8-K: Ares Management Corporation Reports Strong Third Quarter 2024 Results, Expects Record Fundraising Year

Ares Management Corporation announced robust third-quarter 2024 financial results, highlighted by significant fundraising momentum and increased capital deployment.

Summary

• Ares Management Corporation reported a GAAP net income of $118.5 million for the third quarter of 2024.
• The company's after-tax realized income was $316.0 million, or $0.95 per share of Class A common stock.
• Fee-related earnings reached $339.3 million for the quarter.
• Ares experienced strong fundraising, with over $64 billion raised year-to-date and expects to reach the mid-$80 billion range for the full year.
• Capital deployment was nearly $30 billion in the third quarter.
• The company has over $85 billion in assets under management (AUM) not yet paying fees, positioning it for future growth.
• Total AUM reached $463.8 billion as of September 30, 2024.
• Fee-paying AUM was $286.8 billion.
• Available capital stood at $125.3 billion.

Sentiment

Score: 9

Explanation: The document conveys a very positive sentiment due to strong financial results, record fundraising expectations, and significant capital deployment. The management's comments are optimistic, and the company's future outlook is promising.

Positives

• Ares demonstrated strong year-over-year growth in key financial metrics, ranging from the high teens to over twenty percent.
• The company experienced heightened demand for its alternative strategies across all distribution channels.
• Ares has a record amount of available capital, including more than $85 billion in AUM not yet paying fees.
• The company is well-positioned to generate meaningful future earnings growth.
• Ares declared a quarterly dividend of $0.93 per share of its Class A common stock.
• Ares declared a quarterly dividend of $0.759375 per share of its 6.75% Series B mandatory convertible preferred stock.
• The company has a Dividend Reinvestment Program for its Class A common stockholders.

Negatives

• The document does not explicitly state any negative aspects of the results.

Risks

• The document includes forward-looking statements that are subject to various risks and uncertainties.
• Actual results may vary materially from those indicated in the forward-looking statements due to a number of factors, including those described in the company's filings with the Securities and Exchange Commission.

Future Outlook

Ares expects 2024 to be a record fundraising year with gross commitments in the mid-$80 billion range and anticipates broadening investment activities across its strategies in the next 12 months.

Management Comments

• Michael Arougheti, Chief Executive Officer and President of Ares, stated that the company reported strong third quarter results with continued fundraising momentum, increasing deployment, strong fund performance, and year-over-year growth in many key financial metrics.
• Michael Arougheti also noted that they continue to experience heightened demand for their alternative strategies across all three of their distribution channels.
• Jarrod Phillips, Chief Financial Officer of Ares, mentioned that based upon a more positive market tone, their third quarter deployment reached nearly $30 billion and they expect to see their investing activities broaden out further across their strategies in the next 12 months.
• Jarrod Phillips also stated that with a record amount of available capital, including more than $85 billion in AUM not yet paying fees, they are well positioned to generate meaningful future earnings growth.

Industry Context

This announcement reflects a positive trend in the alternative investment management industry, where firms are seeing increased investor interest and capital deployment opportunities. Ares' strong fundraising and deployment figures indicate a robust demand for alternative investment strategies.

Comparison to Industry Standards

• Ares' AUM growth of 17% year-over-year is strong compared to other large alternative asset managers such as Blackstone (BX) and Apollo (APO), which have also reported solid growth but may have different growth rates depending on their specific strategies and market focus.
• The fee-related earnings margin of 41.1% is within the range of what is typically seen in the industry, but can vary based on the mix of strategies and the cost structure of the firm.
• The deployment of nearly $30 billion in a single quarter is a significant figure, indicating strong investment activity and the ability to put capital to work effectively, which is a key metric for investors in alternative asset managers.
• The $85 billion in AUM not yet paying fees is a substantial pipeline for future revenue growth, which is a key differentiator for Ares compared to peers that may have less un-deployed capital.

Stakeholder Impact

• Shareholders will benefit from the strong financial performance and the declared dividends.
• Employees may benefit from the company's growth and success.
• Customers (investors) will benefit from the company's strong investment performance and diverse product offerings.
• Suppliers and creditors may benefit from the company's financial stability and growth.

Next Steps

• Ares will host a conference call on November 1, 2024, to discuss third-quarter results.
• The company will continue to focus on fundraising and deploying capital across its various investment strategies.
• Ares will continue to monitor market conditions and adjust its strategies as needed.

Key Dates

Keywords

Ares Management Corporation, alternative investments, assets under management, fundraising, capital deployment, financial results, dividends, fee related earnings, realized income, private equity, credit, real estate, infrastructure