BlackRock TCP Capital Corp.

Good afternoon. Welcome everyone to BlackRock TCP Capital Corp's fourth quarter and full year 2023 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 Corp. Investor Relations Team. Katie, please proceed.

Thank you, Emily. 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 guaranteed a 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. Additionally, certain information discussed and presented may have been derived from third-party sources and has not been independently verified. Accordingly, we make no representation or warranty with respect to such information. Earlier today, we issued our earnings release for the fourth quarter and full year ended December 31st, 2023. We also posted a supplemental earnings presentation to our website at www.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 for TCPC's fourth quarter and year-end 2023 earnings call. I will begin the call with an overview of our fourth quarter and full year results, and then provide an update on our proposed merger with our affiliate BDC, BlackRock Capital Investment Corporation, or BCIC. Bill Tseng, our President and Chief Operating Officer, will then review the investment environment and our portfolio activity. Eric Cuellar, our Chief Financial Officer, will review our financial results, as well as our capital and liquidity in greater detail. Finally, I will wrap up with a few comments on the outlook and opportunities we see ahead before taking your questions. Let's begin with a review of highlights of our fourth quarter and full year results. I am pleased to report that for the full year 2023, TCPC delivered net investment income of $1.84 per share, an increase of 20% over 2022. Our annualized net investment income return on equity for the year was 14.5%. Given our predominantly floating rate portfolio and higher proportion of fixed rate liabilities, Our net investment income for the period benefited from strong credit performance, higher base rates, and marginally wider spreads. Net investment income for the fourth quarter was $0.44 per share, and our run rate NII at the end of the quarter again remained among the highest in TCPC's history as a public company. During the fourth quarter, our NAV declined 6.4%, reflecting in part the special dividend of $0.25 we paid on December 31st, in addition to our regular dividend. Excluding this special dividend, NAV declined 4.5%, primarily due to net unrealized losses on three portfolio companies, Edmentum, Thrasio, and Securus. We will discuss each of these companies in more detail, but I would like to emphasize that the write-downs in the fourth quarter are mostly the result of unique circumstances impacting the aforementioned portfolio companies. and in the case of Thrasio, the subsector in which it operates, versus any indication of broader credit or macroeconomic related challenges to our portfolio. Despite concerns in the market about how higher interest rates and the recession might be pressuring middle market borrowers, we believe that in general, our portfolio companies are successfully navigating the current environment given the proven resiliency of the sectors and companies we focus on. In fact, as of the most recent quarter, the majority of our portfolio companies continue to report revenue and margin growth in their businesses. Now, turning back to the three primary contributors to net unrealized losses in the quarter. I'll begin with Admentum, which has been a long-term beneficiary of the shift to online learning, which accelerated during COVID, but is now experiencing a reversion to a more normalized but still positive demand environment. As a reminder, our current investment in Admentum is a residual equity position after receiving full repayment of our original debt investment. While we remain confident in the prospects for this well-positioned business, given overall positive secular trends, we reversed a portion of the unrealized gains we had previously recognized on our investment to reflect current demand and performance expectations. Second is Thrazia, an Amazon aggregator that, along with much of the sector, had initially been impacted by COVID-related supply chain issues and then by slowing growth in online consumer spending. The combination has generally left the industry participants, including Thrasio, with temporary excess inventories and many with over-leveraged balance sheets relative to their current operations. While we placed this loan on non-accrual during the beginning of the most recent quarter, we have actually been working closely for some time now with the management team and other lenders to improve liquidity and position the company for long-term success. As of yesterday, this involved the company formally filing for bankruptcy to accelerate achievement of a number of these objectives, as well as to incorporate a protected lender-led financing. I'd like to highlight that our team began reviewing and ultimately investing in the aggregator space relatively early, and we believe we have selected the ultimate winners in this growing space. Generally, these will be scaled players that have management teams with the experience, funding, and ability to navigate these temporary industry challenges. Third is Securus, a traded loan that has faced mark-to-market volatility over the last several quarters, reflecting broad market conditions as well as some company-specific issues. While 2023 performance has tracked ahead of prior years, Securus has faced liquidity tightness due to an elevated cost structure and CapEx requirements as part of a large 2022 product tablet rollout and upcoming debt maturities. We are in active discussions with key stakeholders regarding next steps and the path forward. As a reminder, our team has unique expertise and a proven track record of success working through challenging credits such as these. We are leveraging this expertise and proactively working with the management teams, owners, and lenders of these businesses to drive performance improvements at the companies and ultimately a positive outcome for our investments. Importantly, outside of these idiosyncratic situations, the credit quality of our portfolio remains solid. Now, turning to our dividend. Today, our board of directors declared a first quarter dividend of 34 cents per share, which is consistent with our fourth quarter regular dividend. This first quarter dividend is payable on March 29th to shareholders of record of March 14th. We have always taken a disciplined approach to the dividend with an emphasis on stability and strong coverage from our recurring net investment income. Throughout TCPC's history, we have consistently covered our dividends with recurring NII and have also paid several special dividends, including in recent quarters. Before handing it over to Phil, I'd also like to give a quick update on the proposed merger of TCPC with BCIC. As we approach the shareholder vote, we look forward to closing the transaction as promptly as possible after the successful vote of each BDC. We remain excited about the potential for the transaction, which will bring together two very similar portfolios that we know well with substantial overlap and which we expect to create meaningful value for all shareholders. We hope that any of our shareholders who have not yet voted on the transaction will vote today or in the near future. Now I will turn it over to Phil to discuss our investment activity and portfolio.