BlackRock Capital Investment Corporation

Good morning. My name is Keith, and I'll be your conference facilitator today for the BlackRock Capital Investment Corporation third quarter 2022 earnings call. Hosting the call will be James Keenan, Chairman and Interim Chief Executive Officer, Nick Singel, President, Chip Holliday, Interim Chief Financial Officer and Treasurer, Lawrence D. Paredes, General Counsel in Corporate Strategy, and James Mearing, Manager, Director, and Member of the Company's Investment Committee. Lines have been placed on mute. After the speakers complete their update, they will open the line for question and answer session. In order to ask a question, you can press star one on your touchtone telephone. Thank you. Mr. Paredes, you may begin the conference.

Good morning and welcome to the third 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 lists 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 November 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 third 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 Chip will then discuss our financial results in more detail. We will then open the call to questions. We again produce solid results, sustaining and building upon the momentum we generated in the first half of 2022. We continue to demonstrate the strength of our increasingly diversified portfolio and our commitment to delivering solid risk adjusted returns. Rising interest rates, stronger pricing on new originations, and solid fee income during the third quarter combined to drive a 27% increase in adjusted quarterly net investment income. Importantly, our NII more than covered our dividend this quarter. Our net leverage increased to 0.71 times, up from 0.64 times for the prior quarter, driven by $78 million of gross deployments in the third quarter. We added 16 new portfolio companies and now have 111 portfolio companies, an all-time high, up from 86 at the end of 2021 and 47 at the end of 2019. Notably, our leverage remains relatively modest and we have ample room to take advantage of the current attractive market conditions for deployment. We expect to continue to grow and diversify the portfolio and further increase our earnings power. A core tenant of our underwriting is the emphasis on seniority in the loans we originate. First lien investments now make up 77% of our portfolio. more than doubling the 34% we reported at the end of 2019. Junior capital investments now comprise only 6% of our portfolio, down from 43% at the end of 2019. We also reduced our non-core portfolio to less than 2% of our entire portfolio by the close of the third quarter. We now view the transition away from the legacy portfolio as largely behind us. Even as we grow, we are mindful of the impact on our portfolio companies of the rising interest rates, stubbornly high inflation, as well as lingering global supply chain constraints. We remain committed to selective investing based on our time-tested and prudent underwriting approach that focuses on credit analysis through the cycle. We engage in a regular dialogue with our portfolio companies to assess the impact of the current macroeconomic environment on their financial performance. While we are seeing indications of an economic slowdown, we believe that our portfolio is relatively well-positioned to withstand broader economic slowdown. As a result of our focus on investing in well-structured, first-line loans in less cyclical businesses, we had no new non-accrual loans in the quarter. In the quarter to date, our pipeline is healthy, and we continue to draw upon the BlackRock platform and our team's deep experience to identifying compelling opportunities. Pricing and deal structures also continue to improve as the market shifts and becomes more lender-friendly. 99% of our yielding debt investments in our portfolio carry a floating rate coupon, all of which are above their SOFR or LIBOR floors in the current market. We expect the rising rate environment to further boost interest income. I'll now turn the call over to Nick to discuss our portfolio activity in further detail.