• Fee-Related Earnings (FRE): Over $1.1 billion, a near 30% increase over 2023.
• FRE Margin: Expanded to 46%, a 900-basis point year-over-year increase.
• Inflows: Exceeded $40 billion for the year, totaling more than $100 billion over the last two years.
• Capital Returned to Shareholders: More than $1 billion.
• Global Credit Revenue Growth: Increased by 22% in 2024.
• Assets Under Management (AUM) in Global Credit: $190 billion.
• Global Investment Solutions Fee Revenue Growth: Increased by 44% compared to the prior year.
• Global Wealth Business Inflows: Record inflows of $4.5 billion.
• Global Wealth AUM Growth: Increased by 65% to over $9 billion.
• US Buyout Funds Performance: Appreciated 15% and 21%, respectively, in 2024.
• Real Estate AUM Growth: Increased more than 80% over the past four years.
• Distributable Earnings (DE): $1.5 billion for the year, or $3.66 per share.
• Transaction Fees: More than doubled to $164 million.
• Pending Fee-Earning AUM: $23 billion, up nearly 50% year over year.
• FRE Cash Compensation Ratio: Improved to 36% in 2024, down from 45% in the prior year.
• Fundraising: Strong inflows of more than $14 billion in the fourth quarter and nearly $41 billion for the year.
• Dry Powder: $84 billion available for investment.
• Corporate Private Equity Realized Proceeds: Nearly doubled from the prior year.
• Proceeds Distributed to US Buyout Investors: $5.3 billion throughout the year.

• Warning! GuruFocus has detected 8 Warning Signs with CG.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• The Carlyle Group Inc (NASDAQ:CG) achieved a record performance in 2024, generating over $1.1 billion in fee-related earnings, marking a near 30% increase over 2023.
• The company expanded its fee-related earnings (FRE) margin to 46%, a 900-basis point year-over-year increase.
• Inflows exceeded $40 billion in 2024, contributing to more than $100 billion of inflows over the last two years.
• The Global Credit segment remained the fastest-growing area, with revenues increasing 22% in 2024 and assets under management reaching $190 billion.
• The Carlyle Group Inc (NASDAQ:CG) returned more than $1 billion in capital to shareholders and implemented a $1.4 billion share repurchase authorization, reflecting confidence in the company's undervalued share price.

Negative Points

• Global Private Equity management fees declined by 7% in 2024, with expectations of a continued, albeit more modest, decline in 2025.
• The CLO business within the Global Credit segment faced market headwinds, impacting management fees.
• The fee-paying assets under management experienced a $6 billion mark-to-market decline due to credit market activity, although it was described as having a minor economic impact.
• The company anticipates a modest 6% growth in fee-related earnings for 2025, with potential upside dependent on market conditions.
• Realization activity levels are expected to increase in 2025, but the 6% FRE growth forecast does not assume a substantial pickup in realizations.

Q & A Highlights

Q: What are the bigger drivers in Credit and Solutions for 2025, and when do you expect to come back to market with the next Global Private Equity fund? A: John Redett, CFO, explained that the 6% FRE growth is a base case, reflecting aggressive investment in growth areas like Wealth, Credit, and Solutions. He highlighted strong growth in asset-backed business and CLO business, with potential upside in Wealth growth, Capital Markets fees, and Insurance flows. The next US buyout fund is expected to launch in late 2025, with fee activation in 2026.

Q: How are you thinking about capital return and buybacks given the optimistic outlook for realizations? A: John Redett stated that Carlyle repurchased roughly 12 million shares in 2024 and has $850 million left on the authorization. They view stock buybacks as attractive and will continue to be active in 2025, balancing this with investing in business growth and potential M&A.

Q: Can you explain the negative mark in fee-paying AUM and its impact? A: John Redett noted that the fourth quarter had some noise, including a $6 billion mark to market in credit market activity and $3 billion in FX movement, which had no economic impact. Despite this, Carlyle has $23 billion in pending fee-earning AUM, expected to contribute $200 million annually.

Q: What are the key areas of investment for 2025, and how do you see G&A expenses evolving? A: John Redett highlighted investments in Wealth, Credit, and Solutions, with Wealth headcount expected to grow by 50% in 2025. G&A expenses were up 4% in 2024, with some seasonality and one-off items in Q4. He expects Q1 2025 to be similar to Q4 2024, with FRE growth accelerating throughout the year.

Q: What is the outlook for the BDC merger and the broader direct lending platform? A: John Redett mentioned that the BDC merger will close in late Q1 or early Q2, positively impacting management fees and FRE. Carlyle is investing in the direct lending business, which has strong performance but lacks the scale of peers, presenting upside potential.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.