KKR & Co. Inc. Quarterly Report for Q2 Ended Jun 30, 2019

Summary

KKR & Co. Inc. reported strong financial performance for the second quarter and first half of 2019, driven by robust growth in fee and capital allocation-based income. Total revenues increased significantly year-over-year, reflecting growth across its Private Markets, Public Markets, and Capital Markets businesses. The company's investment income also saw a notable increase, primarily due to strong performance in its Private Equity portfolio, which contributed substantially to both realized and unrealized gains. Despite an increase in compensation and benefits expenses, reflecting higher carried interest due to strong investment performance, KKR maintained healthy profitability. The company's balance sheet remains solid, with total assets growing and a healthy level of liquidity, supported by substantial uncalled capital commitments available to deploy. Key financial highlights include substantial increases in total revenues and capital allocation-based income, driven by strong performance across various business segments, particularly Private Markets and Public Markets. The company also benefited from significant net gains from investment activities, especially within its Private Equity portfolio, signaling positive valuation movements. KKR continues to manage its operations efficiently, with a slight decrease in general, administrative, and other expenses for the quarter, although overall compensation and benefits expenses rose due to strong performance-related payouts and equity awards. The company's commitment to returning capital to shareholders is evident through its share repurchase program and dividend payments. Looking ahead, KKR appears well-positioned to capitalize on market opportunities, supported by its diversified business lines, strong fundraising capabilities, and a disciplined investment approach. The company's focus on expanding its global platform and product offerings, coupled with its operational expertise, suggests continued growth and value creation for its investors.

Key Highlights

• 1Total Revenues increased by $208.2 million (21%) to $1.2 billion for the three months ended June 30, 2019, compared to $971.6 million for the three months ended June 30, 2018.
• 2Capital Allocation-Based Income significantly increased by $102.6 million (18%) to $660.4 million for the three months ended June 30, 2019, primarily driven by higher carried interest and general partner capital interest.
• 3Net Gains (Losses) from Investment Activities decreased by $78.6 million to $1.04 billion for the three months ended June 30, 2019, compared to $1.12 billion for the three months ended June 30, 2018, with Private Equity being a significant contributor to gains.
• 4Compensation and Benefits Expenses increased by $136.5 million to $609.0 million for the three months ended June 30, 2019, primarily due to higher carried interest compensation and cash compensation.
• 5Net Income Attributable to KKR & Co. Inc. Class A Common Stockholders decreased by $166.0 million to $514.4 million for the three months ended June 30, 2019.
• 6Total Assets grew to $57.5 billion as of June 30, 2019, from $50.7 billion as of December 31, 2018, driven by increases in Investments and Cash and Cash Equivalents.
• 7KKR's Assets Under Management (AUM) increased to $205.7 billion as of June 30, 2019, from $199.5 billion as of March 31, 2019, reflecting growth across its Private Markets and Public Markets businesses.

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