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Ares Management Corp - $ARES - Earnings Analysis: Record fundraising and capital deployment in 2024.

By sagebytes in Finance —

Business Model

Ares Management generates revenue primarily through management fees, carried interest allocations, incentive fees, principal investment income, and administrative, transaction, and other fees.

Revenue Sources

  • Management fees are based on a percentage of AUM.
  • Carried interest and incentive fees are based on fund performance exceeding hurdle rates.
  • Administrative, transaction, and other fees arise from services provided to funds.

Income Statement Analysis

  • Management fees increased by 11.65% due to AUM growth.
  • Carried interest allocation increased significantly by 155.60%.
  • Incentive fees decreased slightly by 1.72%.
  • Principal investment income saw a significant decrease of 135.54%.
  • Administrative, transaction and other fees increased by 13.28%.
  • Compensation and benefits expenses increased by 18.47%.
  • Performance related compensation expenses increased by 50.53%.
  • General, administrative and other expenses increased by 25.32%.
  • Expenses of consolidated funds decreased by 40.09%.
  • Net realized and unrealized gains on investments decreased significantly by 96.14%.
  • Interest and dividend income increased significantly by 189.0%.
  • Interest expense increased by 28.62%.
  • Other income increased by 241.41%.
  • Total revenues increased, while Total expenses also increased.
  • Series B mandatory convertible preferred stock dividends declared increased to 22781.
  • Net income attributable to Ares Management Corporation Class A and non-voting common stockholders decreased by 11.16%.

Capital Allocation

Ares declared a quarterly dividend of $1.12 per share of its Class A and non-voting common stock, payable on March 31, 2025. The company also looks to continue to make strategic investments to bolster growth outlook for the years ahead.

Management Commentary

During 2024, we set many financial records, including our best year ever in gross fundraising and capital deployed.

We are making excellent progress on GCP International and we now expect the transaction will close in the first quarter. We believe the GCP International business we are acquiring is well positioned and we expect progress on a number of new fundraising initiatives this year.

Total assets under management increased by 16% from the prior year

Overall Sentiment: Optimistic about the future, focusing on a more active transaction environment and continued growth.

Recommendation

Rating: Hold

Reason for Rating: Hold rating based on solid AUM growth and a positive outlook, balanced against the lack of comprehensive financial data in the press release.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.

Generated on: 2/8/2025, 1:04:04 PM