February 07, 2018
Apollo Investment Corporation Reports Financial Results for the Quarter Ended December 31, 2017
Fiscal Third Quarter and Other Recent Highlights:
- Net investment income per share for the quarter was $0.16 compared to $0.16for the quarter ended September 30, 2017
- Net asset value per share as of the end of the quarter was $6.60 compared to $6.72 as of September 30, 2017, a 1.8% decline
- Three separate events occurred during the quarter which advanced
our strategic repositioning, long-term earnings power, and book value
stability, but had a combined $(0.09) loss per share. Excluding the
three events below, NAV per share declined 0.5%
- Redeemed higher cost debt (1) which reduced overall funding costs by approximately 42 basis points and should contribute approximately $0.02 per share per year to net investment income. The extinguishment of the debt resulted in ($0.03) loss per share during the quarter
- Subsequent to quarter end, a significant portion of the Company’s first lien secured debt investment in Solarplicity Group Limited was repaid. (2) The repayment reduces non-core assets (3) by approximately $106.4 million to approximately $416 million or 19% of the portfolio, at fair value, reduces PIK income, and reduces average borrower exposure. The Company recorded a $(0.04) loss per share on its investment in Solarplicity Group during the December quarter
- The Company recorded a $(0.06) loss per share on its oil hedge and a $0.03 unrealized gain per share on its oil and gas investment marks. The oil hedge is designed to protect against a significant decline in the price of oil. The net impact of these two items was a $(0.03) loss per share during the quarter
- Continued to successfully execute portfolio repositioning strategy, including increasing core assets (4) to 74% of the portfolio as of the end of the quarter, at fair value. Since commencing our repositioning strategy in July 2016, funded approximately $1.1 billion into core strategies (5)
- Net leverage (6) as of the end of the quarter was 0.62x, compared to 0.59x as of September 30, 2017 providing substantial investment capacity to further execute portfolio repositioning strategy
- Declared a distribution of $0.15 per share
- Repurchased 0.8 million shares of common stock for an aggregate cost of $4.6 million during the quarter and repurchased an additional 1.7 million shares for an aggregate cost of $10.0 million subsequent to quarter end (7)
NEW YORK--(BUSINESS WIRE)-- Apollo Investment Corporation (NASDAQ:AINV) or the “Company,” or “Apollo Investment,” today announced financial results for its third fiscal quarter ended December 31, 2017. The Company’s net investment income was $0.16 per share for the quarter ended December 31, 2017, compared to $0.16 per share for the quarter ended September 30, 2017. The Company’s net asset value (“NAV”) was $6.60per share as of December 31, 2017, compared to $6.72 as of September 30, 2017.
On February 6, 2018, the Board of Directors declared a distribution of $0.15 per share, payable on April 12, 2018 to shareholders of record as of March 27, 2018.
Mr. James Zelter, Apollo Investment’s Chief Executive Officer, commented, “During the December quarter, we continued to successfully execute on our strategy by repositioning the portfolio into core assets and reducing our funding costs. The significant drivers of the decline in NAV for the quarter include 1) an unrealized mark-to-market loss our oil hedge which protects us against significant declines in the price of oil, partially offset by gains on our oil investment marks, 2) a realized loss associated with the redemption of higher cost debt which has a payback period of approximately one year, and 3) a loss on our investment in Solarplicity Group, among other factors. We are pleased to announce that subsequent to quarter end, we sold a majority of our investment in Solarplicity Group, a non-core asset that we had been actively seeking to exit, and whose exit we believe greatly enhances the quality of our portfolio and meaningfully reduced our non-core assets.” Mr. Zelter continued, “Additionally, we continued to actively repurchase stock below NAV during the quarter and have continued to do so in the March quarter. Since the inception of the stock repurchase program, we have repurchased approximately $119 million or 8.5% of shares outstanding through this shareholder friendly initiative.”
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| (1) | On October 16, 2017, the Company redeemed $150 million of 6.625% senior unsecured notes due 2042. The Company recognized a realized loss on the extinguishment of debt of approximately $(5.8) million or $(0.03) per share during the three months ended December 31, 2017. | |
| (2) | Subsequent to quarter end, a significant portion of the Company’s first lien secured debt investment in Solarplicity Group Limited was repaid at a price, slightly below the fair value as of December 31, 2017. The repayment reduced the Company’s exposure to Solarplicity Group Limited by approximately $106.4 million, assuming the same currency exchange rate as of December 31, 2017. Based on the fair value mark as of December 31, 2017 and including estimated escrowed amounts, the retained portion of the Company’s investment in Solarplicity Group Limited is approximately $16.4 million. In addition, the Company still holds its investments in Solarplicity UK Holdings Limited, which had a fair value of approximately $7.9 million as of December 31, 2017. | |
| (3) | Non-core strategies include oil & gas, structured credit, renewables, shipping, and commodities. | |
| (4) | Core strategies include corporate lending, aviation, life sciences, asset based and lender finance. | |
| (5) | Excluding aviation. | |
| (6) | The Company’s net leverage ratio is defined as debt outstanding plus payable for investments purchased, less receivable for investments sold, less cash and cash equivalents, less foreign currencies, divided by net assets. | |
| (7) | Through February 6, 2018. | |
FINANCIAL HIGHLIGHTS
| ($ in billions, except per share data) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | ||||||||||||||||
| Total assets | $ | 2.42 | $ | 2.45 | $ | 2.49 | $ | 2.41 | $ | 2.64 | |||||||||||
| Investment portfolio (fair value) | $ | 2.35 | $ | 2.36 | $ | 2.42 | $ | 2.32 | $ | 2.53 | |||||||||||
| Debt outstanding | $ | 0.88 | $ | 0.86 | $ | 0.92 | $ | 0.85 | $ | 1.03 | |||||||||||
| Net assets | $ | 1.44 | $ | 1.47 | $ | 1.48 | $ | 1.48 | $ | 1.51 | |||||||||||
| Net asset value per share | $ | 6.60 | $ | 6.72 | $ | 6.73 | $ | 6.74 | $ | 6.86 | |||||||||||
| Debt-to-equity ratio | 0.61 | x | 0.59 | x | 0.62 | x | 0.57 | x | 0.69 | x | |||||||||||
| Net leverage ratio (1) | 0.62 | x | 0.59 | x | 0.62 | x | 0.55 | x | 0.66 | 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 December | Nine Months Ended December | ||||||||||||||||
| (in millions)* | 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Investments made in portfolio companies | $ | 198.4 | $ | 201.3 | $ | 806.0 | $ | 451.7 | |||||||||
| Investments sold | (48.1 | ) | (17.1 | ) | (69.7 | ) | (181.1 | ) | |||||||||
| Net activity before repaid investments | 150.3 | 184.2 | 736.3 | 270.6 | |||||||||||||
| Investments repaid | (156.7 | ) | (178.2 | ) | (726.8 | ) | (568.7 | ) | |||||||||
| Net investment activity | $ | (6.4 | ) | $ | 6.0 | $ | 9.5 | $ | (298.1 | ) | |||||||
| Portfolio companies at beginning of period | 87 | 82 | 86 | 89 | |||||||||||||
| Number of new portfolio companies | 8 | 13 | 31 | 24 | |||||||||||||
| Number of exited portfolio companies | (9 | ) | (10 | ) | (31 | ) | (28 | ) | |||||||||
| Portfolio companies at end of period | 86 | 85 | 86 | 85 | |||||||||||||
| Number of investments made in existing portfolio companies | 12 | 8 | 19 | 21 | |||||||||||||
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| * | Totals may not foot due to rounding. | |
OPERATING RESULTS
Three Months Ended | Nine Months Ended | ||||||||||||||||
| (in millions)* | 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net Investment Income | $ | 34.0 | $ | 36.4 | $ | 101.4 | $ | 112.0 | |||||||||
| Net Realized and Change in Unrealized Losses | (28.1 | ) | (25.0 | ) | (35.0 | ) | |||||||||||