Hamilton Lane(US:HLNE)2022-08-02 20:32Assets and Management - As of June 30, 2022, the company had approximately $83 billion in assets under management (AUM) from customized separate accounts and $26 billion from specialized funds[91]. - The company reported approximately $724 billion in assets under advisement (AUA) as of June 30, 2022, indicating a strong advisory service presence[91]. - The company’s fee-earning AUM is derived from customized separate accounts and specialized funds, which are not significantly affected by market value changes[117]. - The client base is diversified, primarily comprising institutional investors from various regions including the U.S., Canada, Europe, and Asia[92]. Revenue Sources - Management and advisory fees are the primary revenue sources, with revenues from customized separate accounts based on a contractual rate applied to committed capital or net invested capital[95][96]. - The company’s revenues are also influenced by advisory and reporting services, which are generally fixed annual fees[99]. - Incentive fees, which include carried interest from specialized funds, typically range from 10.0% to 12.5% of net profits, subject to a preferred return of 6.0% to 8.0%[102][104]. Financial Performance - Total revenues increased by $56.5 million, or 72%, to $135.5 million for the three months ended June 30, 2022, compared to the same period in 2021[124]. - Management and advisory fees rose by $12.1 million, or 16%, to $85.9 million, driven by increases in specialized funds and customized separate accounts[125]. - Incentive fees surged by $44.5 million to $49.6 million, reflecting growth in both customized separate accounts and specialized funds[126]. - Net income attributable to Hamilton Lane Incorporated was $33.5 million, up from $28.2 million in the prior year[122]. - Fee Related Earnings for Q2 2022 were $36,779,000, up from $33,381,000 in Q2 2021, reflecting a growth of 7.2%[147]. - Adjusted EBITDA for Q2 2022 reached $66,627,000, a significant increase of 66% compared to $40,156,000 in Q2 2021[147]. - Non-GAAP earnings per share for Q2 2022 was $0.92, compared to $0.84 in Q2 2021, representing a growth of 9.5%[150]. - Adjusted net income for Q2 2022 was $49,572,000, an increase of 9.5% from $45,284,000 in Q2 2021[150]. Expenses and Costs - Total expenses increased by $29.7 million, or 69%, to $73.0 million, primarily due to a 95% rise in compensation and benefits expenses[127]. - Compensation and benefits represent the largest expense, expected to rise with growth in headcount and competitive compensation needs[106]. Cash Flow and Liquidity - As of June 30, 2022, the company had cash and cash equivalents of $83.1 million, up from $72.1 million as of March 31, 2022, indicating a 14% increase in liquidity[165]. - For the three months ended June 30, 2022, net cash provided by operating activities was $60.952 million, a significant increase of 88% compared to $32.389 million for the same period in 2021[182]. - The company reported net cash used in investing activities of $56.453 million for the three months ended June 30, 2022, compared to $4.431 million in the same period of 2021, reflecting increased investment activity[182]. - The company generated net cash provided by financing activities of $6.496 million for the three months ended June 30, 2022, contrasting with a net cash used of $42.087 million in the same period of 2021, highlighting improved financing conditions[182]. Debt and Financing - Outstanding debt as of June 30, 2022, totaled $221.3 million, an increase from $171.8 million as of March 31, 2022, representing a 29% rise in leverage[172]. - The company has a Term Loan Agreement with an outstanding balance of $96.3 million as of June 30, 2022, with a maturity date of July 1, 2027[169]. - The annual interest rate on the Term Loan Agreement was 3.25% as of June 30, 2022[200]. - A 100 basis point increase in interest rates is estimated to result in increased interest expense of $1.2 million over the next 12 months[201]. Investment Performance - The gross internal rate of return (IRR) for the Secondary Fund V (2019) was 49.3%, with a net IRR of 56.5%[157]. - The gross multiple for the PEF IX (2015) was 2.0, with a net multiple of 1.9, indicating strong performance[157]. - The company reported a significant increase in incentive fees, rising to $49,563,000 in Q2 2022 from $5,111,000 in Q2 2021[147]. Strategic Initiatives - The company plans to make strategic investments in technology-driven private markets data and wealth management solutions, indicating a focus on innovation and market expansion[175]. - The company maintains a Stock Repurchase Program authorizing the repurchase of up to 6% of its Class A common stock, not to exceed $50 million, which remains fully available as no shares have been repurchased[176]. - The company expects to continue paying quarterly cash dividends, subject to funds being legally available, to cover applicable taxes and corporate expenses[179]. Regulatory and Compliance - As of June 30, 2022, the company was required to maintain approximately $4.0 million in liquid net assets for regulatory compliance, ensuring adherence to capital adequacy requirements[178]. Risk Management - The company aims to minimize credit risk by limiting counterparties to reputable financial institutions[202]. - The currency exposure related to investments in foreign currency assets is limited to the company's general partner interest, typically one percent of total capital commitments[199]. - The company does not expect changes in exchange rates to materially impact its financial statements due to limited foreign currency assets[199]. - The company does not possess significant assets in foreign countries or engage in material transactions in currencies other than the U.S. dollar[199]. - Management fees and advisory fee revenue are not significantly impacted by changes in investment values[197]. - The company’s equity in income of investees changes with realized and unrealized gains of underlying investments in specialized funds[197].