Ares Management Corporation · NYSE:ARES
Ares Management — Q1 2024 Earnings Presentation
46 slides from Ares Management's earnings presentation, May 2, 2024
Slide 1: Earnings Presentation First Quarter 2024
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 2024 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 (“Aresˮ) (NYSE: ARES) for the benef
Slide 3: First 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 Assets Under Management Q1-24 Financial Results Corporate Actions Recent Developments First Quarter 2024 Highlight
Slide 4: Q1 2024 Gross Capital Raised
4 $ in billions Q1 2024 Commentary Credit Group U.S. Direct Lending $4.0 Equity and debt commitments to various funds, including debt commitments of $2.0 billion and equity commitments of $0.8 billion for our third U.S. senior direct lending fund Business Development Companies 3.2 Capital raised by
Slide 5: Assets Under Management
5 Q1-23 Q4-23 Q1-24 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 March 31, 2024 was $428.3 billion, an increase of 19% from prior year(1) • The
Slide 6: Perpetual Capital
6 Q1-23 Q4-23 Q1-24 $0.3 Perpetual Capital Perpetual Capital AUM Perpetual Capital as of March 31, 2024 was $109.2 billion, an increase of 14% from prior year • The increase of $13.8 billion was primarily driven by: ◦ commitments to certain funds and SMAs in our U.S. direct lending and alternative c
Slide 7: AUM and Management Fees by Type
7 8% 7% 6% 5% 62% 12% 26% 5% 9% 5% 50% 5% 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, 2024: • 88% of assets under management were perpetual capital or long-dated funds • 95% of managemen
Slide 8: Available Capital and AUM Not Yet Paying Fees
8 Q1-23 Q4-23 Q1-24 Available Capital and AUM Not Yet Paying Fees Available Capital as of March 31, 2024 was $114.6 billion, an increase of 29% from prior year • The increase of $26.0 billion was primarily driven by: ◦ commitments to the U.S. and European direct lending and alternative credit strate
Slide 9: AUM Not Yet Paying Fees Available for Future Deployment
9 $64.6 $11.5 $1.3 $57.2 $4.1 $1.5 $1.8 AUM Not Yet Paying Fees Available for Future Deployment AUM Not Yet Paying Fees As of March 31, 2024, AUM Not Yet Paying Fees includes $64.6 billion of AUM available for future deployment that could generate approximately $621.5 million in potential incrementa
Slide 10: Incentive Eligible AUM and Incentive Generating AUM
10 Q1-23 Q4-23 Q1-24 $15.8 Incentive Eligible AUM and Incentive Generating AUM ($ in billions) ($ in billions) Credit(3) Real Assets Private Equity Secondaries(3) Other Businesses Total Incentive Generating AUM $81.8 $16.2 $16.1 $7.7 $0.7 $122.5 + Uninvested IEAUM 60.3 9.6 3.9 7.5 0.5 81.8 + IEAUM b
Slide 11: Capital Deployment
11 $16.4 $1.0 $0.1 $0.5 $0.6 Q1-24 Gross Capital Deployment Capital Deployment ($ in billions) (2) Capital Deployment in Drawdown Funds ($ in billions) Total Gross Capital Deployment during Q1-24 was $18.6 billion compared to $12.2 billion during Q1-23 • Deployment by our drawdown funds was $9.4 bil
Slide 12: GAAP Statements of Operations
12 Three months ended March 31, $ in thousands, except share data 2024 2023 Revenues Management fees $687,692 $600,516 Carried interest allocation (32,478) 151,488 Incentive fees 8,667 8,923 Principal investment income 7,050 22,758 Administrative, transaction and other fees 36,432 29,677 Total reven
Slide 13: RI and Other Measures Financial Summary
13 RI and Other Measures Financial Summary Three months ended March 31, LTM ended March 31, $ in thousands, except share data (and as otherwise noted) 2024 2023 % Change 2024 2023 % Change Management fees(1) $693,365 $602,619 15% $2,662,259 $2,272,226 17% Fee related performance revenues 3,717 3,871
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 2024 2023 2024 2023 Realized Income and Fee Related Earnings: Income before taxes $231,048 $241,122 $1,322,989 $590,619 Adjustments: Amortization of intangibles(1) 29,1
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) Alternative Credit 1.6% / 15.3% Opportunistic Credit 3.4% / 18.1% U.S. Senior Direct Lending 4.9% / 21.0% U.S. Junior Direct Lending 4.7% / 18.0% European Direct Lending 2.9% / 10.5% APAC Credit 7.2% / 38.4% Q1-24 / Q1-24 LTM gross returns(2) $ in thousands Q1-24 Q1-23 % Change Q1
Slide 17: Real Assets Group
17 Real Assets Group(1) Note: Past performance is not indicative of future results. Please refer to investment group highlights endnotes on slide 20 for additional information. • Management and other fees decreased by 5% for Q1-24 compared to Q1-23, primarily due to lower management fees from the re
Slide 18: Private Equity Group
18 Private Equity Group(1) Note: Past performance is not indicative of future results. Please refer to investment group highlights endnotes on slide 20 for additional information. • Management and other fees increased by 17% for Q1-24 compared to Q1-23, primarily driven by the acquisition of Crescen
Slide 19: Secondaries Group
19 Secondaries Group(1) Note: Past performance is not indicative of future results. Please refer to investment group highlights endnotes on slide 20 for additional information. • Management and other fees increased by 11% for Q1-24 compared to Q1-23 primarily driven by higher management fees from AP
Slide 20: Investment Group Highlights Endnotes
20 The tables for each of the investment group highlights on slides 16-19 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 slide 25 for complete financial results. Cre
Slide 21: Realized Income per Share Data
21 Realized Income per Share Data Three months ended March 31, $ in thousands, except share data 2024 2023 After-tax Realized Income Realized Income before taxes $289,156 $254,292 Entity level foreign, state and local taxes (5,908) (5,282) Realized Income before corporate income taxes 283,248 249,01
Slide 22: Balance Sheet
22 64% 19% 16% 4% Substantial balance sheet value related to investments primarily in Ares managed vehicles and net accrued performance income as of March 31, 2024 • Our balance sheet included $346.3 million in cash and cash equivalents and $3,046.2 million in debt obligations, including $975.0 mill
Slide 23: Corporate Data
23 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 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
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 $0
Slide 26: Weighted Average Shares
26 Weighted Average Shares 1. Represents proportional dilutive impact based upon the weighted average percentage of Ares Operating Group owned by Ares Management Corporation (62.32% and 60.14% as of March 31, 2024 and 2023, respectively). 2. Represents units exchangeable for shares of Class A common
Slide 27: AUM Roll-Forward by Segment
27 Credit • AUM increased by 24% from Q1-23, primarily driven by commitments to U.S. direct lending funds, our sixth European direct lending fund and Pathfinder II Real Assets • AUM remained relatively flat from Q1-23 as commitments for our fourth U.S. opportunistic real estate equity fund and our s
Slide 28: FPAUM Roll-Forward by Segment
28 Credit • FPAUM increased by 18% from Q1-23, primarily driven by deployment of capital in funds across U.S. and European direct lending, alternative credit and opportunistic credit strategies Real Assets • FPAUM remained relatively flat from Q1-23 as commitments for our fourth U.S. opportunistic r
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 $29.2 billion, $10.6 billion and $4.1 billion, respectively. ARCC’s wholly owned portfolio company, IHAM, an SEC- registered investment adviser, manages 21 vehicles as of March 31, 2024. SDLP is
Slide 30: Balance Sheet Investments by Strategy
30 Balance Sheet Investments by Strategy(1) $ in millions As of March 31, 2024 As of December 31, 2023 Credit Liquid Credit(2) $127.4 $127.3 Alternative Credit 43.3 37.8 Opportunistic Credit 44.8 42.8 U.S. Direct Lending 86.9 84.6 European Direct Lending 64.3 55.7 APAC Credit 17.0 32.9 Credit $383.7
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, 2024 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. Fund performance metrics for significant funds may be marked as “NMˮ as they may not be considered meaningful due to the limited time since the initial investment and/or early stage of capita
Slide 33: Significant Fund Performance Metrics (cont'd)
33 Note: Past performance is not indicative of future results. Fund performance metrics for significant funds may be marked as “NMˮ as they may not be considered meaningful due to the limited time since the initial investment and/or early stage of capital deployment. AUM and net returns are as of Ma
Slide 34: Significant Fund Performance Metrics Endnotes – Credit
34 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 are calculated using the fund’s NAV and assu
Slide 35: Significant Fund Performance Metrics Endnotes – Real Assets
35 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 share class. Shares of other classes may have lower r
Slide 36: Significant Fund Performance Metrics Endnotes – 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 – Secondaries
37 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’ sh
Slide 38: Supplemental Performance Metrics
38 Supplemental Performance Metrics Note: Past performance is not indicative of future results. AUM and net returns are as of March 31, 2024 unless otherwise noted. Please refer to supplemental performance metric endnotes on slide 40-41 for additional information. Return information presented may no
Slide 39: Supplemental Performance Metrics (cont'd)
39 Supplemental Performance Metrics (cont'd) The following table presents the performance data for commingled funds that were previously reported as significant funds: As of March 31, 2024 Year of Inception Original Capital Commitments Capital Invested to Date Realized Value(1) Unrealized Value(2) T
Slide 40: Supplemental Performance Metrics Endnotes
40 Supplemental Performance Metrics Endnotes Credit 1. For the non-opportunistic credit funds, realized value represent the sum of all cash distributions to all partners and if applicable, exclude tax and incentive distributions made to the general partner. For the opportunistic credit funds, realiz
Slide 41: Supplemental Performance Metrics Endnotes (cont'd)
41 Supplemental Performance Metrics Endnotes (cont’d) Real Assets (cont’d) 7. EF IV is made up of two parallel funds, one denominated in U.S. Dollars and one denominated in Euros. The gross and net MoIC presented in the table are for the Euro denominated parallel fund. The gross and net MoIC for the
Slide 42: Supplemental Performance Metrics Endnotes (cont'd)
42 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
Slide 43: Glossary
43 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 44: Glossary (cont'd)
44 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 45: Glossary (cont'd)
45 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 46: Glossary (cont'd)
46 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