Fourth Quarter 2017 Dividend Declared
Ares Capital Corporation (“Ares Capital”) (NASDAQ:ARCC)
announced that its Board of Directors has declared a fourth quarter
dividend of $0.38 per share, payable on December 29, 2017 to
stockholders of record as of December 15, 2017.
SEPTEMBER 30, 2017 FINANCIAL RESULTS
Ares Capital also announced financial results for its third
quarter ended September 30, 2017.
HIGHLIGHTS
Financial
Q3-17 Q3-16 (dollar amounts in
millions, except per share data) Total Amount
Per Share(1) Total Amount Per Share(1)
Core EPS(2) $ 0.36 $ 0.43 Net investment income $
153 $ 0.36 $ 138 $ 0.44 Net realized gains $ 35 $
0.08 $ 20 $ 0.06 Net unrealized losses $ (49 ) $ (0.11 ) $ (48 ) $
(0.15 ) GAAP net income $ 139 $ 0.33 $ 110 $ 0.35 Dividends
declared and payable $ 0.38 $ 0.38
As of
(dollar amounts in millions, except per share data)
September 30, 2017 September 30, 2016
December 31, 2016 Portfolio investments at fair value $
11,456 $ 8,805 $ 8,820 Total assets $ 12,041 $
9,136 $ 9,245 Stockholders’ equity $ 7,028 $ 5,209 $ 5,165 Net
assets per share $ 16.49 $ 16.59 $ 16.45
__________________________________________________ (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 professional fees and other costs related to the
acquisition of American Capital, Ltd. (“American Capital”) (the
“American Capital Acquisition”), 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. Basic and diluted
GAAP EPS 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 basic and diluted Core EPS to the most directly comparable GAAP
financial measure are set forth in Schedule 1 hereto. For the three
months ended September 30, 2017 and 2016, core EPS excludes $0.01
and $0.01 per share, respectively, of professional fees and other
costs related to the American Capital Acquisition.
Portfolio Activity
(dollar amounts in millions) Q3-17
Q3-16 Q4-16 Portfolio Activity During the
Period: Gross commitments(3) $ 1,546 $ 1,529 $
1,164 Exits of commitments(3) $ 1,644 $ 1,499 $ 1,102
Portfolio as of the End of the Period: Number of portfolio company
investments 325 215 218 Weighted average yield of debt and other
income producing securities(4): At amortized cost 9.6 % 9.7 % 9.3 %
At fair value 9.7 % 9.8 % 9.4 % Weighted average yield on total
investments(5): At amortized cost 8.5 % 8.7 % 8.3 % At fair value
8.7 % 8.8 % 8.5 %
__________________________________________________
(3) In July 2017, in connection with the effective
termination of the Senior Secured Loan Fund LLC (the “SSLP”), Ares
Capital purchased $1.6 billion in aggregate principal amount of
first lien senior secured loans outstanding at par plus accrued and
unpaid interest and fees from the SSLP (the “SSLP Loan Sale”) and
assumed the SSLP’s remaining unfunded loan commitments totaling $50
million. Upon completion of the SSLP Loan Sale, the SSLP made a
liquidation distribution to the holders of the subordinated
certificates of the SSLP (the “SSLP Certificates”) of which Ares
Capital received $1.5 billion. The Q3-17 gross commitments exclude
those investment commitments acquired from the SSLP and the Q3-17
exits of commitments exclude the amounts received by Ares Capital
from the SSLP’s liquidation distribution. (4) Weighted average
yield of debt and other income producing securities is 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 divided by (b) the total accruing debt and other income
producing securities at amortized cost or at fair value as
applicable. The weighted average yield of debt and other income
producing securities that were acquired as part of the American
Capital Acquisition and held as of September 30, 2017 was 10.0% and
9.8% at amortized cost and fair value, respectively. (5) Weighted
average yield on total investments is calculated 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 divided by (b) the total investments at amortized cost
or at fair value as applicable. The weighted average yield on total
investments that were acquired as part of the American Capital
Acquisition and held as of September 30, 2017 was 8.6% and 8.2% at
amortized cost and fair value, respectively.
THIRD QUARTER 2017 OPERATING RESULTS
For the third quarter of 2017, Ares Capital reported GAAP net
income of $139 million or $0.33 per share (basic and diluted), Core
EPS(2) of $0.36 per share (basic and diluted), net investment
income of $153 million or $0.36 per share (basic and diluted), and
net realized and unrealized losses of $14 million or $0.03 per
share (basic and diluted).
Net income can vary substantially from period to period due to
various factors, including the level of new investment commitments,
the amount of acquisition related expenses, 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 September 30, 2017, total assets were $12.0 billion,
stockholders’ equity was $7.0 billion and net asset value per share
was $16.49.
In July 2017, in connection with the SSLP Loan Sale, Ares
Capital purchased $1.6 billion in aggregate principal amount of
first lien senior secured loans outstanding at par plus accrued and
unpaid interest and fees from the SSLP and assumed the SSLP’s
remaining unfunded loan commitments totaling $50 million. Upon
completion of the SSLP Loan Sale, the SSLP made a liquidation
distribution to the holders of the SSLP Certificates of which Ares
Capital received $1.5 billion.
In the third quarter of 2017, excluding the loans acquired from
the SSLP described above, Ares Capital made $1,546 million in new
commitments, including commitments to 18 new portfolio companies
and 21 existing portfolio companies and one additional portfolio
company through the Senior Direct Lending Program, LLC (the
“SDLP”), through which Ares Capital co-invests with Varagon Capital
Partners (“Varagon”) and its clients to fund first lien senior
secured loans. Of the new commitments, 36 were sponsored
transactions. As of September 30, 2017, 172 separate private
equity sponsors were represented in Ares Capital’s
portfolio. Of the $1,546 million in new commitments made
during the third quarter of 2017, 51% were in first lien senior
secured loans, 36% were in second lien senior secured loans, 9%
were in senior subordinated loans, 3% were in the subordinated
certificates of the SDLP, and 1% were in other equity
securities. Of these commitments, 89% were in floating rate
debt securities, of which 97% contained interest rate floors and
the remaining 3% were in the subordinated certificates of the SDLP
to make co-investments with Varagon and its clients in floating
rate first lien senior secured loans through the SDLP, all of which
contained interest rate floors. 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.
In the third quarter of 2017, significant new commitments
included:
- $208 million in first lien senior
secured revolving, delayed draw and term loans, second lien senior
secured delayed draw and term loans, senior subordinated delayed
draw and term loans and equity in a real estate and facilities
management software provider;
- $120 million in first lien senior
secured revolving and term loans and second lien senior secured
delayed draw and term loans of an enterprise management software
provider for the convenience retail and petroleum wholesale
markets;
- $115 million in first lien senior
secured delayed draw and term loans of an alternative financial
services provider;
- $104 million in first lien senior
secured revolving, delayed draw and term loans of a human capital
management software solutions provider to K-12 school
organizations;
- $90 million in a second lien senior
secured term loan of an oil and gas company engaged in onshore
exploration, development and production;
- $88 million in first lien senior
secured revolving and term loans of a manufacturer of elastomeric
parts, mid-sized composite structures and composite tooling;
- $86 million in first lien senior
secured revolving and term loans and a second lien senior secured
term loan of an insurance claims management provider;
- $74 million in first and second lien
senior secured delayed draw and term loans of a software and
payment services provider to faith-based institutions;
- $73 million in a second lien senior
secured term loan of a harvester and processor of seafood;
- $65 million in first lien senior
secured revolving and term loans and a second lien senior secured
term loan in a software solutions provider to the ready-mix
concrete industry;
- $63 million in first lien senior
secured revolving, delayed draw and term loans and second lien
senior secured delayed draw and term loans in a heating,
ventilation and air conditioning services provider;
- $62 million in first lien senior
secured delayed draw and term loans, a senior subordinated term
loan and equity in a provider of outsourced office product
solutions;
- $48 million in the subordinated
certificates of the SDLP to make co-investments with Varagon and
its clients in first lien senior secured loans to three portfolio
companies in a variety of industries; and
- $47 million in a first lien senior
secured term loan of an operator of natural gas and oil fired power
generation facilities.
Also in the third quarter of 2017, excluding the liquidation
distribution of the SSLP Certificates described above, Ares Capital
exited approximately $1,644 million of investment commitments
(including exits of $418 million of commitments acquired as part of
the American Capital Acquisition). Of the total investment
commitments exited, 33% were first lien senior secured loans, 29%
were subordinated certificates of the SSLP, 18% were second lien
senior secured loans, 10% were other equity securities, 5% were
senior subordinated debt, 3% were preferred equity securities and
2% were collateralized loan obligations. Of the approximately
$1,644 million of exited investment commitments, 82% were
floating rate, 13% were non-interest bearing and 5% were fixed
rate.
The fair value of Ares Capital’s portfolio investments at
September 30, 2017 was $11.5 billion, including $10.3 billion
in accruing debt and other income producing securities. As of
September 30, 2017, the total portfolio at fair value included
$1.8 billion of investments acquired in the American Capital
Acquisition. The total portfolio investments at fair value were
comprised of approximately 41% of first lien senior secured loans,
35% of second lien senior secured loans, 4% of subordinated
certificates of the SDLP (the proceeds of which were applied to
co-investments with Varagon and its clients in first lien senior
secured loans through the SDLP), 8% of senior subordinated debt
securities, 1% of collateralized loan obligations, 4% of preferred
equity securities and 7% of other equity securities. As of
September 30, 2017, the weighted average yield of debt and
other income producing securities in the portfolio at amortized
cost and fair value was 9.6% and 9.7%, respectively, the
weighted average yield on total investments in the portfolio at
amortized cost and fair value was 8.5% and 8.7%, respectively, and
82% of the total investments at fair value were in floating rate
securities.
“Our third quarter core earnings showed improvement compared to
the second quarter, as we are starting to realize some of the
benefits of our initiatives to optimize the portfolio and rotate
low and non-yielding assets into higher yielding positions,” said
Kipp deVeer, Chief Executive Officer of Ares Capital. “We also had
another strong quarter generating net realized gains on our
investments. Our core earnings plus these net realized gains
provided strong coverage of our dividend.”
“Our balance sheet remains conservatively leveraged and we
continue to have excellent liquidity and efficient access to the
debt capital markets,” said Penni Roll, Chief Financial Officer of
Ares Capital. “We took advantage of our larger scale during the
third quarter and issued our lowest cost investment grade notes to
date, allowing us to reduce our overall cost of fixed rate
financing. We also continue to be asset sensitive, which positions
our earnings to potentially benefit from a rise in short term
interest rates.”
PORTFOLIO QUALITY
Ares Capital Management LLC (“Ares Capital Management” or Ares
Capital’s “investment adviser”) employs an investment rating system
to categorize Ares Capital’s investments. In addition to various
risk management and monitoring tools, Ares Capital’s investment
adviser grades the credit risk of all investments on a scale of 1
to 4 no less frequently than quarterly. This system is intended
primarily to reflect the underlying risk of a portfolio investment
relative to Ares Capital’s initial cost basis in respect of such
portfolio investment (i.e., at the time of origination or
acquisition), although it may also take into account under certain
circumstances the performance of the portfolio company’s business,
the collateral coverage of the investment and other relevant
factors. Under this system, investments with a grade of 4 involve
the least amount of risk to Ares Capital’s initial cost basis. The
trends and risk factors for this investment since origination or
acquisition are generally favorable, which may include the
performance of the portfolio company or a potential exit.
Investments graded 3 involve a level of risk to Ares Capital’s
initial cost basis that is similar to the risk to Ares Capital’s
initial cost basis at the time of origination or acquisition. This
portfolio company is generally performing as expected and the risk
factors to Ares Capital’s ability to ultimately recoup the cost of
Ares Capital’s investment are neutral to favorable. All investments
or acquired investments in new portfolio companies are initially
assessed a grade of 3. Investments graded 2 indicate that the risk
to Ares Capital’s ability to recoup the initial cost basis of such
investment has increased materially since origination or
acquisition, including as a result of factors such as declining
performance and non-compliance with debt covenants; however,
payments are generally not more than 120 days past due. An
investment grade of 1 indicates that the risk to Ares Capital’s
ability to recoup the initial cost basis of such investment has
substantially increased since origination or acquisition, and the
portfolio company likely has materially declining performance. For
debt investments with an investment grade of 1, most or all of the
debt covenants are out of compliance and payments are substantially
delinquent. For investments graded 1, it is anticipated that Ares
Capital will not recoup Ares Capital’s initial cost basis and may
realize a substantial loss of Ares Capital’s initial cost basis
upon exit. For investments graded 1 or 2, Ares Capital’s investment
adviser enhances its level of scrutiny over the monitoring of such
portfolio company. The grade of a portfolio investment may be
reduced or increased over time.
Ares Capital assigned a fair value on January 3, 2017 (the
“Acquisition Date”), which was the date we closed the American
Capital Acquisition, to each of the portfolio investments acquired
in connection with the American Capital Acquisition. The initial
cost basis of each investment acquired was equal to the fair value
of such investment as of the Acquisition Date. Many of these
portfolio investments were assigned a fair value reflecting a
discount to American Capital’s cost basis at the time of American
Capital’s origination or acquisition. Each investment was initially
assessed a grade of 3 (i.e., generally the grade we assign a
portfolio company at acquisition), reflecting the relative risk to
our initial cost basis of such investments. It is important to note
that our grading system does not take into account factors or
events in respect of the period from when American Capital
originated or acquired such portfolio investments or the status of
these portfolio investments in terms of compliance with debt
facilities, financial performance and similar factors. Rather, it
is only intended to measure risk from the time that we acquired the
portfolio investment in connection with the American Capital
Acquisition. Accordingly, it is possible that the grades of these
portfolio investments may be reduced or increased after the
Acquisition Date.
As of September 30, 2017 and December 31, 2016, the
weighted average grade of the investments in Ares Capital’s
portfolio at fair value was 3.1 and 3.1, respectively, and loans on
non-accrual status represented 3.4% and 2.9%, respectively, of
total investments at amortized cost (or 0.9% and 0.8%,
respectively, at fair value).
LIQUIDITY AND CAPITAL RESOURCES
In August 2017, Ares Capital issued $750.0 million in aggregate
principal amount of unsecured notes, which bear interest at a rate
of 3.50% per year and mature on February 10, 2023 (the “2023
Notes”). The 2023 Notes require payment of interest semi-annually,
and all principal is due upon maturity. These notes are redeemable
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
2023 Notes, and any accrued and unpaid interest. The 2023 Notes
were issued at a discount to the principal amount.
As of September 30, 2017, Ares Capital had $341 million in
cash and cash equivalents and $4.7 billion in total aggregate
principal amount of debt outstanding ($4.6 billion at carrying
value). Subject to leverage, borrowing base and other restrictions,
Ares Capital had approximately $2.7 billion available for
additional borrowings under its existing credit facilities and
Small Business Administration-guaranteed debentures as of
September 30, 2017.
THIRD QUARTER 2017 DIVIDEND
On August 2, 2017, Ares Capital declared a third quarter
dividend of $0.38 per share for a total of approximately $162
million. The record date for this dividend was September 15,
2017 and the dividend was paid on September 29, 2017.
RECENT DEVELOPMENTS
Ares Capital’s consolidated subsidiary, Ares Capital CP Funding
LLC ("Ares Capital CP") is party to a revolving funding facility
(as amended, the "Revolving Funding Facility"). On October 2, 2017,
Ares Capital CP entered into an agreement to amend the Revolving
Funding Facility, that among other things, (a) modified the
interest rate charged on the Revolving Funding Facility from a rate
based on LIBOR plus 2.30% per annum or a "base rate" (as defined in
the agreements governing the Revolving Funding Facility) plus 1.30%
per annum, to a rate based on LIBOR plus 2.15% per annum or a "base
rate" plus 1.15% per annum and (b) modified certain loan
portfolio concentration limits.
From October 1, 2017 through October 26, 2017, Ares
Capital made new investment commitments of approximately $294
million, of which $220 million were funded. Of these new
commitments, 81% were in first lien senior secured loans and 19%
were in second lien senior secured loans. Of the approximately $294
million of new investment commitments, 100% were floating rate. The
weighted average yield of debt and other income producing
securities funded during the period at amortized cost was 7.7%.
Ares Capital may seek to sell all or a portion of these new
investment commitments, although there can be no assurance that we
will be able to do so.
From October 1, 2017 through October 26, 2017, Ares
Capital exited approximately $80 million of investment commitments,
including $24 million of investment commitments acquired in the
American Capital Acquisition. Of the total investment commitments,
35% were senior subordinated loans, 31% were first lien senior
secured loans, 30% were collateralized loan obligations, 3% were
other equity securities and 1% were investments in the subordinated
certificates of the SDLP. Of the approximately $80 million of
exited investment commitments, 62% were floating rate, 35% were
fixed rate and 3% were non-interest bearing. The weighted average
yield of debt and other income producing securities exited or
repaid during the period at amortized cost was 11.4% and the
weighted average yield on total investments exited or repaid during
the period at amortized cost was 10.9%. On the approximately $80
million of investment commitments exited from October 1, 2017
through October 26, 2017, Ares Capital recognized total net
realized gains of approximately $18 million.
In addition, as of October 26, 2017, Ares Capital had an
investment backlog and pipeline of approximately $810 million and
$340 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 our 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.
In addition to the exits noted above, in November 2017, Ares
Capital and Ares Venture Finance, L.P., Ares Capital’s consolidated
subsidiary, sold approximately $125 million of investment
commitments from Ares Capital’s early-stage and/or venture
capital-backed portfolio companies and recognized a net realized
gain of approximately $2 million.
WEBCAST / CONFERENCE CALL
Ares Capital will host a webcast/conference call on Thursday,
November 2, 2017 at 12:00 p.m. (ET) to discuss its
quarter ended September 30, 2017 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 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 6646709 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 November
15, 2017 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
10112891. An archived replay will also be available on a webcast
link located on the Home page of the Investor Resources
section of Ares Capital’s website.
ABOUT ARES CAPITAL CORPORATION
Ares Capital is a leading specialty finance company that
provides one-stop debt and equity financing solutions to U.S.
middle market companies, venture capital backed businesses and
power generation projects. Ares Capital originates and invests in
senior secured loans, mezzanine debt and, to a lesser extent,
equity investments through its national direct origination
platform. Ares Capital’s investment objective is to generate both
current income and capital appreciation through debt and equity
investments primarily in private companies. Ares Capital has
elected to be regulated as a business development company (“BDC”)
and is the largest BDC by both market capitalization and total
assets. Ares Capital is externally managed by a subsidiary of Ares
Management, L.P. (NYSE:ARES), a publicly traded, leading global
alternative asset manager. For more information about Ares Capital
Corporation, visit www.arescapitalcorp.com. However, the contents of
such website are not and should not be deemed to be incorporated by
reference herein.
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 Securities and Exchange
Commission. 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 September 30, 2017
December 31, 2016 (unaudited) ASSETS
Total investments at fair value (amortized cost of $11,740 and
$9,034, respectively) $ 11,456 $ 8,820 Cash and cash equivalents
341 223 Interest receivable 105 112 Receivable for open trades 34
29 Other assets 105 61 Total assets $ 12,041 $
9,245
LIABILITIES Debt $ 4,640 $ 3,874 Base
management fees payable 44 34 Income based fees payable 25 32
Capital gains incentive fees payable 61 38 Accounts payable and
other liabilities 199 58 Interest and facility fees payable 44
44 Total liabilities 5,013 4,080
STOCKHOLDERS’
EQUITY Common stock, par value $0.001 per share, 500 common
shares authorized; 426 and 314 common shares issued and
outstanding, respectively — — Capital in excess of par value 7,206
5,292 Accumulated undistributed (overdistributed) net investment
income (78 ) 37 Accumulated net realized gains on investments,
foreign currency transactions, extinguishment of debt and other
assets 200 57 Net unrealized losses on investments, foreign
currency and other transactions (300 ) (221 ) Total stockholders’
equity 7,028 5,165 Total liabilities and
stockholders’ equity $ 12,041 $ 9,245
NET ASSETS
PER SHARE $ 16.49 $ 16.45
ARES
CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT
OF OPERATIONS (in millions, except per share data)
(unaudited)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2017 2016 2017 2016
INVESTMENT INCOME Interest income from investments $ 238 $
200 $ 700 $ 612 Capital structuring service fees 32 35 73 62
Dividend income 18 16 58 53 Management and other fees 1 4 6 14
Other income 5 3 16 11 Total investment
income 294 258 853 752
EXPENSES Interest and credit facility fees 56 43 166 139
Base management fees 44 34 127 103 Income based fees 35 33 97 91
Capital gains incentive fees (3 ) (6 ) 23 8 Administrative fees 3 3
9 10 Professional fees and other costs related to the acquisition
of American Capital 4 3 42 11 Other general and administrative 7
6 24 21 Total expenses 146 116 488 383
Waiver of income based fees (10 ) — (20 ) — Total
expenses, net of waiver of income based fees 136 116
468 383 NET INVESTMENT INCOME BEFORE INCOME TAXES 158
142 385 369 Income tax expense, including excise tax 5 4
14 13 NET INVESTMENT INCOME 153 138
371 356 REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS, FOREIGN CURRENCY AND OTHER TRANSACTIONS: Net
realized gains 35 20 147 78 Net unrealized losses (49 ) (48 ) (79 )
(35 ) Net realized and unrealized gains (losses) on investments,
foreign currency and other transactions (14 ) (28 ) 68 43 REALIZED
LOSSES ON EXTINGUISHMENT OF DEBT — — (4 ) —
NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS $
139 $ 110 $ 435 $ 399 BASIC AND DILUTED
EARNINGS PER COMMON SHARE $ 0.33 $ 0.35 $ 1.02
$ 1.27 WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING -
BASIC AND DILUTED 426 314 425 314
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 and nine months ended September 30, 2017 and
2016 are provided below.
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2017 2016 2017 2016
(unaudited) (unaudited) (unaudited)
(unaudited) Basic and diluted Core EPS(1) $ 0.36 $ 0.43 $
1.01 $ 1.19 Professional fees and other costs related to the
American Capital Acquisition (0.01 ) (0.01 ) (0.09 ) (0.03 ) Net
realized and unrealized gains (losses) (0.03 ) (0.09 ) 0.15 0.14
Capital gains incentive fees attributable to net realized and
unrealized gains and losses 0.01 0.02 (0.05 ) (0.03 ) Income tax
expense related to net realized gains and losses — —
— — Basic and diluted GAAP EPS $ 0.33 $ 0.35
$ 1.02 $ 1.27
__________________________________________________ (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 professional fees and other costs
related to the American Capital Acquisition, 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.
Basic and diluted GAAP EPS 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171102005467/en/
Investor Relations:Ares Capital CorporationCarl G. Drake
/ John Stilmar, 888-818-5298
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