KKR Reports Record Fee-Related Earnings in Q2 2024

KKR & Co. Inc. Reports Record Earnings for Q2 2024

KKR & Co. Inc. has revealed its earnings for the second quarter of 2024, achieving an unprecedented high in fee-related earnings at $0.84 per share, a remarkable 25% increase from the same quarter last year. The company also reported a 50% rise in adjusted net income, reaching $1.09 per share. Strong capital markets transaction fees and notable growth in management fees contributed to KKR’s total operating earnings of $1.17 per share, representing over 80% of its pretax adjusted net income. The firm expressed optimism about meeting its 2026 guidance figures, citing substantial growth in capital raising and deployment activities.

Key Highlights

• Fee-related earnings reached a historical high of $0.84 per share, up 25% year-over-year.
• Adjusted net income per share surged 50% to $1.09.
• Management fees increased to $847 million, a 13% rise from the prior year.
• Capital markets transaction fees stood strong at $192 million, supported by activities in private equity and infrastructure.
• Realized performance income was $482 million, with realized investment income at $139 million.
• KKR joined the S&P 500 Index in June 2024.
• The company is on track to meet its 2026 targets, including raising over $300 billion in new capital and significant financial growth metrics.
• In Q2, KKR raised $32 billion in capital, including $10 billion for its global infrastructure V fund and $4 billion for its middle-market Ascendant strategy.
• The company deployed $23 billion in Q2 and is optimistic about the investment environment for the latter half of 2024.

Company Outlook

KKR is confident in achieving its 2026 targets, despite anticipating slightly below-target operating earnings in 2025. The firm expects to maintain operating earnings aligned with Q2 levels for the remainder of 2024.

Bearish Viewpoints

• Operating earnings for 2025 are projected to be slightly below the long-term return on equity (ROE) range of 14% to 15%.

Bullish Viewpoints

• KKR marked strong performance across various asset classes and maintains full ownership of Global Atlantic (GA).
• The firm is optimistic about fundraising opportunities, particularly within private wealth and insurance sectors.
• Anticipated significant growth in K-Series products aimed at the wealth market.

Misses

• No particular misses were reported in the earnings call.

Q&A Highlights

• Executives spoke about the strategic partnership with Capital Group and plans to introduce hybrid public and private investment solutions.
• They highlighted a robust pipeline for monetizations in Q3, estimated at around $500 million.
• Focus on infrastructure and digital opportunities, including collaborations on sustainable infrastructure projects, was emphasized.
• KKR is committed to fostering relationships in asset-based finance and real estate, having established 35 partnerships.

KKR’s impressive Q2 2024 performance reinforces its growth trajectory and strategic market position. With its recent entry into the S&P 500 and a clear plan toward achieving its 2026 targets, KKR is viewed as a resilient player in a dynamic investment landscape.