Dividend Declarations
Ares Capital Corporation (“Ares Capital”) (NASDAQ: ARCC)
announced that its Board of Directors has declared a first quarter
dividend of $0.40 per share, an increase of $0.01 per share over
the prior quarter dividend. The first quarter dividend is payable
on March 29, 2019 to stockholders of record as of March 15, 2019.
The Board of Directors has also declared additional dividends
totaling $0.08 per share for 2019, to be distributed in four
consecutive quarterly payments of $0.02 per share per quarter. The
first additional dividend is also payable on March 29, 2019 to the
stockholders of record as of March 15, 2019.
DECEMBER 31, 2018 FINANCIAL RESULTS
Ares Capital also announced financial results for its fourth
quarter and year ended December 31, 2018.
HIGHLIGHTS
Financial
Q4-18 Q4-17 FY-18
FY-17 (dollar amounts in millions, except per share
data)
Total Amount
Per Share(1)
Total Amount
Per Share(1)
Total Amount
Per Share(1)
Total Amount
Per Share(1)
Core EPS(2) $ 0.45 $ 0.38 $ 1.68 $ 1.39 GAAP EPS $ 0.36 $ 0.54 $
2.01 $ 1.57 Net investment income $ 203 $ 0.48 $ 140 $ 0.33 $ 694 $
1.63 $ 511 $ 1.20 Net realized gains (losses) $ 31 $ 0.07 $ (123 )
$ (0.29 ) $ 419 $ 0.98 $ 20 $ 0.05 Net unrealized gains (losses) $
(81 ) $ (0.19 ) $ 215 $ 0.50 $ (255 ) $ (0.60 ) $ 136 $ 0.32 GAAP
net income $ 153 $ 0.36 $ 232 $ 0.54 $ 858 $ 2.01 $ 667 $ 1.57
Dividends declared and payable $ 0.39 $ 0.38 $ 1.54 $ 1.52
As of December 31, (dollar amounts in millions, except
per share data) 2018 2017 Portfolio
investments at fair value $ 12,417 $ 11,841 Total assets $ 12,895 $
12,347 Stockholders’ equity $ 7,300 $ 7,098 Net assets per share $
17.12 $ 16.65
__________________________________________________
(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. (the
“American Capital Acquisition”), expense reimbursement (the “Ares
Reimbursement”) from Ares Capital Management LLC (“Ares Capital
Management” or Ares Capital’s “investment adviser”), 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.
Portfolio Activity
(dollar amounts in millions)
Q4-18 Q4-17 FY-18 FY-17 Portfolio
Activity During the Period: Gross commitments (3)(4) $ 2,709 $
1,506 $ 8,045 $ 5,889 Exits of commitments (3) $ 1,021 $ 1,321 $
6,476 $ 5,593 Portfolio as of the End of the Period: Number
of portfolio company investments 344 314
Weighted average yield of debt and other
income producingsecurities(5):
At amortized cost 10.2 % 9.7 % At fair value 10.3 % 9.8 % Weighted
average yield on total investments(6): At amortized cost 9.0 % 8.7
% At fair value 9.3 % 8.7 %
__________________________________________________
(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 of which Ares Capital received $1.5
billion. The FY-17 gross commitments exclude those investment
commitments acquired from the SSLP and the FY-17 exits of
commitments exclude the amounts received by Ares Capital from the
SSLP’s liquidation distribution. (4) The FY-17 gross
commitments exclude $2.5 billion of investments acquired as part of
the American Capital Acquisition on January 3, 2017. (5)
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. (6) 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.
FOURTH QUARTER 2018 OPERATING RESULTS
For the fourth quarter of 2018, Ares Capital reported GAAP net
income of $153 million or $0.36 per share (basic and diluted), Core
EPS(2) of $0.45 per share (basic and diluted), net investment
income of $203 million or $0.48 per share (basic and diluted), and
net realized and unrealized losses of $50 million or $(0.12) 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 December 31, 2018, total assets were $12.9 billion,
stockholders’ equity was $7.3 billion and net asset value per share
was $17.12.
In the fourth quarter of 2018, Ares Capital made $2.7 billion in
new investment commitments, including commitments to 23 new
portfolio companies, 27 existing portfolio companies and 1
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, 43 were
sponsored transactions. As of December 31, 2018, 167 separate
private equity sponsors were represented in Ares Capital’s
portfolio. Of the $2.7 billion in new commitments made during
the fourth quarter of 2018, 72% were in first lien senior secured
loans, 22% were in second lien senior secured loans, 3% were in
preferred equity, 2% were in other equity securities and 1% were in
the subordinated certificates of the SDLP. Of these
commitments, 97% were in floating rate debt securities, of which
99% contained interest rate floors and 1% 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 fourth quarter of 2018, significant new commitments
included:
- $608 million in first lien senior
secured revolving, delayed draw and term loans, second lien senior
secured delayed draw and term loans and equity in an owner and
operator of veterinary hospitals;
- $230 million in first lien senior
secured revolving, delayed draw and term loans in a manufacturer
and supplier for the power utility and automotive markets;
- $222 million in first and second lien
senior secured term loans and equity in a leading market research
company to the consumer packaged goods industry;
- $154 million in first lien senior
secured revolving and term loans and equity in a designer, marketer
and distributor of licensed and owned apparel;
- $123 million in first lien senior
secured revolving, delayed draw and term loans in an enterprise
management software provider;
- $110 million in first and second lien
senior secured term loans and equity in a customized packaging
solutions provider;
- $94 million in first lien senior
secured revolving and term loans in a marine preservation services
provider;
- $86 million in a first lien senior
secured revolving loan, second lien senior secured delayed draw and
term loans in a generic pharmaceuticals company;
- $81 million in first and second lien
senior secured term loans and equity in a specialized acrylic and
polycarbonate manufacturer;
- $75 million in first lien senior
secured revolving and term loans in a facilities management
services provider;
- $68 million in first lien senior
secured delayed draw and term loans and equity in an oil and gas
exploration and production company;
- $67 million in first lien senior
secured revolving, delayed draw and term loans and equity in a
dental consumer products manufacturer;
- $65 million in first lien senior
secured revolving and term loans in an automotive parts and repair
services retailer;
- $59 million in first lien senior
secured revolving and term loans in a provider of branded lifestyle
apparel;
- $56 million in first lien senior
secured revolving, delayed draw and term loans in an owner and
operator of gastrointestinal physician practices; and
- $51 million in first lien senior
secured revolving, delayed draw and term loans in a benefits broker
and outsourced workflow automation platform provider for
brokers.
Also in the fourth quarter of 2018, Ares Capital exited
approximately $1,021 million of investment commitments (including
exits of $61 million of commitments acquired as part of the
American Capital Acquisition). Of the total investment commitments
exited, 63% were first lien senior secured loans, 20% were second
lien senior secured loans, 12% were senior subordinated loans, 3%
were preferred equity securities, 1% were subordinated certificates
of the SDLP and 1% were other equity securities. Of the
approximately $1,021 million of exited investment commitments,
82% were floating rate, 10% were fixed rate, 4% were on non-accrual
status and 4% were non-interest bearing.
The fair value of Ares Capital’s portfolio investments at
December 31, 2018 was $12.4 billion, including $11.1 billion
in accruing debt and other income producing securities. As of
December 31, 2018, the total portfolio at fair value included
$0.7 billion of investments acquired in the American Capital
Acquisition. The total portfolio investments at fair value were
comprised of approximately 47% of first lien senior secured loans,
29% of second lien senior secured loans, 5% of subordinated
certificates of the SDLP (the proceeds of which were applied to
co-investments with Varagon and its clients to fund first lien
senior secured loans through the SDLP), 6% of senior subordinated
loans, 4% of preferred equity securities and 9% of other equity
securities. As of December 31, 2018, the weighted average
yield of debt and other income producing securities in the
portfolio at amortized cost and fair value was 10.2%
and 10.3%, respectively, the weighted average yield on total
investments in the portfolio at amortized cost and fair value was
9.0% and 9.3%, respectively, and 85% of the total investments at
fair value were in floating rate securities.
“Our strong fourth quarter results concluded a great year for
ARCC in which we increased annual core earnings 21% over last year,
generated record net realized gains, fully covered our dividends
from core earnings and grew book value per share for another year,”
said Kipp deVeer, Chief Executive Officer of Ares Capital. “With
the strength in our core earnings, the stability in our
non-accruals and rotation of the American Capital acquired
portfolio largely completed, we increased our Q1-19 quarterly
dividend to $0.40 per share and declared additional dividends
totaling $0.08 per share for 2019 to be paid evenly over the next
four quarters.”
“Going forward, we believe our modestly leveraged balance sheet
supports our strong financial position and enhances our ability to
invest opportunistically across varying market conditions,” said
Penni Roll, Chief Financial Officer.
PORTFOLIO QUALITY
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.
As of December 31, 2018 and December 31, 2017, the weighted
average grade of the investments in Ares Capital’s portfolio at
fair value was 3.0 and 3.1, respectively, and loans on non-accrual
status represented 2.5% and 3.1%, respectively, of total
investments at amortized cost (or 0.6% and 1.4%, respectively, at
fair value).
LIQUIDITY AND CAPITAL RESOURCES
In December 2018, Ares Capital and Ares Capital CP Funding
LLC (“Ares Capital CP”), a consolidated subsidiary of Ares Capital,
amended Ares Capital CP’s revolving funding facility (“the
Revolving Funding Facility”) to, among other things,
(a) extend the stated maturity date from January 3, 2022
to January 3, 2024; (b) extend the reinvestment period
from January 3, 2019 to January 3, 2022; (c) adjust
the interest rate from the previous spread of 2.15% over LIBOR to a
spread of 2.00% over LIBOR; and (d) adjust the ranges of the
unused portion of the Revolving Funding Facility under which
certain fees are paid.
As of December 31, 2018, Ares Capital had $296 million in
cash and cash equivalents and $5.3 billion in total aggregate
principal amount of debt outstanding ($5.2 billion at carrying
value). Subject to leverage, borrowing base and other restrictions,
Ares Capital had approximately $1.6 billion available for
additional borrowings under its existing credit facilities as of
December 31, 2018.
FOURTH QUARTER 2018 DIVIDEND PAID AND 2019 DECLARED
DIVIDENDS
On October 31, 2018, Ares Capital declared a fourth quarter
dividend of $0.39 per share for a total of approximately $166
million. The record date for this dividend was December 14,
2018 and the dividend was paid on December 28, 2018.
On February 12, 2019, Ares Capital declared a first quarter 2019
dividend of $0.40 per share payable on March 29, 2019 to
shareholders of record on March 15, 2019.
On February 12, 2019, Ares Capital declared an additional $0.08
per share of dividends, to be distributed in quarterly payments of
$0.02 per share during 2019. The first quarter 2019 additional
dividend of $0.02 per share will be payable on March 29, 2019 to
stockholders of record as of March 15, 2019. The second quarter
2019 additional dividend of $0.02 per share will be payable on June
28, 2019 to stockholders of record as of June 14, 2019. The third
quarter 2019 additional dividend of $0.02 per share will be payable
on September 30, 2019 to stockholders of record as of September 16,
2019. The fourth quarter 2019 additional dividend of $0.02 per
share will be payable on December 27, 2019 to stockholders of
record as of December 16, 2019. Payment of the additional June 28,
2019, September 30, 2019 and December 27, 2019 dividends are
subject to the satisfaction of certain Maryland law
requirements.
RECENT DEVELOPMENTS
In February 2019, Ares Capital’s Board of Directors authorized
an amendment to its stock repurchase program to (a) increase the
total authorization under the program from $300 million to $500
million and (b) extend the expiration date of the program from
February 28, 2019 to February 28, 2020. Under the stock repurchase
program, Ares Capital may repurchase up to $500 million in the
aggregate of its outstanding common stock in the open market at a
price per share that meets certain thresholds below its net asset
value per share, in accordance with the guidelines specified in
Rule 10b-18 of the Exchange Act. The timing, manner, price and
amount of any share repurchases will be determined by Ares Capital,
in its discretion, based upon the evaluation of economic and market
conditions, stock price, applicable legal and regulatory
requirements and other factors.
From January 1, 2019 through February 7, 2019, Ares
Capital made new investment commitments of approximately $623
million, of which $577 million were funded. Of these new
commitments, 45% were in first lien senior secured loans, 40% were
in second lien senior secured loans, 13% were in the subordinated
certificates of the SDLP and 2% were in preferred equity
securities. Of the approximately $623 million of new investment
commitments, 98% were floating rate and 2% fixed rate. The weighted
average yield of debt and other income producing securities funded
during the period at amortized cost was 10.0%. 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 January 1, 2019 through February 7, 2019, Ares
Capital exited approximately $469 million of investment
commitments. Of the total investment commitments, 74% were first
lien senior secured loans and 26% were second lien senior secured
loans. Of the approximately $469 million of exited investment
commitments, 100% were floating rate. The weighted average yield of
debt and other income producing securities exited or repaid during
the period at amortized cost was 9.0% and the weighted average
yield on total investments exited or repaid during the period at
amortized cost was 9.0%. On the approximately $469 million of
investment commitments exited from January 1, 2019 through
February 7, 2019, Ares Capital recognized total net realized
gains of approximately $2 million.
In addition, as of February 7, 2019, Ares Capital had an
investment backlog and pipeline of approximately $1,435 million and
$150 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.
WEBCAST / CONFERENCE CALL
Ares Capital will host a webcast/conference call on Tuesday,
February 12, 2019 at 10:00 a.m. (Eastern Time) to discuss
its quarter and year ended December 31, 2018 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 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 6180815 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 February 26, 2019 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 10127020. An
archived replay will also be available through February 26, 2019 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 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 Corporation (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 December 31, 2018
2017 ASSETS Total investments at fair value
(amortized cost of $12,754 and $11,905, respectively) $ 12,417 $
11,841 Cash and cash equivalents 296 316 Interest receivable 91 93
Receivable for open trades 12 1 Other assets 79 96
Total assets $ 12,895 $ 12,347
LIABILITIES
Debt $ 5,214 $ 4,854 Base management fees payable 45 44 Income
based fees payable 36 27 Capital gains incentive fees payable 112
79 Accounts payable and other liabilities 99 181 Interest and
facility fees payable 64 64 Payable for open trades 25 —
Total liabilities 5,595 5,249
STOCKHOLDERS’ EQUITY
Common stock, par value $0.001 per share,
600 common shares authorized; 426 and426 common shares issued and
outstanding, respectively
— — Capital in excess of par value 7,173 7,192 Accumulated
undistributed (overdistributed) earnings 127 (94 ) Total
stockholders’ equity 7,300 7,098 Total liabilities
and stockholders’ equity $ 12,895 $ 12,347
NET
ASSETS PER SHARE $ 17.12 $ 16.65
ARES CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENT OF OPERATIONS (in millions, except per share
data) For the Three Months Ended December
31, For the Years Ended December 31, 2018
2017 2018 2017 (unaudited)
(unaudited) INVESTMENT INCOME Interest income from
investments $ 263 $ 251 $ 1,041 $ 951 Capital structuring service
fees 47 32 143 105 Dividend income 26 18 97 76 Other income 9
6 56 28 Total investment income 345
307 1,337 1,160
EXPENSES
Interest and credit facility fees 60 59 240 225 Base management
fees 45 44 180 171 Income based fees 46 37 169 134 Capital gains
incentive fees (10 ) 18 33 41 Administrative fees 3 3 13 12
Professional fees and other costs related
to the AmericanCapital Acquisition
— 3 3 45 Other general and administrative 6 8 26
32
Total expenses
150 172 664 660 Waiver of income based fees (10 ) (10 ) (40 ) (30 )
Total expenses, net of waiver of income based fees 140 162
624 630 NET INVESTMENT INCOME BEFORE INCOME
TAXES 205 145 713 530 Income tax expense, including excise tax 2
5 19 19 NET INVESTMENT INCOME 203
140 694 511
REALIZED AND UNREALIZED GAINS (LOSSES)ON
INVESTMENTS, FOREIGN CURRENCY ANDOTHER TRANSACTIONS:
Net realized gains (losses)
31 (123 ) 419 24 Net unrealized gains (losses) (81 ) 215
(255 ) 136
Net realized and unrealized gains (losses)
oninvestments, foreign currency and other transactions
(50 ) 92 164 160
REALIZED LOSSES ON EXTINGUISHMENT
OFDEBT
— — — (4 )
NET INCREASE IN STOCKHOLDERS’
EQUITYRESULTING FROM OPERATIONS
$ 153 $ 232 $ 858 $ 667
BASIC AND DILUTED EARNINGS PER
COMMONSHARE
$ 0.36 $ 0.54 $ 2.01 $ 1.57
WEIGHTED AVERAGE SHARES OF COMMONSTOCK
OUTSTANDING - BASIC AND DILUTED
426 426 426 425
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 and years ended December 31, 2018 and
2017 are provided below.
For the Three Months Ended December 31,
For the Years Ended December
31,
2018 2017 2018 2017 Basic
and diluted Core EPS(1) $ 0.45 $ 0.38 $ 1.68 $ 1.39
Professional fees and other costs related
to the AmericanCapital Acquisition
— (0.01 ) — (0.09 ) Ares Reimbursement — — 0.03 — Net realized and
unrealized gains (losses) (0.12 ) 0.21 0.38 0.37
Capital gains incentive fees attributable
to net realized andunrealized gains and losses
0.03 (0.04 ) (0.08 ) (0.10 )
Income tax expense related to net realized
gains andlosses
— — — — Basic and diluted GAAP EPS $
0.36 $ 0.54 $ 2.01 $ 1.57
__________________________________________________
(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,
the Ares Reimbursement, 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. For more
information about the Ares Reimbursement, see Note 13 “Related
Party Transactions” in Part IV “Financial Statements” in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2018.
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INVESTOR RELATIONSAres Capital CorporationCarl G. Drake
or John Stilmar(888) 818-5298irarcc@aresmgmt.com
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