Ares Management Corporation · NYSE:ARES
Ares Management — Q3 2024 Earnings Presentation
45 slides from Ares Management's earnings presentation, Nov 1, 2024
Slide 1: Earnings Presentation Third Quarter 2024
Earnings Presentation Third Quarter 2024 Exhibit 99.2
Slide 2: Important Notice
2 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
Slide 3: Third Quarter 2024 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 Q3-24 Financial Results Assets Under Management Corporate Actions Recent Developments Third Quarter 2024 Highlight
Slide 4: GAAP Statements of Operations
4 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 16,454 105,039 33,327 Principal
Slide 5: Financial Summary
5 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 reven
Slide 6: Gross Capital Raised by Group
6 $ 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), bringing total equity commitments
Slide 7: Assets Under Management
7 Q3-23 Q2-24 Q3-24 Assets Under Management 1. AUM amounts include vehicles managed by Ivy Hill Asset Management, L.P., a wholly owned portfolio company of ARCC and a SEC-registered investment adviser (“IHAMˮ). AUM as of September 30, 2024 was $463.8 billion, an increase of 17% from prior year(1) •
Slide 8: Perpetual Capital
8 Q3-23 Q2-24 Q3-24 $0.5 Perpetual Capital Perpetual Capital AUM 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 E
Slide 9: AUM and Management Fees by Type
9 7% 7% 7% 5% 60% 14% 25% 5% 12% 5% 48% 5% AUM and Management Fees by Type 86% 1. Long-dated funds generally have a contractual life of five years or more at inception. For the quarter ended September 30, 2024: • 86% of assets under management were perpetual capital or long-dated funds • 95% of mana
Slide 10: Available Capital and AUM Not Yet Paying Fees
10 Q3-23 Q2-24 Q3-24 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 eq
Slide 11: AUM Not Yet Paying Fees Available for Future Deployment
11 $74.1 $10.0 $1.1 $66.1 $4.7 $1.6 $1.7 AUM Not Yet Paying Fees Available for Future Deployment 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 incre
Slide 12: Incentive Eligible AUM and Incentive Generating AUM
12 Q3-23 Q2-24 Q3-24 $17.5 Incentive Eligible AUM and Incentive Generating AUM ($ in billions) ($ in billions) Credit(3) Real Assets Private Equity Secondaries(3) Other Businesses Total Incentive Generating AUM $85.3 $16.2 $8.8 $9.0 $1.0 $120.3 + Uninvested IEAUM 65.1 11.2 3.8 7.5 0.6 88.2 + IEAUM b
Slide 13: Capital Deployment
13 $24.1 $2.8 $0.1 $1.4 $1.2 Q3-24 Gross Capital Deployment Capital Deployment ($ in billions) (2) Capital Deployment in Drawdown Funds ($ in billions) 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 bi
Slide 14: Credit Group
14 Note: Past performance is not indicative of future results. Please refer to the endnotes on slide 37 for additional information. Credit Group(1) Alternative Credit 2.7% / 8.9% $ in thousands Q3-24 Q3-23 % Change YTD-24 YTD-23 % Change Management and other fees $567,970 $477,811 19% $1,633,992 $1,
Slide 15: Real Assets Group
15 Note: Past performance is not indicative of future results. Please refer to the endnotes on slide 38 for additional information. Financial Summary and Highlights U.S. Real Estate Equity 1.7% / 5.1% Strategy Performance Highlights European Real Estate Equity 1.3% / (3.2)% Infrastructure Debt 2.6%
Slide 16: Private Equity Group
16 Corporate Private Equity 1.6% / 3.7% Note: Past performance is not indicative of future results. Please refer to the endnotes on slide 40 for additional information. Financial Summary and Highlights Strategy Performance Highlights Q3-24 / Q3-24 LTM gross returns(3) Private Equity Group(1) • Manag
Slide 17: Secondaries Group
17 Note: Past performance is not indicative of future results. Please refer to the endnotes on slide 41 for additional information. Financial Summary and Highlights Private Equity Secondaries (3.7)% / (6.0)% Strategy Performance Highlights Real Estate Secondaries (0.9)% / (5.7)% Q3-24 / Q3-24 LTM gr
Slide 18: Supplemental Details
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 Supplemental Details
Slide 19: Financial Details – Segments
19 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 35-36. 2. Includes fee related performance compensation of $3
Slide 20: Financial Details – Segments (Nine Months)
20 Nine months ended September 30, 2024 $ in thousands Credit Group Real Assets Group Private Equity Group Secondaries Group Other Operations Management Group Total(1) Management fees $1,603,080 $299,156 $103,126 $140,650 $30,726 $— $2,176,738 Fee related performance revenues 48,920 — — 20,633 — — 6
Slide 21: Realized Income per Share Data
21 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) (7,7
Slide 22: Weighted-Average Shares
22 Weighted-Average Shares 1. Represents proportional dilutive impact based upon the weighted average percentage of Ares Operating Group owned by Ares Management Corporation (64.14% and 61.03% as of September 30, 2024 and 2023, respectively). 2. Represents units exchangeable for shares of Class A co
Slide 23: Balance Sheet
23 Substantial balance sheet value related to investments primarily in Ares managed vehicles and net accrued performance income as of September 30, 2024 Balance Sheet 1. Unconsolidated investments includes $786.4 million of investments in Consolidated Funds that are eliminated upon consolidation for
Slide 24: Balance Sheet Investments by Strategy
24 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 $3
Slide 25: AUM Rollforward
25 Credit • AUM increased by 18% from Q3-23, primarily driven by commitments to SDL III, our sixth European direct lending fund and to our alternative credit strategy and by capital raised by our business development companies and AESIF Real Assets • AUM increased by 10% from Q3-23 primarily driven
Slide 26: FPAUM Rollforward
26 Credit • FPAUM increased by 17% from Q3-23, primarily driven by deployment of capital in funds across our U.S. and European direct lending and alternative credit strategies, by capital raised by our business development companies and commitments to CLOs within our liquid credit strategy Real Asse
Slide 27: AUM and FPAUM by Strategy
27 AUM and FPAUM by Strategy 1. AUM includes ARCC, IHAM and Senior Direct Lending Program ("SDLP") AUM of $30.8 billion, $10.6 billion and $3.8 billion, respectively. ARCC’s wholly owned portfolio company, IHAM, an SEC- registered investment adviser, manages 21 vehicles as of September 30, 2024. SDL
Slide 28: Credit Group Fund Performance Metrics
28 Credit Group Fund Performance Metrics The following table presents the performance data for funds that are not drawdown funds as of September 30, 2024: Note: Past performance is not indicative of future results. Return information presented may not reflect actual returns earned by investors in th
Slide 29: Credit Group Fund Performance Metrics (cont'd)
29 Credit Group Fund Performance Metrics (cont'd) Note: Past performance is not indicative of future results. Return information presented may not reflect actual returns earned by investors in the applicable fund. Fund performance metrics for significant funds may be marked as “NMˮ as they may not b
Slide 30: Real Assets Group Fund Performance Metrics
30 Note: Past performance is not indicative of future results. Return information presented may not reflect actual returns earned by investors in the applicable fund. Fund performance metrics for significant funds may be marked as “NMˮ as they may not be considered meaningful due to the limited time
Slide 31: Private Equity Group Fund Performance Metrics
31 Private Equity Group Fund Performance Metrics Note: Past performance is not indicative of future results. Return information presented may not reflect actual returns earned by investors in the applicable fund. Fund performance metrics for significant funds may be marked as “NMˮ as they may not be
Slide 32: Secondaries Group Fund Performance Metrics
32 Secondaries Group Fund Performance Metrics Note: Past performance is not indicative of future results. Return information presented may not reflect actual returns earned by investors in the applicable fund. Fund performance metrics for significant funds may be marked as “NMˮ as they may not be co
Slide 33: Reconciliation and Disclosures
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 Reconciliation and Disclosures
Slide 34: Corporate Data
34 Corporate Data Board of Directors Michael Arougheti Co-Founder, Chief Executive Officer and President of Ares Ashish Bhutani Former Chairman and Chief Executive Officer of Lazard Asset Management and Former Vice Chairman of Lazard Ltd Antoinette Bush Senior Advisor to News Corp Kipp deVeer Head o
Slide 35: GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis
35 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 intan
Slide 36: GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis (cont'd)
36 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 37: Investment Group Highlights and Fund Performance Endnotes
37 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 - Segmentsˮ on slides 19-20 for complete financial results.
Slide 38: Credit Group Endnotes (cont'd)
38 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 funds: ACE V (D) Levered and ACE V (Y) Unlevered. ACE V (E) Levered
Slide 39: Investment Group Highlights and Fund Performance Endnotes (cont'd)
39 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. S
Slide 40: Real Assets Group Endnotes (cont'd)
40 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 gross and net MoIC for the U.S. Dollar denominated parallel fun
Slide 41: Secondaries Group Endnotes
41 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 return, which includes income and appreciation and reinvestment of
Slide 42: Glossary
42 Glossary Ares Operating Group Entities Ares Operating Group entities or an “AOG Entityˮ refers to, collectively, Ares Holdings, L.P. (“Ares Holdingsˮ) and any future entity designated by our board of directors in its sole discretion as an Ares Operating Group entity. Ares Operating Group Unit Are
Slide 43: Glossary (Cont'd)
43 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
Slide 44: Glossary (Cont'd)
44 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 o
Slide 45: Glossary (Cont'd)
45 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