Apollo Investment Corporation (NASDAQ: AINV) or the “Company,” or
“Apollo Investment,” today announced financial results for its
third fiscal quarter ended December 31, 2019. The Company’s
net investment income was $0.54 per share for the quarter ended
December 31, 2019, compared to $0.53 per share for the quarter
ended September 30, 2019. The Company’s net asset value (“NAV”) was
$18.27 per share as of December 31, 2019, compared to $18.69
as of September 30, 2019.
On February 4, 2020, the Board of Directors
declared a distribution of $0.45 per share payable on April 6,
2020 to shareholders of record as of March 20, 2020.
___________________
(1) Non-core assets include oil & gas, structured
credit, renewables, shipping and commodities.(2) Core assets
include leveraged lending, life sciences, asset based, lender
finance and aviation.(3) On a fair value basis.(4)
Excludes $131 million of gross fundings for revolvers. (5)
Includes $1 million net fundings for revolvers and a $2 million
repayment from Merx Aviation.(6) The Company’s net leverage
ratio is defined as debt outstanding plus payable for investments
purchased, less receivable for investments sold, less cash and cash
equivalents, less foreign currencies, divided by net assets.
Mr. Howard Widra, Apollo Investment’s Chief
Executive Officer commented, “During the quarter, we continued to
successfully implement our plan to prudently grow our portfolio
with first lien floating rate corporate loans sourced by the Apollo
Direct Origination platform, while continuing to reduce our
exposure non-core and legacy assets as well as second lien
loans. We believe the risk profile of our portfolio continues
to improve which allows us to operate at a higher leverage
ratio.” Mr. Widra continued, “In addition, this quarter was
an important inflection point in the makeup of our non-core
portfolio. The non-core portfolio decreased by approximately $67
million through the combination of repayments and unrealized
losses, reducing non-core assets to 12% of the portfolio. In
addition, the risk attributable to our remaining non-core portfolio
has decreased due to the successful restructuring of our investment
in Carbonfree Chemicals. The combination of this
restructuring and the accretive impact of the reinvestment of the
proceeds received from non-core and legacy repayments has allowed
us to have a smaller and better collateralized non-core portfolio
while improving the overall earnings profile of Apollo
Investment.”
|
FINANCIAL
HIGHLIGHTS |
|
($ in billions, except
per share data) |
December 31, 2019 |
|
September 30, 2019 |
|
June 30, 2019 |
|
March 31, 2019 |
|
December 31, 2018 |
Total assets |
$ |
3.06 |
|
|
$ |
2.89 |
|
|
$ |
2.70 |
|
|
$ |
2.50 |
|
|
$ |
2.38 |
|
Investment portfolio (fair
value) |
$ |
2.97 |
|
|
$ |
2.80 |
|
|
$ |
2.62 |
|
|
$ |
2.41 |
|
|
$ |
2.31 |
|
Debt outstanding |
$ |
1.79 |
|
|
$ |
1.58 |
|
|
$ |
1.35 |
|
|
$ |
1.13 |
|
|
$ |
0.99 |
|
Net assets |
$ |
1.22 |
|
|
$ |
1.25 |
|
|
$ |
1.29 |
|
|
$ |
1.31 |
|
|
$ |
1.32 |
|
Net asset value per share |
$ |
18.27 |
|
|
$ |
18.69 |
|
|
$ |
19.00 |
|
|
$ |
19.06 |
|
|
$ |
19.03 |
|
|
|
|
|
|
|
|
|
|
|
Debt-to-equity ratio |
1.47 |
x |
|
1.26 |
x |
|
1.05 |
x |
|
0.86 |
x |
|
0.76 |
x |
Net leverage ratio (1) |
1.43 |
x |
|
1.24 |
x |
|
1.03 |
x |
|
0.83 |
x |
|
0.74 |
x |
___________________(1) The Company’s net
leverage ratio is defined as debt outstanding plus payable for
investments purchased, less receivable for investments sold, less
cash and cash equivalents, less foreign currencies, divided by net
assets.
|
|
|
|
|
PORTFOLIO AND
INVESTMENT ACTIVITY |
|
|
|
|
|
|
Three Months Ended December 31, |
|
Nine Months Ended December 31, |
(in
millions)* |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Investments made in portfolio
companies |
|
$ |
530.0 |
|
|
$ |
305.3 |
|
|
$ |
1,442.0 |
|
|
$ |
1,027.8 |
|
Investments sold |
|
(14.9 |
) |
|
(16.3 |
) |
|
(44.5 |
) |
|
(194.4 |
) |
Net activity before repaid investments |
|
515.1 |
|
|
289.0 |
|
|
1,397.5 |
|
|
833.4 |
|
Investments repaid |
|
(344.2 |
) |
|
(274.4 |
) |
|
(804.6 |
) |
|
(740.2 |
) |
Net investment activity |
|
$ |
170.9 |
|
|
$ |
14.6 |
|
|
$ |
593.0 |
|
|
$ |
93.2 |
|
|
|
|
|
|
|
|
|
|
Portfolio companies at
beginning of period |
|
139 |
|
|
98 |
|
|
113 |
|
|
90 |
|
Number of new portfolio
companies |
|
16 |
|
|
14 |
|
|
51 |
|
|
30 |
|
Number of exited portfolio
companies |
|
(4 |
) |
|
(9 |
) |
|
(13 |
) |
|
(17 |
) |
Portfolio companies at end of
period |
|
151 |
|
|
103 |
|
|
151 |
|
|
103 |
|
|
|
|
|
|
|
|
|
|
Number of investments made in
existing portfolio companies |
|
42 |
|
|
26 |
|
|
59 |
|
|
35 |
|
____________________* Totals may not foot due to
rounding.
|
|
|
|
|
OPERATING
RESULTS |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Nine Months Ended December 31, |
(in
millions)* |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net investment income |
|
$ |
36.2 |
|
|
$ |
31.5 |
|
|
$ |
106.5 |
|
|
$ |
95.2 |
|
Net realized and change in
unrealized gains (losses) |
|
(35.9 |
) |
|
(32.7 |
) |
|
(75.3 |
) |
|
(55.1 |
) |
Net increase in net assets
resulting from operations |
|
$ |
0.3 |
|
|
$ |
(1.2 |
) |
|
$ |
31.2 |
|
|
$ |
40.1 |
|
|
|
|
|
|
|
|
|
|
(per share)*
(1) |
|
|
|
|
|
|
|
|
Net investment income on per
average share basis |
|
$ |
0.54 |
|
|
$ |
0.45 |
|
|
1.58 |
|
|
$ |
1.34 |
|
Net realized and change in
unrealized gain (loss) per share |
|
(0.54 |
) |
|
(0.47 |
) |
|
(1.11 |
) |
|
(0.77 |
) |
Earnings per share —
basic |
|
$ |
— |
|
|
$ |
(0.02 |
) |
|
$ |
0.46 |
|
|
$ |
0.56 |
|
____________________* Totals may not foot due to
rounding.
(1) Based on the weighted average number of
shares outstanding for the period presented.
SHARE REPURCHASE PROGRAM
During the three months ended December 31, 2019,
the Company repurchased 501,611 shares at a weighted average price
per share of $15.65, inclusive of commissions, for a total cost of
$7.8 million. During the period from January 1, 2020 through
February 3, 2020, the Company did not repurchase any shares.
Since the inception of the share repurchase program and through
February 3, 2020, the Company repurchased 12,368,013 shares at
a weighted average price per share of $16.83, inclusive of
commissions, for a total cost of $208.1 million, leaving a maximum
of $41.9 million available for future purchases under the current
Board authorization of $250 million.
* Share figures have been adjusted for the
one-for-three reverse stock split which was completed after market
close on November 30, 2018.
CONFERENCE CALL / WEBCAST AT 5:00 PM EST ON
FEBRUARY 4, 2020
The Company will host a conference call on Tuesday,
February 4, 2020 at 5:00 p.m. Eastern Time. All interested parties
are welcome to participate in the conference call by dialing (888)
802-8579 approximately 5-10 minutes prior to the call;
international callers should dial (973) 633-6740. Participants
should reference Apollo Investment Corporation or Conference ID
#9180437 when prompted. A simultaneous webcast of the conference
call will be available to the public on a listen-only basis and can
be accessed through the Events Calendar in the Shareholder section
of our website at www.apolloic.com. Following the call, you may
access a replay of the event either telephonically or via audio
webcast. The telephonic replay will be available approximately two
hours after the live call and through February 25, 2020 by dialing
(800) 585-8367; international callers please dial (404) 537-3406,
reference Conference ID #9180437. A replay of the audio
webcast will also be available later that same day. To access the
audio webcast please visit the Events Calendar in the Shareholder
section of the Company’s website at www.apolloic.com.
SUPPLEMENTAL INFORMATION
The Company provides a supplemental information
package to offer more transparency into its financial results and
make its reporting more informative and easier to follow. The
supplemental package is available in the Shareholders section of
the Company’s website under Presentations at
www.apolloic.com.
Our portfolio composition and weighted average
yields as of December 31, 2019, September 30, 2019, June 30, 2019,
March 31, 2019, and December 31, 2018 were as follows:
|
December 31, 2019 |
|
September 30, 2019 |
|
June 30, 2019 |
|
March 31, 2019 |
|
December 31, 2018 |
Portfolio composition,
at fair value: |
|
|
|
|
|
|
|
|
|
First lien secured debt |
|
78 |
% |
|
|
74 |
% |
|
69 |
% |
|
66 |
% |
|
64 |
% |
Second lien secured debt |
|
14 |
% |
|
|
17 |
% |
|
21 |
% |
|
23 |
% |
|
24 |
% |
Total secured debt |
|
92 |
% |
|
|
91 |
% |
|
90 |
% |
|
89 |
% |
|
88 |
% |
Unsecured debt |
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Structured products and other |
|
0 |
% |
|
|
2 |
% |
|
2 |
% |
|
2 |
% |
|
3 |
% |
Preferred equity |
|
1 |
% |
|
|
1 |
% |
|
1 |
% |
|
1 |
% |
|
1 |
% |
Common equity/interests and warrants |
|
7 |
% |
|
|
6 |
% |
|
7 |
% |
|
8 |
% |
|
8 |
% |
Weighted average
yields, at amortized cost (1): |
|
|
|
|
|
|
|
|
|
First lien secured debt (2) |
|
8.7 |
% |
|
|
9.0 |
% |
|
9.3 |
% |
|
9.9 |
% |
|
10.4 |
% |
Second lien secured debt (2) |
|
10.7 |
% |
|
|
11.0 |
% |
|
11.3 |
% |
|
11.4 |
% |
|
11.4 |
% |
Total secured debt (2) |
|
9.1 |
% |
|
|
9.4 |
% |
|
9.8 |
% |
|
10.2 |
% |
|
10.7 |
% |
Unsecured debt portfolio (2) |
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total debt portfolio (2) |
|
9.1 |
% |
|
|
9.4 |
% |
|
9.8 |
% |
|
10.2 |
% |
|
10.7 |
% |
Total portfolio (3) |
|
8.6 |
% |
|
|
8.9 |
% |
|
9.2 |
% |
|
9.6 |
% |
|
9.6 |
% |
Interest rate type, at
fair value (4): |
|
|
|
|
|
|
|
|
|
Fixed rate amount |
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Floating rate amount |
$ |
2.2 |
billion |
|
$ |
2.0 |
billion |
|
$1.8 billion |
|
$1.5 billion |
|
$1.4 billion |
Fixed rate, as percentage of total |
|
— |
|
|
|
— |
|
|
1 |
% |
|
— |
|
|
— |
|
Floating rate, as percentage of total |
|
100 |
% |
|
|
100 |
% |
|
99 |
% |
|
100 |
% |
|
100 |
% |
Interest rate type, at
amortized cost (4): |
|
|
|
|
|
|
|
|
|
Fixed rate amount |
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Floating rate amount |
$ |
2.3 |
billion |
|
$ |
2.0 |
billion |
|
$1.8 billion |
|
$1.5 billion |
|
$1.4 billion |
Fixed rate, as percentage of total |
|
— |
|
|
|
— |
|
|
1 |
% |
|
— |
|
|
— |
|
Floating rate, as percentage of total |
|
100 |
% |
|
|
100 |
% |
|
99 |
% |
|
100 |
% |
|
100 |
% |
(1) An investor’s yield may be lower than the portfolio
yield due to sales loads and other expenses.(2) Exclusive of
investments on non-accrual status.(3) Inclusive of all income
generating investments, non-income generating investments and
investments on non-accrual status.(4) The interest rate type
information is calculated using the Company’s corporate debt
portfolio and excludes aviation, oil and gas, structured credit,
renewables, shipping, commodities and investments on non-accrual
status.
|
|
APOLLO INVESTMENT CORPORATIONSTATEMENTS OF
ASSETS AND LIABILITIES(In thousands, except share
and per share data) |
|
December 31, 2019 |
|
March 31, 2019 |
Assets |
(Unaudited) |
|
|
Investments at
fair value: |
|
|
|
Non-controlled/non-affiliated investments (cost — $2,285,650 and
$1,654,322, respectively) |
$ |
2,256,200 |
|
|
$ |
1,627,406 |
|
Non-controlled/affiliated investments (cost — $133,246 and $67,072,
respectively) |
93,732 |
|
|
49,681 |
|
Controlled investments (cost — $656,560 and $736,717,
respectively) |
617,265 |
|
|
731,045 |
|
Cash and cash
equivalents |
36,310 |
|
|
36,280 |
|
Foreign currencies
(cost — $5,839 and $4,963, respectively) |
5,916 |
|
|
4,909 |
|
Receivable for
investments sold |
5,686 |
|
|
336 |
|
Interest
receivable |
18,936 |
|
|
24,280 |
|
Dividends
receivable |
4,702 |
|
|
3,748 |
|
Deferred financing
costs |
16,797 |
|
|
19,776 |
|
Prepaid expenses
and other assets |
4,480 |
|
|
336 |
|
Total Assets |
$ |
3,060,024 |
|
|
$ |
2,497,797 |
|
|
|
|
|
Liabilities |
|
|
|
Debt |
$ |
1,785,637 |
|
|
$ |
1,128,686 |
|
Payable for
investments purchased |
800 |
|
|
677 |
|
Distributions
payable |
29,946 |
|
|
31,040 |
|
Management and
performance-based incentive fees payable |
10,414 |
|
|
8,880 |
|
Interest
payable |
8,138 |
|
|
5,818 |
|
Accrued
administrative services expense |
2,576 |
|
|
2,983 |
|
Other liabilities
and accrued expenses |
6,631 |
|
|
7,086 |
|
Total Liabilities |
$ |
1,844,142 |
|
|
$ |
1,185,170 |
|
|
|
|
|
Net Assets |
$ |
1,215,882 |
|
|
$ |
1,312,627 |
|
|
|
|
|
Net
Assets |
|
|
|
Common stock,
$0.001 par value (130,000,000 and 400,000,000
shares authorized; |
|
|
|
|
|
|
|
66,545,741 and 68,876,986 shares issued and outstanding,
respectively) |
$ |
66 |
|
|
$ |
69 |
|
Capital in excess
of par value |
2,118,652 |
|
|
2,155,836 |
|
Accumulated
under-distributed (over-distributed) earnings |
(902,836 |
) |
|
(843,278 |
) |
Net Assets |
$ |
1,215,882 |
|
|
$ |
1,312,627 |
|
|
|
|
|
Net Asset
Value Per Share |
$ |
18.27 |
|
|
$ |
19.06 |
|
APOLLO INVESTMENT CORPORATIONSTATEMENTS OF
OPERATIONS (Unaudited)(In thousands, except per
share data) |
|
|
|
|
|
Three Months Ended December 31, |
|
Nine Months Ended December 31, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Investment Income |
|
|
|
|
|
|
|
Non-controlled/non-affiliated investments: |
|
|
|
|
|
|
|
Interest income (excluding Payment-in-kind (“PIK”) interest
income) |
$ |
49,809 |
|
|
$ |
39,494 |
|
|
$ |
148,303 |
|
|
$ |
123,523 |
|
Dividend income |
264 |
|
|
2 |
|
|
331 |
|
|
2 |
|
PIK interest income |
1,224 |
|
|
643 |
|
|
6,662 |
|
|
2,709 |
|
Other income |
1,193 |
|
|
3,748 |
|
|
4,315 |
|
|
6,961 |
|
Non-controlled/affiliated investments: |
|
|
|
|
|
|
|
Interest income (excluding PIK interest income) |
161 |
|
|
— |
|
|
161 |
|
|
— |
|
Dividend income |
322 |
|
|
298 |
|
|
954 |
|
|
904 |
|
PIK interest income |
515 |
|
|
— |
|
|
515 |
|
|
— |
|
Other income |
— |
|
|
— |
|
|
— |
|
|
— |
|
Controlled
investments: |
|
|
|
|
|
|
|
Interest income (excluding PIK interest income) |
11,449 |
|
|
15,061 |
|
|
36,358 |
|
|
44,627 |
|
Dividend income |
2,651 |
|
|
3,300 |
|
|
5,102 |
|
|
10,550 |
|
PIK interest income |
894 |
|
|
1,495 |
|
|
2,615 |
|
|
4,390 |
|
Other income |
— |
|
|
— |
|
|
— |
|
|
— |
|
Total Investment Income |
$ |
68,482 |
|
|
$ |
64,041 |
|
|
$ |
205,316 |
|
|
$ |
193,666 |
|
Expenses |
|
|
|
|
|
|
|
Management
fees |
$ |
10,342 |
|
|
$ |
8,720 |
|
|
$ |
30,071 |
|
|
$ |
26,851 |
|
Performance-based
incentive fees |
71 |
|
|
7,409 |
|
|
1,983 |
|
|
21,190 |
|
Interest and
other debt expenses |
18,200 |
|
|
14,217 |
|
|
54,445 |
|
|
42,697 |
|
Administrative
services expense |
1,542 |
|
|
1,657 |
|
|
4,810 |
|
|
5,152 |
|
Other general and
administrative expenses |
2,205 |
|
|
2,564 |
|
|
7,814 |
|
|
8,621 |
|
Total expenses |
32,360 |
|
|
34,567 |
|
|
99,123 |
|
|
104,511 |
|
Management and
performance-based incentive fees waived |
— |
|
|
(1,852 |
) |
|
— |
|
|
(5,542 |
) |
Expense
reimbursements |
(98 |
) |
|
(161 |
) |
|
(295 |
) |
|
(500 |
) |
Net Expenses |
$ |
32,262 |
|
|
$ |
32,554 |
|
|
$ |
98,828 |
|
|
$ |
98,469 |
|
Net Investment Income |
$ |
36,220 |
|
|
$ |
31,487 |
|
|
$ |
106,488 |
|
|
$ |
95,197 |
|
Net
Realized and Change in Unrealized Gains (Losses) |
|
|
|
|
|
|
|
Net realized
gains (losses): |
|
|
|
|
|
|
|
Non-controlled/non-affiliated investments |
$ |
(537 |
) |
|
$ |
(12,421 |
) |
|
$ |
(6,245 |
) |
|
$ |
(22,140 |
) |
Non-controlled/affiliated investments |
(1,820 |
) |
|
— |
|
|
(731 |
) |
|
2,007 |
|
Controlled investments |
— |
|
|
— |
|
|
— |
|
|
— |
|
Option contracts |
— |
|
|
(6,475 |
) |
|
— |
|
|
(29,995 |
) |
Foreign currency transactions |
6,200 |
|
|
(55 |
) |
|
5,014 |
|
|
(80 |
) |
Extinguishment of debt |
— |
|
|
— |
|
|
(4,375 |
) |
|
— |
|
Net realized gains (losses) |
3,843 |
|
|
(18,951 |
) |
|
(6,337 |
) |
|
(50,208 |
) |
Net change in
unrealized gains (losses): |
|
|
|
|
|
|
|
Non-controlled/non-affiliated investments |
8,972 |
|
|
2,235 |
|
|
(2,534 |
) |
|
(8,603 |
) |
Non-controlled/affiliated investments |
(21,371 |
) |
|
(7,124 |
) |
|
(22,123 |
) |
|
(11,084 |
) |
Controlled investments |
(10,858 |
) |
|
(18,883 |
) |
|
(33,623 |
) |
|
(8,911 |
) |
Option contracts |
— |
|
|
8,787 |
|
|
— |
|
|
19,146 |
|
Foreign currency translations |
(16,520 |
) |
|
1,271 |
|
|
(10,688 |
) |
|
4,564 |
|
Net change in unrealized gains (losses) |
(39,777 |
) |
|
(13,714 |
) |
|
(68,968 |
) |
|
(4,888 |
) |
Net Realized and Change in Unrealized Gains
(Losses) |
$ |
(35,934 |
) |
|
$ |
(32,665 |
) |
|
$ |
(75,305 |
) |
|
$ |
(55,096 |
) |
Net Increase (Decrease) in Net Assets Resulting from
Operations |
$ |
286 |
|
|
$ |
(1,178 |
) |
|
$ |
31,183 |
|
|
$ |
40,101 |
|
Earnings Per
Share — Basic |
$ |
— |
|
|
$ |
(0.02 |
) |
|
$ |
0.46 |
|
|
$ |
0.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
About Apollo Investment
Corporation
Apollo Investment Corporation (NASDAQ: AINV) is
a closed-end investment company that has elected to be treated as a
business development company under the Investment Company Act of
1940. The Company invests primarily in various forms of debt
investments, including secured and unsecured debt, loan
investments, and/or equity in private middle-market companies. The
Company may also invest in the securities of public companies and
structured products and other investments such as collateralized
loan obligations and credit-linked notes. The Company seeks to
provide private financing solutions for private companies that do
not have access to the more traditional providers of credit. Apollo
Investment Corporation is managed by Apollo Investment Management,
L.P., an affiliate of Apollo Global Management, Inc., a leading
global alternative investment manager. For more information, please
visit www.apolloic.com.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements involve risks and
uncertainties, including, but not limited to, statements as to our
future operating results; our business prospects and the prospects
of our portfolio companies; the impact of investments that we
expect to make; our contractual arrangements and relationships with
third parties; the dependence of our future success on the general
economy and its impact on the industries in which we invest; the
ability of our portfolio companies to achieve their objectives; our
expected financings and investments; the adequacy of our cash
resources and working capital; and the timing of cash flows, if
any, from the operations of our portfolio companies.
We may use words such as “anticipates,”
“believes,” “expects,” “intends,” “will,” “should,” “may” and
similar expressions to identify forward-looking statements. Such
statements are based on currently available operating, financial
and competitive information and are subject to various risks and
uncertainties that could cause actual results to differ materially
from our historical experience and our present expectations.
Statements regarding the following subjects, among others, may be
forward-looking: the return on equity; the yield on investments;
the ability to borrow to finance assets; new strategic initiatives;
the ability to reposition the investment portfolio; the market
outlook; future investment activity; and risks associated with
changes in business conditions and the general economy. Undue
reliance should not be placed on such forward-looking statements as
such statements speak only as of the date on which they are made.
We do not undertake to update our forward-looking statements unless
required by law.
Contact
Elizabeth BesenInvestor Relations ManagerApollo
Investment Corporation212.822.0625ebesen@apollo.com
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