The Carlyle Group (CG) Tops Q4 EPS by 7c; Approves $200M Stock Buyback Plan

The Carlyle Group (NASDAQ: CG) reported Q4 EPS of $0.38, $0.07 better than the analyst estimate of $0.31. Revenue for the quarter came in at $491 million versus the consensus estimate of $529.56 million.

• Distributable Earnings (DE): $145 million for Q4 2015 and $923 million for 2015

• Distributable Earnings were $923 million for 2015, 5% lower than $973 million for 2014. Excluding a non-recurring French tax judgment in the first quarter, DE were $1.0 billion, up slightly from 2014. On a post-tax basis, Carlyle generated DE of $0.38 and $2.73 per common unit for Q4 2015 and 2015, respectively.
• Fee-Related Earnings (FRE) were $43 million for Q4 2015, compared to $67 million for Q4 2014 primarily due to lower management fees, partially offset by lower general and administrative expense, excluding the impact of the reserve for litigation and contingencies. FRE of $199 million in 2015 was 19% lower than 2014 due to lower management and transaction fees, partially offset by higher catch-up management fees. We expect catch-up management fees to be lower in 2016 as compared to $73 million in 2015 as we expect to raise less new capital from funds in the market from prior years.
• Realized Net Performance Fees were $100 million for Q4 2015, compared to $264 million for Q4 2014. For Q4 2015, realized net performance fees resulted primarily from exits in Booz Allen, CoreSite, Healthscope, Kbro Limited, and multiple U.S. Real Estate investments. Realized net performance fees were $789 million in 2015, 8% higher than 2014.
• Realized Investment Income (Loss) was $2 million in Q4 2015 and $(65) million in 2015, compared to a realized investment loss of $(6) million for 2014. The loss in 2015 was driven primarily by a non recurring $80 million French tax judgment in Q1 2015.

• Economic Net Income (ENI): $73 million for Q4 2015 and $397 million for 2015

• Q4 2015 ENI was positively impacted by higher carry fund valuations in Corporate Private Equity and Real Estate, partially offset by lower valuations in Global Market Strategies, resulting in net performance fees of $109 million. For 2015, ENI of $397 million was 59% lower than 2014, primarily as a result of lower carry fund appreciation of 7% in 2015 compared to 15% in 2014.
• Carlyle generated ENI per Adjusted Unit of $0.24 on a post-tax basis for Q4 2015. Post-tax ENI per Adjusted Unit was impacted by a tax benefit relating to the reserve for litigation and contingencies.

Buyback Program:

The Board of Directors of Carlyle's general partner, Carlyle Group Management L.L.C., has authorized the repurchase of up to $200 million of common units and/or Carlyle Holdings units. Under this unit repurchase program, units may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise.Carlyle expects that the majority of repurchases under this program will be done via open market transactions. No units will be repurchased from Carlyle’s executive officers under this program. The timing and actual number of common units and/or Carlyle Holdings units repurchased will depend on a variety of factors, including legal requirements, price and economic and market conditions. This unit repurchase program may be suspended or discontinued at any time and does not have a specified expiration date.

For earnings history and earnings-related data on The Carlyle Group (CG) click here.

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