Ares Capital Corporation

Good morning. Welcome to ARIES Capital Corporation's third quarter and the September 30th, 2019 earnings conference call. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded on Wednesday, October 30th, 2019. I will now turn the conference over to Mr. John Stilmar of Investor Relations. Please go ahead, sir.

Thank you, Carl, and good morning, everyone. Welcome to Aries Capital Corporation's third quarter ended September 30th, 2019 earnings conference call. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded on Wednesday, October 30th, 2019. Let me start with some important reminders. Comments made during the course of this conference call and webcast and accompanying documents contain forward-looking statements and are subject to risks and uncertainties. Many of these forward-looking statements can be identified by the words such as anticipates, believes, expects, intends, will, should, may, and similar such expressions. 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. ARIES 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 a useful information for investors regarding financial performance because it is one method the company uses to measure its financial condition and results of operation. A reconciliation of core EPS to the net per share increase or decrease in stockholders' equity resulting from operations, the most directly comparable GAAP financial measure can be found in the accompanying slide presentations for this call. In addition, reconciliation of these measures may also be found in our earnings release filed this morning with the SEC on Form 8K. Certain information discussed in this presentation, including information relating to portfolio companies, was derived from third-party sources and has not been independently verified, and accordingly, the company makes no representation or warranties with respect to this information. The company's third quarter ended September 30th, 2019 earnings presentation can be found on the company's website at www.ariescapitalcorp.com by clicking on the Q319 earnings presentation link on the homepage of the investor resources section. Aries Capital Corporation's earning release and 10Q are also available on the company's website. I will now turn the call over to Kip DeVere, Aries Capital Corporation's Chief Executive Officer.

Thanks a lot, John. Hello to everyone and thanks for joining the call today. I'm here with our co-presidents Michael Smith and Mitch Goldstein, our chief financial officer Penny Roll, and several other members of the management team. I'd like to take a few minutes to highlight our third quarter results and to provide some thoughts on the current market conditions. After that, I'll turn the call over to Penny and to Michael who will cover our detailed financial results and discuss recent investment activity and some summary metrics for the portfolio. This morning we reported another strong quarter with Q3 core earnings of 48 cents per share, well above our regular and additional dividends declared for the quarter. We also continue to experience stable credit performance with no new non-accruals this quarter. Finally, we believe we're in a strong liquidity position, ending the third quarter with approximately $3 billion of cash and committed debt capital available to us. Overall, we feel very good about our performance and our balance sheet positioning. In terms of new investment activity, I would describe the market that we operate in as one that remains competitive but investable. Transaction volumes are running below levels from last year, and this has increased pressure on some to put capital to work, leading to some aggressive behavior and lower quality underwriting by certain market participants. We believe that we continue to have the many competitive advantages we've developed at ARCC to differentiate us, and that our experience in this market will serve us well. As we look at the market today, we're beginning to see some changes in the broadly syndicated markets that might lead to more broad-based discipline in the middle market. Moderating CLO formation and continued outflows from retail loan funds are two factors that have led to a slowdown in activity in the broadly syndicated leveraged loan market. In addition, there's a widening dispersion of credit performance in the broadly syndicated market that should begin to filter into the middle market. And this has made 2019 a more bifurcated credit pickers market, which we see as a positive for us. Since the middle market's typically influenced by the risk-reward dynamics of these larger, broadly syndicated transactions, we remain hopeful that more friendly terms and opportunities are on the way in the middle market. Even with this, we continue to execute on our playbook, focusing on high-quality companies and using our sourcing and competitive advantages to seek the best investments. Our market leadership position with 100-plus investment professionals, a national coverage footprint, and long tenure in the market generates opportunities for more than 500 active sponsor relationships, as well as with many non-sponsor borrowers. Additionally, our significant capital base and ability to be a meaningful and stable source of capital positions us uniquely to support our best borrowers. In the third quarter, 47% of our new investment commitments were to existing borrowers, which we continue to view as a differentiated source of deal flow with attractive informational and structural advantages. And when taken together, these sourcing advantages continue to enable us to be highly selective, Our selectivity ratio for new companies this quarter was 4%, in line with our historical average despite the unusually busy quarter of $2.4 billion in new commitments. These sourcing advantages, coupled with our consistent investment approach and our conservative balance sheet construction, has enabled us to deliver strong returns to shareholders through a variety of market conditions. We feel we have a strong plan in place for the current markets. I'd like to turn the call over now to Penny to provide more detail in terms of a financial review.