Ares Capital Corporation

Good afternoon. Welcome to Aries Capital Corporation's second quarter-ended June 30, 2026 earnings conference call. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded on Wednesday, July 29, 2026. I will now turn the call over to Mr. John Stilmar, partner of Aries Public Markets Investor Relations.

Thank you. Now let me start with some important reminders. Comments made during the course of this conference call and webcast, as well as accompanying documents, contain forward-looking statements and are subject to risks and uncertainties. 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 filing. 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, which encompasses measures such as core earnings or core EPS. The company believes that 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 of a GAAP financial measure to 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 our earnings release file this morning with the SEC on Form 8K. Certain information discussed in this conference call and the accompanying slide presentation, including credit ratings and information relating to portfolio companies, was derived or obtained from third-party sources and has not been independently verified, and accordingly, the company makes no representation or warranty in respect to this information. The company's second quarter ended June 30th, 2026 earnings presentation to be found on the company's website at www.arc.ares.com. I click you on the second quarter earnings presentation link on the events and presentations page of the investor resources section of the Ares Capital Corporation's earnings release and in the form 10-Q, which are also available on the company's website. I'd like to now turn the call over to Mr. Kort Schnabel, Aries Capital Corporation's Chief Executive Officer.

Kort? Thanks, John, and hello, everyone, and thank you for joining our earnings call today. I'm joined by Jim Miller, our President, Jana Markowicz, our Chief Operating Officer, Scott Lem, our Chief Financial Officer, and other members of the management team who will be available during our Q&A session. This morning, we reported solid second quarter results with core earnings of 47 cents per share Thank you for joining us today. and we are well positioned with significant available capital for new investment opportunities and no meaningful near-term majorities. Let me begin with a few observations on the market environment. We saw fewer deals close across the market in the second quarter as sponsors and borrowers continued to navigate a more uncertain macroeconomic backdrop. This was particularly evident in a lack of sponsor-backed M&A activity. As the quarter progressed, we became more active. We reviewed over 25% more transactions than in the prior quarter and June marked one of our strongest months for new transactions reviewed in the past two years. We believe this momentum reflects the value borrowers and sponsors place on the stability and scale of our capital in a more selective financing environment, particularly as we have seen some managers more heavily indexed to retail capital become less active. As uncertainty persists, borrowers and sponsors are increasingly focused not only on execution, but also on partnering with lenders they are confident can provide incremental capital throughout the cycle. We believe ARIES and ARCC remain meaningfully differentiated in this regard. ARIES' institutionally focused fund complex is supported by stable, long-term capital and substantial dry powder, providing borrowers with confidence that we can support their financing needs across market cycles. Those advantages reinforce ARCC's position as the largest publicly traded BDC and the highest rated BDC across the three major credit rating agencies, supporting differentiated access to capital and financing flexibility. We believe these strengths continue to set ARCC apart and position the company to capitalize on opportunities across market cycles while delivering attractive long-term performance to our shareholders. Another key differentiator for our business is the strength of our relationships with existing borrowers. In the second quarter, 75% of our transactions were with incumbent borrowers, highlighting the sourcing advantages created by our borrower and sponsor relationships. The value of those relationships is reflected in our ability to increase our share of financing commitments across many of our new originations, allowing us to deepen our exposure to some of our best performing borrowers. With 619 portfolio companies, we believe our incumbent relationships will continue to be a meaningful driver of origination activity and long-term value creation for our shareholders. We are also seeing attractive opportunities emerge, particularly in the upper middle market, where the scale of our capital is driving enhanced economics, stronger terms, and more compelling risk-adjusted returns than we saw a year ago, particularly relative to segments such as the lower middle market. We are one of only a few lenders with the scale, certainty, and flexibility to serve borrowers across the entire middle market, which allows us to focus our capital where we see the most compelling relative value. We believe those advantages continue to differentiate ARCC and support strong risk-adjusted returns over time. Underlying these advantages is our institutionalized credit process and disciplined investment approach, which keep us highly selective. While industry transaction volumes remain below what many had expected, we believe some lenders are facing increased pressure to deploy capital, leading them to compromise on quality. By contrast, our second quarter closing ratio was moderately below our historical average of approximately 5%, underscoring the discipline that has been a hallmark of our long-term investment performance. Thank you for joining us. and has been an important contributor to our long-term investment performance. Over our history, our differentiated approach has enabled us to maximize outcomes on challenging credits while capturing additional upside through our equity co-investments. Importantly, our equity co-investment vintages over the last decade have generated an average gross IRR of more than 20%, helping to generate more than $1 billion and many more. According to the portfolio, our diverse, high-quality portfolio continues to perform well. We ended the quarter with investments of $29.7 billion at cost, with no single investment representing more than 1.3% of the portfolio, excluding our investments in Ivy Hill and the SDLP, which offer diversified exposures to senior loans. We believe our level of diversification is an important advantage, particularly as dispersion across the market continues to increase, helping to limit company-specific risk while supporting more consistent portfolio performance over time. The performance of our borrowers also remains healthy overall. Our borrowers generated organic weighted average LTN EBITDA growth of approximately 8% through the end of the second quarter. which is consistent with ARCC's 10-year average and remains well in excess of the broader syndicated loan benchmark. We're also seeing that strength show up in other key credit indicators as interest coverage, leverage levels, and revolving credit facility utilization remain in line with historical averages for our portfolio. Alongside these performance trends, our portfolio companies on average continue to maintain equity capital cushions Thank you for joining us today. often serving as systems of record in regulated end markets with high switching costs and significant embedded value. Importantly, we continue to see strong operating performance across our software investments with organic LTM EBITDA growth accelerating during the second quarter and exceeding the broader portfolio average. Within our software portfolio, only one small loan is currently on non-accrual, and our debt investments remain supported by loan-to-value ratios in the low 40% range providing substantial equity value beneath our positions. As a reminder, as we mentioned on last quarter's call, we recently completed an independent assessment of our software-oriented portfolio companies by a top-tier global management consulting firm. Consistent with the last quarter, we continue to believe AI risk across our software-oriented portfolio remains limited overall, with less than 50 basis points of ARCC's total portfolio at fair value attributable to higher AI risk software investments, and less than 4% attributable to medium or higher AI risk software investments. Importantly, medium risk companies are performing well today. with credit statistics comparable to the overall portfolio. While we believe businesses in this category will need to continue investing considerably in AI to maintain their competitive positions, we have not seen that translate into weaker credit performance. Overall, we continue to feel good about our current positioning as it relates to potential AI-related risks, while recognizing the importance of remaining vigilant in our ongoing portfolio monitoring Thank you for joining us. Our significant spillover income provides an additional layer of flexibility and can help bridge during periods of slower transaction activity. In addition, over the last 12 months, core earnings have exceeded our regular dividend, while an additional 15 cents per share of net realized gains has provided further support for our overall dividend-paying capacity. Taken together, these factors support our outlook for relative stability in earnings and our decision to maintain a stable quarterly dividend, building on our track record of stable or growing regular quarterly dividends for 17 consecutive years. With that, I will turn the call over to Scott to take us through our financial results and balance sheet.