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KKR & Co. Inc. 8-K Report, Financial Results (May 1, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed May 1, 2024
Period End
May 1, 2024
In the record · 2016–202610-K1110-Q328-K167

KKR filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 167 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Mar ’18Mar ’18
  2. Material agreement8-K · Apr ’20Apr ’20
  3. Leadership change8-K · Jul ’22Jul ’22
  4. Material agreement8-K · Jul ’26Jul ’26

01—Abstract

Summary

Summary of the 8-K filed May 1, 2024. Cited figures are marked; the original filing is the authoritative source.

KKR & Co. Inc. reported first quarter 2024 results on May 1, 2024, with fee-based earnings growing at 20%a+ year-over-year.

Fee Related Earnings (FRE) were $669 millionb ($0.75 per adjusted share), up 22%. Total Operating Earnings (TOE), which KKR introduced this quarter as a measure of its more recurring earnings, were $962 million ($1.08 per adjusted share), up 28%. Adjusted Net Income (ANI) was $864 million ($0.97 per adjusted share), up 20%.

GAAP net income attributable to KKR common stockholders was $682 millionc ($0.74 diluted EPS), compared with $323 million ($0.36) a year earlier, though GAAP results are heavily influenced by unrealized investment gains and carried interest, so the non-GAAP measures are more representative of recurring performance. Fundraising and scale also improved. KKR raised $31 billion of new capital in the quarter and $88 billion over the last twelve months, and ended the quarter with $578 billion of assets under management (AUM, up 13%) and $471 billion of fee-paying AUM (up 13%).

Capital invested was $14 billiond for the quarter. The company closed its acquisition of the remaining minority stake in Global Atlantic on January 2, 2024, and now reports through three segments: Asset Management, Insurance and Strategic Holdings. Management reiterated expectations for Strategic Holdings operating earnings to be modest in 2024, reach $300 million or more by 2026, $600 million or more by 2028 and $1 billion or more by 2030.

Investors should note that ANI for the last twelve months was down 2% year-over-year, that Strategic Holdings targets are forward-looking and not reconciled to GAAP, and that the company declared a regular quarterly dividend of $0.175 per share, payable May 28, 2024. Balance sheet metrics were solid, with $14.6 billion of cash and investments on the asset management balance sheet, $8.1 billion of debt at par, and $6.9 billion of gross unrealized performance income.

02—Key points

Key Highlights

  1. Fee Related Earnings of $669 million ($0.75 per adjusted share), up 22% year-over-year; LTM FRE of $2.5 billion, up 19%, with the LTM FRE margin rising to 64%.
  2. Total Operating Earnings of $962 million ($1.08 per adjusted share), up 28% year-over-year; LTM TOE of $3.4 billion, up 17%. KKR expects TOE to approximate 70% of Total Segment Earnings over time.
  3. Adjusted Net Income of $864 million ($0.97 per adjusted share), up 20% year-over-year; LTM ANI of $3.2 billion was down 2%.
  4. GAAP net income to KKR common stockholders of $682 million ($0.74 diluted EPS) versus $323 million ($0.36) in 1Q'23.
  5. Record fundraising momentum: $31 billion of new capital raised in the quarter ($88 billion LTM); AUM reached $578 billion (up 13%) and fee-paying AUM reached $471 billion (up 13%).
  6. Global Atlantic is now 100% owned following the January 2, 2024 closing; the Insurance segment had $177 billion of AUM, and the Manulife block reinsurance transaction added $10 billion.
  7. Strategic Holdings targets of $300 million+ operating earnings by 2026, $600 million+ by 2028 and $1 billion+ by 2030; a regular dividend of $0.175 per share was declared, payable May 28, 2024.

03—Questions

Frequently Asked Questions

  1. What is driving the growth in KKR's earnings?

    Growth is primarily driven by Fee Related Earnings, which rose 22% year-over-year to $669 million. Management fees increased 10% to $815 million, driven by growth in fee-paying AUM from organic capital raising, and the LTM FRE margin improved to 64% because of lower compensation under KKR's revised compensation framework and disciplined expense management.

  2. Why did GAAP net income differ so much from the adjusted measures?

    GAAP results include unrealized gains and losses on investments, unrealized carried interest and related compensation, and the consolidation of insurance and fund entities. These items are volatile and can swing results significantly from quarter to quarter. KKR's non-GAAP measures such as FRE, TOE and ANI exclude these items to better reflect recurring earnings, though they are not substitutes for GAAP measures.

  3. Why did LTM Adjusted Net Income decline while quarterly ANI grew?

    LTM ANI was $3.2 billion, down 2% year-over-year, because the prior-year period included significantly higher realized performance income and realized investment income. Quarterly ANI grew 20% to $864 million, reflecting stronger fee-related earnings and insurance operating earnings from full ownership of Global Atlantic, partly offset by lower realizations.

  4. What does the new three-segment structure mean for investors?

    Beginning in 1Q'24, KKR reports Asset Management, Insurance and Strategic Holdings segments. Strategic Holdings is a new segment that captures dividends from KKR's core private equity businesses, and management expects its operating earnings to be modest in 2024 and grow substantially through 2030. Prior periods have been recast, and KKR notes that these forward-looking expectations are subject to uncertainty and may not materialize.

04—Continue

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