Supplemental Financial Information for Quarter and Year Ended March 31, 2015
May 19, 2015
Disclaimers, Definitions, and Important Notes 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. When used in this release, the words "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 risks associated with investing in real estate assets, 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 us. Some of these factors are described in the company's filings with the SEC. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially 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; 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 “Corporation”) is subject to certain significant risks relating to our business and investment objective. For more detailed information on risks relating to the Corporation, see the latest form 10-K and subsequent quarterly reports filed on Form 10-Q. Financial Data Financial data used in this presentation for the periods shown is from the Corporation’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.
1
Financial Highlights
OPERATING RESULTS (1)
$ in thousands, except per share amounts
Three months ended
March 31, 2015
Three months ended
December 31, 2014
Three months ended
September 30, 2014
Three months ended
June 30, 2014
Three months ended
March 31, 2014
Twelve months ended
March 31, 2015
Twelve months ended
March 31, 2014
Net investment income $52,071 $56,662 $65,688 $53,551 $49,612 $227,973 $201,248
Net realized and unrealized gain (loss) on assets ($63,800) ($76,114) ($23,721) $11,085 $20,293 ($152,551) $69,624
Net increase (decrease) in net assets from operations ($11,729) ($19,452) $41,967 $64,636 $69,905 $75,422 $270,872
Net investment income per share $0.22 $0.24 $0.28 $0.23 $0.22 $0.96 $0.91
Net realized and unrealized gain (loss) per share ($0.27) ($0.33) ($0.10) $0.04 $0.09 ($0.64) $0.30
Earnings (Loss) per share – basic ($0.05) ($0.09) $0.18 $0.27 $0.31 $0.32 $1.21
Earnings (Loss) per share – diluted (2) ($0.05) ($0.09) $0.18 $0.27 $0.30 $0.32 $1.18
Dividend declared per common share $0.20 $0.20 $0.20 $0.20 $0.20 $0.80 $0.80
SELECT BALANCE SHEET DATA $ in billions, except per share amounts March 31, 2015 December 31,
2014 September 30,
2014 June 30, 2014 March 31, 2014 March 31, 2015 March 31, 2014
Investment portfolio (at fair value) $3.35 $3.51 $3.67 $3.64 $3.48 $3.35 $3.48
Debt outstanding $1.50 $1.59 $1.58 $1.57 $1.37 $1.50 $1.37
Net assets $1.94 $2.00 $2.06 $2.07 $2.05 $1.94 $2.05
Net asset value per share $8.18 $8.43 $8.72 $8.74 $8.67 $8.18 $8.67
Debt-to-equity ratio 0.77 x 0.80 x 0.76 x 0.76 x 0.67 x 0.77 x 0.67 x
Net leverage ratio (3) 0.72 x 0.74 x 0.76 x 0.75 x 0.68 x 0.72 x 0.68 x
2 (1) Numbers may not sum due to rounding. (2) In applying the if-converted method, conversion shall not be assumed for purposes of computing diluted EPS if the effect would be anti-dilutive. (3) The Company’s net leverage ratio is defined as debt outstanding plus payable for investments purchased,, less receivable for investments sold, less cash, less foreign currency, divided by total net assets.
Financial Highlights (continued)
PORTFOLIO ACTIVITY (1)
$ in millions
Three months ended
March 31, 2015
Three months ended
December 31, 2014
Three months ended
September 30, 2014
Three months ended
June 30, 2014
Three months ended
March 31, 2014
Twelve months ended
March 31, 2015
Twelve months ended
March 31, 2014
Investments made during period $372 $609 $581 $650 $986 $2,211 $2,816
Investments sold ($336) ($444) ($229) ($397) ($323) ($1,407) ($1,006)
Net investment activity before repayments $36 $165 $352 $253 $663 $804 $1,810
Investments repaid ($139) ($255) ($330) ($120) ($404) ($844) ($1,316)
Net investment activity ($104) ($90) $22 $133 $259 ($40) $494
Number of portfolio companies, at beginning of period 109 113 117 111 101 111 81
Number of new portfolio companies 8 13 15 25 26 60 81
Number of exited portfolio companies (12) (17) (19) (19) (16) (66) (51)
Number of portfolio companies, at period end 105 109 113 117 111 105 111
Number of investments in existing portfolio companies 15 13 18 24 18 47 50
WEIGHTED AVERAGE YIELDS (2) March 31, 2015 December 31, 2014
September 30, 2014 June 30, 2014 March 31, 2014 March 31, 2015 March 31, 2014
Secured debt 11.2% 11.0% 10.9% 10.9% 10.8% 11.2% 10.8%
Unsecured debt 10.9% 11.1% 11.1% 11.5% 11.5% 10.9% 11.5%
Total debt portfolio 11.2% 11.1% 11.0% 11.1% 11.1% 11.2% 11.1%
Portfolio Composition (3) March 31, 2015 December 31, 2014
September 30, 2014 June 30, 2014 March 31, 2014 March 31, 2015 March 31, 2014
1st lien 36% 35% 34% 30% 27% 36% 27%
2nd lien 24% 26% 29% 29% 29% 24% 29%
Total secured debt 60% 61% 63% 59% 56% 60% 56%
Unsecured debt 14% 15% 17% 22% 27% 14% 27%
Structured products and other 11% 10% 9% 8% 6% 11% 6%
Preferred equity 5% 4% 3% 3% 3% 5% 3%
Common equity and warrants 10% 10% 8% 8% 8% 10% 8%
3 (1) Numbers may not sum due to rounding. (2) On a cost basis, exclusive of investments on non-accrual status. (3) On a fair value basis.
Other Recent Highlights
4
Fiscal Fourth Quarter and Recent Highlights:
Declared a dividend of $0.20 per share for the quarter
Issued $350 million of 10-year fixed rate unsecured debt in March 2015
Amended revolving credit facility to extend maturity and increase commitments in April 2015
Fiscal Year 2015 Highlights:
Dividends paid totaled $0.80 per share for the year
Secured Debt 60%
Unsecured Debt 14%
Common Equity, Preferred Equity
and Warrants 15%
Structured Products and
Other 11%
Diversified Portfolio as of March 31, 2015
5
By Asset Class (1)
(1) On a fair value basis. (2) Of income bearing portfolio. (3) Other consists of: Telecommunications; Insurance; Transportation; Printing and Publishing; Cargo Transport; Healthcare; Energy; Education; Packing; Restaurants; Home and Office Furnishings and Durable Consumer Products; Diversified Service; Grocery; Consumer Products; Hotels, Motels, Inns and Gaming; Diversified Natural Resources, Precious Metals and Minerals; Buildings and Real Estate; Mining; Broadcasting & Entertainment; Containers, Packaging, and Glass; Finance; Environmental Services; Electronics; Media; and Cable Television.
Floating Rate 52%
Fixed Rate 48%
Fixed vs. Floating (1) (2)
Business Services 15.6%
Aviation 15.4%
Oil and Gas 13.9%
Diversified Investment Vehicle
9.6%
Financial Services 4.0%
Chemicals 3.8%
Leisure 3.4%
Utilities 3.0%
Aerospace and Defense
2.9%
Distribution 2.9%
Other (3) 25.5%
By Industry (1)
Portfolio Turnover For the Three Months Ended March 31, 2015
For the three months ended March 31, 2015, we invested $372 million across 8 new and 15 existing companies. The weighted average yield on debt investments made during the period was 10.5%.
During the three months ended March 31, 2015, investments sold or repaid totaled $476 million. The weighted average yield on sold or repaid debt investments was 10.6%. The yield on repaid debt investments was 11.7% and the yield on sold debt investments was 10.0%.
%.
6 Note: Restructured investments may impact the weighted average yield of the total debt portfolio but are not reflected in new, sold, or repaid investments. Yields exclude short-term trades. Numbers may not sum due to rounding . (1) Includes $1.1 million of revolver drawdowns. (2) Includes yielding assets. (3) Includes ($18.1) million of revolver repayments. (4) Weighted average calculated on proceeds.
ProceedsYield at Cost (4) % of Total
1st Lien (3) ($88) 10.5% 18%2nd Lien (154) 9.6% 32%Total Secured (242) 9.9% 51%Unsecured Debt (227) 11.4% 48%Preferred Equity - n/a 0%Total Debt (469) 10.6% 99%Structured Products and Other (2) (2) 0%Equity (5) 1%Total (incl non-yielding) (476) 100%
INVESTMENTS SOLD OR REPAID (in millions)
CostYield at
Cost % of Total 1st Lien (1) $164 10.7% 44%2nd Lien 28 9.1% 8%Total Secured 192 10.5% 52%Unsecured Debt 131 10.2% 35%Preferred Equity 36 11.1% 10%Total Debt 359 10.5% 97%Structured Products and Other (2) 13 3%Equity - 0%Total (incl non-yielding) 372 100%
NEW INVESTMENTS (in millions)
Portfolio Turnover For the Twelve Months Ended March 31, 2015
For the twelve months ended March 31, 2015, we invested $2,211 million across 60 new and 47 existing companies. The weighted average yield on debt investments made during the period was 10.2%.
During the twelve months ended March 31, 2015, investments sold or repaid totaled $2,251 million. The weighted average yield on sold or repaid debt investments was 10.4%. The yield on repaid debt investments was 11.3% and the yield on sold debt investments was 9.8%.
7 Note: Restructured investments may impact the weighted average yield of the total debt portfolio but are not reflected in new, sold, or repaid investments. Yields exclude select short-term trades. Numbers may not sum due to rounding. (1) Includes ($1.3) million of unfunded revolver purchases and $232.0 million of revolver drawdowns. (2) Includes yielding and non-yielding assets. (3) Includes $0.8 million of unfunded revolver sales and ($69.6) million of revolver repayments. (4) Weighted average calculated on proceeds.
CostYield at
Cost % of Total 1st Lien (1) $873 10.8% 39%2nd Lien 540 9.8% 24%Total Secured 1,413 10.4% 64%Unsecured Debt 485 9.6% 22%Preferred Equity 66 11.1% 3%Total Debt 1,965 10.2% 89%Structured Products and Other (2) 181 8%Equity 66 3%Total (incl non-yielding) 2,211 100%
NEW INVESTMENTS (in millions)
ProceedsYield at Cost (4) % of Total
1st Lien (3) ($535) 10.4% 24%2nd Lien (770) 9.6% 34%Total Secured (1,305) 9.9% 58%Unsecured Debt (876) 11.3% 39%Preferred Equity - n/a 0%Total Debt (2,181) 10.4% 97%Structured Products and Other (2) (36) 2%Equity (34) 2%Total (incl non-yielding) (2,251) 100%
INVESTMENTS SOLD OR REPAID (in millions)
$986
$650 $581 $609
$372
($323) ($397) ($229)
($444) ($336)
($404) ($120) ($330) ($255)
($139)
$259 $133
$22 ($90) ($104)
Mar-14 Jun-14 Sep-14 Dec-14 Mar-15
New Investments SalesRepayments Net Investment Activity
Quarterly Investment Activity (in $ millions) LTMNew Investments 2,211$ Sales (1,407)$ Repayments (844)$ Net Investment Activity (40)$
Investment Activity and Yields
11.1% 11.1% 11.0% 11.1% 11.2%
10.1% 10.1% 10.0%
10.4% 10.5%
9.9%
9.5%
10.1% 9.9% 10.0%
11.9%
11.3%
11.9%
10.3%
11.7%
Mar-14 Jun-14 Sep-14 Dec-14 Mar-15
Portfolio Yield (eop) (2) New Investments
Sales Repayments
Quarterly Yield on Investment Activity (1)
8 Note: Numbers may not sum due to rounding. (1) Based on debt investments on current cost basis. Yields on new investments, sales and repayments, exclude select short-term trades. (2) On debt portfolio, exclusive of investments on non-accrual status. EOP is end of period.
Net Asset Value
9
$8.67 $8.74 $8.72
$8.43
$8.18
Mar-14 Jun-14 Sep-14 Dec-14 Mar-15
Net Asset Value Per Share
Numbers may not sum due to rounding. (1) Dividends to stockholders represent dividends declared during the period.
$ $ $ $ $ (in 000’s) (in 000’s) (in 000’s) (in 000’s) (in 000’s)
NAV, beginning of period 1,925,339 $ 8.57 2,051,611 $ 8.67 2,068,873 $ 8.74 2,063,491 $ 8.72 1,996,691 $ 8.43 Net investment income 49,612 0.22 53,551 0.23 65,688 0.28 56,662 0.24 52,071 0.22 Net realized and unrealized gain (loss) on assets 20,293 0.09 11,085 0.04 (23,721) (0.10) (76,114) (0.33) (63,800) (0.27)
Net increase (decrease) in net assets resulting from operations 69,905 0.31 64,636 0.27 41,967 0.18 (19,452) (0.09) (11,729) (0.05)Net proceeds from shares sold, less offering costs 103,715 - (26) - - - - - (6) - Dividends to stockholders (1) (47,348) (0.20) (47,348) (0.20) (47,348) (0.20) (47,348) (0.20) (47,348) (0.20)NAV, end of period 2,051,611 $ 8.67 2,068,873 $ 8.74 2,063,491 $ 8.72 1,996,691 $ 8.43 1,937,608 $ 8.18
Per Share Per Share
Quarter ended 30-Jun-14
Quarter ended 30-Sep-14
Quarter ended 31-Dec-1431-Mar-14
Per Share Per Share
Quarter ended 31-Mar-15
Per Share
Quarter ended
Floating Rate Credit Facility
11% Fixed Rate Debt 33%
Common Equity 56%
Funding Sources
Floating Rate 52%
Fixed Rate Debt 48%
Investment Portfolio (1) (2)
Interest Rate Exposure
10 (1) On a fair value basis. (2) Income-bearing investment portfolio. (3) The table shows the approximate annual impact on net investment income of base rate changes in interest rates (considering interest rate floors for variable rate instruments) to our loan portfolio and outstanding debt as of March 31, 2015, assuming no changes in our investment and borrowing structure.
Apollo Investment Corporation has taken several steps to prepare for higher interest rates.
1) Increased portion of portfolio in floating rate assets
52% of income-bearing portfolio was floating rate at March 31, 2015, compared to 52% at December 31, 2014 and 42% at March 31, 2014(1) (2)
2) Issued fixed rate debt, only 11% of funding sources are directly sensitive to interest rates
$300 million of 30-year fixed rate senior unsecured notes (October 2012 and June 2013)
$350 million of 10-year fixed rate unsecured notes (March 2015)
Floating Rate Debt Floor Breakdown (1)
Fair Value ($ millions)
% of Floating Rate Portfolio
No Floor $181 13%< 1.25% 760 53%>1.25% to < 1.75% 332 23%>1.75 156 11%Total $1,429 100%
Basis Point Change
Annual Net Investment
Income (in thousands)
Annual Net Investment Income
per Share
Up 400 basis points $ 22,015 $ 0.093 Up 300 basis points $ 13,541 $ 0.057 Up 200 basis points $ 5,691 $ 0.024 Up 100 basis points $ (986) $ (0.004)
Interest Rate Sensitivity(3)
Capital Structure
11
As of March 31, 2015 Date Issued / Amended
Interest Rate Final Maturity Date
Amount Outstanding
SENIOR SECURED FACILITY (1) 2013 LIBOR + 200 bps with no LIBOR floor Aug-2018 $385 million outstanding
($1.27 billion commitments)
SENIOR SECURED NOTES 2010 6.25% Oct-2015 $225 million
SENIOR SECURED NOTES (Series A) 2011 5.875% Sep-2016 $29 million
SENIOR SECURED NOTES (Series B) 2011 6.25% Sep-2018 $16 million
2042 SENIOR UNSECURED NOTES 2012 6.625% Oct-2042 $150 million
2043 SENIOR UNSECURED NOTES 2013 6.875% July-2043 $150 million
2025 UNSECURED NOTES 2015 5.25% Mar-2025 $344 million
CONVERTIBLE NOTES 2011 5.75% Jan-2016 $200 million
TOTAL DEBT OUTSTANDING 4.72% (2) $1,499 million
TOTAL NET ASSETS $1,938 million
(1) The facility was amended in April 2015 to increase commitments to $1.31 billion and extend maturity until April 2020. (2) Weighted average annualized interest cost for the quarter ended March 31, 2015. Excluding 0.44% for annualized amortization of debt issuance costs.
Investments on Non-Accrual Status
1.0% 1.0% 0.9% 1.0%
1.3%
0.0%
0.5%
1.0%
1.5%
2.0%
Mar
-14
Jun-
14
Sep
-14
Dec
-14
Mar
-15
Percentage of Portfolio on Non-Accrual Status (based on cost)
12
Company Industry Investment Par Amount (000’s)
Cost (000’s)
Fair Value (000’s)
Gryphon Colleges Corporation (Delta Educational Systems) (2 investments)
Education Preferred Stock, 13.50% PIK Preferred Stock, 12.50% PIK
N/A $34,549 $1,613
Denver Parent Corp. (Venoco) Oil and Gas Unsecured Debt, 12.25% (13.00% PIK Toggle), 8/15/18
9,572 $9,411 $1,460
Total Investments on Non-Accrual Status $43,960 $3,073
Investments on non-accrual status as of March 31, 2015
0.4% 0.4% 0.4%
0.3%
0.1%
0.0%
0.5%
1.0%
1.5%
2.0%
Mar
-14
Jun-
14
Sep
-14
Dec
-14
Mar
-15
Percentage of Portfolio on Non-Accrual Status (based on fair value)
Contact Information
13
For investor inquiries regarding Apollo Investment Corporation: Elizabeth Besen Investor Relations Manager 212-822-0625 [email protected]