Bain Capital Specialty Finance, Inc. Announces September 30, 2024 Financial Results and Declares Fourth Quarter 2024 Dividend of $0.42 per Share

About this update from Bain Capital Specialty Finance, Inc.

Bain Capital Specialty Finance, Inc. (NYSE: BCSF, the “Company”, “our” or “we”) today announced financial results for the third quarter ended September 30, 2024, and that its Board of Directors (the “Board”) has declared a dividend of $0.42 per share for the fourth quarter of 2024 and an additional dividend of $0.03 per share that was previously announced. “BCSF delivered another strong quarter of earnings driven by high net investment income, net asset value growth, and continued healthy credit performance,” said Michael Ewald, Chief Executive Officer of BCSF. “We also had an active quarter of new origination activity supported by our dedicated Private Credit Group’s global and longstanding presence in the core middle market. Looking forward, we believe the Company remains well-positioned to capitalize on attractive investment opportunities.” QUARTERLY HIGHLIGHTS Net investment income (NII) per share was $0.53, equating to an annualized NII yield on book value of 11.9% (1) ; Net income per share was $0.51, equating to an annualized return on book value of 11.5% (1) ; Net asset value per share as of September 30, 2024 was $17.76, as compared to $17.70 as of June 30, 2024; Gross and net investment fundings were $413.1 million and $165.1 million, respectively; ending net debt-to-equity was 1.09x, as compared to 0.95x as of June 30, 2024 (2) ; Investments on non-accrual represented 1.9% and 1.1% of the total investment portfolio at amortized cost and fair value, respectively, as of September 30, 2024; and Subsequent to quarter-end, the Company’s Board of Directors declared a dividend of $0.42 per share for the fourth quarter of 2024 payable to stockholders of record as of December 31, 2024. The Board of Directors previously announced an additional dividend of $0.03 per share payable to stockholders of record as of December 31, 2024. (3) SELECTED FINANCIAL HIGHLIGHTS ($ in millions, unless otherwise noted) Q3 2024   Q2 2024   Net investment income per share $ 0.53   $ 0.51   Net investment income $ 34.0   $ 33.1   Earnings per share $ 0.51   $ 0.45   Dividends per share declared and payable $ 0.45   $ 0.45   ($ in millions, unless otherwise noted) As of September 30, 2024   As of June 30, 2024   Total fair value of investments $ 2,408.0   $ 2,237.5   Total assets $ 2,543.7   $ 2,414.8   Total net assets $ 1,146.6   $ 1,142.5   Net asset value per share $ 17.76   $ 17.70   PORTFOLIO AND INVESTMENT ACTIVITY For the three months ended September 30, 2024, the Company invested $413.1 million in 83 portfolio companies, including $330.9 million in 16 new companies and $82.2 million in 67 existing companies. The Company had $248.0 million of principal repayments and sales in the quarter, resulting in net investment fundings of $165.1 million. Investment Activity for the Quarter Ended September 30, 2024: ($ in millions) Q3 2024   Q2 2024   Investment Fundings $ 413.1   $ 306.7   Sales and Repayments $ 248.0   $ 473.7   Net Investment Activity $ 165.1   $ (167.0 ) As of September 30, 2024, the Company’s investment portfolio had a fair value of $2,408.0 million, comprised of investments in 159 portfolio companies operating across 31 different industries. Investment Portfolio at Fair Value as of September 30, 2024: Investment Type $ in Millions   % of Total   First Lien Senior Secured Loan $ 1,521.5     63.2 % Second Lien Senior Secured Loan   55.3     2.3   Subordinated Debt   47.0     2.0   Preferred Equity   171.3     7.1   Equity Interest   220.2     9.1   Warrants   0.8     0.0   Investment Vehicles   391.9     16.3   Subordinated Note in ISLP   190.7     7.9   Equity Interest in ISLP   56.5     2.3   Subordinated Note in SLP   146.5     6.2   Preferred and Equity Interest in SLP   (1.8 )   (0.1 ) Total $ 2,408.0     100.0 % As of September 30, 2024, the weighted average yield on the investment portfolio at amortized cost and fair value were 12.1% and 12.1%, respectively, as compared to 13.1% and 13.2%, respectively, as of June 30, 2024 (4) . 90.8% of the Company’s debt investments at fair value were in floating rate securities. As of September 30, 2024, five portfolio companies were on non-accrual status, representing 1.9% and 1.1% of the total investment portfolio at amortized cost and fair value, respectively. As of September 30, 2024, ISLP’s investment portfolio had an aggregate fair value of $691.7 million, comprised of investments in 37 portfolio companies operating across 15 different industries. The investment portfolio on a fair value basis was comprised of 95.1% first lien senior secured loans, 0.7% second lien senior secured loans and 4.2% equity interests. 100% of ISLP’s debt investments at fair value were in floating rate securities. As of September 30, 2024, SLP’s investment portfolio had an aggregate fair value of $1,132.9 million, comprised of investments in 85 portfolio companies operating across 26 different industries. The investment portfolio on a fair value basis was comprised of 98.4% first lien senior secured loans, 1.4% second lien senior secured loans and 0.2% equity interests. 99.9% of SLP’s debt investments at fair value were in floating rate securities. RESULTS OF OPERATIONS For the three months ended September 30, 2024 and June 30, 2024, total investment income was $72.5 million and $72.3 million, respectively. Total expenses (before taxes) for the three months ended September 30, 2024 and June 30, 2024 were $37.5 million and $38.0 million, respectively. Net investment income for the three months ended September 30, 2024 and June 30, 2024 was $34.0 million or $0.53 per share and $33.1 million or $0.51 per share, respectively. During the three months ended September 30, 2024, the Company had net realized and unrealized losses of $0.9 million. Net increase in net assets resulting from operations for the three months ended September 30, 2024 was $33.1 million, or $0.51 per share. CAPITAL AND LIQUIDITY As of September 30, 2024, the Company had total principal debt outstanding of $1,306.2 million, including $353.7 million outstanding in the Company’s Sumitomo Credit Facility, $352.5 million outstanding of the debt issued through BCC Middle Market CLO 2019-1 LLC, $300.0 million outstanding in the Company’s senior unsecured notes due March 2026 and $300.00 million outstanding in the Company’s senior unsecured notes due October 2026. For the three months ended September 30, 2024, the weighted average interest rate on debt outstanding was 5.1%, as compared to 5.1% for the three months ended June 30, 2024. As of September 30, 2024, the Company had cash and cash equivalents (including foreign cash) of $30.5 million, restricted cash and cash equivalents of $29.3 million, $0.6 million of unsettled trades, net of receivables and payables of investments, and $501.3 million of capacity under its Sumitomo Credit Facility. As of September 30, 2024, the Company had $432.2 million of undrawn investment commitments. As of September 30, 2024, the Company’s debt-to-equity and net debt-to-equity ratios were 1.14x and 1.09x, respectively, as compared to 1.03x and 0.95x, respectively, as of June 30, 2024 (2) . Endnotes (1)   Net investment income yields and net income returns are calculated on average net assets, or book value, for the respective periods shown.       (2)   Net debt-to-equity represents principal debt outstanding less cash and cash equivalents and unsettled trades, net of receivables and payables of investments.       (3)   The fourth quarter dividend is payable on January 31, 2025 to stockholders of record as of December 31, 2024.       (4)   The weighted average yield is computed as (a) the annual stated interest rate or yield earned on the relevant accruing debt and other income producing securities plus amortization of fees and discounts on the performing debt and other income producing investments, divided by (b) the total relevant investments at amortized cost or fair value. The weighted average yield does not represent the total return to our stockholders. CONFERENCE CALL INFORMATION A conference call to discuss the Company’s financial results will be held live at 9:30 a.m. Eastern Time on November 6, 2024. Please visit BCSF’s webcast link located on the Events & Presentations page of the Investor Resources section of BCSF’s website at http://www.baincapitalspecialtyfinance.com for a slide presentation that complements the Earnings Conference Call. Participants are also invited to access the conference call by dialing one of the following numbers: Domestic: 1-800-343-4849 International: 1-203-518-9848 Conference ID: BAIN All participants will need to reference “Bain Capital Specialty Finance - Third Quarter Ended September 30, 2024 Earnings Conference Call” once connected with the operator. All participants are asked to dial in 10-15 minutes prior to the call. Replay Information: An archived replay will be available approximately three hours after the conference call concludes through November 13, 2024 via a webcast link located on the Investor Resources section of BCSF’s website, and via the dial-in numbers listed below: Domestic: 1-844-512-2921 International: 1-412-317-6671 Conference ID: 11157443 Bain Capital Specialty Finance, Inc. Consolidated Statements of Assets and Liabilities (in thousands, except share and per share data)       As of     As of       September 30, 2024     December 31, 2023       (Unaudited)           Assets                 Investments at fair value:                 Non-controlled/non-affiliate investments (amortized cost of $1,759,021 and $1,615,061, respectively)   $   1,754,245     $   1,593,360   Non-controlled/affiliate investment (amortized cost of $75,517 and $132,650, respectively)       80,035         147,971   Controlled affiliate investment (amortized cost of $578,475 and $554,123, respectively)       573,670         557,012   Cash and cash equivalents       25,336         42,995   Foreign cash (cost of $4,657 and $6,865, respectively)       5,125         6,405   Restricted cash and cash equivalents       29,292         63,084   Collateral on forward currency exchange contracts       9,675         7,613   Deferred financing costs       4,855         2,802   Interest receivable on investments       34,520         37,169   Receivable for sales and paydowns of investments       17,873         4,310   Prepaid insurance       383         210   Dividend receivable       8,673         9,417   Total Assets   $   2,543,682     $   2,472,348                     Liabilities                 Debt (net of unamortized debt issuance costs of $5,592 and $7,567, respectively)   $   1,300,607     $   1,255,933   Interest payable       13,170         13,283   Payable for investments purchased       17,280         11,453   Unrealized depreciation on forward currency exchange contracts       6,549         2,260   Base management fee payable       8,897         8,929   Incentive fee payable       7,020         7,327   Accounts payable and accrued expenses       14,518         9,581   Distributions payable       29,053         27,116   Total Liabilities       1,397,094         1,335,882                     Commitments and Contingencies (See Note 10)                                   Net Assets                 Common stock, par value $0.001 per share, 100,000,000,000 and 100,000,000,000 shares authorized, 64,562,265 and 64,562,265 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively       65         65   Paid in capital in excess of par value       1,165,191         1,168,384   Total distributable loss       (18,668 )       (31,983 ) Total Net Assets       1,146,588         1,136,466   Total Liabilities and Total Net Assets   $   2,543,682     $   2,472,348                     Net asset value per share   $   17.76     $   17.60   See Notes to Consolidated Financial Statements Bain Capital Specialty Finance, Inc. Consolidated Statements of Operations (in thousands, except share and per share data) (Unaudited)       For the Three Months Ended September 30,     For the Nine Months Ended September 30,         2024       2023       2024       2023   Income                                 Investment income from non-controlled/non-affiliate investments:                                 Interest from investments   $   45,135     $   45,418     $   134,193     $   140,588   Dividend income       826         —         1,261         62   PIK income       5,231         4,926         15,941         15,015   Other income       5,704         1,008         14,100         8,178   Total investment income from non-controlled/non-affiliate investments       56,896         51,352         165,495         163,843                                     Investment income from non-controlled/affiliate investments:                                 Interest from investments       120         2,412         2,980         7,375   Dividend income       85         950         906         3,955   PIK income       —         655         458         1,677   Total investment income from non-controlled/affiliate investments       205         4,017         4,344         13,007                                     Investment income from controlled affiliate investments:                                 Interest from investments       10,165         9,403         28,948         24,320   Dividend income       5,274         7,618         20,523         21,672   Total investment income from controlled affiliate investments       15,439         17,021         49,471         45,992   Total investment income       72,540         72,390         219,310         222,842                                     Expenses                                 Interest and debt financing expenses       18,117         20,775         53,804         60,784   Base management fee       8,897         9,140         26,484         27,166   Incentive fee       7,020         3,011         24,176         18,129   Professional fees       870         760         2,700         1,792   Directors fees       173         182         521         535   Other general and administrative expenses       2,454         2,234         7,374         5,386   Total expenses, net of fee waivers       37,531         36,102         115,059         113,792   Net investment income before taxes       35,009         36,288         104,251         109,050   Income tax expense, including excise tax       1,025         640         3,200         2,332   Net investment income       33,984         35,648         101,051         106,718                                     Net realized and unrealized gains (losses)                                 Net realized gain (loss) on non-controlled/non-affiliate investments       245         (50,873 )       (7,631 )       (61,753 ) Net realized gain on non-controlled/affiliate investments       3,008         —         7,727         —   Net realized loss on foreign currency transactions       (465 )       (673 )       (888 )       (5,207 ) Net realized gain (loss) on forward currency exchange contracts       20         (221 )       1,916         (2,606 ) Net change in unrealized appreciation on foreign currency translation       998         (279 )       967         3,615   Net change in unrealized appreciation on forward currency exchange contracts       (5,693 )       7,107         (4,289 )       5,792   Net change in unrealized appreciation on non-controlled/non-affiliate investments       (2,135 )       41,509         16,925         35,972   Net change in unrealized appreciation on non-controlled/affiliate investments       2,534         (1,067 )       (10,803 )       1,960   Net change in unrealized appreciation on controlled affiliate investments       600         2,705         (7,694 )       7,821   Total net losses       (888 )       (1,792 )       (3,770 )       (14,406 ) Net increase in net assets resulting from operations   $   33,096     $   33,856     $   97,281     $   92,312                                     Basic and diluted net investment income per common share   $   0.53     $   0.55     $   1.57     $   1.65   Basic and diluted increase in net assets resulting from operations per common share   $   0.51     $   0.52     $   1.51     $   1.43   Basic and diluted weighted average common shares outstanding       64,562,265         64,562,265         64,562,265         64,562,265   About Bain Capital Specialty Finance, Inc. Bain Capital Specialty Finance, Inc. is an externally managed specialty finance company focused on lending to middle market companies. BCSF is managed by BCSF Advisors, LP, an SEC-registered investment adviser and a subsidiary of Bain Capital Credit, LP. Since commencing investment operations on October 13, 2016, and through September 30, 2024, BCSF has invested approximately $8,132.9 billion in aggregate principal amount of debt and equity investments prior to any subsequent exits or repayments. BCSF’s investment objective is to generate current income and, to a lesser extent, capital appreciation through direct originations of secured debt, including first lien, first lien/last out, unitranche and second lien debt, investments in strategic joint ventures, equity investments and, to a lesser extent, corporate bonds. BCSF has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. Forward-Looking Statements This letter may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this letter may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the U.S. Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this letter. View source version on businesswire.com: https://www.businesswire.com/news/home/20241105984992/en/

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