| --- | --- | --- | --- | --- | --- | |-----------------------------------------------------------------------|-------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | BlackRock TCP Capital Corp. Investor presentation September 30, 2024 | | | | | | | | | | | | | Third Quarter 2024 Financial Highlights and Portfolio Overview Continued strong financial performance Diversified portfolio with an emphasis on less-cyclical businesses Flexible capital with available liquid ...

Core Viewpoint - BlackRock TCP reported quarterly earnings of $0.36 per share, missing the Zacks Consensus Estimate of $0.40 per share, and showing a decline from $0.49 per share a year ago, indicating a -10% earnings surprise [1][2] Financial Performance - The company posted revenues of $70.93 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 2.61%, and up from $54.21 million year-over-year [2] - Over the last four quarters, BlackRock TCP has not surpassed consensus EPS estimates [2] Stock Performance - BlackRock TCP shares have declined approximately 32.4% since the beginning of the year, contrasting with the S&P 500's gain of 21.2% [3] Future Outlook - The company's earnings outlook will be crucial for investors, particularly in light of recent earnings expectations and revisions [4] - Current consensus EPS estimate for the upcoming quarter is $0.40 on revenues of $67.94 million, and for the current fiscal year, it is $1.66 on revenues of $264.32 million [7] Industry Context - The Financial - SBIC & Commercial Industry, to which BlackRock TCP belongs, is currently ranked in the bottom 27% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Financial Performance - Net investment income for Q3 2024 was $33.9 million, or $0.40 per share, exceeding the regular dividend of $0.34 per share[2] - Adjusted net investment income for Q3 2024 was $30.8 million, or $0.36 per share, reflecting a 9.4% decrease from $28.3 million, or $0.49 per share in Q3 2023[4] - Total investment income for Q3 2024 was approximately $70.9 million, or $0.83 per share[11] - Net increase in net assets resulting from operations for Q3 2024 was $21.6 million, or $0.25 per share[13] - Total investment income for the three months ended September 30, 2024, was $70,932,487, an increase of 30.9% compared to $54,210,941 for the same period in 2023[22] - Net investment income before taxes for the three months ended September 30, 2024, was $33,877,641, up from $28,333,076 in the prior year, representing a growth of 19.0%[22] - Basic and diluted earnings per share for the three months ended September 30, 2024, were $0.25, compared to $0.22 for the same period in 2023[22] Dividends - The company declared a fourth quarter dividend of $0.34 per share and a special dividend of $0.10 per share, both payable on December 31, 2024[2] - For the three months ended September 30, 2024, approximately $0.7 million of cash distributions were reinvested through the new dividend reinvestment plan (DRIP)[17] Assets and Liabilities - Net asset value per share decreased to $10.11 as of September 30, 2024, down from $10.20 as of June 30, 2024[2] - Total assets as of September 30, 2024, amounted to $2,047,700,892, up from $1,698,772,353 at the end of 2023, indicating an increase of about 20.6%[21] - The net assets applicable to common shareholders as of September 30, 2024, were $865,636,898, an increase from $687,601,546 at the end of 2023, representing a growth of about 26%[21] - Total debt outstanding as of September 30, 2024, was $1,160,042,987, an increase from $985,200,609 as of December 31, 2023, representing a growth of approximately 17.7%[21] - Cash and cash equivalents as of September 30, 2024, were $104,181,765, down from $112,241,946 at the end of 2023, a decrease of approximately 7.5%[21] Investment Activity - Total acquisitions during Q3 2024 were approximately $72.8 million, while total investment dispositions were $139.2 million[2] - The total investments at fair value as of September 30, 2024, were $1,909,089,361, compared to $1,554,941,110 at the end of 2023, reflecting an increase of approximately 22.7%[21] - The company has a stock repurchase plan approved to acquire up to $50.0 million of its common stock, although no shares were repurchased during the three months ended September 30, 2024[18] Portfolio Quality - Debt investments on non-accrual status represented 3.8% of the portfolio at fair value as of September 30, 2024, down from 4.9% as of June 30, 2024[2] - The weighted average annual effective yield of the debt portfolio was approximately 13.4% as of September 30, 2024, compared to 13.7% as of June 30, 2024[8] - The net realized loss on investments for the three months ended September 30, 2024, was $(31,425,777), compared to a loss of $(128,841) in the same period last year[22] - Total operating expenses for the three months ended September 30, 2024, were $37,054,846, a 43.5% increase from $25,877,865 in the same quarter of 2023[22] Management and Strategy - The company is focused on direct lending to middle-market companies and small businesses, aiming for high total returns through current income and capital appreciation[23] - BlackRock TCP Capital Corp. is externally managed by a wholly-owned, indirect subsidiary of BlackRock, Inc., ensuring professional management of its investment portfolio[23] - The company emphasizes principal protection in its investment strategy, which is crucial in the current economic environment[23]

Financial Performance - Total assets as of September 30, 2024, increased to $2,047,700,892 from $1,698,772,353 as of December 31, 2023, representing a growth of approximately 20.6%[5] - Total investments at fair value reached $1,909,089,361, up from $1,554,941,110, indicating an increase of about 22.7%[5] - Net assets applicable to common shareholders rose to $865,636,898, compared to $687,601,546 at the end of 2023, reflecting a growth of approximately 26%[5] - The company reported a net asset per share of $10.11 as of September 30, 2024, down from $11.90 at the end of 2023[5] - Distributable earnings showed a loss of $382,528,734, worsening from a loss of $280,099,476 in the previous period[5] - Basic and diluted earnings per share for the three months ended September 30, 2024, were $0.25, compared to $0.22 for the same period in 2023, indicating an increase of 13.6%[7] - The company reported a net increase in net assets from operations of $21,632,960 for the three months ended September 30, 2024, compared to $12,822,932 in the prior year, marking a growth of 68.5%[7] - Net increase in net assets resulting from operations for the nine months ended September 30, 2024, was $(24,586,416), compared to $51,787,497 for the same period in 2023[4] Debt and Liabilities - Debt increased to $1,160,042,987 from $985,200,609, marking an increase of about 17.7%[5] - Interest payments increased to $49,362,618 from $38,487,722 year-over-year[4] - Total liabilities assumed in the merger amounted to $331,975,868[4] - Total debt investments amount to $1,867,740,000, representing 200.4% of Net Assets[21] - Total debt outstanding as of September 30, 2024, was $1,167,841,603, with total available capacity of $1,645,587,807[121] - The combined weighted-average interest rate on total debt increased from 4.29% as of December 31, 2023, to 5.43% as of September 30, 2024[123] Cash and Cash Equivalents - Cash and cash equivalents decreased to $104,181,765 from $112,241,946, a decline of approximately 7.5%[5] - Total cash and cash equivalents at the end of the period were $104,181,765, up from $91,653,006 at the end of the previous year[4] Investment Income - Total investment income for the three months ended September 30, 2024, was $70,932,487, an increase of 30.9% compared to $54,210,941 for the same period in 2023[7] - Net investment income before taxes for the three months ended September 30, 2024, was $33,877,641, up from $28,333,076 in the prior year, representing a growth of 19.0%[7] Shareholder Returns - Dividends paid to shareholders for the three months ended September 30, 2024, totaled $29,100,986, consistent with the previous quarter[8] - Dividends paid to shareholders increased to $85,100,033 from $66,432,353 year-over-year[4] Mergers and Acquisitions - The company issued common stock in connection with a merger, resulting in an increase of $280,464,610 in total net assets[8] - The company acquired net assets in connection with the merger valued at $603,136,276, including $586,983,708 of investments[4][10] Investment Portfolio - The company has a total of 37 debt investments listed, indicating a diversified investment portfolio[12] - The company is actively managing its debt portfolio with a focus on high-yield investments[12] - The company has a significant investment in the construction and engineering sector, totaling $1,081,667[12] - The company has diversified its portfolio with investments in various sectors, including software and technology, to mitigate risks[19] Market Strategy and Outlook - The company is exploring new strategies for market expansion and product development, particularly in technology and healthcare sectors[15] - Future outlook includes potential market expansions and new product developments in the sectors represented by the debt investments[18] Valuation and Fair Value - The total fair value of Level 3 investments was $1,879,087,978, with significant unrealized losses of $(139,090,785) during the period[78] - The fair value of Equity Securities was $172,419,745, with a range of implied volatility between 45.0% and 75.0%[74] - The company’s investments are valued at least quarterly based on independent third-party sources, with less than 5% priced directly by the Valuation Designee[66] Regulatory and Compliance - The Company has elected to be treated as a regulated investment company (RIC) for U.S. federal income tax purposes, allowing it to avoid taxation on distributed income[58] - Approximately 16.9% of BlackRock TCP Capital Corp.'s total assets were classified as non-qualifying assets under Section 55(a) of the 1940 Act[33]

Group 1 - BlackRock TCP (TCPC) has experienced a significant downtrend, with a stock decline of 17.2% over the past four weeks due to excessive selling pressure [1] - The stock is currently in oversold territory, indicated by an RSI reading of 15.22, suggesting that the heavy selling may be exhausting itself and a rebound could occur [3] - Wall Street analysts have raised earnings estimates for TCPC, with a 0.4% increase in the consensus EPS estimate over the last 30 days, indicating potential price appreciation in the near term [4] Group 2 - TCPC holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a turnaround [4]

Financial Data and Key Metrics Changes - Adjusted net investment income was $0.38 per share with an annualized net investment income return on average equity of approximately 14%, remaining at the high end of historical ranges [4][20] - The net asset value (NAV) declined by 8.4%, with non-accruals increasing from approximately 1.7% to 4.9% of fair value [5][11] - Net realized losses for the quarter were $35 million, while net unrealized losses totaled $52 million [12][21] - Available liquidity at the end of the quarter was $780 million, including $585 million in available capacity under the leverage program and $195 million in cash [22] Business Line Data and Key Metrics Changes - The company invested $130 million in the second quarter, with $124 million in senior secured loans, reflecting a 40% increase in deployment activity compared to the previous year [14][15] - The weighted average annual effective yield of the portfolio decreased to 12.4% from 13.4% in the previous quarter [18] - 91% of the portfolio was invested in senior secured loans, with 81% in first lien loans [19] Market Data and Key Metrics Changes - The company noted a meaningful pickup in activity across its platform, driven by a return of M&A and refinancing activity [14] - The overall credit quality of the portfolio remains strong, with a weighted average internal risk rating of 1.5, slightly improved from 1.56 in the previous quarter [12] Company Strategy and Development Direction - The company is focused on maintaining a disciplined approach to capital deployment, emphasizing credit-first downside protection and investing in the core middle-market [23] - The merger with BlackRock Investment Capital Corp is expected to improve access to capital, allowing the company to capitalize on new investment opportunities [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the increase in non-accruals but emphasized the overall strong health of the portfolio and ongoing efforts to resolve issues with impacted companies [5][23] - The company remains committed to maintaining a well-covered dividend and delivering attractive returns to shareholders [23] Other Important Information - The company raised $325 million of fixed-rate unsecured debt at an attractive rate of 6.95% in May 2024 [13] - The investment manager's support for the dividend is in place for four quarters post-merger, covering any shortfall below $0.32 of net investment income [46] Q&A Session Summary Question: How much did the increase in non-accruals affect EPS in the quarter? - The increase in non-accruals affected EPS by roughly $0.08 per share [24] Question: Were the non-accruals legacy TCPC or from the merger? - The portfolios were largely overlapping at the time of the merger, making it difficult to distinguish between legacy TCPC and BCIC positions [26] Question: What is the target range for leverage? - The regulatory net leverage is 1.13x, which is within the target range of 0.9x to 1.20x [22][27] Question: Why did the company decide to increase investments this quarter? - The increase in investments was not characterized as an acceleration but rather a normal deployment reflecting growth in existing portfolio companies [29][30] Question: Is there more industry concentration in the portfolio? - The company acknowledged the correlation in the Amazon aggregator space but does not see similar trends across other industries in the portfolio [32][34] Question: How many restructurings is the company driving? - The company is meaningfully involved in most restructurings, with a focus on being a significant voice in negotiations [37][38] Question: Are sponsors willing to support their companies? - Sponsor behavior is case-by-case, with some continuing to provide support while making rational decisions based on business performance [40] Question: How is the company managing current leverage levels? - The company views the current leverage as temporary and expects it to decrease significantly after using cash to pay down debt [43]

Financial Performance - BlackRock TCP reported quarterly earnings of $0.42 per share, matching the Zacks Consensus Estimate, but down from $0.48 per share a year ago [1] - The company posted revenues of $71.53 million for the quarter ended June 2024, exceeding the Zacks Consensus Estimate by 1.61% and up from $53.96 million year-over-year [2] - Over the last four quarters, BlackRock TCP has surpassed consensus revenue estimates three times [2] Stock Performance - BlackRock TCP shares have declined approximately 13.8% since the beginning of the year, contrasting with the S&P 500's gain of 9.9% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.40 on revenues of $70.11 million, and for the current fiscal year, it is $1.71 on revenues of $265.43 million [7] - The estimate revisions trend for BlackRock TCP is mixed, which may change following the recent earnings report [6] Industry Context - The Financial - SBIC & Commercial Industry, to which BlackRock TCP belongs, is currently ranked in the bottom 30% of over 250 Zacks industries, indicating potential challenges ahead [8]

Financial Performance - Net investment income for Q2 2024 was $35.8 million, or $0.42 per share, exceeding the regular dividend of $0.34 per share[2] - Adjusted net investment income for Q2 2024 was $32.1 million, or $0.38 per share, compared to $27.6 million, or $0.48 per share in Q2 2023[4] - Total investment income for Q2 2024 was approximately $71.5 million, or $0.84 per share[10] - Net decrease in net assets resulting from operations for Q2 2024 was $51.3 million, or $0.60 per share[12] - Basic and diluted earnings (loss) per share for the three months ended June 30, 2024, was $(0.60), compared to $0.28 for the same period in 2023, indicating a decline in earnings per share[22] Assets and Liabilities - Net asset value per share decreased to $10.20 as of June 30, 2024, down from $11.14 at March 31, 2024[2] - Total assets increased to $2,218.7 million as of June 30, 2024, compared to $1,698.8 million as of December 31, 2023[20] - Net assets applicable to common shareholders rose to $873.1 million as of June 30, 2024, from $687.6 million at the end of 2023[20] - Total debt outstanding as of June 30, 2024, was $1,320.3 million, an increase from $985.2 million as of December 31, 2023[20] - The weighted-average interest rate on debt outstanding was 5.00% as of June 30, 2024[14] Investment Activity - Total acquisitions in Q2 2024 were approximately $129.7 million, while total investment dispositions were $185.0 million[2] - The weighted average annual effective yield of the debt portfolio was approximately 13.7% as of June 30, 2024[7] - The company reported a change in unrealized appreciation of $21.3 million for the six months ended June 30, 2024, due to merger accounting[21] - Total investment income for the three months ended June 30, 2024, was $71,526,225, an increase from $53,960,838 for the same period in 2023, representing a growth of approximately 32.6%[22] - Net investment income before taxes for the three months ended June 30, 2024, was $35,825,532, compared to $27,604,479 for the same period in 2023, reflecting a year-over-year increase of about 29.5%[22] Operating Expenses - Total operating expenses for Q2 2024 were approximately $35.7 million, or $0.42 per share[11] - Total operating expenses for the three months ended June 30, 2024, were $35,700,693, up from $26,356,359 in the same period of 2023, indicating a rise of approximately 35.5%[22] Dividends and Shareholder Returns - The company declared a third quarter dividend of $0.34 per share, payable on September 30, 2024[2] - For the three months ended June 30, 2024, approximately $0.8 million of cash distributions were reinvested under the new dividend reinvestment plan[14] - The company has a stock repurchase plan to acquire up to $50.0 million of its common stock, although no shares were repurchased during the three months ended June 30, 2024[17] Risk Management and Strategy - The company focuses on direct lending to middle-market companies and small businesses, aiming for high total returns through current income and capital appreciation[23] - The company emphasizes principal protection in its investment strategy, aiming to mitigate risks associated with its lending activities[23] - Forward-looking statements highlight potential risks including changes in economic conditions, interest rates, and regulatory changes that could impact future performance[24] Management and Regulation - BlackRock TCP Capital Corp. is externally managed by a wholly-owned, indirect subsidiary of BlackRock, Inc., ensuring professional management of its investment portfolio[23] - The company is regulated under the Investment Company Act of 1940, which provides a framework for its operations and investment strategies[23] Portfolio Quality - Debt investments on non-accrual status represented 4.9% of the portfolio at fair value and 10.5% at cost as of June 30, 2024[7] - The net change in unrealized appreciation (depreciation) for the three months ended June 30, 2024, was $(51,588,119), compared to $(10,959,165) for the same period in 2023, showing a significant increase in depreciation[22]

| --- | --- | --- | --- | --- | --- | |-------------------------------------------------------------------|-------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | BlackRock TCP Capital Corp. Investor presentation March 31, 2024 | | | | | | | | | | | | | Continued strong financial performance Declared a second quarter dividend of $0.34 per share, payable on June 28, to shareholders of record as of the close of business on June 14 91% invested in senior secured debt; ...

Financial Data and Key Metrics - Adjusted net income for Q1 2024 was $0.45 per share, up from $0.44 in the prior quarter [13] - Annualized net investment income (NII) return on equity for the quarter was 14.7% [13] - NAV declined by 6.4% in Q1 2024, primarily due to unrealized losses on investments in Thrasio, Razor, and Edmentum [14] - The company declared a Q2 dividend of $0.34 per share, implying 132% NII coverage based on Q1 adjusted NII [24] Business Line Data and Key Metrics - The portfolio consists of investments in 157 companies, with an average investment of $13.5 million per company [36] - 91% of investments are senior secured debt, with 80% being first-lien and 97% floating rate [37] - The overall effective yield on the debt portfolio is 14.1%, with new investments in Q1 having a weighted average effective yield of 14.7% [38] - The company invested $20 million in Q1, primarily in senior secured loans, with $24 million in dispositions and payoffs [28][33] Market Data and Key Metrics - The portfolio fair market value at the end of Q1 was approximately $2.1 billion [36] - The company has a diversified portfolio across industries, with 75% of portfolio companies contributing less than 1% to recurring income [37] - The company expects further consolidation and cost optimization in the Amazon aggregator space, with fewer but larger-scale vendors emerging [19][20] Company Strategy and Industry Competition - The merger with BCIC has provided greater scale, lower fee structures, and more efficient access to capital [12] - The company focuses on middle-market companies with established business models and proven customer bases, emphasizing downside protection [28][29] - The company sees emerging opportunities in M&A as interest rates stabilize and valuations for higher-quality assets narrow [30] - The company’s industry specialization enhances risk assessment and deal sourcing capabilities, particularly in the middle market [31][49] Management Commentary on Operating Environment and Future Outlook - The company expects a slower growth and elevated rate environment for the foreseeable future, with potential macroeconomic volatility [39] - The direct lending market has seen increased bifurcation, with more borrower-friendly trends in the upper middle market, but the core middle market remains resilient [40][41] - The company remains optimistic about near- to intermediate-term M&A activity, driven by pent-up demand and lower debt service costs [30][76] Other Important Information - The company’s total liquidity increased to $409 million at the end of Q1, with $286 million in available leverage and $121 million in cash [46] - Net leverage excluding SBIC debt is 1.08x, within the target range of 0.9x to 1.2x [47] - The company has five portfolio companies on non-accrual, representing 1.7% of the portfolio at fair value and 3.6% at cost [52] Q&A Session Summary Question: Thrasio Bankruptcy Valuation - The bankruptcy process for Thrasio was finalized after Q1, and the valuation may differ from the mark due to strategic considerations in the bankruptcy process [61][62][63] - The company maintains rigorous valuation processes and expects volatility in marks during restructuring [65][66][67] Question: Market Activity and Interest Rates - The company expects M&A activity to pick up as rates stabilize, but moderates expectations due to the current yield curve [73][74][75] - Market participants are actively pre-marketing deals, and institutional investors are pressuring GPs for distributions, which could drive activity [76][77] Question: Portfolio Flexibility and Non-LBO Deals - The company has historically shown flexibility in deal types, including ABL financing and leasing, and expects to continue exploring such opportunities [79][80][81] - The merger with BCIC provides greater scale to pursue less traditional deal types [81] Question: Debt Refinancing and Funding Costs - The company plans to address upcoming debt maturities in the near term, leveraging its investment-grade rating and favorable capital market conditions [83][91][92] - Moody’s outlook change on private credit may impact funding costs, but the company’s long-established rating provides stability [92][93] Question: Software and ARR Exposure - The company’s software portfolio is diversified across end markets, with ARR being a subset of its software exposure [99][100][101] - Software exposure is viewed as less correlated but more susceptible to end-market risks [102]