Ares Capital Corporation · NASDAQ:ARCC
Ares Capital — Q2 2024 Earnings Presentation
47 slides from Ares Capital's earnings presentation, Jul 30, 2024
Slide 1: Ares Management Corporation Reports Second Quarter 2024 Results
Ares Management Corporation Reports Second Quarter 2024 Results NEW YORK--Ares Management Corporation (NYSE:ARES) today reported its financial results for its second quarter ended June 30, 2024. GAAP net income attributable to Ares Management Corporation was $94.9 million for the quarter ended June
Slide 2: About Ares Management Corporation
About Ares Management Corporation Ares Management Corporation (NYSE: ARES) is a leading global alternative investment manager offering clients complementary primary and secondary investment solutions across the credit, real estate, private equity and infrastructure asset classes. We seek to provide
Slide 3: Earnings Presentation Second Quarter 2024
Earnings Presentation Second Quarter 2024
Slide 4: Important Notice
Important Notice This presentation is prepared for Ares Management Corporation (“Aresˮ) (NYSE: ARES) for the benefit of its public stockholders. This presentation is solely for information purposes in connection with evaluating the business, operations and financial results of Ares and certain of it
Slide 5: Second Quarter 2024 Highlights
Second Quarter 2024 Highlights • GAAP net income attributable to Ares Management Corporation of $94.9 million • GAAP basic and diluted earnings per share of Class A and non-voting common stock of $0.43 • GAAP management fees of $721.7 million Q2-24 • Unconsolidated management fees and other fees of
Slide 6: GAAP Statements of Operations
GAAP Statements of Operations Three months ended June 30, Six months ended June 30, $ in thousands, except share data 2024 2023 2024 2023 Revenues Management fees $721,681 $615,271 $1,409,373 $1,215,787 Carried interest allocation (51,167) 418,466 (83,645) 569,954 Incentive fees 47,734 7,950 56,401
Slide 7: RI and Other Measures Financial Summary
RI and Other Measures Financial Summary Three months ended June 30, Six months ended June 30, $ in thousands, except share data (and as otherwise noted) 2024 2023 % Change 2024 2023 % Change Management fees(1) $726,111 $621,752 17% $1,419,476 $1,224,371 16% Fee related performance revenues 21,567 85
Slide 8: Gross New Capital Commitments
Gross New Capital Commitments(1) $ in billions Q2 2024 Commentary Credit Group U.S. Direct Lending $8.9 Equity and debt commitments to various funds, including equity commitments of $4.4 billion and debt commitments of $2.0 billion for SDL III Business Development Companies 4.9 Capital raised by ASI
Slide 9: Assets Under Management
Assets Under Management AUM as of June 30, 2024 was $447.2 billion, an increase of 18% from prior year(1) • The increase of $69.6 billion was primarily driven by: ◦ commitments to SDL III, our sixth European direct lending fund and Pathfinder II within Credit and to our seventh corporate private equ
Slide 10: Perpetual Capital
Perpetual Capital Perpetual Capital as of June 30, 2024 was $116.3 billion, an increase of 17% from prior year • The increase of $16.8 billion was primarily driven by: ◦ commitments to certain funds and SMAs in our alternative credit and U.S. and European direct lending strategies; ◦ capital raised
Slide 11: AUM and Management Fees by Type
AUM and Management Fees by Type For the quarter ended June 30, 2024: • 87% of assets under management were perpetual capital or long-dated funds • 95% of management fees were earned from perpetual capital or long-dated funds AUM by Type Management Fees by Type 5% 13% 7% 7% 26% 7% 5% 87% 95% 49% 5% 1
Slide 12: Available Capital and AUM Not Yet Paying Fees
Available Capital and AUM Not Yet Paying Fees Available Capital as of June 30, 2024 was $122.1 billion, an increase of 27% from prior year • The increase of $26.3 billion was primarily driven by: ◦ commitments to the U.S. and European direct lending and alternative credit strategies AUM Not Yet Payi
Slide 13: AUM Not Yet Paying Fees
AUM Not Yet Paying Fees As of June 30, 2024, AUM Not Yet Paying Fees includes $70.8 billion of AUM available for future deployment that could generate approximately $674.7 million in potential incremental annual management fees(1) • The $70.8 billion of AUM Not Yet Paying Fees available for future d
Slide 14: Incentive Eligible AUM and Incentive Generating AUM
Incentive Eligible AUM and Incentive Generating AUM Incentive Eligible AUM as of June 30, 2024 was $259.5 billion, an increase of 17% from prior year • The increase of $37.8 billion was primarily driven by: ◦ commitments to funds across our U.S. and European direct lending, alternative credit and pr
Slide 15: Capital Deployment
Capital Deployment Total Gross Capital Deployment during Q2-24 was $26.4 billion compared to $15.2 billion during Q2-23 • Deployment by our drawdown funds was $13.0 billion in Q2-24 compared to $9.1 billion in Q2-23 ◦ Of our drawdown funds, the investment strategies with the highest deployment were
Slide 16: Credit Group
Credit Group(1) • Management and other fees increased by 19% for Q2-24 compared to Q2-23, primarily driven by deployment within our U.S. direct lending and alternative credit strategies • Fee Related Earnings increased by 23% for Q2-24 compared to Q2-23, primarily driven by the increase in managemen
Slide 17: Real Assets Group
Real Assets Group(1) • Management and other fees decreased by 3% for Q2-24 compared to Q2-23, primarily due to lower credit transaction fees from our infrastructure debt strategy in Q2-24, partially offset by higher management fees and catch-up fees in Q2-24 ◦ Management fees in Q2-24 included catch
Slide 18: Private Equity Group
Private Equity Group(1) • Management and other fees increased by 12% for Q2-24 compared to Q2-23, primarily driven by the acquisition of Crescent Point • Fee Related Earnings increased by 9% for Q2-24 compared to Q2-23, primarily driven by the increase in management fees • Realized Income decreased
Slide 19: Secondaries Group
Secondaries Group(1) • Management and other fees increased by 15% for Q2-24 compared to Q2-23, primarily driven by higher management fees from APMF and commitments for our third infrastructure secondaries fund ◦ Management fees in Q2-24 included catch-up fees of $0.9 million from our third infrastru
Slide 20: Supplemental Details
Supplemental Details
Slide 21: Financial Details – Segments
Financial Details – Segments Three months ended June 30, 2024 Real Private Operations Credit Assets Equity Secondaries Management $ in thousands Group Group Group Group Other Group Total(1) Management fees $534,664 $99,609 $33,572 $48,145 $10,121 $— $726,111 Fee related performance revenues 6,404 —
Slide 22: Financial Details – Segments
Financial Details – Segments Six months ended June 30, 2024 Real Private Operations Credit Assets Equity Secondaries Management $ in thousands Group Group Group Group Other Group Total(1) Management fees $1,045,630 $193,423 $68,505 $92,566 $19,352 $— $1,419,476 Fee related performance revenues 7,159
Slide 23: Realized Income per Share Data
Realized Income per Share Data Three months ended June 30, Six months ended June 30, $ in thousands, except share data 2024 2023 2024 2023 After-tax Realized Income Realized Income before taxes $363,158 $312,210 $652,314 $566,502 Entity level foreign, state and local taxes (8,002) (5,804) (13,910) (
Slide 24: Weighted-Average Shares
Weighted-Average Shares Q2-24 Q2-23 Common Shares, Common Shares, Total Shares As Adjusted(1) Total Shares As Adjusted(1) Weighted-average shares of Class A and non-voting common stock 196,186,922 196,186,922 182,999,515 182,999,515 Ares Operating Group Units exchangeable into shares of Class A comm
Slide 25: Balance Sheet
Balance Sheet Substantial balance sheet value related to investments primarily in Ares managed vehicles and net accrued performance income as of June 30, 2024 $ in millions As of June 30, 2024 Financial Strength Cash and cash equivalents $284.4 Metrics Term debt obligations 2,071.9 Amount drawn on $
Slide 26: Balance Sheet Investments by Strategy
Balance Sheet Investments by Strategy(1) $ in millions As of June 30, 2024 As of December 31, 2023 Credit Liquid Credit(2) $139.5 $127.3 Alternative Credit 43.3 37.8 Opportunistic Credit 41.8 42.8 U.S. Direct Lending 80.9 84.6 European Direct Lending 71.5 55.7 APAC Credit 11.3 32.9 Credit $388.3 $38
Slide 27: AUM Rollforward
AUM Rollforward Q2-24 AUM Rollforward $ in millions Credit Real Assets Private Equity Secondaries Other Businesses Total Q1-24 Ending Balance $308,639 $64,104 $24,476 $25,641 $5,479 $428,339 Net new par/equity commitments 11,200 2,491 15 866 1,097 15,669 Net new debt commitments 8,592 1,703 — — — 10
Slide 28: FPAUM Rollforward
FPAUM Rollforward Q2-24 FPAUM Rollforward $ in millions Credit Real Assets Private Equity Secondaries Other Businesses Total Q1-24 Ending Balance $189,826 $40,836 $12,565 $19,891 $3,998 $267,116 Commitments 6,081 1,224 — 606 1,081 8,992 Deployment/subscriptions/increase in leverage 7,185 865 25 40 1
Slide 29: AUM and FPAUM by Strategy
AUM and FPAUM by Strategy As of June 30, 2024 $ in billions AUM % AUM FPAUM % FPAUM Credit Liquid Credit $46.6 14% $44.8 23% Alternative Credit 38.4 12 26.1 13 Opportunistic Credit 13.2 4 8.4 4 U.S. Direct Lending(1) 141.2 44 76.0 39 European Direct Lending 71.5 22 36.5 19 APAC Credit 11.9 3 5.3 2 O
Slide 30: Credit Group Fund Performance Metrics
Credit Group Fund Performance Metrics The following table presents the performance data for funds that are not drawdown funds as of June 30, 2024: Returns(%) Quarter-to-Date Year-to-Date Since Inception(3) Year of Primary Investment ($ in millions) Inception AUM Gross Net Gross Net Gross Net Strateg
Slide 31: Credit Group Fund Performance Metrics (cont'd)
Credit Group Fund Performance Metrics (cont'd) The following table presents the performance data for our drawdown funds as of June 30, 2024: Original Capital MoIC IRR(%) Year of Capital Invested to Realized Unrealized Total Primary Investment ($ in millions) Inception AUM Commitments Date Value(7) V
Slide 32: Real Assets Group Fund Performance Metrics
Real Assets Group Fund Performance Metrics The following table presents the performance data for funds that are not drawdown funds as of June 30, 2024: Returns(%) Quarter-to-Date Year-to-Date Since Inception(3) Year of Primary Investment ($ in millions) Inception AUM Gross Net Gross Net Gross Net St
Slide 33: Private Equity Group Fund Performance Metrics
Private Equity Group Fund Performance Metrics The following table presents the performance data for our drawdown funds as of June 30, 2024: Original Capital MoIC IRR(%) Year of Capital Invested to Realized Unrealized Primary Investment ($ in millions) Inception AUM Commitments Date Value(4) Value(5)
Slide 34: Secondaries Group Fund Performance Metrics
Secondaries Group Fund Performance Metrics The following table presents the performance data for our drawdown funds as of June 30, 2024: Original Capital MoIC IRR(%) Year of Capital Invested to Realized Unrealized Primary Investment ($ in millions) Inception AUM Commitments Date Value(4) Value(5) To
Slide 35: Reconciliation and Disclosures
Reconciliation and Disclosures
Slide 36: Corporate Data
Corporate Data Board of Directors Executive Officers Research Coverage Investor Relations Contacts Michael Arougheti Michael Arougheti Autonomous Greg Mason Co-Founder, Chief Executive Officer Co-Founder, Chief Executive Officer Patrick Davitt Partner/Co-Head of Public Markets and President of Ares
Slide 37: GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis
GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis Three months ended June 30, Six months ended June 30, $ in thousands 2024 2023 2024 2023 Realized Income and Fee Related Earnings: Income before taxes $317,325 $381,969 $548,373 $623,091 Adjustments: Amortization of intangibles(1) 28,9
Slide 38: GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis (cont'd)
GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis (cont'd) Three months ended June 30, Six months ended June 30, $ in thousands 2024 2023 2024 2023 Performance income and net investment income reconciliation: Carried interest allocation $(51,167) $418,466 $(83,645) $569,954 Incentive
Slide 39: Investment Group Highlights and Fund Performance Endnotes
Investment Group Highlights and Fund Performance Endnotes The tables for each of the investment group highlights on slides 14-17 are a financial summary only and segment results are shown before the unallocated support costs of the Operations Management Group. Please refer to “Financial Details - Se
Slide 40: Investment Group Highlights and Fund Performance Endnotes (cont'd)
Investment Group Highlights and Fund Performance Endnotes (cont'd) Credit Group (cont’d) 13. ACE V is made up of four parallel funds, two denominated in Euros and two denominated in pound sterling: ACE V (E) Unlevered, ACE V (G) Unlevered, ACE V (E) Levered, and ACE V (G) Levered, and two feeder fun
Slide 41: Investment Group Highlights and Fund Performance Endnotes (cont'd)
Investment Group Highlights and Fund Performance Endnotes (cont'd) Real Assets Group (cont’d) 5. Performance is measured by total return, which includes income and appreciation and reinvestment of all distributions for the respective time period. Returns are shown for institutional share class. Shar
Slide 42: Investment Group Highlights and Fund Performance Endnotes (cont'd)
Investment Group Highlights and Fund Performance Endnotes (cont'd) Real Assets Group (cont’d) 17. IDF IV is made up of U.S. Dollar hedged, U.S. Dollar unhedged, Euro unhedged, Yen hedged parallel funds and a single investor U.S. Dollar parallel fund. The gross and net IRR and MoIC presented in the t
Slide 43: Investment Group Highlights and Fund Performance Endnotes (cont'd)
Investment Group Highlights and Fund Performance Endnotes (cont'd) Secondaries Group 1. The Secondaries Group had ~100 investment and investor relations professionals, ~815 underlying limited partnership interests and ~80 active funds and related co-investment vehicles as of June 30, 2024. 2. Perfor
Slide 44: Glossary
Glossary Ares Operating Group Ares Operating Group entities or an “AOG Entityˮ refers to, collectively, Ares Holdings, L.P. (“Ares Holdingsˮ) and any future Entities entity designated by our board of directors in its sole discretion as an Ares Operating Group entity. Ares Operating Group Ares Operat
Slide 45: Glossary (Cont'd)
Glossary (Cont'd) Fee Paying AUM Fee Paying AUM or “FPAUMˮ refers to the AUM from which we directly earn management fees. FPAUM is equal to the sum of all the individual fee bases of our funds that directly contribute to our management fees. For our funds other than CLOs, our FPAUM represents the am
Slide 46: Glossary (Cont'd)
Glossary (Cont'd) Management Fees Management Fees refers to fees we earn for advisory services provided to our funds, which are generally based on a defined percentage of fair value of assets, total commitments, invested capital, net asset value, net investment income, total assets or par value of t
Slide 47: Glossary (Cont'd)
Glossary (Cont'd) Perpetual Capital Perpetual Capital refers to the AUM of: (i) our publicly-traded vehicles, including ARCC, Ares Commercial Real Estate Corporation (NYSE: ACRE) (“ACREˮ) and Ares Dynamic Credit Allocation Fund, Inc. (NYSE: ARDC) (“ARDCˮ); (ii) our non-traded vehicles, including ASI