Apollo Global Management, Inc. (new) · NYSE:APO
Apollo Global Management, Inc. (new) — Apollo Global Management — Investor Presentation (March 2019)
17 slides from Apollo Global Management, Inc. (new)'s investor presentation, March 2019
Slide 1: Apollo Global Management Valuation Framework
APOLLO GLOBAL MANAGEMENT, LLC (NYSE: APO) Apollo Global Management Valuation Framework March 2019
Slide 2: Forward Looking Statements & Other Important Disclosures
Forward Looking Statements & Other Important Disclosures This presentation may contain forward-looking statements that are within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exch
Slide 3: Valuation Framework: Sum-of-the-Parts (SOTP)
Valuation Framework: Sum-of-the-Parts (SOTP) FEE RELATED EARNINGS (“FRE”) VALUE • Value FRE at a target price-to-earnings multiple that reflects growth & margin profile 1 • ~90% of fee related revenues from management fees • Growing base of permanent or long-dated funds (nearly 90% of AUM is long-da
Slide 4: FRE is a Predictable and Growing Earnings Stream
1 FRE is a Predictable and Growing Earnings Stream (FRE1, $mns) FRE margin 800 $771 90% 700 CAGR 80% 23% $624 Elevated deployment- 600 related fees and continued 70% platform growth $530 500 60% Full year impact of $446 54% $420 Fund VIII 49% 400 46% 50% $317 43% Significant growth in Credit $299 30
Slide 5: FRE Fundamentals Outperform Perceived Comparables
1 FRE Fundamentals Outperform Perceived Comparables Traditional Active Asset Managers1 Strong growth Revenue Growth (5-Yr CAGR: LTM 4Q’13 – LTM 4Q’18)2 10% 2% AUM Growth (5-Yr CAGR: LTM 4Q’13 – LTM 4Q’18) 12% 2% Longer dated and recurring revenue stream Attractive margins and operating leverage ? FR
Slide 6: Triangulating an Appropriate P/E Multiple for FRE
1 Triangulating an Appropriate P/E Multiple for FRE The fundamental metrics of Apollo’s Fee Related Earnings closely compares with sectors of the financial services landscape valued at much higher price-to-earnings (or P/E) multiples Revenue Earnings Operating Growth Growth Current Margin (Trailing
Slide 7: Valuing Fee Related Earnings
1 Valuing Fee Related Earnings 2019E Based on an average of sellside 2019E estimates for Consensus FRE per share1 $2.11 each component of FRE1 Apollo expects FRE tax rate2 of approximately 15% Tax Rate 15% range over a multi-year period, following recent U.S. tax reform FRE per share (net of tax) $1
Slide 8: Valuing the Balance Sheet
2 Valuing the Balance Sheet Selected Component Balance Per Share at 12/31/18 ($millions) Cash1 $1,003 Debt ($1,360) Preferred Equity (554) Net Debt ($911) GP Investments in Funds2 $1,129 Athene/AAA3 $762 Total Investments4 $1,891 Total Balance Sheet Value $980 $2.37 DE Shares Outstanding (mm) 413.5
Slide 9: Performance Fees are a Series of Cash Flows with Value
3 Performance Fees are a Series of Cash Flows with Value Key Points to Consider: • We believe valuing performance fee cash flows in a discounted cash flow construct is the most appropriate valuation approach • Over 28 years, Apollo’s traditional Private Equity funds have generated an aggregate gross
Slide 10: Performance Fees Modeling Dashboard
3 Performance Fees Modeling Dashboard Below is a set of key assumptions that can be used to value Apollo’s performance fee income potential in a discounted cash flow construct Performance Fee Perf. Terminal Base Case Gross Profit Tax Eligible Fee Growth Other Time Horizon Assumptions AUM Return2 Rat
Slide 11: Sensitizing Key Assumptions Provides Range of Perf. Fee Values
3 Sensitizing Key Assumptions Provides Range of Perf. Fee Values Private Equity Performance Fee Value: $10 - $16 per share Combined Segments Private Equity Return / Gross IRR Assumption Return / Gross IRR Assumption 17% 20% 23% 26% 28% Private Equity 17% 20% 23% 26% 28% Credit + 13% $10.67 $13.01 $1
Slide 12: Sum-of-the-Parts (SOTP) Valuation Summary
Sum-of-the-Parts (SOTP) Valuation Summary FEE RELATED EARNINGS (“FRE”) VALUE 1 • $1.79 FRE per share after-tax $36 - $41 • 20-23x P/E multiple based on fundamentals Apollo deems comparable BALANCE SHEET VALUE 2 • Net debt/cash plus investments $2 • 1.0x P/B multiple PERFORMANCE FEE INCOME VALUE 3 •
Slide 13: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures ($ in thousands) FY'14 FY'15 FY'16 FY'17 FY'18 GAAP Net Income (Loss) Attributable to Apollo Global Management, LLC Class A 168,229 134,497 402,850 615,566 (42,038) Shareholders Preferred distributions - - - 13,538 31,662 Net income (loss) attributable to
Slide 14: Reconciliation of GAAP Net Income Per Class A Share to Non-GAAP Per Share Measures
Reconciliation of GAAP Net Income Per Class A Share to Non-GAAP Per Share Measures ($ in thousands, except per share data where noted) FY'14 FY'15 FY'16 FY'17 FY'18 Net Income (Loss) Attributable to AGM Class A Shareholders $168,229 $134,497 $402,850 $615,566 ($42,038) Distributions declared and pai
Slide 15: Endnotes & Definitions
Endnotes & Definitions “Assets Under Management”, or “AUM”, refers to the assets of the funds, partnerships and accounts to which we provide investment management, advisory, or certain other investment-related services, including, without limitation, capital that such funds, partnerships and account
Slide 16: Endnotes & Definitions
Endnotes & Definitions EI represents segment income (loss) before income tax provision excluding transaction-related charges arising from the 2007 private placement, and any acquisitions. Transaction-related charges includes equity-based compensation charges, the amortization of intangible assets, c
Slide 17: Endnotes & Definitions
Endnotes & Definitions Net IRR of a real assets fund represents the cumulative cash flows in the fund (and not any one investor in the fund), on the basis of the actual timing of cash inflows received from and outflows paid to investors of the fund (assuming the ending net asset value as of December
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