BlackRock Capital Investment Corporation Reports Financial Results for the Quarter Ended March 31, 2023, Declares Quarterly Cash Dividend of $0.10 per Share
-
GAAP Net Investment Income (“NII”) was
$8.9 million $0.12 9.5% increase from prior quarter NII of$8.1 million $0.11 122% on a GAAP basis, up from the prior quarter dividend coverage of112% . -
Net Asset Value (“NAV”) increased to
$319.8 million $318.5 million $4.41 $4.39 -
Gross deployments during the first quarter were
$37.6 million 11.9% , up from11.5% on deployments in the prior quarter. During the quarter, 8 new portfolio companies were added bringing total portfolio companies held at quarter-end to 121, up from 116 at the end of 2022 and 86 at the end of 2021. Gross repayments during the quarter were$20.7 million 1% of total portfolio fair market value. -
The Company’s weighted-average portfolio yield as of March 31, 2023 increased to
12.4% based on total portfolio fair value, up from11.9% as of December 31, 2022. The increase was largely driven by a rise in LIBOR and SOFR rates during the quarter. -
Net leverage was 0.81x as of March 31, 2023, up from 0.77x as of December 31, 2022, driven by new net deployments. Total available liquidity for deployment into portfolio company investments, including cash, was
$98.2 million
“We continued to successfully execute on our strategy of (i) increasing the earnings power of our portfolio via disciplined growth and (ii) increasing the resiliency of our portfolio by creating a diversified portfolio of senior secured assets. Our NII continued to grow this quarter, increasing
“Even as we grew our loan portfolio, we were highly selective during the first quarter in which we saw reduced origination activity across the market. Corporate mergers and acquisitions, demand for growth financings as well as refinancing activity remained muted in the rising interest rate environment. Still, we added 8 new portfolio companies during the quarter, drawing upon the power of the BlackRock platform. We deployed
“Against the macroeconomic backdrop of continued inflation, higher interest rates, and softening consumer demand, we remain conservative in underwriting new investments and vigilant in monitoring our existing portfolio. We believe we are well positioned to withstand the impact of a deteriorating economic environment. Additionally, during the quarter, we exited and realized our non-core legacy investments in Advanced Lighting (previously a non-accrual asset) and Kemmerer, reducing our non-core exposure to less than
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March 31, 2023 |
December 31, 2022 |
December 31, 2021 |
December 31, 2020 |
Portfolio Composition |
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First Lien Debt |
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Second Lien Debt |
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Junior Capital1 |
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Portfolio Company Count |
121 |
116 |
86 |
55 |
Non-Core Assets |
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Portfolio Company Count2 |
1 |
3 |
5 |
6 |
Fair Market Value ("FMV", in Millions) |
4 |
9 |
26 |
42 |
% of investments, at FMV |
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_______________________________________________
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Financial Highlights
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Q1 2023 |
Q4 2022 |
Q1 2022 |
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($'s in millions, except per share data)2 |
Total Amount |
Per Share |
Total Amount |
Per Share |
Total Amount |
Per Share |
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Net Investment Income/(loss) |
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Net realized and unrealized gains/(losses) |
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— |
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Basic earnings/(losses) |
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Dividends declared |
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Net Investment Income/(loss), as adjusted1 |
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Basic earnings/(losses), as adjusted1 |
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_______________________________________________
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($'s in millions, except per share data) |
March 31, 2023 |
December 31, 2022 |
March 31, 2022 |
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Total assets |
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Investment portfolio, at FMV |
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Debt outstanding |
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Total net assets |
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Net asset value per share |
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Net leverage ratio1 |
0.81x |
0.77x |
0.46x |
_______________________________________________
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Business Updates
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Reduced Exposure in Non-Core Legacy Portfolio: During the first quarter, the Company received
$2.4 million $0.8 million -
Other Junior Capital Exposure: As of March 31, 2023, the Company’s other junior capital (including unsecured/subordinated debt and equity) exposure, excluding non-core assets, remained low at
4% of the portfolio, down from6% at December 31, 2021 and21% at December 31, 2020. -
Revolving Credit Facility Amendment: Due to the transition away from LIBOR indices and the discontinuation of publication of the
U.S. Dollar LIBOR benchmarks effective June 30, 2023, the Company entered into an amendment to its senior secured revolving credit facility (the "Credit Facility") on April 26, 2023 to remove and replace the LIBOR-based interest rate benchmark provisions with customary SOFR-based interest rate benchmark provisions plus a negotiated credit spread adjustment of0.10% . Other material terms of the Credit Facility were otherwise unchanged.
First Quarter Financial Updates
-
NII was
$8.9 million $0.12 9.5% from the prior quarter, largely driven by an increase in our weighted average yield as a result of higher LIBOR and SOFR rates, and net deployments during 2022 and the first quarter of 2023. Relative to our dividend declared of$0.10 122% on a GAAP basis, up from112% in the prior quarter. -
NAV increased to
$319.8 million $318.5 million $4.41 $4.39
Portfolio and Investment Activity*
($’s in millions) |
Three Months Ended |
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March 31, 2023 |
December 31, 2022 |
March 31, 2022 |
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Investment deployments |
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Investment exits |
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Number of portfolio company investments at end of period |
121 |
116 |
93 |
Weighted average yield of debt and income producing equity securities, at FMV |
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% of Portfolio invested in Secured debt, at FMV |
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% of Portfolio invested in Unsecured/subordinated debt, at FMV |
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% of Portfolio invested in Equity, at FMV |
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Average investment by portfolio company, at amortized cost |
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_______________________________________________ *Balance sheet amounts and yield information above are as of period end. |
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-
We deployed
$37.6 million $20.7 million $16.9 million
-
Deployments consisted of investments/fundings into 8 new portfolio companies and primarily 7 existing portfolio companies, which are outlined as follows:
New Portfolio Companies-
$6.1 million 7.50% first lien term loan,$0.3 million $0.4 million -
$5.9 million 7.25% first lien term loan and$0.5 million -
$5.1 million 7.50% first lien term loan and$0.5 million -
$3.5 million 6.00% first lien term loan to FSK Pallet Holding Corp. (Kamps), a provider of recycled wood pallet solutions to the North American market; -
$3.3 million 7.75% first lien term loan and$0.4 million -
$2.2 million 8.00% first lien term loan to Tessian Inc., a provider of cloud e-mail security software; -
$1.8 million 6.50% first lien,$0.7 million $0.3 million -
$0.7 million 5.25% first lien term loan to Geo Parent Corporation, a geohazard mitigation solutions provider.
Incremental Investment /Funding Primarily in the Following Existing Portfolio Companies -
$2.0 million 6.75% DDTL funding to GC Champion Acquisition LLC (Numerix); -
$1.0 million 6.25% DDTL funding to Wealth Enhancement Group, LLC; -
$0.9 million 7.50% first lien term loan and$0.2 million -
$0.7 million 3.75% first lien term loan to NEP Group, Inc.; -
$0.6 million 12.00% fixed rate first lien term loan to Magenta Buyer, LLC (McAfee); -
$0.6 million 7.25% DDTL funding to Grey Orange Incorporated; and -
$0.5 million 6.50% DDTL funding and$0.1 million 6.25% revolver funding to Accordion Partners, LLC.
-
-
Exits and repayments were primarily concentrated in three complete exits of portfolio company investments and one partial paydown:
-
$15.0 million -
$2.4 million -
$1.1 million -
$0.8 million
-
-
Deployments consisted of investments/fundings into 8 new portfolio companies and primarily 7 existing portfolio companies, which are outlined as follows:
-
There were no new non-accrual investments during the quarter ended March 31, 2023. After exiting our non-accrual position in Advanced Lighting during the quarter, only two non-accrual investment positions remain, representing approximately
2.7% and11.3% of total debt and preferred stock investments, at fair value and cost, respectively. - The weighted average internal investment rating of the portfolio at FMV was 1.35 at March 31, 2023, as compared to 1.33 at December 31, 2022, and 1.21 at December 31, 2021.
-
During the quarter ended March 31, 2023, net realized and unrealized losses were
$(0.3) million $(0.6) million $0.3 million
Liquidity and Capital Resources
-
At March 31, 2023, we had
$5.2 million $93.0 million $98.2 million -
Net leverage, adjusted for available cash, receivables for investments sold, payables for investments purchased and unamortized debt issuance costs, was 0.81x at quarter-end, and our
220% asset coverage ratio provided the Company with additional debt capacity of$93.0 million 83.9% of our assets were invested in qualifying assets, exceeding the70% requirement for a business development company under Section 55(a) of the Investment Company Act of 1940. -
For the first quarter of 2023, the Company declared a cash dividend of
$0.10
Conference Call
BlackRock Capital Investment Corporation will host a webcast/teleconference at 10:00 a.m. (Eastern Time) on Tuesday, May 2, 2023, to discuss its first quarter 2023 financial results. All interested parties are welcome to participate. You can access the teleconference by dialing, from
The teleconference and the webcast will be available for replay by 3:00 p.m. on Tuesday, May 2, 2023 and ending at 3:00 p.m. on Tuesday, May 16, 2023. The replay of the teleconference can be accessed via the following link: BlackRock Capital Investment Corporation First Quarter 2023 Earnings Call Replay. To access the webcast, please visit the investor relations section of www.blackrockbkcc.com.
Prior to the webcast/teleconference, an investor presentation that complements the earnings conference call will be posted to BlackRock Capital Investment Corporation’s website within the Presentations section of the Investors page.
About BlackRock Capital Investment Corporation
Formed in 2005, BlackRock Capital Investment Corporation is a business development company that provides debt and equity capital to middle-market companies.
The Company's investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in middle-market companies in the form of senior debt securities and loans, and our investment portfolio may include junior secured and unsecured debt securities and loans, each of which may include an equity component.
BlackRock Capital Investment Corporation
Consolidated Statements of Assets and Liabilities
|
March 31, 2023 (Unaudited) |
|
December 31, 2022 |
|
||||
Assets |
|
|
|
|
||||
Investments at fair value: |
|
|
|
|
||||
Non-controlled, non-affiliated investments (cost of |
$ |
572,111,003 |
|
|
$ |
551,686,646 |
|
|
Non-controlled, affiliated investments (cost of |
|
— |
|
|
|
3,574,438 |
|
|
Controlled investments (cost of |
|
15,673,000 |
|
|
|
15,228,000 |
|
|
Total investments at fair value (cost of |
|
587,784,003 |
|
|
|
570,489,084 |
|
|
Interest, dividends and fees receivable |
|
6,236,671 |
|
|
|
5,515,446 |
|
|
Cash and cash equivalents |
|
5,164,450 |
|
|
|
9,531,190 |
|
|
Due from broker |
|
1,868,232 |
|
|
|
1,946,507 |
|
|
Deferred debt issuance costs |
|
942,605 |
|
|
|
1,055,117 |
|
|
Receivable for investments sold |
|
116,102 |
|
|
|
12,096 |
|
|
Prepaid expenses and other assets |
|
382,314 |
|
|
|
510,706 |
|
|
Total assets |
$ |
602,494,377 |
|
|
$ |
589,060,146 |
|
|
Liabilities |
|
|
|
|
||||
Debt (net of deferred issuance costs of |
$ |
263,086,695 |
|
|
$ |
253,003,161 |
|
|
Dividends payable |
|
7,257,191 |
|
|
|
7,257,191 |
|
|
Income incentive fees payable |
|
5,279,252 |
|
|
|
3,403,349 |
|
|
Management fees payable |
|
2,130,472 |
|
|
|
2,186,540 |
|
|
Interest and debt related payables |
|
1,335,009 |
|
|
|
738,719 |
|
|
Interest Rate Swap at fair value |
|
1,165,514 |
|
|
|
1,332,299 |
|
|
Payable for investments purchased |
|
607,368 |
|
|
|
600,391 |
|
|
Accrued administrative expenses |
|
292,634 |
|
|
|
397,299 |
|
|
Accrued expenses and other liabilities |
|
1,557,683 |
|
|
|
1,618,844 |
|
|
Total liabilities |
|
282,711,818 |
|
|
|
270,537,793 |
|
|
Net Assets |
|
|
|
|
||||
Common stock, par value |
|
84,482 |
|
|
|
84,482 |
|
|
Paid-in capital in excess of par |
|
850,199,351 |
|
|
|
850,199,351 |
|
|
Distributable earnings (losses) |
|
(457,127,572 |
) |
|
|
(458,387,778 |
) |
|
Treasury stock at cost, 11,909,890 shares held |
|
(73,373,702 |
) |
|
|
(73,373,702 |
) |
|
Total net assets |
|
319,782,559 |
|
|
|
318,522,353 |
|
|
Total liabilities and net assets |
$ |
602,494,377 |
|
|
$ |
589,060,146 |
|
|
Net assets per share |
$ |
4.41 |
|
|
$ |
4.39 |
|
|
BlackRock Capital Investment Corporation
Consolidated Statements of Operations
(Unaudited)
|
|
Three Months Ended |
|
||||||
|
|
March 31, 2023 |
|
March 31, 2022 |
|
||||
Investment income |
|
|
|
|
|
||||
Interest income (excluding PIK): |
|
|
|
|
|
||||
Non-controlled, non-affiliated investments |
|
$ |
17,412,475 |
|
|
$ |
11,606,903 |
|
|
PIK interest income: |
|
|
|
|
|
||||
Non-controlled, non-affiliated investments |
|
|
1,029,231 |
|
|
|
123,018 |
|
|
Non-controlled, affiliated investments |
|
|
31,794 |
|
|
|
115,896 |
|
|
PIK dividend income: |
|
|
|
|
|
||||
Non-controlled, non-affiliated investments |
|
|
86,342 |
|
|
|
75,882 |
|
|
Other income: |
|
|
|
|
|
||||
Non-controlled, non-affiliated investments |
|
|
204,123 |
|
|
|
260,588 |
|
|
Total investment income |
|
|
18,763,965 |
|
|
|
12,182,287 |
|
|
Operating expenses |
|
|
|
|
|
||||
Interest and other debt expenses |
|
|
4,718,231 |
|
|
|
2,728,951 |
|
|
Management fees |
|
|
2,130,472 |
|
|
|
2,059,864 |
|
|
Incentive fees on income |
|
|
1,875,903 |
|
|
|
19,013 |
|
|
Incentive fees on capital gains(1) |
|
|
— |
|
|
|
(471,501 |
) |
|
Administrative expenses |
|
|
292,634 |
|
|
|
365,507 |
|
|
Professional fees |
|
|
193,427 |
|
|
|
302,857 |
|
|
Insurance expense |
|
|
160,957 |
|
|
|
199,758 |
|
|
Director fees |
|
|
149,625 |
|
|
|
153,125 |
|
|
Investment advisor expenses |
|
|
17,093 |
|
|
|
25,819 |
|
|
Other operating expenses |
|
|
364,131 |
|
|
|
303,799 |
|
|
Total expenses |
|
|
9,902,473 |
|
|
|
5,687,192 |
|
|
|
|
|
|
|
|
||||
Net investment income(1) |
|
|
8,861,492 |
|
|
|
6,495,095 |
|
|
Realized and unrealized gain (loss) on investments and Interest Rate Swap |
|
|
|
|
|
||||
Net realized gain (loss): |
|
|
|
|
|
||||
Non-controlled, non-affiliated investments |
|
|
(157,791 |
) |
|
|
825,913 |
|
|
Non-controlled, affiliated investments |
|
|
(441,906 |
) |
|
|
— |
|
|
Net realized gain (loss) |
|
|
(599,697 |
) |
|
|
825,913 |
|
|
Net change in unrealized appreciation (depreciation): |
|
|
|
|
|
||||
Non-controlled, non-affiliated investments |
|
|
508,216 |
|
|
|
(2,537,021 |
) |
|
Non-controlled, affiliated investments |
|
|
(864,398 |
) |
|
|
582,458 |
|
|
Controlled investments |
|
|
445,000 |
|
|
|
155,929 |
|
|
Interest Rate Swap |
|
|
166,784 |
|
|
|
— |
|
|
Net change in unrealized appreciation (depreciation) |
|
|
255,602 |
|
|
|
(1,798,634 |
) |
|
Net realized and unrealized gain (loss) |
|
|
(344,095 |
) |
|
|
(972,721 |
) |
|
Net increase (decrease) in net assets resulting from operations |
|
$ |
8,517,397 |
|
|
$ |
5,522,374 |
|
|
Net investment income per share—basic(1) |
|
$ |
0.12 |
|
|
$ |
0.09 |
|
|
Earnings (loss) per share—basic(1) |
|
$ |
0.12 |
|
|
$ |
0.07 |
|
|
Weighted average shares outstanding—basic |
|
|
72,571,907 |
|
|
|
73,822,190 |
|
|
Net investment income per share—diluted(1)(2) |
|
$ |
0.12 |
|
|
$ |
0.09 |
|
|
Earnings (loss) per share—diluted(1)(2) |
|
$ |
0.12 |
|
|
$ |
0.07 |
|
|
Weighted average shares outstanding—diluted |
|
|
72,571,907 |
|
|
|
90,815,927 |
|
|
_______________________________________________
|
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Supplemental Information
The Company reports its financial results on a generally accepted accounting principles (“GAAP”) basis; however, management believes that evaluating the Company’s ongoing operating results may be enhanced if investors have additional non-GAAP basis financial measures. Management reviews non-GAAP financial measures to assess ongoing operations and, for the reasons described below, considers them to be effective indicators, for both management and investors, of the Company’s financial performance over time. The Company’s management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
The Company records its liability for incentive fees based on capital gains (if any) by performing a hypothetical liquidation basis calculation at the end of each reporting period, as required by GAAP, which assumes that all unrealized capital appreciation and depreciation is realized as of the reporting date. It should be noted that incentive fees based on capital gains (if any) are not due and payable until the end of the annual measurement period, or every June 30. The incremental incentive fees disclosed for a given period are not necessarily indicative of actual full year results. Changes in the economic environment, financial markets, geopolitical conditions and other parameters could cause actual results to differ from estimates and such differences could be material. There can be no assurance that unrealized capital appreciation and depreciation will be realized in the future, or that any accrued capital gains incentive fee will become payable. Incentive fee amounts on capital gains actually paid by the Company will specifically exclude consideration of unrealized capital appreciation, consistent with requirements under the Investment Advisers Act of 1940 and the Company’s investment management agreement. For a more detailed description of the Company’s incentive fees, please refer to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, on file with the Securities and Exchange Commission ("SEC").
Computations for the periods below are derived from the Company's financial statements as follows:
|
Three Months Ended |
|||
|
March 31, 2023 |
March 31, 2022 |
||
GAAP Basis: |
|
|
|
|
Net Investment Income |
|
|
|
|
Net Investment Income per share |
0.12 |
|
0.09 |
|
Addback: GAAP incentive fee (reversal) based on capital gains |
— |
|
(471,501) |
|
Addback: GAAP incentive fee based on Income |
1,875,903 |
|
19,013 |
|
Pre-Incentive Fee1: |
|
|
|
|
Net Investment Income |
|
|
|
|
Net Investment Income per share |
0.15 |
|
0.08 |
|
Less: Incremental incentive fee based on Income |
(1,875,903) |
|
(19,013) |
|
As Adjusted2: |
|
|
|
|
Net Investment Income |
|
|
|
|
Net Investment Income per share |
0.12 |
|
0.08 |
|
_______________________________________________
|
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Forward-looking statements
This press release, and other statements that BlackRock Capital Investment Corporation may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to BlackRock Capital Investment Corporation’s future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” or similar expressions.
BlackRock Capital Investment Corporation cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which may change over time. Forward-looking statements speak only as of the date they are made, and BlackRock Capital Investment Corporation assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.
In addition to factors previously disclosed in BlackRock Capital Investment Corporation’s SEC reports and those identified elsewhere in this press release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (1) our future operating results; (2) our business prospects and the prospects of our portfolio companies; (3) the impact of investments that we expect to make; (4) our contractual arrangements and relationships with third parties; (5) the dependence of our future success on the general economy and its impact on the industries in which we invest; (6) the financial condition of and ability of our current and prospective portfolio companies to achieve their objectives; (7) our expected financings and investments; (8) the adequacy of our cash resources and working capital, including our ability to obtain continued financing on favorable terms; (9) the timing of cash flows, if any, from the operations of our portfolio companies; (10) the impact of increased competition; (11) the ability of our investment advisor to locate suitable investments for us and to monitor and administer our investments; (12) potential conflicts of interest in the allocation of opportunities between us and other investment funds managed by our investment advisor or its affiliates; (13) the ability of our investment advisor to attract and retain highly talented professionals; (14) changes in law and policy accompanying the new administration and uncertainty pending any such changes; (15) increased geopolitical unrest, terrorist attacks or acts of war, which may adversely affect the general economy, domestic and local financial and capital markets, or the specific industries of our portfolio companies; (16) changes and volatility in political, economic or industry conditions, the interest rate environment, inflation, credit risk, foreign exchange rates or financial and capital markets; (17) the unfavorable resolution of legal proceedings; and (18) the impact of changes to tax legislation and, generally, our tax position.
BlackRock Capital Investment Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 1, 2023, identifies additional factors that can affect forward-looking statements.
Available Information
BlackRock Capital Investment Corporation’s filings with the SEC, press releases, earnings releases and other financial information are available on its website at www.blackrockbkcc.com. The information contained on our website is not a part of this press release.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230501005502/en/
Investor Contact:
Nik Singhal
212.810.5427
Press Contact:
Brian Beades
212.810.5596
Source: BlackRock Capital Investment Corporation
