Ares Management Corporation · NYSE:ARES
Ares Management — Q1 2022 Earnings Presentation
48 slides from Ares Management's earnings presentation, May 2022
Slide 1: Ares Management Corporation Reports First Quarter 2022 Results
Ares Management Corporation Reports First Quarter 2022 Results NEW YORK--Ares Management Corporation (NYSE:ARES) today reported its financial results for its first quarter ended March 31, 2022. GAAP net income attributable to Ares Management Corporation was $45.9 million for the quarter ended March
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 First Quarter 2022
Earnings Presentation First Quarter 2022
Slide 4: Important Notice
Important Notice This presentation is prepared for Ares Management Corporation (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 Management Corporation (“A
Slide 5: First Quarter 2022 Highlights
First Quarter 2022 Highlights • Total Assets Under Management (“AUMˮ) of $325.0 billion • Total Fee Paying AUM (“FPAUMˮ) of $199.0 billion Assets Under • Available Capital of $92.4 billion Management • AUM Not Yet Paying Fees available for future deployment of $58.2 billion • Raised $13.7 billion in
Slide 6: Gross New Capital Commitments
Gross New Capital Commitments(1) $ in billions Q1 2022 Comments Credit Group U.S. Direct Lending $1.1 Primarily new and additional equity commitments to various funds ARCC and affiliates 1.7 Additional debt and equity commitments to ARCC and affiliates New and additional equity commitments to variou
Slide 7: Assets Under Management
Assets Under Management AUM as of March 31, 2022 was $325.0 billion, an increase of 57% from prior year(1) • The increase of $117.8 billion was primarily driven by: ◦ fundraising from SDL II and PCS II in U.S. direct lending, ACE V in European direct lending, our second special opportunities fund in
Slide 8: Perpetual Capital
Perpetual Capital Perpetual Capital as of March 31, 2022 was $82.7 billion, an increase of 63% from prior year • The increase of $32.0 billion was primarily driven by the acquisition of Black Creek in Real Assets and by fundraising in U.S. direct lending, European direct lending and alternative cred
Slide 9: AUM and Management Fees by Type
AUM and Management Fees by Type For the quarter ended March 31, 2022: • 88% of assets under management were perpetual capital or long-dated funds • 94% of management fees were earned from perpetual capital or long-dated funds AUM by Type Management Fees by Type 6% 12% 19% 35% 6% 88% 94% 53% 6% 63% P
Slide 10: Available Capital and AUM Not Yet Paying Fees
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 driven by: ◦ fundraising from SDL II, PCS II, and our second special opportunities fund; and ◦ the acquisitions of
Slide 11: AUM Not Yet Paying Fees
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 incremental annual management fees(1) • The $58.2 billion of AUM Not Yet Paying Fees available for future
Slide 12: Incentive Eligible AUM and Incentive Generating AUM
Incentive Eligible AUM and Incentive Generating AUM Incentive Eligible AUM as of March 31, 2022 was $191.8 billion, an increase of 54% from prior year • The increase of $67.4 billion was primarily driven by: ◦ capital raising across U.S. and European direct lending, alternative credit, corporate pri
Slide 13: Capital Deployment
Capital Deployment(1) Total Gross Invested Capital during Q1-22 was $16.3 billion compared to $12.9 billion during Q1-21 • Of the total amount, $11.0 billion was related to deployment by our drawdown funds compared to $8.9 billion for the same period in 2021 • Of our drawdown funds, the most active
Slide 14: GAAP Statements of Operations
GAAP Statements of Operations 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 fee
Slide 15: RI and Other Measures Financial Summary
RI and Other Measures Financial Summary Three months ended March 31, LTM ended March 31, $ in thousands, except share data (and as otherwise noted) 2022 2021 % Change 2022 2021 % Change (1) Management fees $482,921 $327,463 47% $1,790,735 $1,240,250 44% Fee related performance revenues 12,711 2,036
Slide 16: GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis
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 8,8
Slide 17: GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis (cont'd)
GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis (cont'd) Three months ended March 31, LTM ended March 31, $ in thousands 2022 2021 2022 2021 Performance income and net investment income reconciliation: Carried interest allocation $178,289 $297,535 $1,954,305 $1,034,019 Incentive fee
Slide 18: Credit Group
Credit Group(1) • Management and other fees increased by 29% for Q1-22 compared to Q1-21, primarily driven by deployment in funds in the U.S. and European direct lending strategies • Fee related performance revenues increased to $12.4 million for Q1-22 from $1.4 million for Q1-21, primarily in the U
Slide 19: Private Equity Group
Private Equity Group(1) • Management and other fees increased by 18% for Q1-22 compared to Q1-21, primarily due to higher management fees from ACOF VI, driven by additional commitments, and from ASOF, driven by additional deployment • Fee Related Earnings increased by 14% for Q1-22 compared to Q1-21
Slide 20: Real Assets Group
Real Assets Group(1) • Management and other fees increased by 99% for Q1-22 compared to Q1-21, primarily due to the acquisitions of Black Creek and Infrastructure Debt, and to management fees generated from ACIP, EPEP III and our sixth European real estate fund • Fee Related Earnings increased by 12
Slide 21: Secondary Solutions
Secondary Solutions(1) • On June 2, 2021, Ares completed the acquisition of Landmark, increasing AUM by $19.5 billion. Following the acquisition, Landmark’s results are presented within the newly formed segment named Secondary Solutions. The Secondary Solutions Group invests in secondary markets acr
Slide 22: Strategic Initiatives
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 ben
Slide 23: Realized Income per Share Data
Realized Income per Share Data Three months ended March 31, $ in thousands, except share data 2022 2021 After-tax Realized Income Realized Income before taxes $222,017 $136,793 Entity level foreign, state and local taxes (3,558) (3,261) (1) Series A Preferred Stock dividends — (5,425) Realized Incom
Slide 24: Balance Sheet
Balance Sheet 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 million
Slide 25: Corporate Data
Corporate Data Board of Directors Executive Officers Research Coverage Investor Relations Contacts Michael Arougheti Michael Arougheti Bank of America Merrill Lynch Carl Drake Co-Founder, Chief Executive Officer Co-Founder, Chief Executive Officer Craig Siegenthaler Partner/Head of Public Markets an
Slide 26: Appendix
Appendix
Slide 27: Financial Details – Segments
Financial Details – Segments Three months ended March 31, 2022 Private Real Secondary Operations Credit Equity Assets Solutions Strategic Management $ in thousands Group Group Group Group Initiatives Group Total(1) Management fees $303,159 $45,957 $72,487 $44,504 $16,814 $— $482,921 Fee related perf
Slide 28: Weighted Average Shares
Weighted Average Shares Q1-22 Q1-21 Common Shares, Common Shares, Total Shares As Adjusted(3) Total Shares As Adjusted(3) Weighted average shares of Class A and non-voting common stock 174,215,251 174,215,251 149,271,822 149,271,822 Ares Operating Group Units exchangeable into shares of Class A comm
Slide 29: AUM Rollforward
AUM Rollforward Q1-22 AUM Rollforward Secondary Strategic $ in millions Credit Private Equity Real Assets Solutions Initiatives Total Q4-21 Ending Balance $192,710 $33,404 $45,919 $22,119 $11,623 $305,775 Acquisitions — — 8,184 199 — 8,383 Net new par/equity commitments 4,159 570 3,058 1,080 1,184 1
Slide 30: FPAUM Rollforward
FPAUM Rollforward Q1-22 FPAUM Rollforward Secondary Strategic $ in millions Credit Private Equity Real Assets Solutions Initiatives Total Q4-21 Ending Balance $117,390 $16,689 $28,615 $18,364 $6,787 $187,845 Acquisitions — — 4,855 131 — 4,986 Commitments 2,250 — 2,184 697 1,464 6,595 Subscriptions/d
Slide 31: AUM and FPAUM by Strategy
AUM and FPAUM by Strategy As of March 31, 2022 $ in billions AUM % AUM FPAUM % FPAUM Credit Syndicated Loans $32.4 16% $30.3 25% High Yield 3.5 2 3.5 3 Multi-Asset Credit 5.7 3 5.2 4 Alternative Credit 18.6 9 11.1 9 U.S. Direct Lending(1) 88.4 45 47.2 39 European Direct Lending 48.3 25 24.1 20 Credi
Slide 32: Balance Sheet Investments by Strategy
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 $293.1 Private Equity Corporate P
Slide 33: Significant Fund Performance Metrics
Significant Fund Performance Metrics The following table presents the performance data for the significant funds that are not drawdown funds: As of March 31, 2022 Returns(%)(1) Quarter-to-Date Since Inception (2) ($ in millions) Year of Inception AUM Gross Net Gross Net Primary Investment Strategy C
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 March 31, 2022 Original Capital MOIC IRR(%) Year of Capital Invested Realized Unrealized Total Primary Investment ($ in millions) Inception AUM Commitments to Dat
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 March 31, 2022 Capital MOIC IRR(%) Year of Original Capital Invested to Realized Unrealized Total Primary Investment ($ in millions) Inception AUM Commit
Slide 36: 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 March 31, 2022 Capital MOIC IRR(%) Year of Original Capital Invested to Realized Unrealized Total Primary Investment ($ in millions) Inception AUM Commit
Slide 37: Significant Fund Performance Metrics Endnotes
Significant Fund Performance Metrics Endnotes 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 return
Slide 38: 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 39: Significant Fund Performance Metrics Endnotes (cont’d)
Significant Fund Performance Metrics Endnotes (cont’d) 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.
Slide 40: Significant Fund Performance Metrics Endnotes (cont’d)
Significant Fund Performance Metrics Endnotes (cont’d) Secondary Solutions 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 partner
Slide 41: Supplemental Performance Metrics
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 Original MOIC IRR(%) Year of Capital Capital Invested Realized Unrealized Total Primary Investment ($ in millions) Inceptio
Slide 42: Supplemental Performance Metrics Endnotes
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. Unrea
Slide 43: Supplemental Performance Metrics Endnotes (cont’d)
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 excludes a
Slide 44: Supplemental Performance Metrics Endnotes (cont’d)
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 the
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 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 and
Slide 47: Glossary (cont’d)
Glossary (cont’d) Operations Management In addition to our operating segments, we have an Operations Management Group (the “OMGˮ) that consists of shared Group resource groups to support our reportable segments by providing infrastructure and administrative support in the areas of accounting/finance
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