Apollo Investment Corporation (NASDAQ:AINV) Q2 2019 Earnings Conference Call Transcript

Oct 30, 2018 • 05:00 pm ET


Apollo Investment Corporation (NASDAQ:AINV) Q2 2019 Earnings Conference Call Transcript


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Good afternoon, and welcome to the Apollo Investment Corporation's Earnings Conference Call for the period ended September 30, 2018. At this time all participants have been placed in a listen-only mode. The call will be opened for a question-and-answer session following the speakers prepared remarks. (Operator Instructions)

I will now turn the call over to Elizabeth Besen, IR Manager for Apollo Investment Corporation.

Elizabeth Besen

Thank you, operator, and thank you, everyone for joining us today. Speaking on today's call are Howard Widra, CEO; Tanner Powell, President and Chief Investment Officer; and Greg Hunt, CFO.

I'd like to advise everyone that today's call and webcast are being recorded. Please note that they are the property of Apollo Investment Corporation and that any unauthorized broadcast in any form is strictly prohibited. Information about the audio replay of this call is available in our earnings press release.

(Forward-Looking Cautionary Statements)

I'd also like to remind everyone that we've posted a supplemental financial information package on our website, which contains information about the portfolio, as well as the company's financial performance. As requested by a number of our shareholders, we have added a new slide to the package, page 11, which provides more information on the assets originated since mid-2016.

At this time, I would like to turn the call over to Howard Widra.

Howard Widra

Thanks Elizabeth. I will begin today's call by providing a brief overview of our financial results for the quarter, followed by a review of the execution of our portfolio repositioning strategy. I will then discuss a couple of other important announcements from today's press release. Following my remarks, Tan will discuss the market environment, our second quarter investment activity, and will then provide an update on credit quality. Greg will then review our financial results in greater detail and will also provide an important update about the amendment to our credit facility associated with our plan to prudently increase leverage. We will then open the call to questions.

Beginning with our financial results, net investment income for the quarter was $0.15 per share. Net asset value per share was $6.47 at the end of the period unchanged quarter-over-quarter. During the period our investment activity focused on senior first lien secured floating rate loans sourced by Apollo's direct origination, utilizing our ability to co-invest with other capital managed by Apollo.

Importantly, nearly all of our deployment during the period had a lower risk profile that we were targeting as we prepare to prudently increase our leverage. For example, the weighted average net leverage of originated corporate loans made during the quarter was 4.8 times within our target leverage ratio of 4 to 5.5 times for incremental assets. Repayment activity was robust and accordingly net investment activity was negative $172 million and net leverage at the end of the quarter was 0.68 times.

Moving to an update on our portfolio repositioning strategy, when I joint AINV a little over two years ago, we began a process of reducing assets that we designated as non-core