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Carlyle Group - $CG - Earnings Analysis: Record Fee Related Earnings (FRE) and FRE margin.

By sagebytes in Business —

Business Model

Carlyle generates revenue primarily through fund management fees, incentive fees, and investment income across its three business segments: Global Private Equity, Global Credit, and Global Investment Solutions.

Revenue Sources

  • Fund management fees: Recurring fees based on AUM.
  • Incentive fees (carried interest): Share of profits from successful investments in carry funds.
  • Transaction fees from capital market activities
  • Investment income: Gains or losses from Carlyle's own investments.

Income Statement Analysis

  • Total revenues increased by 11.5% due to increase in fund management and investment income
  • Increase in equity based compensation due to awards granted in February 2024
  • Total expenses significantly decreased due to one time charge in Q4 2023
  • One-time charge in 4Q 2023 related to employee compensation realignment, significantly impacting net income.

Balance Sheet Analysis

  • Total balance sheet assets attributable to Carlyle stockholders of $4.9 billion at Dec 31, 2024
  • Balance sheet cash totaled $1.3 billion as of December 31, 2024, compared to $1.4 billion as of December 31, 2023

Capital Allocation

Carlyle is focused on returning capital to shareholders through share repurchases and dividends, while also investing in growth areas such as Global Wealth, Global Credit and Solutions.

Management Commentary

Carlyle delivered a strong 2024, meeting every financial target we set, including record Fee Related Earnings and FRE margin, and robust inflows.

As we enter 2025, we expect a high level of activity across our platform and remain focused on driving long-term shareholder value.

Overall Sentiment: Positive, with emphasis on strong performance and continued growth.

Recommendation

Rating: Hold

Reason for Rating: Based on strong results and forward-looking statements, a 'Hold' rating is appropriate. Watch for continued execution on growth initiatives.

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 2/12/2025, 3:12:15 AM