Q2 2026 BlackRock TCP Capital Corp Earnings Call

August 6, 2026

Operator 3: Hello, everyone. Thank you for joining us, and welcome to the BlackRock TCP Capital Corp. Q2 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Alex Doll, a member of the BlackRock TCP Capital Corp. investor relations team. Alex, please go ahead.

Operator: Hello, everyone. Thank you for joining us, and welcome to the BlackRock TCP Capital Corp. Q2 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Alex Doll, a member of the BlackRock TCP Capital Corp. investor relations team. Alex, please go ahead.

Speaker #1: If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Alex Doll, a member of the BlackRock TCP Capital Corp.

Speaker #1: Investor Relations team. Alex, please go ahead.

Speaker #2: Thank you, operator. Before we begin, I will note that this conference call may contain forward-looking statements based on management's estimates and assumptions at the time such statements are made.

Alex Doll: Thank you, operator. Before we begin, I will note that this conference call may contain forward-looking statements based on management's estimates and assumptions at the time such statements are made, which are not guarantees of future performance. Forward-looking statements involve risks and uncertainties, and actual results could differ materially from those projected. For more information, please refer to the risk factors discussed in our Form 10-Q and the Form 8-K filed with the SEC today, along with the associated press release. Any forward-looking statements made on this call are as of today and are subject to change without notice. Additionally, certain information discussed and presented may have been derived from third-party sources and has not been independently verified. Accordingly, we make no representation or warranty with respect to such information.

Speaker #2: These are not guarantees of future performance. Forward-looking statements involve risks and uncertainties, and actual results could differ materially from those projected. For more information, please refer to the risk factors discussed in our Form 10-Q and the Form 8-K filed with the SEC today.

Speaker #2: Along with the associated press release. Any forward-looking statements made on this call are as of today and are subject to change without notice. Additionally, certain information discussed and presented may have been derived from third-party sources and has not been independently verified.

Speaker #2: Accordingly, we make no representation or warranty with respect to such information. Before we begin, I would also like to note that today's discussion includes references to certain non-GAAP financial measures, including adjusted net investment income.

Alex Doll: Before we begin, I would also like to note that today's discussion includes references to certain non-GAAP financial measures, including adjusted net investment income. As detailed in our earnings press release, adjusted net investment income excludes the amortization of the purchase accounting discount resulting from our merger with BCIC and is calculated in accordance with GAAP. A full reconciliation of adjusted net investment income to GAAP net investment income, as well as other non-GAAP financial metrics, is included in the earnings press release and 10-Q. Earlier today, we issued a press release announcing our results for the second quarter ended 30 June 2026, as well as the portfolio sale transaction we just completed. We posted a supplemental presentation with information on both to our website at www.tcpcapital.com.

Speaker #2: As detailed in our earnings press release, adjusted net investment income excludes the amortization of the purchase accounting discount resulting from our merger with BCIC and is calculated in accordance with GAAP.

Speaker #2: A full reconciliation of adjusted net investment income to GAAP net investment income, as well as other metrics, is included in the earnings press release and 10-Q.

Speaker #2: Earlier today, we issued a press release announcing our results for the second quarter ended June 30th, 2026, as well as the portfolio sale transaction we just completed.

Speaker #2: We posted a supplemental presentation with information on both to our website at www.tcpcapital.com. To view the slide presentation, which we will refer to on today's call, please click the investor relations link and select events and presentations.

Alex Doll: To view the slide presentation, which we will refer to on today's call, please click the Investor Relations link and select Events and Presentations. These documents should be reviewed in conjunction with the company's Form 10-Q, which was filed with the SEC earlier today. Now, I will turn the call over to our Chairman, CEO, and Co-CIO, Phil Tseng.

Speaker #2: These documents should be reviewed in conjunction with the company's Form 10-Q, which was filed with the SEC earlier today. Now, I will turn the call over to our Chairman, CEO, and Co-CIO, Philip Tseng.

Speaker #3: Thank you, Alex. And thank you to our investors and analysts for joining us. Today, I'll start with an overview of the portfolio sale transaction we announced this morning.

Phil Tseng: Thank you, Alex, and thank you to our investors and analysts for joining us. Today, I'll start with an overview of the portfolio sale transaction we announced this morning, followed by the highlights of our Q2 2026 performance. Jason Mehring, our President, will cover portfolio and investment activity, and Erik Cuellar, our CFO, will walk through our financial results and our balance sheet. I'll provide closing remarks before we open the call for questions. We're also joined by Dan Worrell, our Co-CIO, who will be available for questions. Let me begin with the transaction. This is a milestone for TCPC that meaningfully accelerates the work already underway to strengthen our financial position and reshape our investment portfolio. This transaction materially lowers leverage, reduces investment position sizes, and significantly enhances our investment capacity while realizing a substantial premium to the value implied by TCPC's current share price.

Speaker #3: Followed by the highlights of our second quarter 2026 performance. Then, Jason Mehring, our president, will cover portfolio and investment activity and Erik Cuellar, our CFO, will walk through our financial results and our balance sheet.

Speaker #3: I'll provide closing remarks before we open the call for questions. We're also joined by Dan Worrell, our Co-CIO, who will be available for questions.

Speaker #3: Let me begin with the transaction. This is a milestone for TCPC that meaningfully accelerates the work already underway to strengthen our financial position and reshape our investment portfolio.

Speaker #3: This transaction materially lowers leverage, reduces investment position sizes, and significantly enhances our investment capacity, while realizing a substantial premium to the value implied by TCPC's current share price.

Speaker #3: Looking forward, it provides substantially greater financial investment and operational flexibility, creating a stronger foundation for delivering long-term shareholder value. We will step through the transaction at a high level.

Phil Tseng: Looking forward, it provides substantially greater financial, investment, and operational flexibility, creating a stronger foundation for delivering long-term shareholder value. We will step through the transaction at a high level. Additional detail can be found in the Subsequent Events Disclosure section of the 10-Q. TCPC transferred approximately $523 million of investments across 78 portfolio companies into a continuation vehicle sponsored by Pantheon. The assets sold comprised approximately 48% of the fair market value of our pre-transaction debt portfolio and have broadly similar sector, lien, and credit characteristics. The assets include all collateral underlying the recently issued BlackRock DLF 2026-C CLO, plus additional contributed investments. TCPC retained a direct interest in substantially all of the portfolio companies, transferring on average approximately two-thirds of each investment position to the vehicle.

Speaker #3: Additional detail can be found in the subsequent events disclosure section of the 10-Q. TCPC transferred approximately $523 million of investments across 78 portfolio companies into a continuation vehicle sponsored by Pantheon.

Speaker #3: The assets sold comprised approximately 48% of the fair market value of our pre-transaction debt portfolio, and have broadly similar sector, lien, and credit characteristics.

Speaker #3: The assets include all collateral underlying the recently issued BlackRock DLS 2026-C CLO, plus additional contributed investments. TCPC retained a direct interest in substantially all of the portfolio companies.

Speaker #3: Transferring on average approximately two-thirds of each investment position to the vehicle. In addition, the company retained a 5% equity interest in the continuation vehicle and TCPC's investment advisor will also act as the investment advisor for the vehicle without compensation.

Phil Tseng: In addition, the company retained a 5% equity interest in the continuation vehicle, and TCPC's investment advisor will also act as the investment advisor for the vehicle without compensation. The continuation vehicle assumed all of the CLO liabilities. The transaction was priced at 95% of the 31 December 2025 gross fair market value of the assets sold, subject to customary adjustments, including unfunded commitments, portfolio repayments, and investment income generated prior to closing, and other items, as more fully outlined in Appendix A of the 8-K we filed this morning. The transaction is expected to result in a NAV decline of approximately 10.4% or $0.68 per share based on 30 June NAV. Our board of directors obtained a third-party fairness opinion from Lincoln International in connection with the transaction. The strategic impact of the transaction is substantial.

Speaker #3: The continuation vehicle assumed all of the CLO liabilities. The transaction was priced at $95% of the December 31st, 2025 gross fair market value of the assets sold.

Speaker #3: Subject to customary adjustments including unfunded commitments portfolio repayments and investment income generated prior to closing. And other items as more fully outlined in Appendix A of the AK we filed this morning.

Speaker #3: The transaction is expected to result in a NAV decline of approximately 10.4% or $68 per share based on June 30 NAV. Our board of directors obtained a third-party fairness opinion from Lincoln International in connection with the transaction.

Speaker #3: The strategic impact of the transaction is substantial. The approximately $152 million of proceeds were used primarily to reduce debt, and together with the deconsolidation of the CLO and post–quarter-end repayments, TCPC has reduced net leverage to approximately 0.4 times on a pro forma basis.

Phil Tseng: The approximately $152 million of proceeds were used primarily to reduce debt, and together with deconsolidation of the CLO and post-quarter end repayments, TCPC has reduced net leverage to approximately 0.4 times on a pro forma basis, and unfunded commitments to below $40 million, significantly improving TCPC's financial flexibility and creating substantial new investment capacity. To help evaluate the best way to use that flexibility to create further long-term shareholder value, the board has engaged Keefe, Bruyette, & Woods to assist with strategic review. This review will consider a range of options, including, but not limited to, reinvesting the portfolio, returning capital to shareholders, pursuing strategic combinations or other corporate transactions, or some combination of these options. I want to thank everyone involved in the transaction. It was a complex process, and the hard work required reflects the firm's commitment to TCPC and its shareholders.

Speaker #3: And unfunded commitments to below $40 million. Significantly improving TCPC's financial flexibility and creating substantial new investment capacity. To help evaluate the best way to use that flexibility to create further long-term shareholder value, the board has engaged Keith Briet and Woods to assist with strategic review.

Speaker #3: This review will consider a range of options including but not limited to reinvesting the portfolio, returning capital shareholders, pursuing strategic combinations or other corporate transactions, or some combination of these options.

Speaker #3: I want to thank everyone involved in the transaction. It was a complex process and the hard work required reflects the firm's commitment to TCPC and its shareholders.

Speaker #3: With that, let me turn to our second quarter results. Apart from the transaction, we continue to make progress against our strategic priorities during the second quarter.

Phil Tseng: With that, let me turn to our Q2 results. Apart from the transaction, we continued to make progress against our strategic priorities during Q2, including reducing non-accruals, strengthening the balance sheet, and advancing our portfolio repositioning efforts. While quarterly NAV performance reflected issuer-specific developments at a small number of portfolio companies, broader portfolio performance was generally in line with our expectations, and we experienced strong repayment volumes. NAV in the quarter declined approximately 2.1% to $6.58 per share, primarily reflecting developments at Pluralsight, PVHC, and Zilliant, as well as realized losses on our exits of AutoAlert and Bcomm. Non-accruals declined to 1.6% of the portfolio at fair value and 7.4% at cost from 2.8% and 7.6%, respectively, at the end of Q1. The improvement was driven in large part by positive developments at Thrasio, which repaid $22 million.

Speaker #3: Including reducing non-accruals, strengthening the balance sheet, and advancing our portfolio repositioning efforts. While quarterly NAV performance reflected issuer-specific developments, at a small number of portfolio companies, broader portfolio performance was generally in line with our expectations and we experienced strong repayment volumes.

Speaker #3: NAV in the quarter declined approximately 2.1% to $6.58 per share. Primarily reflecting developments at Pluralsight, PVHC, and Zillion. As well as realized losses on our exits of AutoAlert and BCOM.

Speaker #3: Non-accruals declined to 1.6% of the portfolio at fair value, and 7.4% at cost, from 2.8% and 7.6%, respectively, at the end of the first quarter.

Speaker #3: The improvement was driven in large part by positive developments at Thrasio which repaid $22 million. We removed our remaining $3.7 non-accrual status as we expect this position will be paid down in full.

Phil Tseng: We removed our remaining $3.7 million position at Thrasio from non-accrual status as we expect this position will be paid down in full given the current health of the business. As you may recall, we restructured our investment in Thrasio in early 2024, and we are pleased with this outcome, which we believe reflects the benefits of active portfolio management and patience. Repayment activity was strong in Q2, totaling $111.6 million in payoffs and paydowns, and resulting in net repayments of $86.6 million, which advanced our portfolio repositioning efforts. In addition to Thrasio, we received repayments of $14.9 million from StarRez, $13.1 million from AutoAlert, and an additional $48.7 million across five other companies. This repayment activity also strengthened the balance sheet, with net leverage declining to 1.38 times at quarter end from 1.48 times at the end of Q1.

Speaker #3: Given the current health of the business. As you may recall, we restructured our investment in Thrasio in early 2024 and we are pleased with this outcome which we believe reflects the benefits of active portfolio management and patience.

Speaker #3: Repayment activity was strong in the second quarter. Totaling $111.6 million in payoffs and paydowns and resulting in net repayments of $86.6 million. Which advanced our portfolio repositioning efforts.

Speaker #3: In addition to Thrasio, we received repayments of $14.9 million from StarRez. $13.1 million from AutoAlert and an additional $48.7 million across five other companies.

Speaker #3: This repayment activity also strengthened the balance sheet, with net leverage declining to 1.38 times at quarter end from 1.48 times at the end of the first quarter.

Speaker #3: Following the portfolio sale transaction and post-quarter end repayments completed to date, net leverage is expected to decline to approximately $0.4 times on a pro forma basis and to less than $0.3 times after additional portfolio company paydowns from transactions that have been announced.

Phil Tseng: Following the portfolio sale transaction and post-quarter end repayments completed to date, net leverage is expected to decline to approximately 0.4 times on a pro forma basis and to less than 0.3 times after additional portfolio company paydowns from transactions that have been announced. Turning to capital allocation, on 30 July 2026, our board declared a Q3 dividend of $0.17 per share, payable on 30 September to shareholders of record as of 16 September. We also repurchased 156,370 shares of TCPC stock during Q2 at a weighted average price of $3.78 per share. Now, I'll turn the call over to Jason to discuss the portfolio and investment activity in more detail.

Speaker #3: Turning to capital allocation, on July 30, 2026, our board declared a third-quarter dividend of $0.17 per share, payable on September 30 to shareholders of record as of September 16.

Speaker #3: We also repurchased 156,370 shares of TCPC stock during the second quarter at a weighted average price of $3.78 per share. Now, I'll turn the call over to Jason to discuss the portfolio and investment activity in more detail.

Speaker #2: Thanks, Phil. And welcome everyone. With the portfolio sale transaction now complete, I'll review our second quarter portfolio metrics and then highlight how the transaction and post-quarter end repayments have positioned the portfolio going forward.

Jason Mehring: Thanks, Bill, and welcome everyone. With the portfolio sale transaction now complete, I'll review our Q2 portfolio metrics and then highlight how the transaction and post-quarter end repayments have positioned the portfolio going forward. At quarter end, the portfolio had fair market value of $1.29 billion, invested across 134 portfolio companies in 35 industry sectors with an average position size of $9.6 million. 91.5% of the portfolio was invested in senior secured loans, all of which were floating rate, with the balance of the portfolio in equity. Substantially, all new investments during the quarter were in first-lien loans, bringing total first-lien exposure to 89.8% on a fair value basis. Our largest investment, based on fair value, represented 8.9% of the portfolio, and the five largest investments accounted for 27.6%.

Speaker #2: At quarter end, the portfolio had fair market value of $1.29 billion invested across 134 portfolio companies in 35 industry sectors with an average position size of $9.6 million.

Speaker #2: 91.5% of the portfolio was invested in senior secured loans all of which were floating rate with the balance of the portfolio in equity. Substantially all new investments during the quarter were in first lien loans.

Speaker #2: Bringing total first lien exposure to $89.8% on a fair value basis. Our largest investment based on fair value represented $8.9% of the portfolio and the five largest investments accounted for 27.6%.

Speaker #2: As of June 30th, software represented 29.7% of the portfolio at fair value across 45 portfolio companies, with approximately 97% invested in debt and 3% in equity.

Jason Mehring: As of 30 June, software represented 29.7% of the portfolio at fair value across 45 portfolio companies, with approximately 97% invested in debt and 3% in equity. This software exposure decreased modestly from 30.5% across 47 companies in Q1, primarily reflecting the successful exits of Persado and StarRez during the period. The current software portfolio was originated at a loan-to-value of approximately 26%, providing a considerable equity cushion. As we've discussed previously, we do not view software and potential AI risk as monolithic because certain segments are fundamentally more resilient than others. For some time, our underwriting has focused on systems of record with proprietary data assets and solutions that are deeply embedded in customer workflows or serve regulated end markets, which we believe are generally more insulated from AI-related disruption.

Speaker #2: This software exposure decreased modestly from 30.5% across 47 companies in Q1, primarily reflecting the successful exits of Prosato and StarRez during the period. The current software portfolio was originated at a loan-to-value of approximately 26%, providing a considerable equity cushion.

Speaker #2: As we've discussed previously, we do not view software and potential AI risk as monolithic, because certain segments are fundamentally more resilient than others. For some time, our underwriting has focused on systems of record with proprietary data assets and solutions that are deeply embedded in customer workflows or serve regulated end markets, which we believe are generally more insulated from AI-related disruption.

Speaker #2: In line with our focus on enhancing portfolio quality, discipline deployment, and strengthening our balance sheet, we intentionally kept investment activity limited and highly selective in the second quarter.

Jason Mehring: In line with our focus on enhancing portfolio quality, disciplined deployment, and strengthening our balance sheet, we intentionally kept investment activity limited and highly selective in Q2. The majority of the $25 million of capital deployed during the quarter was directed towards previously committed investments, and we added one new borrower. Capitalizing on incumbency remains a priority for us, and we continue to find compelling investment opportunities among our existing portfolio companies where we have longstanding relationships and industry experience. As Phil mentioned, we saw meaningful payoffs and paydowns this quarter, totaling $111.6 million and resulting in net repayments of $86.6 million. Subsequent to quarter end, we also received $97.4 million in additional repayments, including $55.2 million from Motive Technologies, formerly known as KeepTruckin, and $39 million from Pico Quantitative Trading.

Speaker #2: The majority of the $25 million of capital deployed during the quarter was directed towards previously committed investments, and we added one new borrower.

Speaker #2: Capitalizing on incumbency remains a priority for us, and we continue to find compelling investment opportunities among our existing portfolio companies, where we have longstanding relationships and industry experience.

Speaker #2: As Phil mentioned, we saw meaningful payoffs and paydowns this quarter. Totaling $111.6 million and resulting in net repayments of $86.6 million. Subsequent to quarter end, we also received $97.4 million in additional repayments.

Speaker #2: Including $55.2 million from Motive Technologies formerly known as Keep Truckin and $39 million from Pico Quantitative Trading. In addition, Domo announced that it had entered into a definitive agreement to sell substantially all of its operating businesses to Progress Software.

Jason Mehring: Domo announced that it had entered into a definitive agreement to sell substantially all of its operating businesses to Progress Software. We expect this will result in full repayment of our $69 million debt investment when the transaction closes in Q4. This is a significant positive development in our software book and another example of our ability to create value through active engagement with our portfolio companies. Together, these developments address more than $150 million of exposure across three larger portfolio positions and represent meaningful progress towards reducing concentration and advancing our broader portfolio repositioning efforts. We also see increasing repayment volumes as a sign of general borrower health. At the end of Q2, the weighted average effective yield on our portfolio was 10.5%. New investments had a weighted average yield of 9.4%, while those we exited had a weighted average yield of 10.9%.

Speaker #2: We expect this will result in full repayment of our $69 million debt investment when the transaction closes in the fourth quarter. This is a significant positive development in our software book and another example of our ability to create value through active engagement with our portfolio companies.

Speaker #2: Together, these developments address more than $150 million of exposure across three larger portfolio positions and represent meaningful progress towards reducing concentration and advancing our broader portfolio repositioning efforts.

Speaker #2: We also see increasing repayment volumes as a sign of general borrower health. At the end of the second quarter, the weighted average effective yield on our portfolio was 10.5%.

Speaker #2: New investments had a weighted average yield of 9.4% while those we exited had a weighted average yield of 10.9%. Current yields reflect lower base rates and spread compression consistent with the past several transaction and post-quarter end repayments have significantly reduced our leverage in unfunded commitments and increased our new investment capacity meaningfully accelerating our ability to reposition the portfolio.

Jason Mehring: Current yields reflect lower base rates and spread compression consistent with the past several quarters. The portfolio sale transaction and post-quarter end repayments have significantly reduced our leverage and unfunded commitments and increased our new investment capacity, meaningfully accelerating our ability to reposition the portfolio. On a pro forma basis, the portfolio has a fair market value of $671 million invested across 132 portfolio companies with an average position size of approximately $5.1 million. If we include the additional investment capacity available at a modest one-time debt-to-equity ratio and assume no new software investments with that capacity, software would represent approximately 23% of the pro forma portfolio. That level would be further reduced to approximately 17% if you factor in the expected repayment of Domo.

Speaker #2: On a pro forma basis, the portfolio has a fair market value of $671 million, invested across 132 portfolio companies, with an average position size of approximately $5.1 million.

Speaker #2: If we include the additional investment capacity available at a modest one-time debt-to-equity ratio, and assume no new software investments with that capacity, software would represent approximately 23% of the pro forma portfolio.

Speaker #2: That level would be further reduced to approximately $17% if you factor in the expected repayment of Domo. Following recent repayments and the portfolio sale transaction, we have approximately $395 million of liquidity providing significant flexibility in investment capacity as the board evaluates how best to create long-term shareholder value.

Jason Mehring: Following recent repayments and the portfolio sale transaction, we have approximately $395 million of liquidity, providing significant flexibility and investment capacity as the board evaluates how best to create long-term shareholder value. We continue to benefit from the capabilities of the PFS platform, which provides access to a broad opportunity set while allowing us to remain highly selective and focused on granular, high-quality first-lien investments. Now, I'll turn the call over to Erik to discuss our financial results, capital, and liquidity position.

Speaker #2: We continue to benefit from the capabilities of the PFS platform which provides access to a broad opportunity set while allowing us to remain highly selective and focused on granular, high quality, first lien investments.

Speaker #2: Now, I'll turn the call over to Erik to discuss our financial results, capital, and liquidity position.

Speaker #3: Thank you, Jason. I'll begin with a review of our financial results for the second quarter of 2026. Total investment income was $40.0 million or $48 cents per share.

Erik L. Cuellar: Thank you, Jason. I'll begin with a review of our financial results for Q2 of 2026. Total investment income was $40.0 million, or $0.48 per share. This included recurring cash interest income of $0.35 per share, non-recurring income of $0.04 per share, recurring discount on fee amortization of $0.02 per share, PIK income of $0.04 per share, and dividend income of $0.03 per share. PIK income represented 7.6% of total investment income, down from 8.5% in Q1. Operating expenses for Q2 were $21.9 million, or $0.26 per share, including $15.0 million, or $0.18 per share, of interest and other debt expenses. Net investment income was $18.1 million, or $0.22 per share, and adjusted net investment income was $17.5 million, or $0.21 per share.

Speaker #3: This included recurring cash interest income of $35 cents per share non-recurring income of $4 cents per share, recurring discount on fee amortization of $2 cents per share, PIC income of $4 cents per share, and dividend income of $3 cents per share.

Speaker #3: PIC income represented 7.6% of total investment income. Down from 8.5% in Q1. Operating expenses for the second quarter were $21.9 million or $26 cents per share.

Speaker #3: Including $15.0 million, or $0.18 per share, of interest and other debt expenses. Net investment income was $18.1 million, or $0.22 per share.

Speaker #3: And adjusted net investment income was $17.5 million or $21 cents per share. As of June 30, 2026, our cumulative total return did not exceed the total return hurdle.

Erik L. Cuellar: As of 30 June 2026, our cumulative total return did not exceed the total return hurdle, and therefore, no incentive compensation was accrued for the quarter. Net realized losses for the quarter were $14.8 million, or $0.18 per share, driven primarily by a $10 million loss on the exit of our investment in AutoAlert. Net unrealized gains were $1.3 million, or $0.01 per share, driven primarily by $11.3 million in reversals of previous unrealized losses related to AutoAlert and Thrasio. These gains were partially offset by markdowns in Pluralsight, PVHC, and Zilliant, which together accounted for approximately $9.5 million of unrealized losses. Quarterly distributions to shareholders totaled $0.17 per share during the period. After net investment income, realized and unrealized gains and losses, and distributions, NAV declined by $0.14 per share to $6.58 at 30 June.

Speaker #3: And therefore, no incentive compensation was accrued for the quarter. Net realized losses for the quarter were $14.8 million or $18 cents per share. Driven primarily by a $10 million loss on the exit of our investment in AutoAlert.

Speaker #3: Net unrealized gains were $1.3 million or $0.01 per share. Driven primarily by 11.3 million and reversals of previous unrealized losses related to AutoAlert and Thrasio.

Speaker #3: These gains were partially offset by markdowns in Pluralsight, PVHC, and Cillian which together accounted for approximately $9.5 million of unrealized losses. Quarterly distributions to shareholders total $17 cents per share during the period.

Speaker #3: After net investment income, realized and unrealized gains and losses, and distributions, NAV declined by $0.14 per share to $6.58 at June 30. The corresponding decrease in net assets for the quarter was $13.1 million.

Erik L. Cuellar: The corresponding decrease in net assets for the quarter was $13.1 million. Now I'll discuss our balance sheet and liquidity, which benefited from both repayment and liability optimization activity during the quarter, with improvements further accelerated by the portfolio sale transaction we completed today. During the quarter, we completed two important liability management initiatives. In May, we issued $406 million of CLO debt and used the proceeds to fully repay our TCPC Funding II and merger sub-facilities, allowing us to term out a significant portion of our secured debt. Additionally, given the level of pay-downs and realizations, including those related to the portfolio transaction and the absence of new development activity in our SBIC subsidiary, we elected to repay the remaining $107 million outstanding on our SBIC debt and subsequently surrender our license.

Speaker #3: Now, I'll discuss our balance sheet and liquidity. Which benefited from both repayment and liability optimization activity during the quarter with improvements further accelerated by the portfolio sale transaction we completed today.

Speaker #3: During the quarter, we completed two important liability management initiatives. In May, we issued $406 million of CLO debt and used the proceeds to fully repay our TCPC funding to and merge yourself facilities.

Speaker #3: Allowing us to term out a significant portion of our secure debt. Additionally, given the level of paydowns and realizations, including those related to the portfolio transaction, and the absence of new development activity in our SBIC subsidiary, we elected to repay the remaining $107 million outstanding on our SBIC debt and subsequently surrender our license.

Speaker #3: We concluded there was limited benefit to maintaining the structure given the SBIC's cash position and fully drawn facility. Together, these two actions support our broader balance sheet objectives by extending liability maturities, increasing financing flexibility, and reducing complexity within our capital structure.

Erik L. Cuellar: We concluded there was limited benefit to maintaining the structure given the SBIC's cash position and fully drawn facility. Together, these two actions support our broader balance sheet objectives by extending liability maturities, increasing financing flexibility, and reducing complexity within our capital structure. As Jason mentioned, we also received $86.6 million in net repayments in Q2. As a result, total liquidity at the end of Q2 was $533.7 million, including $376.2 million in available borrowing capacity under our revolvers and $157.5 million in cash. The combined weighted average interest rate on debt outstanding was 6.03% as of 30 June 2026. Net leverage was reduced to 1.38 times at quarter end, resulting in total debt to equity ratio of 1.66 times.

Speaker #3: As Jason mentioned, we also received $86.6 million in net repayments in the second quarter. As a result, total liquidity at the end of the second quarter was $533.7 million including $376.2 million in available borrowing capacity under our revolvers, and $157.5 million in cash.

Speaker #3: The combined weighted average interest rate on debt outstanding was 6.03% as of June 30, 2026. Net leverage was reduced to 1.38 times at quarter end, resulting in total debt to equity ratio of 1.66 times.

Speaker #3: With the combination of post-quarter end repayment activity, and the portfolio sale transaction, we estimate that our proforma net leverage ratio further improved to approximately 0.4 times.

Erik L. Cuellar: With the combination of post-quarter end repayment activity and this portfolio sale transaction, we estimate that our pro forma net leverage ratio further improved to approximately 0.4 times and would be less than 0.3 times if adjusted for future closure of the recently announced Domo transaction that Jason mentioned. Unfunded loan commitments represented 7.0% of our $1.29 billion investment portfolio, or $90 million, including $53 million in revolver commitments as of 30 June 2026. Pro forma for repayments and the portfolio sale transaction, unfunded loan commitments have been reduced to approximately $36 million. Overall, TCPC has a simpler balance sheet and has liquidity and substantially greater financial flexibility today than it did at the outset of Q2. Now I'll turn the call back to Phil for closing remarks.

Speaker #3: And would be less than 0.3 times if adjusted for future closure of the recently announced Domo transaction that Jason mentioned. Unfunded loan commitments represented 7.0% of our $1.29 billion investment portfolio or $90 million including $53 million in revolver commitments as of June 30, 2026.

Speaker #3: Pro forma for repayments and the portfolio sale transaction, unfunded loan commitments have been reduced to approximately $36 million. Overall, TCPC has a simpler balance sheet and has liquidity and substantially greater financial flexibility today than it did at the outset of the second quarter.

Speaker #3: Now, I'll turn the call back to Phil for closing remarks.

Speaker #2: Thanks, Eric. Over the past year, we have made strong progress strengthening our financial position and reshaping our investment portfolio. And this transaction pulls forward the realization of those efforts.

Phil Tseng: Thanks, Erik. Over the past year, we have made strong progress strengthening our financial position and reshaping our investment portfolio. This transaction pulls forward the realization of those efforts. The outcome is significantly lower leverage, reduced investment position sizes, and enhanced investment capacity. We believe these outcomes provide substantially greater financial, investment, and operational flexibility, creating a stronger foundation from which to evaluate and pursue strategic alternatives that can deliver greater long-term value to shareholders. We look forward to working with KBW and sharing more details as that process progresses, as appropriate. With that, I'd like to thank our investors and analysts for their continued support of TCPC. Operator, we are now ready to open the call for questions.

Speaker #2: The outcome is significantly lower leverage, reduced investment position sizes, and enhanced investment capacity. We believe these outcomes provide substantially greater financial, investment, and operational flexibility, creating a stronger foundation from which to evaluate and pursue strategic alternatives that can deliver greater long-term value to shareholders.

Speaker #2: We look forward to working with KBW and sharing more details as that process progresses as appropriate. With that, I'd like to thank our investors and analysts for their continued support of TCPC.

Speaker #2: Operator, we are now ready to open the call for questions.

Speaker #1: We will now begin the question and answer session. Please limit yourselves to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand.

Operator 3: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Robert Dodd with Raymond James. Robert, your line is now open. Please go ahead.

Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Robert Dodd with Raymond James. Robert, your line is now open. Please go ahead.

Speaker #1: To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #1: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Robert Dodd with Raymond James.

Speaker #1: Robert, your line is now open. Please go ahead.

Speaker #4: Hi, guys. And congrats on kind of a landmark transaction. To your point, Phil, it kind of does raise the question though of what next.

Robert Dodd: Hi, guys, congrats on kind of a landmark transaction. To your point, Phil, it kind of does raise the question, though, of what next. Can you address that? There's a strategic review. Kind of two components to the question on that. How long do you think the strategic review, obviously that's hard to say, but do you think that's likely to take? Two, while that's ongoing, what are your likely strategies? Obviously, if part of the review is should we reinvest or should we buy back stock, for example, among other things, are you likely to do either of those things while the review is ongoing, or is it kind of semi sit on your hands until the review is complete and you have a strategic mandate to pursue something?

Speaker #4: Can you address that? There's a strategic review, so kind of two components to the question on that. How long do you think the strategic review and obviously that's hard to say, but do you think that's likely to take?

Speaker #4: And two, while that's ongoing, what are your likely strategies? Obviously, if part of the review is—should we reinvest, or should we buy back stock, for example, among other things.

Speaker #4: Are you likely to do either of those things while the review is ongoing, or is it kind of semi-sat on your hands until the review is complete and you have a strategic mandate to pursue something?

Speaker #2: Yeah, Robert, thanks for the question. So there's no specific timetable on the strategic review. Obviously, we are now in a very good position where we've created a great foundation from which to evaluate various alternatives that we otherwise weren't in a position to.

Phil Tseng: Yeah. Robert, thanks for the question. There's no specific timetable on the strategic review. Obviously, we are now in a very good position where we've created a great foundation from which to evaluate various alternatives that we otherwise weren't in a position to. We feel that this transaction has given us and certainly accelerated our position to be here to evaluate a variety of alternatives which includes the investment flexibility and capacity that we've talked about on the call. Also going deeper into a variety of other initiatives that we've been undertaking at the company. We made good progress, but this certainly accelerates it. In terms of specifically around timing, we'll see.

Speaker #2: So, we feel that this transaction has certainly accelerated our position to be here and evaluate a variety of alternatives, which includes the investment flexibility and capacity that we've talked about on the call.

Speaker #2: And also, going deeper into a variety of other initiatives that we've been undertaking at the company. We've made good progress, but this certainly accelerates it.

Speaker #2: In terms of specifically around timing, we’ll see. Obviously, KBW will do its work, work together with management and the board, and come back with a variety of alternatives from which we can evaluate. And maybe it's a combination of alternatives to drive longer-term shareholder value.

Phil Tseng: Obviously, KBW will do its work together with management of the board and come back with a variety of alternatives from which we can evaluate, maybe it's a combination of alternatives to drive longer-term shareholder value. In terms of how we're going to be investing over the subsequent period between now and then, we're going to continue doing what we've been doing, which is being prudent about our capital. Obviously, the strategic review goes hand-in-hand in how we allocate that capital. We're going to have that lens as we proceed through this period.

Speaker #2: In terms of how we're going to be investing, over the subsequent period between now and then, we're going to continue doing what we've been doing which is being prudent about our capital and obviously the strategic review goes hand in hand in how we allocate that capital.

Speaker #2: So we're going to have that lens as we proceed through this period.

Speaker #4: Got it. Thank you. Moving on from that for a second. And again, I think the transaction definitely puts you in a position where it's appropriate to review options, whereas before, your position was kind of dictating what you had to do.

Robert Dodd: Got it. Thank you. Moving on from that for a second, I think the transaction definitely puts you in a position where it's appropriate to review options before where your position was kind of dictating what you had to do before. Congrats on that. Moving on, to your point, I think you've got Thrasio you expect to be fully paid down. There's $69 million that should get repaid in Q4. There's a lot of repayments coming in as well. To that point, quite apart from the transaction, there's been a lot of movement as well. How much more can be done on that on the portfolio side this year?

Speaker #4: So, congrats on that. Moving on, I mean, to your point, I think you've got Thrasio—you expect Thrasio to be fully paid down.

Speaker #4: The $69 million that should get repaid in the fourth quarter. There's a lot of repayments coming in as well. I mean, to that point, right, you're quite apart from the transaction.

Speaker #4: There's been a lot of movement as well. How much more can be done on that and the portfolio side kind of like this year?

Speaker #4: I mean, longer term, obviously, things do what they do. But how many more things could potentially be accelerated, maybe not purely from your actions, but in terms of beyond the transaction—even also reducing beyond Delmark, etc., etc.—to some of the chunkier investments in the portfolio?

Robert Dodd: Longer term, obviously, things do what they do, how many more things that could potentially be accelerated, maybe not purely from your actions, but in terms of beyond the transaction even, also reducing even beyond Del Mar, et cetera, to some of the chunkier investments in the portfolio?

Speaker #2: Yeah. Well, maybe it's worthwhile, Robert, to take a step back and talk about why we embarked on this transaction, because I think that speaks to what we can do in terms of continuing to drive shareholder value here.

Phil Tseng: Yeah. Well, maybe it's worthwhile, Robert, to take a step back about why we embarked on this transaction, because I think that speaks to what we can do in terms of continuing to drive shareholder value here in terms of repayments and portfolio positioning. With our leverage level in the last several quarters, we've been bumping up against 1.3 and 1.4, even north of 1.4. It's really inhibited our ability to reposition the portfolio. I think you and other investors and analysts in the community have commented on that for good reason. For example, we haven't been able to make meaningfully sized new investments, right, because of that leverage. That's prevented us from diversifying the portfolio. Prevent us from putting on newer investments to generate a more healthy income profile.

Speaker #2: In terms of repayments and portfolio positioning, with our leverage level in the last several quarters, we've been bumping up against 1.3, 1.4, even north of 1.4.

Speaker #2: It's really inhibited our ability to reposition the portfolio. I think you and other investors and analysts in the community have commented on that—for good reason.

Speaker #2: For example, we haven't been able to make meaningfully sized new investments, right, because of that leverage. So that's prevented us from diversifying the portfolio.

Speaker #2: It has prevented us from making new investments to generate a healthier income profile. That limited capacity has also constrained our ability to buy back shares in a more meaningful way.

Phil Tseng: That limited capacity has also constrained our ability to buy back shares in a more meaningful way, aside from what we've done programmatically. Also we've been inhibited from investing further or leaning further into strategic things or assets that we would've otherwise wanted to go deeper on. This newfound financial and investment flexibility, that's what we've accomplished here. We could've done it organically, and we've been making quite a bit of progress organically with, as you've seen, healthy repayments, non-accruals coming down, PIK coming down, position sizes coming down. That takes a long time, and I think you see that. We have a pretty concentrated book, and that's how the portfolio was managed previously. When we have a hit, it has a significant impact on NAV.

Speaker #2: Aside from what we've done programmatically, we've also been inhibited from investing further or leaning more into strategic things or assets that we would have otherwise wanted to go deeper on.

Speaker #2: So this newfound financial and investment flexibility that's what we've accomplished here. And we could have done it organically and we actually made quite a bit of we've been making quite a bit of progress organically with, as you've seen, healthy repayments, non-accruals coming down, pay coming down, position sizes coming down.

Speaker #2: But that takes a long time. And I think you see that. And we have a pretty concentrated book and that's how the portfolio is managed previously.

Speaker #2: So when we have a hit, it has a significant impact on NAV. So the path wasn't necessarily certain either, right? And what we achieved today with this announced sale is that we're here, right?

Phil Tseng: The path wasn't necessarily certain either, right? What we achieved today with this announced sale is that we're here, right? We're at 0.4 times leverage, 0.3 with the expected another pay-down. We have north of $300 million of new investment capacity. We've really accelerated, and that's why I started my comments saying this is a milestone for the company, because I think it really is in putting us in a good position. We're going to continue on the organic path in the interim. Obviously, this new capacity gives us an ability to invest in new deals, to accelerate the diversification of the portfolio, to evaluate other shareholder-friendly initiatives like buybacks or otherwise. That's what we're going to be looking out for in the near term.

Speaker #2: We're at 0.4x leverage, 0.3x with the expected further paydown, and we have north of $300 million of new investment capacity. So we've really accelerated, and that's why I started my comments saying this is a milestone for the company, because I think it really is.

Speaker #2: In putting us in a good position. So we're going to continue on the organic path in the interim. Obviously, this new capacity gives us the ability to invest in new deals, to accelerate the diversification of the portfolio, to evaluate other shareholder-friendly initiatives like buybacks or otherwise.

Speaker #2: And that's what we're going to be looking out for in the near term.

Speaker #4: Got it. I appreciate that. Thank you.

Robert Dodd: Got it. I appreciate that. Thank you.

Speaker #2: Thank you.

Phil Tseng: Thank you.

Speaker #1: Your next question comes from the line of Paul Johnson with KBW Capital Markets. Paul, your line is now open. Please go ahead.

Operator 3: Your next question comes from the line of Paul Johnson with KBW Capital Markets. Paul, your line is now open. Please go ahead.

Operator: Your next question comes from the line of Paul Johnson with KBW Capital Markets. Paul, your line is now open. Please go ahead.

Speaker #2: Yeah. Good afternoon. Thanks for taking my questions. Yeah. So I'm just curious. I was going to wanted to know the impact from the transaction, the asset sale, 10.4%.

Paul Johnson: Yeah, good afternoon. Thanks for taking my questions. I'm just curious. I wanted to know the impact from the transaction, the asset sale, 10.4%. Does that also include, I guess, any sort of transaction-related expenses for completing the sale?

Speaker #2: Does that also include, I guess, any sort of transaction-related expenses for completing the sale?

Speaker #4: Hi, Paul. It's Eric. The 10.4% does include the transaction-related expenses in there. I’d say the easiest way to think about the 10.4% approximate hit to NAV is by starting with that 5% discount that we stated as a portfolio discount.

Erik L. Cuellar: Hi, Paul. It's Erik. The 10.4% does include the transaction-related expenses in there. I'd say that the easiest way to think about the 10.4% approximate hit to NAV is by starting with that 5% discount that we stated as a portfolio discount. Other customized adjustments that are done in these type of transactions, which give you sort of a rough effective discount of about 10%. Your transaction expenses take that up to about 10.4% of a NAV hit.

Speaker #4: And then other customized adjustments that are done in these types of transactions, which give you sort of a rough, effective discount of about 10%.

Speaker #4: And then your transaction expenses take that up to about 10.4% of an NAV hit.

Speaker #2: Okay, got it. That's clear. Thank you for that. And then, I guess my other question would just be, in terms of the strategic alternatives, obviously there's kind of a broad range of possibilities here.

Paul Johnson: Okay. Got it. That's clear. Thank you for that. I guess my other question would just be, I guess, in terms of strategic alternatives. Obviously, there's kind of a broad range of possibilities here. How should we think about it in terms of, is this kind of a resolution to all of the just kind of ongoing challenges from the years past? Does BlackRock, I guess, have any sort of intention here of maybe sort of like a rebuild in terms of the BlackRock BDC franchise? Thank you.

Speaker #2: I mean, how should I guess we think about it in terms of is this kind of a resolution to all of the just kind of ongoing challenges from the years past or I think does BlackRock, I guess, have any sort of intention here of maybe sort of like a rebuild in terms of kind of like the BlackRock BDC franchise?

Speaker #2: Thank you.

Speaker #3: Hey, Paul, it's Phil. We don't have any comment on what we think will come out of the strategic evaluation process, and we're not going into it with a specific agenda except for generating long-term shareholder value.

Phil Tseng: Hey, Paul, it's Phil. We don't have any comment on what we think will come out of the strategic evaluation process, and we're not going into it with a specific agenda except for generating long-term shareholder value. BlackRock, as you can see, is very committed to the success of the shareholders here. As you can see with this transaction, which was very complex and was a lot of effort around the table in getting this done. No preconceived notion of what's going to come out. Obviously, we wanted to hire a third-party advisor to really assist us and the board.

Speaker #3: So BlackRock, as you can see, is very committed to the success of the shareholders here. As you can see with this transaction, which was very complex, there was a lot of effort around the table in getting this done.

Speaker #3: So, no preconceived notion of what's going to come out, but obviously, we want to hire a third-party advisor to really assist us and the board.

Speaker #1: We have reached the end of the Q&A session. I will now turn the call back to Phil for closing remarks.

Operator 3: We have reached the end of the Q&A session. I will now turn the call back to Phil for closing remarks.

Operator: We have reached the end of the Q&A session. I will now turn the call back to Phil for closing remarks.

Speaker #3: Thanks, operator. Thank you all for joining our call today. I'd also like to thank our team for their continued effort and hard work to TCPC.

Phil Tseng: Thanks, operator. Thank you all for joining our call today. I'd also like to thank our team for their continued effort and hard work to TCPC. As always, please reach out with any questions. Thank you very much.

Speaker #3: As always, please reach out with any questions. Thank you very much.

Operator 3: This concludes today's call. Thank you for attending. You may now disconnect.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

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