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 2023 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, Corporate Secretary, Diana Huffman, General Counsel, 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 call.

Good morning and welcome to the fourth quarter and full year 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 that 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, VCIC 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, 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 March 2024 investor presentations 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 thank you for joining our fourth quarter and full year 2023 earnings call. We remain very excited about our pending merger with BlackRock TCP Capital Core, or TCPC. one of our affiliated BDCs. I will speak more about the merger shortly, but first I'll provide an overview of our performance and highlights for the quarter. Nick will then discuss our portfolio activity, and Chip will address our financial results in more detail. We will then open the call to your questions. We finished 2023 on a strong note, hosting solid fourth quarter earnings and covering our $0.10 dividend for our sixth consecutive quarter. We generated year-over-year fourth quarter net investment income growth of 15 percent and provided dividend coverage of 128 percent. Over the past several quarters, we have successfully diversified and strengthened our portfolio as we continue to identify attractive opportunities to prudently grow on behalf of our shareholders. We closed the year with a well-diversified portfolio of 121 companies. more than doubling our portfolio companies over the past three years. First lien term loans make up 85% of the portfolio, up from 50% at the end of 2020. In that space of time, we methodically transformed BCIC's portfolio, drawing upon the breadth and power of the BlackRock platform. Specifically, we have defensively positioned the portfolio with compelling first lien loans, with a steadfast focus on strict underwriting and reliable, strong credit quality, as well as diversity across multiple sectors. Junior capital investments now make up only 4% of our investments, down from 23% at the close of 2020. During the quarter, we added five new portfolio companies and deployed $25 million on a gross basis, all in first lien loans. We also made follow-on investments in four existing portfolio companies. These are companies we know and understand well and as such are excellent avenue for continued deployment. In terms of our overall market commentary, we are seeing a level of bifurcation in different segments of direct lending. Borrower-friendly trends such as tighter credit spreads and covenant-like deal structures are becoming more prevalent in the upper middle market. However, the core middle market, where we focus, has been less impacted by this trend, and we continue to leverage our industry expertise to source and invest in deals that present attractive risk-reward opportunities. We remain disciplined and continue to pass on a substantial number of less attractive opportunities, particularly when we believe that pricing does not appropriately reflect the corresponding risk or terms don't provide adequate lender protections. Our diversified first lien-oriented portfolio is constructed to be resilient in adverse macroeconomic conditions, such as the environment we are in today, characterized by high interest rates, relatively high inflation, and slowing consumer and corporate spending. However, we are not completely immune to these factors. We are seeing this impact on a portion of our book. During the quarter, we placed one additional investment, Thrasio, on non-accrual status. Nick will provide additional detail on Frazio, as well as other exposures to the Amazon third-party aggregator space. Additionally, we placed a portion of our investment in Kellermeyer Bergensen Services on partial non-accrual. Our first lien position in the capital stack, as well as the structural protections baked into these investments, enable us to drive outcomes during down cycles. Our experience and resources to proactively engage with management teams in the event of emerging challenges gives us tremendous confidence in our ability to identify and address company-specific issues. We believe we are well-positioned to withstand the impact of any economic slowdown, and broadly speaking, our portfolio remains healthy. Our fourth quarter weighted average portfolio yield was 12.7%. relatively consistent with the prior quarter and supported by higher interest rates. Our net leverage for the fourth quarter was 0.91 times, driven by borrowings to fund new deployments during the quarter. Total available liquidity for deployment, including cash on hand, was $73.4 million at quarter end, giving BCIC ample resources to fund new investments in the current quarter. And of course, I'd like to conclude by emphasizing the merits of our pending merger and its expected benefits. As we approach our shareholder vote meeting scheduled for March 7th, we intend to close the transaction as soon as practicable, following a successful vote from shareholders of each BDC. We remain excited about the potential for the merger, which will bring together two very similar portfolios with substantial overlap. in which we expect to create meaningful value for our shareholders. I'll now turn the call over to Nick to discuss our portfolio activity in more detail. Thanks, Jim.