Good afternoon. Welcome to Ares Capital Corporation's second quarter ended June 30th, 2022 earnings conference call. At this time, all participants are in a listen-only mode. As a reminder, this conference call is being recorded on Tuesday, July 26, 2022. I'll now turn the call over to Mr. John Stilmar, Managing Director of Investor Relations. Thank you. Let me start with some important reminders. Comments made during the course of this conference call and webcast and the accompanying documents contain 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 SEC filing. Ares Capital Corporation assumes no obligation to update any such forward-looking statements. Please also note that past performance or market information is not a guarantee of future results. During this conference call, the company may discuss certain non-GAAP measures as defined by SEC Regulation G, 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 is one method the company uses to measure its financial condition and results of operation. A reconciliation of core EPS to GAAP net income per share, the most directly comparable GAAP financial measure, can be found in the accompanying slide presentation for this call. In addition, a reconciliation of these measures may also be found in the earnings release filed this morning with the SEC on Form 8-K. All per share information discussed during this call is basic per share information. See the company's 10-Q filed with the SEC this morning for more information. Certain information discussed on this conference call and the accompanying slide presentation, including information related to portfolio companies, was derived from third-party sources and has not been independently verified, and accordingly, the company makes no such representation or warranty with respect to this information. The company's second quarter, June 30, 2022, earnings presentation can be found on the company's website at www.arescapitalcorp.com by clicking on the second quarter 2022 earnings presentation link on the homepage of the investor section of the website. Ares Capital Corporation's earnings release and 10-Q are also available on the company's website. I will now turn the call over to Kipp deVeer, Ares Capital Corporation's Chief Executive Officer. Thanks, John. Hello, everyone. I hope you're all doing well, and we appreciate you joining our call today. I'm here with our Co-Presidents, Michael Smith and Mitchell Goldstein, our Chief Financial Officer, Penni Roll, and several other members of the management team. I'd like to start by highlighting our second quarter results and then provide some thoughts on the changing market conditions and how we're seeing things. This morning, we reported second quarter core earnings of $0.46 per share, an increase of approximately 10% compared to the first quarter, driven by the early benefits of rising interest rates, higher dividend income, and continued credit stability within the portfolio. Our NAV of $18.81 per share declined 1% quarter-over-quarter, largely due to unrealized losses we took to reflect wider credit spreads in the markets. These unrealized marks are to be expected with more volatile markets. However, I will say it's a welcome trend, as more volatile markets tend to provide more deal flow for direct lending participants and most likely more interesting investment opportunities for the longer term. Volatility within the leveraged finance and equity markets continued during the second quarter as central banks around the world became more aggressive in their fight with elevated inflation by rapidly raising interest rates. With this tightening monetary policy, our concerns over an economic slowdown or a recession have increased. The leveraged finance markets are experiencing significant spread widening, weak secondary liquidity, and minimal primary issuance as the large banks are highly focused on working out their unsold inventory of committed financing, many of which we believe are being held at significant losses. During these times, we rely on a playbook that we've developed over the past 17 years. We try to be opportunistic on these situations with banks. We become incrementally more selective with our core deal flow to focus on the highest quality investments and to drive better pricing and terms. We aggressively manage our portfolio, and we strive to build additional liquidity at the company. Against this more volatile backdrop, the stability and scale of our capital is resulting in incremental demand from both our existing portfolio companies and some new borrowers, including some much larger companies that otherwise would turn to the liquid markets in less uncertain times. We believe our long-standing and disciplined approach to investing has resulted in an attractive, highly diversified portfolio that is focused on upper middle market businesses that have significant long-term franchise value and operate in resilient industries. Demonstrating our focus on diversification, our average investment represents just 0.2% of the portfolio, and this minimizes our exposure to any single portfolio company. In addition, we've focused on larger companies in recent years, and the weighted average EBITDA of our portfolio has now reached $179 million. This number has more than doubled over the past five years. Our experience in previous cycles has demonstrated that larger companies tend to be more resilient during market dislocation. All things being equal, we believe these larger companies have more diverse revenue streams, broader customer bases, deeper management teams, and more robust sources of capital. These attributes should all serve to support the credit performance of our portfolio. While we recognize the increasingly complex operating environment that many companies face in today's economy, our portfolio companies are performing well. Our non-accruals at cost remain well below our 10-year average, and we reported another quarter of strong underlying portfolio company EBITDA growth. Furthermore, the weighted average loan to value on the aggregate loan portfolio remains comfortably below our five year average of 51%, which reflects the significant structural support provided by the equity of our clients at both private equity-backed companies and at non-sponsored borrowers. As we discussed at our recent Analyst Day, we have a proactive and deeply embedded credit-oriented culture. We believe our portfolio management team provides an important and differentiated element to our overall approach to risk management. During our quarterly portfolio review, our portfolio management team, alongside our deal team, have put a heightened focus on the risks brought by today's high inflationary environment. While our analysis of our industry sectors and underlying company fundamentals is subjective, we take comfort that this quarter's review revealed only between 5% and 10% of our portfolio was in the higher risk category, specifically regarding the potential impact from inflationary pressures such as rising energy prices, supply chain disruptions, and staffing shortage. Looking forward, we believe the continued increase in market interest rates presents a potential opportunity for the growth of our core earnings, given our largely floating rate loan portfolio that is financed by mostly low-cost, fixed-rate, unsecured sources of financing. As Penni will discuss in more detail, if the full impact of the market rate moves this quarter had flowed through our entire quarter, we calculate that our second quarter core earnings could have been about 11% higher on a run rate basis. Additionally, should market rates increase 100 basis points from the June 30th levels, our quarterly core earnings could benefit by about $0.08 per share or a 17% increase over our second quarter core earnings. We believe the benefit of these market rate increases to earnings will be more impactful in the third quarter and beyond. We also do not believe the currently projected increase in rates will result in deteriorating credit performance. Holding all else equal, including leverage at the borrower level, a 150 basis point increase in market rates would result in a weighted average interest coverage ratio in the portfolio of approximately 2x. Importantly, this analysis doesn't consider any EBITDA growth or deleveraging that has historically occurred in the portfolio. We feel good about the ability of our portfolio companies to navigate a higher rate environment, and we believe these dynamics will further differentiate Ares Capital from many other income-oriented alternatives in the market today. Before I turn the call over to Penni, I wanted to highlight the dividend increase we announced this morning. As a result of our run rate core earnings outlook and the expected further benefit from higher interest rates, coupled with our strong portfolio performance, we increased our regular quarterly dividend from $0.42 per share to $0.43 per share for the third quarter. This amount is in addition to the $0.03 per share additional dividend that we've already declared for each of the third and fourth quarters this year. Let me now turn the call over to Penni to provide more details on second quarter results and some other thoughts on the balance sheet position. Thanks, Kipp. Good afternoon, everyone. Our core earnings per share of $0.46 for the second quarter of 2022 were $0.04 higher than a quarter ago and down $0.07 from the same quarter a year ago. The second quarter of 2022 earnings were driven by strong recurring interest and dividend income, some higher one-time non-recurring dividends, and a solid level of capital structuring service fees from new originations. Our GAAP earnings per share for the second quarter of 2022 were $0.22, which compares to $0.44 for the prior quarter and $1.09 for the second quarter of 2021. Our GAAP earnings for the second quarter of 2022 included net realized and unrealized losses of $0.30 per share. The net realized and unrealized losses on our investments this quarter were largely a result of the unrealized losses we took for certain of our investments to reflect the current widening spread environment Kipp mentioned earlier. Our total portfolio at fair value at the end of the second quarter was $21.2 billion, and we had total assets of $21.8 billion. As of June 30, 2022, the weighted average yield on our debt and other income-producing securities at amortized cost was 9.5%, and the weighted average yield on total investments at amortized cost was 8.7%. The total investments yield at the end of the quarter increased approximately 60 basis points from last quarter, supported by the rise in base rates. As it relates to our future interest rate sensitivity, we remain well-positioned to continue benefiting from a rising rate environment. As of June 30, 2022, 74% of our total portfolio at fair value was in floating rate investments. As Kipp mentioned earlier, we expect continued increases in short-term rates to have a positive impact on the net interest earnings performance of the company. For starters, we have yet to see the full quarter benefit from higher market rates that have already occurred in the second quarter. Given about 60% of the base rates for our floating rate loans currently reset every three months and the increase in base rates through these resets generally occurred in the latter part of the quarter, our second quarter earnings did not fully benefit from the increase in market rates reflected in our yields at quarter end. By holding all else equal for the second quarter and assuming that the June 30 base rates were in effect for the full quarter, we estimate our second quarter core earnings would have been about $0.05 per share higher, resulting in core earnings of approximately $0.51 per share or about an 11% increase over our actual Q2 2022 core EPS results. It is worth pointing out that this analysis does not forecast any other changes, including the incremental benefit from interest rate changes since June 30, 2022. To look at this with a longer-term lens, as of quarter end, holding all else equal and after considering the impact of income-based fees, we calculated that a further 100 basis point increase in market rates from June 30th could increase our annual earnings by approximately $0.31 per share, a 17% increase above this quarter's annualized core EPS. We have provided details on our sensitivity to interest rate movements in this quarter's Form 10-Q for those who want to further examine these impacts. Shifting to our capitalization and liquidity, during the quarter, we continued to enhance our liquidity by growing our committed debt capital more than $300 million by upsizing two of our revolving credit facilities. Aside from the base rate transition from LIBOR to SOFR, the terms of the two facilities remained the same, including the existing pricing. After considering our investment in capital activities during the quarter, we ended the second quarter with nearly $4.6 billion of total available liquidity, including available cash of $200 million and a debt-to-equity ratio net of the available cash of 1.25x, up from 1.06x at the end of the first quarter. Overall, with our significant dry powder and only $750 million in debt obligations maturing in the next eighteen months, we believe our capital and liquidity remain one of our most significant competitive advantages and positions us well to remain active, yet patient investors. Before I conclude, I want to discuss our undistributed taxable income and our dividends. We currently estimate that our spillover income from 2021 into 2022 will be approximately $694 million or $1.41 per share. We believe having a strong and meaningful undistributed spillover supports our goal of maintaining a steady dividend throughout market cycles and sets us apart from many other BDCs that do not have this level of spillover. This morning, we announced that we declared a regular third quarter dividend of $0.43 per share, an increase to our regular dividend rate. The second such increase in the past year, the third such increase in the past six quarters, and our 53rd consecutive quarter of unchanged or growing dividends. This third quarter regular dividend is enhanced by the $0.03 per share additional third quarter dividend that we previously declared in February. Both are payable on September 30, 2022 to stockholders of record on September 15, 2022. Now I will turn the call over to Michael to walk through our investment activities for the quarter. Thanks, Penni. I'm going to spend a few minutes providing more detail on our investments and portfolio performance for the second quarter, and then provide an update on post-quarter end activity and our backlog and pipeline. During the second quarter, our team originated $3.1 billion of new investment commitments across 52 transactions and more than 20 distinct industries. 72% of the commitments issued were senior secured, and approximately 60% of the transactions were to incumbent borrowers. As we noted in our Analyst Day, incumbent portfolio companies, which we have provided additional financings, have historically had greater EBITDA growth and stronger interest coverage ratios on average in comparison to the rest of our portfolio. We believe the opportunity to finance some of our best portfolio companies clearly provides informational and investing advantages. Additionally, we believe our track record and ability to finance a business as it grows continues to be a key differentiating advantage in today's dynamic market. Further to Kipp's point earlier about the upper middle market focus of our portfolio, the weighted average EBITDA of companies to whom we issued commitments during the quarter was $183 million, as compared to the average EBITDA of exited investments of $102 million. While larger companies continue to be our focus, we are reviewing transactions with EBITDA that ranges from approximately $10 million of EBITDA to more than $1 billion of EBITDA, and we continue to be very selective and only finance approximately 5% of the new deals we review. We believe that our selectivity and focus on high free cash flow businesses with market leadership positions ultimately results in a differentiated and attractively positioned portfolio. Our portfolio company's performance during the quarter supports this view. The weighted average EBITDA growth of our portfolio companies over the last reported 12-month period was very strong at approximately 16%. Importantly, this performance is broad-based with all of our top 10 industry concentrations demonstrating a healthy level of positive EBITDA growth. It is also worth noting that industries where we have chosen to invest more heavily, measured as industries that comprise 4% or more of the portfolio, have experienced higher growth than the portfolio weighted average in aggregate. In terms of credit quality metrics, the weighted average portfolio grade at fair value for the quarter slightly improved to 3.2 and continues to be above the ten-year average of 3.0. Underscoring the overall stability of underlying portfolio companies, only 5% of our portfolio companies had a change in their portfolio grade this quarter, which is consistent with our five-year average. We experienced more upgrades than downgrades for the quarter, which resulted in a decline in the number and percentage of our high-risk grade one and grade two investments at fair value. Our non-accrual rate at cost of 1.6% increased slightly from 1.2% at Q1 2022, largely driven by the addition of one new non-accrual, but continues to be meaningfully below our ten-year average of 2.5%. Now, as Mitch and I do on a quarterly basis, I would like to shift our post-quarter end investment activity and pipeline. From July 1st to July 20th, 2022, we made new investment commitments totaling $245 million, of which $142 million were funded. We exited or were repaid on $379 million of investment commitments. As of July 20th, our backlog and pipeline stood at roughly $1.7 billion and $45 million respectively. Our backlog and pipeline contain investments that are subject to approvals and documentations and may not close, or we may sell a portion of these investments post-closing. I will now turn the call back over to Kipp for a few closing remarks. Thanks a lot, Michael. I'll conclude simply by saying we believe that Ares Capital remains well positioned to navigate the economic and market uncertainty ahead. The stability of our capital and our ability to be a strong and capable financial partner to our borrowers is likely to only be more valuable and continue the trend of increasing borrower demand for private capital at scale. While we anticipate further market volatility and the potential for additional spread widening as the cycle progresses, we feel very good about our portfolio and the capabilities of our team. The size and breadth of our team's experience through cycles positions us well to address any future challenges. We also feel the investing environment going forward should begin to look more and more attractive. This confidence in our position and the potential for meaningful earnings growth from rising interest rates is reflected in our election to raise our quarterly dividend. I'd like to finish by quickly taking a moment to thank our team for their continued focus and dedication to the success of the company. That concludes our prepared remarks. We'd be happy to open the line for questions. At this time, if you'd like to ask a question, please press star followed by one on your touch-tone phone. If you'd like to withdraw your question, please press star followed by two. 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 re-enter the queue. The investor relations team will be available to address any further questions at the conclusion of today's call. Our first question today comes from Melissa Wedel of JP Morgan. Please go ahead. Your line is open. Thanks so much. First question. I'm hoping, Kipp, that we can go back to the comment you made about the earnings potential, being driven by higher rates into 3Q. I think you said it was a $0.08 increase potentially. I guess I wanted to make sure I'm understanding sort of what's driving that. Is that based off of, sort of 6.30 LIBOR rates, or should we be thinking about that differently? Yeah, Melissa. I may pull Penny in here too, or John for help on the numbers. It's a little technical in that the borrowers obviously reset LIBOR typically every three months. The point is, as we got to the end of the quarter, we still had a bunch of companies that had not actually applied for their LIBOR resets, which when they do, will imply a much higher base borrowing rate. What we were trying to say is, at the end of the quarter, if we pulled forward our expectation of what our interest income would look like with all of those LIBOR resets getting done, i.e., we're gonna, you know, evidence all that in Q3, we thought we had just $0.08 of additional earnings from where we kind of left off at June 30th. Does that make sense? I'll just maybe add a couple of clarifying points on that because I know we threw a lot of math at you on this. But, you know, kind of f or this particular 100 basis points increase, there is some, you know, hypothetically, if you increase rates by 100 basis points from where we were in June 30, then we would have approximately $0.31 per annum in additional core earnings, which translates to about $0.08 a quarter. Because we did not see the full benefit of rates in Q2, y ou know, we're just saying, you know, further increases in base rates benefit the earnings. The eight cents is really more of the hypothetical side, where in addition to that, we said, if you would have taken the full quarter of higher rates where they did reset to during the second quarter and had those rates in effect for the full quarter, it would have been $0.05 pro forma to Q2. You kinda have this $0.05-$0.08 range. There are two different things at play and at work. Two different metrics at work, the second one is more just to say, look, we think we have further benefits from rising rates, and if you added 100 basis points, it would be about $0.08 a quarter. Thank you. Does that help? Okay. It does help. I appreciate that. I think one of the things that Thank you. Thanks, Melissa. It's gonna be a lot easier once we get through Q3. It'll be easier once we announce Q3. Okay. On that potential $0.08 increase per quarter, you know, you've hypothetically laid out here, does that also include the impact of what we've seen on the dividend income line? Because we've seen a lot of growth there. I know it's something you talked about in prior quarters, but I'm also wondering, you know, how much growth in dividend income from IHAM and recurring income in particular are you sort of baking into that number? Thanks so much. Sure. It doesn't include anything in regards to dividend income. In this quarter, we actually had a not necessarily expected one-time dividend from an equity investment in a portfolio company. You know, the lion's share of the increase, as you can probably expect, is our continued, you know, investment in Ivy Hill. If that's larger, it's gonna just be paying us a larger dividend going forward. Thank you. Thank you. Our next question comes from Finian O'Shea of Wells Fargo. Your line is open. Hi, everyone. Good afternoon. Another question on Ivy Hill. Wa s the $379 million sold down this quarter, was that the total allotted amount from Annaly, or are there other areas affiliated origination groups that may also syndicate down to Ivy Hill? Yeah, that number is not part of the Annaly number, so I just call that ordinary course, Fin. Oh, the 3.79 sold down was not. Okay. That's helpful. That's right. That's helpful. Thank you. You know, with the Annaly portfolio, you know, Ivy Hill bought, you know, north of $1 billion of that portfolio. So those are two separate numbers. Okay. Thanks so much. Next in the queue today. Thank you. Devin Ryan of JMP Securities. Please go ahead. Hi. Thanks. This is Kevin Fultz for Devin. Kip, you mentioned that increased market volatility has led to an improved competitive environment with more attractive terms on new transactions. You know, just curious if you could talk a bit about the shift to a more lender-friendly environment and how that's materializing, both in terms of documentation and more specifically, if you could quantify how pricing has improved on new transactions. Yeah. I mean, I think we're in a bit of a volatile period. We made reference, obviously, to the fact that, you know, banks have underwritten some transactions that they are looking for liquidity on, right? That's probably gonna continue through the remainder of the summer and even into the early part of the fall. All it's done is simply widen, you know, what we're seeing in the public markets. Thankfully now, I think, you know, we and most of our other friends and competitors in the private lending space are widening pricing out as well. You know, an early just preview is probably an additional 100 basis points of spread across most of the tranches as well as higher fees. We're also benefiting, to your question, from much more lender-friendly documentation, you know, reemergence of covenants in some of the smaller deals that perhaps tried to shed covenants, you know, during a frothier period. Pretty much every aspect of the investing environment from pricing terms and documentation has all improved materially in the last 30-60 days. Cool. Just looking at new commitment trends. Over the past two quarters, you've significantly reduced commitments to second lien loans. Just curious, is that mainly driven by less attractive spreads on second lien deals, or is there an ongoing effort to reduce the mix of second liens in the portfolio, you know, given a more uncertain economic outlook? Yeah. I mean, I think, you know, a little bit of that. I mean, there's probably less opportunity on the junior side. You know, there were more unit tranches getting done. I do think also we saw. You know, we've got a large public-facing credit platform here. So when we think about where we were, you know, in March and April, I think we took a pretty conservative tone around how we wanted to, you know, play a transitioning market. We might have been a little bit less busy than some others during, you know, the second quarter. Certainly less busy than we could have been. I think we were taking a bit of a pause as we expected, a widening spread environment. We were trying to, you know, make sure that we had capital here going through the summer into the fall to take advantage again of what we thought was an improving investment environment. It's a little bit of everything, to your point. I'll leave it there, and congratulations on a really nice quarter. Thanks very much. Our next question comes from John Hecht of Jefferies. Your line is open. Morning, guys. Thanks very much for taking my questions. You know, a quick question is, and this is sort of maybe a segue from the, like, the last question a little bit, is, you know, of your gross depreciation, Kipp, I think you cited that most of that was from credit spread widening. You know, can you kind of, you know, kind of allocate some of the gross appreciation to base rate changes versus credit spread changes? I'm trying to just decipher how much of, how much of the change in your book value was tied to, call it, generic credit risk versus rates. Yeah. I mean, I think. Thanks for the question, John. We didn't see really, you know, material change in the overall credit, in the portfolio. Most of what we observed was simply unrealized losses, pretty broadly across the portfolio, in reference just to the, you know, reference securities that we obviously look to to value the portfolio, mostly the loan market and the high yield market. Okay. Just thinking about that, I mean, because you guys obviously have a pretty, you know, detailed view and perspective on credit spreads. I mean, if you look at, you know, the past 15 years, including the great financial crisis, kind of where are we right now with respect to how credit spreads are impacting the market relative to, say, more extreme times? In other words, do you see a lot more potential for widening spreads, or are we already at a point where the market's pricing in some distress? I mean, it's a good question. I think, you know, again, we're not seeing significant change in the overall credit metrics in the portfolio. That being said, you know, for valuation, we're generally working off, you know, April and May numbers, right? We're getting here towards the end of the summer. I think the question will be what do the Q2 and Q3 numbers look like at some of these companies? That's gonna impact, I think, more potential stress in the portfolio than anything. Look, the other thing that's difficult to call right now, John, is everything's widening because there is this underwritten, unsyndicated backlog of some pretty large transactions that the banks are trying to clear out. Depending on how aggressive they are in clearing those, you know, you could set some pretty low levels on price, which would imply very, very widened spreads. What I then expect that to potentially come back, right, is deal flow. I think a little bit lesser, and you don't have this unfortunate backlog of things to get to the market. Look, I mean, I think, you know, you've had a very low base rate environment. With base rates going up, credit spreads typically only widen when you see defaults go up. Again, we're not seeing that really. This is in our market in reference to, I think, the phenomenon of this summer and inventory trying to get cleared out. We keep taking kind of a patient wait-and-see approach. I don't have a great crystal ball on that one. I wish I did. But I think we're just taking a little bit of a patient wait-and-see approach as to how we get through the summer and into the fall. Great. Thanks very much for the color. Thanks, John. Our next question comes from Ryan Lynch of KBW. Please go ahead with your question. Hey, good morning, everybody. My first question. Hey, Ryan. Ivy Hill has been just an incredible asset for you all. But my question is, you know, we've seen that have pretty considerable growth over the last four or five years and really in particular the last couple years of the AUM as well as the dividend growth at Ivy Hill. Could you talk about, you know, what is driving kind of the really accelerated growth that you guys have been achieving, you know, in Ivy Hill and the assets that are going in there? What has sort of changed in that marketplace to kind of have that accelerated growth recently? Then also, you know, it's obviously done really well, generated very high income, but it's also becoming a very large portion of your portfolio. Now I know it's a very diversified, you know, kind of asset manager. It's not like, you know, individual, you know, loan credit risk, you know, with that large investment. Is there any sort of size limitation? It's 8.5% of your portfolio today. Is there any sort of size limitation where you guys say, "Okay, this is enough. We're not gonna grow this anymore"? I mean, you know, there's not, obviously. It's a judgment call. It's been going up because they've done a great job, obviously, managing portfolios of bank loan assets. You know, the cash-on-cash return, if you think about the dividend relative to the total investment we've made, has been very consistent and very attractive over a long period of time. Look, when I see something that's 8.5% of the portfolio, it obviously begs the question you're asking, which is how large could it get, should it get? You know, we just did a very large transaction there, obviously buying this portfolio from Annaly. You know, they took on $1 billion+ of assets. We made a substantial investment in the company. That's a little bit of a needle mover for this quarter relative to others. You know, for me, I would certainly poll the management team too. For me, it's getting to be at the upper end, right? 8% or 9% positions is probably feeling pretty chunky. That being said, the underlying there is very diversified, and we don't really have any concentration in terms of the dividend income coming from one particular investment there. It's not something that's keeping me up at night. It is starting to test the limits a little bit. Mitch is gonna jump in here too. Yeah. The one thing I wanna make sure you understand is. Sure. The valuation of Ivy Hill is through a number of different mechanisms, right? There's the management fee as an asset manager, and we also invest in the subs of a lot of the CLOs and leveraged loan funds that we manage because it's such a tremendous return for ARCC. Over our history, and remember Ivy Hill has been around since 2007, we've had many times where other third-party equity investors have invested in Ivy Hill. If it ever came to a point, and I agree with Kip, it's getting up to the upper levels. There's probably still room to grow. If it ever came to a point, we've always had the ability to sell equity and continue to invest in the assets that drive the core of our business. We have the many levers to pull to moderate the size of Ivy Hill. That's great. Hopefully that makes sense. Understood. That makes sense. You know, that definitely makes sense. Again, it's been a great asset. It's just, yeah, you know, kinda wondering how big you guys feel comfortable with that. The other question I had, and I really do appreciate the color that you guys gave on kind of the run rate ending the quarter from kind of if you reset interest rates for the full quarter of Q2 and then also kind of the overall 100 basis points at the end of the quarter. You know, those statistics show, you know, and kind of the forward LIBOR or SOFR curve shows, you know, earnings are gonna go up pretty meaningfully over the next several quarters likely. When I look at the core earnings today and the potential increases in the future, and then I look at your dividend that you have today and the one you've declared for the third quarter, even with the $0.01 increase and then the $0.03 kinda special dividends you guys have at the end of the year, earnings look like they're gonna be well above those combined when you kinda look at 2023 earnings potential. Can you remind us what are you guys thinking as far as dividend policies going forward? Is your expectation to just kinda pay out all of your earnings in the form of a dividend? And how do you guys plan on, you know, achieving that via core dividends versus special dividends? Yeah. I think we all agree with your analysis. As you look forward, we think that we've got, you know, a great positive earnings trajectory here, you know, with a much higher base rate. We've obviously been fighting, you know, these persistently low base rates for a long time, took advantage as an issuer. But yes, we do pick up some very easy earnings going forward. Look, I'll just say, Ryan, you know, we never talk about dividends beyond, you know, this quarter, but we felt highly confident in our ability to increase the dividend this quarter. And, you know, I couple that with saying we've also built a pretty substantial amount of spillover income, as you're aware, at the company, and I don't feel the need, frankly, to add any more to that number. I could argue that number might even be a little bit high, which is why we've been using it to pay a, you know, special dividend throughout this year. We feel good about the earnings trajectory, and we feel good about the dividend, you know, where it is today and potentially growing from here. Okay. I appreciate the time today. Thanks for the question. Our next question today comes from Kenneth Lee of RBC Capital Markets. Your line is open. Hi. Good afternoon, and thanks for taking my question. You mentioned in the prepared remarks, in terms of the internal credit ratings you saw more upgrades than downgrades within the portfolio. Just want to get a little bit more details behind, you know, perhaps some of the key drivers behind more of those upgrades. Thanks. You know, it's what you'd expect. I mean, it's just generally all around good credit performance. As we mentioned, you know, we had one name that we had to add to non-accrual, which was a pretty small number and well below sort of our historical average if you look. No, you know, it's a large diversified portfolio, Kenneth, and there's nothing in particular to pull out there. I'd say it was, you know, good credit performance all around. You know, a couple of equity gains I think, in certain areas that probably moved that number up a little bit. You know, it's a pretty broad and diversified portfolio. I don't think there are any big takeaways that are worth sharing. Gotcha. Just one follow-up question, if I may. Wondering if you could talk a little bit more about or share your thoughts on how leverage could trend over the near term, just given the activity out there. Thanks. Yeah. We, you know, had a busier quarter. The Annaly, you know, situation and the upside at Ivy Hill kind of got us to a point where our leverage is now at the upper end of our target range at about 1.23, I think, times on a net basis. You know, frankly, in a more volatile market like the one we're experiencing, I'd like to have that number come down. I think we all would. That being said, the ability to upsize at Ivy Hill and the ability to make that portfolio acquisition that we did was just too attractive. So we pushed the leverage to the upper end, but I think the goal longer term would be to be managing that down here in the third and fourth quarters. Gotcha. Very helpful. Thanks again. Mm-hmm. Thank you. Next, we have a question from Robert Dodd of Raymond James. Please proceed. Hi, everyone. Yeah, congrats on the quarter and the outlook. A question, kind of a bigger picture question. I mean, as you, your size of your borrower has gone up a lot, and you've made comments about how those are more stable businesses, et cetera. A question I-g enerally speaking, I would imagine, you know, you get to almost $200 million EBITDA businesses. These are global businesses. The economic outlook right now to me looks a lot better in the U.S. t here's headwinds in the U.S., but compared to Europe, for example, the clouds appear less dark. So can you give us any color on, you know, how much of the end customer demand for some of these larger businesses comes from those international markets where the economic outlook might be more troubled? And do you have any concerns on that front? Obviously, it might not have showed up in the numbers yet because it's still more looking backwards, but again, then the offset is FX can help on that side as well. Any color there? Yeah, I mean, you know, it's a good question, you know, and with the 400-name portfolio, I can't say I can actually give you an answer. We'd have to go back and dig through a lot of data. You know, for the most part, despite the size of these companies, they are U.S. companies, right? You know, that's the primary focus of what we do here. We've got a very large business over in Europe too, but we choose to do that away from the BDC. So certainly with, you know, some of these businesses being large and global, I share your concern as we think about risk management. You know, Europe does look more difficult, I think to your point, than it does over here in the U.S. Just trying to get to the risk in the heart of your question, we don't see any, you know, unusual risks in our portfolio. We're heavily weighted to Europe because we tend to be in some larger companies than other BDCs, so. Again, it's, we'd have to go pull through a whole lot of data to get you a really good answer on that. I mean, just to follow, to hound you a little bit less, but S&P, I think the estimate is 40-50. You know, the U.S. domiciled companies obviously, but 40%-50% of revenues are international. Do you have a ballpark estimate? Very ballparky. Maybe Yankee Stadium size. I mean, I would ballpark guess that it is much, much lower than that, right? If you think about the industries and the sectors that we're in, you think, you know, U.S. healthcare companies, software businesses, et cetera. I mean, a lot of this business is getting done in the States, Robert, right? You know, 40% in the S&P, that's a very large number I think relative to where I would even guess at our portfolio. I would guess that, you know, we're at like a 10 relative to a 40 for your index. Got it. Thank you. Yeah. Perfect. Appreciate it. Thanks for the question. Our next question today comes from John Rowan of Janney Montgomery Scott. Please go ahead. Hi, this is Rishi Kamboj on behalf of John Rowan. Were the unrecognized losses on directly originated loans or broadly syndicated loans? Both, I would assume. Is there any way to get a better breakdown on either or is it just all together you're reporting the- Yeah, I mean, we have. Total number? We could probably go offline and pull that for you guys. I don't have it at my fingertips. I mean, the reality is most of what we're doing is directly sourced loans. We don't have a lot of broadly syndicated loans on ARCC's balance sheet. But the large, you know, the larger borrowers, right? Large EBITDA companies probably have quotes and obviously, you know, we don't ignore quotes. You know, we look at even in a thin market, something that's quoted, and we'll typically use that. Again, you know, there's not a significant focus at ARCC on broadly syndicated loans. All right. Thank you very much. As a reminder, if you'd like to ask a question today, it's star followed by the number one on your telephone keypad. Our next question comes from Casey Alexander from Compass Point. Please go ahead. Hi, good afternoon. This is Casey Alexander on behalf of Casey Alexander. I'm just kind of wondering, you know, this period of economic uncertainty or potential recession that we may or may not be going into or already in is obviously far more telegraphed than the COVID recession, and it allowed you to do an analysis that said 5%-10% of your companies are in higher risk categories from inflation and supply chain impacts. Does the telegraphed nature of this particular cycle as we go into it give you a better opportunity to work with your portfolio companies and just give them a better opportunity to prepare for it by bolstering balance sheets, managing expenses? Would it be your expectation that there would be a better outcome through this cycle of companies that are in a higher risk category than perhaps in the past? I think it's a great question. I think the simple answer is yes. As we're all, you know, looking at our crystal balls, this is a situation, you know, we have a team here that's been doing this together, you know, prior to even getting to Ares 20+ years. You know, this to me feels like a very traditional, although being influenced by different reasons, credit cycle, right? Where you're gonna have companies that are having more trouble operating. I do take your point. When you look back at COVID, that was very unpredictable. Something we'd never experienced before that impacted portfolio companies in a way that we probably couldn't have expected on underwriting. The credit cycle prior to that, you know, for me in the GFC was really much more of a banking crisis, right? Something that was influenced away from traditional corporate credit. We're taking some satisfaction that, you know, we've got a playbook to handle a more traditional, credit situation, right? You know, our deal teams and our portfolio management teams are obviously in regular contact with borrowers and with private equity firms. I think to your point, everybody sees what's happening now, and it's not happening, so quickly that you can't take, measures to mitigate and help companies operate through this, right? It feels like a much more traditional credit cycle, and we've got a very experienced team that I think knows how to navigate through that. All right. Great. Thanks for answering my question. I appreciate it. Thanks for representing yourself. Finally, we have a follow-up question from Ryan Lynch of KBW. Your line is open again. Hey, I just had a couple more follow-up questions, so appreciate the time. You mentioned earlier in your prepared remarks, you know, turning to some new larger borrowers that would normally turn to the broadly syndicated loan market, and now that those are, you know, under some more stress that you have the ability to underwrite some of those deals. I know in the past, some of the deals that could have went to the broadly syndicated loan market that maybe went to the direct route. I know in order to meet the yield profile, sometimes you were participating in the second lien for those positions, and you felt comfortable as such just because they were larger, safer borrowers. I'm just curious with the kind of stress and the uncertainty with the broadly syndicated loan market, as well as the increase in base rates we've seen recently, are you able to participate in more of these in more traditional first lien or unitranche positions than you have in the past? I mean, I think what we're seeing, Ryan, because the traditional sort of bank-led, you know, syndicate in a first lien, second lien, or a first lien sort of high yield issuance is it's just kind of really not there, particularly on the junior side. I mean, the market, I don't want to say is closed, but is generally not operating very well around, you know, rated LBOs getting sold by underwriters to new investors. So what's happening is there's a desire, in particular on the parts of, you know, private equity firms in doing LBOs to find partners that they feel can offer certainty of closing. The preponderance of some of these larger unitranches has helped solve that, right? That being said, we're trying to find the right balance between extracting better terms and extracting higher fees. There is sort of one of the few games in town that are available for those types of transactions. The good news is we're able to push it there, but it doesn't happen overnight. No, nothing's different. I mean, you know, I think we're as well positioned as we've been in past cycles where volatility comes in and makes the capital markets less reliable. We become, again, more reliable. You're right. The only difference maybe is the numbers are a little bit larger these days because we're bigger, and a lot of our competition is bigger. Okay. That's helpful. Then the last one that I had was, you know, obviously you guys had put up very strong results, I would say this quarter. You know, there was obviously some volatility in the marketplace, but overall book value, you know, held up well and non-accruals are still pretty strong and well below your guys' historical average. Very good results. I think everybody in the BDC space, at least BDC investors are worried about kind of what does the next 12 months look like from a credit quality standpoint. You guys provided, you know, a statistic in your slides. I think you maybe even mentioned on the call, 16% EBITDA growth in your portfolio companies over the last 12-month period. I think the question that I think a lot of investors have, and I'm not sure if you get this data from your portfolio companies, if you guys work on this. Do you guys get any sort of forecast from portfolio companies of what they are expecting from an EBITDA growth over the next 12 months? Or you guys have any sort of forecast that you guys provide? Because I think that is kind of the real crux and that's what really I think investors are worried about is what happens over the next 12 months in these portfolio companies. Well, yeah, I mean, I think there's some math. Yeah, I mean, that's obviously what we're talking about all the time here, Ryan. I mean, you know, I share some concern. Am I truly worried? I actually think that with slower growth, which we will likely see again because we're comping off some COVID numbers, right? There's a little bit of a nuance there. Yeah, I would expect slower growth in the portfolio. I think I've said publicly too, we would expect, you know, defaults broadly will go up. That being said, we've always been able to manage those aspects of the company, better than most. We feel pretty confident. Yeah, I mean, I share your forecast for probably not as rosy a back half of the year as we've seen for the first four to six months of this year and probably a little bit tougher sledding. You know, again, a traditional credit cycle where to Casey's question, we can be out early. You know, we can be proactive with companies expecting a weaker second half. It really doesn't keep me up at night. I mean, that's kind of what we do here during periods of, you know, less certainty and more volatility is we obviously manage credit. We try to minimize non-accruals and losses, and we push forward. I share your concern, and others. Okay. I appreciate the follow-up question. Yeah. Thanks, Ryan. This concludes our question and answer session, and I'd like to turn the conference back over to Mr. Kipp deVeer for any closing remarks. Oh, no, just thanks for everybody attending. We're happy with the quarter and hope you enjoy the month of August and get some time with your friends and your families because I think it's gonna be an interesting one as we get positioned here for September and beyond. Thanks again for attending today. 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 August 9th, 2022 at 5 P.M. Eastern Time to domestic callers by dialing 866-813-94303 and to international callers by dialing +44 20 4525 0658. For all replays, please refer to conference number 715312. An archived replay will also be available on a webcast link located on the homepage of the Investor Resources section of Ares Capital website. Thank you for joining.