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Edited Transcript of TCPC earnings conference call or presentation 8-Aug-19 5:00pm GMT

Q2 2019 BlackRock TCP Capital Corp Earnings Call

Santa Monica Aug 17, 2019 (Thomson StreetEvents) -- Edited Transcript of BlackRock TCP Capital Corp earnings conference call or presentation Thursday, August 8, 2019 at 5:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Howard Marshall Levkowitz

BlackRock TCP Capital Corp. - Chairman & CEO

* Kathleen McGlynn

BlackRock TCP Capital Corp. - VP of IR

* Paul Leslie Davis

BlackRock TCP Capital Corp. - CFO

* Rajneesh Vig

Tennenbaum Capital Partners, LLC - Managing Partner and President

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Conference Call Participants

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* Christoph M. Kotowski

Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst

* Christopher Whitbread Patrick Nolan

Ladenburg Thalmann & Co. Inc., Research Division - EVP of Equity Research

* Finian Patrick O'Shea

Wells Fargo Securities, LLC, Research Division - Associate Analyst

* Robert James Dodd

Raymond James & Associates, Inc., Research Division - Research Analyst

* Ryan Patrick Lynch

Keefe, Bruyette, & Woods, Inc., Research Division - MD

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Presentation

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Operator [1]

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Ladies and gentlemen, good afternoon. Welcome, everyone, to BlackRock TCP Capital Corp.'s Second Quarter 2019 Earnings Conference Call. Today's conference call is being recorded for replay purposes. (Operator Instructions)

And now I would like to turn the call over to Katie McGlynn, Director of the BlackRock TCP Capital Corp. Global Investor Relations Team. Katie, please proceed.

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Kathleen McGlynn, BlackRock TCP Capital Corp. - VP of IR [2]

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Thank you, Daniel. Before we begin, I'll note that this conference call may contain forward-looking statements based on the estimates and assumptions of management at the time of such statements and are not guarantees of future performance. Forward-looking statements involve risks and uncertainties, and actual results could differ materially from those projected. Any forward-looking statements made on this call are made as of today and are subject to change without notice.

This morning, we issued our earnings release for the second quarter ended June 30, 2019. We also posted a supplemental earnings presentation to our website at tcpcapital.com. To view the slide presentation, which we will refer to on today's call, please click on the Investor Relations link and select Events & Presentations. These documents should be reviewed in conjunction with the company's Form 10-Q, which was filed with the SEC this morning.

I will now turn the call over to our Chairman and CEO, Howard Levkowitz.

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Howard Marshall Levkowitz, BlackRock TCP Capital Corp. - Chairman & CEO [3]

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Thanks, Katie. I'm here with our TCPC team, and we thank everyone for participating on our call today. I will begin with an overview of our performance during the second quarter, and then our CFO, Paul Davis, will review our financial results. After Paul's comments, I will provide some closing remarks before opening the call to your questions.

In the second quarter, we earned net investment income of $0.41 per share, out-earning our dividend by $0.05. This was the 29th consecutive quarter that our net investment income covered our dividend. And today, we declared a third quarter dividend of $0.36 per share payable on September 30 to shareholders of record as of September 16.

The second quarter was among our strongest quarters for deployments, which totaled $232 million. We continue to leverage both our long-standing relationships with borrowers and deal sources and the power of the BlackRock platform to identify unique and attractive investment opportunities. Dispositions in the quarter were $117 million, resulting in net acquisitions of $115 million.

While our investment portfolio remained strong overall, our net asset value declined 3.8% during the second quarter. This decline was almost entirely due to a write-down of our investment in Fidelis, a cyber security solutions provider, that has significantly underperformed our expectations. Our initial investment in Fidelis, which we made in 2015, was at a relatively low loan-to-value and was made alongside a well-regarded private equity firm whose cash equity investment was nearly 3x our debt. Fidelis initially performed to plan but subsequently struggled in an increasingly competitive sector.

After implementing several growth initiatives, customers are reacting favorably, and sales have increased. However, liquidity is challenging as revenue growth has yet to outpace costs. During the second quarter, it became clear that notwithstanding several add-on investments from the sponsor, the company's liquidity position no longer support its valuation. As a result, we recorded a $28.6 million unrealized loss and place the loans on nonaccrual. We are disappointed by this result and are continuing to work closely with management and the sponsor to maximize value.

The credit quality of the remainder of our portfolio is strong. Across the middle market, we are seeing mostly isolated credit events that appear to be more idiosyncratic and not indicative of widespread issues.

Turning to Slide 6 of the presentation. At quarter end, our portfolio had a fair market value of $1.7 billion, 92% of which was in senior secured debt. In constructing our portfolio, we have consistently focused on seniority as well as diversification. As of June 30, we held investments in a record 104 companies across a wide variety of industries. Our largest position represented only 3.2% of the portfolio, and taken together, our 5 largest positions represented only 14.9% of the portfolio.

Furthermore, as the chart on the left side of Slide 6 illustrates, our recurring income is distributed across a diverse set of portfolio companies. We are not reliant on income from any one portfolio company. In fact, on an individual company basis, well over half of our portfolio companies each contribute less than 1% to our recurring income.

At quarter end, 91% of our debt and investments were floating rate, as demonstrated on Slide 7. As I noted earlier, we deployed $232 million in the second quarter, substantially all of which was in senior secured loans and notes. Our strong origination activity in the second quarter resulted from the relationships we have developed over 2 decades in direct lending as well as expanded access to deal flow and additional resources we are leveraging as part of the BlackRock platform. We are able to add more value to our borrowers and deal sources by providing a full range of strategies and risk profiles across the global credit platform.

Deployment activity in the quarter included 18 new investments, 7 of which were with existing borrowers. Follow-on investments in existing portfolio companies continue to be an important source of investment opportunities and reflect the strength of our borrower relationships and the value we deliver to them. We also continue to focus on investments where we lead or colead negotiations, leveraging our industry expertise and allowing us to set deal terms with solid creditor protections.

In addition to substantial deal flow from existing borrowers, our industry-focused model is generating a number of opportunities from borrowers that prefer lenders who truly understand their business. Our top 5 investments in the second quarter demonstrate our emphasis on diversity in lending at the top of the capital structure. They include a $21 million senior secured loan to Diamondback, a global provider of integrated risk management tools. Diamondback is a new investment for TCPC but is a long-time relationship of our firm. A $20 million senior secured loan to Unanet, a project management solutions provider. The company's owners contacted us directly based on our relationship and our proven execution capabilities. Our third-largest investment in the quarter was a $19 million senior secured loan to GlobalTranz, a provider of freight management services. We also made a $17 million senior secured loan to Dude Solutions, a market-leading provider of cloud-based operations management software. And our fifth-largest investment in the quarter was a $15 million upsize of our existing senior secured loan to Apex Group, a fund administrator serving the global investment management industry. Our other investments in the second quarter provide exposure to a variety of industries, including online retail, construction materials, health care equipment and aircraft financing. Combined, our second quarter investments demonstrate our emphasis on noncyclical industries.

Dispositions in the quarter were $117 million. These included payoffs of all of our loans to Envigo totaling $40 million and payoffs to the $30 million loan to ArcServe and a $20 million loan to Datto. New investments during the quarter had a weighted average effective yield of 9.7%, and the investments we exited had a weighted average effective yield of 12.3%.

While our average new investments were lower-yielding than the investments we exited this quarter, we would caution against viewing any one quarter as a trend. The overall effective yield on our debt portfolio at quarter end was 11% compared to 11.4% at the end of the last quarter.

As shown on Slides 8 and 9, respectively, we have returned $10.64 per share in dividends and outperformed the Wells Fargo BDC index by 33% since our IPO.

Now I will turn the call over to Paul, who will discuss our financial results. Paul?

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Paul Leslie Davis, BlackRock TCP Capital Corp. - CFO [4]

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Thanks, Howard, and hello, everyone. Starting on Slide 14, we generated net investment income in the second quarter of $0.41 per share, again, exceeding our dividend of $0.36 per share. This extends our more than 7-year record of covering our regular dividend every quarter since we went public. Over this period, on a cumulative basis, we've out-earned our dividends by an aggregate $39 million or $0.66 per share based on total shares outstanding at quarter end.

Investment income for the second quarter was $0.82 per share, substantially all of which was interest income. This includes recurring cash interest of $0.64, recurring discount and fee amortization of $0.04 and PIK income of $0.08. We also generated $0.05 per share from prepayment income, including both prepayment fees and unamortized OID.

Our income recognition follows our conservative policy of generally amortizing upfront economics over the life of an investment rather than recognizing all of it at the time the investment is made. Operating expenses for the quarter were $0.41 per share and included incentive compensation of $0.08 per share as well as interest and other debt expenses of $0.19 per share for net investment income of $0.41 per share.

Incentive compensation was reduced by more than $0.01 due to the reduction in our incentive fee rate from 20% to 17.5% that took effect on February 9. Net unrealized losses of $34.6 million or $0.59 per share were primarily attributed to the write-down of our investment in Fidelis, most of which we placed on nonaccrual during the quarter and which comprised 1.1% of our portfolio at fair value at June 30. No other loans were on nonaccrual at quarter end, and the credit quality of our portfolio is strong. Realized gains, net of realized losses, were flat in the quarter.

Turning to Slide 18. We had total liquidity of $237 million at quarter end. This included available leverage of $227 million and cash of $22 million, reduced by net pending settlements of $12 million. Since the beginning of the second quarter, we have expanded our credit facility capacity by a total of $150 million, which includes an incremental $50 million on our SVCP facility that we added earlier this week.

During the second quarter, we also reduced the interest rate on our SVCP facility by 25 basis points to LIBOR plus 200 and extended the maturity of both facilities to May 2023. The increased capacity, reduced cost and extended maturities of our credit facilities further expand our diverse leverage program, which includes 2 low-cost credit facilities, 2 convertible note issuances, a straight unsecured note issuance and an SBA program. Outstanding draws on our $150 million SBA program increased to $118 million at June 30 as we added 2 new portfolio companies to the SBIC.

The increased leverage flexibility following shareholder approval of our reduced regulatory -- coverage ratio allowed us to take advantage of attractive investment opportunities during the quarter. Regulatory leverage at quarter end, which is net of SBIC debt, was 0.99x common equity on a gross basis and 0.98x net of cash and outstanding trades. Our investment-grade rating was reaffirmed by Moody's in June, and we're proud to continue to be 1 of only 3 BDCs with both 2:1 leverage flexibility and an investment-grade rating from both Moody's and S&P.

I'll now turn the call back over to Howard.

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Howard Marshall Levkowitz, BlackRock TCP Capital Corp. - Chairman & CEO [5]

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Thanks, Paul. While we are pleased with our strong net investment income, dividend coverage and net deployment during the quarter, we are disappointed by the decline in our NAV. However, we do not believe this is indicative of broader issues, and we remain focused on delivering the results our shareholders come to expect from TCPC, including consistent dividend coverage, disciplined investing and strong credit quality.

Middle-market indicators have been particularly healthy with 8.5% year-over-year revenue growth in the second quarter, outpacing revenue growth for the S&P 500. However, we remain cautious on the environment, and we continue to observe idiosyncratic company and industry shifts that serve as reminders of the importance of our patient and disciplined investment approach, which is the underpinning of our strong and consistent performance.

We make investment decisions based on a comprehensive analysis of each company, its management team and strategy and relevant industry dynamics. In this environment, we continue to leverage our platform to pursue attractive investment opportunities.

In the third quarter-to-date through August 7, we have invested approximately $125 million primarily in 4 senior secured loans. The combined effective yield of these investments is approximately 9.7%, which excludes certain fees earned this quarter.

Looking ahead, we believe we are well positioned to continue to generate strong and consistent performance for several reasons. Our 20-plus years of experience, which spans several market cycles, is a key advantage in attracting borrowers and deal sources as well as managing risk. Our robust origination platform gives us the ability to source unique and attractive investment opportunities. Joining BlackRock has further enhanced our deal flow, supporting our selective investment approach and our disciplined underwriting.

As the lead or colead on the majority of the loans we make, we take an active role in due diligence, deal structuring, establishing terms and monitoring investments. The direct relationships we form with borrowers as part of this process help protect TCPC and its shareholders. The BlackRock TCPC team is structured so that deal team members source, structure and monitor investments to ensure interests are aligned over the life of an investment. And finally, the BlackRock TCP team has deep experience in both performing and distressed credit. This helps us structure deals that are downside protected and manage through any challenges that may arise.

In closing, we remain focused on generating superior risk-adjusted returns for our investors while preserving capital with downside protection.

And with that, operator, please open up the call for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Chris Kotowski with Oppenheimer.

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Christoph M. Kotowski, Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst [2]

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I assume just on Fidelis, obviously, you probably can't comment too much on what, if any, prospects there are for recoveries, but if you can, please do. But I guess I think just more generally, when you're in a lending business, some losses are inevitable. And I wonder how you think about some mechanism to fill up the NAV bucket after those kinds of losses. And I know that, like, equity is a fairly small part of your portfolio. It's, I think, less than 5%. And so you don't have a lot of gains that you can take to offset the inevitable losses when they happen. So how do you kind of strategically think about being able to try to fill the bucket up and keep NAV stable over time?

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Howard Marshall Levkowitz, BlackRock TCP Capital Corp. - Chairman & CEO [3]

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Chris, thanks for the question. There are a few ways. I think you said it well. You can't always avoid losses, although we certainly make every effort to do so. And in order to maintain and bolster the equity, I think there are a few things. One is over-earning the dividend, which we have consistently done throughout our history. We do have a small equity percentage of our assets, as you note. We do get warrants, and we do fund at a discount and have prepayment premium. Envigo, which we exited, which was a longtime loan, we've been lenders to the company for, I think, over 6 years in aggregate. That's undergone a name change. It used to be BPA. That's a good example of that, where at various times, we have acquired debt and become their largest lender at a pretty significant discount. And so we were able to pick up some accretion off that. And so our goal is to have enough balance there over time to be able to offset. And although we haven't done one for a while, occasionally, we've been doing equity offerings with the goal of having them be accretive to shareholders as well.

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Paul Leslie Davis, BlackRock TCP Capital Corp. - CFO [4]

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And Chris, this is Paul. Howard mentioned our historical practice of out-earning our dividend. I think this event highlights the power of our diversified portfolio. Even at the end of the quarter, at the end of -- at June 30, our recurring net investment income was $0.35, excluding prepayments and other onetime income, compared to $0.36 at the prior quarter and compared to a $0.36 dividend. And as Howard noted in his prepared remarks, over half of our portfolio companies contribute less than 1% of our income, with only a handful over 2%.

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Christoph M. Kotowski, Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst [5]

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Okay. And just as a follow-up. On Fidelis, were there any interest reversals this quarter? Or is what we see in the second quarter kind of the -- what we should expect as the run rate of interest income for the third?

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Paul Leslie Davis, BlackRock TCP Capital Corp. - CFO [6]

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No. We put Fidelis on nonaccrual during the quarter.

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Christoph M. Kotowski, Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst [7]

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But there were no reversals in previous quarters?

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Paul Leslie Davis, BlackRock TCP Capital Corp. - CFO [8]

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No reversals in previous quarters, correct.

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Operator [9]

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And our next question comes from Robert Dodd with Raymond James.

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Robert James Dodd, Raymond James & Associates, Inc., Research Division - Research Analyst [10]

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Following up on that question. I mean when we look at Fidelis, obviously, the change this quarter versus last is pretty pronounced. So can you give us any color on what you saw to make such a material adjustment to the fair value? I mean, obviously, you talked about it last quarter, but this is pretty pronounced.

And then I presume it's a waterfall valuation methodology. So can you give us any color on the sensitivity of the waterfall to -- or the fair value of (inaudible) that C tranche to changes in inputs in your waterfall?

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Rajneesh Vig, Tennenbaum Capital Partners, LLC - Managing Partner and President [11]

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It's Raj. I'll try to answer those questions, and maybe what I'll do is add a little more color to Howard's prepared remarks on the name, and then we can talk about the impact to valuation. But just to reiterate, as Howard mentioned, this is a name we've been in for some time now. And at the outset of this transaction in 2015, this is a business that was really overcapitalized, both cash equity into the business as well as cash on the balance sheet. From the time of the transaction close, not shortly -- not long thereafter, the company faced some challenges. Partly this was the marketplace, but to be honest, a lot of it was self-inflicted issues from management. And leveraging our sort of experience and working with companies (inaudible) and the owners, we really worked to improve those shortfalls. And that included a change in management. That included several additional fundings on the business. And what we have seen since that time over the last several quarters is the impact, the positive impact on that from improvements in revenue, bookings, all the things you want to see happen on the income statement.

The challenge, and really, to answer your question, is the balance sheet challenges and the impact of that shortfall on continuing this recovery was notable and, perhaps, during the quarter, became more evident and more pronounced where one impacts the other. And this isn't a valuation that hasn't changed over time. It has changed over the last several years, but really, where you saw the impact -- where it's less evident was in the equity of the junior tranches. And this quarter, with the mitigation of our coverage and, actually, reduction of our coverage in the junior tranche, the C tranche, you're seeing a more pronounced and disproportionate effect in our piece, but the valuation has declined over time partly due to performance and partly due to just the market multiples which have also come down.

So I think it's harder to see that in any one quarter because of what we disclosed and what the overall valuation decrease has been. But you are seeing, in this quarter, a more notable impact where we're affected in a straight waterfall, to your point, that over time, where the equity has eaten more of the valuation deterioration.

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Robert James Dodd, Raymond James & Associates, Inc., Research Division - Research Analyst [12]

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Got it. I appreciate that color, Raj. Just one more if I can. Howard, you always tell us not to read anything into the trends on yields. The average yield this quarter, 11%. It was 11.4% last quarter. But then obviously, post quarter end, $125 million deployed with yields under 10%. Are you going to reiterate you don't read anything into that? Or is there a conscious decision with leverage going up a little bit, obviously, with new approvals, et cetera, to maybe do some lower-risk, lower-spread assets?

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Howard Marshall Levkowitz, BlackRock TCP Capital Corp. - Chairman & CEO [13]

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Yes. We haven't -- it's a good question, and the numbers you just laid out are obviously pretty significant. If you look at the overall change in yields, about half of that is just decreases in LIBOR. And some of the rest of it, particularly the pronounced difference on the exits, include a couple of higher-yielding things like Envigo that we mentioned earlier.

With respect to the new assets, we haven't fundamentally changed anything differently in the business. We're continuing to underwrite the same kinds of businesses and using the same approach. In any given quarter, that may get pulled down or up by a handful of investments. In this case, we had one of our largest groups, if not a record group, of new investments in the portfolio. So it was more diffused, and there were a number of those that were somewhat lower-yielding.

I said that I wouldn't read too much into it because historically, over time, these numbers have moved up and down. And clearly, there's been a dramatic shift in rates in the last, depending on how you want to count it, week or couple of months. And even the middle market will not ultimately be immune to that. We have been focused on doing more senior loans, less cyclical companies. And on the margin, with the higher leverage, we certainly have the ability to do things at a lower yield, but there's is no overall shift in our approach to the market.

So we will see what happens over time, but we're not trying to do things differently.

And our next question comes from Christopher Nolan with Ladenburg Thalmann.

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Christopher Whitbread Patrick Nolan, Ladenburg Thalmann & Co. Inc., Research Division - EVP of Equity Research [14]

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I appreciate that you guys have excellent credit quality and historically has been very strong. Back on Fidelis, I'm looking at term loan C. And it looks like the cost basis went up by $2.6 million since last quarter, and the fair value is now 0 on that. Can you give us a little background as to what happened? Were you guys trying to put more capital into the business before writing down this loan?

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Paul Leslie Davis, BlackRock TCP Capital Corp. - CFO [15]

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No. Well, the term loan C, the increase is a function of PIK interest. Part of our -- one of our latest efforts with the company and a restructuring of our position had us have a PIK position that is accretive into the C. So we did fund some additional money into the business, but that is in the term loan A. But specifically to your question on the amount of the C that was written down, that was not new funding. That was accretion.

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Christopher Whitbread Patrick Nolan, Ladenburg Thalmann & Co. Inc., Research Division - EVP of Equity Research [16]

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Great. And then back to an earlier question. As I estimate back of the envelope, this Fidelis contributes roughly $0.02 or so to EPS quarterly.

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Paul Leslie Davis, BlackRock TCP Capital Corp. - CFO [17]

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You're correct.

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Christopher Whitbread Patrick Nolan, Ladenburg Thalmann & Co. Inc., Research Division - EVP of Equity Research [18]

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Is a full quarter taken out of the second quarter earnings? Or is only a partial quarter of Fidelis taking out of quarterly earnings?

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Paul Leslie Davis, BlackRock TCP Capital Corp. - CFO [19]

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No. We stopped accrual at the end of May.

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Christopher Whitbread Patrick Nolan, Ladenburg Thalmann & Co. Inc., Research Division - EVP of Equity Research [20]

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Okay. So this second quarter totally reflects no Fidelis.

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Paul Leslie Davis, BlackRock TCP Capital Corp. - CFO [21]

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No. We stopped accrual at the end of May. So there's 2 months of Fidelis, but I would note when we computed the incentive fees, it was excluding anything that we accrued.

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Christopher Whitbread Patrick Nolan, Ladenburg Thalmann & Co. Inc., Research Division - EVP of Equity Research [22]

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Okay. So we just need to back up Fidelis for the third quarter. Okay.

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Paul Leslie Davis, BlackRock TCP Capital Corp. - CFO [23]

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Thanks.

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Operator [24]

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(Operator Instructions) And our next question comes from Ryan Lynch with KBW.

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Ryan Patrick Lynch, Keefe, Bruyette, & Woods, Inc., Research Division - MD [25]

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One question I had. It looks like out of your $230 million of investments, 18 companies this quarter, about 11 were new and 7 were existing. So you found a lot of new portfolio companies to venture into this quarter. Further, a couple other BDCs talked about, given the competitive environment, leaning in more towards their existing borrowers and using the power of incumbency given they're more familiar with these borrowers in this environment. Can you just talk about your, guys, approach to find new borrowers in this challenging environment?

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Rajneesh Vig, Tennenbaum Capital Partners, LLC - Managing Partner and President [26]

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Yes. I can take that. I think I would echo the sentiment that where you can -- you have a known borrower and a history and a relationship, that is certainly an attractive way to generate new deployment, and at a certain scale, you see that with some consistency. I think in terms of finding new borrowers, part of that -- part of it just goes historically to a relationship-based effort on our side, finding opportunities in many different places, whether it's business owners, management teams, Board members, historical relationships. I also think that it's a good segue to highlighting some of the benefits of being part of a large platform, where there's been incremental opportunities coming through BlackRock just given its presence in the market. So I think net-net, there's not a new approach. I think it's more of the same, being able to provide a solution, being a credible counterparty, the power of the portfolio. Generating leads from existing names is also notable. But it's very much the same as we've been talking about over the last couple of years, with the benefit of the BlackRock relationships in addition to that.

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Howard Marshall Levkowitz, BlackRock TCP Capital Corp. - Chairman & CEO [27]

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Yes. Ryan, maybe just to add one thing to what Raj was saying. Historically, we have had very strong relationships with borrowers with our industry-focused approach. Now being part of BlackRock, what we're seeing is the benefits of having an additional group of borrowers who appreciate our industry-centered approach and also like the idea of having a very large, highly regarded institutional lender in there. And so it's been a significant net benefit to our origination activities.

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Ryan Patrick Lynch, Keefe, Bruyette, & Woods, Inc., Research Division - MD [28]

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Got you. Makes sense. And then obviously, the last few days have been pretty wild with some new tariffs being put on, but that's just a continuation. There's been tariffs put on, obviously, quarters before this or months before this. So have you guys done an evaluation and looked through your portfolio to see -- as these new tariffs start to come on? And obviously, there's been existing ones already in place. Are there any portfolio companies or sectors that are particularly vulnerable in your, guys, portfolio today?

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Howard Marshall Levkowitz, BlackRock TCP Capital Corp. - Chairman & CEO [29]

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So we have been doing an analysis on that for some time, and in fact, when we just completed our most recent quarterly review as part of that, that was a special focus item, which was a few weeks ago, before the latest proposed increases. And we have been pleased and surprised, in fact, with how little we're hearing from companies about the impact of tariffs. In fact, there's only one company that was directly citing it as being a material issue for their business. Now having said that, it's still early in this next round, and it's not always immediately clear to people. And sometimes, the impacts may be 2 or 3 layers away, and so it may take a while to filter through. But so far, our emphasis on noncyclical companies with a more domestic focus, I think, has benefited us pretty significantly with respect to tariffs.

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Operator [30]

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And our next question comes from Fin O'Shea with Wells Fargo.

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Finian Patrick O'Shea, Wells Fargo Securities, LLC, Research Division - Associate Analyst [31]

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I just wanted to ask a question on the amended 17(d) order you filed this week. Can you explain to us in layman's terms if this seeks to grant you any expanded leeway on co-investments with your platform funds?

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Howard Marshall Levkowitz, BlackRock TCP Capital Corp. - Chairman & CEO [32]

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Yes. Thanks for the question. It is an attempt to simplify the existing order, as you're well aware because I think you've been a student of these and I suspect a number of others are on this call as well. These orders have gotten increasingly complicated over time, particularly in larger platforms, even before we were part of BlackRock (inaudible) grounding complexity. And so this seeks to simplify the process for us and across -- in our relationships at BlackRock. That's really the intent of it.

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Finian Patrick O'Shea, Wells Fargo Securities, LLC, Research Division - Associate Analyst [33]

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And noticing the order creates some leeway to -- for the adviser to receive fees under rule 57(k), is there any such activity that takes place at TCP or BlackRock?

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Howard Marshall Levkowitz, BlackRock TCP Capital Corp. - Chairman & CEO [34]

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So TCP has always put all of the fees it has received in connection with anything related to investments in TCP Capital Corp. and our other funds in the funds. It is our view that if we are generating income as a part of our investment activities, our duty is to give that to our investors, and it's a policy we've always followed and don't have any intent of changing.

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Operator [35]

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And I'm not showing any further questions at this time. I would now like to turn the call back over to Howard Levkowitz for any closing remarks.

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Howard Marshall Levkowitz, BlackRock TCP Capital Corp. - Chairman & CEO [36]

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I would like to thank all of our shareholders for your confidence and your continued support and our experienced and talented team of professionals at BlackRock TCP Capital Corp. for your continued hard work and dedication. We appreciate your questions and our dialogue today. Thanks again for joining us. This concludes today's call.

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Operator [37]

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Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program, and you may all disconnect. Everyone, have a wonderful day.