Q4 2021 Ares Capital Corp Earnings Call

Speaker 1: Good morning and welcome to Aries Capital Corporation's fourth quarter and year-ended December 31, 2021 earnings conference call. At this time, all participants are in a listen-only mode.

Good morning, and welcome to Ares Capital Corporation's fourth quarter and year ended December 31st 2021 earnings conference call.

At this time all participants are in a listen only mode.

Speaker 1: As a reminder, this conference is being recorded on Wednesday, February 9, 2022.

As a reminder, this conference is being recorded on Wednesday February 9th 2022 .

Speaker 1: I will now turn the call over to Mr. John Stillmar, Managing Director of Aries Investor Relations.

I will now turn the call over to Mr. John still more managing director of <unk> Investor Relations.

Speaker 2: Thank you. Let me start with some important reminders. Comments made during the course of this conference call and webcasts and the accompanying documents contained forward looking statements and are subject to risks and uncertainties. The company's actual results could differ materially from those expressed in such forward looking statements for any reason, including those listed in its FCC file.

Thank you well, let me start with some important reminders comments made during the course of this conference call and webcast and accompanying documents contain forward looking statements and are subject to risks and uncertainties.

Actual results could differ materially from those breast and such forward looking statements for any reason, including those listed in its SEC filings.

Speaker 2: Barry's Capital Corporation assumes no obligation to update any such forward-looking state.

Ares Capital Corporation assumes no obligation to update any such forward looking statements.

Speaker 2: Please also note that past performance or market information is not a guarantee of future results.

Please also note that past performance or market information is not a guarantee of future results.

Speaker 2: During this conference call, the company may discuss certain non-GAAP measures as defined by the SEC regulation.

During this conference call the company May discuss certain non-GAAP measures as defined by the SEC regulation G. Such as core earnings per share or core EPS. The company believes the core EPS provides useful information to investors regarding financial performance because it is one method. The company uses to measure its financial condition and results of operation.

Speaker 2: such as core earnings per share or core EPS. The company believes that core EPS provides useful information to investors regarding financial performance because it's one method the company uses to measure its financial condition and results of operations.

Yeah.

Speaker 2: A reconciliation of core EPS to basic and diluted net income per share, the most directly comparable gaps in initial measure can be found in the accompanying slide presentation for this call. In addition, reconciliation of these measures may also be found in our earnings release filed this morning with the FCC on one

A reconciliation of core EPS to basic and diluted net income per share. The most directly comparable GAAP financial measure can be found in the accompanying slide presentation for this call.

In addition reconciliation of these measures may also be found in our earnings release filed this morning to the SEC form 8-K.

Speaker 2: Certain information discussed in this conference call and the company's slide presentation, including information relating to portfolio companies, was derived from third-party sources and has not been independently verified. Accordingly, the company makes no representation or warranty in respect to the symptoms.

Certain information discussed in this conference call and the accompanying slide presentation, including information relating to portfolio companies was derived from third party sources and has not been independently verified and accordingly, the company makes no representation or warranty in respect to this information.

Speaker 2: The company's fourth quarter and year end December 31st, 2021 earnings presentation can be found on the company's website at www.AriesCapitalCorp.com by clicking on the fourth quarter 2021 earnings presentation link on the homepage of the investor resources.

The company's fourth quarter and year end December 31, 2021 earnings presentation can be found on the company's website at Www Dot Ares Capital Corp Dot com.

Looking on the fourth quarter 2021 earnings presentation, Mike on the homepage of the Investor Resources section Ares Capital Corporation's earnings release and Form 10-K are also available on the company's website I'll now turn the call over to Kip <unk> Ares Capital Corporation's Chief Executive Officer.

Speaker 2: at each capital corporation's earnings release, and Form 10-K are also available on the...

Speaker 2: I'll now turn the call over to Kip Givier, ARIES Capital Corporation's Chief Executive Officer. Yep.

Speaker 3: Thanks, John . Hello, everyone, and thanks for joining our earnings call today. I'm here with our co-presidents Michael Smith and Mitch Goldstein and our Chief Financial Officer Penny Roll, along with other members of the management team.

Thanks, John .

Hello, everyone and thanks for joining our earnings call today I'm here with our co President Michael Smith, and Mitch Goldstein, and our Chief Financial Officer, Penni roll along with other members of the management team.

Speaker 3: I'll begin by providing some fourth quarter and full year highlights, and then discuss the current market and the company's positioning.

I'll begin by providing some fourth quarter and full year highlights and then discuss the current market and the company's positioning.

Speaker 3: This morning we were delighted to report strong results for the fourth quarter and the full year. We generated record core earnings of 58 cents per share for the quarter and $2.02 per share for the year.

This morning, we were delighted to report strong results for the fourth quarter and the full year we generated.

<unk> record core earnings of 58 cents per share for the quarter and $2.02 per share for the year.

Speaker 3: Our financial results reflect the strongest quarterly and annual origination activity in our history, with $5.9 billion of commitments for the fourth quarter and $15.6 billion for the year, more than double that of either 2020 or 2019.

Our financial results reflect the strongest quarterly and annual origination activity in our history with $5.9 billion of commitments for the fourth quarter and $15 6 billion for the year more than double that of either 2020 or 2019.

Speaker 3: On a GAAP basis, our fourth quarter earnings of 83 cents per share capped off a year with the second highest GAAP earnings in our company's history.

On a GAAP basis, our fourth quarter earnings of 83 cents per share capped off a year with the second highest GAAP earnings in our company's history.

Speaker 3: Gap earnings for the year were $3.51 per share and included $258 million or $0.58 per share of net realized gains on investment.

GAAP earnings for the year were $3.51 per share and included $258 million or 58 cents per share of net realized gains on investments.

Speaker 3: The strength of these earnings led to 12% growth in our net asset value per share during the year, which ended the year at an all-time high of $18.96.

The strength of these earnings led to 12% growth in our net asset value per share during the year, which ended the year at an all time high of $18.96.

Speaker 3: When you combine this NAV growth with our dividends paid during 2021, we generated a 22% economic return for our shareholders for the year.

When you combine this NAV growth with our dividends paid during 2021, we generated a 22% economic return for our shareholders for the year.

Speaker 3: Before Penny takes you through our results in more detail, I'd like to take some time to highlight our positioning in the $1.5 trillion and growing US direct lending market and to discuss some of the drivers behind our strong investment activity.

Before a penny it takes you through our results in more detail I'd like to take some time to highlight our positioning in the one and a half trillion dollar and growing U S direct lending market and to discuss some of the drivers behind our strong investment activity.

Speaker 3: We believe that our opportunity set continues to widen as borrowers are increasingly turning to private capital as a preferred source of financing for acquisitions and the growth needs of their businesses.

We believe that our opportunity set continues to widen as borrowers are increasingly turning to private capital as a preferred source of financing for acquisitions and the growth needs of their businesses.

Speaker 3: There's been a noticeable change in the increasing size of the companies seeking our financing solution.

Theres been a noticeable change in the increasing size of the companies seeking our financing solutions over the past five years. The average EBITDA of the company as we reviewed is increased by over 60% and the number of companies that we reviewed with EBITDA over $100 million has more than tripled.

Speaker 3: Over the past five years, the average EBITDA of the companies we reviewed has increased by over 60%. And the number of companies that we reviewed with EBITDA over $100 million has more than tripled.

Speaker 3: We're also seeing a wider range of opportunities that span both the sponsored and non-sponsored market, as private credit seems more far-reaching and more valuable to companies than ever before.

We're also seeing a wider range of opportunities that span both the sponsored and non sponsored market is private credit seems more far reaching and more valuable to companies than ever before.

Speaker 3: We also continue to invest with our model of flexible capital for virtually any situation. What that means is that we're happy to customize solutions for companies with capabilities in senior, unitronch, and subordinated debt, as well as preferred non-controlled common equity.

We also continue to invest with our model of flexible capital for virtually any situation.

What that means is that we're happy to customize solutions for companies with capabilities and senior unit tranche and subordinated debt as well as preferred and non control common equity.

Speaker 3: This is valuable to our borrowers and another reason that we believe that we can drive higher originations and still maintain our rigorous standards for credit quality, documentation, and deal terms.

This is valuable to our borrowers and another reason that we believe that we can drive higher originations and still maintain our rigorous standards for credit quality documentation and deal terms.

Speaker 3: We are however seeing more competition in this growing but fragmented market. In our opinion, many of our competitors do not always act rationally with respect to credit quality, pricing, leverage, documentation and other important considerations.

We are however, seeing more competition in this growing but fragmented market.

In our opinion many of our competitors do not always act rationally with respect to credit quality pricing leverage documentation and other important considerations.

Speaker 3: But despite the competition and fragmentation, we believe we maintain a strong competitive position, and we continue to take market share.

But despite the competition and fragmentation, we believe we maintain a strong competitive position and we continue to take market share.

Speaker 3: In 2021, the estimated dollar volume of the transactions we reviewed grew to more than $550 billion.

In 2021 the.

The estimated dollar volume of the transactions, we reviewed grew to more than $550 billion.

Speaker 3: In comparing the growth of our reviewed transaction volume to market sources, we note that our volume increased 50% faster than the reported market since 2019.

Comparing the growth of our reviewed transaction volume to market sources, we note that our volume increased 50% faster than the reported market since 2019.

Speaker 3: We believe these market share gains and the resulting scale afford us the luxury of being highly selective.

We believe these market share gains and the resulting scale afford us the luxury of being highly selective.

Speaker 3: Today's market is one where we do have to turn away some businesses that we like, simply because we don't like the structure of the deal, the pricing, or perhaps the proposed loan documentation.

Today's market is one where we do have to turn away some businesses that we like simply because we don't like the structure of the deal.

Rising or perhaps the proposed loan documentation.

Speaker 3: We compete for and pursue deals when we want to, but importantly, we also have the platform experience and deal flow to walk away from situations if we have to.

We compete for and pursue deals and we want to but importantly, we also have the platform experience and deal flow to walk away from situations. If we have to.

Speaker 3: The key to being able to say no is that we have a robust set of opportunities to choose from, larger than we ever have in the past.

The key to being able to say no.

We have a robust set of opportunities to choose from larger than we ever have in the past.

Speaker 3: As the market's grown, we've scaled our direct origination capabilities along with it, building what we believe is the largest direct lending platform in the United States with 145 investment professionals and a strong operational platform.

Yeah.

As the market's grown we've scaled our direct origination capabilities along with it building. What we believe is the largest direct lending platform in the United States with 145 investment professionals and a strong operational platform.

Speaker 3: The scale of this team has led to significant market coverage, allowing us to transact with over 420 different sponsors and more than 200 non-sponsored companies since our IPO.

The scale of this team has led to significant market coverage, allowing us to transact with over 420 different sponsors and more than 200 non sponsored companies since our IPO.

Speaker 3: Our team remains highly tenured and cohesive as our investment advisors, investment committee members average 27 years of experience.

Our team remains highly tenured and cohesive.

As our investment Advisors investment Committee members averaged 27 years of experience.

Speaker 3: And importantly, I have an average tenure of 17 years with Aries Management.

And importantly have an average tenure of 17 years with Ares management.

Speaker 3: This stability has created an institutionalized credit process that's supported in our growth, and we have a consistent market approach with sponsors and companies.

This stability has created an institutionalized credit process, that's supported in our growth.

And we have a consistent market approach with sponsors and companies.

Speaker 3: In addition to the scale of the US Direct Lending Team here, we benefit from the additional 175 investment professionals in the Aries Management Credit Group and another 440 investment professionals across the broader Aries Management platform who are engaging with companies and sponsors on a daily basis.

In addition to the scale of the U S direct lending team here, we benefit from the additional 175 investment professionals in the areas management credit group.

And another 440 investment professionals across the broader Ares management platform, who are engaging with companies and sponsors on a daily basis.

Speaker 3: We believe that our advisors, investment professionals, shared experiences, insights, and deep local relationships further enhance our market presence and our underwriting capabilities.

We believe that our advisors investment professionals shared experiences insights and deep local relationships further enhance our market presence and our underwriting capabilities.

Speaker 3: and ultimately we believe that these advantages are reflected in the health and performance of the portfolio. Our portfolio credit quality remains among the strongest in our company's history.

And ultimately we believe that these advantages are reflected in the health and performance of the portfolio.

Portfolio credit quality remains among the strongest in our company's history.

Speaker 3: and we ended the year with our non-accruals at a 14-year low.

And we ended the year with our non accruals at a 14 year low.

Speaker 3: Additionally, we believe our long-standing focus on market-leading companies with high free cash flows in resilient industries has positioned our portfolio to avoid segments of the economy that are likely to be more negatively impacted by recent inflation and supply chain disruptions.

Additionally, we believe our long standing focus on market, leading companies with high free cash flows in resilient industries has positioned our portfolio to avoid segments of the economy that are likely to be more negatively impacted by recent inflation and supply chain disruptions.

Speaker 3: As a result, our portfolio companies have demonstrated solid earnings growth throughout the year.

As a result, our portfolio companies have demonstrated solid earnings growth throughout the year.

Speaker 3: The last 12-month weighted average EBITDA growth of our portfolio companies was 16% this quarter, the highest since we began tracking this information over a decade ago.

The last 12 month weighted average EBITDA growth of our portfolio companies was 16% this quarter the highest since we began tracking this information over a decade ago.

Given the strength of our portfolio's performance.

Speaker 3: and our positive view of the company's earnings power, we are raising our quarterly dividend for the second time in 12 months to $0.42 per share.

Our positive view of the company's earnings power, we are raising our quarterly dividend for the second time in 12 months to 42 cents per share.

Speaker 3: We believe this step further builds on our consistent track record of generating meaningful shareholder value.

We believe this step further builds on our consistent track record of generating meaningful shareholder value.

Through the quarter ended September 30th 2021, which is the latest full reporting quarter for Bdcs Ares capital has delivered the highest regular base dividend per share growth rate and the highest <unk> per share growth rate.

For the past five and 10 year time periods, among any externally managed BDC with a market cap of over $700 million.

Speaker 3: Furthermore, in recognition of the strengths of our 2021 earnings, including another year of net realized gains from the portfolio and the continued growth in our excess, undistributed earnings, we will pay additional dividends to shareholders totaling 12 cents per share for 2022.

Furthermore, in recognition of the strengths of our 2021 earnings including another year of net realized gains from the portfolio and the continued growth in our excess undistributed earnings we will pay additional dividends to shareholders totaling 12 cents per share for 2000.

'twenty two.

Speaker 3: We intend to pay these special dividends of 3 cents per share each quarter this year.

We intend to pay these special dividends of three cents per share each quarter. This year.

Speaker 3: With that, let me turn the call over to Penny to provide more details in our financial results and some further thoughts on the balance sheet positioning.

With that let me turn the call over to Penni to provide more details on our financial results and some further thoughts on the balance sheet positioning.

Thanks, Curt and good morning, everyone.

Speaker 1: 2021 was our most active year ever, and that helped drive our full year core earnings per share of $2.02. These activity levels, along with $826 million of net realized and unrealized gains for the year, helped drive our 2021 gap net income per share to $3.51.

2021 was our most active year ever and that helped drive our full year core earnings per share of $2 and two sets either.

These activity levels, along with $826 million of net realized and unrealized gains for the year.

Drive our 2021 GAAP net income per share to $3.51.

Speaker 1: These results compared to $1.74 and $1.14 per share of core and cap EPS respectively for full year 2020.

These results compared to $1 74, and $1 14 per share of core and GAAP EPS, respectively for full year 2020.

Speaker 1: These strong overall earnings results helped our stockholders' equity reach a record $8.9 billion at year-end 2021 or $18.96 per share. In comparison, our stockholders' equity was $7.2 billion at year-end 2020 or $16.97 per share.

These strong overall earnings results helped our stockholders' equity reached a record $8 $9 billion at year end 2021, or $18 96 per share.

In comparison, our stockholders' equity was $7.2 billion at year end 2020, or $16 97 per share.

Speaker 1: Our total portfolio at fair value at the end of the year grew to just over $20 billion, up from $15.5 billion at the end of 2020.

Our total portfolio at fair value at the end of the year grew to just over $20 billion up from $15 $5 billion at the end of 'twenty 'twenty.

Speaker 1: The weighted average yield on our debt and other income producing securities at amortized cost was 8.7% and the weighted average yield on total investments at amortized cost was 7.9% as compared to 8.9% and 8.2% respectively at September 30, 2021 and 9.3% and 8.5% respectively at December 31, 2020.

The weighted average yield on our debt and other income producing securities at amortized cost was eight 7% and the weighted average yield on total investments at amortized cost was seven 9% as.

As compared to eight 9% and eight 2% respectively at September 30th 'twenty, 'twenty, one and nine 3% and eight 5% respectively at December 31st 2020.

Speaker 1: It is worth noting one change as it relates to our yield calculations. Beginning with our reporting for this period, we updated our weighted average yield calculations to include dividend income from our equity investment in Ivy Hill asset management. Previously, we had excluded the impact of these dividends from our yield calculations because our Ivy Hill equity investment did not have a contractual stated yield component.

It is worth noting one change as it relates to our yield calculations beginning with our reporting for this period, we updated our weighted average yield calculations to include dividend income from our equity investment in Ivy Hill asset management.

Previously we had excluded the impact of these dividends from our yield calculations.

Our Ivy Hill equity investment did not have a contractual stated yield component.

Speaker 1: In light of the fact that Ivy Hill has consistently paid a common dividend to Aries Capital for 50 consecutive quarters, we determined that including these dividends in our calculations more accurately represents the yield on our portfolio.

In light of the fact that Ivy Hill has consistently paid a common dividend to Ares capital for 50 consecutive quarters.

We determined that including these dividends in our calculations more accurately represents the yield on our portfolio.

Speaker 1: For comparative purposes, we have updated the yield calculations for all periods presented to conform to the new methodology.

For comparative purposes, we have updated the yield calculations for all periods presented to conform to the new methodology.

Speaker 1: Shifting to our interest rate sensitivity, we are well positioned to capture an earnings benefit from a rising interest rate environment, particularly if rates move past the interest rate floors on our investment.

Shifting to our interest rate sensitivity, we are well positioned to capture an earnings benefit from a rising interest rate environment, particularly if rates move past the interest rate floors on our port investments at.

Speaker 1: At December 31st, 2021, 77% of our total portfolio at fair value was in floating rate investments. Additionally, excluding our investment in the SDLP certificates, 93% of the remaining floating rate investments had a weighted average floor of approximately 90 basis points, which is higher than today's current 1- and 3-month base rate.

At December 31st 2021.

77% of our total portfolio at fair value was in floating rate investments. Additionally.

Additionally, excluding our investment in the SDLP certificates, 93% of the remaining floating rate investments had a weighted average floor of approximately 90 basis points, which is higher than todays current one and three month base rates.

Speaker 1: This portfolio composition, in concert with our low level of leverage from predominantly fixed rate unsecured notes, should allow our earnings to benefit from rising rates.

This portfolio composition in concert with our low level of leverage from predominantly fixed rate unsecured notes should allow our earnings to benefit from rising rates.

Speaker 1: As of year end and holding all else equal, we calculated that a 100 basis point increase in short-term rates could increase our quarterly earnings by one cent per share, while a 200 basis point increase in short-term rates could increase our total quarterly earnings by approximately six cents per share after considering the impact of income-based fees. Next slide, please.

As of yearend and holding all else equal.

We calculated that a 100 basis point increase in short term rates could increase our quarterly earnings by one cent per share while a 200 basis point increase in short term rates could increase our total quarterly earnings by approximately six cents per share after considering the impact of income based fees.

Now turning to our capitalization and liquidity.

Speaker 1: Our balance sheet is composed of highly efficient sources of capital, including a significant amount of fixed rate unsecured debt.

Our balance sheet is composed of highly efficient sources of capital, including a significant amount of fixed rate unsecured debt.

Speaker 1: We were highly focused throughout 2021 on strengthening our financial position by accessing diverse, long dated, and cost efficient forms of debt financing.

We were highly focused throughout 2021 on strengthening our financial position by accessing diverse long dated and cost efficient forms of debt financing.

Speaker 1: During the year, we closed on over $3.4 billion of new unsecured term borrowing.

During the year, we closed on over $3 $4 billion of new unsecured term borrowings.

Speaker 1: We have continued to extend the maturity ladder having taken advantage of the low rate environment to issue in the 5, 7 and 10 year parts of the curve, which will service well overtime as we face a higher rate environment.

We have continued to extend the maturity ladder, having taken advantage of the low rate environment to issue in the five seven and 10 year parts of the curve.

Which will serve us well over time, as we face a higher rate environment.

Speaker 1: This active balance sheet management has allowed us to lower the weighted average stated interest rate on our total borrowings from 3.4% at the end of 2020 to 3.1% as of December 31st, 2021.

This active balance sheet management has allowed us to lower the weighted average stated interest rate on our total borrowings from three 4% at the end of 'twenty 'twenty, 231% as of December 31st 2021.

Speaker 1: As we look at our long term approach to balance sheet management, we have a low level of debt maturities over the next two years, with only $388 million maturing in 2022, which was already repaid in early February .

As we look at our long term approach to balance sheet management, we have a low level of debt maturities over the next two years with only $388 million maturing in 2022 which was already repaid in early February .

Speaker 1: and won $750 million maturity in mid-2023.

And one $750 million maturity in mid 'twenty two 'twenty three.

Speaker 1: After that, there are no other term maturities until mid 2024, and our nearest committed bank facility maturity is not until 2025.

After that there are no other term maturities until mid 2024, and our nearest committed bank facility maturity is not until 2025.

Speaker 1: The duration of our liabilities and limited near-term maturities continue to provide for significant financial flexibility.

The duration of our liabilities and limited near term maturities continue to provide for significant financial flexibility.

Speaker 1: Commensurate with the activity levels in our portfolio, we also raised over $800 million of accretive equity during 2021 to support our growth, completing our first secondary equity issuances since 2014.

Commensurate with the activity levels in our portfolio. We also raised over $800 million of accretive equity during 2021 to support our growth completing our first secondary equity issuances since 2014.

Speaker 1: Touching on our leverage levels at December 31st, 2021, our net death to equity ratio was 1.21x.

Touching on our leverage levels at December 31st 2021 our net debt to equity ratio was one point to one times.

Speaker 1: Proforma for our year-to-date 2022 capital activity, net leverage levels declined to 1.15 times, and combined available cash and liquidity through undrawn revolvers was a healthy $4.8 billion.

Pro forma for our year to date 2022 capital activity net leverage levels declined to 1.15 times and combined available cash and liquidity through Undrawn revolvers was a healthy four $8 billion.

Speaker 1: As Kip stated, we increased our first quarter 2022 dividend to $0.42 per share, which is payable on March 31st, 2022, to stockholders of record on March 15th, 2022.

Let's get stated we increased our first quarter 2022 dividend to 42 cents per share, which is payable on March 31, 2022 to stockholders of record on March 15th 2022.

Speaker 1: Given our strong earnings for the year, we once again out-earned the dividends we paid, resulting in an increase in our undistributed taxable income, sometimes referred to as our spillover.

Given our strong earnings for the year, we once again out earned the dividends, we paid resulting in an increase in our undistributed taxable income sometimes referred to as our spillover.

Speaker 1: We currently estimate that our spillover income from 2021, after considering the shares issued in our January equity raise, reached $1.30 per share, an increase of $0.24 per share from 2020's level.

We currently estimate that our spillover income from 2021 after considering the shares issued in our January equity raise reached a dollar and 30 cents per share an increase of 24 cents per share from 2000 twenty's level.

Speaker 1: The expansion of our spillover was an important consideration in our decision to pay additional quarterly dividends totaling 12 cents per share during 2022.

The expansion of our spillover was an important consideration in our decision to pay additional quarterly dividend totaling 12 cents per share during 2022.

Speaker 1: The first additional dividend of three cents per share is also payable on March 31st, 2022 to stockholders of record on March 15th, 2022.

The first additional dividend of <unk> <unk> per share is also payable on March 31st 2022 to stockholders of record on March 15th 2022.

Speaker 1: We will continue to monitor our undistributed earnings and balance sheet levels against prunate capital management considerations.

We will continue to monitor our undistributed earnings and balance sheet levels against prudent capital management considerations.

Speaker 1: Overall, we believe having a strong and meaningful undistributed spillover supports our goal of maintaining a steady dividend through varying market conditions and sets us apart from many other BDCs without our level of spillover.

For all we believe having a strong and meaningful undistributed spillover supports our goal of maintaining a steady dividend through varying market conditions and sets us apart from many other bdcs without our level of spillover.

Speaker 1: With that, I will now turn the call over to Michael to walk through our investment activities.

With that I will now turn the call over to Michael to walk through our investment activities.

Speaker 3: Thanks, Penny. I will focus on providing more details on our investment activity and portfolio performance for the fourth quarter and the year, and then conclude with an update on post quarter end activity, backlog, and pipeline.

Thanks, Penni I will focus on providing more details on our investment activity and portfolio performance for the fourth quarter and the year and then conclude with an update on post quarter end activity backlog and pipeline.

Speaker 3: Over the course of 2021, we invested in over 200 companies across 22 distinct industries with a weighted average EBITDA of approximately $200 million.

Over the course of 2021, we invested in over 200 companies across 22 distinct industries with a weighted average EBITDA of approximately $200 million.

Speaker 4: The weighted average EBITDA of our overall portfolio during 2021 grew to 162 million, more than double the weighted average EBITDA five years ago.

The weighted average EBITDA of our overall portfolio. During 2021 grew to 162 million more than double the weighted average EBITDA of five years ago.

Speaker 4: This growth reflects the expanded market opportunity for larger direct lending transactions and ARCC's strong market position that Kip described earlier. It is important to note that while our portfolio companies weighted average EBITDA has grown over the past few years, the EBITDA of the companies we financed this year across sponsored and non-sponsored transactions range from approximately $15 million to more than $500 million.

This growth reflects the expanded market opportunity for a larger direct lending transactions and arcc's strong market position that kept described earlier it.

It is important to note that while our portfolio company's weighted average EBITDA has grown over the past few years.

EBITDA of the companies we financed this year across sponsored and non sponsored transactions range from approximately $15 million to more than $500 million.

Speaker 4: This wide range of investment opportunities underscores the breadth of our sourcing capabilities and the value that we find in high quality, market leading businesses of varying sizes.

This wide range of investment opportunities underscores the breath of our sourcing capabilities and the value that we find in high quality <unk>.

Market, leading businesses of varying sizes.

Speaker 4: One of our differentiated sourcing advantages remains our deep relationships with portfolio companies and private equity sponsors that we have developed.

One of our differentiated sourcing advantages remains our deep relationships with portfolio companies and private equity sponsors that.

We have developed over many years.

Speaker 4: Over the past quarter and year, 55% and 52% of our new commitments, respectively, were to incumbent borrowers.

Over the past quarter and year, 55% and 52% of our new commitments, respectively were to incumbent borrowers.

Speaker 4: Additionally, in 2021, we continued to build upon our deep sponsor relationships, as 75% of our sponsored transactions were with repeat firms.

Additionally, in 2020 , one we continued to build upon our deep sponsor relationships at 75% of our sponsored transactions were with repeat firms.

Speaker 4: With such a large portfolio and many more companies that we have transacted with historically, we believe that our long tenured market presence provides us access to unique deal flow and differentiates ARCC from other BDCs.

With such a large portfolio and many more companies that we have transacted with historically, we believe that our long tenured market presence provides us access to unique deal flow and differentiates ARCC from other bdcs.

Speaker 4: The breadth of our sourcing capabilities as a key component in executing our conservative approach to constructing a highly diversified portfolio with significant downside protection.

The breadth of our sourcing capabilities is a key component and executing our conservative approach to constructing a highly diversified portfolio with significant downside protection.

Speaker 4: Our portfolio remains diversified across 387 different borrowers with an average hold size of only 0.3% at fair value.

Our portfolio remains diversified across 387 different borrowers with an average hold size of only 0.3% at fair value.

Speaker 4: Excluding our investments in IV Hill and SDLP, which we believe are highly diversified on their own, no single investment accounts for more than 1.5% of the portfolio at fair value, and our top 10 largest investments totaled just 10.9% of the portfolio at fair value.

Excluding our investments in Ivy Hill and S. D. L. P, which we believe are highly diversified on their own no single investment accounts for more than 1.5% of the portfolio at fair value and our top 10 largest investments totaled just 10, 9%.

<unk> of the portfolio at fair value.

Speaker 4: Additionally, the loan to value on our debt portfolio, which was approximately 45% at the end of the fourth quarter, is below the mid 50s level seen prior to the pandemic.

Additionally, the loan to value on our debt portfolio, which is approximately 45% at the end of the fourth quarter is below the mid fifties level seen prior to the pandemic.

Speaker 4: As a result of these attributes, the credit performance of our portfolio remains strong.

As a result of these attributes the credit performance of our portfolio remains strong.

Speaker 4: As Kip commented on earlier, our non-accruals at cost during the fourth quarter of 2021 declined to 0.8%, their lowest level since 2007 and down from 1.7% the prior quarter and 3.3% at year-end 2020.

As Kipp commented on earlier, our non accruals at cost during the fourth quarter of 2021 decline to 0.8% their lowest level since 2007 and down from one 7% the prior quarter and 3.3% at year end.

2020 in.

Speaker 4: In addition, the weighted average grade of our portfolio at fair value improved modestly in Q4 to 3.1 from 3.0 at the end of Q3 2021.

In addition, the weighted average grade of our portfolio at fair value improved modestly in Q4 to $3. One from 3.0 at the end of Q3 2021 .

Speaker 4: Before concluding with our investment activities to date in 2022, I want to take a minute to highlight our increased investment in Ivy Hill asset management over the past year and remind investors of the value that we believe Ivy Hill provides to ARCC.

Before concluding with our investment activities to date in 2022, I want to take a minute to highlight our increased investment in Ivy Hill asset management over the past year and remind investors of the value that we believe Ivy Hill provides to ARCC.

Speaker 4: Ivy Hill is a wholly owned portfolio company of ARCC that was started in 2007 to invest in and manage middle market senior secured loans through structured investment vehicles and SMAs.

Ivy Hill as a wholly owned portfolio company of ARCC that was started in 2007 to invest in and manage middle market senior secured loans restructured investment vehicles and S. M S.

Speaker 4: Today, Ivy Hill is a leading middle market loan manager of over 20 middle market investment vehicles and SMAs, and benefits from an experienced management team with strong middle market relationship.

Today, Ivy Hill is a leading middle market loan manager of over 20 middle market investment vehicles, and that's M A's and benefits from an experienced management team with strong middle market relationships.

Speaker 4: Similar to ARCC, Ivy Hill has a long track record of profitability, and the investment vehicles and SMAs that it manages are well diversified with investments across more than 280 distinct borrowers.

Similar to ARCC Ivy Hill has a long track record of profitability and the investment vehicles and SMA is that it manages our well diversified with investments across more than 280 distinct borrowers.

Speaker 4: Many of these borrowers are portfolio companies of our private equity clients.

Many of these borrowers are portfolio companies of our private equity clients.

Speaker 4: In order to support its AUM growth and an expanding middle market opportunity,

In order to support its growth and an expanding middle market opportunity.

Speaker 4: ARCC increased its equity investment in Ivy Hill by $296 million in the fourth quarter, bringing its investment to $765 million on a cost basis.

ARCC increased its equity investment in Ivy Hill by $296 million in the fourth quarter, bringing its investment to $765 million on a cost basis.

Speaker 4: We are optimistic that our capital investment in Ivy Hill will support future growth in its AUM.

We are optimistic that our capital investment in Ivy Hill well.

Support future growth and it's a U N.

Speaker 4: Finally, I will finish with a brief update on our post-corder and investment activity and pipeline.

Finally, I will finish with a brief update on our post quarter end investment activity and pipeline.

Speaker 4: From January 1st through February 2nd, 2022, we made new investment commitments totaling $607 million, of which $385 million were funded.

From January 1st through February 2nd 2022, we made new investment commitments totaling 607 million of which $385 million were funded.

Speaker 4: We exited or were repaid on $956 million of investment commitments, including $529 million sold to vehicles managed by Ivy Hill, generating approximately $20 million of net realized gains on external operators related to public output riskbeforeAlex Pederson, CEO of

We exited or were repaid on $956 million of investment commitments, including 529 million sold two vehicles managed by Ivy Hill generating approximately 20 million of net realized gains on exits.

Speaker 4: As of February 2nd, our backlog and pipeline stood at roughly 1.2 billion and 125 million respectively.

As of February 2nd.

Our backlog and pipeline stood at roughly $1 2 billion and $125 million respectively.

Speaker 4: Our backlog contains investments that are subject to approvals and documentation and may not close. Or we may sell a portion of these investments post closing.

Our backlog contains investments that are subject to approvals and documentation and may not close or we may sell a portion of these investments post closing.

Speaker 4: I will now turn the call back over to Kip for some closing remarks.

I will now turn the call back over to Kip for some closing remarks.

Thanks, a lot Michael.

Speaker 3: In closing, we believe 2021 was an excellent year for the company. Harry's Capital showed strong growth in earnings, deployment, and other metrics that we've discussed today. The strong position of the company is reflected in our announced increase to the regular quarterly dividend and the declaration of an additional dividend of 12 cents per share, again to be paid to shareholders over the four quarters of 2022.

In closing, we believe 2021 was an excellent year for the company.

These capital showed strong growth in earnings deployment and other metrics that we've discussed today.

The strong position of the company is reflected in our announced increase to the regular quarterly dividend and the declaration of an additional dividend of 12 cents per share.

Again to be paid to shareholders over the over the four quarters of 2022.

Speaker 3: As we start this year with increasing market volatility across many risk assets, we note that these periods of volatility have historically led to continued demand for private capital, and we look forward to the next phase of the year.

As we start this year with increasing market volatility across many risk assets. We note that these periods of volatility have historically led to continued demand for private capital.

And we look forward with optimism.

Speaker 3: With significant structural tailwinds and multiple levers for growth, we remain optimistic about the company's future.

With significant structural tailwind and multiple levers for growth, we remain optimistic about the company's future.

Speaker 3: I'd like to close the call by simply thanking our entire team for their hard work and their dedication throughout 2021. And with that operator, we can open the line for questions.

I'd like to close the call by simply thanking our entire team for their hard work and their dedication throughout 2021 and with that operator, we can open the line for questions.

Speaker 5: At this time, if you would like to ask a question, please press star then 1 on your touch tone phone.

At this time, if you would like to ask a question. Please press Star then one on your Touchtone phone.

Speaker 5: If you would like to withdraw your question, please press star then 2. Please note as a courtesy to those who may wish to ask a question, please limit yourself to one question and a single follow-on. If you have additional questions, you may press star.

If you would like to withdraw your question. Please press Star then two please.

Please note as a courtesy to those who may wish to ask a question. Please limit yourself to one question and a single follow on.

If you have additional questions you may reenter the queue.

Speaker 5: The Investor Relations Team will be available to address any further questions at the conclusion of today's call.

The Investor Relations team will be available to address any further questions at the conclusion of today's call.

At this time, we will pause momentarily to assemble the roster.

Speaker 5: The first question comes from Ryan Lynch of KBW. Please go ahead.

The first question comes from Brian Lee.

Oh K B W. Please go ahead.

Speaker 6: Hey, good morning. Thanks for taking my questions. Really great quarter and maybe more importantly, really nice finish to a very strong 2021.

Hey, good morning, Thanks for taking my questions really.

Really great quarter, Hey, Ryan and and maybe more importantly, really nice finish to a very strong 2021.

Speaker 6: The one question, the first one I want to start with was, it kind of comes off a comment we heard from a different BDC last week. Obviously, the fourth quarter portfolio activity was super strong. I don't know if we really expect that to continue at that same level in 2022, but correct me if you think differently. And one of the concerns that he had was, given the rise in interest...

The one question.

First one I'm going to start with was.

It kind of comes off a comment we heard from a different BDC last week.

Obviously, the fourth quarter portfolio activity was Super strong I don't know, we really expect that to continue at that same level in 2022, but correct me you know keeping differently, but one of the concerns that he had was.

Given the rising interest rates that could potentially put some pressure on a private market valuations for these private businesses.

Speaker 6: That could potentially put some pressure on private market valuations for these private businesses.

And.

Speaker 6: the trickle-down effect could be reducing the level of deal activity that we could see in some of these sponsor transactions going into 2022 if interest rates, you know, really continue to rise the way they have and are expected to rise. So I would just love to hear your thoughts on, you know, how much of a concern do you have of rising rates, you know, driving down multiples in some of these private markets and reducing, you know, deal volumes.

The trickle down effect could be reducing the level of deal activity that we could see some be sponsor transactions going into 2022, if interest rates.

Really continue to rise, but the way they have and are expected to rise. So I would just love to hear your thoughts on you know how.

How much of a concern do you have a rising rates you know driving down multiples in some of these private markets and reducing deal volumes.

Speaker 3: I think it's a reasonable point, I'm not sure who made the point obviously, but when rates go up, you know, the value of assets tends to go down, which can sometimes, I think more temporarily than anything perhaps.

Yeah, Brian Thanks for the question I mean, I think it's a reasonable point I'm not sure who made the point, obviously, but when rates go up you know the value of assets tends to go down.

Which can sometimes I think more temporarily than anything perhaps.

Speaker 3: lull activity, right, as folks try to recalibrate what things are worth. So, I actually think some of the slow start that a lot of folks, us included, have seen to this year has been following on an unbelievably busy fourth quarter in 2021, which I would agree with. You know, we just, we look back at 21 as perhaps being a bit of an anomaly in terms of activity levels. So, it's a bit of a resettling now for...

Lull activity right.

<unk> tried to recalibrate, what things are worth so actually I think some of the slow start that a lot of folks US included have seen to this year has been <unk>.

Following on an unbelievably busy fourth quarter, and 2021, which I would agree with we just we look back at 21 is perhaps being a bit of an anomaly in terms of activity levels and I think there's a bit of a reset only now for.

Speaker 3: you know, what activity levels will be and what valuations will be. The good news is that actually from our perspective tends to lead to fewer repayments. And you see longer duration on the assets maybe is the benefit. But, you know, it's hard to disagree with that point that whomever it was pointed out I agree.

What activity levels will be and what valuations will be the good news is it actually from our perspective tends to lead to fewer repayments.

And you see longer duration on the assets.

Maybe as the benefit, but it's hard to hard to disagree with that but that point that whomever. It was pointed out I agree.

Okay.

Speaker 6: And then just my follow-up question, you kind of...

Understood and then just my follow up question, you kind of hit.

Speaker 6: hinted on this in some of your prepared comments with with the kind of the big investments in Ivy Hill.

On this in some of your prepared comments with the kind of the big investments in Ivy Hill.

Speaker 6: But what really drove, I mean, the fair value markup of that investment increased, you know, pretty meaningfully throughout the year. So the fair value over the cost is up pretty substantially in the year. What really drove the increase in that fair value mark throughout the year? So just increased profitability from Ivy Hill given the more scale. And then what are the underlying...

But but what really drove the fair value Mark up of that and that's an increase you know pretty meaningfully.

Throughout the year so.

Fair value over the cost.

It was up pretty substantially in the year, what really drove the increase in that than that fair value marks throughout the year or is it just increased profitability from from Ivy Hill, given the more scale and then what are the underlying fundamental fundamentals that are really driving you guys to increase investment.

Speaker 6: fundamentals that are really driving your guys' increased investment. And those are the same sort of trends you guys are seeing broadly across the direct lending business.

Or was it the same sort of trends that you guys are seeing broadly across the you know, though the direct lending business.

Speaker 3: So what I'd love to do, Ryan, is just actually, why don't we take it offline to check

So what I would I would love to do Ryan is just actually what why don't we take it offline to check.

Speaker 3: Your thoughts on the delta. It's a little tricky because we obviously made a significant new investment, right at cost.

Your thoughts on the Delta, it's a little tricky because we obviously made a significant new investment right at coffee, which will of course increase the fair value of the investment in that portfolio company and then there is the separate point I think youre, making about how did the underlying valuation of the entity change.

Speaker 3: which will of course increase the fair value of the investment in that portfolio company. And then there's the separate point I think you're making about, you know, how did the underlying valuation of the entity change.

Speaker 3: you know, forgetting or putting aside that capital contribution. And actually the increase in value away from the capital contribution is pretty modest.

Forgetting are putting aside that capital contribution.

Really the increase in value away from the capital contribution is pretty modest relative to the cost basis that we have there to date I think.

Speaker 3: relative to the cost basis that we have there to date. I think and

I'm just doing the math quickly I think it's Ah.

Speaker 3: a couple percent, you know, in terms of the increase relative to our overall cost and fair value from last quarter. So why don't we check it offline that there's nothing material that's creating a significant fair value increase. The thing that you're probably seeing is the capital contribution. So we're happy to take it offline and just make sure you have the data.

A couple of percent in terms of the increase relative to our overall cost and fair value from last quarter. So why don't we check it offline, but there's nothing material, that's creating a significant fair value increase the thing that you're probably seeing is the capital contribution. So we're happy to take it offline and just make sure you have the data.

Hi.

Speaker 6: Okay, that sounds good. Thanks for the time today. Thanks for your...

Okay that sounds good.

For the time today.

Thanks for your opening comments, we appreciate it.

Speaker 5: The next question comes from John Hecht of Jefferies. Please go ahead.

The next question comes from John Hecht of Jefferies. Please go ahead.

Speaker 7: Morning, good quarter. Thanks for taking my questions and appreciate the update on the market, Kip. I'm just thinking about puts and takes on originations this year, or kind of deal activity. Understanding it's been pretty strong, but we've got a lot of moving parts, rates going up, and how does that impact the refi market.

Morning, good quarter, Thanks for taking my questions and I appreciate the update on the on the market kept.

I'm just thinking about puts and takes are on originations this year or kind of.

Deal activity.

Understanding it's been a pretty strong, but we've got a lot of moving parts your rates going up and how does that impact the refi market.

Speaker 7: What's the M&A pipeline? How does all the incremental private equity dollars and the sidelines affect things? I guess the real question is how does those factors impact the way things might look this year relative to a couple years ago?

What's the M&A pipeline, how does the all the incremental private equity dollars in the sidelines affect things.

I guess the real question is how does that those factors impact the way things might look this year relative to a couple of years ago.

Speaker 3: um sure i mean there's a lot there i'll give you some thoughts and feel free to follow on but but to ryan's point on some of the other comments think increasing rates um will you know slow refinancing activity probably slow repayments a little bit and extend the duration of the distant portfolio which is

Sure I mean, there's a lot there I'll give you some thoughts and feel free to follow on but but Ryan.

Brian's point on some of the other comments think increasing rates.

<unk> will slow refinancing activity, probably slow repayments, a little bit and extend the duration of the existing portfolio, which is.

Speaker 3: fine with us, you know, makes our life a little bit easier in terms of growth and consistency of earnings. And then the point on M&A activity, despite modest increases here in rates, I think once there's a...

Find with US you know it makes our life a little bit easier.

In terms of growth and consistency of earnings and then the point on M&A activity. Despite modest increases in rates I think once there is a little bit of a recalibration as to what purchase prices look like and maybe I do think some more evidence that folks are gathering today as to how quickly rates will rise.

Speaker 3: little bit of a recalibration as to what purchase prices look like and maybe I do think some more evidence that folks are gathering today as to how quickly rates will rise and by how quickly rates will rise.

<unk> and by how much I think things will settle and I think that it'll be another busy year. You know if you ask just my opinion and others on the team can chime in too I think 22 will be as busy as 'twenty, one probably not right. I mean, there was a huge hangover effect coming out of kind of deep COVID-19 and 2020, but I think put folks on the side.

Speaker 3: I think things will settle and I think that it will be another busy year.

Speaker 3: You know, if you ask just my opinion and others on the team can chime in, do I think 22 will be as busy as 21? Probably not. Right. I mean, there was a huge hangover effect coming out of

Speaker 3: kind of deep COVID in 2020, that I think put folks on the sidelines and then had them come off the sidelines in a pretty vicious way, eager to get things done and to your point, deploy capital that had been on the sidelines, most of which have, you know, finite investment periods.

Lines, and then had them come off the sidelines and a pretty vicious way eager to get things done and to your point deploy capital that had been on the sidelines most of which have finite investment periods, but I think we're through a lot of that so I would expect 22 to be more of a.

Speaker 3: But I think we're through a lot of that. So I would expect 22 to be more of a...

Speaker 3: regular year, or I'll maybe a 2019, right, which was busy, certainly had some uncertainty not around rates and inflation, but about other concerns. And nonetheless, it was a reasonably busy year for everybody.

Regular year, although maybe at 2019, right, which was busy certainly had some uncertainty around rates and inflation, but about other concerns and nonetheless, it was a reasonably busy year for everybody.

Speaker 7: Okay, that's great color. And then it looked like the yields, and I know there were some changes in calculations, but they've been coming down, but looking at Q1, it looks like they call it the run-on yields higher than the run-off. I'm wondering just maybe can you talk about spreads? Has there been any changes in the pipeline of spreads given the volatility in the market?

Okay, that's great color and then.

It looks like the yields and I know there were some changes in calculations, but they've been coming down but looking at Q1, it looks like that they call. It the run on yields higher than the run off I'm wondering just maybe can you talk about spreads has there been any changes in kind of the pipeline of spreads given I don't know the volatility in the market.

Speaker 7: Is there any kind of outlook on the overall book yield over the course of the next few quarters given rates and that element?

Is there any kind of outlook on the overall book yield over the course of the next few quarters given rates in that that element.

Speaker 3: No, I mean you're right. What we onboarded was better than what exited, right? I mean, we had a modest decrease actually in debt and income producing security. This was largely actually because of the equity investments that we made. Ivy Hill, you know, being a significant contributor to that, a slightly lower percentage of the portfolio in SDLP and then to your point, slightly tighter market spreads, but you know between

No I mean, you're right, what we on boarded which was better than what exited right. I mean, we had a modest decrease actually in debt and income producing securities was largely actually because of the equity investments that we made Ivy Hill, you know being a significant contributor to that.

A slightly lower percentage of the portfolio in SDLP, and then to your point slightly tighter market spreads but.

Between.

Speaker 3: you know, the fourth quarter activity and now we haven't really seen a compression and spreads, it's about the same. Okay.

You know the fourth quarter activity and now we haven't really seen a compression in spreads it's about the same.

Okay.

Great. Thanks.

Thanks for your questions John .

Speaker 5: The next question comes from Kenneth Lee of RBC Capital Markets. Please go ahead.

The next question comes from Kenneth Lee of RBC Capital markets. Please go ahead.

Speaker 8: Hi, thanks for taking my question. I just want to follow up on the remarks you had in terms of the competitive environment that you're seeing right now. I wonder if you can talk a little bit more about that, and especially within the upper end of the market, such as larger corporate borrowers. Thanks.

Hi, Thanks for taking my question.

Just want to follow up on the remarks, you had in terms of the kind of competitive environment that you're seeing right now wonder if you could talk a little bit more about that and especially within the upper end of the market such as like larger corporate borrowers. Thanks.

Speaker 3: Yeah, I mean it seems to us that, you know, that portion of the market has gotten more competitive. I think if you look back...

Yeah, I mean, it seems to us that you know that that portion of the market has gotten more competitive I think if you look back.

Speaker 3: At our prepared remarks and probably some of the Q&A over the last three years that we've delivered at this company, we've talked about how we thought there was better risk reward at the upper end of the market frankly than there was.

In our prepared remarks, and probably some of the Q&A over the last three years that we've delivered at this company we've talked about how we thought there was better risk reward at the upper end of the market frankly than there was in the lower end of the middle market, which historically has not been the case right.

Speaker 3: in the lower end of the middle market, which historically has not been the case, right?

Speaker 3: Having done this with the team here for 20 something years, you've always been offered this significant premium in the lower middle market. And over the last couple of years that went away, we obviously played more and more into larger companies where we thought we were getting better credits and frankly the same or better pricing. And that was largely because of our scale advantage and...

Having done this with the team here for 20 something years, you've always been offered this significant premium and the lower middle market and over the last couple of years that went away. We obviously played more and more into larger companies, where we thought we were getting better credits and frankly, the same or better pricing and that was largely.

Because of our scale advantage and.

Speaker 3: the lack of competition there. To your point, I think you're referencing some folks in the market who have put together pretty significant pools of capital here over the last 12 to 18 months and are attacking that portion of the market. So I think our view is it is more competitive there. That being said, we believe the company has some pretty significant competitive advantages that continue to exist despite that.

The lack of competition there to your point I think youre referencing some folks in the market who have put together pretty significant pools of capital here over the last 12 months to 18 months.

Our attacking that portion of the market. So I think our view is it is more competitive there that being said we believe the company has some pretty significant competitive advantages that continue to exist despite that.

Speaker 3: We're able to compete effectively where we want to. And in the prepared remarks I said we're able to walk away when we want to too if we don't like pricing or terms or documentation or whatever it may be because we have confidence in our ability to continue to originate enough deal flow that we don't get put in positions where we are forced to do things.

We're able to compete effectively where we want to add.

And in the prepared remarks, I said, we're able to walk away when we want to two if we don't like pricing or terms or documentation or whatever it may be because we have confidence in our ability to continue to originate enough deal flow that we don't get put in positions, where we are forced to do things and Thats, just really important in terms of being selective and put in port.

Speaker 3: And that's just really important in terms of being selective and putting portfolios together that obviously are illiquid and that we think we're going to be managing for years forward at a time, right? So we need to feel good about where we're coming in. And to your question, I'd say yes, admittedly the upper end of the market, which was wide open for us for years, is a little bit more competitive than it probably was 12 to 18 months ago.

Folios together that obviously are illiquid and that we think we're gonna be managing for years forward at a time right. So we need to feel good about where we're coming in and to your question I'd say, yes, admittedly the upper end of the market, which was wide open for us for years is a little bit more competitive that it probably was 12 months to 18 months ago.

Sure.

Speaker 8: Gotcha, very helpful there. And one follow-up, if I may, wondering if you could just share with us your thoughts around portfolio construction in the current environment, either relatively attractive sectors or any other positioning you have there in the near term thing.

Got you very helpful. There.

One.

One follow up if I may I'm wondering if you could just share with us your thought.

That's around portfolio.

Portfolio construction and the current environment, either relatively attractive sectors or any other positioning you have there in the near term. Thanks.

Speaker 3: Yeah, I mean, I think in terms of industries, things are very similar in terms of our viewpoint. We're trying to take, you know, defensive industries with probably better than GDP growth. Certainly businesses that have good free cash flow and allow us to set up, you know, lever deals that can be lever without a lot of uncertainty because of the

Yeah, I mean, I think in terms of industry things are very similar in terms of our viewpoint, we're trying to take defensive industries with.

Probably better than.

Uh huh.

GDP growth.

Certainly businesses that have good free cash flow and allow us to setup levered deals that can delever.

Without a lot of uncertainty.

Because of the.

Speaker 3: origination and the flexible capital model, which I did call out again in the prepared remarks. We don't have a strong view generally that

Origination and the flexible capital model, which I did call out again in the prepared remarks, we don't we don't have a strong view generally that.

Speaker 3: You know, senior secured debt is better than junior debt or whatever it may be as a kind of platitude or as a generalization, right? We kind of look at things on a deal by deal basis.

Senior secured debt is better than junior debt or whatever it may be as the as the kind of flattish tutor as a generalization right. We kind of look at things on a deal by deal basis.

Speaker 3: If you look over a fairly long period of time, what you'll see from us is a mix that's reasonably consistent, but it can be inconsistent from quarter to quarter. And it really depends on the company, less than it is a view on how do we want the portfolio to respond from an asset mix perspective. We have parameters, right, and that if something got out of whack.

If you look over a fairly long period of time, what youll see from US is a mix thats reasonably consistent but it can be inconsistent from quarter to quarter and it really depends on the company less than it is a view on how do we want the portfolio to to respond from an asset mix perspective, we have parameters Ryan that if something got out of whack.

Speaker 3: you know percentage of equity was you know fifteen or twenty percent of the portfolio we'd probably say that's too high you know if we were putting sixty or seventy percent of the portfolio into pure senior debt we probably wouldn't have enough income in the company to pay the dividend right so it's a balance in terms of putting the portfolio together but i we don't have any strong generalizations about one being better than the other it's really company specific and that's how we think about things

Percentage of equity was 15 or 20% of the portfolio, we'd probably say that's too high.

You know, if we were putting 60 or 70% of the portfolio into pure senior debt, we probably wouldn't have enough income in the company to pay the dividend right. So it's a balance in terms of putting the portfolio together, but we don't have any strong generalizations about one being better than the other it's really company specific and that's how we think about things.

Great. Thank you very much.

No problem. Thanks.

Speaker 5: The next question comes from Finneano Shay of Wells Fargo. Please go ahead.

The next question comes from Finian O'shea of Wells Fargo. Please go ahead.

Yeah.

Speaker 2: Hi, everyone. Good afternoon. First question on Hi. Can you talk about you said the growth opportunity for IV Hill? You know, sort of what is that just in the traditional CLL business or anything else unique they're doing and and what it means for ARCC? Does that mean that you'll be supplying a lot more capital to that business?

Hi, everyone. Good afternoon.

The first.

Question.

Hi.

Can you talk about you said that the growth opportunity for Ivy Hill.

Sort of what it is.

Not just the traditional CLO business or anything else unique they are doing and what it means for ARCC does that mean that you'll be supplying a lot more capital to that business.

Speaker 3: I mean, look, this is Ivy Hills, you know, one of the larger portfolio companies and one of the longer tenured portfolio companies obviously at Aries Capital.

I mean look this is Ivy Hill's.

One of the larger portfolio companies and one of the longer tenured portfolio companies, obviously at Ares capital.

Speaker 3: You know, we think very highly of the management team there. We look at a 10 plus year track record of them delivering excellent returns to the company.

We think very highly of the management team. There we look at a 10 plus year track record of them delivering excellent returns to the company.

Speaker 3: But to your point, their business is reasonably simple and it's a good time for them to grow, i.e. there's lots of middle market senior secured product, they're able to buy from us, they're able to buy from others, and they're seeing significant demand for growth generally. So because of their strong track record, we feel very comfortable increasing the size of our investment in that company by a couple hundred million today.

But to your point in their business is reasonably simple and it's a good time for them to grow I E. There is lots of middle market senior secured product, they're able to buy from us they are able to buy from others.

And they are seeing significant demand for <unk>.

Growth generally so because of their strong track record, we feel very comfortable increasing the size of our investment in that company by a couple of hundred million.

Speaker 3: That brings it to rough numbers of 5% position. We think it can continue to grow from there. We haven't really thought about an upper limit as to how big would be too big. But the size today puts it on par with our investment in SDLP, which is the other.

Today that brings that to rough numbers of five percentage position.

We think it can continue to grow from there.

We haven't really thought about an upper limit as to how big would be too big but the size today puts it on par with our investment in SDLP, which is the other.

Speaker 3: significant contributor to the 30% basket and we think similarly about that program. So again it's just trying to ride the winners and continue to invest more money in things that have done well for us.

Significant contributor to the 30% basket and we think similarly about that program. So again, it's just trying to trying to ride the winners and continue to invest more money in things that have done well for us.

Speaker 2: I'm sure that's helpful. And then a follow-up for Penny. Sort of high level on top of interest rates moving, it feels like.

Sure that's helpful and then a follow up for Penni.

Sort of high level on on top of.

Interest rates moving it feels like.

Speaker 2: the proliferation of these very large BDCs is stretching the demand from the unsecured market. I'm wondering if that's something you're seeing and do you think that there will be sort of a tilt back toward bank funding in the in the BDC industry?

The proliferation of these very large bdcs is stretching.

The demand from the unsecured market.

Wondering if that's something you're seeing and do you think that there'll be sort of a tilt back towards.

Bank.

Bank funding and the in the BDC industry.

Speaker 1: Yeah, thanks, Benny. And yeah, I mean, we're certainly seeing more BDCs out there raising capital. And we did see that in Q4. It was a very active quarter.

Yeah, Thanks, Sunny and yeah, I mean, we're certainly seeing more bdcs out there raising capital and we did see that in Q4. It was a very active quarter for bdcs raising debt in the term market.

Speaker 1: for BDCs raising debt in the term market.

Speaker 1: I think we feel really good about our position in those markets. You know, we've been very long tenured issuing in them and expect to be able to continue to issue in them. But certainly it takes more consideration around just timing and you know, when we want to go to the market given the greater activity. So we've continued to be successful issuing in the market. We were back in Q1 in early January .

I think we feel really good about our position in those markets. You know we've been very long tenured issuing in them and expect to be able to continue to issue and then but certainly it takes more consideration around just timing and.

Literally when I go to the market given the greater activity. So we've continued to be successful issuing in the market. We are back in Q1 in early January .

Speaker 1: and we're able to continue to issue, you know, termed at the much tighter spreads than most. So we feel good about our position and where we are with our capitalization today. Thank you for your time today. All right.

And we're able to continue to issue.

Term debt at much tighter spreads than most so we feel good about our position and where we are with our capitalization today.

Thank you, everybody and a great quarter as well.

Thanks, so much.

Speaker 5: The next question comes from Casey Alexander of Compass Point. Please go ahead.

The next question comes from Casey Alexander of Compass point. Please go ahead.

Speaker 2: Yeah, hi. Good morning. My first question is really a maintenance question, mostly for Penny. In the recent developments,

Yeah, Hi, good morning.

My first question is is really a maintenance question.

Mostly for Penny on the in the recent developments the 48 million loss on the extinguishment of debt.

Speaker 9: The $48 million loss on the extinguishment of debt.

Speaker 9: Was was any of that baked into the financials at the end of the fourth quarter or is that all being fully recognized against earnings per share in the first quarter?

Was any of that baked into the financials at the end of the fourth quarter or is that all being fully recognized against our earnings per share in the first quarter.

Speaker 1: No, that'll all be baked in in Q1 because that's when the repayment happens.

No that'll all be baked in in Q1, because that's when the repayment happened.

Speaker 9: okay so there was nothing like it would be good and there anything like that now it'll be treated as a loss on the extinguishment of that in Q1 okay with similarly on the uh... twenty million dollar net realized gain on the exit in the subsequent events with it does that have a reversal of unrealized gains or is that a fully a new gain coming into the court

Okay. So there was nothing.

Reserve against it or anything like that.

No it'll be treated as a loss on the extinguishment of debt in Q1.

Again, similarly on the $20 million net realized gain on the exit and the subsequent events with it does that have a reversal of unrealized gains or is that a fully a new game coming into the quarter.

Speaker 1: Generally when we exit our investments, there is some reversal of previously recorded unrealized appreciation against the realized event. I don't have the exact number, but it's not, you know, typically there would already be a good bit of that in our nav from the prior quarter when we exit.

Yeah generally when we exit our investment there is some reversal of previously recorded unrealized appreciation against the realized events I don't have the exact number but it's not.

Typically there would already be a good bit of that in our NAV from the prior quarter when we asset.

Okay, Great and then my follow up is for you Kipp.

There's almost an $80 million difference.

In the in the quarters in terms of the capital structuring fees over the course of 2021.

So I'm going to ask you to put my hat on and how would you model those capital structuring fees going forward. If you were me as an analyst looking at that wide differential.

Speaker 3: The easiest way, but it's not all that easy, so I'm sympathetic, is by taking a percentage of new originations, right, is the easiest way to think about it. What that obviously won't pick up is if we're earning a higher percentage than usual because we're doing a transaction or two where we underwrite and syndicate, don't end up with a final hold, etc. I mean, I think it's...

The easiest way, but it's not all that easy.

Uh huh.

Is by taking a percentage of new originations right is the easiest way to think about it what that obviously won't pick up is if we're earning a higher percentage than usual because we're doing a transaction or two where we underwrite and syndicate don't end up with a final hold et cetera, I mean.

I think it is.

Speaker 3: As you try to model 22, right, I, if I were you, would model something less aggressive again, which I,

You try to model 22, right I, if I were you would model something less aggressive again, which I.

Speaker 3: reference in terms of activity in terms of new originations, right? So part of the reason for the special dividend this year was the activity levels were so high that we just said, you know.

Referenced in terms of activity in terms of new originations right. So.

Part of the reason for the special dividend. This year was the activity levels are so high that we just said you know.

Speaker 3: this is the right time for us to recognize that it's time for something special, right? So maybe just thinking forward, try to look back over the last couple of years in terms of our origination activity, average it out and, you know, look at the percentage in terms of what percentage of new growth commitments generate a fee, i.e., do we get a 2% fee, a 2.5% fee and put it through.

This is the right time for us to recognize that it's time for something special right.

So maybe just thinking forward try to try to look back over the last couple of years in terms of our origination activity average it out and look at the percentage in terms of what percentage of new gross commitments generate a fee I do we get a 2% fee of two 5% fee and put it through.

Speaker 3: I think, Casey, that for us, for you, it's a modeling exercise. For us, we don't think about it that much because we feel like our dividend is so well covered even with lower activity levels, which is what we're focused on.

Casey that for us.

For you, it's a modeling exercise for us we don't think about it that much because we feel like our dividend is so well covered even with lower activity levels, which is where we are right John .

Speaker 3: So, you know, we can try to take it offline and help a little bit, but I know you understand how it works and you can create your model as you want to.

So we can try to take it offline and help a little bit, but I know you understand how it works.

You can create your you can create your model as you as you want to.

Speaker 9: Well, anytime I can get you to do my job for me though, I'm getting some, you know, well-priced, well-informed talent. So, you know, I might as well try. I appreciate it if you take my question.

Well anytime I can get you to do my job for me, though I'm getting some.

Well priced well informed talent, so I might as well try.

I appreciate it and we take all my question.

Speaker 3: That's all good. I think we have enough to do around here, but thanks for the offer. Thank you.

So that's all good we I think we have enough to do around here, but thanks for the offer.

Thank you.

Take care.

Speaker 5: The next question comes from Melissa Wendell of JPMorgan. Please go ahead.

The next question comes from Melissa window of J P. Morgan. Please go ahead.

Speaker 5: Good morning, everyone. Appreciate you taking my questions. The first one is for CHEP. CHEP, you talked about the pace of rate increases. And I think.

Good morning, everyone. We appreciate you taking my question.

The first one for cat are.

Can you talk about the pace of rate increases and I think well.

Speaker 10: when you mentioned that earlier, it was in the context of how that might impact activity levels in 22. But I'm also curious if you have any thoughts or concerns about, you know, portfolio companies' ability to kind of service that debt or pass on higher costs as their costs of borrow increases. And whether that's specific to your portfolio or the industry generally, I'm curious what you're thinking about that.

When you mentioned that earlier it was in the context of how that might impact activity levels in 'twenty, two but I'm also curious if you have any thoughts or concerns about them.

Portfolio companies' ability to service that debt or pass on higher costs adds there their cost of borrow.

The increase.

And whether that's specific to your portfolio or the industry generally I'm curious what you are thinking about that.

Speaker 3: Sure, thanks for the question. I think we don't, and I think most of the market don't have those concerns yet, because you're talking about the beginnings of modest rate increases.

Sure. Thanks for the question.

I think we don't and I think most of the market.

Don't have those concerns yet because you're talking about the beginnings of modest rate increases.

Speaker 3: flowing through to borrowers, which for the most part, as an industry have live work floors set at 75 to 100 basis points as a minimum. So that the issuers today are servicing debt at much higher.

Flowing through to borrowers, which for the most part as an industry have LIBOR floors set at 75 to 100 basis points as a minimum so that the issuers today, our servicing debt at much higher.

Speaker 3: LIBOR numbers than the prevailing market would suggest, right? So the companies are already there. I think it's going to take two or three rate increases before some of the companies and then some of the managers obviously invested in those companies look around and start saying will rising rates actually pressure credit metrics, right, underlying credit fundamentals. I think for the time being we're not concerned. I don't think a lot of other people are either as an industry and that's correct.

LIBOR numbers than the prevailing market would suggest alright. So the companies are already there I think it's going to take two or three rate increases before some of the companies and then some of the managers obviously invested in those companies look around and start saying, we'll we'll rising rates actually pressure.

Credit metrics right underlying credit fundamentals I think for the time being we're not concerned I don't think a lot of other people are either as an industry.

Metric.

Speaker 10: Okay, got it. Follow-up question for Penny on the convert issue that will flow through and that with the realized loss flowing through in the first quarter. Just to clarify, is that something that would be excluded from your core EPS number?

Okay got it.

Follow up question for Penny on the convert issue that will flow through and that with the realized loss. During the first quarter just to clarify is that something that would be excluded from your core EPS number.

Speaker 1: Yes, because it will go through as a loss on extinguishment of debt. And if you look back historically when we've had that, it goes in the same section as realized gains and losses so it's not part of core or net investment income.

Yes, because they don't go through as a loss on extinguishment of debt and if you'd look back historically when we've had that it goes in the same section as realized gains and losses. So it's not part of core net investment income.

Yeah, Okay, great. Thank you so much.

Thank you.

Speaker 5: The next question comes from Kevin Foltz of JMP Securities. Please go ahead. Hi, good morning and thank you for taking my questions.

The next question comes from Kevin Folds of JMP Securities. Please go ahead.

Hi, good morning, and thank you for taking my questions.

Looking at portfolio activities.

Sure.

Speaker 2: Looking at portfolio activity during the quarter, new commitments to equity investments were elevated relative to prior quarters, and I realize that was partially due to IB Hill. And then quarter to date, that trend has continued. Can you talk about the opportunities that you're seeing on the equity side that have led you to lean in?

Looking at portfolio activity during the quarter, new equipments to equity investments were elevated relative to prior quarters and I realize that was partially due to Ivy Hill, and then quarter to date that China's continued can you talk about the opportunities that youre seeing on the equity side that led you to lean in there.

Speaker 3: Yeah, I think thanks for the question skewed a little bit for sure because the Ib Syle investment

Yeah.

Yes, I think thanks for the question skewed a little bit for sure because of the Ivy Hill investment.

Speaker 3: No other big movers. You know, we made a couple of both preferred and common investments that were a little bit larger this past quarter than we might have in the past. I wouldn't say it has anything to do with a prevailing view again about portfolio mix. It's much more anecdotal in terms of the opportunities that were presented to us in Q4.

No other big movers, we we made a couple of both preferred and common investments that were a little bit larger this past quarter than we might have in the past I wouldn't I wouldn't say, there's anything to do with a prevailing view again about portfolio mix, it's much more.

Anecdotal in terms of the opportunities that were presented to us in Q4.

Speaker 3: But look, Kevin, we have a good track record in terms of...

But look Kevin we are we have a good track record in terms of investing.

Speaker 3: Investing equity has been a significant contributor to our ability to, you know, earn well in excess of our dividend over the years. We talked about the realized gains for 21 and how significant they were. So definitely an important part of the strategy but nothing unusual to call out other than I think Ivy Hill, you know, which again was pretty substantial for Q4.

Investing equity, it's been a significant contributor to our ability to earn well in excess of our dividend over the years, we've talked about the realized gains for 'twenty, one and how significant they were so definitely an important part of the strategy, but nothing nothing unusual to call out other than I think Ivy Hill, which again was pretty substantial for Q4.

Sure.

Speaker 2: Okay, that's helpful. And then my follow up, you've touched on a bit on this call.

Okay. That's helpful. And then my follow up you've touched on a bit on this call.

Speaker 2: 2021 was clearly an incredibly strong year for deployment and in turn portfolio growth. Can you talk about your expectations for the pace of investment portfolio growth in 2022 and how we should think about that?

2021 was clearly an incredibly strong year for deployment and in turn portfolio growth.

Can you talk about your expectation for the pace of investment portfolio growth in 2022, and how we should think about that.

Speaker 3: Yeah, I mean, I've covered it on a couple of the other questions that folks have asked and don't have much to add. I think that

Yeah, I mean I've covered it on a couple of the other.

Questions that folks have asked and don't have much to add I think that.

Speaker 3: This year again will look more like a traditional pre-COVID year, right? You have all of the

This year again, we'll will look more like a traditional pre COVID-19 year right you have all of the.

Tailwind still in place lots of Uninvested private equity.

Speaker 3: tailwinds still in place, lots of uninvested private equity, strong and growing economy, despite some of the, you know, inflation concerns or thoughts about rising rate, you know, the backdrop for the economy actually seems quite good. And nothing that would contribute to slow down but I think we're in a slow direction as to what's the challenges here in departure

Strong and growing economy. Despite some of the you know inflation concerns or thoughts about rising rate backdrop for the economy actually seems quite good.

And nothing that would contribute to slowdown, but I think we're in a in a slow.

<unk>.

Speaker 3: Q1 here is things evolved, right? Again, folks are taking a little bit of a weight and see approach as to what the Fed's going to do. How quickly they're going to move, and that's just tempering activity for the time being. But I would expect a healthy, busy year, maybe not like 21, but a healthy and busy year, both from an M&A and a lending perspective.

Q1 here as things evolve right again folks are taking a little bit of a wait and see approach as to what the fed is going to do how quickly they're going to move them and that's just tempering activity for the time being but I would expect a healthy busy.

A year, maybe not like 'twenty, one, but a bit of healthy and busy year, both from an M&A in a lending perspective.

Speaker 2: Okay, that's helpful, color tip, and then I'll leave it there. Congratulations on a really nice quarter.

Okay. That's helpful color and then I'll leave it there congratulations on a really nice quarter.

Okay.

Thanks, so much.

Speaker 5: Once again, if you would like to ask a question, please press star then one.

Once again, if you would like to ask a question. Please press Star then one.

Speaker 5: And our next question will come from Robert Dodd of Raymond James. Please go ahead.

And our next question will come from Robert Dodd of Raymond James. Please go ahead.

Speaker 11: Hi and yeah congrats on the quarter and even more so on the credit quality honestly. Um two kind of kind of follow-ups I mean Kip on the the the irrational market I mean you you answered Ken's question mainly at the upper end. Have you seen any signs

Hi, and congrats on the quarter and even more so on the credit quality honestly.

To kind of kind of follow ups here on the the irrational market. I mean, you you answer to Ken's question was mainly at the up for that.

Have you seen any signs.

Speaker 11: that that level of competition at the higher end of the market is starting to squeeze people lower down, maybe to try and mimic some of the flexible capital solutions like more preferred or anything like that. Is there any concern that it's going to drive other players?

That level of competition at the higher end of the market is starting to squeeze people lower down maybe to try and mimic some of the flexible capital solutions like more preferred or anything like that is there any concern that it's going to it's going to drive other players into areas of the market, where we're <unk>.

Speaker 11: to areas of the market where you've been there for a long time and gotten some yield enhanced investments like the Perdaq, what do you think? I mean, you think it's going to shift that

Been there for a long time and gotten some.

Yield and hence investments like preferred equity things like that I mean, do you think it's going to ship that market.

Yeah.

Speaker 3: You mean for folks to be more aggressive down a company's balance sheet? Yes. Can you take on more sub debt or?

You mean for folks to be more aggressive down the company's balance sheet I, yes to take on more sub debt or.

Speaker 3: Um, no, I don't think no, I don't think so. I mean, the only point I was making is we've definitely seen some transactions.

No I don't think no I don't think so I mean, the only point I was making is we've definitely seen some transactions.

Yeah.

Speaker 3: you know, at the upper end of the market more so that we've had to walk away from for different reasons, perhaps the last quarter or two than we had over the prior three years. But it hasn't, I don't think it's changing our behavior at all. It's really not changing the competition's behavior. But there's been some, um,

At the upper end of the market more so than we've had to walk away from for different reasons.

Perhaps the last quarter or two then we had over the prior three years, but it hasn't I don't think it's changing our behavior at all it's really not changing the competition's behavior, but there has been some.

Speaker 3: real focus on that market by a few of our competitors and was just making the point that we haven't necessarily understood it all the time and probably walked away from a few more of those transactions that we would have liked to but other other than that we really haven't changed our behavior or investing at all.

Real focus on that market by a few of our competitors and was just making the point that we haven't.

Necessarily understood. It all the time and it'd probably walked away from a few more of those transactions that we would've liked to but other other than that we really haven't changed our behavior or investing at all.

Speaker 11: Got it. Thank you. And if I can on on Ivy Hill, I mean, obviously.

Okay got it thank you and if I can on Ivy Hill, obviously.

Speaker 11: pre-COVID, it's a $500 million investment now, it's 1.1 billion today, I think, and growing. Over time, it's tended to produce a very nice...

Pre COVID-19 .

So $500 million of investment now its $1 1 billion today I think are growing.

Over time, it's tended to produce a very nice.

Speaker 11: about a 14% dividend yield on fair value of equity, higher on the cost.

How about a 14% dividend yield on on fair value of equity higher on the cost basis of the equity is there anything you know which is comparable to the SDLP, which is a 13% return on capital.

Speaker 11: Is there anything which is comparable to the SCLT?

Speaker 11: 13 and 1 half percent return on capital. I mean, is there any reason we should expect that dividend yield on fair value, say, to decline at ideal? Or do you think that level of return is sustainable with this new amount of capital it has in potentially greater capital?

Is there any reason we should we should expect that that dividend yield on fair value say to decline at IPL or do you think that level of return is.

It is sustainable.

With this new amount of capital that has potentially greater capital as it goes forward.

Speaker 3: Yeah, I mean, without trying to be too forward looking, we're obviously investing $475 million of additional capital into that business. And the returns that we've been generating from IVL have been pretty darn consistent over the last 10 plus years. So I think our expectation is that those returns continue to be achievable, obviously, without making any promises. But those are our expectations, Robert.

Yeah, I mean without trying to be too forward looking we're obviously investing $475 million of additional capital into that business and the returns that we've been generating from Ivy Hill has been pretty darn consistent over the last 10 plus years. So I think our expectation is that those returns continue to be achievable, obviously without making any promises but.

There are those are our expectations Robert.

Got it thank you.

Speaker 5: This concludes our question and answer session. I would like to turn the conference back over to Mr. Kip Devere for any closing remarks.

This concludes our question and answer session I would like to turn the conference back over to Mr. Kipp Davir for any closing remarks.

Speaker 3: We didn't have any other than to thank the folks on the call for their time, and we'll catch up with you all next quarter. Thank you.

We didn't have any other than to thank the folks on the call for their time, and we will catch up with you all next quarter. Thank you.

Speaker 5: Ladies and gentlemen, this concludes our conference call for today. If you missed any part of today's call, an archived replay of the call will be available approximately one hour after the end of the call through February 23, 2022 at 5 p.m. Eastern Time. Contact your local law enforcement office to domestic callers by dialing.

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