Ares Capital Corporation

Thank you. Let me start with some important reminders. Comments during the course of this conference call and webcast and accompanying documents containing forward-looking statements are subject to risks and uncertainty. The company's actual results could differ materially from those expressed in such forward-looking statements for any reason, including those listed in 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 the 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, the most directly comparable GAAP financial measure, the core EPS, can be found in the accompanying slide presentation for this call. In addition, a reconciliation of these measures may also be found in an earnings release filed this morning with the SEC on Form 8K. Certain information discussed in this conference call and the accompanying slide presentation, including information related to portfolio companies, has arrived 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, 2024 earnings presentation can also be found on the company's website at www.ariescapitalcorp.com by clicking on the third quarter 2024 earnings presentation link on the homepage of the investor resources section of the website. Aries Capital Corporation's earnings release and form 10-Q are also available on the company's website. I'll now turn the call over to Mr. Kip DeVere, Aries Capital Corporation's Chief Executive Officer. Kip?

Thanks a lot, John. Hello, everyone, and thanks for joining our earnings call today. I'm here with our co-president, Court Schnabel, and our newly appointed co-president, Kim Miller. Jana Markowitz, our chief operating officer, Scott Lim, our chief financial officer, and other members of the management team will also be available during our Q&A session. Before discussing our third quarter results, I want to recognize the leadership changes that we announced this morning. As I mentioned, Jim Miller will now join Court Schnabel as a co-president of ARCC. And by way of background, Jim joined ARIES in 2006 and currently serves as a co-head of our U.S. Direct Lending Strategy and as a member of our Investment Advisors Investment Committee. Jim has been one of the key contributors to the success of ARCC and the ARIES Direct Lending Platform, and we look forward to having him play an even more prominent role in this company's direction in the years ahead. As part of this change, Mitch Goldstein is stepping down as ARIES Capital's co-president, but he is joining ARIES Capital's board where he and Michael Smith will serve as co-chairmen. Mitch will also continue to lead ARIES' global credit group as a co-head. And as part of this transition, Michael Arrighetti will relinquish his role as chairman, but remain a director of the company. This transition demonstrates the depth and tenure of our team and the continued evolution of our company and its success over a long period of time. With that, let me now turn to the third quarter results. This morning, we reported another quarter of strong core earnings of 58 cents per share and another quarter of record NAV per share of $19.77. As we've discussed in the past, we believe we are well-positioned What we expect will be a more active deal environment in the future, driven by expanding M&A and sponsor activity as private equity managers are benefiting from lower rates while at the same time feeling growing pressure to return capital to their investors. In the third quarter, we saw a further increase in overall M&A volume with an acceleration in sponsor-backed transactions in particular. Against this backdrop, Direct lenders have continued to finance a high percentage of new leverage buyouts, specifically representing about half of the loan volume supporting buyouts in the third quarter. We believe that Ares is well-positioned to take advantage of this environment, given our deep and longstanding sponsor relationships and our focus on strategic transactions in defensive industries with strong secular trends. Due to our strong competitive position and a more active investing environment, we saw meaningful year-over-year growth in both transactions reviewed and new commitments during the third quarter. Specifically, we reviewed nearly 30% more transactions compared to the same period last year, resulting in an estimated $155 billion in quarterly deal volume reviewed. For context, this amount exceeded the completed transaction volume reported for the entire broadly syndicated leveraged loan market for the quarter. Our long-held approach of sourcing as many transactions as possible is a key factor in remaining highly selective, which we believe ultimately results in strong long-term portfolio performance. Our ability to grow with our existing portfolio companies that we know well is another key factor in our high level of selectivity, further reducing underwriting risk and driving stronger credit performance. This advantage supported our loan growth in the third quarter as over 75% of our new commitments were to incumbent borrowers. We believe the growing trend of existing portfolio companies consolidating their financing relationships with us is an encouraging trend. We also added 23 new companies to the portfolio, bringing our highly diverse portfolio to over 530 companies. Aries Capital's strong credit profile can be seen in the health and performance of our portfolio companies. Our non-accrual rates declined quarter over quarter and remain at levels well below industry averages. And the fair value of our risk-rated one and two loans also declined from the second quarter. Further underscoring the consistent health of our borrowers, the LTM EBITDA growth of our portfolio companies remained in the low double digits for the third consecutive quarter. And finally, as Scott will discuss in more detail, the right-hand side of our balance sheet continues to support our investing activities and remains a competitive advantage. You've seen that we were recently upgraded by Moody's to a higher investment grade notch. which we believe further solidifies Aries Capital as the highest-rated company in our sector by all three major rating agencies. With moderate leverage, just over one time's debt to equity, and well over $5 billion in available liquidity, incorporating post-quarter-end financing activities, we believe we have significant financial flexibility and leading access to efficient forms of capital. With that, let me turn the call over to Scott to provide more details on our financial results and some further thoughts on the balance sheet.

Thanks, Kip. Let me walk through our income statement before discussing our balance sheet and the actions we took during the quarter to enhance our capital position. This morning, we reported a gap in income per share of $0.62 for the third quarter of 2024. compared to $0.52 in the prior quarter and $0.89 in the third quarter of 2023. We also reported core earnings per share of $0.58 for the third quarter of 2024 compared to $0.61 in the prior quarter and $0.59 in the third quarter of 2023. Overall, our total investment income increased compared to the prior quarter largely due to higher interest and dividend income from net portfolio growth offset by lower structuring fees as a majority of the new commitments during the quarter were with existing portfolio companies. In terms of our expenses, the increase in our interest and credit facility fees was consistent with our higher leverage during the quarter to fund a portion of our portfolio growth. Our total portfolio at fair value at the end of the quarter was $25.9 billion. up from $25 billion at the end of the second quarter. The weighted average yield on our debt and other income-producing securities at advertised costs was 11.7% at September 30th, which was down from 12.2% at June 30th, and 12.4% for the same period a year ago. Our total weighted average yield on total investments at advertised costs was 10.7%, which compares to 11.1% a quarter ago, and 11.2 percent from a year ago the declines in our yields were largely due to reduced base rates and to a lesser extent spread on new investments our stock course equity ended the quarter at 12.8 billion or 1977 cents per share another record high for us as kip noted earlier in the call Before discussing our capitalization liquidity, let me start by highlighting the notable accomplishment Kip mentioned related to our credit ratings. At the end of September, Moody's upgraded the long-term issuer and senior unsecured rating for Aries Capital to BAA2 from BAA3. In addition to being rated investment grade by all three of the major rating agencies, we now have two of our three ratings firmly mid BBB. We believe this should lead to even more efficient funding costs and potentially increased debt capacity over time. These ratings further distinguish Aries Capital not only within the BDC sector, but also among a select universe of firmly BBB or higher rated public companies in the U.S. Within the BDC sector, we are the only BDC that has both the highest credit ratings from all three major agencies and positive outlooks from S&P and Fitch. In terms of our recent debt capital activity, we amended our revolving funding facility, which included extending the end of the reinvestment period and the maturity to a full three and five years, respectively, and upsizing the facility from $1.78 billion to $2.15 billion. We also announced that we priced our second on-balance sheet CLO for ARCC, which we expect will close next month, subject to customary closing conditions. This closing will bring an additional $544 million of low-cost secure debt capital priced at SOFR plus 158 basis points. We are happy to continue both diversifying and lowering the weight average cost of our debt capital and believe CLO financing can continue to be a nice addition to our debt capital going forward. Lastly, as we discussed in our last earnings call, earlier in the third quarter, we amended our FB funding facility, where we extended the end of the reinvestment period and maturity each by more than one year. upsize the facility from 865 million to 1.3 billion and reduce the drawn spread by 40 basis points in total pro forma always transactions since june 30th we have added over 1.3 billion dollars of new debt capacity and reduced the weight average spread of our committed Our overall liquidity position remains strong with nearly $5.8 billion of total available liquidity, including available cash, on a pro forma basis for the post-quarter end activity that I just highlighted. We also ended the quarter with a debt-to-equity ratio net of available cash of 1.03 times. We believe our significant amount of dry powder positions us well to continue supporting our portfolio company commitments and new investing activities. Moving on to the dividend, we declared a fourth quarter 2024 dividend of 48 cents per share. ARCC has been paying stable or increasing regular quarterly dividends for over 61 consecutive quarters. This dividend is payable on December 30th, 2024 to stockholders of record on December 13th and is consistent with our third quarter 2024 dividend. In terms of our taxable income spillover, we finalized our 2023 tax returns and are happy to report that we ended 2023 with approximately $631 million, or $1.04 per share, available for distribution to stockholders in 2024. In addition to our third quarter core earnings being well in excess of our current dividend, the spillover level is more than two times our current regular quarterly dividend, which we believe is a significant differentiator for us in the BDT sector and helps provide further visibility and stability to our dividend in a potentially declining rate environment. I will now turn the call over to Court to walk through our investment activities.