Tpg Inc. · NASDAQ:TPG
Tpg — Q3 2023 Earnings Presentation
43 slides from Tpg's earnings presentation, Nov 7, 2023
Slide 1: TPG Reports Third Quarter 2023 Financial Results
TPG Reports Third Quarter 2023 Financial Results Quarter Ended September 30, 2023
Slide 2: TPG Reports Third Quarter 2023 Financial Results
TPG Reports Third Quarter 2023 Financial Results ▪ Completed acquisition of Angelo Gordon on November 1, 2023, marking significant expansion into credit investing and adding complementary real estate capabilities ▪ Total assets under management of $136 billion as of September 30, 2023; total AUM of
Slide 3: About TPG; Forward Looking Statements
TPG Reports Third Quarter 2023 Financial Results About TPG TPG is a leading global alternative asset management firm, founded in San Francisco in 1992, with $212 billion(1) of assets under management and investment and operational teams around the world. TPG invests across a broadly diversified set
Slide 4: Third Quarter 2023 Financial Results
Third Quarter 2023 Financial Results
Slide 5: GAAP Statements of Operations (Unaudited)
GAAP Statements of Operations (Unaudited) ▪ Net loss of $95 million for 3Q’23, compared to 2Q’23 net income of $40 million, and 3Q’22 net income of $53 million ▪ Net income attributable to TPG Inc. of $15 million for 3Q’23, compared to net income of $27 million in 2Q’23 and net income of $37 million
Slide 6: Third Quarter and Year to Date Highlights
Third Quarter and Year to Date Highlights ▪ 3Q’23 FRR of $321 million increased 14% versus 3Q’22, with 3Q’23 FRE of $156 million and 3Q’23 After- tax DE of $196 million Non-GAAP 3Q’22 3Q’23 3Q’22 YTD 3Q’23 YTD Financial Fee-Related Revenues ("FRR") $282 $321 $779 $873 Measures Fee-Related Earnings (
Slide 7: Non-GAAP Financial Measures
Non-GAAP Financial Measures ▪ FRE increased 29% from $121 million in 3Q’22 to $156 million in 3Q’23; FRE margin increased to 49% in 3Q’23 compared to 43% in 3Q’22 ▪ FRE of $156 million in 3Q’23 increased 24% from $125 million in 2Q’23; FRE margin increased from 44% in 2Q’23 to 49% in 3Q’23 ▪ After-t
Slide 8: Fee-Related Earnings
Fee-Related Earnings ▪ 3Q’23 FRR increased 12% over 2Q’23 and 14% over 3Q’22, primarily driven by fundraising and an increase in capital markets fees ▪ Fee-Related Expenses in 3Q’23 increased 3% when compared to 2Q’23 and 3Q’22, primarily due to increased compensation and benefits, net ▪ FRE margin
Slide 9: Distributable Earnings
Distributable Earnings ▪ After-tax DE increased by 103% from $96 million in 2Q’23 to $196 million in 3Q’23, mainly due to increases in realized performance allocations, net and FRE ▪ After-tax DE increased from $113 million in 3Q’22 to $196 million for 3Q’23, primarily due to increases in realized p
Slide 10: Realized Performance Allocations, Net
Realized Performance Allocations, Net ▪ Realized performance allocations, net were $43 million in 3Q’23, primarily driven by TPG AAF, a single- asset continuation vehicle for Creative Artists Agency, and TPG VIII in the Capital platform ▪ Realized performance allocations, net for 3Q’23 YTD were $55
Slide 11: Net Accrued Performance Allocations
Net Accrued Performance Allocations Net Accrued Performance Allocations 3Q’23 Net Accrued Performance Allocations 2Q’23 3Q’23 by Fund Vintage ($M) ($M) $35 2017 & Prior $327 $314 $23 2018 47 43 $87 2019 241 225 Total 2020 82 81 $692 $375 2021 60 20 $172 2022 3 9 Total $760 $692 Capital Growth Impact
Slide 12: GAAP Balance Sheet (Unaudited)
GAAP Balance Sheet (Unaudited) ▪ Our investments decreased $22 million from 4Q'22 to 3Q’23, mainly driven by realizations, partially offset by a 5% increase in the value of our portfolio companies for 3Q’23 YTD ▪ Cash increased to $1.2 billion at the end of 3Q’23 primarily due to proceeds received f
Slide 13: Non-GAAP Balance Sheet
Non-GAAP Balance Sheet ▪ Cash and cash equivalents of $647 million at the end of 3Q’23 ▪ At the end of 3Q’23, our net cash(1) was $197 million, and our undrawn credit facility capacity was increased to $1.2 billion(2) ▪ Our borrowings include securitized notes with a principal amount of $250 million
Slide 14: Operating Metrics
Operating Metrics
Slide 15: Assets Under Management and Fee Earning AUM
Assets Under Management and Fee Earning AUM ▪ 3Q’23 AUM rose 1% over 3Q’22 to $136.1 billion, primarily driven by value creation of 6% for the last twelve months and capital raised of $10.5 billion over the same period, which included $1.8 billion in TPG IX and $0.9 billion in Asia VIII within the C
Slide 16: AUM and Fee Earning AUM Duration
Assets Under Management and Fee Earning AUM Duration ▪ At the end of 3Q’23, approximately 92% of our AUM and 92% of our FAUM was in perpetual or long-dated funds with a duration(1) of 10 or more years (prior to any extensions) ▪ At the end of 3Q’23, approximately 81% of our FAUM had a remaining life
Slide 17: AUM Subject to Fee Earning Growth
AUM Subject to Fee Earning Growth ▪ AUM Subject to Fee Earning Growth totaled $10.9 billion at the end of 3Q’23 and represents capital commitments that, once deployed, generate new management fees (AUM Not Yet Earning Fees) or generate a higher rate of management fees (FAUM Subject to Step-Up) ▪ At
Slide 18: AUM Rollforward
AUM Rollforward ▪ AUM decreased 2% over 3Q’23 and increased $1.1 billion, or 1%, in the last twelve months ▪ AUM activity in 3Q’23 was driven by realizations of $5.1 billion, partially offset by capital raised of $3.4 billion ▪ AUM growth for the last twelve months was driven by $10.5 billion of cap
Slide 19: FAUM Rollforward
FAUM Rollforward ▪ FAUM remained consistent in 3Q’23 and decreased $2.2 billion, or 3%, in the last twelve months ▪ Activity in 3Q’23 primarily consisted of fee earning capital raised totaling $2.1 billion, partially offset by a net decrease in actively invested capital of $1.4 billion and a reducti
Slide 20: Other Operating Metrics
Other Operating Metrics ▪ At the end of 3Q’23, we had $38.2 billion of capital available for deployment; we have invested approximately $10.6 billion since the beginning of the year (All tables in $M) 3Q’22 3Q’23 Capital Raised 3Q’22 3Q’23 Available Capital 3Q’22 3Q’23 YTD YTD Capital $ 6,163 $ 2,77
Slide 21: Supplemental Details
Supplemental Details
Slide 22: 3Q'23 GAAP and Non-GAAP Performance Allocations
3Q’23 GAAP and Non-GAAP Performance Allocations Three Months Ended September 30, 2023 GAAP Less: GAAP GAAP Less: Non-GAAP Non-GAAP ($ in thousands) Total Unrealized Realized Adjustments(2) Realized Capital TPG IX $ 11,821 $ 11,821 $ — $ — $ — THP II 9,685 9,685 — — — TPG AAF 4,881 (189,702) 194,583
Slide 23: 3Q'23 YTD GAAP and Non-GAAP Performance Allocations
3Q’23 YTD GAAP and Non-GAAP Performance Allocations Nine Months Ended September 30, 2023 GAAP Less: GAAP GAAP Less: Non-GAAP Non-GAAP ($ in thousands) Total Unrealized Realized Adjustments(2) Realized Capital TPG VIII $ 187,441 $ 139,261 $ 48,180 $ 38,037 $ 10,143 TPG VII 38,010 38,010 — — — TPG AAF
Slide 24: GAAP and Non-GAAP Accrued Performance Allocations
GAAP and Non-GAAP Accrued Performance Allocations As of June 30, 2023 Real Market ($ in millions) Capital Growth Impact Estate Solutions Total GAAP Total $ 2,844 $ 1,461 $ 437 $ 185 $ 144 $ 5,071 Less: Excluded Assets(1) 54 351 — 64 — 469 Less: Non-GAAP Adjustments(2) 2,355 934 351 97 105 3,842 Non-
Slide 25: After-Tax DE and Dividends Per Class A Common Stock
After-Tax DE and Dividends Per Class A Common Stock ▪ After-tax DE attributable to TPG Inc. of $0.56 per share for 3Q’23, and $1.06 per share for 3Q’23 YTD ▪ Declared dividend of $0.48 per share for 3Q’23 on November 7, 2023, with a record date of November 17, 2023 and payable date of December 1, 20
Slide 26: Fee-Related Earnings Per Class A Common Stock
Fee-Related Earnings Per Class A Common Stock ▪ FRE attributable to TPG Inc. of $0.50 per share for 3Q’23 and $1.23 per share for 3Q’23 YTD ($ in thousands, except share and per share amounts) 2Q’23 3Q’23 Share Reconciliation Class A common stock from IPO 79,070,565 79,070,565 (1) Vested restricted
Slide 27: Distributable Earnings Participating Shares Outstanding
Distributable Earnings Participating Shares Outstanding (shares) 2Q’23 3Q’23 TPG Inc. Diluted Shares Outstanding Class A common stock outstanding 80,511,475 80,587,371 Common Units exchangeable into Class A common stock 228,652,641 228,652,641 Diluted Class A common stock outstanding 309,164,116 309
Slide 28: Equity-Based Compensation Summary
Equity-Based Compensation Summary ▪ Equity-based compensation related to TPG Inc. ordinary service-based RSUs totaled $11.8 million in 3Q’23; the total unrecognized compensation expense related to these RSUs amounted to $113.8 million at the end of 3Q’23, and is expected to be recognized over the ne
Slide 29: Fund Performance Metrics
Fund Performance Metrics ($ in millions, as of 9/30/23) Vintage Capital Capital Realized Unrealized Total Gross Gross Net Investor Fund Year(1) Committed(2) Invested(3) Value(4) Value(5) Value(6) IRR(7) MoM(7) IRR(8) Net MoM(9) Platform: Capital Capital Funds Air Partners 1993 $ 64 $ 64 $ 697 $ — $
Slide 30: Fund Performance Metrics (Cont'd)
Fund Performance Metrics (Cont’d) ($ in millions, as of 9/30/23) Vintage Capital Capital Realized Unrealized Total Gross Gross Net Investor Fund Year(1) Committed(2) Invested(3) Value(4) Value(5) Value(6) IRR(7) MoM(7) IRR(8) Net MoM(9) Platform: Growth Growth Funds STAR 2007 $ 1,264 $ 1,259 $ 1,864
Slide 31: Fund Performance Metrics (Cont'd)
Fund Performance Metrics (Cont’d) ($ in millions, as of 9/30/23) Vintage Capital Capital Realized Unrealized Total Gross Gross Net Investor Fund Year(1) Committed(2) Invested(3) Value(4) Value(5) Value(6) IRR(7) MoM(7) IRR(8) Net MoM(9) Platform: Real Estate TPG Real Estate Partners DASA RE 2012 $ 1
Slide 32: Fund Performance Metrics Notes
Fund Performance Metrics Notes 1) Vintage Year, with respect to an investment or group of investments, as applicable, represents the year such investment, or the first investment in such a group, was initially consummated by the fund. For follow-on investments, Vintage Year represents the year that
Slide 33: Fund Performance Metrics Notes (Cont'd)
Fund Performance Metrics Notes (Cont’d) 8) Net IRR represents the compound annualized return rate (i.e., the implied discount rate) of a fund, which is calculated using investor cash flows in the fund, including cash received from capital called from investors, cash distributed to investors and the
Slide 34: Fund Performance Metrics Notes (Cont'd)
Fund Performance Metrics Notes (Cont’d) 13) As of September 30, 2023, TPEP Long/Short had estimated inception-to-date gross returns of 163% and net returns of 120%. These performance estimates represent the composite performance of TPG Public Equity Partners, LP and TPG Public Equity Partners Master
Slide 35: GAAP Statements of Operations Expanded (Unaudited)
GAAP Statements of Operations Expanded (Unaudited) ($ in thousands) 3Q’22 4Q’22 1Q’23 2Q’23 3Q’23 3Q’23 YTD 3Q’23 LTM Revenues Fees and other $ 333,496 $ 350,179 $ 311,471 $ 327,103 $ 366,149 $ 1,004,723 $ 1,354,902 Capital allocation-based (loss) income 227,628 89,156 331,674 276,171 (205,794) 402,
Slide 36: Non-GAAP Financial Measures Expanded
Non-GAAP Financial Measures Expanded ($ in thousands) 3Q’22 4Q’22 1Q’23 2Q’23 3Q’23 3Q’23 YTD 3Q’23 LTM Fee-Related Revenues Management fees $ 254,510 $ 249,933 $ 247,998 $ 256,612 $ 278,503 $ 783,113 $ 1,033,046 Transaction, monitoring and other fees, net 14,909 46,245 4,672 16,864 30,892 52,428 98
Slide 37: Reconciliations and Disclosures
Reconciliations and Disclosures
Slide 38: GAAP to Non-GAAP Financial Measures Reconciliation
GAAP to Non-GAAP Financial Measures Reconciliation ($ in thousands) 3Q’22 4Q’22 1Q’23 2Q’23 3Q’23 3Q’23 YTD 3Q’23 LTM GAAP Revenue $ 561,124 $ 439,335 $ 643,145 $ 603,274 $ 160,355 $ 1,406,774 $ 1,846,109 Capital-allocation based income (loss) (227,628) (89,156) (331,674) (276,171) 205,794 (402,051)
Slide 39: GAAP to Non-GAAP Balance Sheet Reconciliation
GAAP to Non-GAAP Balance Sheet Reconciliation ($ in thousands) 4Q’22 3Q’23 ($ in thousands) 4Q’22 3Q’23 Total GAAP Assets $ 7,941,738 $ 7,383,037 Total GAAP Liabilities $ 4,202,232 $ 4,343,810 Impact of consolidated Public SPACs Impact of consolidated Public SPACs Cash and cash equivalents (5,097) —
Slide 40: Additional Information
Additional Information Dividend Policy Our current intention is to pay holders of our Class A common stock and nonvoting Class A common stock a quarterly dividend representing at least 85% of TPG Inc.’s share of distributable earnings attributable to the TPG Operating Group, subject to adjustment as
Slide 41: Definitions
Definitions After-tax Distributable Earnings (“After-tax DE”) is a non-GAAP performance measure of our distributable earnings after reflecting the impact of income taxes. We use it to assess how income tax expense affects amounts available to be distributed to our Class A common stock holders and Co
Slide 42: Definitions (Cont'd)
Definitions (Cont’d) Distributable Earnings (“DE”) is used to assess performance and amounts potentially available for distributions to partners. DE is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of net income. DE differs from GAAP net income comp
Slide 43: Definitions (Cont'd)
Definitions (Cont’d) Non-GAAP Financial Measures represent financial measures that are calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles in the United States of America. These non-GAAP financial measures should be considered