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Onex Reports Full-Year 2020 Results

ONEX Corporation
·9-min read

All amounts in U.S. dollars unless otherwise stated

TORONTO, Feb. 26, 2021 (GLOBE NEWSWIRE) -- Onex Corporation (TSX: ONEX) today announced its financial results for the fourth quarter and full year ended December 31, 2020.

“We delivered strong results in the fourth quarter and full year 2020. Our disciplined approach to investing was tested and, once again, proved resilient against a challenging economic backdrop,” said Gerry Schwartz, Chairman and Chief Executive Officer of Onex. “I am immensely proud of the work our team did over the year. Everyone demonstrated the flexibility and entrepreneurial spirit that is core to our culture. We continued to build upon our strong foundation and our platforms had good momentum, which positions us well for continued growth in the years to come.”

Highlights

  • Onex reported segment net earnings for the three-months ended December 31, 2020 of $708 million ($7.72 per fully diluted share), comprised of net earnings of $609 million from its investing segment and net earnings of $99 million from its asset and wealth management segment.

  • Onex reported segment net earnings for the year ended December 31, 2020 of $860 million ($8.95 per fully diluted share), comprised of net earnings of $773 million from its investing segment and net earnings of $87 million from its asset and wealth management segment.

  • Onex’ Investing Capital per share grew 10% in the fourth quarter and 18% in the year, reflecting the firm’s strongest year since 2013, primarily driven by net increases in Onex’ private equity and credit investments. As of December 31, 2020, Onex had approximately $6.8 billion of Investing Capital, or $73.61 (C$93.73) per fully diluted share.

  • The fair value of Onex’ private equity investments increased by 14% in the fourth quarter and 24% in the year.

  • Onex’ share of unrealized carried interest from private equity grew to $87 million as of December 31, 2020, an increase of $54 million from the third quarter.

  • Onex continues to have a strong balance sheet, with approximately $1.4 billion of cash and near-cash available to support its investing opportunities.

  • Total assets under management increased by 14% in 2020 to approximately $44 billion, largely driven by Onex Credit’s acquisition of Falcon Investment Management in December 2020. This helped increase run-rate management fees to $330 million, up 12% quarter-over-quarter.

  • Onex repurchased 9,780,411 Subordinate Voting Shares in 2020 for a total cost of $444 million (C$595 million), or at an average cost per share of C$60.86.

Financial Results

For the three-months ended December 31, 2020, total segment net earnings were $708 million ($7.72 per fully diluted share). Investing segment earnings of $609 million ($6.65 per fully diluted share) were primarily driven by net gains on Onex’ private equity and credit investments consistent with the continued strength of the underlying markets during the quarter. The fourth-quarter net earnings from the asset and wealth management segment totalled $99 million ($1.07 per fully diluted share), driven largely by an increase in carried interest.

For the year ended December 31, 2020, total segment net earnings were $860 million ($8.95 per fully diluted share). Investing segment earnings of $773 million ($8.05 per fully diluted share) were primarily driven by a net gain on Onex’ private equity investments which reflects the overall resiliency and diversification of the operating businesses that Onex has invested in. The asset and wealth management segment earnings were $87 million ($0.90 per fully diluted share). Full-year results were driven by the same factor that contributed to the fourth-quarter performance.

Enclosed are supplementary schedules and non-IFRS measures related to Onex’ consolidated net earnings for the three- and twelve-months ended December 31, 2020, shareholder capital at December 31, 2020 and cash and near-cash changes for the year ended December 31, 2020. 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’ fourth-quarter and full year 2020 results on Friday, February 26 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://ir.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; and Gluskin Sheff’s wealth management services including its actively managed public equity and public credit funds. In total, Onex has approximately $44 billion of assets under management, of which approximately $6.8 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.

The Onex Partners and ONCAP businesses have assets of $40 billion, generate annual revenues of $22 billion and employ approximately 147,000 people worldwide. 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

($ millions except per share amounts)
Three months ended December 31, 2020

Investing(i)

Asset and
Wealth
Management
(i)

Total

Segment income

$

609

$

172

$

781

Segment expenses

-

(73

)

(73

)

Segment net earnings

$

609

$

99

$

708

Stock-based compensation expense

(87

)

Amortization of property and equipment and other intangible assets, excluding right-of-use assets

(12

)

Acquisition and integration expense

(12

)

Net earnings

$

597

Segment net earnings per share(ii)

$

6.65

$

1.07

$

7.72

Net earnings per share

Basic

$

6.62

Diluted

$

6.61

(i) Refer to the consolidated financial statements for segment presentation and allocation considerations.
(ii) Calculated on a fully diluted basis.

($ millions except per share amounts)
Year ended December 31, 2020

Investing(i)

Asset and
Wealth
Management
(i)

Total

Segment income

$

773

$

354

$

1,127

Segment expenses

-

(267

)

(267

)

Segment net earnings

$

773

$

87

$

860

Stock-based compensation recovery

21

Amortization of property and equipment and other intangible assets, excluding right-of-use assets

(47

)

Acquisition and integration expense
Impairment of goodwill

(19)
(85)

Net earnings

$

730

Segment net earnings per share(ii)

$

8.05

$

0.90

$

8.95

Net earnings per share

Basic

$

7.64

Diluted

$

7.63

(i) Refer to the consolidated financial statements for segment presentation and allocation considerations.
(ii) Calculated on a fully diluted basis.

Shareholder Capital

($ millions except per share amounts)
As at December 31, 2020

Investing

Asset and
Wealth

Management

Total

Total segmented assets

$

6,787

$

1,038

$

7,825

Accounts payable and accrued liabilities

-

(29

)

(29

)

Accrued compensation

-

(125

)

(125

)

Lease liabilities

-

(75

)

(75

)

Contingent consideration and other liabilities

-

(90

)

(90

)

DSU hedge assets

-

(78

)

(78

)

Total shareholder capital(i)

$

6,787

$

641

$

7,428

Shareholder capital per share(i)(ii)

$

73.61

$

6.96

$

80.57


(i)

Shareholder capital and shareholder capital per share are non-GAAP financial measures which have been calculated using methodologies that are not in accordance with IFRS. A reconciliation of total segmented assets to shareholder capital is presented in this table. 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 shareholder capital is useful to investors as the metric is used, in part, to assess Onex’ performance.

(ii)

Calculated on a fully diluted basis using the treasury stock method. Fully diluted shares for shareholder capital per share were 92.2 million at December 31, 2020.

Cash and Near-Cash

The table below provides a reconciliation of the change in cash and near-cash from December 31, 2019 to December 31, 2020.

($ millions)

Cash and near-cash on hand at December 31, 2019(i)

$

1,842

Private equity realizations

872

Private equity investments

(668

)

Real estate distributions

20

Net Onex Credit strategies investment activity, including warehouse facilities

(49

)

Acquisition of Falcon

(134

)

Onex share repurchases, options exercised, dividends and director DSU redemption

(487

)

Net other, including capital expenditures, management fees, operating costs and treasury income

(19

)

Cash and near-cash on hand at December 31, 2020(i)

$

1,377

(i) Includes $541 million (December 31, 2019 – $395 million) of treasury investments, $98 million (December 31, 2019 – $97 million) invested in an Onex Credit unlevered senior secured loan strategy fund and $122 million (December 31, 2019 – $190 million) of management fees.