BKCC - Earnings call transcript Q1 2018 | BlackRock Capital Investment Corp

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Operator

Good morning. My name is Aaron. And I will be your conference facilitator today for the BlackRock Capital Investment Corporation First Quarter 2018 Earnings Call. Hosting the call will be Chairman and Interim Chief Executive Officer, James Keenan; Interim Chief Financial Officer and Treasurer, Michael Pungello; General Counsel and Corporate Secretary of the company, Laurence D. Paredes; Marshall Merriman, Head of Portfolio Management for BlackRock's U.S. Mehring the Jason Group; Capital Chairman U.S. of Private and Head of Capital Group's Relations Singhal, Committee; Investment Strategy. Private Investor Nik and Business been mute. placed have Lines on the session. speakers for the complete update, will After their a open question-and-answer they line [Operator Instructions] Thank you. Mr. you may begin Paredes, conference. the

Laurence Paredes

Capital to earnings and first call. Corporation's BlackRock morning quarter Investment Good welcome XXXX conference

can as fact be We will, and words Investment and from identified within by I the the subject begin during statements. results expressions. this BlackRock that use of the should, today, anticipates, to of Many such corresponding contains out statements actual call would similar attention uncertainties. and forward-looking differ Corporation's documents we risks intends, forward-looking Before believes, your remarks that these Capital point to expects, to course conference may may like our these statements certain made of call comments

Corporation As these undertake assumes may factors filed to not has to with you the BlackRock the and forward-looking no to update cause materially Capital Capital results BlackRock reports, of Investment statements. which does Corporation lists BlackRock Corporation's Capital differ know, some Investment duty which any SEC statements. Investment from

serve He in Capital for since not certain our contained overseeing of Presentation of XX derived XXXX and link primarily Chief from Global On in call. Presentations the as has the Presentation complements and on note BlackRock Shortly, be Investors investment Please board presentation. Presentations have XXXX team clicking information at quarter our by highlight information an now investment may Jim overview management has Investment verified. as announced XX, the we section appointed to Officer, the representations Chief personal served website been Mike the Zugay, to our May resigned the will agreement Jim, Credit company in warranties BlackRock makes for XXXX. Corporation website this an and our going been and Investor independently that been April page. www.blackrockbkcc.com responsible Jim Keenan, that of business to of over Executive for April who discussed some like with highlights. Accordingly, and succeeding Interim sources accessed reasons. Additionally, of can Chairman, I Jim directors to such call the has as information. to Officer no Chairman Investor third-party provide will BlackRock. and BlackRock the or who Investment respect presented with would at first also serves we since turn the to our Co-Head assumed posted

James Keenan

Thank business call. you, as investment to bit activity discuss Larry. performance our more Good performance a the Pungello, it portfolio morning first you earnings Mike our detail. during and quarter, our results Interim joining and with provide will financial as the update an on thank and turning underlying over you before first highlights, in to for well our the I quarter CFO,

I'm company with contributions. I've of been engagement CEO precedes On week, appointed for as CIO as XXXX. Interim as mentioned of the Mike We'd of with since of like has team our his and Mike the members members, senior of to advises directors the my XX thank whom of Vice team team personal acquisition And company Investment of Chairman March And U.S. announced Business and that BlackRock's from senior and as of Credit of calls. Jason Capital for to by reasons. direct the previous Marsh in since serve from Larry, committed Chairman for have Jason Committee it. and have April BlackRock I as XXXX. pleased recognize the team co-head will investment me XXXX. our this company's earlier had advisor assets company's and BlackRock's by BlackRock Private company's of years been the now the and company Chairman is former have strongly investment been you Global role respectively the the Mehring I Group's his Merriman and company First, we resigned as be strategy. many our Marsh for advisor. today oversight CEO. business of XX, joined board Zugay the to

for declared per the was the share. now for net performance Turning first coverage income distribution board $X.XX $X.XX directors, XX% per distribution there of the Based was by quarter, to on investment our the approximately share quarter.

net As significant deployments during discuss we the had later, quarter. shall we

redeployment in to repayments and quarter between incremental quarter. this quarter-over-quarter a per on positions. decline part last $X.XX subsequent share value to $X.XX markdowns December per asset in legacy a large prior reduction as share quarter time-lag from to or share XX X.X% due a However, contributed of per the was The decrease. Net in NII certain decreased

cover in the will in detail section. We this portfolio overview more

up net times, X.XX times by to prior increased driven quarter deployments. the X.XX leverage from Our

also of no at to million support the had we Under existing first price average an repurchase investment of maturing XXXX. activity share have We and repurchased liquidity have new our program, XXX,XXX nearly quarter ample $X.XX. until during $XXX debt shares

in investments As two, Gordon three in Company; for junior entities. and portfolio April in pro important in pools of investment to is their with underlying company well. Loan million upsizing Partners venture program We lien new our and manner. XX% our investments Senior a its opportunities. business venture joint four Senior on the during three discussed with Capital; Brothers first portfolio first and of on portfolio Senior Finance very that loans our underlying Windward investments investment be continue calls, these investment our high generate have Loan our our upsized BCIC or primarily first strategy core Brothers returns, quality XX, higher performing joint add-ons Gordon capital added two commitment Both Senior equity portfolio lien quarter. Partners part in our This to from channels to risk-adjusted deployment each lastly, million yielding prior is to Loan three, diversified $XX on and Company $XXX commitment Partners, rata attractive partner on Partners our investments Loan company Finance an of

the to by quarter, was made repayments we approximately investment Turning million, approximately during $XX other of company's investments which and totaling exists, partially new $XXX offset the activity million.

For $XXX activity. due a net, million our in to investment this portfolio increase

Our deployments release. and earnings our repayments are first quarter detailed in

$XX We by also Brothers increased million. Gordon Company our net Finance investment in approximately

and our par, size Further in hold in $XX invested expected activity St. of Zest down of today's we St. portfolio end, George our also $XX Corp., repayment to credit Subsequent the approximately We million second quarter approach Acquisition sold million. selection year. new to quarter to Warehousing disciplined reflect which two companies bringing is George at market. this in

when fair the $XXX responsibility BlackRock investment quarter. the is X, quarter, securities basis producing scale activity From broader market into activities XX.X%, we companies Our have was over managing a BlackRock of team, platform, assumed end average this $XXX and portfolio of value last robust of are has team market which at company, of of XXXX, The the now flow deal March repayment approximately seeing yield the benefits we as March XX million and million. from in and income new quarter, fair to XX up however, deployed With the from deployment in the amount BlackRock a of at points the size weighted our XXXX. value approximately of for investments. first XX,

As investments XX, value portfolio our of by March of approximately market investment by by is current XX% fair BlackRock. represented deployed

of status. non-accrual As have no we XX, March investments on

company, quarter, the which Group Holdings a debt, legacy control prior described we quarter's of change a in of last was Our the call. was recapitalization non-accrual in pursuant to MBS exited and

The of this we well the Mezzanine Debt the equity as other a previous portion contingent extinguished non-accrual out-of-court pursuant of to in SVP SVP restructuring structure. capital a own claim. was After restructuring, an as

for investments, portfolio this represented continue have certain market market Westmoreland We macro positive quarter. were forces the and in credit million movers. producers. this at Apple work and only attention which negative quarter of The Defense, in value the Red the Westmoreland SVP, bears to versus of special our $XX.X valuations fair that of well, negative quarter a majority increases the dollar primarily by offset of change given decreases in is the Hunter which in fair terms. to in due coal partially last AGY two valuations, the value U.S., were drove legacy movements volatility

these of nature equity they to valuations. highly in increases to in of movements and EBITDA, improvement underlying and investments, degrees equity-like the are contributed varying Given sensitive businesses experienced the that these

to on additional restructured that, financial our strategy be and into assets, redeploy details reorg to legacy investment. over diligently results. for to our With interest Our Mike equities call monetize turn Pungello the earning I'd and maximize like to some regarding recoveries continues

Michael Pungello

was and three ended financial XXXX. I portfolio March net quarter XX, investment per for XXXX. to will quarter. the $XX.X $X.XX GAAP a take income, for million $XX.X share during declared Thank investment was income the million months per to you, distribution minutes million, the the few for additional Total review was as NII prior of XX% or first the of information share, quarter. our $XX.X quarter, NII Relative compared distribution to $X.XX for year coverage Jim.

Under decrease approximately in Fee by earned rate to This capital administration environment by quarter. attributable of commitments Excluding income. $X.X share an shares million investment offset decrease compared income a our $X.X program per quarter the as first and was and at partially investment income income, million total the we during $X.X primarily price higher XX%, average on dividend prior fee structuring, commissions. decreased for year repurchase higher XXX,XXX during the including current portfolio. of $X.XX XXXX, share, million quarter brokerage totaled repurchased the of our to during average

non-accrual market there at As amortized as March and XX.X% total XX, positions positions investments to XXXX. December investment non-accrual of debt no at our XXXX, cost X% investment in fair of of were XX, value compared

internal Worldwide at depreciation write-offs recognized as Limited. the investments. XX, write-off mentioned net compared Group restructurings market reversal loss as two offset valuation million, Net XX, X.XX by realized decrease investment after due decreased to was million, of fair positions, $XX.X depreciation at result or MBS rating of $XX.X to Our of Net of or $XX.X partially X.XX $XX.X our in restructurings XXXX, legacy average XXXX. unrealized value primarily Holdings, a above, March was Inc. in at investment million and our December million the of previously SVP

on December incentive income we of disclosed, XXXX March XXXX. As waiver based fees to previously XX, a from management X, announced

For income by agreement. the fee our accordingly. waived under management of have the XXXX, fees have million advisor incentive we $X.X this waiver XXXX, XX, waived March XX, total of been $X.X of incentive Through investment based management million quarter ended March earned on the

to liquidity strong and our based based facility to million availability the $X.X $XX debt position. At unsecured in repaid remaining upon call During under no February back until am aggregate due no XXXX, borrowing confident XX, our in $XXX cash has of million notes due XXXX incentive and March the XXXX, amount convertible that, the March restrictions, sheet for balance cash company investments. credit XXXX. company million like base investment our currently its gains. $XXX maturing portfolio XXXX on On With their ability approximately fees equivalents, senior to principal was and resulting our in strength subject X.X% upon Jim. accrual quarter, grow management there base of XX, of we calculation, to maturity, and turn XX, I for our in would the I our to leverage availability of to continue million had the

James Keenan

you our to thank up concludes word team you I'd for our like With that, continued you, this a the moment I'd support. Thank continued closing, and prepared current also recognize transition. thank open through their remarks. to hard for them thank to like your even Mike. it would for questions. Operator, In

Operator

go Wells Thank Jonathan Instructions] And you with Fargo. very sir. much, [Operator Bock we'll first to

Finian Patrick O'shea

color Fin looking Hi, just taking for our a there. more for morning. the I on appreciate little Thanks this guys. Jonathan in for question. Westmoreland, O'shea

you your think the of concern, doubts growing] color raised enterprise I if Can say, [as it? kind I see could give as it on value versus, seniority of given as debt. saw [ph] company some you issuer that the the survive to XX December

Marshall Merriman

you is And Merriman. this your the your power have question Marsh plants. Hi, But out, U.S. narratives around we specifically holding tell morning. and the in we we our considering and not a you the here know I right actively announced Sean. pointed tell now in whole around the has media about alternatives. are of can coal terms its I you as This is lot managing it's time parent details. that publically involved appreciate all that coal-fired here. it There more can strategic in

level, of MLP the by lender the secured MLP. We at are the a assets senior

how the on much effect some there has is given we say. that think I more the obviously about of parent, But at So here. can not that, beyond state our play credit

Finian Patrick O'shea

company just it it VC course the on sense. And think taxable. makes levels, then is well, restructurings, Very this relieves is given for of more the And ICTI there one which shareholders, is ultimately income. favorable I by on didn't sooner think this given levels, not of very the were very names why these at losses, out - happen marks, a levels but sooner? why distressed high I spitting

on would any appreciated. that be Just color

James Keenan

Thanks, thanks This Sean. is And question. the here. Jim for Keenan

value. and think with I non-interest protecting work to outlined, ultimately positions into I our the to we maximize mean have, And exit, then those either through and all bearing the here, of values strategies one exit but Gordon and we as interest ultimately Westmoreland, we've reinvest the Brothers all to to key redeploy hope Senior we strategy, of just recovery opportunities or equity core bearing Finance of regards That's into had back across new that investments into try not Loan of securities capital. all junior continue all that the to those assets. obviously while

Finian Patrick O'shea

Okay, Thank so you very well. much.

Operator

back questions further the no queue, like turn or additional closing management call for with remarks. any I'd to in over And Instructions] [Operator to

James Keenan

just Great. investment about and incredibly to and is on like support and we see thank that excited This as BKCC the progress continue your I the today. Jim participation we again this. across everybody for We're activity all Keenan to

very you thank So much.

Operator

for it We and you conclude Ladies conference. participation. gentlemen, does today's thank your

disconnect. may You now

BlackRock Capital Investment (BKCC) 3 May 182018 Q1 Earnings call transcript