Apollo Investment Corporation Reports Financial Results for the Quarter Ended September 30, 2020

Fiscal Second Quarter and Other Recent Highlights:

  • Net investment income per share for the quarter was $0.43 compared to $0.43 for the quarter ended June 30, 2020
     
  • Net asset value per share as of the end of the quarter was $15.44 compared to $15.29 as of June 30, 2020, an increase of 1.0% driven by a net gain on the corporate lending portfolio(1) and retained earnings, partially offset by a net loss on Merx and on non-core and legacy assets(2)

  • New investment commitments made during the quarter totaled $18 million(3)

  • Gross fundings during the quarter totaled $106 million consisting of $54 million of term loans and $52 million of revolvers

  • Gross exits during the quarter totaled $209 millions consisting of $13 million of term loan sales, $1 million of revolver sales, $108 million of term loan repayments, and $87 million of gross revolver paydowns
  • Net paydowns during the quarter totaled $103 million, consisting of $67 million of net term loan paydowns and $36 million of net revolver paydowns
    - Gross paydowns subsequent to quarter end total approximately $130 million(4)
  • Net leverage(5) as of the end of the quarter was 1.56x, down from to 1.66x as of June 30, 2020

  • Declared a distribution of $0.31 per share and a supplemental distribution of $0.05 per share for the quarter ending December 31, 2020

  • $268 million of immediately available liquidity and $287 million of additional capacity under the Senior Secured Facility as of September 30, 2020(6)

NEW YORK, Nov. 05, 2020 (GLOBE NEWSWIRE) -- Apollo Investment Corporation (NASDAQ: AINV) or the “Company,” or “Apollo Investment,” today announced financial results for its second fiscal quarter ended September 30, 2020. The Company’s net investment income was $0.43 per share for the quarter ended September 30, 2020, compared to $0.43 per share for the quarter ended June 30, 2020. The Company’s net asset value (“NAV”) was $15.44 per share as of September 30, 2020, compared to $15.29 as of June 30, 2020.

On November 5, 2020, the Board of Directors declared a distribution of $0.31 per share payable on January 7, 2021 to shareholders of record as of December 21, 2020. On November 5, 2020, the Company’s Board also declared a supplemental distribution of $0.05 per share payable on January 7, 2021 to shareholders of record as of December 21, 2020.

Mr. Howard Widra, Apollo Investment’s Chief Executive Officer commented, “During the quarter, we made significant progress deleveraging to within our target range of 1.40x to 1.60x. Net leverage at the end of September was 1.56x, down from 1.66x at the end of June. The quarter over quarter decline was due to a combination of strong repayment activity, a net gain on the portfolio, and retained earnings. Notably, repayments included $21 million from non-core assets which we continue to seek to monetize. Furthermore, we have visibility into meaningful additional repayments for the remainder December quarter. Given the reduction in our leverage, combined with our better understanding of how our portfolio companies have been affected by the pandemic and of their expected performance, we can now shift our focus to making new commitments.” Mr. Howard Widra continued, “As announced last quarter, in addition to a quarterly base distribution of 31-cents per share, the Company’s Board of Directors expects to also declare a supplemental distribution in an amount to be determined each quarter. To that end, the Board of Directors, at the recommendation of management, has declared a 5-cent supplemental distribution for the quarter.”
___________________

(1) Corporate lending portfolio includes leveraged lending, life sciences, asset based and lender finance. Excludes Merx Aviation Finance, LLC ("Merx") and non-core and legacy assets.
(2) Non-core and legacy assets include oil & gas, renewables, shipping, commodities, and legacy assets.
(3) For corporate lending portfolio.
(4) From October 1, 2020 through November 3, 2020.
(5) 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.
(6) As of September 30, 2020, aggregate lender commitments under the Senior Secured Facility (the “Facility”) totaled $1.81 billion and there were $1.25 billion of outstanding borrowings under the Facility and $0.2 million of letters of credit issued under the Facility. Accordingly, there was $555 million of unused capacity under the Facility as of September 30, 2020, which is subject to compliance with a borrowing base that applies different advance rates to different types of assets in the Company’s portfolio. As of September 30, 2020, the Company had immediate access to $268 million under the Facility based on the Company’s borrowing base and $287 million of additional capacity.

FINANCIAL HIGHLIGHTS

($ in billions, except per share data)September 30,
2020
 June 30,
2020
 March 31,
2020
 December 31,
2019
 September 30,
2019
Total assets$2.65  $2.81  $2.87  $3.06  $2.89 
Investment portfolio (fair value)$2.59  $2.67  $2.79  $2.97  $2.80 
Debt outstanding$1.60  $1.76  $1.79  $1.79  $1.58 
Net assets$1.01  $1.00  $1.02  $1.22  $1.25 
Net asset value per share$15.44  $15.29  $15.70  $18.27  $18.69 
          
Debt-to-equity ratio1.59 x 1.76 x 1.75 x 1.47 x 1.26 x
Net leverage ratio (1)1.56 x 1.66 x 1.71 x 1.43 x 1.24 x

___________________

(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)*2020 2019 2020 2019
Investments made in portfolio companies$105.9   $476.7   $243.8   $912.0  
Investments sold(14.2)  (20.0)  (83.3)  (29.6) 
Net activity before repaid investments91.7   456.7   160.5   882.4  
Investments repaid(194.8)  (249.7)  (358.6)  (460.4) 
Net investment activity$(103.1)  $207.1   $(198.1)  $422.1  
        
Portfolio companies at beginning of period149   129   152   113  
Number of new portfolio companies2   14   3   35  
Number of exited portfolio companies(4)  (4)  (8)  (9) 
Portfolio companies at end of period147   139   147   139  
        
Number of investments made in existing portfolio companies29   48   49   54  

___________________

* Totals may not foot due to rounding.

OPERATING RESULTS

 Three Months Ended
September 30,
 Six Months Ended
September 30,
(in millions)*2020 2019 2020 2019
Net investment income$27.9   $35.7   $56.1   $70.3  
Net realized and change in unrealized gains (losses)5.4   (28.7)  (19.9)  (39.4) 
Net increase in net assets resulting from operations$33.3   $7.1   $36.3   $30.9  
        
(per share)* (1)       
Net investment income on per average share basis$0.43   $0.53   $0.86   $1.03  
Net realized and change in unrealized gain (loss) per share0.08   (0.43)  (0.30)  (0.58) 
Earnings per share — basic$0.51   $0.10   $0.56   $0.45  

___________________

* Totals may not foot due to rounding.

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

SHARE REPURCHASE PROGRAM *

During the three months ended September 30, 2020, the Company did not repurchase any shares. 

Since the inception of the share repurchase program and through November 4, 2020, the Company repurchased 13,654,578 shares at a weighted average price per share of $16.34, inclusive of commissions, for a total cost of $223.1 million, leaving a maximum of $26.9 million available for future purchases under the current Board authorization of $250 million.

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

LIQUIDITY

As of September 30, 2020, the Company’s outstanding debt obligations, excluding deferred financing cost and debt discount of $4.3 million, totaled $1.605 billion which was comprised of $350 million of Senior Unsecured Notes (the “2025 Notes”) which will mature on March 3, 2025 and $1.255 billion outstanding under the Facility. As of September 30, 2020, $0.2 million in standby letters of credit were issued through the Facility. The available remaining capacity under the Facility was $555 million as of September 30, 2020, which is subject to compliance with a borrowing base that applies different advance rates to different types of assets in the Company’s portfolio.

CONFERENCE CALL / WEBCAST AT 5:00 PM EST ON NOVEMBER 5, 2020

The Company will host a conference call on Thursday, November 5, 2020 at 5:00 p.m. Eastern Time. All interested parties are welcome to participate in the conference call by dialing (888) 802-8579 approximately 5-10 minutes prior to the call; international callers should dial (973) 633-6740. Participants should reference Apollo Investment Corporation or Conference ID #8085183 when prompted. A simultaneous webcast of the conference call will be available to the public on a listen-only basis and can be accessed through the Events Calendar in the Shareholder 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 26, 2020 by dialing (800) 585-8367; international callers please dial (404) 537-3406, reference Conference ID #8085183.  A replay of the audio webcast will also be available later that same day. To access the audio webcast please visit the Events Calendar in the Shareholder 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 in the Shareholders section of the Company’s website under Presentations at www.apolloic.com.

Our portfolio composition and weighted average yields as of September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019, and September 30, 2019 were as follows:

 September 30,
2020
 June 30,
2020
 March 31,
2020
 December 31,
2019
 September 30,
2019
Portfolio composition, at fair value:         
First lien secured debt77% 78% 81% 78% 74%
Second lien secured debt11% 12% 13% 14% 17%
Total secured debt89% 90% 94% 92% 91%
Unsecured debt1% % % % %
Structured products and other0% 0% 0% 0% 2%
Preferred equity0% 0% 0% 1% 1%
Common equity/interests and warrants10% 10% 6% 7% 6%
Weighted average yields, at amortized cost (1):         
First lien secured debt (2)7.9% 7.9% 8.5% 8.7% 9.0%
Second lien secured debt (2)9.8% 9.8% 10.2% 10.7% 11.0%
Total secured debt (2)8.1% 8.1% 8.7% 9.1% 9.4%
Unsecured debt portfolio (2)5.3% % % % %
Total debt portfolio (2)8.1% 8.1% 8.7% 9.1% 9.4%
Total portfolio (3)6.7% 6.8% 8.0% 8.6% 8.9%
Interest rate type, at fair value (4):         
Fixed rate amount         
Floating rate amount$2.0 billion  $2.1 billion  $2.2 billion  $2.2 billion  $2.0 billion 
Fixed rate, as percentage of total         
Floating rate, as percentage of total100% 100% 100% 100% 100%
Interest rate type, at amortized cost (4):         
Fixed rate amount         
Floating rate amount$2.1 billion  $2.2 billion  $2.3 billion  $2.3 billion  $2.0 billion 
Fixed rate, as percentage of total% % % % %
Floating rate, as percentage of total100% 100% 100% 100% 100%

(1) An investor’s yield may be lower than the portfolio yield due to sales loads and other expenses.
(2) Exclusive of investments on non-accrual status.
(3) Inclusive of all income generating investments, non-income generating investments and investments on non-accrual status.
(4) The interest rate type information is calculated using the Company’s corporate debt portfolio and excludes aviation, oil and gas, structured credit, renewables, shipping, commodities and investments on non-accrual status.

APOLLO INVESTMENT CORPORATION
STATEMENTS OF ASSETS AND LIABILITIES
(In thousands, except share and per share data)

 September 30, 2020 March 31, 2020
 (Unaudited)  
Assets   
Investments at fair value:   
Non-controlled/non-affiliated investments (cost — $2,110,330 and $2,298,548, respectively)$2,046,701   $2,191,327  
Non-controlled/affiliated investments (cost — $146,430 and $135,346, respectively)56,976   60,241  
Controlled investments (cost — $633,778 and $655,719, respectively)482,906   533,865  
Cash and cash equivalents25,825   37,301  
Foreign currencies (cost — $5,539 and $6,369, respectively)5,509   6,375  
Receivable for investments sold609   978  
Interest receivable16,876   19,151  
Dividends receivable3,160   5,034  
Deferred financing costs13,732   16,054  
Prepaid expenses and other assets1,075   732  
Total Assets$2,653,369   $2,871,058  
    
Liabilities   
Debt$1,600,328   $1,794,617  
Payable for investments purchased39     
Distributions payable23,493   29,367  
Management and performance-based incentive fees payable9,262   10,289  
Interest payable2,440   2,887  
Accrued administrative services expense2,324   2,796  
Other liabilities and accrued expenses7,745   6,787  
Total Liabilities$1,645,631   $1,846,743  
    
Net Assets$1,007,738   $1,024,315  
    
Net Assets   
Common stock, $0.001 par value (130,000,000 shares authorized; 65,259,176 and 65,259,176 shares issued and outstanding, respectively)$65   $65  
Capital in excess of par value2,099,876   2,099,876  
Accumulated under-distributed (over-distributed) earnings(1,092,203)  (1,075,626) 
Net Assets$1,007,738   $1,024,315  
    
Net Asset Value Per Share$15.44   $15.70  
          

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

 Three Months Ended September 30, Six Months Ended September 30,
 2020 2019 2020 2019
Investment Income       
Non-controlled/non-affiliated investments:       
Interest income (excluding Payment-in-kind (“PIK”) interest income)$46,139   $51,489   $93,502   $98,493  
Dividend income   5      66  
PIK interest income925   732   2,073   5,438  
Other income163   2,185   547   3,122  
Non-controlled/affiliated investments:       
Interest income (excluding PIK interest income)4      12     
Dividend income331   313   676   632  
PIK interest income           
Other income           
Controlled investments:       
Interest income (excluding PIK interest income)6,438   12,271   12,331   24,910  
Dividend income891   2,451   1,691   2,451  
PIK interest income   872   728   1,722  
Other income           
Total Investment Income$54,891   $70,318   $111,560   $136,834  
Expenses       
Management fees$9,262   $10,190   $18,786   $19,729  
Performance-based incentive fees   1,911      1,911  
Interest and other debt expenses13,845   18,735   29,237   36,246  
Administrative services expense1,201   1,542   2,389   3,267  
Other general and administrative expenses2,777   2,305   5,224   5,609  
Total expenses27,085   34,683   55,636   66,762  
Management and performance-based incentive fees waived           
Expense reimbursements(100)  (99)  (210)  (196) 
Net Expenses$26,985   $34,584   $55,426   $66,566  
Net Investment Income$27,906   $35,734   $56,134   $70,268  
Net Realized and Change in Unrealized Gains (Losses)       
Net realized gains (losses):       
Non-controlled/non-affiliated investments$590   $(5,701)  $(8,039)  $(5,710) 
Non-controlled/affiliated investments(3,653)     (3,653)  1,089  
Controlled investments           
Foreign currency transactions64   (1,387)  276   (1,185) 
Extinguishment of debt   (4,375)     (4,375) 
Net realized gains (losses)(2,999)  (11,463)  (11,416)  (10,181) 
Net change in unrealized gains (losses):       
Non-controlled/non-affiliated investments21,680   (7,463)  32,248   (11,508) 
Non-controlled/affiliated investments5,957   (1,659)  (3,006)  (750) 
Controlled investments(11,769)  (13,069)  (29,017)  (22,765) 
Foreign currency translations(7,486)  4,988   (8,660)  5,833  
Net change in unrealized gains (losses)8,382   (17,203)  (8,435)  (29,190) 
Net Realized and Change in Unrealized Gains (Losses)$5,383   $(28,666)  $(19,851)  $(39,371) 
Net Increase (Decrease) in Net Assets Resulting from Operations$33,289   $7,068   $36,283   $30,897  
Earnings (Loss) Per Share — Basic$0.51   $0.10   $0.56   $0.45  

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, Inc., 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: macro- and micro-economic impact of the COVID-19 pandemic; the severity and duration of the COVID-19 pandemic; actions taken by governmental authorities to contain the COVID-19 pandemic or treat its impact; the impact of the COVID-19 pandemic on our financial condition, results of operations, liquidity and capital resources; 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.

For additional information about the COVID-19 pandemic and its potential impact on the Company’s results of operations and financial condition, please refer to the COVID-19 Developments section and additional disclosure in our Form 10-Q for the period ended September 30, 2020.

Contact

Elizabeth Besen
Investor Relations Manager
Apollo Investment Corporation
212.822.0625
[email protected]

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