Ares Acquisition Corporation II (AACT) Financials

Key Positive Financial Highlights for Ares Acquisition Corporation II (NYSE: AACT) over the last four years:

• Consistent net income growth in 2024 with quarterly net income continuing operations of approximately $6.0M to $7.0M each quarter.
• Stable diluted earnings per share (EPS) at around $0.20 to $0.22 for 2024, indicating steady profitability on a per-share basis.
• Interest & Investment Income is the primary source of income, rising from about $3.9M in Q2 2023 to over $7.4M by Q3 2024, supporting pre-tax income growth.
• Increasing total assets from approximately $518M in Q3 2023 to $545M by Q3 2024, primarily due to growth in other noncurrent operating assets.
• The company has maintained a substantial cash & equivalents position between $1.1M to $2.2M over recent quarters, providing liquidity.
• Consistent operating expense management with selling, general & admin expenses fairly stable between $370K to $500K per quarter across 2023-2024.

Neutral Observations:

• No reported total revenue for any quarters; business primarily generates income through interest and investment income rather than operations or sales.
• Weighted average basic and diluted shares outstanding increased from approximately 12.5 million shares in early 2023 to 62.5 million shares in 2024, which dilutes EPS but aligns with capital structure changes.
• Net cash from continuing operating activities remains negative in all quarters analyzed, reflecting adjustments to reconcile net income and changes in operating assets/liabilities.
• Redeemable noncontrolling interest remains substantial at over $529M to $544M, reflecting complex equity structure that investors should monitor carefully.

Potential Areas of Concern or Negative Aspects:

• Consistently negative net cash from operating activities each quarter (-$200K to -$260K), indicating cash generated does not cover operating expenses on a cash basis despite positive net income.
• Negative total common equity of approximately -$20M to -$21.5M, driven primarily by retained earnings deficits, which could raise concerns about book value and shareholder equity.
• Long-term debt remains steady at $5M plus other long-term liabilities of $17.5M, representing a notable leverage load relative to equity.
• Significant fluctuations in net cash from investing and financing activities in 2023 Q2 (large investing outflow of $505M and offsetting financing inflow of $508M), indicating reliance on financing transactions rather than organic cash flow.

Summary: Ares Acquisition Corporation II shows a financially stable and profitable picture at the net income level driven mainly by investment and interest income. However, the lack of operating revenue, persistent negative operating cash flow, sizeable redeemable noncontrolling interests, and negative common equity suggest the company operates in a non-traditional structure, likely as a special purpose acquisition entity or investment holding company. Retail investors should be cautious and consider the unique equity structure and cash flow profile when evaluating AACT's investment merits.