Slide 1: Ares Management Corporation Reports Third Quarter Results
Ares Management Corporation Reports Third Quarter Results NEW YORK--Ares Management Corporation (NYSE:ARES) today reported its financial results for its third quarter ended September 30, 2023. GAAP net income attributable to Ares Management Corporation was $61.8 million for the quarter ended Septemb
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, private equity, real estate and infrastructure asset classes. We seek to provide
Slide 3: Earnings Presentation Third Quarter 2023
Earnings Presentation Third Quarter 2023
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 2023 Highlights
Third Quarter 2023 Highlights • Total Assets Under Management (“AUMˮ) of $394.9 billion • Total Fee Paying AUM (“FPAUMˮ) of $247.7 billion Assets Under • Available Capital of $104.6 billion Management • AUM Not Yet Paying Fees available for future deployment of $65.7 billion • Raised $21.9 billion i
Slide 6: Gross New Capital Commitments
Gross New Capital Commitments(1) $ in billions Q3 2023 Commentary Credit Group U.S. Direct Lending $9.2 Debt and equity commitments to various funds, including equity commitments of $6.5 billion and debt commitments of $2.0 billion for our third U.S. senior direct lending fund Business Development C
Slide 7: Assets Under Management
Assets Under Management AUM as of September 30, 2023 was $394.9 billion, an increase of 16% from prior year(1) • The increase of $53.5 billion was primarily driven by: ◦ commitments to U.S. direct lending funds, our sixth flagship European direct lending fund and Pathfinder II within Credit; and ◦ a
Slide 8: Perpetual Capital
Perpetual Capital Perpetual Capital as of September 30, 2023 was $103.7 billion, an increase of 17% from prior year • The increase of $14.8 billion was primarily driven by: ◦ commitments in our U.S. direct lending and alternative credit strategies, capital raised by ASIF and additional managed asset
Slide 9: AUM and Management Fees by Type
AUM and Management Fees by Type For the quarter ended September 30, 2023: • 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% 8% 7% 26% 6% 5% 87% 95% 50%
Slide 10: Available Capital and AUM Not Yet Paying Fees
Available Capital and AUM Not Yet Paying Fees Available Capital as of September 30, 2023 was $104.6 billion, an increase of 19% from prior year • The increase of $16.8 billion was primarily driven by: ◦ commitments to the U.S. and European direct lending and alternative credit strategies AUM Not Yet
Slide 11: AUM Not Yet Paying Fees
AUM Not Yet Paying Fees As of September 30, 2023, AUM Not Yet Paying Fees includes $65.7 billion of AUM available for future deployment that could generate approximately $647.4 million in potential incremental annual management fees(1) • The $65.7 billion of AUM Not Yet Paying Fees available for fut
Slide 12: Incentive Eligible AUM and Incentive Generating AUM
Incentive Eligible AUM and Incentive Generating AUM Incentive Eligible AUM as of September 30, 2023 was $233.4 billion, an increase of 18% from prior year • The increase of $35.7 billion was primarily driven by: ◦ commitments to funds across our U.S. and European direct lending and alternative credi
Slide 13: Capital Deployment
Capital Deployment Total Gross Capital Deployment during Q3-23 was $16.7 billion compared to $18.3 billion during Q3-22 • Deployment by our drawdown funds was $10.2 billion in Q3-23 compared to $12.7 billion in Q3-22 ◦ Of our drawdown funds, the most active investment strategies were U.S. and Europe
Slide 14: GAAP Statements of Operations
GAAP Statements of Operations Three months ended September 30, Nine months ended September 30, $ in thousands, except share data 2023 2022 2023 2022 Revenues Management fees $637,517 $548,458 $1,853,304 $1,546,350 Carried interest allocation (28,126) 192,186 541,828 417,779 Incentive fees 16,454 8,8
Slide 15: 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) 2023 2022 % Change 2023 2022 % Change Management fees(1) $643,649 $551,768 17% $1,868,020 $1,559,570 20% Fee related performance revenue
Slide 16: 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 2023 2022 2023 2022 Realized Income and Fee Related Earnings: Income (loss) before taxes $226,872 $(60,378) $849,963 $167,997 Adjustments: Amortization of
Slide 17: GAAP to Non-GAAP Reconciliation (cont'd)
GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis (cont'd) Three months ended September 30, Nine months ended September 30, $ in thousands 2023 2022 2023 2022 Performance income and net investment income reconciliation: Carried interest allocation $(28,126) $192,186 $541,828 $417,779
Slide 18: Credit Group
Credit Group(1) • Management and other fees increased by 22% for Q3-23 compared to Q3-22, primarily driven by deployment within U.S. and European direct lending and alternative credit. Management fees also increased due to commitments to SSG Fund VI, which generated $1.0 million of catch-up fees in
Slide 19: Private Equity Group
Private Equity Group(1) • Management and other fees increased by 8% for Q3-23 compared to Q3-22, primarily driven by deployment in ASOF II • Fee Related Earnings increased by 58% for Q3-23 compared to Q3-22, primarily driven by lower compensation and benefits and the increase in management fees • Re
Slide 20: Real Assets Group
Real Assets Group(1) • Management and other fees decreased by 3% for Q3-23 compared to Q3-22, primarily due to lower property-related fees from U.S. real estate equity funds in Q3-23, partially offset by higher management fees from deployment in IDF V and commitments to our fourth U.S. opportunistic
Slide 21: Secondaries Group
Secondaries Group(1) • Management and other fees decreased by 3% for Q3-23 compared to Q3-22, primarily driven by the timing of catch-up fees. Management fees in Q3-23 included catch-up fees of $2.2 million from our ninth real estate secondaries fund and Q3-22 included catch-up fees of $5.1 million
Slide 22: 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 2023 2022 2023 2022 After-tax Realized Income Realized Income before taxes $264,453 $243,442 $830,955 $712,704 Entity level foreign, state and local taxes (7,712) (4,328)
Slide 23: 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, 2023, our balance sheet included $311.8 million in cash and cash equivalents and $2,340.2 million in debt obligations, including $765.0 mil
Slide 24: Corporate Data
Corporate Data Board of Directors Executive Officers Research Coverage Investor Relations Contacts Michael Arougheti Michael Arougheti Autonomous Carl Drake Co-Founder, Chief Executive Officer Co-Founder, Chief Executive Officer Patrick Davitt Partner/Head of Public Markets and President (646) 561-6
Slide 25: Appendix
Appendix
Slide 26: Financial Details – Segments (Q3 2023)
Financial Details – Segments Three months ended September 30, 2023 Private Real Operations Credit Equity Assets Secondaries Management $ in thousands Group Group Group Group Other Group Total(1) Management fees $443,961 $56,447 $92,754 $42,949 $7,538 $— $643,649 Fee related performance revenues 44 —
Slide 27: Financial Details – Segments (Nine Months 2023)
Financial Details – Segments Nine months ended September 30, 2023 Private Real Operations Credit Equity Assets Secondaries Management $ in thousands Group Group Group Group Other Group Total(1) Management fees $1,272,273 $166,622 $285,463 $124,597 $19,065 $— $1,868,020 Fee related performance revenu
Slide 28: Weighted Average Shares
Weighted Average Shares Q3-23 Q3-22 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 186,218,638 186,218,638 175,631,144 175,631,144 Ares Operating Group Units exchangeable into shares of Class A comm
Slide 29: AUM Rollforward
AUM Rollforward Q3-23 AUM Rollforward $ in millions Credit Private Equity Real Assets Secondaries Other Total Q2-23 Ending Balance $250,141 $35,453 $64,771 $23,002 $4,206 $377,573 Net new par/equity commitments 13,459 47 1,158 361 1,201 16,226 Net new debt commitments 5,543 — — — — 5,543 Capital red
Slide 30: FPAUM Rollforward
FPAUM Rollforward Q3-23 FPAUM Rollforward $ in millions Credit Private Equity Real Assets Secondaries Other Total Q2-23 Ending Balance $161,751 $18,954 $41,134 $17,795 $2,775 $242,409 Commitments 2,174 — 569 383 1,197 4,323 Deployment/subscriptions/increase in leverage 5,354 553 1,203 10 102 7,222 C
Slide 31: AUM and FPAUM by Strategy
AUM and FPAUM by Strategy As of September 30, 2023 $ in billions AUM % AUM FPAUM % FPAUM Credit Liquid Credit $45.9 17% $44.0 26% Alternative Credit 32.1 12 21.5 13 U.S. Direct Lending(1) 117.7 44 63.4 38 European Direct Lending 61.3 23 32.5 19 Asia Credit 11.6 3 5.6 4 Other 0.3 1 — — Credit $268.9
Slide 32: Balance Sheet Investments by Strategy
Balance Sheet Investments by Strategy(1) $ in millions As of September 30, 2023 As of December 31, 2022 Credit Liquid Credit(2) $119.7 $93.0 Alternative Credit 55.9 54.6 U.S. Direct Lending 73.7 111.9 European Direct Lending 40.6 33.4 Asia Credit 25.9 18.7 Credit $315.8 $311.6 Private Equity Corpora
Slide 33: Significant Fund Performance Metrics
Significant Fund Performance Metrics The following table presents the performance data for the significant funds that are not drawdown funds: As of September 30, 2023 Returns(%) Quarter-to-Date Year-to-Date Since Inception(1) Year of ($ in millions) Inception AUM Gross Net Gross Net Gross Net Primar
Slide 34: Significant Fund Performance Metrics (cont'd)
Significant Fund Performance Metrics (cont’d) The following table presents the performance data for our significant drawdown funds: As of September 30, 2023 Original Capital MoIC IRR(%) Year of Capital Invested to Realized Unrealized Primary Investment ($ in millions) Inception AUM Commitments Date
Slide 35: Significant Fund Performance Metrics (cont'd)
Significant Fund Performance Metrics (cont’d) The following table presents the performance data for our significant drawdown funds (cont'd): As of September 30, 2023 Original Capital MoIC IRR(%) Year of Capital Invested to Realized Unrealized Primary Investment ($ in millions) Inception AUM Commitme
Slide 36: Significant Fund Performance Metrics Endnotes
Significant Fund Performance Metrics Endnotes Credit 1. Since inception returns are annualized. 2. Returns are time-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses. Net returns a
Slide 37: Significant Fund Performance Metrics Endnotes (cont'd)
Significant Fund Performance Metrics Endnotes (cont’d) Private Equity 1. Realized value represents the sum of all cash dividends, interest income, other fees and cash proceeds from realizations of interests in portfolio investments. Realized value excludes any proceeds related to bridge financings.
Slide 38: Significant Fund Performance Metrics Endnotes (cont'd)
Significant Fund Performance Metrics Endnotes (cont’d) Real Assets 1. Since inception returns are annualized. 2. 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 s
Slide 39: Significant Fund Performance Metrics Endnotes (cont'd)
Significant Fund Performance Metrics Endnotes (cont’d) Secondaries 1. Realized value represents the sum of all cash distributions to all limited partners and if applicable, exclude tax and incentive distributions made to the general partner. 2. Unrealized value represents the limited partners’ share
Slide 40: Supplemental Performance Metrics
Supplemental Performance Metrics The following table presents the performance data for a non-drawdown fund that was previously reported as a significant fund: As of September 30, 2023 Returns(%) Quarter-to-Date Year-to-Date Since Inception(1) Year of ($ in millions) Inception AUM Gross Net Gross Net
Slide 41: Supplemental Performance Metrics (cont'd)
Supplemental Performance Metrics (cont'd) The following table presents the performance data for commingled funds that were previously reported as significant funds: As of September 30, 2023 Original Capital MoIC IRR(%) Year of Capital Invested to Realized Unrealized Primary Investment ($ in millions
Slide 42: Supplemental Performance Metrics Endnotes
Supplemental Performance Metrics Endnotes Credit 1. Since inception returns are annualized. 2. Returns are time-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses. Gross returns do
Slide 43: Supplemental Performance Metrics Endnotes (cont'd)
Supplemental Performance Metrics Endnotes (cont’d) Private Equity (cont’d) 5. The gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the fund and the fund’s residual value at the end of the measurement period. Gross IRRs reflect returns to the fee-payi
Slide 44: Supplemental Performance Metrics Endnotes (cont'd)
Supplemental Performance Metrics Endnotes (cont’d) Secondaries 1. Realized value represents the sum of all cash distributions to all limited partners and if applicable, exclude tax and incentive distributions made to the general partner. 2. Unrealized value represents the limited partners' share of
Slide 45: Glossary
Glossary ARCC Part II Fees ARCC Part II Fees refers to fees from Ares Capital Corporation (NASDAQ: ARCC) (“ARCCˮ) that are paid in arrears as of the end of each calendar year when the cumulative aggregate realized capital gains exceed the cumulative aggregate realized capital losses and aggregate un
Slide 46: 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 47: Glossary (cont'd)
Glossary (cont’d) Net Inflows of Capital Net Inflows of Capital refers to net new commitments during the period, including equity and debt commitments and gross inflows into our open-ended managed accounts and sub-advised accounts, as well as new debt and equity issuances by our publicly-traded vehi
Slide 48: Glossary (cont'd)
Glossary (cont’d) Realized Income Realized Income or “RIˮ, a non-GAAP measure, is an operating metric used by management to evaluate performance of the business based on operating performance and the contribution of each of the business segments to that performance, while removing the fluctuations o