Barings BDC, Inc. (NYSE:BBDC) Q1 2022 Results Conference Call May 6, 2022 9:00 AM ET Company Participants Eric Lloyd - CEO Ian Fowler - President and Co-Head of Global Private Finance Bryan High - Head, U.S. Special Situations and Co-Portfolio Manager Jonathan Bock - CFO Conference Call Participants Casey Alexander - Compass Point Paul Johnson - KBW Robert Dodd - Raymond James Operator At this time, I would like to welcome everyone to Barings BDC, Inc. Conference Call for the quarter and year ending March 3 ...

Barings BDC, Inc. (NYSE:BBDC) Q4 2021 Results Conference Call February 24, 2022 9:00 AM ET Company Participants Eric Lloyd - Chief Executive Officer Ian Fowler - President and Co-Head of Global Private Finance Bryan High - Head of U.S. Special Situations and Co-Portfolio Manager Jonathan Bock - Chief Financial Officer Conference Call Participants Ryan Lynch - KBW Robert Dodd - Raymond James Operator Greetings. At this time, I would like to welcome everyone to the Barings BDC, Inc. Conference Call for the Qu ...

Management Fees - The Base Management Fee for the period from January 1, 2021, is calculated at an annual rate of 1.25% based on gross assets, excluding cash and cash equivalents [94]. - The Base Management Fee for the period from January 1, 2020, to December 31, 2020, was calculated at an annual rate of 1.375% [93]. - The Pre-2021 Income-Based Fee was calculated based on Pre-Incentive Fee Net Investment Income for the preceding calendar quarter, with a hurdle rate of 2% per quarter (8% annualized) [98]. - For the Post-2019 Period, no Pre-2021 Income-Based Fee was payable if the Pre-Incentive Fee Net Investment Income did not exceed the hurdle rate [100]. - The Pre-2021 Capital Gains Fee was calculated as 20% of the positive difference between cumulative realized capital gains and cumulative capital losses, starting from the year ended December 31, 2018 [105]. - Beginning January 1, 2021, the Incentive Fee consists of an Income-Based Fee and a Capital Gains Fee, each calculated independently [106]. - The Income-Based Fee is determined quarterly based on the aggregate Pre-Incentive Fee Net Investment Income exceeding a Hurdle Amount calculated at 2% (8% annualized) of net asset value [107]. - The Income-Based Fee includes a Catch-Up Amount, which is 2.5% (10% annualized) of net asset value for the Trailing Twelve Quarters [107]. - The Incentive Fee Cap limits the Income-Based Fee to 20% of the Cumulative Pre-Incentive Fee Net Return during the relevant Trailing Twelve Quarters [111]. - The Capital Gains Fee is calculated annually as 20% of the positive difference between cumulative realized capital gains and cumulative capital losses, starting from the year ended December 31, 2018 [113]. - If the Incentive Fee Cap is zero or negative, no Income-Based Fee is payable for that quarter [111]. - The Pre-Incentive Fee Net Investment Income does not include realized capital gains or losses, or unrealized appreciation or depreciation [106]. Company Operations and Structure - Barings manages the day-to-day operations and investment advisory services for the company under the Amended and Restated Advisory Agreement [89]. - The company does not currently have any employees; services are provided by employees of Barings [85]. - The company has elected to be regulated as a Business Development Company (BDC) under the 1940 Act, which impacts its operations significantly [124]. - The company intends to distribute substantially all of its income to stockholders, only paying taxes on the portion of taxable income not distributed [126]. - The company is required to maintain a coverage ratio of total assets to total senior securities of at least 150% due to its BDC status [128]. - The company reports investments at market value or fair value, with changes in value reflected in its consolidated statements of operations [124]. - The company has wholly-owned taxable subsidiaries to hold certain portfolio investments, helping to preserve its RIC status and tax advantages [126]. - The company must comply with the provisions of the 1940 Act, including having a majority of directors who are not "interested persons" [129]. - The company is limited in its ability to use leverage for financing its portfolio of investments due to regulatory requirements [128]. - The company is required to meet minimum distribution requirements to avoid incurring significant corporate-level U.S. federal income taxes [126]. - The company may not acquire assets other than qualifying assets unless qualifying assets represent at least 70% of total assets [133]. - The company must obtain exemptive relief from the SEC to co-invest with Barings or its affiliates [130]. - The company has reduced its asset coverage requirement from 200% to 150% following stockholder approval, allowing for more flexibility in issuing senior securities [140]. - The company must distribute at least 90% of its investment company taxable income (ICTI) to qualify for RIC tax treatment, which has been in effect since December 31, 2007 [158]. - The company is subject to a 4% nondeductible U.S. federal excise tax on certain undistributed income unless specific distribution requirements are met [159]. - At least 50% of the company's assets must consist of cash, cash equivalents, U.S. Government securities, and other qualifying securities to meet diversification requirements [160]. - The company may not invest more than 25% of its total assets in securities of a single issuer to maintain compliance with the Diversification Tests [160]. - The company provides significant managerial assistance to portfolio companies, which may include fees for these services [137]. - Temporary investments may include cash, cash equivalents, and U.S. government securities to ensure 70% of assets are qualifying [139]. - The company is required to maintain a bond issued by a reputable fidelity insurance company to protect against larceny and embezzlement [148]. - The company has adopted a Global Code of Ethics Policy and corporate governance guidelines applicable to its directors and employees [141]. - The company is periodically examined by the SEC for compliance with the 1940 Act [147]. Tax and Regulatory Compliance - The company may need to recognize taxable income without receiving corresponding cash payments, such as original issue discounts on debt obligations [163]. - The company anticipates that a portion of its income may consist of original issue discounts or other income required to be included in taxable income prior to cash receipt [163]. - The company may face challenges in meeting the Annual Distribution Requirement necessary to maintain RIC tax treatment, potentially leading to corporate-level income tax [164]. - If the company fails to satisfy the Annual Distribution Requirement, it may be subject to a 4.0% U.S. federal excise tax [164]. - Failure to qualify for RIC tax treatment could result in corporate-level taxation on all taxable income, reducing the amount available for distribution to stockholders [177]. - The company may distribute taxable dividends payable in cash or shares, which could lead to tax implications for stockholders [175]. - Legislative changes could affect the U.S. federal income tax treatment of investments in the company's stock, impacting stockholders [180]. - The company’s distributions are generally treated as dividends for U.S. tax purposes and may be subject to U.S. income or withholding tax [181]. - State and local tax treatment may differ from U.S. federal income tax treatment, requiring stockholders to consult their tax advisors [183]. Financial Position and Market Risks - As of December 31, 2021, approximately $1,307.5 million of the debt portfolio investments bore interest at variable rates, primarily LIBOR-based [558]. - A hypothetical 200 basis point increase or decrease in interest rates on variable-rate debt investments could impact investment income by a maximum of $26.2 million annually [558]. - The February 2019 Credit Facility's borrowings could see a maximum annual interest expense change of $13.1 million with a 200 basis point interest rate shift [559]. - As of December 31, 2021, the company had borrowings in Swedish kronas of 12.8 million kr ($1.4 million), British pounds of £68.3 million ($92.5 million), Australian dollars of A$36.6 million ($26.6 million), and Euros of €138.6 million ($157.6 million) [564]. - The balance of unused commitments to extend financing as of December 31, 2021, included various delayed draw term loans and revolvers totaling over $20 million across multiple companies [566]. - The company is exposed to market risks including interest rate fluctuations, which can affect net interest income and investment portfolio value [553]. - The transition from LIBOR to alternative rates like SOFR presents uncertainties that could impact the cost of capital and net investment income [560]. - The company’s net investment income is sensitive to the difference between borrowing rates and investment rates, with rising interest rates potentially reducing net investment income [563]. - As of December 31, 2021, the company was not a party to any interest rate hedging arrangements, indicating potential exposure to interest rate volatility [556]. - The company’s risk management systems are designed to monitor and mitigate exposure to interest rate risks, but no hedging transactions were in place as of the reporting date [556]. - Total unused commitments to extend financing amount to $234,657.5 million [570]. - New commitments made after December 31, 2021, totaled approximately $126.3 million, with $104.8 million closed and funded [573]. - The $104.8 million of investments included $75.8 million in first lien senior secured debt investments and $28.9 million in equity and joint venture investments [573]. - The weighted average yield of the debt investments was 6.3% [573]. - As of December 31, 2021, guaranteed obligations related to MVC Automotive Group Gmbh amounted to €9.9 million ($11.3 million) for credit facilities [571]. - A cash collateralization of $3.5 million for a letter of credit for Security Holdings B.V. was agreed upon as of December 31, 2020 [572]. - The quarterly distribution declared on February 1, 2022, was $0.23 per share, payable on February 23, 2022 [573]. - The total amount of delayed draw term loans across various portfolio companies includes significant figures such as $6,018.0 million for Command Alkon and $12,457.6 million for EMI Porta Holdco LLC [568][570]. - The company has made substantial investments in various sectors, including $4,539.7 million for Truck-Lite Co., LLC and $2,811.0 million for The Caprock Group, Inc. [570]. - The company has commitments in multiple currencies, with amounts translated into U.S. dollars based on the spot rate at the relevant balance sheet date [570].

Barings BDC Brands, Inc. (NYSE:BBDC) Q3 2021 Earnings Conference Call November 10, 2021 9:00 AM ET Company Participants Eric Lloyd - Chairman & CEO Ian Fowler - President Jonathan Bock - CFO Conference Call Participants Kyle Joseph - Jefferies Ryan Lynch - KBW Leon Cooperman - Omega Advisors Robert Dodd - Raymond James & Associates Operator Greetings. At this time, I would like to welcome everyone to the Barings BDC, Inc. conference call for the quarter ended September 30, 2021. [Operator Instructions]. Tod ...

Financial Data and Key Metrics Changes - The net asset value (NAV) per share increased by $1 or 10.8% to $10.23, primarily driven by unrealized appreciation in the investment portfolio [8][19] - The total investment portfolio was carried at 93% of cost at June 30, compared to 87.4% at March 31 [9] - The net investment income per share was $0.14, which was $0.02 below the second quarter dividend of $0.16 per share [9][10] - The net debt-to-equity ratio decreased from 1.2 to 1.0x due to lower net debt and higher NAV [11][21] Business Line Data and Key Metrics Changes - Net middle market deployments during the quarter totaled $21 million, while the broadly syndicated loan (BSL) portfolio saw a net decrease of $67 million [10][13] - The funded middle market portfolio was spread across 64 companies and 18 industries, while the BSL portfolio was spread across 81 companies and 26 industries [14] - The top 10 investments represented only 21% of the total portfolio, indicating strong diversification [14] Market Data and Key Metrics Changes - The Credit Suisse B Leveraged Loan Index tightened considerably in the second quarter, although it remained above middle market levels [16] - Direct lending spreads were generally wider in the second quarter, reflecting a smaller sample size and a bias towards companies with minimal COVID impact [16][17] Company Strategy and Development Direction - The company received an investment-grade rating of Baa3 with a stable outlook from Moody's, which is expected to provide a distinct advantage during market volatility [6][7] - The company plans to continue rotating out of broadly syndicated loans and focus on middle market investments, with a significant increase in the investment pipeline to approximately $937 million [24][25] - The management emphasized a defensive capital structure while remaining opportunistic in asset composition [22][54] Management's Comments on Operating Environment and Future Outlook - Management noted that the middle market portfolio has weathered the COVID-19 situation well, with no payment defaults or material modifications [30][31] - The outlook remains cautious, with management acknowledging potential challenges in the next 6 to 18 months [31] - The company is not looking to time the market but will continue to underwrite investments assuming economic cycles will occur during the life of each asset [75][76] Other Important Information - The company repurchased approximately 2% of shares year-to-date under its share repurchase plan, generating $0.05 of NAV per share accretion [11] - The company announced a third quarter 2020 dividend of $0.16 per share, to be paid on September 16, 2020 [24] Q&A Session Summary Question: On portfolio improvement and liquidity outlook - Management indicated that some management teams were overly pessimistic about their market outlook, and many took aggressive actions in terms of cost reductions [28][30] Question: On Moody's rating and leverage ratios - Management confirmed that the investment-grade rating does not constrain their strategic outlook or approach [32][33] Question: On BSL sales and market conditions - Management expects the current quarter run rate for BSL reductions to be similar to the previous quarter, focusing on NAV-neutral sales [36] Question: On modifications in the middle market book - Management noted that while there were some requests for modifications, they were not significant, and most companies managed to avoid material changes [38] Question: On the investment pipeline and due diligence process - Management highlighted that the pipeline has improved significantly, but due diligence is being conducted remotely due to social distancing measures [44][46] Question: On the nature of new investments and risk appetite - Management clarified that they are not changing their core strategy but selectively investing in special situations when risk-adjusted returns are attractive [70] Question: On share repurchase program and market conditions - Management expressed commitment to share repurchases, aligning with their capital allocation philosophy, subject to liquidity constraints [72]