BKCC - Earnings call 3 2023 | BlackRock Capital Investment Corp

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Operator

Good morning, everyone. My name is Lynette, and I will be your conference facilitator today for the BlackRock Capital Investment Corporation Third Quarter 2023 Earnings Conference Call. This call is being recorded. Hosting the call today will be James Keenan, Chairman and Interim Chief Executive Officer; Nik Singhal, President; Chip Holladay, Interim Chief Financial Officer and Treasurer; Laurence D. Paredes, Corporate Secretary; Diana Huffman, General Counsel; Jason Mehring, Managing Director and member of the company's investment committee. their answers. will complete for the speakers and question the update, open they line After At time, Instructions] over [Operator this to the to Mr. conference turn I would like Paredes.

call. You the may conference begin

Laurence Paredes

quarter morning, XXXX Capital Good Corporation BCIC. or to welcome the Investment earnings call of and conference BlackRock third

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

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

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

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

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

James Keenan

earnings Chip highlights September. I and Corp or call. TCPC, an BDC, with call our address and in overview our begin more Nik then will of our the detail. was and portfolio results BlackRock thank quarter. a proposed affiliated you merger will activity, you, performance discuss joining will with financial our TCP announced reminder then morning, for third and provide that in the for Thank will Capital Larry. quarter of our I our a review Good

We will questions. call the then open to

of X, BCIC September On merger proposed TCPC. with a XXXX, we announced

highlighted very strategic the of step broader and announcement, of platform proposed at As and BlackRock. natural private growth in business is evolution billion debt the $XX the the and global a time next the BlackRock's at transaction BDC logical

With transformed the BDCs to portfolio, investment both portfolios the our BCIC other. having collective are years many X investment portfolios been successfully has And very its of team each importantly, similar for now managing now.

scale, merger improved growth trading operational proposed potential the believe positions combined create for for will meaningful cost We synergies, company better and enhanced value including to combined for access capital sustained BCIC dynamics. shareholders, improved on and the terms

that to We also the will NII. transaction be accretive anticipate

the several As added of adviser, an assets. assets from X.XX% of measures, BlackRock, including for transaction fee reduction merger the after shareholder-friendly management closing company's is below to supporting X.X% to equal reminder, net or the of with the a XXX%

up via Coverage any merger less share, combined of NII fees a X the waiver the in for such of event for company of than $X.XX after the the any in is NII maximum transaction. quarters XX% $X of quarter first per advisory combined of BlackRock subject the merger by earned of closing million, coverage and during on to a a cap both to for fees of quarter, advisory to up costs the companies the such

split respective before each ratio based stock closing. [ NAV TCPC's net and that each shares on shareholders net will of asset personal that the value of exchange in transaction to share receive the common of for share, determined value will TCPC the per asset BCIC's asset will TCPC newly divided values. by of ] NAV issued result shortly the per is combined an be ownership BCIC The company net an BCIC's

approvals, quarter and customary of transaction turn We close other the conditions. now company's to closing the first performance. third shareholder regulatory our to subject quarter approvals each in expect XXXX, I'll to

$X.XX generated XX% again net year-over-year. investment with consecutive fifth X% the income solid and strong that the quarter our dividend compared for results, quarter to covering prior We was up

coverage the successive for dividend up coverage. of quarter was marked the increased quarter. previous This of XXX% from quarter XXX% Our for tenth dividend the

with With we prudent portfolio past focus opportunities have transformation the first years over few substantially portfolio that on behind by credit diversified successful quality. sound and underwriting us, our the lien compelling identifying unwavering align our

navigating of in volatility. excellent uncertainty deploying position and economic attractive global through an are while continue period We into capital to investments market this

XX% Junior BCIC junior now investments close X% for the the a lien investments XXX XX% record our XX% ended XXXX. up of end positions comprised with companies. make We up from at of the of that XXXX. make only portfolio, now the our fraction and capital third of high proportion at portfolio level First of portfolio, quarter a up

companies downturns. X that to have past positioned a are the defensively sites doubled across We more [ weather than creating number years, ] with over this significant on multiple focus diversity

deal-making X quarter nonaccrual just quarter, in had for was the loan. this we we middle soft in note, a quarter. third environment, origination of each of which X new added this lien companies X and portfolio of a total Of the investment a Even first new

believe less not we particularly disciplined current terms conditions appropriately not to substantial we and the attractive pass when Overall, when market does opportunities provide do remain on market, number continue lender coming that the or the pricing a reflect adequate of to protections.

quarter supported as investments portfolio over in XX.X% well weighted year-over-year, wider yield XX.X%, next on new by the negotiated from SOFR few Our was up rates increases average marginally quarters. as third

quarter quarter. from the Our as the during for net we modest leverage had X.XXx, slightly third prior was quarter down repayments net the

September extended XX made margin and under maturity also our terms, credit XXXX the facility which the among credit facility, of other September, applicable to the the basis we annum. interest reduced per amended loans points In by

health, in are are we communication confident financial regular our the of their to companies of strength assess borrowers. with overall We our in portfolio and

driving to our challenges, shareholders. highly are downturn emerging believe proactively we with toward in We withstand of might where while are well engage impact there on the teams. improved be these also management resources small of number profitability we our behalf confident a positioned the to In and experience of situations economic team's

I'll now to portfolio the discuss in our turn to over Nik detail. more call activity

Nik Singhal

of again $XX Jim. We third risk first solid uncertain We NAV per in results companies. share. a capital in the with profile, with in loans, existing net million strategy macroeconomic Substantially, consistent provided our especially income quarter, new this were and increasing investment growing environment. portfolio lower lien all this our delivered and of Thanks, X quarter maintaining deployments X companies

million other on onetime total quarter X these including were Total income fee million, exits company repayments of exits. in transactions. during and generated $X and portfolio These $XX the drove repayments a

Nephron $X.X our Corp., reconciliation first included financial manufacturing companies lien a a in million SOFR, plus loan close respiratory company specializing of term solutions. a a of and plus pharmaceutical software during portfolio Some X.X% lien new and first to loan medications, $X SOFR, Inc., the Trintech, to X% million term generic and quarter million cloud-based revolver Pharmaceuticals $X.X provider

in brand one was also portfolio of aggregator SellerX, space, companies. acquired our Amazon the our one portfolio Additionally, companies, of Elevate, which

in this rolled combined respective entity. were prior the As proceeds repaid. these investments our companies transaction, SellerX in a We result of these

exposure and our repayment exposure funded quarter, As to are a whereas transactions, by for respectively. unfunded our reduced million. the same our figures the of $XX.X these transactions included quarter-over-quarter, remained these deployment result substantially These companies in

with also portfolio numbers our upsize namely These investments X repayment our these or and deployment Haan and Holding, Bluefin portfolio companies, invested refinanced prior new Cole new include investments to these investments stay existing well-performing companies. Each portfolio ability demonstrate in to our a of Reveal. in company. exposure Our investments

But remain despite see capital activity, we're a new those market, our names. to in seeing allocating in With pricing of the slow existing investment investments across respect both flow private where slight to selective protections. we uptick good coupled lender a current with credit attractive opportunities and we

approved the closed that have Since investment such are quarter, subsequent third the pending assurances will there to of no although has end of can million transactions transactions close. our be and or all third either quarter $XX the close, committee

a at value. representing first fair a position, to As we our of [ nonaccrual continued This of ], at our of million brought investments quarter-end to total performance. due X.X% decline their end quarter, the nonaccrual $X.X loan Perch the operating lien portfolio as precommits total designated in

share million loans, of $X.X feel roughly $X.X well the NII we conditions. from about X% quarter, during and believe of driven impact NAV Overall, dividend portfolio lien we're second realized declared the in the senior potentially good With per diverse a million credit by economic gains up and of increased the net portfolio. the on quarter, that in withstand quarter. first deteriorating Our secured portfolio the our underlying excess of to positioned we of quality the

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

Chip Holladay

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

quarter marked income quarter consecutive our tenth This investment net of growth.

increase the $XX.X income an million quarter. primarily net quarter earned from other XXXX. by increase was quarter of the quarters, and prior income in from earned XX% X portfolio last income investment $X Our X% as third up for The of deployment million gross company was well to the of from additional investment driven prior quarter, the and on exits the over the on million into onetime during investments $XX as fee quarter

for yield the incentive based an borrowing on increase attributable with on the [indiscernible] period. to higher depreciation expenses NII Total was weighted portfolio, increased during rates, the $XXX,XXX XX.X%, the increase professional to of second approximately and pre-incentive incurred The from fees higher average portfolio by an quarter. SOFR fees third quarter to and company's unrealized costs earned in due consistent in quarter-end value due as net higher fair the quarter,

other majority $X.X The the had to higher quarter. by during across on portfolio of offset company of approximately unrealized holdings, also depreciation on position. during interest the realized unrealized our $XXX Net partially valuations and rate markdowns quarter $XXX,XXX depreciation swap the million by was of our positions gains due

quarter-end, the position The X X.X% lien prior earlier, Perch, in nonaccrual investments in X at noted investments fair nonaccrual the our of quarter-end. represented positions portfolio's the quarter. including addition at X Nik up total loan first our value portfolio As of had from

from slightly X.XX Our changed X.XX was quarter-end, at weighted at average portfolio XX. June internal rating

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

X.XXx leverage Our from was quarter. at X.XXx, net the to during our repayments ratio second facility the credit slightly net of the end down due of quarter,

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

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

James Keenan

management the and well led portfolio credit Thank NAV transaction you, Chip. on are return prudent and quality, increased transformed stability. equity portfolio, has returns that strong as with combined for as the TCPC the will summary, In bolster excited our about ability improved believe generate company's to strong shareholders. we with coupled to merger our Furthermore,

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

Operator

queue. caller from from have do a JPMorgan. We in Instructions] [Operator Wedel the We'll hear Melissa

Melissa Wedel

the that Wanted portfolio. your thoughts to outpacing deployments? with kind sort of on on Are remaining amount seeing rates rate environment that get new especially the you repayment high, surprised activity of to base you're we're are surprised, you see in so the repayment of activity in

Nik Singhal

inherently you not for just this unpredictable. companies the easy tend In referred say, say quarter-over-quarter in activity I it's get I Nik. rate financing for that be general, would lumpy very questions. Thank environment can would done. to Melissa, Thematically, is to to, you repayment and that Yes. the the

definitely slower So of seeing pace repayment. we're a

existing there new and portfolio financing all first items, some companies. example, idiosyncratic quarter, idiosyncratic consolidated unit where one company third note trend a facility. to lien Cole we the and a companies, were these other X and provided I a the where new Haan, One company In loan for had actually Reveal was second into the situation healthy, well-performing would They circumstances. their

was acquisition Another add-on. an

many corresponding deployments is entries our of also investments. see schedule repayments at of as that in you'll what these So

number would levels. repayment contributing say, that's below so historical Overall, repayment somewhat to gross activity still a quarter. this is I elevated And

Melissa Wedel

the And in seeing of sense. some makes those That would terms of potential you as add-on of to extension you mean that opportunities are amendment of just of financing? can similar in nature -- existing names. what Sure. described In be sort Or you're sort then in the and terms opportunities particular, seeing you well? I

Nik Singhal

Yes.

into deployment a are us. predominantly companies source and existing huge Melissa, deployment where So we're has companies. the been for of it's predominantly healthy And helping companies nature grow. of our These

We are the incumbent lender.

capital and into to that deploy an advantage, [indiscernible] companies. relationship additional these gives advantage, opportunity We have us

small terms into -- to the to dollars the in at if business I very, very just of The I would companies. have say actual quarters, portfolio been defensive course existing deployed capital just X that as deployments look X normal last usual compared

Melissa Wedel

If variety that of there Okay. question on and that, investments, but name the the portfolios BKCC discrepancies I sneak marks appreciate there some as those the To positions on extent similarity of related that would to the process? exists, in might I extent a overlap between that more To portfolio context. X and is and be you in along marks get further overlap you in names. to could a converge among lot TCPC. expect

Nik Singhal

Yes.

from different difference in valuation So a that you see arises policy. the Melissa, slightly valuation

for X-way that core be the midpoint the for and the of will other it both align uses BDC final bid positions. the NAV side. the our when a combination, If purposes is ] [ for approach the think intent there's the available, BDCs we will struck, I the overlapping one uses

Melissa Wedel

so I merge that And of TCPC be, into follow-on imply sort natural that, the question the with would shift guess, BKCC at to the does approach methodology? in a

Nik Singhal

surviving the combined will be forward valuation the entity. again, expect TCPC carry policy Yes. TCPC we entity, And since to will that

Operator

queue. at for today for no I everyone time, conference. this participation today's additional like thank the to there And are in callers their would

disconnect. You now may

BlackRock Capital Investment (BKCC) 9 Nov 232023 Q3 Earnings call transcript