Yahoo Finance Carlyle (CG) Dips 13.5% on Q1 Earnings & Revenue Miss, AUM Rises
The Carlyle Group Inc.’s CG shares have slipped 13.5% since the announcement of its first-quarter results, likely reflecting concerns over lower-than-expected results. CG reported first-quarter 2023 post-tax distributable earnings per share of 63 cents, missing the Zacks Consensus Estimate of 65 cents. However, the bottom line declined from 74 cents in the year-ago quarter. Our estimate for the metric was 68 cents.
An increase in the assets under management (AUM) balance and fee revenues supported the results. However, a decrease in realized performance revenues and higher expenses were major headwinds.
Net income available to common stockholders (GAAP basis) was $100.7 million, down significantly from $571.6 million in the prior-year quarter.
Revenues Fall, Expenses Rise
Segmental revenues were $754 million in the quarter under review, decreasing 3.3% from the year-ago quarter. Also, the top line missed the Zacks Consensus Estimate of $787 million. Our estimate for the metric was $805.8 million.
Fee revenues in the first quarter increased 7.1% year over year to $551.4 million. Our estimate for the metric was $430 million. A rise in fund management fees, as well as transaction and portfolio advisory fees, net and other revenues, resulted in the uptick. Realized performance revenues plunged 30.1% to $165.1 million. Our estimate for the metric was $342.9 million.
Total segmental expenses amounted to $482.6 million, up 1.2% year over year. The rise primarily resulted from increased cash-based compensation and benefits expenses, as well as general, administrative and other expenses. Our estimate for the metric was $517.2 million.
AUM Increases
As of Mar 31, 2023, total AUM was $381 billion, up 2% from the prior quarter. This was primarily led by appreciation in the carry fund portfolio, an increase in the fair value of assets covered by the strategic advisory services agreement with Fortitude and new capital raised.
Fee-earning AUM for the reported quarter was $271 billion, up 2% sequentially.
Dividend Update
On May 4, Carlyle’s board of directors announced a quarterly cash dividend of 35 cents per share. The dividend indicates a sequential hike of 7.7% and will be paid out on May 23 to shareholders of record as of May 16.
Conclusion
Carlyle’s efforts to expand operations by entering business avenues are encouraging. Going ahead, an increase in the AUM balance and fund management fees is likely to support its organic growth. However, elevated expenses are expected to deter bottom-line growth.
Carlyle Group Inc. Price, Consensus and EPS Surprise
Carlyle Group Inc. price-consensus-eps-surprise-chart | Carlyle Group Inc. Quote
Currently, CG carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Finance Stocks
Invesco’s IVZ first-quarter 2023 adjusted earnings of 38 cents per share surpassed the Zacks Consensus Estimate of 36 cents. The bottom line, however, plunged 32.1% from the prior-year quarter. Our estimate for earnings was 31 cents.
Results benefited from a decline in operating expenses. However, a lower AUM balance and long-term outflows hurt IVZ’s revenues.
T. Rowe Price Group, Inc. TROW reported first-quarter 2023 adjusted earnings per share of $1.69, which outpaced the Zacks Consensus Estimate of $1.62. The bottom line, however, declined 35.5% year over year. Our estimate for earnings per share was $1.52.
TROW's net revenues were adversely impacted by the decline in AUM and investment advisory fees. Also, the company recorded a rise in expenses in the quarter. Nonetheless, appreciation in cash and cash equivalent will help TROW to continue investing.
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