Onex Reports Third Quarter 2023 Results
All amounts in U.S. dollars unless otherwise stated
“Onex performed well in the third quarter as we progressed value creation plans across our portfolios and benefitted from recent cost reductions,” said
Financial Results
| (unaudited)($ millions except per share amounts) |
Three Months Ended |
Nine Months Ended |
|||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||
| Net earnings (loss) | $ | 256 | $ | (180 | ) | $ | 156 | $ | (200 | ) | |
| Net earnings (loss) per diluted share | $ | 3.23 | $ | (2.12 | ) | $ | 1.94 | $ | (2.33 | ) | |
| Investing segment net earnings (loss) | $ | 245 | $ | (114 | ) | $ | 489 | $ | (258 | ) | |
| Asset management segment net earnings (loss) | 38 | (65 | ) | (44 | ) | (145 | ) | ||||
| Total segment net earnings (loss)(1) | $ | 283 | $ | (179 | ) | $ | 445 | $ | (403 | ) | |
| Total segment net earnings (loss) per fully diluted share(2) | $ | 3.58 | $ | (2.08 | ) | $ | 5.51 | $ | (4.62 | ) | |
| Asset management fee-related earnings (loss)(3) | $ | 13 | $ | (6 | ) | $ | 9 | $ | (11 | ) | |
| Total fee-related earnings (loss)(4) | $ | 8 | $ | (15 | ) | $ | (12 | ) | $ | (40 | ) |
| Distributable earnings(5) | $ | 223 | $ | 193 | $ | 658 | $ | 241 | |||
Q3 Highlights
- Onex’ investing capital per fully diluted share(6) increased 15% during the 12 months ended
September 30, 2023 and 4% from the previous quarter endedJune 30, 2023 . Onex had approximately$8 .1 billion of investing capital, or$103.19 (C$139.51 ) per fully diluted share atSeptember 30, 2023 . In Canadian dollars, investing capital per fully diluted share increased 13% over the last 12 months and 7% from the previous quarter endedJune 30, 2023 . - The value of Onex’ private equity investments increased 4% in the third quarter of 2023(7) (Q3 2022: 2% decrease). Investments in Credit strategies generated a net gain of
$44 million or a return of 6% in the third quarter of 2023(8) (Q3 2022:$10 million or a return of 1%). - In October, Onex Partners V agreed to acquire Accredited, a specialty insurance company operating in
North America andEurope that provides underwriting capacity to Managing General Agents (“MGAs”) with support from the global reinsurance market. The transaction is expected to close in the first half of 2024, subject to regulatory approvals and other customary closing conditions, including approval by the seller’s shareholders. - In November,
Onex Partners IV agreed to sell its interest in ASM Global for net proceeds to Onex of approximately$270 million . The transaction is expected to close in the first quarter of 2024 and is subject to regulatory approvals and customary closing conditions. - Onex repurchased 2,090,909 Subordinate Voting Shares (SVS) in the third quarter and an additional 527,463 SVS in
October 2023 for a total of$154 million (C$208 million ) or an average cost per share of$58.95 (C$79.53 ). - Onex closed its twenty-eighth
U.S. CLO and seventh Euro CLO adding fee-generating assets of approximately$440 million and$340 million , respectively. - As of
September 30, 2023 , Onex had$34.2 billion of fee-generating assets under management and run-rate management fees(9) were$235 million . - Unrealized carried interest increased
$29 million from the prior quarter to$240 million atSeptember 30, 2023 . - Onex’ cash and near-cash(10) balance was
$1.5 billion or 19% of Onex’ investing capital as ofSeptember 30, 2023 (December 31, 2022 –$1.1 billion or 13% of Onex’ investing capital).
Webcast
Onex management will host a webcast to review Onex’ third quarter 2023 results on
Additional Information
Enclosed are supplementary financial schedules related to Onex’ consolidated net earnings (loss), investing capital, fee-related earnings (loss), distributable earnings, and cash and near-cash changes for the three and nine months ended
About Onex
Onex is an investor and asset manager that invests capital on behalf of Onex shareholders and clients across the globe. Formed in 1984, we have a long track record of creating value for our clients and shareholders. Onex’ two primary businesses are Private Equity and Credit. In Private Equity, we raise funds from third-party investors, or limited partners, and invest them, along with Onex’ own investing capital, through the funds of our private equity platforms,
Onex is listed on the
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 contains non-GAAP financial measures and ratios 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 and ratios 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 Information:
Tel: +1 416.362.7711 |
Tel: +1 416.362.7711 |
Supplementary Financial Schedules
| Three months ended |
|||||||||||
| 2023(i) | 2022(i) | ||||||||||
| (Unaudited)($ millions except per share amounts) | Investing | Asset Management | Total | Total | |||||||
| Segment income (loss) | $ | 245 | $ | 97 | $ | 342 | $ | (96 | ) | ||
| Segment expenses | - | (59 | ) | (59 | ) | (83 | ) | ||||
| Segment net earnings (loss) | $ | 245 | $ | 38 | $ | 283 | $ | (179 | ) | ||
| Stock-based compensation recovery (expense) | (14 | ) | 11 | ||||||||
| Amortization of property, equipment and intangible assets, excluding right-of-use assets | (5 | ) | (9 | ) | |||||||
| Net impairment reversal of property and equipment | 7 | – | |||||||||
| Restructuring expenses | (5 | ) | – | ||||||||
| Unrealized carried interest included in segment net earnings (loss) – Credit | (5 | ) | 1 | ||||||||
| Integration expenses | (3 | ) | (1 | ) | |||||||
| Other expenses | (2 | ) | (3 | ) | |||||||
| Net earnings (loss) | $ | 256 | $ | (180 | ) | ||||||
| Segment net earnings (loss) per fully diluted share | $ | 3.10 | $ | 0.48 | $ | 3.58 | $ | (2.08 | ) | ||
| Net earnings (loss) per share | |||||||||||
| Basic | $ | 3.24 | $ | (2.12 | ) | ||||||
| Diluted | $ | 3.23 | $ | (2.12 | ) | ||||||
(i) Refer to pages 19 and 20 of Onex’ Q3 2023 Interim MD&A for further details concerning the composition of segmented results.
| Nine months ended |
|||||||||||
| 2023(i) | 2022(i) | ||||||||||
| (Unaudited)($ millions except per share amounts) | Investing | Asset Management | Total | Total | |||||||
| Segment income (loss) | $ | 489 | $ | 174 | $ | 663 | $ | (159 | ) | ||
| Segment expenses | - | (218 | ) | (218 | ) | (244 | ) | ||||
| Segment net earnings (loss) | $ | 489 | $ | (44 | ) | $ | 445 | $ | (403 | ) | |
| Stock-based compensation recovery (expense) | (42 | ) | 240 | ||||||||
| Amortization of property, equipment and intangible assets, excluding right-of-use assets | (20 | ) | (30 | ) | |||||||
| Net impairment of goodwill, intangible assets and property and equipment | (164 | ) | – | ||||||||
| Restructuring expenses | (40 | ) | – | ||||||||
| Unrealized carried interest included in segment net earnings (loss) – Credit | (11 | ) | (1 | ) | |||||||
| Unrealized performance fees included in segment net earnings (loss) | (5 | ) | – | ||||||||
| Integration expenses | (3 | ) | (5 | ) | |||||||
| Other expenses | (1 | ) | (1 | ) | |||||||
| Earnings (loss) before income taxes | 159 | (200 | ) | ||||||||
| Provision for income taxes | (3 | ) | – | ||||||||
| Net earnings (loss) | $ | 156 | $ | (200 | ) | ||||||
| Segment net earnings (loss) per fully diluted share | $ | 6.06 | $ | (0.55 | ) | $ | 5.51 | $ | (4.62 | ) | |
| Net earnings (loss) per share | |||||||||||
| Basic | $ | 1.94 | $ | (2.33 | ) | ||||||
| Diluted | $ | 1.94 | $ | (2.33 | ) | ||||||
(i) Refer to pages 19 and 21 of Onex’ Q3 2023 Interim MD&A for further details concerning the composition of segmented results.
Investing Capital(i)
|
(Unaudited)($ millions except per share amounts) |
||||||
| Private Equity Onex Partners Funds ONCAP Funds Other Private Equity Carried Interest |
$ |
4,208 |
$ |
4,228 |
||
| 5,773 | 6,064 | |||||
| Private Credit | ||||||
| Investments | 754 | 701 | ||||
| Carried Interest | 23 | 16 | ||||
| 777 | 717 | |||||
| Real Estate | 30 | 34 | ||||
| Cash and Near-Cash | 1,517 | 1,053 | ||||
| Other Net Liabilities | (23 | ) | (5 | ) | ||
| Investing Capital | $ | 8,074 | $ | 7,863 | ||
| Investing Capital per fully diluted share ( |
$ | 103.19 | $ | 96.95 | ||
| Investing Capital per fully diluted share (Canadian dollars)(ii) | $ | 139.51 | $ | 131.31 | ||
(i) Refer to the glossary in Onex’ Q3 2023 Interim MD&A for further details concerning the composition of investing capital.
(ii) Fully diluted shares for investing capital per share were 78.2 million at
Fee-Related Earnings and Distributable Earnings
| (Unaudited)($ millions) | Three Months Ended |
Three Months Ended |
|||||
| Private Equity | |||||||
| Management and advisory fees | $ | 31 | $ | 29 | |||
| Total fee-related revenues from Private Equity | 31 | 29 | |||||
| Compensation expense | (18 | ) | (26 | ) | |||
| Support and other net expenses | (7 | ) | (11 | ) | |||
| Net contribution | $ | 6 | $ | (8 | ) | ||
| Credit | |||||||
| Management and advisory fees | $ | 34 | $ | 38 | |||
| Performance fees | 1 | – | |||||
| Other income | 1 | 1 | |||||
| Total fee-related revenues from Credit | $ | 36 | $ | 39 | |||
| Compensation expense | (16 | ) | (19 | ) | |||
| Support and other net expenses | (13 | ) | (18 | ) | |||
| Net contribution | $ | 7 | $ | 2 | |||
| Asset management fee-related earnings (loss) | $ | 13 | $ | (6 | ) | ||
| Compensation expense | $ | (3 | ) | $ | (4 | ) | |
| Other net expenses | (2 | ) | (5 | ) | |||
| Total expenses | $ | (5 | ) | $ | (9 | ) | |
| Total fee-related earnings (loss) | $ | 8 | $ | (15 | ) | ||
| Realized carried interest | $ | 1 | $ | 13 | |||
| Realized net gain on investments | 214 | 195 | |||||
| Distributable earnings | $ | 223 | $ | 193 | |||
| (Unaudited)($ millions) | Nine Months Ended |
Nine Months Ended |
|||||
| Private Equity | |||||||
| Management and advisory fees | $ | 86 | $ | 88 | |||
| Total fee-related revenues from Private Equity | 86 | 88 | |||||
| Compensation expense | (61 | ) | (66 | ) | |||
| Support and other net expenses | (29 | ) | (31 | ) | |||
| Net contribution | $ | (4 | ) | $ | (9 | ) | |
| Credit | |||||||
| Management and advisory fees | $ | 109 | $ | 115 | |||
| Performance fees | 9 | – | |||||
| Other income | 2 | 1 | |||||
| Total fee-related revenues from Credit | $ | 120 | $ | 116 | |||
| Compensation expense | (56 | ) | (65 | ) | |||
| Support and other net expenses | (51 | ) | (53 | ) | |||
| Net contribution | $ | 13 | $ | (2 | ) | ||
| Asset management fee-related earnings (loss) | $ | 9 | $ | (11 | ) | ||
| Compensation expense | $ | (10 | ) | $ | (14 | ) | |
| Other net expenses | (11 | ) | (15 | ) | |||
| Total expenses | $ | (21 | ) | $ | (29 | ) | |
| Total fee-related earnings (loss) | $ | (12 | ) | $ | (40 | ) | |
| Realized carried interest | $ | 9 | $ | 14 | |||
| Realized net gain on investments | 661 | 267 | |||||
| Distributable earnings | $ | 658 | $ | 241 | |||
Fee-related earnings (loss) and distributable earnings are non-GAAP financial measures. The tables below provide reconciliations of Onex’ net earnings (loss) to fee-related earnings (loss) and distributable earnings during the three months and nine months ended
| (Unaudited)($ millions) | Three Months Ended |
Three Months Ended |
|||||
| Net earnings (loss) | $ | 256 | $ | (180 | ) | ||
| Stock-based compensation expense (recovery) | 14 | (11 | ) | ||||
| Amortization of property, equipment and intangible assets, excluding right-of-use assets | 5 | 9 | |||||
| Net impairment reversal of property and equipment | (7 | ) | – | ||||
| Restructuring expenses | 5 | – | |||||
| Unrealized carried interest included in segment net earnings (loss) – Credit | 5 | (1 | ) | ||||
| Integration expenses | 3 | 1 | |||||
| Other expenses | 2 | 3 | |||||
| Total segment net earnings (loss) | 283 | (179 | ) | ||||
| Net unrealized decrease (increase) in carried interest | (29 | ) | 63 | ||||
| Net unrealized loss (gain) on corporate investments | (25 | ) | 310 | ||||
| Interest and net treasury investment income | (6 | ) | (1 | ) | |||
| Distributable earnings | 223 | 193 | |||||
| Less: Realized carried interest | (1 | ) | (13 | ) | |||
| Less: Net realized gain on corporate investments | (214 | ) | (195 | ) | |||
| Total fee-related earnings (loss) | $ | 8 | $ | (15 | ) | ||
| (Unaudited)($ millions) | Nine Months Ended |
Nine Months Ended |
|||||
| Net Earnings (loss) | $ | 156 | $ | (200 | ) | ||
| Provision for income taxes | 3 | – | |||||
| Earnings (loss) before income taxes | $ | 159 | $ | (200 | ) | ||
| Stock-based compensation expense (recovery) | 42 | (240 | ) | ||||
| Amortization of property, equipment and intangible assets, excluding right-of-use assets | 20 | 30 | |||||
| Net impairment of goodwill, intangible assets and property and equipment | 164 | – | |||||
| Restructuring expenses | 40 | – | |||||
| Unrealized carried interest included in segment net earnings (loss) – Credit | 11 | 1 | |||||
| Unrealized performance fees included in segment net earnings (loss) | 5 | – | |||||
| Integration expenses | 3 | 5 | |||||
| Other expenses | 1 | 1 | |||||
| Total segment net earnings (loss) | 445 | (403 | ) | ||||
| Net unrealized decrease in carried interest | 41 | 119 | |||||
| Net unrealized loss on corporate investments | 181 | 525 | |||||
| Interest and net treasury investment income | (9 | ) | – | ||||
| Distributable earnings | 658 | 241 | |||||
| Less: Realized carried interest | (9 | ) | (14 | ) | |||
| Less: Net realized gain on corporate investments | (661 | ) | (267 | ) | |||
| Total fee-related earnings (loss) | $ | (12 | ) | $ | (40 | ) | |
Cash and Near-Cash
The table below provides a breakdown of cash and near-cash at Onex as at
| (Unaudited)($ millions) | ||||
| Management fees and recoverable fund expenses receivable(i) | $ | 580 | $ | 460 |
| Cash and cash equivalents – Investing segment(ii) | 317 | – | ||
| Cash and cash equivalents within Investment Holding Companies(iii) | 217 | 253 | ||
| 205 | 271 | |||
| Receivable from Ryan realization(iv) | 118 | – | ||
| Subscription financing receivable(v) | 80 | 69 | ||
| Cash and near-cash | $ | 1,517 | $ | 1,053 |
(i) Includes management fees and recoverable fund expenses receivable from certain funds which Onex has elected to defer cash receipt from. At
(ii) Excludes cash and cash equivalents allocated to the asset management segment related to accrued incentive compensation (
(iii) Includes restricted cash and cash equivalents of
(iv) Refer to page 8 of Onex’ Q3 2023 Interim MD&A for further details concerning proceeds to be received from the sale of
(v) Subscription financing receivable, including interest receivable, attributable to third-party investors in certain Credit Funds and ONCAP V.
The table below provides a reconciliation of the change in cash and near-cash from
| (Unaudited)($ millions) | |||
| Cash and near-cash at |
$ | 1,053 | |
| Private equity realizations | 900 | ||
| Private equity investments | (282 | ) | |
| Net private credit strategies investment activity | 46 | ||
| Share repurchases, dividends, options exercised, Director DSUs exercised and investment in RSU hedges | (207 | ) | |
| Net other, including cash flows from asset management activities, capital expenditures, operating costs and changes in working capital | 7 | ||
| Cash and near-cash at |
$ | 1,517 | |
(1) Refer to pages 19, 20 and 21 of Onex’ Q3 2023 Interim MD&A for further details concerning the composition of segment net earnings (loss). A reconciliation of total segment net earnings (loss) to net earnings (loss) is provided in the supplementary financial schedules in this press release.
(2) Refer to the glossary in Onex’ Q3 2023 Interim MD&A for details concerning the composition of fully diluted shares.
(3) Asset management fee-related earnings (loss) excludes Onex’ public company expenses and other expenses associated with managing Onex’ investing capital and is a component of total fee-related earnings (loss).
(4) Total fee-related earnings (loss) is a non-GAAP financial measure that does not have a standardized meaning prescribed under International Financial Reporting Standards (“IFRS”). Therefore, it may not be comparable to similar financial measures disclosed by other companies. The most directly comparable financial measure under IFRS to fee-related earnings (loss) is Onex’ net earnings (loss). Refer to the 2023 Year-To-Date Results & Activity section of Onex’ Q3 2023 Interim MD&A and the supplementary financial schedules in this press release for further details concerning fee-related earnings (loss).
(5) Distributable earnings is a non-GAAP financial measure that does not have a standardized meaning prescribed under IFRS. Therefore, it may not be comparable to similar financial measures disclosed by other companies. The most directly comparable financial measure under IFRS to distributable earnings is Onex’ net earnings (loss). Refer to the 2023 Year-To-Date Results & Activity section of Onex’ Q3 2023 Interim MD&A and the supplementary financial schedules in this press release for further details concerning distributable earnings.
(6) Refer to the glossary in Onex’ Q3 2023 Interim MD&A for details concerning the composition of investing capital per share. The percentage changes in investing capital per share exclude the impact of capital deployed in Onex’ asset management segment, where applicable, and dividends paid by Onex.
(7) The gross return on Onex’ private equity investments is a non-GAAP ratio calculated using methodologies that are not in accordance with IFRS. The presentation of this ratio does not have a standardized meaning prescribed under IFRS and therefore may not be comparable to similar financial measures presented by other companies. The net gains (losses) used to calculate the gross return of Onex’ private equity investments are gross of management incentive programs. Refer to page 10 of Onex’ Q3 2023 Interim MD&A for further details concerning the gross performance of Onex’ private equity investments.
(8) The percentage returns on Credit investments have been adjusted for capital deployed, realizations and distributions
(9) Refer to the glossary in Onex’ Q3 2023 Interim MD&A for details concerning the composition of run-rate management fees.
(10) Cash and near-cash is a non-GAAP financial measure calculated using methodologies that are not in accordance with IFRS. The presentation of these measures does not have standardized meaning prescribed under IFRS and therefore might not be comparable to similar financial measures presented by other companies. The most directly comparable financial measure under IFRS to cash and near-cash is Onex’ consolidated cash and cash equivalents balance, which was
Source:
Holiday Hazard Prevention: Steps to a Safe and Accident-Free Season
New Report Details the Strength and Resiliency Private MI Provides to Mortgage Finance System and Role in Promoting Affordable and Sustainable Homeownership
Advisor News
- A rising retirement challenge: The license to spend
- Financial stress leaves less room for retirement saving
- Giving while you’re living: 3 frequently asked questions about gifting
- Helping clients prepare for one of their biggest retirement expenses
- Important year-end financial conversations every advisor must have
More Advisor NewsAnnuity News
- A rising retirement challenge: The license to spend
- What lower interest rates mean to annuity payouts
- AM Best downgrades A-Cap insurers amid financial and regulatory troubles
- Lawsuit claims Delaware Life hid billions in insurer-linked investments
- AM Best to Deliver Presentation at 2026 ACLI Annual Conference
More Annuity NewsHealth/Employee Benefits News
Life Insurance News