BlackRock TCP Capital Corp.

Ladies and gentlemen, good afternoon. Welcome, everyone, to BlackRock CCP Capital Court's fourth quarter 2020 earnings conference call. Today's conference call is being recorded for replay purposes. During the presentation, all participants will be in a listen-only mode. A question and answer session will follow the company's formal remarks. To ask a question, please press star, then 1 on your touch-tone telephone. I will repeat these instructions before we begin the Q&A session. And now I would like to turn the call over to Katie McGlynn, Director of BlackRock TCP Capital Corp. Global Investor Relations Team. Katie, you may begin.

Thank you, Tawanda. Before we begin, I'll note that this conference call may contain forward-looking statements based on the estimates and assumptions of management at the time of such statements and are not guarantees of future performance. Forward-looking statements involve risks and uncertainties, and actual results could differ materially from those projected. Any forward-looking statements made on this call are made as of today and are subject to change without notice. Earlier today, we issued our earnings release for the fourth quarter and fiscal year ended December 31, 2020. We also posted a supplemental earnings presentation to our website at tcpcapital.com. To view the slide presentation, which we will refer to on today's call, please click on the Investor Relations link and select Events and Presentations. These documents should be reviewed in conjunction with the company's Form 10-K, which was filed with the SEC earlier today. I will now turn the call over to our Chairman and CEO, Howard Levkowitz.

Thanks, Katie, and thank you for joining us today. First and foremost, we hope everyone is staying healthy and safe. There are several members of the TCPC team on the call with me, including our President and Chief Operating Officer, Raj Vig, and our Chief Financial Officer, Paul Davis. I will start with a few comments on our performance in 2020, and then I'll provide an update on our portfolio and key highlights from the fourth quarter. Next, Paul will review our financial results as well as our robust liquidity positions. After that, I'll provide some closing comments before opening the call to your questions. On last year's fourth quarter earnings call, we noted several risks to the economic environment, including the coronavirus. The magnitude of the impact that the pandemic has had on our day-to-day lives and across the world exceeded almost everyone's expectations. We would like to thank our entire team for their flexibility and hard work, together with the management teams and employees at our portfolio companies, which enabled us to deliver strong results for the year. Our ability to navigate the unique and evolving conditions in 2020 and deliver for our shareholders is a testament to our dedicated and skilled team and the strength of our carefully constructed, highly diversified portfolio. Despite the significant disruption in Q1, our net asset value increased year over year, and the credit quality of our portfolio remained strong throughout what proved to be a challenging year. The strong performance was due in part to our focus on less cyclical industries and middle market businesses that are more likely to withstand a downturn. In 2020, we meaningfully enhanced our strong capital and liquidity position. We extended our SVCP facility, replaced our TCPC funding facility on better terms, and we opportunistically added to our existing 2024 notes. Earlier this month, We also took advantage of the favorable bond market environment and issued an additional $175 million of unsecured notes in an attractive rate of 2.85%, record pricing for a sub-index eligible BDC bond issuance. Additionally, we opportunistically repurchased a million shares of our stock during the first quarter of 2020. This contributed $0.09 per share of accretion to our NAV. Finally, in August, we welcomed Andrea Petro to our board of directors. Andrea has nearly 30 years of experience in credit and specialty finance, and her addition to the board continues our long-term commitment to diversity. Following Andrea's appointment, half of our independent directors are women. Turning to our fourth quarter results, our NAV increased 4.2 percent from the prior quarter, reflecting a 1.7 percent net market value gain on our investments. This was driven by further spread narrowing on middle market private credit transactions, as well as significant gains resulting from improved financial performance at many of our portfolio companies. Among our significant investment gains in the fourth quarter was our investment in Edmentum, a leading provider of online educational programs. Edmentum received an equity investment from a new majority investor in the quarter, and we were able to realize a gain on our position while retaining a minority ownership interest in the company. This outcome demonstrates our team's ability to leverage its deep special situations expertise to work with the company through a challenging situation and deliver strongly improved financial performance. Edmentum is also currently benefiting from the accelerated demand for online learning solutions amid the pandemic. Given our retained ownership of the company, we believe we will continue to participate in Edmentum's ongoing success. Turning to our portfolio positioning, at year end, our portfolio had a fair market value of approximately $1.6 billion, essentially unchanged from the prior quarter. Eighty-nine percent of our investments are in senior secured debt and represent a wide range of industries. Our diverse portfolio is weighted toward businesses with limited direct exposure to sectors that have been more severely affected by the pandemic. Furthermore, Our loans to companies in more impacted industries, including retail and airlines, are generally supported by strong collateral protections, and most of our investments in these industries continue to perform well. As an example, the value of our investment in OneSky, the second largest provider of private jet aviation services in the country, again appreciated during the quarter. The company is performing well given strong demand for charter flights, despite challenges facing most businesses in the travel sectors. Our diverse portfolio included 96 companies at year-end. Our largest position, 36th Street, represents 4.5% of the total portfolio and provides further diversification given its highly diversified underlying portfolio of lease assets. As the chart on the left side of slide seven of the presentation illustrates, our recurring income is not reliant on income from any one portfolio company. In fact, Over half of our individual portfolio companies contribute less than 1% to our recurring income. 95% of our debt investments are floating rate. 80% of these are subject to interest rate floors, all of which are now in effect. Additionally, 88% of our debt investments are first lane. Moving on to our investment activity, market origination volumes were robust in the fourth quarter. While we have been active deploying capital, we are maintaining our disciplined approach to investing, executing only a small percentage of the opportunities we review. As a result, we invested $183 million during the fourth quarter, including investments in 15 new loans, nearly two-thirds of which were with existing borrowers. Follow-on investments in existing portfolio companies continue to be an important source of opportunities. From a risk management perspective, these are companies we know and understand well. As we analyze new investment opportunities, we continue to emphasize seniority in the capital structure, industry diversity, and transactions where we act as a leader co-lead. Our largest new investment during the fourth quarter was a loan to Team Services, a leading provider of home care assistance for the elderly and people with disabilities. Team is benefiting from an acceleration in the shift toward home care and away from institutional settings as a result of COVID. Given our extensive experience and deep relationships in healthcare, we were chosen to lead the second lean financing. The company's niche focus within the healthcare sector and our industry expertise provided us the opportunity to invest in a successful but overlooked business with a quality management team and strong support from their equity owner. Dispositions in the fourth quarter were $213 million and included payoffs of our $28 million loan to Higginbotham and our $25 million loan to ECI, as well as the payoff of our loans to Edmonton, resulting from the company's acquisition, which I referred to earlier. Investments in new portfolio companies during the quarter had a weighted average effective yield of 9.6%. Investments we exited had a weighted average effective yield of 9.9%. The overall effective yield on our debt portfolio was 9.6%. Over the last two years, LIBOR has declined 256 basis points, or by 91%, which has put pressure on our portfolio yield over this period. However, our portfolio is largely protected from any further declines in interest rates as nearly 80% of our floating rate loans are currently operating with LIBOR floors. Our investment activity in the first quarter to date continues to be selective and focused on companies that are minimally impacted by the pandemic or are beneficiaries of the COVID-impacted operating environment. Our investment activity to date totals approximately $107 million primarily in five senior secured loans with a combined effective yield of approximately 10.2%. The yields on investments in our pipeline are generally in line with our current portfolio yield. Now, I'll turn the call over to Paul, who will discuss our financial results in more detail.