Middle-Market Landscape
Slide 14: 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. In 1H19, this premium was 130 bps compared to being 200 bps or greater between 2016 and 2018 COMPARISON OF 1L TERM LOAN YIELDS:
Slide 15: Middle-Market Spreads Across the Capital Structure
The Middle-Market Landscape Lending spreads remained flat quarter-over-quarter with the exception of unitranche and stretch senior transactions 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 400 b
Slide 16: Leverage (Debt to EBITDA)
The Middle-Market Landscape Leverage continues to reach new highs cross all structures 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 Leverage (Debt to EBITDA) 4.5x 1.2 1.2 1.3 1.4 1.4 1.3 1.2 4.0x 1.3 1.2 3.5x 3.0x 2.5x 5.1 5.2 5.1 5.2 5.2 4.9 4.6 4.4
Slide 17: BBDC Financials
BBDC Financials BARINGS
Slide 18: Net Asset Value (NAV) Bridge – 1Q19 to 2Q19
Net Asset Value (NAV) Bridge – 1Q19 to 2Q19 Since March 31, 2019, BBDC’s NAV per share increased to $11.59 from $11.52 due to portfolio appreciation, earnings exceeding the dividend, and the share repurchase plan 18
Slide 19: BBDC Income Statement
BBDC Income Statement 2Q19 1Q19 4Q18 3Q18 Period from August 3, 1 Three Months Ended Three Months Ended Three Months Ended 2018 through June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 Investment income: Interest income $19,074,824 $18,034,014 $16,355,639 $3,876,365 Dividend income
Slide 20: BBDC Balance Sheet
BBDC Balance Sheet June 30, March 31, December 31, September 30, 2019 2019 2018 2018 Assets: Investments at fair value: Non-Control / Non-Affiliate investments $1,161,189,262 $1,126,969,755 $1,076,631,804 $1,036,189,705 Affiliate investments 5,000,210 — — — Short-term investments 34,423,491 62,414,3
Slide 21: Debt Summary and Maturity Profile
Debt Summary and Maturity Profile On May 9, 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 $250.0 million As of 6/30/2019 As of 3/31/2019 As of 12/31/2018 Principal Principal Principal Principal Pri
Slide 22: Quarterly Dividends
Quarterly Dividends BBDC has declared a third quarter dividend of $0.14 per share BBDC DIVIDENDS DECLARED PER SHARE $0.16 $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 22
Slide 23: 3Q 2019 Origination Pipeline
3Q 2019 Origination Pipeline
Slide 24: Investment Activity Since Quarter End
Investment Activity Since Quarter End Below is a summary of BBDC’s investment activity since June 30, 2019 • From July 1, 2019 through July 29, 2019, BBDC made approximately $70.1 million of new middle-market private debt commitments, of which approximately $33.0 million have closed and funded. Of t
Slide 25: Investment Pipeline
Investment Pipeline Below is a summary of Barings North America Private Finance probability-weighted pipeline • As of July 29, 2019, Barings North America Private Finance group had a probability-weighted pipeline of approximately $420 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 June 30, March 31, December 31, September 30, 2019 2019 2018 2018 Total debt (principal) $633,750,000 $620,000,000 $570,000,000 $210,000,000 minus: Cash (12,926,602) (3,056,609) (12,426,982) (116,678,976) minus
Slide 28: 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