BlackRock TCP Capital Corp.

Ladies and gentlemen, good afternoon. Welcome everyone to BlackRock TCP Capital Core's first quarter 2022 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 the star key followed by the digit 1. 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 the BlackRock TCP Capital Core Investor Relations Team. Katie, please proceed.

Thank you, Tamiya. 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 first quarter ended March 31, 2022. 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-Q, 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 TCPC's first quarter 2022 earnings call. I will begin today's call with a few comments on the market environment, as well as highlights from our first quarter results. I will then turn the call over to our President and Chief Operating Officer, Phil Tseng, who will provide an update on our portfolio and investment activity. Our CFO, Eric Coyier, will review our financial results as well as our capital and liquidity positioning in greater detail. I will then conclude with a few closing remarks before we take your questions. Turning to the current environment, despite notable volatility in the public markets, direct lending continues to provide a reliable source of financing for a wide spectrum of middle market companies. We continue to work with a broad range of businesses as they seek to finance growth, make acquisitions, or simply refinance their existing debt with typically greater earnings power. As such, we believe that our shareholders continue to benefit from our efforts and expertise as our investments deliver a premium source of predictable and mainly variable rate interest income at an attractive risk reward level. I would note that the first quarter of the year tends to have a cyclically lower level of investment activity As it did this quarter, however, our team reviewed a substantial number of opportunities and selectively deployed capital on favorable terms. As we all know, the last few years since the initial onset of the COVID-19 pandemic have been challenging on many levels. As I look back a little over two years from the death of COVID, I'm exceedingly proud of the results we delivered for our shareholders in this challenging environment. Non-approvals throughout the pandemic have remained below 1% of the portfolio at fair value and below 1.8% of cost. We've also delivered a 28.5% ROE since the start of the pandemic, including net realized and unrealized gains on the portfolio over this period. These results are a testament to the hard work and dedication of our team, and I'm very appreciative of their significant effort. Let's now turn to a review of our first quarter performance and discuss a few highlights from the quarter. First, we delivered strong net investment income of $0.34 per share, which exceeded our first quarter dividend of $0.30 per share, resulting in a dividend coverage ratio of 113%. This extends our record of continuous dividend coverage throughout our 10 years as a public company. On May 4th, our board of directors declared a second quarter 2022 dividend of $0.30 per share, payable on June 30th to shareholders of record on June 16th. Second, our portfolio credit quality remains very strong. As of March 31st, non-accruals declined to just 0.3% of the portfolio at fair value with no new non-accruals for the quarter. Our excellent credit quality is a function of our disciplined and consistent underwriting along with stable or improving profitability across many of our portfolio companies, both during the pandemic and in the post-pandemic period. Third, as Phil will discuss in more detail, The strength of our underwriting platform continued to drive significant investment opportunities that resulted in a total of $112 million deployed in 11 investments during the first quarter. This is driven by the strength of the relationships we've developed with a broad variety of deal sources over our more than two decades in direct lending, as well as the extensive resources and relationships of the broader platform that we benefit from. I would note that although the direct lending market remains robust, Middle market companies continue to opportunistically refinance their existing debt. This was the case with a number of our portfolio companies in the first quarter, as we experienced $153 million of sales and repayments, resulting in net sales and repayments of $41 million. Fourth, Fitch reaffirms our investment grade rating with a stable outlook, and TCPC continues to be investment grade rated by both Moody's and Fitch. During the quarter, we continue to exceed our total return hurdle. As a reminder, TCPC maintains a 7% hurdle rate based on total returns, including a realized and unrealized gains and losses, and with a cumulative look back. Since 2012, when we took TCPC public, we have generated a 10.8% annualized return on invested assets and a total annualized cash return of 9.7%. We believe that this is at the higher end of our peer group, demonstrating our ability to consistently identify attractive opportunities at premium yields. We did see a slight decline in NAV of 0.6% during the first quarter, which was driven by wider credit spreads that resulted in minor net unrealized losses on our existing portfolio. These are partially offset by net investment income in excess of our dividend. I now look to spend a few minutes to provide a portfolio overview. At quarter end, our portfolio had a fair market value of approximately $1.8 billion. 88% of our investments were 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. At quarter end, the portfolio was made up of investments in 119 companies. As the 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 the 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 currently in. I will now turn it over to Phil to discuss our investment activity and portfolio positioning.