Blackrock Tcp Capital NASDAQ: TCPC reported lower first-quarter adjusted net investment income and a decline in net asset value as the business development company continued to reposition its portfolio, reduce leverage and work through troubled credits.
On the company’s earnings call for the quarter ended March 31, 2026, Chairman, CEO and Co-CIO Philip Tseng said TCPC executed against priorities that include improving credit quality, repositioning the investment portfolio and strengthening the balance sheet. He said the company is deploying capital selectively into higher-quality opportunities while reducing average position sizes, increasing the share of first-lien loans and lowering leverage.
“While there is work to do, we are taking steps to drive value for our shareholders,” Tseng said.
Non-accruals decline as restructurings and exits progress
TCPC said non-accruals declined to 2.8% of the portfolio at fair value and 7.6% at cost, down from 4.0% and 9.7%, respectively, in the prior quarter. Tseng attributed the improvement to the completion of restructurings involving Alpine, 48forty and Suited Connector, as well as the sale of Fishbowl.
Full exits and partial paydowns totaled $135.3 million during the quarter, including repayments tied to Team Services, James Perse, Cart.com and Eddie Bauer. Tseng said those investments had an average position size of more than $28 million, and noted that Team Services, the largest repayment during the period, was a second-lien position.
Since quarter-end, the company received more than $50 million of additional paydowns, including about $13 million from AutoAlert, which had previously been restructured and was recently sold to a strategic buyer. Tseng said TCPC still holds equity in the combined company but views the repayment as “a positive outcome” that reduces exposure while preserving potential upside.
Portfolio yield slips as new investments trail exits
At quarter-end, TCPC’s portfolio had a fair value of $1.4 billion and was invested across 139 companies in more than 20 industry sectors, with an average position size of $10 million. The company said 91.8% of the portfolio was invested in senior secured loans, 8.2% was in equity investments and 94.4% of debt investments were floating rate.
President Jason Mehring said the company invested about $22.5 million during the quarter across six new and two existing portfolio companies. All new investments were senior secured loans. Mehring said originations were “intentionally modest” as the company prioritized paydowns and exits to reduce leverage.
New investments carried an effective yield of about 8.3%, compared with 11.2% on investments exited during the quarter. Mehring said that reflected lower base rates and spread compression relative to when the repaid deals were originated. TCPC’s average portfolio yield declined to 10.9% at March 31 from 11.1% in the prior quarter.
The company also said its five largest investments accounted for 24.9% of the portfolio, while investment income was broadly distributed, with more than 70% of portfolio companies each contributing less than 1% of total investment income.
NAV falls on markdowns, including Job&Talent and software holdings
Adjusted net investment income was $0.21 per share, down from $0.25 in the prior quarter. Tseng said the decline primarily reflected a smaller portfolio as paydowns outpaced investments, lower investment income and higher expenses. Annualized net investment income return on equity was 11.8%.
Net asset value declined 4.9% to $6.72 per share from $7.07 in the prior quarter, reflecting $35 million of net portfolio markdowns. Tseng said Job&Talent, a staffing company, was the largest contributor, accounting for about $11 million, or 32% of total markdowns. He said weaker operating performance, together with lower industrywide valuation multiples, pressured the company’s enterprise value. TCPC’s exposure includes a first-lien term loan and preferred equity, with the preferred equity driving a meaningful portion of the mark-to-market move because of its sensitivity to enterprise value.
Software-related investments also accounted for about $11 million, or 32% of total markdowns. Tseng said those reductions were driven primarily by valuation multiple compression, revised growth expectations and AI-related disruption risk in certain subsectors.
Tseng said software represented 30.5% of the portfolio at fair value as of March 31, spread across 47 companies. About 95% of that exposure was in debt positions and 5% in equity. He said the companies had a loan-to-value ratio of approximately 26% at origination, which TCPC viewed as providing an equity cushion. While public software valuations have repriced, Tseng said the company has not seen a corresponding decline in the operating performance of its private software portfolio companies.
Financial results and balance sheet
CFO Erik Cuellar said total investment income for the quarter was $42.6 million, or $0.51 per share. That included recurring cash interest of $0.39 per share, non-recurring income of $0.03, recurring discount and fee amortization of $0.03, payment-in-kind income of $0.04 and dividend income of $0.02.
Operating expenses were $0.29 per share, including $0.19 of interest and other debt expenses. Net investment income was $0.22 per share, and adjusted net investment income was $0.21 per share. Cuellar said TCPC did not accrue incentive compensation for the quarter because its cumulative total return did not exceed the total return hurdle.
Net realized losses were $32.7 million, or $0.39 per share, driven primarily by the sale of Fishbowl and the restructuring of Alpine and 48forty, which together accounted for about $30 million. Net unrealized losses were $2.0 million, or $0.02 per share. Cuellar said the net decrease in net assets was $16.3 million, or $0.19 per share.
TCPC repaid all $325 million of its 2026 notes during the quarter and said it has no material debt maturities due in the near term. Total liquidity at quarter-end was $358.6 million, including $264.1 million in available borrowings under revolvers and $93.3 million in cash. Net regulatory leverage declined to 1.29 times from 1.41 times in the fourth quarter of 2025, and improved further to 1.23 times after quarter-end due to paydowns.
Dividend and share repurchases
Mehring said TCPC’s board declared a second-quarter dividend of $0.17 per share, payable June 30 to stockholders of record on June 16. The company repurchased 505,433 shares during the quarter at a weighted average price of $4.51, and an additional 156,370 shares after quarter-end at a weighted average price of $3.78.
On April 29, the board reapproved a stock repurchase plan authorizing the company to acquire up to $50 million of its common stock.
During the question-and-answer session, Raymond James analyst Robert Dodd asked about the pace of restructurings and workouts. Tseng said such processes are not linear and depend on company-specific issues including products, competitive dynamics and liquidity management. He pointed to progress during the quarter, including restructurings and sales involving several legacy positions.
Asked about Job&Talent and the role of AI, Mehring said the business is primarily a staffing and recruitment company with a technology-enabled component. He said the quarter’s drop in enterprise value was driven more by market valuation multiples than by AI-related business challenges, with relative operating performance a more modest contributor.
Tseng closed the call by saying TCPC has made progress repositioning the portfolio toward more senior secured first-lien loans, smaller position sizes and reduced concentration, while acknowledging that “there is more work to do.”
About Blackrock Tcp Capital NASDAQ: TCPC
BlackRock TCP Capital Corp is a publicly traded business development company (BDC) listed on the NASDAQ under the ticker TCPC. Externally managed by BlackRock, the firm provides customized financing solutions to U.S. middle-market companies, with a focus on sponsor-backed transactions. Its core strategy centers on delivering current income and capital appreciation through a diversified portfolio of debt and equity investments across a variety of sectors, including consumer products, healthcare, business services and industrials.
Since its initial public offering in 2013, BlackRock TCP Capital has partnered with private equity sponsors to underwrite and structure senior secured first-lien loans, second-lien loans, mezzanine debt and select equity co-investments.
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