DigitalBridge (US:DBRG)2022-05-05 19:07Financial Data and Key Metrics Changes - Total consolidated revenues for Q1 2022 were $257 million, representing a 17% increase year-over-year [27] - Net income reported a loss of $262 million, primarily due to one-time noncash losses totaling $219 million [28] - Adjusted EBITDA for the quarter was $20 million, up from $13 million in the same period last year [28] - Digital AUM reached $47 billion, a 45% increase from $32 billion year-over-year [29] - Annualized fee revenues increased from $124 million to $235 million, while fee-related earnings (FRE) rose from $70 million to $124 million [33] Business Line Data and Key Metrics Changes - Consolidated core digital revenues were $247 million, a 12% increase from the same period last year, driven by new DBP II fees [31] - Investment management revenues declined compared to the previous quarter due to one-time catch-up fees [31] Market Data and Key Metrics Changes - The company is positioned to capitalize on a $400 billion annual global CapEx spend across the digital infrastructure industry [26] - The company has seen significant growth in its digital business, particularly in the high-margin investment management sector [33] Company Strategy and Development Direction - The company aims to build a full-stack digital infrastructure investor, focusing on high-quality digital businesses and scaling its operating platform [5][26] - The decision to revert to a conventional C-Corp structure was made to gain strategic flexibility and enhance capital deployment opportunities [12][13] - Recent acquisitions, including Wafra and AMP Capital, are expected to significantly increase fee-related earnings and enhance the company's investment management platform [20][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the evolving macroeconomic environment, emphasizing strong liquidity and capital flexibility [50][59] - The company is focused on maintaining high returns on invested capital and is optimistic about future growth opportunities in digital infrastructure [65][67] - Management highlighted the importance of retaining employees and managing labor costs amid rising competition for talent in the digital infrastructure sector [72] Other Important Information - The company plans to initiate a regular quarterly common dividend in Q3 2022, with expectations for material increases over time [30] - The company has approximately $1 billion in current liquidity, which will support ongoing acquisitions and capital structure optimization [34] Q&A Session Summary Question: How should the balance of further M&A between the investment management platform and the operating business be viewed? - Management indicated that capital allocation will prioritize opportunities that generate the best earnings and fastest AFFO, with recent transactions being opportunistic [47][49] Question: How has the view on LTV and net debt-to-EBITDA changed in light of rising interest rates? - Management noted that while access to capital remains strong, the cost of borrowing is increasing, and they have locked down long-term capital at historically low rates [53][56] Question: How does the company manage business priorities in the evolving macroeconomic environment? - Management emphasized the importance of communication with portfolio companies and monitoring key performance indicators, particularly regarding construction costs and labor [69][71]