Carlyle(US:CG)2025-08-08 20:53PART I – FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements for The Carlyle Group Inc. as of June 30, 2025, and for the three and six-month periods then ended, showing significant increases in net income and total assets Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $25.1 billion from $23.1 billion at year-end 2024, driven by growth in investments of Consolidated Funds, while total liabilities rose to $18.4 billion and total equity increased to $6.7 billion Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $25,067.8 | $23,103.5 | | Cash and cash equivalents | $1,275.8 | $1,266.0 | | Investments | $11,203.1 | $10,936.7 | | Investments of Consolidated Funds | $9,857.5 | $7,782.4 | | Total Liabilities | $18,350.2 | $16,755.9 | | Debt obligations | $2,155.3 | $2,143.5 | | Loans payable of Consolidated Funds | $8,056.1 | $6,864.2 | | Accrued compensation and benefits | $5,598.9 | $5,446.6 | | Total Equity | $6,717.6 | $6,347.6 | Condensed Consolidated Statements of Operations For Q2 2025, total revenues surged to $1.57 billion from $1.07 billion in the prior-year quarter, primarily due to a significant increase in performance allocations, leading to a net income of $319.7 million, or $0.89 per basic share Key Operating Results (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1,572.9 | $1,069.7 | $2,546.0 | $1,758.1 | | Fund management fees | $620.4 | $534.4 | $1,206.5 | $1,058.0 | | Performance allocations | $638.8 | $198.2 | $861.7 | $41.2 | | Total Expenses | $1,179.1 | $845.8 | $1,987.3 | $1,406.5 | | Net Income Attributable to CG | $319.7 | $148.2 | $449.7 | $213.8 | | Basic EPS | $0.89 | $0.41 | $1.25 | $0.59 | | Diluted EPS | $0.87 | $0.40 | $1.23 | $0.58 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash used in operating activities significantly improved to $520.9 million, with net cash provided by financing activities totaling $526.8 million, resulting in a slight increase in total cash Six Months Ended June 30 Cash Flow Summary (in millions) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(520.9) | $(1,198.6) | | Net cash used in investing activities | $(34.2) | $(36.9) | | Net cash provided by financing activities | $526.8 | $717.2 | | Increase (decrease) in cash | $10.4 | $(525.0) | Notes to the Condensed Consolidated Financial Statements The notes detail the company's accounting policies, including consolidation of VIEs, revenue recognition for performance allocations, and fair value measurement, alongside significant disclosures on investments, borrowings, and equity-based compensation - The company consolidates Variable Interest Entities (VIEs) where it is the primary beneficiary. As of June 30, 2025, assets and liabilities of consolidated VIEs were $10.6 billion and $9.1 billion, respectively59 - Performance allocations (carried interest) are accounted for under ASC 323 as earnings from financial assets and are recognized based on the amount that would be due if the funds were hypothetically liquidated at the reporting date7087 - On March 31, 2025, the company restructured its strategic investment in NGP, resulting in an impairment charge of $92.5 million on its investment in NGP Management and a $38 million reduction in accrued performance allocations195196199 - The company's Board of Directors reset the share repurchase authorization to $1.4 billion effective February 6, 2024. As of June 30, 2025, $572.0 million of repurchase capacity remained305 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's performance amidst a volatile macroeconomic environment, highlighting strong investment and realization pace, segment-specific results, and robust liquidity management strategies Overview and Business Trends Management observed a volatile Q2 2025, marked by tariff concerns and strong financial market performance, with ongoing risks from trade policy changes, subdued M&A deal count, and continued strong investment and realization activity for Carlyle - The market faced volatility from higher-than-expected tariffs, though it ultimately performed well, with the S&P 500 up 10.6% in Q2 2025. However, changes in trade policy pose ongoing risks to corporate profit margins and global growth382385 - Global M&A activity was subdued in terms of deal count (8,700 transactions, the lowest since 2005), despite high aggregate dollar volumes flattered by mega-deals. Sponsor-led exit activity was also sluggish388 - Carlyle's investment activity remained strong, deploying $14.6 billion and realizing $7.6 billion in proceeds in Q2 2025, significantly higher than Q2 2024. The carry fund portfolio appreciated 2% during the quarter390391 Consolidated Results of Operations The company's consolidated results for Q2 2025 show a 47% increase in total revenues to $1.57 billion, driven by a 222% surge in performance allocations, leading to a 116% increase in net income attributable to common stockholders Consolidated Results of Operations Summary (in millions) | Metric | Q2 2025 | Q2 2024 | Change % | YTD 2025 | YTD 2024 | Change % | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1,572.9 | $1,069.7 | 47% | $2,546.0 | $1,758.1 | 45% | | Fund management fees | $620.4 | $534.4 | 16% | $1,206.5 | $1,058.0 | 14% | | Performance allocations | $638.8 | $198.2 | 222% | $861.7 | $41.2 | NM | | Total Expenses | $1,179.1 | $845.8 | 39% | $1,987.3 | $1,406.5 | 41% | | Net Income Attributable to CG | $319.7 | $148.2 | 116% | $449.7 | $213.8 | 110% | - The increase in fund management fees for the six months ended June 30, 2025 was driven by the commencement of investment periods for newly raised funds and higher transaction fees, which more than doubled to $122.5 million from $50.0 million in the prior year period464468 - The decrease in Principal Investment Income for the six months ended June 30, 2025 was primarily due to a $92.5 million impairment charge and a $38.0 million reduction in accrued carry related to the NGP restructuring478 Segment Analysis This section details the performance of Carlyle's three segments, showing Global Private Equity's Distributable Earnings (DE) slightly down, Global Credit's DE up 27% due to higher fee-related earnings, and Carlyle AlpInvest's DE surging 96% from increased fund management fees and principal investment income Distributable Earnings by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Global Private Equity | $231.9 | $199.1 | $497.5 | $512.2 | | Global Credit | $120.9 | $99.8 | $231.4 | $181.9 | | Carlyle AlpInvest | $78.2 | $44.3 | $157.5 | $80.4 | | Total Distributable Earnings | $431.0 | $343.2 | $886.4 | $774.5 | Fee Related Earnings by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Global Private Equity | $143.6 | $151.6 | $284.8 | $312.7 | | Global Credit | $111.4 | $81.3 | $215.3 | $152.5 | | Carlyle AlpInvest | $68.3 | $40.1 | $133.8 | $74.1 | | Total Fee Related Earnings | $323.3 | $273.0 | $633.9 | $539.3 | Liquidity and Capital Resources The company maintains a strong liquidity position with $1.3 billion in cash and equivalents and $1.0 billion available credit, utilizing capital for business growth, debt service, and shareholder returns through dividends and share repurchases, with detailed contractual obligations - As of June 30, 2025, Carlyle had approximately $1.3 billion in cash and cash equivalents and $1.0 billion of available capacity under its senior revolving credit facility598599 - The company maintains a quarterly dividend policy of $0.35 per common share. Dividends paid during the first six months of 2025 totaled $252.7 million621622 - During the six months ended June 30, 2025, the company paid $280.1 million to repurchase or retire 5.6 million shares, including shares withheld for tax obligations on equity awards628638 Contractual Obligations Summary as of June 30, 2025 (in millions) | Obligation Type (Carlyle Operating Entities) | Total | | :--- | :--- | | Debt obligations | $2,176.7 | | Interest payable | $1,997.9 | | Operating lease obligations | $590.4 | | Capital commitments to Carlyle funds (Company portion) | $674.8 | | Tax receivable agreement payments | $71.6 | | Total | $5,569.5 | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposure is linked to the fair value of its fund investments, with no material changes observed during the first six months of 2025 - The company's main market risk is tied to the fair value of its funds' investments, which affects management fees, incentive fees, and performance allocations670 - There was no material change in market risks during the six months ended June 30, 2025672 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of the end of the reporting period674 - No changes occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting675 PART II – OTHER INFORMATION Legal Proceedings The company is involved in various legal matters, including the Authentix Matter concerning breach of fiduciary duty and the Tax Receivable Agreement Matter regarding stockholder payments, with outcomes not expected to materially exceed accrued amounts - The company is a defendant in the Authentix Matter, where former minority shareholders allege breach of fiduciary duty in the sale of a portfolio company. A trial court decision in favor of Carlyle is currently on appeal255 - The company is also involved in the Tax Receivable Agreement Matter, a stockholder lawsuit challenging payments made to certain officers and directors in connection with the company's 2020 corporate conversion256 Risk Factors This section refers to the comprehensive discussion of potential risks and uncertainties detailed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - For a discussion of potential risks and uncertainties, the report refers to Item 1A, "Risk Factors," in the Annual Report on Form 10-K for the year ended December 31, 2024678 Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2025, the company repurchased approximately 2.2 million shares of common stock for $100.0 million under its share repurchase program, with $572.0 million remaining authorized as of June 30, 2025 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Total Value (millions) | | :--- | :--- | :--- | :--- | | April 2025 | — | — | — | | May 2025 | 835,494 | $45.84 | $38.3 | | June 2025 | 1,338,472 | $46.13 | $61.7 | | Total Q2 | 2,173,966 | - | $100.0 | - The maximum remaining value of shares that may be purchased under the plan was $572.0 million as of June 30, 2025, factoring in both open market repurchases and net share settlements of equity-based awards684 Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, credit agreements, compensatory plan forms, and officer certifications