Bain Capital Specialty Finance, Inc. Announces June 30, 2023 Financial Results and Declares Third Quarter 2023 Dividend of $0.42 per Share

Bain Capital Specialty Finance, Inc. (NYSE: BCSF, the “Company”, “our” or “we”) today announced financial results for the second quarter ended June 30, 2023, and that its Board of Directors has declared a dividend of $0.42 per share for the third quarter of 2023.

“Our net investment income increased 20% quarter-over-quarter driven by the continued benefits of higher interest rates across our well-diversified portfolio of largely senior secured, floating rate loans,” said Michael Ewald, Chief Executive Officer of BCSF. “As a result of the Company’s strong earnings and the continued stable credit performance across our high-quality portfolio, we are raising our regular quarterly dividend by 10.5% to $0.42 per share, which represents the third increase for our shareholders in the past twelve months.”

QUARTERLY HIGHLIGHTS

• Net investment income (NII) per share was $0.60, equating to an annualized NII yield on book value of 13.9%⁽¹⁾;
• Net income per share was $0.45, equating to an annualized return on book value of 10.4%⁽¹⁾;
• Net asset value per share as of June 30, 2023 was $17.44, as compared to $17.37 as of March 31, 2023;
• Gross and net investment fundings were $197.5 million and $(30.3) million, respectively; Ending net debt-to-equity was 1.13x, as compared to 1.16x as of March 31, 2023⁽²⁾; and
• Subsequent to quarter-end, the Company’s Board of Directors increased its regular quarterly dividend by $0.04 per share to $0.42 per share for the third quarter of 2023 payable to stockholders of record as of September 29, 2023⁽³⁾.

SELECTED FINANCIAL HIGHLIGHTS

PORTFOLIO AND INVESTMENT ACTIVITY

For the three months ended June 30, 2023, the Company invested $197.5 million in 46 portfolio companies, including $119.8 million in six new companies, $47.7 million in 39 existing companies and $30.0 million in Senior Loan Program, LLC (“SLP”). The Company had $227.8 million of principal repayments and sales in the quarter, resulting in net investment fundings of $(30.3) million.

Investment Activity for the Quarter Ended June 30, 2023:

As of June 30, 2023, the Company’s investment portfolio had a fair value of $2,385.3 million, comprised of investments in 142 portfolio companies operating across 30 different industries.

Investment Portfolio at Fair Value as of June 30, 2023:

As of June 30, 2023, the weighted average yield on the investment portfolio at amortized cost and fair value were 12.8% and 13.0%, respectively, as compared to 12.3% and 12.5%, respectively, as of March 31, 2023.⁽⁴⁾ 94.1% of the Company’s debt investments at fair value were in floating rate securities.

As of June 30, 2023, two portfolio companies were on non-accrual status, representing 2.1% and 0.0% of the total investment portfolio at amortized cost and fair value, respectively.

As of June 30, 2023, ISLP’s investment portfolio had an aggregate fair value of $686.6 million, comprised of investments in 39 portfolio companies operating across 19 different industries. The investment portfolio on a fair value basis was comprised of 93.7% first lien senior secured loans, 3.0% second lien senior secured loans and 3.3% equity interests. 100% of ISLP’s debt investments at fair value were in floating rate securities.

As of June 30, 2023, SLP’s investment portfolio had an aggregate fair value of $830.1 million, comprised of investments in 60 portfolio companies operating across 25 different industries.⁽⁵⁾ The investment portfolio on a fair value basis was comprised of 97.4% first lien senior secured loans and 2.6% second lien senior secured loans. 98.9% of SLP’s debt investments at fair value were in floating rate securities.

RESULTS OF OPERATIONS

For the three months ended June 30, 2023 and March 31, 2023, total investment income was $75.7 million and $74.7 million, respectively. The increase in investment income was primarily due to an increase in interest income as a result of higher base rates, partially offset by lower other income.

Total expenses (before taxes) for the three months ended June 30, 2023 and March 31, 2023 were $35.7 million and $42.0 million, respectively.

Net investment income for the three months ended June 30, 2023 and March 31, 2023 was $38.9 million or $0.60 per share and $32.2 million or $0.50 per share, respectively.

During the three months ended June 30, 2023, the Company had net realized and unrealized gains (losses) of $(9.7) million.

Net increase in net assets resulting from operations for the three months ended June 30, 2023 was $29.2 million, or $0.45 per share.

CAPITAL AND LIQUIDITY

As of June 30, 2023, the Company had total principal debt outstanding of $1,498.5 million, including $546.0 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 $300.0 million outstanding in the Company’s senior unsecured notes due October 2026.

For the three months ended June 30, 2023, the weighted average interest rate on debt outstanding was 5.2%, as compared to 5.0% for the three months ended March 31, 2023.

As of June 30, 2023, the Company had cash and cash equivalents (including foreign cash) of $92.3 million, restricted cash and cash equivalents of $36.2 million, $95.7 million of unsettled trades, net of receivables and payables of investments, and $104.3 million of capacity under its Sumitomo Credit Facility. As of June 30, 2023, the Company had $276.0 million of undrawn investment commitments.

As of June 30, 2023, the Company’s debt-to-equity and net debt-to-equity ratios were 1.33x and 1.13x, respectively, as compared to 1.26x and 1.16x, respectively, as of March 31, 2023⁽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 third quarter dividend is payable on October 31, 2023 to holders of record as of September 29, 2023.
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.
5. SLP acquired 70% of the member equity interests of the Company’s 2018-1 portfolio (“2018-1”). The Company retained 30% of the 2018-1 membership interests as a non-controlling equity interest.

CONFERENCE CALL INFORMATION

A conference call to discuss the Company’s financial results will be held live at 8:30 a.m. Eastern Time on August 9, 2023. 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: 1-888-886-7786
• International: 1-416-764-8658
• Conference ID: 50402553

All participants will need to reference “Bain Capital Specialty Finance - Second Quarter Ended June 30, 2023 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 August 16, 2023 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: 50402553

Bain Capital Specialty Finance, Inc.

Consolidated Statements of Assets and Liabilities

(in thousands, except share and per share data)

See Notes to Consolidated Financial Statements

Bain Capital Specialty Finance, Inc.

Consolidated Statements of Operations

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(Unaudited)

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 June 30, 2023, BCSF has invested approximately $6.8 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.

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