The Carlyle Group Inc.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Carlyle Group third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone keypad. At this time, I would like to turn the conference over to Mr. Daniel Harris, head of investor relations. Mr. Harris, you may begin, sir.

Thank you, Howard. Good morning and welcome to Carlyle's third quarter 2022 earnings call. With me on the call this morning is our interim chief executive officer, Bill Conway, our chief financial officer, Kurt Buser, and several leaders from the office of our CEO. Pete Clare, chief investment officer for corporate private equity, Mark Jenkins, head of global credit, and Wilka Fahim, head of global investment solutions. Bill and Kurt will begin with some prepared remarks, and then the entire Carlisle team will be available for your Q&A. 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 reconciliation 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 that could cause actual results to differ materially from those indicated. RIL assumes 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. We're going to begin with a quick discussion of our results and then hand the call over to Bill. For the third quarter, we generated $213 million in fee-related earnings and $644 million in distributable earnings. Fee-related earnings of $213 million increased 40% compared to the third quarter of 2021. Year-to-date, FRA is $632 million. It's 49% higher year-over-year. through a combination of strong organic growth as well as the positive impact of various strategic transactions completed earlier this year. FRE declined sequentially from the second quarter largely due to two items we signaled last quarter. Catch-up management fees totaled $10 million compared to $19 million in the second quarter and fee-related performance revenue was also lowered sequentially. Distributable earnings were $644 million this quarter and year-to-date DE of $1.5 billion is 10% ahead of last year's $1.3 billion and is already more than double any prior full-year results other than our record results from last year. On an after-tax basis, we generated $1.42 in DE per share for the third quarter and $3.33 year-to-date. We declared a quarterly dividend of $0.325 per common share. With that, let me turn the call over to our interim chief executive officer and co-founder,

and Bill Conway. Thank you, Dan. Good morning, everyone, and thank you for joining us today. It's been a while since I've spoken with many of you, but I'm pleased to be on the call today to discuss Carlyle's results for the quarter. While Carlyle is in a transition period as we move towards a new CEO, the firm is operating well, and I'm proud of our teams around the world as we continue to perform for all of our stakeholders. There are two important points I'd like to focus on today. I'll touch on the results and highlight the strength and diversity of Carlyle's global business. Second, as we navigate challenging markets and a difficult economic environment, I'll discuss how our approach and investment experience is helping us manage through economic uncertainty and positioning the firm for the future. I'll also give a brief comment on the status of our search for a permanent CEO. First, let me provide some perspective on Carlyle today. In the third quarter, Carlyle delivered solid results for our fund investors and our shareholders despite the market volatility. In year-to-date, our results are just as strong, with FRA up almost 50%. None of this is by chance. We were able to deliver this outcome due to the breadth and depth of our businesses, strong business leadership, and highly capable investment teams around the world. Let me be very clear. The firm's strategic focus on growing affiliated earnings Diversifying our business mix and earning stream and improving the way in which we operate has not changed at all. These core tenets will not change regardless of who is leading the firm. We have three global business segments that are run by three strong leaders, each of which serves as stewards of investor capital and drivers of growth for our shareholders. Wilco Behein in Global Investment Solutions, Pete Clare in Global Private Equity, and Mark Jenkins in Global Credit are all on the call with me today, and you'll have the opportunity to ask them your questions later. As we navigate through more challenging markets than any of us have seen in a decade, the firm is in an enviable position. Carlisle and I have been doing this for 35 years, and we've seen all types of markets and economic cycles. We are confident that each of our businesses have the resources, investment talent, and capital of over $74 billion of dry powder to capture opportunities for our stakeholders. Our teams are highly experienced and have worked together through various cycles. In fact, the partners of our investment teams have worked together at Carlyle for more than 15 years on average, with decades more at firms across the globe. Moving on, let me discuss the broader environment and how that impacts our investment outlook. All of you see the same things we do. Ranking interest rates, high levels of inflation, geopolitical uncertainty, each of which lead to increased market volatility and headwinds for investors and operators. This is unlikely to resolve in the short term, though our teams are not sitting back and waiting for better days. Certainly, this market is tougher for some parts of our businesses than others, but on some parts of a business, this environment will create opportunities, and two examples come to mind. Our credit opportunities business, which should see far more lucrative places to put money to work, and our solutions business, which will have even more chances at attractive returns to finance buyers and sellers of existing fund positions. One of our core strengths has been in the area of investment risk management, particularly in the construction of our portfolios. We certainly take risk. You can't make money without doing so, but we need to get paid for the risk we take. Until recently, the investors who have made the most money have taken the most risk. That isn't our style. Portfolio construction matters. It's the differentiator that continues to position our business to deliver outside the relative performance for fund investors across market cycles. Our portfolios are built with diversification by geography, industries, deal size, and risk. And portfolio construction isn't just in our private equity business. but in global credit and global solutions as well. For instance, in our CLO businesses, CLO portfolios, where we manage hundreds of credits, this investment strategy has led to default rates at half the industry average. Another example would be our US real estate business, which is investing its ninth closed-end fund with committed capital of $8 billion. This is an experienced team with a long and successful track record. In terms of portfolio construction, They favored demographics over GDP. Their current fund has almost no exposure to office, hotel, and retail, which represents 60% of a typical real estate fund. In volatile markets like today's, our fund results should reflect the benefits of our strategy, and so far they have. Before I close, let me comment on our search for a permanent CEO. In short, the search continues. The board and search committee are making good progress, finding the right leader, and we do not have any additional information to provide at this time. I'll finish where I started. Carlyle has the capital and expertise to have a long-term focus, which has served our investors well for decades. We have three strong segments that are well positioned to navigate the current environment and capture value. Our quarterly and year-to-date results underscore the strength of this platform. and Carlisle has delivered through various market cycles and transitions. I'm proud of where we are today and feel that we can continue driving long-term shareholder value. With that, I'll hand things over to Kurt Buser, our Chief Financial Officer.