Onex Reports Full-Year 2018 Results
All amounts in U.S. dollars unless otherwise stated
TORONTO, March 01, 2019 (GLOBE NEWSWIRE) -- Onex Corporation (TSX: ONEX) today announced its consolidated financial results for the fourth quarter and full year ended December 31, 2018 and an update on matters following quarter-end.
-- We invested approximately $2.3 billion in nine operating companies in 2018, of which Onex’ portion was approximately $865 million. -- We returned approximately $1.9 billion to our limited partners in 2018, through realizations and distributions, of which Onex’ portion was approximately $705 million, including $37 million of carried interest. We expect to return a further $780 million to our limited partners from the sale of BrightSpring Health Services (formerly ResCare), of which Onex’ portion will be approximately $190 million, including $39 million of carried interest. -- We increased our assets under management at Onex Credit by 7% in 2018, driven by the issuance of CLO-15 and the capital raised for our first private debt fund, of which more than 70% of the $1.1 billion of available capital has been invested. In February 2019, we issued CLO-16, bringing total AUM at Onex Credit to nearly $11 billion. -- We started investing Onex Partners V, a $7.15 billion fund, which further enhances Onex’ operating leverage on its private equity manager. Our total run-rate management fees from our private equity and credit platforms increased to $192 million. -- Our operating businesses completed 38 follow-on acquisitions, collectively raised or refinanced debt totalling $7.0 billion and paid down approximately $295 million of debt. -- We repurchased approximately 1.2 million Subordinate Voting Shares (“SVS”) in 2018 for a total cost of $79 million, or an average cost per share of C$86.78. Since year-end, an additional 621,127 SVS were repurchased for a total cost of $34 million, or an average cost per share of C$73.58.
“We had mixed results in 2018. We added nine new businesses to our private equity platform, grew our credit platform and had a number of successful realizations,” said Gerry Schwartz, Chairman and Chief Executive Officer of Onex. “We were, however, disappointed with the performance of our private equity portfolio during the year. We are focused on driving change and improving the value of our businesses and believe our efforts will be rewarded in the years to come.”
Onex management continues to share in the risks and rewards of our businesses through the team’s significant investment in everything Onex owns. Today, the team has approximately $1.7 billion invested in the underlying private equity operating businesses, credit funds and Onex shares, including approximately $135 million invested in 2018.
Creating Value for Shareholders
We create value for shareholders by growing both our capital per share and our fee-generating assets over the long term. For the full year ended December 31, 2018, Onex’ capital per share decreased by 5% to $61.24, which was largely impacted by the underperformance of our private equity portfolio and volatility in our credit portfolio mark-to-market valuations in the quarter. Over the same period, our fee-generating assets decreased by 5% to $20.6 billion driven primarily by several successful private equity realizations, the redemption of CLO-2 and net fair value decreases in Onex’ private equity portfolio. Partially offsetting these decreases was capital raised for Onex Credit. Over the last five years, Onex’ capital per share and our fee-generating assets grew by 4% and 11% per year, respectively.
Onex is well-positioned to grow in the years to come with nearly $8 billion of committed, uncalled capital available to deploy for new private equity investments and a growing asset management business.
Onex paid a fourth-quarter dividend of C$0.0875 per SVS on January 31, 2019 to shareholders of record on January 10, 2019.
Onex’ quarterly and full-year consolidated financial results do not follow any specific trends due to acquisitions and dispositions of businesses, changes in the value of its publicly traded and privately held operating companies and varying business cycles at its operating companies.
On a consolidated basis for the fourth quarter, revenues increased by 4% to $6.1 billion compared to the same period of the prior year. The increase was largely due to the inclusion of revenues from the acquisitions of AutoSource, IntraPac, KidsFoundation, Laces, Precision, SMG and Walter Surface Technologies. Net earnings for the fourth quarter of 2018 was $88 million compared to $304 million in the same quarter of 2017. This decrease in earnings was primarily driven by a decrease in the fair value of investments in joint ventures and associates; losses on investments and long-term debt in credit strategies and an increase in non-cash impairment charges recorded by certain operating companies, partially offset by a recovery of limited partners’ interests.
On a consolidated basis for the full year, revenues increased by 4% to $23.8 billion from the prior year. The increase in revenues was largely driven by the inclusion of revenues from acquisitions completed during 2018. Onex reported a consolidated net loss of $796 million for the year compared to net earnings of $2.4 billion in 2017. This decrease in earnings was primarily driven by $3.3 billion of gains recorded in 2017 from the loss of control over JELD-WEN and the sale of USI; a decrease in the fair value of investments in joint ventures and associates and an increase in non-cash impairment charges recorded by certain operating companies, partially offset by a recovery of limited partners’ interests.
Prior year comparative information has been restated to conform with IFRS 15, Revenue from Contracts with Customers, which was adopted by Onex retrospectively on January 1, 2018 (refer to Note 1 in the interim consolidated financial statements for further details).
Attached are Onex’ Consolidated Balance Sheets at December 31, 2018, December 31, 2017 and January 1, 2017 and Statements of Earnings, Statements of Cash Flows and Information by Industry Segment for the years ended December 31, 2018 and 2017 which have been prepared in accordance with International Financial Reporting Standards. The complete financial statements, 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, which includes the How We Are Invested schedule, Schedules of Fees and Expenses and additional information, is available on Onex’ website, www.onex.com.
Onex management will host a webcast to review Onex’ fourth-quarter and full-year 2018 results on Friday, March 1 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.
Onex is one of the oldest and most successful private equity firms. Through its Onex Partners and ONCAP private equity funds, Onex acquires and builds high-quality businesses in partnership with talented management teams. At Onex Credit, Onex manages and invests in leveraged loans, collateralized loan obligations and other credit securities. Onex has $31 billion of assets under management, including $6.4 billion of Onex proprietary capital, in private equity and credit securities. With offices in Toronto, New York, New Jersey and London, Onex and the team are collectively the largest investors across Onex’ platforms.
Onex’ businesses have assets of $51 billion, generate annual revenues of $32 billion and employ approximately 217,000 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.
This news release may contain forward-looking statements that are based on management’s current expectations and are subject to known and unknown uncertainties and risks, which could cause actual results to differ materially from those contemplated or implied by such forward-looking statements. Onex is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.
For further information:Emilie BlouinDirector, Investor RelationsTel: +1 416.362.7711