Core Insights - The establishment of a separate investment account for BDC investments aims to enhance tracking and performance measurement of BDCs [1] Group 1: Investment Strategy - The investment account is designed to share progress and insights regarding BDC investments with stakeholders [1] Group 2: Analyst Background - Roberts Berzins has over a decade of experience in financial management, focusing on corporate financial strategies and large-scale financings [1] - Significant contributions include institutionalizing the REIT framework in Latvia to improve liquidity in pan-Baltic capital markets [1] - Involvement in developing national SOE financing guidelines and frameworks for private capital in affordable housing [1] - Holds a CFA Charter and an ESG investing certificate, with experience from an internship at the Chicago Board of Trade [1] - Actively participates in thought-leadership activities to support the development of pan-Baltic capital markets [1]

Core Viewpoint - The article discusses three ultra-high-yield dividend stocks that investors should consider, highlighting their strong performance and growth potential in the current market environment. Group 1: Ares Capital - Ares Capital has a forward yield of 9.3% and has maintained stable or growing payouts for 15 consecutive years [3][5] - The company has the highest regular dividend growth over the last 10 years among externally managed business development companies with a market cap over $700 million [3] - Ares Capital primarily provides capital to middle-market businesses, representing a $3 trillion opportunity, with an additional $2.4 trillion from companies with revenues over $1 billion [4] - The company is well-positioned to capture market share, being the largest publicly traded business development company with a strong balance sheet and deep industry relationships [5] - Concerns regarding the CEO transition are mitigated by the new CEO's extensive experience within the company and industry [6] Group 2: Enterprise Products Partners - Enterprise Products Partners offers a forward yield of 6.9% and has increased its distribution for 26 consecutive years [7] - The company has demonstrated resilience in its cash flows during economic downturns, including the Great Recession and the COVID-19 pandemic [8] - Global demand for liquid hydrocarbons is expected to grow, with the U.S. maintaining a competitive advantage due to low production costs, positively impacting Enterprise's growth prospects [9] Group 3: Verizon Communications - Verizon Communications has a forward dividend yield of 6.3% and has increased its payouts for 18 straight years [10] - Despite a declining stock market, Verizon's share price has risen due to limited exposure to tariffs and strong business performance [11][12] - The company is expanding its offerings through the acquisition of Frontier Communications, expected to close in Q1 2026, which will enhance its products and services for consumers and small businesses [13]

Core Insights - Ares Capital Corporation (ARCC) reported lower-than-expected results for Q1 2025, with core earnings of 50 cents per share, missing the Zacks Consensus Estimate of 54 cents, and reflecting a 15.3% decline from the prior-year quarter [1] - The company's total investment income improved to $732 million, up 4.4% year over year, but still fell short of the Zacks Consensus Estimate of $770 million [3] - Ares Capital's gross commitments to portfolio companies were $3.45 billion, slightly down from $3.55 billion in the prior-year quarter, while portfolio exits decreased to $2.86 billion from $3.41 billion [4] Financial Performance - GAAP net income for Q1 2025 was $241 million or 36 cents per share, down from $449 million or 76 cents per share in the prior-year quarter [2] - Total quarterly expenses decreased to $360 million, down 2.4%, primarily due to negative capital gains incentive fees [3] - As of March 31, 2025, total assets were $28.3 billion, with stockholders' equity at $13.7 billion and a net asset value of $19.82 per share, down from $19.89 [5] Portfolio and Balance Sheet - The fair value of Ares Capital's portfolio investments was $27.1 billion, with accruing debt and other income-producing securities valued at $23.9 billion as of March 31, 2025 [4] - Cash and cash equivalents totaled $647 million, an increase from $635 million as of December 31, 2024, with $5.4 billion available for additional borrowings under existing credit facilities [5] Market Outlook - The demand for customized financing is expected to drive growth in total investment income, while increased investment commitments may support ARCC's financials [6] - However, potential cost increases from expansion strategies and regulatory constraints are identified as significant challenges [6]

Financial Data and Key Metrics Changes - The company reported GAAP net income per share of $0.56 for Q1 2025, down from $0.76 in Q1 2024 and $0.55 in the previous quarter [19] - Core earnings per share were $0.50, compared to $0.59 a year ago and $0.55 in the prior quarter, primarily due to a decline in portfolio yields [19][20] - The total portfolio at fair value increased to $27.1 billion from $26.7 billion in the previous quarter and $23.1 billion a year ago [21] Business Line Data and Key Metrics Changes - The company originated $3.5 billion in new investment commitments during Q1 2025, with approximately 60% coming from existing borrowers [26] - The weighted average yield on debt and other income-producing securities at amortized cost was 11.1% at the end of Q4 2024, down to 10.1% by the end of Q1 2025 [20] - The average debt to EBITDA ratio for portfolio companies was 5.7 times, the lowest since Q1 2020, indicating improved leverage [29] Market Data and Key Metrics Changes - New transaction activity in the liquid loan market dropped significantly as banks became more cautious, while the direct lending market remained stable [10][11] - The company noted increased volatility and widening spreads in secondary loan markets, with banks transitioning to a risk-off position [10][11] - The company has a significant amount of available capital totaling nearly $6.8 billion, positioning it well for new investments [14] Company Strategy and Development Direction - The company aims to capitalize on opportunities arising from market volatility, leveraging long-standing relationships to source deals [12][13] - The focus remains on service-oriented businesses that are more insulated from tariff impacts, with proactive engagement with portfolio companies to mitigate risks [15][17] - The company declared a quarterly dividend of $0.48 per share, marking the 63rd consecutive quarter of stable or increasing dividends [17][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating future market conditions, citing a strong investment team and a healthy portfolio [12][13] - The company anticipates a slower M&A environment but believes long-term drivers for M&A remain intact [11] - Management highlighted the importance of proactive communication with market participants to ensure readiness for new opportunities [12] Other Important Information - The company has a low non-accrual rate of 1.5% at cost, down from 1.7% in the previous quarter, indicating strong credit quality [29] - The company has a significant taxable income spillover estimated at $883 million or $1.29 per share available for distribution in 2025 [24] Q&A Session Summary Question: Impact of private BDCs on pricing and competitive position - Management noted that spreads have already begun to widen, indicating a shift in the market dynamics, and expressed confidence in outperforming competitors [35][36] Question: Analysis of tariff exposure - Management conducted a thorough analysis of portfolio companies' exposure to tariffs, finding a mid-single-digit percentage of companies potentially impacted [39][41] Question: Outlook on M&A deal volume - Management acknowledged the slowdown in M&A activity but emphasized their ability to capture market share in the current environment [45][47] Question: Strategies for managing rising costs of liabilities - Management highlighted their historical ability to maintain consistent ROE and mentioned potential strategies such as leveraging and utilizing spillover income [51][54] Question: Backlog and deal closure uncertainty - Management indicated that while there may be some uncertainty regarding the backlog due to market volatility, they remain optimistic about closing existing deals [75][77]

Financial Data and Key Metrics Changes - The company reported GAAP net income per share of $0.60 for Q1 2025, down from $0.76 in Q1 2024 and $0.55 in the previous quarter [19] - Core earnings per share were $0.50, compared to $0.59 a year ago and $0.55 in the prior quarter, primarily due to a decline in portfolio yields [19][20] - The total portfolio at fair value increased to $27.1 billion from $26.7 billion in the previous quarter and $23.1 billion a year ago [21] Business Line Data and Key Metrics Changes - The company committed $3.5 billion in gross commitments during the first quarter, a 54% increase compared to the same period last year [9][10] - The weighted average yield on debt and other income-producing securities at amortized cost was 11.1% at the end of Q4 2024, down to 10.1% by the end of Q1 2025 [20] - The portfolio companies reported a 12% weighted average LTM EBITDA growth, up from 11% in the prior quarter [28] Market Data and Key Metrics Changes - New transaction activity in the liquid loan market dropped significantly as banks became more cautious, leading to increased volatility and widening spreads in secondary loan markets [10][11] - The direct lending market remained stable, with certain transactions shifting from the syndicated loan market to private credit solutions [11] Company Strategy and Development Direction - The company aims to leverage its strong liquidity and conservative balance sheet leverage to capitalize on potential investment opportunities in a potentially improving spread environment [10][14] - The focus remains on domestic service-oriented businesses, which are believed to be more insulated from the impacts of higher tariffs [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate future market conditions, citing a seasoned investment team and strong relationships in the market [12][13] - The company declared a quarterly dividend of $0.48 per share, marking the 63rd consecutive quarter of stable or increasing dividends [17][24] Other Important Information - The company has nearly $6.8 billion in total available liquidity, positioning it well for future investments [22] - The non-accrual rate at cost ended the quarter at 1.5%, down from the previous quarter, indicating strong portfolio health [29] Q&A Session Summary Question: Will private credit provide similar or lower pricing than banks? - Management noted that spreads have already started to widen, indicating a shift in the market dynamics [35][36] Question: What is the exposure to tariffs for portfolio companies? - The company conducted a thorough analysis and found a mid-single-digit exposure to companies importing from high-tariff countries, emphasizing that this is an exposure analysis, not an impact analysis [39][41] Question: How does the company plan to manage earnings against rising costs of liabilities? - Management highlighted the ability to adjust leverage and utilize spillover income to manage costs effectively [50][54] Question: Is there a trend in portfolio stress or sectors experiencing issues? - Management indicated that there are no significant trends observed in portfolio stress at this time [102] Question: What is the outlook for new investment opportunities? - Management expressed optimism about the potential for larger deals in the private credit market, indicating a readiness to pivot as market conditions change [84][85]

Financial Performance - GAAP Net Income Per Share for Q1 2025 was $036, compared to $076 in Q1 2024[12] - Core EPS for Q1 2025 was $050, down from $059 in Q1 2024[12] - Net Investment Income Per Share for Q1 2025 was $054, slightly lower than $055 in Q1 2024[12] - Net Asset Value Per Share increased to $1982 in Q1 2025 from $1953 in Q1 2024[12] Portfolio Composition and Activity - Total Fair Value of Investments increased to $2713 billion in Q1 2025 from $23124 billion in Q1 2024[13] - Gross Commitments for Q1 2025 were $3453 billion, compared to $3554 billion in Q1 2024[13] - Exits of Commitments for Q1 2025 were $2857 billion, lower than $3414 billion in Q1 2024[13] - First Lien Senior Secured Loans accounted for 58% of the portfolio at fair value as of March 31, 2025[19] - Floating Rate investments represented 69% of the portfolio at fair value as of March 31, 2025[19] Debt and Dividends - The company estimates it will carry forward excess taxable income of approximately $883 million, or $129 per share, from 2024 for distribution to stockholders in 2025[77] - Unsecured Debt to Total Debt was 688% as of March 31, 2025[16]

Core Insights - Ares Capital reported $732 million in revenue for Q1 2025, a year-over-year increase of 4.4%, but fell short of the Zacks Consensus Estimate by 4.97% [1] - The earnings per share (EPS) for the quarter was $0.50, down from $0.59 a year ago, representing a surprise of -7.41% compared to the consensus estimate of $0.54 [1] Revenue and Earnings Performance - Dividend income was reported at $143 million, below the average estimate of $154.25 million from four analysts [4] - Other income reached $17 million, slightly above the average estimate of $16.73 million [4] - Capital structuring service fees totaled $46 million, close to the estimated $46.86 million [4] - Interest income from investments was $526 million, lower than the average estimate of $553.84 million [4] Stock Performance - Ares Capital's shares have returned -4.1% over the past month, compared to a -0.8% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Company Performance - Ares Capital reported quarterly earnings of $0.50 per share, missing the Zacks Consensus Estimate of $0.54 per share, and down from $0.59 per share a year ago, representing an earnings surprise of -7.41% [1] - The company posted revenues of $732 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 4.97%, compared to year-ago revenues of $701 million [2] - Over the last four quarters, Ares Capital has surpassed consensus EPS estimates just once and topped consensus revenue estimates two times [2] Market Outlook - Ares Capital shares have lost about 2.9% since the beginning of the year, while the S&P 500 has declined by 6% [3] - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimate for the coming quarter at $0.54 on revenues of $780.46 million, and $2.17 on $3.15 billion in revenues for the current fiscal year [7] Industry Context - The Financial - SBIC & Commercial Industry, to which Ares Capital belongs, is currently in the bottom 44% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Ares Capital's stock performance [5]

Part I [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Ares Capital Corporation and its subsidiaries, including the balance sheet, statement of operations, schedule of investments, statement of stockholders' equity, statement of cash flows, and accompanying notes, providing a detailed financial overview for the periods ended March 31, 2025, and December 31, 2024 [Consolidated Balance Sheet](index=3&type=section&id=Consolidated%20Balance%20Sheet) Presents the company's financial position, including assets, liabilities, and equity, as of March 31, 2025, and December 31, 2024 Consolidated Balance Sheet | Indicator | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :----------------------------------- | :----------------------------- | :----------------------------- | | Total assets | $28,317 | $28,254 | | Total liabilities | $14,645 | $14,899 | | Total stockholders' equity | $13,672 | $13,355 | | Net assets per share | $19.82 | $19.89 | - Investments at fair value increased from **$26,720 million** as of December 31, 2024, to **$27,130 million** as of March 31, 2025[10](index=10&type=chunk) - Debt increased from **$13,727 million** as of December 31, 2024, to **$13,922 million** as of March 31, 2025[10](index=10&type=chunk) [Consolidated Statement of Operations](index=4&type=section&id=Consolidated%20Statement%20of%20Operations) Details the company's revenues, expenses, and net income for the three months ended March 31, 2025, and March 31, 2024 Consolidated Statement of Operations | Indicator | For the Three Months Ended March 31, 2025 (in millions) | For the Three Months Ended March 31, 2024 (in millions) | | :---------------------------------------------------------------------- | :------------------------------------------------------ | :------------------------------------------------------ | | Total investment income | $732 | $701 | | Total expenses | $360 | $369 | | Net investment income | $365 | $325 | | Net increase in stockholders' equity resulting from operations | $241 | $449 | | Basic and diluted net income per common share | $0.36 | $0.76 | - Total investment income increased by **$31 million (4.4%)** from $701 million in Q1 2024 to $732 million in Q1 2025[12](index=12&type=chunk) - Net investment income increased by **$40 million (12.3%)** from $325 million in Q1 2024 to $365 million in Q1 2025[12](index=12&type=chunk) - Net increase in stockholders' equity resulting from operations decreased by **$208 million (46.3%)** from $449 million in Q1 2024 to $241 million in Q1 2025, primarily due to higher net realized losses and net unrealized losses in 2025[12](index=12&type=chunk) [Consolidated Schedule of Investments](index=5&type=section&id=Consolidated%20Schedule%20of%20Investments) Provides a detailed listing and valuation of the company's investment portfolio as of March 31, 2025, and December 31, 2024 - Total investments at fair value were **$27,130 million** as of March 31, 2025, compared to **$26,720 million** as of December 31, 2024[10](index=10&type=chunk) - The amortized cost of total investments was **$26,778 million** as of March 31, 2025, compared to **$26,374 million** as of December 31, 2024[10](index=10&type=chunk) - As of March 31, 2025, investments at fair value represented **198.44%** of Net Assets[142](index=142&type=chunk) [Derivative Instruments](index=67&type=section&id=Derivative%20Instruments) Outlines the company's use of foreign currency forward contracts and interest rate swaps to manage market risks Derivative Instruments | Type of Derivative | Total Notional Amount (in millions) | Unrealized Appreciation / (Depreciation) (in millions) | | :------------------------- | :---------------------------------- | :----------------------------------------------------- | | Foreign currency forward | $899 | $(19) | | Interest rate swaps | $3,750 | $55 | - The company uses foreign currency forward contracts and interest rate swaps to mitigate foreign currency and interest rate risk exposures[180](index=180&type=chunk)[464](index=464&type=chunk) [Notes to Consolidated Financial Statements](index=154&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides explanatory details and disclosures supporting the consolidated financial statements [1. Organization](index=154&type=section&id=1.%20ORGANIZATION) Describes the company's structure, investment objectives, and external management arrangements - Ares Capital Corporation is a specialty finance company regulated as a **Business Development Company (BDC)** and has elected to be treated as a **Regulated Investment Company (RIC)** for tax purposes[322](index=322&type=chunk) - The company's investment objective is to generate current income and capital appreciation through debt and equity investments, primarily focusing on first and second lien senior secured loans, subordinated loans, and preferred equity[323](index=323&type=chunk) - The company is externally managed by Ares Capital Management LLC, a subsidiary of Ares Management Corporation, with administrative services provided by Ares Operations LLC[324](index=324&type=chunk) [2. Significant Accounting Policies](index=154&type=section&id=2.%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Details the accounting principles and methods used in preparing the financial statements - Financial statements are prepared in conformity with **U.S. GAAP** for investment companies (ASC 946) and reflect all necessary adjustments for fair presentation[325](index=325&type=chunk)[326](index=326&type=chunk) - Investments are recorded at fair value, with market quotations used when available, and non-publicly traded securities valued in good faith by the Valuation Designee, subject to board oversight and independent third-party valuation providers (IVPs)[333](index=333&type=chunk)[334](index=334&type=chunk) - Interest income includes accretion of discounts, amortization of premiums, and Payment-in-Kind (PIK) interest, recognized on an accrual basis. Loans are generally placed on non-accrual status if payments are 30+ days past due or collectability is doubtful[339](index=339&type=chunk)[340](index=340&type=chunk) Cash, Cash Equivalents and Restricted Cash Reconciliation | Category | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :----------------------------------------------------------------------- | :--------------------------- | :--------------------------- | | Cash and cash equivalents | $647 | $635 | | Restricted cash | $95 | $225 | | Total cash, cash equivalents and restricted cash shown in cash flow statement | $742 | $860 | [3. Agreements](index=159&type=section&id=3.%20AGREEMENTS) Summarizes key contractual agreements, including investment advisory, management, and administration fees - The investment advisory and management agreement with Ares Capital Management includes a base management fee (**1.5%** on assets up to **1.0x** debt-to-equity, **1.0%** on leverage over **1.0x**), an income-based fee (**20%** of pre-incentive fee net investment income exceeding a **1.75%** hurdle rate, with a 'catch-up' provision), and a capital gains incentive fee (**20%** of cumulative aggregate realized capital gains, net of losses and unrealized depreciation)[365](index=365&type=chunk)[366](index=366&type=chunk)[370](index=370&type=chunk)[371](index=371&type=chunk) Management and Incentive Fees | Fee Type | For the Three Months Ended March 31, 2025 (in millions) | For the Three Months Ended March 31, 2024 (in millions) | | :------------------------ | :------------------------------------------------------ | :------------------------------------------------------ | | Base management fee | $102 | $87 | | Income based fee | $85 | $88 | | Capital gains incentive fee | $(25) | $25 | - A capital gains incentive fee of **$(25) million** was calculated in accordance with GAAP for Q1 2025, compared to **$25 million** in Q1 2024, primarily due to net losses on investments and foreign currency transactions[377](index=377&type=chunk)[378](index=378&type=chunk) - The administration agreement with Ares Operations LLC covers office equipment, clerical, bookkeeping, and record-keeping services, with fees based on the company's allocable portion of overhead and other expenses[382](index=382&type=chunk) [4. Investments](index=163&type=section&id=4.%20INVESTMENTS) Presents the composition, fair value, and credit quality of the company's investment portfolio Investment Portfolio Composition (Fair Value) | Investment Type | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :----------------------------------- | :--------------------------- | :--------------------------- | | First lien senior secured loans | $15,901 | $15,179 | | Second lien senior secured loans | $1,532 | $1,847 | | Subordinated certificates of the SDLP | $1,115 | $1,192 | | Senior subordinated loans | $1,366 | $1,351 | | Preferred equity | $2,645 | $2,649 | | Ivy Hill Asset Management, L.P. | $1,920 | $1,915 | | Other equity | $2,651 | $2,587 | | Total | $27,130 | $26,720 | Geographic Composition of Portfolio (Fair Value) | Geographic Region | March 31, 2025 (%) | December 31, 2024 (%) | | :---------------- | :----------------- | :-------------------- | | West | 23.6 | 25.2 | | Midwest | 21.6 | 20.9 | | Southeast | 18.5 | 19.3 | | Mid-Atlantic | 16.5 | 16.1 | | Northeast | 13.6 | 12.2 | | International | 6.2 | 6.3 | | Total | 100.0 | 100.0 | - Loans on non-accrual status represented **1.5%** of total investments at amortized cost (**0.9%** at fair value) as of March 31, 2025, a decrease from **1.7%** at amortized cost (**1.0%** at fair value) as of December 31, 2024[392](index=392&type=chunk) - Ivy Hill Asset Management, L.P. (IHAM), a wholly owned portfolio company, had assets under management of approximately **$12.9 billion** as of March 31, 2025[394](index=394&type=chunk) - The Senior Direct Lending Program (SDLP) had total first lien senior secured loans of **$4,691 million** at principal amount as of March 31, 2025, with **20** borrowers. One loan was on non-accrual status[415](index=415&type=chunk) [5. Debt](index=171&type=section&id=5.%20DEBT) Details the company's outstanding debt obligations, asset coverage, and interest rate management strategies - As of March 31, 2025, the company's asset coverage ratio was **198%**, exceeding the **150%** regulatory requirement[417](index=417&type=chunk) Outstanding Debt Summary | Debt Instrument | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------- | :--------------------------- | :--------------------------- | | Revolving Credit Facility | $1,113 | $1,113 | | Revolving Funding Facility | $1,030 | $1,065 | | SMBC Funding Facility | $400 | $502 | | BNP Funding Facility | $785 | $889 | | April 2036 CLO Notes | $473 | $473 | | October 2036 CLO Secured Loans | $541 | $541 | | Unsecured Notes | $9,583 | $9,144 | | Total Carrying Value | $13,922 | $13,727 | - The weighted average stated interest rate for all outstanding debt was **4.9%** as of both March 31, 2025, and December 31, 2024, with a weighted average maturity of **3.9 years** and **3.8 years**, respectively[421](index=421&type=chunk) - In **March 2025**, the company repaid in full **$600 million** of March 2025 Notes upon maturity[456](index=456&type=chunk) - The company has entered into interest rate swaps for certain unsecured notes (**January 2027**, **March 2029**, **July 2029**, and **March 2032** Notes) to align interest rates with its floating-rate investment portfolio[457](index=457&type=chunk)[458](index=458&type=chunk) [6. Derivative Instruments](index=180&type=section&id=6.%20DERIVATIVE%20INSTRUMENTS) Provides detailed information on the company's derivative financial instruments and their impact on financial results Foreign Currency Forward Contracts (March 31, 2025) | Derivative Instrument | Notional Amount (in millions) | Gross Recognized Assets (in millions) | Gross Recognized Liabilities (in millions) | | :---------------------------- | :---------------------------- | :------------------------------------ | :--------------------------------------- | | Foreign currency forward contract | $899 | $899 | $(918) | Interest Rate Swaps (March 31, 2025) | Hedged Item | Notional Amount (in millions) | Gross Recognized Assets (in millions) | Gross Recognized Liabilities (in millions) | | :------------------ | :---------------------------- | :------------------------------------ | :--------------------------------------- | | January 2027 Notes | $900 | $9 | $0 | | March 2029 Notes | $1,000 | $5 | $0 | | July 2029 Notes | $850 | $20 | $0 | | March 2032 Notes | $1,000 | $21 | $0 | | Total | $3,750 | $55 | $0 | - Net realized gains on foreign currency forward contracts were **$31 million** in Q1 2025, compared to net realized losses of **$15 million** in Q1 2024[468](index=468&type=chunk) - Net unrealized losses on foreign currency forward contracts were **$44 million** in Q1 2025, compared to net unrealized gains of **$30 million** in Q1 2024[468](index=468&type=chunk) [7. Commitments and Contingencies](index=182&type=section&id=7.%20COMMITMENTS%20AND%20CONTINGENCIES) Outlines the company's unfunded loan and equity commitments and potential contingent liabilities Unfunded Revolving and Delayed Draw Loan Commitments | Commitment Type | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :---------------------------------------------------------------------------- | :--------------------------- | :--------------------------- | | Total net unfunded revolving loan commitments | $1,799 | $1,724 | | Total net unfunded delayed draw loan commitments | $2,413 | $2,171 | | Total net unfunded revolving and delayed draw loan commitments | $4,212 | $3,895 | - As of March 31, 2025, the company had commitments to issue up to **$463 million** in letters of credit, with **$53 million** currently issued and outstanding[479](index=479&type=chunk) Unfunded Equity Investment Commitments | Commitment Type | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------------------------------------- | :--------------------------- | :--------------------------- | | Total equity commitments | $199 | $191 | | Less: funded equity commitments | $(39) | $(88) | | Total unfunded equity commitments | $160 | $103 | | Less: equity commitments substantially at discretion of the Company | $(43) | $(43) | | Total net unfunded equity commitments | $117 | $60 | [8. Fair Value of Financial Instruments](index=183&type=section&id=8.%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) Explains the methodologies and categorization of financial instruments measured at fair value - The company follows ASC 820-10, defining fair value as the price received in an orderly transaction between market participants, and categorizes inputs into **Level 1** (quoted active markets), **Level 2** (observable inputs in non-active markets), and **Level 3** (unobservable and significant inputs)[483](index=483&type=chunk)[487](index=487&type=chunk) Fair Value Measurements (March 31, 2025) | Category | Total (in millions) | Level 1 (in millions) | Level 2 (in millions) | Level 3 (in millions) | | :--------------------------------------------------------------------- | :------------------ | :-------------------- | :-------------------- | :-------------------- | | Cash and cash equivalents | $647 | $647 | $0 | $0 | | Restricted cash | $95 | $95 | $0 | $0 | | Investments not measured at net asset value | $27,115 | $17 | $713 | $26,385 | | Investments measured at net asset value | $15 | | | | | Unfunded revolving and delayed draw loan commitments | $(32) | $0 | $0 | $(32) | | Derivatives: Foreign currency forward contracts | $(19) | $0 | $(19) | $0 | | Derivatives: Interest rate swaps | $55 | $0 | $55 | $0 | Significant Unobservable Inputs for Level 3 Investments (March 31, 2025) | Asset Category | Fair Value (in millions) | Primary Valuation Techniques | Input | Estimated Range | Weighted Average (%) | | :---------------------------------- | :----------------------- | :--------------------------- | :-------------- | :---------------- | :------------------- | | First lien senior secured loans | $15,420 | Yield analysis | Market yield | 6.4% - 23.7% | 10.3 | | Second lien senior secured loans | $1,245 | Yield analysis | Market yield | 9.5% - 19.1% | 14.8 | | Subordinated certificates of the SDLP | $1,115 | Discounted cash flow analysis | Discount rate | 9.8% - 12.8% | 12.0 | | Senior subordinated loans | $1,354 | Yield analysis | Market yield | 8.1% - 21.9% | 13.2 | | Preferred equity | $2,711 | Yield analysis | Market yield | 7.0% - 21.6% | 13.5 | | Ivy Hill Asset Management, L.P. | $1,920 | Discounted cash flow analysis | Discount rate | 9.3% - 19.0% | 10.5 | | Other equity | $2,620 | EV market multiple analysis | EBITDA multiple | 5.5x - 76.2x | 23.4 | - Net unrealized appreciation on Level 3 investments was **$403 million** as of March 31, 2025[501](index=501&type=chunk) [9. Stockholders' Equity](index=189&type=section&id=9.%20STOCKHOLDERS%20%27%20EQUITY) Details changes in common stock, equity offerings, and the stock repurchase program Common Stock Issuances (Q1 2025) | Issuances of Common Stock | Number of Shares (in millions) | Gross Proceeds (in millions) | Underwriting Fees/Offering Expenses (in millions) | Net Proceeds (in millions) | Average Offering Price Per Share | | :------------------------ | :----------------------------- | :--------------------------- | :------------------------------------------------ | :------------------------- | :------------------------------- | | "At the market" offerings | 17.2 | $388.6 | $4.4 | $384.2 | $22.55 | - As of March 31, 2025, **$1.1 billion** of common stock remained available for issuance under the equity distribution agreements[512](index=512&type=chunk) - The stock repurchase program authorizes up to **$1.0 billion** in repurchases, with **$1.0 billion** still available as of March 31, 2025. No repurchases were made in Q1 2025 or Q1 2024[517](index=517&type=chunk)[518](index=518&type=chunk) [10. Earnings Per Share](index=190&type=section&id=10.%20EARNINGS%20PER%20SHARE) Presents the calculation of basic and diluted net increase in stockholders' equity per common share Basic and Diluted Net Increase in Stockholders' Equity Per Share | Indicator | For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | | :---------------------------------------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Net increase in stockholders' equity resulting from operations (in millions) | $241 | $449 | | Weighted average shares of common stock outstanding—basic and diluted | 676 | 591 | | Basic and diluted net increase in stockholders' equity resulting from operations per share | $0.36 | $0.76 | [11. Dividends and Distributions](index=190&type=section&id=11.%20DIVIDENDS%20AND%20DISTRIBUTIONS) Summarizes dividends declared and payable, along with activity under the dividend reinvestment plan Dividends Declared and Payable | Date Declared | Record Date | Payment Date | Per Share Amount | Total Amount (in millions) | | :--------------- | :------------- | :------------- | :--------------- | :------------------------- | | February 5, 2025 | March 14, 2025 | March 31, 2025 | $0.48 | $328 | | February 7, 2024 | March 15, 2024 | March 29, 2024 | $0.48 | $291 | Dividend Reinvestment Plan Activity | Indicator | For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | | :------------------------ | :---------------------------------------- | :---------------------------------------- | | Shares issued (in millions) | 0.9 | 1.0 | | Average issue price per share | $22.16 | $20.82 | [12. Related Party Transactions](index=191&type=section&id=12.%20RELATED%20PARTY%20TRANSACTIONS) Discloses transactions and reimbursements involving the company's investment adviser and affiliates - The company reimbursed its investment adviser or affiliates **$2 million** in Q1 2025 and **$1 million** in Q1 2024 for operational costs and expenses[522](index=522&type=chunk) - Ares Management Capital Markets LLC (AMCM), an affiliate, received **$0.3 million** in underwriting and advisory fees for co-managing the **March 2032** Notes offering in Q1 2025[524](index=524&type=chunk) [13. Financial Highlights](index=191&type=section&id=13.%20FINANCIAL%20HIGHLIGHTS) Provides key financial ratios and per-share data for performance analysis Financial Highlights (Per Share Data) | Per Share Data | As of and For the Three Months Ended March 31, 2025 | As of and For the Three Months Ended March 31, 2024 | | :-------------------------------------------------------- | :-------------------------------------------------- | :-------------------------------------------------- | | Net asset value at beginning of period | $19.89 | $19.24 | | Net increase in stockholders' equity resulting from operations | $0.41 | $0.77 | | Total distributions to stockholders | $(0.48) | $(0.48) | | Net asset value at end of period | $19.82 | $19.53 | | Per share market value at end of period | $22.16 | $20.82 | | Total return based on market value | 3.52% | 6.44% | | Total return based on net asset value | 2.06% | 4.00% | Ratios to Average Net Assets (Annualized) | Ratio | For the Three Months Ended March 31, 2025 (%) | For the Three Months Ended March 31, 2024 (%) | | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Ratio of operating expenses to average net assets | 10.81 | 12.79 | | Ratio of net investment income to average net assets | 10.96 | 11.36 | | Portfolio turnover rate | 39 | 51 | [14. Segment Reporting](index=192&type=section&id=14.%20SEGMENT%20REPORTING) Confirms the company operates as a single operating and reporting segment - The company operates as a **single operating and reporting segment**, with the Chief Operating Decision Maker (CODM) assessing performance and making decisions on a consolidated basis, primarily using net income[532](index=532&type=chunk) [15. Subsequent Events](index=192&type=section&id=15.%20SUBSEQUENT%20EVENTS) Reports significant events occurring after the balance sheet date, impacting financial position or operations - In **April 2025**, the Revolving Credit Facility was amended, increasing total commitment from **$4,513 million** to **$5,283 million** and extending the revolving period and maturity dates for most lenders[534](index=534&type=chunk)[659](index=659&type=chunk)[660](index=660&type=chunk) - From **April 1** to **April 24, 2025**, the company made **$492 million** in new investment commitments (**87%** first lien senior secured loans, **92%** floating rate) and funded **$406 million**[661](index=661&type=chunk) - During the same period, **$394 million** of investment commitments were exited (**98%** first lien senior secured loans, all floating rate), resulting in **$1 million** of net realized gains[662](index=662&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=194&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, and liquidity, including an overview of investment activities, macroeconomic factors, and critical accounting estimates. It also includes forward-looking statements and risk factors [Overview](index=195&type=section&id=OVERVIEW) Provides an overview of Overview - Ares Capital Corporation is a specialty finance company regulated as a **BDC** and has elected **RIC** tax treatment, aiming for current income and capital appreciation through debt and equity investments[540](index=540&type=chunk)[542](index=542&type=chunk)[549](index=549&type=chunk) - Since its IPO (**October 8, 2004**) through **March 31, 2025**, exited investments yielded an asset-level realized gross internal rate of return of approximately **13%**, with realized gains exceeding losses by **$0.8 billion** (excluding certain items)[544](index=544&type=chunk)[545](index=545&type=chunk) - The company must invest at least **70%** of total assets in 'qualifying assets' (e.g., private U.S. companies, cash, government securities) and can invest up to **30%** in non-qualifying assets[548](index=548&type=chunk) [Macroeconomic Environment](index=196&type=section&id=MACROECONOMIC%20ENVIRONMENT) Provides an overview of Macroeconomic Environment - Leveraged corporate credit markets showed positive returns in Q1 2025, supported by stable economic performance, labor market trends, and healthy debt capital markets[550](index=550&type=chunk) - Increased uncertainty from trade and economic policies has led to reduced expectations for future economic growth, higher inflation expectations, and greater capital markets volatility[550](index=550&type=chunk) [Portfolio and Investment Activity](index=197&type=section&id=PORTFOLIO%20AND%20INVESTMENT%20ACTIVITY) Provides an overview of Portfolio and Investment Activity Investment Activity Summary | Indicator | For the Three Months Ended March 31, 2025 (in millions) | For the Three Months Ended March 31, 2024 (in millions) | | :------------------------------------------------ | :------------------------------------------------------ | :------------------------------------------------------ | | Total new investment commitments | $3,453 | $3,554 | | Investment commitments exited | $(2,857) | $(3,414) | | Net investment commitments | $596 | $140 | | Principal amount of investments funded | $2,805 | $2,959 | | Principal amount of investments sold or repaid | $2,562 | $2,914 | | Number of new investment commitments | 70 | 61 | | Average new investment commitment amount | $49 | $58 | | Weighted average term for new investment commitments (in months) | 70 | 75 | | Percentage of new investment commitments at floating rates | 90% | 97% | Investment Portfolio Composition (Fair Value) | Investment Type | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :----------------------------------- | :--------------------------- | :--------------------------- | | First lien senior secured loans | $15,901 | $15,179 | | Second lien senior secured loans | $1,532 | $1,847 | | Subordinated certificates of the SDLP | $1,115 | $1,192 | | Senior subordinated loans | $1,366 | $1,351 | | Preferred equity | $2,645 | $2,649 | | Ivy Hill Asset Management, L.P. | $1,920 | $1,915 | | Other equity | $2,651 | $2,587 | | Total | $27,130 | $26,720 | Investment Grade Distribution (Fair Value) | Investment Grade | March 31, 2025 (Fair Value in millions) | March 31, 2025 (% of Total) | December 31, 2024 (Fair Value in millions) | December 31, 2024 (% of Total) | | :----------------- | :-------------------------------------- | :-------------------------- | :----------------------------------------- | :----------------------------- | | Grade 4 | $5,071 | 18.7% | $4,792 | 17.9% | | Grade 3 | $21,305 | 78.5% | $21,156 | 79.2% | | Grade 2 | $499 | 1.9% | $513 | 1.9% | | Grade 1 | $255 | 0.9% | $259 | 1.0% | | Total | $27,130 | 100.0% | $26,720 | 100.0% | - The weighted average grade of the investment portfolio at fair value remained stable at **3.1** as of March 31, 2025, and December 31, 2024[563](index=563&type=chunk) [Results of Operations](index=209&type=section&id=RESULTS%20OF%20OPERATIONS) Provides an overview of Results of Operations [Investment Income](index=209&type=section&id=Investment%20Income) Provides an overview of Investment Income Investment Income | Income Type | For the Three Months Ended March 31, 2025 (in millions) | For the Three Months Ended March 31, 2024 (in millions) | | :------------------------------ | :------------------------------------------------------ | :------------------------------------------------------ | | Interest income from investments | $526 | $513 | | Capital structuring service fees | $46 | $28 | | Dividend income | $143 | $147 | | Other income | $17 | $13 | | Total investment income | $732 | $701 | - Interest income from investments increased by **$13 million (2.5%)** in Q1 2025 compared to Q1 2024, driven by an increase in the average size of the portfolio[593](index=593&type=chunk) Average Portfolio Size and Yield | Indicator | For the Three Months Ended March 31, 2025 (in millions) | For the Three Months Ended March 31, 2024 (in millions) | | :-------------------------------------- | :------------------------------------------------------ | :------------------------------------------------------ | | Average size of portfolio | $26,576 | $22,737 | | Weighted average yield on portfolio | 10.2% | 11.4% | - Capital structuring service fees increased by **$18 million (64.3%)** in Q1 2025, primarily due to an increase in new investment commitments[594](index=594&type=chunk) Dividend Income Breakdown | Source of Dividend Income | For the Three Months Ended March 31, 2025 (in millions) | For the Three Months Ended March 31, 2024 (in millions) | | :------------------------------ | :------------------------------------------------------ | :------------------------------------------------------ | | Dividend income received from IHAM | $73 | $66 | | Recurring dividend income | $69 | $66 | | Non-recurring dividend income | $1 | $15 | | Total dividend income | $143 | $147 | [Operating Expenses](index=210&type=section&id=Operating%20Expenses) Provides an overview of Operating Expenses Operating Expenses | Expense Type | For the Three Months Ended March 31, 2025 (in millions) | For the Three Months Ended March 31, 2024 (in millions) | | :-------------------------------- | :------------------------------------------------------ | :------------------------------------------------------ | | Interest and credit facility fees | $186 | $159 | | Base management fee | $102 | $87 | | Income based fee | $85 | $88 | | Capital gains incentive fee | $(25) | $25 | | Administrative and other fees | $4 | $3 | | Other general and administrative | $8 | $7 | | Total expenses | $360 | $369 | - Interest and credit facility fees increased by **$27 million (17.0%)** in Q1 2025, primarily due to an increase in the average principal amount of outstanding debt[598](index=598&type=chunk)[600](index=600&type=chunk) Average Outstanding Debt and Yield | Indicator | For the Three Months Ended March 31, 2025 (in millions) | For the Three Months Ended March 31, 2024 (in millions) | | :---------------------------------------------- | :------------------------------------------------------ | :------------------------------------------------------ | | Average outstanding debt | $14,174 | $11,865 | | Weighted average stated interest rate on outstanding debt | 4.9% | 4.9% | - The base management fee increased in Q1 2025 due to the increased average size of the portfolio, while the income-based fee decreased due to lower pre-incentive fee net investment income[601](index=601&type=chunk) - The capital gains incentive fee calculated under GAAP was a reduction of **$25 million** in Q1 2025, compared to an expense of **$25 million** in Q1 2024, primarily due to net losses on investments and foreign currency[602](index=602&type=chunk) [Income Tax Expense, Including Excise Tax](index=212&type=section&id=Income%20Tax%20Expense%2C%20Including%20Excise%20Tax) Provides an overview of Income Tax Expense, Including Excise Tax - The company accrued a net expense of **$7 million** for U.S. federal excise tax in Q1 2025, compared to **$8 million** in Q1 2024[608](index=608&type=chunk) - Net tax expense for consolidated taxable subsidiaries was **$0 million** in Q1 2025, compared to a net tax benefit of **$(1) million** in Q1 2024[609](index=609&type=chunk) [Net Realized Gains/Losses](index=212&type=section&id=Net%20Realized%20Gains%2FLosses) Provides an overview of Net Realized Gains/Losses Net Realized Gains/Losses | Indicator | For the Three Months Ended March 31, 2025 (in millions) | For the Three Months Ended March 31, 2024 (in millions) | | :-------------------------------------------- | :------------------------------------------------------ | :------------------------------------------------------ | | Sales, repayments or exits of investments | $2,390 | $2,905 | | Gross realized gains | $46 | $42 | | Gross realized losses | $(138) | $(46) | | Total net realized losses on investments | $(92) | $(4) | - Net realized losses on investments increased significantly from **$(4) million** in Q1 2024 to **$(92) million** in Q1 2025, primarily driven by losses from Vobev, LLC and Vobev Holdings, LLC, and SVP-Singer Holdings Inc[610](index=610&type=chunk)[611](index=611&type=chunk) - Net realized gains on foreign currency and other transactions were **$31 million** in Q1 2025, compared to net realized losses of **$14 million** in Q1 2024[611](index=611&type=chunk)[612](index=612&type=chunk) - In Q1 2024, a realized loss of approximately **$14 million** was incurred from the full repayment of **$403 million** in 2024 Convertible Notes[613](index=613&type=chunk) [Net Unrealized Gains/Losses](index=213&type=section&id=Net%20Unrealized%20Gains%2FLosses) Provides an overview of Net Unrealized Gains/Losses Net Unrealized Gains/Losses | Indicator | For the Three Months Ended March 31, 2025 (in millions) | For the Three Months Ended March 31, 2024 (in millions) | | :---------------------------------------------------------------------- | :------------------------------------------------------ | :------------------------------------------------------ | | Unrealized appreciation | $252 | $321 | | Unrealized depreciation | $(354) | $(207) | | Net unrealized depreciation reversed related to net realized gains or losses | $83 | $12 | | Total net unrealized (losses) gains on investments | $(19) | $126 | - Total net unrealized losses on investments were **$(19) million** in Q1 2025, a significant decrease from net unrealized gains of **$126 million** in Q1 2024[614](index=614&type=chunk) - Key contributors to net unrealized depreciation in Q1 2025 included Senior Direct Lending Program, LLC, Implus Footcare, LLC, and VPROP Operating, LLC and V SandCo, LLC[615](index=615&type=chunk) - Net unrealized losses on foreign currency and other transactions were **$44 million** in Q1 2025, compared to net unrealized gains of **$30 million** in Q1 2024[617](index=617&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=215&type=section&id=FINANCIAL%20CONDITION%2C%20LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Provides an overview of Financial Condition, Liquidity and Capital Resources [Equity Capital Activities](index=215&type=section&id=Equity%20Capital%20Activities) Provides an overview of Equity Capital Activities - Total equity market capitalization was **$15.3 billion** as of March 31, 2025, up from **$14.7 billion** as of December 31, 2024[622](index=622&type=chunk) Common Stock Issuances (Q1 2025) | Issuances of Common Stock | Number of Shares (in millions) | Gross Proceeds (in millions) | Underwriting Fees/Offering Expenses (in millions) | Net Proceeds (in millions) | Average Offering Price Per Share | | :------------------------ | :----------------------------- | :--------------------------- | :------------------------------------------------ | :------------------------- | :------------------------------- | | "At the market" offerings | 17.2 | $388.6 | $4.4 | $384.2 | $22.55 | - As of March 31, 2025, **$1.1 billion** of common stock remained available for issuance under the Equity Distribution Agreements[623](index=623&type=chunk) - The stock repurchase program has **$1.0 billion** available for repurchases as of March 31, 2025, with **no shares** repurchased in Q1 2025 or Q1 2024[627](index=627&type=chunk)[628](index=628&type=chunk) Common Stock Price Range and Dividends | Quarter | Net Asset Value | High Sales Price | Low Sales Price | High Sales Price Premium (Discount) to NAV | Low Sales Price Premium (Discount) to NAV | Cash Dividend Per Share | | :----------------------- | :-------------- | :--------------- | :-------------- | :----------------------------------------- | :---------------------------------------- | :---------------------- | | Year ending Dec 31, 2025 | | | | | | | | First Quarter | $19.82 | $23.81 | $21.28 | 20.13% | 7.37% | $0.48 | | Year ended Dec 31, 2024 | | | | | | | | First Quarter | $19.53 | $20.82 | $19.94 | 6.61% | 2.10% | $0.48 | | Second Quarter | $19.61 | $21.58 | $20.24 | 10.05% | 3.21% | $0.48 | | Third Quarter | $19.77 | $21.28 | $19.80 | 7.64% | 0.15% | $0.48 | | Fourth Quarter | $19.89 | $22.27 | $20.74 | 11.97% | 4.27% | $0.48 | [Debt Capital Activities](index=217&type=section&id=Debt%20Capital%20Activities) Provides an overview of Debt Capital Activities Debt Obligations Summary | Debt Instrument | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------- | :--------------------------- | :--------------------------- | | Revolving Credit Facility | $1,113 | $1,113 | | Revolving Funding Facility | $1,030 | $1,065 | | SMBC Funding Facility | $400 | $502 | | BNP Funding Facility | $785 | $889 | | April 2036 CLO Notes | $473 | $473 | | October 2036 CLO Secured Loans | $541 | $541 | | Unsecured Notes | $9,583 | $9,144 | | Total Carrying Value | $13,922 | $13,727 | - The ratio of total principal amount of outstanding debt to stockholders' equity was **1.02:1.00** as of March 31, 2025, slightly down from **1.03:1.00** as of December 31, 2024[640](index=640&type=chunk) - The Revolving Credit Facility had **$1.1 billion** outstanding as of March 31, 2025, with an applicable spread of **1.75%** over SOFR (or alternate base rate)[641](index=641&type=chunk) - The Revolving Funding Facility had **$1.0 billion** outstanding as of March 31, 2025, with an interest rate based on SOFR or a base rate plus a **2.00%** spread[642](index=642&type=chunk)[643](index=643&type=chunk) - The SMBC Funding Facility had **$400 million** outstanding as of March 31, 2025, with an interest rate based on SOFR or a base rate plus a **2.00%** spread[644](index=644&type=chunk) - The BNP Funding Facility had **$785 million** outstanding as of March 31, 2025, with an interest rate based on SOFR or a base rate plus a **1.90%** margin during the reinvestment period[645](index=645&type=chunk) - The company completed the ADL CLO 1 Debt Securitization (**$702 million**) in **May 2024** and the ADL CLO 4 Debt Securitization (**$544 million**) in **November 2024**, issuing secured notes and retaining subordinated notes[646](index=646&type=chunk)[649](index=649&type=chunk) - In **March 2025**, the company repaid in full **$600 million** of March 2025 Notes upon maturity[653](index=653&type=chunk) [Recent Developments](index=221&type=section&id=RECENT%20DEVELOPMENTS) Provides an overview of Recent Developments - In **April 2025**, the Revolving Credit Facility was amended, increasing the total commitment to **$5,283 million** and extending the revolving period and maturity dates for most lenders[659](index=659&type=chunk)[660](index=660&type=chunk) - From **April 1** to **April 24, 2025**, the company made **$492 million** in new investment commitments (**87%** first lien senior secured loans, **92%** floating rate) and funded **$406 million**[661](index=661&type=chunk) - During the same period, **$394 million** of investment commitments were exited (**98%** first lien senior secured loans, all floating rate), resulting in **$1 million** of net realized gains[662](index=662&type=chunk) - As of **April 24, 2025**, the company had an investment backlog of approximately **$2.6 billion**, representing transactions likely to close[663](index=663&type=chunk) [Critical Accounting Estimates](index=222&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) Provides an overview of Critical Accounting Estimates - Investment transactions are recorded on the trade date, with realized gains/losses measured by the difference between net proceeds and amortized cost, and unrealized gains/losses reflecting changes in investment values[665](index=665&type=chunk) - Investments without readily available market quotations are valued at fair value by the Valuation Designee, subject to board oversight and input from independent third-party valuation providers (IVPs)[666](index=666&type=chunk)[667](index=667&type=chunk) - Valuation techniques include enterprise value (EV) analysis (using EBITDA multiples or discounted cash flow) for equity and control debt investments, and yield analysis for non-credit impaired debt investments[673](index=673&type=chunk)[676](index=676&type=chunk) - Fair value measurements are categorized into **Level 1** (quoted active markets), **Level 2** (observable inputs in non-active markets), and **Level 3** (unobservable and significant inputs)[675](index=675&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=225&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to financial market risks, including investment valuation risk and interest rate risk, and how these risks are managed [Investment Valuation Risk](index=225&type=section&id=Investment%20Valuation%20Risk) Provides an overview of Investment Valuation Risk - The fair value of most portfolio investments is determined by the investment adviser (valuation designee) with IVP input, leading to inherent uncertainty and potential fluctuations from period to period[679](index=679&type=chunk) - Illiquid nature and legal restrictions on resale of investments mean realized values could differ significantly from recorded fair values, especially in forced liquidation sales[679](index=679&type=chunk) [Interest Rate Risk](index=225&type=section&id=Interest%20Rate%20Risk) Provides an overview of Interest Rate Risk - The company's net investment income is **sensitive to changes in interest rates** due to funding investments with borrowings[680](index=680&type=chunk) - As of **March 31, 2025**, **69%** of investments at fair value bore variable rates (including SDLP Certificates), **12%** bore fixed rates, **11%** were non-income producing, **1%** on non-accrual, and **7%** was the IHAM equity investment[683](index=683&type=chunk) - Excluding SDLP Certificates, **99%** of variable rate investments contained interest rate floors. The Facilities and CLO Secured Loans bear variable rates without floors, while Unsecured Notes are fixed or swapped to floating[683](index=683&type=chunk) Annualized Impact on Net Income from Base Rate Changes (March 31, 2025) | Basis Point Change | Interest and Dividend Income (in millions) | Interest Expense (in millions) | Net Income (in millions) | | :----------------- | :--------------------------------------- | :----------------------------- | :----------------------- | | Up 300 | $564 | $213 | $351 | | Up 200 | $376 | $142 | $234 | | Up 100 | $188 | $71 | $117 | | Down 100 | $(189) | $(71) | $(118) | | Down 200 | $(375) | $(142) | $(233) | | Down 300 | $(555) | $(213) | $(342) | [Item 4. Controls and Procedures](index=226&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=226&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Provides an overview of Evaluation of Disclosure Controls and Procedures - Management, with participation from the principal executive and financial officers, evaluated the effectiveness of disclosure controls and procedures as of **March 31, 2025**, and concluded they were **effective**[689](index=689&type=chunk) [Changes in Internal Control over Financial Reporting](index=227&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) Provides an overview of Changes in Internal Control over Financial Reporting - There were **no changes** in internal control over financial reporting during the quarter ended **March 31, 2025**, that materially affected or are reasonably likely to materially affect internal control over financial reporting[690](index=690&type=chunk) Part II [Item 1. Legal Proceedings](index=227&type=section&id=Item%201.%20Legal%20Proceedings) The company and its affiliates are subject to various legal and regulatory proceedings in the ordinary course of business, incurring significant costs and expenses - The company and its affiliates are subject to legal proceedings, including those from investments, and extensive regulation, incurring **significant costs and expenses**[691](index=691&type=chunk)[692](index=692&type=chunk) [Item 1A. Risk Factors](index=227&type=section&id=Item%201A.%20Risk%20Factors) Refers readers to the comprehensive risk factors detailed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, noting that additional unknown risks may also exist - Readers should carefully consider risk factors described in Part I, Item 1A of the Annual Report on Form 10-K for the fiscal year ended **December 31, 2024**, as additional unknown risks may also materially and adversely affect the business[693](index=693&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=227&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section confirms no unregistered sales of equity securities and provides updates on the dividend reinvestment plan and stock repurchase program [Dividend Reinvestment Plan](index=227&type=section&id=Dividend%20Reinvestment%20Plan) Provides an overview of Dividend Reinvestment Plan - The company did not purchase shares of its common stock in the open market to satisfy dividend reinvestment requests during the quarter ended **March 31, 2025**[695](index=695&type=chunk) [Stock Repurchase Program](index=227&type=section&id=Stock%20Repurchase%20Program) Provides an overview of Stock Repurchase Program - The board of directors authorized an extension of the stock repurchase program to **February 15, 2026**, for up to **$1.0 billion** in aggregate repurchases[696](index=696&type=chunk) - **No repurchases** were made under the program during the quarter ended **March 31, 2025**, and **$1.0 billion** remains available for future repurchases[697](index=697&type=chunk) [Item 3. Defaults Upon Senior Securities](index=228&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not applicable - This item is **not applicable** to the current report[698](index=698&type=chunk) [Item 4. Mine Safety Disclosures](index=228&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - This item is **not applicable** to the current report[699](index=699&type=chunk) [Item 5. Other Information](index=228&type=section&id=Item%205.%20Other%20Information) This section confirms no Rule 10b5-1 trading plans were adopted or terminated by directors or executive officers during the quarter [Rule 10b5-1 Trading Plans](index=228&type=section&id=Rule%2010b5-1%20Trading%20Plans) Provides an overview of Rule 10b5-1 Trading Plans - **No Rule 10b5-1 trading plans** were adopted or terminated by directors or executive officers during the fiscal quarter ended **March 31, 2025**[700](index=700&type=chunk) [Item 6. Exhibits](index=229&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the report, including articles of amendment, bylaws, supplemental indentures, equity distribution agreements, and certifications - The report includes exhibits such as **Articles of Amendment and Restatement**, **Third Amended and Restated Bylaws**, **Second Supplemental Indenture for 5.800% Notes due 2032**, and various **Equity Distribution Agreements**[702](index=702&type=chunk) - Certifications by the **Chief Executive Officer** and **Chief Financial Officer** pursuant to the Sarbanes-Oxley Act of 2002 are also filed as exhibits[702](index=702&type=chunk) [Signatures](index=230&type=section&id=SIGNATURES) Official signatures of the registrant's Chief Executive Officer, Chief Financial Officer and Treasurer, and Chief Accounting Officer, certifying the report - The report is signed by **R. Kipp deVeer** (**Chief Executive Officer**), **Scott C. Lem** (**Chief Financial Officer** and Treasurer), and **Paul Cho** (**Chief Accounting Officer**) on **April 29, 2025**[707](index=707&type=chunk)

Exhibit 99.1 ARES CAPITAL CORPORATION ANNOUNCES MARCH 31, 2025 FINANCIAL RESULTS AND DECLARES SECOND QUARTER 2025 DIVIDEND OF $0.48 PER SHARE DIVIDEND DECLARATIONS New York, NY — April 29, 2025 — Ares Capital Corporation ("Ares Capital") (NASDAQ: ARCC) announced that its Board of Directors has declared a second quarter 2025 dividend of $0.48 per share. The second quarter 2025 dividend is payable on June 30, 2025 to stockholders of record as of June 13, 2025. MARCH 31, 2025 FINANCIAL RESULTS Ares Capital als ...