Ares Capital Corporation

Ares Capital reported GAAP net income per share of $0.24, up from $0.13 in the first quarter of 2026. Core earnings were $0.47 per share, consistent with the prior quarter, and management said that implied an annualized return on equity of 9.7%. Net asset value ended at $13.9 billion, or $19.35 per share, down $0.24 per share quarter over quarter. The portfolio was $29.3 billion at fair value, down slightly from $29.5 billion in the first quarter, and leverage was 1.12x debt-to-equity net of available cash. Management said available liquidity was approximately $6 billion, with no additional unsecured note maturities in 2026 and $1.4 billion maturing in 2027. For the third quarter of 2026, the regular dividend is $0.48 per share, payable September 30 to stockholders of record September 15. Management also estimated approximately $988 million, or $1.38 per share, of taxable spillover income available for future periods. Forward-looking commentary was constructive but cautious: management expects transaction activity to improve, sees leverage with some room to move within its 0.9x to 1.25x target range, and said the current regular dividend remains appropriate for long-run earnings power.

Kort Schnabel framed the quarter as solid, emphasizing stable core earnings, healthy portfolio performance, and a stronger setup for future originations. He repeatedly stressed ARCC’s scale, diversified capital base, and incumbent borrower relationships, saying those advantages are drawing more opportunities as competitors backed by retail capital become less active. His tone was confident but disciplined: he said ARCC remains highly selective, is not chasing volume, and views the current dividend as well supported by earnings, spillover income, and credit performance.

Scott Lem focused on stable earnings, balance-sheet strength, and funding efficiency. He cited GAAP net income per share of $0.24, core EPS of $0.47, NAV of $19.35 per share, leverage of 1.12x, and about $6 billion of available liquidity. He also highlighted roughly $1.2 billion of additional financing during the quarter, the new $1 billion commercial paper program that could lower funding costs by about 50 to 100 basis points versus average secured borrowings, and the post-quarter reset of the $476 million debt securitization that cut the spread by 35 basis points while extending reinvestment and final maturity. He reiterated the third-quarter dividend of $0.48 and said taxable spillover income is about $988 million, or $1.38 per share.

Analysts pressed management on whether industry weakness and dispersion could create M&A or strategic acquisition opportunities, and Kort said the likelihood of such a transaction is probably higher than in the past, while declining to discuss specific alternatives. Questions also focused on industry credit normalization, prepayments, PIK usage, the commercial paper program, and two troubled names; management mostly answered at a market level, saying non-accruals are trending toward historical norms because portfolios are maturing and that it is not seeing a specific industry trend driving ARCC’s new non-accruals. On the two challenged credits, management would not comment on names but said it is in ongoing and constructive dialogue with the sponsor and has some confidence in addressing near-term maturities.