8-K: Ares Management Corporation Reports Strong Fourth Quarter and Full Year 2023 Results, Declares Dividend

Ares Management Corporation announced its financial results for the fourth quarter and full year 2023, highlighting significant growth in key financial metrics and a record level of available capital.

Summary

• Ares Management Corporation reported GAAP net income of $174 million for the fourth quarter and $474.3 million for the full year 2023.
• After-tax realized income was $400.4 million for the quarter and $1,185.7 million for the year.
• Fee related earnings reached $368.7 million in the fourth quarter and $1,163.7 million for the year.
• The company raised $21 billion in the fourth quarter and over $74 billion for the full year, marking its second-highest level ever.
• Ares ended the year with a record $111 billion in available capital.
• Total assets under management (AUM) reached $419 billion, a 19% increase year-over-year.
• Fee-paying AUM (FPAUM) totaled $261.7 billion, a 13% increase year-over-year.
• A quarterly dividend of $0.93 per share was declared, payable on March 29, 2024.

Sentiment

Score: 8

Explanation: The document presents a very positive outlook with strong financial results, record capital levels, and successful fundraising. While there are some negative points, the overall tone is optimistic and indicates a healthy and growing business.

Positives

• Ares experienced strong fundraising momentum, securing $74 billion in capital for the year.
• The company's investment activity accelerated, contributing to a strong finish to the year.
• The acquisition of Crescent Point Capital added $3.7 billion to AUM.
• There is $62.9 billion of AUM not yet paying fees available for future deployment.
• The company has a dividend reinvestment program for Class A common stockholders.

Negatives

• Fee related performance revenues decreased by 23% for the quarter and 25% for the year.
• Realized income in the Private Equity Group decreased by 40% for the quarter.
• Realized income in the Real Assets Group decreased by 62% for the quarter and 33% for the year.
• Realized income in the Secondaries Group decreased by 7% for the year.
• The company's corporate investment portfolio was $2,041.3 million on an unconsolidated basis, but only $1,211.9 million in accordance with GAAP.

Risks

• The company's forward-looking statements are subject to various risks and uncertainties.
• Actual results may vary materially from those indicated in forward-looking statements.
• The company's performance is subject to market cycles and economic conditions.
• There is no guarantee that the $62.9 billion of AUM not yet paying fees will be deployed or generate the estimated $621.6 million in potential incremental annual management fees.
• The company's incentive eligible AUM may not always generate incentive fees.

Future Outlook

The company is positioned to invest opportunistically and drive continued strong growth in key financial metrics, with growing contributions from recent investments.

Management Comments

• Michael Arougheti, Chief Executive Officer and President of Ares, stated that the company generated significant year-over-year growth in key financial metrics, continued fundraising momentum, and accelerated investment activity.
• Jarrod Phillips, Chief Financial Officer of Ares, noted that the company ended the year with a record level of available capital, positioning them to invest opportunistically and drive continued strong growth.

Industry Context

Ares' results reflect the ongoing demand for alternative investment strategies, with strong growth in credit, private equity, and real assets. The company's ability to raise significant capital and deploy it effectively positions it well within the competitive landscape of alternative asset managers.

Comparison to Industry Standards

• Ares' AUM growth of 19% year-over-year is strong compared to other large alternative asset managers, such as Blackstone and Apollo, which have also seen growth but may have different focuses.
• The company's fundraising of $74 billion is a significant achievement, placing it among the top firms in terms of capital raising for the year.
• The dividend yield of Ares is competitive with other publicly traded alternative asset managers.
• The company's performance in specific sectors, such as direct lending, is in line with industry trends, while some areas like real estate are facing headwinds.

Stakeholder Impact

• Shareholders will benefit from the declared dividend and potential for future growth.
• Employees may benefit from the company's continued success and expansion.
• Customers will have access to a broader range of investment solutions.
• Suppliers and creditors will benefit from the company's financial stability.

Next Steps

• The company will continue to deploy its available capital opportunistically.
• Ares will host a conference call to discuss the results.
• The company will hold its Annual Meeting of Stockholders on June 4, 2024.

Key Dates

Keywords

Ares Management Corporation, Alternative Investments, Assets Under Management, Fee Paying AUM, Financial Results, Dividend, Private Equity, Credit, Real Estate, Infrastructure, Secondaries