BCP Investment reveals strong Q3 performance with net investment income of $8.8 million, announces $9 million buyback to enhance shareholder value.

OPERATOR - (00:01:10)

Welcome to BCP Investment Corporation's third quarter ended September 30, 2025 earnings conference call an earnings press release was distributed yesterday, November 6th after market close. A copy of release along the earnings presentation is available on the company's website at www.bcpinvestmentcorporation.com in the investor Relations section and should be reviewed in conjunction with the company's Form 10Q filed yesterday with the SEC. As a reminder, this conference call is being recorded for replay purposes. Please note that today's conference call may contain forward looking statements which are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in forward looking statements. As a result of a number of factors including those described in the Company's filings with the sec, BCP Investment Corporation assume no obligation to update any such forward looking statements unless required by law. Speaking on today's call will be Ted Gallthorpe, Chief Executive Officer, President and Director of BCP Investment Corporation, Brandon Satoren, Chief Financial Officer and Patrick Schaefer, Chief Investment Officer. With that, I would now like to turn the call over to Ted Goldthorpe, Chief Executive Officer of BCP Investment Corp. Please go ahead. Ted.

Ted Goldthorpe - Chief Executive Officer, President and Director - (00:02:50)

Good morning. Welcome to our third quarter 2025 earnings call. I'm joined today by our Chief Financial Officer Brandon Sutorin and our Chief Investment Officer Patrick Schaefer. Following my opening remarks on the Company's performance and activities during the third quarter. Patrick will provide commentary on our investment portfolio and our markets and Brandon will discuss our operating results and financial condition in greater detail. We are pleased to report strong results for the third quarter, our first earnings as a combined company from the completion of our merger with Logan Ridge on July 15, 2025. This milestone marks the beginning of a new chapter for BCP Investment Corporation as we continue to leverage our expanded scale broader portfolio diversification, enhanced operating efficiency to drive long term value for shareholders. I'm pleased to report meaningful progress on the value creation initiatives we announced in June 2025. Notably consistent with our previously stated intentions, the Company plans to commence a modified Dutch auction tender of approximately $9 million. Combined with the daily share repurchases executed by the Company under the buyback program, as well as open market purchases by Management, the Advisor and its affiliates. We anticipate total repurchases when combined with Management's advisors and its affiliates, ownership of BCP Investment Corporation's outstanding stock can approximate 10% by year end. These actions underscore our continued focus on driving shareholder value and narrowing the discount to NAV. During the quarter we generated net investment income of $8.8 million or $0.71 per share, compared with $4.6 million or $0.50 per share in the prior quarter. We expect to realize further benefits of our expanded scale and broader investment platform. For the fourth quarter of 2025, the board of directors approved a base distribution of $0.47 per share, which would annualized based on November 6, 2025. Closing price of12.13 per share represents a yield of 15.5%. Before handing over the call, I'd like to take a moment to address recent commentary in the broader private credit markets. While recent high profile collapses of certain borrowers have understandably drawn market attention, we firmly believe the full scale of concern for the overall private credit market is unwarranted, echoing sentiment from other leaders in our industry. In the case of First Brands, for example, only 2% of its nearly $12 billion balance sheet was linked to private credit, highlighting that events like this aren't signs of systemic weakness. Yet the sector has been subject to disproportionately heightened scrutiny despite its limited involvement in these high profile bankruptcies. Looking ahead, our focus remains on disciplined capital allocation, maintaining a high quality portfolio and delivering attractive risk adjusted returns for our shareholders. With a larger, more diversified platform and a stronger balance sheet, we believe we are well positioned to drive continuing earnings growth and long term value creation. With that, I will turn the call over to Patrick Schaefer, our Chief Investment Officer, for a review of our investment activity.

Patrick Schaefer - Chief Investment Officer - (00:06:04)

Thanks, Ted. Overall, M&A activity in our core markets continued to increase during the quarter as a combination of using benchmark rates and more settled tariff framework gave sponsors more confidence in the macro environment. To illustrate this, over 80% of our new fundings during the quarter were in new borrowers, a significantly higher percentage than what has historically been over the last several quarters. With the renewed activity has also come renewed competition on deals and overall tightening of spreads. As you've noted in the past, our focus on companies with less than 50 million of EBITDA and our sourcing of non sponsor backed companies provide some insulation to these trends. We continue to be selective from a credit quality perspective and are focused on maximizing risk adjusted return for our shareholders. Turning to Slide 10 originations for the third quarter were $14.2 million and repayments and sales were $43.8 million, resulting in net repayments and sales of approximately $29.6 million. Overall yield on par of the new debt investments during the quarter was 12.5%. This compares to a 13.8% weighted average annualized yield excluding income from non accruals and collateralized loan obligations as of September 30, 2025 excluding the impact of purchase discount accounting. The weighted average annualized yield excluding income from non accruals and collateralized loan obligations was approximately 10.3% as of September 30, 2025. Our investment portfolio at year end remained highly diversified. We ended the third quarter with a debt investment portfolio when excluding our investments in CLO funds, equities and joint ventures spread across 79 different portfolio companies and 28 different industries with an average par balance of $3.2 million per entity. Turning to Slide 11 at the end of the third quarter 2025, we had 10 investments on non accrual status representing 3.8% and 6.3% of the portfolio at fair value and cost respectively. This compares to six investments on non accrual status as of June 30, 2025 representing 2.1% and 4.8% of the portfolio at fair value and cost respectively. I would note that the quarter over quarter increase does include investments acquired through the Logan Ridge transaction that were on non accrual at the time of that transaction. It's further worth noting that two of the investments currently on non accrual status we continue to recognize interest income on a cash basis, that is only when payments are actually received. On slide 12, excluding our non accrual investments, we have an aggregate debt investment portfolio of $429.5 million at fair value which represents a blended price of 93.1% of par value and is 84.4% comprised of first lien loans at par value. Assuming a PAR recovery, our September 30, 2025 fair values reflect a potential of $31.2 million of incremental NAV value or a 13.7% increase to NAV. When applying an illustrative 10% default rate and 70% recovery rate, our debt portfolio would generate an incremental $1.36 per share of NAV, or a 7.8% increase as it rotates. I'll now turn the call over to Brandon to further discuss our financial results for the quarter.

Brandon Sutorin - Chief Financial Officer - (00:09:18)

Thanks, Patrick. For the quarter ended September 30, 2025, the company generated $18.9 million in investment income, an increase of $6.3 million compared to $12.6 million reported for the quarter ended June 30, 2025. Core income for the same periods was $15.3 million and $12.6 million respectively. The increase in investment income from the prior quarter was primarily driven by the Logan Ridge acquisition, which contributed $7.4 million of GAAP income and $3.8 million of core income. Core income. For the quarter ended September 30, 2025. Gross expenses were $10.3 million and net expenses were $10.1 million, which includes the $0.2 million performance based incentive fee waiver. This represents a $2 million increase compared to $8.1 million for the prior quarter. The increase in expenses compared to the prior quarter reflect the larger combined company. Accordingly, our net investment income for the quarter ended September for the third quarter of 2025 was $8.8 million or $0.71 per share, which constitutes an increase of $4.3 million or $0.21 per share from $4.6 million or $0.50 per share for the second quarter of 2025. Core net investment income for the third quarter of 2025 was 5.3 million dollars or $0.42 per share, compared to 4.6 million dollars or $0.50 per share for the second quarter of 2025. As of September 30, 2025, our net asset value totaled 231.3 million dollars, an increase of 66.6 million from the prior quarters NAV of 164.7 million. The increase in total NAV on a gross dollar basis was primarily driven by net realized and unrealized gains of 14.8 million. The $49.6 million impact on a GAAP basis of the Logan Ridge acquisition partially offset by the third quarter distribution exceeding core net investment income for the prior compared to the prior quarter's distribution of 1.1 million on a per share basis, NAV was $17.55 per share as of September 30, 2025, representing a 34 cent decrease compared to 1789 as of June 30, 2025. The decline in NAV per share was primarily due to to core net investment income, which excludes purchase, discount accretion not fully covering the dividend for the quarter and approximately $4 million of mark to market loss across the portfolio. As of September 30, 2025, our gross and net leverage ratios were 1.4 times and 1.3 times respectively, compared to 1.6 and 1.4 times respectively in the prior quarter. Specifically, as of September 30, 2025, we had a total of 324.6 million of borrowings outstanding with a current weighted average contractual interest rate of 6.1%. This compares to 255.4 million of borrowings outstanding as of the prior quarter. With a weighted average contractual interest rate 6%. The company finished the quarter with 110 million of available borrowing capacity under the senior secured revolving credit facilities subject to borrowing based restrictions. Consistent with our long term capital approach, we proactively extended and laddered our unsecured debt maturities, issuing a $75 million 7.75% note that is due on October 2030 and a $35 million 7.5% note due October 2028, while at the same time initiating the redemption of our 4 and 7/8 notes due in April 2026, expected to be completed on or about November 13th. These actions diversify funding, reduce near term refinancing risk and enhance financial flexibility. With that, I will now turn the call back over to Ted.

Ted Goldthorpe - Chief Executive Officer, President and Director - (00:14:09)

Thanks Brendan. Other questions? I'd like to reemphasize how excited we are about the opportunities the newly combined company are already creating. As we move forward, our focus remains on disciplined capital allocation, maintaining a high quality portfolio and delivering attractive risk adjusted returns for our shareholders. With a more diversified platform, a strengthened balance sheet, we believe we are well positioned to drive the continued earnings growth and value creation in the quarters ahead. Thank you once again to all of our shareholders for your ongoing support. This concludes our prepared remarks and I'll turn on the call for any questions.

OPERATOR - (00:14:47)

Thank you. As a reminder to ask a question you will need to press Star then the number one on your telephone keypad. And if you would like to withdraw your question, press Star one again. We will pause for just a moment to compile the Q and A roster. Your first question comes from the line of Eric Zwick with Lucid Capital Markets. Please go ahead.

Eric Zwick - Equity Analyst - (00:15:12)

Thank you. Good morning guys. To start first, I wanted to start first in terms of. With your kind of pronouncement of potentially repurchasing 10% of the shares. Just want to make sure is that relative to the 930 outstanding balance of about 13.9?

Ted Goldthorpe - Chief Executive Officer, President and Director - (00:15:36)

It's relative to the transaction closing date shares, which was about 13.2 million off the top of my head. Let me. Hold on. I have that right here. Yeah. When we announced that when we closed the transaction, we committed to shareholders that we'd buy back a bunch of stock between as soon as practically possible and obviously we were in a blackout period until today. So the intention is to buy back 10% of the closing amount of shares. But Eric, the short Answer is there. Were not a lot of days in Q3 that we could do anything because of some of the rules around six day cooling off period, things like that. So it's off of a slightly higher number than the September 30th, but that's going to be a decent approximation. That's right. If you recall, we had, I was going to say, Eric, we had to wait 60 days until after closing before we could turn the buyback back on. But we did provide some color on post quarter end daily repurchases in our subsequent events, which was about $1.2 million.

Eric Zwick - Equity Analyst - (00:16:42)

Excellent. Yep, I did see that too. So great. Yep, that's helpful. And then secondly, looking at slide 11 and just noticing the quarter over quarter improvement in your internal ratings performing versus underperforming. Was the majority of that change from June 30 to September 30 a result of the combination as well or was there any additional kind of, you know, upgrades going on within the combined portfolio?

Ted Goldthorpe - Chief Executive Officer, President and Director - (00:17:13)

Yeah, I mean, I mean the short answer is like both. I mean there were certainly upgrades going on in the portfolio, but the reality is we added a significant chunk through the Logan Ridge and kind of using those internal ratings kind of gets you that. That again, it's a little bit of both. But my hunch is without giving the specifics, it's probably the assets from Logan coming onto the balance sheet and those ratings as opposed to a broad swath of increases. Probably the biggest surprise for us over the last six months is we really haven't had a lot of negative portfolio surprises and we've had a bunch of positive portfolio surprises. And again, our LPs and our shareholders are a little rattled by some of the recent headlines out there around First Brands Tricolor, this telecom name last week. The reality is a lot of those are really idiosyncratic. I mean a lot of them are related to fraud, number one. But number two is a lot of the underperformance has been in their asset based parts of their business as opposed to the cash flow based parts of their business. So this BDC sell off we think is probably overdone. It's beginning to correct a little bit, but we're not seeing broad based weakness in our portfolio.

Eric Zwick - Equity Analyst - (00:18:31)

I appreciate the commentary there and I would echo that sentiment just from the number of portfolios I've reviewed so far this earnings season. Just with respect to the 10 credits that are on non accrual at this point. Could you just kind of maybe walk through your strategy and methodology for resolving those? If there's Any potential for restructurings or sales or resolutions in the near term for any of those?

Ted Goldthorpe - Chief Executive Officer, President and Director - (00:18:56)

Yeah, Eric, I mean the short answer. Is they're all very like company specific. So there is one name that we are in the process of restructuring and that hopefully is going to get resolved in Q4. You know, maybe it flipped into Q1, but that's a kind of relatively near term thing that we'll get that will get resolved out. You know, there's one of them that is sort of for sale in the market and hopefully, you know, they have a couple visions and hopefully some are all that get resolved in Q4 and then but you know, other than that, you know, the rest of them it's again, you know, continuing to optimize what's the best return, Whether that is, you know, putting a little bit more capital, growing the businesses, whether it's looking for, you know, restructuring of the balance sheet or just kind of an outright sale. Each of the opportunities are sort of like one off and have their own kind of pros and cons. But there are again probably two or three companies that we would hope to have a near term resolution on. Eric, I.

Eric Zwick - Equity Analyst - (00:19:57)

Thanks for the update there.

Ted Goldthorpe - Chief Executive Officer, President and Director - (00:19:59)

Okay, it's worth highlighting. Last quarter you may have noticed there were two assets we put on cash basis, income recognition. That's generally a good indicator when you start recognizing some income on the assets and again when those assets are current on the debt and paying their coupon interest.

Eric Zwick - Equity Analyst - (00:20:22)

Yep, that makes sense. Thanks for taking my question this this morning.

Ted Goldthorpe - Chief Executive Officer, President and Director - (00:20:26)

Thanks. Have a good weekend.

OPERATOR - (00:20:41)

Your next question comes from the line of Stephen Martin with Sleeter Capital. Please go ahead.

Stephen Martin - (00:20:49)

Morning guys and congratulations on getting the deal done and you know, cleaning, starting the cleanup process. With respect to the buyback, which, you know, we applaud, how is that going to affect your ability to continue to do deals going forward? And can you also talk about what the Q4 activity level looks like?

Ted Goldthorpe - Chief Executive Officer, President and Director - (00:21:16)

Yeah, I'll answer the first comment. I mean if you look this quarter, we obviously came into the quarter with a lot of cash because we were just kind of gearing up for this. Again, when you take a huge step back, if you look at where spreads are in the middle market versus where our stock trades, it's still accretive for us to buy back stock. So we aren't seeing there's a massive pipeline that I should really defer to Patrick on this, but we have a massive pipeline of what I would call generic sponsor finance. The ability to get premium pricing, I would say are wider spreads. Our pipeline in that area is probably not as robust. So we have an unlimited amount of supply at L or 475 Dell 500 kind of thing. We're not seeing a lot of like, you know, much wider spreading stuff that we like right now. I don't know, Patrick, I don't know. If you agree with that.

Patrick Schaefer - Chief Investment Officer - (00:22:05)

No, I'm sorry. I've kind of said this several times on our calls. But from our perspective, it's around getting the right pipeline in the portfolio as opposed to, as Ted said, we could load up on S475, S500 unitranches. I'm not sure that that ultimately but spits out the right ROE for our shareholders. So we're being careful and judicious with how we actually deploy our capital. But we do have a very, very large pipeline of opportunity to the extent that sort of we feel like the credit and the pricing align with each other. Investing in your own stock at these spread at where your own stock trades.

Ted Goldthorpe - Chief Executive Officer, President and Director - (00:22:53)

That's right. So that again, we run the math every single quarter for our board and we show the math of doing a new investment versus the buyback. And buybacks generally, they're kind of fairly similar, to be honest, depending on what you see on pricing. But buybacks are a guaranteed return and we feel like it's pretty shareholder friendly and we're supportive of making the right capital allocation decisions for our shareholders. Yeah, I think it's worth noting, Steve, just to sort of reinforcing the point that we think it's important to do for shareholders at these prices, especially because of the day one nav impact. However, it is hard to buy back large swaths of our equity and maintain prudent leverage ratios. So you'll note the fund is going to buy back $7.5 million. Management is going to come in and fill out the rest of the order. Book. For the buyback. So recognizing exactly what you're getting at.

Stephen Martin - (00:23:50)

Yeah, no, and look, we applaud both and we have been a proponent of management increasing its stake as well. Just out of curiosity, has there been any further realizations? I assume most of what's in the legacy LRFC portfolio is still a lot of equity.

Ted Goldthorpe - Chief Executive Officer, President and Director - (00:24:14)

No, I don't think that's a. I don't think that's a fair statement. I don't. I don't have the number off the top of my head, to be honest, Steve, but I. It's probably disproportionate relative to the rest of our book. But I would, I would have to run I'd have to run the math, but I'd be. I mean, maybe it's. It's a third to a half of it, you know, 20 billion bucks or so of equity, but I would not say it's the majority of it.

Stephen Martin - (00:24:41)

Okay, on that same page, just out of Curiosity, on page 10, the weighted average yield on debt investments at par is 13.8. Does that have something to do with the purchase accounting? Because it jumped up from 10. 7 to 13.8.

Brandon Sutorin - Chief Financial Officer - (00:25:01)

Yep, that's exactly right. So on a core basis, it's about 10.3%, Steve, but that is the impact of purchase accounting accretion. You may note, when you do an asset acquisition, the board negotiates everything on a NAV for NAV basis. But the actual accounting for it, when you issue the equity, it actually is issued at the market price or closing stock price on the issuance date. So because of the discount to NAV on the issuance date, that creates a large disconnect between the NAV you're bringing on and the dollar value of the purchase reflected in your financials, which creates an unrealized gain that's allocated to the cost basis of your investment portfolio, which is accreted into income over time.

Stephen Martin - (00:25:55)

I got that. You might want to consider either footnoting that or putting a second number there.

Brandon Sutorin - Chief Financial Officer - (00:26:02)

Yeah, good call, Steve. Again, putting the two portfolios together was slightly dilutive on a yield at par basis. But as I mentioned, on my call, our new origination was about a 12.5% yield. So obviously we're being thoughtful and selective about our new investments to work on increasing that yield despite sort of, you know, where kind of spreads are going in the market in general.

Stephen Martin - (00:26:31)

Okay, can you talk about pick this quarter? It didn't, it didn't move too much. And what's going on on the PIC side of the portfolio?

Brandon Sutorin - Chief Financial Officer - (00:26:43)

So, Steve, it actually did come down quite a bit. As a percentage of the book, it's down to about 14.3%. And I was pulling up what it was last quarter, but it was quite a bit higher. North of 20%, I believe. Yeah, 19.5 is a percentage of the current quarter's income. Yes, that's right. Yeah. It's come. I mean, it's come down quite materially, Steve. It's come down on a combined basis by a quarter. Yeah, by five points. And again, we're, as I said, but.

Patrick Schaefer - Chief Investment Officer - (00:27:20)

Part of our strategy is a good. Amount, not a good amount, but we have securities on our book that have a mix of cash and pic. We have Investments that we do that we look at a first lien and a preferred equity investment together for the same company and that preferred is pick and the first lien is cash. So again, as you kind of noted. Before. Not all pick is bad pick, but we are certainly actively working to reduce that number and our conscious of market perception of that and are being careful as we think about new deals and how we think about allocating to kind of make sure that we are overweighting cash opportunities versus things that have a blend of cash and pay.

Stephen Martin - (00:28:06)

Okay, Brendan, overhead expenses and the expense side of the income statement. Is this quarter exemplary or is there, you know, was this could this quarter still have merger related costs that are. Going to come out?

Brandon Sutorin - Chief Financial Officer - (00:28:28)

So this is actually a pretty decent run rate. Most of the transaction costs don't flow through the income statement here. They hit nav on the closing date. There were some elevated expenses obviously for time spent integrating the portfolios, et cetera. However, we closed on July 15, so there's you know, 15 next quarter will have 15 days of extra expenses. However, we think that, you know, 1.9, 1.8 number is a reasonable run rate for the combined portfolio.

Stephen Martin - (00:29:05)

Got it. Professional fees were elevated. Is that still residual?

Brandon Sutorin - Chief Financial Officer - (00:29:11)

Yes, exactly.

Stephen Martin - (00:29:14)

Okay, thanks a lot guys.

Brandon Sutorin - Chief Financial Officer - (00:29:17)

Yeah, thanks Steve.

OPERATOR - (00:29:21)

Your next question comes from the land of Christopher Nolan with Ladenburg. Please go ahead, Steve.

Christopher Nolan - (00:29:30)

Just asked all my questions. Thanks.

Brandon Sutorin - Chief Financial Officer - (00:29:34)

Thanks Chris.

OPERATOR - (00:29:40)

Again, if you would like to ask a question, press Star, then the number one on your telephone keypad. Your next question comes from the land of Eric Sweeck with Lucid Capital Markets. Your line is open.

Eric Sweeck - (00:29:58)

Thanks. Just a quick follow up on the topic of the purchasing accounting accretion. What was all of the Discount recorded in 3Q or. I suspect there may still be potentially more and if so, what is that balance and over what kind of time period will the remaining amount be recognized?

Brandon Sutorin - Chief Financial Officer - (00:30:19)

Yeah, I don't know what a brand I mean about, but it's generally recognized over the duration of the underlying assets themselves. So it's tough to tell you exactly what that would be. The decline curve, if you will, is going to be based on how those assets get monetized and what their maturity dates are, et cetera. That's right. In terms of. Go ahead. I was just going to say, Eric, there's about just north of 21 million purchase accounting accretion. There's about 18 or 18 million left. So I would just say generally speaking, a lot of the purchase accounting increasing tends to work its way through the book in the first couple quarters after closing it is recognized over time. But obviously you have assets with shorter maturities, things like that and you know, natural portfolio rotation as a result of the integration that, you know, again this quarter we had 3.6 million on, you know, effectively a stub quarter.

Eric Sweeck - (00:31:25)

So yeah, okay, so greater amounts up front and then it'll kind of trail off as that portfolio kind of matures and pays down over time. So. Okay, that's very helpful. Thank you.

OPERATOR - (00:31:41)

There are no further questions at this time. I will now turn the call back over to Ted Goldthorpe for closing remarks.

Ted Goldthorpe - Chief Executive Officer, President and Director - (00:31:51)

Thank you all for attending our call. As always, please reach out to us with any questions which we're happy to discuss. We look forward to speaking to you again in March when We announce our fourth quarter and full year 2025 results. Have a good weekend and thank you.

OPERATOR - (00:32:04)

Very much, ladies and gentlemen. That concludes today's call. Thank you all for joining. You may now disconnect.