The Carlyle Group Inc.

Good morning, ladies and gentlemen, and welcome to the Carlyle Group second quarter 2021 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star, then zero on your touchtone telephone. As a reminder, this conference call is being recorded. I would now like to hand the conference over to your host, Mr. Daniel Harris, Head of Investor Relations. Please go ahead.

Thank you, Whitney. Good morning and welcome to Carlyle's second quarter 2021 earnings call. With me on the call this morning is our Chief Executive Officer, Chu-Sung Lee, and our Chief Financial Officer, Kurt Buser. This call is being webcast and a replay will be available on our website. We will refer to certain non-GAAP financial measures during today's call. These measures should not be considered in isolation from or as a substitute for measures prepared in accordance with generally accepted accounting principles. We have provided reconciliations of these measures to GAAP in our earnings release. Any forward-looking statements made today do not guarantee future performance and undue reliance should not be placed on them. These statements are based on current management expectations and involve inherent risks and uncertainties, including those identified in the risk factor section of our annual report on Form 10-K Carl Allison is no obligation to update any forward-looking statements at any time. Earlier this morning, we issued a press release and a detailed earnings presentation, which is also available on our investor relations website. For the second quarter, we generated $143 million in fee-related earnings and $395 million in distributable earnings, with DE per common share of $0.88. We declared a quarterly dividend of $0.25 per common share. To ensure participation by all those on the call today, please limit yourself to one question and one follow-up and then return to the queue for any additional questions. With that, let me turn the call over to our Chief Executive Officer, Yu-Sung Lee.

Thank you, Dan. Good morning, everyone, and thank you for joining us today. In February, we unveiled a new strategic plan to accelerate growth and earnings over the next four years. We laid out the targets, initiatives, and changes we are implementing to drive our firm forward. essential to our objective of performing well for our stakeholders is scale and speed which is why our senior leadership team is focused on ensuring we're the best investors we can be and leading the company to operate better and faster than ever before I am pleased to tell you that we are delivering results that are larger and occurring sooner than previously expected With our investment platform firing on all cylinders, we are confident in the momentum we are building to drive growth and earnings in the years to come. We have built a talented and diverse leadership team that is executing well. Together, we've made meaningful changes that are helping us deliver very attractive and in some cases record results as we usher in a new chapter of growth at Carlyle. What our performance this quarter really underscores is that the changes we've made are paying off for our stakeholders, which I'd like to summarize with the same framework I outlined at our investor day. Think bigger, perform better, move faster. Let me start with moving faster as the velocity of virtually all aspects of our business has increased. Deals are being completed on shorter timelines. Financings are being executed more quickly. Opportunities for exits are presenting themselves sooner. Funds are being raised faster than ever before. And accelerating impact from disruptive technology and changes from the pandemic are powering an increased demand for private capital across sectors and regions. The new direction of our organization positions Carlyle well to capture growth from the increased velocity within our industry. For example... Thank you for joining us. with an ability to pursue buyout, growth, and core strategies utilizing a common platform. On the fundraising side, the past year has demonstrated the benefits of adopting a hybrid approach that has helped us raise capital faster and more efficiently. We move quickly to adapt to virtual LP meetings, diligence sessions, and roadshows. We now interact with our LPs more regularly, strengthening already deep client relationships. Thank you for joining us. Thank you for joining us. We built a team from scratch, launched and invested a first-time fund, and are well on our way to raising a second fund. Today, this strategy has almost $6 billion of AUM with further growth ahead. Given we are moving faster and thinking bigger, simply put, we are performing better. Our results are improving across the board, as Kurt will detail in a moment. Whether it's FRE, FRE margin, carry, or investment income, our financial results are attractive and ahead of previous expectations. Importantly, the DE generation from our business in the coming years should provide strong retained earnings, which we intend to invest in growing FRE generative businesses. Let me give you some additional details on just how well our investment platform is operating. Fundraising has increased nearly 50% year-to-date. We remain confident in the plus of our $130 billion plus target by 2024. This is made possible in large part because our funds are generating attractive returns and our net accrued carry balance is at record levels. Our corporate private equity carry funds are up 28% this year and we've seen strong results across virtually all our investment strategies. This appreciation drove our net accrued carry to a record $4 billion, which we believe is an important indicator of our future earnings power for shareholders. Speaking of which, realizations across our platform continue to accelerate, with a growing pipeline of announced sales amounting to more than $40 billion of total enterprise value, which sets the stage for increasing distributable earnings in the quarters ahead. And finally, Our deployment pace has also been robust, more than double the first six months of last year as we continue our thesis-based investing in attractive growth areas like technology, healthcare, and e-commerce. We have announced deals equating to almost $50 billion in enterprise value that will close in the next few quarters. Our platform is investing in growth private equity investments like EOGOV and Trinetics in the United States and in Europe and HutchMed in Asia. as well as in large buyout transactions like Medline, the largest deal in more than a decade in our industry. As I said, our platform is really firing on all cylinders and benefiting from a virtuous cycle where strong performance and increased return of capital results in commitments being made to reinvest back into our funds that are organically growing in scale. Thank you very much. Thank you for joining us. More than 80% of the capital from our largest LPs is now in four or more strategies with us, four times the level it was a decade ago. And as I stated before, our client relationships are deeper and broader than they've ever been. Despite these tailwinds, we remain mindful and acutely aware that the pandemic is by no means over around the world. We closely monitor geopolitical, regulatory, and policy risks, The threat of inflation and market conditions. So while we have momentum in our business and are confident in the factors we can control, we remain vigilant to avoid complacency. We believe Carlyle is well positioned to navigate the environment, manage risk, and capture opportunity. Before handing the call over to Kurt, let me pull this all together and summarize very simply by stating, I'm excited about the momentum we have across our entire organization. We're delivering great results and we are ahead of schedule. We know if we invest well and continue to build and operate the firm well, we will accelerate our earnings and generate sustainable growth for our shareholders. Thank you for your time this morning and now over to you, Kirk.