Bain Capital Specialty Finance, Inc.

Good day and welcome to the Bain Capital Specialty Finance. Third quarter ended September 30th, 2023 earnings conference call. All participants will be in the listen only mode. Should you need assistance, please signal a conference specialist by pressing star followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one, on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Catherine Schneider. Please go ahead.

Thanks, Niko. Good morning, everyone, and welcome to the Bain Capital Specialty Finance Third Quarter Ended September 30, 2023 Conference Call. Yesterday after market closed, we issued our earnings press release and investor presentation of our quarterly results, a copy of which is available on Bain Capital Specialty Finance's investor relations website. Following our remarks today, we will hold a question and answer session for analysts and investors. This call is being webcast and a replay will be available on our website. This call and the webcast are property of Bain Capital Specialty Finance and any unauthorized broadcast in any form is strictly prohibited. Any forward-looking statements made today do not guarantee future performance and actual results may differ materially. These statements are based on current management expectations, which include risks and uncertainties, which are identified in the risk factor section of our Form 10-Q that could cause actual results to differ materially from those indicated. Bain Capital Specialty Finance assumes no obligation to update any forward-looking statements at this time unless required to do so by law. Lastly, test performance does not guarantee future results. So with that, I'd like to turn the call over to our Chief Executive Officer, Michael Ewald.

Thanks, Catherine, and good morning, and thank you, everyone, for joining us today on our earnings column. I'm joined by Mike Boyle, our President, and our Chief Financial Officer, Sally Dornis. I'll start with an overview of our third quarter, ended September 30, 2023 results, and then provide some thoughts on our performance, the overall market environment, and our positioning. Thereafter, Mike and Sally will discuss our investment portfolio and financial results in greater detail. Yesterday, after market close, we delivered strong third quarter results. Q3 net investment income per share was $0.55, driven by the continued benefits of higher interest rates across our portfolio. Our net investment income return represented an annualized yield of 12.6% on book value and covered our dividend by 131%. Q3 earnings per share were $0.52, driven by stable credit quality across our portfolio investments during the quarter. Our net income produced an annualized return on book value of 12.0%. These results led to another consecutive quarter of growth in our net asset value to $17.54, reflecting a 60 basis point increase from our $17.44 NAV as of June 30th. Subsequent to quarter end, our board declared a fourth quarter dividend equal to 42 cents per share and payable to record date holders as of December 29th, 2023. We believe our regular dividend amount represents an attractive yield for our shareholders at a 9.6% annualized yield on ending book value as of September 30th. Our spillover income per share is approximately 79 cents, or 1.9 times our quarterly regular dividend. We believe this is a healthy amount of undistributed income and provides for increased dividend and NAV stability. Our management team, alongside our board, continues to evaluate the potential for any additional distributions as we near the end of the year. Turning to the market environment, new loan volumes in the private credit market saw a modest increase during the third quarter from Q2 levels, but volumes remain low overall. Driving the higher activity levels in this quarter with the return of large unit tranche loans as private credit continues to take share away from broadly syndicated loan markets, particularly during periods where new CLO creation remains challenged as the BSL market is largely dependent on this. While we observe these trends taking place in the private credit market, we continue to favor middle market size companies versus large corporate borrowers, as many of the core tenants that we value for direct lenders provides greater value within this segment of the market in our view. Particularly, we prefer investing in debt structures that benefit from strong lender controls through loan credit documentation containing financial covenants and having control positions among a small lender group. Our focus on these structures allows us to drive eventual outcomes at our discretion and minimizes lender consensus risk. Within our invested portfolio, 93% of our debt investments are structured with documentation containing financial covenants, and we have majority control positions in 75% of our debt tranches. For the new companies in which our private credit group platform invested during the third quarter, we were the lead investor driving terms and structure as we leveraged our in-house industry expertise and partnered with high-quality sponsors. The investing environment for middle market lenders continues to be attractive, as demonstrated by favorable terms and structures that are more lender-friendly. For example, the weighted average spread on our new portfolio company First Lean Debt Investments was approximately 650 basis points this quarter. which produced a weighted average yield of 12% when factoring in current base rates and amortization of original discounts. And the weighted average net debt to EBITDA leverage on these new loans was 4.0 times, reflecting conservative capital structures in the current market environment. Our portfolio companies continue to perform well and have proven to be durable thus far in the light of the higher interest rate environment as demonstrated by stable credit quality trends across our portfolio. Our non-accrual rates continue to be low at just 1% of the portfolio at fair value, and we had an overall improvement in our watch list investments within our risk ratings. Notwithstanding these solid portfolio metrics, our team remains vigilant, monitoring our portfolio companies closely, particularly given the expectation for a more sustained higher interest rate environment and any potential for an economic slowdown. I'll now turn the call over to Mike Boyle, our president, to walk through our investment portfolio in greater detail.