Ares Management Corp Quarterly Report for Q2 Ended Jun 30, 2020

Summary

Ares Management Corporation (ARES) reported its second quarter 2020 financial results, showing a significant increase in total revenues, driven primarily by a strong performance in management fees and a notable rebound in carried interest allocation compared to the previous quarter. The company's total assets grew to $13.7 billion, indicating robust growth in its asset management business. Despite the ongoing economic challenges presented by the COVID-19 pandemic, Ares demonstrated resilience, with management fees increasing year-over-year across all segments. The Credit Group, in particular, saw substantial growth in management fees, bolstered by increased AUM in direct lending funds and ARCC's fee structure. While overall net income attributable to Class A common stockholders decreased year-over-year for the six-month period, this was largely due to fluctuations in carried interest and unrealized gains/losses, which are inherently volatile. The company's Fee Related Earnings (FRE) and Realized Income (RI) metrics showed positive year-over-year growth, highlighting the underlying stability and growth of its core fee-generating business. The company also strengthened its balance sheet by issuing new senior notes, increasing its cash reserves and overall financial flexibility.

Key Highlights

• 1Total revenues increased by 57% to $602.8 million for the three months ended June 30, 2020, compared to $384.8 million in the prior year period, driven by strong growth in management fees and a significant increase in carried interest.
• 2Assets Under Management (AUM) grew to $158.4 billion as of June 30, 2020, up from $142.1 billion as of June 30, 2019, demonstrating continued fundraising success across its segments.
• 3Fee Related Earnings (FRE) increased by 26% year-over-year to $97.0 million for the three months ended June 30, 2020, indicating strong operational performance and growth in recurring revenue streams.
• 4Realized Income (RI) increased by 22% year-over-year to $115.2 million for the three months ended June 30, 2020, reflecting solid performance across its business segments.
• 5The Credit Group's management fees increased by 17% year-over-year, supported by higher AUM in direct lending funds and ARCC's fee structure.
• 6The company issued $400 million in 3.250% Senior Notes due 2030 in June 2020, strengthening its liquidity and capital structure.
• 7Despite market volatility due to COVID-19, the company reported a net income of $50.9 million attributable to Class A common stockholders for the three months ended June 30, 2020, up from $26.7 million in the prior year period.

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