ARCC - Earnings call transcript Q2 2024 | Ares Capital Corporation

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Operator

Good morning. Welcome to Ares Capital Corporation's Second Quarter June 30, 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded on Tuesday, July 30, 2024. I will now turn the call over to Mr. John Stilmar, partner of Ares' Public Markets Investor Relations. Please go ahead.

John Stilmar

and start much, reminders. some very you let with me important Thank statements to made this results such the statements its well forward-looking of the could in accompanying those listed for are call contain Comments those course forward-looking as differ conference materially during expressed [indiscernible] and risks uncertainties. The and from webcast documents any filings. and actual including subject in SEC as reason, no assumes obligation to such any statements. Corporation update forward-looking Capital Ares information note is a that future past also market results. or Please of not performance guarantee

this call, performance measure measures to per provides most EPS share, be per company EPS reconciliation condition Regulation uses method it results because and as During company conference discuss measure operations. A The the found the income certain this financial the core is slide earnings as X financial G, of useful core the net company GAAP presentation its financial non-GAAP information core for share may GAAP EPS. that SEC or accompanying call. for can core in defined investors by comparable to believes the directly such regarding of

to DeVeer independently the respect website. relating website. I'd to with Kip to Ares accordingly, And verified. over Executive Form like the been information. turn sources company's on are this In found third-party in or filed XXXX company presentation, and also addition, at may page available the be to Corporation's the the second Mr. Capital in morning company's Officer. XX-Q on not warranty Kip? quarter information can presentation conference information on Certain the including Investor be Earnings XXXX, quarter no with the of has SEC section of Aries release Corporation's Resources portfolio the the Presentation earnings reconciliation accompanying slide clicking discussed companies, our call from these The Capital now by on was home and makes Form of this representation company's also link website June X-K. XX, the derived second and measures call Chief release www.arescapitalcorp.com on earnings found earnings this

Robert DeVeer

Hello, environment Goldstein our Schnabel; for Operating our thanks Kort earnings our here Mitch Officer, of call and by Scott team. I'd results, Co-Presidents, the John. start members we This and some joining Chief call our with today. morning, market. earnings of current & of to with quarter Jana Lem, per Chief quarter another that reported like share. economic we'll strong I'm Officer, Thanks, everyone, the second and highlighting thoughts and $X.XX other on follow Financial management Markowicz, the the our quarter

believe of environment. We and provided well-established is dividend. reported quarter, our healthy and an per of and we we share from were core results this prior record performance, X% increased benefits year-over-year, from investment $XX.XX up per a platform driven the quarter We which continue direct in significant environment, investing NAV the acceleration active year. activity in attractive healthy Our of the X% a more credit prior by earnings These continued X% lending. a transaction and to quarterly see scale share

represent private most part as we companies lenders saw acceleration Against continued we observed in conjunction our the a equity this the a year, activity sponsor past billion Ares NAV the backdrop, of portfolio sponsors seeking the BDCs to with managed underscoring with group generated have current solutions growth best among In market its over distributions deal meaningful growth particularly saw and quarter. fund in of amongst market. to direct for of Over meaningful clear during in in lending peer a flexible Capital the during of is the the externally active support importance solutions work improving of transactions and seeking quarter, their capitalization. Throughout this growth capital second XXXX, are capital quarter market, exit investments market from buyout flow the more aging $X as environment we of increase second healthy companies they to direct vintages. leverage and

new Specifically, we $XXX resulting compared reviewed to in estimated XX% quarterly the more volume billion transactions reviewed. an in quarter, prior total deal

and ago, same contributor For $X.X key selectivity has relationships broader Many highly quarter on quarter. our long-standing some this selection favorable. market our market, that more long-term we to competition we which originated threefold And from always competitive we believe say attractive. have the better operating amount the transaction move driving next exceeded consistent quarter in year to transaction terms the to been our we are a know a and for the our performance. loan the volume in are when credit deep to strong context, believe no the in you philosophy characteristics is increased remained that second not a put origination deal rate a the if in Despite the our billion although reported believe completed need of to overall investments out-originate mid-single institutional for in and originations position us digits. We

leverage X higher the originated second originations unit in the value below return our view we over of all-in recent environment, levels average the the rate the which than nearly average. approximately as current of yield quarter loan X-year weighted of risk-adjusted our was below XX% per yield had measure X leverage, years. Furthermore, XX% Specifically, to a weighted X.X of average XX%, past and turn

Moving on.

Our perform portfolio also environment. well, the companies and adjusted higher well the to have to rate continues base

averages. levels well quarter-over-quarter declined and Our nonaccrual at industry below rates remain

and growth addition, of which XX% The double names X the LTM quarter. The weighted has the are improving which quarter, companies years. performance risk-rated slightly of coverage and to to fair first underperformers the accelerate for this we've loans, rate and the watch our attractive EBITDA see of capital now liquid of year EBITDA also are typically also list In continued companies us growth from of markets now X capital declined debt the portfolio overall environment interest our roughly value our enhance our ratios in X third a pickup impact by our consecutive We portfolio ago. to quarter. in reached duration from average in reaching level is driving LTM the portfolio forms the current leverage committed lowest stable portfolio The declining extending the seen portfolio financing company facilities. accessing levels, company the and organic base positive allowed of

over further discuss more industry. With quarter, in we that, on some during at Scott details provide to on accessed both our unsecured secured the funding further call financial As turn me and our some balance that we Scott best will are let amongst levels markets and the results the believe thoughts to the sheet.

Scott Lem

Kipp. Thanks,

and income and balance of our quarter for Let quarter our income the me GAAP per during XXXX prior to walk $X.XX $X.XX $X.XX second XXXX. capital in position. our reported in compared the of the before took the we statement second quarter to share we actions of through net This enhance discussing quarter sheet morning, the

$X.XX reported to core earnings per second share $X.XX $X.XX and XXXX. also quarter XXXX quarter of prior We of quarter compared the second the for in in the of

income more structuring primarily XXXX. Our over in the investment the in fees first level since fees first than net by resulting the of increased driven the The doubled X% was investment also structuring reaching fourth due the quarter increased quarter and Interest from their since quarter higher of XXXX by income interest portfolio growth. income. quarter to highest activity,

of a of interest the portion leverage higher our quarter the our fees terms fund during facility expenses, in consistent to In increase growth. our was credit and with our portfolio

quarter. generated taxes, very you was our uptick capital This capital nice realized netting may seen the with gains investment overall return $XXX out million. a largely gain from the our in still exit notable of during sizable of the Hillstone. Even by driven a in we investment with Lastly, have tax after expense over net these taxes gains realized on associated gain a our

total quarter. end portfolio slightly at was a XX, securities March value from XX.X% to the XX.X% ago. which at Our weighted up was of first same other down debt year equal and XX.X% yield the on was quarter The and the at at average the amortized the $XX from the at costs period June end from income-producing of billion fair $XX at our billion, XX

weighted at slightly remained a costs amortized at XX% XX.X%, For steady yield a from up investments average on total year total ago.

per Our stockholders equity another record $XX.X stated. $XX.XX for ended high share, us, the Kipp as or billion quarter at

and achieved advantage sure conditions of to Since notes In amendment very of quarter. of we BNP of investment drawn and rate making points. In years, basis by rate XXX which extension revolving including second our in to industry-leading X terms, took recent of X.XX%. the market what points. These benefits a terms timing spread with our earnings have revolving we on-balance long the capitalization and liquidity, X of of of coupon facility highly we we million total, such floating remain we XXX issuance, on we able $XXX and weighted this maturity environment, rate funding in securitization overall XX extended unsecured busy been years, to our we to to favorable can the increasing reducing our facility rate supporting it SOFR to $XXX issuances the swap both we our average we a call, and most facility X-year at full floating stated a the Similar points period the higher our basis in spread million other place took and XXX timed issued the terms. believe and billion that Post and drive the the last notes during and build first the facility issuance extending the continue are $X.X credit recent transactions continue opportunities. from achieved sheet resulting borrowing our this to swap upon and the our month basis by of floating favorable the quarter end size end, spread earlier for obligations amended in debt reduce X respectively,

total discussed cash including and nearly for overall $X.X liquidity remains available earlier. activity strong the Our pro forma position available liquidity, billion of with post-quarter

net the a believe ratio investing and debt-to-equity ended to our positions well significant our X.XXx. portfolio We also active with us of environment. of amount the continue in second remain We cash current powder available company dry quarter commitments supporting

year quarterly per XX ARCC's on payable quarter Moving record September of consecutive on We third XXXX of the This dividend This on share. stable consistent $X.XX to increasing a September marks XXth second is or dividends. dividend dividend. and to is dividend. XX, regular our stockholders of with quarter took XXXX XXXX

In the we XXXX is level we XXXX. our with or per taxable approximately ended This stockholders turn current our and terms now share visibility investment to to we currently for that quarterly dividend, $XXX our over call $X.XX Xx stability estimate to further which Kort than over to in distribution million through provide more activities. income [indiscernible] regular dividend. I of our walk helps spillover believe estimates will

Kort Schnabel

our spend our our I quarter, approximately investment now activity, and team commitments, more a providing expanding second the Thanks, our of Scott. same activity, post-quarter-end our billion second last I'm conclude deployment then on with and update details the new investment performance and the last to pipeline. In portfolio originated an our minutes from meaningfully quarter. positioning going on for quarter few backlog period $X.X year. from will

new $X.X borrowers increasingly a us as new our as lender. Ares selecting their and set with are billion financing of consolidating our relationships Importantly, are quarterly commitments net their record existing borrowers

base year we believe our significant better of of where an existing provides our performance. growing our last incumbent differentiated risk over believe have to lending reduce and further credit borrowers, can underwriting drive of an XXX company, opportunities investing knowledge the By XX% installed in portfolio continue We a for we we and large companies, company. relationship increase

and in continue existing growth to to over to long-term their these as market consolidate the provide believe share favor our gains borrowers of support our advantages those commitments companies. plans. were their who flexibility total We as the are can into that scale borrowers us. relationships driving portfolio the existing business lean lending for quarter of We we of XX% in

existing to financings trend compared quarter, example previous our the those our investments companies. overall share of to we this X the share same of top companies in our As provided portfolio to across XX doubled

relationships. During second borrower quarter, continued new the we also add to

portfolio with the active buyout new prior the across value, quarter, of among the well median from Reflecting different new we the increased quarter-over-quarter and million. our EBITDA by rebound focus median quarter growing total in portfolio our an very the quarter portfolio, as and million XX% on borrowers. The driven the originate in broader $XX the borrowers quarter and activity year. EBITDA reflecting fair into grew to was companies prior our market second from ended investments Our XX% below middle $XX slightly activity smaller approximately the across midsized asset our portfolio as companies these ability of at covering on classes. which X% billion all $XX

now grade of state overall level. our the me the on respect portfolio X.X weighted unchanged quarter's you portfolio. to Let from average credit prior performance, our of update With our remained

Our at the quarter the quarter. ended points XX prior nonaccruals cost lower X.X%, than at basis

Our the and average the current since X.X% below our same financial the over historical nonaccrual level at period. crisis of well cost BDC great average X.X% time remains

value with of which X.X% of remained us in portfolio, and rate Further protection the quarter, believe underpinning levels downside well nonaccrual and second value consistent average at provides Our end which the continues for be at company. below the last strong to the to XX% was weighted fair historical we strength loans. the for with our portfolio quarter at loan our our

with remain when companies exposure based these than differentiation been has total of selective currently over annual higher credit our not point driver extending An additional compared to performance. in of our in fair EBITDA of to revenue addition, million to X% recurring portfolio portfolio $XX that as had similar In of with million companies of at highly million a even value. loans portfolio as we less EBITDA. $XX company is is or our to size rates $XXX growth on the Companies

our are results. what portfolio in the process ability Our drive industries our we attractive underwriting helps management to and companies best and believe select

highly the on We diversification benefits also of that the strength our credit to adds portfolio. focused remain

is size value. X.X% hold average at Our only fair

believe investment to than the our largest the an critical XX% from a just X% for tool individual totaled diversified Excluding the at and level Hill impact the that reduces and risk Ivy XX management the in single of value. negative our accounts fair portfolio are this on overall This the top company. fair single at diversification portfolio investments any of believe we meaningfully We at event in credit SDLP, which value us own, of more portfolio well differentiates their investments is no market.

start XX, commitments We X gains. commitments, net the XXXX, million $XXX million, repaid Finally, resulted investment July of From third made had we've active $XXX earning $X on an were $XXX quarter. exited funded. to we investment in of which July totaling realized were million to of which new or us million

pipeline of July at stood and As our $X 'XX, roughly billion. backlog

investments Our we will and contains some and closing for to call are subject remarks. investments backlog over a Kipp that approvals the to of now sell may documentation may closing. I not these or turn portion post back close

Robert DeVeer

our being standards, ability invest leverage, healthy of deal are the selective With a capital market to to flow. and possible, underpinned our squarely set we Thanks scale that investing rigorous In believe differentiated rate as a low results origination the an our highly to deliver believe this quarter a varying opportunity year. continue more many wide portfolio by today's negotiating maintaining well structure, companies, strong financial we In we the Kort. our on to for interest as credit are results around and throughout leveraging attractive earnings durable advantages proven investors. appropriate closing, conditions our documentation through are historically positioned we see growing drive lot, environment, across underlying competitive and focused

appreciate to we you speaking quarter. we today, with questions. we us can open forward that, for joining line and always, next As operator, you the With look

Operator

JPMorgan. [Operator Melissa And we question Wedel do from first have with Instructions] our

Melissa Wedel

quarter. Look, anticipated in already. that really there's was the I few of here You strong think a lot them a

terms wondering it? that the a quarter, and nonaccrual. like One clients you during in certainly think come added saw resolving pretty our the that situation sort We there, ongoing there's quarter public looks share if to anything the about during was Pluralsight. it how can up from I'm markdown us you how of you think with of the that and with the has things of situation about mark it you

Robert DeVeer

say Sure. were -- what's going surprised reported accurate. of what most The to the press is about I'd so a in actually is question not Kevin. look, Thanks, I'm Melissa. ask been people Pluralsight.

just think going indicative Equity there. for reasonably it's last work the is unfortunately, that's see article who I which Vista very put for them. did to important be of is, to not well out was The what's happening So I sponsor, Partners, there, a I'll situation. that out

on they're . the significant the the not a facility, agent handing lenders. We're of So company over [indiscernible] to group

to company. the the put reduce in working take of place with sort of control there restructuring we're debt group where a will lenders and So obviously

it's of But So going taken history. that's lot on that's for reason, pretty first our on. simple. what's happened that's some It's in the But time press. a

Melissa Wedel

think a I quarter, appreciate Okay. your got definitely we No, questions and to than share our can about you're willingness whatever -- I the more -- you during I it clients there.

helpful. I think it's

Robert DeVeer

frankly, in think, speculation frankly wasn't situation the I very of based that lot on conversation cited a in lot accurate. of a

So...

Melissa Wedel

comments right. could All on are seen It it certainly, a it's which like forward the lot sounded clarification. the follow M&A. carried X up sounded the of and driven the It of Is a think activity by I in decent as you amount seeing the few well? years. you in quarter. the about pickup [indiscernible] the like be If during to don't you we've something backlog, I of were last also fair activity strong strong a characterization? seems in activity real seeing Or sponsor-driven investment made appreciate that I that

Robert DeVeer

activity. seeing not a We're Yes. tremendous refi of amount

So you're right.

a under lot to seeing activity. there's capital read better I accurate actually is direction LPs. that particular, actually in as of press probably of in you sponsors or return The we're M&A reasonably think it's pressure

And to M&A then and multiples transactions sponsors rates those had reasonably characterize seen and what are just M&A ground. been substantial of in during the this amount high, a increase that's we on It's the lower ones done in in materially know expected hard that we're that time we've actually my are NAV for on reasonable to we with as higher deals best in. presume obviously, in new get the that of estimation up has that a there's actually getting done that are companies view seeing expected in based there, to and I'd we companies the But transactions. multiples. getting all a as most rates. be participate actually would there are of decrease valuations valuation. think Interestingly, portfolios attractive that at realizations on So they're reset unrealized some the want that out best I with We'd at we occur least holding

Kort Schnabel

seen end our about the the across add, just And across different in we've think as more large obviously, I'll transactions across all months seen activity the prepared thing that we of Kort, see sized we well. benefiting smaller during the this start really as XX M&A origination, classes. talk as the market XX the or all I in some really middle real last we brand the is a always deals period, as now well rebound large I one to we've as for mentioned showing environment the think pickup companies. all dislocation it's market, these is that well now up And asset middle but different from we're remarks but

Operator

Fargo Finian next question O'Shea with from Securities. And our Wells we have

Finian O'Shea

were of new of I from what color Kort which at is big investments, are the Like some market doing a large cap going $XX doing the attractive are you've that something that? core of years? you I that well? that that how is up add middle in drop Can course, to think, that large peers terms Is Is something in So -- a recent -- market? into and end, as your million range. think the comments the been function in also less

Kort Schnabel

originating just business don't think talking to along Thanks, all from of of of There's these which market what we the middle I them. gain be the the invested the us of lots across question. they're the it's and ordinary and I rebound was strategic companies for Yes. all More lines companies. sort out is of highly so that then in Fin. Great sizes different stripes. small, grow same us and of can it's about, different smaller And sized anything And incumbency just with market. great end plans. the support get their companies And to for when

So anything it's I unusual. don't think

think environment been just this we've last XX a I it's for from the operating or XX change in months.

your X of of different see advantages. companies. competitors, a size than question, in And across the companies As that is core I more large-sized set if think aren't sized we to our the medium we last There in see any, think ranges. and different compete competitors part all that smaller differentiating the many I of

in and those So markets, it's set come a markets competitive different all they different as well. with of -- competitors dynamics those

what we pivot is were see attractive be fortunate the giving us market to to up return. down and So risk-adjusted able on we where based and

Finian O'Shea

Okay. sample on yields where post-quarter the sort that a of that function And we is new a more down of a on are is of deployments? now XX.X% touch Or commitment follow-up size? small -- to

Robert DeVeer

think right? there's spread were They've reality compression. tightened us little wide. The Spreads much, modest been a bit. that surprise is didn't I

right? great, base is people lower here they come still, So I in is think, performance the view think that response will are. the in. what's, defaults, to economic in What's extraordinary than all-in median high better-than-expected a average class opinion, is is as what total rates on strong and recovery I in see in asset U.S., return as breads our the with yes, though, pretty pretty

Operator

next Paul our Johnson with ABW. question from have we And

Paul Johnson

sponsor concentration direct if site. with of working place funded portfolio large wondering of general, with and doing around just group does kind going currently terms been lenders? or kind and your was potentially I of or Just within some like of and participation network kind club questions deals the investments you've kind in specific in of within our forward that investments with any raise generally, other just in kind what issues just of general took

Robert DeVeer

the if lot didn't, question I let XXX-plus a don't know have and our portfolio or If either obviously, correctly, but versus nonsponsored, investments. we can -- in of sponsored sponsors you with me heard concentration with I

drill didn't Site look when work confidence company do a step [indiscernible] of so the obviously unfortunately. through a earlier, of are a as Visa the well They in. X portfolio. that the and at management with out But them. we have biggest a them, be with and sponsors sponsors situation of won't first that we to we really for either team who a tremendous is the in this amount as So mentioned are lot we in where group have own of lenders. I with sole lender other business

were So think, the situation. facts unfortunate of other go ones, incorrect. an I It's I said, move and a again, But on. and we'll really in it as lot the fix like reported

Paul Johnson

higher $XX it. me, or the for we Kipp. million million Appreciate $XX Should from It so income-related that is look Thanks, or like nature? fortune basically on tax onetime kind expense million it so and looked quarter. nonrecurring correct. the that in from question Approximately the have at Last just $X was tax so excise of the in I tax. or numbers of

Unknown Executive

million related the about $XX exit. Yes, to Hillstone was that

investment a we because tax held blocker in kind a corporation. onetime So the of

a taxes overall still So on unfortunately ahead to level we're of that, gain. on $XXX -- had million for corporate basis we the pay net net but

Operator

our Kenneth from next question have Lee RBC we Capital And with Markets.

Kenneth Lee

the of versus you sort new like borrowers between In incumbents quarter's originations the mix what's that terms saw. of

Robert DeVeer

think it's I X/X. around, we're about saying looking We're

Unknown Executive

borrowers, XX% borrowers. it's new incumbent around I XX% think Yes,

up. a it little dislocation the So was borrower the period picks as than again during on environment higher the M&A new mix

Kenneth Lee

what's in current Got And you. helpful like of of debt the terms Very there environment? outlook in there. then the sort opportunities, latest junior

Robert DeVeer

of terms sorry, that I'm we in opportunities? debt missed senior

Kenneth Lee

opportunities. debt Junior

Robert DeVeer

hard a little the far really kind unitranche taken between has deal and I of It's to hear there. flow. say over new days driving of new in fewer refinancings, in most and probably kind the buyouts then healthy they're Okay. of just would performing these

companies they rate. in is the with, can higher right? to on be interest with relief good can a need where actually interest constraint We're can very most think, that a it's where deleveraging coverage, returns little can't maybe seeing bit improved pay capital and So to answer opportunities seeing that the performance less junior impactful interesting question. capital some themselves some you base places is capital, the duration actually are but lenders junior some be finding from probably relevant lower bring to because And light pretty I we the situation but equity, that's then the for honest, but cash achieve we general make extend interesting your think we're

Unknown Executive

top pretty I very and cap a the opportunities seeing securities those lien seeing second would second high-yield add on of buyers we're where are X place are we where spreads. Yes. just dynamic in large crossover interesting is in borrowers tight unitranche lien actually darn an right perspective, pricing stepping from spread even almost

being selective. we're just So highly

where opportunities, those playing around being extremely selective we're but seeing we're those. We just are

Operator

question Raymond have with And Robert James. we from Dodd next our

Robert Dodd

of you et us at type is et well, But the How portfolio, that artifact proportion as the prevalent portfolio it portfolio And at still within portfolio it much broadly. confined points that is any matter is of It more is in gave structure only value. us basis well? XX On in [indiscernible] the of give your is can Or fair anymore. to is, an in what side, I X%. today, that saw question common cetera, doesn't elsewhere package, covenant structure obviously, what terms of mean, it occurring only any not on you how there X the The common color profit, but cetera. to you originations?

Robert DeVeer

Yes.

it most in as phone time frankly, tremendous know, the we the into the a amount experience I'll so actually spend, explicitly, our important have I about, we like of you think, of which market, just we the deals. on thinking to and documentations lead think the is because that's way that say is I of question, transactions just own come we

better We for actually doing like give this that to covenants, downside and protection risk. a Because write et the us we documents. time, we've can cetera. structure, things allow think long we mitigate and We like been to

have we the don't generally transactions, our increasing So which as say, broadly view as risk middle tell agree, our sort covenants. have you really obviously make something are can all reason companies unrestricted of collateral deals into passed covenants We and on I'd Robert, There's deal. often view them more portfolio. your Do actually no. would months, those actually you last the management strip ability a aren't liability argue lot debates. any think to passing syndicated subsidiaries need in where in Can the what present of part than world probably about for to on a move market over of I don't loans I'd document to them where no need like. can with borrowers a you look that We the probably and no on companies I we you other covenants? actually core debate package not to XX you liquidity XX and exit. assets that's Do

Pluralsight indicative So was is else other again things the But what we I in in on was not the that know put is situation. hard in indicative what accurate. certain that portfolio reported don't I or that it's reported of not was what try not very, very in ourselves portfolio. accurately think for of to

I don't huge risk. that view as a So

Unknown Executive

that think darn inaccurate a larger -- again, actually And in around are I no, to of because saying, has cap to lot to back need as well what question we and was as earlier issue gives point, document that, all the us Fin's Kipp's in to was Pluralsight, because when size to a back protection it no, of reported the across pretty luxury say transaction documentation well. different of worked And origination we the document a deal. do ranges able

Robert Dodd

or the to refi-ed the done on related the are Got that And and to B-grade just ones a be -- to companies. it. some companies point the issue what's you any quality may thoughts lower now really to going lot C kind for does sidelines mean your I have at not of year? be that quality. size Do that sort that of time you're that be right to the of of market good on are the going out lot all mean, in some high credit following mean, sitting size left of up over on that I getting [indiscernible] left be said period grade deals couple The done next my you been still you're transacting. need quality prolonged front? the the next companies years. quality the Or think market, of there's Well, approach the with a if to

Unknown Executive

I in on I mean jump that. can

and volume, think Obviously, to do, ingredients worse a weaker like choosing just that's we'll you'll that broad we less we companies. get not quality be I sure, companies, best the foresee but see selective and we quality sure the how environment place And that us if environment the always pickup in credits. there's there's being. back just think will I'm be only very a then transaction I going active, normalized quality still where are would good for to be but in some more pretty credits, some

I nice forward. think mix be there's a to healthy going going

Robert DeVeer

that's Yes, right.

trillion think is, you well this companies bit our us, rough incumbency I I'll are that's situation give I different. we're many a equity look, numbers reality Robert, new private and $X the LP accurate. trillion mean little help numbers to where the will There's as about are just in having versus to private right? capital -- advantage NAV think that a on people's reasonably returned unrealized of powder transactions. about we $X do in of equity dry in ground

unlock through So actually create selling, that unrealized NAV capital until you difficult new transactions. to for it's

would happen capital for we'll that price. My what lower unrealized gets what guess sold that leverage NAV ground forever. taking at in I the think at support a X% to structure, start multiples can going obviously exit, because looking a levels and be $X it's trillion, rate lower with [indiscernible] stay an that is capital is can't about all account would So base into the

Operator

question And Oppenheimer. our Penn next comes from with Mitchel

Mitchel Penn

a questions. of just couple It's quick

do they ultimately how On collected? the get the perpetual in portfolio, preferreds

Robert DeVeer

of collected gets our tickets upon most i.e., refinanced. or Typically, repayment, sold exit or gets company

Mitchel Penn

to a cause a have like Or you get you typically, option Do don't XX-year conversion? that?

Robert DeVeer

sometimes no. and yes Sometimes

Mitchel Penn

tick, Got synthetic do it. terms And in do tax? you guys of the synthetic

Robert DeVeer

think don't want means, because but me what I don't so to yesterday. that know I know means. know what Somebody I to if what to I don't me, that it mentioned don't is. this you describe that actually

Mitchel Penn

they to align the each access line interest essentially, borrower period. to and your pay So interest issue you

So to they're interest. the pay the essentially drawing line down

Robert DeVeer

of company interest that but over where reserve, make not effectively that done of Let's reserve a transactions We've out the flow an them get of I with period interest drawing you very it's XX up payments company to interest in or a through sounds a bit things cash lot a from gate, balance cash a do -- or that other a turnaround and that's rare. to generating of couple whether years capital. time, time But it's guess. an of sort a like set

Unknown Executive

I a think that of even we the revenue portfolio common more our in very in loans. of small some and ARR percentage already about, And our it's loans, that's the probably percentage as within portfolio. recurring talked

any... I think very if limited amount,

Mitchel Penn

quarter. [indiscernible] this By Pluralsight

Robert DeVeer

partially, lost for [indiscernible] different there. but sure mean, I And of Yes. I'd in yes, components, be handful for

Operator

comes and Instructions] our [Operator Point. Casey next question Compass with from Alexander

Casey Alexander

out. that exits assets your next Does XX% new is, question first were your earning average make investments should to saw earning basis stable, overall the the -- about because quarters. at that few continuing were But because sense? interest be yields on it over yield I declined you able was looking points. portfolio was of issue of compression XX My yield yield to weighted we the able some we The about noninterest sort think, on thinking balance

Robert DeVeer

but and as Turn it little I Kort yesterday. and about bit, come to generally, spreads seen were I Kort, it responses of the mean, X in, a think, talking mentioned I earlier, but I we've I think

the they've kind lot can in in. see of days. feel and don't You chime last we of compression plateaued again We a like XX, XX

Kort Schnabel

Yes.

higher recently, of stabilization little terms benefits structuring And we anecdotally, saying, activity, little what in then I it without currently of results bit bit up quarterly so But we're them. of effect what of maybe increased the a there more goes be hopefully compression seeing obviously M&A seeing a shows report but fees. of as might think, as obviously, capital lag in well spread and a lots of there's

that anything this to concerned that, there's that As you take offsets quarter, about. see and we're that able we -- advantage it's we're of so really meaningfully saw when not jumped particularly

talked in higher relative historical already and about, well averages Kipp overall lower be As investing levels, environment. leverage today's to yields really set to up

Casey Alexander

All little better. -- little The picking the stock now bit, wasn't couple the you million this origination a you stock sales should to more your like environment the ratio leverage the so -- is deal that calendar? balancing about and the activity. environment a frustration came room also -- leverage indicative this you sales think in bring of do right. but sold to little seems shares relative is up Great. how of it the quarter are how Or much is think up, quarter? a there's what My quarters a sort your maybe that origination might of of bit ratio bit the next we be to of valuation stock expressed up follow-up lot the XX in shares, a relative

Robert DeVeer

felt me, every stock have thinks is of right? as Yes. simple got busier. So CEO to price yes, it their We my the X think answer low. I is much partners mean -- question company to said despite I too that your

me into we're and But specifically cost very And think to supporting the backlog we about. despite to pipeline is program, effectively strong the that ATM company. accretively we're excited that, through So mix. look, throw your what still question the issuing

Operator

our [Operator over turn session. now off for you with could to the Doug like questions. [Operator Mr. Instructions] And this UBS. And your mic remarks. from Instructions] next Doug, Kipp if your comes DeVeer does post closing to is our conclude make Harter back question when and sure of any mute you I'd question-and-answer conference

Robert DeVeer

let No, call. I us I I they hope support hook joining of off you enjoy and early. the the rest everyone's day. the guess the appreciate thanks.

Operator

[indiscernible].

Investor call, archived August after of the missed Time end XX domestic any If be of approximately the X the by to homepage by callers international call (XXX) of day. replay the the An a p.m. you Ares part replay available a to be great webcast callers XXXXXX-XXXX. call dialing available Eastern and on an X:XX of also dialing section located of hour Thank Goodbye. link at X archived have Capital's today's Resources XXX-XXXX and you, through website. will on will

Ares Capital (ARCC) 30 Jul 242024 Q2 Earnings call transcript