Sculptor Capital Management Inc
Sculptor Capital Management — Q3 2023 Earnings Presentation
33 slides from Sculptor Capital Management's earnings presentation, Nov 8, 2023
Slide 1: Sculptor Reports Third Quarter 2023 Financial Results
Sculptor Reports Third Quarter 2023 Financial Results November 8, 2023
Slide 2: About Sculptor
|2 New York - November 8, 2023 - Sculptor Capital Management, Inc. (NYSE: SCU) today reported its unaudited results for the third 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 con
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: Third Quarter 2023 Financial Results
Third Quarter 2023 Financial Results
Slide 5: Financial and capital metrics summary
|5 (dollars in millions, except per share amounts) 3Q '23 2Q '23 3Q '22 YTD '23 YTD '22 GAAP Results Net Loss Attributable to Sculptor Capital Management $ (31.1) $ (4.4) $ (22.7) $ (25.8) $ (17.6) Net (Loss) Income Attributable to Class A Shareholders (31.1) 3.6 (22.5) (19.0) (13.7) (Loss) Earnings
Slide 6: Fund Performance, AUM and Financial Results Highlights
|6 ▪ Gross fund performance for the quarter and year-to-date (“YTD”)1: – Sculptor Credit Opportunities Master Fund was up 2.1% in 3Q and up 10.0% YTD – Customized Credit Focused Platform was up 2.1% in 3Q and up 10.3% YTD – Master Fund was up 3.3% in 3Q and up 12.9% YTD ▪ AUM was $33.8 billion, down
Slide 7: Fund performance overview
|7 ▪ Overall, funds extended strong absolute and relative outperformance amidst continued volatility and an uncertain economic environment ▪ Opportunistic credit funds extended strong absolute and relative performance versus relevant benchmarks, fully recovering 2022 losses and eliminating our high
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 drivers
|9 ▪ Revenues were up 9% from 3Q '22, primarily driven by: – Higher incentive income from crystallizations in real estate and opportunistic credit funds – Higher other revenues due to higher interest rates – Lower management fees from lower multi-strategy AUM driven by net outflows ▪ Expenses were u
Slide 10: Economic income revenues, expenses and distributable earnings
|10 (dollars in millions) 3Q '23 2Q '23 3Q '22 YTD '23 YTD '22 Revenues $ 80.5 $ 68.3 $ 71.4 $ 254.4 $ 274.7 Management fees 56.1 58.4 61.2 174.2 195.3 Incentive income 17.8 4.3 7.6 62.4 73.7 Other revenues 6.6 5.6 2.6 17.8 5.7 Expenses $ 83.5 $ 65.1 $ 65.8 $ 235.5 $ 207.2 Total compensation and ben
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 ▪ ANA decreased from 3Q’22 primarily due to the return of capital through our share repurchase plan, dividends and timing of certain payables ▪ ANA incre
Slide 12: Accrued but unrecognized incentive income
|12 (dollars in millions) Opportunistic Credit Funds Real Estate Funds Multi-Strategy Funds Total Quarter-to-Date 2Q '23 $ 76.9 $ 117.2 $ 0.8 $ 194.9 Recognized Incentive Income (4.7) (10.3) (0.1) (15.1) Performance 14.4 11.4 0.4 26.2 3Q '23 $ 86.6 $ 118.3 $ 1.1 $ 206.0 Year-to-Date 4Q '22 $ 37.3 $
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 June 30, 2023 $ 5,169 $ 11,112 $ 3,782 $ 8,390 $ 28,453 Inflows / (Outflows)(h) (194) — 61 (658) (791) Distributions / Other Reductions (220) (164) (41) —
Slide 15: Assets under management and returns
|15 Assets Under Management as of September 30, Returns(a) for the Nine months ended September 30, Annualized Returns Since Inception Through 20232023 2022 (dollars in thousands) 2023 2022 Gross Net Gross Net Gross Net Credit $ 21,422,432 $ 22,224,535 Opportunistic credit funds: 5,540,393 5,988,951
Slide 16: Customized Credit Platform and closed-end credit funds
|16 Weighted-Average Returns for the Nine Months Ended September 30, Inception to Date as of September 30, 2023 2023 2022 IRR Net Invested Capital MultipleGross Net Gross Net Gross Net Customized Credit Focused Platform(t) Opportunistic Credit Performance 10.3 % 7.9 % -4.0 % -3.6 % 14.3 % 10.8 % 4.5
Slide 17: Institutional Credit Strategies
|17 Most Recent Launch or Refinancing Year Assets Under Management as of September 30, (dollars in thousands) Deal Size 2023 2022 Collateralized Loan Obligations(1) $ 18,521,950 $ 13,945,632 $ 14,224,363 2017 1,658,282 886,532 1,024,168 2018 5,315,728 3,606,929 3,944,934 2019 653,250 — — 2020 1,868,
Slide 18: Real estate funds
|18 (dollars in thousands) Assets Under Management as of September 30, Inception to Date as of September 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) $ 4,248,298 $ 4,529,680 $ 7,83
Slide 19: Appendix
Appendix Sculptor (CAPITAL MANAGEMENT
Slide 20: GAAP consolidated statements of financial condition
|20 (dollars in thousands) September 30, 2023 December 31, 2022 Cash and cash equivalents $ 159,446 $ 258,863 Restricted cash 8,297 7,895 Investments (includes assets measured at fair value of $296,951 and $231,929 including assets sold under agreements to repurchase of $173,156 and $157,107 as of S
Slide 21: GAAP consolidated statements of operations
|21 Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands, except per share amounts) 2023 2022 2023 2022 Revenues Management fees $ 60,194 $ 66,236 $ 186,344 $ 211,443 Incentive income 17,801 7,566 62,383 73,788 Other revenues 7,683 3,576 20,931 8,526 (Loss) income o
Slide 22: GAAP consolidated statements of comprehensive loss
|22 Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2023 2022 2023 2022 Consolidated net loss $ (38,462) $ (30,610) $ (45,819) $ (28,207) Other Comprehensive Loss, Net of Tax Other comprehensive loss – currency translation adjustment (1,266) (1,430) (427) (3,4
Slide 23: Reconciliation of net loss to non-GAAP measures
|23 (dollars in thousands, except per share amounts) 3Q '23 2Q '23 3Q '22 YTD '23 YTD '22 Net (Loss) Income Attributable to Class A Shareholders—GAAP $ (31,113) $ 3,654 $ (22,518) $ (18,967) $ (13,688) Change in redemption value of redeemable noncontrolling interests — (8,004) (174) (6,826) (3,939)
Slide 24: Economic income basis reconciliation
|24 (dollars in thousands) 3Q '23 2Q '23 3Q '22 YTD '23 YTD '22 Management fees—GAAP $ 60,194 $ 62,442 $ 66,236 $ 186,344 $ 211,443 Adjustment to management fees1,2 (4,056) (4,068) (5,011) (12,177) (16,148) Management Fees—Economic Income Basis—Non-GAAP 56,138 58,374 61,225 174,167 195,295 Incentive
Slide 25: Adjusted Net Assets reconciliation
|25 (dollars in thousands) 9/30/2023 6/30/2023 12/31/2022 9/30/2022 Cash and cash equivalents—GAAP $ 159,446 $ 159,679 $ 258,863 $ 170,304 U.S. government obligations, at fair value—GAAP 79,408 58,988 24,782 79,283 Cash, Cash Equivalents and Long-Term U.S. Government Obligations—Non-GAAP $ 238,854 $
Slide 26: Distribution Holiday Economic Income reconciliation
|26 (dollars in thousands) From October 1, 2018 to September 30, 2023 Net income attributable to Class A shareholders $ 181,539 Change in redemption value of redeemable noncontrolling interests and Preferred Units (22,516) Net Income Allocated to Sculptor Capital Management, Inc.—GAAP 159,023 Equity
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: Non-GAAP and Other Measures (contd.)
|28 Notes (contd.) Non-GAAP and Other Measures (contd.) Longer-term AUM (or "LT AUM") is defined as AUM from investors that are subject to initial commitment periods of three years or longer. Investors with longer-term AUM may have less than three years remaining in their commitment period. This exc
Slide 29: Notes: Non-GAAP and Other Measures (contd.)
|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 September 30, 2023. Total value will be impacted (either positively or negatively) by future economic and other factors. Accordingl
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