BKCC - Earnings call transcript Q3 2018 | BlackRock Capital Investment Corp

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Operator

Good morning. My name is Anna. And I will be your conference facilitator today for the BlackRock Capital Investment Corporation Third 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 call. may begin Paredes, conference the

Laurence Paredes

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

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

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

link discussed Presentations of highlights. have from Presentation like sources I verified. over to website quarter Jim clicking who Investor such October to been Shortly, website will to has page. to we to presented and our the certain note business third-party third in the would provide posted no the the overview going section independently call and Presentation Investment presentation. our Presentations Investor the and call. Accordingly, an not warranty derived turn at an been information of be Corporation can highlight will Investors Capital now with by this the respect accessed contained Jim, the Additionally, and XXXX www.blackrockbkcc.com in BlackRock that makes information or may some representation of information. complements Please

Jim Keenan

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

the share about We our the $X was For Board investment The equity per third share of net $X.XX per income was which million coverage value tended shortly. increased mark per per was ups Net $X.XX will distribution had quarter, X.X% Based from quarter asset $X.XX I repayments there last increase like portfolio approximately Directors, quarter-over-quarter or declared net their distribution volatile more of more which the or share. for be talk to XX% as quarter. XX, given legacy due by part of for on increase. share equity $X.XX to have net large to per on nature. certain in quarter positions September the share

Our the at stayed X.XXx quarter. to leverage relative prior flat

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

capital joint Senior our opportunities. deployment its continued in higher Capital, portfolio investments As attractive one, Senior company Loan and calls, the venture quality on yielding Gordon entities. channels BCIC these Finance portfolio junior loans each Partners investment new two our discussed add-ons Windward added three third Company, Senior on three, underlying XX% in company in lien core investments have investment primarily portfolio investments generate Partners our returns, Loan to risk two, in investment or quarter. four Brothers diversified with Partners, our Both prior Loan Company of Finance Gordon of during for in first our Brothers to high pools adjusted lien and be; and that five first

As $XXX million the capacity million. July, previously investment with credit total announced, Senior in Loan to $XXX $XXX facility million and of over providing upsized Partners refinanced its from

is Our investment investment strategy an important of is in underlying very part Senior business portfolio its Loan and Partners our performing well.

in Turning million the and which approximately of investment new the due net activity. for Company's to by $XX our totaling a activity during repayments made investment quarter, to million $XX exits million, offset $X approximately other investments we decrease portfolio were

$XX Brothers in deployments repayments quarter third Our increased investment Company earnings by million. and detailed We Finance Gordon our are net in release. our

invested of reflects which two also to Holdings, a saw this credit We portfolio market. quarter. company first loan new in the lien in term in our disciplined approach company PF third exits United We the portfolio selection

a $XXX third the end producing activities of with at of X, team XXXX assumes disposition. to is investment Additionally, marks last BlackRock we as yield the of CB-HDT, responsibility now in Hunter related million as volatility the Technologies, deployment investments, investment exited position $XXX of we XX%. quarter. approximately sold the of basis our to successful of million. The down This securities activity XX.X% the value mark our been previously quarters average has deployed XX in value downside managing quarter, market company XX into quarter, income XX, this have fair $XX equity new companies BlackRock points at realized which Defense $XXX yet million. a another prior fair weighted of as million market legacy portfolio and equity of repayment known IRR when From the monetization and September some was which has for from the the With approximately of eliminates March

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

X% about which is of legacy total which Let and comprises is of performing in me XX% of now part debt U.S. talk is the portfolio that Well, a market largest the little bit non-core a X% our fair position portfolio. book by Company's value, equity.

stack is expected consists and the and in value. total non-performing one debt of hand debt a agreement the performing traded shareholder the to If legacy debt merger some non-core position. publicly market U.S. the Well exit shortly The The merger equities names, performance equity pending approval. eventual get position As of Westmoreland's represents debt debt the non-performing on on declined fair equity paid after the bankruptcy our announced which company approved remaining completion and performing disclosed, other. X% while previously path October. of off creating the Among its filed Well the and is is then U.S. book of with and portion for portfolio protection a watch-list a by XX% represents

bankruptcy value discount certain things discount a the AGY of value stock and of be point minority to of certainty. hard X.X% by outcomes at funds exposure Tennenbaum The complex preferred Westmoreland valuation improvements BlackRock's to driven represents and the portfolio. any removal operational AGYs was market increase under are fair process market preferred stock other occurred in predict of the removal with long expect our of and total among to At our advisory. We on time in degree it's impact as owning this minority fair at the The business. common now

only market the of portfolio As stock our September is fair status, of total value. AGY on representing investment at preferred XX, non-accrual X.X%

redeploy creating income as producing a into are focused pool the remaining assets. on We stable for non-core avenues monetization of book, to so

some these earnings we as into as quarter visibility power next the expect to gain of greater of names, well around the Over sustainable portfolio.

share visibility to the expect updates. future the We increased during

origination to of Capital Before financial I'll our larger quantity set. even I Tennenbaum network flow. note The turn to of BlackRock's gives that Mike increase borrowers access the opportunities results, the and the our Partners additional Over Pungello, be you us acquisition on over to solutions Mike. and X, scale and closed for to to broader expertise provider call both quality August a details company enhances which deal regarding the helps which

Mike Pungello

a $X.X approximately distribution for XX% or take the months September information coverage Thank and or the as GAAP you, was per XXXX. million to distribution per the quarter. additional, for of quarter decreased ended three $X.XX Total share our net compared NII the three review ended the to declared income investment Relative income, three XXXX financial million months $X.XX for XX, share, to September was XXXX. portfolio Jimmy. for $XX.X XXXX. XX, minutes few of third investment ended XX, months September X.X% NII I'll

by ended Excluding total decreased investment fee fourth in approximately attributable primarily income is rate a impact compared The quarter partially to primarily to XX, same decrease the September second the environment. of the portfolio due XXXX. average income The quarter a decrease size X.X% quarter as XXXX during higher offset the by to of other was and income, of portfolio and in for quarter which in XXXX dispositions investment XXXX.

stock was cost X.X% one there total X.X% XXXX value at investments of representing and fair and As debt investment of XX, approximately September preferred non-accrual and position respectively.

of debt XX, XX.X% approximately and As at of investments and stock compared December to X.X% investment non-accrual total respectively and fair XXXX. at cost value preferred positions

investment to credit expenses XX.X% from months interest of management Total in and compared or XXXX quarter a decreased fees. XX, three primarily X.XX internal September as prior ended XXXX average fees market as decrease the comparable facility million fair rating in at Our X.XX value period XXXX September was at for and to end. XX, the due $X.X base the

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

on XXXX, $X.X XX, of waived management earned incentive on XX, by million Through advisor we've $XX.X of XXXX fees the income fees September million based have ended incentive For accumulative September total waived. our been basis. quarter based investment management on income a

there gains. management of of as in decreased as unrealized partially related Net primarily the before due three million from primarily months quarter depreciation September was incentive Holdings disposition. resulting XXXX XX, to of the reversal previously During was valuation for due realized accrual on recognized fees $X.X to Management for investments Inc. the depreciation unrealized Solutions, loss equity the offset CB-HDT ended deferred to million $XX.X portfolio sale Bankruptcy no based appreciation Inc. gain by taxes a Net well

increase three XXXX tax XX, $X.X million. liability in and unrealized a gains consolidated of For our months deferred September the resulted ended subsidiary taxable an to

including liquidity quarter $XXX XX, in XXXX of that Jim. availability like million million the had and XXXX would million we between we call September base strong per During shares At facility investments are share cash to for to equivalents. average $X.X to availability back X.XX company of subsequent as commission. investment brokerage portfolio to very it, repurchased approximately our turn for and and grow an position of the a price cash under $X.XX third credit we at I our With

Jim Keenan

for closing, your hard demonstrate concludes we as you would our Operator, objectives. open progress a thank in for them remarks. you, work Thank questions. call our to take continued I we continued up like moment and I like like Mike. achieving for team to portfolio This recognize In prepared support. to to would also our their thank the

Operator

Shane [Operator now question from Instructions] We'll Rick with take a JPMorgan.

Rick Shane

capacity clarify the buyback. the activity? on is want under What the to Just the quarter share authorization delayed remaining following

Nik Singhal

our have million as re-up now, program So share of and repurchase. shares approximately we X.X for we available reauthorization

Rick Shane

of have your for capacity, there's opportunity obviously attractiveness market the quarter the of those do shares different you through of move How given advantage you then ultimately in we opportunity And objectives? leverage. the taken terms investments as cited balance greater guys you and repurchasing have

Nik Singhal

our Loan capital our And well first investment before Partners look Brothers, times as in and that is Loan investments. Gordon is capital goal our shareholder's several to our Senior our so Rick, junior opportunities. mentioned attractive as which adjusted and risk JV, we that's as investment deploy Yes Senior in foremost

be focus. our to continues that So

times think stability program provide to buy dislocation. to supplement repurchase of into to the that at I a very be share stock as redeem at serves price attractive our prices

as supplement our view would a that I philosophy. investment So core to

Rick Shane

when in is But NAV to substantially trading accretive to repurchases your it’s NAV accretive at - are companies obviously book It can premiums interesting also phase that to premiums accretive are to be to obviously or ROE. and income.

to it And ultimately your actually well? enhance so and pay as ability cover does the dividend

Jim Keenan

and shareholders is stable I different we balance the the by creating try to dividend also think its what do Keenan. Rick, deploying to Completely Jim into obviously value diversification stream. a and income assets the agree,

diversified balance attractiveness able discount the assets do of and goals. compare we sense our being a versus buy achieve in that the to at So to deploy ability a of to

Operator

[Operator Instructions]

Jim Keenan

to the and you, to again performance there the Thank everybody forward If continue like look questions, Thanks no again. Operator. BKCC. just for I for further support to is thank

Operator

your for once We that And conclude participation. all does conference. again you today's thank

You many now disconnect.

BlackRock Capital Investment (BKCC) 1 Nov 182018 Q3 Earnings call transcript