The Carlyle Group Inc. · NASDAQ:CG
The Carlyle — Q2 2020 Earnings Presentation
39 slides from The Carlyle's earnings presentation, Jul 30, 2020
Slide 1: The Carlyle Group Reports Second Quarter 2020 Financial Results
THE CARLYLE GROUP REPORTS SECOND QUARTER 2020 FINANCIAL RESULTS JULY 30, 2020
Slide 2: The Carlyle Group Reports Second Quarter 2020 Financial Results
The Carlyle Group Reports Second Quarter 2020 Financial Results WASHINGTON, DC – JULY 30, 2020 – Global investment firm The Carlyle Group Inc. (NASDAQ: CG) today reported its unaudited results for the second quarter ended June 30, 2020. Dividend The Board of Directors has declared a quarterly divide
Slide 3: Impact of Fortitude Transaction and Forward Looking Statements
The Carlyle Group Reports Fourth SecondQuarter Quarterand 2020 FullFinancial Year 2019Results Financial Results Impact of Fortitude Transaction on U.S. GAAP Results On June 2, 2020, a Carlyle-affiliated investment fund purchased additional interests in Fortitude Group Holdings LLC (“Fortitude”) from
Slide 4: Second Quarter 2020 Earnings
Second Quarter 2020 Earnings 4
Slide 5: Carlyle Second Quarter 2020 U.S. GAAP Results
Carlyle Second Quarter 2020 U.S. GAAP Results • Net income (loss) attributable to The Carlyle Group Inc. common stockholders in Q2 2020 was $145.9 million (Dollars in millions, except per share amounts) 2Q'19 2Q'20 YTD 2Q'19 YTD 2Q'20 REVENUES Fund management fees $ 390.9 $ 371.8 $ 744.3 $ 727.7 Inc
Slide 6: Carlyle Second Quarter 2020 Highlights
Carlyle Second Quarter 2020 Highlights • Distributable Earnings (“DE”) of $198 million for Q2 2020 on a pre-tax basis, or $0.53 per common share on a post-tax basis. DE of $373 million, or $1.01 per common share for the YTD Financial • Fee Related Earnings ("FRE") of $127 million for Q2 2020 and $25
Slide 7: Carlyle Second Quarter 2020 Total Segment Operating Results
Carlyle Second Quarter 2020 Total Segment Operating Results (Dollars in millions, except per share amounts) 2Q'19 2Q'20 YTD 2Q'19 YTD 2Q'20 SEGMENT REVENUES Fund management fees $ 414.5 $ 386.4 $ 796.1 $ 767.9 Transaction and portfolio advisory fees, net and other 14.9 18.3 24.9 25.1 Total segment f
Slide 8: Distributable Earnings
Distributable Earnings • Distributable Earnings were $198 million in Q2 2020 and $373 million YTD – Fee Related Earnings accounted for 64% of Distributable Earnings in the quarter and 69% for the YTD period • Realized Net Performance Revenues were $71 million in Q2 2020 and $119 million YTD – Corpor
Slide 9: Fee Related Earnings
Fee Related Earnings • Fee Related Earnings were $127 million in Q2 2020, down from $133 million in Q2 2019, with the decrease driven by lower catch-up management fees, and partially offset by higher transaction fees and lower general & administrative expenses. YTD Fee Related Earnings of $256 milli
Slide 10: Performance Revenues
Performance Revenues • Net Accrued Performance Revenues1 were $1.8 billion as of Q2 2020, up 49% from $1.2 billion last quarter due largely to strong appreciation in our sixth U.S. Buyout fund, and up 4% YTD • Realized Net Performance Revenues were $71 million in Q2 2020 and $119 million YTD – Q2 20
Slide 11: Total Assets Under Management
Total Assets Under Management • Total Assets Under Management1 of $221 billion at June 30, 2020 increased 2% from the prior quarter and decreased (1)% YTD 2 • Available Capital of $73 billion at June 30, 2020 decreased from $74 billion in the prior quarter 3 YTD Change (1)% Credit & Other $47 $221 (
Slide 12: Fair Value of Investments
Fair Value of Investments • Fair Value of Investments4 of $148 billion at June 30, 2020 increased 3% from $143 billion in the prior quarter, and is down (5)% YTD • Fair value in traditional carry funds of $81 billion increased 6% from 1Q 2020 and is down (7)% YTD. The in-carry ratio of 40% increased
Slide 13: Fee-earning Assets Under Management
Fee-earning Assets Under Management • Fee-earning Assets Under Management7 of $162 billion increased 3% from the prior quarter and 1% YTD, with growth in Global Credit (10% YTD) and Investment Solutions (12% YTD) partially offset by runoff in Corporate Private Equity and Real Assets • Pending Fee-ea
Slide 14: Key Metrics Activity
Key Metrics Activity • Fundraising was $4.8 billion in Q2 2020 driven by activity in Investment Solutions and Global Credit, and $12.4 billion YTD • Invested Capital in carry funds was $2.9 billion in Q2 2020 and $5.9 billion YTD, with a higher relative level of activity in Investment Solutions and
Slide 15: Segment Highlights
Segment Highlights 15
Slide 16: Corporate Private Equity
Corporate Private Equity • Fee Related Earnings of $69 million in Q2 2020 were up from $62 million in Q2 2019, primarily driven by lower G&A expenses in the current quarter. Fee Related Earnings of $146 million YTD Other increased 21% compared to $121 million in the prior YTD period Buyout US Buyout
Slide 17: Real Assets
Real Assets • Fee Related Earnings of $23 million in Q2 2020 were down from $54 million in Q2 2019 primarily driven by negligible catch-up management fees in Q2 2020 compared to $26 million in Q2 2019. Fee Related Earnings of $47 million YTD compared to $80 million in the prior YTD period Real • Tot
Slide 18: Global Credit
Global Credit • Fee Related Earnings of $24 million in Q2 2020 increased from $11 million in Q2 2019, primarily driven by Direct higher transaction fees and lower general & administrative expenses (expense recovery), both related to the Other Lending closing of our recent Fortitude transaction. Mana
Slide 19: Investment Solutions
Investment Solutions • Fee Related Earnings of $12 million in Q2 2020 were up from $6 million in Q2 2019 primarily driven by AlpInvest - AlpInvest - activating management fees on AlpInvest's latest secondaries program. Fee Related Earnings of $20 million Primary Secondary YTD were 59% higher compare
Slide 20: Supplemental Details
Supplemental Details 20
Slide 21: Carlyle Second Quarter 2020 Total Segment Results
Carlyle Second Quarter 2020 Total Segment Results (Dollars in millions, except per share amounts) 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 YTD 2Q'19 YTD 2Q'20 SEGMENT REVENUES Fund management fees $ 414.5 $ 384.6 $ 390.2 $ 381.5 $ 386.4 $ 796.1 $ 767.9 Transaction and portfolio advisory fees, net and other 14.
Slide 22: Total Segment Balance Sheet Highlights
Total Segment Balance Sheet Highlights • Balance sheet assets attributable to Carlyle stockholders (including net cash and equivalents, net accrued performance revenue and investments) totaled $2.1 billion at June 30, 2020 • Balance sheet cash totaled $0.6 billion as of June 30, 2020, with no balanc
Slide 23: AUM and Fee-earning AUM Roll Forward
AUM and Fee-earning AUM Roll Forward Total AUM Roll Forward (Unaudited) Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 ($mm) Corporate Corporate Private Real Global Investment Private Real Global Investment Equity Assets Credit Solutions5 Total Equity Assets Credit Solutions5 Total
Slide 24: Corporate Private Equity Fund Performance
Corporate Private Equity Fund Performance TOTAL INVESTMENTS REALIZED/PARTIALLY REALIZED INVESTMENTS(7) (Reported in Local Currency, mm) As of June 30, 2020 As of June 30, 2020 Investment Period End/ Cumulative Remaining Gross Net IRR In Accrued LTM Cumulative Gross Fund Fee Committed Invested Realiz
Slide 25: Real Assets Fund Performance
Real Assets Fund Performance TOTAL INVESTMENTS REALIZED/PARTIALLY REALIZED INVESTMENTS(7) (Reported in Local Currency, mm) As of June 30, 2020 As of June 30, 2020 Investment In Accrued LTM Period End/ Cumulative Remaining Gross Net IRR Carry/ Realized Cumulative Gross Fund Fee Committed Invested Rea
Slide 26: Global Credit Fund Performance (Carry Funds Only)
Global Credit Fund Performance (Carry Funds Only) TOTAL INVESTMENTS ($mm) As of June 30, 2020 Investment Period End/ Cumulative LTM Realized Fund Fee Committed Invested Realized Remaining MOIC Gross IRR Net IRR In Accrued Carry/ Carry/ Vintage(1) Stepdown(2) Capital Capital(25) Value(4) Fair Value(5
Slide 27: Investment Solutions Fund Performance
Investment Solutions Fund Performance TOTAL INVESTMENTS (Reported in Local Currency, mm) As of June 30, 2020 Cumulative Invested Realized Remaining Fair Total Fair INVESTMENT SOLUTIONS(27) Fund Vintage Fund Size Capital(3)(28) Value(28) Value Value(29) MOIC(6) Gross IRR(17)(30) Net IRR(10)(17) AlpIn
Slide 28: Reconciliation & Disclosures
Reconciliation & Disclosures 28
Slide 29: Reconciliation for Distributable Earnings Per Share (Unaudited)
Reconciliation for Distributable Earnings Per Share (Unaudited) (Dollars in millions, 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 YTD 2Q'20 LTM 2Q'20 QoQ YoY LTM except per share data and where noted) FEE RELATED EARNINGS $ 132.7 $ 108.8 $ 108.0 $ 128.8 $ 127.3 $ 256.1 $ 472.9 (1)% (4)% (5)% DISTRIBUTABLE EARNING
Slide 30: Reconciliation of GAAP to Total Segment Information
Reconciliation of GAAP to Total Segment Information (Dollars in millions) 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 YTD 2Q'19 YTD 2Q'20 FY'18 FY'19 LTM 2Q'20 INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES $ 542.0 $ 261.4 $ (40.3) $ (789.0) $ 256.8 $ 1,012.3 $ (532.2) $ 360.2 $ 1,233.4 $ (311.1) Adjustments: Ne
Slide 31: Reconciliation of GAAP to Total Segment Information, continued
Reconciliation of GAAP to Total Segment Information, continued Total Reportable Consolidated Reconciling Carlyle Total Reportable Consolidated Reconciling Carlyle (Dollars in millions) Segments Funds Items Consolidated1 Segments Funds Items Consolidated1 Three Months Ended June 30, 2019 Year to Date
Slide 32: Reconciliation of GAAP to Total Segment Information, continued
Reconciliation of GAAP to Total Segment Information, continued (Dollars in millions) 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 YTD 2Q'19 YTD 2Q'20 FY'18 FY'19 LTM 2Q'20 REVENUE RECONCILING ITEMS Unrealized performance revenues $ 167.3 $ (87.4) $ (113.9) $ (1,109.0) $ 1,037.1 $ 469.1 $ (71.9) $ (42.7) $ 267.8 $
Slide 33: Reconciliation for Total Segment Information, continued
Reconciliation for Total Segment Information, continued RECONCILIATION OF TOTAL INVESTMENTS RECONCILIATION OF ATTRIBUTABLE TO THE CARLYLE GROUP INC. ACCRUED PERFORMANCE ALLOCATIONS (Dollars in millions) 06/30/20 (Dollars in millions) 06/30/20 ACCRUED PERFORMANCE ALLOCATIONS, NET OF ACCRUED INVESTMEN
Slide 34: GAAP Statement of Operations (Unaudited)
GAAP Statement of Operations (Unaudited) (Dollars in millions, except per share amounts) 2Q'19 2Q'20 YTD 2Q'19 YTD 2Q'20 REVENUES Fund management fees $ 390.9 $ 371.8 $ 744.3 $ 727.7 Incentive fees 8.8 9.0 16.9 17.9 Investment income (loss) Performance allocations 247.6 1,191.8 596.7 254.2 Principal
Slide 35: GAAP Balance Sheet (Unaudited)
GAAP Balance Sheet (Unaudited) As of June 30, 2020 Consolidated Consolidated (Dollars in millions) Operating Entities Funds Eliminations Consolidated ASSETS Cash and cash equivalents $ 554.5 $ — $ — $ 554.5 Cash and cash equivalents of Consolidated Funds — 98.0 — 98.0 Restricted cash 4.5 — — 4.5 Inv
Slide 36: Notes
Notes Dividend Policy Under our dividend policy for our common stock that we adopted in connection with the Conversion, we expect to pay our common stockholders an annualized dividend of $1.00 per share of common stock, equal to a quarterly dividend of $0.25 per share of common stock. The declaratio
Slide 37: Notes, continued
Notes, continued Notes on Assets Under Management (Pages 11-13) (continued) (7) Fee-earning Assets Under Management refers to the assets we manage or advise from which we derive recurring fund management fees, and is calculated as the basis on which management fees would be called, if called on the
Slide 38: Notes, continued
Notes, continued Notes on Fund Performance Tables (Pages 24-27) (1) The data presented herein that provides “inception to date” performance results of our segments relates to the period following the formation of the first fund within each segment. For our Corporate Private Equity segment our first
Slide 39: Notes, continued
Notes, continued Notes on Fund Performance Tables (Pages 24-27), continued (22) Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: SASOF II and SASOF III. (23) Aggregate includes the