Q4 2023 Bain Capital Specialty Finance Inc Earnings Call

Operator: The Bulletproof Executive 2013 Good morning, ladies and gentlemen, and welcome to the Bain Capital Specialty Finance fourth quarter and fiscal year-ended December 31, 2023 earnings conference call. At this time, all lines are in a listen-only mode.

Good morning, ladies and gentlemen, and welcome to the Bain capital.

Oh, sorry, Bain capital specialty finance fourth quarter and fiscal year ended December 31, 2023 earnings conference call. At this time all lines are in a listen only mode.

Catherine Schneider: Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. Catherine Schneider, Director of Investor Relations. Thank you, Jenny. Good morning, everyone, and welcome to the Bain Capital Specialty Finance fourth quarter and year ended December 31st, 2023 conference. Yesterday, at the market close, we issued our earnings press release and investor presentation of our quarterly and year-ended 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.

Following the presentation, we will conduct a question and answer session.

At times during this call with our immediate assistance. Please press star zero pretty all Peter.

I would now like.

Turning the conference over to Katherine Schneider Director and Investor Relations. Please go ahead.

Thank you Jenny good morning, everyone and welcome to the Bain capital Specialty Finance fourth quarter and year ended December 31, 2023 conference call Yes.

Yesterday after market close we issued our earnings press release, and Investor presentation of our quarterly and year ended results a copy of which are available on Bain capital specialty finance is investor Relations website.

Following our remarks today, we will hold a question and answer session for analysts and investor.

This call is being webcast and a replay will be available on our website.

Catherine Schneider: 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-K 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, past performance does not guarantee future performance. So with that, I'd like to turn the call over to our CEO, Michael Ewald. Thanks, Catherine, and good morning to everyone, and thank you for joining us on our earnings call. I'm joined here today by Mike Boyle, our President, and our Chief Financial Officer, Amit Joshi. Before we begin, I would like to welcome Amit.

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 factors section of our Form 10-K that could cause actual results to differ materially from those indicated.

Bank capital Specialty finance assumes no obligation to update any forward looking statements at this time unless required to do so by law.

Lastly, past performance does not guarantee future results.

That I would like to turn the call over to our CEO Michael <unk>.

Thanks, Kathryn and good morning to everyone and thank you for joining us on our earnings call I'm joined here today by Mike Boyle, Our President and our Chief Financial Officer <unk> Joshi.

As we begin I would like to welcome I met for those who may not have seen our announcement that made has been appointed as our new Chief Financial Officer effective January 1st 2024.

Michael A. Ewald: For those who may not have seen our announcement, Amit has been appointed as our new Chief Financial Officer, effective January 1, 2024. He brings a wealth of accounting knowledge specifically within the private credit and BDC landscapes and has over two decades of finance and accounting experience. We're excited to have Amit join our management team, and I would be remiss if I didn't thank our predecessor CFO, Sally Dornaus, for her many contributions to the company over the last eight years. Sally remains in place as a senior leader across the greater Bain Capital platform. Thank you, Sally.

He brings a wealth of accounting knowledge, specifically within the private credit and BDC landscapes and has over two decades of finance and accounting experience.

I had to have joined our management team.

And then that would be remiss if I didn't thank our predecessors CFO Sally Dorn us for her many contributions to the company over the last eight years Sally remains in place as a senior leader across the greater Bain capital platform. Thank you Sally.

Michael A. Ewald: In terms of the agenda for the call, I'll start with an overview of our fourth quarter and 2023 full-year results and then provide some thoughts on our performance, the overall market environment, and our positioning. Thereafter, Mike and Amit will discuss our investment portfolio and financial results in greater detail. So first, yesterday after market close, we delivered strong fourth-quarter and full-year 2023 results. Q4 net investment income per share was $0.54, representing an annualized yield on book value of 12.3%. Our net investment income covered our dividend by 129% during the quarter. Q4 earnings per share were $0.48, reflecting an annualized return on book value of 10.9%.

In terms of the agenda for the call I'll start with an overview of our fourth quarter and 2023 full year results and then provide some thoughts on our performance the overall market environment and our positioning.

Thereafter, Mike in a minute will discuss our investment portfolio and financial results in greater detail.

So first yesterday after market close we delivered strong fourth quarter and full year 2023 results.

Q4, net investment income per share was <unk> 54, representing an annualized yield on book value of 12, 3%.

Our net investment income covered our dividend by 129% during the quarter.

Q4 earnings per share were <unk> 48 cents, reflecting an annualized return on book value of 10, 9%.

Michael A. Ewald: For the full year 2023, net investment income per share was $2.19, equal to a 12.6% return on equity. This was up 60 cents per share, or 38% year over year. Our NII covered our dividend by 137% during the year.

For the full year 2023, net investment income per share was $2 19.

Equal to a 12, 6% return on equity.

This was up 60 per share or 38% year over year.

Our NII covered our dividend by 137% during the year.

Michael A. Ewald: In 2023, earnings per share were $1.91, representing a total return on equity of 11.4%. Our annual net earnings continue to exceed our dividend payout for a third consecutive year, demonstrating our consistently strong credit performance. Our results were driven by high-quality interest income earned from our middle-market borrowers and stable credit performance across our portfolio during the fourth quarter and throughout the year. Our net asset value ended the year at $17.60 per share, up from $17.54 from the previous quarter and up from $17.29 as of Q4 2022. Reflecting the underlying portfolio strength.

2023 earnings per share were $1 $1 91, representing a total return on equity of 11, 4%.

Our annual net earnings continued to exceed our dividend payout for a third consecutive year, demonstrating our consistently strong credit performance.

Our results were driven by high quality interest income earned from our middle market borrowers and stable credit performance across our portfolio during the fourth quarter and throughout the year.

Our net asset value ended the year at $17 60 per share up from $17 54 from the previous quarter and up.

From $17.29 as of Q4 2022.

Reflecting the underlying portfolio strength.

Michael A. Ewald: In addition, total dividends to our shareholders were $1.60 per share for 2023, reflecting a 16% increase from 2022 dividends. Subsequent to quarter end, our board declared a first quarter dividend equal to 42 cents per share payable to record date holders as of March 28th, 2024. As we have highlighted to our shareholders in prior calls, our management team, alongside our board, has continuously been evaluating paying out any additional dividends as we near year end. In recognition of the strength of our 2023 earnings as demonstrated by the company's strong net investment income and continued growth in our excess undistributed earnings, our board has declared additional dividends to shareholders, totaling $0.12 per share for 2024. We intend to pay these special dividends in installments of $0.03 per share each quarter throughout the year.

In addition, total dividends to our shareholders were $1 60 per share for 2023, reflecting a 16% increase from 2022 dividends.

Subsequent to quarter end, our board declared a first quarter dividend equal to <unk> 42 per share and payable to record date holders as of March 28 2024.

As we've highlighted to our shareholders in prior calls our management team alongside our board has been continuously evaluating paying out any additional dividends as we near year end.

In recognition of the strength of our 2023 earnings as demonstrated by the Companys strong net investment income and continued growth in our excess undistributed earnings. Our board has declared additional dividends to shareholders totaling 12 per share for 2024.

We intend to pay the special dividends in installments of <unk> <unk> per share each quarter throughout the year.

Michael A. Ewald: Together with our declared regular and special dividend, our total dividend payout for the first quarter represents an attractive yield of 10.2% annualized on ending book value. At BCSF's current trading levels, our total Q1 dividend represents an 11.6% annualized yield. And we believe this is a compelling level for investors on both an absolute and relative value basis across the BDC sector. Furthermore, over the course of 2023, our middle market borrowers across our diversified portfolio demonstrated resiliency against a macroeconomic backdrop of moderate inflation and stunted economic growth. Corporate fundamentals remain solid, with net debt to EBITDA across our borrowers declining to a median net leverage across our portfolio of 4.8 times at year end. The strong credit quality health of our portfolio is reflected both by the low non-accrual rate of 1% of the portfolio at fair value and the small number of portfolio companies on our watch list. Only 5% of our portfolio at fair value merited a risk rating of 3 or 4, our lowest ratings.

Together with our declared regular and special dividend, our total dividend payout for the first quarter represents an attractive yield of 10, 2% annualized on ending book value.

At UCSF current trading levels, our total Q1 dividend represents an 11, 6% annualized yield.

And we believe this is a compelling level for investors on both an absolute and relative value basis across the BDC sector.

Over the course of 2023, our middle market borrowers across our diversified portfolio demonstrated resiliency against the macroeconomic backdrop of moderate inflation and stunted economic growth.

Corporate fundamentals remained solid with net debt to EBITDA across our borrowers declining to a median net leverage across our portfolio of four eight times at year end.

The strong credit quality health of our portfolio as reflected both by the low non accrual rate of 1% of the portfolio at fair value and the small number of portfolio companies on our watch list at only 5% of our portfolio at fair value Meredith to risk rating three or four are lowest ratings.

Michael A. Ewald: We ended the fourth quarter at a net leverage ratio of 1.02 times, at the lower end of our target net leverage ratio between 1 and 1.25 times, providing us with ample dry powder to capitalize on new investments in the current environment. While middle market transaction volumes were lower throughout 2023, we believe future transaction growth from new LBO and M&A processes is expected to be higher in 2024 with a clearer macroeconomic outlook and increased clarity on the rate environment. Importantly, while much has been made in the press lately of the return of the broadly syndicated loan market and how it may portend a decline in private credit opportunities going forward, the public markets have never been a player in our core middle market segment of companies with $25 to $75 million of EBITDA, and we don't see that dynamic changing in the future. Bain Capital's global and long-standing presence in the middle market positions us well to source new investment opportunities from our broad and deep set of relationships while remaining highly selective.

We ended the fourth quarter and a net leverage ratio of one point or two times at the lower end of our target net leverage ratio between one and one five times, providing us with ample dry powder to capitalize on new investments in the current environment.

While middle market transaction volumes were lower throughout 2023, we believe future transaction growth from new LBO and M&A processes are expected to be higher in 2024, with a clear macroeconomic outlook and increased clarity on the rate environment.

Importantly, while much has been made in the press lately of the return of the broadly syndicated loan market and how it may portend, a decline in private credit opportunities going forward the.

The public markets have never been a player in our core middle market segment of companies was $25 to $75 million of EBITDA, and we don't see that dynamic changing in the future.

Bain capital's global and longstanding presence in the middle market positions us well to source new investment opportunities from our broad and deep set of relationships while remaining highly selective.

Michael A. Ewald: Furthermore, our platform incumbency advantage provides us with a sourcing, underwriting, and execution edge. As new deal flow volume has slowed over the past year, supporting existing portfolio companies has been an increased source of new investment activity across our platform, as we've been providing add-on capital to existing portfolio companies to allow them to grow and execute their business plans. I will now turn the call over to Mike Boyle, our president, to walk through our investment portfolio in greater detail. Thank you, Mike, and good morning, everyone.

Furthermore, our platform incumbency advantage provides us with a sourcing underwriting and execution edge.

As new deal flow volume has slowed over the past year supporting existing portfolio of companies has been an increased source of new investment activity across our platform as we've been providing add on capital to existing portfolio companies to allow them to grow and execute their business plans.

I will now turn the call over to Mike Boyle, our president to walk through our investment portfolio in greater detail Mike.

Thank you, Mike and good morning, everyone.

Michael Boyle: I'll start by discussing our investment activity in the fourth quarter and then provide an update and more detail on our portfolio. New funding during the fourth quarter for $206 million across 43 portfolios, including $56 million to two new companies, $145 million to 40 existing companies, and $5 million to the ISLP. Sales and repayment activity totaled approximately $308 million, resulting in a net funded portfolio decline of $102 million quarter over quarter. For the full year, fundings were $821 million.

I'll start by discussing our investment activity in the fourth quarter, and then provide an update and more detail on our portfolio.

New fundings during the fourth quarter were $206 million.

<unk> 43 portfolio companies, including $56 million to two new companies 145 million to 40 existing companies and $5 million to the <unk>.

Sales and repayment activity totaled approximately $308 million, resulting in net funded portfolio a decline of $102 million quarter over quarter.

For the full year fundings were $821 million.

Michael Boyle: Total sales and repayment activity for the year was $924 million, and as a result of this activity, the size of our total portfolio modestly declined 4% year-over-year. But that leaves us well-positioned with ample dry powder for investment opportunities over the course of 2024. Our new investing activities... for the fourth quarter and full year were comprised of a mix of funding to new portfolio companies and existing portfolio companies. During the fourth quarter, funding to new portfolio companies represented 27% of total versus 73% to existing companies. For the full year, 52% of our investment activity was lending to new portfolio companies, with the remaining 48% to existing companies, highlighting the importance of incumbency.

Total sales and repayment activity for the year were $924 million.

As a result of this activity the size of our total portfolio portfolio modestly declined 4% year over year, but that leaves us well positioned with ample dry powder for investment opportunities over the course of 2024.

Our new investing activities.

For the fourth quarter and full year were comprised of a mix of fundings to new portfolio companies and existing portfolio companies during.

During the fourth quarter fundings to new portfolio companies represented 27% of total versus 73% to existing companies for.

For the full year, 52% of our investment activity with lending to new portfolio companies with the remaining 48% to existing companies.

Delighting the importance of incumbency is in a market with muted LVL volumes.

Michael Boyle: In a market with muted LBO volume, the cornerstone of our investment philosophy is focused on rigorous, fundamental due diligence at the industry and company level. During the quarter, we continue to leverage Bain Capital's in-house industry knowledge across our new investors. Our two largest investments this quarter were to companies within industries that have less traffic, capital equipment, and aerospace and defense. In Q4, we provided a first lien senior secured loan at SOFR plus 675 and a preferred equity co-investment to AXH Air Coolers, a supplier of air-cooled heat exchangers, which are manufactured products that are used to cool gases and liquids. We sourced this investment from a high-quality sponsor who also knows the niche and market well and has partnered with us on prior investments within the sector.

The cornerstone of our investment philosophy is focused on rigorous fundamental due diligence at the industry and company level.

During the quarter, we continued to leverage bank capital in house industry knowledge across our new investment.

Our two largest investments this quarter, where the companies within industries that are less traffic capital equipment and aerospace and defense.

In Q4, we provided a first lien senior secured loan at Sofa, plus $2 75, and a preferred equity co investment to eight X H Air coolers.

<unk> of air cooled heat exchangers, which are manufactured products that are used to cool gases and liquids we.

We sourced this investment from our high quality sponsor, who also knows the niche end market well and has partnered with us on prior investments within the sector.

Michael Boyle: We also provided add-on capital for Forward Slope, a provider of mission-critical software and surveillance solutions to the defense industry. Aerospace and defense is our largest sector exposure and one that we continue to favor in the current environment given the non-cyclical nature of the demand drivers in this industry. Our add-on investment was structured at the same interest rate as our existing first-lane loan at SOFR plus 675 basis points.

We also provided add on capital to forward slope, a provider of mission critical software and surveillance solutions.

The defense industry.

Space and defense is our largest sector exposure and one that we continue to favor in the current environment given the non cyclical nature of the demand drivers in this industry.

<unk> investment was structured at the same interest rate as our existing first lien loan at Sulphur plus 675 basis points.

Michael Boyle: Turning to the investment portfolio, at the end of the fourth quarter, the size of our investment portfolio at fair value was approximately $2.3 billion across a highly diversified set of 137 portfolio companies operating across 31 different industries. Our portfolio primarily consists of investments in first lien, senior secured loans, given our focus on downside management and investing at the top of the capital structure. As of December 31st, 64% of the investment portfolio at fair value was invested in first lien debt, 3% in second lien debt, 2% in subordinated debt, 5% in preferred equity, 10% in equity and other interests, and 16% across our joint ventures.

Turning to the investment portfolio at the end of the fourth quarter the size of our investment portfolio at fair value was approximately $2 3 billion.

Across our highly diversified set of 137 portfolio companies operating across 31 different industries.

Our portfolio primarily consists of investments in first lien senior secured loans, given our focus on downside management and investing at the top of capital structures.

As of December 31, 64% of the investment portfolio at fair value was invested in first lien debt, 3% in second lien debt, 2% subordinated debt.

5% preferred equity.

10% in equity and other interests and 16% across our joint ventures.

Michael Boyle: As we've highlighted to our shareholders on prior earnings calls, 96% of the underlying investments held in our joint ventures consist of first lien loans, resulting in a look-through first lien exposure of approximately 82% of the overall portfolio. As of December 31st, 2023, the weighted average yield on the investment portfolio at amortized cost and fair value were 13.0% and 13.1%, respectively, as compared to 12.9% and 13.1% as of 94% of our debt investments bear interest at a floating rate, positioning the company favorably as interest rates have continued to rise beyond reference rate floors across our loan portfolio. Moving on to portfolio credit quality trends, fundamentals remained healthy, and we have observed positive credit migration across our portfolio. As Mike highlighted earlier, the median leverage detachment point declined to 4.8 times as of December 31st, as compared to 5.0 times as of September 30th.

We've highlighted to our shareholders in prior earnings call, 96% of the underlying investments held in our joint venture consisted of first lien loans, resulting in a look through first lien exposure of approximately 82% of the overall portfolio.

As of December 31, 2023.

Average yield on the investment portfolio at amortized cost and fair value were 13% and 13, 1%, respectively as compared to 12, 9% and 13, 1% as of September 32023.

94% of our debt investments bear interest at a floating rate positioning the company favorably as interest rates have continued to rise beyond reference rate floors across our loan portfolio.

Okay.

Moving on to portfolio credit quality trends fundamentals remained healthy and we have observed positive credit migration across our portfolio as Mike highlighted earlier, the median leverage detachment point declined to four eight times as of December 31, as compared to five <unk> times as of September 30th.

Michael Boyle: Over the course of a year, we were pleased to see declining leverage across older vintage companies that have come back in line with our budget. During the quarter, we realized a net gain by exiting our investment in Black Brush Oil and Gas. This was a 2018 vintage investment that was restructured back in 2020, and we are pleased to demonstrate our ability to drive a positive outcome for our shareholders by taking ownership of that business. The growth IRR and multiple of money for our investment in black fresh oil and gas were 14% and 1.6 times, respectively, at year-end. We have a small residual value that we currently expect in near-term distribution at or near our mark. On our internal risk rating scale, we saw modest improvement within our risk rating one and two investments, which indicates that the company is performing in line or better than expectations relative to our original underwriting.

Over the course of the year, we're pleased to see declining leverage across older vintage companies that have come back in line with our budget.

During the quarter, we realized the net gain exiting our investment in black breast oil and gas.

This was the 2018 vintage investment was restructured back in 2020, and we are pleased to demonstrate our ability to drive a positive outcome for our shareholders by taking ownership of that business. The.

The gross IRR and multiple of money for our investment in black rest of oil and gas were 14% and one six times, respectively at year end.

A small residual value that we currently expect a near term distribution at or near all Mark.

Within our internal risk rating scale, we saw modest improvement within our risk rating one into investments, which indicate that the company is performing in line or better than expectations relative to our original underwrite as of December 31. These investments comprise 95% of our portfolio at fair value relatively unchanged from the prior quarter end.

Michael Boyle: As of December 31st, these investments comprise 95% of our portfolio at fair value, relatively unchanged from the prior quarter end. Risk rating three and four investments comprise 5% of our portfolio at fair value, consistent with prior quarter earnings. Investments on nonaccrual remain low across our portfolio and represented 1.9% and 1.2% of the total investment portfolio at amortized cost and fair value as of December 31st, as compared to 1.5% and 1.0%, respectively, as of September 30th. Amit will now provide a more detailed financial report. Thank you, Mike, and good morning, everyone.

Risk rating three and four investments comprised 5% of our portfolio at fair value consistent with prior quarter end.

<unk> on non accrual remained low across our portfolio and represented one 9% and one 2% of the total investment portfolio at amortized cost and fair value as of December 31, as compared to one five and 1% respectively as of September 30th.

Amit will now provide a more detailed financial review.

Thank you, Mike and good morning, everyone.

Amit Joshi: I'll start the review of our fourth quarter 2023 results with our conference call. Total investment income was $74.9 million for the 3-month-ended December 31, 2023, as compared to $72.4 million for the 3-month-ended September 30, 2023. The increase in investment income was primarily driven by an increase in dividend and other income.

In fact that if you all by fourth quarter of 2023 days with our income statement.

Total investment income was $74 9 million.

The three months ended December 31, 2023, as compared to $72 4 million, but the three months ended September 32022.

The increase in investment income, primarily driven by increase in dividend and debt.

Doug.

Amit Joshi: VCSF continues to benefit from high-quality sources of investment income largely driven by contractual cash income across its industry. Interest income and dividend income represented 97% of our total investment income in Q4. Total expenses for the fourth quarter were $39 million as compared to $36.1 million for the third quarter.

DCF continues to benefit from high quality sources of investment income largely driven by contractual cash income offsets investments.

Interest income and dividend income represented 97% of our total investment income in Q4.

Total expenses for the fourth quarter were totally 9 million as compared to $36 1 million for the third quarter.

Amit Joshi: Net investment income for the fourth quarter was $34.9 million, or $0.54 per share, as compared to $35.6 million, or $0.55 per share, for the prior quarter. Net investment income per share for the full year 2023 was $2.19. During the three-month-ended December 31, 2023, the company had net realized and unrealized losses of $3.8 million. Notably, the company had $19 million of net realized gain during the fourth quarter, primarily driven by an exit of our investment in black brush oil and gas, as Mike highlighted earlier. Net income for the three months ended December 31, 2023, was $31.1 million, or $0.48 per share. Moving over to our panel. As of December 31st, our investment portfolio at share value totaled $2.3 billion and total assets of $2.5 billion. Total net assets were $1.1 billion as of December 31, 2020. NAB per share was $17.60, up from $17.54 at the end of the third quarter, representing a 0.3% increase quarter over quarter. The increase in our NABs was primarily driven by the over-earning of our debt.

Net investment income for the fourth quarter was $34 9 million or 54 cents per share as compared with $35 6 million or <unk> 55 per share for the quarter.

Net investment income per share for the full year 2023 was Uganda in 19 states.

During the three months ended December 31, 2023, the company had net realized and unrealized losses of $3 8 million.

Notably the company had $19 billion of net realized gains during the fourth quarter, primarily driven by an exit of that investment in black oil and gas as Mike highlighted.

Net income for the three months ended December 31st 2023, less Toby $1 1 million or 48 cents per share.

Moving over to our balance sheet as well.

December 31st our investment portfolio at fair value totaled $2 3 billion and total assets of $2 5 billion.

Total net assets were $1 1 billion as of December 31st 2023.

Net loss was $17 60.

$17 54 at the end of third quarter, representing a 0.3 question increase quarter over quarter.

NAV was primarily driven by over earning of our dividend.

Amit Joshi: At the end of Q4, our debt-to-equity ratio was 1.11 times as compared to 1.22 times for the end of Q3. Additionally, our net leverage ratio, which represents principal debt outstanding, less cash, and unsettled trades, was 1.02 times at the end of Q4 as compared to 1.12 times at the end of Q3. As of December 31st, approximately 53% of outstanding debt was in floating rate debt and 47% in fixed rate debt.

At the end of Q4, our debt to equity ratio was one one times as compared to one two times for the end of Q2.

Net leverage ratio.

And then principal debt outstanding less cash and unsettled James was 1.02 times at the end of Q4 as compared to $1. One two times at the end of Q3.

As of December 31st approximately 53% of outstanding debt was floating rate debt and 47% in fixed rate debt. The company does not have any debt maturities until 2026, and then the weighted average maturity across our total debt commitments was $4 <unk>.

Amit Joshi: The company does not have any debt maturities until 2026, and the weighted average maturity across our total debt commitment was 4.3 years on December 31st, 2020. Our debt funding continues to benefit from low fixed-rate debt structures, and we access the unsecured market during the period of low interest. For the three months ended December 31st, 2023, the weighted average interest rate on debt outstanding was 5.3% as compared to 5.4% as of the prior quarter. Liquidity at quarter end was $448,000, including $343 million of undrawn capacity on a revolving credit facility. $112 million of cash and cash equivalents, including $63 million of restricted cash and liquidity, was netted with $7 million of unsettled trade payable, net of receivables, and payable on investments.

Yes.

At December 30, <unk> 2023.

Our debt funding continues to benefit from low fixed rate debt such as.

Access the unsecured market during the BD adopt new inkjet suite for the team.

<unk> months ended December 31, 2023 debated average interest rate on our debt outstanding was $5 three question as compared to price forward pricing has off the prior quarter.

Liquidity at quarter end totaled 48 million, including 343 million undrawn capacity on our revolving credit facility.

<unk> million dollars of cash and cash equivalent, including 63 million of restricted cash and liquidity was netted with $7 million unsettled JP, but neighbor placebos and develop investment.

Amit Joshi: As Mike highlighted earlier, our board declared a first quarter 2024 dividend equal to $0.42 per share, payable on April 30, 2024, to stockholders of record on March 28, 2024. Given our strong earnings throughout the year, we out-earned the dividend paid in 2023, resulting in an increase in our undistributed taxable income or spillover. We currently estimate that our spillover income totaled approximately $0.87 per share at year-end, reflecting an increase of $0.51 per share from 2011, on and currently represents over two times our quarterly regular. As a result of the companies' spillover income expansion throughout the year, our board declared additional dividends totaling 12 cents per share during 2024, which will be paid in four equal quarterly installments of 3 cents per share alongside our regular dividends.

As Mike highlighted earlier yet.

Declared a first quarter 2024 dividend equal to 42 cents per share payable on April 30th 'twenty.

<unk> 24 to stockholders of record on March 28, 2024.

Given our strong earnings throughout but yet the outgoing back dividend paid in 2023, resulting in an increase in that.

Undistributed taxable income or spillover income.

Victor I think your estimate.

Spillover income totaled approximately 87 price yet had to hit it.

Lifting and increased 51.

By Shea from 'twenty two levels.

And currently it.

And then what types of Pi quarterly regular dividend.

Theres a company spillover income expansion throughout the year.

Additional dividend totaling 12 question during 2024, which will be paid in four equal quarterly installments of <unk> price yet alongside <unk>.

Amit Joshi: The first additional dividend of three cents per share is payable on April 30th, 2024, to stockholders of record on March 28th, 2023. Including our $0.42 per share regular quarterly dividends, this brings our total Q1 distribution to $0.45 per share, which equates to an annualized dividend yield of 10.2% based on our ending fourth quarter. We will continue to monitor our undistributed earnings against student capital management considerations. Overall, we believe having a strong and meaningful amount of undistributed income is beneficial to the stability of the dividend through varying market conditions.

The first additional dividend of <unk> price, yet stable on <unk>, but as Tokyo 2024 to stockholders of record on March 28 2020.

Including our 42 cents per share regular quarterly dividend.

Bringing our total Q1 distribution to <unk> 45 cents per share, which equates to an annualized dividend.

Tier two person based on our ending fourth quarter net.

We will continue to monitor our undistributed earnings against prudent capital management considerations.

We believe having a strong and meaningful amount of undistributed income is beneficial to the stability of our dividend through varying market conditions.

Michael A. Ewald: With that, I'll turn the call back over to Mike Ewald for closing. Great, thanks, Amit. In closing, we are pleased with the execution of our investment strategy on behalf of our shareholders during the fourth quarter and throughout 2023. We demonstrated attractive levels of investment income earned across our portfolio and strong credit performance across our middle market borrowers.

With that I'll turn the call back over to Mike <unk> Park closing remarks.

Great. Thanks, Amit and closing we were pleased with the execution of our investment strategy on behalf of our shareholders during the fourth quarter and throughout 2023, we demonstrated attractive levels of investment income earned across our portfolio.

And strong credit performance across our middle market borrowers.

Operator: As we look forward into 2024, we believe we are well positioned to capitalize on attractive growth opportunities. We remain committed to delivering value for our shareholders by producing attractive returns on equity, including through our newly announced additional special dividends. And thank you for the privilege of managing our shareholders' capital. Jenny, please open the line for questions. Thank you.

As we look forward into 2024, where we believe we are well positioned to capitalize on attractive growth opportunities.

We remain committed to delivering value for our shareholders I producing attractive returns on equity, including through our newly announced additional special dividends and thank you for the privilege of managing our shareholders' capital.

Jenny Please open the line for questions.

Thank you ladies.

Operator: And gentlemen, we will now begin the question and answer session. If you have a question, please press the star followed by the number on your touch-tone phone. You will hear a tweet on prompt acknowledging your request. Questions will be taken in the order received. Should you wish to cancel your request, please press the star followed by the number. If you are using a speakerphone, please wave the handset before pressing any key.

And gentlemen, we will now begin the question and answer session did you have a question. Please press the star followed by the one on your touch on phone.

Alright suites on prompt acknowledging your request.

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Paul Johnson: Your first question is from Paul Johnson from KBW. Please ask your question. Yes, thank you. Thanks for taking my questions this morning. I just kind of wondered, just kind of give some maybe higher-level commentary on credit, obviously, it looks like. I don't think there are two or three and four rated names in the portfolio this quarter. Black Brush would have been one of those names, but maybe we could talk about the movements there as well as just the new non-equivalent.

Your first question is from Paul Johnson from DB W. Please ask your question.

Yes. Thank you thanks for taking my questions. This morning.

I just kind of wondering just kind of give some maybe higher level commentary.

Commentary on credit and obviously it looks like.

Fewer three and four rated names in the portfolio. This quarter I don't think that black brush would've been one of those names, but maybe talk about the movements there as well as just the new nonaccrual this quarter.

Michael A. Ewald: Sure, thanks for the question. As we've highlighted, the number has stayed quite low, particularly our non-accrual number representing about 1% of the portfolio. I'd say that non-accruals we've had have been highly idiosyncratic and across varied industries. Right now, we have three different names on non-accrual, really spanning from consumer industries to more industrial industries.

Sure. Thanks for the question.

As we've highlighted the number has stayed.

Quite low, particularly our non accrual number representing about 1% of the portfolio I'd say the non accruals. We've had have been highly aoc and chronic and across varied industries right. Now we have three different names on nonaccrual.

Really spanning from consumer industries more.

The more industrial industry, then I think you have marked all of those positions.

Michael A. Ewald: And I think we have marked all of those positions appropriately, probably close to where we think ultimate recoveries are across the portfolio. I think some of the positive migration has been names that were COVID-era issues that we've seen companies start to perform better. One of the specific companies was actually in the educational travel space that was dealing with a reduction in travel during COVID. But as we've seen the world reopen and the company get back on firm footing, we were able to take that name off of non-accrual and move that up back to a risk rating of three. So it has really been highly idiosyncratic.

Appropriately probably close to where we think.

Ultimate recoveries are across the portfolio I think some of the positive migration has been named that.

That were Covid era issues that we've seen companies start to perform better.

The specific companies is actually an educational travel space.

We're dealing with a reduction in travel during COVID-19, but as we've seen the world Reopens and the company get back on firm footing, we were able to take that name off of non accrual and move that up back to a risk rating three so it really has been highly idiosyncratic and I think I'd highlight the fact that 95% of the portfolio is at or above budget.

Michael A. Ewald: And I think I'd highlight the fact that 95% of the portfolio is at or above budget, really focusing in on the fact that credit has been stable in spite of some of these idiosyncrasies. Thanks for that, Michael. That's very helpful. And then, I guess, you know, just kind of looking at the opportunities set globally. You know, where do you kind of wait?

Focusing in on the fact that credit credit has been stable in spite of some of these credit issues.

Thanks for that Michael that's very helpful.

And then I guess, just kind of looking at the opportunity set globally.

Where do you kind of way I guess, the best set of opportunities today I mean.

Michael A. Ewald: the best set of opportunities today. Europe, you know, is it the United States, you know, or somewhere else internationally? And what are you, what are you kind of looking at? Thanks, Paul. I would say today the relative value across the different geographies is fairly equivalent. As we talked about in the past, for example, in 2021, the U.S. was a little bit overheated, so we focused a little bit more on Europe. In 2022, we're a little bit more focused on the U.S., given some of the geopolitical concerns in Europe. But as we sit here today, I'd say that they're probably relatively equivalent.

Is it Europe is it the United States or somewhere else internationally.

How do you kind of looking at the world today.

Thanks, Paul look I would say today, the relative value across the different geographies is fairly equivalent.

As we've talked about in the past for example in 2021 the U S was a bit overheated. So we focus with Oman Europe 2022, we're a little bit more focused on the U S. Given some of the geopolitical concerns in Europe, but as we sit here today I would say that they're probably relatively equivalent.

Michael A. Ewald: The one caveat I would say is that, as Mike highlighted, most of our deal flow, or a big chunk of our deal flow in 2023, has been with existing portfolio companies. So there's just been a dearth of new volume across geographies. So we're happy to take a look at anything in either geography, certainly Australia and New Zealand as well, but it's just been a little bit more focused on existing portfolio companies the past year or so.

The one caveat I would say is that as Mike highlighted most of our deal flow or a big chunk of our deal flow in 2023 has been with existing portfolio companies. So there's just been a dearth of new about volume across geographies. So we're <unk>.

Happy to take a look at anything in either geography, certainly Australia, New Zealand as well got it.

It's just been a little bit more focused on existing portfolio companies the past year or so.

Great. Thanks for the commentary that's all for me.

Michael A. Ewald: Thanks for the commentary. Sure. Thanks, Paul. Thank you once again. Should you have a question, please press star 1.

Sure. Thanks, Paul.

Thank you once again should you have a question. Please press star one.

Operator: There are no further questions at this time. I will now hand the call back to Mike Ewald for the closing remarks.

There are no further questions at this time I will now hand, the call back to Mike Walsh vertical closing remarks.

Michael A. Ewald: Thanks, Jenny. And again, thanks to everyone on the phone, not just for your time today but for your support of BCSF over the years. We look forward to bringing you more news in the upcoming quarters. Thanks very much. Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining me. You may now disconnect.

Great. Thanks, Jenny and again, thanks, everyone on the phone not just for your time today, but for your support of a bcf over the years, we look forward to bringing more news in the upcoming quarters. Thanks very much.

Thank you ladies and gentlemen, the conference has now ended thank you all for joining you may all disconnect.