Earnings call transcript Q4 2022

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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 Fourth Quarter and Full Year 2022 Earnings Call. Hosting the call will be James Keenan, Chairman and Interim Chief Executive Officer; Nik Singhal, President; Chip Holladay, Interim Chief Financial Officer and Treasurer; Laurence D. Paredes, General Counsel and Corporate Secretary; Jason Mehring, Managing Director and member of the company’s Investment Committee.

All lines have been placed on mute. their session. will complete for the speakers’ question-and-answer a the update open they line After Instructions] [Operator

you. Thank you Paredes, Mr. conference call. may begin the

Laurence Paredes

morning. of the XXXX Good or to and welcome year full BCIC. fourth earnings Capital BlackRock quarter call Investment Corporation conference And

begin documents would to Before uncertainties. subject risks contain that forward-looking our point call conference today, during and made statements comments this remarks and out I we like certain within corresponding to

such as of We the words these Many the forward-looking use should, actual will, from be statements call BCIC’s may results to expressions. believes, by identified anticipates, may these can attention fact similar intends, that statements. differ expects, of and your

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

derived and no independently Additionally, have and presented discussed may been warranty or representation Accordingly, sources from such verified. respect with certain information. third-party to been not BCIC information has makes

going presentation at Please Presentation be posted page. March link contained our investor section to the in website Presentations the Jim of complements presentation. Investor some call. that Investors www.blackrockbkcc.com Shortly, the and The presentation clicking have this will by information website note, accessed highlight an to XXXX we our of can the in the

now turn to I the to like over would call Jim.

James Keenan

the And discuss Afterwards, financial on will an our all an results thanks Nik in for year. you open year fourth portfolio Chip And you, joining call performance to we activity earnings and of XXXX our and overview questions. Larry. provide the morning. will Good give I and detail. Thank full to quarter quarter status. for our of and highlights more call. then then our will update will

with meaningful throughout on strong highly momentum a our investments directly while first-lien diversified efforts concentrating portfolio, quarter XXXX. in the reflected year Our to debt results the and successful build into

risk growth earnings positioned returns. adjusted further are well deliver enhance selective to our pursue We to solid power and

benefit to of of environment, continues rate majority close of protection during the the in the rate benefit vast investments, portfolio a have consisting positions the debt we investments of our deteriorating first-lien at our from year. interest floating a rising economic With of XX% Our downside with debt environment.

market able this changes appropriate loans believe to are toward with recent risk and Given pricing, terms environment. lender-friendly in we in uncertain a reflects tighter dynamics, environment, shift structure more an more new reward shifting leverage. improved lower a We market proposition

well XX% of quarter to earned of dividend over as Higher quarter over XXX% improved in sequential XXXX. pleased pricing prior our and our increase am I quarter the NII increase SOFR LIBOR covered rates, as that contributed in by this the NII NII fourth and a quarter. a $X.XX X% the in fourth

net leverage in across million decrease the the for quarter prior to all quarter, loans, a for nearly $XX from our increased times by in gross Our deployments, fourth X.XX with of portfolio. valuations X.XX driven coupled first-lien times

portfolio record a of represents we tremendous added portfolio XX a progress the our companies, end new During diversifying companies have XXX the now from of This towards end XXXX. at two XX of the at quarter, of eight the and goal portfolio and up last years. the XXXX over

draw on an to in team’s investment leeway platform BlackRock leaves emphasis power of expertise of upon opportunities further portfolio current the both to grow and Our prudently and plenty the our capital the stack. seniority of with the us we evaluate leverage breadth identify as compelling the

now a end XX% the This of measure have advances at at capital First-lien few investments of another end the of X% reported XXXX. far XX% marks in exceeds of up level from investments now and the just made our highest portfolio, in the only down history. make XXXX portfolio, important comprise we years. our XX% the Junior of our

and strong conservative we While on to committed grow, our focused credit culture. remain we underwriting

the Our new solid credit in no quality quarter. reflects this, punctuated fourth by we that the investments non-accrual fact had

U.S. there year. of signs and are job early highs of from easing the market remains the While resilient last inflation

We periods creating of rates financial resulted have borrowers. are mindful for conditions that growth in economic or rising slower historically contraction, interest tighter

quality We in rising that support believe first-lien of continue on our us our portfolio well companies in as of to in help as of portfolio, economic to inflation, borrowers. rates downturn. be carefully as track as an loans positioned prevalence We the impact the interest well our high well defensively ownership

to the experience companies the our outlook, proactively well event portfolio resources engage to and and health We the management we regularly in are communicate challenges. teams and assess their of financial with with emerging equipped with

are our investments now, well credit and For strong. quality performing remains

confident succeed behalf cycles, are ability across in on our We generating while our shareholders. profitability economic to of improved

the over now further turn to Nik portfolio call I our will detail. activity to discuss in

Nik Singhal

growing provided and into core portfolio to We increasing important an source XX% the power. continue Thanks, approximately for our quarter to went fourth existing good companies, dollars Jim. quarter, this relationships. investment be in Follow-on eight investments companies capital made and portfolio earnings portfolio again of of We existing new opportunities us. seven headway existing

consistent uncertain with in portfolio of as especially a economic profile, strategy entirely enter times. lower we investments quarter first-lien companies Fourth our were new risk in almost maintaining loans,

million. $XX investments at full principal of the Exits debt of holding three across with were par along full Financial, XX.X% our Bari IRR over an we these quarter MetroNet repayments in during This names. exits realized contractual return each In with Systems. realized the the UniNet aggregate case, included and period and

end but opportunities we very new of selective current we are and flow the of names, no although our quarter, to the what we respect all investment fourth or be investment our close. has quarter can invest the are pending transactions either that will to fourth in. close, closed of that transactions approved on committee Since existing both there $XX assurances remain across such seeing activity, million a steady With subsequent

life a portfolio $X.X new distributor three Our and X.X% and the independent first-lien insurance quarter products. of include, SOFR plus an million loan Integrity health Marketing term to unfunded fourth revolver largest marketer company million in $X.X investments and Acquisition,

Marketing is Integrity Favorable had made investment name. company’s portfolio, committee a attractive the conditions to this current addition the this longstanding our an has company. in While market for new pricing familiarity the investment with a

$X.X of SOFR plus loan A million to unfunded term million X.X% support first-lien Inc., revolver term provider and solutions. and loan a $X.X Zendesk, customer

Logic X% marketing loan $X a a million unfunded $X.X SOFR business-to-business and term And Madison services Inc., to provider. plus revolver million Holdings, first-lien

Our broader portfolio other market NAV declined fourth across the the share spread valuation in widening X.X% per and by credit driven by quarter, declines.

the the realized and Subsequent no we to new non-core exited fourth quarter. fourth during quarter, As previously mentioned, had we two investments. non-accruals

these was of previously One asset. was a Advanced Lighting, non-accrual which

of was Kemmerer is these forma names, fair total other basis, market value the two X% following pro a down The exit our now the to portfolio. less non-core Operations, on of than

including achieve than we grow even our of range. fee target without one-time to more have happy coverage still room to dividend full are We income, towards our leverage

are we more the and market, time this remain that opportunities in to approach. disciplined we become attractive true While continue seeing our tested investment to

I for our Chip further discuss will quarter. to call turn now over the financial results to the

Chip Holladay

the up will I XX% quarter of fourth some million X% quarter $X.XX review a increase of now per Nik. for the BCIC you, for to results or XXXX. $X.X financial additional fourth Thank from was investment the and few from quarter, share approximately third income the quarter. fourth minutes GAAP net an take

NII to from third provided coverage coverage quarter XXXX. dividend fourth fourth XXX% in and of substantially dividend in coverage quarter XXX%, the compared up the of XX% quarter

in of an million was Our the gross income XX% increase fourth the XXXX. up and quarter quarter, income of for $XX.X earned X% gross fourth quarter the prior investment from from

income Excluding one-time our to for approximately fees, quarter grew compared the gross XX% as third the investment quarter. current

a investment for by accrued in XXXX approximately NII XXXX, million our of over and quarter. $X adjusted net deployments incentive The fourth from interest environment of higher $XX increase rate net earned the was of in the impact income XX% course increased $XX.X the gains primarily approximately Excluding driven XXXX. of including million adjusted fee, capital million by

increased average of quarter the X.X% improved The December XX.X% the fair on and prior company’s XXst, portfolio end from as as yield XX.X% XXXX. as of weighted based up of end value of to from

from increased SOFR and rates. to by uptick and $X outstanding driven due the an debt for Total LIBOR million primarily quarter, net costs, third fourth balance increase borrowing average other our interest expenses in quarter in in the an increase by quarter-over-quarter, approximately an and

fourth Net were and credit market for driven losses by other portfolio quarter the were no unrealized million There quarter. the $XX.X across or the in spread losses broader declines. realized gains valuation widening

X.X% investments, XXXX. end new as X.X% from the fair quarter. down portfolio There non-accrual during our September end and non-accrual end value, no an three at total investments quarter portfolio’s had fourth the the representing X.X% Year the improvement of of were from of

just the XXXX, in position the of Advanced non-accrual in investment of number quarter positions nonaccrual we further Lighting, first In the portfolio our two. of reducing sale to debt completed the

fair average internal X.XX X.XX, portfolio declined compared to as to weighted XX, at prior of X.XX end quarter Our December and the at rating slightly XXXX. value

use restrictions. for to leverage million, end, including subject general approximately and operating hand year was available At base on total and borrowing liquidity $XXX.X cash deployment and

the Our prior X.XX net from end quarter. leverage ratio was up times at the X.XX times, of

XXX,XXX share, fourth commissions. repurchased million shares average of per stock price at the for an we approximately of brokerage quarter, During our including $X.X $X.XX

record close a to announced quarterly on of share the $X.XX we payable XX, per XXXX. April business XXXX dividend X, declared March As of yesterday, of on shareholders at

to like the turn to would call I back that, With Jim.

James Keenan

Thank produce committed In in and our remain shareholders We NAV we to you, to their results continued conservative and our disciplined support. for portfolio reliable diversity growth income, for order thank closing, solid Chip. underwriting, stability shareholders.

the now open would like call we that, With for to questions.

Operator

[Operator Instructions]

Operator

questions. there And are appears it no telephone

your So We for that thank call. today’s conclude all will you conference participation.

You disconnect. may now

BlackRock Capital Investment (BKCC) 2 Mar 232022 Q4 Earnings call transcript