Slide 1: Fiscal Year 2018 Fourth Quarter and Full Year Results
Fiscal Year 2018 Fourth Quarter and Full Year Results Earnings Presentation - June 7, 2018
Slide 2: Today's Speakers
Today’s Speakers Mario Giannini Erik Hirsch Randy Stilman Chief Executive Officer Vice Chairman Chief Financial Officer Jeff Meeker Demetrius Sidberry Chief Client Officer Head of Investor Relations Page 2
Slide 3: Period Highlights
Period Highlights • Total asset footprint (assets under management/advisement) reached a record Business amount of approximately $451 billion, growing 32% compared to March 31, 2017 Performance • Assets under management and fee-earning assets under management were approximately $54 billion and $31 b
Slide 4: Growing Asset Footprint & Influence
Growing Asset Footprint & Influence Total Assets Under Management/Advisement ($B)1 $451B AUM & AUA $500 Y-o-Y Growth Q-o-Q Growth $54 $50 AUA: 32% AUA: 6% $400 AUM: 28% AUM: 7% $397 % R: 21 $40 $374 CAG $300 $35 $32 $292 $200 $30 $24 $205 $22 $189 $16 $19 $11 $13 $147 $147 $100 $129 $7 $79 $95 $81 $
Slide 5: AUM Growth
AUM Growth AUM AUA Customized Separate Specialized Advisory Accounts Funds Services Diverse mix of existing and Select funds in market: Typically larger clients with prospective clients seeking to • Co-investment fund wide-ranging mandates; further or establish relationship opportunity set continues
Slide 6: Fee-Earning AUM Driving Revenues
Fee-Earning AUM Driving Revenues Fee-earning AUM growth continues... Total Fee-Earning Assets Under Management ($B) Total Management Fee Revenues as a % of Average FEAUM $40 0.55% 0.56% 0.57% 0.56% $35 $31 $30 CAGR: 13% $27 $10 $25 $24 $22 $9 $20 $19 $7 $6 $5 $21 $15 $18 $10 $16 $17 $14 $5 $0 Mar-14
Slide 7: Capital Allocation Strategy
Capital Allocation Strategy Growth Opportunities Debt Paydown Dividend Philosophy • New geographies • Conservative balance • Paid $0.70 in fiscal 2018 sheet of <1x debt to • New strategies • Fiscal 2019 target of Adjusted EBITDA $0.85, up 21% year- • Technology over-year • Talent acquisition Page 7
Slide 8: The Client Partnership
The Client Partnership The Partnership Relationship Management Client Staff Client Service & Trustees The Platform Monitoring & Legal & Compliance Research Investment Teams Reporting • Relationship Management Team is a partner and can serve as extension of staff depending on a client’s needs • Clien
Slide 9: Focused on Long-Term Performance
Focused on Long-Term Performance Hamilton Lane Private Markets Index Annualized Time-Weighted Return (as of 12/31/17) Strategy 1 Year 3 Year 5 Year 10 Year 15 Year All Private Markets1 16.5% 10.5% 12.0% 7.8% 12.6% All Equity Strategies 20.3% 12.9% 14.5% 9.6% 13.7% Developed Markets Buyout 22.3% 14.2
Slide 10: Client Observations - Drivers of Growth
Client Observations - Drivers of Growth Additional Re-ups to maintain commitments to New entrants to the Long-term allocation targets reach allocation private markets outperformance targets Page 10
Slide 11: Financial Highlights
Financial Highlights
Slide 12: Consolidated Revenues
Consolidated Revenues Strong revenue growth across management and advisory fees and incentive fees Management and Advisory Fees YTD Long-Term Growth Y-o-Y Growth: 13% 200 CAGR: 12% • Represented an average of 90% of total revenues over the USD in Millions $195 $195 past five fiscal years $173 150 •
Slide 13: Consolidated Earnings
Consolidated Earnings Profitability stable and growing Net Income Attributable to HLI YTD Long-Term Growth USD in Millions • $13M in net income attributable to HLI for the quarter $1 $17 N/A $17 FY17 FY18 FY13 FY18 Adjusted EBITDA1 YTD Long-Term Growth Y-o-Y Growth: 60% CAGR: 19% USD in Millions $13
Slide 14: Other Key Items
Other Key Items Strong balance sheet with investments in our own products and a modest amount of leverage... Investments $150 • Vast majority of our investments are those made USD in Millions $120 $137 $120 alongside our clients $90 $103 $103 $78 $92 • For 3/31/18, the total investment balance consi
Slide 15: Fiscal Year 2018 Fourth Quarter and Full Year Results
Fiscal Year 2018 Fourth Quarter and Full Year Results Earnings Presentation - June 7, 2018
Slide 16: Appendix
Appendix
Slide 17: Condensed Consolidated Statements of Income (Unaudited)
Condensed Consolidated Statements of Income (Unaudited) Three Months Ended March 31, Year Ended March 31, (Dollars in thousands except share and per share amounts) 2017 2018 % Change 2017 2018 % Change Revenues Management and advisory fees $46,401 $48,704 5% $172,674 $195,030 13% Incentive fees 278
Slide 18: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended March 31, Year Ended March 31, (Dollars in thousands except share and per share amounts) 2017 2018 % Change 2017 2018 % Change Adjusted EBITDA Management and advisory fees $46,401 $48,704 5% $172,674 $195,030 13% Total expenses 27,619 33,247 20% 103,705
Slide 19: Management and Advisory Fees
Management and Advisory Fees Three Months Ended March 31, Year Ended March 31, (Dollars in thousands) 2017 2018 % Change 2017 2018 % Change Management and advisory fees Customized separate accounts $18,467 $20,891 13% $71,261 $79,144 11% Specialized funds 21,268 19,569 (8)% 74,675 83,151 11% Advisor
Slide 20: Incentive Fees
Incentive Fees Three Months Ended March 31, Year Ended March 31, (Dollars in thousands) 2017 2018 % Change 2017 2018 % Change Incentive fees Secondary Fund II $183 $- (100)% $2,293 $2,239 (2)% Co-investment Fund II - 26,072 N/A - 40,650 N/A Other specialized funds 28 150 436% 4,202 1,012 (76)% Custo
Slide 21: Assets Under Management
Assets Under Management March 31, December 31, March 31, YoY % Change QoQ % Change (Dollars in millions) 2017 2017 2018 Assets under management / advisement Assets under management $41,794 $50,295 $53,679 28% 7% Assets under advisement 300,426 374,132 396,837 32% 6% Total assets under management / a
Slide 22: Condensed Consolidated Balance Sheets (Unaudited)
Condensed Consolidated Balance Sheets (Unaudited) (Dollars in thousands except share and per share amounts) March 31, 2017 March 31, 2018 Assets Cash and cash equivalents $32,286 $47,596 Restricted cash 1,849 1,787 Fees receivable 12,113 14,924 Prepaid expenses 2,593 2,301 Due from related parties 3
Slide 23: Condensed Consolidated Statements of Cash Flows (Unaudited)
Condensed Consolidated Statements of Cash Flows (Unaudited) Year Ended March 31, (Dollars in thousands) 2016 2017 2018 Operating activities Net income $55,852 $74,438 $106,297 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,027 1,915
Slide 24: Non-GAAP Reconciliation
Non-GAAP Reconciliation Reconciliation from Net Income Three Months Ended March 31, Year Ended March 31, (Dollars in thousands) 2017 2018 2017 2018 Net income attributable to Hamilton Lane Incorporated1 $612 $13,498 $612 $17,341 Income attributable to non-controlling interests in general partnership
Slide 25: Gross Leverage Ratio
Gross Leverage Ratio Year Ended March 31, (Dollars in thousands) 2017 2018 Principal amount of debt outstanding $86,100 $84,513 Adjusted EBITDA 83,031 132,586 Gross leverage ratio 1.0x 0.6x Page 25
Slide 26: Terms
Terms Adjusted EBITDA is our primary internal measure of profitability. We believe Adjusted EBITDA is useful to investors because it enables them to better evaluate the performance of our core business across reporting periods. Adjusted EBITDA represents net income excluding (a) interest expense on
Slide 27: Disclosures
Disclosures Some of the statements in this presentation may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Words such as “will,” “exp