Fiera Capital (FSZ) Q2 2024 earnings summary

Executive summary

• Assets under management (AUM) declined 3.8% quarter-over-quarter to $158.9B, mainly due to outflows from PineStone sub-advised assets and a large Canadian intermediary, partially offset by private markets growth and positive market impact.

• Private Markets AUM grew by $0.3B (2%) to $19.1B, driven by new mandates and market appreciation, and now contributes 34% of total revenues.

• Senior management and board members acquired all equity previously held by Desjardins, aligning interests and supporting long-term strategy.

• Dividend of $0.215 per share declared, payable September 19, 2024; NCIB renewed for up to 4M Class A shares.

• Revenues for Q2 2024 were $164.8M, up 3% year-over-year, driven by higher Private Markets fees and equity market performance.

Financial highlights

• Adjusted EBITDA was $45.3M, flat year-over-year; margin at 27.5%.

• Adjusted net earnings were $24.9M ($0.23 per diluted share); trailing 12-month adjusted EPS was $1.17, up from $1.06.

• Free cash flow over the last 12 months was $121M, up from $45M a year ago.

• Base management fees were $149M, flat year-over-year; performance fees increased to $3M.

• Operating expenses rose to $142.1M in Q2 2024 from $135.2M in Q2 2023.

Outlook and guidance

• Management expects PineStone-related outflows to decelerate significantly in the second half of 2024.

• Optimism for positive net organic growth in H2 2024, supported by a strong sales pipeline and regional distribution model.

• Committed, undeployed capital of $1.3B as of June 30, 2024, provides a strong pipeline for future opportunities.

• Free cash flow is expected to normalize, covering dividends but not remaining at the current excess level.