KKR & Co. Inc. Quarterly Report for Q1 Ended Mar 31, 2020

Summary

KKR & Co. Inc. (KKR) reported a significant net loss of $1.28 billion for the first quarter of 2020, a sharp contrast to the $701 million net income reported in the same period of the previous year. This downturn was primarily driven by substantial unrealized losses from investment activities, totaling $4.0 billion, reflecting the adverse impact of the COVID-19 pandemic on financial markets. Despite the overall loss, the company saw an increase in "Fees and Other" revenues, driven by higher management fees, though this was offset by a decrease in transaction fees. Total revenues declined significantly to a loss of $1.0 billion, compared to over $1.1 billion in revenue in the first quarter of 2019. The company's "Capital Allocation-Based Income (Loss)" also saw a substantial negative swing, moving from a gain of $815 million to a loss of $1.38 billion, largely due to market depreciation. While the "Fees and Other" segment showed resilience, the significant negative impact on investment values, particularly in private equity and credit, resulted in a challenging quarter. The company has substantial uncalled capital commitments, providing a degree of future deployment flexibility. Looking forward, KKR is navigating a highly uncertain economic environment due to COVID-19, which has impacted portfolio company valuations, fundraising activities, and overall market sentiment. The company's ability to manage its investments and adapt to these conditions will be crucial in the coming periods.

Key Highlights

• 1KKR reported a net loss of $1.28 billion for Q1 2020, a significant decrease from a net income of $701 million in Q1 2019.
• 2Total revenues plummeted to a loss of $1.0 billion in Q1 2020, compared to over $1.1 billion in revenue for Q1 2019.
• 3Net losses from investment activities were $3.94 billion in Q1 2020, a sharp reversal from net gains of $1.20 billion in Q1 2019, heavily impacted by unrealized losses.
• 4"Fees and Other" revenue increased slightly to $380.6 million in Q1 2020 from $372.5 million in Q1 2019, driven by higher management fees.
• 5"Capital Allocation-Based Income (Loss)" swung from a gain of $814.9 million in Q1 2019 to a loss of $1.38 billion in Q1 2020.
• 6Total Assets decreased to $55.6 billion as of March 31, 2020, down from $60.9 billion as of December 31, 2019, largely due to investment depreciation.
• 7KKR held approximately $6.2 billion in uncalled capital commitments as of March 31, 2020, indicating future deployment potential.

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