BlackRock Capital Investment Corporation

Good morning. My name is Alan. I'll be your conference facilitator today for the BlackRock Capital Investment Corporation first quarter 2022 earnings call. Hosting the call will be James Keenan, Chairman and Interim Chief Executive Officer, Nick Singhal, President, Abby Miller, Chief Financial Officer and Treasurer, Lawrence DeParedes, General Counsel and Corporate Secretary, Chip Holliday, Managing Director, Marshall Merriman, Managing Director and member of the Company's Investment Committee, and James Mehring, Managing Director and member of the Company's Investment Committee. Lines have been placed on mute. After the speakers complete their update, they will open their lines for a question and answer session. In order to ask a question, you can press star 1 on your touchtone telephone. Today's call is being recorded. Thank you. Mr. Paredes, you may begin your call.

Good morning and welcome to the first quarter 2022 earnings conference call of BlackRock Capital Investment Corporation, or BCIC. Before we begin our remarks today, I would like to point out that certain comments made during this conference call and within corresponding documents contain forward-looking statements subject to risks and uncertainties. Many of these forward-looking statements can be identified by the use of words such as anticipates, believes, expects, intends, will, should, may, and similar expressions. We call to your attention the fact that BCIC's actual results may differ from these statements. As you know, BCIC has filed with the SEC reports which list some of the factors which may cause BCIC's results to differ materially from these statements. BCIC assumes no duty to, and does not undertake to update any forward-looking statements. Additionally, certain information discussed and presented may have been derived from third-party sources and has not been independently verified. Accordingly, BCIC makes no representation or warranty with respect to such information. Please note we've posted to our website an investor presentation that complements this call. Shortly, Jim will highlight some of the information contained in the presentation. The presentation can be accessed by going to our website at www.blackrockbkcc.com and clicking the May 2022 investor presentation link in the presentation section of the investors page. I would now like to turn the call over to Jim.

Thank you, Larry. Good morning and thanks to all of you for joining our first quarter earnings call. I'll provide an overview and highlights from the quarter. Nick will then give an update on our portfolio activity and status, and Abby will follow with the discussion of our financial results in more detail. We will then open the call to questions. I'm pleased with the progress we have made in reconstructing and diversifying the portfolio with the goal of delivering a stable NAV and a competitive return on equity. We started the year on solid footing, building on the momentum we generated throughout 2021. we deployed $44 million of new capital in the first quarter. In keeping with our focus on senior secured debt, substantially all of this consisted of first lien loans. Approximately 72% of the portfolio now consists of first lien investments, up from 50% at the end of 2020 and up from 34% at the close of 2019. Additionally, We continue to broaden our investments to further diversify and strengthen the portfolio. We added nine new portfolio companies and ended the quarter with 93 portfolio companies, up from 55 at the end of 2020 and 47 at the end of 2019. We are firmly committed to a robust underwriting approach that focuses on the investment performance through economic cycles. We generally favor businesses in non-cyclical industries, with a growing revenue profile, ability to pass through cost increases, and strong equity support. We avoid over-leveraged capital structures that are more prone to pressures from rising inflation and rising interest rates. Our credit quality remains healthy as a result. There are no new non-accrual investments in the first quarter and all of 2021. Net leverage of 0.46 times was down from 0.56 times at the close of 2021, as repayments exceeded new investments. While there were only three portfolio company exits during the quarter, they included some of the larger names, such as St. George Logistics, which has previously the largest portfolio company at 8% of the total portfolio by fair market value. Our investment in St. George provided a 12.4% realized IRR over its four-year hold period. With many of the more concentrated investments now exited, we anticipate that the repayment impact of any single issuer on NII to be more muted going forward. We have ample leverage capacity as we pursue disciplined portfolio growth. We are confident we can identify compelling new opportunities that will be accretive to NII and drive solid risk-adjusted returns for our shareholders. We expect rising interest rates to be accretive to the company's NII. 99% of the debt investments in our portfolio have a floating rate coupon, of which 92% have a LIBOR or SOFR floor with a weighted average floor of 1%. As these rates rise above the floor level, we expect NII to increase by approximately 0.8 cents per quarter for every 100 basis points of benchmark rate increase. all else being equal. Before I pass it over to Nick, I want to take a moment to thank Abby for her contributions as CFO and Treasurer of BCIC. As we previously reported, Abby plans to step down from her roles on May 6th to pursue other career endeavors. We wish her all the best. The Board has appointed Chip Holliday to serve as Interim CFO and Treasurer, effective May 6th. Chip is the managing director with the advisor, having joined BlackRock in 2005. Chip is well-qualified to step into this role, and we have the utmost confidence in his abilities. I'll now turn the call over to Nick Segal to discuss our portfolio activity in further detail.