Ares Capital (ARCC) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future. Over the past month, shares of this private equity firm have returned -9.8%, compared to the Zacks S&P 500 composite's -8.9% change. During this period, the Zacks Financial - SBIC & Commercial Industry industry, which Ares Capital falls in, has lost 10.3%. The key question now is: What could be th ...

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Core Insights - The article emphasizes the importance of dividend investing in quality blue-chip stocks, BDCs, and REITs for building a sustainable retirement income [1][2]. Group 1 - The author is a Navy veteran focused on long-term investment strategies, particularly in high-quality, dividend-paying companies [1]. - The goal is to assist lower and middle-class workers in constructing investment portfolios that can lead to financial independence [1]. - The author expresses a preference for a buy-and-hold investment approach, valuing quality over quantity in stock selection [1]. Group 2 - The article does not provide specific financial performance data or metrics related to the companies mentioned [2][3]. - There is a disclosure of a beneficial long position in shares of BXSL and ARCC, indicating a personal investment interest in these companies [2].

Financial Data and Key Metrics Changes - The company reported GAAP net income per share of $0.55 for Q4 2024, down from $0.62 in Q3 2024 and $0.72 in Q4 2023 [30] - For the full year, GAAP net income per share was $2.44, compared to $2.75 in 2023 [30] - Core earnings per share for Q4 2024 were $0.55, down from $0.58 in Q3 2024 and $0.63 in Q4 2023 [30] - The total portfolio at fair value increased to $26.7 billion, up from $25.9 billion in Q3 2024 and $22.9 billion a year ago [33] - Stockholders' equity ended the quarter at $13.4 billion, or $19.89 per share, marking a record high [34] Business Line Data and Key Metrics Changes - The company originated approximately $3.8 billion of new investment commitments in Q4 2024, a greater than 50% increase over Q4 2023 [41] - For the full year, over $15 billion of new commitments were originated, more than double the commitment volumes of 2023 [41] - The weighted average loan-to-value ratio was 44%, providing strong downside protection for loans [48] Market Data and Key Metrics Changes - The company reviewed a record volume of new opportunities totaling more than $650 billion in 2024 [20] - The organic weighted average LTM EBITDA growth rate of portfolio companies reached 11% in Q4 2024, up from 10% in Q3 2024 [24] Company Strategy and Development Direction - The company aims to out-originate its competition, which is seen as a key driver of long-term credit performance [21] - The focus on financing incumbent borrowers has increased, with over 70% of new commitments made to existing borrowers [22] - The company is well-positioned for a successful 2025, anticipating an increase in M&A activity due to a healthy economy and pressure on private equity sponsors [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong credit performance and the health of the underlying portfolio, despite a historically subdued M&A environment in 2024 [19][24] - The company does not expect any material direct impact from new government policies on its portfolio [25] - Management noted that the overall risk ratings remain stable, and the portfolio is diversified, which mitigates the impact of negative credit events [46] Other Important Information - The company declared a first-quarter 2025 dividend of $0.48 per share, consistent with the fourth-quarter 2024 dividend [38] - The company has a significant amount of dry powder, with nearly $6.7 billion of total available liquidity [36] Q&A Session Summary Question: Activity during the fourth quarter and its impact on NII - Management noted that Q4 activity levels were flat compared to Q3, with some delays due to the election, but January remained busy [55] Question: Asset allocation within the portfolio - Management confirmed that there is no change in the mix of the portfolio over time, maintaining a balance between junior and senior positions [59] Question: Sports franchise investment - Management explained that the investment in the Dolphins is part of a broader strategy to leverage the Ares credit platform and is seen as a unique opportunity [70] Question: Impact of base rate declines on portfolio yields - Management indicated that there is a lag effect in the impact of base rates on portfolio yields, with expectations of a similar level of decline in Q1 [83] Question: Outlook on credit losses - Management expressed confidence in the portfolio's performance, noting that non-accruals remain below historical averages and the underlying profit growth is strong [110] Question: Ivy Hill distribution increase - Management confirmed that Ivy Hill's increased distribution is due to growth and a special dividend, with a new run rate expected going forward [118] Question: Exposure to government contracts - Management stated that there is minimal exposure to government contracting within the portfolio, indicating it would not have a significant impact [120]

Financial Data and Key Metrics Changes - The company reported GAAP net income per share of $0.55 for Q4 2024, down from $0.62 in Q3 2024 and $0.72 in Q4 2023 [19] - For the full year, GAAP net income per share was $2.44, compared to $2.75 in 2023 [19] - The total portfolio at fair value increased to $26.7 billion at the end of Q4 2024, up from $25.9 billion at the end of Q3 2024 and $22.9 billion a year ago [21] - The weighted average yield on debt and other income-producing securities at amortized costs was 11.1% at December 31, down from 11.7% at September 30 and 12.5% at the end of 2023 [21] Business Line Data and Key Metrics Changes - The company originated approximately $3.8 billion of new investment commitments in Q4 2024, a more than 50% increase over Q4 2023 [26] - Total new commitments for the year reached $15 billion, more than double the commitment volumes of 2023 [26] - The non-accrual rate at cost ended the quarter at 1.7%, up 40 basis points from the prior quarter but below the historical average of 2.8% [29] Market Data and Key Metrics Changes - The company ended 2024 with a record NAV per share of $19.89, marking the eighth consecutive quarter of NAV growth [13] - The organic weighted average LTM EBITDA growth rate of portfolio companies reached 11% in Q4, up from 10% in the prior quarter [16] Company Strategy and Development Direction - The company aims to out-origin its competition, which is seen as a key driver of long-term credit performance [14] - The focus on financing incumbent borrowers has increased, with over 70% of new commitments made to existing borrowers [15] - The company is well-positioned for a successful 2025, anticipating a healthy economy and increased M&A activity [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate potential impacts from new government policies, stating no material direct impact is expected [17] - The company is monitoring the economic environment closely, with a focus on maintaining strong credit performance despite potential challenges [18] - Management highlighted the importance of their diversified portfolio and strong credit performance in comparison to peers [16][18] Other Important Information - The company declared a first-quarter 2025 dividend of $0.48 per share, consistent with the Q4 2024 dividend [24] - The company has a taxable income spillover estimated at $922 million or $1.37 per share available for distribution to stockholders in 2025 [24] Q&A Session Summary Question: Activity during Q4 and its impact on NII - Management noted that Q4 activity levels were flat compared to Q3, with some delays due to the election, but January has been busy [35][36] Question: Asset allocation within the portfolio - Management confirmed no change in the mix of the portfolio over time, maintaining a balance between junior and senior deals [39][41] Question: Sports franchise investment - Management discussed the recent investment in the Dolphins, emphasizing its uniqueness and potential for growth [48] Question: Impact of base rate declines on portfolio yields - Management indicated a lag effect in yield declines, with expectations for similar levels of decline in Q1 [61][63] Question: Outlook for credit losses - Management expressed confidence in the portfolio's performance, noting strong underlying profit growth and low non-accrual rates [87] Question: Ivy Hill distribution increase - Management confirmed that Ivy Hill's increased distribution is due to strong performance and a special dividend, with a new run rate expected [92][93] Question: Exposure to government contracts - Management indicated minimal exposure to government contracts, suggesting no significant impact on the portfolio [96][109]

Earnings Presentation Fourth Quarter 2024 0 42 65 155 112 42 4 94 109 127 127 127 0 42 65 2 87 133 71 126 163 120 163 198 Credit Private Equity Real Estate Strategic Initiative s BUSINESS SECTOR PALETTE GENERAL PALETTE Important Notice This presentation has been prepared for Ares Capital Corporation ("Ares Capitalˮ) for the benefit of its public stockholders. This presentation is solely for information purposes in connection with evaluating the business, operations and financial results of Ares Capital. Thi ...

Financial Performance and Strategy - As of December 31, 2024, the company's asset coverage was 196%, allowing it to borrow up to two dollars for every dollar in assets[34]. - The company managed approximately $12.8 billion in assets under management through its wholly owned portfolio company, Ivy Hill Asset Management, L.P. (IHAM) as of December 31, 2024[45]. - Since its IPO on October 8, 2004, the company has achieved a realized gross internal rate of return of approximately 13% on exited investments, with total proceeds of approximately $63.7 billion from $49.7 billion originally invested[55]. - The company’s average annualized net realized gain rate since its IPO was approximately 0.8%, excluding one-time gains and losses from specific transactions[56]. - The company primarily invests in first lien senior secured loans, second lien senior secured loans, subordinated debt, and preferred equity, with terms generally ranging from three to ten years[67]. - The company’s financial condition and results depend on effectively managing future growth and acquiring suitable investments[149]. - The company completed two debt securitizations through collateralized loan obligations (CLOs), with approximately $476 million and $544 million in aggregate principal amounts issued[169]. Investment Portfolio Composition - The investment portfolio is diversified across various industries, with the largest sectors being Software and Services (24.5%) and Health Care Equipment and Services (12.0%) as of December 31, 2024[52]. - The geographic composition of the portfolio as of December 31, 2024, included 25.2% in the West and 20.9% in the Midwest[59]. - As of December 31, 2024, the weighted average grade of the investments in the company's portfolio at fair value was 3.1, indicating a generally favorable risk profile[80]. - The company monitors 550 portfolio companies, with 15% entitled to board seats or observation rights, representing approximately 27% of the portfolio at fair value[77]. - As of December 31, 2024, IHAM represented 7.1% of the total investment portfolio at fair value and contributed approximately 9.6% of total investment income for the year[198]. Risk Management and Compliance - The company’s investment strategy emphasizes capital preservation, low volatility, and minimizing downside risk, supported by intensive credit investment analysis[61]. - The investment adviser employs a credit risk grading system, with grades ranging from 1 (high risk) to 4 (low risk) assessed quarterly[80]. - The company may incur significant expenses for evaluating potential strategic acquisition and investment transactions[76]. - The company is regulated as a Business Development Company (BDC) under the Investment Company Act, adhering to specific regulatory requirements[118]. - The company must distribute at least 90% of its investment company taxable income to maintain its RIC status, limiting available funds for new investments[151]. - The company is subject to financial and operating covenants that restrict business activities and could hinder financing additional loans[162]. Fees and Expenses - The annual base management fee rate was reduced from 1.5% to 1.0% for assets financed using leverage over 1.0x debt to equity, effective June 21, 2019[88]. - The income based fee is calculated quarterly based on pre-incentive fee net investment income, which includes interest and dividend income minus operating expenses[89]. - The hurdle rate for pre-incentive fee net investment income is set at 1.75% per quarter, with a "catch-up" provision for income exceeding this rate[90][91]. - The capital gains incentive fee is calculated at 20% of the positive difference between cumulative realized capital gains and cumulative realized capital losses at the end of each year[94]. - The investment advisory and management agreement was approved for continuation until June 6, 2025[101]. - The company bears all operational costs and expenses, including those related to investment advisory and management services[100]. Market and Economic Conditions - Rising interest rates may increase the cost of debt for underlying portfolio companies, potentially impacting their financial performance[144]. - Inflation has adversely affected the business and financial condition of portfolio companies, increasing costs of labor, energy, and raw materials[145]. - The current macroeconomic environment includes persistent inflation and supply chain disruptions, which could adversely affect the company's operations[227]. - Economic downturns could impair portfolio companies, leading to increased non-performing assets and decreased portfolio value[228]. Regulatory and Legal Risks - The company is subject to potential litigation and regulatory investigations, which could be time-consuming and costly[207][208]. - The SEC has adopted rules for enhancing climate-related disclosures, which may increase compliance costs and regulatory burdens[204]. - The Corporate Sustainability Reporting Directive (CSRD) requires broader sustainability reporting, potentially increasing management burdens and costs for portfolio companies[203]. - Changes in U.S. tax laws and regulations could negatively impact the company and its portfolio companies, affecting long-term business operations[214]. Operational Risks - The company relies on key personnel from Ares for future success, and their departure could materially affect operations[147]. - The company is highly dependent on Ares Management's information systems, which could disrupt operations and negatively affect stock prices and dividend payments[221]. - The company relies on third-party service providers for certain operations, increasing operational risks related to cybersecurity and service disruptions[224]. Investment Risks - The company primarily invests in privately held U.S. middle-market companies, which involve significant risks including limited financial resources and less predictable operating results[230]. - Investments in debt are typically below investment grade, indicating a higher risk of loss[231]. - The company may invest in "covenant-lite" loans, which could hinder the ability to monitor borrower performance and increase exposure to losses[232]. - Some portfolio companies may be highly leveraged, which could impair their ability to finance future operations and limit flexibility in responding to changing conditions[242].

Exhibit 99.1 ARES CAPITAL CORPORATION ANNOUNCES DECEMBER 31, 2024 FINANCIAL RESULTS AND DECLARES FIRST QUARTER 2025 DIVIDEND OF $0.48 PER SHARE DIVIDEND DECLARATIONS New York, NY — February 5, 2025 — Ares Capital Corporation ("Ares Capital") (NASDAQ: ARCC) announced that its Board of Directors has declared a first quarter 2025 dividend of $0.48 per share. The first quarter 2025 dividend is payable on March 31, 2025 to stockholders of record as of March 14, 2025. (1) All per share amounts and weighted averag ...

Ares Capital Corporation (NASDAQ:ARCC) Q3 2024 Earnings Conference Call October 30, 2024 12:00 PM ET Company Participants John Stilmar - Partner, Co-Head of Public Markets IR Kipp DeVeer - CEO Scott Lem - CFO Kort Schnabel - Co-President, Los Angeles Jim Miller - Co-President Conference Call Participants John Hecht - Jefferies Finian O'Shea - Wells Fargo Securities Casey Alexander - Compass Point Robert Dodd - Raymond James Kenneth Lee - RBC Capital Markets Mark Hughes - Truist Paul Johnson - KBW Derek Hewe ...