Q1 2020 Earnings Call
[music].
Welcome to Onyx first quarter 2020 conference call. My name is Jonathan and I will be your operator today during the presentation all participants will be anyway.
I can only mode. Afterwards, we will conduct a question and answer session at that time. If you had a question. Please press star one on your telephone keypad if at any point during the conference you need to reach the operator. Please press Star then zero as a reminder, this conference call is being recorded.
I will now turn the conference over to Ms. Clare Classic Errani director Clyde and product solutions that Onyx. Please go ahead.
Thank you Jonathan.
Good morning, everyone and thanks for joining.
Broadcasting that calling our web site.
With me today, our Jerry Schwartz, Chris Gorman, and a number of managing director.
Earlier. This morning, we issued our first quarter 2020 press release.
I'm DNA and consolidated financial statements.
Which are all available on the shareholder section that her website and have also been filed on SEDAR.
Our supplemental information package is also available on our website.
As a reminder, all references to dollar amounts on this call are in U.S. unless otherwise stated.
I'm not also point, everyone tour webcast presentation for our usual disclaimer and cautionary factors relating to any forward looking statements contained in today's presentation and remark.
Lastly, I want to like you know that we knew this year annual and special meeting of shareholders to this summer.
We'll now take place on July 20 hurt by audio webcast.
More detailed would be provided in the coming week.
With that I'll now turn the call over to Jerry to discuss our recent activity.
Thanks, Clare good morning, everybody.
If you can believe it it's be more than two months since we began working from home.
Our support functions in accounting legal human resources finance and technology.
I've done a wonderful job, making us productive almost as though the world hadn't been locked down.
Nonetheless, the truth is it's not quite business as usual.
In particular private equity functions best.
And our investment professionals are meeting with their management teams.
Visiting operating facilities and seeing for themselves products produced in services delivered.
At our wealth management business loss can chef.
<unk> wealth managers want to see their clients in person.
Plenti virtual interaction.
But we crave real interaction with one another.
For now, we're all making do with the technology tools at our disposal.
But we also look forward to a return to normalcy.
And we will get back to normal.
One element all crazy share.
Eventually end.
Until then our focus will be on positioning our companies to navigate this downturn and to be ready to prosper in the recovery.
As Chris will explain in more detail a private equity portfolio has several businesses directly.
And negatively.
Impacted by covert 19.
Others that will suffer varying degrees of headwinds.
And several that aren't really affected much at all.
In each case, though our businesses are important contributors to their markets.
The strong reason do exist and to grow.
Let's now turn to a couple of notable events in the private equity portfolio. So far this year.
[noise] primarily.
Driven by successful secondary sale of Sig comedy block shares.
Onyx has received more than $200 million from realizations and distributions in the first quarter.
In total the Onyx group received 572 million from this same sale.
In mid April we agreed to acquire independent clinical services.
No one is ice yes.
Well few traditional obiols are getting finance these days.
We're able to acquire ice, yes by assuming its existing financing.
This company I see as is the leading UK based healthcare staffing and workforce management business.
It off rates, primarily in the UK, but also has an emerging.
U.S. footprint.
We like ice, yes, leading position in its core markets.
The favorable market backdrop.
And the what runway to grow both organically and through acquisitions.
Other new opportunities in private equity are likely to come to us in more distressed situations.
I'll now turn to our credit platform.
As you know the credit markets have been highly volatile the credit Suisse leverage loan index was down as much as 18% in March.
Onyx exposure to the credit markets is almost entirely first lien loans.
Most of them Belden seal lows.
We're onyx is both the manager and an equity investor.
There's been much written about siloed as of late.
So Chris will spend some time walking you through our exposure and now we think about it.
I'll, just say that we feel good about the positioning of the portfolio and its current status.
Even though the mark to market reductions are significant.
And some distributions maybe reduced over the next couple of years, but.
Please remember that our CFO those are not forced to sell assets because of marks.
One of the credit opportunities that we maybe able to take advantage of in the near future.
Is the difficulty some less well capitalized managers will have.
Getting through the downturn.
We also believe there maybe opportunities to invest in CLL securities held by other investors.
Who are in fact more sensitive to mark to market volatility.
In light of the pandemic environment and our recent hiring of Jason New.
Which by the way I'll touch on or just a minute.
Our team will also be looking more opportunistic distressed strategies.
We believe we're well positioned to.
To help good businesses with that balance sheets.
Now I'd like to return for a moment guston chef.
Overall gluskin chef client capital declined 988 million Canadian dollars.
Or 12%.
As a result of market declines at the end of March.
Obviously some of that has come back with the market rebound during April.
With only a couple of exceptions are equity and credit portfolios performed at or above their benchmarks on a net basis.
His particular I'd like to give a shadowed to Peter results and he's Blair Franklin team they did exceptionally well throughout the volatility.
In the last few months, we've added great new people to our team Jason New is joined Onyx is co chief executive of Onyx credit.
Jason comes to Us after 12 years at Blackstone.
Where he was a senior managing director and co head of distressed and special situation investing.
In addition to his role as co CEO with Stewart Iwinski.
Jason will soon spearhead the launch of distressed and opportunistic credit strategies.
Jessica Brennan joins us as the head of client and product solutions.
Jessica was that the Carlyle group for the last decade.
Where she was a partner in managing director Investor Relations.
Weve, knowing Jessica for a long time as earlier in her career. She worked on the Onyx partners, one two and three fundraisers well. She was then at credit Suisse.
Jessica will be focused on continuing to build our institutional distribution capabilities.
As well as helping to develop new products across all onyx platforms.
As I look back over a 36 years in business I realize that Onyx is seen wars recessions and yes, even pandemics.
Cobot 19, maybe the worst.
But I have enormous confidence in our team.
To navigate through the challenges ahead.
In each case over our history.
We've come through the crisis stronger and more resilient and when we went into it.
I have no doubt, we will do it again here.
Before I turn it over to Chris I'd like to thank all of our stakeholders.
Employees and investors for their support.
We are side by side with you.
And we look forward to see each other in person.
And putting this chapter behind us.
I'll now turn the call over to Chris.
Thanks, Jerry and good morning, everyone.
Onyx reported a net loss of $997 million or $9 in 97 cents per share in Q1.
The Q1 segment loss, which excludes stock based compensation on impairment charge and amortization of intangibles and most of our peony.
Was $1.052 billion or $10.34 per share.
Our segment results are driven by our investing segment, which have a 985 million dollar loss this quarter.
Although these Q1 results largely aligned with the co bid related declines we all saw in the equity credit markets.
I will spend more time than usual breaking things down.
Let's start by looking at Onyx is PE portfolio.
There was a net mark to market loss from private equity investing in the first quarter of $644 million.
This loss reflects broad mark to market decreases across the portfolio. So I think it's worth discussing the approach we took and the p. evaluations for Q1.
The valuation of ARPI portfolio always involves a significant amount of judgment.
This was especially true for Q1 in light of the code at 19 pandemic.
The impact on our portfolio companies will depend on the duration and spread in the pandemic.
Duration and severity of advisories in restrictions affecting the economy.
And the longer term modifications to demand and consumer behavior.
At March 31st each of these factors was highly uncertain and difficult to predict.
Given the unique challenge pose this quarter.
We took a falling approach to ensure a robust process.
First we deferred the normal timeline by about two weeks.
Sure we had sufficient time to digest and consider all of the available information in the markets.
And the most current results at our portfolio companies.
Second liquidity with a particular area of focus.
Although liquidity is always a consideration or evaluation process. The current environment brought liquidity and the near term cash burn up some of our businesses to the forefront.
And finally, we made adjustments to cash flow projections and business plans for the near term impact scope. It but we generally relied on the equity in credit markets for an assessment of long term risks typically reducing valuation multiples and increasing weighted average cost of capital for.
Evaluation purposes.
Before moving on Allpoint that no 13 to the Q1 financial statements.
This valuation disclosure, including ranges of key valuation inputs and sensitivity tables is always included in our quarterly report.
The data maybe a greater interest to you this quarter than in the past.
As you all know from your own portfolios of public equities. The valuation of just about every business was negatively impacted in Q1, why this inferior economic contraction and.
Ongoing uncertainties and risks.
And although every sector contributed to the S&P, 520% decline.
Sector allocation and diversification mattered.
Hi, key sector was only off 12%, whereas energy was down just over 50%.
Onyx is PE portfolio is made up 37 separate businesses with no cross collateralization.
This slide detailed the allocation of the portfolio by industry segment at the end of Q1.
For those of you that follows closely you'll notice that rather than bucketing the investments by the broad industry verticals, we typically talk about.
Refined the list a bit to create some sub categories. We thought would be useful to you in thinking about onyx is exposure to cobot.
Looking at this last you'll note that our largest exposures are to business services and financial services.
Our business services investment did very well in the quarter.
About 60% of this and Avi isn't quite surveyed which actually traded up 24% in Q1.
Similarly financial services was a bright spot with our exposure, mainly consisting of specialty insurance broker, our ESG and convex a well capitalized specialty insurer in the very early stages of building its book of business.
On the flip side as you'd probably expect the economic shock and the prospect of ongoing social distancing took a toll on valuations in the events and leisure and the aerospace and defense sectors.
Overall, our private equity investments declined by 16% in Q1.
Which was actually about 3% better than the S&P 500, despite the higher leverage in our portfolio.
Strong performance from our two largest sectors and a lack of exposure to energy drove this relative outperformance.
Although industry sector is helpful in thinking about the impact of co bid there are many different business models within each sector.
So I thought it'd be helpful to share with you how we've been discussing our exposure internally and in conversations with our limited partners.
Although far from scientific we founded helpful to bucket our investments in three categories of cobot exposure as detailed on this slide.
The first category being the fortunate group of 11 businesses, what are the expected impact of coded as low or in some cases, even along turn positive.
Next 19 businesses, where the pandemic has and will create material headwinds on the demand or supply side.
And last the seven businesses that are directly exposed to cobot or some of US have said in the cross hairs.
These are companies, where revenue has been reduced to near zero and where longer term changes in consumer behavior and demand or a meaningful ongoing risk.
About 90% of Onyx is exposure in this category is made up of SM Global Emerald Exposition part D and Westjet.
I found this segmentation of Onyx is private equity exposure to be helpful from two perspectives this quarter.
First it helps explain the overall movement of our Q1 marks and in my mind evidences the reasonable and clear eyed approach we took.
And perhaps more importantly, it provides insight.
How onyx is PE portfolio may perform going forward, depending upon the severity and duration of the pandemic and its associated impact on our economies.
Let's now turn to Onyx is credit investments.
These investments generated a 323 million dollar mark to market last quarter.
Given the structural leverage employed in the underlying strategies Onyx is port formants was largely in line with the overall market, which saw the CS leveraged loan index down just over 13% in Q1.
As we said on many occasions, we hold a long term view on our credit investments and particularly as it relates to our CFO close.
Market volatility and Mark to market write downs will not make us forced sellers.
Rather will continue to sit in our equity knowing the underlying cash flows from the loan portfolio will ultimately determine our return.
The impact of the current economic conditions on our credit investments will depend largely on how the underlying loans perform through the coming down cycle.
Simply put the extent of defaults and associated recoveries.
Today in addition to our focus on overall credit quality, we watch very carefully the portfolios exposure to Triple C rated loans.
To the extent of sea level has more than 7.5% exposure to triple C loans.
The excess is included in the interest diversion testing market.
Rather than par.
If the interest diversion test has not met on a testing date.
Sounds that otherwise would be distributed on the seal as equity our retained to purchase additional loans.
This mechanism is what we sometimes referred to as the self healing feature of the CLL.
So far all Rcs flows have met their Q2 interest diversion test with only one left to be tested.
However, we'll be watching the threeq 2014, vintage CLS carefully going forward as some defaults and losses early in their lives have put then closest to the line.
To put the near term risk in context.
First quarter distributions were $20 million with 4 million of that coming from the 2014 vintage.
However, should downgrades in default in the senior loan market persist or accelerate additional vintages could come under pressure.
We are however, relatively well positioned.
Our team at Onyx credit has a long track record of lower than market defaults.
And they have continued to build the portfolios by Underweighting, cyclicals and focusing on liquid and high quality names.
To put it mildly this is an atypical order and as such I've gone into more detail than I normally would around all the mark to market activity.
So let's bring this all back into perspective by looking at our shareholder capital as a whole.
After all the puts and takes private equity in credit now represent 56% and 8% of our investing capital respectively.
With our $1.9 billion of cash in near cash accounting for a full 35% of hard and abbey.
Overall Onyx has shareholder capital of just over $60 per share.
All of which $54, an 83 cents or Canadian 70, 779 is attributable to our hard and Avi.
Before turning the call over to Q in a I'll spend a few minutes on the asset and wealth management.
Incurred a loss of 67 million or 65 cents per share compared to net earnings of $12 million or 12 cents per share in Q1 90.
PE management fees trended down year over year as realizations reduce the fee base in our fully invested funds.
However, the most significant driver of Q1 asset manager performance with an $84 million net reversal of carried interest, including a $22 million net reversal on on excess capital.
As a result, the key he manager contributed a 70 million loss in the quarter with the contributions from credit wealth management and the parent company being more typical.
I also like to look at our asset management results on an LTM basis.
LTM PE management fees were up 33 million year over year with the inclusion of a full year of fees from LP five.
However, as was the case for the quarter. The most significant driver of LTM asset manager performance with a net reversal of carried interest.
As a result, the P.E. manager contribute an LTM 21 million dollar loss with more typical contributions from credit and the parent company.
Wealth Managements 41 million dollar contribution reflects the first 10 months of gluskin chef under Onyx ownership.
Looking forward on.
Onyx is total run rate annual management fees are now $288 million, which consisted of 185 million from private equity, including an allocation of 57 million Onyx This capital.
49 million from credit.
And 54 million from gluskin public that equity and debt strategies.
As you can imagine this is not the starts the year that any of us expected and our relative performance is cold comfort.
However, onyx is fortunate and well positioned to perform going forward.
We have about $3.5 billion invested at work in our PE and credit strategies with a great deal will control over when and how we realize on this capital we are not forced sellers.
We have $1.9 billion of cash and near cash alongside 4.3 billion of Uncalled LP capital to take advantage of opportunities going forward.
We have almost 300 million of annual management fees, the lions share of which are on long term capital and unaffected by marks.
And we have a seasoned management team that has $1.3 billion of personal that investments aligned with our shareholders limited partners and clients.
Q1 wasn't fund at all and a lot of uncertainty remains around what the balance of 2020 holds for all of us, but we look forward to the challenge and believe we have the resources and business model to succeed.
We'd now be happy to take questions.
Certainly ladies and gentlemen, if you have a question at this time. Please press Star then one and you touched on telephone. If your question has been answered and we'd like to move yourself from the Q. Please press the pound key our first question comes in the line of Jeff Quanta from RBC capital markets. Your question. Please.
Hi, Good morning, I'm, just wondering if you give maybe some examples of things you've done.
Specifically with your private equity companies to try and preserve value or even take advantage of opportunities in light of covers 90.
Hey, Jeff as Bobby.
So the first thing we did obviously after we made sure.
Employees Onyx from employees that all of our portfolio Compusafe as we focused on liquidity isn't covenants and just made sure that the portfolio.
We understood where needs might be interestingly.
For a variety of different reasons, we don't see a lot of liquidity problems within our PE portfolio for this calendar year.
I mean, there, maybe one or two where a covenant and or some liquidity is needed, but if we see the aggregate dollars for those being less than sort of $100 million at the moment.
That could second obviously change.
And in some situations, where the situation, where we had direct exposure to.
In the cross hairs as Chris said, we'd had modest leverage in some cases, even as specific pandemic ensures we.
We are looking to take advantage of it as well so to the extent competitors are wounded and we're in a better capitalized situation. When there's some of those businesses. We are looking for opportunities to take advantage of it.
Nothing to speak of definitively, but clearly we have our eye on that but overall, we were I was pretty pleased to see.
How well our our portfolio seems to be holding up from a liquidity perspective today.
Okay. Thank you for that.
I know, it's still early days here, but.
How does cobot 19 change how you're thinking about the types of acquisitions, you want to do and Conversely ones that you may not be has attracted to that you would have before hand.
So look it from an immediate term as Jerry said the normal way M&A is sort of is gone.
It will come back for sure we're looking at.
We're making Pete you return the debt of Rone portfolio companies industries, we know well that are having liquidity problems and things of that nature I'm going to pick. It I think one will need to think about portfolio construction going forward, depending upon when a vaccine is available and when things get back to normal.
I wouldn't sit here and say we will never.
By a business again that has the risk of crowns gathering because of its actually income through I would fully expect those types of businesses to have high demand I'm just like they did priests United team. So too early to tell how the long term would be impacted.
But short term those impacted type businesses are the ones that are having liquidity problem, which could be an opportunity for us on the investment side.
Okay.
And going back to Chris your comments about the private equity investments outperforming the S&P kind of three to 400 basis points in Q1.
Is it too early to say, how your investments would have compared to other key private equity tiers.
It's not too early some of them have reported.
We don't have it's too early for us to have a view of the whole market, including I'll call. It our private competitors.
But theres a handful of public competitors that have already published and and I'd say, we're sort of right kind of and then it'll maybe a little bit better than average.
A couple of the large ones were off 22%.
A couple of the other ones were off sort of a 12%.
I think it depends a bit on portfolio and industry focus.
But but so far I'd say, we're kind of right in the in the middle maybe a little bit better than than average.
Okay and then just my last question was on slide just give us a supplementary slides 14 at the conference call presentation. When you talk about the gross Pete's capital is that.
Original historical cost or some more up to date valuation.
Sorry, what's the on whats implied unplanned John you're giving just yet.
Well the sector exposure like business services, Okay, it's gotten sentence answer, yes, but it got it sorry, yes, those numbers are all.
Fair market value as reported in our financials at March 31.
Okay got it perfect. Thank you Beth.
Thank you. Our next question comes the line of Nick pre from BMO capital markets. Your question. Please.
Okay. Good morning.
I wanted to ask if you could talk about the dislocation in the repricing that we've seen occur in the leverage loan market and how that might actually impact your private equity investments.
Guess, what I'm really getting had it when you foresee any complications in associated with refinancing risk at this point.
No we don't have any meaningful maturities coming due till 2022. So I think we're in we're in pretty good shape from that perspective, obviously, if you tried to go out into a new loan today every five something today the cost to borrow will be much higher than it was preachy 19, but we're pretty well insulated for that for the for the.
The seeable future on the pizza.
Okay, Okay got our portfolio.
Yes.
Okay, and then from an asset allocation perspective, I think you finished the quarter with a higher proportion of you're investing capital allocated cash.
In light of circumstances is that something you'd look to maintain for the foreseeable future.
I don't think we're sorry, it's Chris Gavin speaking, yes. Unfortunately, one of the reasons, obviously, our cash as a percentage of abbey went up as because of the denominator effect of the write downs across the rest of the portfolio.
I don't think were fixated on maintaining cash in that 35% of any be out of a sense of caution I.
I think we're going to continue to look for opportunities to put that cash to work as we have in the past.
Whether that's through our existing commitments in the private equity space, new opportunities in credit, including some new strategies.
We hope to be bringing to market.
And as you can imagine and as you would have seen our disclosure the opportunity a buyback our stock got more attractive with the downturn.
So yeah I don't think we're now.
A situation, where we're trying to hoard our cash I think we're going to.
Stay focused on also playing offense and looking for opportunities to put that to work.
Okay. That's it from me thank you.
Thank you aren't next question comes from a line of Paul How are you still see IVC. Your question. Please.
Thank you good morning, a couple of questions on the credit strategies.
Our.
From what I look I am I might look at a different leveraged loan index.
Yes.
Looks like it's recovered roughly.
Hi.
It's losses from Q1 is to that line up with what you're seeing.
Yes, I got to admit I don't I don't follow it up all that closely Paul It's Chris speaking I don't know except follows a little bit more closely when these certainly the leverage loan index has recovered from March 30, Onest I'm just not on how those numbers.
And to me.
So.
Hi, This unit evident Paul Paul This is up.
Directionally you'd certainly be correct right because the.
The COO portfolio in particular is very broad.
Portfolio. So whenever you see a market move you expect to see a.
Similar move.
In in our portfolio now that doesn't necessarily translate.
Directly into.
Equity marks on zelos, because those are our mark to.
Separately by.
Inside.
But directionally or an absolutely be correct.
Okay.
And then I'm better understand what happens to be equity position in this low.
An interest diversion test sales, it's simply a matter of.
Thereby you collect class cash flow and interest.
Or is there also mark to market.
Implication as well.
So yes go ahead you okay.
So what gets mark to market.
Is the amount of defaulted loans or triple C loans that are in excess of 7%.
And then what that can affect is your overcollateralization tests.
If you failed that then.
Cash flow that that you would have otherwise received.
In distributions as the equity investor.
We'll get diverted to buy additional loans to improve the collateral coverage and that's why we refer to it as self healing because you take.
That which you would have received and instead bring down the leverage in effect.
No those moneys are lost forever.
As the portfolio improves you can resume district distributions and of course, you own the remainder cash flows.
Yes, I think about it Paul is so long as ultimately the COO.
Ends up paying off all of its debts, which in the history of close there have been very very very few exceptions to that.
Whether an interest or whether there's a diversion of your equity in any particular quarter as an equity holder it won't affect your multiple of capital. We actual amounts you end up getting back it only ends up affecting your IR, our because those cash flows are.
Our deferred until the back end of the structure.
I'd add to that just to say that in the.
2008, a crisis.
There were a fair some number of diversions of cash flow to the equity, but by the time those close we're completely were wound up.
I think it's fair to say that in almost every case the shortfall in equity cash flow had been made up.
Okay. That's helpful and makes sense. Thank you.
And then I want to ask a few questions on.
Updated valuations on the private.
Equity investments.
First question something that the Bobby set in the answer sort of either.
The pandemic insurance.
Our did your updated valuations reflect expected payouts for that coverage.
It depends on the on the situation.
I think for Q2 will have a much better idea, what's actually going to occur there.
But they did and they yeah.
To answer that question what.
We are much better clarity on we will have much better clarity into collectability of that insurance as of end of Q2 than we did in Q1.
So I think it was it was taking into consideration, we just had better information today.
Got it.
I think it's fair to say call, though in the aggregate.
Looking at the totality of our portfolio.
Those outcomes won't have a particularly material.
Effect on the aggregate portfolio.
That's important.
Next question I want to.
Because it seems like to me it seems like you've made more conservative assumption changes then what I've seen in the past.
From on X.
Even even maybe during the great financial crisis I'd say.
Mark so being more conservative than how quickly you just remarks.
Back then so it's kinda like is that a fair characterization and then second part of that question is.
We've seen the cost of credit and.
40 risk premiums change post order and.
How quickly will those kind of changes be reflected in the and the Mark's going forward.
Yes, it's Chris Paul.
I think I can't speak to all the gives and takes in terms of our valuation process.
From 12 years ago today.
But I I would say I do think they are different crises I think that this crisis had a more direct and obvious impact on cash flows of businesses as opposed to necessarily you know liquidity and finance ability and balance sheet impacts.
So I do think it's just different when you turn your mine to evaluation of about running the mill industrial business today versus what you might have been thinking back into it.
In a financial crisis of a wedo nine I don't think I have anything more to give you on that others might might have a view on your second question.
Yes, I think if markets.
Rebound in terms of.
Reduced or cost of equity and reduce cost of debt that will flow through into our valuations at the end of June.
We really do look to the markets.
To to a large extent to help us price future risk.
We've got to figure out the expectations for each of our businesses independently, but yes, you know when markets move materially you should expect got to be reflected in the co relation with.
The movement in our overall valuations across the portfolio.
Great. Okay last question I have been.
This is really to sort of maybe broad assumptions you've made around the length of duration for the pandemic in the length of duration around warranty just so.
I can have some kind of benchmarks to work with this things resolved quicker than maybe kind of generally what you baked and or things resolved.
And over a longer period of time versus what your big I think it'd be helpful and again general characterizations not specifics, but generally.
Yes. So we obviously don't know when things will go back to quote unquote normal.
What we've been testing and all of our P companies is to make sure we have visibility on liquidity.
For the next year so.
But beyond that it's really hard to tell.
But that's sort of a timeframe we've been working in when we think about the rest of making it making sure for the next 12 months I'm, we have a path to make sure that we have the proper liquidity for each purposes.
Yeah and from a valuation perspective, Paul this sort of tied back to the last question I answered.
That was the point I tried to make in my opening comments.
That tool to up to a material effect to a material part of our valuations in terms of trying to assess the depth and duration of the pandemic, we really kind of tried to look at what the the markets were telling us about.
About the overall markets assessment about through a risk premiums and cost to cost of debt cost of equity.
So we're trying to really reflect the overall markets view of that as opposed to taking an independent on X view that we're going back to normal in two months form on six months.
Okay I'll leave it there then thank you.
Thank you as a reminder, ladies and gentlemen, if you have a question at this time. Please press Star then one under you touched on telephone. Our next question comes from lined out Scott Chan from Canaccord Genuity. Your question. Please.
Good morning, I think it'd be helpful. If you if you provided some update or insight into the Westjet investment.
Maybe particularly in terms of the kind of the capital position and any injection of a future capital might be needed bionics or recall investors.
Tough tough acute and respond to that.
Yeah, I mean, I think he I think you should assume that any comments that you've heard from Chris and Bobby about liquidity.
Yes, I have westjet assumed in those so that means anything further to say on on the liquidity comments.
In terms of activity there if you followed what's happened with our peers.
And the U.S. carriers publicly it's really a similar story.
Capacity is down a lot.
You know in some ways.
We've been just really really focused on getting our resting heart rate.
Down to a level where.
We can emerge on the other side of this gradually in following the advice of the.
Various federal and provincial public health agencies.
In a way.
That allows us to recover gradually and meet demand is it added surfaces. So we're just really.
In in a bit of a hibernation I guess you could call it.
And then in some ways I think we'll probably have to plan for.
Perhaps recovery of bids sooner rather than later, if the borders open in a way that favour domestic leisure travel which is still.
Really core to our business relative to many of the international and cross border carriers that that you would read about.
Thanks, and maybe just.
If someone can update just on the general M&A pipeline because there I think in your opening remarks, you kind of talked about it being a bit slow, but if I look at your private equity peers. It seems like it's the right environment or ripe environment for for deploying capital.
So it's really still pretty early posting 19, so I'd say the M&A environment for us on the large cap he side is still relatively slow.
Against businesses that are hitting liquidity walls are the ones that are looking for money right now, but if they if the economy is slow for several quarters that'll start to permeates through.
The rest of the the opposite the rest of the industry's work that that could have opportunity than normal straight at M&A Goldman Sachs hires.
Well this extra by a business or a process that is that is that part of the markets just shut down right now.
Relatively speaking because of that the pipelines the pipeline is less slower.
Okay fair enough.
Going back to Gluskin shaft, Gary I think you commented that flare Franklin performed well was it in April or in the quarter.
I look at the public that's trying to tease it seems like it was down significantly quarter over quarter.
Could you give some specifics on that or.
Was down in the month March although recovers much of that month April but when you look at it relative to just about any other competitor.
Certainly most others strategies, we thought they did exceptionally well.
In keeping mind, it's not a contrary per se. It just came into the quarter or came into the month significantly under levered relative to its peers and then was able to take advantage of.
The disruptions in the market by effectively remembering somewhat.
Okay, and just last question, maybe for Chris I noticed that the disclosure on the private investments the at the LTM EBITDA and net debt was that was not included as far as I can see that's something that we expect going forward.
No Scott, we're discontinuing that disclosure, we got to a point where because of.
Situations and restrictions with with partners and co investors and the like we were down to a very small handful of companies, where we were able to disclose.
And overall, we just thought that the value of that relative to the cost to the companies involved.
Wasn't wasn't worth wild in the context of trying to understand our overall private equity business.
Okay. Thank you very much.
Thank you. This does conclude the question and answer session in the face program I think they had the program back to Jerry Schwartz for any further remarks.
Thanks, everybody for participating in this call today, we appreciate your support and as always feel free to contact Chris or Claire if you have any questions at all.
Well look forward to speaking with you again next quarter, thanks, everybody bye.
Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.
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