Skip to content
AnalystLens

Ares Management Corp 8-K Report, Financial Results (Feb 8, 2024)

Reports
Earnings & Results·Regulation FD·Exhibits & Filings
Filing Date
Filed February 8, 2024
Period End
February 8, 2024
Securities
ARESARES-PB
In the record · 2016–202610-K1110-Q328-K128

ARES filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 128 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Dec ’17Dec ’17
  2. Leadership change8-K · Feb ’20Feb ’20
  3. Material agreement8-K · Apr ’22Apr ’22
  4. Material agreement8-K · May ’26May ’26

01—Abstract

Summary

Summary of the 8-K filed February 8, 2024. Cited figures are marked; the original filing is the authoritative source.

Ares Management Corp. (NYSE: ARES) reported fourth-quarter and full-year 2023 results on February 8, 2024, alongside a declared quarterly dividend of $0.93a per Class A share.

GAAP net income attributable to Ares Management was $174.0 millionb for Q4 and $474.3 million for the full year, with diluted EPS of $0.86 and $2.42, respectively. The more closely watched non-GAAP metrics were strong: Fee Related Earnings rose to $368.7 million in Q4 and $1,163.7 million for FY-23 (up 17% year over year), and after-tax Realized Income per Class A share was $1.21 for Q4 and $3.65 for the year (up 9%). Fee-paying AUM grew to $261.7 billion and total AUM reached $418.8 billion, up 19% year over year.

Fundraising and deployment were the main growth drivers. Ares raised $21.1 billionc of gross new capital in Q4 and $74.5 billion for the year, its second-highest annual total, with net inflows of $68.3 billion for FY-23. Available capital reached a record $111.4 billion, and AUM not yet paying fees stood at $74.3 billion, which management says could generate significant future management fees.

Capital deployment was $68.1 billiond for FY-23, down from $79.8 billion in FY-22, with the Credit Group producing most of the activity. The Crescent Point acquisition, completed October 2, 2023, added $3.7 billion in AUM to the Private Equity Group. Investors should weigh the strong fee-based growth against several softer areas.

Real Assets Fee Related Earnings fell 19% for the year after the absence of prior-year real estate incentive fees, and Fee Related Performance Revenues were lower overall for FY-23 at $180.4 million versus $239.4 million in FY-22. Realized Income from the Real Assets Group fell 33% for the year. Fee Related Performance Revenues remain concentrated in the Credit Group's direct lending strategies, and the filing's supplementary materials note that ARCC's Part II fee hurdle was not met at year-end, so incentive income depends on future portfolio performance.

02—Key points

Key Highlights

  1. Q4-23 GAAP net income attributable to Ares Management of $174.0M ($0.86 diluted EPS); FY-23 of $474.3M ($2.42 diluted EPS), versus $167.5M for FY-22.
  2. Fee Related Earnings of $368.7M in Q4-23 (+10% YoY) and $1,163.7M for FY-23 (+17% YoY), with FRE margin of 40.9% for the year.
  3. After-tax Realized Income per Class A share of $1.21 for Q4-23 (flat YoY) and $3.65 for FY-23 (+9% YoY).
  4. Record available capital of $111.4B (+32% YoY) and $74.3B of AUM not yet paying fees, supporting future fee growth.
  5. Gross new capital raised of $21.1B in Q4-23 and $74.5B for FY-23, the second-highest annual total in company history; net inflows of $68.3B for the year.
  6. Quarterly dividend declared at $0.93 per Class A share, payable March 29, 2024 to holders of record on March 15, 2024.
  7. Real Assets Group Fee Related Earnings fell 19% for FY-23 and Realized Income fell 33%, reflecting lower incentive fees from non-traded REITs.

03—Questions

Frequently Asked Questions

  1. How did Ares perform on its key non-GAAP profitability measures in 2023?

    Fee Related Earnings rose 17% to $1,163.7 million for FY-23, and after-tax Realized Income per Class A share increased 9% to $3.65. Growth came mainly from higher management fees in the Credit Group, while Real Assets earnings declined due to lower fee-related performance revenues.

  2. What is the outlook for future fee growth given the current capital base?

    Ares ended 2023 with $111.4B of available capital and $74.3B of AUM not yet paying fees. The filing estimates that $62.9B of AUM available for future deployment could generate roughly $621.6M in potential incremental annual management fees, though management notes no assurance that this capital will be deployed.

  3. Why did Real Assets earnings decline in 2023?

    Real Assets Fee Related Earnings fell 19% and Realized Income fell 33% for FY-23. The decline reflected lower fee-related performance revenues because AIREIT and AREIT did not meet performance hurdles in 2023, after generating $164.3M of incentive fees in 2022.

  4. Is the $0.93 quarterly dividend supported by earnings?

    The dividend is set in line with Ares' expected annual Fee Related Earnings after an allocation of current taxes, per its stated dividend policy. Dividends are not guaranteed and could be reduced or suspended if FRE cash flows are insufficient over time.

  5. Did Ares complete any acquisitions or significant changes in 2023?

    Yes. Ares completed the acquisition of Crescent Point Capital, an Asia-focused private equity firm, on October 2, 2023, adding $3.7B of AUM and about 25 investment professionals to its Private Equity Group. Management also cited the rebranding of Ares SSG to Ares Asia, which led to impairment charges of $78.7M on intangible assets during 2023.

04—Continue

← View all 8-K filings