10-QPeriod: Q3 FY2021

Ares Management Corp Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 5, 2021For Securities:ARESARES-PB

Summary

Ares Management Corporation (ARES) reported a strong third quarter of 2021, with total revenues reaching $948.7 million, a significant increase of 94% compared to the same period in 2020. This growth was primarily driven by a substantial rise in management fees and carried interest, reflecting robust fundraising and successful investment performance across its various segments. The company's total AUM grew to $282.0 billion, up from $179.2 billion in the prior year period, indicating successful capital deployment and investor confidence. Profitability also saw a marked improvement, with net income attributable to Ares Management Corporation Class A and non-voting common stockholders increasing by 101% year-over-year to $84.7 million for the quarter. This positive performance was supported by strong Fee Related Earnings (FRE) and Realized Income (RI) across its Credit, Private Equity, and Real Estate segments. Strategic acquisitions, including Landmark and Black Creek, have contributed positively to revenue and expanded the company's service offerings, particularly in the secondary solutions market. Looking ahead, Ares Management appears well-positioned to capitalize on its diversified platform and strong market position, although continued vigilance regarding market volatility and economic conditions remains prudent.

Financial Highlights

27 data points
Beta

Revenue

$948.72M

Net Income

$84.73M

8.9% Net Margin

Total Assets

$19.93B

Cash & Equivalents

$295.70M

Free Cash Flow

-$774.71M

Financial Statements
Beta
Revenue$948.72M
SG&A Expenses$134.45M
Operating Expenses$813.27M
Interest Expense$11.52M
Net Income$84.73M

Key Highlights

  • 1Total revenues surged by 94% year-over-year to $948.7 million, driven by significant increases in management fees and carried interest.
  • 2Net income attributable to Ares Management Corporation Class A and non-voting common stockholders grew by 101% year-over-year to $84.7 million.
  • 3Total Assets Under Management (AUM) increased to $282.0 billion, up from $179.2 billion in the prior year period.
  • 4Fee Related Earnings (FRE) grew by 71% to $182.3 million, demonstrating strong core operational performance.
  • 5Acquisitions of Landmark and Black Creek were completed, integrating new capabilities in secondary solutions and expanding the real estate offerings.
  • 6Carried interest allocation increased substantially by 173% year-over-year, reflecting strong performance across various funds, particularly in credit and private equity.
  • 7The company redeemed all outstanding Series A Preferred Stock for $310 million in June 2021.

Frequently Asked Questions

The primary driver for the substantial increase in revenue was a combination of higher Fee Paying Assets Under Management (FPAUM) due to successful capital deployment in direct lending funds, and a significant increase in carried interest, reflecting strong investment performance and market appreciation across credit, private equity, and real estate funds.

The acquisitions of Landmark and Black Creek were completed during the period and contributed positively to revenue. The Landmark acquisition expanded Ares into the secondaries market, while the Black Creek acquisition strengthened its real estate offerings. These acquisitions also contributed to an increase in general, administrative, and other expenses, primarily due to amortization of acquired intangible assets.

Ares Management Corporation views its diversified platform, strong AUM growth, and robust fee-related earnings as indicators of a well-positioned future. The company maintains sufficient liquidity through cash on hand and its credit facility to fund operations, strategic initiatives, and dividend payments. Management remains optimistic about leveraging market opportunities while being mindful of economic and market volatility.

Ares Management Corporation redeemed all outstanding Series A Preferred Stock for $310 million on June 30, 2021. This action eliminated preferred dividends and is expected to improve earnings per share for common stockholders. The redemption was funded by available liquidity.