Ares Management Corporation · NYSE:ARES
Ares Management — Q1 2022 Earnings Presentation
46 slides from Ares Management's earnings presentation, Apr 28, 2022
Slide 1: Earnings Presentation First Quarter 2022
0 42 65 155 112 42 4 94 109 127 127 127 0 42 65 2 87 133 71 126 163 120 163 198 Credit Privat e Equ ity Real Esta te Strate gic Initi atives BUSINES S SECTOR PALETTE GENERA L PALE TTE Earnings Presentation First Quarter 2022 Exhibit 99.2
Slide 2: Important Notice
0 42 65 155 112 42 4 94 109 127 127 127 0 42 65 2 87 133 71 126 163 120 163 198 Credit Privat e Equ ity Real Esta te Strate gic Initi atives BUSINES S SECTOR PALETTE GENERA L PALE TTE 2 Important Notice This presentation is prepared for Ares Management Corporation (NYSE: ARES) for the benefit of its
Slide 3: First Quarter 2022 Highlights
0 42 65 155 112 42 4 94 109 127 127 127 0 42 65 2 87 133 71 126 163 120 163 198 Credit Privat e Equ ity Real Esta te Strate gic Initi atives BUSINES S SECTOR PALETTE GENERA L PALE TTE 3 Assets Under Management Financial Results Corporate Actions Recent Developments First Quarter 2022 Highlights 1. N
Slide 4: Gross New Capital Commitments
4 Gross New Capital Commitments(1) 1. Represents gross new capital commitments during the period presented, including equity and debt commitments and gross inflows into our open-ended managed accounts and sub-advised accounts. Commitments denominated in currencies other than U.S. dollar have been co
Slide 5: Assets Under Management
5 $91.6 $117.4 $121.4 $14.9 $16.7 $16.1 $14.5 $28.6 $36.1 $18.3 $18.1 $6.6 $6.8 $7.3 $127.6 $187.8 $199.0 Q1-21 Q4-21 Q1-22 Assets Under Management 1. AUM amounts include vehicles managed by Ivy Hill Asset Management, L.P., a wholly owned portfolio company of ARCC and an SEC-registered investment ad
Slide 6: Perpetual Capital
6 Perpetual Capital 1. Commingled funds refers to publicly managed funds, non-registered funds, illiquid funds and insurance strategies. 2. CLOs are a type of closed end vehicle. Perpetual Capital as of March 31, 2022 was $82.7 billion, an increase of 63% from prior year • The increase of $32.0 bill
Slide 7: AUM and Management Fees by Type
7 19% 6% 63% 12% 35% 6% 53% 6% AUM and Management Fees by Type 88% 1. Long-dated funds generally have a contractual life of five years or more at inception. For the quarter ended March 31, 2022: • 88% of assets under management were perpetual capital or long-dated funds • 94% of management fees were
Slide 8: Available Capital and AUM Not Yet Paying Fees
8 $33.7 $43.2 $42.9 $3.0 $6.8 $6.8 $1.8 $3.4 $7.6$1.3 $3.7 $1.7 $3.2 $3.7 $40.2 $57.9 $64.7 Q1-21 Q4-21 Q1-22 Available Capital and AUM Not Yet Paying Fees Available Capital as of March 31, 2022 was $92.4 billion, an increase of 63% from prior year • The increase of $35.6 billion was primarily drive
Slide 9: AUM Not Yet Paying Fees
9 $39.9 $6.2 $5.8 $3.5 $2.8 $58.2 $6.1 $0.4 AUM Not Yet Paying Fees Available for Future Deployment AUM Not Yet Paying Fees As of March 31, 2022, AUM Not Yet Paying Fees includes $58.2 billion of AUM available for future deployment which could generate approximately $557.0 million in potential incre
Slide 10: Incentive Eligible AUM and Incentive Generating AUM
10 Q1-21 Q4-21 Q1-22 Incentive Eligible AUM and Incentive Generating AUM ($ in billions) ($ in billions) Credit Private Equity Real Assets Secondary Solutions Strategic Initiatives Total Incentive Generating AUM $43.8 $20.9 $21.9 $6.0 $0.3 $92.9 + Uninvested IEAUM 38.7 10.7 10.6 7.4 4.0 71.4 + IEAUM
Slide 11: Capital Deployment
11 $11.0 $0.2 $3.6 $0.8$0.7 Q1-22 Gross Capital Deployment Capital Deployment(1) ($ in billions) (2) 1. Capital deployment figures include deployment from perpetual capital vehicles. Capital Deployment in Drawdown Funds ($ in billions) Total Gross Invested Capital during Q1-22 was $16.3 billion comp
Slide 12: GAAP Statements of Operations
12 Three months ended March 31, $ in thousands, except share data 2022 2021 Revenues Management fees $477,332 $320,273 Carried interest allocation 178,289 297,535 Incentive fees 16,422 2,820 Principal investment income 8,326 25,100 Administrative, transaction and other fees 34,630 12,660 Total reven
Slide 13: RI and Other Measures Financial Summary
13 RI and Other Measures Financial Summary 1. Includes Part I Fees of $50.8 million and $46.5 million for Q1-22 and Q1-21, respectively, and $50.8 million and $186.7 million for Q1-22 LTM and Q1-21 LTM, respectively. 2. Includes fee related performance compensation of $8.5 million and $1.2 million f
Slide 14: GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis
14 GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis Three months ended March 31, LTM ended March 31, $ in thousands 2022 2021 2022 2021 Realized Income and Fee Related Earnings: Income before taxes $161,309 $190,064 $1,036,935 $865,955 Adjustments: Amortization of intangibles 31,384
Slide 15: GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis (cont'd)
15 GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis (cont'd) Note: These tables reconcile consolidated carried interest allocation and incentive fees reported in accordance with GAAP to unconsolidated realized performance income and consolidated GAAP other income to unconsolidated re
Slide 16: Credit Group
16 Credit Group(1) 1. This table is a financial summary only and segment results are shown before the unallocated support costs of the Operations Management Group. Please refer to “Financial Details - Segmentsˮ on slide 25 for complete financial results. 2. Performance for the U.S. senior direct len
Slide 17: Private Equity Group
17 Private Equity Group(1) Note: Past performance is not indicative of future results. The Private Equity Group had ~85 investment professionals, ~45 portfolio companies and ~10 active funds and related co-investment vehicles as of March 31, 2022. 1. This table is a financial summary only and segmen
Slide 18: Real Assets Group
18 Real Assets Group(1) Note: Past performance is not indicative of future results. The Real Assets Group had ~250 investment professionals, ~510 properties, ~45 infrastructure and power assets and ~60 active funds and related co-investment vehicles as of March 31, 2022. 1. This table is a financial
Slide 19: Secondary Solutions
19 Secondary Solutions(1) Note: Past performance is not indicative of future results. The Secondary Solutions Group had ~70 investment professionals, ~855 limited partnership interests and ~65 active funds and related co-investment vehicles as of March 31, 2022. 1. This table is a financial summary
Slide 20: Strategic Initiatives
20 Strategic Initiatives(1) • Management and other fees increased by 7% for Q1-22 compared to Q1-21, primarily due to higher management fees from SLO III, driven by additional deployment • Fee Related Earnings decreased by 13% for Q1-22 compared to Q1-21, primarily driven by higher compensation and
Slide 21: Realized Income per Share Data
21 Realized Income per Share Data 1. Ares had 12,400,000 shares of 7% Series A Preferred Stock outstanding as of March 31, 2022. 2. Amount represents the current corporate taxes paid by Ares for the periods presented and exclude the effects for Q1-22 and Q1-21, of $5.1 million and $22.0 million, res
Slide 22: Balance Sheet
22 29% 41% 24% 6% Substantial balance sheet value related to investments primarily in Ares managed vehicles and net accrued performance income • As of March 31, 2022, our balance sheet included $346.0 million in cash and cash equivalents and $1,942.6 million in debt obligations, including $370.0 mil
Slide 23: Corporate Data
23 Corporate Data Board of Directors Michael Arougheti Co-Founder, Chief Executive Officer and President of Ares Antoinette Bush Executive Vice President and Global Head of Government Affairs of News Corp Kipp deVeer Head of Credit Group Paul G. Joubert Founding Partner of EdgeAdvisors and Investing
Slide 24: Appendix
0 42 65 155 112 42 4 94 109 127 127 127 0 42 65 2 87 133 71 126 163 120 163 198 Credit Private Equity Real Estate Strategic Initiative s BUSINESS SECTOR PALETTE GENERAL PALETTE Appendix 5
Slide 25: Financial Details – Segments
25 Financial Details – Segments 1. Includes results of the reportable segments on a combined basis together with the Operations Management Group. Please refer to “GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basisˮ on slides 14-15. 2. Includes fee related performance compensation of $8
Slide 26: Weighted Average Shares
26 Weighted Average Shares 1. Represents units exchangeable for shares of Class A common stock on a one-for-one basis. 2. We apply the treasury stock method to determine the dilutive weighted-average common shares represented by our restricted units to be settled in shares of Class A common stock an
Slide 27: AUM Rollforward
27 AUM Rollforward Credit • AUM increased by 30% from Q1-21, primarily driven by new commitments to U.S. and European direct lending, including closings for ACE V, SDL II and PCS II, to alternative credit strategies and by issuances of new CLOs in the syndicated loans strategy Private Equity • AUM i
Slide 28: FPAUM Rollforward
28 FPAUM Rollforward Credit • FPAUM increased by 33% from Q1-21, primarily driven by deployment in U.S. and European direct lending and alternative credit funds paid on invested capital and by issuances of new CLOs in the syndicated loans strategy Private Equity • FPAUM increased by 8.7% from Q1-21,
Slide 29: AUM and FPAUM by Strategy
29 AUM and FPAUM by Strategy 1. AUM includes ARCC, IHAM and Senior Direct Lending Program ("SDLP") AUM of $25.3 billion, $8.6 billion and $3.4 billion, respectively. ARCC’s wholly owned portfolio company, IHAM, an SEC- registered investment adviser, manages 20 vehicles and serves as the sub-manager
Slide 30: Balance Sheet Investments by Strategy
30 Balance Sheet Investments by Strategy(1) $ in millions March 31, 2022 December 31, 2021 Credit Syndicated Loans(2) $101.3 $103.8 Multi-Asset Credit 11.8 12.0 Alternative Credit 35.7 27.5 U.S. Direct Lending 111.4 116.8 European Direct Lending 33.2 33.0 Credit $293.4 $293.1 Private Equity Corporat
Slide 31: Significant Fund Performance Metrics
31 Significant Fund Performance Metrics The following table presents the performance data for the significant funds that are not drawdown funds: Note: Past performance is not indicative of future results. AUM and net returns are as of March 31, 2022 unless otherwise noted. The above table includes f
Slide 32: Significant Fund Performance Metrics (cont'd)
32 Significant Fund Performance Metrics (cont’d) Note: Past performance is not indicative of future results. AUM and net returns are as of March 31, 2022 unless otherwise noted. The above table includes fund performance metrics for significant funds which includes commingled funds that contributed a
Slide 33: Significant Fund Performance Metrics (cont'd)
33 Note: Past performance is not indicative of future results. AUM and net returns are as of March 31, 2022 unless otherwise noted. The above table includes fund performance metrics for significant funds which includes commingled funds that contributed at least 1% of total management fees or compris
Slide 34: Significant Fund Performance Metrics (cont'd)
34 Note: Past performance is not indicative of future results. AUM and net returns are as of March 31, 2022 unless otherwise noted. The above table includes fund performance metrics for significant funds which includes commingled funds that contributed at least 1% of total management fees or compris
Slide 35: Significant Fund Performance Metrics Endnotes – Credit
35 Credit 1. 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. 2. Since inception returns are annualized. 3. Net returns are calculated using the fund's NAV and a
Slide 36: Significant Fund Performance Metrics Endnotes (cont'd) Private Equity
36 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 financing
Slide 37: Significant Fund Performance Metrics Endnotes – Real Assets
37 Real Assets 1. 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. 2. Since inception returns are annualized. 3. Returns are shown for institutional share class.
Slide 38: Significant Fund Performance Metrics Endnotes – Strategic Initiatives
38 Strategic Initiatives 1. Realized value represents the sum of all cash distributions to all partners and if applicable, exclude tax and incentive distributions made to the general partner. 2. Unrealized value represents the fund's NAV reduced by the accrued incentive allocation, if applicable. Th
Slide 39: Supplemental Performance Metrics
39 Supplemental Performance Metrics The following table presents the performance data for commingled funds that were previously reported as significant funds: As of March 31, 2022 Year of Inception Original Capital Commitments Capital Invested to Date Realized Value(1) Unrealized Value(2) Total Valu
Slide 40: Supplemental Performance Metrics Endnotes
40 Supplemental Performance Metrics Endnotes Private Equity 1. Realized proceeds represent the sum of all cash dividends, interest income, other fees and cash proceeds from realizations of interests in portfolio investments. Realized proceeds excludes any proceeds related to bridge financings. 2. Un
Slide 41: Supplemental Performance Metrics Endnotes (cont'd) Real Assets
41 Supplemental Performance Metrics Endnotes (cont’d) Real Assets 1. For the infrastructure opportunities funds, realized proceeds represent the sum of all cash dividends, interest income, other fees and cash proceeds from realizations of interests in portfolio investments. Realized proceeds exclude
Slide 42: Supplemental Performance Metrics Endnotes (cont'd) Strategic Initiatives
42 Supplemental Performance Metrics Endnotes (cont’d) Strategic Initiatives 1. Realized value represents the sum of all cash distributions to all partners and if applicable, exclude tax and incentive distributions made to the general partner. 2. Unrealized value represents the fund's NAV reduced by
Slide 43: Glossary
43 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
Slide 44: Glossary (cont'd)
44 Glossary (cont’d) Fee Related Earnings Fee Related Earnings or “FREˮ, a non-GAAP measure, is used to assess core operating performance by determining whether recurring revenue, primarily consisting of management fees and fee related performance revenues, is sufficient to cover operating expenses
Slide 45: Glossary (cont'd)
45 Glossary (cont’d) Operations Management Group In addition to our operating segments, we have an Operations Management Group (the “OMGˮ) that consists of shared resource groups to support our reportable segments by providing infrastructure and administrative support in the areas of accounting/fina
Slide 46: Glossary (cont'd)
46 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 fluctuation