Apollo Investment Corporation Reports Financial Results for the Quarter Ended September 30, 2017

By: Apollo Investment Corporation via Business Wire News Releases

November 03, 2017 at 07:30 AM EDT

Apollo Investment Corporation (NASDAQ: AINV) or the “Company,” or “Apollo Investment,” today announced financial results for its second fiscal quarter ended September 30, 2017. The Company’s net investment income was $0.16 per share for the quarter ended September 30, 2017, compared to $0.15 per share for the quarter ended June 30, 2017. The Company’s net asset value (“NAV”) was $6.72 per share as of September 30, 2017, compared to $6.73 as of June 30, 2017.

On November 2, 2017, the Board of Directors declared a distribution of $0.15 per share, payable on January 5, 2018 to shareholders of record as of December 21, 2017.

Mr. James Zelter, Apollo Investment’s Chief Executive Officer, commented, “We continue to make steady progress with respect to our investment portfolio repositioning strategy that we outlined last year. We continue to deploy capital into our core strategies including investments made pursuant to our co-investment order.”

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(1) Core strategies include corporate lending, aviation, life sciences, asset based and lender finance.

FINANCIAL HIGHLIGHTS

($ in billions, except per share data)	September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016
Total assets	$	2.45		$	2.49		$	2.41		$	2.64		$	2.65
Investment portfolio (fair value)	$	2.36		$	2.42		$	2.32		$	2.53		$	2.55
Debt outstanding	$	0.86		$	0.92		$	0.85		$	1.03		$	1.01
Net assets	$	1.47		$	1.48		$	1.48		$	1.51		$	1.54
Net asset value per share	$	6.72		$	6.73		$	6.74		$	6.86		$	6.95

Debt-to-equity ratio	0.59		x	0.62		x	0.57		x	0.69		x	0.66		x
Net leverage ratio (1)	0.59		x	0.62		x	0.55		x	0.66		x	0.63		x

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(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 September 30,						Six Months Ended September 30,
(in millions)*	2017			2016			2017			2016
Investments made in portfolio companies	$	265.4		$	127.6		$	607.5		$	250.4
Investments sold	(11.7		)	(17.9		)	(21.7		)	(164.0		)
Net activity before repaid investments	253.7			109.7			585.8			86.4
Investments repaid	(328.1		)	(197.1		)	(570.1		)	(390.5		)
Net investment activity	$	(74.4	)	$	(87.4	)	$	15.7		$	(304.1	)

Portfolio companies at beginning of period	84			81			86			89
Number of new portfolio companies	12			6			23			11
Number of exited portfolio companies	(9		)	(5		)	(22		)	(18		)
Portfolio companies at end of period	87			82			87			82

Number of investments made in existing portfolio companies	11			10			16			22

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* Totals may not foot due to rounding.

OPERATING RESULTS

	Three Months Ended September 30,					Six Months Ended September 30,
(in millions)*	2017			2016		2017			2016
Net investment income	$	34.2		$	39.5	$	67.5		$	75.6
Net realized and change in unrealized gains (losses)	(2.4		)	1.6		(6.9		)	(76.6		)
Net increase (decrease) in net assets resulting from operations	$	31.8		$	41.1	$	60.6		$	(1.0	)

(per share)*
Net investment income on per average share basis	$	0.16		$	0.18	$	0.31		$	0.34
Net realized and change in unrealized gain (loss) per share	$	(0.01	)	$	0.01	$	(0.03	)	$	(0.34	)
Earnings (loss) per share	$	0.14		$	0.18	$	0.28		$	0.00

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* Totals may not foot due to rounding.

SHARE REPURCHASE PROGRAM

On September 15, 2016, the Company announced that its Board of Directors expanded the Company’s stock repurchase program by $50 million which increased the total amount available to be repurchased to $150 million.

During the three months ended September 30, 2017, the Company repurchased 660,300 shares at a weighted average price per share of $5.99, inclusive of commissions, for a total cost of $4.0 million.

During the period from October 1, 2017 through November 2, 2017, the Company repurchased 591,800 shares at a weighted average price per share of $5.97, inclusive of commissions, for a total cost of $3.5 million.

Since the inception of the share repurchase program and through November 2, 2017, the Company repurchased 18,298,797 shares at a weighted average price per share of $5.89, inclusive of commissions, for a total cost of $107.8 million, leaving a maximum of $42.2 million available for future purchases under the current Board authorization.

CONFERENCE CALL / WEBCAST AT 10:00 AM EDT ON NOVEMBER 3, 2017

The Company will host a conference call on Friday, November 3, 2017 at 10:00 a.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 #90925356 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 Event Calendar in the Investor Relations 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 November 24, 2017 by dialing (800) 585-8367; international callers please dial (404) 537-3406, reference Conference ID # 90925356. A replay of the audio webcast will also be available later that same day. To access the audio webcast please visit the Event Calendar in the Investor Relations section of the Company’s 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 September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016, and September 30, 2016 were as follows:

	September 30, 2017	June 30, 2017	March 31, 2017	December 31, 2016	September 30, 2016
Portfolio composition, at fair value:
Secured debt	80%	77%	75%	69%	64%
Unsecured debt	5%	7%	7%	10%	9%
Structured products and other	5%	6%	7%	9%	12%
Preferred equity	1%	1%	1%	1%	3%
Common equity/interests and warrants	9%	9%	10%	11%	12%
Weighted average yields, at amortized cost, exclusive of investments on non-accrual status (1):
Secured debt portfolio	10.3%	10.2%	10.2%	10.9%	11.0%
Unsecured debt portfolio	11.2%	11.1%	11.1%	10.7%	10.8%
Total debt portfolio	10.3%	10.3%	10.3%	10.9%	11.0%
Interest Rate Type, at fair value (2):
Fixed rate amount	$0.1 billion	$0.2 billion	$0.2 billion	$0.2 billion	$0.2 billion
Floating rate amount	$1.2 billion	$1.2 billion	$1.1 billion	$1.0 billion	$0.9 billion
Fixed rate, as percentage of total	9%	14%	16%	16%	21%
Floating rate, as percentage of total	91%	86%	84%	84%	79%
Interest Rate Type, at amortized cost (2):
Fixed rate amount	$0.1 billion	$0.2 billion	$0.2 billion	$0.2 billion	$0.2 billion
Floating rate amount	$1.2 billion	$1.1 billion	$1.0 billion	$1.0 billion	$0.9 billion
Fixed rate, as percentage of total	9%	15%	17%	17%	22%
Floating rate, as percentage of total	91%	85%	83%	83%	78%

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(1) An investor’s yield may be lower than the portfolio yield due to sales loads and other expenses.

(2) The interest 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)

	September 30, 2017			March 31, 2017
	(Unaudited)
Assets
Investments and option contracts at fair value:
Non-controlled/non-affiliated investments (cost — $1,448,348 and $1,510,980, respectively)	$	1,441,064		$	1,402,409
Non-controlled/affiliated investments (cost — $246,083 and $417,471, respectively)	224,881			239,050
Controlled investments (cost — $701,852 and $676,972, respectively)	694,345			675,249
Option contracts (cost — $5,057 and $0, respectively)	4,020			—
Cash and cash equivalents	31,179			9,783
Foreign currencies (cost — $1,961 and $1,494, respectively)	1,966			1,497
Collateral on option contracts	6,070			—
Receivable for investments sold	8,129			40,226
Interest receivable	18,237			17,072
Dividends receivable	3,143			6,489
Deferred financing costs	15,791			17,632
Prepaid expenses and other assets	581			713
Total Assets	$	2,449,406		$	2,410,120

Liabilities
Debt	$	864,906		$	848,449
Option contracts at fair value (proceeds — $5,041 and $0, respectively)	5,877			—
Payable for investments purchased	40,878			13,970
Distributions payable	32,855			32,954
Management and performance-based incentive fees payable	18,370			16,306
Interest payable	7,280			7,319
Accrued administrative services expense	1,785			2,250
Other liabilities and accrued expenses	4,855			7,075
Total Liabilities	$	976,806		$	928,323

Net Assets	$	1,472,600		$	1,481,797

Net Assets
Common stock, $0.001 par value (400,000,000 shares authorized; 219,034,354 and 219,694,654 shares issued and outstanding, respectively)	$	219		$	220
Paid-in capital in excess of par	2,920,820			2,924,775
Accumulated underdistributed net investment income	89,802			88,134
Accumulated net realized loss	(1,514,999		)	(1,277,625		)
Net unrealized loss	(23,242		)	(253,707		)
Net Assets	$	1,472,600		$	1,481,797

Net Asset Value Per Share	$	6.72		$	6.74


APOLLO INVESTMENT CORPORATION
STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)

	Three Months Ended September 30,						Six Months Ended September 30,
	2017			2016			2017			2016
Investment Income
Non-controlled/non-affiliated investments:
Interest income (excluding Payment-in-kind interest income)	$	39,319		$	41,728		$	78,271		$	88,779
Dividend income	—			1,069			—			2,173
Payment-in-kind interest income	2,118			678			4,174			1,971
Other income	2,647			349			3,777			2,047
Non-controlled/affiliated investments:
Interest income (excluding Payment-in-kind interest income)	1			247			115			461
Dividend income	981			4,656			2,068			7,703
Payment-in-kind interest income	2,501			122			4,938			169
Other income	—			—			(306		)	70
Controlled investments:
Interest income (excluding Payment-in-kind interest income)	14,241			12,247			29,315			24,677
Dividend income	3,303			2,750			8,153			7,450
Payment-in-kind interest income	1,351			5,180			2,668			9,995
Total Investment Income	$	66,462		$	69,026		$	133,173		$	145,495
Expenses
Management fees	$	12,290		$	13,302		$	24,415		$	27,700
Performance-based incentive fees	8,037			1,943			15,949			10,393
Interest and other debt expenses	13,832			14,438			28,047			31,231
Administrative services expense	1,692			2,642			3,368			4,168
Other general and administrative expenses	1,620			2,550			4,176			7,589
Total expenses	37,471			34,875			75,955			81,081
Management and performance-based incentive fees waived	(5,081		)	(5,302		)	(10,091		)	(11,019		)
Expense reimbursements	(85		)	(84		)	(168		)	(168		)
Net Expenses	$	32,305		$	29,489		$	65,696		$	69,894
Net Investment Income	$	34,157		$	39,537		$	67,477		$	75,601
Net Realized and Change in Unrealized Gains (Losses)
Net realized gains (losses):
Non-controlled/non-affiliated investments	$	(7,309	)	$	17,348		$	(97,148	)	$	(40,127	)
Non-controlled/affiliated investments	—			(21,257		)	(146,840		)	44,574
Controlled investments	—			—			—			(191		)
Option contracts	(5		)	—			(5		)	—
Foreign currency transactions	3,695			905			6,619			1,265
Net realized gains (losses)	(3,619		)	(3,004		)	(237,374		)	5,521
Net change in unrealized losses:
Non-controlled/non-affiliated investments	10,049			46,305			101,287			65,026
Non-controlled/affiliated investments	1,489			(36,007		)	157,219			(129,794		)
Controlled investments	1,284			(10,284		)	(5,784		)	(34,583		)
Option contracts	(1,873		)	—			(1,873		)	—
Foreign currency translations	(9,700		)	4,567			(20,384		)	17,257
Net change in unrealized losses	1,249			4,581			230,465			(82,094		)
Net Realized and Change in Unrealized Gains (Losses)	$	(2,370	)	$	1,577		$	(6,909	)	$	(76,573	)
Net Increase (Decrease) in Net Assets Resulting from Operations	$	31,787		$	41,114		$	60,568		$	(972	)
Earnings (Loss) Per Share	$	0.14		$	0.18		$	0.28		$	0.00

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.

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Contacts:

Apollo Investment Corporation
Elizabeth Besen, 212-822-0625
Investor Relations Manager
[email protected]