Ares Management Corporation (NYSE:ARES) Q4 2023 Earnings Conference Call February 8, 2024 11:00 AM ET Company Participants Greg Mason – Co-Head-Public Markets Investor Relations Michael Arougheti – Chief Executive Officer Jarrod Phillips – Chief Financial Officer Conference Call Participants Steven Chubak – Wolfe Research Craig Siegenthaler – Bank of America Patrick Davitt – Autonomous Research Nick Benoit – Barclays Luke Bianculli – Goldman Sachs Michael Cyprys – Morgan Stanley Brennan Hawken – UBS Mike Br ...

For the quarter ended December 2023, Ares Management (ARES) reported revenue of $951.78 million, up 6.7% over the same period last year. EPS came in at $1.21, compared to $1.21 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $862.71 million, representing a surprise of +10.32%. The company delivered an EPS surprise of +10.00%, with the consensus EPS estimate being $1.10.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- ...

Ares Management (ARES) came out with quarterly earnings of $1.21 per share, beating the Zacks Consensus Estimate of $1.10 per share. This compares to earnings of $1.21 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 10%. A quarter ago, it was expected that this private equity firm would post earnings of $0.86 per share when it actually produced earnings of $0.83, delivering a surprise of -3.49%.Over the last four quarters, the ...

The market expects Ares Management (ARES) to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended December 2023. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.The earnings report, which is expected to be released on February 8, 2024, might help the stock move higher if these key number ...

NEW YORK--(BUSINESS WIRE)--Ares Management Corporation (NYSE: ARES) (“Ares”) announced today that Julie Solomon, Global Chief Operating Officer of Ares Real Estate, has been promoted to Co-Head of Real Estate alongside Bill Benjamin, current Head of Real Estate. Effective immediately, Ms. Solomon and Mr. Benjamin together will co-lead the Ares Real Estate business globally. Ms. Solomon joined Ares in 2013 and has been an invaluable leader on the Real Estate team throughout this time as a key contributor ...

LOS ANGELES--(BUSINESS WIRE)--Ares Management Corporation (NYSE: ARES) announced today the launch of Automated Industrial Robotics Inc. (“AIR” or the “Company”), a newly formed industrial automation company designed to capitalize on increasing global demand for manufacturing automation solutions. An Ares Private Equity fund (“Ares”) has invested substantial equity capital to support AIR’s acquisition and organic growth strategy. AIR is focused on acquiring and facilitating the growth of differentiated in ...

LOS ANGELES--(BUSINESS WIRE)--Sunbit, the company building financial technology for everyday expenses, announced today that it closed a $310 million debt warehouse facility led by Citi and Ares Management Credit funds. Established in 2016 to transform how consumers access, use and benefit from credit, Sunbit will leverage the funds to meet ever-increasing consumer demand for the company’s market-dominant Buy Now, Pay Later (BNPL) solution and the next-gen, no-fee Sunbit Card. Arad Levertov, CEO of Sunbit ...

Ralf Hahn Ares Management Corporation (NYSE:ARES) has outperformed most listed alternative asset managers in the past year with a one-year total return of about 57%. This was mainly attributable to its outsized emphasis on private credit, a hot buzzword in alternative investing. Direct lending was ~45% of ARES' AUM in 3Q23, whereas real estate was only ~12% of AUM, helping it navigate away from a tough sector in 2023. Data by YCharts Robust 3Q earnings amidst high interest rates ARES has had a notable 3Q23 ...

[PART I—FINANCIAL INFORMATION](index=9&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=9&type=section&id=Item%201.%20Financial%20Statements) Presents Ares Management Corporation's unaudited condensed consolidated financial statements and detailed notes for Q3 2023 [Condensed Consolidated Statements of Financial Condition](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition) Total assets increased to $23.4 billion, liabilities to $18.3 billion, and equity to $4.0 billion as of September 30, 2023 Condensed Consolidated Statements of Financial Condition (in thousands) | Account | September 30, 2023 (unaudited) | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$23,383,893** | **$22,002,839** | | Cash and cash equivalents | $311,827 | $389,987 | | Investments | $4,436,746 | $3,974,734 | | Assets of Consolidated Funds | $15,347,425 | $14,134,683 | | **Total Liabilities** | **$18,339,676** | **$17,097,810** | | Debt obligations | $2,340,173 | $2,273,854 | | CLO loan obligations, at fair value | $11,460,963 | $10,701,720 | | **Total Equity** | **$4,018,454** | **$3,798,618** | | Total stockholders' equity | $1,733,179 | $1,589,239 | [Condensed Consolidated Statements of Operations](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Total revenues rose to $2.58 billion, with net income attributable to stockholders significantly increasing to $300.4 million Key Operating Results (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | **Total Revenues** | **$2,577,903** | **$2,117,719** | | Management fees | $1,853,304 | $1,546,350 | | Carried interest allocation | $541,828 | $417,779 | | **Total Expenses** | **$2,027,334** | **$2,062,654** | | **Income Before Taxes** | **$849,963** | **$167,997** | | **Net Income Attributable to AMC Stockholders** | **$300,376** | **$50,048** | | **Diluted EPS** | **$1.54** | **$0.23** | [Notes to the Condensed Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section details accounting policies and financial data, covering goodwill, debt, segment reporting, and subsequent events [Note 3. Goodwill and Intangible Assets](index=17&type=section&id=Note%203.%20Goodwill%20and%20Intangible%20Assets) Net intangible assets decreased to $1.03 billion due to amortization and impairment, with goodwill at $997.8 million - In Q3 2023, the company recorded a non-cash impairment charge of **$65.7 million** on client relationships from the Landmark Partners acquisition due to lower expected fee-paying AUM in a private equity secondaries fund[53](index=53&type=chunk) - Following the SSG Buyout, the Ares SSG reporting unit was transferred to the Credit Group, and its total goodwill of **$224.6 million** was reallocated accordingly[58](index=58&type=chunk) Goodwill and Intangible Assets, Net (in thousands) | Account | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Intangible assets, net | $1,033,590 | $1,208,220 | | Goodwill | $997,801 | $999,656 | [Note 6. Debt](index=26&type=section&id=Note%206.%20Debt) Total debt obligations increased slightly to $2.34 billion, comprising various notes and a credit facility Company Debt Obligations (in thousands) | Debt Instrument | Maturity Date | Carrying Value (Sep 30, 2023) | Interest Rate (Sep 30, 2023) | | :--- | :--- | :--- | :--- | | Credit Facility | 3/31/2027 | $765,000 | 6.37% | | 2024 Senior Notes | 10/8/2024 | $249,240 | 4.21% | | 2030 Senior Notes | 6/15/2030 | $396,937 | 3.28% | | 2052 Senior Notes | 2/1/2052 | $484,101 | 3.77% | | 2051 Subordinated Notes | 6/30/2051 | $444,895 | 4.13% | | **Total Debt Obligations** | | **$2,340,173** | | [Note 13. Segment Reporting](index=38&type=section&id=Note%2013.%20Segment%20Reporting) Segments generated $795.0 million in FRE and $831.0 million in RI, primarily driven by the Credit Group - Effective January 1, 2023, Ares SSG was rebranded as Ares Asia and its credit business was reclassified into the Credit Group, while 'Strategic Initiatives' became 'Other'[173](index=173&type=chunk) Fee Related Earnings (FRE) by Segment (in thousands) | Segment | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Credit Group | $866,403 | $674,978 | | Private Equity Group | $80,399 | $54,214 | | Real Assets Group | $160,716 | $134,844 | | Secondaries Group | $71,262 | $80,111 | | Other | $7,454 | $747 | | Operations Management Group | ($391,219) | ($286,287) | | **Total FRE** | **$795,015** | **$658,607** | Realized Income (RI) by Segment (in thousands) | Segment | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Credit Group | $912,402 | $714,827 | | Private Equity Group | $86,264 | $47,631 | | Real Assets Group | $157,543 | $166,595 | | Secondaries Group | $67,227 | $80,245 | | Other | ($1,552) | ($8,383) | | Operations Management Group | ($390,929) | ($288,211) | | **Total RI** | **$830,955** | **$712,704** | [Note 15. Subsequent Events](index=55&type=section&id=Note%2015.%20Subsequent%20Events) Post-quarter, a $0.77 per share dividend was declared, and the AAC I SPAC business combination was terminated - In October 2023, the board declared a quarterly dividend of **$0.77 per share** of Class A and non-voting common stock[237](index=237&type=chunk) - The business combination agreement for the SPAC Ares Acquisition Corporation I (AAC I) was terminated in October 2023, with outstanding shares to be redeemed in Q4 2023[237](index=237&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=56&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, operating results, key trends, and liquidity, highlighting stable fee income [Trends Affecting Our Business](index=56&type=section&id=Trends%20Affecting%20Our%20Business) Global markets faced volatility and rising rates, but the company's portfolio is well-positioned with floating-rate assets - Approximately **95%** of management fees for Q3 2023 were derived from perpetual capital vehicles and long-dated funds, ensuring a stable capital base[241](index=241&type=chunk) - The company's portfolio is positioned for a rising interest rate environment, with **86%** of debt assets and **56%** of total assets being floating-rate instruments as of September 30, 2023[246](index=246&type=chunk) - Recent strategic transactions include the acquisition of Crescent Point Capital and a partnership with Vinci Partners to expand in Latin America[247](index=247&type=chunk) [Managing Business Performance](index=57&type=section&id=Managing%20Business%20Performance) Total AUM grew to $394.9 billion and FPAUM to $247.7 billion, with $65.7 billion in AUM not yet paying fees AUM Rollforward Summary (in millions) | Metric | As of Sep 30, 2023 | As of Sep 30, 2022 | | :--- | :--- | :--- | | **Total AUM** | **$394,942** | **$341,416** | | Net New Commitments (Par/Equity + Debt) | $62,844 (YTD) | $43,603 (YTD) | FPAUM Rollforward Summary (in millions) | Metric | As of Sep 30, 2023 | As of Sep 30, 2022 | | :--- | :--- | :--- | | **Total FPAUM** | **$247,693** | **$218,636** | | Commitments & Deployment (YTD) | $33,158 | $49,502 | - As of September 30, 2023, AUM not yet paying fees was **$65.7 billion**, which could generate approximately **$647.4 million** in potential incremental annual management fees[267](index=267&type=chunk) [Results of Operations by Segment](index=73&type=section&id=Results%20of%20Operations%20by%20Segment) FRE increased 21% to $795.0 million and RI grew 17% to $831.0 million, primarily driven by the Credit Group Segment Fee Related Earnings (FRE) (in thousands) | Segment | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Credit Group | $866,403 | $674,978 | | Private Equity Group | $80,399 | $54,214 | | Real Assets Group | $160,716 | $134,844 | | Secondaries Group | $71,262 | $80,111 | | **Total FRE** | **$795,015** | **$658,607** | Segment Realized Income (RI) (in thousands) | Segment | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Credit Group | $912,402 | $714,827 | | Private Equity Group | $86,264 | $47,631 | | Real Assets Group | $157,543 | $166,595 | | Secondaries Group | $67,227 | $80,245 | | **Total RI** | **$830,955** | **$712,704** | [Liquidity and Capital Resources](index=108&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $311.8 million cash, generating $724.9 million from operations - As of September 30, 2023, the company had cash and cash equivalents of **$311.8 million** and **$765.0 million** in borrowings outstanding under its Credit Facility[476](index=476&type=chunk) - For the nine months ended September 30, 2023, net cash provided by operating activities was **$724.9 million**, while financing activities used **$759.2 million**, mainly for dividends (**$446.3 million**) and AOG unitholder distributions (**$313.8 million**)[483](index=483&type=chunk)[489](index=489&type=chunk) - The Tax Receivable Agreement (TRA) liability balance increased to **$165.6 million** as of September 30, 2023, from **$118.5 million** at year-end 2022[495](index=495&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=112&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk primarily stems from investment fair value movements, exchange rates, and credit risk - The company's main market risk is the impact of investment fair value movements on management fees, performance income, and investment income[501](index=501&type=chunk) - Exchange rate risk is managed through operational activities and, when appropriate, derivative instruments to hedge net foreign currency exposure[506](index=506&type=chunk) - Credit risk is minimized by limiting counterparties to reputable financial institutions and applying a rigorous, credit-oriented approach to all investments[507](index=507&type=chunk)[508](index=508&type=chunk) [Item 4. Controls and Procedures](index=113&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes - The principal executive officer and principal financial officer concluded that as of September 30, 2023, the company's disclosure controls and procedures were effective[510](index=510&type=chunk) - No material changes to the internal control over financial reporting occurred during the quarter ended September 30, 2023[511](index=511&type=chunk) [PART II—OTHER INFORMATION](index=114&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=114&type=section&id=Item%201.%20Legal%20Proceedings) As of September 30, 2023, the company was not subject to any material pending legal proceedings - As of September 30, 2023, Ares Management Corporation was not subject to any material pending legal proceedings[513](index=513&type=chunk) [Item 1A. Risk Factors](index=114&type=section&id=Item%201A.%20Risk%20Factors) This section refers to previously disclosed risk factors in the Annual Report on Form 10-K and Q1 2023 Form 10-Q - The report directs readers to previously filed documents (Annual Report on Form 10-K for FY2022 and Q1 2023 Form 10-Q) for a detailed description of risk factors[514](index=514&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=114&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the reporting period - No unregistered sales of equity securities occurred during the period covered by this report[515](index=515&type=chunk) [Item 6. Exhibits](index=115&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including equity compensation agreements and certifications - Exhibits filed with the report include various forms of Restricted Unit Agreements under the 2023 Equity Incentive Plan, as well as required CEO and CFO certifications[518](index=518&type=chunk)[519](index=519&type=chunk)

Ares Management Corporation (NYSE:ARES) Q3 2023 Earnings Conference Call October 31, 2023 11:00 AM ET Company Participants Carl Drake - Head, Public Market Investor Relations Michael Arougheti - Chief Executive Officer Jarrod Phillips - Chief Financial Officer Conference Call Participants Craig Siegenthaler - Bank of America Alex Blostein - Goldman Sachs Ben Budish - Barclays Brennan Hawken - UBS Ken Worthington - JPMorgan Michael Cyprys - Morgan Stanley Patrick Davitt - Autonomous Research Mike Brown - KBW ...