BlackRock TCP Capital Corp.

Ladies and gentlemen, good afternoon and welcome everyone to BlackRock TCP Capital Corp's fourth quarter and full year 2021 earnings conference call. Today's conference call is being recorded for replay purposes. During the presentation, all participants will be in listen only mode. A question and answer session will follow the company's formal remarks. To ask a question, please press the start button followed by the digit one. I will now repeat these instructions before we begin Q&A session. I would now like to turn the call over to Katie McGlynn, Director of BlackRock TCP Capital Corp Investor Relations Team. Katie, please go ahead.

Thank you, Charlie. 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 full year ended December 31st, 2021. We also posted a supplemental earnings presentation to our website at tcpcapitals.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, Raj Vig.

Thanks, Katie, and thank you all for joining us today for TCP's fourth quarter 2021 earnings call. I will begin today's call with a few comments on the market environment, as well as highlights from our fourth quarter and full year 2021 results. I will then turn the call over to our Chief Operating Officer, Phil Tseng, who will provide an update on our portfolio and investment activity. Our CFO, Eric Cuellar, will then review our financial results, as well as our capital and liquidity positioning in greater detail, and I will then close with a few concluding remarks. After our prepared remarks, we will all be available to take your questions. Turning to the current market environment, in prior calls, we have expressed our view that in general, private capital markets performed well during the pandemic, and that direct lending in particular emerged as a well-positioned source of financing for a wider spectrum of middle market companies. We continue to believe that that is the case. Activity during Q4 and the full year 2021 was among the busiest in our over two decades of investing, and current activity levels in the middle market remain robust. We work with a broad range of businesses as they seek to finance growth, make acquisitions, or simply refinance existing debt with greater earnings power. As such, we believe that our shareholders continue to benefit from our efforts and expertise as our direct lending investments deliver a premium source of income and an attractive risk reward position relative to other fixed income investment categories. I'd now like to review our fourth quarter performance and discuss a few key highlights for 2021 a year in which our team again delivered strong results for shareholders. First, we had strong NAV appreciation. Year-over-year, NAV per share increased 8.5%, including an increase of 1.9% in the fourth quarter alone. This performance was driven by both realized and unrealized gains in our portfolio holdings, as well as by net investment income that continues to exceed dividends paid. Our ROE for the full year was 17.5%, the highest level since TCPC became the public company in 2012, reflecting strong portfolio performance combined with a lower cost of capital. Second, portfolio credit quality remains strong. As of December 31st, non-approvals were limited to just 0.9% of the portfolio at fair value and have remained at 1% or less throughout the pandemic. Our excellent credit quality is a function of our disciplined and consistent underwriting process along with a stable or improving profitability across many of our portfolio companies, even during the midst of the pandemic. Third, as Phil will discuss in more detail, the strength of our underwriting platform continues to drive robust investment activity. Year over year, TCPC's investment activity increased 65% and was up 8% versus the pre-pandemic levels in 2019. We reviewed nearly 1,000 investment opportunities across the U.S. private capital platform in 2021. which is a testament to the strength of the relationships we've developed with a wide variety of deal sources, as well as the extensive resources and relationships with the broader BlackRock platform. During the fourth quarter, we deployed more than $180 million in capital and continued to identify attractive opportunities across our industry groups. We also had approximately $115 million of sales and repayments, resulting in net portfolio growth of $67 million. fourth we further optimize our balance sheet and liability profile during the year we issued a total of 325 million dollars of unsecured notes due february 2026 at attractive rates as a result we were able to redeem higher cost notes that were due in august 2022 prior to their maturity thereby taking advantage of the attractive financing environment to further reduce our cost of capital Additionally, we amended one of our two credit facilities on more favorable terms, including lowering the headline borrowing rate on the facility. We continue to seek ways to diversify and enhance the right side of our balance sheet and are benefiting from the significant flexibility in our existing capital structure. Fifth, in addition to our strong performance and financial results in 2021, and as an indication of our commitment to strong corporate governance, TCPC's Board of Directors elected our existing longtime board member, Eric Drought, to serve as lead independent director. And finally, we extended our record of continuous dividend coverage, having done so every quarter since we took the company public in 2012. On February 24th, our board declared a first quarter 2022 dividend of 30 cents per share, payable on March 31st to shareholders of record on March 17th. It is also worth noting that we continue to exceed our cumulative total return hurdle. As a reminder, TCPC maintains a 7% hurdle based on total returns including realized and unrealized gains and losses and with a cumulative look back since 2012 we have generated a 10.9 annualized return on invested assets and a total annualized cash return of 9.7 which we believe is the high end of our peer group demonstrating our ability to consistently identify attractive opportunities at premium yields throughout 2021 we capitalize on the scale of our platform and the breadth of our team's experience to grow along with the expanding direct lending market. Some portfolio highlights I'd like to mention. At year end, our portfolio had a fair market value of approximately $1.8 billion. Eighty-nine percent of our investments are senior secured debt and are spread across a wide range of industries, providing portfolio diversity and minimizing concentration risk. Our portfolio continues to be weighted towards companies with established business models and less cyclical industries. The portfolio year-end was made up of investments in 115 companies. As a chart on the left side of slide 7 of the presentation illustrates, our recurring income is distributed broadly across our portfolio and is not reliant on income from any one company. In fact, nearly 90% of our portfolio companies each contribute less than 2% to our recurring income. 84% of our debt investments are first lien, providing significant downside protection, and 95% of our debt investments are floating rate, positioning us well for the rising rate environment we are likely entering. Now, I will turn it over to Phil to discuss our investment activity and portfolio positioning. Phil?