KKR & Co. Inc. (KKR) Q4 2022 Earnings Call Transcript

For the period ending December 31, 2022

February7,2023 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 Fourth Quarter 2022 Earnings Conference Call. During today’s presentation, all parties will be in a listen-only mode. And following management’s prepared remarks, the conference will be opened for questions. [Operator Instructions] As a reminder, this conference call 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 fourth quarter 2022 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’d like to remind everyone that we will 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 events or performance. Please refer to our earnings release and our SEC filings for cautionary factors about these statements.

So this quarter, we’re pleased to be reporting solid results with $0.63 of fee-related earnings per share and $0.92 of after-tax distributable earnings per share. I’ll start by walking through the quarter. So beginning first with management fees. Management fee growth continues to be a real bright spot for us. In Q4, management fees were $706 million, that’s up 5% compared to last quarter, and up 19% compared to Q4 of 2021. And comparing full year 2022 to 2021, management fees increased 28% from $2.1 billion to $2.7 billion. Growth in full year 2022 was greatest within our Real Assets business where management fees increased over 50%. Net transaction and monitoring fees were $195 million, with our Capital Markets business, generating $144 million of revenue in the quarter.

Now to go through expenses. Our fee-related compensation margin for the quarter was 20%, which is at the low end of our 20% to 25% range. Rob is actually going to circle back on this topic in a moment. And other operating expenses for us were $177 million. The increase here compared to last quarter was driven by higher professional fees given activity levels across the firm as well as increased expenses related to capital raising. So in total, fee-related earnings for Q4 were $559 million or $0.63 per share with an FRE margin of 61%.