BlackRock TCP Capital (US:TCPC)2021-08-02 11:45Part I. Financial Information This section details the company's financial performance, condition, market risk exposures, and internal controls for the period ended June 30, 2021 Financial Statements The financial statements detail the company's financial position and performance, showing increased net assets and investment portfolio growth driven by unrealized appreciation Consolidated Statements of Assets and Liabilities This statement presents the company's financial position, detailing assets, liabilities, and net assets at period-end | Financial Metric | June 30, 2021 (unaudited) | December 31, 2020 | | :--- | :--- | :--- | | Total Investments, at fair value | $1,826,056,622 | $1,629,564,482 | | Total Assets | $1,882,986,414 | $1,671,987,155 | | Total Liabilities | $1,062,348,821 | $907,000,577 | | Total Net Assets | $820,637,593 | $764,986,578 | | Net Assets Per Share | $14.21 | $13.24 | Consolidated Statements of Operations This statement outlines the company's operational results, including investment income and net assets changes for the reported periods | Metric (Three Months Ended June 30) | 2021 (unaudited) | 2020 (unaudited) | | :--- | :--- | :--- | | Total Investment Income | $41,644,683 | $45,114,424 | | Net Investment Income | $17,767,186 | $21,052,373 | | Net Increase in Net Assets | $54,826,551 | $46,351,267 | | Earnings Per Share (Basic and Diluted) | $0.95 | $0.80 | | Metric (Six Months Ended June 30) | 2021 (unaudited) | 2020 (unaudited) | | :--- | :--- | :--- | | Total Investment Income | $82,808,585 | $86,365,623 | | Net Investment Income | $36,208,572 | $43,105,299 | | Net Increase (Decrease) in Net Assets | $90,311,372 | $(23,130,143) | | Earnings (Loss) Per Share (Basic and Diluted) | $1.56 | $(0.40) | Consolidated Statements of Changes in Net Assets This statement details the changes in net assets, reflecting investment income, gains, and shareholder dividends - For the six months ended June 30, 2021, net assets increased from $765.0 million to $820.6 million, driven by $36.2 million in net investment income and $54.1 million in net realized and unrealized gains, offset by $34.7 million in dividends paid to shareholders1012 Consolidated Statements of Cash Flows This statement summarizes cash flows from operating, investing, and financing activities for the reported periods | Cash Flow Activity (Six Months Ended June 30) | 2021 (unaudited) | 2020 (unaudited) | | :--- | :--- | :--- | | Net Cash (Used in) Provided by Operating Activities | $(105,710,093) | $7,633,357 | | Net Cash Provided by (Used in) Financing Activities | $103,584,980 | $(31,834,068) | | Net (Decrease) in Cash and Cash Equivalents | $(2,125,113) | $(24,200,711) | | Cash and Cash Equivalents at End of Period | $17,881,467 | $20,647,828 | Consolidated Schedule of Investments This schedule details the company's investment portfolio, including fair value, composition, and industry concentration - As of June 30, 2021, the total investment portfolio was valued at $1.826 billion, spread across 108 portfolio companies, primarily composed of debt investments (88.1%) with a significant concentration in senior secured loans (82.5%)35236 Industry Concentration | Industry | Percent of Total Investments | | :--- | :--- | | Internet Software and Services | 14.4% | | Diversified Financial Services | 12.3% | | Software | 8.7% | | Diversified Consumer Services | 8.4% | | Professional Services | 7.3% | | Other | 52.5% | Notes to Consolidated Financial Statements These notes provide additional details on accounting policies, valuation, fees, and commitments supporting the financial statements - As of June 30, 2021, 98.3% of the company's investments were categorized as Level 3 assets, valued using significant unobservable inputs, primarily through independent third-party valuation services83226 - The company's management fee is 1.5% on total assets up to 200% of net asset value, and 1.0% thereafter, with an incentive fee of 17.5% of income and gains, subject to a 7% cumulative total return hurdle116117118 - As of June 30, 2021, the company had total unfunded commitments of $105.5 million to its portfolio companies162 - For the six months ended June 30, 2021, the company declared total dividends of $0.60 per share, amounting to $34.7 million165 Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes the company's financial condition and operational results, emphasizing portfolio growth, yield, and liquidity position Portfolio and Investment Activity This section details investment activities, including capital deployed, portfolio composition, and non-accrual status - During the six months ended June 30, 2021, the company invested approximately $418.3 million and received $280.3 million in proceeds from sales or repayments234 - As of June 30, 2021, the portfolio consisted of 108 companies with a fair value of $1.826 billion, with 82.5% in senior secured loans and a weighted average effective yield of 9.3% on the debt portfolio236239 - Debt investments in three portfolio companies were on non-accrual status as of June 30, 2021, representing 0.3% of the portfolio at fair value239 Results of Operations This section analyzes operational results, focusing on investment income and the impact of unrealized appreciation on net assets - For H1 2021, investment income decreased to $82.8 million from $86.4 million in H1 2020, primarily due to lower LIBOR rates, with net investment income also decreasing to $36.2 million from $43.1 million241245 - The company recorded a net change in unrealized appreciation of $51.2 million for H1 2021, a significant improvement from a net unrealized depreciation of $(70.8) million in H1 2020, driven by unrealized gains in the Edmentum investment and overall market recovery248 - The net increase in net assets from operations for H1 2021 was $90.3 million, compared to a net decrease of $(23.1) million for H1 2020, mainly due to the positive swing in unrealized portfolio valuations254 Liquidity and Capital Resources This section discusses the company's liquidity, capital structure, borrowing capacity, and regulatory compliance Leverage Facility Summary | Leverage Facility | Total Capacity | Carrying Value (June 30, 2021) | | :--- | :--- | :--- | | Operating Facility | $300.0M | $79.2M | | Funding Facility II | $200.0M | $32.0M | | SBA Debentures | $150.0M | $150.0M | | 2022 Convertible Notes | $139.5M | $139.5M | | 2022 Notes | $174.8M | $174.8M | | 2024 Notes | $248.1M | $248.1M | | 2026 Notes | $174.3M | $174.3M | | Total Leverage | $1,386.9M | $998.1M | - As of June 30, 2021, the company had $388.8 million in available borrowing capacity under its leverage program and held $17.9 million in cash and cash equivalents257264 - The company's asset coverage ratio was 189% as of June 30, 2021, compliant with the 150% regulatory requirement260 - During H1 2020, the company repurchased 1,000,000 shares for $6.1 million under its stock repurchase plan, with no shares repurchased in H1 2021257 Quantitative and Qualitative Disclosures About Market Risk This section details the company's exposure to market risks, primarily interest rate risk, and provides a sensitivity analysis on net investment income - As of June 30, 2021, 94.3% of the company's debt investments were floating-rate, and 87.3% of these had an interest rate floor, mitigating downside risk from falling rates279 Interest Rate Sensitivity Analysis | Basis Point Change | Annual Impact on Net Investment Income | | :--- | :--- | | Up 300 bps | +$33.0 million | | Up 200 bps | +$17.9 million | | Up 100 bps | +$4.5 million | | Down 100 bps | -$0.5 million | Controls and Procedures Management evaluated the company's disclosure controls and procedures, concluding they were effective with no material changes to internal controls - Management concluded that the company's disclosure controls and procedures were effective as of the end of the quarter282 - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls over financial reporting282 Part II. Other Information This section provides additional disclosures on legal matters, risk factors, equity transactions, and other relevant information Legal Proceedings As of June 30, 2021, the company is not a party to any pending material legal proceedings - The company is not currently a party to any pending material legal proceedings284 Risk Factors This section updates risk factors, noting a new disclosure on potential operational and financial impacts from cyber-attacks - A new risk factor was added regarding the potential for cyber-attacks to disrupt operations and cause financial losses for the company or its portfolio companies285286 Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the period - None294 Defaults upon Senior Securities There were no defaults upon senior securities during the period - None294 Mine Safety Disclosures This item is not applicable to the company - None295 Other Information There is no other information to report for the period - None296 Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications - The report includes various exhibits, such as the CEO and CFO certifications required by the Sarbanes-Oxley Act, and an amendment to its loan documents297