Hamilton Lane Incorporated · NASDAQ:HLNE
Hamilton Lane — Q2 FY2019 Earnings Presentation
25 slides from Hamilton Lane's earnings presentation, Nov 6, 2018
Slide 1: Fiscal Year 2019 Second Quarter Earnings Presentation
Fiscal Year 2019 Second Quarter Earnings Presentation - November 6, 2018
Slide 2: Today's Speakers
Today’s Speakers Mario Giannini Hartley Rogers Erik Hirsch Chief Executive Officer Chairman Vice Chairman Randy Stilman Karen Greene Chief Financial Officer Head of Investor Relations Hamilton Lane | Global Leader in the Private Markets Page 2
Slide 3: Period Highlights
Period Highlights • Total asset footprint (assets under management/advisement) reached an amount of Business approximately $452 billion, growing 12% compared to September 30, 2017 Performance • Assets under management and fee-earning assets under management were approximately $58 billion and $32 bil
Slide 4: Abraaj-related Financial Exposure
Abraaj-related Financial Exposure Total Exposure to Abraaj: ~$382M AUM AUA Total AUM: ~$58B Total AUA: ~$394B Abraaj Exposure: ~$376M Abraaj Exposure: ~$5M % of Abraaj in Total AUM: <1% % of Abraaj in Total AUA: <0.01% Balance Sheet Total Balance Sheet Investments: ~$134M Investments in Abraaj: ~$0.
Slide 5: Growing Asset Footprint & Influence
Growing Asset Footprint & Influence Total Assets Under Management/Advisement ($B)1 $452B AUM & AUA $500 Y-o-Y Growth $58 AUA: 10% $50 $400 AUM: 21% $394 $40 $374 CAGR: 21% $300 $35 $32 $292 $200 $30 $24 $205 $22 $189 $16 $19 $11 $13 $147 $147 $100 $129 $7 $79 $95 $81 $6 $77 $36 $51 $0 2005 2006 2007
Slide 6: Fee-Earning AUM Driving Revenues
Fee-Earning AUM Driving Revenues Fee-earning AUM growth continues... Total Fee-Earning Assets Under Management ($B) ~8% YoY Growth $40 0.55% 0.56% 0.57% 0.56% 0.59%¹ 0.55%² $35 $31 $32 $30 3% CAGR: 1 $27 $29 $24 $10 $11 $25 $22 $9 $9 $20 $19 $7 $6 $15 $5 $10 $21 $21 $17 $18 $20 $16 $5 $14 $0 Mar-14
Slide 7: AUM Growth
AUM Growth AUM AUA Customized Specialized Advisory Separate Accounts Funds Services Diverse mix of existing and Select funds in market: Typically larger clients with wide- prospective clients seeking to • Co-investment fund ranging mandates which include further or establish relationship customized,
Slide 8: Financial Highlights
Financial Highlights
Slide 9: Consolidated Revenue
Consolidated Revenue Strong revenue growth across management and advisory fees and incentive fees Management and Advisory Fees YTD Long-Term Growth • Represented an average of 90% of total revenues over the past five Y-o-Y Growth: 6% CAGR: 12% 200 fiscal years USD in Millions $195 150 • Y-o-Y increa
Slide 10: Consolidated Earnings
Consolidated Earnings Profitability stable and growing Net Income Attributable to HLI YTD Long-Term Growth Y-o-Y Growth: 98% • Y-o-Y growth of 98% USD in Millions • $11M in net income attributable to HLI for the quarter $20 $10 N/A $17 Q2 FY18 Q2 FY19 FY13 FY18 Adjusted EBITDA1 YTD Long-Term Growth
Slide 11: Other Key Items
Other Key Items Strong balance sheet with investments in our own products and a modest amount of leverage... Investments $150 • Investment balance decreased year-to-date due to $120 $137 $134 $23M in distributions from the sales of two technology investments USD in Millions $120 $90 $103 $103 $92 $6
Slide 12: Share Repurchase Program
Share Repurchase Program • Board has authorized the repurchase of up to 6%, or up to $50 million, of Hamilton Lane Class A Common Stock • Authorization is in place for the next twelve months • The timing of purchases and the exact number of shares to be purchased will depend on market conditions • T
Slide 13: Fiscal Year 2019 Second Quarter
Fiscal Year 2019 Second Quarter Earnings Presentation - November 6, 2018
Slide 14: Appendix
Appendix
Slide 15: Condensed Consolidated Statements of Income (Unaudited)
Condensed Consolidated Statements of Income (Unaudited) Three Months Ended September 30, Six Months Ended September 30, (Dollars in thousands except share and per share amounts) 2017 2018 % Change 2017 2018 % Change Revenues Management and advisory fees 46,298 53,248 15% 97,982 104,227 6% Incentive
Slide 16: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended September 30, Six Months Ended September 30, (Dollars in thousands except share and per share amounts) 2017 2018 % Change 2017 2018 % Change Adjusted EBITDA Management and advisory fees $46,298 $53,248 15% $97,982 $104,227 6% Total expenses 28,703 34,46
Slide 17: Management and Advisory Fees
Management and Advisory Fees Three Months Ended September 30, Six Months Ended September 30, (Dollars in thousands) 2017 2018 % Change 2017 2018 % Change Management and advisory fees Customized separate accounts $19,609 $21,106 8% $38,393 $41,493 8% Specialized funds 19,244 22,736 18% 44,450 43,751
Slide 18: Incentive Fees
Incentive Fees Three Months Ended September 30, Six Months Ended September 30, (Dollars in thousands) 2017 2018 % Change 2017 2018 % Change Incentive fees Secondary Fund II $477 $142 (70)% $1,115 $583 (48)% Co-investment Fund II - 1,182 N/A - 6,340 N/A Other specialized funds 34 761 2,137% (6) 886 N
Slide 19: Assets Under Management
Assets Under Management (Dollars in millions) September 30, 2017 June 30, 2018 September 30, 2018 YoY % Change QoQ % Change Assets under management / advisement Assets under management $47,819 $56,684 $58,092 21% 1% Assets under advisement 356,774 414,796 394,083 10% (5)% Total assets under manageme
Slide 20: Condensed Consolidated Balance Sheets (Unaudited)
Condensed Consolidated Balance Sheets (Unaudited) (Dollars in thousands except share and per share amounts) March 31, 2018 September 30, 2018 Assets Cash and cash equivalents $47,596 $75,181 Restricted cash 1,787 2,176 Fees receivable 14,924 13,678 Prepaid expenses 2,301 2,855 Due from related parti
Slide 21: Condensed Consolidated Statements of Cash Flows (Unaudited)
Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended September 30, (Dollars in thousands) 2017 2018 Operating activities Net income $43,846 $55,675 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 910 1,141 Change
Slide 22: Non-GAAP Reconciliation
Non-GAAP Reconciliation Reconciliation from Net Income Three Months Ended September 30, Six Months Ended September 30, (Dollars in thousands) 2017 2018 2017 2018 Net income attributable to Hamilton Lane Incorporated $4,688 $11,222 $10,152 $20,067 Income attributable to non-controlling interests in g
Slide 23: Gross Leverage Ratio
Gross Leverage Ratio Twelve Months Ended (Dollars in thousands) March 31, 2018 September 30, 2018 Principal amount of debt outstanding $84,513 $73,125 Adjusted EBITDA 132,586 139,876 Gross leverage ratio 0.6x 0.5x Hamilton Lane | Global Leader in the Private Markets Page 23
Slide 24: Terms
Terms Adjusted EBITDA is used to measure our profitability including carried interest. 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) inter
Slide 25: 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