Kkr & Co. Inc. · NYSE:KKR
Kkr & — Q2 2023 Earnings Presentation
47 slides from Kkr &'s earnings presentation, Aug 7, 2023
Slide 1: KKR & Co. Inc. Reports Second Quarter 2023 Financial Results
KKR & Co. Inc. Reports Second Quarter 2023 Financial Results August 7, 2023
Slide 2: KKR Reports Second Quarter 2023 Financial Results
KKR Reports Second Quarter 2023 Financial Results New York, August 7, 2023 – KKR & Co. Inc. (NYSE: KKR) today reported its second quarter 2023 results. Conference Call A conference call to discuss KKR's financial results will be held on August 7, 2023 at 10:00 a.m. ET. The conference call may be acc
Slide 3: Legal Disclosures
KKR Reports Second Quarter 2023 Financial Results Legal Disclosures This presentation has been prepared by KKR & Co. Inc. solely for informational purposes for its public stockholders in connection with evaluating the business, operations and financial results of KKR & Co. Inc. and its subsidiaries
Slide 4: KKR & Co. Inc. Second Quarter Earnings
KKR & Co. Inc. Second Quarter Earnings
Slide 5: KKR's Second Quarter 2023 GAAP Results (Unaudited)
KKR’s Second Quarter 2023 GAAP Results (Unaudited) • GAAP Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders was $844.5 million for the quarter. GAAP Stockholders’ Equity Per Outstanding Share of Common Stock was $21.99 at quarter end. ($ in thousands, except per share data) 2Q'22
Slide 6: KKR's Second Quarter 2023 Highlights
KKR’s Second Quarter 2023 Highlights • Fee Related Earnings (“FRE”) of $602 million ($0.67/adj. share) in the quarter, up 31% year-over-year • FRE was $2.3 billion in the LTM ($2.53/adj. share), up 2% year-over-year • After-tax Distributable Earnings (“DE”) of $653 million ($0.73/adj. share) in the
Slide 7: KKR's Second Quarter 2023 Segment Earnings
KKR’s Second Quarter 2023 Segment Earnings ($ in thousands, except per share data) 2Q'22 2Q'23 2Q'22 YTD 2Q'23 YTD Management Fees $ 654,927 $ 748,888 $ 1,279,855 $ 1,487,044 Transaction and Monitoring Fees, Net 107,301 190,228 413,339 332,407 Fee Related Performance Revenues 9,999 28,352 22,050 50,
Slide 8: Management Fees and Fee Related Earnings
Management Fees and Fee Related Earnings Management Fees Fee Related Earnings Per Adjusted Share • Increased by 18% to $2.9 billion in the LTM • Increased 1% year-over-year driven primarily by higher management fees and fee related • Growth has been driven by an increase in Fee performance revenues
Slide 9: Assets Under Management
Assets Under Management • AUM increased to $519 billion, up 6% year-over-year, with $13 billion of organic new capital raised in the quarter and $54 billion in the LTM • Fee Paying AUM of $420 billion, up 9% year-over-year, with $13 billion of organic new capital raised in the quarter and $62 billio
Slide 10: Additional Capital Detail
Additional Capital Detail • Dry Powder: Uncalled commitments of $100 billion are diversified across the firm’s strategies and are down 13% year-over-year • AUM Not Yet Paying Fees: At quarter end, there was $38 billion of committed capital with a weighted average management fee rate of approximately
Slide 11: Fund Investment Performance
Fund Investment Performance • Gross unrealized carried interest totals $5.0 billion as of June 30, 2023 Gross Return 2Q'23 LTM Private Equity Traditional Private Equity Portfolio 5% 2% Real Assets Opportunistic Real Estate Portfolio 0% -11% Infrastructure Portfolio 2% 10% Credit Leveraged Credit Com
Slide 12: Segment Detail
Segment Detail KKR
Slide 13: Asset Management Segment − Private Equity
Asset Management Segment − Private Equity • AUM: Increased 3% quarter-over-quarter and decreased 1% year-over-year to $170 billion with organic new capital raised of $2 billion in the quarter and YTD • New capital raised in the quarter was driven by Ascendant, a middle market focused traditional pri
Slide 14: Asset Management Segment − Real Assets
Asset Management Segment − Real Assets • AUM: Increased 1% quarter-over-quarter and 7% year-over-year to $122 billion with organic new capital raised of $3 billion in the quarter and $5 billion YTD • New capital raised in the quarter was driven by core infrastructure, real estate credit inflows and
Slide 15: Asset Management Segment − Credit and Liquid Strategies
Asset Management Segment − Credit and Liquid Strategies • AUM: Increased 1% quarter-over-quarter and 10% year-over-year to $227 billion with organic new capital raised of $8 billion in the quarter and $17 billion YTD • New capital raised in the quarter came from a diverse set of leveraged credit and
Slide 16: Asset Management Segment − Capital Markets and Principal Activities
Asset Management Segment − Capital Markets • Transaction Fees: Totaled $150 million in the quarter and $252 million YTD • 2Q fees by geography and transaction type: • 53% originated in North America with 35% and 12% from Europe and Asia, respectively • Infrastructure was the largest fee generating s
Slide 17: Insurance Segment
Insurance Segment • Net Investment Income: Net Investment Income of $1,284 million in the quarter, reflecting higher liquidity balances and relatively flat yields • Net Cost of Insurance: Net Cost of Insurance totaled $812 million in the quarter, reflecting new business growth and higher funding cos
Slide 18: Book Value
Book Value • Book Value Per Adjusted Share: Increased 4% year-over-year • Net Cash and Total Investments of $20.33 per adjusted share at 2Q'23, compared to $19.65 at 2Q'22 • Total Cash and Investments: $26 billion at quarter end • Global Atlantic Book Value: Reflects our 63% economic ownership ($ in
Slide 19: Investments Detail
Investments Detail ($ in millions) 2Q'23 Investment Holdings by Asset Class Investments Fair Value Other Core Private Equity $ 6,187 Alternative Credit 5% 5% Traditional Private Equity 3,660 Leveraged Credit Growth Equity 927 6% Private Equity Total 10,774 Core Private Energy Real Estate 1,890 Equit
Slide 20: Capital Detail
Capital Detail KKR
Slide 21: Duration of Capital
Duration of Capital Strategic & Perpetual Capital Assets Under Management ($ in billions) 51% of AUM $262 is perpetual capital or long-dated strategic investor partnerships $236 $62 $60 9% 39% 40% $200 $176 12% 91% of AUM is perpetual capital or has a duration of at least 8 years at inception 2Q'22
Slide 22: Assets Under Management Rollforward
Assets Under Management Rollforward Three Months Ended June 30, 2023 Credit and Liquid ($ in millions) Private Equity Real Assets Total Strategies Beginning Balance $ 165,762 $ 120,806 $ 223,501 $ 510,069 New Capital Raised 1,992 2,812 7,979 12,783 Distributions and Other (1,793) (1,618) (5,882) (9,
Slide 23: Fee Paying Assets Under Management Rollforward
Fee Paying Assets Under Management Rollforward Three Months Ended June 30, 2023 Credit and Liquid ($ in millions) Private Equity Real Assets Total Strategies Beginning Balance $ 102,323 $ 105,727 $ 207,821 $ 415,871 New Capital Raised 3,145 3,139 7,160 13,444 Distributions and Other (1,882) (2,177)
Slide 24: Supplemental Information
Supplemental Information KKR
Slide 25: Investment Vehicle Summary
Investment Vehicle Summary Investment Amount Period ($ in millions) Percentage Start End Uncalled Committed Remaining Remaining Commitment Invested Realized Date Date Commitments by General Cost Fair Value Partner PRIVATE EQUITY BUSINESS LINE North America Fund XIII 8/2021 8/2027 $ 18,400 $ 12,209 3
Slide 26: Investment Vehicle Summary (cont'd)
Investment Vehicle Summary (cont’d) Investment Amount Period ($ in millions) Percentage Start End Uncalled Committed Remaining Remaining Commitment Invested Realized Date Date Commitments by General Cost Fair Value Partner REAL ASSETS BUSINESS LINE Energy Income and Growth Fund II 8/2018 8/2022 $ 99
Slide 27: Investment Vehicle Summary (cont'd) & Additional AUM Detail
Investment Vehicle Summary (cont’d) & Additional AUM Detail Investment Amount Period ($ in millions) Percentage Start End Uncalled Committed Remaining Remaining Commitment Invested Realized Date Date Commitments by General Cost Fair Value Partner (1) CREDIT AND LIQUID STRATEGIES BUSINESS LINE Disloc
Slide 28: Stock Summary
Stock Summary From December 31, 2022 through August 1, 2023, KKR used a total of $292 million to repurchase 5.3 million shares in the open market and to retire equity awards representing 0.6 million shares that otherwise would have been issued to participants under KKR's equity incentive plans. Duri
Slide 29: Investments Detail – Core Private Equity
Investments Detail – Core Private Equity Growth in Balance Sheet Fair Value Background on Core Private Equity ($ in billions) • Core Private Equity is a long duration investment strategy with a more Cost modest risk return profile compared to traditional private equity; we are $6.2 seeking mid-to-hi
Slide 30: Dividends and Other Corporate Information
Dividends and Other Corporate Information The declaration and payment of any future dividends on preferred or common stock will be subject to the discretion of the board of directors of KKR & Co. Inc. based on a number of factors, including KKR’s future financial performance and other considerations
Slide 31: Appendix
Appendix KKR
Slide 32: GAAP Condensed Consolidated Income Statement (Unaudited)
GAAP Condensed Consolidated Income Statement (Unaudited) ($ in thousands) 2Q'22 2Q'23 2Q'22 YTD 2Q'23 YTD Revenues Asset Management Fees and Other $ 615,264 $ 754,447 $ 1,395,775 $ 1,431,463 Capital Allocation-Based Income (Loss) (923,474) 696,897 (1,869,217) 1,145,915 (308,210) 1,451,344 (473,442)
Slide 33: GAAP Condensed Consolidated Balance Sheet (Unaudited)
GAAP Condensed Consolidated Balance Sheet (Unaudited) ($ in thousands) 4Q'22 2Q'23 Assets Asset Management Cash and Cash Equivalents $ 6,705,325 $ 5,885,308 Investments 92,375,463 101,878,868 Other Assets 7,114,360 6,703,972 106,195,148 114,468,148 Insurance Cash and Cash Equivalents 6,118,231 4,421
Slide 34: Reconciliation of GAAP to Non-GAAP Shares (Unaudited)
Reconciliation of GAAP to Non-GAAP Shares (Unaudited) 2Q'22 3Q'22 4Q'22 1Q'23 2Q'23 GAAP Shares of Common Stock Outstanding 859,833,444 859,833,444 861,110,478 861,104,000 857,987,641 Adjustments: Exchangeable Securities and Other 29,288,380 29,288,380 29,517,712 29,517,712 30,804,276 Adjusted Share
Slide 35: Reconciliation of GAAP to Non-GAAP Measures (Unaudited)
Reconciliation of GAAP to Non-GAAP Measures (Unaudited) ($ in thousands) 2Q'22 2Q'23 2Q'22 YTD 2Q'23 YTD 2Q'22 LTM 2Q'23 LTM Net Income (Loss) - KKR Common Stockholders $ (734,625) $ 844,463 $ (744,411) $ 1,167,207 $ 918,880 $ 1,320,954 Preferred Stock Dividends 17,250 17,249 34,500 34,499 76,953 68
Slide 36: Reconciliation of GAAP to Non-GAAP Measures (Unaudited) (cont'd)
Reconciliation of GAAP to Non-GAAP Measures (Unaudited) (cont’d) ($ in thousands) 2Q'22 2Q'23 2Q'22 YTD 2Q'23 YTD Fee Related Earnings $ 461,235 $ 602,309 $ 1,066,157 $ 1,150,887 Insurance Segment Operating Earnings 180,615 170,224 324,562 375,336 Realized Performance Income 730,858 149,334 1,340,06
Slide 37: Reconciliation of GAAP to Non-GAAP Measures (Unaudited) (cont'd)
Reconciliation of GAAP to Non-GAAP Measures (Unaudited) (cont’d) ($ in thousands, except share and per share amounts) 4Q'18 4Q'19 4Q'20 4Q'21 4Q'22 2Q'22 2Q'23 KKR & Co. Inc. Stockholders' Equity - Common Stock $ 8,167,056 $ 10,324,936 $ 12,118,472 $ 16,542,643 $ 17,691,975 $ 18,870,292 $ 18,865,775
Slide 38: KKR's Second Quarter 2023 Segment Earnings – Detailed View
KKR’s Second Quarter 2023 Segment Earnings – Detailed View ($ in thousands) 2Q'22 2Q'23 2Q'22 YTD 2Q'23 YTD Management Fees $ 654,927 $ 748,888 $ 1,279,855 $ 1,487,044 Transaction and Monitoring Fees, Net 107,301 190,228 413,339 332,407 Fee Related Performance Revenues 9,999 28,352 22,050 50,093 Fee
Slide 39: Important Information − Endnotes
Important Information − Endnotes Notes to page 2 – KKR's Second Quarter 2023 Highlights • Net Cash and Total Investments is calculated as Cash and Short-term Investments, less Debt Obligations – KKR and KFN, plus Investments and Global Atlantic Book Value. Please see the endnote for page 15 for info
Slide 40: Important Information − Endnotes (cont'd)
Important Information − Endnotes (cont’d) Notes to page 13 – Insurance Segment • Net investment income represents income earned on invested assets, net of investment-related expenses, including investment management fees paid to KKR. • Net cost of insurance represents the net cost of funding institu
Slide 41: Important Information − Endnotes (cont'd)
Important Information − Endnotes (cont’d) Notes to page 17 – Duration of Capital • Please see endnote for page 5 for information about the term "perpetual capital." • "Other" in the chart primarily includes hedge fund partnerships and certain leveraged credit funds. Notes to page 18 – Assets Under M
Slide 42: Important Information – Non-GAAP and Other Measures
Important Information – Non-GAAP and Other Measures Non-GAAP and Segment Measures The key non-GAAP and other operating and performance measures that follow are used by management in making operational and resource deployment decisions as well as assessing the performance of KKR's business. They incl
Slide 43: Important Information – Non-GAAP and Other Measures (cont'd)
Important Information – Non-GAAP and Other Measures (cont’d) Non-GAAP and Segment Measures (cont’d) • Book Value is a non-GAAP performance measure of the net assets of KKR and is used by management primarily in assessing the unrealized value of KKR’s net assets presented on a basis that (i) excludes
Slide 44: Important Information – Non-GAAP and Other Measures (cont'd)
Important Information – Non-GAAP and Other Measures (cont’d) Non-GAAP and Segment Measures (cont’d) • Fee Related Earnings (“FRE”) is a performance measure used to assess the Asset Management segment’s generation of profits from revenues that are measured and received on a recurring basis and are no
Slide 45: Important Information – Non-GAAP and Other Measures (cont'd)
Important Information – Non-GAAP and Other Measures (cont’d) Other Measures and Terms (cont’d) • Capital Invested is the aggregate amount of capital invested by (i) KKR’s investment funds and Global Atlantic insurance companies, (ii) KKR's Principal Activities business line as a co-investment, if an
Slide 46: Important Information – Other Legal Disclosures
Important Information – Other Legal Disclosures Website From time to time, KKR may use its website as a channel of distribution of material company information. Financial and other important information regarding KKR is routinely posted and accessible on the Investor Center for KKR & Co. Inc. at htt
Slide 47: Important Information – Other Legal Disclosures (cont'd)
Important Information – Other Legal Disclosures (cont'd) Forward Looking Statements This presentation contains certain forward-looking statements pertaining to KKR, including investment funds, vehicles and accounts managed by KKR and the insurance companies managed by Global Atlantic. You can identi