Fiera Capital A Signals Momentum Amid Deleveraging Push

Fiera Capital A ((TSE:FSZ)) has held its Q4 earnings call. Read on for the main highlights of the call.

Fiera Capital A’s latest earnings call struck a cautiously optimistic tone, as management highlighted momentum in private markets and core public franchises alongside improving profitability. At the same time, they acknowledged pressure from sub‑advised outflows, weaker performance fees, private wealth softness and a dilutive debenture, stressing that disciplined deleveraging and execution remain critical.

Total AUM Dynamics and Core Growth Excluding Sub-Advised

Total assets under management ended the year at $164.1 billion, but the more telling story is outside sub‑advised strategies where AUM rose 0.4% in Q4 and 5.7% for the year. That increase, over $7 billion, was driven by roughly $1 billion of net inflows and strong equity market gains in 2025, underscoring healthier underlying client demand.

Private Markets Expansion and Strong Capital Flows

Private markets continued to be a standout, with AUM climbing to $22 billion, up 11.4% year‑over‑year. The segment attracted close to $900 million of net inflows, supported by $1.9 billion of new subscriptions and a strategic acquisition of a controlling stake in a real estate investment platform, further deepening the firm’s alternatives footprint.

Public Markets Mandates and Core Franchise Momentum

Public markets secured about $500 million of new mandates in the quarter and $3.2 billion for the full year, reflecting renewed confidence in key strategies. The four core public market franchises delivered $2.8 billion of net inflows, with Canadian public markets swinging from more than $4 billion of outflows in 2024 to $2.7 billion of inflows in 2025, a $6.8 billion turnaround.

Fixed Income Outperformance Anchors the Franchise

Management highlighted very strong performance across fixed income, where roughly 95% of assets beat their benchmark over both 1‑year and 5‑year periods. Over three years the picture was even stronger, with 97% of fixed income strategies outperforming, bolstering Fiera’s case with liability‑driven and income‑focused investors.

Improving Profitability and Margin Expansion

Profitability metrics moved in the right direction, with adjusted net earnings rising to $30 million from $25 million in the prior quarter and $23 million a year ago. Adjusted EBITDA climbed to $55 million, up 9% sequentially, and quarterly EBITDA margin expanded to 30.4%, contributing to a full‑year margin of 28.8%, modestly above last year.

Private Markets Revenue Mix and Attractive Economics

The earnings mix shows why management is leaning into private markets, which represent just 13% of total AUM yet generated 37% of total revenues, up from 35% a year earlier. This underscores the higher fees and margins associated with alternatives and gives Fiera a more diversified, less market‑beta‑driven earnings profile.

Capital Deployment and Balance Sheet Management

Capital returned to shareholders and redeployed into growth was sizable, with roughly $100 million returned in the quarter and about $600 million over the year. The firm deployed about $450 million in Q4 and nearly $2 billion year‑to‑date into new projects, while reducing net debt to $664 million and trimming the net debt ratio to 3.4x, though funded debt crept higher.

Three-Year Strategic Plan and Distribution Focus

Management laid out a detailed three‑year strategic plan that splits distribution between private and public markets to sharpen focus and accountability. The roadmap emphasizes elevating performance management, using private markets as a growth engine, driving operational efficiencies and reallocating capital toward deleveraging and selective reinvestment, targeting net debt of roughly 2.5x.

Sub-Advised AUM Contraction Weighs on Headline Totals

Despite underlying growth, headline AUM declined when sub‑advised assets are included, falling 1.7% in the quarter and 1.8% for the year. Persistent net outflows from these sub‑advised strategies continue to mask progress in core franchises and represent a drag that management is working to offset with higher‑quality mandates.

Revenue and Performance Fee Pressures

Total revenues reached $180 million in Q4, up 8% sequentially, but slipped 2% versus the prior year, with full‑year revenues down $16 million or 2%. The decline stemmed from lower sub‑advised AUM, reduced earnings from joint ventures and softer public market performance fees, which fell to $5.4 million from $8 million.

Sub-Advised and U.S. Fixed Income Outflows

Excluding sub‑advised AUM, the quarter still saw $450 million of net outflows, primarily from U.S. fixed income strategies. Management attributed the U.S. fixed income asset losses to structural changes at advisory partners rather than investment underperformance, framing the pressure as relationship‑driven rather than a reflection of product quality.

Equity Performance Headwinds and Style Challenges

Most equity portfolios produced positive absolute returns, but beating benchmarks proved difficult in an index‑dominated market. The year was especially challenging for value and high‑conviction managers, whose styles fell out of favor, leading to relative underperformance and performance‑driven outflows in certain equity mandates.

Private Wealth AUM Decline

The private wealth business remained under pressure, with AUM at $14 billion, down 2% in the quarter and 6% year‑over‑year. Negative net contributions, particularly related to treasuries and sub‑advised strategies, weighed on the segment and highlighted the need to stabilize and reposition this franchise.

Dilutive Hybrid Debenture Weighs on EPS

Earnings per share came under pressure from capital structure decisions, as full‑year adjusted diluted EPS slipped to $0.87 from $0.94. Management pointed to share dilution from a 6% hybrid debenture, which reduced adjusted EPS by about $0.09 for the year and roughly $0.03 in the current quarter, despite underlying earnings growth.

Free Cash Flow and JV/Other Revenue Softness

Last 12‑month free cash flow declined to $79 million from $87 million, mainly because of higher dividends to noncontrolling interests. Contributions from joint ventures fell to about $7 million from $12 million, and other revenues eased after a one‑off insurance claim benefit in the prior year, trimming some of the upside from core operations.

Funded Debt Increase and Remaining Leverage Work

While net debt improved modestly, funded debt as defined in the credit facility rose by $35 million to $540 million, nudging the funded debt ratio to roughly 3.0x. The uptick underscores that Fiera still has work to do on the balance sheet to reach its 2.5x net debt target over the plan period and fully align leverage with cash‑flow generation.

Guidance and Outlook: Deleveraging and AUM Momentum

Looking ahead, management’s guidance centers on capital allocation discipline, aiming to cut net debt leverage to 2.5x by 2028 from 3.4x today, with roughly half of excess free cash flow earmarked for debt reduction and the balance split between reinvestment and opportunistic buybacks. They reiterated confidence in continued AUM momentum, particularly in private markets with $22 billion of AUM, about $900 million of recent net inflows and $2.0 billion of committed undeployed capital, alongside plans to deploy a sizable separately managed account this year.

Fiera Capital A’s earnings call painted a picture of a firm in transition but building momentum, powered by high‑margin private markets and recovering core public franchises. Execution on deleveraging, stabilizing sub‑advised and private wealth flows and navigating performance‑fee headwinds will determine whether the improving fundamentals translate into sustained value creation for shareholders.