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Apollo Investment Corporation Reports Financial Results for the Quarter and Fiscal Year Ended March 31, 2019

Fiscal Fourth Quarter and Other Recent Highlights:

  • Net investment income per share for the quarter was $0.47 compared to $0.45 for the quarter ended December 31, 2018

  • Net asset value per share as of the end of the quarter was $19.06 compared to $19.03 as of December 31, 2018, a 0.2% increase

  • Continued to successfully execute portfolio repositioning strategy increasing core assets (1) to 81% of the portfolio (2) as of the end of the quarter

  • Gross commitments made during the quarter totaled $228 million (3)

  • Gross fundings totaled $164 million (4) and net fundings totaled $98 million (5)

  • Net leverage (6) as of the end of the quarter was 0.83x, compared to 0.74x as of December 31, 2018

  • Declared a distribution of $0.45 per share

  • Repurchased 310,818 shares of common stock at a weighted average price per share of $15.38, inclusive of commissions, for an aggregate cost of $4.8 million during the quarter

  • Commitments to the Company’s Senior Secured Facility (“Facility”) increased by $50 million with the addition of one new lender during the quarter, which increased the size of the Facility from $1.59 billion to $1.64 billion

  • Effective April 4, 2019, the Company’s asset coverage ratio requirement was reduced from 200% to 150% (7)

NEW YORK, May 16, 2019 (GLOBE NEWSWIRE) -- Apollo Investment Corporation (NASDAQ: AINV) or the “Company,” or “Apollo Investment,” today announced financial results for its fourth fiscal quarter and fiscal year ended March 31, 2019. The Company’s net investment income was $0.47 per share for the quarter ended March 31, 2019, compared to $0.45 per share for the quarter ended December 31, 2018. The Company’s net asset value (“NAV”) was $19.06 per share as of March 31, 2019, compared to $19.03 as of December 31, 2018.

On May 16, 2019, the Board of Directors declared a distribution of $0.45 per share, payable on July 5, 2019 to shareholders of record as of June 20, 2019.

Mr. Howard Widra, Chief Executive Officer commented, “During fiscal year 2019, we made significant progress implementing our investment strategy.  Given the recent reduction in our asset coverage requirement, we have accelerated the origination of lower risk loans. As previously discussed, we intend to use our incremental investment capacity to invest in first lien floating rate loans sourced by Apollo’s Direct Origination platform.  We believe the ability to increase our leverage provides a unique opportunity for AINV given the robust volume of senior floating rate corporate loans originated by the platform.   We also remain focused on prudently exiting our remaining non-core positions.”  Mr. Howard Widra continued, “During the quarter, net investment income benefited from growth in the investment portfolio and the impact from the total return provision in our fee structure.  Net  asset value per share was up slightly given the relatively stable performance of our portfolio and the accretive impact from stock repurchases.”

___________________

  1. Core assets include leveraged lending, life sciences, asset based, lender finance and aviation.
  2. At fair value.
  3. For corporate lending portfolio.  Excludes non-core and legacy assets.
  4. Excludes $4 million of gross fundings for Merx Aviation and $82 million of gross fundings for revolvers.
  5. Includes $31 net repayment from Merx Aviation and $9 million net fundings for revolvers.
  6. The Company’s net leverage ratio is defined as debt outstanding plus payable for investments purchased, less receivable for investments sold, less cash and cash equivalents, less foreign currencies, divided by net assets.
  7. The Company announced that on April 4, 2018, its Board of Directors approved the application of the modified asset coverage requirements set forth in new Section 61(a)(2) of the Investment Company Act of 1940, as amended by The Small Business Credit Availability Act (“SBCAA”). As a result, the asset coverage ratio test applicable to the Company was reduced from 200% to 150%, effective April 4, 2019. 
                   
FINANCIAL HIGHLIGHTS                  
                   
($ in billions, except per share data) March 31,
 2019
  December 31,
 2018
  September 30,
 2018
  June 30,
 2018
  March 31,
 2018
Total assets $ 2.50     $ 2.38     $ 2.39     $ 2.57     $ 2.31  
Investment portfolio (fair value) $ 2.41     $ 2.31     $ 2.32     $ 2.50     $ 2.25  
Debt outstanding $ 1.13     $ 0.99     $ 0.95     $ 1.10     $ 0.79  
Net assets $ 1.31     $ 1.32     $ 1.37     $ 1.39     $ 1.42  
Net asset value per share $ 19.06     $ 19.03     $ 19.40     $ 19.42     $ 19.67  
                   
Debt-to-equity ratio 0.86 x   0.76 x   0.69 x   0.79 x   0.56 x
Net leverage ratio (1) 0.83 x   0.74 x   0.68 x   0.78 x   0.57 x

/EIN News/ -- ___________________

  1. The Company’s net leverage ratio is defined as debt outstanding plus payable for investments purchased, less receivable for investments sold, less cash and cash equivalents, less foreign currencies, divided by net assets.
 
PORTFOLIO AND INVESTMENT ACTIVITY
 
  Three Months Ended March 31,   Year Ended March 31,
(in millions)* 2019   2018   2019   2018
Investments made in portfolio companies $ 250.2     $ 243.3     $ 1,278.1     $ 1,049.4  
Investments sold (10.8 )   (119.3 )   (205.2 )   (189.0 )
Net activity before repaid investments 239.4     124.0     1,072.8     860.3  
Investments repaid (141.4 )   (238.1 )   (881.6 )   (964.9 )
Net investment activity $ 98.1     $ (114.1 )   $ 191.3     $ (104.6 )
               
Portfolio companies at beginning of period 103     86     90     86  
Number of new portfolio companies 12     8     42     39  
Number of exited portfolio companies (2 )   (4 )   (19 )   (35 )
Portfolio companies at end of period 113     90     113     90  
               
Number of investments made in existing portfolio companies 31     19     46     28  

___________________

* Totals may not foot due to rounding.

 
OPERATING RESULTS
 
  Three Months Ended March 31,   Year Ended March 31,
(in millions)* 2019   2018   2019   2018
Net Investment Income $ 32.6     $ 31.9     $ 127.8     $ 133.4  
Net Realized and Change in Unrealized Losses (0.7 )   (11.3 )   (55.8 )   (46.4 )
Net Increase in Net Assets Resulting from Operations $ 31.8     $ 20.6     $ 72.0     $ 87.0  
               
(per share)*  (1)              
Net Investment Income $ 0.47     $ 0.44     $ 1.81     $ 1.83  
Net Realized and Change in Unrealized Losses $ (0.01 )   $ (0.16 )   $ (0.79 )   $ (0.64 )
Earnings per share — basic $ 0.46     $ 0.29     $ 1.02     $ 1.19  

___________________
* Totals may not foot due to rounding.

(1)  Based on the weighted average number of shares outstanding for the period presented.

SHARE REPURCHASE PROGRAM *

During the three months ended March 31, 2019, the Company repurchased 310,818 shares at a weighted average price per share of $15.38, inclusive of commissions, for a total cost of $4.8 million.  During the period from April 1, 2019 through May 15, 2019, the Company repurchased 44,534 shares at a weighted average price per share of $15.23 inclusive of commissions, for a total cost of $0.7 million.  Since the inception of the share repurchase program and through May 15, 2019, the Company repurchased 10,081,302 shares at a weighted average price per share of $17.02, inclusive of commissions, for a total cost of $171.6 million, leaving a maximum of $78.4 million available for future purchases under the current Board authorization of $250 million.

* Share figures have been adjusted for the 1-for-3 reverse stock split which was completed after market close on November 30, 2018.

CONFERENCE CALL / WEBCAST AT 5:00 PM ET ON MAY 16, 2019

The Company will host a conference call on Thursday, May 16, 2019 at 5:00 p.m. Eastern Time. All interested parties are welcome to participate in the conference call by dialing (888) 802-8579 approximately 5-10 minutes prior to the call; international callers should dial (973) 633-6740.  Participants should reference Apollo Investment Corporation or Conference ID # 8859695 when prompted.  A simultaneous webcast of the conference call will be available to the public on a listen-only basis and can be accessed through the Events Calendar in the Shareholders section of our website at www.apolloic.com.  Following the call, you may access a replay of the event either telephonically or via audio webcast.  The telephonic replay will be available approximately two hours after the live call and through June 6, 2019 by dialing (800) 585-8367; international callers please dial (404) 537-3406, reference Conference ID #8859695.  A replay of the audio webcast will also be available later that same day.  To access the audio webcast please visit the Events Calendar in the Shareholders section of our website at www.apolloic.com.

SUPPLEMENTAL INFORMATION

The Company provides a supplemental information package to offer more transparency into its financial results and make its reporting more informative and easier to follow. The supplemental package is available on the Investor Relations section of the Company’s website at www.apolloic.com.

Our portfolio composition and weighted average yields as of March 31, 2019, December 31, 2018, September 30, 2018, June 30, 2018, and March 31, 2018 were as follows:

  March 31,
 2019
  December 31,
 2018
  September 30,
 2018
  June 30,
 2018
  March 31,
 2018
Portfolio composition, at fair value:                  
First lien secured debt   66 %   64 %   57 %   55 %   50 %
Second lien secured debt   23 %   24 %   27 %   30 %   31 %
Total secured debt   89 %   88 %   84 %   84 %   82 %
Unsecured debt           3 %   4 %   5 %
Structured products and other   2 %   3 %   3 %   3 %   3 %
Preferred equity   1 %   1 %   1 %   1 %   1 %
Common equity/interests and warrants   8 %   8 %   9 %   8 %   9 %
Weighted average yields, at amortized cost (1):                  
First lien secured debt (2)   9.9 %   10.4 %   10.4 %   10.4 %   10.5 %
Second lien secured debt (2)   11.4 %   11.4 %   11.2 %   11.1 %   10.9 %
Total secured debt (2)   10.2 %   10.7 %   10.7 %   10.7 %   10.7 %
Unsecured debt portfolio (2)           11.0 %   11.4 %   11.3 %
Total debt portfolio (2)   10.2 %   10.7 %   10.7 %   10.7 %   10.7 %
Total portfolio (3)   9.6 %   9.6 %   9.7 %   9.7 %   9.6 %
Interest rate type, at fair value (4):                  
Fixed rate amount           $0.1 billion   $0.1 billion   $0.1 billion
Floating rate amount   $1.5 billion   $1.4 billion   $1.3 billion   $1.4 billion   $1.2 billion
Fixed rate, as percentage of total           6 %   6 %   8 %
Floating rate, as percentage of total   100 %   100 %   94 %   94 %   92 %
Interest rate type, at amortized cost (4):                  
Fixed rate amount           $0.1 billion   $0.1 billion   $0.1 billion
Floating rate amount   $1.5 billion   $1.4 billion   $1.3 billion   $1.4 billion   $1.2 billion
Fixed rate, as percentage of total           6 %   6 %   8 %
Floating rate, as percentage of total   100 %   100 %   94 %   94 %   92 %
  1. An investor’s yield may be lower than the portfolio yield due to sales loads and other expenses.
  2. Exclusive of investments on non-accrual status.
  3. Inclusive of all income generating investments, non-income generating investments and investments on non-accrual status.
  4. The interest rate type information is calculated using the Company’s corporate debt portfolio and excludes aviation, oil and gas, structured credit, renewables, shipping, commodities and investments on non-accrual status.
 
APOLLO INVESTMENT CORPORATION
STATEMENTS OF ASSETS AND LIABILITIES
(In thousands, except share and per share data)

  March 31, 2019   March 31, 2018
       
Assets      
Investments at fair value:      
Non-controlled/non-affiliated investments (cost — $1,654,322 and $1,471,492, respectively) $ 1,627,406     $ 1,450,033  
Non-controlled/affiliated investments (cost — $67,072 and $73,943, respectively) 49,681     68,954  
Controlled investments (cost — $736,717 and $723,161, respectively) 731,045     729,060  
Cash and cash equivalents 36,280     14,035  
Foreign currencies (cost — $4,963 and $1,494, respectively) 4,909     1,298  
Cash collateral on option contracts     5,016  
Receivable for investments sold 336     2,190  
Interest receivable 24,280     22,272  
Dividends receivable 3,748     2,550  
Deferred financing costs 19,776     14,137  
Variation margin receivable     1,846  
Prepaid expenses and other assets 336     419  
Total Assets $ 2,497,797     $ 2,311,810  
       
Liabilities      
Debt $ 1,128,686     $ 789,846  
Payable for investments purchased 677     41,827  
Distributions payable 31,040     32,447  
Management and performance-based incentive fees payable 8,880     16,585  
Interest payable 5,818     5,310  
Accrued administrative services expense 2,983     2,507  
Other liabilities and accrued expenses 7,086     5,202  
Total Liabilities $ 1,185,170     $ 893,724  
       
Net Assets $ 1,312,627     $ 1,418,086  
       
Net Assets      
Common stock, $0.001 par value (400,000,000 shares authorized; 68,876,986 and
72,104,032 shares issued and outstanding, respectively)
$ 69     $ 72  
Capital in excess of par value 2,155,836     2,636,651  
Accumulated under-distributed (over-distributed) earnings (843,278 )   (1,218,637 )
Net Assets $ 1,312,627     $ 1,418,086  
       
Net Asset Value Per Share $ 19.06     $ 19.67  


 
APOLLO INVESTMENT CORPORATION
STATEMENTS OF OPERATIONS
(In thousands, except per share data)
  Three Months Ended
March 31,
  Year Ended March 31,
  2019   2018   2019   2018
  (Unaudited)   (Unaudited)        
Investment Income              
Non-controlled/non-affiliated investments:              
Interest income (excluding Payment-in-kind (“PIK”) interest income) $ 40,664     $ 40,537     $ 164,186     $ 157,076  
Dividend income 2         4      
PIK interest income 656     1,250     3,365     7,176  
Other income 1,174     1,284     8,135     6,548  
Non-controlled/affiliated investments:              
Interest income (excluding PIK interest income)     152         266  
Dividend income 294     67     1,198     2,528  
PIK interest income     44         7,626  
Other income             (306 )
Controlled investments:              
Interest income (excluding PIK interest income) 14,241     13,012     58,868     55,781  
Dividend income 3,550     3,750     14,100     17,153  
PIK interest income 829     1,393     5,220     5,439  
Total Investment Income $ 61,410     $ 61,489     $ 255,076     $ 259,287  
Expenses              
Management fees $ 8,881     $ 11,474     $ 35,733     $ 47,937  
Performance-based incentive fees     5,277     21,190     28,710  
Interest and other debt expenses 15,623     12,560     58,319     53,039  
Administrative services expense 1,620     1,854     6,772     6,915  
Other general and administrative expenses 2,757     3,161     11,378     9,599  
Total expenses 28,881     34,326     133,392     146,200  
Management and performance-based incentive fees waived     (4,641 )   (5,542 )   (19,718 )
Expense reimbursements (23 )   (138 )   (523 )   (582 )
Net Expenses $ 28,858     $ 29,547     $ 127,327     $ 125,900  
Net Investment Income $ 32,552     $ 31,942     $ 127,749     $ 133,387  
Net Realized and Change in Unrealized Gains (Losses)              
Net realized gains (losses):              
Non-controlled/non-affiliated investments $ 30     $ 206     $ (22,109 )   $ (96,498 )
Non-controlled/affiliated investments     (25,944 )   2,007     (167,416 )
Option contracts     (3,656 )   (29,995 )   (4,275 )
Foreign currency transactions 144     9,216     64     15,851  
Extinguishment of debt             (5,790 )
Net realized losses 174     (20,178 )   (50,033 )   (258,128 )
Net change in unrealized gains (losses):              
Non-controlled/non-affiliated investments 3,148     (1,915 )   (5,454 )   86,870  
Non-controlled/affiliated investments (1,319 )   22,846     (12,403 )   173,674  
Controlled investments (2,660 )   8,418     (11,571 )   7,622  
Option contracts     (5,172 )   19,145     (19,145 )
Foreign currency translations (51 )   (15,314 )   4,513     (37,251 )
Net change in unrealized losses (882 )   8,863     (5,770 )   211,770  
Net Realized and Change in Unrealized Losses $ (708 )   $ (11,315 )   $ (55,803 )   $ (46,358 )
Net Increase in Net Assets Resulting from Operations $ 31,844     $ 20,627     $ 71,946     $ 87,029  
Earnings Per Share $ 0.46     $ 0.29     $ 1.02     $ 1.19  

About Apollo Investment Corporation

Apollo Investment Corporation (NASDAQ: AINV) is a closed-end investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. The Company invests primarily in various forms of debt investments, including secured and unsecured debt, loan investments, and/or equity in private middle-market companies. The Company may also invest in the securities of public companies and structured products and other investments such as collateralized loan obligations and credit-linked notes. The Company seeks to provide private financing solutions for private companies that do not have access to the more traditional providers of credit. Apollo Investment Corporation is managed by Apollo Investment Management, L.P., an affiliate of Apollo Global Management, LLC, a leading global alternative investment manager. For more information, please visit www.apolloic.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, including, but not limited to, statements as to our future operating results; our business prospects and the prospects of our portfolio companies; the impact of investments that we expect to make; our contractual arrangements and relationships with third parties; the dependence of our future success on the general economy and its impact on the industries in which we invest; the ability of our portfolio companies to achieve their objectives; our expected financings and investments; the adequacy of our cash resources and working capital; and the timing of cash flows, if any, from the operations of our portfolio companies.

We may use words such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations. Statements regarding the following subjects, among others, may be forward-looking: the return on equity; the yield on investments; the ability to borrow to finance assets; new strategic initiatives; the ability to reposition the investment portfolio; the market outlook; future investment activity; and risks associated with changes in business conditions and the general economy. Undue reliance should not be placed on such forward-looking statements as such statements speak only as of the date on which they are made. We do not undertake to update our forward-looking statements unless required by law.

Contact

Elizabeth Besen
Investor Relations Manager
Apollo Investment Corporation
212.822.0625
ebesen@apollo.com

Apollo IC horzontal match size.jpg


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