BlackRock TCP Capital Corp. Announces Third Quarter 2019 Financial Results Including Net Investment Income Of $0.43 Per Share; 30 Consecutive Quarters Of Dividend Coverage

News provided by

BlackRock TCP Capital Corp.

Nov 06, 2019, 08:05 ET

SANTA MONICA, Calif., Nov. 6, 2019 /PRNewswire/ -- BlackRock TCP Capital Corp. ("we," "us," "our," "TCPC" or the "Company"), a business development company (NASDAQ: TCPC), today announced its financial results for the third quarter ended September 30, 2019 and filed its Form 10-Q with the U.S. Securities and Exchange Commission.

FINANCIAL HIGHLIGHTS

  • Net investment income for the quarter ended September 30, 2019 was $25.3 million, or $0.43 per share on a diluted basis, exceeding the dividend of $0.36 per share.
  • Net increase in net assets resulting from operations for the quarter ended September 30, 2019 was $18.4 million, or $0.31 per share.
  • Net asset value per share at September 30, 2019 was $13.59 compared to $13.64 at June 30, 2019.
  • Total acquisitions during the quarter ended September 30, 2019 were $176.0 million and total dispositions were $180.6 million. Our diversified portfolio reached a record 105 companies as of September 30, 2019.
  • On August 23, 2019, we issued $150.0 million of unsecured notes that mature on August 23, 2024 (the "2024 Notes). The 2024 Notes bear interest at an annual rate of 3.900%, payable semi-annually, and all principal is due upon maturity.
  • On November 6, 2019, our board of directors declared a fourth quarter dividend of $0.36 per share payable on December 31, 2019 to shareholders of record as of December 17, 2019.

"We are pleased to have continued our record of covering our dividend for the 30th consecutive quarter, with a dividend coverage ratio of 119% in the third quarter. We also further expanded our diverse leverage program by completing a $150 million unsecured note issuance at an attractive interest rate of 3.9%," said Howard Levkowitz, BlackRock TCP Capital Corp. Chairman and CEO. "While our income reflected significant repayments, we were able to offset those repayments with another quarter of strong originations. We continue to have a solid pipeline of new investment opportunities and believe we are well-positioned to continue to deliver attractive risk-adjusted returns to our shareholders."

PORTFOLIO AND INVESTMENT ACTIVITY

As of September 30, 2019, our investment portfolio consisted of debt and equity positions in a record 105 portfolio companies with a total fair value of approximately $1.7 billion. Debt positions represented approximately 94% of the portfolio at fair value, with 93% of the portfolio comprised of senior secured debt. Equity positions, including equity interests in portfolios of debt and lease assets, represented approximately 6% of our investment portfolio.

As of September 30, 2019, the weighted average annual effective yield of our debt portfolio was approximately 10.6%(1) following decreases in LIBOR during the quarter, and the weighted average annual effective yield of our total portfolio was approximately 10.0%. Debt investments in three portfolio companies were on non-accrual status as of September 30, 2019.

During the three months ended September 30, 2019, we invested approximately $176.0 million, primarily in 7 investments, comprised of 4 new and 3 existing portfolio companies. The investments were comprised of approximately $144.4 million in senior secured loans and $10.8 million in senior secured notes. The remaining $20.8 million were comprised primarily of $20.4 million in equity interests in portfolios of debt and lease assets and $0.4 million in equity positions received in connection with debt investments. Additionally, we received proceeds from sales and repayments of investment principal of approximately $180.6 million. We expect to continue to invest in senior secured loans, bonds and subordinated debt, as well as select equity investments, to obtain a high level of current income, with an emphasis on principal protection.

As of September 30, 2019, total assets were $1,800.7 million, net assets were $798.6 million and net asset value per share was $13.59, as compared to $1,742.5 million, $801.3 million, and $13.64 per share, respectively, as of June 30, 2019.

(1) Weighted average annual effective yield includes amortization of deferred debt origination and end-of-term fees and accretion of original issue discount, but excludes market discount and any prepayment and make-whole fee income. The weighted average effective yield on our debt portfolio excludes any debt investments that are distressed or on non-accrual status.

CONSOLIDATED RESULTS OF OPERATIONS

Total investment income for the three months ended September 30, 2019 was approximately $51.6 million, or $0.88 per share, including $0.06 per share from prepayment premiums and related accelerated original issue discount and exit fee amortization, $0.04 per share from recurring original issue discount and exit fee amortization, and $0.06 per share from recurring income paid in kind. This reflects our policy of recording interest income, adjusted for amortization of premiums and discounts, on an accrual basis. Origination, structuring, closing, commitment, and similar upfront fees received in connection with the outlay of capital are generally amortized into interest income over the life of the respective debt investment.

Total operating expenses for the three months ended September 30, 2019 were approximately $26.3 million, or $0.45 per share, including interest and other debt expenses of $12.4 million, or $0.21 per share, and incentive compensation from net investment income of $5.4 million, or $0.09 per share. Excluding incentive compensation, interest and other debt expenses, annualized third quarter expenses were 4.2% of average net assets.

Net investment income for the three months ended September 30, 2019 was approximately $25.3 million, or $0.43 per share. Net investment income is net of incentive compensation and benefited from the incentive fee rate reduction that took effect on February 9, 2019.

Net unrealized losses for the three months ended September 30, 2019 were $6.7 million, or $0.11 per share, comprised primarily of markdowns of $5.7 million on our investment in Fidelis, $3.2 million on our investment in Hylan and $3.0 million on our investment in AGY,  partially offset by a gain of $5.2 million on our investment in Edmentum as well as a gain of $3.3 million on our investment in Snaplogic. We also earned prepayment income of $0.6 million on the disposition of our loan to SnapLogic during the quarter. Net realized losses for the three months ended September 30, 2019 were $0.2 million.

Net increase in net assets resulting from operations for the three months ended September 30, 2019 was $18.4 million, or $0.31 per share.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2019, available liquidity was approximately $432.2 million, comprised of approximately $346.5 million in available capacity under our leverage program, $80.1 million in cash and cash equivalents and approximately $5.6 million in net outstanding settlements of investments purchased.

The combined weighted-average interest rate on debt outstanding at September 30, 2019 was 4.10%.

Total debt outstanding at September 30, 2019 was as follows:

Maturity

Rate

Carrying Value (1)

Available

Total
Capacity

SVCP Facility

2023

L+2.00%

$

108,000,000

$

162,000,000

$

270,000,000

TCPC Funding Facility

2023

L+2.00%

(2)

177,500,000

172,500,000

350,000,000

SBA Debentures

 2024−2029

2.63%

(3)

138,000,000

12,000,000

150,000,000

2019 Convertible Notes ($108 million par)

2019

5.25%

107,889,074

—

107,889,074

2022 Convertible Notes ($140 million par)

2022

4.625%

138,430,085

—

138,430,085

2022 Notes ($175 million par)

2022

4.125%

174,618,208

—

174,618,208

2024 Notes ($150 million par)

2024

3.900%

148,171,294

—

148,171,294

Total leverage



992,608,661

$

346,500,000

$

1,339,108,661

Unamortized issuance costs




(7,566,146)




Debt, net of unamortized issuance costs













$

985,042,515
















(1)Except for the convertible notes, the 2022 Notes and the 2024 Notes, all carrying values are the same as the principal amounts outstanding.

(2)Subject to certain funding requirements

(3)Weighted-average interest rate, excluding fees of 0.36% or 0.35%

On October 31, 2019, our board of directors re-approved our stock repurchase plan to acquire up to $50 million in the aggregate of our common stock at prices at certain thresholds below our net asset value per share, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934. During the nine months ended September 30, 2019, we repurchased 9,000 shares for a total cost of $0.1 million.

RECENT DEVELOPMENTS

On November 4, 2019, the Company reduced the credit facility capacity on the TCPC Funding facility by $50.0 million to $300.0 million.

On November 6, 2019, the Company's board of directors declared a fourth quarter regular dividend of $0.36 per share payable on December 31, 2019 to stockholders of record as of the close of business on December 17, 2019.

CONFERENCE CALL AND WEBCAST

BlackRock TCP Capital Corp. will host a conference call on Wednesday, November 6, 2019 at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time) to discuss its financial results. All interested parties are invited to participate in the conference call by dialing (866) 393-0571; international callers should dial (206) 453-2872. Participants should enter the Conference ID 8891946 when prompted. For a slide presentation that we intend to refer to on the earnings conference call, please visit the Investor Relations section of our website (www.tcpcapital.com) and click on the Third Quarter 2019 Investor Presentation under Events and Presentations. The conference call will be webcast simultaneously in the investor relations section of our website at http://investors.tcpcapital.com/. An archived replay of the call will be available approximately two hours after the live call, through November 13, 2019. For the replay, please visit https://investors.tcpcapital.com/events-and-presentations or dial (855) 859-2056. For international replay, please dial (404) 537-3406. For all replays, please reference program ID number 8891946.

BlackRock TCP Capital Corp.

Consolidated Statements of Assets and Liabilities


September 30, 2019

December 31, 2018

(unaudited)

Assets


Investments, at fair value:


Companies less than 5% owned (cost of $1,557,184,865 and $1,460,936,257, respectively)

$

1,519,866,072

$

1,463,800,744

Companies 5% to 25% owned (cost of $88,523,218 and $78,353,253, respectively)

71,180,241

63,193,357

Companies more than 25% owned (cost of $128,059,216 and $110,258,458, respectively)

90,228,801

70,291,689

Total investments (cost of $1,773,767,299 and $1,649,547,968, respectively)

1,681,275,114

1,597,285,790




Cash and cash equivalents

80,069,184

27,920,402

Accrued interest income:


Companies less than 5% owned

19,004,733

20,898,838

Companies 5% to 25% owned

652,121

678,057

Companies more than 25% owned

260,540

124,009

Receivable for investments sold

7,433,969

—

Deferred debt issuance costs

6,070,455

4,843,985

Prepaid expenses and other assets

5,952,549

7,784,608

Total assets

1,800,718,665

1,659,535,689




Liabilities


Debt, net of unamortized issuance costs of $7,566,146 and $6,805,196, respectively

985,042,515

805,202,192

Interest payable

6,621,542

8,747,872

Incentive compensation payable

5,369,678

5,840,346

Payable for investments purchased

1,859,746

908,759

Payable to the Advisor

759,032

1,226,372

Management and advisory fees payable

—

5,247,344

Accrued expenses and other liabilities

2,439,688

1,888,077

Total liabilities

1,002,092,201

829,060,962




Commitments and contingencies






Net assets

$

798,626,464

$

830,474,727




Composition of net assets


Common stock, $0.001 par value; 200,000,000 shares authorized, 58,766,215 and 58,774,607 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively

$

58,766

$

58,775

Paid-in capital in excess of par

999,956,007

1,000,073,183

Distributable earnings (loss)

(201,388,309)

(169,657,231)

Net assets

$

798,626,464

$

830,474,727




Net assets per share

$

13.59

$

14.13

BlackRock TCP Capital Corp.

Consolidated Statements of Operations (Unaudited)


Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

2019

2018

Investment income






Interest income (excluding PIK):






Companies less than 5% owned

$

44,778,592

$

44,534,087

$

128,578,869

$

127,316,161

Companies 5% to 25% owned

495,480

604,116

2,208,502

1,737,510

Companies more than 25% owned

1,024,457

918,146

2,822,733

2,747,763

PIK interest income:






Companies less than 5% owned

2,525,116

1,968,566

8,363,204

5,462,468

Companies 5% to 25% owned

1,030,375

1,151,270

2,488,171

3,576,948

Companies more than 25% owned

—

170,938

—

649,680

Dividend income:






Companies more than 25% owned

914,330

59,006

1,786,932

105,287

Lease income:






Companies more than 25% owned

74,457

74,457

223,370

223,370

Other income:






Companies less than 5% owned

797,542

—

883,721

—

Companies 5% to 25% owned

—

—

—

297,356

Total investment income

51,640,349

49,480,586

147,355,502

142,116,543








Operating expenses






Interest and other debt expenses

12,419,312

10,071,574

34,251,576

29,817,623

Management and advisory fees

6,356,723

6,265,432

18,510,954

18,149,243

Incentive fee

5,369,678

6,127,983

15,554,088

17,505,818

Administrative expenses

599,559

599,559

1,798,677

1,794,023

Legal fees, professional fees and due diligence expenses

492,847

625,181

1,360,860

1,639,293

Director fees

194,396

212,135

585,522

545,718

Insurance expense

160,578

123,109

416,647

338,027

Custody fees

104,841

95,692

302,054

278,795

Other operating expenses

628,220

847,988

2,127,194

2,024,732

Total operating expenses

26,326,154

24,968,653

74,907,572

72,093,272








Net investment income

25,314,195

24,511,933

72,447,930

70,023,271








Realized and unrealized gain (loss) on investments and foreign currency





Net realized gain (loss):






Investments in companies less than 5% owned

(224,682)

1,106,469

(525,041)

1,181,233

Investments in companies 5% to 25% owned

—

—

43,320

—

Net realized gain (loss)

(224,682)

1,106,469

(481,721)

1,181,233








Change in net unrealized appreciation/depreciation

(6,651,462)

(10,427,026)

(40,230,222)

(24,706,701)

Net realized and unrealized loss

(6,876,144)

(9,320,557)

(40,711,943)

(23,525,468)








Net increase in net assets resulting from operations

$

18,438,051

$

15,191,376

$

31,735,987

$

46,497,803








Basic and diluted earnings per common share

$

0.31

$

0.26

$

0.54

$

0.79








Basic and diluted weighted average common shares outstanding

58,766,002

58,806,049

58,766,410

58,824,514

ABOUT BLACKROCK TCP CAPITAL CORP.

BlackRock TCP Capital Corp. (NASDAQ: TCPC) is a specialty finance company focused on direct lending to middle-market companies as well as small businesses. TCPC lends primarily to companies with established market positions, strong regional or national operations, differentiated products and services and sustainable competitive advantages, investing across industries in which it has significant knowledge and expertise. TCPC's investment objective is to achieve high total returns through current income and capital appreciation, with an emphasis on principal protection. TCPC is a publicly-traded business development company, or BDC, regulated under the Investment Company Act of 1940 and is externally managed by its advisor, Tennenbaum Capital Partners, LLC, a wholly-owned, indirect subsidiary of BlackRock, Inc. For more information, visit www.tcpcapital.com.

FORWARD-LOOKING STATEMENTS

Prospective investors considering an investment in BlackRock TCP Capital Corp. should consider the investment objectives, risks and expenses of the company carefully before investing. This information and other information about the company are available in the company's filings with the Securities and Exchange Commission ("SEC"). Copies are available on the SEC's website at www.sec.gov and the company's website at www.tcpcapital.com. Prospective investors should read these materials carefully before investing.

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on estimates, projections, beliefs and assumptions of management of the company at the time of such statements and are not guarantees of future performance. Forward-looking statements involve risks and uncertainties in predicting future results and conditions. Actual results could differ materially from those projected in these forward-looking statements due to a variety of factors, including, without limitation, changes in general economic conditions or changes in the conditions of the industries in which the company makes investments, risks associated with the availability and terms of financing, changes in interest rates, availability of transactions, and regulatory changes. Certain factors that could cause actual results to differ materially from those contained in the forward-looking statements are included in the "Risks" section of the Company's prospectus dated August 16, 2019 and its prospectus supplement dated August 16, 2019, the "Risk Factors" section of the company's Form 10-K for the year ended December 31, 2018, and the company's subsequent periodic filings with the SEC. Copies are available on the SEC's website at www.sec.gov and the company's website at www.tcpcapital.com. Forward-looking statements are made as of the date of this press release and are subject to change without notice. The company has no duty and does not undertake any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information, or otherwise.

SOURCE BlackRock TCP Capital Corp.

Related Links

http://www.tcpcapital.com

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