On July 30, 2024, Ares Capital Corp (ARCC, Financial) released its 8-K filing detailing its financial results for the second quarter ended June 30, 2024. Ares Capital Corp is a United States-based closed-ended specialty finance company focused on generating both current income and capital appreciation through debt and equity investments, primarily in U.S. middle-market companies.
Performance Overview
Ares Capital Corp reported a GAAP net income per share of $0.52 for Q2 2024, falling short of the analyst estimate of $0.58. However, the company's core EPS, a non-GAAP measure, came in at $0.61, surpassing the previous year's $0.58. The company declared a third-quarter dividend of $0.48 per share, consistent with the previous quarter.
Financial Achievements
Despite the earnings miss, Ares Capital Corp achieved significant milestones. The company's net investment income rose to $358 million, or $0.58 per share, compared to $314 million, or $0.57 per share, in the same period last year. This growth was driven by increased investment activity and strong credit fundamentals.
"We reported another strong quarter with solid year-over-year growth in both our Core EPS and net asset value per share," said Kipp deVeer, Chief Executive Officer of Ares Capital.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| GAAP Net Income per Share | $0.52 | $0.61 |
| Core EPS | $0.61 | $0.58 |
| Net Investment Income | $358 million | $314 million |
| Net Realized Gains (Losses) | $12 million | $(81) million |
| Net Unrealized (Losses) Gains | $(48) million | $98 million |
Balance Sheet and Cash Flow
As of June 30, 2024, Ares Capital Corp's total assets stood at $26.1 billion, up from $23.8 billion at the end of 2023. The company's stockholders' equity increased to $12.4 billion from $11.2 billion. The debt-to-equity ratio remained stable at 1.06x, indicating a well-managed balance sheet.
Investment Activity
During Q2 2024, Ares Capital Corp made new investment commitments of approximately $3.9 billion, significantly higher than the $1.2 billion in Q2 2023. The company exited commitments worth $1.4 billion, compared to $1.1 billion in the same period last year. The portfolio investments at fair value increased to $24.97 billion from $22.87 billion at the end of 2023.
Liquidity and Capital Resources
As of June 30, 2024, Ares Capital Corp had $601 million in cash and cash equivalents and $13.0 billion in total aggregate principal amount of debt outstanding. The company also had approximately $4.5 billion available for additional borrowings under its existing credit facilities.
"With over $5 billion of available liquidity and a net debt to equity ratio of approximately 1.0x, our balance sheet continues to support our ability to invest in the compelling opportunities we are seeing," said Scott Lem, Chief Financial Officer of Ares Capital.
Conclusion
Ares Capital Corp's Q2 2024 earnings report highlights the company's robust investment activity and strong financial position, despite missing the EPS estimate. The consistent dividend declaration and solid balance sheet underscore the company's commitment to delivering value to its shareholders.
For more detailed insights, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from Ares Capital Corp for further details.
