8-K: Apollo Global Management Announces Record 2023 Results and $3 Billion Share Repurchase Program

Apollo Global Management reported strong fourth quarter and full year 2023 results, highlighted by significant growth in fee and spread related earnings, and authorized a new $3 billion share repurchase program.

Summary

• Apollo Global Management reported a GAAP net income attributable to common stockholders of $2.9 billion for the fourth quarter and $5.1 billion for the full year 2023.
• Adjusted Net Income (ANI), a key non-GAAP metric, totaled $1.2 billion for the quarter and $4.1 billion for the year, or $1.91 and $6.74 per share, respectively.
• Fee Related Earnings (FRE) reached $457 million for the quarter and a record $1.8 billion for the year, driven by strong fee revenue growth and controlled expenses.
• Spread Related Earnings (SRE) also hit record levels at $748 million for the quarter and $3.1 billion for the year, fueled by organic growth and new business profitability.
• The company's total Assets Under Management (AUM) stood at $651 billion, with $157 billion in inflows for the year.
• Apollo's board authorized a new share repurchase program of up to $3.0 billion, replacing the previous program.
• A cash dividend of $0.43 per share of common stock was declared for the fourth quarter, payable on February 29, 2024.
• A cash dividend of $0.8438 per share of Mandatory Convertible Preferred Stock was also declared, payable on April 30, 2024.
• The company repurchased over $800 million of common stock in 2023 and paid over $1 billion in common stock dividends.

Sentiment

Score: 9

Explanation: The document conveys a very positive sentiment due to record earnings, significant inflows, a new share repurchase program, and increased dividends. The company's performance and future outlook are strong, indicating a high level of confidence from management.

Positives

• Apollo achieved record Fee Related Earnings (FRE) and Spread Related Earnings (SRE) for the full year 2023.
• The company experienced significant inflows of $157 billion, boosting total Assets Under Management (AUM) to $651 billion.
• Apollo's strategic growth pillars, including origination, global wealth, and capital solutions, showed meaningful progress.
• The new $3 billion share repurchase program demonstrates management's confidence in the company's value.
• The company increased its annual dividend to $1.85 per share, reflecting a commitment to shareholder returns.
• Apollo's retirement services business saw record organic inflows, driven by retail annuity sales and flow reinsurance.
• The company's focus on directly originated, senior secured loans is well-suited for its long-duration liability profile.

Negatives

• Principal Investing Income (PII) was lower in 2023 compared to 2022, at $83 million versus $284 million.
• The company experienced lower alternative net investment income in the Retirement Services segment.
• Realized investment income was negative in the fourth quarter of 2023, at -$37 million.
• The compensation ratio for the Principal Investing segment was high at 81% for the year ended December 31, 2023.

Risks

• The company's performance is subject to risks related to inflation, interest rate fluctuations, and market conditions.
• Apollo faces competition in the alternative asset management industry.
• The company's revenues, earnings, and cash flow can be variable.
• The performance of the funds Apollo manages can impact its financial results.
• Athene's ability to maintain or improve financial strength ratings is crucial.
• Changes in the regulatory environment and tax status could affect the company.
• The company is dependent on certain key personnel.
• The company uses leverage to finance its businesses and investments.

Future Outlook

Apollo intends to distribute an annual dividend of $1.85 per share of common stock commencing with the first quarter 2024 dividend. The company will continue to focus on strategic growth pillars and disciplined capital allocation.

Management Comments

• Marc Rowan, Chief Executive Officer at Apollo, stated, 'Amid a volatile market backdrop in 2023, Apollo was firing on all cylinders. We generated exceptional results highlighted by Fee and Spread Related Earnings growth exceeding 25% and nearly $160 billion of inflows.'
• Marc Rowan also noted, 'Entering 2024, we are employing discipline at every turn as we continue to provide our clients with excess return per unit of risk.'

Industry Context

Apollo's strong performance reflects the continued demand for alternative investments and retirement services. The company's focus on yield, hybrid, and equity strategies aligns with current market trends. The growth in AUM and inflows indicates a positive outlook for the alternative asset management industry.

Comparison to Industry Standards

• Apollo's 25% year-over-year growth in Fee and Spread Related Earnings is strong compared to peers such as Blackstone (BX) and KKR, which have also reported solid growth but may not have reached the same percentage increase in these specific metrics.
• The $157 billion in inflows is a significant achievement, placing Apollo among the top asset managers in terms of capital raising, comparable to firms like Brookfield Asset Management (BAM) and Ares Management (ARES).
• Apollo's focus on direct origination and senior secured loans aligns with industry trends towards private credit, similar to strategies employed by firms like Oaktree Capital Management (OAK).
• The company's retirement services business, through Athene, is a major player in the annuity market, competing with companies like Global Atlantic and Prudential Financial (PRU).
• The $3 billion share repurchase program is a substantial capital return to shareholders, similar to actions taken by other large asset managers to enhance shareholder value.

Stakeholder Impact

• Shareholders will benefit from the increased dividend and share repurchase program.
• Employees may benefit from the company's strong performance and growth.
• Clients will benefit from the company's focus on providing excess returns.
• The company's growth may create opportunities for suppliers and other business partners.

Next Steps

• The company will continue to execute its strategic growth pillars.
• Apollo will implement the new $3 billion share repurchase program.
• The company will distribute the increased annual dividend of $1.85 per share of common stock.

Key Dates

Keywords

Asset Management, Retirement Services, Alternative Investments, Share Repurchase, Dividends, Assets Under Management, Fee Related Earnings, Spread Related Earnings, Financial Results, Debt Origination