BlackRock Capital Investment Corporation Reports Financial Results for the Quarter Ended June 30, 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 second quarter, consistent with the first quarter NII level. Second quarter NII provided dividend coverage of 123% on a GAAP basis, an increase from the prior quarter dividend coverage of 122%. -
Net Asset Value (“NAV”) decreased to
$314.0 million as ofJune 30, 2023 , down from$319.8 million as ofMarch 31, 2023 , driven largely by net unrealized depreciation in portfolio fair value of$7.0 million during the quarter. NAV per share decreased to$4.33 per share from$4.41 per share as ofMarch 31, 2023 . -
Gross deployments during the second quarter were
$20.8 million , substantially all of which were in first lien loans. The weighted average yield on gross deployments during the quarter was 12.1%, up from 11.9% on deployments in the prior quarter. During the quarter, 3 new portfolio companies were added. Total portfolio companies held at quarter-end were 121, which was flat from the prior quarter, up from 116 at the end of 2022 and 86 at the end of 2021. Gross repayments during the quarter were$6.5 million , including full exits from 3 existing portfolio companies. -
The Company’s weighted-average portfolio yield as of
June 30, 2023 increased to 12.8% based on total portfolio fair value, up from 12.4% as ofMarch 31, 2023 . The increase was largely driven by a rise in LIBOR and SOFR rates. -
Net leverage was 0.86x as of
June 30, 2023 , up from 0.81x as ofMarch 31, 2023 , driven by borrowings to fund new deployments during the quarter. Total available liquidity at quarter-end, including borrowing capacity and cash on hand, was$85.4 million , subject to leverage and borrowing base restrictions.
“We are pleased to see the successful transformation of the Company’s portfolio, which now represents a well diversified pool of income producing assets, with a first lien heavy orientation. With a relatively modest leverage ratio of 0.86x, we have the flexibility to selectively grow our portfolio and continue to increase our earnings power. For the fourth consecutive quarter, our NII covered our
“Even as the overall lending activity remains muted in this rising interest rate environment, we have been able to take advantage of our investing capacity and selectively grow our loan portfolio. While origination activity is lower than historical levels, we are seeing better pricing, less levered capital structures and ability to negotiate better structural protections. We added 3 new portfolio companies during the second 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. Our credit quality remains solid, with no new non-accrual investments in the second quarter, demonstrating our unwavering focus on our strong credit culture.”
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Portfolio Composition |
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First Lien Debt |
84% |
79% |
74% |
50% |
Second Lien Debt |
12% |
16% |
19% |
27% |
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4% |
5% |
7% |
23% |
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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)3 |
— |
9 |
26 |
42 |
% of investments, at FMV3 |
— |
2% |
5% |
9% |
_______________________________________________ |
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1. Includes unsecured/subordinated debt and equity investments.
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Financial Highlights
Q2 2023 |
Q1 2023 |
Q2 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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1. Non-GAAP basis financial measure, excluding the hypothetical liquidation basis capital gain incentive fee accrual (reversal), if any, under GAAP. See Supplemental Information. | ||||||
2. Totals may not foot due to rounding. |
($'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 |
0.86x |
0.81x |
0.77x |
0.64x |
_______________________________________________ |
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1. Calculated as the ratio between (a) debt, excluding unamortized debt issuance costs, less available cash and receivable for investments sold, plus payables for investments purchased, and (b) NAV. |
Business Updates
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Continued Portfolio Growth and Deployment: The Company continued to see net positive deployment of capital into portfolio investments including
$14.3 million during the three months endedJune 30, 2023 , marking the fifth consecutive quarter of portfolio growth. The Company has deployed approximately$105 million of capital into new and existing portfolio companies on a net basis sinceMarch 31, 2022 , predominantly all of which was invested in first lien loans. -
Non-Core Legacy Portfolio and Other Junior Capital Exposure: As of
June 30, 2023 , the Company's non-core assets have been reduced to 0.01% of the entire portfolio at fair value, down from 9% at the end of 2020. As ofJune 30, 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 . During the second quarter, the Company received a$0.5 million partial repayment of its unsecured debt position inGordon Brothers Finance Company ("GBFC"), a non-accrual investment.
Second Quarter Financial Updates
-
NII was
$8.9 million , or approximately$0.12 per share, for the three months endedJune 30, 2023 , consistent with prior quarter NII. Relative to our dividend declared of$0.10 per share, dividend coverage was 123% on a GAAP basis, up from 122% in the prior quarter. As compared to the second quarter of 2022, NII increased$1.8 million , representing a 25% year-over-year increase; dividend coverage similarly increased from 97% in the second quarter of 2022 to 123% in the current quarter. -
NAV decreased to
$314.0 million atJune 30, 2023 , down from$319.8 million atMarch 31, 2023 , largely driven by$7.0 million of unrealized depreciation in portfolio fair value. This decrease was concentrated in certain positions includingStitch Holdings, L.P. (a legacy non-core equity position),Astra Acquisition Corp. and Thras.io, LLC. NAV per share decreased to$4.33 per share from$4.41 per share as ofMarch 31, 2023 .
Portfolio and Investment Activity*
($’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 |
121 |
100 |
Weighted average yield of debt and income producing equity securities, at FMV |
12.9% |
12.5% |
9.3% |
% of Portfolio invested in Secured debt, at FMV |
96% |
95% |
94% |
% of Portfolio invested in Unsecured/subordinated debt, at FMV |
3% |
4% |
4% |
% of Portfolio invested in Equity, at FMV |
1% |
1% |
2% |
Average investment by portfolio company, at amortized cost |
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_______________________________________________ |
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*Balance sheet amounts and yield information above are as of period end. |
-
We deployed
$20.8 million during the quarter while exits and repayments totaled$6.5 million , resulting in a$14.3 million net increase in our portfolio.
- Deployments consisted of investments/fundings into 3 new portfolio companies and primarily 5 existing portfolio companies, which are outlined as follows:
New Portfolio Companies
-
$6.1 million SOFR ("S") + 6.50% first lien term loan and$0.6 million unfunded revolver toSerrano Parent, LLC (Sumo Logic ), a cloud-native software provider for observability and security management; -
$4.5 million S + 7.00% first lien term loan and$0.5 million unfunded revolver toFusion Risk Management, Inc. , a software provider of business continuity and risk management solutions; and -
$2.2 million S + 7.50% first lien term loan and$0.3 million unfunded revolver toLucky US BuyerCo LLC (Global Payments), a payment services provider to the gaming sector.
-
$1.7 million S + 9.00% delayed draw term loan ("DDTL") funding toFreedom Financial Network Funding, LLC ; -
$1.5 million S + 5.75% first lien term loan and$0.3 million unfunded revolver toSuperman Holdings, LLC (Foundation Software ); -
$0.9 million S + 6.75% first lien term loan,$0.2 million unfunded DDTL, and$0.2 million unfunded revolver toSonny's Enterprises, LLC ; -
$0.7 million S + 6.25% DDTL funding toWealth Enhancement Group, LLC ; and -
$0.6 million S + 6.25% DDTL funding toAccordion Partners, LLC .
- Exits and repayments were primarily concentrated in three complete exits of portfolio company investments and one partial paydown:
-
$3.3 million full repayment at par of first lien term loan and DDTL inSunland Asphalt & Construction, LLC ; -
$0.4 million full repayment at par of first lien term loan inFusion Risk Management, Inc. ; -
$0.3 million full repayment at par of first lien term loan inRigUp, Inc. ; and -
$0.5 million partial repayment of unsecured debt position in GBFC, a non-accrual position.
-
There were no new non-accrual investments during the quarter ended
June 30, 2023 . At quarter-end, the Company had only two non-accrual investment positions, representing approximately 2.5% and 11.0% of total debt and preferred stock investments, at fair value and cost, respectively. -
The weighted average internal investment rating of the portfolio at FMV was 1.44 at
June 30, 2023 , as compared to 1.35 atMarch 31, 2023 , 1.33 atDecember 31, 2022 and 1.21 atDecember 31, 2021 . -
During the quarter ended
June 30, 2023 , net realized and unrealized losses were$(7.4) million , including$(7.0) million of unrealized depreciation on investments and$(0.6) million of depreciation on our interest rate swap, which was partially offset by$0.2 million of realized gains during the quarter.
Liquidity and Capital Resources
-
At
June 30, 2023 , we had$12.4 million in cash and cash equivalents and$73.0 million of availability under our Credit Facility, subject to leverage restrictions, resulting in$85.4 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 0.86x at quarter-end, and our 210% asset coverage ratio provided the Company with additional debt capacity of
$73.0 million under its asset coverage requirements, subject to borrowing capacity and borrowing base restrictions. Further, as ofJune 30, 2023 , approximately 84% 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 second quarter of 2023, the Company declared a cash dividend of
$0.10 per share, payable onOctober 6, 2023 to stockholders of record at the close of business onSeptember 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.
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Assets |
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Investments at fair value: |
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Non-controlled, non-affiliated investments (cost of |
|
|
|
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Non-controlled, affiliated investments (cost of |
— |
|
3,574,438 |
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Controlled investments (cost of |
14,999,000 |
|
15,228,000 |
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Total investments at fair value (cost of |
595,837,411 |
|
570,489,084 |
|
Cash and cash equivalents |
12,405,398 |
|
9,531,190 |
|
Interest, dividends and fees receivable |
6,836,319 |
|
5,515,446 |
|
Due from broker |
2,097,000 |
|
1,946,507 |
|
Deferred debt issuance costs |
1,347,337 |
|
1,055,117 |
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Receivable for investments sold |
36,986 |
|
12,096 |
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Prepaid expenses and other assets |
403,727 |
|
510,706 |
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Total assets |
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Liabilities |
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Debt (net of deferred issuance costs of |
|
|
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Dividends payable |
7,257,191 |
|
7,257,191 |
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Income incentive fees payable |
7,165,434 |
|
3,403,349 |
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Management fees payable |
2,221,908 |
|
2,186,540 |
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Interest and debt related payables |
1,698,635 |
|
738,719 |
|
Interest Rate Swap at fair value |
1,445,045 |
|
1,332,299 |
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Accrued administrative expenses |
288,454 |
|
397,299 |
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Payable for investments purchased |
1,463 |
|
600,391 |
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Accrued expenses and other liabilities |
1,685,832 |
|
1,618,844 |
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Total liabilities |
304,935,119 |
|
270,537,793 |
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Net Assets |
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Common stock, par value |
84,482 |
|
84,482 |
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Paid-in capital in excess of par |
850,199,351 |
|
850,199,351 |
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Distributable earnings (losses) |
(462,881,072) |
|
(458,387,778) |
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|
(73,373,702) |
|
(73,373,702) |
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Total net assets |
314,029,059 |
|
318,522,353 |
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Total liabilities and net assets |
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Net assets per share |
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Consolidated Statements of Operations (Unaudited) |
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Three Months Ended |
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Six Months Ended |
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Investment income |
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Interest income (excluding PIK): |
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Non-controlled, non-affiliated investments |
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PIK interest income: |
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|
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|
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Non-controlled, non-affiliated investments |
|
999,236 |
|
126,140 |
|
2,028,467 |
|
249,158 |
|
Non-controlled, affiliated investments |
|
— |
|
116,572 |
|
31,794 |
|
232,468 |
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PIK dividend income: |
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Non-controlled, non-affiliated investments |
|
89,040 |
|
78,729 |
|
175,382 |
|
154,611 |
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Other income: |
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|
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|
|
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Non-controlled, non-affiliated investments |
|
311,438 |
|
301,503 |
|
515,561 |
|
562,091 |
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Total investment income |
|
19,941,461 |
|
12,268,955 |
|
38,705,426 |
|
24,451,242 |
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Operating expenses |
|
|
|
|
|
|
|
|
|
Interest and other debt expenses |
|
5,482,450 |
|
2,860,691 |
|
10,200,681 |
|
5,589,642 |
|
Management fees |
|
2,221,908 |
|
1,947,167 |
|
4,352,380 |
|
4,007,031 |
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Incentive fees on income |
|
1,886,182 |
|
69,343 |
|
3,762,085 |
|
88,356 |
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Incentive fees on capital gains(1) |
|
— |
|
(1,073,068) |
|
— |
|
(1,544,569) |
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Director fees |
|
299,375 |
|
153,125 |
|
449,000 |
|
306,250 |
|
Administrative expenses |
|
288,454 |
|
299,262 |
|
581,088 |
|
664,769 |
|
Professional fees |
|
249,734 |
|
207,489 |
|
443,161 |
|
510,346 |
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Insurance expense |
|
162,746 |
|
196,114 |
|
323,703 |
|
395,872 |
|
Investment advisor expenses |
|
17,094 |
|
25,819 |
|
34,187 |
|
51,638 |
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Other operating expenses |
|
423,298 |
|
462,797 |
|
787,429 |
|
766,596 |
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Total expenses |
|
11,031,241 |
|
5,148,739 |
|
20,933,714 |
|
10,835,931 |
|
|
|
|
|
|
|
|
|
|
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Net investment income(1) |
|
8,910,220 |
|
7,120,216 |
|
17,771,712 |
|
13,615,311 |
|
Realized and unrealized gain (loss) on investments and Interest Rate Swap |
|
|
|
|
|
|
|
|
|
Net realized gain (loss): |
|
|
|
|
|
|
|
|
|
Non-controlled, non-affiliated investments |
|
195,593 |
|
— |
|
37,802 |
|
825,913 |
|
Non-controlled, affiliated investments |
|
— |
|
— |
|
(441,906) |
|
— |
|
Net realized gain (loss) |
|
195,593 |
|
— |
|
(404,104) |
|
825,913 |
|
Net change in unrealized appreciation (depreciation): |
|
|
|
|
|
|
|
|
|
Non-controlled, non-affiliated investments |
|
(6,866,500) |
|
(9,875,353) |
|
(6,358,284) |
|
(12,412,374) |
|
Non-controlled, affiliated investments |
|
— |
|
(352,787) |
|
(864,398) |
|
229,671 |
|
Controlled investments |
|
(171,084) |
|
766,458 |
|
273,916 |
|
922,387 |
|
Interest Rate Swap |
|
(564,538) |
|
(198,694) |
|
(397,754) |
|
(198,694) |
|
Net change in unrealized appreciation (depreciation) |
|
(7,602,122) |
|
(9,660,376) |
|
(7,346,520) |
|
(11,459,010) |
|
Net realized and unrealized gain (loss) |
|
(7,406,529) |
|
(9,660,376) |
|
(7,750,624) |
|
(10,633,097) |
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Net increase (decrease) in net assets resulting from operations |
|
|
|
|
|
|
|
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Net investment income per share—basic(1) |
|
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|
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|
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Earnings (loss) per share—basic(1) |
|
|
|
|
|
|
|
|
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Weighted average shares outstanding—basic |
|
72,571,907 |
|
73,667,822 |
|
72,571,907 |
|
73,744,580 |
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Net investment income per share—diluted(1)(2) |
|
|
|
|
|
|
|
|
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Earnings (loss) per share—diluted(1)(2) |
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding—diluted |
|
72,571,907 |
|
87,860,082 |
|
72,571,907 |
|
89,329,839 |
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_______________________________________________ | |||||||||
(1) Net investment income and per share amounts displayed above are net of the accrual (reversal) for incentive fees on capital gains which is reflected on a hypothetical liquidation basis in accordance with GAAP for the three and six months ended |
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(2) For the three and six month periods ended |
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:
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Three Months Ended |
Six Months Ended |
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GAAP Basis: |
|
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|
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Net Investment Income |
|
|
|
|
|
|
|
|
Net Investment Income per share |
0.12 |
|
0.10 |
|
0.24 |
|
0.18 |
|
Addback: GAAP incentive fee (reversal) based on capital gains |
— |
|
(1,073,068) |
|
— |
|
(1,544,569) |
|
Addback: GAAP incentive fee based on Income |
1,886,182 |
|
69,343 |
|
3,762,085 |
|
88,356 |
|
Pre-Incentive Fee1: |
|
|
|
|
|
|
|
|
Net Investment Income |
|
|
|
|
|
|
|
|
Net Investment Income per share |
0.15 |
|
0.08 |
|
0.30 |
|
0.16 |
|
Less: Incremental incentive fee based on Income |
(1,886,182) |
|
(69,343) |
|
(3,762,085) |
|
(88,356) |
|
As Adjusted2: |
|
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|
|
|
|
|
|
Net Investment Income |
|
|
|
|
|
|
|
|
Net Investment Income per share |
0.12 |
|
0.08 |
|
0.24 |
|
0.16 |
|
_______________________________________________ |
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1. Pre-Incentive Fee: Amounts are adjusted to remove the impact of all accrued (reversed) incentive fees recorded during the period.
2. As Adjusted: Amounts are adjusted to remove the GAAP accrual (reversal) for incentive fee based on capital gains (if any) and to include only the incremental incentive fee based on income. Adjusted amounts reflect the fact that no incentive fee on capital gains was realized and payable to the Advisor during the three and six month periods ended |
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/20230802687333/en/
Investor:
212.810.5427
Press:
646.231.8518
Source: