Financial Data and Key Metrics Changes - The net investment income (NII) increased by 9.5% sequentially compared to the prior quarter, driven by higher LIBOR and SOFR rates [30] - NII covered the $0.10 dividend by 122%, up from 112% in the previous quarter, marking the third consecutive quarter of full dividend coverage [34] - Gross investment income for the first quarter was $18.8 million, a 7% increase from the prior quarter and a 54% increase from the first quarter of 2022 [41] - The weighted average portfolio yield increased to 12.4%, up from 11.9% in the previous quarter [50][65] Business Line Data and Key Metrics Changes - Approximately 26% of investment dollars went into existing relationships, with new portfolio company investments primarily in first lien loans [38] - The company added eight new portfolio companies, increasing the total to 121, compared to 116 at the end of 2020 [35] - First lien investments now comprise 82% of the portfolio, a significant increase from 50% at the end of 2020 [51] Market Data and Key Metrics Changes - The company noted that while the US job market remains resilient, higher inflation and interest rates could lead to slower economic growth or contraction [36] - The portfolio had two non-accrual investments representing 2.7% of total fair value, down from 4.4% a year ago [42] Company Strategy and Development Direction - The strategy focuses on diversifying the portfolio to create NAV stability and predictable net investment income [13] - The company aims to maintain a lower risk profile by primarily investing in first lien loans, especially in light of potential recession risks [38] - The management emphasized the importance of being selective in investment opportunities while also leveraging existing portfolio companies for deployment [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's resilience, noting no new non-accruals in the first quarter and proactive engagement with portfolio companies [46][52] - The company is well-positioned to withstand economic downturns due to the diversified nature of its portfolio and high-quality ownership support [36][40] - Management highlighted ongoing opportunities for investment despite a slow overall M&A market, indicating a steady flow of opportunities [27][39] Other Important Information - The company recorded total net unrealized gains of $0.3 million in the first quarter, alongside realized losses of $0.6 million from exiting non-core positions [58] - Total available liquidity for deployment and general operating use was approximately $98 million [59] Q&A Session Summary Question: Update on share repurchase activity - Management stated that share repurchases remain a tool for delivering shareholder value, with assessments made quarterly, but variability is expected [5] Question: Current or forward-looking fixed charge coverage - Management indicated that interest coverage ratios are generally required to be strong, but have contracted due to rising rates, with median ratios now in the high ones or low twos [10][11] Question: Performance of remaining securities related to Gordon Brothers - Management confirmed ongoing performance assessments and potential for future recoveries, though timing remains uncertain [17] Question: Activity in new portfolio companies versus existing ones - Management noted that while diversification is a goal, they remain disciplined in maintaining tight lending standards [22][68]
BlackRock Capital Investment (BKCC) - 2023 Q1 - Earnings Call Transcript