Ares Capital Corporation Announces September 30, 2024 Financial Results and Declares Fourth Quarter 2024 Dividend of $0.48 Per Share

OPERATING RESULTS

Q3-24⁽¹⁾

Q3-23⁽¹⁾

(dollar amounts in millions, except per share data)

Total
Amount

Per
Share

Total
Amount

Per
Share

GAAP net income per share(2)(3)

$

0.62

$

0.89

Core EPS(4)

$

0.58

$

0.59

Dividends declared and payable

$

0.48

$

0.48

Net investment income(2)

$

361

$

0.57

$

289

$

0.52

Net realized losses(2)

$

(24

)

$

(0.04

)

$

(76

)

$

(0.14

)

Net unrealized gains(2)

$

57

$

0.09

$

287

$

0.51

GAAP net income(2)(3)

$

394

$

0.62

$

500

$

0.89

As of

(dollar amounts in millions, except per share data)

September 30,
2024

December 31,
2023

Portfolio investments at fair value

$

25,918

$

22,874

Total assets

$

27,100

$

23,800

Stockholders' equity

$

12,773

$

11,201

Net assets per share

$

19.77

$

19.24

Debt/equity ratio

1.06x

1.07x

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

1.03x

1.02x

(1)

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

(2)

All per share amounts and weighted average shares outstanding are basic. The basic weighted average shares outstanding for the three months ended September 30, 2024 and 2023 were approximately 635 million and 562 million, respectively.

(3)

The basic and diluted weighted average shares outstanding for the three months ended September 30, 2024 was approximately 635 million shares. Ares Capital's diluted GAAP net income per share for the three months ended September 30, 2023 was $0.87. The weighted average shares outstanding for the purpose of calculating the diluted GAAP net income per share for the three months ended September 30, 2023 was approximately 582 million shares, which includes approximately 20 million shares related to the assumed conversion of Ares Capital's then outstanding $403 million in aggregate principal amount of unsecured convertible notes (the "2024 Convertible Notes").

(4)

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

(5)

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

(dollar amounts in millions)

Q3-24

Q3-23

Portfolio Activity During the Period:

Gross commitments

$

3,919

$

1,598

Exits of commitments

$

2,598

$

1,280

Portfolio Information:

As of

September 30,
2024

December 31,
2023

Portfolio investments at fair value

$

25,918

$

22,874

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

$

23,346

$

20,375

Number of portfolio company investments

535

505

Percentage of floating rate securities at fair value(7)

69

%

69

%

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

At amortized cost

11.7

%

12.5

%

At fair value

11.7

%

12.5

%

Weighted average yields on total investments(9):

At amortized cost

10.7

%

11.3

%

At fair value

10.5

%

11.2

%

Asset class percentage at fair value:

First lien senior secured loans

53

%

44

%

Second lien senior secured loans

11

%

16

%

Subordinated certificates of the SDLP

5

%

6

%

Senior subordinated loans

5

%

5

%

Preferred equity

10

%

11

%

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

7

%

9

%

Other equity

9

%

9

%

(6)

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

(7)

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

(8)

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

(9)

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

(10)

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

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in millions, except per share data)

As of

September 30,
2024

December 31,
2023

ASSETS

(unaudited)

Total investments at fair value (amortized cost of $25,573 and $22,668, respectively)

$

25,918

$

22,874

Cash and cash equivalents

486

535

Restricted cash

138

29

Interest receivable

269

245

Receivable for open trades

113

16

Other assets

169

91

Operating lease right-of-use asset

7

10

Total assets

$

27,100

$

23,800

LIABILITIES

Debt

$

13,500

$

11,884

Base management fee payable

96

84

Income based fee payable

92

90

Capital gains incentive fee payable

106

88

Interest and facility fees payable

119

132

Payable to participants

38

29

Payable for open trades

45

7

Accounts payable and other liabilities

284

234

Secured borrowings

34

34

Operating lease liabilities

13

17

Total liabilities

14,327

12,599

STOCKHOLDERS' EQUITY

Common stock, par value $0.001 per share, 1,000 common shares authorized; 646 and 582 common shares issued and outstanding, respectively

1

1

Capital in excess of par value

12,044

10,738

Accumulated undistributed earnings

728

462

Total stockholders' equity

12,773

11,201

Total liabilities and stockholders' equity

$

27,100

$

23,800

NET ASSETS PER SHARE

$

19.77

$

19.24

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,

2024

2023

2024

2023

INVESTMENT INCOME

Interest income from investments

$

568

$

495

$

1,620

$

1,441

Capital structuring service fees

38

20

124

51

Dividend income

151

128

441

372

Other income

18

12

46

43

Total investment income

775

655

2,231

1,907

EXPENSES

Interest and credit facility fees

195

145

528

425

Base management fee

96

81

274

239

Income based fee

92

83

273

238

Capital gains incentive fee

7

42

19

40

Administrative fees

3

4

9

10

Other general and administrative

9

8

24

23

Total expenses

402

363

1,127

975

NET INVESTMENT INCOME BEFORE INCOME TAXES

373

292

1,104

932

Income tax expense, including excise tax

12

3

60

11

NET INVESTMENT INCOME

361

289

1,044

921

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

Net realized losses

(24

)

(76

)

(30

)

(207

)

Net unrealized gains

57

287

165

395

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

33

211

135

188

REALIZED LOSS ON EXTINGUISHMENT OF DEBT

-

-

(14

)

-

NET INCREASE IN STOCKHOLDERS' EQUITY RESULTING FROM OPERATIONS

$

394

$

500

$

1,165

$

1,109

NET INCOME PER COMMON SHARE:

Basic

$

0.62

$

0.89

$

1.90

$

2.03

Diluted

$

0.62

$

0.87

$

1.90

$

1.98

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:

Basic

635

562

614

548

Diluted

635

582

614

568

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

2024

2023

2024

2023

(unaudited)

(unaudited)

(unaudited)

(unaudited)

GAAP net income per share(1)(2)

$

0.62

$

0.89

$

1.90

$

2.03

Adjustments:

Net realized and unrealized gains(1)

(0.05

)

(0.37

)

(0.20

)

(0.35

)

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

0.01

0.07

0.03

0.08

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

-

-

0.05

(0.02

)

Core EPS(3)

$

0.58

$

0.59

$

1.78

$

1.74

(1)

All per share amounts and weighted average shares outstanding are basic. The basic weighted average shares outstanding for the three and nine months ended September 30, 2024 were approximately 635 million and 614 million, respectively, and approximately 562 million and 548 million, respectively, for the comparable periods in 2023.

(2)

The basic and diluted weighted average shares outstanding for the three and nine months ended September 30, 2024 was approximately 635 million shares and 614 million shares, respectively. Ares Capital's diluted GAAP net income per share for the three and nine months ended September 30, 2023 was $0.87 and $1.98, respectively. The weighted average shares outstanding for the purpose of calculating the diluted GAAP net income per share for the three and nine months ended September 30, 2023 were approximately 582 million shares and 568 million shares, respectively, which includes approximately 20 million shares for each period related to the assumed conversion of the then outstanding 2024 Convertible Notes.

(3)

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