Carlyle(US:CG)2024-02-07 17:03Financial Data and Key Metrics Changes - The company reported record Fee-Related Earnings (FRE) of $859 million for the year, with a record FRE margin of 43% in Q4 2023 [101][106] - The company expects FRE to increase to approximately $1.1 billion in 2024, representing a more than 25% increase from 2023 [102][116] - The net accrued carry balance ended the year at $2.4 billion, equating to over $6 per share [99][120] Business Line Data and Key Metrics Changes - Global Credit is now the largest segment with almost $190 billion of Assets Under Management (AUM), having increased credit AUM by nearly 300% over the past four years [111] - Investment Solutions AUM has grown 70% over the past four years to $77 billion, with expectations for a sharp increase in FRE in 2024 due to strong fundraising [112] - The company raised $17 billion in capital in Q4 2023, marking its third-largest fundraising quarter in history [107][121] Market Data and Key Metrics Changes - The company anticipates inflows to exceed $40 billion in 2024, reflecting strong market demand [102][116] - The company noted that fundraising in credit was elevated at $9 billion in Q4, significantly higher than the first three quarters combined [130] Company Strategy and Development Direction - The company is focusing on enhancing stakeholder alignment through changes in its compensation strategy, aiming for a performance-driven culture [109][117] - The capital allocation strategy has been optimized, with an increased share repurchase capacity of $1.4 billion, alongside a planned annual dividend of over $500 million [100][110] - The company is committed to investing in growth while returning capital to shareholders, indicating a balanced approach to capital management [100][116] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the operating environment in 2024, expecting a tailwind for credit fundraising [3][7] - The company is confident in its financial targets for 2024, emphasizing growth, prudent expense management, and compensation changes as key components [142][144] Other Important Information - The company incurred a one-time non-cash GAAP charge of $1.1 billion related to future carry going to employees, which is expected to generate higher FRE for shareholders more quickly [99][120] - The company has awarded performance stock units to senior professionals, aligning their compensation with shareholder interests [119] Q&A Session Summary Question: Discussion on momentum and fundraising for 2024 - Management highlighted the importance of providing value to limited partners and expressed confidence in achieving the $40 billion fundraising target for 2024 [124][127] Question: Clarification on credit fundraising jump in Q4 - Management noted that the elevated fundraising was spread across various products, including CLOs and retail credit products, indicating broad-based strength [130] Question: Insights on the pacing of share repurchase - Management emphasized the strong momentum in the business and indicated that they would be active buyers of stock, reflecting confidence in the company's value [135][139] Question: Expectations for 2024 FRE target and compensation model - Management explained that the $1.1 billion FRE target is based on growth, compensation changes, and prudent expense management, with flexibility built into the compensation model [142][152] Question: Details on the composition of the $40 billion fundraising target - Management indicated that fundraising activity would be strong across various platforms, including credit, private equity, and real estate, reflecting a comprehensive growth strategy [144][153]