BlackRock TCP Capital (US:TCPC)2026-02-27 18:02Financial Data and Key Metrics Changes - Full year 2025 adjusted net investment income (NII) was $1.22 per share, down from $1.52 in 2024 [4] - Annualized net asset income (NAI) return on equity (ROE) for the year was 12.3%, compared to 14.5% in 2024 [5] - Fourth quarter adjusted NAI was $0.25 per share, down from $0.30 in the previous quarter and $0.36 in the fourth quarter of 2024 [5] - Net asset value (NAV) declined 19% to $7.07 per share as of December 31, 2025, from $8.71 as of September 30, 2025 [6] Business Line Data and Key Metrics Changes - Non-accrual debt investments represented 4% of the portfolio at fair market value and 9.7% at cost, compared to 5.6% at fair market value and 14.4% at cost for the fourth quarter of 2024 [6] - The portfolio had a fair market value of $1.5 billion invested across 141 companies, with 92.4% in senior secured loans [11] - The average size of new investments in 2025 was $5.8 million, down from $11.7 million at the end of the previous year [12] Market Data and Key Metrics Changes - The weighted average effective yield of the portfolio was 11.1%, down from 11.5% in the previous quarter [12] - Investments during the quarter had a weighted average yield of 9.7%, while those exited had a yield of 11.1% [12] Company Strategy and Development Direction - The company aims to improve credit quality by resolving challenged credits and repositioning the portfolio for attractive returns [21] - The strategy includes deploying capital selectively into senior secured first lien loans and building a diversified portfolio to reduce concentration risk [22] - The company is leveraging BlackRock's resources to enhance investment capabilities and expand the pipeline of opportunities [23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged disappointing write-downs but emphasized active management of the investment portfolio to maximize recoveries [21] - The company is focused on improving credit quality and executing its refined investment strategy [21] - Management noted that the road to recovery for challenged investments is rarely linear and requires diligent management [30] Other Important Information - The board declared a first quarter dividend of $0.17 per share, payable on March 31, 2026 [10] - The company repurchased 515,869 shares during the fourth quarter at an average price of $5.84 per share [10] Q&A Session Summary Question: At what point does it make sense to take more aggressive strategic adjustments to the BDC? - Management believes the best path forward is to focus on improving credit quality and executing the current investment strategy, which includes increasing first lien loans and portfolio diversification [26] Question: How should investors view the trend of restructurings not sticking? - Management indicated that restructurings can vary and the recovery process is not always linear, emphasizing the importance of a robust management process for challenged investments [30] Question: Was there a change in personnel or procedures that led to the recent NAV drawdowns? - Management confirmed there were no changes to the valuation policy and that the NAV drawdowns were concentrated among a few specific investments that experienced significant underperformance [35]