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Ares Capital Corporation Declares Second Quarter 2016 Dividend of $0.38 Per Share and Announces March 31, 2016 Financial Results

NEW YORK, May 04, 2016 (BUSINESS WIRE) -- Ares Capital Corporation (“Ares Capital”) ARCC, -0.66% announced that its Board of Directors has declared a second quarter dividend of $0.38 per share, payable on June 30, 2016 to stockholders of record as of June 15, 2016.

MARCH 31, 2016 FINANCIAL RESULTS

Ares Capital also announced financial results for its first quarter ended March 31, 2016.

HIGHLIGHTS

Financial

Q1-16 Q1-15
(dollar amounts in millions, except per share data)

Total
Amount

Per
Share(1)

Total
Amount

Per
Share(1)

Core EPS(2) $ 0.37 $ 0.37
Net investment income $ 112.7 $ 0.36 $ 121.7 $ 0.39
Net realized gains $ 27.3 $ 0.09 $ 27.9 $ 0.09
Net unrealized losses $ (8.5 ) $ (0.03 ) $ (49.0 ) $ (0.16 )
GAAP net income $ 131.5 $ 0.42 $ 100.6 $ 0.32
Dividends declared and payable $ 0.38 $ 0.43 (3 )
As of
(dollar amounts in millions, except per share data) March 31, 2016 March 31, 2015 December 31, 2015
Portfolio investments at fair value $ 9,072.1 $ 8,481.9 $ 9,055.5
Total assets $ 9,365.5 $ 8,878.7 $ 9,506.8
Stockholders’ equity

$

5,179.9 $ 5,255.4 $ 5,173.3
Net assets per share

$

16.50 $ 16.71 $ 16.46

___________________________________

(1) All per share amounts are basic and diluted.
(2) Basic and diluted Core EPS is a non-GAAP financial measure. Core EPS is the net per share increase (decrease) in stockholders’ equity resulting from operations less realized and unrealized gains and losses, any capital gains incentive fees attributable to such net realized and unrealized gains and losses and any income taxes related to such 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.
(3) Includes an additional dividend of $0.05 per share paid in the first quarter ended March 31, 2015.

Portfolio Activity

(dollar amounts in millions) Q1-16 Q1-15 Q4-15
Portfolio Activity During the Period:
Gross commitments $ 470.6 $ 500.2 $ 972.2
Exits of commitments $ 484.3 $ 1,123.3 $ 569.1
Portfolio as of the End of the Period:
Number of portfolio company investments 220 201 218
Weighted average yield of debt and other income producing securities(1):
At amortized cost 10.1 % 10.5 % 10.1 %
At fair value 10.3 % 10.5 % 10.3 %
Weighted average yield on total investments(2):
At amortized cost 9.2 % 9.6 % 9.1 %
At fair value 9.3 % 9.5 % 9.2 %

________________________________

(1) 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) total accruing debt and other income producing securities at amortized cost or at fair value, as applicable.
(2) 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) total investments at amortized cost or at fair value, as applicable.

FIRST QUARTER 2016 OPERATING RESULTS

For the first quarter of 2016, Ares Capital reported GAAP net income of $131.5 million or $0.42 per share (basic and diluted), Core EPS(2) of $0.37 per share (basic and diluted), net investment income of $112.7 million, or $0.36 per share (basic and diluted), and net realized and unrealized gains of $18.8 million or $0.06 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 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 March 31, 2016, total assets were $9.4 billion, stockholders’ equity was $5.2 billion and net asset value per share was $16.50.

In the first quarter of 2016, Ares Capital made $470.6 million in new commitments, including commitments to nine new portfolio companies and 10 existing portfolio companies. Of these new commitments, all were sponsored transactions. As of March 31, 2016, 155 separate private equity sponsors were represented in Ares Capital’s portfolio. Of the $470.6 million in new commitments made during the first quarter of 2016, 53% were in first lien senior secured loans, 33% were in second lien senior secured loans, 13% were in senior subordinated debt and 1% were in preferred equity securities. Of these commitments, 81% were in floating rate debt securities, of which 100% 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 first quarter of 2016, significant new commitments included:

  • $100 million in a second lien senior secured term loan of a revenue cycle management provider to the healthcare industry;
  • $75 million in first lien senior secured revolving and term loans of an educational travel provider;
  • $59 million in a senior subordinated loan of a gas turbine power generation facilities operator;
  • $54 million in a second lien senior secured term loan of a distributor of emergency medical service and respiratory products;
  • $40 million in first lien senior secured delayed draw and term loans of a provider of repairs, refurbishments and services to the broader industrial end user markets;
  • $36 million in first lien senior secured delayed draw and term loans and equity of a payment services software provider to faith-based institutions; and
  • $28 million in a first lien senior secured term loan and equity of a dental services provider.

Also in the first quarter of 2016, Ares Capital exited approximately $484.3 million of investment commitments. Of these investment commitments, 59% were first lien senior secured loans, 33% were second lien senior secured loans, 6% were senior subordinated debt and 2% were other equity securities. Of the approximately $484.3 million of exited investment commitments, 90% were floating rate, 7% were fixed rate, 2% were non-interest bearing and 1% were on non-accrual status.

The fair value of Ares Capital’s portfolio investments at March 31, 2016 was $9.1 billion, including $8.2 billion in accruing debt and other income producing securities. The total portfolio investments at fair value were comprised of approximately 29% of first lien senior secured loans, 31% of second lien senior secured loans, 21% of subordinated certificates of the Senior Secured Loan Program (the “SSLP”) (the proceeds of which were applied to co-investments with GE in first lien senior secured loans through the SSLP), 8% of senior subordinated debt securities, 4% of preferred equity securities and 7% of other equity securities. As of March 31, 2016, the weighted average yield of debt and other income producing securities in the portfolio at fair value was 10.3%(3) (10.1% at amortized cost(4)), the weighted average yield on total investments in the portfolio at fair value was 9.3%(5) (9.2% at amortized cost(6)), and 80% of the total investments at fair value were in floating rate securities.

“We are very pleased with another solid quarter of financial results at ARCC,” said Ares Capital Chief Executive Officer, Kipp deVeer. “The portfolio continues to perform well — we saw an increase...


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