The Carlyle Group (CG): Profit Turnaround Masks Cash Stress

Revenue and profit swung sharply in FY2024 — but cash tells a different story#

The Carlyle Group [CG] posted FY2024 revenue of $4.09B, a +118.97% year‑over‑year increase, and net income of $1.02B, a swing from a -$608.4MM loss a year earlier — an earnings recovery that dominated headlines. At the same time the shares trade near $64.72 with a market cap of $23.41B. Those top‑line and bottom‑line moves are real and material, but the company's cash generation and balance‑sheet profile reveal tensions beneath the headline profitability that deserve investor attention. According to Carlyle’s FY2024 consolidated filings (filed 2025‑02‑27), the company delivered strong EBITDA and margin expansion even as operating cash flow and free cash flow turned negative for the year, and leverage rose meaningfully on a reported basis.

What the FY2024 numbers actually show#

A close read of the consolidated statements highlights a classic private‑equity style earnings rebound driven by realized gains and fee growth, paired with working‑capital and financing flows that strained cash. Carlyle reported EBITDA of $1.58B in FY2024, which implies an EBITDA margin of 38.59% on the $4.09B top line. Operating income was $1.39B (34.09% operating margin) and net income came in at $1.02B (24.96% net margin) — all substantial improvements from FY2023 levels when operating income and net income were negative (operating loss of $600.9MM, net loss of $608.4MM) [FY2024 consolidated statements (filed 2025‑02‑27)].

Those improvements are impressive on an accounting basis. But the cash flow statement shows a different pace of execution. Carlyle reported net cash provided by operating activities of -$759.5MM and free cash flow of -$837.2MM for FY2024, while still paying $503MM in dividends and repurchasing $554.6MM of common stock during the year [FY2024 cash flow statement (filed 2025‑02‑27)]. The divergence between accrual earnings and cash flow is the central tension for the investment story in the near term.

Income statement trend table (2021–2024)#

(Data: Carlyle consolidated income statements, FY2021–FY2024 filings)

These numbers show volatility in Carlyle’s revenue and margin profile over the last three years — not surprising for a diversified alternative‑asset manager where realized gains, incentive fees and mark‑to‑market items can swing results year to year. The FY2024 rebound is meaningful but must be evaluated against cash flows and balance‑sheet durability.

Balance sheet and leverage: net debt increased materially in 2024#

Carlyle’s reported total debt of $9.5B and cash & equivalents of $2.1B produce a net debt position of $7.4B at year‑end 2024. Total stockholders’ equity was $5.61B, implying a debt‑to‑equity ratio of approximately 169.4% (9.5 / 5.61). Using the FY2024 EBITDA of $1.58B, the company’s net debt/EBITDA calculates to ~4.68x (7.4 / 1.58). These are management‑reported balance sheet figures from the FY2024 filing (filed 2025‑02‑27).

From a market multiples standpoint, a simple enterprise value (EV) assembled from the $23.41B market cap + $9.5B total debt - $2.1B cash = $30.81B divided by FY2024 EBITDA of $1.58B yields an EV/EBITDA of ~19.50x. That contrasts with a TTM EV/EBITDA figure reported elsewhere in the dataset (17.53x), a difference driven by timing (TTM vs FY metrics), varying EBITDA definitions and market‑price timing. When you encounter such differences, prioritize the precise period definitions: our EV/EBITDA above is FX‑free and anchored to FY2024 EBITDA and the snapshot market cap provided in the dataset.

Balance sheet & cash flow summary (2021–2024)#

(Data: Carlyle consolidated balance sheets and cash flow statements, FY2021–FY2024 filings)

The key point: Carlyle’s net debt moved from a net cash position on several measures in prior years to a clear net debt position at year‑end 2024. That shift matters because private‑equity firms are not just asset managers — they are also capital allocators whose ability to fund buyouts, support portfolio companies and return capital to shareholders depends on both fee‑generation and liquidity.

Capital allocation: dividends and buybacks continued despite negative FCF#

Carlyle maintained its quarterly dividend cadence in 2024–2025 with a $1.40 annual dividend per share (four quarterly payments of $0.35), which at the current price is ~2.16% yield. During FY2024 the company paid $503MM in dividends and repurchased $554.6MM of stock while reporting negative operating cash flow and negative free cash flow. That combination reflects a deliberate capital‑return posture but raises questions about sustainability if cash generation does not normalize.

Management’s capital allocation mix — dividends, repurchases and opportunistic investments including strategic acquisitions — must be read against liquidity and leverage metrics. The company’s TTM debt metrics in the dataset (e.g., net debt/EBITDA of ~4.86x in the ratios table) echo the same structural constraint: leverage is elevated relative to historical lows and will be a gating factor for incremental M&A or aggressive repurchases absent a cash flow recovery.

Strategic context: the Intelliflo acquisition and further fintech exposure#

Carlyle has continued to pursue technology and fintech investments as a strategic priority. Most recently, the firm agreed to acquire wealthtech player Intelliflo from Invesco for up to $200M (an upfront $135M with up to $65M in earn‑outs), a deal reported by multiple press outlets Investing.com and Professional Adviser. The transaction is being executed from Carlyle Europe Technology Partners V and includes a carve‑out strategy that will separate Intelliflo’s UK/Australia operations from a US‑facing business (RedBlack) to focus growth by geography.

This transaction is modest in size relative to Carlyle’s balance sheet — up to $200M against $23.4B market cap and $7.4B net debt — but it is strategically consistent with management’s push into recurring‑revenue software businesses where private equity value creation often comes from product investment, cross‑sell and multiple expansion on exit. The deal’s structure (partial earn‑outs, fund financing) is also consistent with standard PE playbooks and limits near‑term cash impact while providing upside if growth targets are met Investing.com.

Linking that acquisition strategy back to the numbers: software and asset‑management fee growth are favorable drivers of recurring revenue and higher margin fee‑related earnings, but they do not immediately solve negative operating cash flow or the near‑term need for liquidity if distributable cash stays under pressure.

Quality of earnings: accrual gains vs. cash reality#

Carlyle’s FY2024 results are partly explained by improved realized performance fees and valuation changes in portfolio companies. Those items boost net income without necessarily translating into immediate cash. The cash flow statement shows the lag: negative operating cash flow and negative FCF in FY2024, even while net income was positive. That divergence flags lower earnings quality from the perspective of distributable cash in the short run.

Two practical implications follow. First, dividends and repurchases funded out of financing or asset‑sale proceeds (rather than operating cash) are inherently less sustainable. Second, leverage metrics anchored to EBITDA can understate near‑term liquidity stress when EBITDA is driven by accruals or non‑cash items and working capital dynamics are unfavorable.

Valuation signals and metric discrepancies#

Market multiples show a mixed picture. The stock is trading at P/E ~18.92x using the provided trailing EPS of $3.42 and price $64.72 (64.72 / 3.42). Our direct FY2024 EV/EBITDA calculation produced ~19.50x using the dataset market cap and FY2024 EBITDA. The dataset also contains a TTM EV/EBITDA of 17.53x and a TTM net debt/EBITDA of ~4.86x; those differences illustrate timing and definitional effects (TTM vs FY, and market price timing). When reconciling valuation measures, always match market cap timing to the EBITDA period used and account for non‑recurring items that affect EBITDA.

Forward estimates in the dataset project revenue and EPS growth over the next three years (consensus formatted estimates: 2025 revenue ~$4.14B; 2026 revenue ~$5.19B; 2027 revenue ~$5.84B), which underlie forward P/E compression in the dataset (forward P/E falling toward the high‑teens and low‑teens by 2026–2027). Those forecasts assume continued fee growth and portfolio performance improvement, and they are plausible if recurring fee engines and realized gains track management targets — but they depend on a re‑emergence of positive operating cash flow and stable leverage.

Key risks and sensitivity points#

Carlyle’s investment case rests on several execution assumptions. First, the company must convert improved accrual earnings into cash: operating cash flow and free cash flow need to normalize. Second, leverage is elevated; a sustained negative cash profile would force either slower buybacks/dividends or asset sales. Third, private‑equity realized performance is cyclical and sensitive to exit markets and interest rates; weaker exit conditions would compress fees and carried‑interest realization. Finally, integration and carve‑out execution for smaller strategic buys (e.g., Intelliflo) is an execution item rather than a balance‑sheet game changer, but repeated acquisitions financed by debt would increase risk.

What this means for investors#

Investors should treat Carlyle’s FY2024 results as evidence of a meaningful earnings recovery, but not as proof that cash generation or balance‑sheet risk are fully resolved. The company now has a larger net‑debt position and is returning capital at a pace that suggests confidence; however, returns of capital remain contingent on operational cash normalization. The Intelliflo purchase is strategically coherent — it increases recurring‑revenue, fee‑like exposure and adds a software asset that can be grown by Carlyle’s technology fund — but it is small relative to the balance‑sheet questions that dominate the near term.

From a metrics perspective, watch three things in the next two quarters: operating cash flow trends, net debt/EBITDA (on a consistent period definition) and distributable cash after dividends and buybacks. Improvement in operating cash conversion (from accrual net income to cash) is the clearest path to reducing leverage and securing the current capital‑return profile.

Key takeaways#

• FY2024 delivered a sharp accounting rebound: revenue $4.09B (+118.97%) and net income $1.02B, with EBITDA $1.58B and EBITDA margin 38.59% (FY2024 filings).
• Cash flow is the constraining factor: operating cash flow -$759.5MM and free cash flow -$837.2MM in FY2024, yet Carlyle paid $503MM in dividends and repurchased $554.6MM of stock.
• Leverage increased to net debt ~$7.4B and net debt/EBITDA ~4.68x (FY2024 EBITDA basis); simple EV/EBITDA using dataset market cap and FY2024 EBITDA is ~19.50x — differences with TTM ratios reflect period definitions.
• Strategic M&A (e.g., Intelliflo up to $200M) complements a tech‑ and fee‑growth strategy but is not a near‑term liquidity cure; deal cited in press reports Investing.com and Professional Adviser.
• The reconciliation of accrual earnings to cash flow — not headline net income — will determine whether Carlyle can sustain current dividends and buybacks without materially slowing capital returns.

Conclusion#

Carlyle’s FY2024 is simultaneously reassuring and cautionary. The firm proved it can deliver a large accrual‑based earnings rebound, but the negative operating cash flow and the jump in net debt temper the victory lap. Strategic additions such as Intelliflo reinforce management’s shift toward recurring‑revenue technology investments that can raise fee predictability over time, yet they do not materially change the company’s near‑term liquidity equation.

For stakeholders, the essential questions are operational: can Carlyle convert improved operating performance into cash, reduce leverage, and sustain disciplined capital allocation? The next two quarters of cash flow and the company’s commentary on distributable earnings will be the decisive inputs for assessing whether FY2024 was the start of a durable recovery or a volatile accrual peak.