Ares Capital Corporation Declares Third Quarter 2013 Dividend of $0.38 Per Share and Announces June 30, 2013 Financial Results
Aug 06, 2013 9:00 AM
Third Quarter 2013 Dividend Declared
HIGHLIGHTS |
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Financial |
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Q2-13 | Q2-12 | |||||||||||||
(in millions, except per share data) |
Total |
Per Share(1) |
Total Amount |
Per Share(1) |
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Core EPS (2) | $ | 0.38 | $ | 0.40 | ||||||||||
Net investment income | $ | 93.6 | $ | 0.35 | $ | 87.9 | $ | 0.40 | ||||||
Net realized gains (losses) | $ | 8.6 | $ | 0.03 | $ | (41.6 | ) | $ | (0.19 | ) | ||||
Net unrealized gains | $ | 31.3 | $ | 0.12 | $ | 44.6 | $ | 0.20 | ||||||
GAAP net income | $ | 133.5 | $ | 0.50 | $ | 90.9 | $ | 0.41 | ||||||
Dividends declared | $ | 0.38 | $ | 0.37 | ||||||||||
As of |
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(in millions, except per share data) | 2013 | 2012 | ||||||||||||
Portfolio investments at fair value | $ | 6,815.0 | $ | 5,504.8 | ||||||||||
Total assets | $ | 7,130.8 | $ | 5,807.5 | ||||||||||
Stockholders’ equity | $ | 4,348.0 | $ | 3,446.5 | ||||||||||
Net assets per share | $ | 16.21 | $ | 15.51 |
(1) | All per share amounts are basic and diluted. | |
(2) |
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 realized and unrealized gains and
losses, any incentive fees attributable to such net realized and
unrealized gains and losses and any income taxes related to such
realized gains. Basic and diluted GAAP EPS is the most directly
comparable GAAP financial measure. |
Portfolio Activity |
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(dollar amounts in millions) | Q2-13 | Q2-12 | ||||||
Portfolio Activity During the Period: | ||||||||
Gross commitments | $ | 1,203.2 | $ | 727.6 | ||||
Exits of commitments | $ | 394.7 | $ | 473.3 | ||||
Portfolio as of the End of the Period: | ||||||||
Number of portfolio company investments | 164 | 144 | ||||||
Weighted average yield of debt and other income producing securities: | ||||||||
At amortized cost(3) | 10.8 | % | 11.7 | % | ||||
At fair value(4) | 10.7 | % | 11.6 | % | ||||
Weighted average yield on total investments: | ||||||||
At amortized cost(5) | 9.8 | % | 10.4 | % | ||||
At fair value(6) | 9.6 | % | 10.3 | % |
(3) | Computed as (a) annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount earned on accruing debt and other income producing securities, divided by (b) total debt and other income producing securities at amortized cost. | |
(4) | Computed as (a) annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount earned on accruing debt and other income producing securities, divided by (b) total debt and other income producing securities at fair value. | |
(5) | Computed as (a) annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount earned on accruing debt and other income producing securities, divided by (b) total investments at amortized cost. | |
(6) | Computed as (a) annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount earned on accruing debt and other income producing securities, divided by (b) total investments at fair value. |
SECOND QUARTER 2013 OPERATING RESULTS
For the quarter ended June 30, 2013,
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.
As of June 30, 2013, total assets were
In the second quarter of 2013,
During the second quarter of 2013, significant new commitments included:
-
$210 million in a second lien senior secured term loan of a laundry service and equipment provider; -
$202 million in the subordinated certificates of the SSLP, the proceeds of which were applied to co-investments with GE to fund first lien senior secured loans to six portfolio companies in a variety of industries; -
$93 million in first lien senior secured delayed draw and term loans of a healthcare professional provider; -
$86 million in first lien and second lien senior secured term loans of an operator of general acute care hospitals; -
$85 million in a first lien senior secured term loan of an IT security software provider; -
$85 million in first lien senior secured revolving, delayed draw and term loans of a provider of repair services to the industrial end market; -
$80 million in a first lien senior secured term loan of a private school operator; -
$78 million in first lien senior secured revolving, delayed draw and term loans of a student fundraising and enrollment management services provider; -
$75 million in a second lien senior secured term loan of a food service distributor; -
$70 million in first lien senior secured delayed draw and term loans of a residential solar energy provider; and -
$58 million in a first lien senior secured term loan of an airport restaurant operator.
Also during the second quarter of 2013,
The fair value of Ares Capital’s portfolio investments at June 30, 2013
was
Chief Executive Officer
President Kipp deVeer added, “While the broader credit markets
experienced some volatility during the quarter, our core middle market
remained relatively stable and transaction volume increased. We made
PORTFOLIO QUALITY
As of June 30, 2013, the weighted average grade of the investments in our portfolio at fair value was 3.0. Also, as of June 30, 2013, loans on non-accrual status represented 1.9% of total investments at amortized cost (or 0.6% at fair value).
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2013,
In April 2013, we completed a public add-on equity offering (the
“April 2013 Offering”) pursuant to which we sold 19.1 million shares of
common stock at a price of
In May 2013, we entered into an amendment to our senior secured
revolving credit facility (the “Revolving Credit Facility”). The
amendment, among other things, (1) extended the expiration of the
revolving period from May 4, 2015 to May 4, 2017, (2) extended the
stated maturity date from May 4, 2016 to May 4, 2018, (3) reduced the
interest rate charged from LIBOR plus an applicable spread of 2.25% or a
“base rate” (as defined in the agreements governing the Revolving Credit
Facility) plus an applicable spread of 1.25% to LIBOR plus an applicable
spread of 2.00% or a “base rate” plus an applicable spread of 1.00% and
(4) increased total commitments to
SECOND QUARTER 2013 DIVIDEND
For the three months ended June 30, 2013,
RECENT DEVELOPMENTS
In July 2013, we increased total commitments of the Revolving Credit
Facility from
In July 2013, we issued
From July 1, 2013 through August 2, 2013, we made new investment
commitments of
From July 1, 2013 through August 2, 2013, we exited
In addition, as of August 2, 2013, we had an investment backlog and pipeline of approximately $750 million and $230 million, respectively. Investment backlog includes transactions approved by our investment adviser’s investment committee and/or for which a formal mandate, letter of intent or signed commitment has been issued, and therefore we believe 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 has 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 our due diligence investigation of the prospective portfolio company, our acceptance of the terms and structure of such investment and the execution and delivery of satisfactory transaction documentation.
In addition, we may syndicate a portion of these investments. We cannot assure you that we will make any of these investments or that we will syndicate any portion of these investments.
WEBCAST / 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 our website at http://www.arescapitalcorp.com. Please visit the website to test your connection before the webcast. Domestic callers can access the conference call by dialing (888) 317-6003. International callers can access the conference call by dialing +1 (412) 317-6061. All callers will need to enter the Participant Elite Entry Number 6806363 followed by the # sign and reference “Ares Capital Corporation” once connected with the operator. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected. For interested parties, an archived replay of the call will be available approximately one hour after the end of the call through August 19, 2013 at 5:00 p.m. (Eastern Time) to domestic callers by dialing (877) 344-7529 and to international callers by dialing +1 (412) 317-0088. For all replays, please reference conference number 10030723. An archived replay will also be available on a webcast link located on the Home page of the Investor Resources section of our website.
ABOUT
FORWARD-LOOKING STATEMENTS
Statements included herein or on the webcast/conference call may
constitute “forward-looking statements,” which relate to future events
or our 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 our filings with the
AVAILABLE INFORMATION
Ares Capital Corporation’s filings with the
ARES CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Amounts in thousands, except per share data) |
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As of | ||||||||
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(unaudited) | ||||||||
ASSETS | ||||||||
Total investments at fair value (amortized cost of |
$ | 6,814,960 | $ | 5,924,555 | ||||
Cash and cash equivalents | 100,517 | 269,043 | ||||||
Interest receivable | 119,467 | 108,998 | ||||||
Receivable for open trades | 144 | 131 | ||||||
Other assets | 95,736 | 98,497 | ||||||
Total assets | $ | 7,130,824 | $ | 6,401,224 | ||||
LIABILITIES | ||||||||
Debt | $ | 2,562,440 | $ | 2,195,872 | ||||
Management and incentive fees payable | 123,822 | 131,585 | ||||||
Accounts payable and other liabilities | 56,098 | 53,178 | ||||||
Interest and facility fees payable | 40,343 | 30,603 | ||||||
Payable for open trades | 76 | 1,640 | ||||||
Total liabilities | 2,782,779 | 2,412,878 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Common stock, par value |
268 | 249 | ||||||
Capital in excess of par value | 4,459,701 | 4,117,517 | ||||||
Accumulated overdistributed net investment income | (31,580 | ) | (27,910 | ) | ||||
Accumulated net realized loss on investments, foreign currency
transactions, |
(182,288 | ) | (202,614 | ) | ||||
Net unrealized gain on investments | 101,944 | 101,104 | ||||||
Total stockholders’ equity | 4,348,045 | 3,988,346 | ||||||
Total liabilities and stockholders’ equity | $ | 7,130,824 | $ | 6,401,224 | ||||
NET ASSETS PER SHARE | $ | 16.21 | $ | 16.04 |
ARES CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (in thousands, except per share data) |
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For the three months ended | For the six months ended | |||||||||||||
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(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||
INVESTMENT INCOME: | ||||||||||||||
Interest income from investments | $ | 157,969 | $ | 138,042 | $ | 302,146 | $ | 270,927 | ||||||
Capital structuring service fees | 24,149 | 21,267 | 30,140 | 38,927 | ||||||||||
Dividend income | 15,778 | 8,938 | 47,867 | 18,157 | ||||||||||
Management and other fees | 4,993 | 4,512 | 9,491 | 9,444 | ||||||||||
Other income | 3,234 | 4,796 | 11,534 | 7,838 | ||||||||||
Total investment income | 206,123 | 177,555 | 401,178 | 345,293 | ||||||||||
EXPENSES: | ||||||||||||||
Interest and credit facility fees | 40,261 | 35,018 | 79,608 | 67,794 | ||||||||||
Base management fees | 24,902 | 20,811 | 48,120 | 40,797 | ||||||||||
Incentive fees | 33,374 | 22,733 | 53,459 | 49,119 | ||||||||||
Professional fees | 3,736 | 3,548 | 6,880 | 7,234 | ||||||||||
Administrative fees | 2,606 | 2,217 | 5,198 | 4,537 | ||||||||||
Other general and administrative | 3,748 | 2,474 | 7,516 | 5,275 | ||||||||||
Total expenses | 108,627 | 86,801 | 200,781 | 174,756 | ||||||||||
NET INVESTMENT INCOME BEFORE | ||||||||||||||
INCOME TAXES | 97,496 | 90,754 | 200,397 | 170,537 | ||||||||||
Income tax expense, including excise tax | 3,919 | 2,853 | 7,723 | 5,598 | ||||||||||
NET INVESTMENT INCOME | 93,577 | 87,901 | 192,674 | 164,939 | ||||||||||
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: |
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Net realized gains (losses) | 8,648 | (38,897 | ) | 20,326 | (46,568 | ) | ||||||||
Net unrealized gains | 31,273 | 44,606 | 840 | 80,786 | ||||||||||
Net realized and unrealized gains on investments | 39,921 | 5,709 | 21,166 | 34,218 | ||||||||||
REALIZED LOSS ON EXTINGUISHMENT OF DEBT | — | (2,678 | ) | — | (2,678 | ) | ||||||||
NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS | $ | 133,498 | $ | 90,932 | $ | 213,840 | $ | 196,479 | ||||||
BASIC AND DILUTED EARNINGS PER COMMON SHARE | $ | 0.50 | $ | 0.41 | $ | 0.83 | $ | 0.90 | ||||||
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING - BASIC AND DILUTED | 266,174 | 221,878 | 257,464 | 219,461 |
SCHEDULE 1
Reconciliations of basic and diluted Core EPS to basic and diluted GAAP EPS
Reconciliations of basic and diluted Core EPS to basic and diluted GAAP EPS, the most directly comparable GAAP financial measure, for the three months ended June 30, 2013 and 2012 are provided below.
For the three months ended |
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2013 (unaudited) |
2012 (unaudited) |
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Basic and diluted Core EPS(1) | $ | 0.38 | $ | 0.40 | ||
Net realized and unrealized gains | 0.15 | 0.01 | ||||
Incentive fees attributed to net realized and unrealized gains and losses | (0.03 | ) | — | |||
Income tax expense related to realized gains | — | — | ||||
Basic and diluted GAAP EPS | $ | 0.50 | $ | 0.41 |
(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 realized and unrealized gains and
losses, any incentive fees attributable to such net realized and
unrealized gains and losses and any income taxes related to such
realized gains. Basic and diluted GAAP EPS is the most directly
comparable GAAP financial measure. |
Source: