Onex Reports Third-Quarter 2021 Results
All amounts in U.S. dollars unless otherwise stated
TORONTO, Nov. 12, 2021 (GLOBE NEWSWIRE) -- 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 Information
Jill Homenuk
Managing 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) | Investing(i) | Asset | 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) | Investing(i) | Asset | 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, | ||
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.
