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Ares Capital Corporation Announces March 31, 2024 Financial Results and Declares Second Quarter 2024 Dividend of $0.48 Per Share

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Ares Capital announced its Q1 2024 financial results with a dividend of $0.48 per share for Q2 2024. The company reported a strong start to the year with increased earnings, low non-accruals, and moderate leverage. Ares Capital made $3.6 billion in new investment commitments in Q1 2024 and continues to support growth in existing portfolio companies. The company remains well-positioned with available capital and competitive advantages.

Ares Capital ha annunciato i risultati finanziari del primo trimestre del 2024, con un dividendo di $0,48 per azione per il secondo trimestre del 2024. La società ha avuto un forte inizio d'anno con un aumento degli utili, bassi non-performing loans e un leverage moderato. Ares Capital ha realizzato nuovi impegni d'investimento per 3,6 miliardi di dollari nel primo trimestre del 2024 e continua a supportare la crescita delle società nel proprio portafoglio. L'azienda rimane in una buona posizione competitiva con capitale disponibile.
Ares Capital anunció sus resultados financieros del primer trimestre de 2024, con un dividendo de $0,48 por acción para el segundo trimestre de 2024. La compañía reportó un fuerte inicio de año con un aumento en las ganancias, bajas tasas de no cumplimiento y un apalancamiento moderado. Ares Capital realizó nuevos compromisos de inversión por $3,6 mil millones en el primer trimestre de 2024 y sigue apoyando el crecimiento de las empresas en su cartera existente. La compañía se mantiene bien posicionada con capital disponible y ventajas competitivas.
Ares Capital이 2024년 1분기 재무 성과를 발표했으며 2024년 2분기 주당 배당금은 0.48달러입니다. 이 회사는 수익 증가, 낮은 미회수채권, 적당한 레버리지로 해를 강하게 시작했습니다. Ares Capital은 2024년 1분기에 36억 달러의 새로운 투자 약속을 했으며 기존 포트폴리오 회사의 성장을 지속적으로 지원하고 있습니다. 회사는 사용 가능한 자본과 경쟁 우위를 갖추고 안정적으로 위치하고 있습니다.
Ares Capital a annoncé ses résultats financiers pour le premier trimestre de 2024, avec un dividende de 0,48 $ par action pour le deuxième trimestre de 2024. La société a connu un bon début d'année avec une augmentation des bénéfices, de faibles non-performances et un levier modéré. Ares Capital a engagé 3,6 milliards de dollars de nouveaux investissements au premier trimestre 2024 et continue de soutenir la croissance de ses entreprises en portefeuille. L'entreprise reste bien positionnée avec du capital disponible et des avantages concurrentiels.
Ares Capital gab seine Finanzergebnisse für das erste Quartal 2024 bekannt und kündigte eine Dividende von 0,48 $ pro Aktie für das zweite Quartal 2024 an. Das Unternehmen verzeichnete einen starken Jahresbeginn mit gestiegenen Erträgen, geringen Ausfallraten und mäßiger Verschuldung. Ares Capital tätigte im ersten Quartal 2024 neue Investitionszusagen in Höhe von 3,6 Milliarden Dollar und unterstützt weiterhin das Wachstum bestehender Portfolio-Unternehmen. Das Unternehmen ist gut positioniert mit verfügbarem Kapital und Wettbewerbsvorteilen.
Positive
  • Ares Capital reported a healthy level of earnings and record net asset value per share for Q1 2024.

  • The company made $3.6 billion in new investment commitments in Q1 2024, demonstrating strong growth and market presence.

  • Ares Capital continues to support the growth of existing portfolio companies with over $6 billion in available capital.

  • The company's competitive advantages and direct origination platform position it well for generating attractive investment returns.

Negative
  • Ares Capital experienced a decrease in net investment income for Q1 2024 compared to the previous year.

  • The company realized net losses of $32 million in Q1 2024, impacting overall financial performance.

  • The debt/equity ratio for Ares Capital decreased slightly from the previous quarter, raising concerns about leverage.

The dividend declaration and consistent dividend payout of $0.48 per share indicate a stable cash return to shareholders, which could imply confidence by Ares Capital management in the company's cash flow stability. However, the dividend yield should be considered in relation to the stock's price to assess attractiveness to dividend-oriented investors. An increase in GAAP net income from $278 million to $449 million, alongside a core EPS rise from $0.57 to $0.59, suggests operational growth. However, this should be weighed against the potential dilution effect of the 20 million new shares issued in connection with the 2024 Convertible Notes repayment.

Moreover, the company's debt/equity ratio improved from 1.07x to 0.99x, reflecting a healthier balance sheet. Investors should closely monitor this metric as it provides insight into financial leverage and potential risk. The portfolio's diversification, with 510 company investments and a maintained average grade of the portfolio at fair value, shows risk mitigation strategies, which is critical given the potential for market fluctuations.

Overall, the company's proactive financial management through the issuance of the 2029 Notes and amendments to existing credit facilities to secure lower interest rates or extended maturities demonstrates a strategic approach to capital structure optimization. These actions could signal to investors the management's commitment to sustaining growth while managing liabilities effectively.

With a portfolio growth to $23.124 billion from $22.874 billion and an increase in net assets per share from $19.24 to $19.53, Ares Capital appears to be effectively managing and expanding its investment portfolio. The weighted average yield on investments remains consistent, suggesting steady income-generating capabilities from the portfolio. Investors should appreciate the emphasis on senior secured loans, which tend to be less risky compared to unsecured or subordinated loans.

The investment activity data reveals a significant increase in new commitments, rising from $766 million to $3.554 billion, indicating an aggressive expansion strategy. However, investors need to be mindful of the liquidity constraints and market conditions that could affect the deployment of these commitments and the realization of projected yields.

From a market perspective, the floating rate majority of the portfolio could be seen as a positive in an environment of rising interest rates, as it suggests the potential for higher income as rates increase. Nevertheless, the management comments about leveraging their market coverage and origination platform to source opportunities should be taken with cautious optimism and evaluated against the performance and realization of these ventures.

The amendment of credit facilities and the issuance of the 2029 Notes reflect Ares Capital's diligence in maintaining a flexible capital structure. The terms of the credit agreements, such as the interest rates and maturity extensions, are significant for investors to gauge the company's future interest obligations and refinancing risk. The interest rate swap agreement tied with the 2029 Notes issuance serves as a hedge against fluctuating rates and is a prudent move to manage interest rate exposure.

Additionally, the full repayment of the 2024 Convertible Notes and the mechanism of part cash and part stock settlement showcase an adept approach to liability management and equity dilution control. These strategic financial actions suggest a proactive legal and risk management framework within Ares Capital. However, investors should be aware of the covenants and conditions associated with these new financial structures as they could impinge on the company's operational freedom and impact future dividend policies.

DIVIDEND DECLARATIONS

NEW YORK--(BUSINESS WIRE)-- Ares Capital Corporation (“Ares Capital”) (NASDAQ: ARCC) announced that its Board of Directors has declared a second quarter 2024 dividend of $0.48 per share. The second quarter 2024 dividend is payable on June 28, 2024 to stockholders of record as of June 14, 2024.

MARCH 31, 2024 FINANCIAL RESULTS

Ares Capital also announced financial results for its first quarter ended March 31, 2024.

OPERATING RESULTS

 

 

 

Q1-24(1)

 

Q1-23(1)

 

(dollar amounts in millions, except per share data)

 

Total Amount

 

Per Share

 

Total Amount

 

Per Share

 

GAAP net income per share(2)(3)

 

 

 

$

0.76

 

 

 

 

$

0.52

 

 

Core EPS(4)

 

 

 

$

0.59

 

 

 

 

$

0.57

 

 

Dividends declared and payable

 

 

 

$

0.48

 

 

 

 

$

0.48

 

 

Net investment income(2)

 

$

325

 

 

$

0.55

 

 

$

318

 

 

$

0.60

 

 

Net realized losses(2)

 

$

(32

)

 

$

(0.05

)

 

$

(50

)

 

$

(0.10

)

 

Net unrealized gains(2)

 

$

156

 

 

$

0.26

 

 

$

10

 

 

$

0.02

 

 

GAAP net income(2)(3)

 

$

449

 

 

$

0.76

 

 

$

278

 

 

$

0.52

 

 

 

 

As of

(dollar amounts in millions, except per share data)

 

March 31, 2024

 

December 31, 2023

Portfolio investments at fair value

 

$

23,124

 

$

22,874

Total assets

 

$

24,256

 

$

23,800

Stockholders’ equity

 

$

11,872

 

$

11,201

Net assets per share

 

$

19.53

 

$

19.24

Debt/equity ratio

 

0.99x

 

1.07x

Debt/equity ratio, net of available cash(5)

 

0.95x

 

1.02x

____________________________________________

 

 

(1)

Net income can vary substantially from period to period due to various factors, including the level of new investment commitments, the recognition of realized gains and losses and unrealized appreciation and depreciation. As a result, quarterly comparisons of net income may not be meaningful.

 

 

(2)

All per share amounts and weighted average shares outstanding are basic. The basic weighted average shares outstanding for the three months ended March 31, 2024 and 2023 were approximately 591 million and 534 million, respectively.

 

 

(3)

In March 2024, in connection with the repayment of the 2024 Convertible Notes (as defined below), Ares Capital issued approximately 20 million shares of common stock. As a result, the basic and diluted weighted average shares outstanding for the three months ended March 31, 2024 was approximately 591 million. Ares Capital’s diluted GAAP net income per share for the three months ended March 31, 2023 was $0.51. The weighted average shares outstanding for the purpose of calculating the diluted GAAP net income per share for the three months ended March 31, 2023 was approximately 555 million shares, which includes approximately 21 million shares related to the assumed conversion of the 2024 Convertible Notes.

 

 

(4)

Core EPS is a non-GAAP financial measure. Core EPS is the net increase (decrease) in stockholders’ equity resulting from operations, and excludes net realized and unrealized gains and losses, any capital gains incentive fees attributable to such net realized and unrealized gains and losses and any income taxes related to such net realized gains and losses, divided by the basic weighted average shares outstanding for the relevant period. GAAP net income (loss) per share is the most directly comparable GAAP financial measure. Ares Capital believes that Core EPS provides useful information to investors regarding financial performance because it is one method Ares Capital uses to measure its financial condition and results of operations. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. Reconciliations of GAAP net income, the most directly comparable GAAP financial measure, to Core EPS are set forth in Schedule 1 hereto.

 

 

(5)

Computed as total principal debt outstanding less available cash divided by stockholders’ equity. Available cash excludes restricted cash as well as cash held for uses specifically designated for paying interest and expenses on certain debt.

“We are off to a strong start to the year, with a healthy level of earnings, low non-accruals, moderate leverage, increased year-over-year investment activity and record net asset value per share,” said Kipp deVeer, Chief Executive Officer of Ares Capital. “We believe our broad market coverage and the scale of our direct origination platform across the middle market enable us to source differentiated investment opportunities. With our competitive advantages, we believe we are well positioned to build upon our nearly 20-year track record of generating attractive investment returns for our shareholders.”

“We continued to bolster and diversify our capital base by issuing, amending or renewing over $7 billion of financing at attractive rates so far this year,” said Scott Lem, Chief Financial Officer of Ares Capital. “With over $6 billion of available capital, and leverage levels below 1.0x, we believe we are well positioned to continue to support the growth of our existing portfolio companies and to remain opportunistic investors in this market environment.”

PORTFOLIO AND INVESTMENT ACTIVITY

 

(dollar amounts in millions)

 

Q1-24

 

Q1-23

Portfolio Activity During the Period:

 

 

 

 

Gross commitments

 

$

3,554

 

 

$

766

 

Exits of commitments

 

$

3,414

 

 

$

1,884

 

 

 

 

 

 

Portfolio Information:

 

 

 

 

 

 

As of

 

 

March 31, 2024

 

December 31, 2023

Portfolio investments at fair value

 

$

23,124

 

 

$

22,874

 

Fair value of accruing debt and other income producing securities(6)

 

$

20,490

 

 

$

20,375

 

Number of portfolio company investments

 

 

510

 

 

 

505

 

Percentage of floating rate securities at fair value(7)

 

 

68

%

 

 

69

%

Weighted average yields on debt and other income producing securities(8):

 

 

 

 

At amortized cost

 

 

12.4

%

 

 

12.5

%

At fair value

 

 

12.4

%

 

 

12.5

%

Weighted average yields on total investments(9):

 

 

 

 

At amortized cost

 

 

11.1

%

 

 

11.3

%

At fair value

 

 

11.0

%

 

 

11.2

%

 

 

 

 

 

Asset class percentage at fair value:

 

 

 

 

First lien senior secured loans

 

 

46

%

 

 

44

%

Second lien senior secured loans

 

 

13

%

 

 

16

%

Subordinated certificates of the SDLP

 

 

6

%

 

 

6

%

Senior subordinated loans

 

 

5

%

 

 

5

%

Preferred equity

 

 

11

%

 

 

11

%

Ivy Hill Asset Management, L.P.(10)

 

 

9

%

 

 

9

%

Other equity

 

 

10

%

 

 

9

%

____________________________________________

(6)

Includes the fair value of Ares Capital’s equity investment in Ivy Hill Asset Management, L.P. (“IHAM”).

 

 

(7)

Includes Ares Capital's investment in the subordinated certificates of the SDLP (as defined below).

 

 

(8)

Weighted average yields on debt and other income producing securities are computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount or premium earned on accruing debt and other income producing securities (including the annualized amount of the dividend received by Ares Capital related to its equity investment in IHAM during the most recent quarter end), divided by (b) the total accruing debt and other income producing securities at amortized cost or at fair value (including the amortized cost or fair value of Ares Capital’s equity investment in IHAM as applicable), as applicable.

 

 

(9)

 

Weighted average yields on total investments are computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount or premium earned on accruing debt and other income producing securities (including the annualized amount of the dividend received by Ares Capital related to its equity investment in IHAM during the most recent quarter end), divided by (b) total investments at amortized cost or at fair value, as applicable.

 

 

(10)

Includes Ares Capital’s subordinated loan and equity investments in IHAM, as applicable.

In the first quarter of 2024, Ares Capital made new investment commitments of approximately $3.6 billion, of which approximately $2.5 billion were funded. New investment commitments included 16 new portfolio companies and 45 existing portfolio companies. As of March 31, 2024, 240 separate private equity sponsors were represented in Ares Capital’s portfolio. Of the approximately $3.6 billion in new commitments made during the first quarter of 2024, 88% were in first lien senior secured loans, 2% were in second lien senior secured loans, 1% were in subordinated certificates of the Senior Direct Lending Program (the “SDLP”), 7% were in Ares Capital’s subordinated loan investment in IHAM and 2% were in other equity. Of the approximately $3.6 billion in new commitments, 97% were in floating rate debt securities, of which 95% contained interest rate floors and 1% were in the subordinated certificates of the SDLP. The weighted average yield of debt and other income producing securities funded during the period at amortized cost was 11.0% and the weighted average yield on total investments funded during the period at amortized cost was 10.8%. Ares Capital may seek to sell all or a portion of these new investment commitments, although there can be no assurance that Ares Capital will be able to do so. Also in the first quarter of 2024, Ares Capital funded approximately $396 million related to previously existing unfunded revolving and delayed draw loan commitments.

Also in the first quarter of 2024, Ares Capital exited approximately $3.4 billion of investment commitments, including approximately $35 million of loans sold to IHAM or certain vehicles managed by IHAM. Of the approximately $3.4 billion of exited investment commitments, 71% were first lien senior secured loans, 18% were second lien senior secured loans, 7% were Ares Capital’s subordinated loan investment in IHAM, 3% were subordinated certificates of the SDLP and 1% were preferred equity. Of the approximately $3.4 billion of exited investment commitments, 98% were floating rate, 1% were non-income producing and 1% were on non-accrual.

As of March 31, 2024 and December 31, 2023, the weighted average grade of the portfolio at fair value was 3.1 and 3.1, respectively, and loans on non-accrual status represented 1.7% of the total investments at amortized cost (or 0.7% at fair value) and 1.3% at amortized cost (or 0.6% at fair value), respectively. For more information on Ares Capital’s portfolio investment grades and loans on non-accrual status, see “Part I—Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Portfolio and Investment Activity” in Ares Capital’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, filed with the Securities and Exchange Commission (“SEC”) on May 1, 2024.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2024, Ares Capital had $509 million in cash and cash equivalents and $11.8 billion in total aggregate principal amount of debt outstanding ($11.7 billion at carrying value). Subject to borrowing base and other restrictions, Ares Capital had approximately $5.5 billion available for additional borrowings under its existing credit facilities as of March 31, 2024.

In January 2024, Ares Capital issued $1.0 billion in aggregate principal amount of unsecured notes, which bear interest at a rate of 5.875% per annum and mature on March 1, 2029 (the “2029 Notes”). The 2029 Notes pay interest semi-annually and all principal is due upon maturity. The 2029 Notes may be redeemed in whole or in part at any time at Ares Capital’s option at a redemption price equal to par plus a “make whole” premium, if applicable, as determined pursuant to the indenture governing the 2029 Notes, and any accrued and unpaid interest. The 2029 Notes were issued at a discount to the principal amount. In connection with the 2029 Notes, Ares Capital entered into an interest rate swap agreement for a total notional amount of $1.0 billion that matures on March 1, 2029. Under the interest rate swap agreement, Ares Capital receives a fixed interest rate of 5.875% and pays a floating interest rate of one-month Secured Overnight Financing Rate (“SOFR”) plus 2.023%.

In February 2024, Ares Capital and its consolidated subsidiary, ARCC FB Funding LLC (“AFB”), entered into an agreement to amend AFB’s revolving funding facility (the “BNP Funding Facility”). The amendment, among other things, adjusted the interest rate charged on the BNP Funding Facility from an applicable SOFR or a “base rate” (as defined in the agreements governing the BNP Funding Facility) plus a margin of (i) 2.80% during the reinvestment period and (ii) 3.30% following the reinvestment period to an applicable SOFR or a “base rate” (as defined in the agreements governing the BNP Funding Facility) plus a margin of (i) 2.65% during the reinvestment period and (ii) 3.15% following the reinvestment period.

In March 2024, Ares Capital and its consolidated subsidiary, Ares Capital JB Funding LLC (“ACJB LLC”), entered into an agreement to amend ACJB LLC’s revolving funding facility (the “SMBC Funding Facility”) with Sumitomo Mitsui Banking Corporation and each of the other parties thereto. The amendment, among other things, (a) extended the reinvestment period from May 28, 2024 to March 28, 2027; (b) extended the stated maturity date from May 28, 2026 to March 28, 2029; and (c) adjusted the interest rate charged on the SMBC Funding Facility from an applicable spread of either (i) 1.75% or 2.00% over one month SOFR plus a credit spread adjustment of 0.10% or (ii) 0.75% or 1.00% over a “base rate” (as defined in the agreements governing the SMBC Funding Facility) to an applicable spread of either (x) 2.50% over one month SOFR or (y) 1.50% over a “base rate” (as defined in the agreements governing the SMBC Funding Facility).

In March 2024, Ares Capital repaid in full the $403 million in aggregate principal amount of unsecured convertible notes, which bore interest at a rate of 4.625% per year, payable semi-annually (the “2024 Convertible Notes”) upon their maturity, resulting in a realized loss on extinguishment of debt of $14 million. In accordance with the indenture governing the 2024 Convertible Notes, Ares Capital settled the repayment of the 2024 Convertible Notes with a combination of cash and shares of its common stock. Approximately $393 million of aggregate principal amount was settled with approximately 20 million shares of Ares Capital’s common stock and the remaining $10 million was settled with available cash.

During the three months ended March 31, 2024, Ares Capital issued and sold approximately 4.2 million shares of common stock under its equity distribution agreements, with net proceeds totaling approximately $84.1 million, after giving effect to sales agents’ commissions and certain estimated offering expenses.

FIRST QUARTER 2024 DIVIDENDS PAID

On February 7, 2024, Ares Capital announced that its Board of Directors declared a first quarter 2024 dividend of $0.48 per share for a total of approximately $291 million. The first quarter 2024 dividend was paid on March 29, 2024 to stockholders of record as of March 15, 2024.

RECENT DEVELOPMENTS

In April 2024, Ares Capital amended and restated its senior secured credit facility (as amended and restated, the “A&R Credit Facility”). The amendment, among other things, (a) reduced the total commitment under the A&R Credit Facility from $4,758 million to $4,488 million, (b) extended the expiration of the revolving period for lenders electing to extend their revolving commitments in an amount equal to approximately $3,005 million from April 19, 2027 to April 12, 2028, during which period Ares Capital, subject to certain conditions, may make borrowings under the A&R Credit Facility, (c) extended the stated maturity date for lenders electing to extend their revolving commitments in an amount equal to approximately $3,005 million from April 19, 2028 to April 12, 2029 and (d) extended the stated maturity date for $968 million of the lenders electing to extend their term loan commitments from April 19, 2028 to April 12, 2029. Lenders who elected not to extend their revolving commitments in an amount equal to approximately $269 million and $107 million will remain subject to a revolving period expiration of March 31, 2026 and March 31, 2025, respectively, and a stated maturity date of March 31, 2027 and March 31, 2026, respectively. Lenders who elected not to extend their term loan commitments in an amount equal to $70 million, $41 million and $28 million will remain subject to a maturity date of April 19, 2028, March 31, 2027 and March 31, 2026, respectively.

The A&R Credit Facility is composed of a revolving loan tranche equal to approximately $3,381 million and a term loan tranche equal to approximately $1,107 million. The A&R Credit Facility includes an “accordion” feature that allows Ares Capital, under certain circumstances, to increase the size of the facility by an amount up to $2,244 million.

In April 2024, the Ares Capital and its consolidated subsidiary, AFB, entered into an agreement to amend the BNP Funding Facility. The amendment, among other things, adjusted the interest rate charged on the BNP Funding Facility from an applicable SOFR or a “base rate” (as defined in the agreements governing the BNP Funding Facility) plus a margin of (i) 2.65% during the reinvestment period and (ii) 3.15% following the reinvestment period to an applicable SOFR or a “base rate” (as defined in the agreements governing the BNP Funding Facility) plus a margin of (i) 2.50% during the reinvestment period and (ii) 3.00% following the reinvestment period. The other terms of the BNP Funding Facility remained materially unchanged.

In April 2024, Ares Capital, through a wholly owned and consolidated subsidiary, priced a $476 million term debt securitization. The transaction is expected to close in May 2024, subject to customary closing conditions. Term debt securitization is also known as a collateralized loan obligation and is a form of secured financing incurred by Ares Capital which is consolidated by it and subject to its overall asset coverage requirement.

From April 1, 2024 through April 24, 2024, Ares Capital made new investment commitments of approximately $1.2 billion, of which approximately $1.1 billion were funded. Of the approximately $1.2 billion in new investment commitments, 85% were in first lien senior secured loans, 7% were in senior subordinated loans, 7% were in preferred equity and 1% were in other equity. Of the approximately $1.2 billion in new investment commitments, 92% were floating rate, 7% were fixed rate and 1% were non-income producing. The weighted average yield of debt and other income producing securities funded during the period at amortized cost was 11.6% and the weighted average yield on total investments funded during the period at amortized cost was 11.5%. Ares Capital may seek to sell all or a portion of these new investment commitments, although there can be no assurance that it will be able to do so.

From April 1, 2024 through April 24, 2024, Ares Capital exited approximately $249 million of investment commitments. Of the approximately $249 million of exited investment commitments, 64% were first lien senior secured loans, 7% were subordinated certificates of the SDLP, 23% were Ares Capital’s subordinated loan investment in IHAM and 6% were other equity. Of the approximately $249 million of exited investment commitments, 94% were floating rate and 6% were non-income producing. The weighted average yield of debt and other income producing securities exited or repaid during the period at amortized cost was 11.5% and the weighted average yield on total investments exited or repaid during the period at amortized cost was 10.9%. Of the approximately $249 million of investment commitments exited from April 1, 2024 through April 24, 2024, Ares Capital recognized total net realized gains of approximately $1 million.

In addition, as of April 24, 2024, Ares Capital had an investment backlog and pipeline of approximately $1.3 billion and $30 million, respectively. Investment backlog includes transactions approved by Ares Capital’s investment adviser’s investment committee and/or for which a formal mandate, letter of intent or a signed commitment have been issued, and therefore Ares Capital believes are likely to close. Investment pipeline includes transactions where due diligence and analysis are in process, but no formal mandate, letter of intent or signed commitment have been issued. The consummation of any of the investments in this backlog and pipeline depends upon, among other things, one or more of the following: satisfactory completion of Ares Capital due diligence investigation of the prospective portfolio company, Ares Capital’s acceptance of the terms and structure of such investment and the execution and delivery of satisfactory transaction documentation. In addition, Ares Capital may sell all or a portion of these investments and certain of these investments may result in the repayment of existing investments. Ares Capital cannot assure you that it will make any of these investments or that Ares Capital will sell all or any portion of these investments.

WEBCAST / CONFERENCE CALL

Ares Capital will host a webcast/conference call on Wednesday, May 1, 2024 at 10:00 a.m. (Eastern Time) to discuss its quarter ended March 31, 2024 financial results. PLEASE VISIT ARES CAPITAL’S WEBCAST LINK LOCATED ON THE HOME PAGE OF THE INVESTOR RESOURCES SECTION OF ARES CAPITAL’S WEBSITE FOR A SLIDE PRESENTATION THAT COMPLEMENTS THE EARNINGS CONFERENCE CALL.

All interested parties are invited to participate via telephone or the live webcast, which will be hosted on a webcast link located on the Home page of the Investor Resources section of Ares Capital’s website at www.arescapitalcorp.com. Please visit the website to test your connection before the webcast. Domestic callers can access the conference call toll free by dialing +1 (800) 579-2543. International callers can access the conference call by dialing +1 (785) 424-1789. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected and to reference the conference ID ARCCQ124. For interested parties, an archived replay of the call will be available approximately one hour after the end of the call through May 30, 2024 at 5:00 p.m. (Eastern Time) to domestic callers by dialing toll free +1 (800) 839-5635 and to international callers by dialing +1 (402) 220-2561. An archived replay will also be available through May 30, 2024 on a webcast link located on the Home page of the Investor Resources section of Ares Capital’s website.

ABOUT ARES CAPITAL CORPORATION

Founded in 2004, Ares Capital is a leading specialty finance company focused on providing direct loans and other investments in private middle market companies in the United States. Ares Capital’s objective is to source and invest in high-quality borrowers that need capital to achieve their business goals, which often times can lead to economic growth and employment. Ares Capital believes its loans and other investments in these companies can help generate attractive levels of current income and potential capital appreciation for investors. Ares Capital, through its investment manager, utilizes its extensive, direct origination capabilities and incumbent borrower relationships to source and underwrite predominantly senior secured loans but also subordinated debt and equity investments. Ares Capital has elected to be regulated as a business development company (“BDC”) and was the largest publicly traded BDC by market capitalization as of March 31, 2024. Ares Capital is externally managed by a subsidiary of Ares Management Corporation (NYSE: ARES), a publicly traded, leading global alternative investment manager. For more information about Ares Capital, visit www.arescapitalcorp.com.

FORWARD-LOOKING STATEMENTS

Statements included herein or on the webcast/conference call may constitute “forward-looking statements,” which relate to future events or Ares Capital’s future performance or financial condition. These statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results and conditions may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in Ares Capital’s filings with the SEC. Ares Capital undertakes no duty to update any forward-looking statements made herein or on the webcast/conference call.

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in millions, except per share data)

 

As of

 

March 31, 2024

 

December 31, 2023

ASSETS

(unaudited)

 

 

Total investments at fair value (amortized cost of $22,805 and $22,668, respectively)

$

23,124

 

$

22,874

Cash and cash equivalents

 

509

 

 

535

Restricted cash

 

68

 

 

29

Interest receivable

 

251

 

 

245

Receivable for open trades

 

213

 

 

16

Other assets

 

82

 

 

91

Operating lease right-of-use asset

 

9

 

 

10

Total assets

$

24,256

 

$

23,800

LIABILITIES

 

 

 

Debt

$

11,695

 

$

11,884

Base management fee payable

 

87

 

 

84

Income based fee payable

 

88

 

 

90

Capital gains incentive fee payable

 

112

 

 

88

Interest and facility fees payable

 

107

 

 

132

Payable to participants

 

68

 

 

29

Payable for open trades

 

14

 

 

7

Accounts payable and other liabilities

 

164

 

 

234

Secured borrowings

 

34

 

 

34

Operating lease liabilities

 

15

 

 

17

Total liabilities

 

12,384

 

 

12,599

STOCKHOLDERS’ EQUITY

 

 

 

Common stock, par value $0.001 per share, 1,000 common shares authorized; 608 and 582 common shares issued and outstanding, respectively

 

1

 

 

1

Capital in excess of par value

 

11,251

 

 

10,738

Accumulated undistributed earnings

 

620

 

 

462

Total stockholders’ equity

 

11,872

 

 

11,201

Total liabilities and stockholders’ equity

$

24,256

 

$

23,800

NET ASSETS PER SHARE

$

19.53

 

$

19.24

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(in millions, except per share data)

(unaudited)

 

 

For the Three Months Ended March 31,

 

2024

 

2023

INVESTMENT INCOME

 

 

 

Interest income from investments

$

513

 

 

$

470

 

Capital structuring service fees

 

28

 

 

 

10

 

Dividend income

 

147

 

 

 

121

 

Other income

 

13

 

 

 

17

 

Total investment income

 

701

 

 

 

618

 

 

 

 

 

EXPENSES

 

 

 

Interest and credit facility fees

 

159

 

 

 

139

 

Base management fee

 

87

 

 

 

79

 

Income based fee

 

88

 

 

 

76

 

Capital gains incentive fee

 

25

 

 

 

(6

)

Administrative fees

 

3

 

 

 

3

 

Other general and administrative

 

7

 

 

 

7

 

Total expenses

 

369

 

 

 

298

 

NET INVESTMENT INCOME BEFORE INCOME TAXES

 

332

 

 

 

320

 

Income tax expense, including excise tax

 

7

 

 

 

2

 

NET INVESTMENT INCOME

 

325

 

 

 

318

 

REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS, FOREIGN CURRENCY AND OTHER TRANSACTIONS:

 

 

 

Net realized losses

 

(18

)

 

 

(50

)

Net unrealized gains

 

156

 

 

 

10

 

Net realized and unrealized gains (losses) on investments, foreign currency and other transactions

 

138

 

 

 

(40

)

REALIZED LOSS ON EXTINGUISHMENT OF DEBT

 

(14

)

 

 

 

NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS

$

449

 

 

$

278

 

NET INCOME PER COMMON SHARE:

 

 

 

Basic

$

0.76

 

 

$

0.52

 

Diluted

$

0.76

 

 

$

0.51

 

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:

 

 

 

Basic

 

591

 

 

 

534

 

Diluted

 

591

 

 

 

555

 

SCHEDULE 1

Reconciliations of GAAP net income per share to Core EPS

Reconciliations of GAAP net income per share, the most directly comparable GAAP financial measure, to Core EPS for the three months ended March 31, 2024 and 2023 are provided below.

 

For the Three Months Ended March 31,

 

2024

 

2023

 

(unaudited)

 

(unaudited)

GAAP net income per share(1)(2)

$

0.76

 

 

$

0.52

 

Adjustments:

 

 

 

Net realized and unrealized (gains) losses(1)

 

(0.21

)

 

 

0.08

 

Capital gains incentive fees attributable to net realized and unrealized gains and losses(1)

 

0.04

 

 

 

(0.01

)

Income tax expense (benefit) related to net realized gains and losses(1)

 

 

 

 

(0.02

)

Core EPS(3)

$

0.59

 

 

$

0.57

 

__________________________________________________

 

 

(1)

All per share amounts and weighted average shares outstanding are basic. The basic weighted average shares outstanding for the three months ended March 31, 2024 and 2023 was approximately 591 million and 534 million, respectively.

 

 

(2)

In March 2024, in connection with the repayment of the 2024 Convertible Notes, Ares Capital issued approximately 20 million shares of common stock. As a result, the basic and diluted weighted average shares outstanding for the three months ended March 31, 2024 was approximately 591 million. Ares Capital’s diluted GAAP net income per share for the three months ended March 31, 2023 was $0.51. The weighted average shares outstanding for the purpose of calculating the diluted GAAP net income per share for the three months ended March 31, 2023 was approximately 555 million shares, which includes approximately 21 million shares related to the assumed conversion of the 2024 Convertible Notes.

 

 

(3)

Core EPS is a non-GAAP financial measure. Core EPS is the net increase (decrease) in stockholders’ equity resulting from operations, and excludes net realized and unrealized gains and losses, any capital gains incentive fees attributable to such net realized and unrealized gains and losses and any income taxes related to such net realized gains and losses, divided by the basic weighted average shares outstanding for the relevant period. GAAP net income (loss) per share is the most directly comparable GAAP financial measure. Ares Capital believes that Core EPS provides useful information to investors regarding financial performance because it is one method Ares Capital uses to measure its financial condition and results of operations. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.

 

INVESTOR RELATIONS

Ares Capital Corporation

John Stilmar or Carl Drake

(888) 818-5298

irarcc@aresmgmt.com

Source: Ares Capital Corporation

FAQ

What was Ares Capital's dividend for Q2 2024?

Ares Capital declared a dividend of $0.48 per share for the second quarter of 2024.

How much did Ares Capital make in new investment commitments in Q1 2024?

Ares Capital made approximately $3.6 billion in new investment commitments in the first quarter of 2024.

What is the debt/equity ratio for Ares Capital as of March 31, 2024?

Ares Capital's debt/equity ratio was 0.99x as of March 31, 2024, showing a slight decrease from the previous quarter.

When will Ares Capital host a webcast to discuss its financial results?

Ares Capital will host a webcast/conference call on May 1, 2024, at 10:00 a.m. (Eastern Time) to discuss its quarter ended March 31, 2024 financial results.

Ares Capital Corporation

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