BARINGS BDC, INC. MAY 8, 2024
Barings BDC, Inc.
First Quarter 2024
Earnings Presentation
Disclaimers & Cautionary Notice Regarding Forward-Looking Statements
Cautionary Notice: Certain statements contained in this presentation are "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's current estimates, projections, expectations or beliefs, and which are subject to risks and uncertainties that may cause actual results or events to differ materially. Forward-looking statements include, but are not limited to, Barings BDC, Inc.'s ("Barings BDC" or the "Company") distribution levels and frequency of distributions, the Company's share repurchase activity, the ability of Barings LLC to manage the Company and identify investment opportunities, the Company's portfolio composition and some of the factors that could cause actual results or events to differ materially from those identified in forward-looking statements are enumerated in the filings the Company makes with the Securities and Exchange Commission (the "SEC"). These statements are subject to change at any time based upon economic, market or other conditions, including with respect to Barings BDC's and its portfolio companies' results of operations and financial condition. Important factors that could cause actual results or activities to differ materially from plans, estimates, targets or expectations included in this presentation include, among others, those risk factors detailed in Barings BDC's annual report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 22, 2024, in Barings BDC's subsequently filed quarterly reports on Form 10-Q, and as may be included from time to time in Barings BDC's other filings with the SEC, including current reports on Form 8-K. In addition, there is no assurance that Barings BDC or any of its affiliates will purchase additional shares of Barings BDC at any specific discount levels or in any specific amounts or that the market price of Barings BDC's shares, either absolutely or relative to net asset value, will increase as a result of any share repurchases, or that any repurchase plan will enhance stockholder value over the long term. The Company undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by law.
This presentation contains statistics and other data that has been obtained from or compiled from information made available by third-party service providers. We have not independently verified such statistics or data.
These materials and any presentation of which they form a part are neither an offer to sell, or a solicitation of an offer to purchase, an interest in the Company. The information presented in this presentation is as of March 31, 2024 unless indicated otherwise.
Other Important Information
Any forecasts in this document are based upon Barings' opinion of the market at the date of preparation and are subject to change without notice, dependent upon many factors. Any prediction, projection or forecast is not necessarily indicative of the future or likely performance. Investment in the Company's securities involves risk. The value of any investments and any income generated may increase or decrease and are not guaranteed. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. Any investment results, portfolio compositions and/or examples set forth in this document are provided for illustrative purposes only and are not indicative of any future investment results, future portfolio composition or investments. The composition, size of, and risks associated with an investment may differ substantially from any examples set forth in this document. No representation is made that an investment will be profitable or will not incur losses. Where appropriate, changes in the currency exchange rates may affect the value of investments.
Agenda
ERIC LLOYD
MATTHEW FREUND
BRYAN HIGH
ELIZABETH MURRAY
1Q 2024 HIGHLIGHTS (LLOYD)
Summary points of the quarter.
BARINGS BDC MARKET UPDATE & INVESTMENT PORTFOLIO (FREUND)
Update on the portfolio performance.
BARINGS BDC FINANCIALS (MURRAY)
A walk through the balance sheet, income statement, NAV bridge and liquidity.
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BARINGS OVERVIEW
Who We Are
Global Headquarters
$406+ B
ASSETS UNDER MANAGEMENT
Barings is a global asset management firm that works with institutional, insurance and intermediary clients to provide excess returns across public and private markets in fixed income, real assets and capital solutions.
External AUM by Region1
EMEA
28%
Americas
43%
Asia
Pacific
29%
Investment Offices Other Locations | |
1,200+ | 1,800+ |
EXTERNAL CLIENTS | PROFESSIONALS GLOBALLY |
1. Includes third party, external AUM only.
All figures are as of March 31, 2024 unless otherwise indicated. Assets shown are denominated in USD. Percentages may not equal 100 due to rounding.
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Sponsor Backed Investments
Barings BDC Franchise
Private credit expertise delivering comprehensive exposure to the
Middle Market
with a focus on first lien loans and securities
What is it? Financing the operating companies of issuers
Owned by Private Equity firms
Assets are Directly Originated by the Barings team through proprietary relationships with leading Private Equity firms through the United States and Europe
Typical Terms
- <50% Loan to Value
- Maintenance Covenants
- EBITDA between $15 and $75 million
5-15%
5-10%
75-85%
Non-Sponsored Investments
What is it? Financing the | Typical Terms | |
Operating Companies of | • | <50% Loan to Value |
issuers irrespective of ownership. | • | Maintenance Covenants |
Leverages Barings brand and | • EBITDA between $25 and | |
scale to source optimal risk | $150 million | |
adjusted return in upper middle | ||
market and opportunistic middle | ||
market transactions |
Platform Investments
What is it? BDC investments in | Typical Terms | |
two originators of uncorrelated | • | LTV <80% of Liquidation |
middle market first-lien loans | Value | |
• | Floating Rate | |
• | Highly diversified underlying | |
loan exposures |
The above is being shown for illustrative purposes only.
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First Quarter 2024 Highlights
NET ASSET
VALUE
NET INVESTMENT
INCOME
DIVIDEND
Net asset value (NAV) as of March 31, 2024 was $11.44 per share as compared to $11.28 per share as of
December 31, 2023
Net investment income for the quarter ended March 31, 2024
was $0.28 per share
The Board of Directors
approved a second quarter 2024 dividend of $0.26 per share, matching the $0.26 per share in the first quarter of 2024
ORIGINATIONS
PORTFOLIO
YIELD
CREDIT
PERFORMANCE
Total originations during the quarter were $142 million, while sales and repayments totaled $119 million, for net deployments of $23 million
The weighted-average portfolio yield1 as of March 31, 2024 was 11.3%
There were four BBDC-
originated investments and two acquired investments on non-accrual. Total non- accruals represented 0.3% of total portfolio at fair value
1. Yield is calculated as the weighted average of current coupon rates (USD-equivalent). Excludes equity investments and non-accrual investments. Data as of March 31, 2024. Refer to slide 16 for fully-reconciled income statement including numbers of shares used to calculate per-share data.
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Selected Financial Highlights
Balance Sheet Highlights | 1Q 2024 | 4Q 2023 | 3Q 2023 | 2Q 2023 | 1Q 2023 |
Investment Portfolio, at Fair Value | $2,527.5 | $2,488.7 | $2,521.6 | $2,505.9 | $2,556.1 |
Total Debt Outstanding (Principal) | $1,465.4 | $1,444.9 | $1,521.1 | $1,497.1 | $1,494.1 |
Total Net Assets (Equity) | $1,211.9 | $1,196.6 | $1,198.2 | $1,207.6 | $1,205.0 |
Debt-to-Equity Ratio | 1.21x | 1.21x | 1.27x | 1.24x | 1.24x |
Net Debt-to-Equity Ratio1 | 1.17x | 1.15x | 1.18x | 1.15x | 1.19x |
Income Statement Highlights | |||||
Total Investment Income | $69.8 | $75.8 | $70.8 | $75.3 | $67.2 |
Net Investment Income | $29.4 | $33.4 | $33.3 | $33.6 | $27.5 |
Net Realized Gains/(Losses) | $(21.5) | $12.8 | ($17.3) | ($48.5) | ($9.7) |
Net Unrealized Appreciation/(Depreciation) | $36.1 | ($16.4) | $2.0 | $55.1 | $22.0 |
Net Income | $44.0 | $29.9 | $18.3 | $40.1 | $39.7 |
Per-Share Data | |||||
Net Asset Value per Share | $11.44 | $11.28 | $11.25 | $11.34 | $11.17 |
Net Investment Income per Share (Basic and Diluted)2 | $0.28 | $0.31 | $0.31 | $0.31 | $0.25 |
Net Income per Share (Basic and Diluted)2 | $0.41 | $0.28 | $0.17 | $0.37 | $0.37 |
Dividend per Share | $0.26 | $0.26 | $0.26 | $0.25 | $0.25 |
Amounts in millions, except per-share data and ratios.
1. Net of unrestricted cash and foreign currencies and net unsettled transactions. Refer to slide 21 for a reconciliation of Debt-to-Net Debt and a calculation of Net Debt-to-Equity Ratio.
2. Refer to slide 16 for weighted-average shares outstanding for each period.
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Portfolio Highlights
$2.53B 337
PORTFOLIO SIZE | ISSUER COUNT |
73% 87%
SECURED DEBT | FLOATING RATE |
626 BPS | 11.3% |
WEIGHTED AVERAGE | YIELD |
SPREAD |
0.3% | 2.2X |
ASSETS ON NON- | WEIGHTED-AVERAGE |
ACCRUAL | INT. COVERAGE |
Senior Secured Focus | |||
4% 4% | |||
16% | First Lien | ||
Second Lien | |||
Mezzanine | |||
4% | Equity | ||
6% | Structured | ||
66% | JV | ||
Diversified Industry Exposure
Finance & Insurance | ||||
24% | 16% | Services: Business | ||
High Tech Industries | ||||
Healthcare And Pharmaceuticals | ||||
15% | Aerospace And Defense | |||
3% | Capital Equipment | |||
4% | Investment Funds And Vehicles | |||
4% | 12% | Structured Products | ||
4% | Transportation: Cargo | |||
5% | 8% | Automotive | ||
5% | ||||
Other
Portfolio highlights at fair value as of March 31, 2024. Totals may not foot due to rounding.
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Portfolio Composition
Investment Portfolio by Issuer
- Barings BDC maintains a highly diversified portfolio, with the top issuer accounting for 6.1% of exposure and the top 10 issuers accounting for 22.9%
- Eclipse, the largest asset by market value, is itself supported by a diversified pool of asset backed loans
Eclipse Business | Rocade Holdings |
Capital, LLC, 6.1% | |
LLC, 3.0% | |
Security Holdings | |
B.V., 2.4% | |
Policy Services | |
Company, LLC, 2.1% | |
County of Gallatin | |
MT, 1.7% | |
Sierra Senior Loan | |
Strategy JV I LLC, | |
1.7% | |
Jocassee | |
Partners | |
Top 10 | LLC, 1.6% |
Coastal Marina | |
Issuers: | |
Holdings, LLC, | |
22.9% | 1.5% |
Shelf Bidco Ltd, | |
1.5% |
MVC Automotive
Other Issuers,Group Gmbh, 1.3%
77.1%
1. Excludes Swaps and Joint Ventures with substantially similar exposure as the broader portfolio. Portfolio composition at fair value as of March 31, 2024.
Totals may not foot due to rounding.
Investment Portfolio Strategy1
- BBDC's existing investments are substantially consistent with our long-term strategy, as Sponsored and Non-Sponsored corporate issuers accounted for 82% of the BBDC portfolio at 3/31/24
7%
8%
9%
75%
Sponsored Non-Sponsored Other Platform Investments
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Portfolio Composition Trends
Consistent Focus on Secured Investments
- Barings BDC has consistently been comprised largely of secured investments. When accounting for the look-through exposure of investments in Eclipse and Rocade, more than 84% of the portfolio is comprised of secured assets
3% | 3% | 4% | 4% | 4% |
5% | 5% | 5% | 4% | 4% |
13% | 14% | 14% | 15% | 16% |
4% | 4% | 4% | 4% | 4% |
6% | 6% | 7% | 6% | |
6% | ||||
69% | 68% | 67% | 67% | 66% |
1Q 2023 | 2Q 2023 | 3Q 2023 | 4Q 2023 | 1Q 2024 | |||||||
First Lien | Second Lien | Mezzanine | Equity | JV | Structured | ||||||
Active Rotation to Barings Originated Loans
- Barings BDC is driving towards a portfolio focused on secured debt augmented by non-correlated investments
13% | 18% | 10% | 10% | 10% | 10% | 9% | 8% | |||||
3% | 3% | 3% | 2% | 2% | 3% | |||||||
6% | ||||||||||||
87% | 86% | 87% | 87% | 88% | 89% | 89% | ||
76% | ||||||||
MVC Sierra
Acquisition Acquisition
4Q 2020 | 1Q 2022 | 4Q 2022 | 1Q 2023 | 2Q 2023 | 3Q 2023 | 4Q 2023 | 1Q 2024 | ||||
Barings Originated | MVC | SIC | |||||||||
Portfolio composition trends at fair value as of March 31, 2024.
Totals may not foot due to rounding.
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Disclaimer
Barings BDC Inc. published this content on 07 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 May 2024 20:47:48 UTC.
