Carlyle Group Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Alexander Blostein - Goldman Sachs - Analyst : Hey, good morning, everybody, and we'll probably hold John. So maybe just to kick us off with a little bit of a macro question now from obviously related to the election. And I know you made a couple of comments in your opening remarks, but curious how you think the Trump administration could impact our activity in the old space, both on a macro activity side, but also any regulatory items you're paying particular attention to and how that could impact, Carlyle? Thanks.

Question: Ken Worthington - JPMorgan - Analyst : Hi, good morning. Thanks for taking the question. I wanted to dig into performance you called out and are having some nice exits, StandardAero, Rigaku, and it seems like there's more to come. At the same time, the net IRR, in CP7 sort of remained at 8% despite the Joplin accrued carry. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 1:30PM, CG.OQ - Q3 2024 Carlyle Group Inc Earnings Call If you look at CP5 the IRR fell to 4%. How should we think about the performance metrics developing a buyout if and as you get the exit, do you expect in this improving environment? And I think we the investment community see performance in buyout as a headwind. Do you see that changing or have a different view again, given the environment? And if so, is it big enough to change the fund raising trajectory?

Question: Ben Budish - Barclays - Analyst : Good morning, and thanks for taking the question. I wanted to ask about your outlook for 2025 a little bit in terms of what you expect in the credit side. I think on the private equity side, you done with a lot of the major fundraises. And it sounds like you're expecting a big pickup in activity, same with the solutions. As I recall, you should be mostly done kind of fundraising there by the end of this year. So on the credit side, what you expectation for fundraising activity? What else are you thinking about in terms of how to build growth develop that platform? Thank you.

Question: Ben Budish - Barclays - Analyst : Got it. Thank you.

Question: Patrick Davitt - Autonomous Research - Analyst : Good morning, everyone. I think I have two other positive from the Trump win for the Altar fairly obvious and you went through a lot of those. But curious if you guys have done any scenario testing of how the business and or in ground portfolio would fare through some of the more aggressive plan and we have like tariffs and or mass deportation where the outcome is a little bit much year for us. Thank you.

Question: Brian McKenna - Citizens GMP - Analyst : Good morning, all. So it's great to see the significant step-up and net accrued performance fees in the quarter, which could have clearly has positive implications on future earnings over time. But with the vast majority of this ultimately moving to cash on the balance sheet once realized, how should we think about deploying this excess capital over time? Specifically as it relates to organic growth, strategic M&A as well as buybacks

Question: Brian McKenna - Citizens GMP - Analyst : Thanks, John.

Question: Glenn Schorr - Evercore ISI - Analyst : Good morning. I think we'd all love to see the pickup in M&A and IPOs and better capital markets activity. And it is only the short-term downside, maybe is less or no net asset growth is outflows are bigger than fund raising rents. You saw a little bit this quarter. So When I look at the 2% growth growth in management fees year on year. I don't feel like it reflects what the real underlying growth is and what's going on in the momentum that you've highlighted secures, how we should think about is there a path to double digit management fee growth as you start to deploy that dry powder that you have? Thanks.

Question: Mike Brown - Wells Fargo Securities - Analyst : Hi. Good morning. Thank you for taking my question. So it seems like at this point, Harvey, year-and-a-half, flushing that out into the job, the foundation is in place and established at Carlyle. As you think about the next few years. What is the right way to think about the annual fundraising potential? Is this $40 billion level, what Carlyle can deliver on an annual basis? And then also the FRE growth potential from here. I guess if you think about that multi-year horizon can Carlyle get to a point of delivering low double digit FRE growth annually. Thank you.

Question: Brian Bedell - Deutsche Bank - Analyst : Good morning, folks. Thanks for taking my question. Maybe just on Harvey, if I can go back to the tariffs topic on just some from a global trade perspective and deployment outside the US, how are you viewing that potential landscape? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 1:30PM, CG.OQ - Q3 2024 Carlyle Group Inc Earnings Call Do you see any frictions and deployment are regionally in? Are you thinking -- I guess how are you thinking about deployment firm-wide between Europe and Japan? And any impact from the tariffs there?

Question: Brennan Hawken - UBS - Analyst : Good morning, Harvey, good morning, John. Thanks for taking my question. So on interested to talk about fundraising point, and I might be reading too much into this, but it seems like now you're talking about 40 and the pace is in the sort of like upper mid 20s year to date. So a little behind the pace of 40. Was the about 40 meant to -- meant as a softener around that number. And how should we be thinking about the fourth quarter? What are the drivers that will come through? And also just to confirm, did you close the real estate [X] fund in the third quarter?

Question: Brennan Hawken - UBS - Analyst : Thanks for that clarity.

Question: Steven Chubak - Wolfe Research - Analyst : Good morning, Harvey, John, and thanks for taking my question. So I was hoping you could help frame the revenue opportunity in capital markets with deal activity poised to accelerate. You noted you're seeing momentum across the franchise. Just trying to gauge how you think about an achievable run rate for this business and whether you're adequately resourced Easter in relation to the opportunity that you envisage?

Question: Steven Chubak - Wolfe Research - Analyst : Helpful color. Thanks for taking my questions.

Question: Bill Katz - TD Cowen - Analyst : Thank you very much and good morning, everybody. Just maybe a slightly different tact on FRE. You've done a very good job of enhancing the FRE margin, as you mentioned, year on year. And then you look at the segments is up very strongly with the algorithm for next year. As we look ahead, how much more incremental margin can you shoot for? And then just one of a secondary question, just given the interplay between where you're growing assets, where you're realizing assets, how do we think about the interplay between fee-paying AUM growth versus the base management fee rate? Thank you.

Question: Michael Cyprys - Morgan Stanley - Analyst : Hey, good morning and thanks for taking the question. Just wanted to ask about asset based finance, meaningful growth opportunity for Carlyle. So hoping you could just update us on where that stands today, just in terms of AUM, how that part of the business has been growing and maybe talk about some of the steps you might take in to '25 to accelerate growth of that platform and to what extent might you take space and platform capabilities here to best capture the opportunity set? Thank you.

Question: Craig Siegenthaler - Bank of America - Analyst : Hey, good morning, everyone. I hope you're all doing well. Good to hear from you. Stock-based comp is now run rating between 120 and 130 after the grants earlier this year. And I believe you comment on prior calls that there should be a step down next year in 2025. However, I also believe the mechanics of the issuance is related to the price of the stock, which is higher today. So I just wanted your perspective on how we should be forecasting stock based comp next year relative to where it came in this past quarter.