8-K: BlackRock TCP Capital Corp. Announces 2024 Financial Results and Declares Dividends

BlackRock TCP Capital Corp. reports its 2024 financial results, including a net investment income of $0.40 per share for the fourth quarter, and declares a first quarter dividend of $0.25 per share plus a special dividend of $0.04 per share.

Summary

• BlackRock TCP Capital Corp. (TCPC) announced its financial results for the fourth quarter and year ended December 31, 2024.
• Net investment income for Q4 2024 was $33.8 million, or $0.40 per share, exceeding the regular dividend of $0.34 per share.
• Adjusted net investment income for Q4 2024 was $30.8 million, or $0.36 per share.
• Adjusted net investment income for the year ended December 31, 2024, was $121.5 million, or $1.52 per share.
• Net asset value per share was $9.23 as of December 31, 2024, compared to $10.11 as of September 30, 2024.
• The company declared a first quarter dividend of $0.25 per share and a special dividend of $0.04 per share, payable on March 31, 2025.
• TCPC intends to declare a special dividend of at least $0.02 per share in each of the second and third quarters of 2025, subject to Board approval.
• The Adviser voluntarily agreed to waive one-third of its base management fee for three calendar quarters starting January 1, 2025.
• As of December 31, 2024, debt investments on non-accrual status represented 5.6% of the portfolio at fair value and 14.4% at cost.
• Total acquisitions during the quarter were approximately $120.7 million, and total investment dispositions were $168.6 million.
• Net leverage was 1.14x as of December 31, 2024, compared to 1.08x at September 30, 2024.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the company highlights positive aspects like dividend declarations and fee waivers, there are concerns about the decrease in net asset value and the increase in non-accruals. Management expresses optimism, but the results indicate some challenges.

Positives

• Net investment income for Q4 2024 exceeded the regular dividend.
• The company declared a special dividend for Q1 2025 and intends to declare special dividends for the subsequent two quarters.
• The Adviser's voluntary fee waiver will reduce expenses for the company.
• Available liquidity was approximately $615.3 million as of December 31, 2024.

Negatives

• Net asset value per share decreased from $10.11 to $9.23 during the quarter.
• Debt investments on non-accrual status increased to 5.6% of the portfolio at fair value and 14.4% at cost.
• Net decrease in net assets resulting from operations for the three months ended December 31, 2024 was $38.6 million, or $0.45 per share.

Risks

• The company acknowledges higher non-accruals and the impact of lower base rates and higher expenses.
• The company is working to resolve portfolio issues that impacted results in recent quarters.
• Forward-looking statements are subject to risks and uncertainties, including economic conditions, interest rate changes, and regulatory changes.

Future Outlook

The company intends to declare a special dividend of at least $0.02 per share in each of the second and third quarters of 2025, subject to Board approval. The new management team remains optimistic about future prospects and is confident in their plan to navigate challenges and return portfolio performance to historical levels.

Management Comments

• TCPCs new management team remains optimistic about our future prospects and is confident we have the right plan in place to effectively navigate the challenges presented during 2024 and to return the portfolio performance to historical levels, said Phil Tseng, Chairman and CEO of BlackRock TCP Capital Corp.
• Given our recent performance, our board declared a regular dividend of $0.25 per share for the first quarter 2025, which we believe is a sustainable level.
• We appreciate our shareholders support and have taken additional steps to further align our interests, Tseng concluded.

Industry Context

As a business development company (BDC), BlackRock TCP Capital Corp.'s performance is closely tied to the health of the middle-market lending environment. The increase in non-accruals suggests potential stress in this segment. The fee waiver by the advisor could be seen as a move to maintain competitiveness and shareholder value in a challenging market.

Comparison to Industry Standards

• Comparing TCPC's net asset value per share of $9.23 to other BDCs like Ares Capital (ARCC) or Main Street Capital (MAIN) provides a benchmark for asset management effectiveness.
• The non-accrual rate of 5.6% at fair value should be compared to the average non-accrual rates of other BDCs to assess portfolio quality.
• The weighted average yield of the debt portfolio at 12.4% can be compared to similar BDCs to evaluate the risk-adjusted return profile.

Stakeholder Impact

• Shareholders will receive a regular dividend of $0.25 per share and a special dividend of $0.04 per share for Q1 2025.
• The Adviser's fee waiver will reduce expenses, potentially benefiting shareholders.
• The increase in non-accruals and decrease in net asset value may concern shareholders.

Next Steps

• The company will host a conference call on February 27, 2025, to discuss the financial results.
• The company intends to declare special dividends in the second and third quarters of 2025, subject to Board approval.

Key Dates