BlackRock TCP Capital Corp.

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 Michaela Murray, a member of the BlackRock TCP Capital Corp Investor Relations team. Michaela, please proceed.

Thank you. 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. 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 year-ended December 31, 2024. We also posted a supplemental earnings presentation to our website at tcpcapital.com. To view the slide presentation, which we referred to on today's call, please click on investor relations link and select events and presentations. These documents should be reviewed in conjunction with the company's form 10K, which we filed with the SEC earlier today. Please note that we will shortly issue a corrected earnings release due to a typographical error. The third sentence of the third paragraph under consolidated results of operations has been corrected to refer to unrealized losses rather than unrealized gains. Our NAV and other statistics are presented correctly throughout. I will now turn the call over to our Chairman and CEO, Phil Tseng.

Thank you, Michaela, and thank you all for joining our call today. I will discuss our results for the fourth quarter and full year 2024. I will also describe how we are approaching our portfolio construction and investments to return the portfolio to historical above-market returns, as well as outline a shareholder-friendly change we have implemented. I'll then turn the call over to our President, Jason Merring, to review details of our investment activity and provide comments on the market environment. Last, Eric Quay, our CFO, will provide financial results before we open the call up for questions. We're also joined today by Dan Worrell, our co-CIO. We are optimistic about our future and confident in our strategic plan to successfully navigate the challenges presented in 2024. Full year 2024 adjusted net investment income was $1.52 per share as compared to $1.84 per share in 2023. Annualized net investment income, ROE, for the year was 14.5%. The declines in net investment income and ROE primarily reflect the impact from lower base rates and an increase in non-accruals and expenses versus the prior year. Fourth quarter adjusted net investment income per share was flat. with last quarter at $0.36. At the end of the quarter, non-accruals represented 5.6% of the portfolio at fair market value as compared to 3.8% in the previous quarter. NAV per share was $9.23 compared to $10.11 per share, reflecting incremental investment portfolio markdowns, the largest of which were Razor, Securus, and Astra. Our results were also impacted by market conditions, including tighter spreads as a result of the continued slower deal environment and declining interest rates. The vast majority of our portfolio continues to perform well and in a way that is reflective of our 12-year history of consistently delivering attractive returns as a public company. That said, we are not pleased with the markdowns and non-accruals that have impacted our performance in recent quarters. and we remain laser focused on working with our borrowers and sponsors to resolve these issues. Based on our team's substantial experience in direct lending, we are confident that we will make the right decisions to resolve these issues. We know from experience that resolving credit issues quickly does not always produce the best results for shareholders, and that shareholder returns are often optimized through thoughtful solutions that may take some time to execute. Now, let me provide a few high-level updates on markdowns and non-accruals during the quarter. We marked down our positions in Razor, Securus, and Astra, each of which we've addressed on prior calls. We remain actively engaged with the management teams of each of these companies on the best path forward, and we'll provide additional detail when we can. I'll quickly share an update on the Amazon aggregators. First is Razor, which accounted for roughly 70% of our total markdowns this quarter. It continues to struggle with inventory issues that have impacted its profitability and liquidity. We're working closely with Razor to resolve these challenges, which may include consolidation to drive improved cashflow and provide runway for its turnaround. Again, these resolutions are not always linear and can take time to complete. On the other hand, Seller X, which experienced a markup for the quarter, is further along in its transformation, having simplified its business by reducing overstock and investing in its growing brands while trimming unprofitable products. Notably, the company's top brand nearly doubled in revenue year over year as it diversified its sales channels into brick and mortar. This progress is emblematic of the fact that improvements may take time and effort for our challenged borrowers. During the quarter, we added two new names, Renovo and InMoment to non-accrual status. On our last call, we mentioned that InMoment, which provides customer experience management software and solutions that help businesses understand and improve their customer experiences, experienced a slowdown in growth due to industry dynamics and is transitioning its focus toward its multi-signal product, which we believe has a long-term growth potential. This slowdown in growth has continued into the fourth quarter, resulting in our decision to place the company on non-accrual. We will continue to monitor InMoment closely and to collaborate and support the management team. Renovo, the other company we placed on non-accrual this quarter, is a direct-to-consumer home remodeling company. Renovo's performance has declined as the company worked to integrate acquisitions while demand for residential repair and remodel services softened due to persistent inflation, resulting in deferred home repair and remodeling spend. We remain actively engaged with Renovo and its management team on both performance and financing considerations. Given our recent financial performance, our board made the decision to reduce our regular dividend to 25 cents per share for the first quarter. While net investment income exceeded our dividend in the fourth quarter, We believe the revised level is sustainable. In addition, our board declared a $0.04 special dividend for the first quarter, and we intend to declare a special dividend of at least $0.02 in each of the second and third quarters of 2025, subject to board approval. Next, I want to discuss actions we're taking to support our shareholders. We appreciate your continued trust and patience and believe these are examples of how we continue to align with you. First, on February 25th, 2025, our advisor voluntarily agreed to waive one-third of our base management fee for three calendar quarters beginning on January 1st, 2025 and ending on September 30th, 2025. These fees cannot be earned back at a later date. We are taking this action as we acknowledge the decline in the portfolio's NAV. Second, during the fourth quarter, we repurchased 510,687 shares at a weighted average price per share of $8.86, pursuant to the plan our Board of Directors re-approved on April 24, 2024. And third, as you know, our shareholder-friendly incentive structure incentive fee structure ensures that we earn incentive fees only when our total return exceeds the hurdle rate. This fee structure was intentionally designed to align management and shareholder interests. When our shareholders do well, we do well, and only then. As the new management team, we have a clear path to position TCPC in a way that results in consistent, attractive long-term returns. First, we will continue to focus primarily on the core middle market with an industry-driven, proactive approach to sourcing and underwriting. We will also opportunistically invest in companies in both the lower and upper middle market that align with our strategy, are relationship driven, and ensure an efficient use of available capital. There are many benefits to lending in the middle market. It's an attractive and underserved segment with less competition than the broadly syndicated market that has historically delivered strong risk-adjusted returns. It's also an area where our direct relationships and our deep industry knowledge and deal structuring expertise are highly valued in creating customized financing solutions for companies that need growth capital. Second, we will maintain a highly diversified portfolio and limit exposure to industry subsectors. We have always focused on maintaining a diverse portfolio in industries we know well and where we have an established ecosystem of referral sources and borrower relationships, including verticals like healthcare, technology, and fintech. Going forward, we will also avoid meaningful concentrations in any one industry subsector, such as Amazon aggregators. Third, we will continue to prioritize investing in first lien loans and where we consider second lien loans we will emphasize those where we are a lender of influence. We know that having a direct relationship or at least a seat at the table with borrowers provides significant downside protection. Finally, we will continue to deepen our connections to and leverage the broader BlackRock platform. Our ability to draw on the extensive resources and relationships of the full platform is a distinct competitive advantage. As part of BlackRock, we have access to a broader origination platform and investment team as well as substantial resources. In addition, we see a significant amount of proprietary deal flow that allows us to be highly selective in the investments we make. With our talented, experienced team and the unparalleled resources of the BlackRock platform, I am confident that we will successfully work through our current challenges and return the portfolio to historical performance levels. We believe that we have the right team and the right plan. We appreciate our shareholders' continued patience throughout this process. Now I'll turn it over to Jason, who will review our investment activity during the quarter and the market environment.