Ladies and gentlemen, thank you for standing by. Welcome to KKR's First Quarter 2016 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following management's prepared remarks, the conference will be open for questions, and instructions will be given at that time. As a reminder, this conference call is being recorded. I will now hand the call over to Craig Larson, Head of Investor Relations for KKR. Craig, please go ahead.

Thank you, Bridget. Welcome to our first quarter earnings call. Thank you for joining us. As usual, I'm joined by Bill Janetschek, our CFO; and Scott Nuttall, Global Head of Capital and Asset Management. We'd like to remind everyone that we'll refer to non-GAAP measures on the call which are reconciled to GAAP figures in our press release, and that this call will also contain forward-looking statements which do not guarantee future events or performance. Please refer to our SEC filings for cautionary factors related to these statements. And also, like previous quarters, we've posted a supplementary presentation on our website that we'll be referring to over the course of the call. Turning to the quarter, the first quarter was a bumpy ride across global capital markets. And like many others, we weren't immune. This morning, we reported our first quarter economic net loss of $507 million and an after-tax economic net loss per unit of $0.65. Total cash earnings for the quarter were $169 million. Now in our second quarter reporting under our fixed distribution policy, we have again announced a $0.16 per unit distribution. And on the buyback front from February 11, the date we last provided an update through April 21, we repurchased and canceled 10.9 million units for $170 million – $147 million, leaving us with about $110 million remaining under the current authorization. And with that, I'll turn it over to Bill to discuss our performance in more detail. Bill? William Joseph Janetschek - Member & Chief Financial Officer: Thanks, Craig. To set the stage for our results, let me begin with our performance. Overall, our private equity portfolio was down 0.9% in the quarter, and on a trailing 12 months basis was up 7.7%. This compares to 0.2% decline to the MSCI World Index…

And Bridget, just before we open it up, just looking at the screen we have quite a long queue so if we could ask everyone to please limit it to one question and follow up if necessary, we would appreciate it.

Thank you. Our first question is going to be from Bill Katz from Citi. Your line is open.

Okay. Thanks very much. I appreciate the update. So it sounds like you may have bought back like another 1 million units around numbers from the end of the month until now. So just stepping back, Scott, with sort of your last discussion point on the migration of your balance sheet and then sort of the redeployment of that capital, could you counterbalance how you sort of see return of capital to investors versus growth in some of these other initiatives? And then more specifically to that, how you're thinking about incremental buyback assuming you would have finished off this current $500 million authorization. Scott C. Nuttall - Member & Head of Global Capital and Asset Management Group, KKR & Co. LP: Great. Thanks for the question, Bill. Yeah. Just by way of background, look, we do see a lot of opportunities to grow our firm and our businesses. And as I mentioned with the next-generation technology growth fund real estate credit, we continue to use the balance sheet to seed new businesses and drop them into funds format so that we can accelerate management fee and carry realization. So we'll continue to do that and we see a lot of opportunities to continue to use the balance sheet for that purpose. As background, as I think as you're aware, we announced a $500 million buyback in late October, and we started buying stock in early November. So at the time we announced the program, we said we thought we'd spend the $500 million over 12 months or so. And we also said that our goal was to keep our share count flat over time to control dilution from comp-related share issuances. So we said $500 million and we thought it would take about a year to spend. Over the…

Okay. All right. Thank you. Scott C. Nuttall - Member & Head of Global Capital and Asset Management Group, KKR & Co. LP: Thank you.

Our next question is from Glenn Schorr with Evercore ISI. Your line is open.

Hi. Thanks very much. Curious, on the seven exits so far in April that you announced, did you mention what type of the distributable earnings are attributable to them? William Joseph Janetschek - Member & Chief Financial Officer: Hey, Glenn. This is Bill Janetschek.

Hi, Bill. William Joseph Janetschek - Member & Chief Financial Officer: Right now, as we stand today, if I did the math on the seven, the cash carry that would come to us would be approximately $0.16 in total. And then, to the extent that we have some economics by our GP interest in those assets as well, that would produce roughly about another $0.07 of cash earnings on our balance sheet.

Okay. I appreciate that. And then could you remind us the process on how investments make their way – new investments going forward, make their way on to the balance sheet? What goes into funds, what gets co-invested on balance sheet? Is that a corporate decision, one investment at a time? Scott C. Nuttall - Member & Head of Global Capital and Asset Management Group, KKR & Co. LP: Hey, Glenn. It's Scott. I think the most straightforward way to think about it is the balance sheet is a large investor in our funds, and oftentimes these are the largest or certainly one of the largest investor in all of our funds. So when you have a drawdown of capital that goes into a fund, the balance sheet capital is just drawn down pro rata alongside the limited partner investors. And that's how the vast majority of the capital is getting deployed these days off the balance sheet. So just every time we announce a transaction across asset classes, think of it as the balance sheet making a pro rata investment alongside the third party investors. Periodically, we'll also announce strategic activity, and that's clearly 100% balance sheet. Things like the Marshall Wace transaction, as an example. And also even less periodically, we'll have co-investments where the balance sheet will participate. But I'd point to the vast majority of activity is just going alongside the third party LPs.

So I guess over time we should see public – never mind. Okay. I got it. Thank you. Scott C. Nuttall - Member & Head of Global Capital and Asset Management Group, KKR & Co. LP: Thank you.

Our next question is from Patrick Davitt with Autonomous. Your line is open.

Hi. Good morning, guys. Looks like the energy mark was significantly higher than even the curve moved in the quarter, at least the oil curve. Is there like some real impairment to some of those positions? Can you help walk through why it appears to be so disconnected this quarter? William Joseph Janetschek - Member & Chief Financial Officer: Hey, Patrick. This is Bill. If you take a look at where we marked the portfolio in December and where we marked the portfolio in March, when you take a look at where the three- and four-year forward curve is, it was down roughly 14% and 16%, respectively. And so when you run that through a DCF, you should expect that our energy portfolio would be down in about that percentage range.

Okay. William Joseph Janetschek - Member & Chief Financial Officer: So nothing really to talk about as far as any impairments.

Okay. Great. Thank you.

The next question is from Devin Ryan with JMP Securities. Your line is open.

Hey, thanks. Good morning. Just on the private equity investments, a little surprised by the 4% increase in this backdrop. Just curious if that was a function of some specific situations or movement in public comps. And can you also provide any perspective around the type of discount you're applying right now relative to the public comps and how that's changed maybe over the past year since the privates have outperformed quite a bit up about 10% relative to a flattish market? William Joseph Janetschek - Member & Chief Financial Officer: Hey, Devin. This is Bill. Just at a high level on the privates, when you think about it where we were carrying some of our private investments in December and then where we marked them in March, we mentioned that they were a couple of strategic that we're selling. So during this quarter, you actually saw a pretty nice uplift in those investments. Typically, when we value our privates, 50% is DCF, 50% is market comp, and we usually take a liquidity discount on those values. Obviously, when someone comes in and you have a strategic for 100% of the company and someone's willing to pay a premium, you're going to see an increase in those privates. Scott C. Nuttall - Member & Head of Global Capital and Asset Management Group, KKR & Co. LP: Yeah. The only other thing I'd add, Devin, is that we do have seen good operational performance in the private equity portfolio. So if you look at kind of the weighted average performance across the portfolio globally, the last 12 months about 8% revenue growth and about 10% EBITDA growth. So it's really a combination of good underlying operational performance, plus some strategic exits that Bill mentioned.

Great. That's helpful. And then just quick follow-up here. On Europe, last quarter you guys were pretty constructive on the call, I'm curious how you're feeling today. It sounds like you still are. And I guess I'm just more curious with Brexit, that conversation. Is the timing there impacting activity or is stuff on hold until kind of post-decision? Scott C. Nuttall - Member & Head of Global Capital and Asset Management Group, KKR & Co. LP: Great question. Look, the private equity funds in Europe are continuing to perform really well. The underlying portfolio is performing, but it's not just private equity. We're also seeing good performance across credit, real estate, infrastructure, and really strong performances we've seen in the last 10 years ex-energy. So we've been busy. We've been selling businesses in Europe. Buying is a bit more challenging with high prices, but we managed to get a couple of things announced, including the Airbus Defence Electronics deal. And financing is available. So, yeah, we can remain constructive on Europe overall and see lots of opportunity. In terms of the Brexit question, it is impacting how we think about investing in the UK in particular, but it's really much more isolated to the UK as opposed to Pan European.

Understood. Great. Thanks, guys. Scott C. Nuttall - Member & Head of Global Capital and Asset Management Group, KKR & Co. LP: Thank you.

Our next question is from Chris Harris with Wells Fargo. Your line is open.

Thanks, guys. So a question about the marks on the balance sheet this quarter. You highlighted here that around $350 million tied to First Data and energy, that still leaves about $240 million of other write-downs. You mentioned, I think, that this is tied to a handful of other positions. Wondering if you could maybe talk a little bit about what happened with those positions in the quarter. And then if we step back more broadly and think about the balance sheet, it sounds like we think the First Data marks are sort of technical in nature. The energy marks clearly some fundamental issues going on there. But how would you guys characterize the other marks, whether you think they're broadly technical or whether there's some more fundamental problems in those underlying investments? Scott C. Nuttall - Member & Head of Global Capital and Asset Management Group, KKR & Co. LP: Sure, Chris. It's Scott. I guess your math – I think your math's right. So you're right. If you look at page six of the deck, you can see, if I lump together Walgreens and WMI with First Data, if you look at just what's on that page, you've got $380 million, give or take, of marks there just in those positions. And that's kind of the first big bucket. The other balance sheet marks are really going to be – have a couple of themes to them. One is going to be some credit positions we have that will have some indirect exposure to energy so that there's some look through in the credit book to some energy names. And that would be the other big theme. Everything else will be just little one-offs for the most part of individual comps that have traded down in the quarter,…

Okay. Thank you. Scott C. Nuttall - Member & Head of Global Capital and Asset Management Group, KKR & Co. LP: Thank you.

Our next question is from Chris Kotowski with Oppenheimer. Your line is open. Chris Kotowski - Oppenheimer & Co., Inc. (Broker): Yeah. I'd like to ask Scott to elaborate a bit on the comments you made about credit. And just going from 37% of the balance sheet to 26% in the span of just two years seems fairly dramatic, and I'm curious to what extent does that reflect a much more cautious view on the credit cycle. And I guess, also, if you can elaborate a little bit on what are the relative risks of CLO 1.0 versus CLO 2.0 and of a GP investment in a fund. How do you see the risk reward of those three categories of investments? Scott C. Nuttall - Member & Head of Global Capital and Asset Management Group, KKR & Co. LP: Great, Chris. Happy to take it. So you're right. We have gone from 37% credit June 2014, to about 26% as of March 31. But I'll point you back to when we announced the KFN acquisition, and we said that we saw an opportunity to redeploy a lot of the capital on the KFN balance sheet into higher returning opportunity, including business building. So as a reminder, the KFN portfolio when we bought it, was about a 10% to 11% ROE business. And we thought that we could generate higher returns by monetizing some of those legacy investments and redeploying the cash into other opportunities that we saw at the firm. And so that was really the articulated strategy when we did the deal. And a big portion of this, Chris, is just us following through on that commitment. So if you look at the pie chart, you can see the biggest change on the pie charts on page seven is…

Our next question is from Brian Bedell with Deutsche Bank. Your line is open.

Hi. Good morning, folks. Scott C. Nuttall - Member & Head of Global Capital and Asset Management Group, KKR & Co. LP: Good morning.

Talk a little about the management fee development, maybe if you can just – a couple of things, I guess just highlight the fund raising outlook for this year. You're certainly between NAXI XII and some of the real estate investments and anything else that you want to highlight. And also, how you view the timing of the $18 billion of shadow AUM coming on to fee based AUM. And I guess related to that, how do you think appetite for more alternative manager acquisitions like Marshall Wace and Prisma? Scott C. Nuttall - Member & Head of Global Capital and Asset Management Group, KKR & Co. LP: Great. I'll take one and three and Bill will take two. In terms of the overall fund raising, look, it's been busy. As I mentioned, Q1 Special Sits II, European direct lending, growth tech, initial closed, and then of course Americas XII, off to a great start. So there's been a lot of going on. As we look at the rest of this year and say one continued fund raising for Americas XII. We have our second opportunistic real estate fund, REPA II, we call it, in the market. We'll be wrapping up fund raising for European real estate fund, REPE (42:31). We've got our PCOP II fund, a successor to Mezz end market, and then we'll continue raising capital for growth equity. And so those call it five or so funds will be in market for a good chunk of the rest of this year. Coming down the pike, we've got Global Direct Lending III because we've seen quite good pace of development in Direct Lending II. And then at some point, we'll be talking to you about Asia private equity but it's a bit early. And then on top of…

Okay. I'm sorry. Do the $18 billion, you said that included in NAXI XII or was NAXI XII outside of that? William Joseph Janetschek - Member & Chief Financial Officer: No. Well, right now, NAXI XII, it would only be an AUM. It wouldn't be a fee paying AUM.

Right. Right. Okay. So it's part of that $18 billion? William Joseph Janetschek - Member & Chief Financial Officer: Correct.

Right. Right. Got it. Got it. Okay. Thanks very much.

Thank you. Scott C. Nuttall - Member & Head of Global Capital and Asset Management Group, KKR & Co. LP: Thank you.

Our next question is from Alex Blostein with Goldman Sachs. Your line is open. Alexander Blostein - Goldman Sachs & Co.: Thanks. Good morning, everybody. A question for you guys again, back to the balance sheet for a second. I wanted to touch on the (45:20) you did earlier this quarter, $345 million. I guess, taking a step back, the change in distribution policy was either to do a buyback or grow the balance sheet with distributable earnings coming in still kind of ahead of the $0.16 a quarter. It feels like there's room to still do both of those things. So just trying to understand the rationale for the prefs and your expected use of proceeds. Scott C. Nuttall - Member & Head of Global Capital and Asset Management Group, KKR & Co. LP: Hey, Alex. It's Scott. I would just – nothing particular to call out there. We think it's attractive cost, long-term it's perpetual capital. And so we kind of view the general corporate purposes to give us an ability to do the two things you mentioned, invest further in building the business or buybacks or both. So nothing to call out with particular use of proceeds. It's just normal corporate financing. Alexander Blostein - Goldman Sachs & Co.: Got you. And then just a quick follow-up for Bill, I guess. Among the dry powder that you guys have currently raised and funded that are in market today, if we think about the commitment for KKR to co-invest in some of those yields, what is that amount right now? William Joseph Janetschek - Member & Chief Financial Officer: Well, it all depends on the mandate, but the GP commitment for a private equity fund is going to be anywhere in between 3% and 5%. And the same will hold true on the public market side and more established funds. But to the extent that we're raising capital in a new mandate where we want to really jumpstart it, either A, we'll season it with capital on a balance sheet and drop some of those assets into that particular fund, or we'll make a stronger commitment as the GP in that particular mandate. Alexander Blostein - Goldman Sachs & Co.: Okay, great. Thanks.

Thank you.

The next question is from Gerald O'Hara with Jefferies. Your line is open.

Great, thanks. And thanks for the update on the Marshall Wace integration. Just a quick question. Could you potentially remind us or maybe elaborate on some of the new product launches that you touched on, and I guess as it relates to management fees that might be associated with those strategies? Thank you. Scott C. Nuttall - Member & Head of Global Capital and Asset Management Group, KKR & Co. LP: Sure. In terms of the way to think about it perhaps, most of what we're in the market with right now will be more traditional private equity-style economics, call it 1.25% to 1.5% management fees for most of the products, it'll be 20% carry. And that's certainly the case across Americas XII, REPA II, which is the real estate fund I mentioned, REPE (47:53) which is our European real estate and growth equity. PCOP II, which the successor to our Mezzanine funds, also has similar economics. The distinction though in the credit funds and the private credit funds in particular is that instead of getting paid on committed and invested capital, in those funds we tend to get paid just on invested. So you won't see the fees come online until the capital starts to be invested in the ground. And so it'll show up in the AUM but may take a little bit longer to show up in the fee-paying side in terms of impacting the management fee line. And direct lending is similar to PCOP II in that regard. So most of those products are going to be fee- and carry-based, think long-term capital, three to six years to invest and then seven to twelve-plus to harvest. So really long-term capital in nature. The more continuously raised capital that I mentioned, high yield, leverage loans, hedge funds are going to be shorter dated and they typically will have either management fee only or management fee plus some incentive.

Understood. Thank you. That's it for me.

Your next question is from Robert Lee with KBW. Your line is open. Robert Lee - Keefe, Bruyette & Woods, Inc.: Hey. Good morning, guys.

Good morning. Robert Lee - Keefe, Bruyette & Woods, Inc.: I apologize if maybe you went through some of this before, but could we maybe drill down a little bit more into the new capital raised in AUM? In private markets, of the $6.6 billion, I mean how much of that was maybe the new North American fund and then how much was the other strategies? And I guess as a follow up to that, I mean you did mention what the targeted hard cap is on the new North American fund. But could you maybe, if possible, update us on some of your target fundraisings for some of the other strategies that you're out there with? William Joseph Janetschek - Member & Chief Financial Officer: Hey, Rob. This is Bill Janetschek. Just real quickly, I'll go through the particulars on the $11 billion that we raised this quarter, and Scott can elaborate more just on the particular strategies like what the hard cap might be on North America XII. But if you turn to page 11 on the private market side, most of that new capital raise is attributed to North America XII with some attributed to the growth technology fund that we raised. On the private market side, that gets you to that $6.6 billion. On a public market side, we're talking about $4 billion, and that came across several mandates. We raised over $1 billion in some credit SMAs. We had the final close of Special Sits at roughly $700 million. We had a final close on European direct lending. We actually had $600 million come in from Prisma, which was a very good number in a particular quarter. And remember, we report 25% roughly of the strategic partnerships that we own. Roughly, we own 25% in…

Thanks, Robert.

Our next question is from Michael Kim with Sandler O'Neill. Your line is open Michael S. Kim - Sandler O'Neill & Partners LP: Okay. So I understand the losses related to the balance sheet were largely unrealized, and as you pointed out, the balance sheet is much more diversified today relative to prior periods. But with First Data skew in the quarter as much as it did, and I understand that position is a bit of a unique situation, but just wondering how you might be thinking about sort of addressing concentration risk related to the balance sheet going forward if at all. Scott C. Nuttall - Member & Head of Global Capital and Asset Management Group, KKR & Co. LP: Thanks for the question, Michael. If you look at the balance sheet chart on page seven, look at the far right, you'll see that we actually called out First Data and Walgreens in the pie chart. And First Data is about 12.5% of our balance sheet, and Walgreens is about 9%. And so, if you look in the grand scheme of the firm, obviously, the balance sheet ignores the $126 billion now of third-party AUM that we manage. So if you think about an individual position, even First Data at 12.5% of the balance sheet, and then the balance sheet is obviously just part of the overall organization, we feel good about the trajectory of that company, and we think that we'll be able to generate good returns on that investment going forward, same thing with Walgreens. But we will continue to look at trade-offs as to the trajectory from here for those individual names and other things we have on the balance sheet relative to other uses of capital. So we don't have a particular goal in terms of the – we want to get the exposure down to X. What we'd really like to do is have the value creation thesis from here in both those names continue to play out. And then, over time, you'll probably see us lighten up, but it's very – very early on First Data to expect that in the near-term. We think there's a lot of upside from here. Walgreens, as we mentioned in a prior slide, has performed very nicely for us so far and is already 3.5 times our cost. So maybe a slightly different story there. Michael S. Kim - Sandler O'Neill & Partners LP: Okay. Fair enough. Thanks. Scott C. Nuttall - Member & Head of Global Capital and Asset Management Group, KKR & Co. LP: Thanks.

And our next question is from Michael Cyprys with Morgan Stanley. Your line is open. Michael J. Cyprys - Morgan Stanley & Co. LLC: Hi. Good morning. Thanks for taking the question. Just on real estate just to follow up there, could you just update us on the build-out of your real estate platform? Which I know you started off your balance sheet a couple of years ago. Recently, you've been investing on the real estate credit side. Just how that's been progressing, the strategy around that, and any thoughts on timing for raising a third-party fund. Scott C. Nuttall - Member & Head of Global Capital and Asset Management Group, KKR & Co. LP: Great question. So, look, I'd say the real estate business has been developing really well. And certainly at least in line with our expectations, if not ahead of. So, as a reminder, we did seed our opportunistic real estate strategy off the balance sheet and dropped those investments down into a first-time real estate fund that we call REPA. That fund right now has a gross IRR of about 26%. So, so far, so good on that. We're in the market now with REPA II marketing off that track record. So the opportunistic strategy is going quite well. I also mentioned that we are in the market and have had the first closing on our first European real estate fund, and that's because we saw so much opportunity to invest in real estate in Europe. We'd filled up the baskets on our global fund and needed more capital, so that fund is progressing quite nicely. And we've already raised $600 million of capital for real estate Europe. You're right in credit. We saw an opportunity, brought a team over from Rialto not long ago. Same…

Thank you, and our last question is from Mike Carrier of Bank of America Merrill Lynch. Your line is open. Michael Roger Carrier - Merrill Lynch, Pierce, Fenner & Smith, Inc.: Hi. Thanks, guys. Hey Scott, maybe just on the marked-to-market in the quarter, you mentioned some of the portfolio trends in terms of revenues and EBITDA, and it seems like things are progressing still relatively well given the backdrop. So I just want to get your take on what are you guys looking for to turn that around. And maybe, if you have an update, I don't know, quarter-to-date on where things stand. But I just wanted to get a sense on what are you guys looking at in terms of the drivers to shift that? Scott C. Nuttall - Member & Head of Global Capital and Asset Management Group, KKR & Co. LP: Hey, Mike. Happy to take a shot at that. So look, I think, for us, we're focused on what we can control. And the biggest driver, in our view, over time of performance of our portfolio is how the companies are performing from an operating standpoint. That's why I called out the 8% revenue growth, the 10% EBITDA growth. Even in names like First Data, that's why we called out the 5% revenue growth, the 13% EBITDA growth for Q1. And our view is if our companies continue to perform like that, then over time we'll perform quite nicely. And you can see bottom left-hand side of page four how the biggest names have performed in terms of multiple of invested capital. So the operating performance continues to be strong in the first quarter. No big change in trends that I'd point you to. And I think the important thing is for us all to…

I'm not showing any further questions. So I'll now turn the call back over to Mr. Larson for closing remarks.

Thank you, Bridget. I'd like to take a moment and thank all of you for joining the call. Hopefully, we will see many of you in the coming weeks in the interim. Should you have any questions or follow-ups, please feel free to reach out to Danny (01:01:36) or to me directly. Thanks, everybody.

Ladies and gentlemen, this does conclude the program and you may all disconnect. Everyone, have a great day.