KKR & Co. Inc. (KKR) Q2 2022 Earnings Call Transcript

For the period ending June 30, 2022

August 2, 2022 10:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. Welcome to KKR’s Second Quarter 2020 [ph] Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I will now hand the call over to Craig Larson, Head of Investor Relations for KKR. Craig, please go ahead.

Craig Larson

Thank you, operator. Good morning, everyone. Welcome to our second quarter 2022 earnings call. This morning, as usual, I’m joined by Rob Lewin, our CFO; and Scott Nuttall, our Co-Chief Executive Officer.

We’d 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 rental performance. Please refer to our earnings release and our SEC filings for cautionary factors about these statements.

This quarter, we’re reporting fee-related earnings per share of $0.52 and after-tax distributable earnings of $0.95. Looking at the first half of 2022 compared to 2021, we feel very good about our performance. Against a challenging market backdrop, our management fees are up 39%, fee-related earnings increased 28% and our after-tax DE increased 14%.

Now, before we go into more details on our results, we’d like to highlight the changes to our business lines that we posted to our website last week and are also reflected in today’s earnings release.

We’ve seen a dramatic increase in the scale of our real assets business. So, we split private markets into two business lines, private equity and real assets. Our private equity business line is comprised of our traditional PE, core PE and growth strategies while real assets include real estate, infrastructure and energy.

And at the same time, we’re changing the name of our public markets business line to credit and liquid strategies, a more descriptive name for the capital that we manage here. The driver of these changes is the growth and increasing significance of our real assets business. KKR today is a meaningfully more diversified firm by strategy and by geography than it was only a few years ago.

To give you a sense of the growth we’ve experienced here at the end of 2019, so two and a half years ago, real assets AUM was $28 billion. Today, that number is $114 million. So it’s over four times the size today compared to just two and a half years ago, and the drivers of this growth are several.