Good day, ladies and gentlemen. Thank you for standing by and welcome to KKR's Third Quarter 2018 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 is being recorded. I would now like to introduce your host for today's conference, Craig Larson, Head of Investor Relations for KKR. Please begin, sir. Craig Larson - KKR & Co., Inc.: Thank you, Norma. Welcome to our third quarter 2018 earnings call. Thanks for joining us. As usual, I'm joined by Bill Janetschek, our CFO; and Scott Nuttall, our Co-President and Co-COO. We'd like to remind everyone that we'll be referring to non-GAAP measures on the call which are reconciled to GAAP figures in our press release which is available on the Investor Center section at kkr.com. And the call will also contain forward-looking statements which do not guarantee future events or performance, so please refer to our SEC filings for cautionary factors related to these statements. And like previous quarters, we've posted a supplementary presentation on our website that we'll be referring to over the course of the call. This morning we announced a strong quarter with total segment revenues of $1.2 billion and after tax distributable earnings of $497 million, increases of 27% and 21% respectively year-over-year. Now, before we get into all of the numbers, this is also a notable quarter for us because it's our first as a C corp, having completed the change in our structure from a partnership to a corporation on July 1. To begin, the dialogue we're having with institutions continues to only reinforce in our minds what we felt for a long time, that the…

Thank you. Craig Larson - KKR & Co., Inc.: And, Norma, if we could ask everyone if they wouldn't mind to just please ask one question and then one follow-up if necessary. It'd be helpful as we work our way through everyone in the queue.

Thank you. Ladies and gentlemen, that's one question and one follow-up, please. Our first question comes from Patrick Davitt of Autonomous Research. Your line is open.

Hey. Good morning. Thank you. It looks like the LTM performance numbers are fine in credit but some of the balances on the balance sheet went down fairly significantly. Is there anything to point out from a credit stress standpoint there or is it really more about just selling some positions? William J. Janetschek - KKR & Co., Inc.: Hey, Patrick. It's Bill. If you're referring to page 9, it's a little bit of both there. There was some selling of the assets. But in Special Situations we had one position just on a mark-to-market basis written down in the quarter, but I wouldn't spend too much time highlighting that one particular area. When you look at the balance sheet itself, the balance sheet was up 5% for the quarter and 15% on a year-to-date basis. And when you look across all the other platforms that we're investing in the balance sheet, so we're talking about private equity and core and energy, real estate, infrastructure, performance in all those other assets were above benchmark So nothing to be worried about.

Okay. And I guess just more broadly, particularly in the last few weeks obviously everyone is getting a little bit more worried about credit. When you look at your own portfolio, do you see any kind of broader deterioration or is it really just mark-to-market at this point? Scott Charles Nuttall - KKR & Co., Inc.: Hey, Patrick. It's Scott. No broader deterioration. Actually, the fundamentals of the companies in our credit portfolio and our private equity portfolio continue to be strong. And actually in the liquid credit markets, we've seen some volatility come into high yield but the leverage loan market is actually quite stable. So no broader read-through as of yet that we'd be worried about.

Thank you. Scott Charles Nuttall - KKR & Co., Inc.: Thank you.

Thank you. Our next question comes from Bill Katz of Citigroup. Your line is open.

Okay. Thank you very much for taking the question this morning. First question is you ticked off a number of things that you're going to be in the market for and I guess you said six other things that'll be coming down the pipe. I was wondering if you can maybe help quantify the opportunity set here collectively of how much incremental assets you might be able to bring on? A couple of your peers have sort of been bold enough to give specific guideposts in terms of what they think they can raise over a set period of time. I mean, just trying to frame out the incremental opportunity in terms of capital raising. Craig Larson - KKR & Co., Inc.: Hey, Bill. It's Craig. We don't have a specific number and specific guidepost to give you. I think the broad fundamentals as we think about the opportunity set is as we've described for some time. We think the industry as a whole is growing given a number of secular trends. Against that backdrop, we've taken share. And again, as we think about our businesses that we're in, most of them are younger and they're scaling. So that leads us to look and think we have a lot of meaningful growth opportunities relative to where we stand today, again just recognizing how young a number of those businesses are. And I think over the coming periods and other dynamic, we talked about our adjacencies as we think about opportunities for us in geographies like Asia. So I think there's a lot of good things to come but not a hard specific number to give you. Scott Charles Nuttall - KKR & Co., Inc.: Yeah. I would point out, Bill, that last 12 months we've raised $38 billion organically without having a flagship private equity fund in the market. So we've been busy on a lot of different fronts.

No doubt. Okay. And then sort of a follow-up question, Scott, maybe for you. So you still highlighted both the volatilities and opportunity to both invest in companies as well as potentially buyback. Can you sort of frame that, how you're thinking about that dynamic, if you will, between maybe stepping in and buying stock here just under $23 versus the income opportunity to sort of grow either in public or private markets? Scott Charles Nuttall - KKR & Co., Inc.: Sure. So I think, first, back on the volatility itself. The first thing I would point out is outside the U.S. we've already been in bear market territory. So the euro stock's 50%, down about 13% in the last 12 months. China is down about 20% and we've been increasing our deployment outside the U.S., Asia in particular this year. And so the way we kind of look at it is we've been investing into this location already and are pleased with that. And the good news is we're doing this at a period of time where we've got $58 billion of dry powder as I mentioned. And just to put that in context, that was about the total AUM of the firm in 2011. So we've got a lot of capital to put to work and a lot of cash on the balance sheet. But I think in terms of the buyback, as we said several times in the past, we're focused on and committed to making sure there's no dilution from compensation-related share insurance. And so I think what you should expect, Bill, all else equal, in periods of time when we see a dislocation like this on our own stock you should expect us to be more active in delivering on that promise than when the stock's higher, but no change in overall policy. But just directionally, you should expect us to be more active when we've got periods like this. William J. Janetschek - KKR & Co., Inc.: And, Bill, just a little more color on that and to drive on Scott's point about actually executing on what we said. We said specifically that we wanted to make sure that we didn't deal with share creep as it relates to share issuances to our employees. When we changed our distribution policy in 2015, the share count adjusted for Marshall Wace shares that we use for an acquisition were roughly $864 million. We issued shares at the end of 2015, 2016, and 2017 to our employees, and the share count today stands at $864 million. Scott Charles Nuttall - KKR & Co., Inc.: Shares. William J. Janetschek - KKR & Co., Inc.: Is equivalent to 684 million (sic) [864 million] shares, yeah. And one other final point is keep in mind that we did authorize a buy back when we announced our conversion to C corp and we still have roughly $366 million of dry powder relating to that buy back.

Okay, thank you very much. Scott Charles Nuttall - KKR & Co., Inc.: Thank you.

Thank you. Our next question comes from Alex Blostein of Goldman Sachs. Your line is open. Alexander Blostein - Goldman Sachs & Co. LLC: Thanks. Hey, good morning everybody. Scott Charles Nuttall - KKR & Co., Inc.: Morning. Alexander Blostein - Goldman Sachs & Co. LLC: So just maybe picking up on the question earlier from Patrick around direct lending and the trends you guys are seeing. So it feels like competitor dynamics are getting a little bit more intense. I guess I should say Franklin announced an acquisition of a middle market direct lending platform this morning. So I guess in the past you guys talked about playing and continue to move in kind of like the higher end of the direct lending market. So maybe speak a little bit to the differences between various kind of parts of the direct lending you're seeing, kind of where the industry is versus where you're deploying capital, and any metrics you guys could help us to think about your exposures within direct lending, i.e. like what's sort of the EBITDA run rate for some of the companies, leverage levels, interest coverage? Anything like that will be helpful just to get a sense how your business might be different. Craig Larson - KKR & Co., Inc.: Alex, it's Craig. Let me start and see if Scott has anything he wants to add. But, look, I think you're right. The overall dynamics within direct lending have changed. Money has come in and it's more competitive than it was a few years ago. But in our view, as you said, the place where it's become most competitive is in the lower end of the middle market where you really do have many, many firms that can be relevant, and these dynamics are different at…

Thank you. Our next question comes from Craig Siegenthaler of Credit Suisse. Your line is open. Craig Siegenthaler - Credit Suisse Securities (USA) LLC: Thanks. Good morning. Scott Charles Nuttall - KKR & Co., Inc.: Morning. Craig Siegenthaler - Credit Suisse Securities (USA) LLC: So just starting on capital markets fees, so we know they're included in fee-related earnings but they can be more cyclical than the management fees on locked up capital. So I just wanted to see like what type of volatility do you expect in these fees in the next down cycle, which maybe has already started, versus the underlying growth in the business and share gains that you expect? William J. Janetschek - KKR & Co., Inc.: Hey, Craig. This is Bill. I'll take just one and then if Scott or Craig wants to chime in later, feel free. But when you look at the Capital Markets business, it's hard to predict what that earnings base is going to be the next particular quarter. But as you did see in the supplement that we sent around with the press release, capital markets fees over the last four quarters were in excess of $100 million. You could see that the capital markets fee in this third quarter were quite significant and roughly $186 million, and I did mention that Unilever actually drove $60 million of that $186 million. We did give you a little bit of visibility in the fourth quarter about Envision and BMC and so we feel really comfortable that Capital Markets performance in the fourth quarter is going to be solid. But when you drill down, and what actually happened even in this third quarter, 60% of the economics came from equity, 40% came from debt, and the income generation of that $186 million…

Thank you. Our next question comes from Glenn Schorr of Evercore. Your line is open.

Thanks very much. Just a little follow-up in private credit land. First is for Lending Partners II, can you remind us of what the hurdle rate is there and if there's anything that's weighing on performance that we should know? And then just a quick follow-up on Franklin Square. William J. Janetschek - KKR & Co., Inc.: Hey, Glenn. This is Bill. The hurdle rate is I believe 8%.

Got it. And then on Franklin Square, do you mind just reminding us sort of where are we now in the process on the combination? And then, are there funds that are in the pipeline that are going to be part of that fundraising over the next, say, six months that you talked about? Craig Larson - KKR & Co., Inc.: Hey, Glenn. It's Craig. So there is a proxy statement that's out as we think about CCT and FS, so I'd point you to that as it relates to that transaction specifically. And then more broadly, on the question about the opportunities for us, it's interesting and we've talked about this over time. We have a penchant to only have within our firm what really needs to be within the firm, and FS is a great example of how we can work with partners. So FS has built out a lot of capabilities and they have a few hundred people that spend their time focused on being best-in-class in administering, running, selling these more permanent type capital structures to an audience of hundreds of thousands of retail investors. I think we look at what they do and think they're better at that than we could ever be. So we partnered with them on the BDC front and we're talking with them about other products that we can create together over time where we can marry our two capabilities that we think can really be differentiated. So more to come on that over time but we do think that's a growth area for us.

Okay. And is it fair to say that if you do expand in that space it'll be through that partnership? Scott Charles Nuttall - KKR & Co., Inc.: I think in terms of the private credit space, you should expect that we will continue to grow in partnership with Franklin Square both by expanding our existing vehicles and then over time launching new ones together. And to Craig's point, I think it's also going to be an opportunity for us to create non-private credit vehicles with Franklin Square, so we'll keep you updated but we are talking about, on an R&D basis, what else we can be doing together. But we will continue to have a private fund and SMA component of our private credit business as well. But if I'm looking at aggregate dollars, I'd say the majority is going to be through our Franklin Square partnership but we'll continue to be active on the private side as well. William J. Janetschek - KKR & Co., Inc.: And the benefit of that mandate, and you mentioned it earlier, is that for the most part this is permanent capital which is the best capital to have.

Amen. Thank you. Scott Charles Nuttall - KKR & Co., Inc.: Thank you.

Thank you. Our next question comes from Michael Carrier of Bank of America Merrill Lynch. Your line is open.

All right. Thanks, guys. Scott, maybe one for you. Just with the recent volatility in the market and your comments in terms of the deployment opportunities, all that's helpful. Just wanted to get a sense, and we're in this type of backdrop, how you guys are thinking about like deploying capital and then also the current portfolio? And just kind of a couple of things if you want to touch on, maybe how you're thinking about underwriting if we go through sort of a recession at some point? Where we are in terms of the multiples on invested capital, the typical revenue, EBITDA trends? Anything on like entry multiples, leverage, how you're structuring it? And then, how the business plan can shift if you do get into that phase in terms of the portfolio companies focusing on maybe efficiencies versus growth? I know that's a lot, so whatever you want to hit on. Craig Larson - KKR & Co., Inc.: I'll agree with you on that. Scott Charles Nuttall - KKR & Co., Inc.: Thanks, Michael. Look, all great questions. But I think let's just do a backdrop first. I mean, I think the comments from before, our feeling is that to some extent what we've seen in the last few weeks is the U.S. starting to catch up a little bit with the rest of the world. We've already seen a meaningful sell-off in China. We've seen the beginnings of some valuation changes in Europe. In the U.S., I think for us we've kind of been waiting for this to some extent. We're past the peak in earnings growth. At the same time, the Fed is tightening. And if you really just step back from it all, eight of the last eight times the Fed raised rates multiples in…

Okay. Thanks for all the color. Scott Charles Nuttall - KKR & Co., Inc.: Thank you.

Thank you. Our next question comes from Chris Harris of Wells Fargo. Your line is open.

Thanks, guys. So we've already touched on Asia a little bit. Wondering if you guys might be able to share your perspectives on what you're seeing economically in that part of the world. The stock market seemed to be indicating that things are pretty bad, so curious to hear what you guys have to say. And then related to that, you've already mentioned that you're not really seeing too much weakness or any weakness in your portfolio in the aggregate. But what about Asia specifically? Are you seeing any sort of weakness for some of those investments that are already in the ground there? Scott Charles Nuttall - KKR & Co., Inc.: Thanks, Chris. It's Scott. So I think Asia is really hard to talk about as a monolith given all the countries, so let me try to do a quick kind of spin with you. So we've been particularly active the last few years in Japan. And it's not because the Japanese economy we think has an extraordinary amount of opportunity in the near-term; it's more because we've seen corporates in Japan start to be comfortable selling non-core subsidiaries. And so a lot of the activity you've seen, and it really started with our Panasonic Healthcare transaction, has been around us to incorporate carve-outs from large scale companies in that country. And then, what we've been doing, and we've done this twice in a very visible way now, is to help those companies post-carve-out go global. So Panasonic Healthcare, we did an acquisition of Bayer's Diabetes business in Germany, and then we just announced this transaction Craig just referenced with Calsonic and Fiat. So the companies in Japan continue to operate as expected, no change. Kind of the ability to get out efficiencies and drive growth is as expected.…

Great. Thank you. Scott Charles Nuttall - KKR & Co., Inc.: Thank you.

Thank you. Our next question comes from Michael Cyprys. Your line is open – of Morgan Stanley. Michael J. Cyprys - Morgan Stanley & Co. LLC: Hey. Good morning. Thanks for taking the question. Just on the CLO market, you guys are active in that space and the market has broadly seen tremendous growth from CLOs across the industry. But just some concerns are manifesting around equity buyers potentially stepping away and concerns around weakening terms and higher use of leverage. Just curious to hear your perspective on what you're seeing, what you're hearing, what your perspective is on that, and how your underwriting criteria has evolved over the past 12 months to 24 months in the context of the CLO market? Thanks. Scott Charles Nuttall - KKR & Co., Inc.: Great. Happy to take it. So you're right. We continue to be active in the CLO market in both the U.S. and Europe. Our issue has not been around equity buyers stepping away so much because remember, we tend to use our balance sheet to retain a decent portion of the equity in our own CLOs. So we have heard that but we haven't seen a big impact on our business from equity buyers stepping away. I think the bigger thing that we're focused on is your second point around how does the math work right now in terms of creating new CLOs and are the returns for the equity attractive given the spread between asset returns and liability cost. And so for example, we have been very busy this year U.S. and Europe. The math has become less compelling in the very recent past but it doesn't change our thinking in terms of our ability to scale that business over the long-term. We think it's a bit of…

Thank you. At this time, I would like to turn the call back to Craig Larson for closing remarks. Craig Larson - KKR & Co., Inc.: Okay. Thank you, Norma, and thank you everybody for joining our call. If you have any follow-up questions, of course, please reach out to us directly. Thank you so much.

Ladies and gentlemen, thank you for your participation in today's conference. You may disconnect. Have a wonderful day.