8-K: Ares Management Corporation Reports Strong First Quarter 2024 Results, AUM Climbs 19%

Ares Management Corporation announced robust first quarter 2024 financial results, highlighted by a 19% year-over-year increase in assets under management and strong fundraising.

Summary

• Ares Management Corporation reported a GAAP net income of $73.0 million for the first quarter of 2024.
• The company's after-tax realized income was $265.1 million, or $0.80 per share.
• Fee related earnings reached $301.7 million for the quarter.
• Assets under management (AUM) grew by 19% year-over-year to $428 billion.
• The company raised over $17 billion in gross new capital during the quarter.
• Available capital reached a record of nearly $115 billion.
• AUM not yet paying fees grew by 28%, indicating future growth potential.
• A quarterly dividend of $0.93 per share was declared, payable on June 28, 2024.

Sentiment

Score: 8

Explanation: The document presents a very positive outlook with strong growth in AUM, fundraising, and available capital. While there are some negative points, the overall tone is optimistic and indicates a healthy financial position and future potential.

Positives

• Ares experienced strong year-over-year growth across key financial metrics.
• The company has a record amount of available capital, positioning it well for future growth.
• There is significant capacity for growth when transaction activity increases.
• The company's portfolios continue to perform well.
• Ares is finding compelling investment opportunities across its global platform.
• The company has a dividend reinvestment program for Class A common stockholders.

Negatives

• GAAP net income attributable to Ares Management Corporation decreased to $73.0 million from $94.0 million in the same quarter last year.
• Carried interest allocation was negative at $(32.478) million compared to $151.488 million in the same quarter last year.
• Realized net investment loss was $(22.539) million compared to $(7.622) million in the same quarter last year.

Risks

• The company's future performance is subject to various risks and uncertainties.
• Actual results may vary materially from forward-looking statements due to various factors.
• The company's performance is dependent on market conditions and transaction activity.
• There is no guarantee that AUM not yet paying fees will be deployed or generate the estimated management fees.

Future Outlook

The company believes it has significant capacity for growth when there is a return to higher levels of transaction activity, given its record available capital and AUM not yet paying fees.

Management Comments

• Michael Arougheti, Chief Executive Officer and President of Ares, stated that they continued to see strong year-over-year growth across key financial metrics, including 19% growth in AUM.
• Michael Arougheti also noted robust fundraising, higher deployment, and attractive investment performance.
• Jarrod Phillips, Chief Financial Officer of Ares, mentioned the record amount of available capital and 28% growth in AUM not yet paying fees, indicating significant capacity for growth.

Industry Context

This announcement reflects a positive trend in the alternative investment management sector, where firms are focusing on growing AUM and deploying capital effectively. Ares' strong fundraising and AUM growth position it well against competitors in the space.

Comparison to Industry Standards

• Ares' 19% AUM growth is strong compared to industry averages, which typically range from 10-15% for large alternative asset managers.
• The $17.4 billion in gross new capital raised is a significant achievement, placing Ares among the top fundraisers in the sector this quarter.
• The 28% growth in AUM not yet paying fees is a positive indicator of future revenue potential, exceeding the growth rates of many peers.
• Comparable companies like Blackstone and Apollo have also reported strong AUM growth, but Ares' specific focus on credit and direct lending provides a unique competitive advantage.
• Ares' dividend yield of $0.93 per share is competitive with other publicly traded alternative asset managers.

Stakeholder Impact

• Shareholders will benefit from the declared dividend and potential future growth.
• Employees may see opportunities for career advancement due to the company's growth.
• Customers will have access to a wider range of investment solutions.
• Suppliers and creditors will benefit from the company's strong financial position.

Next Steps

• Ares will host a conference call on May 2, 2024, to discuss the first quarter results.
• The company will continue to deploy capital and seek investment opportunities.
• Ares will pay a quarterly dividend on June 28, 2024.

Key Dates

Keywords

Assets Under Management, AUM, Alternative Investments, Fee Related Earnings, Realized Income, Dividend, Capital Deployment, Fundraising, Private Equity, Credit, Real Estate, Infrastructure