KKR & Co. Inc.

Ladies and gentlemen, thank you for standing by. Welcome to KKR's fourth quarter 2024 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following management's prepared remarks, the conference will be open for questions. If you'd like to ask a question that time, the command is star 1. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. I would now like to hand the call over to Craig Larson, partner and head of investor relations for KKR. Craig, please go ahead.

Thank you, operator. Good morning, everyone. Welcome to our fourth quarter 2024 earnings call. This morning, as usual, I'm joined by Rob Lewin, our chief financial officer, and Scott Nuttall, our co-chief executive officer. We would like to remind everyone that we'll refer to non-GAAP measures on the call, which are reconciled to GAAP figures in our press release, which is available on the Investor Center section at KKR.com. And as a reminder, we report our segment numbers on an adjusted share basis. This call will contain forward-looking statements, which do not guarantee future eventual performance. Please refer to our earnings release and our SEC filings for cautionary factors about these statements. So beginning with our financial results, we had a really solid end to the year. Fee-related earnings per share came in at 94 cents. That is up 24 percent from a year ago and is the second highest quarterly figure in our history. And adjusted net income came in at $1.32 per share. That is up 32 percent year over year and is also the second highest quarterly figure in our history. For the year, FRE per share and ANI per share were $3.66 and $4.70, up 37% and 38%, respectively, compared to 2023. And both are record annual figures for us. So very healthy growth during a period of time where it has fell to us as the market conditions have just begun to improve. Walking through our quarterly results in a little more detail. Management fees in Q4 came in at $906 million. That's up 15% year over year, driven by the breadth of our fundraising activities alongside of a pickup and deployment. Total transaction and monitoring fees were $324 million in the quarter. Capital markets transaction fees in particular ended the year on a strong note with $270 million in revenue, driven primarily by deployment activity within private equity as well as infrastructure. related performance revenues were 25 million in the quarter and so in aggregate fee related revenues were 1.3 billion and that's up 17 year over year turning to expenses as usual fee related compensation was right at the midpoint of our guided range at 17 and a half percent of fee related revenues for the quarter as well as for the year other operating expenses were 192 million in q4 So in total, fee-related earnings were $843.94 per share, as I mentioned a minute ago, with an FRE margin of 67%. Insurance operating earnings were $250 million, and strategic holdings operating earnings were $8 million. Both of these figures came in right in line with the levels we discussed on our call last quarter. Total operating earnings, as a reminder, comprised of our fee-related earnings, insurance, and strategic holdings operating earnings were $1.23 per share. So total operating earnings for KKR, again, these are the more durable and recurring components of our earnings, comprised almost 80% of total segment earnings for the year. Moving to investing earnings within our asset management segment, realized performance income was $676 million and realized investment income was $110 million. for total monetization activity of $786 million. That's up almost 50% year over year. This activity was driven by combination of secondary sales and strategic transactions, dividends and interest income, as well as the annual performance fee for Marshall Waste. So in total, investing earnings were $399 million. Turning to investment performance, you can see the details here on page 10 of our earnings release. The private equity portfolio was flat in the quarter and appreciated 14% for the year. In real assets, the opportunistic real estate portfolio was up one in the quarter and four for the year. Infrastructure, up two for the quarter and up 14% for the year. And in credit, the leveraged credit composite and the alternative credit composite were both up 2% in Q4. And for the year, performance here was up 10 and up 12% respectively. And then finally, consistent with our historical practice, we intend to increase our annual dividend from 70 cents to 74 cents per share, which will go into effect alongside first quarter 2025 earnings. And with that, I'm pleased to turn the call over to Rob.

Thanks a lot, Craig. And thank you all for joining our call this morning. KKRI had a strong 2024, and our fourth quarter results that Craig just walked through give us continued confidence as we head into 2025. I'm going to begin today by reviewing some key operating metrics from the quarter and the very tangible signs of momentum that we are seeing across our businesses. Let me start first with our asset management business. As it relates to our capital raising efforts, we raised $27 billion this quarter, which was driven by diversified activity across each of our business lines. Our private equity and real asset businesses together raised $15 billion of capital across a number of strategies. And momentum and credit continued across our asset-based finance and direct lending vehicles, and we also saw an uptick in CLO formation. Total new capital raised for 2024 is $114 billion. That is the second most active year in our history, and up meaningfully from the approximately $70 billion that we raised in 2023. While we are only six months into our fundraising super cycle, we are seeing meaningful progress. In our North American private equity strategy, where we are in early stage fundraising, we are ahead of where we thought we would be at this point in time. Our efforts here are benefiting from really strong investment performance. Also of note, 2024 was the eighth consecutive year that we've returned more capital to our North American private equity clients than we have called. And alongside the encouraging first steps in our flagship fundraising within private equity and infrastructure, we continue to raise capital across the breadth of our asset classes and vehicles. Taking a step back, over the past 12 months, only 15% of our $114 billion of new capital raised was from our flagship funds. Client interest feels strong in areas like private credit, including asset-based finance in particular. our IV sidecar franchise and insurance, as well as in newer strategies for us, such as climate. Turning to wealth, we are seeing continued scaling with AUM across our K-Series vehicles at $16 billion as of year end, and including activity that closed January 1st, 2025, we are now at $18 billion, which compares to $7 billion just a year ago. Looking more broadly, We now have approximately 100 billion of assets under management from individuals, largely via family offices and ultra high net worth clients, as well as the accredited investor universe. And looking ahead, we expect our reach will expand to a new client base as we continue to track towards the launch of our two hybrid credit products in the first half of 2025. These are developed exclusively in partnership with Kappa Group, targeting the mass affluent. At the same time, we continue to work on product design across other asset classes, which will follow over the coming several quarters. So we feel good about where we are from a private wealth perspective, and we really do believe that this is just the beginning for us. Turning now to monetizations. Over the past couple of quarters, we've been noting signs of an improved backdrop with increased M&A volumes and firmer global equity and debt markets. This strength is evidence in our 2024 gross realized performance income and realized investment income figures of $1.8 billion and over $600 million, respectively. Overall, our monetization activity is up over 40% year on year. And now looking at deployment. In 2024, we invested $84 billion of capital. That's up meaningfully from $44 billion in 2023 and compared to $71 billion in 2022. This was driven by a significant ramp in credit, along with a rebound across many of our private market strategies. As we head into a more constructive environment, we do feel very well positioned. As a result of the current activity levels, especially in relation to deployment, our capital markets business saw another strong revenue quarter at $270 million, bringing the 2024 total to $1 billion for the first time in our history. This is a major milestone in the evolution of the business, and it was only just four years ago when this business was roughly half the size and largely private equity driven. Now turning to insurance. 2024 marked the first year that we've owned 100% of Global Atlantic, and the connectivity between KKR and GA only increased over the course of the year. You've seen investment opportunities for GA increase in strategies like infrastructure and real estate equities. And as our businesses continue to integrate, we see even more opportunities to invest strategically against the long-dated liabilities that Global Atlantic is able to source at scale. And finally, focusing on strategic holdings for a minute. Our strategic holdings business represents a big differentiator for us, and the announcement this morning is a further accelerant of this segment. We will be increasing the existing stakes of three businesses that we know well and really like by at least $2.1 billion. KKR will invest $1.1 billion, which will show up in strategic holdings, while the remainder will be from one of our strategic partners. This piece will become fee-paying assets under management and will be additive to management fees and future carried interest. As a reminder, these businesses have high-quality management teams. They are cash generative, tend to be less cyclical, and typically have lower leverage over the hold period, to name just a few of the key attributes. In other words, these are businesses that we want to own for the long term. Today, we have 18 companies that we've invested behind over the course of the last eight years, and we're continuing to see consistent growth across the underlying franchises. For context, KKR's share of these businesses as of the third quarter, so this is on a one-quarter lag basis, generated approximately $3.7 billion of revenue and approximately $900 million of EBITDA over the trailing 12 months. We believe strategic holdings will be a truly unique driver of future financial performance for KKR for years to come. Remember, no employees sit within strategic holdings. We didn't have to hire anybody new to lean into this growth opportunity, which aligns really well with our focus on preserving our collaborative, one firm culture. And with these additional purchases, alongside continued strong performance across our portfolio, we are increasing our guidance for strategic holdings operating earnings that we introduced roughly a year ago by $50 million in 2026 to $350-plus million and by $100 million in each of 2028 and 2030 to $700-plus million and $1.1-plus billion, respectively. I don't believe that there are many corporates that give guidance out to 2030. Hopefully, this gives you a very clear sense of our confidence in the outlook, durability, and the growth trajectory for our business. With that, let me hand it off to Scott.