Good morning, ladies and gentlemen, and welcome to the Bain Capital, 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. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Katherine Schneider, Director in 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. Yesterday after market closed, we issued our earnings press release and investor presentation of our quarterly and year-end results, a copy of which are 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 Factors 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 results. So with that, I'd like to turn the call over to our CEO, Michael Ewald.

Thanks, Katherine, 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, 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 him join our management team. And I would be remiss if I didn't thank our predecessor CFO, Sally Dornaus for 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. 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%. For the full year 2023, net investment income per share was $2.19, equal to a 12.6% return on equity. This was up $0.60 per share or 38% year-over-year. Our NII covered our dividend by 137% during the year. 2023 earnings per share were $1.91 representing a total…

Thank you, Mike and good morning everyone. I'll start by discussing our investment activity in the fourth quarter, and then provide an update in more detail on our portfolio. New fundings during the fourth quarter were $206 million across 43 portfolio companies including $56 million to two new companies $145 million to 40 existing companies and $5 million for the ISLP. Sales and repayment activity totaled approximately $308 million, resulting in net funded portfolio decline of $102 million quarter-over-quarter. For the full year, fundings were $821 million. Total Sales and repayment activity for the year, were $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 2020. 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 the fourth quarter, fundings 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 incumbencies in a market with muted LBO volumes. 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 Bain Capital's in-house industry knowledge across our new investments. Our two largest investments this quarter were to companies within industries that are less traffic Capital Equipment and Aerospace and Defense. In Q4, we provided a first lien senior secured loan, at so for plus 675 and a preferred equity co-investment to AXH air-coolers, a supplier of AIR-COOLED HEAT EXCHANGERS which are manufactured products…

Thank you, Mike and good morning, everyone. I'll start the review of our fourth quarter 2023 results with our income statement. Total investment income was $74.9 million for the three months ended December 31, 2023 as compared to $72.4 million for the three months ended September 30, 2023. The increase in investment income was primarily driven by increase in dividend and other income. BCSF continues to benefit from high-quality sources of investment income largely driven by contractual cash income across its investment. 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. 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 months ended December 31 2023, the company had a net realized and unrealized losses of $3.8 million. Notably, the company had $19 million of net realized gains during the fourth quarter, primarily driven by an exit of our investment in BlackBrush Oil & Gasoil 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 balance sheet. As of December 31, 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 31 2023. NAV per share was $17.60, up from $17.54 at the end of third quarter representing a 0.3% increase quarter-over-quarter. The increase in our NAV was primarily driven by over-earning of our dividend. At the end of Q4, our debt to equity…

Great. Thanks, Amit. In 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. 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. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] 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, looks like there's two or three and four rated names in the portfolio this quarter, I don’t think BlackBrush would have been one of those names, but maybe talk about the movements there as well as just the new non-accrual this quarter?

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 idiosyncratic and across varied industries. Right now we have three different names on non-accrual, clearly expanding from consumer industries to more industrial industries. 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 named that that was COVID era issues that we've seen companies start to perform better. One of the specific companies is actually in an 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 our 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, really focusing in on the fact that credit, credit has been stable in spite of some of these idiosyncratic 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 weigh, I guess the best set of opportunities today. I mean is it Europe, is it the United States or somewhere else internationally? What do you -- how are 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 talked about in the past, for example in 2021, the US is a little bit overheated, so we focused them on Europe. 2022, we'll have it more focused on the US given some of the geopolitical concerns in Europe. But as we sit here today, I'd say that they're probably relatively equivalent. And the one caveat, I would say, is that as Mike highlighted most of our deal flow, a big chunk of our deal flow in 2023 has been with existing portfolio companies. So there's just been a dearth of new route volume across geographies. So, we're happy to take a look at anything in either geography certainly Australia, New Zealand as well. And 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 helpful for me.

Sure. Thanks Paul.

Thank you. [Operator Instructions] There are no further questions at this time. I will now hand the call back to Mike Ewald for closing remarks.

Great. Thanks, Jenny. And again, thanks everyone on the phone, not just for your time today, but for your support of BCSF 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.