Investor Presentation September 2019 Unless otherwise noted, - - PowerPoint PPT Presentation
A P O L L O I N V E S T M E N T C O R P O R A T I O N Investor Presentation September 2019 Unless otherwise noted, information as of June 30, 2019 It should not be assumed that investments made in the future will be profitable or will equal
Unless otherwise noted, information as of June 30, 2019 It should not be assumed that investments made in the future will be profitable or will equal the performance of the investments shown in this document.
A P O L L O I N V E S T M E N T C O R P O R A T I O N
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Forward-Looking Statements We make forward-looking statements in this presentation and other filings we make with the Securities and Exchange Commission (“SEC”) within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond our control. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives, including information about our ability to generate attractive returns while attempting to mitigate risk. Words such as “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “may” or similar expressions, are intended to identify forward-looking statements. 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; and other risks associated with investing including changes in business conditions and the general economy. The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Forward- looking statements are not predictions of future events. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to
from those expressed in our forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This presentation may contain statistics and other data that in some cases has been obtained from or compiled from information made available by third-party service providers. Past Performance Past performance is not indicative nor a guarantee of future returns, the realization of which is dependent on many factors, many of which are beyond the control of Apollo Global Management, LLC (“AGM”); Apollo Investment Management, L.P.; and Apollo Investment Corporation (collectively “Apollo”). There can be no assurances that future dividends will match or exceed historic ones, or that they will be made at all. Net returns give effect to all fees and expenses. Unless otherwise noted, information included herein is presented as of the date indicated on the cover page and may change at any time without notice. Apollo Investment Corporation (the “Company”) is subject to certain significant risks relating to our business and investment objective. For more detailed information on risks relating to the Company, see the latest Form 10-K and subsequent quarterly reports filed on Form 10-Q. This presentation does not constitute a prospectus and should under no circumstances be understood as an offer to sell or the solicitation of an offer to buy any securities of the Company. Financial Data Financial data used in this presentation for the periods shown is from the Company’s Form 10-K and Form 10-Q filings with the SEC during such periods. Unless otherwise indicated, the numbers shown herein are rounded and unaudited. Quarterly and annual financial information for the Company refers to fiscal periods. All share and per share data shown herein is adjusted for the one-for-three reverse stock split of the Company’s common stock which took effect at the close of business on November 30, 2018.
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AUM Definition Assets Under Management (“AUM”) refers to the investments AGM manages or with respect to which it has control, including capital it has the right to call from its investors pursuant to their capital commitments to various funds. AGM’s AUM equals the sum of: (i) the fair value of its private equity investments plus the capital that it is entitled to call from its investors pursuant to the terms of their capital commitments plus non-recallable capital to the extent a fund is within the commitment period in which management fees are calculated based on total commitments to the fund; (ii) the net asset value of AGM’s capital markets funds, other than certain senior credit funds, which are structured as collateralized loan obligations or certain collateralized loan obligation and collateralized debt obligation credit funds that have a fee generating basis other than mark-to-market asset values, plus used or available leverage and/or capital commitments; (iii) the gross asset values or net asset values of AGM’s real estate entities and the structured portfolio vehicle investments included within the funds AGM manages, which includes the leverage used by such structured portfolio vehicles; (iv) the incremental value associated with the reinsurance investments of the portfolio company assets that AGM manages; and (v) the fair value of any other investments that AGM manages plus unused credit facilities, including capital commitments for investments that may require pre-qualification before investment plus any other capital commitments available for investment that are not otherwise included in the clauses above. AGM’s AUM measure includes AUM for which it charges either no or nominal fees. AGM’s definition of AUM is not based on any definition of AUM contained in its operating agreement or in any of its Apollo fund management
investment decisions for existing and available assets; (2) its ability to generate income from the underlying assets in its funds; and (3) the AUM measures that it uses internally or believes are used by other investment managers. Given the differences in the investment strategies and structures among other alternative investment managers, AGM’s calculation of AUM may differ from the calculations employed by other investment managers and, as a result, this measure may not be directly comparable to similar measures presented by other investment managers.
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1 On a fair value basis. 2 As of June 30, 2019 3 Apollo Investment Management, L.P. 4 See definition of AUM at beginning of presentation. 5 MidCap Financial refers to MidCap FinCo Designated Activity Company, a private limited company domiciled in Ireland, and its subsidiaries, including MidCap Financial Services, LLC. MidCap Financial is managed by Apollo Capital Management, L.P., a subsidiary of Apollo Global Management, LLC, pursuant to an investment management agreement between Apollo Capital Management, L.P. and MidCap FinCo Designated Activity Company. 6 The Company announced that on April 4, 2018, its Board of Directors approved the application of the modified asset coverage requirements set forth in new Section 61(a)(2) of the Investment Company Act of 1940, as amended by The Small Business Credit Availability Act (“SBCAA”). As a result, the asset coverage ratio test applicable to the Company will be decreased from 200% to 150%, effective April 4, 2019. 7 On March 29, 2016, the Company received an exemptive order from the SEC permitting greater flexibility to participate in co-investment transactions with certain of its affiliates where terms other than price and quantity are negotiated, subject to the conditions included therein. 8 As of September 6, 2019. 9 Most recent quarterly dividend annualized divided by share
the current level.
Specialty Finance Company Focused on Lending to US Middle Market Companies
regulated investment company (“RIC”)
Externally Managed by Apollo Global Management
approximately $312 billion of AUM 2,4 with expertise in private equity, credit and real estate
Competitive Advantages Apollo Affiliation
benefits
team with joint front engine across AINV and MidCap Financial (“MidCap”) 5 Well Positioned to Benefit from Increase in Regulatory Leverage 6
assets from existing Apollo Direct Origination platform
commitments while maintaining relatively small hold sizes given AINV’s receipt of exemptive relief to co-invest 7 Exemptive Relief to Co-Invest 7
competitive positioning
Current Market Information 8 Market capitalization $1.11 billion Dividend yield at market price 9 11.0% Dividend yield at NAV 10 9.5%
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Key Attributes Global Footprint
Value-oriented, contrarian approach Opportunistic across market cycles Integrated platform across asset classes and geographies Deep industry knowledge
Private Equity
147 Investment Professionals2 $77 bn in AUM1
Credit Real Assets
190 Investment Professionals2 $201 bn in AUM1 86 Investment Professionals2 $33 bn in AUM1
New York Bethesda Houston Los Angeles London Madrid Frankfurt Luxembourg Delhi Mumbai Shanghai Hong Kong Singapore
Firm Profile
Founded: 1990 AUM: ~$312 bn1 Employees: 1,268 Offices Worldwide: 15
Tokyo San Diego
All figures as of June 30, 2019 unless otherwise noted. Please refer to the beginning of this presentation for the definition of AUM. 1 AUM figures include funds that are denominated in Euros and translated into US dollars at an exchange rate of €1.00 to $1.14 as of June 30, 2019. Business segment AUM may not sum to total firm AUM due to rounding. 2 Headcount includes 4 Executive Officers as Private Equity Investment Professionals and 1 Executive Officer as a Credit Investment Professional.
Commercial Real Estate Debt
$15 billion in AUM 25 Professionals
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Note: All strategies and leadership listed above reflect global coverage. AUM and headcount as of June 30, 2019. Please refer to the slides in this presentation entitled “Risk Factors and Definitions” for the definition of AUM. AUM figures include funds that are denominated in Euros and translated into U.S. dollars at an exchange rate of €1.00 to $1.14 as of June 30, 2019. (1) Strategy headcounts excludes 12 global business professionals. (2) ISG manages $150bn in assets for affiliate insurance balance sheets, including those sub-advised by Apollo’s Credit, Private Equity, and Real Assets businesses. (3) In addition, serves as co-portfolio manager of the SCRF Funds and Partner, European Credit.
Apollo Global Credit $201 Billion in AUM & 190 Investment Professionals (1)
Corporate Fixed Income $60 billion in AUM 28 Professionals Corporate Credit $45 billion in AUM 47 Professionals Direct Origination $20 billion in AUM 29 Professionals Insurance Solutions Group (ISG) (2) 31 Professionals
Strategies
corporate bonds
placements
loans
loans
finance
side sourcing
solution capital
securities
estate – RMBS & whole loans
loans & ABS
CMLs
construction & asset allocation
management
capital efficiency Structured Credit & ABS $20 billion in AUM 16 Professionals Consumer & Residential Credit $18 billion in AUM 20 Professionals Hybrid Capital
$9 billion in AUM 26 Professionals
Infrastructure and Energy Credit
$7 billion in AUM 13 Professionals
European Principal Finance
$7 billion in AUM 22 Professionals
Other Credit Related Strategies
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1 As of June 30, 2019. 2 Apollo Investment Management, L.P. (AIM), the investment adviser to Apollo Investment Corporation, is a non-controlling member of CION Investment Management, LLC (CIM), the investment adviser to CION Investment Corporation (CION). AIM performs sourcing services for CIM, which include, among other services, (i) assistance with identifying and providing information about potential investment opportunities for approval by CIM’s investment committee; (ii) providing (a) trade and settlement support; (b) portfolio and cash reconciliation; (c) market pipeline information regarding syndicated deals, in each case, as reasonably requested by CIM; and (d) monthly valuation reports and support for all broker-quoted investments. AIM has a limited role as a member of CIM and does not provide advice, evaluation, or recommendation with respect to the CION’s investments. All of CION’s investment decisions are the sole responsibility of, and are made at the sole discretion of, CIM..
Apollo Investment Corporation MidCap CION Investment Corporation 2
under the Investment Company Act of 1940 that has elected to be treated as a regulated investment company (RIC) for federal income tax purposes
solutions to US middle market companies
Market
129 companies 1
directly sourced middle market senior debt
leveraged loans, real estate and venture lending
affiliated with Apollo Global
services 487 transactions 1
a RIC for federal income tax purposes
solutions to US middle market companies
Additional capacity in select opportunistic credit accounts
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Encompasses an array of origination verticals and a comprehensive suite of products
Origination Channels Product Capabilities
Leveraged Lending
intermediaries
core investments
Niche Markets
$1.0 $4.1 $3.8 $2.9 $0.4 $0.9 $1.1 $0.9 $1.4 $5.0 $4.9 $3.8 0% 5% 10% 15% 20% 25% 30% 35% $- $1 $2 $3 $4 $5 2016 2017 2018 2019 YTD Apollo Global Commitment, excluding AINV AINV Commitment
Apollo Global Management Co-Investment Volume 1
1 On March 29, 2016, the Company received an exemptive order from the SEC permitting greater flexibility to participate in co-investment transactions with certain of its affiliates where terms other than price and quantity are negotiated, subject to the conditions included therein.
Direct Origination platform
maintain relatively small hold sizes given AINV’s receipt of exemptive relief to co-invest in 2016) 1
135+ Investment Professionals 60+ sourcing professionals 75+ underwriters
Volume Team
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$ in billions
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On a fair value basis, Percentages based on total investment portfolio December 31, 2016 December 31, 2017 December 31, 2018 June 30, 2019 Exposure to core assets1 66% 74% 80% 83% Exposure to non-core assets and legacy 2 34% 26% 20% 17% Exposure to first lien debt as % of corporate lending portfolio 29% 38% 62% 71% Exposure to floating rate debt 3 84% 92% 100% 99% Investments made pursuant to co- investment order 4 3% 33% 59% 67% Borrower concentration 5 $21.3 m $19.7 m $15.9 m $15.7 m
1 Core assets include corporate lending and aviation. Corporate lending portfolio includes leveraged lending, life sciences, asset based and lender finance. 2 Non-core strategies include oil & gas, structured credit, renewables, shipping, commodities and legacy assets. 3 The interest type information is calculated using the Company’s corporate lending portfolio and excludes aviation, oil and gas, structured credit, renewables, shipping, commodities and investments on non-accrual status. 4 On March 29, 2016, the Company received an exemptive order from the SEC permitting greater flexibility to participate in co-investment transactions with certain of its affiliates where terms other than price and quantity are negotiated, subject to the conditions included therein. 5 Based on corporate lending portfolio.
Non-Core and Legacy Assets ($ in millions)
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1 Non-core strategies include oil & gas, structured credit, renewables, shipping, commodities and legacy assets. On a fair value basis.
Over the past 12 quarters, reduced exposure to non-core strategies by over $600 million
$304 $147
$232 $57
$133 $152 $238 $158 $90 $1,065 $446
Jun-16 Jun-19
Oil & Gas Renewables Shipping Structured Credit Legacy & Other
Key Elements of Our Plan 1
leveraged loans sourced by Apollo’s Direct Origination platform with the following characteristics: – Leverage range of 4.0x to 5.5x – Floating rate spreads ~500 to 700 basis points – ~ 1 to 1.5% position sizes
1 Subject to change at any time without notice.
On April 4, 2018, AINV’s Board approved the increase in allowable leverage as permitted under SBCAA which went into effect on April 4, 2019
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We believe that the ability to increase our leverage provides a unique opportunity for AINV given the robust volume of senior floating rate assets already originated by the Apollo Direct Origination platform
Majority of incremental assets expected to be first lien floating rate loans with leverage of 4.0 ‒ 5.5x at L+500 ‒ 700 basis points
` June 30, 2019 Target Leverage and Portfolio Size AINV Debt-to-Equity Ratio 1.05x 1.25x – 1.40x Portfolio Size (in billions) $2.6 $3.0 - $3.2 Asset Mix (%) at fair value First Lien Corporate Loans 1 49 ~ 80-85 Second Lien Corporate Loans 19 < 10 Merx Aviation 15 ~10 – 15 Non-Core and Legacy 17 < 5 Other Key Metrics Weighted Average Spread 2 ~686 bps ~600 to 650 bps Weighted Average Net Leverage through AINV position 3 5.4x 4.2x Net Leverage Range of Incremental Assets n/a 4.0x – 5.5x Projected Loss Rate n/a 35-40 bps % of Total Portfolio Per Co-Investment Order 4 46% 70%-80%
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1 Excludes Merx Aviation and non-core and legacy assets 2 For corporate lending portfolio. Corporate lending portfolio includes leveraged lending, life sciences, asset based and lender finance. 3 Source: Company data. Based on corporate lending portfolio. Excludes investments on non-accrual status. Current. Weighted by cost. 4 On March 29, 2016, the Company received an exemptive order from the SEC permitting greater flexibility to participate in co- investment transactions with certain of its affiliates where terms other than price and quantity are negotiated, subject to the conditions included therein.
Incremental leverage will mostly come from increased usage of the revolving credit
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June 30, 2019 Target Leverage and Portfolio Size AINV Debt-to-Equity Ratio 1.05x 1.25x – 1.40x Portfolio Size (in billions) $2.6 $3.0 - $3.2 Funding Structure ($ in billions) Senior Secured Revolving Credit Facility (drawn) $0.9 $1.1- $1.3 Unsecured Term Debt 0.5 0.5 Total Debt Outstanding $ 1.3 $1.6 -$1.8 Stockholders’ Equity 1.3 1.3 Total Capital $2.6 $3.0 – $3.2 Capitalization (% Total Capital) Senior Secured Revolving Credit Facility 32% 41% 1 Unsecured Term Debt 19% 16% 1 Stockholders’ Equity 49% 43% 1
1 Based on the mid-point of the leverage range.
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1 Effective April 1, 2018. 2 The Company announced that on April 4, 2018, its Board of Directors approved the application of the modified asset coverage requirements set forth in new Section 61(a)(2) of the Investment Company Act of 1940, as amended by the SBCAA. As a result, the asset coverage ratio test applicable to the Company will be decreased from 200% to 150%, effective April 4, 2019. 3 The calculation of the incentive fee with the total return requirement will begin on January 1, 2019. The incentive fee rate and performance threshold remain 20% and 7% respectively. There is no change to the catch-up provision. For the period between April 1, 2018 through December 31, 2018, the incentive fee rate will be waived to 15%, subject to the 7% annualized performance threshold. 4 Since the inception of the share repurchase program and through August 5, 2019. Inclusive of commissions. 5 As of August 5, 2019.
Fee Structure Closely Aligns the Incentives of the Manager with the Interests of the Shareholders
assets to
Active Share Repurchase Program
$188.2 million 4
The combination of AINV’s new fee structure and active stock repurchase program demonstrate
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Leveraged Lending 54% Life Sciences 4% Asset Based and Lender Finance 10% Merx Aviation 15% Non-Core and Legacy 17%
Portfolio by Strategy
Corporate Lending Portfolio Represents 68% Total Portfolio
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Investment Portfolio 2 $2.62 bn # of Portfolio Companies 129 Weighted Average Yield 3,4 9.9% % Floating Rate 2,4 99% % Sponsored 2,4 86% Average Company Exposure 2,4 $15.7 mn Median EBITDA 5,6 $42 mn Net Leverage Through AINV Position 4,5,6,7 5.4 x AINV Weighted Average Attachment Point 4,5,6,7 1.7x Interest Coverage 4,5,6,7 2.4 x
Portfolio Key Statistics1 Portfolio by Industry1,2
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15.1% 14.5% 13.5% 8.9% 6.1% 5.6% 4.2% 3.9% 3.7% 3.4% 21.1%
Healthcare & Pharmaceuticals Aviation and Consumer Transport Business Services High Tech Industries Transportation – Cargo, Distribution Energy – Oil & Gas Consumer Goods – Non-durable Diversified Investment Vehicles, Banking, Finance, Real Estate Consumer Services Beverage, Food & Tobacco Other
1 As of June 30, 2019. 2 On a fair basis. 3 Based on an average of beginning of period and end of period yield. On a cost basis. Exclusive of investments on non-accrual status. 4 Based on corporate lending portfolio. 5 Current. 6 Source: Company data. 7 Excludes select investment where metrics is not relevant or appropriate or data is not available. Weighted by cost. 8 Other consists of: Chemicals, Plastics & Rubber; Aerospace & Defense; Consumer Goods – Durable; Manufacturing, Capital Equipment; Energy – Electricity; Automotive; Utilities – Electric; Advertising, Printing & Publishing; Insurance; Construction & Building; Containers, Packaging & Glass; Telecommunications; Media – Diversified & Production; Food & Grocery ; Hotel, Gaming, Leisure, Restaurants and Metals & Mining.
Corporate Lending 68% Merx Aviation 15% Non- Core and Legacy 17%
First Lien 71% Second Lien 28%
Total Investment Portfolio
(Corporate Lending, Merx, & Non-Core and Legacy)
exposure
through AINV position2 – 5.02x weighted average net leverage for first lien – 6.12x weighted average net leverage for second lien
– ~609 weighted average spread for first lien – ~877 weighted average spread for second lien
Metrics for Corporate Lending Portfolio Corporate Lending Portfolio
Notes: All data as of June 30, 2019. On a fair value basis. 1 On March 29, 2016, the Company received an exemptive order from the SEC permitting greater flexibility to participate in co-investment transactions with certain of its affiliates where terms other than price and quantity are negotiated, subject to the conditions included therein. 2 Source: Company data. Based on corporate lending portfolio. Excludes investments on non-accrual status. Current. Weighted by cost.
$2.62 billion $1.79 billion
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$ in millions, unless indicated otherwise
Fair Value % of Portfolio Leveraged Lending 1,422 $ 54% Life Sciences 116 4% Asset Based and Lender Finance 256 10% Total Corporate Lending Portfolio 1,794 $ 68% Aviation 381 15% Total Core Assets 2,174 83% Non-Core and Legacy 446 17% Total Portfolio 2,620 $ 100%
Rank Portfolio Company Fair Value % of Portfolio 1 Genesis Healthcare, Inc. 59 $ 3.3% 2 PSI Services, LLC 43 2.4% 3 RA Outdoors, LLC (Active Outdoors) 40 2.2% 4 Aero Operating LLC 36 2.0% 5 Telestream Holdings Corporation 35 1.9% 6 Reddy Ice Corp. 35 1.9% 7 Electro Rent Corporation 34 1.9% 8 ChyronHego Corporation 32 1.8% 9 CT Technologies Intermediate Holdings, Inc 32 1.8% 10 FiscalNote 31 1.7% Top Ten Corporate Lending Portfolio Companies 377 $ 21.0% Other 1,417 79.0% Total Corporate Lending Portfolio 1,794 $ 100.0%
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1 Based on corporate lending portfolio. Top ten portfolio companies based on market value as of March 31, 2019. 2 Based on corporate lending portfolio.
Portfolio by Origination Strategy ($ in millions) Top Ten Corporate Lending Portfolio Companies1 ($ in millions) Average Position Size 2, at fair value ($ in millions) $18.8 $16.6 $15.9 $15.5 $15.7 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
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Represents 14.5% of AINV’s investment portfolio 1, 2
93 aircraft 13 aircraft types 43 lessees in 28 countries Weighted average age of aircraft ~8.5 years Weighted average lease maturity ~5.1 years Merx Portfolio1 Number of Aircraft by Type1 Aircraft by Region1,3 Staggered Lease Maturity1 Aircraft Value by Lessee1,2 Revenue by Lessee1,4
33 28 9 2 1 1 6 5 21212
737-800 A320-200 A321-200 A321neo 777-200F 787-8 737-700 A319-100 E-195 A330-200 E-190 737-900ER E-170
33% 29% 20% 11% 3% 2% 2% Asia Europe North America Latin America Africa Australia Middle East 1 11 14 7 14 10 12 12 7 1 4
1 3 5 7 9 11 13 15 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 # of leases maturing by year 9% 8% 6% 5% 4% 4% 4% 4% 3% 3% 3% 2% 1% 2% 2% 2% 2% 2% 2% 2% 27% 23 Lessees Each < 2%
8.1% 7.8% 7.7% 4.8% 4.6% 4.0% 3.5% 3.5% 3.3% 3.2% 3.1% 3.0% 2.9%
1 As of June 30, 2019 2 On a fair value basis. 3 Based on base value. 4 Revenue for next four quarters. For more information about Merx, please visit www.merxaviation.com.
Median LTM EBITDA
2.8 x 2.8 x 2.1 x 1.9 x 1.7 x Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 2.3 x 2.3 x 2.3 x 2.4 x 2.4 x Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 5.58 x 5.54 x 5.48 x 5.45 x 5.43 x Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 $73 $73 $67 $54 $42 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
Source: Company data. 1 Based on corporate lending portfolio. Excludes select investments where metric is not relevant or appropriate or data is not available. Weighed average by cost. Current metric.
Net Leverage through AINV Position 1 Total Cash Interest Coverage 1 AINV Attachment Point 1
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Notes: Reflects the views of Apollo. For detailed information on risks relating to AINV, see the latest 10-K and subsequent quarterly reports on Form 10-Q, filed with the SEC. 1 The Company announced that on April 4, 2018, its Board of Directors approved the application of the modified asset coverage requirements set forth in new Section 61(a)(2) of the Investment Company Act of 1940, as amended by the SBCAA. As a result, the asset coverage ratio test applicable to the Company will be decreased from 200% to 150%, effective April 4, 2019. 2 On March 29, 2016, the Company received an exemptive order from the SEC permitting greater flexibility to participate in co-investment transactions with certain of its affiliates where terms other than price and quantity are negotiated, subject to the conditions included therein.
1 Origination platform is highly differentiated versus other market participants 2 Uniquely positioned to benefit from increase in regulatory leverage 1 3 Receipt of exemptive relief to co-invest enhances competitive positioning 2 4 Plan for reduction in asset coverage requirement should deliver improved shareholder returns and provide significant investment capacity 5 Strong balance sheet and diverse funding sources 6 Fee structure closely aligns the incentives of the manager with the interests of shareholders 7 Active share repurchase program
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Asset Based
term loans against fixed assets or as supported by cash flow
expertise, borrowing base monitoring capabilities and complex cash dominion structures
Life Sciences
development (e.g., biotech companies) or early commercialization
liquidation value
Lender Finance
underlying collateral
borrowers
assets, and corporate and/or personal recourse with various restrictive covenants
underlying collateral
asset class
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Notes: Numbers may not sum due to rounding. 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. 2 Based on commitments for core portfolio and non-core and legacy investments. ($ in thousands, except per share data) 1Q'20 4Q'19 3Q'19 2Q'19 1Q'19 Jun-19 Mar-19 Dec-18 Sep-18 Jun-18 Financial Highlights Net investment income per share $0.50 $0.47 $0.45 $0.45 $0.44 Net realized and change in unrealized gains (losses) per share (0.16) (0.01) (0.47) (0.06) (0.25) Earnings (loss) per share $0.35 $0.46 ($0.02) $0.39 $0.18 Net asset value per share $19.00 $19.06 $19.03 $19.40 $19.42 Distribution recorded per common share $0.45 $0.45 $0.45 $0.45 $0.45 Net leverage ratio 1 1.03 x 0.83 x 0.74 x 0.68 x 0.78 x Investment Activity Commitments 2 Gross commitments made $451,100 $230,396 $278,276 $224,569 $300,807 Exits of commitments (141,965) (52,746) (225,625) (286,133) (81,586) Net investment commitments made $309,135 $177,650 $52,652 ($61,563) $219,221 Funded Investment Activity Gross fundings, excluding Merx Aviation and revolvers $312,423 $164,140 $220,602 $265,874 $199,714 Net fundings, including Merx Aviation and revolvers $214,997 $98,051 $14,640 ($171,740) $250,331
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1 Corporate lending includes leveraged lending, life sciences, asset based and lender finance. Excludes Merx Aviation and non-core and legacy investments. 2 Non-core assets include oil & gas, structured credit, renewables, shipping and commodities. 3 Based on average of beginning of period and end of period portfolio yield. On a cost basis. Exclusive of investments on non-accrual status. ($ in thousands) 1Q'20 4Q'19 3Q'19 2Q'19 1Q'19 Jun-19 Mar-19 Dec-18 Sep-18 Jun-18 Portfolio by Strategy, at fair value ($) Leveraged lending $1,421,556 $1,196,426 $1,077,142 $1,098,839 $1,263,372 Life sciences 115,726 121,660 109,333 130,002 119,005 Asset based and lender finance 256,242 203,147 196,844 133,407 102,267 Corporate lending portfolio 1 $1,793,524 $1,521,233 $1,383,320 $1,362,248 $1,484,644 Merx Aviation 380,915 425,481 455,551 456,886 502,801 Core portfolio $2,174,438 $1,946,713 $1,838,870 $1,819,134 $1,987,444 Non-core and legacy 2 445,874 461,419 469,096 505,607 508,014 Total investment portfolio $2,620,312 $2,408,132 $2,307,966 $2,324,741 $2,495,459 Portfolio by Strategy, at fair value (%) Leveraged lending 54% 50% 47% 47% 51% Life sciences 4% 5% 5% 6% 5% Asset based and lender finance 10% 8% 9% 6% 4% Corporate lending portfolio 1 68% 63% 60% 59% 59% Merx Aviation 15% 18% 20% 20% 20% Core portfolio 83% 81% 80% 78% 80% Non-core and legacy 2 17% 19% 20% 22% 20% Total investment portfolio 100% 100% 100% 100% 100% Weighted Average Yield on Debt Investments, average 3 Corporate lending portfolio 1 9.9% 10.3% 10.4% 10.5% 10.5% Merx Aviation 12.0% 12.0% 12.0% 12.0% 12.0% Core portfolio 10.3% 10.7% 10.8% 10.8% 10.9% Non-core and legacy 2 7.3% 8.4% 9.5% 9.4% 9.3% Total investment portfolio 10.0% 10.4% 10.7% 10.7% 10.7% Number of portfolio companies, at period end 129 113 103 98 96
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1 Corporate lending includes leveraged lending, life sciences, asset based and lender finance. Excludes Merx Aviation and non-core and legacy investments. Non-core assets include oil & gas, structured credit, renewables, shipping and commodities 2 Source: Company data. 3 Through AINV position. 4 Excludes select investments where metric is not relevant or appropriate or data is not available. 5 Weighted average by cost. Current metric. ($ in thousands) 1Q'20 4Q'19 3Q'19 2Q'19 1Q'19 Jun-19 Mar-19 Dec-18 Sep-18 Jun-18 Portfolio by Asset Class, measured at fair value ($) First lien $1,277,535 $991,430 $854,494 $676,266 $683,019 Second lien 509,716 525,493 525,977 599,484 705,845 Other 6,272 4,310 2,849 86,498 95,779 Total corporate lending portfolio $1,793,524 $1,521,233 $1,383,320 $1,362,248 $1,484,644 Portfolio by Asset Class, measured at fair value (%) First lien 71% 65% 62% 50% 46% Second lien 28% 35% 38% 44% 48% Other 0% 0% 0% 6% 6% Total corporate lending portfolio 100% 100% 100% 100% 100% Weighted Average Spread over LIBOR of Floating Rate Assets (in bps) First lien 609 640 650 670 671 Second lien 877 855 855 859 857 Weighted average spread 686 713 727 777 788 Weighted Average Net Leverage 2, 3, 4, 5 First lien 5.02 x 5.10 x 5.08 x 4.94 x 4.98 x Second lien 6.12 x 5.89 x 5.89 x 5.87 x 5.94 x Weighted average net leverage 5.43 x 5.45 x 5.48 x 5.54 x 5.58 x Interest Rate Type, measured at fair value Fixed rate % 1% 0% 0% 6% 6% Floating rate % 99% 100% 100% 94% 94% Sponsored / Non-sponsored, measured at fair value Sponsored % 88% 86% 85% 84% 83% Non-sponsored % 12% 14% 15% 16% 17% Other Metrics Pursuant to co-investment order % 67% 63% 59% 50% 41% Average borrower exposure $15,733 $15,523 $15,900 $16,613 $18,793 Interest coverage 2, 4, 5 2.4 x 2.4 x 2.3 x 2.3 x 2.3 x Attachment point 2, 4, 5 1.7 x 1.9 x 2.1 x 2.8 x 2.8 x
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1 Corporate lending includes leveraged lending, life sciences, asset based and lender finance. Excludes Merx Aviation and non-core and legacy investments. Non-core assets include oil & gas, structured credit, renewables, shipping and
($ in thousands) 1Q'20 4Q'19 3Q'19 2Q'19 1Q'19 Jun-19 Mar-19 Dec-18 Sep-18 Jun-18 Gross Commitments Made by Asset Class First lien $449,816 $227,639 $266,090 $211,869 $247,391 Second lien 11,583 4,441 53,415 Other 1,284 463 603 260 Gross commitments made $451,100 $228,102 $278,276 $216,569 $300,807 Gross Commitments Made Information Number of portfolio companies 25 19 19 12 14 Average commitment size $18,044 $12,005 $14,646 $18,047 $21,486 Floating Rate % 100% 100% 100% 100% 100% Pursuant to co-investment order % 96% 94% 77% 90% 69% Weighted Average Spread over LIBOR of New Floating Rate Commitments (in bps) First lien 552 585 599 639 617 Second lien N/A N/A 734 900 779 Weighted average spread 552 585 604 644 647 Weighted Average Net Leverage of New Commitments 2 First lien 4.7 x 3.9 x 5.1 x 4.6 x 4.4 x Second lien N/A N/A 5.2 x 6.2 x 6.3 x Weighted average net leverage 4.7 x 3.9 x 5.1 x 4.7 x 4.9 x Exits of Commitments by Asset Class First lien ($118,065) ($32,239) ($30,252) ($154,071) ($25,858) Second lien (21,887) (2,450) (94,221) (114,918) (27,987) Other (84,533) (10,681) (12,741) Exits of commitments ($139,952) ($34,689) ($209,006) ($279,670) ($66,586)
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1 Excludes Merx Aviation and revolvers. ($ in thousands) 1Q'20 4Q'19 3Q'19 2Q'19 1Q'19 Jun-19 Mar-19 Dec-18 Sep-18 Jun-18 Gross fundings 1 $312,423 $164,140 $220,602 $265,874 $199,714 Sales and syndications 1 (9,562) (10,814) (16,317) (154,776) (14,832) Repayments 1 (66,864) (33,588) (196,774) (248,107) (13,464) Net fundings, excluding Merx Aviation and revolvers $235,997 $119,738 $7,510 ($137,008) $171,418 Net fundings, Merx Aviation (46,000) (31,000) (1,350) (47,250) 91,000 Net fundings, revolvers 25,000 9,313 8,479 12,518 (12,086) Net fundings, including Merx Aviation and revolvers $214,997 $98,051 $14,640 ($171,740) $250,331 Number of Portfolio Companies Number of portfolio companies, at beginning of period 113 103 98 96 90 Number of new portfolio companies 21 12 14 9 7 Number of exited portfolio companies (5) (2) (9) (7) (1) Number of portfolio companies, at period end 129 113 103 98 96
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As of June 30, 2019, 2.5% of total investments at amortized cost, or 1.7% of total investments at fair value, were on non-accrual status.
Note: Numbers may not sum due to rounding ($ in thousands) 1Q'20 4Q'19 3Q'19 2Q'19 1Q'19 Jun-19 Mar-19 Dec-18 Sep-18 Jun-18 Investments on Non-Accrual Status Non-accrual investments at amortized cost $67,240 $72,003 $79,771 $75,671 $75,671 Non-accrual investments/total portfolio, at amortized cost 2.5% 2.9% 3.4% 3.2% 3.0% Non-accrual investments at fair value $45,300 $56,853 $63,754 $61,580 $57,646 Non-accrual investments/total portfolio, at fair value 1.7% 2.4% 2.8% 2.6% 2.3% Investments on Non-Accrual Status as of June 30, 2019 Industry Cost Fair Value Magnetation, LLC $1,134 $530 Spotted Hawk 44,380 31,683 Crowne Automotive 7,986 1,329 KLO Holdings 13,740 11,758 Total $67,240 $45,300 Metals & Mining Energy – Oil & Gas Automotive Consumer Goods – Durable
$19.00 $19.06 $19.03 $19.40 $19.42 $17 $18 $18 $19 $19 $20 $20 Jun-19 Mar-19 Dec-18 Sep-18 Jun-18
Net Asset Value Per Share
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Note: Numbers may not sum due to rounding. ($ in thousands, except per share data) 1Q'20 4Q'19 3Q'19 2Q'19 1Q'19 Jun-19 Mar-19 Dec-18 Sep-18 Jun-18 Per Share NAV, beginning of period $19.06 $19.03 $19.40 $19.42 $19.67 Net investment income 0.50 0.47 0.45 0.45 0.44 Net realized and change in unrealized gains (losses) (0.16) (0.01) (0.47) (0.06) (0.25) Net increase (decrease) in net assets resulting from operations 0.35 0.46 (0.02) 0.39 0.18 Repurchase of common stock 0.04 0.02 0.10 0.03 0.02 Distribution recorded (0.45) (0.45) (0.45) (0.45) (0.45) NAV, end of period $19.00 $19.06 $19.03 $19.40 $19.42 Total NAV, beginning of period $1,312,627 $1,316,605 $1,371,152 $1,391,166 $1,418,086 Net investment income 34,534 32,552 31,487 32,163 31,547 Net realized and change in unrealized gains (losses) (10,705) (708) (32,665) (4,134) (18,297) Net increase (decrease) in net assets resulting from operations 23,829 31,844 (1,178) 28,029 13,250 Repurchase of common stock (15,123) (4,781) (22,067) (16,105) (7,877) Distributions recorded (30,624) (31,040) (31,302) (31,938) (32,293) NAV, end of period $1,290,710 $1,312,627 $1,316,605 $1,371,152 $1,391,166
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Note: Numbers may not sum due to rounding. ($ in thousands, except per share data) 1Q'20 4Q'19 3Q'19 2Q'19 1Q'19 Jun-19 Mar-19 Dec-18 Sep-18 Jun-18 Total investment income Interest income (excluding PIK) $59,643 $54,905 $54,555 $59,661 $53,933 Dividend income 381 3,846 3,600 2,280 5,577 PIK interest income 5,556 1,485 2,138 2,283 2,678 Other income 937 1,174 3,748 1,810 1,403 Total investment income $66,516 $61,410 $64,041 $66,034 $63,591 Expenses Management fees $9,539 $8,881 $8,720 $9,258 $8,873 Performance-based incentive fees 7,409 6,359 7,423 Interest and other debt expenses 17,511 15,623 14,217 14,903 13,576 Administrative services expense 1,725 1,620 1,657 1,857 1,638 Other general and administrative expenses 3,305 2,757 2,564 3,524 2,533 Total expenses 32,079 28,881 34,567 35,901 34,043 Management and performance-based incentive fees waived (1,852) (1,834) (1,856) Expense reimbursements (98) (23) (161) (196) (144) Net expenses $31,982 $28,858 $32,554 $33,871 $32,043 Net investment income $34,534 $32,552 $31,487 $32,163 $31,548 Net realized gains (losses) $1,282 $174 ($18,951) ($8,074) ($23,183) Net change in unrealized gains (losses) (11,987) ($882) ($13,714) $3,940 $4,885 Net realized and change in unrealized gains (losses) (10,705) (708) (32,665) (4,134) (18,298) Net increase (decrease) in net assets resulting from operations $23,829 $31,844 ($1,178) $28,029 $13,250 Additional Data Net investment income per share $0.50 $0.47 $0.45 $0.45 $0.44 Earnings (loss) per share $0.35 $0.46 ($0.02) $0.39 $0.18 Distribution recorded per common share $0.45 $0.45 $0.45 $0.45 $0.45 Weighted average shares outstanding 68,588,541 69,121,393 70,105,587 71,366,492 71,971,572 Shares outstanding, end of period 67,927,353 68,876,986 69,187,804 70,685,665 71,641,765 For the Three Months Ended
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Note: Numbers may not sum due to rounding. 1 Other assets include cash collateral on option contracts, dividends receivable, deferred financing costs, variation margin receivable on options contracts and prepaid expenses and other assets. 2 The Company’s net leverage ratio is defined as debt outstanding plus payable for investments purchased, less receivable for investments sold, less cash and cash equivalents, less foreign currencies, divided by net assets. ($ in thousands, except share and per share data) 1Q'20 4Q'19 3Q'19 2Q'19 1Q'19 Jun-19 Mar-19 Dec-18 Sep-18 Jun-18 Assets Investments at fair value $2,620,312 $2,408,132 $2,307,966 $2,324,741 $2,495,459 Cash and cash equivalents (including foreign currencies) 30,570 41,189 29,937 19,258 12,667 Interest receivable 25,692 24,280 20,695 21,939 23,406 Receivable for investments sold 684 336 43 3,158 15,874 Other assets 1 23,171 23,860 25,026 17,696 25,965 Total Assets $2,700,430 $2,497,797 $2,383,667 $2,386,792 $2,573,371 Liabilities Debt $1,349,597 $1,128,686 $994,487 $946,236 $1,102,679 Payables for investments purchased 677 7,811 3,877 11,453 Distributions payable 30,624 31,040 31,302 31,942 32,293 Management and performance-base incentive fees payable 9,539 8,880 14,276 16,853 17,506 Interest payable 10,404 5,818 9,508 5,695 10,184 Accrued administrative services expense 2,295 2,983 3,012 2,232 1,575 Other liabilities and accrued expenses 7,260 7,086 6,666 8,805 6,515 Total Liabilities $1,409,719 $1,185,170 $1,067,062 $1,015,640 $1,182,205 Net Assets $1,290,710 $1,312,627 $1,316,605 $1,371,152 $1,391,166 Additional Data Net asset value per share $19.00 $19.06 $19.03 $19.40 $19.42 Debt-to-equity ratio 1.05 x 0.86 x 0.76 x 0.69 x 0.79 x Net leverage ratio 2 1.03 x 0.83 x 0.74 x 0.68 x 0.78 x Shares outstanding, end of period 67,927,353 68,876,986 69,187,804 70,685,665 71,641,765
Fixed rate assets 20% Floating rate assets 70% Non yielding and non-accrual assets 5% Variable rate assets 5% Fixed rate debt 19% Floating rate debt 32% Common equity 49% Debt Facilities Debt Issued/ Amended Final Maturity Date Interest Rate Principal Amount Outstanding Senior Secured Facility ($1.71 billion) 11/19/2018 11/19/2023 L + 200 bps $859,510 2043 Notes 6/17/2013 7/15/2043 6.875% 150,000 2025 Notes 3/3/2015 3/3/2025 5.250% 350,000 5.151% 1,359,510 Deferred Financing Cost and Debt Discount (9,912) $1,349,597 Total Debt Obligations, Net of Deferred Financing Cost and Debt Discount Weighted Average Annualized Interest Cost1 & Total Debt Obligations
3 4
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1 Includes the stated interest expense and commitment fees on the unused portion of the Senior Secured Facility. Excludes amortized debt issuance costs. For the three months ended June 30, 2019. Based on average debt obligations
August 12, 2019. 4 Excluding the 2043 Notes, the weighted average annualized interest cost, excluding amortized debt issuance costs, would have been 4.866% for the period.
Debt Facilities ($ in thousands) Funding Sources by Interest Rate Type Net Investment Income Interest Rate Sensitivity Investment Portfolio by Interest Rate Type 2
Annual Net Investment Income (in millions) Annual Net Investment Income Per Share Basis Point Change Up 200 basis points $15.6 $0.230 Up 100 basis points $7.8 $0.115 Down 100 basis points ($7.7) ($0.113) Down 200 basis points ($7.7) ($0.114)
For more information, please contact: Elizabeth Besen Investor Relations Manager Phone: (212) 822-0625 Email: ebesen@apollo.com Gregory W. Hunt Chief Financial Officer and Treasurer Phone: (212) 822-0655 Email: ghunt@apollo.com