Ares Capital (ARCC) Q3 2024 earnings summary

Executive summary

• Reported Q3 2024 GAAP net income per share of $0.62 and Core EPS of $0.58, with record net asset value per share of $19.77 and portfolio at fair value of $25.9 billion across 535 companies.

• Net investment income for Q3 2024 was $361 million, up from $289 million in Q3 2023, driven by portfolio growth and higher rates.

• Declared a Q4 2024 dividend of $0.48 per share, consistent with prior quarters and payable December 30, 2024.

• Celebrated 20 years with a cumulative net realized loss rate of 0% and a 13% asset-level realized gross IRR over nearly 4,000 investments.

• Leadership changes include Jim Miller as Co-President and Mitch Goldstein joining the board as Co-Chairman.

Financial highlights

• Q3 2024 investment income was $775 million, up from $655 million in Q3 2023 and $755 million in Q2 2024.

• Net realized losses for Q3 2024 were $24 million, with net unrealized gains of $57 million.

• For the nine months ended September 30, 2024, GAAP net income per share was $1.90 and Core EPS was $1.78.

• Dividends declared and payable for the nine months ended September 30, 2024 totaled $1.44 per share.

• Portfolio at fair value grew to $25.9 billion as of September 30, 2024, from $22.9 billion at year-end 2023.

Outlook and guidance

• Management expects a more active deal environment in 2025, with increased M&A and sponsor activity as rates stabilize.

• Investment backlog as of October 24, 2024 was approximately $2.8 billion, with $408 million in new commitments made post-quarter, primarily in first lien senior secured loans.

• Weighted average yield on new debt and income-producing securities funded post-quarter was 10.8%.

• Management confident in maintaining the current dividend level, supported by strong core earnings and spillover income.

• Positive macroeconomic environment with stable credit markets and easing inflation.