Core Viewpoint - Small-cap companies are rapidly adopting AI technologies, leading to increased efficiency and potential profit growth, while currently being the cheapest sector in the market [2] Group 1: Small-Cap Dividend Stocks - BlackRock TCP Capital (TCPC) has a yield of 15.7% and invests in over 150 companies across 20 industries, but is currently facing restructuring due to credit issues [3] - TCPC is trading at an 18% discount to its net asset value (NAV), with a regular yield of 14% and an additional 1.7% from special dividends [4] - New Mountain Finance (NMFC) offers a 12.1% yield and is also trading at a 14% discount to NAV, focusing on U.S. upper-middle-market businesses [5][6] - NMFC's NAV has declined nearly 2% quarter-over-quarter, with markdowns in healthcare and consumer products, but its credit quality remains stable [8][9] - Kayne Anderson BDC (KBDC) has a yield of 12.6% and targets companies with $10 million to $75 million in EBITDA, with a focus on defensive industries [10] - KBDC has initiated a $100 million buyback program and has seen investments increase in Q3, despite a slight decline in NAV [12] Group 2: Income-Generating Investments - Mach Natural Resources LP (MNR) offers a 16.0% distribution and operates primarily in the Anadarko Basin, with a focus on natural gas [13] - MNR trades at approximately 3.5 times this year's EBITDAX estimates, which is below the average for comparable MLPs [14] - MFA Financial (MFA) has a yield of 14.4% and invests in residential mortgage loans and securities, with a recent 13% QoQ increase in origination fees [15][17] - MFA's distributable earnings are expected to drop significantly this year, but the market does not seem to be pricing in a dividend cut [18] - Armour Residential REIT (ARR) offers a high yield of 19.0% but has a history of dividend cuts, trading at about 90% of book value [19][21]

Group 1: Market Sentiment and Analyst Ratings - The article highlights a significant disparity in analyst ratings, with 81% of S&P 500 companies rated as Buy, which is unusually high given current market conditions influenced by AI disruptions [2][3] - Analysts are more inclined to issue Sell ratings, as they allow for potential upgrades, making contrarian strategies appealing for investors [3] Group 2: Company Profiles and Performance - Prospect Capital (PSEC) is a business development company (BDC) with a yield of 18.7%, but it has faced challenges, including three dividend cuts in the past decade, leading to a consensus Sell rating from analysts [4][6] - BlackRock TCP Capital Corp. (TCPC) has a yield of 15.7% and is considered a consensus Sell, but most analysts rate it as Hold, indicating a less negative outlook compared to PSEC [6][8] - Cheniere Energy Partners LP (CQP) has a yield of 6.1% and is investing heavily in expansions, which may lead to increased distributable cash flow in the future despite a recent reduction in variable distributions [9][11] - Innovative Industrial Properties (IIPR), a REIT focused on the cannabis industry, has a yield of 14.4% but faces a challenging regulatory environment, leading to a bearish consensus among analysts [12][15]

Financial Data and Key Metrics Changes - Nonaccruals decreased to 3.7% of the portfolio's fair market value, down from 4.4% last quarter and 5.6% at the end of 2024 [6] - NAV declined during the quarter primarily due to markdowns on previously restructured portfolio companies [6] - Adjusted net investment income was $0.31 per share, down from $0.36 in the first quarter, while gross investment income was $0.61 per share compared to $0.66 in the prior quarter [23] Business Line Data and Key Metrics Changes - The portfolio had a fair market value of approximately $1.8 billion invested across 153 companies in over 20 industry sectors [21] - The average investment size was $11.7 million, with 89% of the portfolio invested in senior secured debt, all in floating rate instruments [21] - The weighted average annual effective yield of the portfolio was 12% in the second quarter, compared to 12.2% in the prior quarter [21] Market Data and Key Metrics Changes - New investments had a weighted average yield of 10.8%, while exited investments carried an average yield of 10.5% [21] - Total liquidity at quarter end was $566 million, including $455 million of available leverage and $107 million in cash [27] Company Strategy and Development Direction - The acquisition of HPS is expected to enhance TCPC's capabilities in private credit, creating a new platform called Private Financing Solutions (PFS) [31] - PFS aims to centralize private investment sourcing and origination teams to maximize collaboration and effectiveness [32] - TCPC will continue to directly source investments while leveraging PFS's extensive deal sourcing capabilities [32] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over additional markdowns but noted progress in reducing nonaccruals and sourcing attractive investments [34] - The company is focused on diligently working through portfolio challenges to deliver the best possible outcomes for shareholders [34] - Management acknowledged that the high rate environment and macroeconomic conditions could impact demand and performance of portfolio companies [56] Other Important Information - The Board declared a second quarter dividend of $0.25 and a special dividend of $0.04 per share, payable on September 30 [13] - The company repurchased 40,830 shares of TCPC stock during the quarter [13] Q&A Session Summary Question: Changes in the investment process with new committee members - Management indicated that the investment process will benefit from centralized origination and sourcing, leveraging resources from both BlackRock and HPS [36][38] Question: Ensuring TCPC receives proper access and resources during growth - Management assured that TCPC remains a strategic priority for the PFS platform and will continue to receive deep engagement across investment processes [42][44] Question: Markdown on Auto Alert and its performance - The markdown was primarily driven by market comps rather than performance issues, although the company has shown improvements since restructuring [45]

Core Insights - BlackRock TCP Capital Corp. (TCPC) experienced a decline in net asset value (NAV) in Q2 2025, primarily due to markdowns on previously restructured portfolio companies rather than new credit issues [12][19] - The company reduced nonaccruals to 3.7% of the portfolio's fair market value, down from 4.4% in Q1 2025 and 5.6% at the end of 2024, indicating improved management of distressed assets [12][19] - The acquisition of HPS by BlackRock has led to the formation of the Private Financing Solutions (PFS) platform, which is expected to enhance TCPC's investment sourcing and risk management capabilities [11][41] Financial Performance - Net realized losses for Q2 2025 totaled approximately $66 million, or $0.78 per share, mainly due to restructurings in several portfolio companies [3][36] - Adjusted net investment income was $0.31 per share in Q2 2025, down from $0.36 per share in Q1 2025; gross investment income was $0.61 per share, down from $0.66 [7][34] - The weighted average annual effective yield was 12% in Q2 2025, compared to 12.2% in the prior quarter [7][33] Portfolio Management - The portfolio included 153 companies across more than 20 industry sectors, with an average investment size of $11.7 million [6][32] - 89% of the $1.8 billion portfolio was invested in senior secured debt, all in floating-rate instruments [6][32] - Four new investments were added to nonaccrual status in Q2 2025 due to uneven performance and liquidity constraints [4][19] Dividend and Share Repurchase - A regular dividend of $0.25 and a special dividend of $0.04 per share were declared for Q2 2025, payable on September 30 [8][24] - The company repurchased 40,830 shares during Q2 2025 [8][25] Leverage and Liquidity - Total liquidity at the end of Q2 2025 was $566 million, with available leverage of $155 million and cash of $107 million [9][37] - Net regulatory leverage rose to 1.28 times, exceeding the targeted range of 0.9 to 1.2 times, due to new investments and delayed repayments [3][38] Strategic Outlook - Management expects net regulatory leverage to return to approximately Q1 2025 levels in the next quarter following investment deployments and delayed repayments [14] - The integration into the PFS platform is anticipated to provide enhanced sourcing and allocation capabilities, benefiting TCPC's investment strategy [41][42]

Financial Performance - Adjusted Net Investment Income (NII) was $0.31 per share, exceeding the regular dividend of $0.25 per share[9] - The company declared a regular dividend of $0.25 per share and a special dividend of $0.04 per share for Q2 2025[9] - The regular dividend coverage ratio in Q2 2025 was 124%[9] - The annualized adjusted NII Return on Equity (ROE) was 13.6% for the second quarter[9] Portfolio Composition - The total portfolio fair value is $1.8 billion, diversified across 153 portfolio companies[9] - 89.4% of the portfolio is invested in senior secured debt, with 82.4% in 1st lien[9] - The weighted average yield of the performing debt portfolio is 12.0%[9] - Non-accruals declined to 3.7% of the portfolio at fair value in Q2 2025[52] Leverage and Liquidity - The company has a diverse leverage program totaling $1.6 billion[9] - 63% of the outstanding leverage is unsecured as of June 30, 2025[9] - Available liquidity is $565.5 million, including $455 million of available borrowing capacity[9]

BLACKROCK TCP CAPITAL CORP. ANNOUNCES SECOND QUARTER 2025 FINANCIAL RESULTS INCLUDING NET INVESTMENT INCOME OF $0.32 PER SHARE; DECLARES A THIRD QUARTER REGULAR DIVIDEND OF $0.25 PER SHARE AND A SPECIAL DIVIDEND OF $0.04 PER SHARE SANTA MONICA, Calif., August 7, 2025 - BlackRock TCP Capital Corp. ("we," "us," "our," "TCPC" or the "Company"), a business development company (NASDAQ: TCPC), today announced its financial results for the second quarter ended June 30, 2025 and filed its Form 10-Q with the U.S. Se ...

Part I. Financial Information This section presents the unaudited consolidated financial statements and management's discussion and analysis for the company [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents BlackRock TCP Capital Corp.'s unaudited consolidated financial statements and notes for the periods ended June 30, 2025, and December 31, 2024 [Consolidated Statements of Assets and Liabilities](index=3&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities%20as%20of%20June%2030%2C%202025%20(unaudited)%20and%20December%2031%2C%202024) Total assets slightly increased, while net assets and net assets per share decreased as of June 30, 2025, compared to December 31, 2024 | Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :----------------------------------- | :-------------------------- | :-------------------- | | Total investments (at fair value) | $1,792,334,843 | $1,794,758,336 | | Cash and cash equivalents | $107,317,578 | $91,589,702 | | Total assets | $1,936,968,600 | $1,923,031,363 | | Debt (net) | $1,174,640,591 | $1,118,340,225 | | Total liabilities | $1,196,491,662 | $1,137,907,696 | | Net assets | $740,476,938 | $785,123,667 | | Net assets per share | $8.71 | $9.23 | - Net assets per share decreased from **$9.23** at December 31, 2024, to **$8.71** at June 30, 2025[9](index=9&type=chunk) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20(unaudited)%20and%20June%2030%2C%202024%20(unaudited)) Total investment income and net investment income decreased, but operating expenses also fell due to fee waivers, leading to a net increase in assets from operations for the six months ended June 30, 2025 | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total investment income | $51,464,997 | $71,526,225 | $107,353,912 | $127,255,534 | | Total operating expenses | $23,870,322 | $35,700,693 | $47,556,568 | $63,168,729 | | Net investment income | $27,594,675 | $35,825,532 | $59,797,344 | $64,086,805 | | Net realized gain (loss) | $(66,297,375) | $(35,513,930) | $(107,214,713) | $(35,682,007) | | Net change in unrealized appreciation (depreciation) | $22,796,116 | $(51,588,119) | $52,405,373 | $(74,624,174) | | Net increase (decrease) in net assets from operations | $(15,906,584) | $(51,276,517) | $4,988,004 | $(46,219,376) | | Basic and diluted earnings (loss) per share | $(0.19) | $(0.60) | $0.06 | $(0.63) | - Management fee waiver of **$1,820,372** for the three months ended June 30, 2025, and **$3,648,320** for the six months ended June 30, 2025, contributed to lower operating expenses[11](index=11&type=chunk) - Incentive fees were **$0** for both the three and six months ended June 30, 2025, compared to **$6,815,672** and **$12,696,050** for the same periods in 2024, respectively[11](index=11&type=chunk) [Consolidated Statements of Changes in Net Assets](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20(unaudited)%20and%20June%2030%2C%202024%20(unaudited)) Total net assets decreased from **$785.1 million** at December 31, 2024, to **$740.5 million** at June 30, 2025, primarily due to net realized/unrealized losses and dividends | Metric | December 31, 2024 | March 31, 2025 | June 30, 2025 | | :----------------------------------- | :---------------- | :------------- | :------------ | | Balance at period start | $785,123,667 | $781,318,924 | $781,318,924 | | Repurchase of common stock | — | $(26,915) | $(274,463) | | Net investment income | — | $32,202,669 | $27,594,675 | | Net realized and unrealized gain (loss) | — | $(11,308,081) | $(43,501,259) | | Dividends paid to shareholders | — | $(24,672,416) | $(24,660,939) | | Balance at period end | — | $781,318,924 | $740,476,938 | - For the six months ended June 30, 2024, the company issued **27,823,870** common shares in connection with the Merger, totaling **$280,464,610**[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030%2C%202025%20(unaudited)%20and%20June%2030%2C%202024%20(unaudited)) Net cash provided by operating activities decreased significantly, while financing activities shifted to a net cash inflow, resulting in an overall increase in cash and cash equivalents in 2025 | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------- | :----------------------------- | :----------------------------- | | Net increase (decrease) in net assets from operations | $4,988,004 | $(46,219,376) | | Net cash provided by (used in) operating activities | $10,642,229 | $119,831,602 | | Net cash provided by (used in) financing activities | $5,085,647 | $(37,404,112) | | Net increase (decrease) in cash and cash equivalents | $15,727,876 | $82,427,490 | | Cash and cash equivalents at end of period | $107,317,578 | $194,669,436 | - In 2024, the Merger resulted in the acquisition of **$586,983,708** in investments and **$11,670,610** in cash, along with the assumption of **$315,296,749** in debt[18](index=18&type=chunk)[19](index=19&type=chunk) - Purchases of investments decreased from **$(142,018,224)** in 2024 to **$(163,597,176)** in 2025 (excluding Merger-related acquisitions)[18](index=18&type=chunk)[19](index=19&type=chunk) [Consolidated Schedule of Investments](index=8&type=section&id=Consolidated%20Schedule%20of%20Investments%20as%20of%20June%2030%2C%202025%20

Financial Data and Key Metrics Changes - Adjusted net investment income was $0.36 per share, flat compared to the prior quarter [7] - Annualized net investment income ROE was 15.4% and net asset value per share was $9.18, down from $9.23 in the previous quarter [8] - Net realized losses for the quarter were approximately $41 million or $0.48 per share, primarily due to the disposition of investments [24] - Net unrealized gains totaled $30 million or $0.35 per share, reflecting reversals of previous losses [24] Business Line Data and Key Metrics Changes - The number of portfolio companies on nonaccrual status decreased to eight from twelve, representing 4.4% of the portfolio at fair value [8][25] - The portfolio had a fair market value of approximately $1.8 billion, invested across 146 companies [15] - 90% of the portfolio was invested in senior secured debt, with 94% of that amount being floating rate [16] Market Data and Key Metrics Changes - The weighted average annual effective yield of the portfolio was 12.2%, down from 12.4% in the previous quarter [16] - New investments had a weighted average yield of 11.4%, while exited investments had a yield of 11.2% [17] Company Strategy and Development Direction - The company is focused on investing in first lien loans and maintaining a diversified portfolio [20] - The strategy includes targeting core middle market companies and leveraging resources from the BlackRock platform [20] - The company aims to resolve remaining challenged positions within the portfolio and maintain a disciplined approach to loan origination [33][34] Management's Comments on Operating Environment and Future Outlook - The current market environment is characterized by tightened access to capital and higher financing costs [29] - The company believes the immediate impact from potential tariffs will be limited, estimating only a mid-single-digit percentage of the portfolio will be directly affected [30] - There is strong interest from borrowers for direct loans in the core middle market, which is the fastest-growing sector of the economy [31] Other Important Information - The Board declared a second quarter dividend of $0.25 and a special dividend of $0.04 per share [13] - The company repurchased 3,150 shares of TCP stock during the quarter and an additional 39,500 shares after the quarter end [13] Q&A Session Summary Question: What are the thoughts on the trajectory of share repurchases going forward? - The company will continue to monitor the trading price and repurchase shares when they are deemed accretive [38] Question: Do most portfolio companies have sponsors? - The majority of portfolio companies do have sponsors or institutional ownership, but decision-making often involves management teams [40] Question: What is the appetite of sponsors for injecting more equity in financing? - Sponsors have been supportive, but their willingness may decrease if equity values are not sustainable [42][43] Question: How long will it take to complete restructuring of the aggregators? - The company expects to complete restructurings in the next few quarters, with some positive signs of improvement [51] Question: What drove the markup for Job and Talent? - The markup was driven by improved performance and the provision of growth capital, which included enhanced economics for the company [62][67] Question: Are there plans to pursue new SBIC licenses? - The company is in the process of obtaining a second SBIC license, which is the maximum allowed [68]

Financial Data and Key Metrics Changes - Adjusted net investment income was $0.36 per share, flat compared to the prior quarter [7] - Annualized net investment income ROE was 15.4% and net asset value per share was $9.18, down from $9.23 in the previous quarter [8] - Net realized losses for the quarter were approximately $41 million or $0.48 per share, primarily due to the disposition of investments [24] - Net unrealized gains totaled $30 million or $0.35 per share, reflecting reversals of previous losses [24] Business Line Data and Key Metrics Changes - The portfolio had a fair market value of approximately $1.8 billion, invested across 146 companies [16] - 90% of the portfolio was invested in senior secured debt, with a weighted average annual effective yield of 12.2%, down from 12.4% in the previous quarter [17] - New investments had a weighted average yield of 11.4%, while exited investments had a yield of 11.2% [17] Market Data and Key Metrics Changes - The company estimates that only a mid-single-digit percentage of the portfolio at fair market value will be directly impacted by tariffs [30] - The middle market is identified as the fastest-growing sector of the economy, with over 200,000 companies generating more than $10 trillion in annual revenue [31] Company Strategy and Development Direction - The company is focused on investing in first lien loans and maintaining a well-diversified portfolio [20] - Plans to refinance the next major debt maturity in 2026 are underway, with a goal to access attractively priced capital [28] - The company aims to resolve remaining challenged positions within the portfolio while maintaining a disciplined approach to originating loans [33] Management's Comments on Operating Environment and Future Outlook - The current market environment is characterized by tightened access to capital and higher financing costs [29] - The company remains optimistic about the prospects for portfolio companies, particularly those in the middle market, which are seen as resilient [32] - Management is closely monitoring portfolio companies to assess potential impacts from the current environment [33] Other Important Information - The Board declared a second quarter dividend of $0.25 and a special dividend of $0.04 per share [14] - The company repurchased 3,150 shares of TCP stock during the quarter and an additional 39,500 shares after the quarter end [14] Q&A Session Summary Question: Thoughts on the trajectory of share repurchases - The company will continue to monitor trading prices and repurchase shares when they are deemed accretive [38] Question: Do most portfolio companies have sponsors? - The majority of portfolio companies have sponsors or institutional ownership, but decision-making often involves management teams [40] Question: Timeline for restructuring aggregator businesses - The company expects to complete restructurings in the next few quarters, with some positive signs of improvement [50] Question: Changes in deal types going forward - The company plans to focus on being the dominant lender in deals, avoiding situations where they cannot exercise influence [56] Question: Details on the job and talent markup - The markup was driven by improved performance and the provision of growth capital, with confidentiality around specific deal terms [62] Question: Pursuing new SBIC licenses - The company is in the process of obtaining a second SBIC license, with no significant changes to the expected timeline [67]

Financial Performance - BlackRock TCP reported quarterly earnings of $0.36 per share, exceeding the Zacks Consensus Estimate of $0.34 per share, but down from $0.45 per share a year ago, representing an earnings surprise of 5.88% [1] - The company posted revenues of $55.89 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 1.79%, compared to revenues of $55.73 million a year ago [2] - Over the last four quarters, BlackRock TCP has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Performance - BlackRock TCP shares have declined approximately 24.1% since the beginning of the year, while the S&P 500 has decreased by 4.3% [3] - The current consensus EPS estimate for the upcoming quarter is $0.34 on revenues of $56.81 million, and for the current fiscal year, it is $1.35 on revenues of $227.9 million [7] Industry Outlook - The Financial - SBIC & Commercial Industry, to which BlackRock TCP belongs, is currently ranked in the bottom 28% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment [5]