01—Abstract
Summary
Summary of the 8-K filed February 5, 2025. Cited figures are marked; the original filing is the authoritative source.
Ares Management (NYSE: ARES) reported strong fourth-quarter and full-year 2024 results, highlighted by record gross fundraising and capital deployment.
Fourth-quarter GAAP net income attributable to Ares Management Corporation was $177.3 milliona, or $0.72 per share, versus $0.88 a year earlier. The more important metrics for the asset-management model are non-GAAP: Fee Related Earnings (FRE) reached $396.2 million in Q4-24, up 7% year over year, and full-year FRE was $1.36 billion, up 17%. After-tax Realized Income per Class A share was $1.23 for the quarter, up 2%, and $3.97 for the full year, up 9%.
Assets under management ended the year at $484.4 billionb, up 16%, and fee-paying AUM rose 12% to $292.6 billion. Growth drivers were fundraising and deployment. Ares raised $92.7 billion of gross new capital in 2024 and deployed $106.7 billion, with net inflows of $86.3 billion.
Available capital stood at $133.1 billionc, and AUM not yet paying fees rose to a record $95.0 billion, of which $81.0 billion is available for future deployment and could generate roughly $728.8 million of potential incremental annual management fees. Management said it expects a more active transaction environment in 2025 and that the pending GCP International acquisition should close in the first quarter of 2025. The board declared a $1.12 per share quarterly common dividend, payable March 31, 2025, and a $0.84375 per share dividend on the 6.75% Series B mandatory convertible preferred stock.
Investors should note that quarterly GAAP earnings fell and that the Q4 performance-related compensation expense was elevated. Fee-related performance revenues and carried interest are volatile, so the quarterly figures can swing materially even when the underlying fee base grows steadily.
02—Key points
Key Highlights
- Fee Related Earnings of $396.2 million in Q4-24 (+7% YoY) and $1.36 billion for FY-24 (+17%), with a 40.9% quarterly FRE margin.
- After-tax Realized Income per Class A share of $1.23 for Q4-24 (+2%) and $3.97 for FY-24 (+9%).
- Record $92.7 billion of gross new capital raised in FY-24 and $106.7 billion of capital deployed, with $86.3 billion of net inflows.
- AUM reached $484.4 billion (+16% YoY) and fee-paying AUM reached $292.6 billion (+12%).
- Record $95.0 billion of AUM not yet paying fees, including $81.0 billion available for future deployment (about $728.8 million in potential annual management fees).
- GAAP net income attributable to Ares Management fell to $177.3 million in Q4-24 from $173.9 million in Q4-23 on a basic-share basis; GAAP EPS was $0.72 versus $0.88 a year earlier.
- Declared a $1.12 quarterly common dividend (payable March 31, 2025) and a $0.84375 quarterly dividend on the Series B mandatory convertible preferred stock.
03—Questions
Frequently Asked Questions
What drove Ares' growth in fee-related earnings in 2024?
Growth was driven mainly by higher management fees from deployment and commitments in U.S. and European direct lending and alternative credit, along with the Walton Street Mexico acquisition in real estate. FY-24 management fees rose 15% to $2.96 billion on a unconsolidated basis, and FRE rose 17%.
Why did GAAP EPS decline in Q4-24 even though fee-related earnings grew?
GAAP results include unrealized performance income and compensation, equity-based compensation, amortization of intangibles, and acquisition-related expenses. Q4-24 GAAP performance-related compensation rose to $309.4 million from $205.5 million, and carried interest allocation fell sharply, so GAAP results moved differently from the fee-based metrics.
What is the outlook for capital deployment and fundraising in 2025?
Management said it expects a more active transaction environment that should create more investment opportunities, and it expects progress on several new fundraising initiatives. The $81.0 billion of AUM available for future deployment and $133.1 billion of total available capital provide a substantial base for future fee growth, though deployment timing is uncertain.
What is the status of the GCP International acquisition?
Management said it is making excellent progress and now expects the transaction to close in the first quarter of 2025. Ares had a $2.0 billion bridge facility as backup financing, which was not used and was terminated in Q4-24, after $5.5 million of one-time interest expense.
Is the dividend secure, and how is it determined?
Ares sets its dividend policy around expected annual fee-related earnings after an allocation of current taxes. The $1.12 quarterly dividend is consistent with this approach, but management notes that dividends could be reduced if FRE were insufficient to fund them over a sustained period. The dividend is not guaranteed.
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