Ares Capital Corporation · NASDAQ:ARCC
Ares Capital — Q1 2022 Earnings Presentation
27 slides from Ares Capital's earnings presentation, 2022
Slide 1: First Quarter 2022 Earnings Presentation
First Quarter 2022 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 Q1-22 Q4-21 Q1-21 (1) Core EPS* $ 0.42 $ 0.58 $ 0.43 Net Investment Income Per Share(2) $ 0.41 $ 0.52 $ 0.33 (2) Net Realized Gains Per Share $ 0.02 $ 0.04 $ 0.04 Net Unrealized Gains Per Share(2) $ 0.01 $ 0.27 $ 0.50 (2)(3) GAAP Net Income Per
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) 3/31/22 12/31/21 9/30/21 6/30/21 3/31/21 Core EPS*(1) $ 0.42 $ 0.58 $ 0.47 $ 0.53 $ 0.43 Net Investment Income Per Share(2) $ 0.41 $ 0.52 $ 0.40 $ 0.39
Slide 5: Selected Historical Financial Information (cont’d)
Selected Historical Financial Information (cont’d) As of (dollar amounts in millions) 3/31/22 12/31/21 9/30/21 6/30/21 3/31/21 Investments at Fair Value $ 19,486 $ 20,009 $ 17,677 $ 17,136 $ 15,429 Number of Portfolio Companies(12) 395 387 371 365 350 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) 3/31/22 12/31/21 9/30/21 6/30/21 3/31/21 Commitments: Gross Commitments(4) $ 2,001 $ 5,866 $ 3,110 $ 4,847 $ 1,750 Exits of Commitments(5) (2,551) (3,869) (2,263) (2,925) (2,138) Net Commitment
Slide 7: Quarterly Operating Results
Quarterly Operating Results For the Three Months Ended (amounts in millions, except per share data) 3/31/22 12/31/21 9/30/21 6/30/21 3/31/21 Investment income $ 440 $ 529 $ 442 $ 459 $ 390 Expenses 229 279 253 277 241 Net investment income before income taxes 211 250 189 182 149 Income tax expense,
Slide 8: Quarterly Operating Results Detail
Quarterly Operating Results Detail For the Three Months Ended (amounts in millions) 3/31/22 12/31/21 9/30/21 6/30/21 3/31/21 Net Investment Income Before Income Taxes: Investment Income: Interest income from investments $ 310 $ 336 $ 317 $ 305 $ 289 Capital structuring service fees 30 116 59 93 38 D
Slide 9: Quarterly Gain/Loss Detail
Quarterly Gain/Loss Detail For the Three Months Ended (amounts in millions) 3/31/22 12/31/21 9/30/21 6/30/21 3/31/21 Net Realized and Unrealized Gains (Losses): Realized gains (losses) on investments: Gains $ 81 $ 49 $ 233 $ 79 $ 80 Losses (12) (49) (110) (11) (13) Net realized gains on investments
Slide 10: Quarterly Balance Sheets
Quarterly Balance Sheets As of (amounts in millions, except per share data) 3/31/22 12/31/21 9/30/21 6/30/21 3/31/21 ASSETS Investments at fair value $ 19,486 $ 20,009 $ 17,677 $ 17,136 $ 15,429 Cash and cash equivalents 695 372 1,193 377 337 Restricted cash 19 114 20 57 19 Interest receivable 128 1
Slide 11: Investment Portfolio by Issuer as of March 31, 2022
Investment Portfolio by Issuer as of March 31, 2022* Top 15 Investments 6.5% 25.1% Ivy Hill Asset Management, L.P. 5.0% (14) Senior Direct Lending Program, LLC 1.4% 1.2% Cornerstone OnDemand, Inc. 1.2% Symplr Software Inc. 1.2% 1.1% CoreLogic, Inc. 1.0% 1.0% IRI Holdings, Inc. 1.0% AthenaHealth Grou
Slide 12: Investment Portfolio as of March 31, 2022
Investment Portfolio as of March 31, 2022* Asset Class Industry 8% 7% 2% 2% 2% 7% 2% 20% 2% 4% 9% 4% 45% 5% 11% 5% 5% 5% 10% 5% 21% 5% 10% 6% First Lien Senior Secured Loans(13) Software & Services Power Generation Second Lien Senior Secured Loans Healthcare Services Automobiles & Components Senior
Slide 13: Portfolio Activity
Portfolio Activity Gross Commitments by Asset Class Exits of Commitments by Asset Class 100% 1% 3% 3% 100% 2% 3% 1% 1% 3% 3% 4% 6% 2% 4% 1% 3% 1% 2% 1% 6% 8% 5% 6% 2% 1% 9% 5% 18% 5% 4% 3% 8% 4% 5% 14% 17% 2% 3% 2% 3% 80% 15% 2% 80% 4% 11% 11% 31% 17% 30% 24% 5% 1% 60% 60% 40% 78% 40% 79% 77% 76% 72
Slide 14: Portfolio Company EBITDA and Credit Statistics
Portfolio Company EBITDA and Credit Statistics 10.0x $200.0 $173.4 $162.0 8.0x $157.0 $160.0 $146.3 $130.4 $127.4 $129.0 $111.1 6.2x 6.1x 6.0x 6.0x 6.0x 5.8x $120.0 ($ Millions) $105.2 $92.4 4.0x $80.0 2.8x 2.9x 2.8x 3.0x 2.9x 2.0x $40.0 0.0x $0.0 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 PortfolioWeighted Port
Slide 15: Portfolio By Grade
Portfolio By Grade(24) % by Fair Value % by Number of Companies 100% 100% 14% 13% 11% 13% 13% 11% 13% 14% 90% 17% 19% 90% 80% 80% 70% 70% 60% 60% 69% 72% 50% 74% 50% 77% 76% 78% 82% 75% 78% 75% 40% 40% 30% 30% 20% 20% 12% 10% 10% 10% 7% 6% 6% 12% 9% 6% 4% 1% 5% 6% 5% 5% 5% 5% 1% 1% 0% 0% Q1-21 Q2-21
Slide 16: Loans on Non-Accrual Status
Loans on Non-Accrual Status Amortized Cost Fair Value 5.0% $700 5.0% $700 $600 $600 4.0% 4.0% $519 $503 $500 $500 3.0% 3.3% 3.0% ($ Millions) ($ Millions) $400 $400 2.9% $336 $320 $297 $300 $300 2.0% 2.0% 2.2% $229 1.9% 1.7% $200 $171 $200 $157 1.0% 1.2% 1.0% $121 1.0% $92 $100 $100 0.8% 0.5% 0.6% 0
Slide 17: Investment Activity from April 1, 2022 through April 20, 2022
Investment Activity from April 1, 2022 through April 20, 2022 Ares Capital made approximately $106 million of new investment commitments ∙ 67% were in first lien senior secured loans, 15% were in second lien senior secured loans, 15% were in preferred equity and 3% were in subordinated certificates
Slide 18: Backlog and Pipeline
Backlog and Pipeline ∙ As of April 20, 2022, Ares Capital had a backlog and pipeline of approximately $2.3 billion and $110 million, respectively(25) ∙ The following is a breakdown of the backlog and pipeline by asset class and by industry Asset Class Industry 5% 9% 3% 16% 4% 5% 46% 6% 15% 61% 9% 2%
Slide 19: Debt Summary
Debt Summary As of 12/31/21 As of 3/31/22 Aggregate Aggregate Weighted Principal Carrying Principal Carrying Average Amount Principal Value of Amount Principal Value of Stated Committed/ Amount Outstanding Committed/ Amount Outstanding Interest (dollar amounts in millions) Outstanding(27) Outstandin
Slide 20: Debt Summary - Debt Maturities
Debt Summary Debt Maturities* ($ in millions) $5,000 $4,000 $3,000 (30) $1,001 (30) $1,021 (30) $45 $2,000 $2,450 $1,000 $2,150 ** $1,850 $900 $750 $403 $0 $— — 2022 $— 2023 2024 $— 2025 2026 $— Thereafter As of March 31, 2022 Convertible Unsecured Notes Other Unsecured Notes Secured Revolving Facil
Slide 21: Quarterly Dividends
Quarterly Dividends $0.50 $0.03 $0.03 $0.02 $0.02 $0.02 $0.02 $0.42 $0.42 $0.40 $0.41 $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 $0.30 $0.20 $0.10 $0.00 (31) 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 Q4-21 Q1-22 Q2-22
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 core earnings per share to basic net income per share computed in accordance with GAAP: For the Three Months Ended 3/31/22 12/31/21 9/30/21 6/30/21 3/31/21 (1) Core EPS $ 0.42 $ 0.58 $ 0.47 $ 0.53 $ 0.43 Net realized and unrealized gai
Slide 24: Endnotes
Endnotes 1) Core EPS is a non-GAAP financial measure. Core EPS is the net 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 unrealized gains and losses, and a
Slide 25: Endnotes (cont'd)
Endnotes (cont'd) 14) Represents Ares Capital’s portion of co-investments with Varagon Capital Partners and its clients in first lien senior secured loans, including certain loans that the SDLP classifies as "unitranche" loans, to U.S. middle-market companies. As of March 31, 2022, the Senior Direct
Slide 26: Endnotes (cont'd)
Endnotes (cont'd) 23) The EBITDA growth rate for each included portfolio company is calculated as the percentage change for the most recently reported fiscal year to date comparable periods and is weighted based on the fair value of the portfolio company investments to calculate the portfolio weight
Slide 27: Ares Capital Corporation
OD ARES ARES CAPITAL CORPORATION