Ares Capital Corporation · NASDAQ:ARCC
Ares Capital — Q2 2021 Earnings Presentation
28 slides from Ares Capital's earnings presentation, Jul 28, 2021
Slide 1: Second Quarter 2021 Earnings Presentation
Second Quarter 2021 Earnings Presentation
Slide 2: Important Notice
Important Notice This presentation contains “forward looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to risks and uncertainties, including the impact of the novel coronavirus (“COVID-19”) pandemic and significant market volat
Slide 3: Financial and Portfolio Highlights
Financial and Portfolio Highlights Financial Highlights (all per share amounts, excluding net asset value per share, are basic and diluted) Q2-21 Q1-21 Q2-20 (1) Core EPS* $ 0.53 $ 0.43 $ 0.39 Net Investment Income Per Share $ 0.39 $ 0.33 $ 0.39 Net Realized Gains Per Share $ 0.14 $ 0.04 $ 0.02 Net
Slide 4: Selected Historical Financial Information
Selected Historical Financial Information As of and for the Three Months Ended (dollar amounts in millions, except per share data and stock prices) 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 Core EPS – Basic and Diluted*(1) $ 0.53 $ 0.43 $ 0.54 $ 0.39 $ 0.39 Net Investment Income Per Share – Basic and
Slide 5: Selected Historical Financial Information (cont’d)
Selected Historical Financial Information (cont’d) As of (dollar amounts in millions) 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 Investments at Fair Value $ 17,136 $ 15,429 $ 15,515 $ 14,358 $ 13,842 Number of Portfolio Companies(10) 365 350 350 347 352 Asset Class (at fair value): First Lien Senior S
Slide 6: Selected Historical Financial Information (cont’d)
Selected Historical Financial Information (cont’d) For the Three Months Ended (dollar amounts in millions) 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 Commitments: Gross Commitments(2) $ 4,847 $ 1,750 $ 3,858 $ 706 $ 867 Exits of Commitments(3) (2,925) (2,138) (3,032) (352) (1,484) Net Commitments(14)
Slide 7: Quarterly Operating Results
Quarterly Operating Results For the Three Months Ended (amounts in millions, except per share data) 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 Investment income $ 459 $ 390 $ 440 $ 352 $ 350 Expenses 277 241 204 182 180 Net investment income before income taxes 182 149 236 170 170 Income tax expense,
Slide 8: Quarterly Operating Results Detail
Quarterly Operating Results Detail For the Three Months Ended (amounts in millions) 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 Net Investment Income Before Income Taxes: Investment Income: Interest income from investments $ 305 $ 289 $ 294 $ 280 $ 287 Capital structuring service fees 93 38 93 12 16 Di
Slide 9: Quarterly Gain/Loss Detail
Quarterly Gain/Loss Detail For the Three Months Ended (amounts in millions) 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 Net Realized and Unrealized Gains (Losses): Realized gains (losses) on investments: Gains $ 79 $ 80 $ 38 $ 9 $ 33 Losses (11) (13) (208) (32) (23) Net realized gains (losses) on inves
Slide 10: Quarterly Balance Sheets
Quarterly Balance Sheets As of (amounts in millions, except per share data) 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 ASSETS Investments at fair value $ 17,136 $ 15,429 $ 15,515 $ 14,358 $ 13,842 Cash and cash equivalents 377 337 254 233 278 Restricted cash 57 19 72 43 23 Interest receivable 110 98 1
Slide 11: Investment Portfolio by Issuer as of June 30, 2021
Investment Portfolio by Issuer as of June 30, 2021* Top 15 Investments 25.5% Senior Direct Lending Program, LLC(12) 5.6% Ivy Hill Asset Management, L.P. 3.7% Singer Sewing Company 2.0% 1.4% Mac Lean-Fogg Company 1.3% GHX Ultimate Parent Corporation 1.3% Symplr Software Inc. 1.3% Essential Services H
Slide 12: Investment Portfolio as of June 30, 2021
Investment Portfolio as of June 30, 2021* Asset Class Industry 8% 10% 2% 2%2% 20% 2%2% 7% 3% 4% 6% 47% 5% 6% 14% 5% 5% 7% 5% 24% 6% 6% 6% First Lien Senior Secured Loans(11) Software & Services Automobiles & Components Second Lien Senior Secured Loans Healthcare Services Insurance Services Senior Di
Slide 13: Portfolio Activity
Portfolio Activity Gross Commitments by Asset Class Exits of Commitments by Asset Class 3% 2% 2% 1% 4% 2% 2% 2% 2% 2% 100% 100% 1% 4% 3% 3% 3% 2% 5% 3% 3% 2% 1% 3% 8% 3% 3% 7% 9% 3% 5% 4% 18% 3% 13% 15% 3% 80% 80% 14% 7% 24% 39% 31% 30% 60% 60% 94% 92% 40% 78% 40% 78% 74% 69% 60% 54% 52% 55% 20% 20%
Slide 14: Portfolio Company EBITDA and Credit Statistics
Portfolio Company EBITDA and Credit Statistics 8.0x $156.3 $160.0 $153.1 $146.3 $141.0 $140.0 $130.4 6.0x 5.9x 6.0x 6.0x $120.0 5.7x 5.8x $105.2 $92.4 $100.0 $90.1 ($ Millions) $83.9 $85.5 4.0x $80.0 2.9x 2.9x $60.0 2.7x 2.8x 2.8x 2.0x $40.0 $20.0 0.0x $0.0 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 PortfolioWei
Slide 15: Portfolio By Grade
Portfolio By Grade(21) % by Fair Value % by Number of Companies 100% 100% 9% 10% 10% 8% 10% 10% 14% 13% 13% 13% 90% 90% 80% 80% 70% 70% 60% 60% 67% 66% 71% 70% 70% 76% 69% 72% 50% 74% 50% 78% 40% 40% 30% 30% 20% 20% 16% 16% 13% 12% 10% 19% 18% 10% 10% 13% 12% 9% 9% 8% 7% 1% 2% 1% 6% 5% 0% 0% Q2-20 Q
Slide 16: Loans on Non-Accrual Status
Loans on Non-Accrual Status Amortized Cost Fair Value 10.0% $1,000 10.0% $1,000 9.0% $900 9.0% $900 8.0% $764 $800 8.0% $800 7.0% $657 $700 7.0% $700 6.0% $600 6.0% $600 ($ Millions) ($ Millions) $528 $519 $503 5.0% $500 5.0% $457 $500 5.1% 4.0% 4.4% $400 4.0% $356 $400 $336 $320 $308 3.0% $300 3.0%
Slide 17: Investment Activity from July 1, 2021 through July 22, 2021
Investment Activity from July 1, 2021 through July 22, 2021 Ares Capital made approximately $470 million of new investment commitments ∙ 97% were in first lien senior secured loans, 2% were in other equity and 1% were in preferred equity ∙ 97% were floating rate, 2% were non-interest bearing and 1%
Slide 18: Backlog and Pipeline
Backlog and Pipeline ∙ As of July 22, 2021, Ares Capital had a backlog and pipeline of approximately $1.4 billion and $110 million, respectively(22) ∙ The following is a breakdown of the backlog and pipeline by asset class and by industry Asset Class Industry 2% 8% 2% 4% 8% 8% 37% 4% 8% 12% 84% 23%
Slide 19: Debt Summary
Debt Summary As of 3/31/21 As of 6/30/21 Aggregate Aggregate Weighted Principal Carrying Principal Carrying Average Amount Principal Value of Amount Principal Value of Stated Committed/ Amount Outstanding Committed/ Amount Outstanding Interest (dollar amounts in millions) Outstanding(24) Outstanding
Slide 20: Debt Maturities
Debt Summary Debt Maturities* ($ in millions) ($ in millions) $5,000 $5,000 $4,000 $4,000 (27) $206 $3,000 $3,000 (27)(28) $1,143 (27) $192 $2,000 (27)(28) $1,291 $2,000 (27) $38 (27) $38 $3,000 $1,000 $2,150 $1,000 $900 $900 $1,850 $600 $1,350 $600 $750 $750 $388 $403 $388 $403 $0 $— $— $0 $— — 202
Slide 21: Quarterly Dividends
Quarterly Dividends $0.50 $0.02 $0.02 $0.02 $0.02 $0.40 $0.41 $0.40 $0.40 $0.40 $0.40 $0.40 $0.40 $0.40 $0.40 $0.40 $0.40 $0.39 $0.39 $0.38 $0.38 $0.38 $0.38 $0.30 $0.20 $0.10 $0.00 (31) Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Regular Div
Slide 22: Corporate Data
Corporate Data Board of Directors Investment Committee Corporate Officers Research Coverage Corporate Counsel MICHAEL AROUGHETI MARK AFFOLTER MICHAEL AROUGHETI BANK OF AMERICA MERRILL LYNCH KIRKLAND & ELLIS LLP Co-Chairman and Executive Vice Partner, Co-Head of U.S. Direct Lending Co-Chairman and Ex
Slide 23: Reconciliations of Core EPS
Reconciliations of Core EPS The following are reconciliations of basic and diluted net income per share computed in accordance with GAAP to basic and diluted core earnings per share: For the Three Months Ended 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 (1) Basic and Diluted Core EPS $ 0.53 $ 0.43 $ 0.
Slide 24: Endnotes
Endnotes 1) Basic and diluted Core EPS is a non-GAAP financial measure. Core EPS is the net per share increase (decrease) in stockholders’ equity resulting from operations less net realized and unrealized gains and losses, any capital gains incentive fees attributable to such net realized and unreal
Slide 25: Endnotes (cont’d)
Endnotes (cont'd) 13) As of June 30, 2021, excluding Ares Capital's investment in the subordinated certificates of the SDLP, 88% of the floating rate investments at fair value contained interest rate floor features. 14) Represents gross commitments or fundings less commitments or investments exited,
Slide 26: Endnotes (cont’d)
Endnotes (cont'd) 21) Based on our investment adviser’s internal investment rating system scale from 1 to 4. Investments with a grade of 4 involve the least amount of risk to our initial cost basis and the trends and risk factors for these investments since origination or acquisition are generally f
Slide 27: Endnotes (cont’d)
Endnotes (cont'd) 28) The interest rate charged on the Revolving Funding Facility is based on LIBOR plus 2.00% per annum or a “base rate” (as defined in the agreements governing the Revolving Funding Facility) plus 1.00% per annum. As of June 30, 2021, the interest rate in effect was LIBOR plus 2.00
Slide 28: Ares Capital Corporation
OD ARES ARES CAPITAL CORPORATION