Ares Capital Corporation · NASDAQ:ARCC
Ares Capital — Q3 2021 Earnings Presentation
28 slides from Ares Capital's earnings presentation, Oct 26, 2021
Slide 1: Third Quarter 2021 Earnings Presentation
Third 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) Q3-21 Q2-21 Q3-20 (1) Core EPS* $ 0.47 $ 0.53 $ 0.39 Net Investment Income Per Share $ 0.40 $ 0.39 $ 0.39 Net Realized Gains (Losses) Per Share $ 0.33 $ 0.14 $
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) 9/30/21 6/30/21 3/31/21 12/31/20 9/30/20 Core EPS – Basic and Diluted*(1) $ 0.47 $ 0.53 $ 0.43 $ 0.54 $ 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) 9/30/21 6/30/21 3/31/21 12/31/20 9/30/20 Investments at Fair Value $ 17,677 $ 17,136 $ 15,429 $ 15,515 $ 14,358 Number of Portfolio Companies(10) 371 365 350 350 347 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) 9/30/21 6/30/21 3/31/21 12/31/20 9/30/20 Commitments: Gross Commitments(2) $ 3,110 $ 4,847 $ 1,750 $ 3,858 $ 706 Exits of Commitments(3) (2,263) (2,925) (2,138) (3,032) (352) Net Commitments(14
Slide 7: Quarterly Operating Results
Quarterly Operating Results For the Three Months Ended (amounts in millions, except per share data) 9/30/21 6/30/21 3/31/21 12/31/20 9/30/20 Investment income $ 442 $ 459 $ 390 $ 440 $ 352 Expenses 253 277 241 204 182 Net investment income before income taxes 189 182 149 236 170 Income tax expense,
Slide 8: Quarterly Operating Results Detail
Quarterly Operating Results Detail For the Three Months Ended (amounts in millions) 9/30/21 6/30/21 3/31/21 12/31/20 9/30/20 Net Investment Income Before Income Taxes: Investment Income: Interest income from investments $ 317 $ 305 $ 289 $ 294 $ 280 Capital structuring service fees 59 93 38 93 12 Di
Slide 9: Quarterly Gain/Loss Detail
Quarterly Gain/Loss Detail For the Three Months Ended (amounts in millions) 9/30/21 6/30/21 3/31/21 12/31/20 9/30/20 Net Realized and Unrealized Gains (Losses): Realized gains (losses) on investments: Gains $ 233 $ 79 $ 80 $ 38 $ 9 Losses (110) (11) (13) (208) (32) Net realized gains (losses) on inv
Slide 10: Quarterly Balance Sheets
Quarterly Balance Sheets As of (amounts in millions, except per share data) 9/30/21 6/30/21 3/31/21 12/31/20 9/30/20 ASSETS Investments at fair value $ 17,677 $ 17,136 $ 15,429 $ 15,515 $ 14,358 Cash and cash equivalents 1,193 377 337 254 233 Restricted cash 20 57 19 72 43 Interest receivable 111 11
Slide 11: Investment Portfolio by Issuer as of September 30, 2021
Investment Portfolio by Issuer as of September 30, 2021* Top 15 Investments 5.3% 23.4% Senior Direct Lending Program, LLC(12) 3.5% Ivy Hill Asset Management, L.P. 1.4% Essential Services Holding Corporation 1.4% Mac Lean-Fogg Company 1.3% 1.2% CoreLogic, Inc. 1.2% IRI Holdings, Inc. 1.1% Ministry Br
Slide 12: Investment Portfolio as of September 30, 2021
Investment Portfolio as of September 30, 2021* Asset Class Industry 8% 10% 2% 2%2% 19% 2% 7% 3% 4% 6% 5% 49% 12% 5% 5% 5% 10% 5% 23% 5% 7% 6% First Lien Senior Secured Loans(11) Software & Services Automobiles & Components Second Lien Senior Secured Loans Healthcare Services Power Generation Senior
Slide 13: Portfolio Activity
Portfolio Activity Gross Commitments by Asset Class Exits of Commitments by Asset Class 2% 2% 1% 4% 3% 2% 2% 2% 2% 1% 100% 100% 1% 3% 3% 2% 6% 4% 3% 2% 1% 3% 5% 6% 3% 8% 7% 9% 3% 5% 8% 5% 4% 3% 13% 5% 15% 3% 80% 14% 3% 80% 4% 11% 39% 31% 30% 24% 60% 60% 94% 40% 78% 40% 78% 74% 76% 72% 60% 54% 52% 55
Slide 14: Portfolio Company EBITDA and Credit Statistics
Portfolio Company EBITDA and Credit Statistics 8.0x $156.3 $157.0 $160.0 $153.1 $146.3 $140.0 $130.4 6.0x 5.9x 6.0x 6.0x $111.1 $120.0 5.8x 5.8x $105.2 $92.4 $100.0 $90.1 ($ Millions) $85.5 4.0x $80.0 2.9x $60.0 2.7x 2.8x 2.8x 2.8x 2.0x $40.0 $20.0 0.0x $0.0 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 PortfolioWe
Slide 15: Portfolio By Grade
Portfolio By Grade(21) % by Fair Value % by Number of Companies 100% 100% 10% 10% 13% 11% 10% 10% 13% 13% 11% 14% 90% 90% 80% 80% 70% 70% 60% 60% 66% 70% 70% 76% 69% 72% 50% 74% 50% 77% 78% 82% 40% 40% 30% 30% 20% 20% 16% 13% 12% 10% 18% 10% 10% 13% 7% 12% 9% 8% 2% 1% 6% 1% 7% 6% 5% 5% 0% 0% Q3-20 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% $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% $400 4.0% $400 $336 $320 $297 $308 3.0% $300 3.0% $300 3.3%
Slide 17: Investment Activity from October 1, 2021 through October 20, 2021
Investment Activity from October 1, 2021 through October 20, 2021 Ares Capital made approximately $1.5 billion of new investment commitments ∙ 48% were in first lien senior secured loans, 30% were in second lien senior secured loans, 14% were in preferred equity and 8% were in other equity ∙ 82% wer
Slide 18: Backlog and Pipeline
Backlog and Pipeline ∙ As of October 20, 2021, Ares Capital had a backlog and pipeline of approximately $1.9 billion and $149 million, respectively(22) ∙ The following is a breakdown of the backlog and pipeline by asset class and by industry Asset Class Industry 7% 12% 3% 3% 30% 4% 7% 16% 9% 69% 10%
Slide 19: Debt Summary
Debt Summary As of 6/30/21 As of 9/30/21 Aggregate Aggregate Weighted Principal Carrying Principal Carrying Average Amount Principal Value of Amount Principal Value of Stated Committed/ Amount Outstanding Committed/ Amount Outstanding Interest (dollar amounts in millions) Outstanding(24) Outstanding
Slide 20: Debt Summary
Debt Summary Debt Maturities* ($ in millions) ($ in millions) $5,000 $5,000 $4,000 $4,000 $206 (27) (27) $206 $3,000 $3,000 (27)(28) $1,393 (27)(28) $1,143 $2,000 $2,000 $3,400 (27) $38 $3,000 (27) $38 $1,000 $1,850 $1,000 $1,850 $900 $900 $600 $600 $750 $750 $388 $403 $388 $403 $0 $— $0 $— 2021 202
Slide 21: Quarterly Dividends
Quarterly Dividends $0.50 $0.02 $0.02 $0.02 $0.02 $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 $0.38 $0.38 $0.30 $0.20 $0.10 $0.00 (31) 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 Q4-21 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 9/30/21 6/30/21 3/31/21 12/31/20 9/30/20 (1) Basic and Diluted Core EPS $ 0.47 $ 0.53 $ 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 September 30, 2021, excluding Ares Capital's investment in the subordinated certificates of the SDLP, 91% of the floating rate investments at fair value contained interest rate floor features. 14) Represents gross commitments or fundings less commitments or investments ex
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 September 30, 2021, the interest rate in effect was LIBOR plus
Slide 28: Ares Capital Corporation
OD ARES ARES CAPITAL CORPORATION