BlackRock Capital Investment Corporation (BKCC) Misses Q4 EPS by 2c

BlackRock Capital Investment Corporation (NASDAQ: BKCC) reported Q4 EPS of $0.10, $0.02 worse than the analyst estimate of $0.12.

• GAAP Net Investment Income (“NII”) of $0.10 per share, or $7.3 million, provided fourth quarter distribution coverage of 101%.
• Net Asset Value (“NAV”) increased to $315.0 million, up 2.8% from $306.6 million; NAV per share decreased 0.2% to $4.23 per share from $4.24 per share, primarily due to an increase in total shares outstanding.
• Transformational progress towards reducing junior capital and non-core exposure, successfully exiting $171 million of these investments during the fourth quarter and subsequent period. As a result, non-core holdings represent just 9%1 of the total portfolio at fair value as of February 23, 2021.
• Net leverage of 0.51x as of December 31, 2020, down significantly from 0.98x as of September 30, 2020, primarily driven by net investment exits during the fourth quarter.
• Total liquidity for portfolio company investments, including cash, was approximately $285 million, subject to leverage and borrowing base restrictions.

“We are pleased to report continued transformational progress towards our goal of reducing non-core and junior capital exposure in our portfolio,” said James E. Keenan, Chairman and Interim CEO of the Company. “During and subsequent to the fourth quarter, we made significant headway in reducing this exposure. We achieved this primarily through meaningful reductions in our exposure to Gordon Brothers Finance Company (“GBFC”) and BCIC Senior Loan Partners (“SLP”), coupled with the complete exits of our investments in First Boston Construction Holdings (“FBCH”) and CB-HDT Holdings. In addition, we believe there are more near-term opportunities that could lead to continued repayments in the non-core book.”

“The Company has continued to identify strong risk-adjusted return opportunities for capital deployment. Consistent with our strategy, investments have been focused on senior secured debt with an emphasis on first lien loans. We expect the percentage of first lien investments as well as the diversity of the portfolio to further increase as we continue to deploy capital,” added Keenan.

“We are returning to paying an all cash dividend this quarter at a level of $0.10 per share. For the last three quarters, we have de-risked our portfolio during a period of unprecedented economic uncertainty, and as part of that process we took the prudent but temporary step of paying a portion of our dividend in stock. With most of the de-risking accomplished, we are confident in resuming our normalized approach to dividends.

“This strategic progress has resulted in significant repayments and deleveraging, causing portfolio leverage to decline to approximately 0.43x as of February 23rd, 2021, from 0.98x at the end of the third quarter of 2020. We believe the strength of our platform will allow us to rebuild the portfolio in a manner that is consistent with our strategy. In the near term, we expect that NII will likely be compressed (in the range of 5 to 6 cents per share at the current leverage ratio). We anticipate that, as we redeploy capital, we will rebuild NII, enabling us to grow into the dividend,” added Keenan.

“With the strategic portfolio exits largely behind us, our near-term priorities include optimizing our capital structure, which includes addressing the 2022 and 2023 debt maturities, as well as allocating more capital towards programmatic share repurchases. Additionally, to further bolster NAV, BlackRock has elected to fully waive its incentive fee for the fourth quarter, which totaled $1.3 million,” concluded Keenan.

For earnings history and earnings-related data on BlackRock Capital Investment Corporation (BKCC) click here.

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