BlackRock Capital Investment Corporation

Good morning. My name is Taryn, and I will be your conference facilitator today for the BlackRock Capital Investment Corporation First Quarter 2023 Earnings Conference Call. Hosting the call will be James Keenan, Chairman and Interim Chief Executive Officer, Nick Singall, 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 1 on your touchtone telephone. Thank you. Mr. Paredes, you may begin the conference.

Good morning and welcome to the first quarter 2023 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 have posted to our website an investor presentation that complements this call. Shortly, our management team 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 2023 investor presentation link in the presentations section of the investors page. I would now like to turn the call over to Jim.

Thank you, Larry. Good morning and thank you for joining our first quarter earnings call. After I provide an overview of our performance and highlights for the quarter, Nick will give an update on our portfolio activity. Then Chip will discuss our financial results in more detail. And then we will open the call to your questions. Building on the momentum we generated over the past couple of years, we produced another strong quarter by further diversifying our portfolio and increasing net investment income. We selectively identified several compelling investments during the quarter while benefiting from higher LIBOR and SOFR rates and an improved pricing environment for new originations to drive a 9.5% sequential increase in NII as compared to the prior quarter. our NII covered our 10-cent dividend by 122% this quarter, up from 112% in the fourth quarter of 2022, marking our third consecutive quarter of full dividend coverage. This is a reflection of our deliberate strategy to grow our loan portfolio with high-quality investments. As is evident from the results over the last several quarters, we have made significant progress with this strategy. We had no new non-accrual investments in the first quarter. The vast majority of our investments are in first lien positions where we have extensive downside protection. In the current market environment, we have been able to structure new loans with improved pricing, lower leverage, and a more favorable documentation. Our first quarter weighted average portfolio yield increased by 50 basis points from the fourth quarter to 12.4% based on total portfolio fair value. We have a solid foundation to continue our pursuit of prudent growth, adding to our portfolio's earning power, and delivering consistent and favorable risk-adjusted returns to our shareholders. Our net leverage for the first quarter increased 2.81 times from 0.77 times from the prior quarter, driven by $37.6 million of new deployments, nearly all in first lien loans. We added eight new portfolio companies, boosting our total to 121, as compared to 116 at the close of 2022, 86 at the end of 2021, and 55 at the end of 2020. Notably, our current leverage leaves us ample runway to further diversify the portfolio as we draw upon our team's deep expertise across multiple cycles and the power of BlackRock platform to identify compelling income-producing investment opportunities. First lien investments now make up 82% of our portfolio, another record for BCIC. This marked a dramatic improvement from 50% at the end of 2020. Junior capital investments now comprise only 5% of our portfolio, down from 23% at the end of 2020, and another indicator of our substantial and ongoing improvement in the credit quality and positioning of our portfolio. While the US job market remains resilient amidst higher inflation and interest rates, we are mindful that such conditions have historically resulted in slower economic growth or contraction, creating tiny financial conditions for borrowers. We believe that the diversified nature of our portfolio, with the prevalence of first lien loans, as well as high quality of ownership support in our portfolio companies, help us to be defensively positioned 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. Now, our investments continue to perform well and our 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.