Carlyle Group Inc
For the period ended Jun 30, 2024. Filed Aug 6, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 6, 2024
CG$39.70-0.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-07.
0001527166-24-000051
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001527166-24-000067
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 1394 previous paragraphs and 1519 current paragraphs.
884 unchanged; 318 reworded; 295 added; 175 removed; 17 previous and 22 current paragraphs rearranged.
Tables are not compared: 48 previous and 48 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (295)
Current report
AUM and$155 billion in Fee-earning AUM.
Current report
billion in AUM and$48 billion in Fee-earning AUM.
Current report
Global growth generally moderated in the second quarter of 2024 as the impact of persistently high interest rates began to
Current report
manifest. U.S. economic activity showed signs of softening, India experienced slower economic activity and consumption
Current report
growth, China’s economic momentum decelerated due to uneven underlying growth across sectors, and Korea’s economy
Current report
contracted as domestic demand weakened. In contrast, Japan’s economy rebounded following a first quarter contraction, and
Current report
euro area growth improved despite significant dispersion across regions and sectors.
Current report
In the United States, official data indicate the economy grew at a 2.8% annualized rate. However, excluding inventory
Current report
accumulation, which accounted for nearly one-third of the expansion, growth was 2%. This is consistent with the estimate
Current report
implied by our proprietary portfolio data, and June was clearly the weakest of the quarter’s three months. While goods spending
Current report
appears to be growing at its slowest rate in a year, and “experiences” spending finished June down 3% from its April 2024
Current report
peak, the level of overall experiences outlays remains elevated well above pre-pandemic levels, as evidenced by robust
Current report
passenger enplanements and hotel occupancy rates. Fixed investment in industrial facilities continues to be a bright spot, led by
Current report
investments in (renewable) power generation and storage, data centers, semiconductors, and battery and EV manufacturing.
Current report
These investments coincide with a backlog of projects in this space, with announced investment roughly five times larger than
Current report
the dollar value of assets put-in-place thus far. This investment also comes alongside explosive growth in direct government
Current report
investment in infrastructure, which is now growing at a faster rate than private outlays. The slowdown in economic growth,
Current report
combined with a rise in the unemployment rate in July to its highest level in over two years, present growing evidence of the
Current report
disinflationary trends that the Federal Reserve has signaled are necessary to observe before it considers lowering interest rates.
Current report
Additionally, inflation, as measured by the Federal Reserve’s preferred gauge, the core Personal Consumption Expenditures
Current report
Price Index (PCE), fell to 2.6%, marking the lowest level since March 2021. Recent market volatility has created a wide range
Current report
of expected outcomes for the federal funds rate among market participants, with expectations whipsawing from two to as many
Current report
as ten 25 basis point rate cuts from the Federal Reserve in the second half of 2024.
Current report
In Japan, estimates indicate the economy rebounded in the second quarter, growing at a 2.5% annualized rate,
Current report
following a first-quarter contraction. This economic recovery occurred against a backdrop of notable currency movements. For
Current report
the past three years, the yen has closely tracked levels expected given the differential between the yields on U.S. Treasuries and
Current report
Japanese Government Bonds. That ended in June, as the yen weakened even as interest differentials narrowed, though there has
Current report
been a significant reversal in the beginning of the third quarter. Since July 10, the yen has appreciated nearly 12% against the
Current report
U.S. dollar. Japanese public equities and the yen exchange rate tend to move in opposite directions; the recent strengthening of
Current report
the yen against the U.S. dollar has been accompanied by a sharp selloff in Japanese public markets. However, it is important to
Current report
view recent market volatility in the context of longer-term trends. Overall, corporate governance and stock exchange reforms
Current report
have thus far produced their intended effect, with delistings, buyouts, spinoffs, and asset sales accelerating as management
Current report
teams restructure operations for higher returns. The optimism and growing business volumes of M&A advisors suggest that the
Current report
recent moves in Japanese asset prices do not reflect the potential scale of improvement in profitability outlooks. Global
Current report
enthusiasm (until the past few weeks) for the Japanese market has also influenced the Korean Financial Services Commission to
Current report
introduce its own corporate governance reforms earlier this year. Korea’s market appears to have an even greater opportunity
Current report
for reform, with a higher proportion of companies priced below their accounting value of assets compared to Japan. Corporate
Current report
inefficiencies are viewed as an intolerable drag on growth in light of demographic realities.
Current report
In India, despite moderating consumption, our proprietary portfolio data suggest the economy expanded at a 5.9%
Current report
annualized rate in the second quarter. India appears poised for a significant period of catch-up growth and rising living
Showing the first 40 of 295 passages. Open the source sections for the rest.
Removed paragraphs (175)
Previous report
AUM and$153 billion in Fee-earning AUM.
Previous report
billion in AUM and$47 billion in Fee-earning AUM.
Previous report
deconsolidates these investment funds. Accordingly, our segment revenues primarily consist of fund management fees and
Previous report
related transaction and portfolio advisory fees and other income, realized performance revenues (consisting of incentive fees
Previous report
and performance allocations), realized principal investment income, including realized gains on our investments in our funds
Previous report
and other trading securities, as well as interest income. Our segment expenses primarily consist of cash compensation and
Previous report
benefits expenses, including salaries, bonuses, and realized performance payment arrangements, and general and administrative
Previous report
expenses. While our segment expenses include depreciation and interest expense, our segment expenses exclude acquisition and
Previous report
purposes.
Previous report
(1)Global Private Equity also includes assets under management in funds which we jointly advise with Riverstone Holdings L.L.C. (the
Previous report
“Legacy Energy funds”). The impact of these funds is no longer significant to our results of operations.
Previous report
The global economy showcased resilience in the first quarter of 2024, notwithstanding geopolitical tensions and
Previous report
persistently high interest rates. The U.S. economy maintained momentum, euro area growth was stable despite ongoing
Previous report
challenges in energy-intensive industrials and Germany, China’s economy expanded robustly despite uneven underlying growth
Previous report
across sectors, and both India and Korea experienced accelerated economic activity and consumption. U.S. GDP expanded at a
Previous report
1.6% annualized rate in the first quarter of 2024; however, this decelerated pace was largely due to declines in net exports and
Previous report
inventory investment. Underlying domestic demand remained robust, as evidenced by 3.1% annual growth in real final sales to
Previous report
private domestic purchasers. This growth was driven by robust consumer spending, large corporate technology budgets
Previous report
(software, data analytics, artificial intelligence (AI), storage, and other digital services), and an ongoing and unprecedented rise
Previous report
in industrial facilities investment. Our services (experiences) index ended the quarter at its highest ever levels as demand for air
Previous report
travel, hotel stays, live events, and off-premises dining continued to surge. Higher interest rates make it more difficult to finance
Previous report
“big ticket” purchases, most notably homes, as well as durable goods like autos, appliances, and renovations. Household debt
Previous report
service ratios remain low, however, with fixed-rate mortgages saving households over $450 billion annually (equal to over 2%
Previous report
of total consumption) relative to if these loans were repriced at market rates. This “hedge” allows consumption to grow with
Previous report
compensation (approximately 4% annually) and naturally biases spending toward entertainment services that do not need to be
Previous report
financed. Core and headline inflation finished the quarter up 3.5% and 3.8%, respectively, from a year earlier, continuing to be
Previous report
driven by services costs. At the November 1st Federal Open Market Committee Meeting, the Federal Reserve signaled that it
Previous report
was likely at the end of its tightening cycle, as inflationary pressures had begun to become less pronounced; however, as of the
Previous report
end of the first quarter of 2024, inflation remains above target, the labor market remains strong, and economic growth is steady,
Previous report
which has driven uncertainty amongst market participants on the timing and magnitude of any potential rate cuts in 2024. The
Previous report
market is currently pricing with the expectation of two rate cuts in 2024, down from the peak point of optimism when the
Previous report
market was pricing in seven rate cuts over the year.
Previous report
In China, official data indicate the economy surpassed expectations in the first quarter, growing at a 6.6% quarter-
Previous report
over-quarter annualized rate and 5.3% from a year ago. Although Chinese property markets remained weak, with new floor
Previous report
space sold ending the quarter down 50%cumulatively from 2021 levels, there are positive signs elsewhere. Momentum in
Previous report
domestic innovation and the industrial sector indicates a strategic redirection of capital, suggesting a methodical approach to
Previous report
mitigating the immediate risks posed by the property sector. Package throughput volumes increased significantly relative to
Previous report
year-ago levels during the quarter, retail sales and foot traffic across our portfolio strengthened in March, and the value added
Previous report
of high-tech manufacturing rose by 7.5% year-over-year, accelerating 2.6% faster than in the fourth quarter of 2023. In Korea,
Previous report
broad measures of economic activity indicate that domestic demand momentum continued in the first quarter. Similarly, these
Showing the first 40 of 175 passages. Open the source sections for the rest.
Reworded paragraphs (318)
Previous wording
also includes the NGP Carry Funds advised by NGP. As of March 31, 2024, our Global Private Equity segment had$159
Current wording
also includes the NGP Carry Funds advised by NGP. As of June 30, 2024, our Global Private Equity segment had$164
Previous wording
debt, insurance solutions and global capital markets. As of March 31, 2024, our Global Credit segment had$186 billion in
Current wording
debt, insurance solutions and global capital markets. As of June 30, 2024, our Global Credit segment had$190 billion in
Previous wording
related co-investment and secondary activities. As of March 31, 2024, our Global Investment Solutions segment had$80
Current wording
related co-investment and secondary activities. As of June 30, 2024, our Global Investment Solutions segment had$81
Previous wording
disposition related charges and amortization of intangibles and impairment. Refer to Note 15, Segment Reporting, to the
Current wording
deconsolidates these investment funds. Refer to Note 15, Segment Reporting, to the condensed consolidated financial
Previous wording
condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for more information on the
Current wording
statements included in this Quarterly Report on Form 10-Q for more information on the differences between our financial
Previous wording
differences between our financial results reported pursuant to U.S. GAAP and our financial results for segment reporting
Current wording
results reported pursuant to U.S. GAAP and our financial results for segment reporting purposes.
Previous wording
management of$425 billion as of March 31, 2024 for each of our three global business segments (in billions):
Current wording
management of$435 billion as of June 30, 2024 for each of our three global business segments (in billions):
Previous wording
(2)Includes our Financial Services (CGFSP), Sub-Saharan Africa Buyout (CSSAF), South America Buyout (CSABF), Peru Buyout (CPF),
Current wording
(1)Includes our Financial Services (CGFSP), Sub-Saharan Africa Buyout (CSSAF), South America Buyout (CSABF), Peru Buyout (CPF),
Previous wording
(3)NGP Energy funds are advised by NGP Energy Capital Management, LLC, a separately registered investment adviser. We do not serve as
Current wording
(2)NGP Energy funds are advised by NGP Energy Capital Management, LLC, a separately registered investment adviser. We do not serve as
Previous wording
(4)Includes our Infrastructure (CGIOF), Renewable Energy (CRSEF) and Power funds (CPP / CPOCP).
Current wording
(3)Includes our Infrastructure (CGIOF), Renewable Energy (CRSEF) and Power funds (CPP / CPOCP).
Previous wording
(5)Includes Carlyle FRL, capital raised from strategic third-party investors which directly invest in Fortitude alongside Carlyle FRL, as well
Current wording
(4)Includes Carlyle FRL, capital raised from strategic third-party investors which directly invest in Fortitude alongside Carlyle FRL, as well
Previous wording
(6)Includes our business development companies (CSL / CARS) and our newly launched evergreen fund (CDLF).
Current wording
(5)Includes our business development companies (CSL / CARS) and our evergreen fund (CDLF).
Previous wording
(7)Includes our Energy Credit (CEMOF) and Real Estate Credit (CNLI) funds.
Current wording
(6)Includes our Energy Credit (CEMOF) and Real Estate Credit (CNLI) funds.
Previous wording
(8)Includes Mezzanine funds and Carlyle AlpInvest Private Markets Fund (CAPM).
Current wording
(7)Includes Mezzanine funds and Carlyle AlpInvest Private Markets Fund (CAPM).
Previous wording
Our data indicate modest improvement in Europe’s economy, with our composite measure of gross domestic product
Current wording
Our data indicate improvement in Europe’s economy, with our composite measure of GDP signaling positive growth, and
Previous wording
significantly higher than in 2023, at an anticipated 11% for the year compared to merely 1% the previous year. Earnings are
Current wording
Earnings growth estimates remain significantly higher than in 2023, at an anticipated 10.8% for the year compared to 1%
Previous wording
estimated to have grown by 5% in the first quarter of 2024, compared to the same period a year ago, led by the communication
Current wording
the previous year. Earnings are estimated to have grown by 11.5% in the second quarter of 2024, compared to the same period a
Previous wording
services, utilities, consumer discretionary, and information technology sectors. The estimated blended net profit margin for the
Current wording
year ago, led by the communication services, information technology, financials, and utilities sectors. The estimated blended net
Previous wording
fourth quarter of 2023 was reported at 11.7%, slightly higher than the 11.6% margin observed a year earlier.
Current wording
profit margin for the second quarter of 2024 was reported at 12.3%, which is above the 11.6% margin observed a year earlier.
Previous wording
U.S. equity markets continued to perform well in the first quarter of 2024. The Dow Jones, S&P 500, and Nasdaq 100
Current wording
U.S. equity markets generally performed well in the second quarter of 2024. While the Russell 2000 and Dow Jones
Previous wording
top seven stocks (Apple, Microsoft, NVIDIA, Alphabet, Amazon, Tesla, and Meta); during the first quarter, these stocks have
Current wording
increase in asset prices was narrow, with the top seven stocks (Apple, Microsoft, NVIDIA, Alphabet, Amazon, Tesla, and
Previous wording
and co-investment strategies during the third quarter of 2023.
Current wording
The third quarter of 2024, by contrast, has been characterized to date by a spike in volatility and sharp market downturn.
Previous wording
Our carry fund portfolio had modest 2% appreciation in the first quarter of 2024. Within our Global Private Equity
Current wording
portfolio had 1% appreciation in thesecond quarter of 2024. Within our Global Private Equity segment in thesecond quarter,
Previous wording
segment in thefirst quarter, our infrastructure and natural resources funds appreciated 2%, our real estate funds appreciated 1%,
Current wording
our infrastructure and natural resources funds appreciated 3%, our corporate private equity funds appreciated 2%, and our real
Previous wording
and our corporate private equity funds were flat. Our Global Credit carry funds (which represent approximately 11% of the total
Current wording
estate funds appreciated 1%. Our Global Credit carry funds (which represent approximately 11% of the total Global Credit
Previous wording
quarter of 2024 as higher financing costs continue to pressure borrower debt-service capacity.
Current wording
Higher financing costs continue to pressure borrower debt-service capacity, and we have seen default rates increase in 2023 and
Previous wording
default rate less than the industry average, and we are actively managing our credit positions to maintain balanced risk-adjusted
Current wording
than the industry average, and we are actively managing our credit positions to maintain balanced risk-adjusted credit quality.
Previous wording
Gross originations in our direct lending strategy totaled $0.8 billion in the first quarter of 2024, a more than 100%
Current wording
Gross originations in our direct lending strategy totaled $1.1 billion in the second quarter of 2024, a nearly three-fold
Previous wording
increase over originations in the first quarter of 2023, which was impacted by the slowdown in sponsor M&A activity in 2022
Current wording
increase over originations in the second quarter of 2023, which was impacted by the slowdown in sponsor M&A activity in
Previous wording
and 2023. Dividend yields on our business development companies and CTAC as of March 31, 2024 were approximately 10%.
Current wording
2022 and 2023. Dividend yields on our business development companies and CTAC as of June 30, 2024 were approximately
Previous wording
We had$5.3 billion in new capital inflows in thefirst quarter towards our previously announced target of $40 billion of
Current wording
We had$12.4 billion in new capital inflows in thesecond quarter, and$17.7 billion year-to-date, towards our previously
Previous wording
capital inflows in 2024. The impact of muted realizations on investor liquidity has been exacerbated by an increase in demand
Current wording
announced target of $40 billion of capital inflows in 2024. The impact of muted realizations on investor liquidity has been
Previous wording
on investor capital as the increased cost of subscription lines commonly used to bridge capital calls has led to borrowing
Current wording
exacerbated by an increase in demand on investor capital as the increased cost of subscription lines commonly used to bridge
Previous wording
repayments and restricted use in current investment activity. The impact of net negative distributions to investors, combined
Current wording
capital calls has led to borrowing repayments and restricted use in current investment activity. The impact of net negative
Previous wording
with increasing geopolitical risk and continued global economic uncertainty, has compounded an already challenging
Current wording
distributions to investors, combined with increasing geopolitical risk and continued global economic uncertainty, has
Previous wording
fundraising landscape. While we believe that we will continue to attract a significant amount of capital for our buyout funds, we
Current wording
compounded an already challenging fundraising landscape. While we believe that we will continue to attract a significant
Previous wording
have seen, and expect to continue to see, a decline in buyout fund sizes across most geographies, which may result in lower
Current wording
amount of capital for our buyout funds, we have seen a decline in buyout fund sizes across most geographies, which may
Previous wording
management fees in Global Private Equity in the future.
Current wording
continue to result in lower management fees in Global Private Equity in the future.
Previous wording
pending completion of judicial review of consolidated challenges to the rules by the Court of Appeals for the Eighth Circuit.
Current wording
pending completion of judicial review of consolidated challenges to the rules by the U.S. Court of Appeals for the Eighth
Previous wording
We are closely evaluating potential impacts to our business of these rule adoptions and various financial, regulatory, and other
Current wording
business of these rule proposals and adoptions and various financial, regulatory, and other proposals put forth by the current
Showing the first 40 of 318 pairs. Open the source sections for the rest.
Rearranged current paragraphs (22)
Current report — wording carried from elsewhere
with our updated compensation program that has not yet been paid is also excluded from our net accrued performance
Current report — wording carried from elsewhere
months ended June 30, 2024 and 2023, respectively.
Current report — wording carried from elsewhere
increased $16.7 million for thesix months ended June 30, 2024 compared to 2023, primarily due to an increase in incentive fees
Current report — wording carried from elsewhere
are included in the following table:
Current report — wording carried from elsewhere
portion of compensation from performance allocations.
Current report — wording carried from elsewhere
Interest and other expenses of Consolidated Funds. Interest and other expenses of Consolidated Funds increased $50.0
Current report — wording carried from elsewhere
(2)Includes charges (credits) related to Carlyle corporate actions and non-recurring items that affect period-to-period comparability and are
Current report — wording carried from elsewhere
not reflective of the Company’s operating performance.
Current report — wording carried from elsewhere
accrued fee related performance revenues for CPI as of June 30, 2024.
Current report — wording carried from elsewhere
Cash-based compensation and benefits expense. Cash-based compensation and benefits expense decreased $10.6 million
Current report — wording carried from elsewhere
bonuses as a result of the updates to our compensation program effective as of December 31, 2023.
Current report — wording carried from elsewhere
which charge fees on invested capital.
Current report — wording carried from elsewhere
Fee Revenues. Fee revenues increased $22.8 million for thethree months ended June 30, 2024 as compared to thethree
Current report — wording carried from elsewhere
General, administrative and other indirect expenses. General, administrative and other indirect expenses decreased$4.6
Current report — wording carried from elsewhere
finance and co-investment strategies and investment activity across all strategies. Market appreciation of$1.3 billion was driven
Current report — wording carried from elsewhere
The fund return information reflected in this discussion and analysis is not indicative of the performance of The Carlyle
Current report — wording carried from elsewhere
Group Inc. and is also not necessarily indicative of the future performance of any particular fund. An investment in The Carlyle
Current report — wording carried from elsewhere
Group Inc. is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and
Current report — wording carried from elsewhere
future funds will achieve similar returns.
Current report — wording carried from elsewhere
$300 million (the “2027 Tranche Revolving Loans”) and extend the maturity date to September 2027. This amendment also
Current report — wording carried from elsewhere
Note 6, Borrowings, to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for
Current report — wording carried from elsewhere
condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Rearranged previous paragraphs (17)
Previous report — wording carried elsewhere
raised for the investment in Fortitude through a Carlyle-affiliated investment fund and from strategic investors who directly
Previous report — wording carried elsewhere
management fees in the first quarter of 2023.
Previous report — wording carried elsewhere
allocations and incentive fee related compensation in 2024 reflects the increase in the proportion of our Performance allocations
Previous report — wording carried elsewhere
Interest and other expenses of Consolidated Funds. Interest and other expenses of Consolidated Funds increased $30.9
Previous report — wording carried elsewhere
for thethree months ended March 31, 2024 as compared to thethree months ended March 31, 2023, primarily due to a decrease
Previous report — wording carried elsewhere
ended March 31, 2024 as compared to thethree months ended March 31, 2023, primarily due to a decrease in realized net
Previous report — wording carried elsewhere
invested capital, and negative market activity of$1.3 billion driven by a decrease in value of the assets covered by the strategic
Previous report — wording carried elsewhere
lower of cost or fair value and net asset value.
Previous report — wording carried elsewhere
commitments, cumulative equity invested or total value as of March 31, 2024, which we refer to as our “significant funds,” is
Previous report — wording carried elsewhere
included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods
Previous report — wording carried elsewhere
information reflected in this discussion and analysis is not indicative of the performance of The Carlyle Group Inc. and is also
Previous report — wording carried elsewhere
not necessarily indicative of the future performance of any particular fund. An investment in The Carlyle Group Inc. is not an
Previous report — wording carried elsewhere
investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will
Previous report — wording carried elsewhere
2.00% or an alternate base rate plus an applicable margin of 1.00%. The Company madeno borrowings under the Global Credit
Previous report — wording carried elsewhere
6, Borrowings, to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for more
Previous report — wording carried elsewhere
Note 13, Equity, to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Previous report — wording carried elsewhere
professionals, with the balance funded directly by the Company.