Ares Capital Corporation · NASDAQ:ARCC
Ares Capital — Q3 2024 Earnings Presentation
47 slides from Ares Capital's earnings presentation, Oct 30, 2024
Slide 1: Ares Management Corporation Reports Third Quarter 2024 Results
Ares Management Corporation Reports Third Quarter 2024 Results NEW YORK--Ares Management Corporation (NYSE:ARES) today reported its financial results for its third quarter ended September 30, 2024. GAAP net income attributable to Ares Management Corporation was $118.5 million for the quarter ended S
Slide 2: Conference Call and Webcast Information
Conference Call and Webcast Information Ares will host a conference call on November 1, 2024 at 9:00 a.m. (Eastern Time) to discuss third quarter results. All interested parties are invited to participate via telephone or the live webcast, which will be hosted on a webcast link located on the Home p
Slide 3: Earnings Presentation Third Quarter 2024
Earnings Presentation Third 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: Third Quarter 2024 Highlights
Third Quarter 2024 Highlights • GAAP net income attributable to Ares Management Corporation of $118.5 million • GAAP basic and diluted earnings per share of Class A and non-voting common stock of $0.55 • GAAP management fees of $753.6 million Q3-24 • Unconsolidated management fees and other fees of
Slide 6: GAAP Statements of Operations
GAAP Statements of Operations Three months ended September 30, Nine months ended September 30, $ in thousands, except share data 2024 2023 2024 2023 Revenues Management fees $753,597 $637,517 $2,162,970 $1,853,304 Carried interest allocation 277,651 (28,126) 194,006 541,828 Incentive fees 48,638 16,
Slide 7: RI and Other Measures Financial Summary
RI and Other Measures Financial Summary Three months ended September 30, Nine months ended September 30, $ in thousands, except share data (and as otherwise noted) 2024 2023 % Change 2024 2023 % Change Management fees(1) $757,262 $643,649 18% $2,176,738 $1,868,020 17% Fee related performance revenue
Slide 8: Gross New Capital Commitments
Gross New Capital Commitments(1) $ in billions Q3 2024 Commentary Credit Group U.S. Direct Lending $5.2 Equity and debt commitments to various funds, including final equity commitments of $1.8 billion and debt commitments of $1.0 billion for Ares Senior Direct Lending Fund III, L.P. (“SDL IIIˮ), bri
Slide 9: Assets Under Management
Assets Under Management AUM as of September 30, 2024 was $463.8 billion, an increase of 17% from prior year(1) • The increase of $68.9 billion was primarily driven by: ◦ commitments to SDL III and our sixth European direct lending fund within Credit and to AREOF IV within Real Assets; ◦ capital rais
Slide 10: Perpetual Capital
Perpetual Capital Perpetual Capital as of September 30, 2024 was $124.1 billion, an increase of 20% from prior year • The increase of $20.4 billion was primarily driven by: ◦ commitments to certain funds and SMAs in our alternative credit and U.S. and European direct lending strategies; ◦ capital ra
Slide 11: AUM and Management Fees by Type
AUM and Management Fees by Type For the quarter ended September 30, 2024: • 86% 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% 14% 7% 7% 25% 7% 5% 86% 95% 5%
Slide 12: Available Capital and AUM Not Yet Paying Fees
Available Capital and AUM Not Yet Paying Fees Available Capital as of September 30, 2024 was $125.3 billion, an increase of 20% from prior year • The increase of $20.7 billion was primarily driven by: ◦ commitments to the U.S. and European direct lending and corporate private equity strategies AUM N
Slide 13: AUM Not Yet Paying Fees
AUM Not Yet Paying Fees As of September 30, 2024, AUM Not Yet Paying Fees includes $74.1 billion of AUM available for future deployment that could generate approximately $721.5 million in potential incremental annual management fees(1) • The $74.1 billion of AUM Not Yet Paying Fees available for fut
Slide 14: Incentive Eligible AUM and Incentive Generating AUM
Incentive Eligible AUM and Incentive Generating AUM Incentive Eligible AUM as of September 30, 2024 was $267.3 billion, an increase of 15% from prior year • The increase of $33.9 billion was primarily driven by: ◦ commitments to funds across our U.S. and European direct lending, alternative credit a
Slide 15: Capital Deployment
Capital Deployment Total Gross Capital Deployment during Q3-24 was $29.6 billion compared to $16.7 billion during Q3-23 • Deployment by our drawdown funds was $13.7 billion in Q3-24 compared to $10.2 billion in Q3-23 ◦ 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 Q3-24 compared to Q3-23, primarily driven by deployment within our U.S. and European direct lending and alternative credit strategies. Management fees in Q3-23 included catch-up fees of $1.0 million from SSG Fund VI • Fee related perfo
Slide 17: Real Assets Group
Real Assets Group(1) • Management and other fees increased by 14% for Q3-24 compared to Q3-23, primarily due to higher management fees from commitments to AREOF IV, our second climate infrastructure fund and our fourth European value-add real estate equity fund. Management fees in Q3-24 included cat
Slide 18: Private Equity Group
Private Equity Group(1) • Management and other fees increased by 16% for Q3-24 compared to Q3-23, primarily driven by the acquisition of Crescent Point • Fee Related Earnings increased by 21% for Q3-24 compared to Q3-23, primarily driven by the increase in management fees • Realized Income increased
Slide 19: Secondaries Group
Secondaries Group(1) • Management and other fees increased by 12% for Q3-24 compared to Q3-23, primarily driven by higher management fees from APMF and commitments to our third infrastructure secondaries fund. Management fees in Q3-23 included catch-up fees of $2.2 million from LREF IX • Fee Related
Slide 20: Supplemental Details
Supplemental Details
Slide 21: Financial Details – Segments
Financial Details – Segments Three months ended September 30, 2024 Real Private Operations Credit Assets Equity Secondaries Management $ in thousands Group Group Group Group Other Group Total(1) Management fees $557,450 $105,733 $34,621 $48,084 $11,374 $— $757,262 Fee related performance revenues 41
Slide 22: Financial Details – Segments
Financial Details – Segments Nine months ended September 30, 2024 Real Private Operations Credit Assets Equity Secondaries Management $ in thousands Group Group Group Group Other Group Total(1) Management fees $1,603,080 $299,156 $103,126 $140,650 $30,726 $— $2,176,738 Fee related performance revenu
Slide 23: Realized Income per Share Data
Realized Income per Share Data Three months ended September 30, Nine months ended September 30, $ in thousands, except share data 2024 2023 2024 2023 After-tax Realized Income Realized Income before taxes $338,756 $264,453 $991,070 $830,955 Entity level foreign, state and local taxes (8,396) (7,712)
Slide 24: Weighted-Average Shares
Weighted-Average Shares Q3-24 Q3-23 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 200,724,068 200,724,068 186,218,638 186,218,638 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 September 30, 2024 $ in millions As of September 30, 2024 Financial Strength Cash and cash equivalents $350.1 Metrics Term debt obligations 2,072.4 Amount
Slide 26: Balance Sheet Investments by Strategy
Balance Sheet Investments by Strategy(1) $ in millions As of September 30, 2024 As of December 31, 2023 Credit Liquid Credit(2) $142.7 $127.3 Alternative Credit 24.6 37.8 Opportunistic Credit 41.3 42.8 U.S. Direct Lending 92.9 84.6 European Direct Lending 76.1 55.7 APAC Credit 10.0 32.9 Credit $387.
Slide 27: AUM Rollforward
AUM Rollforward Q3-24 AUM Rollforward $ in millions Credit Real Assets Private Equity Secondaries Other Businesses Total Q2-24 Ending Balance $323,123 $67,692 $24,580 $26,303 $5,534 $447,232 Acquisitions 362 — — — — 362 Net new par/equity commitments 8,801 1,604 105 688 2,043 13,241 Net new debt com
Slide 28: FPAUM Rollforward
FPAUM Rollforward Q3-24 FPAUM Rollforward $ in millions Credit Real Assets Private Equity Secondaries Other Businesses Total Q2-24 Ending Balance $197,088 $41,623 $12,265 $20,461 $4,412 $275,849 Acquisitions 244 — — — — 244 Commitments 5,214 1,153 — 507 1,946 8,820 Deployment/subscriptions/increase
Slide 29: AUM and FPAUM by Strategy
AUM and FPAUM by Strategy As of September 30, 2024 $ in billions AUM % AUM FPAUM % FPAUM Credit Liquid Credit $46.9 14% $46.2 23% Alternative Credit 40.6 12 27.8 14 Opportunistic Credit 13.4 4 7.4 4 U.S. Direct Lending(1) 147.9 44 80.9 39 European Direct Lending 74.4 22 37.8 18 APAC Credit 11.8 3 5.
Slide 30: Credit Group Fund Performance Metrics
Credit Group Fund Performance Metrics The following table presents the performance data for funds that are not drawdown funds as of September 30, 2024: Returns(%) Quarter-to-Date Year-to-Date Since Inception(3) Year of Primary Investment ($ in millions) Inception AUM Gross Net Gross Net Gross Net St
Slide 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 September 30, 2024: Original Capital MoIC IRR(%) Year of Capital Invested to Realized Unrealized Total Primary Investment ($ in millions) Inception AUM Commitments Date Value
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 September 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 N
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 September 30, 2024: Original Capital MoIC IRR(%) Year of Capital Invested to Realized Unrealized Primary Investment ($ in millions) Inception AUM Commitments Date Value(4) Val
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 September 30, 2024: Original Capital MoIC IRR(%) Year of Capital Invested to Realized Unrealized Primary Investment ($ in millions) Inception AUM Commitments Date Value(4) Value(
Slide 35: Reconciliation and Disclosures
Reconciliation and Disclosures
Slide 36: Corporate Data
Corporate Data Board of Directors Executive Officers Research Coverage Research Coverage (con’t) Michael Arougheti Michael Arougheti Autonomous TD Cowen Co-Founder, Chief Executive Officer Co-Founder, Chief Executive Officer Patrick Davitt Bill Katz (646) 561-6254 and President of Ares and President
Slide 37: GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis
GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis Three months ended September 30, Nine months ended September 30, $ in thousands 2024 2023 2024 2023 Realized Income and Fee Related Earnings: Income before taxes $327,106 $226,872 $875,479 $849,963 Adjustments: Amortization of intangib
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 September 30, Nine months ended September 30, $ in thousands 2024 2023 2024 2023 Performance income and net investment income reconciliation: Carried interest allocation $277,651 $(28,126) $194,006 $541,828
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) 16. EF V is made up of two parallel funds, one denominated in U.S. dollars and one denominated in Euros. The gross and net IRR and MoIC presented in the table are for the Euro denominated parallel fund. The
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, ~860 underlying limited partnership interests and ~80 active funds as of September 30, 2024. 2. Performance is measured by total ret
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