BlackRock TCP Capital (TCPC) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net investment income for Q3 2023 was $0.49 per share, a 17% increase year-over-year, exceeding the dividend of $0.34 per share [17][75] - The overall effective yield in the debt portfolio increased to 14.1% compared to 11.3% one year ago, reflecting higher base rates and wider spreads on new investments [13] Business Line Data and Key Metrics Changes - In Q3, the company invested $92 million, a significant increase from $17 million in Q2, focusing on senior secured loans [6][4] - Follow-on investments in existing portfolio companies accounted for about half of the dollars deployed over the last 12 months [8] Market Data and Key Metrics Changes - The portfolio at quarter end had fair market values of approximately $1.6 billion, with 89% of investments in secured debt across various industries [11] - The credit quality remains strong, with only three portfolio companies on non-accrual, representing 1.1% of the portfolio's fair value [29] Company Strategy and Development Direction - The company is focused on maintaining a disciplined investment approach, emphasizing companies that provide necessary services or products, ensuring resilience across market cycles [14][34] - A proposed merger with BlackRock Capital Investment Corp. is expected to enhance operational efficiencies and provide better access to capital [42][71] Management's Comments on Operating Environment and Future Outlook - Management anticipates a slower growth and elevated rate environment with ongoing macroeconomic uncertainties [1] - The company remains confident in its investment strategy and ability to deliver long-term returns despite market volatility [34][75] Other Important Information - The company declared a fourth quarter dividend of $0.34 per share and a supplemental dividend of $0.25 per share, reflecting a commitment to sustainable dividends [17][77] - The total liquidity increased to $353 million at the end of the quarter, with available leverage of $261 million and cash of $92 million [30] Q&A Session Summary Question: How is the solar investment maturing? - The solar investment is a residual position with no plans to extend, as it is expected to run off in a staggered fashion [20] Question: Can you provide insights on the credit quality and sponsor discussions? - There are no thematic portfolio-wide issues; individual companies are facing specific challenges, but sponsors are generally proactive in managing liquidity and costs [39][40] Question: What are the proceeds used for in follow-on investments? - Proceeds are primarily used for add-on acquisitions and organic growth, with some instances of dividend recapitalizations [46][49] Question: Will special dividends continue in the future? - Special dividends should not be expected as recurring; they are a way to return value to shareholders based on strong earnings [51][54]