Hamilton Lane Incorporated · NASDAQ:HLNE
Hamilton Lane — Q3 FY2020 Earnings Presentation
23 slides from Hamilton Lane's earnings presentation, Feb 4, 2020
Slide 1: Fiscal Year 2020 Third Quarter Results
Fiscal Year 2020 Third Quarter Results Earnings Presentation - February 4, 2020 Hamilton Lane l Global Leader in the Private Markets Page 1
Slide 2: Today's Speakers
Today's Speakers Mario Giannini Erik Hirsch Atul Varma John Oh Chief Executive Officer Vice Chairman Chief Financial Officer Investor Relations Manager Hamilton Lane l Global Leader in the Private Markets Page 2
Slide 3: Period Highlights
Period Highlights Business Performance • Assets under management and fee-earning assets under management were approximately $66 billion and $37 billion, respectively, as of December 31, 2019, increases of 13% and 14%, respectively, compared to December 31, 2018 • Management and advisory fees increas
Slide 4: Growing Asset Footprint & Influence
Growing Asset Footprint & Influence $488B AUM & AUA 1 Total Assets Under Management/Advisement ($B) $500 $66 Y-o-Y Growth $59 AUM: 13% $50 $400 AUA: 3% $ 422 % $410 AG R: 19 $40 C $374 $300 $292 $35 $32 $200 $30 $205 $24 $189 $22 $147 $147 $16 $19 $11 $13 $129 $100 $7 $95 $79 $81 $6 $77 $51 $36 $0 2
Slide 5: Fee-Earning AUM Driving Revenues
Fee-Earning AUM Driving Revenues Fee-Earning AUM growth continues and annual fee rates are stable Total Fee-Earning Assets Under Management ($B) .56% .57% .56% .55% .55%1 .56%2 $40 $37 $35 $34 $33 1% $32 CAGR: 1 $31 $30 $14 $27 $11 $10 $11 $25 $24 $21 $9 $20 $7 $5 $15 $22 $23 $10 $21 $21 $17 $18 $16
Slide 6: AUM & AUA Drivers
AUM & AUA Drivers 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 ranging mandates which include • Secondary fund technology-driven reporting, to further or es
Slide 7: Financial Highlights
Financial Highlights Hamilton Lane l Global Leader in the Private Markets Page 7
Slide 8: Consolidated Revenue
Consolidated Revenue Strong revenue growth across management and advisory fees Management and Advisory Fees YTD Long-Term Growth • Recurring management and advisory fees Y-o-Y Growth: 12% CAGR: 11% represented an average of just under 90% of total $218 $180 revenues over the past five fiscal years U
Slide 9: Unrealized Carried Interest
Unrealized Carried Interest Unrealized Carried Interest Unrealized Carry by Age 63 > 12 years $400 5% 60 53 < 5 years 8-12 years 44 31% $300 24% USD in Millions Vehicles 40 $409 $200 $355 $301 20 $100 5-8 years 40% 0 $0 Dec-17 Dec-18 Dec-19 Period Ending Vehicles in Unrealized Carry Position Unreali
Slide 10: Consolidated Earnings
Consolidated Earnings Profitability stable and growing Net Income Attributable to HLI YTD Long-Term Growth • $40M in net income attributable to HLI for YTD FY20 Y-o-Y Growth: 57% • $13M in net income attributable to HLI for the quarter USD in Millions USD in Millions $40 $26 $34 N/A1 Q3 FY19 Q3 FY20
Slide 11: Other Key Items
Other Key Items Strong balance sheet with investments in our own products and a modest amount of leverage... Investments $200 • For 12/31/19, the total investment balance consisted of: $175 $193 ◦ ~$171M in equity method investments in our USD in Millions $150 $154 funds $125 $137 $100 $120 $103 $10
Slide 12: Fiscal Year 2020 Third Quarter Results
Fiscal Year 2020 Third Quarter Results Earnings Presentation - February 4, 2020 Hamilton Lane l Global Leader in the Private Markets Page 12
Slide 13: Appendix
Appendix Hamilton Lane l Global Leader in the Private Markets Page 13
Slide 14: Condensed Consolidated Statements of Income (Unaudited)
Condensed Consolidated Statements of Income (Unaudited) Three Months Ended December 31, Nine Months Ended December 31, (Dollars in thousands except share and per share amounts) 2018 2019 % Change 2018 2019 % Change Revenues Management and advisory fees $55,617 $59,837 8% $159,844 $179,584 12 % Incen
Slide 15: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended December 31, Nine Months Ended December 31, (Dollars in thousands except share and per share amounts) 2018 2019 % Change 2018 2019 % Change Adjusted EBITDA1 Management and advisory fees $55,617 $59,837 8% $159,844 $179,584 12 % Total expenses 37,759 39,
Slide 16: Management and Advisory Fees
Management and Advisory Fees Three Months Ended December 31, Nine Months Ended December 31, (Dollars in thousands) 2018 2019 % Change 2018 2019 % Change Management and advisory fees Specialized funds $23,413 $27,789 19 % $67,164 $81,733 22 % Customized separate accounts 21,594 22,618 5% 63,087 67,04
Slide 17: Incentive Fees
Incentive Fees Three Months Ended December 31, Nine Months Ended December 31, (Dollars in thousands) 2018 2019 % Change 2018 2019 % Change Incentive fees Secondary Fund II $741 $159 (79)% $1,324 $711 (46)% Co-investment Fund II 8,618 2,500 (71)% 14,959 6,254 (58)% Other specialized funds 867 979 13
Slide 18: Assets Under Management
Assets Under Management YoY % QoQ % (Dollars in millions) December 31, 2018 September 30, 2019 December 31, 2019 Change Change Assets under management / advisement Assets under management $58,840 $65,680 $66,271 13% 1% Assets under advisement 409,924 415,675 421,799 3% 1% Total assets under manageme
Slide 19: Condensed Consolidated Balance Sheets (Unaudited)
Condensed Consolidated Balance Sheets (Unaudited) (Dollars in thousands except share and per share amounts) March 31, 2019 December 31, 2019 Assets Cash and cash equivalents $49,357 $81,599 Restricted cash 2,233 3,095 Fees receivable 20,320 19,456 Prepaid expenses 4,714 4,587 Due from related partie
Slide 20: Condensed Consolidated Statements of Cash Flows (Unaudited)
Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended December 31, (Dollars in thousands) 2018 2019 Operating activities Net income $78,590 $88,163 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,759 2,379 Chan
Slide 21: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Ended Nine Months Ended Reconciliation from Net Income Year Ended March 31, December 31, December 31, (Dollars in thousands) 2014 2019 2018 2019 2018 2019 Net income attributable to Hamilton Lane Incorporated $0 $33,573 $5,458 $13,497 $25,525 $40,177 Income attri
Slide 22: 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 23: 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