ONEX Corporation ((TSE:ONEX)) has held its Q4 earnings call. Read on for the main highlights of the call.
Discover the Best Stocks and Maximize Your Portfolio:
- See what stocks are receiving strong buy ratings from top-rated analysts.
- Filter, analyze, and streamline your search for investment opportunities with TipRanks’ Stock Screener.
In the recent earnings call, ONEX Corporation expressed a generally positive sentiment about its performance in 2024, particularly highlighting strong achievements in its credit and structured credit segments. The company celebrated significant capital returns and successful fundraising endeavors while acknowledging certain challenges in healthcare, consumer sectors, and foreign exchange impacts. Despite these hurdles, ONEX remains optimistic about its growth prospects in 2025.
Significant Fundraising Success
ONEX Corporation reported impressive fundraising achievements across its private equity platforms, raising $1.5 billion in 2024. This success was bolstered by strategic co-investment partnerships, which helped expand its client base. Notably, Onex Partners completed fundraising for its Opportunities Fund, securing $1.2 billion in commitments.
Return of Capital
The company demonstrated an exceptional return of capital, with OP and ONCAP returning over $3 billion to investors, including $1 billion to Onex itself. This figure is 2.5 times more than what was achieved in 2023, marking a significant milestone for the corporation.
Structured Credit Growth
ONEX ranked as the seventh issuer of global broadly syndicated CLOs, executing 30 transactions and raising $13 billion of fee-generating AUM in 2024. This growth represents a 34% increase in fee-generating AUM over the past year, underscoring the strength of its structured credit segment.
Share Repurchase Program
The corporation completed a substantial issuer bid, repurchasing 2.3 million shares in Q4, which contributed to a total of 5.7 million shares repurchased in 2024. Over the last five years, ONEX has repurchased approximately 28 million shares, reducing its shares outstanding by almost 30%.
Strong Performance in Credit Investments
Credit investments delivered a $16 million net gain, translating to a 2% return in Q4 and a 9% return for the year. This performance was driven by structured and opportunistic strategies, highlighting the robustness of ONEX’s credit investments.
Challenges in Healthcare and Consumer Companies
Despite its successes, ONEX faced challenges in the healthcare and consumer sectors, which offset returns and impacted overall performance. These sectors remain areas for close monitoring moving forward.
Foreign Exchange Impact on PE Portfolio
The strengthening U.S. dollar led to an unfavorable foreign exchange impact, resulting in a mark-to-market loss of approximately $60 million on non-U.S. dollar investments. This factor was a notable challenge for ONEX’s private equity portfolio.
Modest FRE Loss
A modest fee-related earnings loss of $1 million for Q4 was reported, with a $6 million contribution from the asset management platforms. This indicates some challenges in reaching breakeven for non-credit operations.
Forward-Looking Guidance
ONEX Corporation’s forward-looking guidance highlights a strong performance across its platforms in 2024, with positive momentum anticipated for 2025. The company aims to sustain positive fee-related earnings, particularly from the credit platform, and plans to continue active share repurchases. With a substantial liquidity position, ONEX is well-positioned to capitalize on future growth opportunities.
In summary, the ONEX Corporation earnings call showcased a robust performance in 2024, particularly in its credit and structured credit segments, coupled with strategic fundraising and capital return achievements. While certain challenges in healthcare, consumer sectors, and foreign exchange impacts were noted, the company remains optimistic about its growth trajectory in 2025.
