Ares Capital Corp Files 2023 Annual Report on Form 10-K

TL;DR

<b>Ares Capital Corporation has submitted its comprehensive 2023 annual report detailing financial performance and operational aspects.</b>

AI Summary

ARES CAPITAL CORP (ARCC) filed a Annual Report (10-K) with the SEC on February 7, 2024. Ares Capital Corporation filed its 10-K annual report for the fiscal year ending December 31, 2023. The filing covers the period from January 1, 2023, to December 31, 2023. The company's principal executive offices are located at 245 Park Avenue, 44th Floor, New York, NY 10167. The filing includes references to various financial instruments and accounting standards, such as foreign exchange forwards and debt/equity securities gains/losses. Specific industry concentrations are noted, including Software and Services, Healthcare, Financial Services, Commercial and Professional Services, and Investment Funds and Vehicles.

Why It Matters

For investors and stakeholders tracking ARES CAPITAL CORP, this filing contains several important signals. This 10-K filing provides a detailed overview of Ares Capital's financial health, investment portfolio, and risk factors for the fiscal year 2023, crucial for investors assessing the company's stability and future prospects. The report's disclosure of industry concentrations and specific financial instruments offers insights into the company's strategic focus and potential vulnerabilities within its investment strategy.

Risk Assessment

Risk Level: medium — ARES CAPITAL CORP shows moderate risk based on this filing. The company's business is subject to industry concentration risks, as detailed in the filing, which could lead to significant financial impact if these concentrated sectors experience downturns.

Analyst Insight

Investors should review the detailed breakdown of investment portfolio concentrations and associated risks within the 10-K to understand potential impacts on Ares Capital's future performance.

Key Numbers

• 20231231 — Fiscal Year End (Conformed period of report)
• 20240207 — Filing Date (Filed as of date)
• 120 — Public Document Count (Total documents in the filing)
• 2023-01-01 — Reporting Period Start (Fiscal year start date)
• 2023-12-31 — Reporting Period End (Fiscal year end date)

Key Players & Entities

• ARES CAPITAL CORP (company) — Filer name
• ARCC (company) — Ticker symbol
• 245 PARK AVENUE, 44TH FLOOR (location) — Business address
• New York (location) — Business address city
• MD (location) — State of incorporation
• Ivy Hill Asset Management LP (company) — Mentioned entity
• Royal Bank of Canada (company) — Mentioned entity
• Canadian Imperial Bank of Commerce (company) — Mentioned entity

Forward-Looking Statements

• Ares Capital Corp will continue to maintain relationships with major financial institutions for hedging activities. (ARES CAPITAL CORP) — high confidence, target: 2024-12-31
• The company's fiscal year end will remain December 31st for the foreseeable future. (ARES CAPITAL CORP) — high confidence, target: 2025-12-31

FAQ

Risk Factors

• Industry Concentration Risk [high — market]: The company faces risks associated with concentrations in specific industries, including Software and Services, Healthcare, Financial Services, and Commercial and Professional Services.
• Investments at Fair Value [medium — financial]: A significant portion of the company's investments are recorded at fair value, introducing volatility and potential for unrealized gains and losses.
• Debt and Equity Securities [medium — financial]: The company's performance is influenced by realized and unrealized gains and losses on its debt and equity securities portfolio.

Key Dates

• 2023-12-31: Fiscal Year End — Marks the end of the reporting period for the 10-K filing.
• 2024-02-07: Filing Date — Date the 10-K report was officially submitted to the SEC.

Key Financial Figures

• $0.001 — ch registered Common Stock, par value $0.001 per share ARCC The NASDAQ Global Select
• $18.79 — ed on the closing price on that date of $18.79 on The NASDAQ Global Select Market, was
• $23.8 billion — et capitalization and had approximately $23.8 billion of total assets. We are externally ma
• $10 million — to companies with annual EBITDA between $10 million and $250 million. As used herein, EBITD
• $250 million — h annual EBITDA between $10 million and $250 million. As used herein, EBITDA represents net
• $30 million — orate borrowers generally range between $30 million and $500 million each. However, the inv
• $500 million — generally range between $30 million and $500 million each. However, the investment sizes may
• $20 million — control equity investments of less than $20 million (usually in conjunction with a concurre

Filing Documents

• arcc-20231231.htm (10-K) — 21195KB
• arccq4-23exhibit211.htm (EX-21.1) — 35KB
• arccq4-2023exhibit231.htm (EX-23.1) — 3KB
• arccq4-23exhibit311.htm (EX-31.1) — 16KB
• arccq4-23exhibit312.htm (EX-31.2) — 16KB
• arccq4-23exhibit321.htm (EX-32.1) — 9KB
• arccq4-23exhibit971.htm (EX-97.1) — 26KB
• arccq4-23ex991xreportonsup.htm (EX-99.1) — 5KB
• arcc-20231231_g1.jpg (GRAPHIC) — 7KB
• arcc-20231231_g2.jpg (GRAPHIC) — 114KB
• 0001287750-24-000011.txt (&nbsp;) — 64835KB
• arcc-20231231.xsd (EX-101.SCH) — 200KB
• arcc-20231231_cal.xml (EX-101.CAL) — 102KB
• arcc-20231231_def.xml (EX-101.DEF) — 1116KB
• arcc-20231231_lab.xml (EX-101.LAB) — 1616KB
• arcc-20231231_pre.xml (EX-101.PRE) — 1103KB
• arcc-20231231_htm.xml (XML) — 14776KB

Risk Factors

Item 1A. Risk Factors 24

Unresolved Staff Comments

Item 1B. Unresolved Staff Comments 51

Cybersecurity

Item 1C. Cybersecurity 51

Properties

Item 2. Properties 52

Legal Proceedings

Item 3. Legal Proceedings 52

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 52 Part II.

Market f or Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 5. Market f or Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 53

[Reserved]

Item 6. [Reserved] 64

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 65

Quantitative and Qualitative Disclosures about Market Risk

Item 7A. Quantitative and Qualitative Disclosures about Market Risk 96

Financial Statements and Supplementary Data

Item 8. Financial Statements and Supplementary Data 98

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 98

Controls and Procedures

Item 9A. Controls and Procedures 98

Other Information

Item 9B. Other Information 99

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 99 Part III.

Directors, Executive Officers and Corporate Governance

Item 10. Directors, Executive Officers and Corporate Governance 100

Executive Compensation

Item 11. Executive Compensation 100

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 100

Certain Relationships and Related Transactions, and Director Independence

Item 13. Certain Relationships and Related Transactions, and Director Independence 100

Principal Accountant Fees and Services

Item 14. Principal Accountant Fees and Services 100 Part IV.

Exhibits and Financial Statement Schedules

Item 15. Exhibits and Financial Statement Schedules 101

Form 10-K Summary

Item 16. Form 10-K Summary 107

Signatures

Signatures 2 PART I

Business

Item 1. Business GENERAL Ares Capital Corporation Ares Capital Corporation, a Maryland corporation (together with its subsidiaries, where applicable, "Ares Capital" or the "Company," which may also be referred to as "we," "us" or "our"), is a specialty finance company that is a closed-end, non-diversified management investment company. We have elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder, the "Investment Company Act." We were founded on April 16, 2004, were initially funded on June 23, 2004 and completed our initial public offering ("IPO") on October 8, 2004. As of December 31, 2023, we were the largest publicly traded BDC by market capitalization and had approximately $23.8 billion of total assets. We are externally managed by Ares Capital Management LLC ("Ares Capital Management" or our "investment adviser"), a subsidiary of Ares Management Corporation (NYSE:ARES) ("Ares Management" or "Ares"), a publicly traded, leading global alternative investment manager, pursuant to our investment advisory and management agreement. Ares Operations LLC ("Ares Operations" or our "administrator"), a subsidiary of Ares Management, provides certain administrative and other services necessary for us to operate. Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in U.S. middle-market companies, where we believe the supply of primary capital is limited and the investment opportunities are most attractive. However, we may from time to time invest in larger or smaller companies. We generally use the term "middle-market" to refer to companies with annual EBITDA between $10 million and $250 million. As used herein, EBITDA represents net income before net interest expense, income tax expense, depreciation and amortization. We invest primarily in first lien senio

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