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Blackstone(BX) - 2025 Q1 - Earnings Call Transcript
BXBlackstone(BX)2025-04-17 14:59
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Financial Data and Key Metrics Changes - The company reported GAAP net income of 1.2billionforthequarter,withdistributableearningsincreasing111.2 billion for the quarter, with distributable earnings increasing 11% year-over-year to 1.4 billion or 1.09percommonshare[6][7][48]−Fee−relatedearningsgrew91.09 per common share [6][7][48] - Fee-related earnings grew 9% year-over-year, reaching 1.3 billion or 1.03pershare,markingoneofthebestquartersinthecompany′shistory[7][47]−Totalassetsundermanagement(AUM)rose101.03 per share, marking one of the best quarters in the company's history [7][47] - Total assets under management (AUM) rose 10% year-over-year to nearly 1.2 trillion, with 199billionofinflowsoverthelast12months[8][47]BusinessLineDataandKeyMetricsChanges−Theprivatecreditbusinessexpandedsignificantly,with199 billion of inflows over the last 12 months [8][47] Business Line Data and Key Metrics Changes - The private credit business expanded significantly, with 465 billion in assets, up more than 2.5 times in the past four years, and inflows of 113billionoverthelast12months[25]−TheprivatewealthchannelsawAUMgrowtoover113 billion over the last 12 months [25] - The private wealth channel saw AUM grow to over 270 billion, with fundraising in this area increasing by nearly 40% year-over-year to 11billioninQ1[19][34]−Theinfrastructureplatform′sAUMincreased3611 billion in Q1 [19][34] - The infrastructure platform's AUM increased 36% year-over-year to 60 billion, with strong performance in its strategies [39] Market Data and Key Metrics Changes - The company raised 62billionininflowsduringQ1,thehighestlevelinthreeyears,reflectingbroad−basedmomentumacrossvariouschannels[8]−ThefirmnotedthatconstructionstartsinU.S.logisticsandapartmentshavefallentotheirlowestlevelsinoveradecade,whichcouldsupportrealestatevalues[15]−TheinsuranceAUMgrew1862 billion in inflows during Q1, the highest level in three years, reflecting broad-based momentum across various channels [8] - The firm noted that construction starts in U.S. logistics and apartments have fallen to their lowest levels in over a decade, which could support real estate values [15] - The insurance AUM grew 18% year-over-year to 237 billion, indicating strong traction in the insurance channel [31] Company Strategy and Development Direction - The company aims to leverage its 177billionofdrypowdertocapitalizeoninvestmentopportunitiesarisingfrommarketdislocations[13][66]−AstrategicalliancewithWellingtonandVanguardwasannouncedtoenhanceaccesstopublic−privateinvestmentsolutions,reflectingthecompany′scommitmenttodemocratizingprivatemarkets[20][21]−Thefirmcontinuestofocusonareaswithhighconviction,investing177 billion of dry powder to capitalize on investment opportunities arising from market dislocations [13][66] - A strategic alliance with Wellington and Vanguard was announced to enhance access to public-private investment solutions, reflecting the company's commitment to democratizing private markets [20][21] - The firm continues to focus on areas with high conviction, investing 36 billion in Q1, with a commitment of 13billiontonewdealsbenefitingfromlong−termseculartailwinds[16]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinnavigatingthecurrentturbulentmarket,emphasizingthestrengthandstabilityofthefirm[12][22]−Thecompanyhighlightedtheimportanceofafastresolutiontotariffuncertaintiestomitigaterisksandmaintaineconomicgrowth[11][56]−Managementnotedthatthefirmiswell−preparedtotakeadvantageofopportunitiesarisingfrommarketvolatility,withafocusonlong−termvaluecreation[57]OtherImportantInformation−Thecompanyreportedasignificantincreaseinnetrealizations,up2213 billion to new deals benefiting from long-term secular tailwinds [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current turbulent market, emphasizing the strength and stability of the firm [12][22] - The company highlighted the importance of a fast resolution to tariff uncertainties to mitigate risks and maintain economic growth [11][56] - Management noted that the firm is well-prepared to take advantage of opportunities arising from market volatility, with a focus on long-term value creation [57] Other Important Information - The company reported a significant increase in net realizations, up 22%, contributing to the growth in distributable earnings [48] - The firm emphasized its asset-light model and minimal net debt, which provides flexibility to respond to changing market conditions [13][72] Q&A Session Summary Question: Deployment opportunities with 180 billion of dry powder - Management indicated that periods of dislocation often present attractive deployment opportunities, with a focus on sectors like digital infrastructure and energy [60][66] Question: Characteristics of private market solutions - Management highlighted the resilience of their model during stress periods, allowing them to generate excess returns by leaning into market dislocations [70][72] Question: Outlook for North American institutional channel - Management noted that while there may be a slowdown in decision-making, there is a long-term commitment to private assets among clients [82][85] Question: Expansion of global wealth management business - Management discussed the potential growth in the wealth management sector, particularly through the partnership with Wellington and Vanguard [87][94] Question: Direct first-order tariff impact on the portfolio - Management defined direct first-order impact as limited, with a focus on second-order effects related to capital markets and economic slowdown [98][100] Question: Investment-grade private credit opportunities - Management emphasized the flexibility and bespoke solutions offered to borrowers, which are more challenging to execute in public markets [110][113] Question: International backdrop and deployment ability - Management acknowledged questions from global investors regarding geopolitical issues but noted that their businesses continue to operate normally [120][122] Question: Wealth flows and asset class preferences - Management reported no pullback in sales in the wealth channel, indicating strong investor interest in alternatives [126][128] Question: Real estate fundraising appetite - Management observed improved conversations with institutional LPs regarding real estate, although some hesitance remains due to recent market conditions [134][135]