Q3 2024 Ares Capital Corp Earnings Call Transcript
Key Points
- Ares Capital Corp (ARCC) reported strong core earnings of $0.58 per share and a record NAV per share of $19.77 for the third quarter.
- The company saw a significant increase in M&A activity, particularly in sponsor-backed transactions, positioning ARCC well in the market.
- ARCC's portfolio remains healthy with nonaccrual rates declining quarter-over-quarter and remaining below industry averages.
- The company has been upgraded by Moody's to a higher investment-grade notch, solidifying its position as the highest-rated company in its sector by all three major rating agencies.
- ARCC declared a fourth-quarter dividend of $0.48 per share, maintaining a stable or increasing dividend for over 61 consecutive quarters.
- GAAP net income per share decreased to $0.52 for the third quarter of 2024 from $0.89 in the third quarter of 2023.
- The weighted average yield on debt and other income-producing securities decreased to 11.7% from 12.2% in the previous quarter.
- There is ongoing spread compression in the market, which could impact future returns.
- Interest and credit facility fees increased due to higher leverage used to fund portfolio growth.
- The company's second lien exposure has been significantly reduced, which may indicate a shift in market dynamics or strategy.
Thank you. Let me start with some important reminders. Comments during the course of this conference call and webcast and accompanying documents contain forward-looking statements and are subject to risks and uncertainties. The company's actual results could differ materially from those expressed in such forward-looking statements for any reason, including those listed in its SEC filings. Ares Capital Corporation assumes no obligation to update any such forward-looking statements. Please also note that past performance or market information is not a guarantee of future results.
During this conference call, the company may discuss certain non-GAAP measures as defined by SEC Regulation G, such as core earnings per share or core EPS. The company believes that core EPS provides useful information to investors regarding financial performance because it's one method the company uses to measure its financial condition and results of operation. A reconciliation of GAAP net income per share of the most
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