8-K: Ares Management Corporation Reports Strong Second Quarter 2024 Results, Driven by Record Fundraising and Deployment
Summary
- Ares Management Corporation reported a GAAP net income of $94.9 million for the second quarter of 2024.
- The company's after-tax realized income was $332.0 million, or $0.99 per share.
- Fee related earnings reached $324.5 million for the quarter.
- Ares achieved record gross fundraising of $26 billion and deployed $26.4 billion in capital.
- The company's available capital stands at more than $120 billion.
- Assets under management (AUM) totaled $447.2 billion, a 18% increase year-over-year.
- Fee-paying AUM (FPAUM) reached $275.8 billion, a 14% increase year-over-year.
- A quarterly dividend of $0.93 per share was declared, payable on September 30, 2024.
Sentiment
Score: 8
Explanation: The document conveys a positive sentiment due to record fundraising, strong capital deployment, and double-digit growth in key metrics. While there are some negative points, the overall tone is optimistic and forward-looking.
Positives
- The company experienced double-digit growth across many key financial metrics.
- Ares has a record amount of available capital, exceeding $120 billion.
- The company is well-positioned to capitalize on the improving transaction environment.
- The dividend reinvestment program is effective for the September 30, 2024 dividend.
- The company's global platform has over $447 billion of assets under management with more than 2,950 employees.
Negatives
- GAAP net income attributable to Ares Management Corporation was $94.9 million, which is lower than the $144.5 million reported in the same quarter last year.
- Realized net investment income decreased by 86% for Q2-24 compared to Q2-23, primarily due to realized gains from the sale of an investment in Q2-23 that did not recur in Q2-24.
- Realized Income decreased by 21% for the Real Assets Group in Q2-24 compared to Q2-23, primarily due to a realized loss associated with a guarantee of a credit facility.
Risks
- The document contains forward-looking statements that are subject to various risks and uncertainties.
- Actual results may vary materially from those indicated in the forward-looking statements.
- The company's performance is subject to market cycles and economic conditions.
- The company's ability to deploy capital and generate additional earnings growth is dependent on the transaction environment.
Future Outlook
Ares believes it is well-positioned to capitalize on the improving transaction environment and generate additional earnings growth, with a record amount of available capital.
Management Comments
- Michael Arougheti, Chief Executive Officer and President of Ares, stated that they generated impressive results in the second quarter, including their highest level of gross fundraising and second highest level of deployment.
- Jarrod Phillips, Chief Financial Officer of Ares, noted the continued strength in the fundamental performance of their portfolios and double-digit growth across many key financial metrics.
Industry Context
Ares' strong performance reflects the continued investor interest in private market investment solutions, as institutional and high net worth investors seek diversification and yield in a low-interest rate environment. The company's diversified platform across credit, real estate, private equity, and infrastructure positions it well to capture opportunities across various asset classes.
Comparison to Industry Standards
- Ares' 18% year-over-year growth in AUM is strong compared to industry averages, which typically range from 10-15% for large alternative asset managers.
- The $26 billion in gross fundraising is a significant achievement, placing Ares among the top firms in terms of capital raising for the quarter.
- The 14% growth in FPAUM is also above average, indicating strong demand for Ares' fee-generating products.
- Comparable companies such as Blackstone, Apollo, and KKR have also reported strong fundraising and deployment numbers, but Ares' growth rate is competitive.
- Ares' focus on direct lending and alternative credit strategies aligns with current market trends, where investors are seeking higher yields and less correlation with public markets.
Stakeholder Impact
- Shareholders will benefit from the declared dividend and the company's strong financial performance.
- Employees will benefit from the company's growth and success.
- Customers will benefit from the company's ability to provide flexible capital and create value.
- Suppliers and creditors will benefit from the company's financial stability and growth.
Next Steps
- Ares will host a conference call on August 2, 2024, to discuss the second quarter results.
- The company will continue to deploy its available capital and capitalize on the improving transaction environment.
- Ares will pay a quarterly dividend on September 30, 2024.
Key Dates
- June 30, 2024: End of the second quarter for which financial results are reported.
- August 2, 2024: Date of the press release and earnings presentation, and the date of the conference call to discuss results.
- September 16, 2024: Record date for the quarterly dividend.
- September 30, 2024: Payment date for the quarterly dividend.
- September 2, 2024: End date for the archived replay of the conference call.
Keywords
Filings with Classifications
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.
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.
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.
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.
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.
SEC Form 4 Filing
- The document indicates a reduction in stake by a major shareholder, which is generally viewed negatively by the market.
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.
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.
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).
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.
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 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.
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.
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.
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.
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 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 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.
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.
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.
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.