Gluskin Sheff + Associates Inc. Announces Fourth Quarter Fiscal 2018 Results
TORONTO--(BUSINESS WIRE)--Sep 20, 2018--Gluskin Sheff + Associates Inc. (the “Company”) announced today its results for the three months and year ended June 30, 2018.
The Company’s revenues are derived from Base Management Fees, calculated as a percentage of Assets Under Management (“AUM”), Performance Fees, which are earned when the Company exceeds pre-specified rates of return, and Other Income.
During the quarter, AUM increased by $154 million to $9.1 billion as at June 30, 2018, from $8.9 billion as at March 31, 2018, due to positive net investment performance of $145 million and net additions of $9 million. Year-over-year AUM increased by $217 million due to positive net investment performance of $452 million, partially offset by net withdrawals of $235 million. High net worth clients comprise 87% of AUM as at June 30, 2018, unchanged from June 30, 2017.
Base Management Fees for the three months ended June 30, 2018, increased year-over-year to $27.9 million from $27.1 million as the Average AUM for the quarter increased to $9.0 billion from $8.9 billion and average Base Management Fee Percentage increased to 1.24% from 1.21% for the same quarter last year. Base Management Fees for the year ended June 30, 2018, increased to $109.6 million from $106.6 million in the year ago period with an increase in Average AUM to $9.0 billion from $8.7 billion for the same period last year, while average Base Management Fee Percentage to remained unchanged at 1.22%.
Performance Fees for the three months ended June 30, 2018, were $1.3 million, compared to $3.9 million for the three months ended June 30, 2017. Performance Fees for the year ended June 30, 2018, were $31.6 million, compared to $43.2 million for the year ended June 30, 2017.
Year-over-year, net income for the three months ended June 30, 2018, was essentially flat at $5.9 million, and represented basic and diluted earnings per share of $0.19, which was unchanged from the basic and diluted earnings per share for the three months ended June 30, 2017. Net income for the year ended June 30, 2018, was $37.7 million, and represented earnings per share, basic and diluted, of $1.24 and $1.21, respectively. Net income for the year ended June 30, 2017, was $43.2 million, and represented basic and diluted earnings per share of $1.44 and $1.38 respectively.
Total expenses decreased by $2.4 million from the year-ago quarter. Compensation expense increased by $0.6 million as the accrued cash bonus expense increased by $2.0 million, primarily due to the true-up of the cash portion of the bonus expense during the fourth quarter to reflect the actual full fiscal period cash percentage, partially offset by lower RSU amortization. Included in compensation expense for the three months ended June 30, 2018 and 2017, was $1.7 million of bonus expense in addition to the formulaic bonus pool. Client Wealth Management expenses increased $0.3 million from the year ago quarter due to higher donation levels and higher branding costs. General and Administrative expenses decreased by $2.9 million from the year ago quarter due primarily to the absence of a $2.8 million adjustment to the Founders’ related obligations expense as a result of the arbitration decision, and to the absence of $1.5 million in professional fees related to the Founders’ arbitration, partially offset by the absence of $0.6 million in tax recoveries and higher investment research and technology expenses. Total expenses decreased $1.8 million from the previous fiscal year. Compensation expense decreased $1.6 million due to lower RSU amortization of $2.2 million and a decrease in base salaries of $0.8 million, partially offset by an increase in accrued bonuses of $1.5 million. General and Administrative expenses decreased by $0.5 million due primarily to a decrease of $4.4 million in professional fees related to the Founders’ arbitration to $0.2 million from $4.6 million, and a $1.1 million decrease to $2.0 million in the Founders’ related obligations in respect of the arbitration decision. Partially offsetting these decreases was an absence of $1.5 million in tax recoveries and a $3.3 million increase in investment research and technology expenses.
Base EBITDA eliminates the effect of Performance Fees, Performance Fee related expenses, post-retirement obligations, stock option expense and amortization of RSU awards, and deducts the dollar value of the base bonus RSUs to be awarded in respect of the current period and special RSUs awarded in the period. Base EBITDA was $12.4 million for the three months ended June 30, 2018, compared with $9.4 million for the three months ended June 30, 2017. The increase was primarily due to higher Base Management Fees and Other Income, and lower operating expenses, and reclassification of $1.0 million of Base EBITDA compensation expense to Adjusted EBITDA compensation expense. Base EBITDA compensation expense for the three months ended June 30, 2018, includes $1.2 million of bonus expense in addition to the formulaic bonus pool, while Base EBITDA compensation expense for the three month ended June 30, 2018, included $2.0 million in additional bonus expense. Base EBITDA was $47.4 million, compared with $43.5 million for the year ago period due to higher Base Management Fees and other income.
“We are pleased with the advancements made over the past year,” commented Jeff Moody, President & Chief Executive Officer. “Our focus remains on disciplined investment and risk management in our clients’ portfolios, while initiatives such as wealth planning and educational events are delivering additional value or our clients.”
Gluskin Sheff + Associates Inc. is one of Canada’s pre-eminent wealth management firms. Founded in 1984 and serving high net worth private clients and institutional investors, the Company is dedicated to meeting clients’ needs by delivering strong risk-adjusted returns together with the highest level of personalized client service. The Company’s Common Shares are listed on the Toronto Stock Exchange under the symbol “GS”. For more information about the Company, please visit our website at www.gluskinsheff.com.
This press release may contain forward-looking statements relating to Gluskin Sheff + Associates Inc.’s business and the environment in which it operates. These statements are based on the Company’s expectations, estimates, forecasts and projections. They are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. These risks and uncertainties are discussed in the Company’s regulatory filings available on the Company’s website at or at . Actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, a forward-looking statement speaks only as of the date on which such statement is made. The Company undertakes no obligation to publicly update any such statement or to reflect new information or the occurrence of future events or circumstances; except as required by applicable law.
Included in this press release are certain financial terms (including Base EBITDA and AUM) that the Company utilizes to assess the financial performance of its business that are not measures recognized under International Financial Reporting Standards (IFRS). These non-IFRS measures do not have any standardized meanings prescribed by IFRS and should not be considered alternatives to net income or any other measure of performance determined in accordance with IFRS. Therefore, these non-IFRS measures are unlikely to be comparable to similar measures presented by other issuers. For additional information regarding the Company’s use of non-IFRS measures, including the calculation of these measures, please refer to the “Non-IFRS financial measures” section of the Company’s Management’s Discussion and Analysis and its financial statements available on the Company’s website and on the SEDAR website located at .
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CONTACT: Gluskin Sheff + Associates Inc.
David R. Morris, (416) 681-6036
Chief Financial Officer and Secretary
KEYWORD: NORTH AMERICA CANADA
INDUSTRY KEYWORD: PROFESSIONAL SERVICES BANKING FINANCE
SOURCE: Gluskin Sheff + Associates Inc.
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PUB: 09/20/2018 05:05 PM/DISC: 09/20/2018 05:05 PM