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Segment Reporting | 3 Months Ended
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Mar. 31, 2023
Segment Reporting [Abstract] |
Segment Reporting | 15. Segment Reporting Carlyle conducts its operations through three reportable segments: Global Private Equity – The Global Private Equity segment advises the Company’s buyout, middle market and growth capital funds, its U.S. and internationally focused real estate funds, and its infrastructure and natural resources funds. The segment also includes the NGP Carry Funds advised by NGP. Global Credit – The Global Credit segment advises funds and vehicles that pursue investment strategies including loans and structured credit, direct lending, opportunistic credit, distressed credit, aircraft financing and servicing, infrastructure debt, insurance solutions and global capital markets. Global Investment Solutions – The Global Investment Solutions segment advises global private equity programs and related co-investment and secondary activities. The Company’s reportable business segments are differentiated by their various investment focuses and strategies. Overhead costs are generally allocated based on cash-based compensation and benefits expense for each segment. The Company’s earnings from its investment in NGP are presented in the respective operating captions within the Global Private Equity segment. Distributable Earnings. Distributable Earnings, or “DE,” is a key performance benchmark used in the Company’s industry and is evaluated regularly by management in making resource deployment and compensation decisions and in assessing performance of the Company’s three reportable segments. Management also uses DE in budgeting, forecasting, and the overall management of the Company’s segments. Management believes that reporting DE is helpful to understanding the Company’s business and that investors should review the same supplemental financial measure that management uses to analyze the Company’s segment performance. DE is intended to show the amount of net realized earnings without the effects of the consolidation of the Consolidated Funds. DE is derived from the Company’s segment reported results and is used to assess performance. Distributable Earnings differs from income (loss) before provision for income taxes computed in accordance with U.S. GAAP in that it includes certain tax expenses associated with certain foreign performance revenues (comprised of performance allocations and incentive fees), and does not include unrealized performance allocations and related compensation expense, unrealized principal investment income, equity-based compensation expense, net income (loss) attributable to non-Carlyle interests in consolidated entities, or charges (credits) related to Carlyle corporate actions and non-recurring items. Charges (credits) related to Carlyle corporate actions and non-recurring items include: charges (credits) associated with acquisitions, dispositions or strategic investments, changes in the tax receivable agreement liability, amortization and any impairment charges associated with acquired intangible assets, transaction costs associated with acquisitions and dispositions, charges associated with earn-outs and contingent consideration including gains and losses associated with the estimated fair value of contingent considerations issued in conjunction with acquisitions or strategic investments, impairment charges associated with lease right-of-use assets, gains and losses from the retirement of debt, charges associated with contract terminations and employee severance. Management believes the inclusion or exclusion of these items provides investors with a meaningful indication of the Company’s core operating performance. Fee Related Earnings. Fee Related Earnings, or “FRE,” is used to assess the ability of the business to cover direct base compensation and operating expenses from total fee revenues. FRE differs from income (loss) before provision for income taxes computed in accordance with U.S. GAAP in that it adjusts for the items included in the calculation of DE and also adjusts DE to exclude net realized performance revenues, realized principal investment income, net interest (interest income less interest expense), and certain general, administrative and other expenses when the timing of any future payment is uncertain. The following tables present the financial data for the Company’s three reportable segments for the three months ended March 31, 2023:
| Three Months Ended March 31, 2023
| Global Private Equity |  | Global Credit |  |  |  | Global Investment Solutions |  | Total
| (Dollars in millions)
Segment Revenues |  |  |  |  |  |  |  |  |
Fund level fee revenues |  |  |  |  |  |  |  |  |
Fund management fees | $ | 326.9 |  |  | $ | 122.6 |  |  |  |  | $ | 56.7 |  |  | $ | 506.2 |
Portfolio advisory and transaction fees, net and other | 5.4 |  |  | 11.0 |  |  |  |  | — |  |  | 16.4 |
Fee related performance revenues | 9.6 |  |  | 18.4 |  |  |  |  | 0.8 |  |  | 28.8 |
Total fund level fee revenues | 341.9 |  |  | 152.0 |  |  |  |  | 57.5 |  |  | 551.4 |
Realized performance revenues | 99.0 |  |  | 27.7 |  |  |  |  | 38.4 |  |  | 165.1 |
Realized principal investment income | 11.9 |  |  | 9.0 |  |  |  |  | 2.9 |  |  | 23.8 |
Interest income | 5.4 |  |  | 7.2 |  |  |  |  | 1.3 |  |  | 13.9 |
Total revenues | 458.2 |  |  | 195.9 |  |  |  |  | 100.1 |  |  | 754.2 |
Segment Expenses |  |  |  |  |  |  |  |  |
Compensation and benefits |  |  |  |  |  |  |  |  |
Cash-based compensation and benefits | 148.7 |  |  | 80.4 |  |  |  |  | 31.5 |  |  | 260.6 |
Realized performance revenues related compensation | 46.3 |  |  | 12.7 |  |  |  |  | 36.6 |  |  | 95.6 |
Total compensation and benefits | 195.0 |  |  | 93.1 |  |  |  |  | 68.1 |  |  | 356.2 |
General, administrative, and other indirect expenses | 57.1 |  |  | 21.7 |  |  |  |  | 8.7 |  |  | 87.5 |
Depreciation and amortization expense | 6.7 |  |  | 2.0 |  |  |  |  | 1.2 |  |  | 9.9 |
Interest expense | 16.6 |  |  | 10.2 |  |  |  |  | 2.2 |  |  | 29.0 |
Total expenses | 275.4 |  |  | 127.0 |  |  |  |  | 80.2 |  |  | 482.6 |
Distributable Earnings | $ | 182.8 |  |  | $ | 68.9 |  |  |  |  | $ | 19.9 |  |  | $ | 271.6 |
(-) Realized net performance revenues | 52.7 |  |  | 15.0 |  |  |  |  | 1.8 |  |  | 69.5 |
(-) Realized principal investment income | 11.9 |  |  | 9.0 |  |  |  |  | 2.9 |  |  | 23.8 |
(+) Net interest | 11.2 |  |  | 3.0 |  |  |  |  | 0.9 |  |  | 15.1 |
(=) Fee Related Earnings | $ | 129.4 |  |  | $ | 47.9 |  |  |  |  | $ | 16.1 |  |  | $ | 193.4 |
Segment assets as of March 31, 2023 | $ | 9,459.8 |  |  | $ | 3,075.2 |  |  |  |  | $ | 1,948.9 |  |  | $ | 14,483.9 |
The following tables present the financial data for the Company’s three reportable segments for the three months ended March 31, 2022:
| Three Months Ended March 31, 2022
| Global Private Equity |  |  |  | Global Credit |  | Global Investment Solutions |  | Total
| (Dollars in millions)
Segment Revenues |  |  |  |  |  |  |  |  |
Fund level fee revenues |  |  |  |  |  |  |  |  |
Fund management fees | $ | 304.2 |  |  |  |  | $ | 93.7 |  |  | $ | 56.3 |  |  | $ | 454.2 |
Portfolio advisory and transaction fees, net and other | 6.1 |  |  |  |  | 10.1 |  |  | — |  |  | 16.2 |
Fee related performance revenues | 30.6 |  |  |  |  | 13.9 |  |  | — |  |  | 44.5 |
Total fund level fee revenues | 340.9 |  |  |  |  | 117.7 |  |  | 56.3 |  |  | 514.9 |
Realized performance revenues | 199.9 |  |  |  |  | 13.7 |  |  | 22.7 |  |  | 236.3 |
Realized principal investment income | 14.2 |  |  |  |  | 10.3 |  |  | 1.8 |  |  | 26.3 |
Interest income | 0.4 |  |  |  |  | 1.5 |  |  | 0.1 |  |  | 2.0 |
Total revenues | 555.4 |  |  |  |  | 143.2 |  |  | 80.9 |  |  | 779.5 |
Segment Expenses |  |  |  |  |  |  |  |  |
Compensation and benefits |  |  |  |  |  |  |  |  |
Cash-based compensation and benefits | 153.0 |  |  |  |  | 67.2 |  |  | 25.6 |  |  | 245.8 |
Realized performance revenues related compensation | 90.7 |  |  |  |  | 6.7 |  |  | 20.9 |  |  | 118.3 |
Total compensation and benefits | 243.7 |  |  |  |  | 73.9 |  |  | 46.5 |  |  | 364.1 |
General, administrative, and other indirect expenses | 45.5 |  |  |  |  | 23.5 |  |  | 7.3 |  |  | 76.3 |
Depreciation and amortization expense | 6.3 |  |  |  |  | 2.0 |  |  | 1.2 |  |  | 9.5 |
Interest expense | 15.8 |  |  |  |  | 8.2 |  |  | 2.8 |  |  | 26.8 |
Total expenses | 311.3 |  |  |  |  | 107.6 |  |  | 57.8 |  |  | 476.7 |
Distributable Earnings | $ | 244.1 |  |  |  |  | $ | 35.6 |  |  | $ | 23.1 |  |  | $ | 302.8 |
(-) Realized net performance revenues | 109.2 |  |  |  |  | 7.0 |  |  | 1.8 |  |  | 118.0 |
(-) Realized principal investment income | 14.2 |  |  |  |  | 10.3 |  |  | 1.8 |  |  | 26.3 |
(+) Net interest | 15.4 |  |  |  |  | 6.7 |  |  | 2.7 |  |  | 24.8 |
(=) Fee Related Earnings | $ | 136.1 |  |  |  |  | $ | 25.0 |  |  | $ | 22.2 |  |  | $ | 183.3 |
The following tables reconcile the Total Segments to the Company’s Income (Loss) Before Provision for Taxes for the three months ended March 31, 2023 and 2022, and Total Assets as of March 31, 2023.
| Three Months Ended March 31, 2023
| Total Reportable Segments |  | Consolidated Funds |  | Reconciling Items |  |  |  | Carlyle Consolidated
| (Dollars in millions)
Revenues | $ | 754.2 |  |  | $ | 121.9 |  |  | $ | (17.1) |  |  | (a) |  | $ | 859.0 |
Expenses | $ | 482.6 |  |  | $ | 97.2 |  |  | $ | 123.2 |  |  | (b) |  | $ | 703.0 |
Other income (loss) | $ | — |  |  | $ | 3.6 |  |  | $ | — |  |  | (c) |  | $ | 3.6 |
Distributable earnings | $ | 271.6 |  |  | $ | 28.3 |  |  | $ | (140.3) |  |  | (d) |  | $ | 159.6 |
Total assets | $ | 14,483.9 |  |  | $ | 7,403.1 |  |  | $ | (613.1) |  |  | (e) |  | $ | 21,273.9 |
| Three Months Ended March 31, 2022
| Total Reportable Segments |  | Consolidated Funds |  | Reconciling Items |  |  |  | Carlyle Consolidated
| (Dollars in millions)
Revenues | $ | 779.5 |  |  | $ | 61.7 |  |  | $ | 740.6 |  |  | (a) |  | $ | 1,581.8 |
Expenses | $ | 476.7 |  |  | $ | 52.9 |  |  | $ | 312.3 |  |  | (b) |  | $ | 841.9 |
Other income (loss) | $ | — |  |  | $ | 2.8 |  |  | $ | — |  |  | (c) |  | $ | 2.8 |
Distributable earnings | $ | 302.8 |  |  | $ | 11.6 |  |  | $ | 428.3 |  |  | (d) |  | $ | 742.7 |
(a)The Revenues adjustment principally represents unrealized performance revenues, unrealized principal investment income (loss) (including Fortitude), revenues earned from the Consolidated Funds which were eliminated in consolidation to arrive at the Company’s total revenues, adjustments for amounts attributable to non-controlling interests in consolidated entities, adjustments related to expenses associated with the investments in NGP Management and its affiliates that are included in operating captions or are excluded from the segment results, adjustments to reflect the reimbursement of certain costs incurred on behalf of Carlyle funds on a net basis, and the inclusion of tax expenses associated with certain foreign performance revenues, as detailed below:
|  |  | Three Months Ended March 31,
|  |  |  |  | 2023 |  | 2022
|  |  |  |  | (Dollars in millions)
Unrealized performance and fee related performance revenues |  |  |  |  | $ | (20.7) |  |  | $ | 698.8 |
Unrealized principal investment income (loss) |  |  |  |  | (29.0) |  |  | 23.7 |
Adjustments related to expenses associated with investments in NGP Management and its affiliates |  |  |  |  | (3.4) |  |  | (3.1) |
Tax expense associated with certain foreign performance revenues |  |  |  |  | — |  |  | (0.1) |
Non-controlling interests and other adjustments to present certain costs on a net basis |  |  |  |  | 50.8 |  |  | 17.9 |
Elimination of revenues of Consolidated Funds |  |  |  |  | (14.8) |  |  | 3.4 |
|  |  |  |  | $ | (17.1) |  |  | $ | 740.6 |
The following table reconciles the total segments fund level fee revenue to the most directly comparable U.S. GAAP measure, the Company’s consolidated fund management fees, for the three months ended March 31, 2023 and 2022.
|  |  | Three Months Ended March 31,
|  |  |  |  | 2023 |  | 2022
|  |  |  |  | (Dollars in millions)
Total Reportable Segments - Fund level fee revenues |  |  |  |  | $ | 551.4 |  |  | $ | 514.9 |
Adjustments(1) |  |  |  |  | (50.6) |  |  | (64.4) |
Carlyle Consolidated - Fund management fees |  |  |  |  | $ | 500.8 |  |  | $ | 450.5 |
(1) Adjustments represent the reclassification of NGP management fees from principal investment income, the reclassification of fee related performance revenues from business development companies and other products, management fees earned from consolidated CLOs which were eliminated in consolidation to arrive at the Company’s fund management fees, and the reclassification of certain amounts included in portfolio advisory fees, net and other in the segment results that are included in interest and other income in the U.S. GAAP results. (b)The Expenses adjustment represents the elimination of intercompany expenses of the Consolidated Funds payable to the Company, the inclusion of equity-based compensation, certain tax expenses associated with realized performance revenues related compensation, and unrealized performance revenues related compensation, adjustments related to expenses associated with the investment in NGP Management that are included in operating captions, adjustments to reflect the reimbursement of certain costs incurred on behalf of Carlyle funds on a net basis, changes in the tax receivable agreement liability, and charges and credits associated with Carlyle corporate actions and non-recurring items, as detailed below:
|  |  | Three Months Ended March 31,
|  |  |  |  | 2023 |  | 2022
|  |  |  |  | (Dollars in millions)
Unrealized performance and fee related performance revenue compensation expense |  |  |  |  | $ | (2.3) |  |  | $ | 232.2 |
Equity-based compensation |  |  |  |  | 57.1 |  |  | 40.7 |
Acquisition or disposition-related charges (credits) and amortization of intangibles and impairment |  |  |  |  | 28.7 |  |  | 29.1 |
Tax expense associated with certain foreign performance revenues related compensation |  |  |  |  | (0.5) |  |  | (0.7) |
Non-controlling interests and other adjustments to present certain costs on a net basis |  |  |  |  | 40.0 |  |  | 16.5 |
Other adjustments including severance |  |  |  |  | 3.9 |  |  | 4.6 |
Elimination of expenses of Consolidated Funds |  |  |  |  | (3.7) |  |  | (10.1) |
|  |  |  |  | $ | 123.2 |  |  | $ | 312.3 |
(c)The Other Income (Loss) adjustment results from the Consolidated Funds which were eliminated in consolidation to arrive at the Company’s total Other Income (Loss). (d)The following table is a reconciliation of Income (Loss) Before Provision for Income Taxes to Distributable Earnings and to Fee Related Earnings:
|  |  | Three Months Ended March 31,
|  |  |  |  | 2023 |  | 2022
|  |  |  |  | (Dollars in millions)
Income (loss) before provision for income taxes |  |  |  |  | $ | 159.6 |  |  | $ | 742.7 |
Adjustments: |  |  |  |  |  |  |
Net unrealized performance and fee related performance revenues |  |  |  |  | 18.4 |  |  | (466.6) |
Unrealized principal investment (income) loss |  |  |  |  | 29.0 |  |  | (23.7) |
Equity-based compensation(1) |  |  |  |  | 57.1 |  |  | 40.7 |
Acquisition or disposition-related charges (credits), including amortization of intangibles and impairment |  |  |  |  | 28.7 |  |  | 29.1 |
Tax expense associated with certain foreign performance revenues |  |  |  |  | (0.5) |  |  | (0.8) |
Net income attributable to non-controlling interests in consolidated entities |  |  |  |  | (24.6) |  |  | (23.2) |
Other adjustments including severance |  |  |  |  | 3.9 |  |  | 4.6 |
Distributable Earnings |  |  |  |  | $ | 271.6 |  |  | $ | 302.8 |
Realized performance revenues, net of related compensation(2) |  |  |  |  | 69.5 |  |  | 118.0 |
Realized principal investment income(2) |  |  |  |  | 23.8 |  |  | 26.3 |
Net interest |  |  |  |  | 15.1 |  |  | 24.8 |
Fee Related Earnings |  |  |  |  | $ | 193.4 |  |  | $ | 183.3 |
(1)Equity-based compensation for the three months ended March 31, 2023 and 2022 includes amounts that are presented in principal investment income and general, administrative and other expenses in the Company’s U.S. GAAP statement of operations. (2)See reconciliation to most directly comparable U.S. GAAP measure below:
| Three Months Ended March 31, 2023
| Carlyle Consolidated |  | Adjustments (3) |  | Total Reportable Segments
| (Dollars in millions)
Performance revenues | $ | 160.8 |  |  | $ | 4.3 |  |  | $ | 165.1 |
Performance revenues related compensation expense | 105.7 |  |  | (10.1) |  |  | 95.6 |
Net performance revenues | $ | 55.1 |  |  | $ | 14.4 |  |  | $ | 69.5 |
Principal investment income (loss) | $ | 11.7 |  |  | $ | 12.1 |  |  | $ | 23.8 |
| Three Months Ended March 31, 2022
| Carlyle Consolidated |  | Adjustments (3) |  | Total Reportable Segments
| (Dollars in millions)
Performance revenues | $ | 710.2 |  |  | $ | (473.9) |  |  | $ | 236.3 |
Performance revenues related compensation expense | 370.7 |  |  | (252.4) |  |  | 118.3 |
Net performance revenues | $ | 339.5 |  |  | $ | (221.5) |  |  | $ | 118.0 |
Principal investment income (loss) | $ | 319.6 |  |  | $ | (293.3) |  |  | $ | 26.3 |
(3) Adjustments to performance revenues and principal investment income (loss) relate to (i) unrealized performance allocations net of related compensation expense and unrealized principal investment income, which are excluded from the segment results, (ii) amounts earned from the Consolidated Funds, which were eliminated in the U.S. GAAP consolidation but were included in the segment results, (iii) amounts attributable to non-controlling interests in consolidated entities, which were excluded from the segment results, (iv) the reclassification of NGP performance revenues, which are included in principal investment income in the U.S. GAAP financial statements, (v) the reclassification of fee related performance revenues, which are included in fund level fee revenues in the segment results, and (vi) the reclassification of tax expenses associated with certain foreign performance revenues. Adjustments to principal investment income (loss) also include the reclassification of earnings for the investments in NGP Management and its affiliates to the appropriate operating captions for the segment results, and the exclusion of charges associated with the investment in NGP Management and its affiliates that are excluded from the segment results. (e) The Total Assets adjustment represents the addition of the assets of the Consolidated Funds that were eliminated in consolidation to arrive at the Company’s total assets.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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