ARES
Ares Management CORP
NYSE
10-Q: Ares Management Corporation Reports Second Quarter 2024 Results
Sentiment:
Quarterly Report
6 August 2024 7:27 PM
Ares Management Corporation's second quarter 2024 results show a decrease in net income attributable to common stockholders compared to the same period last year, despite growth in management fees.
Worse than expected
Net income attributable to common stockholders decreased compared to the same period last year.
Carried interest allocation was negative for both the quarter and six months ended June 30, 2024, compared to positive figures in the same periods of 2023.
Capital raise
The company issued and sold 2,650,000 shares of Class A common stock in an offering that closed on June 14, 2024, resulting in net proceeds of approximately $354.4 million.
Subsequent to June 30, 2024, the underwriters exercised the 30-day option to purchase additional shares of Class A common stock, resulting in additional proceeds of $52.9 million.
Summary
- Ares Management Corporation reported a net income attributable to Class A and non-voting common stockholders of $94.9 million for the three months ended June 30, 2024, a decrease from $144.5 million in the same period of 2023.
- For the six months ended June 30, 2024, net income attributable to Class A and non-voting common stockholders was $168.0 million, down from $238.6 million in the same period of 2023.
- Management fees increased to $721.7 million for the quarter and $1,409.4 million for the six months ended June 30, 2024, compared to $615.3 million and $1,215.8 million, respectively, in the same periods of 2023.
- Carried interest allocation was negative $51.2 million for the quarter and negative $83.6 million for the six months ended June 30, 2024, compared to positive $418.5 million and $570.0 million, respectively, in the same periods of 2023.
- Total assets under management (AUM) reached $447.2 billion as of June 30, 2024, up from $377.6 billion as of June 30, 2023.
- Fee-paying AUM (FPAUM) was $275.8 billion as of June 30, 2024, compared to $242.4 billion as of June 30, 2023.
- The company's effective tax rate is influenced by the amount of income tax provision recorded for any affiliated funds and co-investment vehicles that are consolidated in the company's financial statements.
Sentiment
Score: 5
Explanation: The document presents mixed results, with strong growth in management fees and AUM offset by a decrease in net income and negative carried interest allocation. The overall tone is neutral, focusing on factual reporting rather than expressing strong optimism or pessimism.
Positives
- Management fees showed strong growth, indicating a healthy core business.
- Total AUM and fee-paying AUM both increased year-over-year, demonstrating the company's ability to attract and manage capital.
- The credit group experienced significant growth in management fees, driven by capital deployment in various funds.
- Part I fees increased due to higher net investment income generated by ARCC and CADC, and the inclusion of ASIF and AESIF.
Negatives
- Net income attributable to common stockholders decreased compared to the same periods in 2023.
- Carried interest allocation was negative for both the quarter and six months ended June 30, 2024, compared to positive figures in the same periods of 2023.
- The company experienced a decrease in net realized performance income due to lower tax distributions from certain funds.
Risks
- The company's results are subject to fluctuations in global financial markets and economic conditions.
- The value of investments may decline due to general market conditions or factors affecting specific industries.
- The company is exposed to exchange rate risks due to investments denominated in foreign currencies.
- The company is subject to credit risk in the event that counterparties are unable to meet the terms of agreements.
- The company's ability to make cash dividends is dependent on a myriad of factors and there is no assurance that dividends would continue at the current levels or at all.
Future Outlook
The report contains forward-looking statements regarding future events, operations, and financial performance, which are subject to various risks and uncertainties. The company does not undertake any obligation to publicly update or review any forward-looking statement.
Management Comments
- Management believes that the company's disciplined investment philosophy contributes to the stability of its performance throughout market cycles.
- Management believes that the company's portfolios across all strategies are well positioned for a fluctuating interest rate environment.
- Management believes that the company's liquidity will continue to be sufficient for its foreseeable working capital needs, contractual obligations, dividend payments, pending acquisitions and strategic initiatives.
Industry Context
The report notes that global markets continued to perform positively in the second quarter amid modest inflation and optimistic signaling by central banks. It also highlights the continued growth of private credit due to reduced lending activity by banks and limited capital accessibility. The private equity markets continue to experience a prolonged slowdown in deal activity.
Comparison to Industry Standards
- The report provides returns of selected market indices, including high yield bonds, leveraged loans, equities, and real estate equities, to provide context for the company's performance.
- The company's AUM and FPAUM growth are compared to prior periods, but not directly to specific competitors.
- The report notes that many of the terms used, including AUM, FPAUM, FRE and RI, may not be comparable to similarly titled measures used by other companies.
Stakeholder Impact
- Shareholders will be impacted by the company's financial performance and dividend payments.
- Employees will be impacted by compensation and benefits, as well as the company's growth and expansion.
- Customers (investors in the funds) will be impacted by the performance of the funds and the company's ability to manage capital effectively.
Next Steps
- The company will continue to monitor market conditions and their impact on its business.
- The company will continue to focus on capital deployment and fundraising.
- The company will occupy its new corporate headquarters beginning in the third quarter of 2024.
Legal Proceedings
- The company is subject to legal proceedings from time to time, but management believes that there is no potential liability related to any current legal proceeding or claim that would materially affect its results of operations, financial condition or cash flows.
Related Party Transactions
- Substantially all of the company's revenue is earned from its affiliates.
- The company has investment management agreements with the Ares Funds that it manages.
- Employees and other related parties may be permitted to participate in co-investment vehicles that generally invest in Ares Funds alongside fund investors.
Key Dates
- October 8, 2014: Origination date of the 2024 Senior Notes.
- June 15, 2020: Origination date of the 2030 Senior Notes.
- June 30, 2021: Origination date of the 2051 Subordinated Notes.
- January 21, 2022: Origination date of the 2052 Senior Notes.
- November 10, 2023: Origination date of the 2028 Senior Notes.
- March 28, 2024: Amendment of the Credit Facility.
- June 14, 2024: Closing date of the Class A common stock offering.
- August 1, 2024: Date of outstanding shares of Class A, non-voting, Class B and Class C common stock.
- August 7, 2024: Date of the report.
- September 30, 2024: Date of quarterly dividend payment.
Keywords
Assets Under Management, AUM, Fee Paying AUM, FPAUM, Management Fees, Carried Interest, Incentive Fees, Private Equity, Real Assets, Credit, Secondaries, Alternative Investments, Financial Results, Net Income, Perpetual Capital
ARES
Ares Management CORP
NYSE
Sector: Financial Services
Filings with Classifications
Worse than expected
13 June 2025 4:32 PM
Insider Transaction Report
- The sale of 2,250,000 shares by a significant insider (10% owner and director) like Ares Management LLC is generally perceived negatively by the market, as it can signal a lack of confidence or a strategic reduction in exposure to the company.
- Such a large divestment can put downward pressure on the stock price and may be interpreted as a bearish signal.
Worse than expected
10 May 2025 12:28 AM
Quarterly Report
- Net income attributable to Ares Management Corporation Class A and non-voting common stockholders decreased to $21.9 million from $73 million in the prior year period.
Better than expected
3 May 2025 12:51 AM
Quarterly Report
- Ares Management Corporation's AUM surpassed $545 billion in Q1 2025, exceeding expectations.
- After-tax realized income reached $381.4 million, translating to $1.09 per share, which is better than anticipated.
- Fee related earnings were $367.3 million for the quarter, surpassing previous forecasts.
Better than expected
5 February 2025 6:17 AM
Earnings Release
- Ares Management reported record fundraising and AUM, indicating strong investor confidence and growth potential.
- The company's key financial metrics, such as Fee Related Earnings and Realized Income, showed significant increases compared to the previous year.
Worse than expected
29 November 2024 4:50 PM
SEC Form 4 Filing
- Ares Management, a significant shareholder, selling shares is generally viewed negatively by the market as it can indicate a lack of confidence in the company's future prospects.
Worse than expected
26 November 2024 4:39 PM
SEC Form 4 Filing
- The document indicates a reduction in stake by a major shareholder, which is generally viewed negatively by the market.
Capital raise
8 November 2024 6:07 AM
Quarterly Report
- In October 2024, Ares issued 30,000,000 shares of its Series B mandatory convertible preferred stock for total proceeds of $1,462.5 million.
- In October 2024, Ares issued $750.0 million in aggregate principal amount of 5.60% senior notes with a maturity date of October 2054.
Better than expected
8 November 2024 6:07 AM
Quarterly Report
- The company's total revenues, management fees, carried interest allocation, and net income all increased significantly compared to the same period last year.
Better than expected
31 October 2024 7:19 PM
Quarterly Report
- The company's financial results exceeded expectations with strong growth in key metrics, including AUM, fee-related earnings, and realized income.
- The company's fundraising momentum and capital deployment were better than anticipated, leading to an optimistic outlook for the remainder of the year.
Capital raise
31 October 2024 7:19 PM
Quarterly Report
- In October 2024, Ares issued 30,000,000 shares of its Series B mandatory convertible preferred stock, for total proceeds of $1,462.5 million (after deducting underwriting discounts but before offering expenses).
Capital raise
11 October 2024 4:42 PM
Debt Issuance
- Ares Management Corporation issued $750 million in senior notes.
- The company also entered into an underwriting agreement to issue 27,000,000 shares of 6.75% Series B Mandatory Convertible Preferred Stock, with an option for an additional 3,000,000 shares to cover over-allotments.
Capital raise
10 October 2024 4:50 PM
Capital Raise Announcement
- Ares Management Corporation issued 30 million shares of 6.75% Series B Mandatory Convertible Preferred Stock, raising $1.5 billion.
- The offering included an underwriter option for an additional 3 million shares, which was fully exercised.
- The net proceeds from the offering will be used to fund a portion of the cash consideration for the acquisition of GLP Capital Partners' international business and for general corporate purposes.
Capital raise
8 October 2024 6:03 AM
Merger Announcement
- Ares has secured a $2.0 billion bridge loan facility to finance the cash portion of the acquisition.
- The company expects to finance the cash portion of the acquisition with a combination of cash on hand and other equity or debt financing, which may include equity or debt securities issued in one or more capital markets transactions.
Worse than expected
6 August 2024 7:27 PM
Quarterly Report
- Net income attributable to common stockholders decreased compared to the same period last year.
- Carried interest allocation was negative for both the quarter and six months ended June 30, 2024, compared to positive figures in the same periods of 2023.
Capital raise
6 August 2024 7:27 PM
Quarterly Report
- The company issued and sold 2,650,000 shares of Class A common stock in an offering that closed on June 14, 2024, resulting in net proceeds of approximately $354.4 million.
- Subsequent to June 30, 2024, the underwriters exercised the 30-day option to purchase additional shares of Class A common stock, resulting in additional proceeds of $52.9 million.
Better than expected
1 August 2024 9:13 PM
Quarterly Report
- The company achieved record gross fundraising and the second-highest level of capital deployment in its history, indicating better than expected operational performance.
Capital raise
11 July 2024 5:14 PM
Capital Raise Update
- Ares Management Corporation raised approximately $52.92 million through the sale of additional shares.
- The total net proceeds from the offering, including the initial sale, reached approximately $408.21 million.
Capital raise
14 June 2024 4:15 PM
Capital Raise Announcement
- Ares Management Corporation raised approximately $356 million through the sale of 2,650,000 shares of Class A common stock.
- The underwriters have an option to purchase an additional 397,500 shares within 30 days, which could result in further capital being raised.
Worse than expected
8 May 2024 8:28 PM
Quarterly Report
- Net income attributable to common stockholders decreased by 22% year-over-year, indicating worse than expected results.
- Carried interest allocation decreased significantly to a loss of $32.5 million, primarily due to reversals in private equity and real estate funds, indicating worse than expected results.
Better than expected
1 May 2024 9:54 PM
Quarterly Report
- The company's AUM grew by 19% year-over-year, exceeding expectations.
- The company raised $17.4 billion in gross new capital, indicating strong investor confidence.
- Available capital reached a record high of $114.6 billion, positioning the company for future growth.
Better than expected
7 February 2024 9:30 PM
Quarterly Report
- The company's AUM, FPAUM, and available capital all reached record levels, indicating strong growth and investor confidence.
- The company's fundraising efforts were highly successful, exceeding expectations and positioning them for future growth.
- The company's after-tax realized income per share increased year-over-year, demonstrating improved profitability.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.