To all sites on hold, appreciate your patience, and please continue to stand by. To all sites on hold, we appreciate your patience and please continue to stand by. Please standby. Your program is about to begin. If you require assistance throughout the event today, press 0. Good day, everyone, and welcome to today's Bain Capital Specialty Finance Third Quarter Ended 09/30/2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. Please note, today's call will be recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Katherine Schneider with Investor Relations. Please go ahead.

Thanks, Chloe. Good morning, everyone, and welcome to the Bain Capital Specialty Finance Third Quarter Ended 09/30/2025 Conference Call. Yesterday, after market close, 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, include risks and uncertainties, which are identified in the risk factors 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, 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. Thank you all for joining us on our earnings call here today. Continuing the regular programming, we do want to take a moment just to recognize anyone on the call who has served or is serving in our armed services. We genuinely appreciate your service and want to recognize you today on Veterans Day. Thanks. I'm joined today by Mike Boyle, our President, and our Chief Financial Officer, Amit Joshi. As usual, in terms of the agenda for the call, I'll start with an overview of our third quarter results and then provide some thoughts on our performance, the current market environment, and our positioning. Thereafter, Mike and Amit will discuss our investment portfolio and financial results in greater detail, and we'll leave some time for questions at the end. Yesterday, after market close, we delivered another quarter of solid results for the third quarter ended September 30. Q3 net investment income per share was $0.45, representing an annualized yield on book value of 10.3% and exceeding our regular quarterly dividend by 7%. Q3 earnings per share were $0.29, reflecting an annualized return on book value of 6.6%. Our net asset value per share was $17.40, a decline of $0.16 per share from the prior quarter end. This modest decline in our NAV this quarter was primarily due to a markdown on one of our loans that was idiosyncratic driven, not reflective of any broader credit issues apparent across our broader portfolio. Subsequent to quarter end, our board declared a fourth quarter dividend equal to $0.42 per share and payable to record date holders as of 12/16/2025. The Board also declared an additional dividend of $0.03 per share for shareholders of record as of 12/16/2025. As we previously announced in February, this brings total dividends…

Thank you, Michael, and good morning, everyone. I'll start with our investment activity for the third quarter and then provide an update in more detail on our portfolio. New investment fundings during the third quarter were $340 million into 101 portfolio companies, including $124 million in 14 new companies, $210 million into 86 existing companies, and $6 million into our SLP. Sales and repayment activity totaled approximately $296 million, resulting in net investment fundings of $44 million quarter over quarter. Our new investment fundings were comprised of 36% to new companies and 64% to existing portfolio companies. First lien senior secured loans continue to comprise the vast majority of our new investments, representing 89% of our new investment fundings. The remaining 11% was comprised of 3% into second lien loans, 1% in subordinated debt, 5% in preferred and common equity, and 2% in our investment vehicles. We remain selective in our underwriting approach and continue to favor middle market-sized companies within the core middle market. While the market environment remains competitive with spread compression continuing in the broader market, we believe Bain Capital remains well positioned to source new opportunities given our platform's breadth, scale, and longevity in the core middle market. As Michael Ewald highlighted earlier, the weighted average spread of our Q3 originations to new companies was approximately 550 basis points. We were also particularly active this quarter with providing add-on capital to existing portfolio companies, which resulted in a weighted average spread across all of our originations in the quarter of 610 basis points over base rates. Our new investments during the quarter continued to favor defensive sectors such as healthcare, pharmaceuticals, aerospace and defense, and wholesale. Turning to the investment portfolio, at the end of the third quarter, the size of our portfolio at fair value…

Thank you, Mike, and good morning, everyone. I'll start the review of our third quarter results with our income statement. Total investment income was $67.2 million for the three months ended 09/30/2025 as compared to $71 million for the three months ended 06/30/2025. The decrease in investment income was primarily driven by a decrease in other income from lower activity levels during the quarter. The quality of our investment income continues to be high as the vast majority of our investment income is driven by contractual cash income across our investments. Interest income and dividend income represented 98% of our total investment income in Q3. Notably, the vast majority of our PIK income, which represents 11% of our total investment income in Q3, is derived from investments that were underwritten with PIK. Only a small portion of our PIK income is related to amended or restructured investments. Total expenses before taxes for the third quarter were $37.2 million as compared to $39.3 million in the second quarter. The decrease in expenses was driven by a lower incentive fee resulting from our three-year look-back on our incentive fee hurdle as well as lower interest and debt fee expenses. Net investment income for the quarter was $29.2 million or $0.45 per share as compared to $30.6 million or $0.47 per share for the prior quarter. During the three months ended 09/30/2025, the company had net realized and unrealized losses of $10.5 million. As Mike highlighted earlier, our net losses this quarter were primarily driven by one of our portfolio company investments and not broad-based across our portfolio. Net income for the three months ended 09/30/2025 was $18.7 million or $0.29 per share. Moving over to our balance sheet, as of September 30, our investment portfolio at fair value totaled $2.5 billion and…

Thanks, Amit. In closing, we are pleased to deliver another quarter of attractive net investment income and credit fundamentals across our middle market borrower portfolio. Bain Capital Credit brings over twenty-five years of experience investing in the middle market and has demonstrated solid credit quality with low losses and non-accrual rates since our inception. We remain committed to delivering value for our shareholders by providing attractive returns on equity and prudently managing our shareholders' capital. Chloe, please open the line for questions.

Certainly. You may withdraw yourself from the queue at any time by pressing star 2. Again, that is star and 1. And we'll take our first question from Finian O'Shea with Wells Fargo Securities. Your line is open.

Hey, everyone. Good morning. Michael, can you talk about to what extent the push for more spreads, leverage, off-balance sheet leverage, etcetera, to what extent that brings on more risk, and the sort of change in, say, expected loss rate on the go forward? Thanks.

Sure. So I do think running in line with our on-balance sheet leverage ratio between one and one and a quarter is what we continue to focus on doing. And so we don't have a particularly heavy reliance on off-balance sheet leverage. Both of our joint ventures do use leverage. The ISLP is levered about 0.8 times to one, and the SLP is levered slightly more than that but is a smaller position. So I think prudently managing to that on-balance sheet leverage ratio target is one thing that we do focus on, and I think that is a key part of the risk-return equation that we're doing for BCSF. In terms of loss rates going forward, I do think, as we've noted on the call, there are idiosyncratic losses that come across any portfolio. But the fact that we have a very diversified set of companies, almost 200 companies in BCSF, puts us in a position where any individual loss won't drive a meaningful impact on the overall performance of the BDC. So I think that focus on on-balance sheet leverage and then pairing that with diversification is a key part of why we're able to drive the risk-return that we have been delivering in BCSF.

That I think is helpful. I just want to follow-up on the aircraft. Looks like a little bit of a mark there this quarter. Correct me if I'm wrong. I'm just seeing what sort of going on if it's airplane values or whatnot. And then the aircraft high level given that's a strength differentiator for Bain. Is this something you could expand, say, in a good asset or 30% bucket friendly way into more of the portfolio or say lever those vehicles more, safely a comment on that. Thanks.

Sure. So we did have a small write down on some of our aircraft this quarter. But, really, that's just looking to potential exit valuation of some of the aircraft that we do own, and not reflecting a meaningful change in our underwriting thesis there. We do think underwriting hard assets is an important part of what we do and a big differentiator for BCSF. We've done that in aviation. We've also done that through legacy corporate lending, which is an asset-based financial company that we've supported and grown. And so I do think we are out there finding interesting opportunities across the asset-backed market, and we'll continue to have that be a substantial part of the portfolio. I wouldn't expect meaningful growth from here, but I think some stability from that segment adds good diversification, and it's something we'll continue to find new investments in.

Okay. Thanks so much.

Thank you, Finian. And once again for your questions, that is. We'll move next to Paul Johnson with KBW. Your line is open.

Yes, good morning. Thanks for taking my questions. So NII earnings just without the look back would obviously be a little bit lower. It was about 3¢ this quarter. I understand. I mean, it looks like fee and dividend income is also a little bit lighter this quarter just quarter over quarter. But if I kind of do the math on just the incentive fee or essentially the full incentive fee coming back in, that's roughly, like, 60-70 basis points on ROE plus you have roughly about half of your debt stack that's going to have to reprice pretty significantly higher next year. So that's probably, you know, another, you know, call it 50 basis points or so of an ROE hurdle that's just kind of coming in from the incentive fee and refinancing. So I guess the things that you guys kind of identified in terms of what makes you confident about the earnings coverage of the dividend. I mean, do you think that that should be kind of able, I guess, to exceed those items?

Yes. We do expect that as both Mike highlighted. I think we have different levers to pull from our perspective. And we have baked into account some of the points which you've highlighted about our debt coming for refinancing next year. Of course, we did issue a debt earlier this year. But we totally appreciate that they will be done at a different level, which will put some pressure. But as Mike highlighted earlier, the levers which we have should be able to keep us above our regular dividend in terms of meeting those thresholds. Along with that, as we highlighted, we do have decent cushion from a spillover income perspective too, which is healthy as well. So among all of that, we feel comfortable.

Got it. Okay. And then, I guess, like, the financing within the joint ventures and the CLO, at this point, do you think there's any potential room to extract any improvement there at this point? Most of those financing arrangements are pretty tapped out.

We are continuously having discussions with our banking partners. So to your point, I would say yes. As spreads on the asset side have continued to tighten, we have been managing our liabilities as well appropriately. So my short answer would be yes. We are continuously looking at them. As you highlighted, some of them do have lock-in periods from that perspective, but again, as we have continued to grow, we have been having active dialogues. So in some cases, we have already done that. Like, in one of our joint ventures, ISLP, we did refinance the debt at a much tighter spread. So that's, again, something which we'll continue to do as we continue to look at those portfolios.

Got it. Thanks for that. And then last one for me was just the junior capital opportunities that you mentioned. Is that something that you're seeing now, or is that just something I guess, you know, because you've been able to do that in the past that that's just, I guess, one of the levers that's available if opportunities come through the funnel.

Yeah. Thanks, Paul. Look, you know, the junior capital bit is part of the private credit group's calling card. It has been for over twenty-five years as well. So, you know, we've got a much larger platform, which has about $20 billion or so of AUM, of which BCSF is $2.5 billion of that. Across that entire platform. Again, junior capital is something that we've done for over twenty-five years, and that's something that we can lean into when appropriate, when there's a need for flexible capital. You know, we're cautious about just taking more risk for the sake of taking more risk. It's more that, in today's market where base rates, though coming down, have stayed elevated, does seem to be an interesting air pocket in some companies' capital structures where you can charge a little bit more without taking some undue risk. Unfortunately, sometimes that does come with PIK income. But it is something that we can find where we can find some pretty interesting opportunities and have done so and continue to do so.

Okay. Thank you very much. That's all for me.

Thanks, Paul. We'll pause another moment. And it does appear that there are no further questions at this time. I would now like to hand the call back to Michael Ewald for any additional or closing remarks.

Thanks, Chloe, and thanks again, everyone, for your time and attention today. We certainly appreciate your continued support of BCSF, and look forward to speaking with you again soon. Thanks.

This does conclude today's program. Thank you for your participation. You may disconnect at any time, and have a wonderful afternoon.