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01/10 05:07
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial performance with a significant dividend increase, robust fee-related earnings, and positive returns across various strategies. Despite missing EPS expectations, the optimistic guidance and strategic management changes suggest potential growth. The Q&A section indicates stable investor behavior and achievable margin expansion, although there are concerns about economic conditions and management's vague responses on tariffs. Given the overall positive financial metrics and strategic outlook, the stock price is likely to experience a positive movement in the short term.
Quarterly Dividend $1.12 per share, representing a 20% increase year-over-year.
Management Fees $818,000,000, an 18% year-over-year increase.
Fee Related Earnings (FRE) $367,000,000, a 22% year-over-year increase.
After Tax Realized Income per Share $4.06, a 36% year-over-year increase.
Fee Related Performance Revenues (FRPR) $28,000,000, a significant increase from $4,000,000 in Q1 2024.
FRE Margins 41.5%, with a modest drag from GCP integration.
Net Realized Performance Income Over $40,000,000, primarily driven by European waterfall tax distributions.
Total AUM $546,000,000,000, including $45,000,000,000 added through GCP acquisition.
Accrued Performance Income Just over $1,000,000,000, with over $850,000,000 in European style funds.
Realized Income $4.06, a 40% year-over-year increase.
Effective Tax Rate on Realized Income 8.1%, expected to remain between 8% to 12% for the year.
Credit Strategy Composites Returns Positive returns across all strategies, with U.S. Senior Direct Lending at 3.2% and European Direct Lending at 2.4%.
Non-Accruals Rate 1.5%, well below the long-term average of 2.8%.
LTVs in U.S. Direct Lending Portfolio Average of 42%.
EBITDA Growth in U.S. Direct Lending Portfolio Over 11% year-over-year.
Net Returns from Non-Traded REITs 2.4% in the first quarter.
Total Dry Powder $142,000,000,000 available for deployment.
Fundraising in First Quarter Over $20,000,000,000 in gross new capital commitments, the highest level for first quarter fundraising on record.
Deployment in First Quarter Over $31,000,000,000 with a gross to net deployment ratio of 49%.
Private Wealth Inflows in April $1,200,000,000 in equity commitments.
Alternative Credit Business Return 12.5% LTM return.
U.S. Senior Direct Lending Business Return 15% return.
Asia Pacific Credit Composite Return 25% return.
European Direct Lending Return 12% return.
Secondaries Group Commitments $2,300,000,000 in new commitments across various funds.
GCP Fee Paying AUM $30,500,000,000, impacted by FX.
GCP FRE Run Rate for 2026 $245,000,000, still considered accurate.
New Products: Ares launched two new products: an open-end infrastructure fund and an open-ended sports media and entertainment product, both now open for monthly subscriptions.
Market Expansion: Ares raised over $20 billion in gross new capital commitments, the highest level for first quarter fundraising on record, with significant contributions from various strategies including real estate, infrastructure debt, and private equity.
Geographic Expansion: Ares is expanding its wealth management distribution outside the U.S., with over 30% of demand coming from European and Asian markets.
Operational Efficiency: Ares reported a 22% year-over-year increase in fee-related earnings (FRE) and a 41.5% FRE margin for the first quarter.
Integration Efficiency: The integration with GCP International is progressing well, with early fundraising momentum and identified synergy opportunities.
Strategic Shifts: Ares is focusing on credit-related products, with over 72% of total AUM in credit, and is positioned to capitalize on market volatility.
Investment Strategy: Ares is leveraging its record dry powder of $142 billion to pursue opportunistic investments in private markets, particularly in credit and secondaries.
Market Volatility: Increased market volatility and uncertainty were noted, particularly following the announcement of tariffs and geopolitical events, leading to a risk-off position among banks and liquid market investors.
Tariff Impact: The introduction of tariffs is expected to drive up construction costs, potentially constraining supply in already supply-constrained markets, which could impact real estate values and transaction activity.
Economic Growth Uncertainty: There is uncertainty regarding the path of economic growth, which could affect M&A activity and overall market conditions.
Credit Market Risks: Concerns were raised about potential defaults and non-accruals in private credit due to anticipated negative GDP growth, although the company believes its portfolios are well-positioned to withstand such pressures.
Regulatory Environment: The new administration's regulatory and tax policies are expected to impact market conditions, creating both opportunities and challenges.
Supply Chain Challenges: The company has limited exposure to international markets and global supply chains, which may mitigate some risks associated with tariff changes.
Investment Pipeline: While the investment pipeline remains steady, the company anticipates slower M&A activity until there is more certainty regarding tariffs and economic conditions.
Wealth Management Flows: The behavior of private wealth investors during market volatility remains uncertain, with potential for changes in allocation strategies as they become more educated about private market investments.
Quarterly Dividend: Declared a quarterly dividend of $1.12 per share, a 20% increase year-over-year.
Fundraising: Raised over $20 billion in gross new capital commitments, the highest level for first quarter fundraising on record.
AUM Growth: Total AUM reached $546 billion, with a year-over-year growth of 27.25%.
Investment Pipeline: Investment pipeline remains strong, with significant opportunities in opportunistic credit, alternative credit, and secondaries.
GCP Integration: Integration with GCP International is progressing well, with early fundraising momentum and synergy opportunities identified.
2025 Performance Income Target: Expecting net realized performance income from European style funds to be in the range of $225 million to $275 million.
FRE Margin Outlook: Expecting FRE margin expansion of 0 to 150 basis points for the year.
Future Fundraising: Expecting continued growth in fundraising due to strong institutional relationships and diverse product offerings.
Market Conditions: Anticipate slower M&A activity until more certainty on tariffs and economic impact is established.
Wealth Channel Growth: Encouraged by private wealth inflows, with $1.2 billion in equity commitments in April.
Quarterly Dividend: $1.12 per share on the company’s Class A and nonvoting common stock, representing a 20% increase over the same quarter a year ago.
Share Repurchase Program: None
The earnings call highlights strong financial performance, optimistic guidance, and strategic growth initiatives, including increased dividends, robust fundraising, and expansion in real estate and private credit. The Q&A section reinforces positive sentiment, with management addressing concerns effectively and emphasizing growth opportunities. The positive outlook for real estate and private credit, coupled with strategic acquisitions and increased dividends, suggests a strong positive impact on stock price.
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