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Gluskin Sheff + Associates Inc. Announces Third Quarter Fiscal 2019 Results

TORONTO--(BUSINESS WIRE)--

Gluskin Sheff + Associates Inc. (the “Company”) announced today its results for the three and nine months ended March 31, 2019.

Financial Highlights:

       
                 
Assets Under Management As At As At
($ in millions)           Mar 31, 2019   Mar 31, 2018
 
 
$   8,330     $   8,949  
 
                 
Income Statement Information 3 Months 3 Months 9 Months 9 Months
($ in thousands except for per share amounts)   Ended   Ended   Ended   Ended
Mar 31, 2019 Mar 31, 2018 Mar 31, 2019 Mar 31, 2018
 
 
Revenue:
Base Management Fees $   25,726 $   27,382 $   80,457 $   81,741
Performance Fees 601 580 1,453 30,246
Investment & Other Income 726 725 2,123 2,003
Reimbursement From Pooled Funds     1,002         903       2,686         2,682  
Total Revenue $ 28,055 $ 29,590 $ 86,719 $ 116,672
 
Net Income attributable to shareholders $ 4,127 $ 6,903 $ 19,513 $ 31,799
Amortization of Restricted Share Units (RSUs) 830 1,265 3,264 6,395
Other amortization 1,350 1,564 4,938 4,890
RSU portion of current period's Base bonus (798 ) (757 ) (1,663 ) (2,389 )
Special RSUs - (375 ) (150 ) (375 )
Stock option and post-retirement obligation / Founders' retirement obligation provision 39 372 117 2,479
Performance fees net of related cash bonus (361 ) (369 ) (883 ) (19,681 )
Provision for income taxes     1,630         2,717       7,508         12,902  
Base EBITDA $ 6,817 $ 11,320 $ 32,644 $ 36,020
 
Basic Earnings per Share $ 0.14 $ 0.23 $ 0.64 $ 1.05
 
Diluted Earnings per Share   $   0.13     $   0.22     $   0.62     $   1.02  

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, Other Income and Reimbursement from Pooled Funds.

During the quarter, AUM increased by $139 million to $8.3 billion as at March 31, 2019, from $8.2 billion as at December 31, 2018. High net worth clients comprise 88% of AUM as at March 31, 2019, compared to 89% as at December 31, 2018.

Base Management Fees for the three months ended March 31, 2019, decreased year-over-year to $25.7 million from $27.4 million in the prior year period as Average AUM for the quarter decreased to $8.4 billion from $9.0 billion, partially offset by an increase in the Average Base Management Fee Percentage to 1.24% from 1.23% for the same quarter last year.

For the three months ended March 31, 2019, net income was $4.1 million, and represented earnings per share, basic and diluted, of $0.14 and $0.13, respectively. Net income for the three months ended March 31, 2018, was $6.9 million, and represented earnings per share, basic and diluted, of $0.23 and $0.22, respectively.

Total expenses increased $2.3 million from the prior fiscal period due to $0.7 million in expense related to the acquisition of the Company by Onex Corporation and an increase in compensation expense of $2.7 million.

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 $6.8 million for the three months ended March 31, 2019, compared with $11.3 million for the three months ended March 31, 2018. The decrease was primarily due to lower Base Management Fees and higher Base bonuses, partially offset by lower other cash Base operating expenses.

“Following the turbulent fourth quarter of 2018, there has been a strong rebound in global capital markets in the first few months of this calendar year. Given this recent appreciation, we have positioned our portfolios more conservatively,” commented Jeff Moody, President & Chief Executive Officer. “We remain fully focused on our current business, and are very enthusiastic about the possibilities of our future with Onex.”

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 www.gluskinsheff.com or at www.sedar.com. 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.

Non-IFRS Measures

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 www.sedar.com.

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