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In 2012, 78% of realized proceeds were from sale activities, versus 88% in 2011. In addition, 58% of realized proceeds in 2012 were produced by funds actively realizing performance fees versus 64% in 2011.

           
Segment Realized Proceeds Equity Invested

# ofInvestments

 

 

# of Funds

 

 

$ mn

# ofInvestments

 

 

# of Funds

 

 

$ mn

         

Q4

Corporate Private Equity 50 18 $4,739 18 10 $2,369
 
Global Market Strategies 42 6 $584 9 4 $106
 
Real Assets 67 15 $1,477 70 10 $861
                         
Carlyle   155   39   $6,801   96   24   $3,336
 

YTD

Corporate Private Equity 94 21 $12,148 49 16 $4,170
 
Global Market Strategies 58 6 $1,127 26 5 $577
 
Real Assets   106   15   $5,444   126   11   $3,172
Carlyle   250   42   $18,719   197   32   $7,919
 
Note: The columns may not sum as some investments cross segment lines, but are only counted one time for Carlyle results.
 

Carlyle All Segment Results for Fourth Quarter and Full Year 2012

  • Distributable Earnings (DE): $188 million for Q4 2012 and $688 million for 2012
    • Pre-tax Distributable Earnings of $188 million for Q4 2012 equates to $0.49 per common unit on a post-tax basis. Post-IPO and after-tax Distributable Earnings per common unit for 2012 was $1.39. Distributable Earnings of $688 million in 2012 compares to $864 million in 2011.
    • Fee-Related Earnings were $55 million for Q4 2012 and increased from $14 million in Q4 2011 due to an increase in fee earning assets under management, lower general and administrative expenses and $18 million in proceeds from an insurance settlement. Fee-Related Earnings of $170 million in 2012 increased 40% from $121 million in 2011.
    • Realized Net Performance Fees of $127 million for Q4 2012 compares to $216 million in Q4 2011. For the current quarter, realized net performance fees were positively impacted by public equity exits in Hertz, Housing Development Finance Corporation (HDFC) and Kinder Morgan in Corporate Private Equity and the sale of Metaldyne in Global Market Strategies, among other full and partial realization events. Realized net performance fees of $502 million in 2012 compared to $678 million in 2011.
    • Realized Investment Income was $6 million in Q4 2012. Realized investment income was $16 million in 2012.
  • Economic Net Income (ENI): $182 million for Q4 2012 and $736 million for 2012
    • Economic Net Income was $182 million for Q4 2012 and $736 million for 2012. On an after-tax basis, Carlyle generated $0.47 in ENI per Adjusted Unit for Q4 2012.
    • Q4 2012 ENI was positively impacted by appreciation of 4% in Carlyle’s carry fund portfolio, which excludes structured credit, hedge funds and Fund of Funds Solutions vehicles. Corporate Private Equity and Global Market Strategies carry funds were up an average of 5%, while Real Asset funds were up 1% compared to the end of Q3 2012. Carry fund appreciation was 14% in 2012 compared to 16% in 2011.
    • Carlyle’s public carry fund portfolio increased 4% during Q4 2012 while the private carry fund portfolio increased 3%.
             
The Carlyle Group L.P. - All Segments (Actual Results) Period LTM % Change
$ in millions, except where noted Q4 2011   Q1 2012   Q2 2012   Q3 2012   Q4 2012   Q1 12 - Q4 12   QoQ   YoY   YTD
 
Revenues 666 894 61 584 505 2,044 (14%) (24%) (5%)
 
Expenses 411   501   119   365   323   1,308   (12%)   (21%)   (1%)
Economic Net Income 254   392   (57)   219   182   736   (17%)   (28%)   (12%)
Fee-Related Earnings 14   34   36   46   55   170   20%   289%   39%
Net Performance Fees 223   335   (107)   165   132   525   (20%)   (41%)   (17%)
Realized Net Performance Fees 216   143   76   156   127   502   (18%)   (41%)   (26%)
Distributable Earnings 247   179   115   206   188   688   (9%)   (24%)   (20%)
 
Total Assets Under Management ($ billion) 147.0   159.2   156.2   157.4   170.2       8%   16%    
Fee-Earning Assets Under Management ($ billion) 111.0   117.0   112.0   115.1   123.1       7%   11%    
Note: Totals may not sum due to rounding.
 
 

Assets Under Management and Remaining Fair Value of Capital

  • Total Assets Under Management: $170.2 billion as of Q4 2012 (+16% in 2012)
    • Changes versus Q3 2012: Acquisitions of equity interests in NGP Energy Capital Management and Vermillion Asset Management (+$14.4 billion), new capital commitments (+$3.5 billion), market appreciation (+$2.9 billion), foreign exchange impact (+$640 million), changes in par value of CLO collateral (-$383 million) and net distributions (-$8.0 billion).
    • Increases versus year end 2011 primarily were due to acquisitions, portfolio appreciation, fundraising and foreign exchange impacts. Partially offsetting these additions was a significant level of distributions to fund investors.
    • Total Dry Powder of $43.9 billion as of Q4 2012, comprised of Corporate Private Equity $17.6 billion, Global Market Strategies $1.8 billion, Real Assets $9.9 billion and Fund of Funds Solutions $14.5 billion.
  • Fee-Earning Assets Under Management: $123.1 billion as of Q4 2012 (+11% in 2012)
    • Changes versus Q3 2012: Acquisitions (+$12.6 billion), asset inflows (+$2.8 billion), foreign exchange impact (+$968 million), market appreciation (+$394 million), change in the par value of CLO collateral (-$364 million) and net distributions and outflows (-$8.4 billion).
    • As of December 31, 2012, Carlyle had raised Limited Partner commitments of $5.0 billion to several of its latest vintage funds, including our U.S. Buyout, Asia Buyout and Financial Services funds, which are not yet included in Fee-Earning Assets Under Management.
  • Remaining Fair Value of Capital (carry funds only) as of Q4 2012: $60 billion
    • Current Multiple of Invested Capital (MOIC) of remaining fair value of capital: 1.2x.
    • Remaining fair value of capital in the ground in investments made in 2008 or earlier: 48% of total fair value.
    • AUM in-carry ratio as of the end of Q4 2012: 67%.

Non-GAAP Operating Results

Carlyle’s non-GAAP results for Q4 2012 are provided in the table below:

   
Carlyle Group Summary $ in millions, except unit and per unit amounts
 
Economic Net income   Q4 2012
Economic Net Income (pre-tax) $ 182.2
Less: Provision for income taxes (1)   36.6
Economic Net Income, After Taxes $ 145.6
Fully diluted units (in millions) 311.8
 
Economic Net Income, After Taxes per Adjusted Unit $ 0.47
 
Distributable Earnings    
Distributable Earnings $ 187.5
Less: Estimated foreign, state, and local taxes (2)   12.5
Distributable Earnings, After Taxes $ 175.0
 
Allocating Distributable Earnings for only public unitholders of The Carlyle Group L.P.
 
Distributable Earnings to The Carlyle Group L.P. $ 24.7
Less: Estimated current corporate income taxes (3)   3.6
Distributable Earnings to The Carlyle Group L.P. net of corporate income taxes $ 21.1
 
Units in public float (in millions) 43.2
 
Distributable Earnings, net, per The Carlyle Group L.P. common unit outstanding  

$

0.49

(1) Represents the implied provision for income taxes that was calculated using a similar methodology applied in calculating the tax provision for The Carlyle Group L.P., without any reduction for noncontrolling interests.(2) Represents the implied provision for current income taxes that was calculated using a similar methodology applied in calculating the current tax provision for The Carlyle Group L.P., without any reduction for noncontrolling interests.(3) Represents current corporate income taxes payable upon distributable earnings allocated to Carlyle Holdings I GP Inc. and estimated current Tax Receivable Agreement payments owed

 

Corporate Private Equity (CPE)

             
Funds Raised Equity Invested Realized Proceeds Carry Fund Returns
Q4 $3.0 bn   Q4 $2.4 bn   Q4 $4.7 bn   Q4 5%  

2012: $7.8 bn

  2011: $1.6 bn

2012: $4.2 bn

  2011: $7.5 bn

2012: $12.1 bn

  2011: $11.4 bn

2012: 16%

  2011: 16%
       
  • Distributable Earnings (DE): $74 million for Q4 2012 and $399 million for 2012. The following components impacted Distributable Earnings in Q4 and 2012:
    • Fee Related Earnings were $18 million in Q4 2012 and $61 million for 2012, compared to $(4) million in Q4 2011 and $57 million in 2011.
    • Realized Net Performance Fees were $54 million for Q4 2012 and $335 million for 2012, compared to $130 million for Q4 2011 and $465 million for 2011. In 2012, realized proceeds of $12.1 billion compared to $11.4 billion in 2011.
  • Economic Net Income (ENI): $122 million for Q4 2012 and $479 million for 2012
    • Economic Net Income of $122 million for Q4 2012 and $479 million for 2012 compared to $162 million for Q4 2011 and $514 million for 2011.
    • CPE carry fund valuations increased 5% in Q4 2012, compared with 7% in Q4 2011. For 2012, carry fund valuations increased 16%, in line with 16% appreciation in 2011.
    • Net Performance Fees of $100 million for Q4 2012 and $394 million for 2012, compared to $152 million for Q4 2011 and $413 million for 2011. The composition of funds experiencing appreciation was different year-over-year, resulting in a lower increase in unrealized performance fees in 2012 versus 2011.
  • Assets Under Management (AUM): $53.3 billion as of Q4 2012
    • Total AUM increased 4% during 2012 to $53.3 billion.
    • Funds Raised of $3.0 billion was driven by an additional closing of our latest vintage U.S. buyout fund, a first closing in our latest vintage Asia buyout fund, as well as closings in our U.S. mid-market buyout fund, regional funds and various co-investments. For 2012, corporate private equity funds raised of $7.8 billion compared to $1.6 billion for 2011.
    • Fee Earning Assets Under Management were $33.8 billion as of Q4 2012, down from $38.0 billion as of Q4 2011, with the decline driven by $5.2 billion in outflows, which are partially offset by fundraising.
               
Corporate Private Equity (Actual Results) Period LTM % Change
$ in millions, except where noted Q4 2011   Q1 2012   Q2 2012   Q3 2012   Q4 2012 Q1 12 - Q4 12 QoQ   YoY   YTD
 
Economic Net Income 162   244   (65)   177   122   479   (31%)   (24%)   (7%)
Net Performance Fees 152   215   (80)   159   100   394   (38%)   (34%)   (5%)
Realized Net Performance Fees 130   105   50   126   54   335   (57%)   (58%)   (28%)
Distributable Earnings 134   120   61   145   74   399   (49%)   (45%)   (29%)
 
Total Assets Under Management ($ in billions) 51.1   53.3   52.5   53.2   53.3         0%   4%    
Fee-Earning Assets Under Management ($ in billions) 38.0   37.8   37.1   36.9   33.8         (8%)   (11%)    
Note: Totals may not sum due to rounding.
 
 

Global Market Strategies (GMS)

             

Funds Raised

Equity Invested

Realized Proceeds

Carry Fund Returns

Q4 $1.2 bn   Q4 $0.1 bn   Q4 $0.6 bn   Q4 5%  

2012: $5.2 bn

  2011: $2.4 bn

2012: $0.6 bn

  2011: $0.8 bn

2012: $1.1 bn

  2011: $1.0 bn

2012: 23%

  2011: 9%
Note: Funds Raised excludes acquisitions, but includes hedge funds and CLOs. Equity Invested and Realized Proceeds are for carry funds only.
 
  • Distributable Earnings (DE): $86 million for Q4 2012 and $168 million for 2012. The following components impacted Distributable Earnings for Q4 and 2012:
    • Fee Related Earnings were $31 million in Q4 2012 and $89 million for 2012, compared to $14 million for Q4 2011 and $57 million for 2011, as fee-earning AUM increased 34% for 2012 driven by organic fundraising, a new CLO issuance and acquisitions.
    • Realized Net Performance Fees were $50 million for Q4 2012 and $66 million for 2012, compared to $67 million in Q4 2011 and $116 million for 2011, as hedge fund net performance was not as strong in 2012 as it was in 2011.
  • Economic Net Income (ENI): $59 million for Q4 2012 and $165 million for 2012
    • Economic Net Income of $59 million for Q4 2012 and $165 million for 2012 compared to $22 million for Q4 2011 and $162 million for 2011.
    • Net Performance Fees were $23 million for Q4 2012 and $53 million for 2012.
  • Assets Under Management (AUM): $32.5 billion as of Q4 2012
    • Total AUM of $32.5 billion as of Q4 2012 increased 33% versus Q4 2011, while Fee-Earning AUM of $31.0 billion as of Q4 2012 increased 34% versus Q4 2011.
    • Hedge Fund net inflows (excluding acquisitions) were flat in Q4 2012 and were $1.8 billion in 2012. Total hedge fund AUM was $12.1 billion as of Q4 2012.
    • Carlyle raised a fourth new CLO during Q4 2012 with $620 million in assets. For the year, Carlyle raised four new CLOs with total capital of $2.3 billion.
    • GMS Carry Fund AUM ended 2012 at $3.8 billion.
    • Total Structured Credit AUM ended 2012 at $16.6 billion.
             
Global Markets Strategies (Actual Results) Period LTM % Change
$ in millions, except AUM where noted Q4 2011   Q1 2012   Q2 2012   Q3 2012   Q4 2012 Q1 12 - Q4 12 QoQ   YoY   YTD
Economic Net Income 22   38   32   36   59   165   64%   169%   3%
Net Performance Fees 3   18   4   8   23   53   183%   673%   (25%)
Realized Net Performance Fees 67   15   1   1   50   66   7086%   (25%)   (43%)
Distributable Earnings 90   31   23   28   86   168   210%   (5%)   (13%)
 
Total Assets Under Management ($ in billions) 24.5   28.3   29.0   30.1   32.5       8%   33%    
Fee-Earning Assets Under Management ($ in billions) 23.2   26.8   27.7   28.5   31.0       9%   34%    
                                   
Funds Raised, excluding hedge funds ($ in billions) 0.0   0.7   0.8   0.8   1.2   3.5   50%   N.A.    
Hedge Fund Net Inflows ($ in billions) 0.8   0.7   0.7   0.4   0.0   1.8   N.M   N.M.    
Note: Totals may not sum due to rounding. Funds Raised excludes the impact of acquisitions.
 
 

Real Assets (RA)

             
Funds Raised

Equity Invested

Realized Proceeds

Carry Fund Returns
Q4 $0.0 bn   Q4 $0.9 bn   Q4 $1.5 bn  

Q4

1%  

2012: $0.3 bn

  2011: $2.1 bn

2012: $3.2 bn

  2011: $3.0 bn

2012: $5.4 bn

  2011: $5.2 bn

2012: 9%

  2011: 16%
Note: Equity Invested and Realized Proceeds are for carry funds only. Funds Raised excludes acquisitions.
 
  • Distributable Earnings (DE): $22 million for Q4 2012 and $102 million for 2012. The following components impacted Distributable Earnings in Q4 and 2012:
    • Fee Related Earnings were $0.3 million in Q4 2012 and $3 million for 2012, compared to $(2) million for Q4 2011 and $(7) million for 2011.
    • Realized Net Performance Fees were $22 million for Q4 2012 and $99 million for 2012, compared to $17 million for Q4 2011 and $90 million for 2011.
  • Economic Net Income (ENI): $(7) million for Q4 2012 and $67 million for 2012
    • Economic Net Income was $(7) million for Q4 2012 and $67 million for 2012, compared to $64 million for Q4 2011 and $144 million for 2011. Real Assets carry fund valuations increased 9% in 2012 and 16% in 2011. The ENI loss in Q4 2012 was due to unrealized losses on real estate investments.
    • Net Performance Fees were $6 million for Q4 2012 and $69 million for 2012, compared to $67 million for Q4 2011 and $146 million for 2011.
  • Assets Under Management (AUM): $40.2 billion as of Q4 2012
    • Total AUM increased 31% versus 2011, driven largely by the investment in NGP Energy Capital Management and portfolio appreciation, offset by net distributions of $4.2 billion.
    • Fee-Earning AUM of $29.3 billion was up 32% in 2012 compared to 2011, with the increase driven largely by the investment in NGP Energy Capital Management, partially offset by outflows of $5.3 billion.
    • On December 20, 2012, Carlyle announced the acquisition of an equity interest in NGP Energy Capital Management which entitles Carlyle to 47.5% of NGP’s management fee related revenues. NGP had $12.1 billion in total AUM as of Q3 2012 and $10.3 billion in fee earning AUM as of Q4 2012. Although Carlyle does not consolidate NGP, Carlyle includes NGP AUM within Total AUM and Fee-Earning AUM.
             
Real Assets (Actual Results) Period LTM % Change
$ in millions, except where noted Q4 2011   Q1 2012   Q2 2012   Q3 2012   Q4 2012   Q1 12 - Q4 12 QoQ   YoY   YTD
Economic Net Income 64   101   (29)   2   (7)   67   (531%)   (111%)   (53%)
Net Performance Fees 67   99   (33)   (4)   6   69   272%   (91%)   (53%)
Realized Net Performance Fees 17   22   26   29   22   99   (25%)   30%   10%
Distributable Earnings 14   22   28   31   22   102   (27%)   60%   21%
 
Total Assets Under Management ($ in billions) 30.7   32.2   30.0   29.5   40.2       36%   31%    
Fee-Earning Assets Under Management ($ in billions) 22.2   22.8   19.5   19.6   29.3       49%   32%    
Note: Totals may not sum due to rounding.
 
 

Fund of Funds Solutions (FoF)

  • Distributable Earnings (DE): $6 million for Q4 2012 and $18 million for 2012
    • Fee Related Earnings of $5 million for Q4 2012 and $16 million for 2012.
    • Realized Net Performance Fees were $1 million for Q4 2012 and $2 million for 2012.
  • Economic Net Income (ENI): $8 million for Q4 2012 and $24 million for 2012
  • Assets Under Management (AUM): $44.1 billion as of Q4 2012
    • Total AUM was up 8% compared to 2011.
    • Fee-Earning AUM of $28.9 billion increased 4% versus 2011.
    • AlpInvest raised $349 million in new commitments during Q4 2012.
             
Fund of Funds Solutions (Actual Results) Period LTM % Change
$ in millions, except where noted Q4 2011   Q1 2012   Q2 2012   Q3 2012   Q4 2012   Q1 12 - Q4 12 QoQ   YoY   YTD
 
Economic Net Income 6   9   4   4   8   24   105%   27%   N.A.
Net Performance Fees 1   4   1   1   3   9   383%   190%   N.A.
Realized Net Performance Fees 3   0   0   0   1   2   233%   (67%)   N.A.
Distributable Earnings 9   6   3   3   6   18   68%   (37%)   N.A.
 
Total Assets Under Management ($ in billions) 40.7   45.4   44.6   44.6   44.1       (1%)   8%   N.A.
Fee-Earning Assets Under Management ($ in billions) 27.7   29.5   27.6   30.2   28.9       (4%)   4%   N.A.
Note: Carlyle Group acquired a 60% ownership interest in AlpInvest on July 1, 2011. Totals may not sum due to rounding.
 
 

Balance Sheet Highlights

The amounts presented below exclude the effect of U.S. GAAP consolidation eliminations on investments and accrued performance fees, as well as cash and debt associated with Carlyle’s consolidated funds. All data is as of December 31, 2012.

  • Cash and Cash Equivalents of $567 million.
  • On-balance sheet investments attributable to unitholders of $310 million, excluding the equity-method investment by Carlyle in NGP Energy Capital Management.
  • Net Accrued Performance Fees attributable to unitholders of $1,200 million. These performance fees comprise Gross Accrued Performance Fees of $2,205 million less $79 million in accrued giveback obligation and $926 million in accrued performance fee compensation and non-controlling interest.
  • Loans payable of $886 million, including $386 million drawn from the revolving credit facility. On January 15, 2013, Carlyle Holdings Finance L.L.C., an indirect subsidiary of The Carlyle Group L.P., issued $500 million aggregate principal amount of 3.875% Senior Notes due 2023. Carlyle used a portion of the net proceeds to repay the outstanding borrowings of $386 million under the revolving credit facility of its senior credit facility, as of December 31, 2012. The remaining net proceeds were used to prepay the initial $75 million amortization amount due under Carlyle’s term loan and for general corporate purposes.

Conference Call

Carlyle will host a conference call on February 21, 2013 at 8:00 a.m. EST to discuss Q4 and 2012 results and industry trends. Immediately following the prepared remarks, there will be a question and answer session for analysts and investors.

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