8-K: Carlyle Group Reports Record Third Quarter Results Driven by Strategic Actions and Investment Activity

The Carlyle Group Inc. announced record third-quarter 2024 financial results, highlighting the impact of strategic actions and increased investment activity.

Summary

• The Carlyle Group reported unaudited results for the third quarter ended September 30, 2024.
• The company's income before provision for income taxes was $789 million, with a margin of 29.9%.
• Accrued performance allocations, net of giveback obligations, reached $7.2 billion, a 27% increase from June 30, 2024.
• The company's assets under management totaled $447 billion as of September 30, 2024.
• Fee-earning assets under management were $314 billion, with perpetual capital fee-earning AUM at $95 billion.
• Fundraising for the quarter was $8.8 billion, and $43.5 billion for the last twelve months.
• Invested capital in carry funds was $3.9 billion for the quarter and $20.0 billion for the last twelve months.
• Realized proceeds from carry funds were $6.8 billion for the quarter and $23.8 billion for the last twelve months.
• Carry fund appreciation was 3% for the quarter and 8% for the last twelve months.
• Distributable Earnings were $367 million for the quarter, or $0.95 per common share on a post-tax basis.
• Fee Related Earnings were $278 million for the quarter and $817 million year-to-date.
• Realized Net Performance Revenues were $91 million for the quarter and $288 million year-to-date.
• Net Accrued Performance Revenues were $2.8 billion as of September 30, 2024.

Sentiment

Score: 9

Explanation: The document conveys a very positive sentiment due to record results, strong growth metrics, and positive management commentary. The company's strategic actions and market positioning are highlighted, indicating a strong outlook.

Positives

• The company's strategic actions over the past eighteen months have positively impacted performance.
• There was a pick-up in investment activity across the platform.
• The company is well-positioned to capture new opportunities in an evolving market.
• The company continues to deliver strong returns and long-term growth for clients and shareholders.
• Fund management fees increased by 6% in Q3 2024 compared to the same period in 2023.
• The company's business development companies and CTAC continue to deliver double-digit dividend yields of 11% and 10%, respectively.
• Net Accrued Performance Revenues increased 28% quarter-over-quarter and 17% from Q4 2023.
• Total Assets Under Management increased 3% from the prior quarter and 17% year-over-year.
• Performance Fee Eligible AUM increased 4% quarter-over-quarter and 9% year-over-year.
• Fee-earning Assets Under Management increased 2% from the prior quarter and 15% year-over-year.

Negatives

• Step-downs in certain products in the Global Private Equity segment partially offset increases in fund management fees.
• Investment loss in 3Q23 reflects the reversal of unrealized performance allocations in certain carry funds.
• Realized Net Performance Revenues were $91 million in Q3 2024 and $288 million YTD, which is lower than the previous quarter.
• Realized Principal Investment Income was $9 million in Q3 2024 and $69 million YTD, which is lower than the previous quarter.
• Outflows in the Global Private Equity and Global Credit segments partially offset increases in Fee-earning Assets Under Management.

Risks

• Forward-looking statements are subject to various risks, uncertainties, and assumptions.
• Actual outcomes or results could differ materially from those indicated in forward-looking statements.
• The company's performance is subject to market conditions and investment performance.
• The company's dividend policy is subject to the discretion of the Board of Directors and may change.

Future Outlook

The company is well-positioned to capture new opportunities in an evolving market and continue delivering strong returns and long-term growth for its clients and shareholders.

Management Comments

• Carlyle Chief Executive Officer Harvey M. Schwartz said, 'Carlyle's record third quarter results reflect the impact of strategic actions we have taken over the past eighteen months.'
• He also stated, 'These actions, combined with a pick-up in investment activity across our platform, helped generate one of the best quarters of performance in the firm's history, including record quarterly Fee Related Earnings and FRE margin, and a nearly 30% quarterly increase in our net accrued performance revenues.'

Industry Context

The results reflect a positive trend in the alternative investment industry, with increased fundraising and investment activity. Carlyle's performance is indicative of the broader market's recovery and investor appetite for private capital.

Comparison to Industry Standards

• Carlyle's 17% year-over-year growth in AUM is strong compared to peers like Blackstone and Apollo, which have also seen growth but may have different segment focuses.
• The 36% increase in Fee Related Earnings for Q3 2024 is a significant improvement, potentially outperforming some competitors who may have experienced slower growth in fee-based income.
• The 47% FRE margin is a strong indicator of operational efficiency, and is likely higher than many of its peers.
• The 3% carry fund appreciation for the quarter is in line with industry averages, but the 8% LTM appreciation is a positive sign of strong investment performance.
• The 11% and 10% dividend yields from business development companies and CTAC are competitive in the credit space, offering attractive returns to investors.

Stakeholder Impact

• Shareholders will benefit from the declared quarterly dividend of $0.35 per common share.
• Shareholders will also benefit from the share repurchase program.
• Clients will benefit from the company's strong investment performance and returns.
• Employees will benefit from the company's success and compensation programs.

Next Steps

• The company will host a conference call on November 7, 2024, to discuss the third-quarter results.
• The company will continue to focus on capturing new opportunities and delivering strong returns.

Key Dates

Keywords

Carlyle Group, Financial Results, Third Quarter, Assets Under Management, Fee Related Earnings, Performance Allocations, Private Equity, Global Credit, Investment Solutions, Dividend, Fundraising