The Washington Post

Carlyle first-quarter results drop compared with one year ago

Carlyle Group on Wednesday reported a significant drop in first-quarter earnings, which the private-equity firm attributed to a slowdown in the number of investments it sold.

The company reported economic net income, a popular method of measuring profitability at investment firms, of $322 million, down 18 percent from $394 million a year earlier.

Revenue rose 5 percent, to $897 million from $852 million.

Carlyle’s performance fell far short of analysts’ expectations. The D.C.-based firm earned 85 cents per share, compared with a forecast of $1.01 from analysts polled by Thomas Reuters.

Carlyle, which went public two years ago this week, had enjoyed robust earnings for 2013. It sold companies at healthy prices, thanks largely to a strapping stock market. The Dow Jones industrial average closed at an all-time high Wednesday.

“We are executing sales at attractive prices around the world,” Carlyle co-chief executive William E. Conway Jr. said in a news release accompanying the earnings report.

The downside of rising stock prices is a growing dearth of attractive investment opportunities, which Conway said has occurred over the past several months.

Even as it looks for better investments, Carlyle put $1.1 billion into companies in the first quarter. And it committed an additional $3.1 billion that it will invest as deals close.

As a private-equity firm, Carlyle raises money from limited partners, which it uses to buy companies, improve them and sell them at a profit. During the first quarter, Carlyle raised $5.5 billion to fund its investments, raising its total amount under management to $199 billion.

The company also said its board of directors had declared a dividend of 16 cents per share, to be paid May 22.

In the earnings release, co-chief executive David M. Rubenstein took note of a prominent figure who recently decided to join the firm. In March, Carlyle announced it had hired Michael J. Cavanagh, who was once viewed as a potential successor to JPMorgan chief executive Jamie Dimon. Now, Cavanagh appears poised to emerge as one of the key leaders of Carlyle, given that the firm’s founders are in their 60s.

“Carlyle had a solid start to 2014,” Rubenstein said. “As new top talent joins our seasoned leadership team and we launch new fund strategies and make targeted acquisitions, Carlyle continues to meet the increasingly complex demands of our global investor base.”

Thomas Heath is a local business reporter and columnist, writing about entrepreneurs and various companies big and small in the Washington Metropolitan area. Previously, he wrote about the business of sports for The Post’s sports section for most of a decade.
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