Sculptor Capital Management Inc
Sculptor Capital Management — Q2 2023 Earnings Presentation
33 slides from Sculptor Capital Management's earnings presentation, Aug 8, 2023
Slide 1: Sculptor Reports Second Quarter 2023 Financial Results
Sculptor Reports Second Quarter 2023 Financial Results August 8, 2023
Slide 2: About Sculptor
|2 New York - August 8, 2023 - Sculptor Capital Management, Inc. (NYSE: SCU) today reported its unaudited results for the second quarter of 2023. About Sculptor Sculptor is a leading global alternative asset manager and a specialist in opportunistic investing. For over 25 years, we have pursued cons
Slide 3: Forward-looking statements
|3 This press release and earnings presentation contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that reflect the Company's current views with respect to, among other th
Slide 4: Second Quarter 2023 Financial Results
Second Quarter 2023 Financial Results
Slide 5: Second quarter 2023 results summary
|5 (dollars in millions, except per share amounts) 2Q '23 1Q '23 2Q '22 YTD '23 YTD '22 GAAP Results Net (Loss) Income Attributable to Sculptor Capital Management $ (4.4) $ 9.7 $ (8.8) $ 5.3 $ 5.0 Net Income (Loss) Attributable to Class A Shareholders 3.7 8.5 (8.1) 12.1 8.8 Earnings (Loss) per Class
Slide 6: Fund performance, AUM and financial results
|6 ▪ Gross fund performance for the quarter and year-to-date (“YTD”)1: – Sculptor Credit Opportunities Master Fund was up 4.0% in 2Q and up 7.7% YTD – Customized Credit Focused Platform was up 3.6% in 2Q and up 7.9% YTD – Master Fund was up 3.4% in 2Q and up 9.3% YTD ▪ AUM was $34.8 billion, down $1
Slide 7: Fund performance versus peer indices
|7 ▪ Overall our funds extended strong YTD absolute and relative performance versus peer indices in 2Q amidst signs of stress and fragility materializing across global markets against a mixed and uncertain economic picture ▪ Opportunistic credit funds generated strong absolute and relative performan
Slide 8: Assets under management by strategy
|8 37.4 36.8 34.7 32.2 30.1 28.5 24.9 25.1 25.5 11.5 9.7 8.5 11.2 9.5 8.4 0.7 0.5 0.4 6.5 6.0 5.8 6.0 5.5 5.2 4.7 4.6 4.7 15.1 16.5 16.2 11.1 11.2 11.1 15.1 15.6 16.2 4.3 4.6 4.2 3.9 3.9 3.8 4.4 4.4 4.2 Multi-strategy Opportunistic Credit ICS Real Estate 2Q 2022 1Q 2023 2Q 2023 2Q 2022 1Q 2023 2Q 20
Slide 9: Revenues and expenses commentary
|9 ▪ Revenues were down 37% from 2Q '22, primarily driven by: – Lower incentive income from limited realizations in real estate funds – Lower management fees primarily from lower multi-strategy AUM driven by net outflows and 2022 fund performance ▪ Expenses were down 15% from 2Q '22, primarily drive
Slide 10: Revenues, expenses and distributable earnings
|10 (dollars in millions) 2Q '23 1Q '23 2Q '22 YTD '23 YTD '22 Revenues $ 68.3 $ 105.6 $ 112.5 $ 173.9 $ 203.3 Management fees 58.4 59.7 66.3 118.1 134.1 Incentive income 4.3 40.3 44.6 44.6 66.1 Other revenues 5.6 5.6 1.6 11.2 3.1 Expenses $ 65.1 $ 87.0 $ 79.8 $ 152.1 $ 141.5 Total compensation and
Slide 11: Adjusted net assets
|11 ▪ Adjusted Net Assets (“ANA”) is a measure of the Company’s net debt position to evaluate the liquidity and balance sheet health of the business ▪ Remain well positioned with a strong ANA position, increasing the resilience of our platform and allowing us to take advantage of market opportunitie
Slide 12: Accrued but unrecognized incentive income
|12 (dollars in millions) Opportunistic Credit Funds Real Estate Funds Multi-Strategy Funds Total Quarter-to-Date 1Q '23 $ 58.5 $ 103.3 $ 0.7 $ 162.6 Recognized Incentive Income (2.8) (1.0) (0.3) (4.2) Performance 21.2 14.9 0.5 36.5 2Q '23 $ 76.9 $ 117.2 $ 0.9 $ 194.9 Year-to-Date 4Q '22 $ 37.3 $ 12
Slide 13: Supplemental Details
Supplemental Details Sculptor (CAPITAL MANAGEMENT
Slide 14: AUM roll-forward by strategy
|14 (dollars in millions) Opportunistic Credit Funds Institutional Credit Strategies Real Estate Funds Multi-Strategy Funds Total Quarter-to-Date March 31, 2023 $ 5,254 $ 11,168 $ 3,820 $ 9,188 $ 29,430 Inflows / (Outflows)(h) (94) 35 33 (990) (1,016) Distributions / Other Reductions (213) (105) (80
Slide 15: Assets under management and returns
|15 Assets Under Management as of June 30, Returns(a) for the Six Months Ended June 30, Annualized Returns Since Inception Through June 30, 20232023 2022 (dollars in thousands) 2023 2022 Gross Net Gross Net Gross Net Credit $ 22,006,332 $ 22,486,161 Opportunistic credit funds: 5,831,145 6,026,297 Sc
Slide 16: Customized credit platform and closed-end credit funds
|16 Weighted-Average Returns for the Six Months Ended June 30, Inception to Date as of June 30, 2023 2023 2022 IRR Net Invested Capital MultipleGross Net Gross Net Gross Net Customized Credit Focused Platform(t) Opportunistic Credit Performance 7.9 % 6.0 % -4.6 % -4.0 % 14.4 % 10.9 % 3.5x Assets Und
Slide 17: Institutional Credit Strategies
|17 Most Recent Launch or Refinancing Year Assets Under Management as of June 30, (dollars in thousands) Deal Size 2023 2022 Collateralized Loan Obligations(1) $ 18,521,950 $ 14,154,884 $ 14,502,364 2017 1,658,282 979,116 1,024,627 2018 5,315,728 3,752,762 4,038,908 2019 653,250 — — 2020 1,868,287 1
Slide 18: Real estate funds
|18 (dollars in thousands) Assets Under Management as of June 30, Inception to Date as of June 30, 2023 Total Investments Total Commitments Invested Capital(p) Total Value(q) Gross IRR(f) Net IRR(g) Gross MOIC(r)2023 2022 Real Estate Funds (Investment Period) $ 4,232,951 $ 4,623,952 $ 7,623,889 $ 5,
Slide 19: Appendix
Appendix Sculptor (CAPITAL MANAGEMENT
Slide 20: GAAP consolidated balance sheet
|20 (dollars in thousands) June 30, 2023 December 31, 2022 Cash and cash equivalents $ 159,679 $ 258,863 Restricted cash 7,915 7,895 Investments (includes assets measured at fair value of $267,126 and $231,929, including assets sold under agreements to repurchase of $164,202 and $157,107 as of June
Slide 21: GAAP consolidated statements of operations
|21 Three Months Ended June 30, Six Months Ended June 30, (dollars in thousands, except per share amounts) 2023 2022 2023 2022 Revenues Management fees $ 62,442 $ 71,770 $ 126,150 $ 145,207 Incentive income 4,296 44,580 44,582 66,222 Other revenues 6,703 2,520 13,248 4,950 Income of consolidated ent
Slide 22: GAAP consolidated statements of comprehensive income
|22 Three Months Ended June 30, Six Months Ended June 30, (dollars in thousands) 2023 2022 2023 2022 Consolidated net (loss) income $ (12,321) $ (2,473) $ (7,357) $ 2,403 Other Comprehensive (Loss) Income, Net of Tax Other comprehensive income (loss) – currency translation adjustment 174 (1,226) 839
Slide 23: Reconciliation of net income to distributable earnings
|23 (dollars in thousands, except per share amounts) 2Q '23 1Q '23 2Q '22 YTD '23 YTD '22 Net Income (Loss) Attributable to Class A Shareholders—GAAP $ 3,654 $ 8,492 $ (8,052) $ 12,146 $ 8,830 Change in redemption value of redeemable noncontrolling interests (8,004) 1,178 (697) (6,826) (3,765) Net (
Slide 24: Economic income basis reconciliation
|24 (dollars in thousands) 2Q '23 1Q '23 2Q '22 YTD '23 YTD '22 Management fees—GAAP $ 62,442 $ 63,708 $ 71,770 $ 126,150 $ 145,207 Adjustment to management fees1,2 (4,068) (4,053) (5,457) (8,121) (11,137) Management Fees—Economic Income Basis—Non-GAAP 58,374 59,655 66,313 118,029 134,070 Incentive
Slide 25: Adjusted net assets reconciliation
|25 (dollars in thousands) 6/30/2023 3/31/2023 12/31/2022 6/30/2022 Cash and cash equivalents—GAAP $ 159,679 $ 211,758 $ 258,863 $ 192,578 U.S. government obligations, at fair value—GAAP 58,988 9,978 24,782 14,784 Cash, Cash Equivalents and Long-Term U.S. Government Obligations—Non-GAAP $ 218,667 $
Slide 26: Distribution Holiday Economic Income reconciliation
|26 (dollars in thousands) From October 1, 2018 to June 30, 2023 Net income attributable to Class A shareholders $ 212,652 Change in redemption value of redeemable noncontrolling interests and Preferred Units (22,516) Net Income Allocated to Sculptor Capital Management, Inc.—GAAP 190,136 Equity-base
Slide 27: Non-GAAP and Other Measures
|27 Non-GAAP and Other Measures Accrued but Unrecognized Incentive Income (or "ABURI") is the amount of incentive income accrued at the fund level on our longer-term AUM that has not yet been recognized in our revenues. These amounts may ultimately not be recognized as revenue by us in the event of
Slide 28: Notes (contd.) Non-GAAP and Other Measures
|28 Notes (contd.) Non-GAAP and Other Measures (contd.) Fee Paying Assets Under Management (or "FP AUM") refers to the AUM on which we earn management fees and/or incentive income. Longer-term AUM (or "LT AUM") is defined as AUM from investors that are subject to initial commitment periods of three
Slide 29: Notes (contd.) Distribution Holiday Economic Income
|29 Notes (contd.) Non-GAAP and Other Measures (contd.) Distribution Holiday Economic Income is the cumulative amount of Economic Income earned since October 1, 2018, less any dividends paid to Class A Shareholders or on the now-retired Preferred Units. Distribution Holiday Economic Income is a non-
Slide 30: Footnotes to Non-GAAP Reconciliations
|30 Footnotes to Non-GAAP Reconciliations (1) Adjustment to present management fees net of recurring placement and related service fees, as management considers these fees a reduction in management fees, not an expense. (2) Adjustment to exclude the related eliminations of management fees and incent
Slide 31: Footnotes to Fund Information
|31 Footnotes to Fund Information (a) Past performance is not indicative of future results. The return information reflected in these tables represents, where applicable, the composite performance of all feeder funds that comprise each of the master funds presented. Gross return information is gener
Slide 32: Footnotes to Fund Information
|32 Footnotes to Fund Information (e) Source: Bloomberg, HFRI. The comparison shows the returns of the MSCI World Gross Local Index (GDDLWI Index), the Balanced US 60/40 Index (VBINX US Equity) and the HFRI Fund Weighted Composite Index (HFRIFWI Index (the “Broader Market Indices”) against the Multi
Slide 33: Footnotes to Fund Information
|33 Footnotes to Fund Information (q) Total value represents the sum of realized distributions and the fair value of unrealized and partially realized investments as of June 30, 2023. Total value will be impacted (either positively or negatively) by future economic and other factors. Accordingly the
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