Gluskin Sheff + Associates Inc. Announces Second Quarter Fiscal 2018 Results
Gluskin Sheff + Associates Inc. (the “Company”) announced today its results for the three and six months ended December 31, 2017.
Financial Highlights:
| Assets Under Management | As At | As At | ||||||||||
| ($ in millions) | Dec 31, 2017 | Dec 31, 2016 | ||||||||||
| $ | 8,978 | $ | 8,739 | |||||||||
| Income Statement Information | 3 Months | 3 Months | 6 Months | 6 Months | ||||||||
| (unaudited, $ in thousands except for per share amounts) | Ended | Ended | Ended | Ended | ||||||||
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2017 | Dec 31, 2016 | |||||||||
| Revenue: | ||||||||||||
| Base Management Fees | $ | 27,688 | $ | 26,612 | $ | 54,359 | $ | 53,353 | ||||
| Performance Fees | 28,404 | 37,431 | 29,666 | 38,741 | ||||||||
| Investment & Other Income | 636 | 539 | 1,278 | 1,081 | ||||||||
| Total Revenue | $ | 56,728 | $ | 64,582 | $ | 85,303 | $ | 93,175 | ||||
| Net Income attributable to shareholders | $ | 19,095 | $ | 24,004 | $ | 24,896 | $ | 31,368 | ||||
| Amortization of Restricted Share Units (RSUs) | 2,984 | 2,774 | 5,130 | 5,290 | ||||||||
| Other amortization | 1,634 | 1,589 | 3,326 | 3,086 | ||||||||
| RSU portion of current period's Base bonus | (1,319) | (879) | (1,999) | (1,636) | ||||||||
| Special RSUs | - | - | - | (581) | ||||||||
|
Stock option and post-retirement obligation / |
1,696 | 133 | 2,107 | 260 | ||||||||
| Performance fees net of related cash bonus | (19,194) | (25,658) | (20,046) | (26,547) | ||||||||
| Provision for income taxes | 6,928 | 8,885 | 10,185 | 12,049 | ||||||||
| Base EBITDA | $ | 11,824 | $ | 10,848 | $ | 23,599 | $ | 23,289 | ||||
| Basic Earnings per Share | $ | 0.63 | $ | 0.80 | $ | 0.82 | $ | 1.05 | ||||
| Diluted Earnings per Share | $ | 0.61 | $ | 0.78 | $ | 0.80 | $ | 1.01 | ||||
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 $55 million to $9.0 billion as at December 31, 2017, from $8.9 billion as at September 30, 2017, due to positive net investment performance of $221 million, partially offset by net withdrawals of $166 million. Half of the net withdrawals during the quarter were attributable to one client. Year-over-year AUM increased by $239 million due to positive net investment performance of $596 million, partially offset by net withdrawals of $357 million.
Base Management Fees for the three months ended December 31, 2017, increased year-over-year to $27.7 million from $26.6 million as the increase in Average AUM for the quarter to $9.1 billion from $8.6 billion for the same quarter last year was partially offset by a decrease in the average Base Management Fee Percentage to 1.20% from 1.22% for the same period last year.
Performance Fees for the three months ended December 31, 2017, were $28.4 million, compared to $37.4 million for the three months ended December 31, 2016.
Total expenses decreased by $1.0 million from the year ago quarter. Compensation expense decreased by $2.0 million due primarily to a decrease in accrued bonuses of $2.3 million as a result of lower performance fees. General and Administrative expense increased by $1.0 million due to a $1.7 million increase in the Founders related obligations to reflect the final arbitration settlement amount, and increases in research and technology spending, partially offset by a decrease of $1.8 million in professional fees associated with the arbitration.
Net income was $19.1 million and represented earnings per share, basic and diluted, of $0.63 and $0.61, respectively for the three months ended December 31, 2017. 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.
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 $11.8 million for the three months ended December 31, 2017, compared with $10.8 million in the year ago quarter due primarily to higher Base Management Fees.
“I am pleased with our strong finish to the calendar year and confident about the team we have in place to continue to deliver strong risk-adjusted returns for our clients,” commented Jeff Moody, President & Chief Executive Officer. “We are excited to welcome two new talented portfolio managers, Alkarim Jiwa and Leanne Caravaggio, to our investment team and we look forward to their insights and contributions. We are also pleased to have resolution on the final amount in regards to the Founders’ Arbitration.”
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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180208006445/en/
Gluskin Sheff + Associates Inc.
David R. Morris,
1.416.681.6036
Chief Financial Officer and Secretary
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