KKR(US:KKR)2024-05-01 10:50Financial Performance - KKR reported a GAAP net income of $0.7 billion for Q1 2024, with $4.0 billion over the last twelve months (LTM)[15] - Fee Related Earnings (FRE) for Q1 2024 were $669 million, up 19% year-over-year, with LTM FRE reaching $2.5 billion[17] - Total Operating Earnings (TOE) for Q1 2024 were $962 million, a 28% increase year-over-year, with LTM TOE at $3.4 billion[17] - Adjusted Net Income (ANI) for Q1 2024 was $864 million, down 2% year-over-year, with LTM ANI at $3.2 billion[17] - Total revenues for Q1 2024 were $9.66 billion, up significantly from $3.13 billion in Q1 2023[16] - Insurance segment revenues for Q1 2024 were $7.70 billion, compared to $2.00 billion in Q1 2023[16] - Net Investment Income for the quarter was $1.5 billion, driven by higher yields and strong net inflows[48] - Net Cost of Insurance totaled $1.0 billion in the quarter, primarily due to new business and higher funding costs[48] - Total revenues for 1Q'24 were $9.656 billion, with net income attributable to KKR common stockholders at $682.214 million[73] - Adjusted Net Income for 1Q'24 was $863.75 million, compared to $719.28 million in 1Q'23, reflecting a 20% increase[79] - Total Operating Earnings for 1Q'24 were $962.30 million, up from $753.69 million in 1Q'23, a 28% increase[79] - Total GAAP Revenues for 1Q'24 were $9.66 billion, a significant increase from $3.13 billion in 1Q'23[81] - Insurance GAAP Revenues for 1Q'24 were $7.70 billion, compared to $2.00 billion in 1Q'23[81] - Adjusted EBITDA for 1Q'24 was $1.17 billion, up from $990.63 million in 1Q'23[80] Assets Under Management (AUM) - Assets Under Management (AUM) grew to $578 billion, a 13% increase year-over-year, with Fee Paying AUM at $471 billion[17] - Assets Under Management (AUM) reached $578 billion, up 13% year-over-year, with $31 billion of organic new capital raised in the quarter[28] - Fee Paying AUM grew to $471 billion, up 13% year-over-year, with $36 billion of organic new capital raised in the LTM[28] - Perpetual Capital increased to $240 billion, up 22% year-over-year, representing 42% of AUM and 50% of Fee Paying AUM[28] - Private Equity AUM increased 10% year-over-year to $183 billion, with $10 billion of organic new capital raised in the LTM[35] - Real Assets AUM grew 12% year-over-year to $135 billion, with $19 billion of organic new capital raised in the LTM[37] - Credit and Liquid Strategies AUM increased 16% year-over-year to $260 billion, with $59 billion of organic new capital raised in the LTM[40] - Global Atlantic AUM reached $177 billion, with $137 billion in Credit AUM[48] - The Manulife block reinsurance transaction added $10 billion to AUM in the quarter[48] - Private Equity AUM increased to $182.8 billion, with $3.6 billion in new capital raised during the quarter[57] - Real Assets AUM grew to $135.4 billion, with $5.9 billion in new capital raised during the quarter[57] - Credit and Liquid Strategies AUM rose to $259.5 billion, with $21.2 billion in new capital raised during the quarter[57] - Fee Paying AUM for Private Equity increased to $116.3 billion, with $9.5 billion in new capital raised during the quarter[59] - Total Assets Under Management (AUM) stand at $480.125 billion, with $97.508 billion in uncalled commitments[64] Capital Raising and Deployment - KKR raised $31 billion in new capital during Q1 2024 and $88 billion over the LTM[17] - Capital invested during Q1 2024 was $14 billion, with $48 billion invested over the LTM[17] - KKR completed the acquisition of the remaining minority equity stake in Global Atlantic, now reporting three segments including the new Insurance segment[18] - KKR's share of Strategic Holdings' 4Q'23 LTM Adjusted Revenues was $3.6 billion, with LTM Adjusted EBITDA of $1.5 billion[51] - Capital Invested in Strategic Holdings was $0.9 billion over the LTM[51] - Total Private Equity commitments amount to $194.641 billion, with $54.951 billion in uncalled commitments and $146.409 billion invested[61] - North America Fund XIII has a commitment of $18.4 billion, with $8.219 billion uncalled and $10.181 billion invested[61] - Global Infrastructure Investors IV has a commitment of $16.59 billion, with $6.86 billion uncalled and $10.062 billion invested[63] - Asian Fund IV shows a commitment of $14.735 billion, with $8.322 billion uncalled and $6.965 billion invested[61] - Total Real Assets commitments stand at $80.078 billion, with $23.606 billion uncalled and $58.236 billion invested[63] - Next Generation Technology Growth Fund III has a commitment of $2.74 billion, with $2.321 billion uncalled and $419 million invested[61] - Health Care Strategic Growth Fund II has a commitment of $3.789 billion, with $2.812 billion uncalled and $977 million invested[61] - Real Estate Partners Americas III has a commitment of $4.253 billion, with $1.544 billion uncalled and $2.818 billion invested[63] - Co-Investment Vehicles and Other in Private Equity have a commitment of $20.763 billion, with $3.358 billion uncalled and $17.973 billion invested[61] - Asia Pacific Infrastructure Investors II has a commitment of $6.348 billion, with $5.444 billion uncalled and $904 million invested[63] - Total Credit and Liquid Strategies commitments amount to $38.329 billion, with $25.640 billion invested and $17.407 billion realized[64] - KKR's portion of Uncalled Commitments to its investment funds includes $4.6 billion to Private Equity, $2.2 billion to Real Assets, and $1.2 billion to Credit and Liquid Strategies[88] Financial Position and Liquidity - Uncalled commitments (Dry Powder) remained at $98 billion, diversified across the firm's investment strategies[30] - Gross unrealized carried interest totaled $6.9 billion as of March 31, 2024[32] - Cash and Investments total $14.586 billion at 1Q'24, with embedded gains of $2.8 billion[65] - Net Cash and Investments amount to $6.529 billion, with gross unrealized performance income of $6.931 billion[66] - KKR maintains a strong financial profile with an 'A' rating from both S&P and Fitch, and $1.5 billion of undrawn corporate credit revolver capacity[65] - Total assets for 4Q'23 were $317.29 billion, with cash and cash equivalents in Asset Management and Strategic Holdings at $8.39 billion and Insurance at $11.95 billion[75] - Total liabilities for 4Q'23 were $258.92 billion, with debt obligations in Asset Management and Strategic Holdings at $44.89 billion and Insurance at $2.59 billion[75] Dividends and Share Repurchases - KKR declared a dividend of $0.175 per share of common stock for the first quarter of 2024, payable on May 28, 2024[70] - KKR used $93 million to retire equity awards, repurchasing shares at an average cost of $100.58 per share[68] - Total capital used for share repurchases and retired equity awards was $93 million, with an average price paid per share of $100.58[69] Expenses and Compensation - Total expenses for 1Q'24 were $9.312 billion, with compensation and benefits accounting for $1.316 billion[73] - The tax benefit from equity-based compensation for 1Q'24 was $26.2 million, increasing Adjusted Net Income by 3%[86] - KKR's compensation framework has been modified to decrease the percentage from fee-related revenues and increase the percentage from realized carried interest and incentive fees[122] Strategic Holdings and Investments - KKR's share of Strategic Holdings' 4Q'23 LTM Adjusted Revenues was $3.6 billion, with LTM Adjusted EBITDA of $1.5 billion[51] - Capital Invested for Strategic Holdings segment is included in Private Equity Capital Invested within the Asset Management segment and relates to Core Private Equity[93] - LTM Adjusted revenue and EBITDA represents KKR's look-through ownership percentage for each of these companies in the aggregate as a result of the firm's investments in these companies through its participation in our core private equity strategy multiplied by the revenue and EBITDA of each portfolio company, respectively[94] - Non-U.S. dollar businesses have been converted at the period-ending foreign exchange rate[94] - The calculation reflects the underlying revenue or EBITDA growth of investments made in the preceding periods, assuming those businesses were owned for the full acquisition year and are shown on a constant currency / constant ownership percentage basis[94] Risks and Uncertainties - Risks related to KKR's business include market volatility, geopolitical developments, and challenges in raising additional funds[127] - Valuation methodologies for certain assets can be subjective, and historical returns may not be indicative of future results[128] - Risks related to insurance activities include interest rate fluctuations and discrepancies between policyholder behavior estimates and actual claims experience[129] Operational Metrics - Management fees increased by 12% to $3.1 billion in the LTM, driven by growth in Fee Paying AUM from organic capital raised[26] - Fee Related Earnings (FRE) increased by 18% year-over-year, driven by growth in management fees, with the LTM FRE margin rising due to compensation framework adjustments[27] - For the three months ended March 31, 2024, Distributions and Other includes $128 million of redemptions by fund investors in Real Assets and $2,893 million of redemptions by fund investors in Credit and Liquid Strategies[96] - For the twelve months ended March 31, 2024, Distributions and Other includes $360 million of redemptions by fund investors in Real Assets and $8,396 million of redemptions by fund investors in Credit and Liquid Strategies[96] - The adjusted revenue and adjusted EBITDA information represents the measures management currently uses to monitor the operating performance of the businesses[93] - LTM Adjusted EBITDA is shown based on the geographic location of the businesses' headquarters[93] - Total Segment Earnings excludes: (i) equity-based compensation charges, (ii) amortization of acquired intangibles, (iii) strategic corporate related charges, and (iv) non-recurring items, if any[107] - Total Operating Earnings is a performance measure that represents the sum of (i) FRE, (ii) Insurance Operating Earnings, and (iii) Strategic Holdings Operating Earnings[112] - Capital Invested includes investments in funds, co-investments, and Principal Activities business line, with financing arrangements like credit facilities and leveraged credit strategies[115] - Fee Paying AUM (FPAUM) represents assets under management that generate management fees, excluding assets only entitled to performance income[115] - Uncalled Commitments represent the aggregate amount of capital available for future investments by KKR's investment funds and co-investment vehicles[116] - KKR's website serves as a channel for distributing material company information, including financial updates and investor alerts[117] - Forward-looking statements include expectations for business growth, AUM expansion, capital deployment, and investment returns, subject to risks and uncertainties[122] - KKR's Strategic Holdings segment is expected to contribute to future financial results, with potential for compounding earnings over time[122] - Perpetual capital, a component of AUM, includes registered funds, unregistered funds, listed companies, and insurance companies, but excludes traditional private equity funds and other investment vehicles[87]