Investor Presentation February 2020 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 February 2020 Unless otherwise noted, information as of December 31, 2019 It should not be assumed that investments made in the future will be profitable or will equal
Unless otherwise noted, information as of December 31, 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, Inc. (“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 December 31, 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, Inc., 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 was reduced from 200% to 150% on 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 February 25, 2020. 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 $331 billion of AUM 2,4 with expertise in private equity, credit and real assets
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 $1.08 billion Dividend yield at market price 9 11.0% Dividend yield at NAV 10 9.6%
All figures as of December 31, 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 $1.12 as of December 31, 2019. Business segment AUM may not sum to total firm AUM due to rounding. (2) Headcount includes 3 Executive Officers as Private Equity Investment Professionals (3) Number may not be fully reflective of all Apollo affiliated office space worldwide
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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
160 Investment Professionals2 $77 bn in AUM1
Credit Real Assets
215 Investment Professionals $216 bn in AUM1 97 Investment Professionals $39 bn in AUM1
New York Bethesda Houston Los Angeles London Madrid Frankfurt Luxembourg Delhi Mumbai Shanghai Hong Kong Singapore
Firm Profile
Founded: 1990 AUM: ~$331 bn1 Employees: 1,421 Offices Worldwide: 153
Tokyo San Diego
Commercial Real Estate Debt
Scott Weiner $24 billion in AUM 29 Professionals
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Note: All strategies and leadership listed above reflect global coverage. AUM and headcount as of December 31, 2019. . Please refer to the beginning of this presentation 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 $1.12 as of December 31, 2019. (1) Strategy headcounts excludes 17 global business professionals. (2) ISG manages $162bn 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 $216 Billion in AUM & 215 Investment Professionals (1)
Fixed Income $63 billion in AUM 31 Professionals Corporate Credit $48 billion in AUM 53 Professionals Direct Origination $24 billion in AUM 38 Professionals Insurance Solutions Group (ISG) (2) 37 Professionals
Leadership
Jim Hassett Brigitte Posch Joseph Moroney John Zito Howard Widra Tanner Powell Gary Rothschild Justin Sendak Bret Leas Nancy De Liban Rob Graham Jamshid Ehsani Jim Galowski (3) Vikram Kavthekar Matt O’Mara Jasjit Singh
Strategies
bonds
placements
loans
loans
finance
side sourcing
solution capital
securities
estate – RMBS & whole loans
loans & ABS
construction & asset allocation
management
capital efficiency Structured Credit & ABS $21 billion in AUM 18 Professionals Consumer & Residential Credit $18 billion in AUM 21 Professionals Hybrid Capital
Robert Ruberton Matthew Michelini $9 billion in AUM 27 Professionals
Infrastructure and Energy Credit
Various $1 billion in AUM 17 Professionals
European Principal Finance
Skardon Baker $7 billion in AUM 25 Professionals
Other Credit Related Strategies
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1 As of December 31, 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. 3 As of September 30, 2019.
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
151 companies 1
directly sourced middle market senior debt
leveraged loans, real estate and venture lending
affiliated with Apollo Global
management, of which MidCap holds $13.0 billion, of which $9.3 billion are funded and outstanding 1
a RIC for federal income tax purposes
solutions to US middle market companies
135 companies 3
Additional capacity in select opportunistic credit accounts
Encompasses an array of origination verticals and a comprehensive suite of products
Origination Channels Product Capabilities
Leveraged Lending
intermediaries
core investments
Niche Markets
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$1.0 $4.1 $3.8 $4.5 $13.4 $0.4 $0.9 $1.1 $1.4 $3.8
$1.4 $5.0 $4.9 $5.9 $17.2 0% 5% 10% 15% 20% 25% 30% 35% $- $2 $4 $6 $8 $10 $12 $14 $16 $18 2016 2017 2018 2019 2016 - 2019 Apollo Global Commitment, excluding AINV AINV Commitment
Apollo Global Management Co-Investment Volume 1
1 On March 29, 2016, the Company received an exemptive order from the SEC permitting greater flexibility to participate in co-investment transactions with certain of its affiliates where terms other than price and quantity are negotiated, subject to the conditions included therein.
Direct Origination platform
maintain relatively small hold sizes given AINV’s receipt of exemptive relief to co-invest in 2016) 1
200+ Investment Professionals Globally
Volume Team
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$ in billions
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On a fair value basis December 31, 2016 December 31, 2017 December 31, 2018 December 31, 2019 Exposure to core assets 1, 2 66% 74% 80% 88% Exposure to non-core assets and legacy
2,3
34% 26% 20% 12% Exposure to first lien debt 4 29% 38% 62% 82% Exposure to floating rate debt 4,5 84% 92% 100% 100% Investments made pursuant to co- investment order 4,6 5% 33% 59% 76% Borrower concentration 4 $21.3 m $19.7 m $15.9 m $16.4 m
1 Core assets include corporate lending and aviation. Corporate lending portfolio includes leveraged lending, life sciences, asset based and lender finance. 2 Percentage based on total investment portfolio. 3 Non-core assets include
excludes aviation, oil and gas, structured credit, renewables, shipping, commodities and investments on non-accrual status. 6 On March 29, 2016, the Company received an exemptive order from the SEC permitting greater flexibility to participate in co-investment transactions with certain of its affiliates where terms other than price and quantity are negotiated, subject to the conditions included therein.
Non-Core and Legacy Assets ($ 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 14 quarters, reduced exposure to non-core strategies by over $700 million
$304 $117
$232 $43
$133 $140 $238 $158 $58 $1,065 $358
Jun-16 Dec-19
Oil & Gas Renewables Shipping Structured Credit Legacy & Other
Key Elements of Our Strategy 1
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
` December 31, 2019 Target Leverage and Portfolio Size AINV Net Leverage Ratio 1.43x 1.25x – 1.50x Portfolio Size (in billions) $3.0 $2.8 - $3.0 Asset Mix (%) at fair value First Lien Corporate Loans 1 62 ~ 80-85 Second Lien Corporate Loans 13 < 10 Merx Aviation 12 ~10 – 15 Non-Core and Legacy 12 < 5 Other Key Metrics Weighted Average Spread 2 ~651 bps ~600 to 650 bps Weighted Average Net Leverage through AINV position 3 5.3x 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 58% 70%-80%
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Note: Numbers may not sum due to rounding. 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
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.
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December 31, 2019 Target Leverage and Portfolio Size AINV Net Leverage Ratio 1.43x 1.25x – 1.50x Portfolio Size (in billions) $3.0 $2.8 – $3.0 Funding Structure ($ in billions) Senior Secured Revolving Credit Facility (drawn) $1.44 $1.2- $1.5 Unsecured Term Debt 0.35 0.35 Total Debt Outstanding $1.79 $1.5 -$1.8 Stockholders’ Equity 1.22 1.22 Total Capital $3.00 $2.7 – $300 Capitalization (% Total Capital) Senior Secured Revolving Credit Facility 48% 46% 1 Unsecured Term Debt 12% 12% 1 Stockholders’ Equity 41% 42% 1
Note: Numbers may not sum due to rounding. 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 November 4, 2019. Inclusive of commissions. 5 As of February 3, 2020.
Fee Structure Closely Aligns the Incentives of the Manager with the Interests of the Shareholders
assets to
Active Share Repurchase Program
$208.1 million 4
The combination of AINV’s new fee structure and active stock repurchase program demonstrates
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1 As of December 31, 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. Corporate lending portfolio includes leveraged lending, life sciences, asset based and lender finance 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: Consumer Goods – Non-durable; Aerospace & Defense; Manufacturing, Capital Equipment; Consumer Goods – Durable; Energy – Electricity; Advertising, Printing & Publishing; Automotive; Media – Diversified & Production; Utilities – Electric; Retail; Insurance; Construction & Building; Telecommunications; Food & Grocery; Hotel, Gaming, Leisure, Restaurants ;Containers, Packaging & Glass and Metals & Mining.
Portfolio by Strategy Portfolio by Industry Portfolio Key Statistics
Leveraged lending 62% Life sciences 5% Asset based and lender finance 9% Merx Aviation 12% Non-core and legacy 12%
Corporate lending represents 76% of total portfolio
Investment Portfolio 2 $2.97 bn # of Portfolio Companies 151 Weighted Average Yield 3,4 9.0% % Portfolio Floating Rate 2,4 100% % of Portfolio Sponsored 2,4 87% Average Funded Borrower Exposure 2,4 $16.4 mn Median EBITDA 4,5,6 $35mn Net Leverage Through AINV Position 4,5,6,7 5.27 x AINV Weighted Average Attachment Point 4,5,6,7 0.9x Interest Coverage 4,5,6,7 2.5 x
Healthcare & Pharmaceuticals 16% Business Services 14% Aviation and Consumer Transport 13% High Tech Industries 10% Transportation – Cargo, Distribution 6% Consumer Services 5% Energy – Oil & Gas 4% Automotive 4% Beverage, Food & Tobacco 3% Chemicals, Plastics & Rubber 3% Other 23%
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Total Investment Portfolio
(Corporate Lending, Merx, & Non-Core and Legacy)
Corporate Lending 76% Merx Aviation 12% Non- Core and Legacy 12%
First Lien 82% Second Lien 18%
exposure
through AINV position2 – 5.11x for first lien – 5.82x for second lien
– ~606 bps for first lien – ~859 bps for second lien
Metrics for Corporate Lending Portfolio Corporate Lending Portfolio
Notes: All data as of December 31, 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.
$2.97 billion $2.25 billion
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$ in millions, unless indicated otherwise
$15.9 $15.5 $15.7 $16.3 $16.4 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19
Rank Portfolio Company Fair Value % of Portfolio 1 Truck-Lite Co., LLC 76 $ 3.4% 2 Genesis Healthcare, Inc. 55 2.5% 3 Aero Operating LLC 39 1.7% 4 Simplifi Holdings, Inc. 38 1.7% 5 US Auto 38 1.7% 6 RA Outdoors, LLC (Active Outdoors) 37 1.7% 7 Telestream Holdings Corporation 37 1.7% 8 ChyronHego Corporation 36 1.6% 9 NFA Group 36 1.6% 10 MAKS 34 1.5% Top Ten Corporate Lending Portfolio Companies 426 $ 19.0% Other 1,820 81.0% Total Corporate Lending Portfolio 2,246 $ 100.0% Fair Value % of Portfolio Leveraged Lending 1,840 $ 62% Life Sciences 132 4% Asset Based and Lender Finance 274 9% Total Corporate Lending Portfolio 2,246 $ 76% Aviation 363 12% Total Core Assets 2,609 88% Non-Core and Legacy 358 12% Total Portfolio 2,967 $ 100%
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1 Based on corporate lending portfolio. Top ten portfolio companies based on market value as of December 31, 2019. 2 AINV sold $65 million of the position subsequent to quarter end to achieve its desired hold size. 3 Based on corporate lending portfolio.
Portfolio by Origination Strategy ($ in millions) Top Ten Corporate Lending Portfolio Companies1 ($ in millions) Average Position Size 3, at fair value ($ in millions)
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Represents 12.2% of AINV’s investment portfolio 1, 2
83 aircraft 10 aircraft types 40 lessees in 26 countries Weighted average age of aircraft ~8.4 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 27 7 2 1 1 5 5 11
737-800 A320-200 A321-200 A321neo 777-200F 787-8 737-700 A319-100 A330-200 737-900ER
36% 26% 21% 9% 3% 3% 2% Asia Europe North America Latin America Africa Australia Middle East 2 10 9 15 12 13 10 6 1 4 1
1 3 5 7 9 11 13 15 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 # of leases maturing by year 9% 8% 7% 5% 5% 4% 4% 4% 4% 3% 3% 3% 3% 2% 2% 2% 2% 29% 23 Lessees Each < 2%
8.7% 8.6% 8.1% 5.3% 5.2% 4.4% 3.9% 3.9% 3.6% 3.2% 2.9% 2.9% 2.7%
1 As of December 31, 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
2.1 x 1.9 x 1.7 x 1.3 x 0.9 x Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 2.3 x 2.4 x 2.4 x 2.5 x 2.5 x Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 5.48 x 5.45 x 5.43 x 5.50 x 5.27 x Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 $67 $54 $42 $37 $35 Dec-18 Mar-19 Jun-19 Sep-19 Dec-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
loans against fixed assets or as supported by cash flow
borrowing base monitoring capabilities and complex cash dominion structures
Life Sciences
(e.g., biotech companies) or early commercialization
Lender Finance
collateral
corporate and/or personal recourse with various restrictive covenants
underlying collateral
Franchise Finance
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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) 3Q'20 2Q'20 1Q'20 4Q'19 3Q'19 Dec-19 Sep-19 Jun-19 Mar-19 Dec-18 Financial Highlights Net investment income per share $0.54 $0.53 $0.50 $0.47 $0.45 Net realized and change in unrealized gains (losses) from investments and foreign currencies per share ($0.54) ($0.36) ($0.16) ($0.01) ($0.47) Net realized loss on extinguishment of debt per share – (0.06) – – – Earnings (loss) per share $0.00 $0.10 $0.35 $0.46 ($0.02) Net asset value per share $18.27 $18.69 $19.00 $19.06 $19.03 Distribution recorded per common share $0.45 $0.45 $0.45 $0.45 $0.45 Net leverage ratio 1 1.43 x 1.24 x 1.03 x 0.83 x 0.74 x Investment Activity Commitments 2 Gross commitments made $491,440 $378,707 $451,100 $230,396 $278,276 Exits of commitments (309,485) (145,689) (141,965) (52,746) (225,625) Net investment commitments made $181,955 $233,018 $309,135 $177,650 $52,652 Funded Investment Activity Gross fundings, excluding Merx Aviation and revolvers $399,385 $357,804 $312,423 $164,140 $220,602 Net fundings, including Merx Aviation and revolvers $170,912 $207,057 $214,997 $98,051 $14,640
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1 Corporate lending includes leveraged lending, life sciences, asset based and lender finance. Excludes Merx Aviation and non-core and legacy investments. 2 Non-core assets include oil & gas, structured credit, renewables, shipping and commodities. 3 Based on average of beginning of period and end of period portfolio yield. On a cost basis. Exclusive of investments on non-accrual status.
($ in thousands) 3Q'20 2Q'20 1Q'20 4Q'19 3Q'19 Dec-19 Sep-19 Jun-19 Mar-19 Dec-18 Portfolio by Strategy, at fair value ($) Leveraged lending $1,839,711 $1,627,004 $1,421,556 $1,196,426 $1,077,142 Life sciences 132,165 119,322 115,726 121,660 109,333 Asset based and lender finance 273,871 269,905 256,242 203,147 196,844 Corporate lending portfolio 1 $2,245,746 $2,016,231 $1,793,524 $1,521,233 $1,383,320 Merx Aviation 363,060 362,997 380,915 425,481 455,551 Core portfolio $2,608,806 $2,379,228 $2,174,438 $1,946,713 $1,838,870 Non-core and legacy 2 358,391 425,532 445,874 461,419 469,096 Total investment portfolio $2,967,197 $2,804,760 $2,620,312 $2,408,132 $2,307,966 Portfolio by Strategy, at fair value (%) Leveraged lending 62% 58% 54% 50% 47% Life sciences 4% 4% 4% 5% 5% Asset based and lender finance 9% 10% 10% 8% 9% Corporate lending portfolio 1 76% 72% 68% 63% 60% Merx Aviation 12% 13% 15% 18% 20% Core portfolio 88% 85% 83% 81% 80% Non-core and legacy 2 12% 15% 17% 19% 20% Total investment portfolio 100% 100% 100% 100% 100% Weighted Average Yield on Debt Investments, average 3 Corporate lending portfolio 1 9.0% 9.4% 9.9% 10.3% 10.4% Merx Aviation 12.0% 12.0% 12.0% 12.0% 12.0% Core portfolio 9.4% 9.8% 10.3% 10.7% 10.8% Non-core and legacy 2 7.4% 7.3% 7.3% 8.4% 9.5% Total investment portfolio 9.2% 9.6% 10.0% 10.4% 10.7% Number of portfolio companies, at period end 151 139 129 113 103
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1 Corporate lending includes leveraged lending, life sciences, asset based and lender finance. Excludes Merx Aviation and non-core and legacy investments. Non-core assets include oil & gas, structured credit, renewables, shipping and commodities 2 Source: Company data. 3 Through AINV position. 4 Excludes select investments where metric is not relevant or appropriate or data is not available. 5 Weighted average by cost. Current metric.
($ in thousands) 3Q'20 2Q'20 1Q'20 4Q'19 3Q'19 Dec-19 Sep-19 Jun-19 Mar-19 Dec-18 Portfolio by Asset Class, measured at fair value ($) First lien $1,847,797 $1,559,301 $1,277,535 $991,430 $854,494 Second lien 388,820 450,495 509,716 525,493 525,977 Other 9,130 6,435 6,272 4,310 2,849 Total corporate lending portfolio $2,245,746 $2,016,231 $1,793,524 $1,521,233 $1,383,320 Portfolio by Asset Class, measured at fair value (%) First lien 82% 77% 71% 65% 62% Second lien 17% 22% 28% 35% 38% Other 0% 0% 0% 0% 0% Total corporate lending portfolio 100% 100% 100% 100% 100% Weighted Average Spread over LIBOR of Floating Rate Assets (in bps) First lien 606 611 609 640 650 Second lien 859 859 877 855 855 Weighted average spread 651 667 686 713 727 Weighted Average Net Leverage 2, 3, 4, 5 First lien 5.11 x 5.20 x 5.02 x 5.10 x 5.08 x Second lien 5.82 x 6.26 x 6.12 x 5.89 x 5.89 x Weighted average net leverage 5.27 x 5.50 x 5.43 x 5.45 x 5.48 x Interest Rate Type, measured at fair value Fixed rate % 0% 0% 1% 0% 0% Floating rate % 100% 100% 99% 100% 100% Sponsored / Non-sponsored, measured at fair value Sponsored % 87% 88% 88% 86% 85% Non-sponsored % 13% 12% 12% 14% 15% Other Metrics Pursuant to co-investment order % 76% 74% 67% 63% 59% Average borrower exposure $16,392 $16,260 $15,733 $15,523 $15,900 Interest coverage 2, 4, 5 2.5 x 2.5 x 2.4 x 2.4 x 2.3 x Attachment point 2, 4, 5 0.9 x 1.3 x 1.7 x 1.9 x 2.1 x
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1 Corporate lending includes leveraged lending, life sciences, asset based and lender finance. Excludes Merx Aviation and non-core and legacy investments. Non-core assets include oil & gas, structured credit, renewables, shipping and
($ in thousands) 3Q'20 2Q'20 1Q'20 4Q'19 3Q'19 Dec-19 Sep-19 Jun-19 Mar-19 Dec-18 Gross Commitments Made by Asset Class First lien $490,386 $376,707 $449,816 $227,639 $266,090 Second lien 11,583 Other 1,055 1,284 463 603 Gross commitments made $491,440 $376,707 $451,100 $228,102 $278,276 Gross Commitments Made Information Number of portfolio companies 28 22 25 19 19 Average commitment size $17,551 $17,123 $18,044 $12,005 $14,646 Floating Rate % 100% 100% 100% 100% 100% Pursuant to co-investment order % 85% 94% 96% 94% 77% Weighted Average Spread over LIBOR of New Floating Rate Commitments (in bps) First lien 612 604 552 585 599 Second lien N/A N/A N/A N/A 734 Weighted average spread 612 604 552 585 604 Weighted Average Net Leverage of New Commitments 2 First lien 5.3 x 5.4 x 4.7 x 3.9 x 5.1 x Second lien N/A N/A N/A N/A 5.2 x Weighted average net leverage 5.3 x 5.4 x 4.7 x 3.9 x 5.1 x Exits of Commitments by Asset Class First lien ($136,257) ($87,135) ($118,065) ($32,239) ($30,252) Second lien (61,675) (57,547) (21,887) (2,450) (94,221) Other (7) (84,533) Exits of commitments ($197,933) ($144,689) ($139,952) ($34,689) ($209,006)
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1 Excludes Merx Aviation and revolvers.
($ in thousands) 3Q'20 2Q'20 1Q'20 4Q'19 3Q'19 Dec-19 Sep-19 Jun-19 Mar-19 Dec-18 Gross fundings 1 $399,385 $357,804 $312,423 $164,140 $220,602 Sales and syndications 1 (14,930) (19,996) (9,562) (10,814) (16,317) Repayments 1 (212,333) (136,484) (66,864) (33,588) (196,774) Net fundings, excluding Merx Aviation and revolvers $172,122 $201,324 $235,997 $119,738 $7,510 Net fundings, Merx Aviation (2,000) (17,900) (46,000) (31,000) (1,350) Net fundings, revolvers 790 23,633 25,000 9,313 8,479 Net fundings, including Merx Aviation and revolvers $170,912 $207,057 $214,997 $98,051 $14,640 Number of Portfolio Companies Number of portfolio companies, at beginning of period 139 129 113 103 98 Number of new portfolio companies 16 14 21 12 14 Number of exited portfolio companies (4) (4) (5) (2) (9) Number of portfolio companies, at period end 151 139 129 113 103
As of December 31, 2019, 2.0% of total investments at amortized cost, or 0.7% of total investments at fair value, were on non-accrual status.
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Note: Numbers may not sum due to rounding
($ in thousands) 3Q'20 2Q'20 1Q'20 4Q'19 3Q'19 Dec-19 Sep-19 Jun-19 Mar-19 Dec-18 Investments on Non-Accrual Status Non-accrual investments at amortized cost $60,243 $60,756 $67,240 $72,003 $79,771 Non-accrual investments/total portfolio, at amortized cost 2.0% 2.1% 2.5% 2.9% 3.4% Non-accrual investments at fair value $20,707 $26,682 $45,300 $56,853 $63,754 Non-accrual investments/total portfolio, at fair value 0.7% 1.0% 1.7% 2.4% 2.8% Investments on Non-Accrual Status as of December 31, 2019 Industry Cost Fair Value Crowne Automotive $1,329 $1,080 KLO Holdings, LLC 13,953 4,065 Magnetation, LLC 581 Spotted Hawk 44,380 15,562 Total $60,243 $20,707 Automotive Consumer Goods – Durable Metals & Mining Energy – Oil & Gas
$18.27 $18.69 $19.00 $19.06 $19.03 $17 $18 $18 $19 $19 $20 $20 Dec-19 Sep-19 Jun-19 Mar-19 Dec-18
Net Asset Value Per Share
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Note: Numbers may not sum due to rounding.
($ in thousands, except per share data) 3Q'20 2Q'20 1Q'20 4Q'19 3Q'19 Dec-19 Sep-19 Jun-19 Mar-19 Dec-18 Per Share NAV, beginning of period $18.69 $19.00 $19.06 $19.03 $19.40 Net investment income 0.54 0.53 0.50 0.47 0.45 Net realized and change in unrealized gains (losses) (0.54) (0.36) (0.16) (0.01) (0.47) Net realized loss on extinguishment of debt per share – (0.06) – – – Net increase (decrease) in net assets resulting from operation 0.00 0.10 0.35 0.46 (0.02) Repurchase of common stock 0.02 0.04 0.04 0.02 0.10 Distribution recorded (0.45) (0.45) (0.45) (0.45) (0.45) NAV, end of period $18.27 $18.69 $19.00 $19.06 $19.03 Total NAV, beginning of period $1,253,392 $1,290,710 $1,312,627 $1,316,605 $1,371,152 Net investment income 36,220 35,733 34,534 32,552 31,487 Net realized and change in unrealized gains (losses) (35,934) (24,291) (10,705) (708) (32,665) Net realized loss on extinguishment of debt – (4,375) – – – Net increase (decrease) in net assets resulting from operation 286 7,068 23,829 31,844 (1,178) Repurchase of common stock (7,850) (14,215) (15,123) (4,781) (22,067) Distributions recorded (29,946) (30,171) (30,624) (31,040) (31,302) NAV, end of period $1,215,882 $1,253,392 $1,290,710 $1,312,627 $1,316,605
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Note: Numbers may not sum due to rounding.
($ in thousands, except per share data) 3Q'20 2Q'20 1Q'20 4Q'19 3Q'19 Dec-19 Sep-19 Jun-19 Mar-19 Dec-18 Total investment income Interest income (excluding PIK) $62,417 $63,760 $59,643 $54,905 $54,555 Dividend income 3,237 2,769 381 3,846 3,600 PIK interest income 1,634 1,603 5,556 1,485 2,138 Other income 1,193 2,185 937 1,174 3,748 Total investment income $68,482 $70,318 $66,516 $61,410 $64,041 Expenses Management fees $10,342 $10,190 $9,539 $8,881 $8,720 Performance-based incentive fees 71 1,911 – – 7,409 Interest and other debt expenses 18,200 18,735 17,511 15,623 14,217 Administrative services expense 1,542 1,542 1,725 1,620 1,657 Other general and administrative expenses 2,205 2,304 3,305 2,757 2,564 Total expenses 32,360 34,683 32,079 28,881 34,567 Management and performance-based incentive fees waived – – – – (1,852) Expense reimbursements (99) (99) (98) (23) (161) Net expenses $32,262 $34,584 $31,982 $28,858 $32,554 Net investment income $36,220 $35,733 $34,534 $32,552 $31,487 Net realized gains (losses) $3,843 ($7,087) $1,282 $174 ($18,951) Net realized loss on extinguishment of debt – (4,375) – – – Net change in unrealized gains (losses) (39,777) (17,203) (11,987) (882) (13,714) Net realized and change in unrealized gains (losses) (35,934) (28,666) (10,705) (708) (32,665) Net increase (decrease) in net assets resulting from operations $286 $7,068 $23,829 $31,844 ($1,178) Additional Data Net investment income per share $0.54 $0.53 $0.50 $0.47 $0.45 Earnings (loss) per share $0.00 $0.10 $0.35 $0.46 ($0.02) Distribution recorded per common share $0.45 $0.45 $0.45 $0.45 $0.45 Weighted average shares outstanding 66,613,469 67,446,575 68,588,541 69,121,393 70,105,587 Shares outstanding, end of period 66,545,741 67,047,352 67,927,353 68,876,986 69,187,804 For the Three Months Ended
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Note: Numbers may not sum due to rounding. 1 Other assets include cash collateral on option contracts, dividends receivable, deferred financing costs, variation margin receivable on options contracts and prepaid expenses and other assets. 2 The Company’s net leverage ratio is defined as debt outstanding plus payable for investments purchased, less receivable for investments sold, less cash and cash equivalents, less foreign currencies, divided by net assets.
($ in thousands, except share and per share data) 3Q'20 2Q'20 1Q'20 4Q'19 3Q'19 Dec-19 Sep-19 Jun-19 Mar-19 Dec-18 Assets Investments at fair value $2,967,197 $2,804,760 $2,620,312 $2,408,132 $2,307,966 Cash and cash equivalents (including foreign currencies) 42,226 36,437 30,570 41,189 29,937 Interest receivable 18,936 28,692 25,692 24,280 20,695 Receivable for investments sold 5,685 269 684 336 43 Other assets 1 25,979 22,803 23,171 23,860 25,026 Total Assets $3,060,024 $2,892,962 $2,700,430 $2,497,797 $2,383,667 Liabilities Debt $1,785,637 $1,584,128 $1,349,597 $1,128,686 $994,487 Payables for investments purchased 800 – – 677 7,811 Distributions payable 29,946 30,171 30,624 31,040 31,302 Management and performance-base incentive fees payable 10,414 12,101 9,539 8,880 14,276 Interest payable 8,138 3,666 10,404 5,818 9,508 Accrued administrative services expense 2,576 2,354 2,295 2,983 3,012 Other liabilities and accrued expenses 6,631 7,149 7,260 7,086 6,666 Total Liabilities $1,844,142 $1,639,570 $1,409,719 $1,185,170 $1,067,062 Net Assets $1,215,882 $1,253,392 $1,290,710 $1,312,627 $1,316,605 Additional Data Net asset value per share $18.27 $18.69 $19.00 $19.06 $19.03 Debt-to-equity ratio 1.47 x 1.26 x 1.05 x 0.86 x 0.76 x Net leverage ratio 2 1.43 x 1.24 x 1.03 x 0.83 x 0.74 x Shares outstanding, end of period 66,545,741 67,047,352 67,927,353 68,876,986 69,187,804
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 $1,440,666 2025 Notes 3/3/2015 3/3/2025 5.250% 350,000 4.197% $1,790,666 Deferred Financing Cost and Debt Discount (5,029) $1,785,637 Weighted Average Annualized Interest Cost1 & Total Debt Obligations Total Debt Obligations, Net of Deferred Financing Cost and Debt Discount
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Note: Numbers may not sum due to rounding. 1 Includes the stated interest expense and commitment fees on the unused portion of the Senior Secured Facility. Excludes amortized debt issuance costs. For the three months ended December 31, 2019. Based on average debt
Debt Facilities ($ in thousands)
Investment Portfolio by Interest Rate Type 1
Fixed rate assets 15% Floating rate assets 77% Non yielding and non-accrual assets 4% Variable rate assets 4%
Floating Asset Rate Floor
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Note: Numbers may not sum due to rounding. 1 Total investment portfolio. On a fair value basis.
Funding Sources by Interest Rate Type Net Investment Income Interest Rate Sensitivity
Annual Net Investment Income (in millions) Annual Net Investment Income Per Share Basis Point Change Up 200 basis points $13.0 $0.195 Up 100 basis points $6.3 $0.095 Down 100 basis points ($4.4) ($0.066) Down 200 basis points $1.0 $0.015 Par or Cost (in millions) % of Floating Rate Portfolio Interest Rate Floors No Floor $320 14% < 1.00% 179 8% 1.00% to 1.24% 1,737 74% 1.25% to 1.49% 24 1% 1.50% to 1.74% 28 1% > = 1.75% 48 2% Total $2,335 Fixed rate debt 12% Floating rate debt 48% Common equity 40%
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
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