10-QPeriod: Q2 FY2021

Ares Management Corp Quarterly Report for Q2 Ended Jun 30, 2021

Filed August 9, 2021For Securities:ARESARES-PB

Summary

Ares Management Corporation (ARES) reported a strong second quarter of 2021, driven by significant growth across its Credit and Private Equity segments. Total revenues surged by 115% year-over-year to $1.3 billion, largely due to a substantial increase in carried interest allocation, reflecting robust fund performance. Net income attributable to Ares Management Corporation stockholders more than doubled to $125 million. The company also completed the significant acquisition of Landmark Partners, expanding its capabilities into the secondaries market and adding $1.1 billion in value. Management fees saw a healthy increase, supported by growth in Fee Paying Assets Under Management (FPAUM) across its core segments. Overall, the report indicates a positive operational and financial trajectory for Ares Management.

Financial Highlights

28 data points
Beta

Revenue

$1.29B

Net Income

$141.64M

10.9% Net Margin

Total Assets

$18.64B

Cash & Equivalents

$582.91M

Free Cash Flow

-$327.93M

Financial Statements
Beta
Revenue$1.29B
SG&A Expenses$83.36M
Operating Expenses$1.02B
Interest Expense$6.91M
Net Income$141.64M

Key Highlights

  • 1Total revenues increased significantly by 115% to $1.3 billion in Q2 2021 compared to Q2 2020.
  • 2Net income attributable to Ares Management Corporation Class A and non-voting common stockholders more than doubled, reaching $125 million in Q2 2021.
  • 3Carried interest allocation saw a substantial increase of 181% year-over-year, driven by strong performance in Credit and Private Equity funds.
  • 4The company completed the acquisition of Landmark Partners for $1.1 billion, expanding its capabilities into the secondaries market.
  • 5Fee Paying Assets Under Management (FPAUM) grew across all segments, with particular strength in the Credit Group, reaching $153.7 billion as of June 30, 2021.
  • 6Total Assets Under Management (AUM) increased to $247.9 billion as of June 30, 2021, reflecting continued fundraising success and capital deployment.

Frequently Asked Questions

The substantial increase in total revenues was primarily driven by a significant rise in carried interest allocation, which grew by 181% year-over-year to $852.5 million for the three months ended June 30, 2021. This was a result of strong performance across several key funds, particularly within the Credit and Private Equity segments, where investments generated returns exceeding hurdle rates and experienced market appreciation.

The acquisition of Landmark Partners, completed on June 2, 2021, contributed $12.9 million in management fees to the newly formed Secondary Solutions Group in the second quarter of 2021. The acquisition, valued at $1.1 billion, expanded Ares' capabilities into the secondaries market and added $19.5 billion in Assets Under Management (AUM) and $16.8 billion in Fee Paying Assets Under Management (FPAUM) to the company's portfolio.

Fee Related Earnings (FRE) showed a strong increase of 52% year-over-year, reaching $146.9 million for the three months ended June 30, 2021. This growth was predominantly driven by the Credit Group, which saw a 46% increase in FRE, and the newly established Secondary Solutions Group contributing positively since its acquisition. The overall increase in FRE indicates the company's ability to generate recurring revenue from its growing fee-paying AUM.

Ares Management redeemed all outstanding shares of its Series A Preferred Stock on June 30, 2021, for $310 million. The company also issued $450 million in 2051 Subordinated Notes and raised approximately $827 million from common stock offerings. These actions, along with the absence of borrowings under its credit facility as of June 30, 2021, indicate a strengthening of its capital structure and ample liquidity.