Gluskin Sheff + Associates Inc. Announces Second Quarter Fiscal 2017 Results
TORONTO, Feb. 13. 2017 /CNW/ -Gluskin Sheff + Associates Inc. (the "Company") announced today its results for the three and six months ended December 31, 2016.
Financial Highlights:
| (unaudited, $ '000s except for AUM and per share amounts) |
3 Months |
3 Months |
6 Months |
6 Months |
||||||||
| Ended |
Ended |
Ended |
Ended |
|||||||||
| Dec 31, 2016 |
Dec 31, 2015 |
Dec 31, 2016 |
Dec 31, 2015 |
|||||||||
| Assets Under Management ($ in millions) |
$ |
8,739 |
$ |
8,307 |
$ |
8,739 |
$ |
8,307 |
||||
| Revenue: |
||||||||||||
| Base Management Fees |
$ |
26,612 |
$ |
26,828 |
$ |
53,353 |
$ |
53,845 |
||||
| Performance Fees |
37,431 |
31,198 |
38,741 |
33,004 |
||||||||
| Investment & Other Income |
539 |
613 |
1,081 |
1,641 |
||||||||
| Total Revenue |
$ |
64,582 |
$ |
58,639 |
$ |
93,175 |
$ |
88,490 |
||||
| Net Income attributable to shareholders |
$ |
24,004 |
$ |
18,765 |
$ |
31,368 |
$ |
25,991 |
||||
| Amortization of Restricted Share Units (RSUs) |
2,774 |
4,001 |
5,290 |
8,032 |
||||||||
| Other amortization |
1,589 |
2,124 |
3,086 |
3,734 |
||||||||
| RSU portion of current period's Base bonus |
(879) |
(819) |
(1,636) |
(1,614) |
||||||||
| Special RSUs |
- |
- |
(581) |
(863) |
||||||||
| Stock option and post-retirement obligation / Founders' retirement obligation provision |
133 |
103 |
260 |
206 |
||||||||
| Performance fees net of related cash bonus |
(25,658) |
(21,595) |
(26,547) |
(22,823) |
||||||||
| Provision for income taxes |
8,885 |
8,378 |
12,049 |
11,535 |
||||||||
| Base EBITDA |
$ |
10,848 |
$ |
10,957 |
$ |
23,289 |
$ |
24,198 |
||||
| Basic Earnings per Share |
$ |
0.80 |
$ |
0.63 |
$ |
1.05 |
$ |
0.87 |
||||
| Diluted Earnings per Share |
$ |
0.78 |
$ |
0.61 |
$ |
1.01 |
$ |
0.84 |
||||
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 $205 million to $8.7 billion as at December 31, 2016, from $8.5 billion as at September 30, 2016, due to positive net investment performance of $210 million, partially offset by net withdrawals of $5 million. Net withdrawals of $7 million from high net worth clients were partially offset by net additions of $2 million from institutional clients. Year-over-year AUM increased by $432 million due to positive net investment performance of $508 million, partially offset by net withdrawals of $76 million. Net withdrawals of $100 million from high net worth clients were partially offset by net additions of $24 million from institutional clients.
Base Management Fees for the three months ended December 31, 2016, decreased year-over-year to $26.6 million from $26.8 million as the increase in Average AUM for the quarter to $8.6 billion from $8.4 billion for the same quarter last year was offset by a decrease in the average Base Management Fee Percentage to 1.22% from 1.27% for the same period last year.
Performance Fees for the three months ended December 31, 2016, were $37.4 million, compared to $31.2 million for the three months ended December 31, 2015.
Total expenses increased by $0.2 million from the year-ago quarter primarily due to an increase in accrued cash bonuses of $3.1 million, an increase in professional fees related to the Founders' arbitration to $1.9 million from $0.4 million, and an increase in other consulting fees. These increases were partially offset by lower RSU amortization and the absence of a $3.6 million charge relating to a change in the tax treatment of certain transactions in two pooled funds.
Net income was $24.0 million and represented earnings per share, basic and diluted, of $0.80 and $0.78, respectively for the three months ended December 31, 2016. Net income was $18.8 million and represented earnings per share, basic and diluted, of $0.63 and $0.61, respectively, for the three months ended December 31, 2015.
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 $10.8 million for the three months ended December 31, 2016, compared with $11.0 million in the year ago quarter due primarily to lower Base Management Fees and other income as an increase in base bonus expense was offset by a decrease in other operating expenses.
"While the new U.S. administration and the upcoming elections across Europe will introduce uncertainty, we will stay true to our investment process and finding value that lies beneath the veneer of the market indices – companies that are attractively priced within otherwise expensive markets in the later stages of the economic cycle," commented Thomas MacMillan, President & Chief Executive Officer. "We believe our team's experience, emphasis on capital preservation and company-specific active portfolio construction give us and our clients an advantage in this environment."
Gluskin Sheff + Associates Inc. is one of Canada's pre-eminent wealth management firms, serving high net worth private clients, estates, trusts and institutional investors. Founded in 1984, the Company is dedicated to providing clients with 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.
SOURCE Gluskin Sheff + Associates Inc.
David R. Morris, Chief Financial Officer and Secretary, 1.416.681.6036
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