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BlackRock TCP Capital Corp. Announces Second Quarter 2021 Financial Results Including Net Investment Income of $0.31 Per Share; Declares Third Quarter Dividend of $0.30 Per Share; 37 Consecutive Quarters of Dividend Coverage

Aug 2, 2021

SANTA MONICA, Calif.--(BUSINESS WIRE)-- BlackRock TCP Capital Corp. (“we,” “us,” “our,” “TCPC” or the “Company”), a business development company (NASDAQ: TCPC), today announced its financial results for the second quarter ended June 30, 2021 and filed its Form 10-Q with the U.S. Securities and Exchange Commission.

FINANCIAL HIGHLIGHTS

  • Net investment income for the quarter ended June 30, 2021 was $17.8 million, or $0.31 per share on a diluted basis, which exceeded the dividend of $0.30 per share paid on June 30, 2021.
  • Net increase in net assets from operations for the quarter ended June 30, 2021 was $54.8 million, or $0.95 per share compared to $35.5 million, or $0.61 per share for the quarter ended March 31, 2021. Net increase in net assets from operations for the six months ended June 30, 2021 was $90.3 million, or $1.56 per share.
  • Net asset value per share increased 4.8% to $14.21 at June 30, 2021 compared to $13.56 at March 31, 2021 and 7.3% compared to $13.24 at December 31, 2020. The increase in net asset value included approximately $40.7 million of unrealized gains on our investment in Edmentum, partially offset by a $7.6 million reversal of unrealized gains on our investment in Amteck and $5.3 million of unrealized loss on our investment in Fishbowl.
  • Total acquisitions during the quarter ended June 30, 2021 were $235.7 million and total dispositions were $184.6 million.
  • As of June 30, 2021, loans on non-accrual status represented 0.3% of the portfolio at fair value and 0.7% at cost. No new loans were placed on non-accrual.
  • On June 1, 2021, the Company announced that Howard Levkowitz will retire from his role as Chairman and Chief Executive Officer. Rajneesh Vig will succeed Howard Levkowitz as Chairman and Chief Executive Officer and Phil Tseng will assume the roles of President and Chief Operating Officer. Howard Levkowitz will retire from his role as Chief Executive Officer of the Company on August 5, 2021, and as a Director and Chairman of the Board of Directors on September 30, 2021.
  • On June 22, 2021, the Company amended its SVCP Credit Facility (the “Operating Facility) and extended the maturity two years to May 6, 2026. Amendments made to the Operating Facility included a reduction in the stated interest rate to LIBOR +1.75%, subject to certain borrowing base conditions.
  • On August 2, 2021, our board of directors declared a third quarter dividend of $0.30 per share payable on September 30, 2021 to stockholders of record as of the close of business on September 16, 2021.

“We generated another quarter of robust results, underscored by continued NAV increases, strong credit quality and significant deployments, helping us to continue to deliver an attractive risk-adjusted return to our shareholders,” said Howard Levkowitz, BlackRock TCP Capital Corp. Chairman and CEO. “I’m proud of our continued strong results and the successful company we have built over two decades. TCPC is in stellar financial shape and excellent hands with Raj stepping up to the CEO role and Phil assuming the job of President as I retire from day-to-day management of the firm.”

PORTFOLIO AND INVESTMENT ACTIVITY

As of June 30, 2021, our investment portfolio consisted of debt and equity positions in 108 portfolio companies with a total fair value of approximately $1.8 billion, 88% of which was senior secured debt. 87% of the debt portfolio was first lien. Equity positions, including equity interests in portfolios of debt and lease assets, represented approximately 12% of the portfolio. 94% of our debt investments were floating rate, 87% of which had interest rate floors.

As of June 30, 2021, the weighted average annual effective yield of our debt portfolio was approximately 9.3%(1) and the weighted average annual effective yield of our total portfolio was approximately 9.0%, compared with 9.5% and 9.2%, respectively, as of March 31, 2021. Debt investments in two portfolio companies were on non-accrual status as of June 30, 2021, representing 0.3% of the portfolio at fair value and 0.7% at cost.

During the three months ended June 30, 2021, we invested approximately $235.7 million, primarily in 19 investments, comprised of 16 new and 3 existing portfolio companies. Of these investments, $234.3 million, or 99.4% of total acquisitions, were in senior secured loans. The remaining $1.4 million (0.6% of total acquisitions) was comprised of equity investments. Additionally, we received approximately $184.6 million in proceeds from sales or repayments of investments during the three months ended June 30, 2021. New investments during the quarter had a weighted average effective yield of 8.8%. Investments we exited had a weighted average effective yield of 9.2%. 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 June 30, 2021, total assets were $1.9 billion, net assets were $820.6 million and net asset value per share was $14.21 per share, as compared to $1.8 billion, $783.1 million, and $13.56 per share, respectively, as of March 31, 2021.

CONSOLIDATED RESULTS OF OPERATIONS

Total investment income for the three months ended June 30, 2021 was approximately $41.6 million, or $0.72 per share. Investment income for the three months ended June 30, 2021 included $0.03 per share from prepayment premiums and related accelerated original issue discount and exit fee amortization, $0.03 per share from recurring original issue discount and exit fee amortization, $0.02 per share from interest income paid in kind, $0.03 per share of dividend income and $0.01 per share in other income. 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 June 30, 2021 were approximately $23.9 million, or $0.41 per share, including interest and other debt expenses of $10.7 million, or $0.19 per share, and incentive compensation from net investment income of $4.5 million, or $0.08 per share. For the three months ended June 30, 2021, our incentive compensation expense included approximately $0.6 million, or $0.01 per share of previously deferred incentive compensation related to the first quarter in 2020. Excluding incentive compensation, interest and other debt expenses, annualized second quarter expenses were 4.3% of average net assets.

Net investment income for the three months ended June 30, 2021 was approximately $17.8 million, or $0.31 per share. Net unrealized gains for the three months ended June 30, 2021 were $37.3 million, or $0.65 per share, primarily driven by $40.7 million in unrealized gains on our investment in Edmentum in addition to overall spread tightening and continued recovery related to the market impact of COVID-19, partially offset by $7.6 million in reversal of unrealized gains from Amteck and $5.3 million in unrealized losses from Fishbowl. Net realized losses for the three months ended June 30, 2021 were $0.2 million, or $0.00 per share. Net increase in net assets resulting from operations for the three months ended June 30, 2021 was $54.8 million, or $0.95 per share.

__________________________

(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.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2021, available liquidity was approximately $373.2 million, comprised of approximately $388.8 million in available capacity under our leverage program, $17.9 million in cash and cash equivalents, and $33.5 million in net outstanding settlements of investments purchased.

The combined weighted-average interest rate on debt outstanding at June 30, 2021 was 3.48%.

Total debt outstanding at June 30, 2021 was as follows:

 

 

Maturity

 

Rate

 

 

Carrying
Value (1)

 

 

Available

 

 

Total
Capacity

 

Operating Facility

 

2026

 

L+1.75%

(2)

 

$

79,208,243

 

 

$

220,791,757

 

 

$

300,000,000

(3)

Funding Facility II

 

2025

 

L+2.00%

(4)

 

 

32,000,000

 

 

 

168,000,000

 

 

 

200,000,000

(5)

SBA Debentures

 

2024−2031

 

2.63%

(6)

 

 

150,000,000

 

 

 

 

 

 

150,000,000

 

2022 Convertible Notes ($140 million par)

 

2022

 

4.625%

 

 

 

139,549,804

 

 

 

 

 

 

139,549,804

 

2022 Notes ($175 million par)

 

2022

 

4.125%

 

 

 

174,844,853

 

 

 

 

 

 

174,844,853

 

2024 Notes ($250 million par)

 

2024

 

3.900%

 

 

 

248,144,731

 

 

 

 

 

 

248,144,731

 

2026 Notes ($175 million par)

 

2026

 

2.850%

 

 

 

174,342,012

 

 

 

 

 

 

174,342,012

 

Total leverage

 

 

 

 

 

 

 

998,089,643

 

 

$

388,791,757

 

 

$

1,386,881,400

 

Unamortized issuance costs

 

 

 

 

 

 

 

(7,003,641

)

 

 

 

 

 

 

 

 

Debt, net of unamortized issuance costs

 

 

 

 

 

 

$

991,086,002

 

 

 

 

 

 

 

 

 

__________________________

(1)

Except for the convertible notes, the 2022 Notes, the 2024 Notes and the 2026 Notes, all carrying values are the same as the principal amounts outstanding.

(2)

As of June 30, 2021, $8.8 million of the outstanding amount bore interest at a rate of EURIBOR + 2.00% and $19.0 million of the outstanding amount bore interest at a rate of Prime + 1.00%.

(3)

Facility has a $100 million accordion which allows for expansion of the facility to up to $400.0 million subject to consent from the lender and other customary conditions.

(4)

Subject to certain funding requirements

(5)

Facility has a $50 million accordion which allows for expansion of the facility to up to $250.0 million subject to consent from the lender and other customary conditions.

(6)

Weighted-average interest rate on pooled loans, excluding fees of 0.35% or 0.36%. As of June 30, 2021, $12.0 million of the outstanding amount was not yet pooled, and bore interest at a temporary rate of 0.50% plus fees of 0.35% through September 21, 2021, the date of the next SBA pooling.

On July 29, 2021, 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 three months ended June 30, 2021, no shares were repurchased.

RECENT DEVELOPMENTS

On August 2, 2021, our board of directors declared a third quarter dividend of $0.30 per share payable on September 30, 2021 to stockholders of record as of the close of business on September 16, 2021.

On August 2, 2021, Kathleen A Corbet retired from her position as a director of the Company after serving on the board since 2017.

CONFERENCE CALL AND WEBCAST

BlackRock TCP Capital Corp. will host a conference call on Monday, August 2, 2021 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) 270-1533; international callers should dial (412) 317-0797. 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 Second Quarter 2021 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 August 9, 2021. For the replay, please visit https://investors.tcpcapital.com/events-and-presentations or dial (877) 344-7529. For international replay, please dial (412) 317-0088. For all replays, please reference access code 10158358.

BlackRock TCP Capital Corp.

Consolidated Statements of Assets and Liabilities

 

 

 

June 30, 2021

 

 

December 31, 2020

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Investments, at fair value:

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments (cost of $1,619,351,358 and $1,473,322,720, respectively)

 

$

1,611,819,393

 

 

$

1,461,610,769

 

Non-controlled, affiliated investments (cost of $65,554,080 and $63,114,875, respectively)

 

 

119,908,356

 

 

 

68,927,182

 

Controlled investments (cost of $133,243,969 and $136,332,302, respectively)

 

 

94,328,873

 

 

 

99,026,531

 

Total investments (cost of $1,818,149,407 and $1,672,769,897, respectively)

 

 

1,826,056,622

 

 

 

1,629,564,482

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

17,881,467

 

 

 

20,006,580

 

Interest, dividends and fees receivable

 

 

20,471,329

 

 

 

15,571,648

 

Receivable for investments sold

 

 

12,419,141

 

 

 

278,737

 

Deferred debt issuance costs

 

 

5,243,761

 

 

 

4,984,388

 

Prepaid expenses and other assets

 

 

914,094

 

 

 

1,581,320

 

Total assets

 

 

1,882,986,414

 

 

 

1,671,987,155

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Debt (net of deferred issuance costs of $7,003,641 and $6,308,172, respectively)

 

 

991,086,002

 

 

 

850,016,199

 

Payable for investments purchased

 

 

45,894,977

 

 

 

33,275,348

 

Interest and debt related payables

 

 

11,886,381

 

 

 

9,886,085

 

Management fees payable

 

 

6,286,786

 

 

 

5,753,347

 

Incentive fees payable

 

 

4,548,443

 

 

 

5,020,794

 

Reimbursements due to the Advisor

 

 

977,345

 

 

 

1,344,756

 

Accrued expenses and other liabilities

 

 

1,668,887

 

 

 

1,704,048

 

Total liabilities

 

 

1,062,348,821

 

 

 

907,000,577

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets

 

$

820,637,593

 

 

$

764,986,578

 

 

 

 

 

 

 

 

 

 

Composition of net assets applicable to common shareholders

 

 

 

 

 

 

 

 

Common stock, $0.001 par value; 200,000,000 shares authorized, 57,767,264 and 57,767,264

shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

 

$

57,767

 

 

$

57,767

 

Paid-in capital in excess of par

 

 

979,973,202

 

 

 

979,973,202

 

Distributable earnings (loss)

 

 

(159,393,376

)

 

 

(215,044,391

)

Total net assets

 

 

820,637,593

 

 

 

764,986,578

 

Total liabilities and net assets

 

$

1,882,986,414

 

 

$

1,671,987,155

 

 

 

 

 

 

 

 

 

 

Net assets per share

 

$

14.21

 

 

$

13.24

BlackRock TCP Capital Corp.

Consolidated Statements of Operations (Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Investment income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income (excluding PIK):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

$

37,070,947

 

 

$

34,939,196

 

 

$

70,924,259

 

 

$

70,928,532

 

Non-controlled, affiliated investments

 

 

33,471

 

 

 

451,965

 

 

 

59,568

 

 

 

1,004,241

 

Controlled investments

 

 

1,674,786

 

 

 

1,518,141

 

 

 

3,324,819

 

 

 

3,194,397

 

PIK income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

989,930

 

 

 

2,557,814

 

 

 

2,294,631

 

 

 

3,969,445

 

Non-controlled, affiliated investments

 

 

 

 

 

863,826

 

 

 

 

 

 

1,865,956

 

Dividend income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

178,767

 

 

 

 

 

 

998,122

 

 

 

 

Non-controlled, affiliated investments

 

 

1,127,927

 

 

 

 

 

 

2,824,587

 

 

 

 

Controlled investments

 

 

252,851

 

 

 

301,725

 

 

 

1,144,901

 

 

 

730,145

 

Lease income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Controlled investments

 

 

 

 

 

 

 

 

 

 

 

38,136

 

Other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

164,036

 

 

 

3,832,958

 

 

 

211,154

 

 

 

3,985,972

 

Non-controlled, affiliated investments

 

 

151,968

 

 

 

648,799

 

 

 

1,026,544

 

 

 

648,799

 

Total investment income

 

 

41,644,683

 

 

 

45,114,424

 

 

 

82,808,585

 

 

 

86,365,623

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other debt expenses

 

 

10,712,356

 

 

 

10,645,437

 

 

 

20,818,243

 

 

 

21,601,082

 

Management fees

 

 

6,425,571

 

 

 

5,804,143

 

 

 

12,368,933

 

 

 

11,921,185

 

Incentive fees

 

 

4,548,446

 

 

 

5,245,304

 

 

 

9,239,904

 

 

 

5,245,304

 

Professional fees

 

 

579,926

 

 

 

502,658

 

 

 

870,260

 

 

 

1,001,068

 

Administrative expenses

 

 

428,857

 

 

 

539,947

 

 

 

968,804

 

 

 

1,079,894

 

Director fees

 

 

295,200

 

 

 

208,000

 

 

 

545,200

 

 

 

440,232

 

Insurance expense

 

 

150,000

 

 

 

175,080

 

 

 

285,000

 

 

 

350,161

 

Custody fees

 

 

85,008

 

 

 

111,773

 

 

 

144,191

 

 

 

223,440

 

Other operating expenses

 

 

652,133

 

 

 

829,709

 

 

 

1,359,478

 

 

 

1,397,958

 

Total operating expenses

 

 

23,877,497

 

 

 

24,062,051

 

 

 

46,600,013

 

 

 

43,260,324

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

17,767,186

 

 

 

21,052,373

 

 

 

36,208,572

 

 

 

43,105,299

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Net realized gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

(236,632

)

 

 

(383,875

)

 

 

1,842,683

 

 

 

4,410,583

 

Non-controlled, affiliated investments

 

 

 

 

 

 

 

 

1,028,057

 

 

 

 

Controlled investments

 

 

 

 

 

(32,062

)

 

 

 

 

 

129,950

 

Net realized gain (loss)

 

 

(236,632

)

 

 

(415,937

)

 

 

2,870,740

 

 

 

4,540,533

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in unrealized appreciation (depreciation):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

(3,058,802

)

 

 

21,775,179

 

 

 

4,299,422

 

 

 

(51,041,046

)

Non-controlled, affiliated investments

 

 

40,751,395

 

 

 

1,477,294

 

 

 

48,541,962

 

 

 

(16,956,732

)

Controlled investments

 

 

(396,596

)

 

 

2,462,358

 

 

 

(1,609,324

)

 

 

(2,778,197

)

Net change in unrealized appreciation (depreciation)

 

 

37,295,997

 

 

 

25,714,831

 

 

 

51,232,060

 

 

 

(70,775,975

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized and unrealized gain (loss)

 

 

37,059,365

 

 

 

25,298,894

 

 

 

54,102,800

 

 

 

(66,235,442

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in net assets resulting from operations

 

$

54,826,551

 

 

$

46,351,267

 

 

$

90,311,372

 

 

$

(23,130,143

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings (loss) per share

 

$

0.95

 

 

$

0.80

 

 

$

1.56

 

 

$

(0.40

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average common shares outstanding

 

 

57,767,264

 

 

 

57,766,916

 

 

 

57,767,264

 

 

 

58,217,663

 

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 “Risk Factors” section of the company’s Form 10-K for the year ended December 31, 2020, 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.

BlackRock TCP Capital Corp.
Katie McGlynn
310-566-1094
investor.relations@tcpcapital.com

Source: BlackRock TCP Capital Corp.

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