10-Q: Ares Management Corporation Reports Third Quarter 2024 Results, AUM Reaches $463.8 Billion

• Ares Management Corporation reported its financial results for the third quarter ended September 30, 2024, showing a substantial increase in total revenues to $1.13 billion, compared to $671.3 million in the same period last year.
• Management fees increased to $753.6 million, up from $637.5 million year-over-year, driven by growth in fee-paying assets under management (FPAUM).
• The company's assets under management (AUM) reached $463.8 billion, a significant increase from $394.9 billion in the prior year.
• Carried interest allocation saw a dramatic shift, moving from a loss of $28.1 million to a gain of $277.7 million year-over-year.
• Net income attributable to Ares Management Corporation Class A and non-voting common stockholders was $118.5 million, compared to $61.8 million in the third quarter of 2023.
• The company's realized income was $338.8 million, while fee-related earnings (FRE) reached $339.3 million.
• The company's effective management fee rate increased due to a higher contribution from Part I fees.
• The company's credit group saw a significant increase in management fees, driven by capital deployment in direct lending, alternative credit and opportunistic credit funds.
• The company's real assets group saw an increase in management fees, driven by new capital commitments for AREOF IV and our second climate infrastructure fund.
• The company's private equity group saw an increase in management fees, driven by funds acquired from the Crescent Point Acquisition.
• The company's secondaries group saw an increase in management fees, driven by higher management fees from APMF due to additional capital raised and an increase in fee rate.

Score: 8

Explanation: The document presents a strong financial performance with significant growth in revenue, AUM, and net income. The company's strategic acquisitions and capital raises also indicate a positive outlook. However, there are some concerns about increasing expenses and market risks.

• The company experienced significant growth in AUM, reaching $463.8 billion.
• Management fees increased substantially, driven by growth in FPAUM and Part I fees.
• The company's carried interest allocation saw a significant positive shift.
• Net income attributable to Ares Management Corporation Class A and non-voting common stockholders increased significantly.
• The company's realized income and fee-related earnings (FRE) both showed strong performance.
• The company's credit, real assets, private equity and secondaries groups all saw increases in management fees.

• The company's general, administrative and other expenses increased due to costs incurred to support fundraising, distribution of shares in non-traded vehicles, and acquisition-related costs.
• The company's performance related compensation increased due to the increase in carried interest allocation and incentive fees.
• The company's interest expense increased due to the issuance of the 2028 Senior Notes in November 2023.

• The company's results are subject to market fluctuations and economic conditions.
• The company's carried interest allocation and incentive fees are subject to volatility and may not be realized.
• The company's ability to obtain debt financing and complete stock offerings may be impacted by market conditions.
• The company's ability to make cash dividends is dependent on a myriad of factors and may be reduced or suspended.
• The company's ability to transfer cash between different operating entities and jurisdictions may be restricted due to regulatory requirements.

The company expects interest expense to trend higher in future periods as the issuance of our 2054 Senior Notes is expected to result in greater interest expense than the collective savings resulting from the repayment of our 2024 Senior Notes in October 2024 and lower anticipated balances from our Credit Facility.

The global financial markets continued to perform positively in the third quarter, fueled by the easing of monetary policy by the Federal Reserve and several other major central banks, better than expected economic growth and resilient consumer spending. Reduced lending activity by banks and limited capital accessibility continued to support private credit growth. The private equity markets saw a modest recovery, with an increase in private equity deal value in the U.S. The U.S. and European commercial real estate markets continued to improve in the third quarter, with increased deal activity on a year over year basis that was largely supported by the improving macroeconomic environment.

• The document does not provide specific comparisons to industry standards, but it does mention that the company's funds have a stable base of committed capital, enabling them to invest in assets with a long-term focus over different points in a market cycle and to take advantage of market volatility.
• The document also mentions that the company's portfolios across all strategies are well positioned for a fluctuating interest rate environment, with approximately 85% of debt assets and 57% of total assets being floating rate instruments as of September 30, 2024.
• The document also mentions that the company's performance is affected by a variety of factors, including conditions in the global financial markets and economic and political environments, particularly in the U.S., Europe and Asia-Pacific (APAC).
• The document also mentions that the company's results are affected by a variety of factors, including conditions in the global financial markets and economic and political environments, particularly in the U.S., Europe and Asia-Pacific (APAC).
• The document also mentions that the company's portfolios across all strategies are well positioned for a fluctuating interest rate environment, with approximately 85% of debt assets and 57% of total assets being floating rate instruments as of September 30, 2024.

• Shareholders will benefit from the increased net income and dividend payments.
• Employees will benefit from the company's growth and expansion.
• Customers will benefit from the company's continued investment in its products and services.
• Suppliers will benefit from the company's increased business activity.
• Creditors will benefit from the company's strong financial position.

• The company expects to close the GCP Acquisition in the first half of 2025.
• The company expects to close the WSM Acquisition in the fourth quarter of 2024.
• The company will continue to monitor market conditions and manage its exposure to exchange rate and credit risks.
• The company will continue to pay dividends to its Class A and non-voting common stockholders on a quarterly basis in accordance with its dividend policy.

• 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.
• The company is reimbursed for expenses incurred in providing administrative services to certain related parties, including publicly-traded and non-traded vehicles.
• Employees and other related parties may be permitted to participate in co-investment vehicles that generally invest in Ares Funds alongside fund investors.

• October 8, 2014: 2024 Senior Notes were issued.
• June 15, 2020: 2030 Senior Notes were issued.
• June 30, 2021: 2051 Subordinated Notes were issued.
• January 21, 2022: 2052 Senior Notes were issued.
• November 10, 2023: 2028 Senior Notes were issued.
• March 28, 2024: The Credit Facility was amended.
• October 8, 2024: The 2024 Senior Notes were repaid at maturity.
• October 10, 2024: The Fifth Amended and Restated Limited Partnership Agreement of Ares Holdings L.P. was signed.
• October 11, 2024: The 2054 Senior Notes were issued.
• October 11, 2024: The Second Supplemental Indenture was signed.
• October 10, 2024: The Certificate of Designations of 6.75% Series B Mandatory Convertible Preferred Stock was signed.
• October 10, 2024: The Form of 6.75% Series B Mandatory Convertible Preferred Stock was signed.
• October 10, 2024: The Fifth Amended and Restated Limited Partnership Agreement of Ares Holdings L.P. was signed.
• October 11, 2024: The 2054 Senior Notes were issued.
• October 11, 2024: The Second Supplemental Indenture was signed.
• October 10, 2024: The Certificate of Designations of 6.75% Series B Mandatory Convertible Preferred Stock was signed.
• October 10, 2024: The Form of 6.75% Series B Mandatory Convertible Preferred Stock was signed.
• December 17, 2024: Record date for the quarterly dividend of $0.93 per share of Class A and non-voting common stock.
• December 31, 2024: Payment date for the quarterly dividend of $0.93 per share of Class A and non-voting common stock.
• December 15, 2024: Record date for the quarterly dividend of $0.759375 per share of Series B Mandatory Convertible Preferred Stock.
• January 1, 2025: Payment date for the quarterly dividend of $0.759375 per share of Series B Mandatory Convertible Preferred Stock.