BlackRock Capital Investment Corporation Reports Financial Results for the Quarter Ended March 31, 2019, Declares Quarterly Distribution of $0.18 per Share

  • GAAP Net Investment Income (NII) of $0.17 per share providing first
    quarter distribution coverage of approximately 92%.
  • Net Asset Value (NAV) per share increased 1.1% or $0.08 per share to
    $7.15 per share on a quarter-over-quarter basis.
  • Net leverage of 0.37x was slightly up reflecting a net increase in
    investments. Total liquidity for portfolio company investments,
    including cash, was approximately $268.8 million, subject to leverage
    and borrowing base restrictions.
  • Under our existing share repurchase program, we repurchased 85,543
    shares of common stock for $0.5 million at an average price of $5.49,
    including brokerage commissions, via open market purchases in the
    first quarter.

NEW YORK–(BUSINESS WIRE)–BlackRock Capital Investment Corporation (NASDAQ:BKCC) (“BCIC” or the
“Company,” “we,” “us” or “our”) announced today that its Board of
Directors declared a quarterly distribution of $0.18 per share, payable
on July 9, 2019 to stockholders of record at the close of business on
June 18, 2019.

“Our deployment pipeline remains robust heading into the second quarter,
reflecting the increased capabilities of our platform following the
integration of Tennenbaum Capital Partners LLC, or TCP, with the
Company’s adviser, BlackRock Capital Investment Advisors, LLC. Two of
the new investments made by the Company during the quarter were driven
by BlackRock-managed funds being able to provide a holistic financing
solution to our borrowers. For the second quarter, we anticipate
investments in new companies to trend higher based on our current
pipeline and completed investments thus far in the second quarter.
Additionally, we believe that our ability to co-invest with TCP
affiliated funds allows us to mitigate portfolio risk by increasing
issuer and sector diversity,” commented James E. Keenan, Chairman and
Interim CEO of the Company.

“Our net unrealized and realized gains of $6.6 million were a result of
net portfolio valuation increases, primarily driven by appreciation in
our equity investment in US Well Services, Inc. (“USWS”). We anticipate
that the valuation of our USWS investment will continue to shift in line
with the quarter-end closing prices of the USWS stock. Substantially all
of our investment in USWS is subject to lock-ups, half of which expire
in May 2019 and the other half in November 2019.

“Under BlackRock’s management of BCIC, from March 6, 2015 to March 31,
2019, we have deployed capital of approximately $1 billion, of which
$387 million has been exited with a realized IRR of 14.1%. With
liquidity at approximately $269 million and no debt maturities until
2022, we have significant operating flexibility and deployment capacity.”

Financial Highlights

     
Q1 2019 Q4 2018 Q1 2018
($’s in millions, except per share data)      

Total
Amount

    Per Share    

Total
Amount

    Per Share    

Total
Amount

    Per Share
               
Net Investment Income/(loss) $ 11.4 $ 0.17 $ 11.8 $ 0.17 $ 11.6 $ 0.16
Net realized and unrealized gains/(losses) $ 6.6 $ 0.09 $ (46.4 ) $ (0.66 ) $ (12.5 ) $ (0.17 )
Deferred taxes $ 2.2 $ 0.03
Basic earnings/(losses) $ 18.0 $ 0.26 $ (32.4 ) $ (0.46 ) $ (0.9 ) $ (0.01 )
Distributions declared $ 12.4 $ 0.18 $ 12.6 $ 0.18 $ 13.2 $ 0.18
Net Investment Income/(loss), as adjusted1 $ 11.4 $ 0.17 $ 11.8 $ 0.17 $ 11.6 $ 0.16
Basic earnings/(losses), as adjusted1       $ 18.0     $ 0.26     $ (32.4 )     $ (0.46 )     $ (0.9 )     $ (0.01 )
($’s in millions, except per share data)       March 31,

2019

  December 31,

2018

  March 31,

2018

         
Total assets $721.8 $693.6 $887.1
Investment portfolio, at fair market value $680.4 $671.7 $870.1
Debt outstanding $208.8 $186.4 $310.1
Total net assets $492.1 $487.0 $553.1
Net asset value per share $7.15 $7.07 $7.65
Net leverage ratio2       0.37x     0.36x     0.56x

Business Updates

  • Under our existing share repurchase program, during the first quarter
    of 2019, 85,543 shares were repurchased for $0.5 million at an average
    price of $5.49 per share, including brokerage commissions. The
    cumulative repurchases since BlackRock entered into the investment
    management agreement with the Company in early 2015 totaled
    approximately 7.3 million shares for $50.4 million, representing 80.4%
    of total share repurchase activity, on a dollar basis, since
    inception. Since the inception of our share repurchase program through
    March 31, 2019, we have purchased 9.0 million shares at an average
    price of $6.94 per share, including brokerage commissions, for a total
    of $62.7 million. As of March 31, 2019, 3,320,309 shares remained
    authorized for repurchase.
  • The non-core legacy asset book comprised 33% of our total portfolio by
    fair market value as of March 31, 2019. This is further broken down
    into income-producing investments, non-earning equities and
    non-accrual investments at 25%, 7% and 1% of the total portfolio,
    respectively, by fair market value. Our investments in Vertellus
    Holdings, AGY Holding, Sur La Table, US Well Services and related
    issuers comprise 73% of the non-core book by fair market value.
___________________________
1 Non-GAAP basis financial measure. See Supplemental
Information on page 8.
2 Calculated as the ratio between (A) debt, excluding
unamortized debt issuance costs, less available cash and receivable
for investments sold, and (B) net asset value.
 

Portfolio and Investment Activity*

($’s in millions)      

Three Months
ended
March 31, 2019

 

   

Three Months
ended
December 31, 2018

 

   

Three Months
ended
March 31, 2018

 

             
Investment deployments $ 58.0 $ 32.0 $ 144.6
Investment exits $ 55.7 $ 94.7 $ 17.2
Number of portfolio company investments at the end of period 28 27 31
Weighted average yield of debt and income producing equity
securities,

at fair market value

11.7 % 11.5 % 11.3 %
% of Portfolio invested in Secured debt, at fair market value 47 % 47 % 59 %
% of Portfolio invested in Unsecured debt, at fair market value 23 % 23 % 16 %
% of Portfolio invested in Equity, at fair market value 30 % 30 % 25 %
Average investment by portfolio company, at amortized cost

(excluding investments below $5.0 million)

      $ 32.5       $ 34.1       $ 33.6  
 

*Balance sheet amounts above are as of period end

  • We deployed $58.0 million during the quarter while exits of
    investments totaled $55.7 million, resulting in a $2.3 million net
    increase in our portfolio due to investment activity.

    • Our deployments were primarily concentrated in three new portfolio
      company investments and one investment into an existing portfolio
      company.

      • $7.5 million funded L + 6.75% first lien term loan (with an
        additional $2.5 million unfunded at close) to
        FinancialForce.com, a provider of cloud ERP and Professional
        Service Automation (“PSA”) software;
      • $4.7 million funded L + 7.25% first lien term loan (with a
        $0.4 million unfunded revolver) to CareATC, Inc., a
        tech-enabled provider of employer-sponsored health and
        wellness clinics;
      • $21.0 million funded L + 8.50% second lien term loan to
        Paragon Films, a leading manufacturer or stretch films
        servicing the storage and distribution pallet unitization
        market; and
      • $23.9 million of incremental L + 11.0% unsecured debt to
        Gordon Brothers Finance Company (“GBFC”) to fund portfolio
        growth.
    • Our repayments were primarily concentrated in one portfolio
      company exit and two partial repayments:

      • $25.0 million repayment of Paragon Films second lien term
        loan. The exit of this investment occurred pursuant to a sale
        of the company to a new sponsor and accompanying
        recapitalization. The aforementioned $21.0 million investment
        in Paragon Films was an investment in the post-sale capital
        structure;
      • $26.1 million partial repayment of unsecured debt to GBFC;
      • $3.0 million partial repayment of NorthStar Financial second
        lien term loan; and
    • A $3.0 million revolver commitment to Bankruptcy Management
      Solutions was terminated resulting in a complete exit from this
      investment. The revolver was unfunded.
  • Our $96.3 million equity investment in BCIC Senior Loan Partners
    (“SLP”) is generating a yield of greater than 12%. During the first
    quarter, SLP made investments into one new portfolio company and four
    existing portfolio companies totaling $11.9 million of new capital
    deployments during the quarter. Total committed capital and
    outstanding investments, at par, amounted to $369.7 million and $354.5
    million, respectively, to 28 borrowers. The new investment, at par,
    was a $3.1 million first lien term loan to Research Now Group, LLC, a
    global leader in data collection through online, mobile, and offline
    surveys. Incremental investments to existing portfolio companies
    primarily included an additional $4.1 million investment in Protective
    Industrial Products, Inc., and an additional $3.6 million investment
    in MSHC, Inc. (Service Logic Acquisition).
  • As of March 31, 2019, there were three non-accrual investment
    positions, representing approximately 1.6% and 7.0% of total debt and
    preferred stock investments, at fair value and cost, respectively, as
    compared to non-accrual investment positions of approximately 1.6% and
    7.1% of total debt and preferred stock investments at fair value and
    cost, respectively, at December 31, 2018. Our average internal
    investment rating at fair market value at March 31, 2019 was 1.49 as
    compared to 1.44 as of the prior quarter end.
  • During the quarter ended March 31, 2019, net realized and unrealized
    gains were $6.6 million, primarily due to appreciation in portfolio
    valuations during the quarter.

First Quarter Financial Updates

  • GAAP net investment income (“NII”) was $11.4 million, or $0.17 per
    share, for the three months ended March 31, 2019. Relative to
    distributions declared of $0.18 per share, our NII distribution
    coverage was 92% for the quarter.
  • As previously disclosed, our base management fee rate was reduced from
    an annual rate of 2.00% of total assets to 1.75%, effective March 7,
    2017, and incentive management fees based on income were waived by our
    investment adviser until June 30, 2019. For the quarter ended March
    31, 2019, we incurred base management fees of $2.9 million. Incentive
    management fees based on income of $2.3 million were earned and waived
    by our adviser during the current quarter. Additionally, $18.8 million
    of incentive management fees have been waived on a cumulative basis.
    For incentive management fees based on gains, there was no accrual as
    of March 31, 2019.
  • Tax characteristics of all 2018 distributions were reported to
    stockholders on Form 1099 after the end of the calendar year. Our 2018
    distributions of $0.72 per share were comprised of $0.70 per share
    from various sources of income and $0.02 per share of return of
    capital. Our return of capital distributions totaled $1.98 per share
    from inception to December 31, 2018. At our discretion, we may carry
    forward taxable income in excess of calendar year distributions and
    pay a 4% excise tax on this income. We will accrue excise tax on
    estimated undistributed taxable income as required. There was no
    undistributed taxable income carried forward from 2018.

Liquidity and Capital Resources

  • At March 31, 2019, we had $27.1 million in cash and cash equivalents
    and $241.7 million of availability under our credit facility, subject
    to leverage restrictions, resulting in approximately $268.8 million of
    availability for portfolio company investments.
  • Net leverage, adjusted for available cash, receivables for investments
    sold, payables for investments purchased and unamortized debt issuance
    costs, stood at 0.37x at quarter-end, and our 328% asset coverage
    ratio provided the Company with available debt capacity under its
    asset coverage requirements of $274.7 million. Further, as of
    quarter-end, approximately 77% of our portfolio was invested in
    qualifying assets, exceeding the 70% regulatory requirement of a
    business development company.

Conference Call

BlackRock Capital Investment Corporation will host a
webcast/teleconference at 10:00 a.m. (Eastern Time) on Thursday, May 2,
2019, to discuss its first quarter 2019 financial results. All
interested parties are welcome to participate. You can access the
teleconference by dialing, from the United States, (800) 458-4148, or
from outside the United States, +1-720-543-0206, 10 minutes before 10:00
a.m. and referencing the BlackRock Capital Investment Corporation
Conference Call (ID Number 3027722). A live, listen-only webcast will
also be available via the Investor Relations section of www.blackrockbkcc.com.
Both the teleconference and webcast will be available for replay by 1:00
p.m. on Thursday, May 2, 2019 and ending at 1:00 p.m. on Thursday, May
16, 2019. To access the replay of the teleconference, callers from the
United States should dial (888) 203-1112 and callers from outside the
United States should dial (719) 457-0820 and enter the Conference ID
Number 3027722.

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 (http://www.blackrockbkcc.com/news-and-events/disclaimer).

About BlackRock Capital Investment Corporation

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. The
Company invests primarily in middle-market companies in the form of
senior and junior secured and unsecured debt securities and loans, each
of which may include an equity component, and by making direct
preferred, common and other equity investments in such companies.

         

BlackRock Capital Investment Corporation

Consolidated Statements of Assets and Liabilities

 
        March 31,

2019

    December 31,

2018

Assets
Investments at fair value:
Non-controlled, non-affiliated investments (cost of $253,938,127 and
$233,331,450)
$ 218,148,636 $ 200,569,644
Non-controlled, affiliated investments (cost of $114,252,403 and
$130,892,674)
99,991,510 111,727,234
Controlled investments (cost of $387,251,367 and $388,870,375)   362,234,127     359,356,068  
Total investments at fair value (cost of $755,441,897 and
$753,094,499)
680,374,273 671,652,946
Cash and cash equivalents 27,107,015 13,497,320
Receivable for investments sold 2,002,968 1,691,077
Interest, dividends and fees receivable 9,945,510 4,084,001
Prepaid expenses and other assets   2,368,966     2,707,036  
Total Assets $ 721,798,732   $ 693,632,380  
Liabilities
Debt (net of deferred financing costs of $2,997,396 and $3,227,965) $ 208,835,348 $ 186,397,728
Interest and credit facility fees payable 2,576,255 722,841
Distributions payable 12,390,525 12,552,212
Base management fees payable 2,923,149 3,494,520
Payable for investments purchased 989,460
Accrued administrative services 739,812 376,507
Other accrued expenses and payables   2,204,539     2,078,958  
Total Liabilities   229,669,628     206,612,226  
Net Assets
Common stock, par value $.001 per share, 200,000,000 common shares
authorized,
77,861,287 and 77,861,287 issued and 68,836,255 and 68,921,798
outstanding
77,861 77,861
Paid-in capital in excess of par 853,248,794 853,248,794
Distributable earnings (losses) (298,528,296 ) (304,106,473 )
Treasury stock at cost, 9,025,032 and 8,939,489 shares held   (62,669,255 )   (62,200,028 )
Total Net Assets   492,129,104     487,020,154  
Total Liabilities and Net Assets $ 721,798,732   $ 693,632,380  
Net Asset Value Per Share       $ 7.15       $ 7.07  
 

BlackRock Capital Investment Corporation

Consolidated Statements of Operations

         
       

Three Months
ended
March 31, 2019
(Unaudited)

   

Three Months
ended
March 31, 2018
(Unaudited)

Investment Income:
Non-controlled, non-affiliated investments:
Cash interest income $ 5,942,016 $ 7,144,027
PIK interest income 240,184
Fee income   475,407     465,206  
Total investment income from non-controlled, non-affiliated
investments
  6,657,607     7,609,233  
Non-controlled, affiliated investments:
Cash interest income 1,222,251 2,214,613
PIK interest income 690,960
PIK dividend income 220,480 189,026
Fee income       35,000  
Total investment income from non-controlled, affiliated investments   1,442,731     3,129,599  
Controlled investments:
Cash interest income 6,900,738 5,085,705
PIK interest income 766,466
Cash dividend income 4,191,703 3,126,861
PIK dividend income 731,516
Fee income   121,862     387,058  
Total investment income from controlled investments   11,214,303     10,097,606  
Total investment income   19,314,641     20,836,438  
Expenses:
Base management fees 2,923,149 3,312,369
Incentive management fees 2,280,836 1,735,195
Interest and credit facility fees 3,392,434 3,708,958
Professional fees 473,043 733,164
Administrative services 363,305 553,764
Director fees 193,000 187,000
Investment advisor expenses 87,500 87,500
Other   478,029     630,737  
Total expenses, before incentive management fee waiver   10,191,296     10,948,687  
Incentive management fee waiver   (2,280,836 )   (1,735,195 )
Expenses, net of incentive management fee waiver   7,910,460     9,213,492  
Net Investment Income   11,404,181     11,622,946  
 
Realized and Unrealized Gain (Loss):
Net realized gain (loss):
Non-controlled, non-affiliated investments 325,489 (50,515,956 )
Non-controlled, affiliated investments (269,226 )
Controlled investments       (26,118,432 )
Net realized gain (loss)   56,263     (76,634,388 )
Net change in unrealized appreciation (depreciation) on:
Non-controlled, non-affiliated investments (2,684,053 ) 43,690,517
Non-controlled, affiliated investments 4,560,914 1,422,575
Controlled investments 4,497,067 19,156,544
Foreign currency translation   134,330     (173,911 )
Net change in unrealized appreciation (depreciation)   6,508,258     64,095,725  
Net realized and unrealized gain (loss)   6,564,521     (12,538,663 )
Net Increase (Decrease) in Net Assets Resulting from Operations $ 17,968,702   $ (915,717 )
Net Investment Income Per Share-basic $ 0.17   $ 0.16  
Earnings (Loss) Per Share-basic $ 0.26   $ (0.01 )
Average Shares Outstanding-basic   68,837,612     72,991,828  
Net Investment Income Per Share-diluted $ 0.16   $ 0.15  
Earnings (Loss) Per Share-diluted $ 0.24   $ (0.01 )
Average Shares Outstanding-diluted   85,831,349     89,985,565  
Distributions Declared Per Share       $ 0.18       $ 0.18  
 

Supplemental Information

The Company reports its financial results on a 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.

Until March 6, 2017, the Company recorded its liability for incentive
management fees based on income as it became legally obligated to pay
them, based on a hypothetical liquidation at the end of each reporting
period. The Company’s obligation to pay incentive management fees with
respect to any fiscal quarter until March 6, 2017 was based on a formula
that reflects the Company’s results over a trailing four-fiscal quarter
period ending with the pro-rated period until March 6, 2017. The Company
is legally obligated to pay the amount resulting from the formula less
any cash payments of incentive management fees during the prior three
quarters. The formula’s requirement to reduce the incentive management
fee by amounts paid with respect to such fees in the prior three
quarters caused the Company’s incentive management fee expense to become
concentrated in the fourth quarter of each year. Management believes
that reflecting incentive management fees throughout the year, as the
related investment income is earned, is an effective measure of the
Company’s profitability and financial performance that facilitates
comparison of current results with historical results and with those of
the Company’s peers. The Company’s “as adjusted” results reflect
incentive management fees based on the formula the Company utilizes for
each trailing four-fiscal quarter period until March 6, 2017, with the
formula applied to each quarter’s incremental earnings and without any
reduction for incentive management fees paid during the prior three
quarters. The resulting amount represents an upper limit of each
quarter’s incremental incentive management fees that the Company may
become legally obligated to pay at the end of the year. Prior year
amounts are estimated in the same manner. These estimates represent
upper limits because, in any calendar year, subsequent quarters’
investment underperformance could reduce the incentive management fees
payable by the Company with respect to prior quarters’ operating
results. After March 6, 2017, incentive management fees based on income
have been calculated for each calendar quarter and are paid on a
quarterly basis if certain thresholds are met. The Company records its
liability for incentive management fees based on capital gains by
performing a hypothetical liquidation at the end of each reporting
period. The accrual of this hypothetical capital gains incentive
management fee is required by GAAP, but it should be noted that a fee so
calculated and accrued is not due and payable until the end of the
measurement period, or every June 30. The incremental incentive
management fees disclosed for a given period are not necessarily
indicative of actual full year results. Changes in the economic
environment, financial markets and other parameters used in determining
such estimates could cause actual results to differ and such differences
could be material. In addition, on March 7, 2017, BlackRock Advisors, in
consultation with the Company’s Board of Directors, agreed to waive
incentive fees based on income after March 6, 2017 to December 31, 2018,
which was extended to June 30, 2019. BCIA has agreed to honor such
waiver. For a more detailed description of the Company’s incentive
management fee, please refer to the Company’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2018, 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, 2019

 

   

Three months
ended
March 31, 2018

 

GAAP Basis:
Net Investment Income $ 11,404,181 $ 11,622,946
Net Investment Income per share 0.17 0.16
Addback: GAAP incentive management fee expense based on Gains
Addback: GAAP incentive management fee expense based on Income
Pre-Incentive Fee 1 :
Net Investment Income $ 11,404,181 $ 11,622,946
Net Investment Income per share 0.17 0.16
Less: Incremental incentive management fee expense based on Income
As Adjusted 2 :
Net Investment Income $ 11,404,181 $ 11,622,946
Net Investment Income per share         0.17       0.16
 
Note: The Net Investment Income amounts for the three months ended
March 31, 2019 and 2018 are net of incentive management fees based
on income and a corresponding incentive management fee waiver in the
amounts of $2,280,836 and $1,735,195, respectively. For the periods
shown, there is no difference between the GAAP and as adjusted
figures; however, there may be a difference in future periods.
 

1Pre-Incentive Fee: Amounts are adjusted to
remove all incentive management fees. Such fees are calculated but
not necessarily due and payable at this time.

 

2 As Adjusted: Amounts are adjusted to remove
the incentive management fee expense based on gains, as required
by GAAP, and to include only the incremental incentive management
fee expense based on Income. Until March 6, 2017, the incremental
incentive management fee was calculated based on the current
quarter’s incremental earnings, and without any reduction for
incentive management fees paid during the prior calendar quarters.
After March 6, 2017, incentive management fee expense based on
income has been calculated for each calendar quarter and may be
paid on a quarterly basis if certain thresholds are met. Amounts
reflect the Company’s ongoing operating results and reflect the
Company’s financial performance over time.

 

Contacts

Investor Contact:
Nik Singhal
212.810.5427

Press
Contact:

Brian Beades
212.810.5596

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