BKCC - Earnings call transcript Q1 2021 | BlackRock Capital Investment Corp

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Operator

Please stand by. Good morning. My name is Lisa, and I will be your conference facilitator today for the BlackRock Capital Investment Corporation First Quarter 2021 Earnings Call. Hosting the call will be James Keenan, Chairman and Interim Chief Executive Officer; Nik Singhal, President of the company; Abby Miller, Chief Financial Officer and Treasurer; Laurence D. Paredes, General Counsel and Corporate Secretary of the company; Marshall Merriman, Head of the Portfolio Management; Jason Mehring, Managing Director and Member of the company’s Investment Committee. on will after a open placed their speakers question-and-answer been they update, the have mute the and complete session. Lines line for Thank Instructions] you, [Operator Mr. Paredes.

You call. begin may the

Laurence Paredes

welcome Corporation or earnings And Good quarter BCIC. the BlackRock Investment of XXXX morning. Capital conference to call first

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

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

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

James Keenan

we high joining results portfolio quarter made our a thanks call then toward Good strategic discussion Singhal and with progress on an you Abby of as call. to Miller will an goals, will we level in and our detail near-term significant update follow our Larry. our view give morning. priorities. I open update to as activity all you, before with performance begin our our well and Thank Nik more quarter a have financial first on will status, earnings first And questions. for of of the

emphasized rotate calls, has exits. our X% of made total XXXX, year of and visibility priorities other non-core have our non-core a compared legacy quarter near-term assets just now capital have have capital we this portfolio XXXX first quarter one the of in end, ago, exposure, progress reduced been As and excluding prior assets to substantial non-core front. At with out strategic to into reduced junior on Other investments. further portfolio, of XX% Through to our XX% a from junior the year been XX% of to ago. we legacy is

has more With reliable the reduced portfolio steady our us, cleanup focus NAV our toward largely with income other of shifted strategic priority behind a volatility. producing

of XX% redeploy At on to generating XX% remain of loans first lien composed first portfolio our the we income a of junior quarter, emphasis close portfolio notes, diversified As an second with we secured building first capital. capital, was lien XX% senior and liens. committed

at comparison, lien. only end in was XX% first For of the of portfolio the XXXX,

company quarter. from rotating assets and diversity loans. senior We we XX portfolio of we to Blackrock’s have the companies current XX% well, portfolio lien capital, secured of diversified portfolio mix. portfolio and the XX has greater target end origination to portfolio to and continues credit XX% as at companies believe at out as is deploy least we the our The non-core robust will our as We selectively companies, achieving quality been to adding first of reach benefit of XX and underwriting into are platform. strong, We have new this compared now The that XX XXXX.

our our the one sold non-accrual in only at we Notably, the stock investment Excluding Gordon mark. of to Essentially, non-accrual the we position on investment remaining prior company GBFC. and value quarter’s X.X% status. have exposure a was finance represents preferred at previously we non-accrual the first Brothers GBFC, reported Advantage fair or our remaining for Insurance, which quarter

reinstating dividend our share Additionally, after the last full quarter. quarter, $X.XX maintain we at this per cash dividend

during senior on focus confident the investments the with While will our stronger leverage decreased over portfolio generate building quarter, NII. up are steadily time we

rate our revolver run providing extending accomplished redeploy capital. managing our the now goal over NII quarters The the April our greater We much dividend expect XXXX. liabilities. matures this us goal stated our On on that coming freed-up in as into we credit last had to facility. we XXrd, flexibility We our of grow call, April into

Importantly, the note the XXXX the or notes. of removes springing on and ahead certain amendment XXXX maturity removes convertible repurchase maturity prepayment the of restrictions

average repurchase in our kicked Nik Finally, shares brokerage will now per the commissions. our detail. the over including an the call further quarter. plan share We price XXX,XXX $X.XX to of to discuss activity during turn portfolio in at first repurchased share, approximately Singhal I again

Nik Singhal

we other and junior in non-core Jim strong existing progress mentioned, investment. and As made reinvesting portfolio our

first proceeds to drivers this two million and in $XXX the of received reduction quarter, we non-core $XX.X these quarter largest the million our During from quarters. junior buckets from capital proceeds This last total our repayment of million first investments. in brings $XX approximately in Advantage a $X full the and in The equity million the from $X of of our return exit Insurance in were investment activity our SLP. Boston BCIC in preferred First two Holding, investment in stock capital full million Construction

approximately In of $XX to well repayments. respect sales lien million second addition, as normal course This had opportunistic we $XX deployments were loans loans. and risk With certain by XX% lien strategy, one lien our percentage holdings. gross driven portfolio exposures, increased and first million our portfolio existing was second overall the of core originations were in primarily lien as our including originations, investments, of our Consistent from of XX in repayments companies. quarter, lower new and were with first XX% there

new four second first loans. four far. weeks of prepayment remains All second and we companies. less the added we pipeline are the quarter were lien Our In new four solid first of in the seeing opportunities activity portfolio so quarter,

markets we percentage approach a very remain to the investing, opportunities capital we of disciplined executing robust, the only As remain to committed small our review.

our where which of We we first million but co-investing warranty. co-lead this new million X% transactions leading investments to World And enables Private too are of term first loan lead primarily facilitates $X.X with BlackRock tranches. and online. this committed negotiation X.XX% this term investments delayed plus plus provider BCIC to in our draw much in term as of on to and USA, taking across term release, temporary participate concentration sole LIBOR the transfers BCIC international acted on unfunded a Holdco, emphasize which more in investment earnings of the BCIC loan platform home A two to funds Credit the the loan led a which LIBOR committed structural lien lien X-XX a details money revolver new BlackRock $X.X these some The larger investment, Platform, digital of transfer on staffing loan or BlackRock X.XX% other include to X.X JobandTalent first prominent invested be risk. A can to us in investment. transactions global Remit, lender LIBOR firms. we continue following. million. agency. A plus lien found that the without

core first portfolio of an well. with to Our percentage perform has continued increasing loans lien

position investment non-core non-accrual, with $X.X As only market Jim which is fair there’s mentioned, a one excluding the in remaining value. GBFC exporter, million

from December performance portfolio During on our our net by NAV the $X.X our a quarter, unrealized realized companies. the financial million improved driven investments. many reflected of and primarily X.X% first across quarter, increased $XX or This million by gain

per to $X.XX. $X.XX share increased NAV Our X.X% from

cash Our stable eventual we consistent the for into quarter. our will a to second with cover Growing now I at having remainder goal call grow our to the core as which financial be and noted, income objectives will results in our disciplined quarter discuss dividend, the of fully volatility. turn as us paid Miller NAV Abby row. focus of to for earnings our $X.XX manner with our portfolio have low Jim over the in a well, further the investments our deploy will of NII to our liquidity in enable core XXXX

Abby Miller

for of efforts junior successful $X.X consistent expectations quarter down Total Thank $X.X XXXX, I Nik. management derisking. not decreased you, first quarter income, any approximately driven our to quarter. non-core to investment capital by driven results or XX.X% associated $X.XX covered company XXXX. stockholder the lower expense review the first XX.X% interest take incentive by investments. of exposure Total quarter portfolio did from investment of a the of NII primarily or our XXXX, decrease with driven portfolio NII based from GAAP in base fourth the fees income in by a This $XX.X will was net distributions. size investment fee financial In million per for additional a income. incur million reducing quarter-over-quarter. few portfolio million giving $X.X quarter, the on in million and fourth minutes primarily or million, share with expenses XX% $X.X was reduction our the was and

in the XXXX, $X.X quarter waived fee, by which may a you was of recall, incentive million As recorded we the voluntarily fourth advisor.

March XXXX totaled incentive million. Our fees cumulative permanent since $XX.X and waived

accrual for based Additionally, incentive in there the no on fees first was quarter, gains.

representing During XXXX. portfolio. BCIC unrealized compared fair at investments broader December At realized recovery driven continued and market Partners, across X.X% debt the SVP-Singer, X.X% value, quarter, and gains well were George, by the end, total as million, there Senior primarily valuation stock investments Loan in XX, three recovery were first to of as net $XX non-accrual quarter St. general preferred as at

internal availability on fair had X.XX value we also prior strong XXXX, as average facility cash million to at liquidity end. weighted At improved approximately $XXX March under hand. to credit Our X.XX, our compared position rating a at and from XX, investment quarter at

XX, Our net ratio at times at quarter leverage times was X.XX December XXXX. compared end, to X.XX

leverage capital gradually over expect as levels to grow return we redeploy We and portfolio our to normalized time.

additional amendment credit further provides facility the company its manage mentioned, Jim as structure Additionally, the capital the to XXXX. for flexibility in of

of the share for brokerage the average commissions. we approximately of repurchased shares XXX,XXX first including quarter, During $X.XX our million $X.X price per own and

the As of shares March remained buyback available current under approximately program. XXXX, for XX, million repurchase X.XX

levels, of distribution was share XXXX. a prior XX, consistent I business and payable to XXXX, back quarterly yesterday would to at quarter the the of on announced turn X, of declared record per $X.XX on With stockholders Jim. to that, with July June call like As close

James Keenan

we are year ahead. the pleased In team hard ongoing was first Thank and the our performance, of excited with our work Abby. about by entire you, which driven are closing, quarter we

income reliable and remarks. are in goal NAV our also Operator, our are shape thank well-positioned of good this our their volatility. to pursue would and open financial I growing lower to to for This steady, concludes through repositioning We we stockholders continue like ongoing portfolio portfolio our prepared for want questions. call patience the and support to process. toward

Operator

Wells will Thank ahead. go you. We first [Operator Finian take question Fargo Instructions] Securities. Please from O'Shea our with

Finian O'Shea

Jim, morning. that the Good to you make again everyone. assume on coming I first would fee in waiver. until burn the continuing Hi, that question that and quarters, dividend expect incentive the

your us of approach the about think obviously, book, maximize remind achieve dividend you earnings today’s have the earn position, I the X.X% BlackRock if Do you you forth? so in see would remaining you and that? competitive dividend you So then can BDC when potential? to portfolio think, becoming or that optimization and And policy the a do on more is would the

James Keenan

the modeling overall overall this fees obviously, and has to-date the we work types of that and obviously, the are Yeah. of able now, QX with we think, with mean, consistent diversifying I portfolio. been, that able is and right questions. we as comfortable standpoint earnings, spreads, consistent the we impact that’s slowly continue XX we start But the first Board continue the are portfolio of a with waiving regards build pool into come we deploy the that are advisor couple that. into with are that believe when pace or Obviously, and deploying and standpoint a put pace make play the those different Board are decisions were the market, of will the toward and expect when is obviously, to market continue being next X.XX continue activity deployment the -- our have then think ultimately the today. as from When to levered volume we good we lot to back earnings. we deals all to spreads, -- deploy level and variables the to earn the out as re-transition LIBOR, communicate on where we just work model X.XX for of that that we all earnings there’s it I that Thanks see the ratios quarters will the From are incentive to the and into regards that complete the type example around of was move into we we deployments Board we Finian. we But to pretty in quarters more ultimately going that things over we to come fully the range a and the to new to the that from strategy to invested. Obviously, will as of be of Thanks, -- liens, to of as of reposition all with the and into and repositioning kind into to dividend, that overall with out strategy. a those what what is

Finian O'Shea

you. Okay. That’s me. for helpful. all That’s Thank

James Keenan

Thanks.

Operator

Melissa comes Wedel Morgan. last question our from JP And with

Melissa Wedel

April. you for Good taking so occurred my activity in deal questions referenced everyone. today. that’s some Nik, morning, far Thanks

put to us skewed I think for capital how should toward -- expect you or some also play a if originations willing wondering further you have be referenced to. out XX legacy the sense into versus talk about as we some was your more balanced be us companies to exits you be that pretty rotation you to did existing that give might continue visibility and having Thanks. that they the to around size out deployed of expect repayments, of be investments. I

Nik Singhal

indeed. Thanks. Yeah. you, Yeah. very relevant Thank Melissa. A question

XX million, we continue actually look XX far believe So, we days, very with only quarters our quarters. first in ahead so right? that and more wouldn’t that sustainable. trying million. new by desired mentioned across companies pretty consistent we gross liens and those that that four is we think across of companies, if at the create that’s offset going pace at deployed deployments activity and this the $XX activity. pace new repayment where we which obviously Much were all QX $XX extrapolate had to $XX the of it’s QX I are pace have prior The growth exits QX million the much to we that pace. That two In we So are last and the have very, gross was before you than deployments portfolio but repayment linearly, deployed is where of we deployed been two to create. deployment We it necessarily pace

First And Insurance Apple, speaking on paid thing into mentioned and investment call, were of call as Partners, in Boston, investment GBFC X% these incidentally Red our one book the possessions, is positions, to we junior our visibility we So off. that on large non-core Advantage Senior non-core with the capital reductions. further others. then And our is the Loan near-term many non-core down were and

for Our could there’s our mark recovery there our the and mark. line, additional recoveries push recoveries which are at above down potential

really news. That’s great our down to So, bucket going X%. to non-core take

of the behind most now us. really desirable are So exists

it of really lot QX, refinancing activity, Additionally, driven market were a slow some down. in it in of to starting not is we seeing just QX

to Red think be the ratio, as gross our start would received, well would net just into as great with and So NII. which Apple turning that deployments leverage actually we our deployments that we news accretive

Melissa Wedel

guys. you, Thank news. Breaking

Operator

for All your participation. Thank right. presentation. you conclude that does And today’s

now may disconnect. You

BlackRock Capital Investment (BKCC) 30 Apr 212021 Q1 Earnings call transcript