The Carlyle Group Inc.

Hello, everyone, and welcome to the Carlyle Group fourth quarter 2024 earnings. 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 participate, you will need to press star 11 on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, simply press star 11 again. Please be advised that today's conference is being recorded. Now it's my pleasure to turn the call over to the head of investor relations, Daniel Harris. Please proceed.

Thank you, Carmen. Good morning and welcome to Carlyle's fourth quarter and full year 2024 earnings call. With me on the call this morning is our chief executive officer, Harvey Schwartz, and our chief financial officer and head of corporate strategy, John Redette. Earlier this morning, we issued a press release and a detailed earnings presentation, which is available on our investor relations websites. This call is being webcast and a replay will be available. 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 to the extent reasonably available. 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. Parallel assumes no obligation to update any forward-looking statements at any time. In order to ensure participation by all those on the line today, please limit yourself to one question and return to the queue for any additional follow-ups. With that, let me turn the call over to our Chief Executive Officer, Harvey Schwartz.

Thanks, Dan. Good morning, everyone, and thank you for joining us. We had a very strong 2024, and I'm pleased to say delivered on each of our financial targets. Our record performance demonstrates our ability to mobilize across the firm and deliver long-term value. We generated over $1.1 billion of fee-related earnings, a near 30% increase over 2023. We expanded our FRE margin to 46%, a 900 basis point year-over-year increase. Inflows exceeded $40 billion. That brings us to more than $100 billion of inflows over the last two years, and we returned more than $1 billion in capital to shareholders. As I approach my two-year anniversary at Carlyle this week, I'd like to reflect on some of our key achievements. When I joined Carlyle, it was clear the firm had a proven investment track record, a leading global brand, an iconic name in financial history. However, there was certainly some work to do. Let me share some of the progress we made across our firm. We bolstered our leadership team through a combination of motions from within and hiring of external industry leaders. This group has quickly come together to mobilize our efforts around improving operations across the firm and delivering performance excellence. We overhauled our compensation strategy, which improved alignment across all of our stakeholders. You, our shareholders, get more of what you value most, fees, and our investment team's compensation is even more driven by performance. We implemented a new capital allocation strategy with a $1.4 billion share repurchase authorization, reflecting our strong belief that this share price is significantly undervalued. And most importantly, we have both strong momentum in areas we strategically identified for growth over the last two years, like global credit and insurance, global investment solutions, global wealth, and capital markets. Together, these businesses delivered two-year revenue growth of approximately 40 percent. Let me underscore that again. Together, these businesses delivered two-year revenue growth of 40 percent. Now, let me focus on our 2024 highlights. First, global credit has remained our fastest-growing area over the past five years, with revenues increasing 22 percent in 2024. This business has finished the year at 190 billion of assets under management. We closed our third opportunistic credit fund, which was 30% larger than the prior vintage. We also completed a landmark Discover transaction, one of the largest asset-backed finance transactions of the year. At $25 trillion globally, asset-backed finance is a massive addressable market, and we see significant opportunity to continue scaling this business. Moving on to capital markets, this business was clearly subscale when I arrived two years ago. We made a number of changes to drive value in this business. We appointed a new global head of capital markets and revised our incentive program. As a result, we had a record year in transaction fees. It's worth noting this record result was achieved in a market environment well below peak activity levels. Newer areas like asset-backed finance, infrastructure, and renewable energy are now all meaningful capital markets fee contributors. These areas accounted for nearly 40 percent of our capital markets revenue in 2024, up from single digits two years ago. 2025, we expect continued growth in this area. Another priority has been broadening the scope of our global investment solutions business. This year, solutions produced a 44% increase in fee revenue compared to the prior year. This platform has broadened its product set. New areas like CAPM, Alpenvest Global Wealth Evergreen Fund, and our portfolio finance strategy are adding to the platform scale. As an example of this growth, We closed a $1 billion collateralized fund obligation in the fourth quarter. There are two things to note here. One is that the design of this structure improved access to key Alpinvest funds for insurance clients. Two, this is the largest instrument of its kind ever raised. And of course, the core of this business continues to accelerate. We're finalizing fundraising for our eighth vintage secondaries fund, which is already substantially larger than its predecessor. 2024 was also a notable year for our global wealth business. We saw record inflows of $4.5 billion, and we expect to build on that success in 2025. Our evergreen wealth products saw a 65% step up in AUM in 2024 to over $9 billion. There is strong demand across the globe for Carlyle solutions. We've added new distribution partners, and we expect our new private equity product to launch in the latter half of 2025. Now moving on to global private equity, I want to highlight the performance of our two latest U.S. buyout funds. Performance in these two funds appreciated 15% and 21%, respectively, in 2024. That is more than $5 billion of value creation. It's a fantastic year for these two funds. Activity levels accelerated across our U.S. buyout franchise over the past year. We took Standard Aero Public in one of the most successful IPOs of the year. We also invested capital into leading businesses like Vantiv, $4 billion carve-out of a leading global kidney care business, and Wellpact, $2 billion carve-out of a leading automotive equipment provider. We want to congratulate the team for driving value for all of our investors in these funds, our firm, and our shareholders. It's really great to see. Switching to real estate, our leading U.S. real estate franchise is finalizing its latest opportunistic fund. We expect this fund to close larger than its predecessor. AUM in this business has increased more than 80 percent over the past four years, and the team has done an extraordinary job navigating the real estate market. Really impressive. Before I turn over to John, let me give you some thoughts on the broader macro environment. We have unique insights into the global economy through data from our investment portfolio, and the indicators remain positive around economic growth and employment. This reinforces our perspective that interest rates will stay higher for longer. This should spur new investment activity regardless of the amount of future monetary easing by the Fed and other major central banks. Now, with respect to new administration, our roots in D.C. are particularly helpful here. We have a long history of working through various cycles, administration, and legislative priorities. We have mobilized a team as we evaluate changes in policy and regulatory action. The new administration promotes a pro-growth and pro-business agenda which broadly supports our portfolio and global economic activity. On tariffs, an area getting a lot of attention, situation remains fluid, but the majority of our portfolio is either domestically focused or more services-oriented versus goods, insulating it well from the impact of tariffs. Nearly 80% of our global private equity portfolio is U.S.-based, and though it is early days, anticipate very manageable impact across the portfolio, but continue to monitor closely, obviously. On regulation, we feel that the regulation will be an overall positive for all market participants, and again, pro-growth, pro-business. In conclusion, we wrap up a solid 2024, and we anticipate a strong year of investment activity, realizations, and fundraising in 25. John will provide specific color on our 2025 outlook, but all the work we've done in helping position Karloff for continued long-term growth, with all of it, we're confident that we can further build on our progress in the years ahead. With that, let me now turn the call over to John.