Hamilton Lane Incorporated · NASDAQ:HLNE
Hamilton Lane — Q1 FY2018 Earnings Presentation
30 slides from Hamilton Lane's earnings presentation, Aug 8, 2017
Slide 1: Fiscal Year 2018 First Quarter Results
Fiscal Year 2018 First Quarter Results Earnings Presentation - August 8, 2017
Slide 2: Today’s Speakers
Today’s Speakers Mario Giannini Erik Hirsch Randy Stilman Demetrius Sidberry Chief Executive Officer Vice Chairman Chief Financial Officer Head of Investor Relations Page 2
Slide 3: Period Highlights
Period Highlights • Total asset footprint (assets under management/advisement) reached a record amount of Business $359 billion, growing 14% compared to June 30, 2016 Performance • Assets under management and fee-earning assets under management were $46 billion and $28 billion, respectively, as of J
Slide 4: Leading, Global Private Markets Solutions Provider
Leading, Global Private Markets Solutions Provider B u yo u t Gr ow it th d E re Pr i m a r y Fu n d s qu C it y ~$46B ure Rea Infra st r uc t Private Markets Funds l E st ate Investors/Limited of AUM1 Partners (LPs) t i on s ~$314B Private Companies Co- Inv sac Ven e st s r an of AUA1 rc e me t yT
Slide 5: Deep Bench of Talent and Award-Winning Culture
Deep Bench of Talent and Award-Winning Culture Executive Management (7) Investment Business Product Finance Team Development Management (20) (95) (20) (20) Client Legal & IT HR / Admin Services Compliance (20) (80) (20) (15) Key Stats Awards • Over 290 employees globally • ~70% of the team is less t
Slide 6: What We Do for Our Clients
What We Do for Our Clients Our value proposition Customized Specialized Funds Distribution Separate Accounts Management Primaries, secondaries, Tailored solutions through direct/co-investments, fund- Active portfolio managed investment of-funds and white-label management of private accounts products
Slide 7: Key Business Highlights
Key Business Highlights
Slide 8: Key Topics
Key Topics 1 Opportunity Pipeline 2 Asset Growth 3 Geographic Expansion 4 Strategic Development Page 8
Slide 9: Opportunity Pipeline
1 Opportunity Pipeline Customized Separate Specialized Advisory Accounts Funds Services Diverse mix of existing and Select funds in market: Typically larger clients with prospective clients seeking to • Co-Investment Fund wide-ranging mandates; further or establish relationship opportunity set conti
Slide 10: Growing Asset Footprint & Influence
2 Growing Asset Footprint & Influence Total Assets Under Management/Advisement ($B)1 $400 $359B AUM & AUA $350 Q-o-Q Growth AUA: 4% $46 $40 $300 AUM: 10% $250 1% R: 2 CAG $35 $200 $32 $314 $24 $30 $150 $292 $22 $16 $19 $100 $11 $13 $205 $189 $7 $147 $147 $129 $50 $6 $95 $81 $77 $79 $36 $51 $0 2005 2
Slide 11: Fee-Earning AUM Driving Revenues
2 Fee-Earning AUM Driving Revenues Total Fee-Earning Assets Under Management ($B)1 $40 Total Management Fee Revenues as a % of Average FEAUM 12% Y-o-Y Growth $35 0.58% 0.55% 0.56% 0.57% 0.51% 0.65%2 $30 $27 $28 14% CAGR: $25 $24 $25 $22 $9 $9 $20 $19 $7 $7 $6 $16 $5 $15 $5 $18 $17 $18 $10 $17 $16 $1
Slide 12: Geographic Expansion
3 Geographic Expansion International United States Portland Australia Germany Oregon Sydney Munich Page 12
Slide 13: Strategic Development - RAPM
4 Strategic Development - RAPM On June 20, 2017, Hamilton Lane announced the acquisition of Real Asset Portfolio Management LLC (“RAPM”) Overview • RAPM is an investment advisory firm focused exclusively on real assets • Established in 2011 and headquartered in Portland, OR, RAPM manages and advises
Slide 14: Financial Highlights
Financial Highlights
Slide 15: Consolidated Revenues
Consolidated Revenues Revenues continue to be driven primarily by management and advisory fees Management and Advisory Fees • Represented an average of 93% of total revenues over the Quarter Long-Term Growth past five fiscal years 200 • Y-o-Y growth of 38%; Q-o-Q growth of 11% Y-o-Y Growth: 38% CAGR
Slide 16: Consolidated Earnings
Consolidated Earnings Profitability stable and growing Net Income Attributable to HLI Quarter Long-Term Growth • $5M in net income attributable to HLI for the quarter USD in Millions • No comparable measure in prior period as that was before the Company’s IPO $5 N/A N/A $1 Q1 FY17 Q1 FY18 FY13 FY17
Slide 17: Other Key Items
Other Key Items Strong balance sheet with investments in our own products and a modest amount of leverage... Investments $150 • Vast majority of our investments are those made USD in Millions $120 $120 $124 alongside our clients $90 $103 $103 $78 $92 • For 6/30/17, the total investment balance consi
Slide 18: Fiscal Year 2018 First Quarter Results
Fiscal Year 2018 First Quarter Results Earnings Presentation - August 8, 2017
Slide 19: Appendix
Appendix
Slide 20: Condensed Consolidated Statements of Income (Unaudited)
Condensed Consolidated Statements of Income (Unaudited) Three Months Ended, (Dollars in thousands except share and per share amounts) June 30, 2016 March 31, 2017 June 30, 2017 YoY % Change QoQ % Change Revenues Management and advisory fees $37,583 $46,401 $51,684 38% 11% Incentive fees 1,983 278 1,
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended, (Dollars in thousands except share and per share amounts) June 30, 2016 March 31, 2017 June 30, 2017 YoY % Change QoQ % Change Adjusted EBITDA Management and advisory fees $37,583 $46,401 $51,684 38% 11% Total expenses 22,706 27,619 28,420 25% 3% Less:
Slide 22: Management and Advisory Fees
Management and Advisory Fees Three Months Ended, (Dollars in thousands) June 30, 2016 March 31, 2017 June 30, 2017 YoY % Change QoQ % Change Management and advisory fees Customized separate accounts $17,504 $18,467 $18,784 7% 2% Specialized funds 13,752 21,268 25,206 83% 19% Advisory and reporting 5
Slide 23: Incentive Fees
Incentive Fees Three Months Ended, (Dollars in thousands) June 30, 2016 March 31, 2017 June 30, 2017 YoY % Change QoQ % Change Incentive fees Secondary Fund II $900 $183 $638 (29)% 249% Other specialized funds 569 28 (40) (107)% (243)% Customized separate accounts 514 67 419 (18)% 525% Incentive fee
Slide 24: Assets Under Management
Assets Under Management Three Months Ended, (Dollars in millions) June 30, 2016 March 31, 2017 June 30, 2017 YoY % Change QoQ % Change Assets under management / advisement Assets under management $39,032 $41,794 $45,788 17% 10% Assets under advisement 276,682 300,426 313,652 13% 4% Total assets unde
Slide 25: Condensed Consolidated Balance Sheets (Unaudited)
Condensed Consolidated Balance Sheets (Unaudited) As of, (Dollars in thousands except share and per share amounts) March 31, 2017 June 30, 2017 Assets Cash and cash equivalents $32,286 $46,471 Restricted cash 1,849 1,857 Fees receivable 12,113 19,474 Prepaid expenses 2,593 2,719 Due from related par
Slide 26: Condensed Consolidated Statements of Cash Flows (Unaudited)
Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended, (Dollars in thousands) June 30, 2016 June 30, 2017 Operating activities Net income $16,391 $25,612 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 488 437 C
Slide 27: Non-GAAP Reconciliation
Non-GAAP Reconciliation Reconciliation from Net Income Three Months Ended, (Dollars in thousands) June 30, 2016 March 31, 2017 June 30, 2017 Net income attributable to Hamilton Lane Incorporated $- $612 $5,464 Income attributable to non-controlling interests in general partnerships 545 168 898 Incom
Slide 28: Gross Leverage Ratio
Gross Leverage Ratio Twelve Months Ended, (Dollars in thousands) March 31, 2017 June 30, 2017 Senior secured term loan payable - principal amount $86,100 $85,450 Adjusted EBITDA 83,031 90,975 Gross leverage ratio 1.0x 0.9x Page 28
Slide 29: Terms
Terms Adjusted EBITDA is our primary internal measure of profitability. 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) interest expense on
Slide 30: 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