BlackRock Capital Investment Corporation

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, Nick Singel, President, Chip Holliday, Interim Chief Financial Officer and Treasurer, Lawrence D. Paredes, General Counsel and Corporate Secretary, Jason Merring, 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 the line for a question and answer session. In order to ask a question, you can press star one on your touchtone phone. Thank you. Mr. Paredes, you may begin the conference call.

Good morning and welcome to the fourth quarter and full year 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 FCC 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 March 2023 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 fourth quarter and full year 2022 earnings call. I'll provide an overview of our performance and highlights for the quarter and year. Nick will then give an update on our portfolio activity and status, and Chip will then discuss our financial results in more detail. Afterwards, we will open the call to questions. Our strong results in the quarter and throughout the year directly reflected our successful efforts to build a highly diversified portfolio. While concentrating on first lien debt investments with meaningful momentum into 2023, we are well positioned to pursue selective growth to further enhance our earnings power and deliver solid risk-adjusted returns. Our portfolio continues to benefit from a rising interest rate environment, with 99% of our debt investments consisting of floating rate debt at the close of the year. With first lien positions in the vast majority of our investments, we have the benefit of downside protection during a deteriorating economic environment. Given recent changes in market dynamics, shifting toward a more lender-friendly environment, we are able to structure new loans with improved pricing, tighter terms, and lower leverage. We believe this market shift reflects a more appropriate risk-reward proposition in an uncertain environment. Higher LIBOR and SOFA rates, as well as improved pricing in the fourth quarter, contributed to a 6% sequential increase in NII over the prior quarter, and a 36% increase over NII earned in the fourth quarter of 2021. I am pleased that our NII covered our dividend of 10 cents by 112% this quarter. Our net leverage for the fourth quarter increased to 0.77 times from 0.71 times for the prior quarter, driven by $36 million of gross deployments, nearly all in first lien loans, coupled with a decrease in valuations across our portfolio. During the quarter, we added eight new portfolio companies and now have a record of 116 portfolio companies, up from 86 at the end of 2021 and 55 at the end of 2020. This represents a tremendous progress towards our goal of diversifying the portfolio over the last two years. Our current leverage leaves us plenty of leeway to further grow the portfolio as we draw upon both the breadth of our team's expertise and the power of the BlackRock platform to identify and prudently evaluate compelling investment opportunities, with an emphasis on seniority in the capital stack. First lien investments now make up 79% of our portfolio, the highest level in our history. This far exceeds the 50% reported at the end of 2020 and marks another important measure of the advances we've made in just a few years. Junior capital investments now comprise only 5% of our portfolio, down from 23% at the end of 2020. While we grow, we remain focused on conservative underwriting and committed to our strong credit culture. Our solid credit quality reflects this, punctuated by the fact that we had no new non-accrual investments in the fourth quarter. While the U.S. job market remains resilient and there are early signs of inflation easing from the highs of last year, we are mindful that periods of rising interest rates have historically resulted in slower economic growth or contraction, creating tighter financial conditions for borrowers. We continue to carefully track the impact of inflation as well as rising interest rates on our borrowers. We believe that the prevalence of first lien loans in our portfolio as well as high quality of ownership support in our portfolio companies, help us to be well positioned defensively in an economic downturn. We communicate regularly with our portfolio companies to assess their financial health and outlook, and we are well equipped with the experience and resources to proactively engage with the management teams in the event of emerging challenges. For now, our investments are performing well and credit quality remains strong. We are confident in our ability to succeed across economic cycles while generating improved profitability on behalf of our shareholders. I'll now turn the call over to Nick to discuss our portfolio activity in further detail.