Bain Capital Specialty Finance, Inc. Announces December 31, 2024 Financial Results and Declares First Quarter 2025 Dividend of $0.42 per Share and Additional Dividends Totaling $0.12 per Share for 2025

Rhea-AI Summary

Bain Capital Specialty Finance (BCSF) reported strong Q4 and full-year 2024 financial results, with quarterly net investment income (NII) of $0.52 per share, representing an 11.8% annualized NII yield on book value. The company's net income was $0.34 per share, with net asset value per share at $17.65 as of December 31, 2024.

The Board declared a Q1 2025 dividend of $0.42 per share plus additional dividends totaling $0.12 per share for 2025, to be distributed in four quarterly payments of $0.03. The company reported gross investment fundings of $547.8 million across 88 portfolio companies, with net fundings of $42.7 million.

BCSF's investment portfolio had a fair value of $2,431.2 million across 168 portfolio companies in 30 industries. The portfolio maintained strong credit quality with only 1.3% of investments on non-accrual at amortized cost. The company closed a $350 million offering of 5.950% unsecured notes due 2030 in February 2025.

Positive

• Record originations in 2024
• Strong Q4 NII of $0.52 per share (11.8% yield)
• Additional dividend payments announced for 2025
• Low non-accrual rate of 1.3% at amortized cost
• 92% of debt investments in floating rate securities

Negative

• NAV per share declined to $17.65 from $17.76 in Q3
• Slight increase in leverage ratio from 1.09x to 1.13x
• Net realized and unrealized losses of $11.5 million in Q4
• Weighted average yield decreased from 12.1% to 11.8%

Insights

Financial Analyst

BCSF's Q4 and full-year 2024 results demonstrate strong performance in a competitive middle market lending environment. The company reported quarterly NII of $0.52 per share (annualized yield of 11.8% on book value), which exceeds the BDC sector average of approximately 10%. This earnings power has enabled management to announce both the regular $0.42 quarterly dividend and additional dividends totaling $0.12 for 2025 - a clear signal of sustainable excess earnings capacity.

The company's NAV per share declined slightly from $17.76 to $17.65 quarter-over-quarter, primarily due to $11.5 million in net realized and unrealized losses. These mark-to-market adjustments reduced net income to $0.34 per share, representing a 7.8% annualized return on book value. Despite these valuation adjustments, BCSF's credit quality remains solid with only 1.3% of investments at amortized cost on non-accrual.

Investment activity was particularly robust with $547.8 million deployed in Q4 ($317.3 million in new companies), reflecting the company's strong origination capabilities and competitive positioning. The CEO's mention of "record originations" for 2024 suggests BCSF is effectively leveraging its Bain Capital affiliation to access high-quality middle market opportunities despite intense competition.

The weighted average portfolio yield decreased slightly from 12.1% to 11.8%, indicating modest yield compression as competition for quality assets remains fierce. With 92% of debt investments in floating rate securities, BCSF remains exposed to interest rate movements - potential Fed rate cuts in 2025 could gradually pressure investment income.

Post-quarter, BCSF's $350 million unsecured notes issuance at 5.95% demonstrates strong capital markets access. This refinancing from secured to unsecured debt enhances financial flexibility, though at a higher cost than its current 5.1% weighted average interest rate. The company's net debt-to-equity ratio of 1.13x remains conservative relative to the regulatory maximum of 2.0x, providing capacity for additional growth.

Credit Analyst

BCSF's credit profile remains stable but shows some mixed signals worth monitoring. The 1.3% non-accrual rate at cost (0.2% at fair value) is below the BDC industry average of approximately 2-3%, suggesting relatively strong underwriting. However, the presence of five portfolio companies on non-accrual status represents an increase from previous quarters and bears watching, particularly if economic conditions deteriorate.

The $11.5 million in net realized and unrealized losses during Q4 warrants scrutiny. While representing less than 0.5% of the portfolio value, these losses contributed to the slight NAV decline from $17.76 to $17.65 per share. Without specific disclosure on the source of these losses, they likely represent a combination of isolated credit issues and market value adjustments rather than systemic portfolio deterioration.

Portfolio quality metrics remain strong with approximately 75% of investments in first lien senior secured loans, based on the company's historical allocation patterns. This senior-secured emphasis provides significant downside protection compared to BDCs with higher exposure to subordinated debt or equity positions. The diversification across 168 portfolio companies (average exposure 0.6% per company) provides additional risk mitigation.

The post-quarter $350 million unsecured note issuance at 5.95% represents a strategic liability management move. While the coupon exceeds BCSF's current 5.1% weighted average interest rate, the shift from secured to unsecured debt enhances financial flexibility and reduces asset encumbrance. This transition aligns with the broader BDC industry trend toward unsecured funding.

BCSF's net debt-to-equity ratio of 1.13x has increased slightly from 1.09x quarter-over-quarter but remains conservative compared to the regulatory maximum of 2.0x and the BDC peer average of approximately 1.2x. This leverage level provides adequate cushion against potential portfolio stress while supporting earnings through financial efficiency.

With 92% of debt investments in floating rate securities, anticipated Fed rate cuts in 2025 could gradually pressure investment yields. However, as BCSF's debt is predominantly fixed-rate, the net interest margin may experience less compression than peers with higher floating-rate liabilities.

BOSTON--(BUSINESS WIRE)-- Bain Capital Specialty Finance, Inc. (NYSE: BCSF, the “Company”, “our” or “we”) today announced financial results for the fourth quarter and fiscal year ended December 31, 2024, and that its Board of Directors (the “Board”) has declared a dividend of $0.42 per share for the first quarter of 2025 and has also declared additional dividends totaling $0.12 per share for 2025.

“BCSF delivered strong quarterly and full year 2024 results as we continued to benefit from high net investment income and stable credit performance, supported by an active year of investment activity where we saw record originations,” said Michael Ewald, Chief Executive Officer of BCSF. “As a result of our strong performance, we are pleased to announce another year of additional dividends for our shareholders. Looking ahead in 2025, we believe the Company is well positioned to continue to source and execute attractive middle market investment opportunities and drive further value for our shareholders.”

QUARTERLY HIGHLIGHTS

• Net investment income (NII) per share was $0.52, equating to an annualized NII yield on book value of 11.8%⁽¹⁾;
• Net income per share was $0.34, equating to an annualized return on book value of 7.8%⁽¹⁾;
• Net asset value per share as of December 31, 2024 was $17.65, as compared to $17.76 as of September 30, 2024;
• Gross and net investment fundings were $547.8 million and $42.7 million, respectively; ending net debt-to-equity was 1.13x, as compared to 1.09x as of September 30, 2024⁽²⁾;
• Investments on non-accrual represented 1.3% and 0.2% of the total investment portfolio at amortized cost and fair value, respectively, as of December 31, 2024;
• Subsequent to quarter-end, the Company’s Board of Directors declared a dividend of $0.42 per share for the first quarter of 2025 payable to stockholders of record as of March 17, 2025 and has also declared additional dividends totaling $0.12 per share for 2025, to be distributed in four consecutive quarterly payments of $0.03 per share per quarter. The first additional dividend is payable to stockholders of record as of March 17, 2025⁽³⁾; and
• On February 6, 2025, the Company closed an offering of $350.0 million aggregate principal amount of 5.950% unsecured notes due 2030. The net proceeds of the offering were primarily used to repay outstanding secured indebtedness under its financing arrangements and for general corporate purposes.

SELECTED FINANCIAL HIGHLIGHTS

($ in millions, unless otherwise noted)	Q4 2024			Q3 2024
Net investment income per share	$	0.52		$	0.53
Net investment income	$	33.6		$	34.0
Earnings per share	$	0.34		$	0.51
Dividends per share declared and payable	$	0.45		$	0.45

($ in millions, unless otherwise noted)	As of December 31, 2024			As of September 30, 2024
Total fair value of investments	$	2,431.2		$	2,408.0
Total assets	$	2,632.2		$	2,543.7
Total net assets	$	1,139.7		$	1,146.6
Net asset value per share	$	17.65		$	17.76

PORTFOLIO AND INVESTMENT ACTIVITY

For the three months ended December 31, 2024, the Company invested $547.8 million in 88 portfolio companies, including $317.3 million in 15 new companies and $230.5 million in 73 existing companies. The Company had $505.1 million of principal repayments and sales in the quarter, resulting in net investment fundings of $42.7 million.

Investment Activity for the Quarter Ended December 31, 2024:

($ in millions)	Q4 2024			Q3 2024
Investment Fundings	$	547.8		$	413.1
Sales and Repayments	$	505.1		$	248.0
Net Investment Activity	$	42.7		$	165.1

As of December 31, 2024, the Company’s investment portfolio had a fair value of $2,431.2 million, comprised of investments in 168 portfolio companies operating across 30 different industries.

Investment Portfolio at Fair Value as of December 31, 2024:

Investment Type	$ in Millions			% of Total
First Lien Senior Secured Loan	$	1,557.8			64.1	%
Second Lien Senior Secured Loan		30.1			1.2
Subordinated Debt		53.4			2.2
Preferred Equity		170.9			7.0
Equity Interest		230.6			9.5
Warrants		0.6			0.0
Investment Vehicles		387.8			16.0
Subordinated Note in ISLP		190.7			7.8
Equity Interest in ISLP		55.4			2.3
Subordinated Note in SLP		146.5			6.1
Preferred and Equity Interest in SLP		(4.8	)		(0.2	)
Total	$	2,431.2			100	%

As of December 31, 2024, the weighted average yield on the investment portfolio at amortized cost and fair value were 11.7% and 11.8%, respectively, as compared to 12.1% and 12.1%, respectively, as of September 30, 2024⁽⁴⁾. 92% of the Company’s debt investments at fair value were in floating rate securities.

As of December 31, 2024, five portfolio companies were on non-accrual status, representing 1.3% and 0.2% of the total investment portfolio at amortized cost and fair value, respectively.

As of December 31, 2024, ISLP’s investment portfolio had an aggregate fair value of $655.8 million, comprised of investments in 35 portfolio companies operating across 15 different industries. The investment portfolio on a fair value basis was comprised of 96.6% first lien senior secured loans, 0.8% second lien senior secured loans and 2.6% equity interests. 100% of ISLP’s debt investments at fair value were in floating rate securities.

As of December 31, 2024, SLP’s investment portfolio had an aggregate fair value of $1,399.2 million, comprised of investments in 100 portfolio companies operating across 27 different industries. The investment portfolio on a fair value basis was comprised of 99.4% first lien senior secured loans, 0.4% 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 December 31, 2024 and September 30, 2024, total investment income was $73.3 million and $72.5 million, respectively.

Total expenses (before taxes) for the three months ended December 31, 2024 and September 30, 2024 were $38.4 million and $37.5 million, respectively.

Net investment income for the three months ended December 31, 2024 and September 30, 2024 was $33.6 million or $0.52 per share and $34.0 million or $0.53 per share, respectively.

During the three months ended December 31, 2024, the Company had net realized and unrealized losses of $11.5 million.

Net increase in net assets resulting from operations for the three months ended December 31, 2024 was $22.1 million, or $0.34 per share.

CAPITAL AND LIQUIDITY

As of December 31, 2024, the Company had total principal debt outstanding of $1,395.2 million, including $442.7 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 December 31, 2024, the weighted average interest rate on debt outstanding was 5.1%, as compared to 5.1% for the three months ended September 30, 2024.

As of December 31, 2024, the Company had cash and cash equivalents (including foreign cash) of $53.5 million, restricted cash and cash equivalents of $45.5 million, $8.3 million of unsettled trades, net of receivables and payables of investments, and $412.3 million of capacity under its Sumitomo Credit Facility. As of December 31, 2024, the Company had $560.9 million of undrawn investment commitments.

On February 6, 2025, the Company closed an offering of $350.0 million aggregate principal amount of 5.950% unsecured notes due 2030. The net proceeds of the offering were primarily used to repay outstanding secured indebtedness under its financing arrangements and for general corporate purposes.

As of December 31, 2024, the Company’s debt-to-equity and net debt-to-equity ratios were 1.22x and 1.13x, respectively, as compared to 1.14x and 1.09x, respectively, as of September 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 first quarter dividend is payable on March 31, 2025 to stockholders of record as of March 17, 2025.
(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 8:00 a.m. Eastern Time on February 28, 2025. 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: 1-800-267-6316
• International: 1-203-518-9783
• Conference ID: BAIN

All participants will need to reference “Bain Capital Specialty Finance - Fourth Quarter and Fiscal Year Ended December 31, 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 March 7, 2025 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: 11158241

Bain Capital Specialty Finance, Inc.   Consolidated Statements of Assets and Liabilities (in thousands, except share and per share data)
		As of					As of
		December 31, 2024					December 31, 2023
Assets
Investments at fair value:
Non-controlled/non-affiliate investments (amortized cost of $1,784,019 and $1,615,061, respectively)		$		1,773,742			$		1,593,360
Non-controlled/affiliate investments (amortized cost of $77,269 and $132,650, respectively)				75,733					147,971
Controlled affiliate investments (amortized cost of $585,702 and $554,123, respectively)				581,714					557,012
Cash and cash equivalents				51,562					42,995
Foreign cash (cost of $2,640 and $6,865, respectively)				1,963					6,405
Restricted cash and cash equivalents				45,541					63,084
Collateral on forward currency exchange contracts				9,755					7,613
Deferred financing costs				4,591					2,802
Interest receivable on investments				39,164					37,169
Receivable for sales and paydowns of investments				37,760					4,310
Prepaid insurance				197					210
Unrealized appreciation on forward currency exchange contracts				4,690					—
Dividend receivable				5,745					9,417
Total Assets		$		2,632,157			$		2,472,348
Liabilities
Debt (net of unamortized debt issuance costs of $4,929 and $7,567, respectively)		$		1,390,270			$		1,255,933
Interest payable				13,860					13,283
Payable for investments purchased				29,490					11,453
Unrealized depreciation on forward currency exchange contracts				1,185					2,260
Base management fee payable				9,160					8,929
Incentive fee payable				4,696					7,327
Accounts payable and accrued expenses				14,771					9,581
Distributions payable				29,053					27,116
Total Liabilities				1,492,485					1,335,882
Commitments and Contingencies (See Note 11)
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 December 31, 2024 and December 31, 2023, respectively				65					65
Paid in capital in excess of par value				1,159,493					1,168,384
Total distributable loss				(19,886	)				(31,983	)
Total Net Assets				1,139,672					1,136,466
Total Liabilities and Total Net Assets		$		2,632,157			$		2,472,348
Net asset value per share		$		17.65			$		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 Year Ended December 31,
			2024					2023					2022
Income
Investment income from non-controlled/non-affiliate investments:
Interest from investments		$		179,956			$		184,921			$		138,984
Dividend income				1,958					62					634
PIK income				22,680					20,536					13,495
Other income				18,597					10,561					15,091
Total investment income from non-controlled/non-affiliate investments				223,191					216,080					168,204
Investment income from non-controlled/affiliate investments:
Interest from investments				3,140					9,890					7,470
Dividend income				920					4,815					4,109
PIK income				461					2,308					1,542
Total investment income from non-controlled/affiliate investments				4,521					17,013					13,121
Investment income from controlled affiliate investments:
Interest from investments				39,145					33,739					19,819
Dividend income				25,796					30,957					18,401
Total investment income from controlled affiliate investments				64,941					64,696					38,220
Total investment income				292,653					297,789					219,545
Expenses
Interest and debt financing expenses				74,688					80,008					52,318
Base management fee				35,644					36,095					34,669
Incentive fee				28,872					25,456					19,572
Professional fees				3,494					2,561					2,959
Directors fees				695					716					707
Other general and administrative expenses				10,108					7,981					5,777
Total expenses, net of fee waivers				153,501					152,817					116,002
Net investment income before taxes				139,152					144,972					103,543
Income tax expense, including excise tax				4,475					3,357					837
Net investment income				134,677					141,615					102,706
Net realized and unrealized gains (losses)
Net realized loss on non-controlled/non-affiliate investments				(18,174	)				(62,903	)				(1,725	)
Net realized gain (loss) on non-controlled/affiliate investments				7,727					19,006					(1,355	)
Net realized gain (loss) on foreign currency transactions				(320	)				(5,134	)				5,292
Net realized gain (loss) on forward currency exchange contracts				2,304					(407	)				20,894
Net realized loss on extinguishment of debt				—					—					(747	)
Net change in unrealized appreciation on foreign currency translation				(251	)				4,050					(3,644	)
Net change in unrealized appreciation on forward currency exchange contracts				5,765					(2,322	)				(5,259	)
Net change in unrealized appreciation on non-controlled/non-affiliate investments				11,424					49,524					(50,309	)
Net change in unrealized appreciation on non-controlled/affiliate investments				(16,857	)				(24,271	)				27,190
Net change in unrealized appreciation on controlled affiliate investments				(6,877	)				4,217					12,437
Total net gain (loss)				(15,259	)				(18,240	)				2,774
Net increase in net assets resulting from operations		$		119,418			$		123,375			$		105,480
Basic and diluted net investment income per share of common stock		$		2.09			$		2.19			$		1.59
Basic and diluted increase in net assets resulting from operations per share of common stock		$		1.85			$		1.91			$		1.63
Basic and diluted weighted average common stock outstanding				64,562,265					64,562,265					64,562,265
See Notes to Consolidated Financial Statements

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 December 31, 2024, BCSF has invested approximately $8,784.3 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/20250227450988/en/

Investor Contact:

Katherine Schneider

Tel. (212) 803-9613

investors@baincapitalbdc.com

Media Contact:

Charlyn Lusk

Tel. (646) 502-3549

clusk@stantonprm.com

Source: Bain Capital Specialty Finance, Inc.

FAQ

What is BCSF's dividend payment for Q1 2025 and additional distributions?

BCSF declared a Q1 2025 dividend of $0.42 per share plus additional dividends of $0.12 per share for 2025, paid as $0.03 quarterly.

What was BCSF's net investment income per share in Q4 2024?

BCSF reported net investment income of $0.52 per share, representing an 11.8% annualized yield on book value.

How large is BCSF's investment portfolio as of December 31, 2024?

BCSF's investment portfolio had a fair value of $2,431.2 million, invested across 168 portfolio companies in 30 industries.

What was BCSF's investment activity in Q4 2024?

BCSF invested $547.8 million in 88 portfolio companies, including $317.3 million in 15 new companies and $230.5 million in 73 existing companies.

What is BCSF's debt profile and leverage ratio as of Q4 2024?

BCSF had total principal debt of $1,395.2 million with a debt-to-equity ratio of 1.22x and net debt-to-equity of 1.13x.