Ares Capital Corporation

Good afternoon. Welcome to Aries Capital Corporation's first quarter, March 31st, 2020 earnings conference call. At this time, all participants are in a listen-only mode. As a reminder, this conference call is being recorded on Tuesday, May 5th, 2020. If you require operator assistance, please press star then zero. I will now turn the call over to Mr. John Stilmar, Managing Director of Investor Relations.

Thank you. Let me start with some important reminders. Comments made during the course of this conference call and webcast and the accompanying documents contain forward-looking statements and are subject to risks and uncertainties, including the impact of COVID-19, related changes in base rates, and significant market volatility on our business and our portfolio companies. Many of these forward-looking statements can be identified by the use of 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 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 the financial performance because it is one method the company uses to measure its financial condition and results of operations. A reconciliation of core EPS to 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 presentation 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 8-K. 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 warranty in respect of this information. The company's first quarter ended March 31st, 2020 earnings presentation can be found on the company's website at www.ariescapitalcorp.com by clicking on the Q120 earnings presentation link on the homepage of the investor resources section. Aries Capital Corporation's earnings release and 10Q are also available on the company's website. I'd now like to turn the call over to Mr. Kip DeVere, Aries Capital Corporation's Chief Executive Officer.

Thanks, John. Hello to everyone and thank you for joining us. I'm joined on the line by our co-presidents, Mitch Goldstein and Michael Smith, our chief financial officer, Penny Roll, and several other members of the management team. We want to start by recognizing this very challenging time for our country, and we send our thoughts and best wishes to those most affected by the COVID-19 pandemic, particularly those who have suffered from the virus and the extraordinary folks on the front lines who are allowing us to get by in these trying times. We're fortunate that our employees are safe and healthy and we've successfully navigated the transition to a remote working environment without experiencing significant disruption in our day-to-day operations. We will now dig in to provide highlights on the first quarter results for Aries Capital Corporation and then provide some thoughts on the company's position in light of the current market conditions. This morning, we reported first quarter core earnings of 41 cents per share, which is a strong result given the current economic and market disruptions. As we will discuss in more detail later, most businesses across the U.S. have been impacted by the economic consequences of COVID-19 to varying degrees, and our portfolio companies are not immune to the consequences of this pandemic. However, we do believe that we are operating from a position of relative strength. as our portfolio is highly diversified and well positioned in larger upper middle market franchise businesses in defensive industries like healthcare services, software and business services. Furthermore, we remain underway to the most impacted sectors such as energy, travel, restaurants, hospitality and retail. A recent focus has been on working with our portfolio companies Our management teams and private equity sponsors to determine each company's liquidity needs and operating plans to manage through to the recovery as we bridge to a time when the economy can restart. We're finding that each company has a different set of circumstances and our close working relationship with each company and often their private equity sponsor is of significant benefit. One key benefit in managing our portfolio in these difficult times is that we have one of the deepest and most experienced investment teams in the business. We have more than 130 investment professionals, including 25 dedicated portfolio management professionals. Keep in mind that Aries Capital does not have investment professionals solely focused on origination. All of our investment professionals are involved in the underwriting and risk management aspects of our investing activities. During periods like this, This allows us to put all of our investment professionals into risk management roles and bring very significant resources to bear on the portfolio. The size and breadth of our team's capabilities and experience allow us to be early, active, and thorough in these volatile markets. As many of you know, we have a long track record of significant success managing through difficult economic environments, including selected workout situations with borrowers. In addition to working with portfolio companies, we believe we are operating with relative strength due to the way that we have constructed our funding and liabilities. We believe that our philosophy of fortifying the balance sheet with significant unsecured, long-dated financing has us very well positioned to navigate volatile markets. Our debt maturities are well-laddered, and we have no maturities until 2022. And in this case, total 2022 maturities are less than 12% of our current total debt outstanding. With regard to our secured credit facilities, we are significantly over collateralized due to the predominantly unsecured nature of our capital structure, which gives us full access to these facilities. Today we have approximately $2.6 billion of available liquidity, which is more than two times our aggregate unfunded revolver and delayed draw term loan commitments of $1.2 billion. We believe this deep liquidity position will be important in enabling us to support our portfolio companies and to invest in the recovery. Given this strong position, we declared a 40 cent per share quarterly cash dividend for the second quarter of 2020. Even as we factor in a cautious outlook for a possible slow and uneven recovery, we are confident that we can continue to support a steady dividend level for the foreseeable future. As we look ahead, While there's a high bar for investing new capital during these uncertain times, we're seeing increasingly attractive opportunities to invest. Our focus will be on making new investments in existing portfolio companies and select investment. Investment spreads have widened and documentation terms and leverage have improved materials. Our view of attractive investment opportunities includes investing in our own stock, which is trading well below net asset value. During the first quarter, we repurchased $100 million of our stock at an average price per share of $11.83, implying a 13% annualized return using the most recently declared dividend. Given the strength of our liquidity and balance sheet, we will continue to consider acquiring our stock at attractive levels. Before I turn it over to Penny, let me reassure you with one additional thought. We do not foresee the need to issue any dilutive equity capital due to the current situation. I'll now turn it over to Penny to provide more details on our first quarter results.