Onex Corporation (TSX: ONEX) today announced its financial results
for the second quarter and six-months ended June 30, 2021, and an
update on matters following quarter end.
“Onex had another good quarter of activity, with
each of our platforms executing on important initiatives,” said
Gerry Schwartz, Chairman and Chief Executive Officer of Onex. “Our
goal is to create value every day and continue to build on our
strong foundation. As a well-capitalized asset manager with a deep
bench of talent, we’re well-positioned to benefit from the
opportunities ahead.”
Highlights
- Onex reported
total segment net earnings for the three-months ended June 30, 2021
of $280 million ($3.04 per fully diluted share),
comprised of net earnings of $225 million from its investing
segment and net earnings of $55 million from its asset and wealth
management segment.
- Onex reported
total segment net earnings for the six-months ended June 30, 2021
of $752 million ($8.15 per fully diluted share),
comprised of net earnings of $549 million from its investing
segment and net earnings of $203 million from its asset and wealth
management segment.
- Onex’ investing
capital per share grew 3% in the second quarter and 9% since
December 31, 2020 to $80.32 (C$99.55), driven by growth in its
private equity and credit investments. As of June 30, 2021, Onex
had approximately $7.5 billion of investing capital.
- Onex’ private
equity investments generated a gross return of 4% in the quarter
and 13% year-to-date.
- Onex had
approximately $1.3 billion of cash and near-cash on its balance
sheet as of June 30, 2021. Pro forma for activity announced in
July, Onex’ cash and near-cash increased to $1.6 billion.
- As of the end of
July 2021, Onex had deployed approximately $504 million and
received approximately $787 million of realizations and
distributions through its private equity investing activities so
far this year. Most notable were Onex Partners V’s investments
in Weld North Education and Newport Healthcare and Onex’ partial
realization of Ryan Specialty Group.
- Onex ended the
quarter with third-party fee-generating assets under management of
$31.7 billion. Run-rate management fees on this capital were
$271 million.
- Onex Credit’s
fee-generating assets under management increased 4% in the quarter
to approximately $15.7 billion.
- Gluskin Sheff
fee-generating client capital increased 4% in the quarter and 9%
since December 31, 2020, reflecting positive gross client
inflows and good investment performance.
- Onex repurchased 699,100
Subordinate Voting Shares in the first seven months of 2021 for a
total cost of $44 million (C$55 million), or at an
average cost per share of C$79.35.
Financial Results
For the three-months ended June 30, 2021, total
segment net earnings were $280 million ($3.04 per fully
diluted share). Investing segment earnings of $225 million ($2.44
per fully diluted share) were primarily driven by net gains on
Onex’ private equity and credit investments. The second-quarter net
earnings from the asset and wealth management segment totalled $55
million ($0.60 per fully diluted share), driven largely by an
increase in carried interest.
For the six-months ended June 30, 2021, total
segment net earnings were $752 million ($8.15 per fully
diluted share). Investing segment earnings of $549 million ($5.94
per fully diluted share) were primarily driven by net gains on
Onex’ private equity and credit investments. The second-quarter net
earnings from the asset and wealth management segment totalled $203
million ($2.21 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
six-months ended June 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’ second-quarter 2021 results on Thursday, August 5 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
$46 billion of assets under management, of which approximately
$7.5 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
June 30, 2021 |
|
Investing(i) |
|
Asset and Wealth
Management(i) |
|
Total |
Segment income |
$ |
225 |
$ |
130 |
|
$ |
355 |
|
Segment expenses |
|
- |
|
(75) |
|
|
(75) |
|
Segment net earnings |
$ |
225 |
$ |
55 |
|
$ |
280 |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
|
|
|
(91) |
|
Amortization of property and equipment and other intangible assets,
excluding right-of-use assets |
|
|
|
(12) |
|
Integration expense |
|
(4) |
|
Earnings
before income taxes |
$ |
173 |
|
Recovery of income
taxes |
|
1 |
|
Net earnings |
|
|
|
|
$ |
174 |
|
|
|
|
|
|
|
|
Segment net earnings per share(ii) |
$ |
2.44 |
$ |
0.60 |
|
$ |
3.04 |
|
Net earnings per share |
|
|
|
|
|
|
Basic |
|
|
|
|
$ |
1.95 |
|
Diluted |
|
|
|
|
$ |
1.95 |
|
(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)Six months ended
June 30, 2021 |
|
Investing(i) |
|
Asset and Wealth
Management(i) |
|
Total |
Segment income |
$ |
549 |
$ |
356 |
|
$ |
905 |
|
Segment expenses |
|
- |
|
(153) |
|
|
(153) |
|
Segment net earnings |
$ |
549 |
$ |
203 |
|
$ |
752 |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
|
|
|
(134) |
|
Amortization of property and equipment and other intangible assets,
excluding right-of-use assets |
|
|
|
(26) |
|
Integration expense |
|
(4) |
|
Earnings
before income taxes |
$ |
588 |
|
Recovery of income
taxes |
|
1 |
|
Net earnings |
|
|
|
|
$ |
589 |
|
|
|
|
|
|
|
|
Segment net earnings per share(ii) |
$ |
5.94 |
$ |
2.21 |
|
$ |
8.15 |
|
Net earnings per share |
|
|
|
|
|
|
Basic |
|
|
|
|
$ |
6.55 |
|
Diluted |
|
|
|
|
$ |
6.54 |
|
(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) |
|
June 30, 2021 |
Private Equity |
|
|
|
Onex Partners Funds |
$ |
3,543 |
|
ONCAP Funds |
|
625 |
|
Other Private Equity |
|
902 |
|
Carried Interest |
|
211 |
|
|
|
5,281 |
|
|
|
|
Onex Credit Strategies |
|
851 |
|
Real Estate |
|
60 |
|
Other Net Liabilities |
|
(10) |
|
Cash and Near-Cash |
|
1,280 |
|
Investing Capital |
$ |
7,462 |
|
Investing Capital per share (U.S.
dollars)(ii)(iii) |
$ |
80.32 |
|
Investing Capital per share (Canadian
dollars)(ii)(iii) |
$ |
99.55 |
|
(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 92.9 million at June 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 June 30,
2021.
(Unaudited)($ millions) |
|
|
Cash and near-cash on hand at December 31, 2020(i) |
$ |
1,377 |
|
Private equity realizations |
|
295 |
|
Private equity investments |
|
(302) |
|
Net Onex Credit strategies investment activity |
|
3 |
|
Onex share repurchases, options exercised and dividends |
|
(66) |
|
Net other, including capital expenditures, management fees,
operating costs and treasury income |
|
(27) |
|
Cash and near-cash on hand at June 30,
2021(i) |
$ |
1,280 |
|
(i) Includes $368 million (December 31, 2020 –
$541 million) of treasury investments and associated working
capital managed by a third-party investment manager and $154
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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