10-QPeriod: Q1 FY2015

Ares Management Corp Quarterly Report for Q1 Ended Mar 31, 2015

Filed May 12, 2015For Securities:ARESARES-PB

Summary

Ares Management L.P. reported solid financial performance for the first quarter of 2015, with total revenues increasing by 36% year-over-year to $181.7 million. This growth was primarily driven by a 22.5% increase in management fees and a significant 147.1% surge in performance fees, indicating strong investment performance across several segments. The company's Private Equity Group saw substantial growth in management fees, partly due to the recent acquisition of EIF, and a significant increase in performance fees, largely from Ares Corporate Opportunities Fund IV, L.P. The Direct Lending Group also experienced growth in management fees, supported by increased capital deployment and higher fees from ARCC. Despite a challenging market environment with increased volatility, Ares Management demonstrated resilience across its diverse business segments, with positive contributions from its Tradable Credit, Direct Lending, Private Equity, and Real Estate groups. Net income attributable to Ares Management, L.P. was $18.5 million, reflecting the consolidation of various funds and non-controlling interests. The company's liquidity remains strong, with $69.4 million in cash and cash equivalents and $970 million in available borrowings under its credit facility as of March 31, 2015. The acquisition of EIF in January 2015 further expanded the company's capabilities in the energy infrastructure sector. Ares Management's strategic focus on diverse investment strategies and robust infrastructure positions it well for continued growth and value creation for its investors.

Financial Highlights

20 data points
Beta

Revenue

$269.90M

Net Income

$18.46M

6.8% Net Margin

Total Assets

$21.62B

Free Cash Flow

-$597.86M

Financial Statements
Beta
Revenue$269.90M
Operating Expenses$234.46M
Net Income$18.46M
Shares Outstanding (Basic)80.67M

Key Highlights

  • 1Total revenues increased by 36.3% to $181.7 million in Q1 2015 compared to Q1 2014.
  • 2Management fees rose by 22.5% to $135.4 million, driven by growth across all segments, notably Private Equity and Direct Lending.
  • 3Performance fees significantly increased by 147.1% to $40.1 million, primarily due to strong performance in the Private Equity Group from Ares Corporate Opportunities Fund IV, L.P.
  • 4The company completed the acquisition of EIF Management, LLC in January 2015, adding approximately $4.4 billion in AUM and a new energy infrastructure strategy to its Private Equity Group.
  • 5Net income attributable to Ares Management, L.P. was $18.5 million, a substantial increase from $0 in the prior year period.
  • 6Liquidity remains strong with $69.4 million in cash and cash equivalents and $970 million of available borrowings under its credit facility as of March 31, 2015.
  • 7Assets Under Management (AUM) grew to $86.9 billion as of March 31, 2015, up from $81.8 billion at the beginning of the quarter, with a significant portion attributed to new commitments and acquisitions.

Frequently Asked Questions

Ares Management L.P.'s total revenues increased by 36.3% to $181.7 million in the first quarter of 2015, up from $133.6 million in the same period of 2014. This growth was driven by increases in both management fees and performance fees.

The acquisition of EIF Management, LLC in January 2015 added approximately $4.4 billion in Assets Under Management (AUM) to the Private Equity Group and contributed to a significant increase in management fees for that segment. The acquisition also led to higher general, administrative, and other expenses due to integration and operational costs.

As of March 31, 2015, Ares Management L.P. had $69.4 million in cash and cash equivalents and $970 million in available borrowings under its credit facility, indicating a strong liquidity position to fund operations and strategic initiatives.

Performance fees saw a significant increase of 147.1% to $40.1 million in Q1 2015 compared to Q1 2014. This surge was primarily driven by strong investment performance in the Private Equity Group, particularly from Ares Corporate Opportunities Fund IV, L.P., which exceeded its hurdle rate.