Fiera Capital A ((TSE:FSZ)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Fiera Capital A’s recent earnings call revealed a mixed sentiment, highlighting both achievements and challenges. The company reported strong new mandate activity and impressive performance in private markets, yet faced hurdles such as stagnant asset growth and significant outflows in sub-advised assets. Despite these obstacles, Fiera Capital remains optimistic about future growth and enhancing operational efficiency.
New Mandate Achievements
Fiera Capital A secured a total of $1.4 billion in new mandates during the quarter, with nearly $1 billion directed towards equity strategies. This marks the highest level of new mandate activity the company has seen in over two years, showcasing its ability to attract substantial new business.
Strong Performance in Private Markets
Private markets have proven to be a significant revenue driver for Fiera Capital, generating 38% of total revenues while only comprising 13% of total assets under management. This indicates a strong revenue contribution relative to its size, underscoring the effectiveness of the company’s private market strategies.
Positive Investment Performance
All flagship equity strategies delivered positive absolute returns. Notably, the Canadian equity strategy outperformed its benchmark by 250 basis points, and the Atlas Global strategy added 180 basis points year-to-date, reflecting strong investment performance across the board.
Robust Private Market Pipeline
Fiera Capital deployed approximately $600 million of capital and has $1.3 billion of committed undeployed capital for future opportunities in private markets. This robust pipeline positions the company well for continued growth in this sector.
Improved EBITDA Margin
The adjusted EBITDA margin increased to 28% for the quarter, up from 27.5% compared to the same quarter last year. This improvement highlights the company’s focus on operational efficiency and cost management.
Flat Assets Under Management Growth
Assets under management ended the quarter at $160.5 billion, remaining flat from the prior quarter. This stagnation was due to negative net contributions and the wind-down of certain strategies, presenting a challenge for the company.
Sub-advised Assets Outflows
Fiera Capital experienced net outflows of $1.1 billion in sub-advised assets, with $700 million withdrawn by clients with ongoing relationships. This significant outflow poses a challenge to maintaining asset growth.
Decline in Public Market Revenues
Base management fees for public markets declined by 5% compared to the same quarter last year, primarily due to outflows from sub-advised mandates. This decline in revenue highlights the challenges faced in the public markets sector.
Restructuring Costs Impact
The company’s earnings were impacted by a $6.9 million charge for restructuring costs related to severance, affecting net earnings attributable to shareholders. This restructuring is part of the company’s efforts to streamline operations and improve efficiency.
Forward-Looking Guidance
Looking ahead, Fiera Capital remains focused on growth and operational efficiency. The company ended the quarter with $160.5 billion in assets under management, despite challenges. New mandates of $1.7 billion and market gains were offset by strategy wind-downs. Notable achievements include launching a Qatar equity strategy and new fund management initiatives. The company continues to emphasize its strong performance in private markets and expects to leverage its robust pipeline for future growth.
In summary, Fiera Capital A’s earnings call painted a picture of both opportunity and challenge. While the company achieved significant new mandates and demonstrated strong performance in private markets, it also faced hurdles with flat asset growth and sub-advised asset outflows. Nevertheless, Fiera Capital remains optimistic about its future prospects and is committed to improving operational efficiency.