Onex Corporation (TSX: ONEX) today announced its financial results
for the third quarter and nine-months ended September 30, 2021, and
an update on matters following quarter end.
“It was a very active quarter for Onex with
strong momentum across all businesses. Investing capital per share
grew by 8% and, within our private equity platform, fund
performance was strong and capital deployment was focused within
our target verticals,” said Gerry Schwartz, Chairman and Chief
Executive Officer of Onex. “As we said at our recent Investor Day,
we have the people, strategy and culture in place to succeed and
feel confident in our ability to accelerate growth and deliver
strong results.”
Highlights
- Onex reported
total segment net earnings for the three-months ended September 30,
2021 of $607 million ($6.59 per fully diluted share),
comprised of net earnings of $493 million from its investing
segment and net earnings of $114 million from its asset
management segment.
- Onex reported
total segment net earnings for the nine-months ended September 30,
2021 of $1.4 billion ($14.74 per fully diluted share),
comprised of net earnings of $1.0 billion from its investing
segment and net earnings of $317 million from its asset management
segment.
- Onex’ investing
capital per share grew 8% in the third quarter and 18% since
December 31, 2020 to $86.95 (C$110.79), driven primarily by
growth in its private equity investments. As of September 30, 2021,
Onex had approximately $7.9 billion of investing capital.
- Onex’ private
equity investments generated a gross return of 11% in the quarter
and 25% year-to-date.
- Onex generated
carried interest of $76 million and $204 million in the three- and
nine-months ended September 30, 2021, respectively, from its
private equity investments. In total, Onex has unrealized carried
interest of $271 million and has realized carried interest of $20
million so far this year.
- As of the end of
October 2021, Onex’ private equity platforms had deployed
approximately $2.7 billion ($750 million from Onex) and received
approximately $3.0 billion ($1.2 billion for Onex) of
realizations and distributions so far this year, both of which have
already outpaced activity for all of 2020.
- Onex ended the
quarter with third-party fee-generating assets under management
(“FGAUM”) of approximately $32 billion. Run-rate management
fees from this capital are $269 million.
- At September 30,
2021, Onex Credit had FGAUM of approximately $21.5 billion,
which includes private credit and public strategies.
- Onex had
approximately $1.4 billion of cash and near-cash on its balance
sheet as of September 30, 2021. Pro forma for activity in October,
Onex’ cash and near-cash increased to approximately $1.6
billion.
- Onex repurchased
3,100,809 Subordinate Voting Shares in the first ten months of 2021
for a total cost of $217 million (C$273 million), or at
an average cost per share of $70.04 (C$88.16).
Financial Results
For the three-months ended September 30, 2021,
total segment net earnings were $607 million ($6.59 per fully
diluted share). Investing segment earnings of $493 million ($5.36
per fully diluted share) were primarily driven by net gains on
Onex’ private equity investments. The third-quarter net earnings
from the asset management segment totalled $114 million ($1.23 per
fully diluted share), driven largely by an increase in carried
interest.
For the nine-months ended September 30, 2021,
total segment net earnings were $1.4 billion ($14.74 per fully
diluted share). Investing segment earnings of $1.0 billion ($11.30
per fully diluted share) were primarily driven by net gains on
Onex’ private equity investments. Net earnings from the asset
management segment in the same period totalled $317 million
($3.44 per fully diluted share), driven largely by an increase
in carried interest.
Enclosed are supplementary schedules and
non-IFRS measures related to Onex’ consolidated net earnings,
investing capital and cash and near-cash changes for the three- and
nine-months ended September 30, 2021. The financial
statements prepared in accordance with International Financial
Reporting Standards (IFRS), including Management’s Discussion and
Analysis of the results, are posted on Onex’ website, www.onex.com,
and are also available on SEDAR at www.sedar.com. A supplemental
information package with additional information is available on
Onex’ website, www.onex.com.
Webcast
Onex management will host a webcast to review
Onex’ third-quarter 2021 results on Friday, November 12 at 11:00
a.m. ET. The webcast will be available in listen-only mode from the
Presentations and Events section of Onex’ website,
https://www.onex.com/events-and-presentations. A 90-day on-line
replay will be available shortly following the completion of
the event.
About Onex
Founded in 1984, Onex manages and invests
capital on behalf of its shareholders, institutional investors and
high net worth clients from around the world. Onex’ platforms
include: Onex Partners, private equity funds focused on mid- to
large-cap opportunities in North America and Western Europe; ONCAP,
private equity funds focused on middle market and smaller
opportunities in North America; Onex Credit, which manages
primarily non-investment grade debt through tradeable, private and
opportunistic credit strategies as well as actively managed public
equity and public credit funds; and Gluskin Sheff’s wealth
management services. In total, Onex has approximately
$47 billion of assets under management, of which approximately
$7.9 billion is its own investing capital. With offices in
Toronto, New York, New Jersey, Boston and London, Onex and its
experienced management teams are collectively the largest investors
across Onex’ platforms.
Onex shares trade on the Toronto Stock Exchange
under the stock symbol ONEX. For more information on Onex, visit
its website at www.onex.com. Onex’ security filings can also be
accessed at www.sedar.com.
Forward-Looking Statements
This press release may contain, without
limitation, statements concerning possible or assumed future
operations, performance or results preceded by, followed by or that
include words such as “believes”, “expects”, “potential”,
“anticipates”, “estimates”, “intends”, “plans” and words of similar
connotation, which would constitute forward-looking statements.
Forward-looking statements are not guarantees. The reader should
not place undue reliance on forward-looking statements and
information because they involve significant and diverse risks and
uncertainties that may cause actual operations, performance or
results to be materially different from those indicated in these
forward-looking statements. Except as may be required by Canadian
securities law, Onex is under no obligation to update any
forward-looking statements contained herein should material facts
change due to new information, future events or other factors.
These cautionary statements expressly qualify all forward-looking
statements in this press release.
Non-GAAP Financial Measures
This press release may contain non-GAAP
financial measures which have been calculated using methodologies
that are not in accordance with IFRS. The presentation of financial
measures in this manner does not have a standardized meaning
prescribed under IFRS and is therefore unlikely to be comparable to
similar financial measures presented by other companies. Onex
management believes these financial measures provide helpful
information to investors. Reconciliations of the non-GAAP financial
measures to information contained in the consolidated financial
statements have been presented where practical.
For
Further
InformationJill
HomenukManaging Director – Shareholder Relations and Communications
Tel: +1 416.362.7711
Supplementary and Non-IFRS
Measures
Summarized Consolidated Net
Earnings
(Unaudited)($ millions except per share amounts)Three months ended
September 30, 2021 |
|
Investing(i) |
|
Asset Management(i) |
|
|
Total |
|
Segment income |
$ |
493 |
$ |
195 |
|
$ |
688 |
|
Segment expenses |
|
- |
|
(81) |
|
|
(81) |
|
Segment net earnings |
$ |
493 |
$ |
114 |
|
$ |
607 |
|
|
|
|
|
|
|
|
Stock-based compensation recovery |
|
|
|
|
|
7 |
|
Amortization of property, equipment and other intangible assets,
excluding right-of-use assets |
|
|
|
(10) |
|
Integration expense |
|
(1) |
|
Earnings
before income taxes |
$ |
603 |
|
Provision for income
taxes |
|
(1) |
|
Net earnings |
|
|
|
|
$ |
602 |
|
|
|
|
|
|
|
|
Segment net earnings per share(ii) |
$ |
5.36 |
$ |
1.23 |
|
$ |
6.59 |
|
Net earnings per share |
|
|
|
|
|
|
Basic |
|
|
|
|
$ |
6.77 |
|
Diluted |
|
|
|
|
$ |
6.76 |
|
(i) Refer to the consolidated
financial statements for segment presentation and allocation
considerations.(ii) Calculated on a fully diluted
basis.
(Unaudited)($ millions except per share amounts)Nine months ended
September 30, 2021 |
|
Investing(i) |
|
Asset Management(i) |
|
|
Total |
|
Segment income |
$ |
1,042 |
$ |
551 |
|
$ |
1,593 |
|
Segment expenses |
|
- |
|
(234) |
|
|
(234) |
|
Segment net earnings |
$ |
1,042 |
$ |
317 |
|
$ |
1,359 |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
|
|
|
(127) |
|
Amortization of property, equipment and other intangible assets,
excluding right-of-use assets |
|
|
|
(36) |
|
Integration expense |
|
(5) |
|
Net earnings |
|
|
|
|
$ |
1,191 |
|
|
|
|
|
|
|
|
Segment net earnings per share(ii) |
$ |
11.30 |
$ |
3.44 |
|
$ |
14.74 |
|
Net earnings per share |
|
|
|
|
|
|
Basic |
|
|
|
|
$ |
13.29 |
|
Diluted |
|
|
|
|
$ |
13.27 |
|
(i) Refer to the consolidated financial
statements for segment presentation and allocation
considerations.(ii) Calculated on a fully diluted basis.
Investing
Capital(i)
(Unaudited)($ millions except per share amounts) |
|
September 30, 2021 |
|
Private Equity |
|
|
|
Onex Partners Funds |
$ |
4,075 |
|
ONCAP Funds |
|
654 |
|
Other Private Equity |
|
587 |
|
Carried Interest |
|
271 |
|
|
|
5,587 |
|
|
|
|
|
Onex Credit Strategies |
|
890 |
|
Real Estate |
|
58 |
|
Other Net Liabilities |
|
(20) |
|
Cash and Near-Cash |
|
1,375 |
|
Investing Capital |
$ |
7,890 |
|
Investing Capital per share (U.S.
dollars)(ii)(iii) |
$ |
86.95 |
|
Investing Capital per share (Canadian
dollars)(ii)(iii) |
$ |
110.79 |
|
(i) Refer to Onex’ Supplemental Information
Package for presentation considerations.
(ii) Investing Capital per share is a non-GAAP
financial measures which has been calculated using a methodology
that is not in accordance with IFRS. The presentation of financial
measures in this manner does not have a standardized meaning
prescribed under IFRS and is therefore unlikely to be comparable to
similar financial measures presented by other companies. Management
believes that Investing Capital per share is useful to investors as
the metric is used, in part, to assess Onex’ performance.
(iii) Calculated on a fully diluted basis using
the treasury stock method. Fully diluted shares for investing
capital per share were 90.7 million at September 30, 2021.
Cash and Near-Cash
The table below provides a reconciliation of the
change in cash and near-cash from December 31, 2020 to September
30, 2021.
(Unaudited)($ millions) |
|
|
Cash and near-cash on hand at December 31, 2020(i) |
$ |
1,377 |
|
Private equity realizations |
|
1,030 |
|
Private equity investments |
|
(750) |
|
Net Onex Credit strategies investment activity |
|
(5) |
|
Onex share repurchases, options exercised and dividends |
|
(227) |
|
Net other, including capital expenditures, management fees,
operating costs, treasury income and changes in working
capital |
|
(50) |
|
Cash and near-cash on hand at September 30,
2021(i) |
$ |
1,375 |
|
(i) Includes $389 million (December 31, 2020 –
$541 million) of treasury investments and associated working
capital managed by a third-party investment manager and $157
million (December 31, 2020 – $122 million) of management fees. The
December 31, 2020 cash and near-cash balance also includes $98
million invested in an Onex Credit unlevered senior secured loan
strategy fund.
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