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 , or$0.12 per share in the first quarter, representing a 9.5% increase from prior quarter NII of$8.1 million , or$0.11 per share. First quarter NII provided dividend coverage of 122% on a GAAP basis, up from the prior quarter dividend coverage of 112%. -
Net Asset Value (“NAV”) increased to
$319.8 million as ofMarch 31, 2023 , up from$318.5 million as ofDecember 31, 2022 ; NAV per share increased to$4.41 per share from$4.39 per share as ofDecember 31, 2022 . -
Gross deployments during the first quarter were
$37.6 million , substantially all of which were in first lien loans. The weighted average yield on gross deployments during the quarter was 11.9%, up from 11.5% 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 , including full exits from 3 existing portfolio companies, including two legacy investments which further reduced exposure to non-core legacy assets to less than 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 from 11.9% as ofDecember 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 ofDecember 31, 2022 , driven by new net deployments. Total available liquidity for deployment into portfolio company investments, including cash, was$98.2 million , subject to leverage and borrowing base restrictions.
“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 9.5% from the prior quarter. We are very pleased that our NII covered our
“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 1% of the portfolio. Our credit quality remains solid as there were no new non-accrual investments in the first quarter, demonstrating our unwavering focus on our strong credit culture.”
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Portfolio Composition |
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First Lien Debt |
82% |
79% |
74% |
50% |
Second Lien Debt |
13% |
16% |
19% |
27% |
|
5% |
5% |
7% |
23% |
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|
|
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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 |
1% |
2% |
5% |
9% |
_______________________________________________
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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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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) |
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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
-
Reduced Exposure in Non-Core Legacy Portfolio: During the first quarter, the Company received
$2.4 million in proceeds from the full sale of its first lien debt and equity positions inKemmerer Operations, LLC andKemmerer Holdings, LLC (collectively, "Kemmerer"), and$0.8 million in proceeds from the full sale of its non-accrual second lien secured note position inAdvanced Lighting Technologies, LLC ("Advanced Lighting"), further reducing the Company's non-core legacy exposure. -
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 from 6% atDecember 31, 2021 and 21% atDecember 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 effectiveJune 30, 2023 , the Company entered into an amendment to its senior secured revolving credit facility (the "Credit Facility") onApril 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 of 0.10%. Other material terms of the Credit Facility were otherwise unchanged.
First Quarter Financial Updates
-
NII was
$8.9 million , or approximately$0.12 per share, for the three months endedMarch 31, 2023 , an increase of 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 per share, dividend coverage was 122% on a GAAP basis, up from 112% in the prior quarter. -
NAV increased to
$319.8 million atMarch 31, 2023 , up from$318.5 million atDecember 31, 2022 ; NAV per share increased to$4.41 per share from$4.39 per share as ofDecember 31, 2022 .
Portfolio and Investment Activity*
($’s in millions) |
Three Months Ended |
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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 |
12.5% |
12.0% |
8.5% |
% of Portfolio invested in Secured debt, at FMV |
95% |
94% |
92% |
% of Portfolio invested in Unsecured/subordinated debt, at FMV |
4% |
4% |
5% |
% of Portfolio invested in Equity, at FMV |
1% |
2% |
3% |
Average investment by portfolio company, at amortized cost |
|
|
|
_______________________________________________ *Balance sheet amounts and yield information above are as of period end. |
-
We deployed
$37.6 million during the quarter while exits and repayments totaled$20.7 million , resulting in a$16.9 million net increase in our portfolio.-
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 SOFR ("S") + 7.50% first lien term loan,$0.3 million unfunded delayed draw term loan ("DDTL") and$0.4 million unfunded revolver toShowtime Acquisition, L.L.C. (World Choice), a live dinner attraction and family entertainment operator; -
$5.9 million S + 7.25% first lien term loan and$0.5 million unfunded revolver toBynder Bidco B.V. andBynder Bidco, Inc. , a digital asset management provider; -
$5.1 million S + 7.50% first lien term loan and$0.5 million unfunded revolver toDisco Parent, Inc. (Duck Creek), a property and casualty insurance software provider; -
$3.5 million S + 6.00% first lien term loan toFSK Pallet Holding Corp. (Kamps), a provider of recycled wood pallet solutions to the North American market; -
$3.3 million S + 7.75% first lien term loan and$0.4 million unfunded revolver toOranje Holdco, Inc. (KnowBe4), a cybersecurity awareness training provider; -
$2.2 million S + 8.00% first lien term loan toTessian Inc. , a provider of cloud e-mail security software; -
$1.8 million S + 6.50% first lien,$0.7 million unfunded DDTL, and$0.3 million unfunded revolver toLJ Avalon Holdings, LLC (Ardurra ), a provider of water and transportation infrastructure engineering and consulting services; and -
$0.7 million S + 5.25% first lien term loan toGeo Parent Corporation , a geohazard mitigation solutions provider.Incremental Investment /Funding Primarily in the Following Existing Portfolio Companies -
$2.0 million S + 6.75% DDTL funding toGC Champion Acquisition LLC (Numerix ); -
$1.0 million S + 6.25% DDTL funding toWealth Enhancement Group, LLC ; -
$0.9 million S + 7.50% first lien term loan and$0.2 million DDTL funding toAerospike, Inc. ; -
$0.7 million S + 3.75% first lien term loan to NEP Group, Inc.; -
$0.6 million 12.00% fixed rate first lien term loan toMagenta Buyer, LLC (McAfee); -
$0.6 million S + 7.25% DDTL funding toGrey Orange Incorporated ; and -
$0.5 million S + 6.50% DDTL funding and$0.1 million S + 6.25% revolver funding toAccordion Partners, LLC .
-
-
Exits and repayments were primarily concentrated in three complete exits of portfolio company investments and one partial paydown:
-
$15.0 million full repayment at par of second lien term loan inZest Acquisition Corp. ; -
$2.4 million of proceeds from the full sale of our first lien debt and equity positions in Kemmerer, a non-core legacy position; -
$1.1 million of proceeds from the partial repayment of first lien term loan and DDTL inPersado, Inc. ; and -
$0.8 million of proceeds from the full sale of our non-accrual second lien secured note position in Advanced Lighting.
-
-
Deployments consisted of investments/fundings into 8 new portfolio companies and primarily 7 existing portfolio companies, which are outlined as follows:
-
There were no new non-accrual investments during the quarter ended
March 31, 2023 . After exiting our non-accrual position in Advanced Lighting during the quarter, only two non-accrual investment positions remain, representing approximately 2.7% and 11.3% of total debt and preferred stock investments, at fair value and cost, respectively. -
The weighted average internal investment rating of the portfolio at FMV was 1.35 at
March 31, 2023 , as compared to 1.33 atDecember 31, 2022 , and 1.21 atDecember 31, 2021 . -
During the quarter ended
March 31, 2023 , net realized and unrealized losses were$(0.3) million , including$(0.6) million of realized losses on portfolio exits, partially offset by$0.3 million of net unrealized appreciation on investments and our interest rate swap.
Liquidity and Capital Resources
-
At
March 31, 2023 , we had$5.2 million in cash and cash equivalents and$93.0 million of availability under our Credit Facility, subject to leverage restrictions, resulting in$98.2 million of availability for deployment into portfolio company investments including current unfunded commitments, and for general use in the normal course of business. -
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 under its asset coverage requirements, subject to borrowing capacity and borrowing base restrictions. Further, as ofMarch 31, 2023 , approximately 83.9% of our assets were invested in qualifying assets, exceeding the 70% 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 per share, payable onJuly 6, 2023 to stockholders of record at the close of business onJune 15, 2023 .
Conference Call
The teleconference and the webcast will be available for replay by
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
Formed in 2005,
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
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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 |
) |
|
|
|
(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)
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Three Months Ended |
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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 |
|
|
_______________________________________________
|
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
Computations for the periods below are derived from the Company's financial statements as follows:
|
Three Months Ended |
|||
|
|
|
||
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 |
|
_______________________________________________
|
Forward-looking statements
This press release, and other statements that
In addition to factors previously disclosed in BlackRock Capital Investment Corporation’s
BlackRock Capital Investment Corporation’s Annual Report on Form 10-K for the year ended
Available Information
BlackRock Capital Investment Corporation’s filings with the
View source version on businesswire.com: https://www.businesswire.com/news/home/20230501005502/en/
Investor Contact:
212.810.5427
Press Contact:
212.810.5596
Source: