BlackRock TCP Capital Corp Q2 2025 Earnings Call Highlights: Strategic Moves and Growth Amidst Challenges

BlackRock TCP Capital Corp's Q2 2025 earnings call highlights strategic moves and progress in reducing non-accruals, which declined to 3.7% of the portfolio's fair market value. The company declared a second quarter dividend of $0.25 and a special dividend of $0.04 per share, and invested $178 million in 13 new and 11 existing portfolio companies. However, NAV declined due to markdowns on previously restructured portfolio companies, and net realized losses were approximately $66 million.

BlackRock TCP Capital Corp (TCPC) reported its Q2 2025 earnings, highlighting strategic moves and progress in reducing non-accruals to 3.7% of the portfolio's fair market value. The company declared a second quarter dividend of $0.25 and a special dividend of $0.04 per share, and invested $178 million in 13 new and 11 existing portfolio companies. However, net asset value (NAV) declined due to markdowns on previously restructured portfolio companies, resulting in net realized losses of approximately $66 million.

Phil Tseng, CEO, opened the call by noting the reduction in non-accruals, which fell to 3.7% from 4.4% in Q1 2025 and 5.6% at the end of 2024. This improvement was achieved despite a decline in NAV, primarily due to markdowns on restructured assets rather than new credit issues. The company removed four large investments from nonaccrual status, including InMoment, SellerX, Lithium, and Renovo, while adding four investments, including Thrasio, Fishbowl, Brook and Whittle, and 4840, to nonaccrual status due to uneven performance, liquidity constraints, or lower demand.

Jason Mehring, President, detailed the portfolio's senior secured loan focus and broad sector diversification, with the average investment size at $11.7 million. The weighted average annual effective yield was 12% in Q2 2025, compared to 12.2% in the prior quarter. Adjusted net investment income was $0.31 per share, down from $0.36 in Q1 2025, while gross investment income was $0.61 per share, down from $0.66 in Q1 2025.

Erik Cuellar, CFO, reviewed the financial results, noting that operating expenses were $0.28 per share for Q2 2025, including $0.02 per share of interest and other debt expenses. Total liquidity at Q2 2025 period end was $566 million, with available leverage of $155 million and cash of $107 million; net regulatory leverage was 1.28 times at Q2 2025 quarter-end.

Post-acquisition, three senior credit investors from HPS joined the investment committee, expanding restructuring bench strength and portfolio management capabilities within TCPC. The company marked up Domo following a strong earnings report and cited it as the largest gain this quarter, while markdowns such as in AutoAlert were attributed to sector valuation compression despite operating improvement.

The strategic integration into BlackRock's Private Financing Solutions (PFS) platform is expected to offer enhanced sourcing, allocation, and risk management capabilities. President Mehring noted that repeat borrowers remain an important source of originations, while CEO Tseng expressed excitement about the anticipated private credit deal opportunities from the PFS platform.

Management expects net regulatory leverage to return to approximately Q1 2025 levels in the next quarter, following investment deployments and delayed repayments.

References:
[1] https://www.fool.com/earnings/call-transcripts/2025/08/07/blackrock-tcp-capital-tcpc-earnings-transcript/