10-QPeriod: Q1 FY2024

Ares Management Corp Quarterly Report for Q1 Ended Mar 31, 2024

Filed May 9, 2024For Securities:ARESARES-PB

Summary

Ares Management Corporation reported mixed financial results for the first quarter of 2024. Total revenues decreased by 13% year-over-year to $707.4 million, primarily due to a significant drop in carried interest allocation, which was down 150% from the prior year. This was partially offset by a 15% increase in management fees, reaching $687.7 million, and a 23% rise in administrative, transaction, and other fees. Net income attributable to common stockholders declined by 22% to $73.0 million. Despite the revenue dip, the company saw growth in Fee Related Earnings (FRE), up 18% to $301.7 million, and Realized Income (RI), up 14% to $289.2 million, highlighting the resilience of its core fee-generating businesses. Assets Under Management (AUM) grew to $428.3 billion, an increase from $360.3 billion in the prior year, demonstrating continued fundraising success. The company also amended its credit facility, increasing commitments and extending its maturity, indicating proactive balance sheet management.

Financial Highlights

27 data points
Beta

Revenue

$707.36M

Net Income

$73.03M

10.3% Net Margin

Total Assets

$24.41B

Cash & Equivalents

$346.33M

Free Cash Flow

$710.04M

Financial Statements
Beta
Revenue$707.36M
SG&A Expenses$170.93M
Operating Expenses$538.49M
Net Income$73.03M

Key Highlights

  • 1Total revenues decreased 13% year-over-year to $707.4 million, largely impacted by a significant decrease in carried interest allocation.
  • 2Management fees increased by 15% to $687.7 million, driven by growth in Fee Paying Assets Under Management (FPAUM) across various segments, particularly Credit.
  • 3Fee Related Earnings (FRE) grew by 18% to $301.7 million, reflecting the strength of recurring revenue streams.
  • 4Realized Income (RI) increased by 14% to $289.2 million, indicating improved operating performance.
  • 5Assets Under Management (AUM) grew to $428.3 billion, up from $360.3 billion in the prior year, showcasing successful fundraising efforts.
  • 6Net income attributable to Ares Management Corporation Class A and non-voting common stockholders decreased by 22% to $73.0 million.
  • 7The company amended its Senior Credit Facility, increasing commitments to $1.4 billion and extending the maturity to March 2029.

Frequently Asked Questions

Total revenues decreased by 13% year-over-year primarily due to a significant 150% decrease in carried interest allocation, which fell from $151.5 million in Q1 2023 to a negative $32.5 million in Q1 2024. This was partially offset by a 15% increase in management fees and a 23% increase in administrative, transaction, and other fees.

Both FRE and RI showed positive growth, indicating the strength of Ares' core, fee-generating businesses. FRE increased by 18% to $301.7 million, and RI grew by 14% to $289.2 million, demonstrating effective operational management and earnings generation.

Ares Management's AUM continued to grow, reaching $428.3 billion as of March 31, 2024, up from $360.3 billion in the prior year. This growth reflects successful fundraising efforts across its various investment strategies.

The acquisition of Crescent Point Capital contributed an additional $7.4 million in management fees during the quarter. However, the company also incurred acquisition and merger-related expenses and acquisition-related compensation expenses, which impacted overall profitability.