Summary
Ares Management Corporation's (ARES) Q3 2015 10-Q filing reveals a mixed financial performance impacted by the adoption of new accounting standards and challenging market conditions. While the company saw an increase in management fees driven by growth in assets under management across its Direct Lending, Tradable Credit, and Private Equity segments, this was partially offset by decreases in performance fees, particularly in the Private Equity and Tradable Credit segments, due to market depreciation and fund liquidations. The adoption of ASU 2015-02 led to the deconsolidation of several funds, which impacted reported revenues and expenses but had no net effect on net income attributable to Ares Management, L.P. The company's balance sheet shows a significant increase in debt obligations, largely due to the issuance of senior notes to fund strategic initiatives and potential acquisitions. Despite a challenging market environment with increased volatility and investor aversion to risk assets, Ares demonstrated resilience, with its Direct Lending and Tradable Credit groups leveraging flexible investment mandates to navigate market shifts.
Financial Highlights
23 data points| Revenue | $143.85M |
| Operating Expenses | $136.39M |
| Net Income | -$11.35M |
| Shares Outstanding (Basic) | 80.68M |
Key Highlights
- 1Management fees increased year-over-year across most segments, driven by asset growth and the impact of deconsolidated funds due to new accounting standards.
- 2Performance fees saw a significant decline, particularly in the Private Equity and Tradable Credit segments, reflecting weaker market conditions and fund-specific performance.
- 3The adoption of ASU 2015-02 led to the deconsolidation of 56 entities, impacting reported revenue and expense figures but not net income attributable to the company.
- 4Debt obligations increased significantly due to the issuance of senior notes, including the AFC Notes and AFC II Notes, impacting interest expenses.
- 5The company's AUM grew to $91.5 billion as of September 30, 2015, up from $79.6 billion in the prior year, driven by new commitments and acquisitions.
- 6Despite market headwinds, Ares' Direct Lending and Tradable Credit segments showed resilience due to flexible investment mandates and a significant portion of floating-rate assets.
- 7The proposed merger with Kayne Anderson Capital Advisors, L.P. was terminated in October 2015, with Ares reimbursing KACALP for expenses and making new capital commitments to KACALP-managed funds.