Q4 2024 Fiera Capital Corp Earnings Call
Emily: Good morning, my name is Emily and I will be your conference operator today.
Good morning, My name is Emily and I will be your conference operator today at this time I would like to welcome everyone to furor capital's, earning call to discuss financial results of the fourth quarter of 'twenty 'twenty four all lines have been placed on mute to prevent any background noise. After the speakers' prepared remarks, there will be a question and answer period.
Emily: At this time, I would like to welcome everyone to Fiera Capital's Earnings Call to discuss financial results of the fourth quarter of 2024. All lines have been placed on you to prevent any background noise. After the speaker's prepared remarks, there will be a question and answer period.
Emily: As a reminder, this conference call is being recorded. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. If you would like to withdraw your question, please press star 2. Thank you.
As a reminder, this conference call is being recorded if you would like to ask a question. During this time simply press star one on your telephone keypad. If you would like to withdraw your question. Please press star two thank you I will now turn the conference over to MS. Mary Farscape Senior Vice President Treasury and Investor Relations.
Marie-France Gay: I will now turn the conference over to Ms. Marie-France Gay, Senior Vice President, Treasury and Investor Relations. Ms. Gay, you may begin your conference.
MS Gait: MS Gait, you may begin your conference.
Marie-France Gay: Thank you, Emily.
Speaker Change: Thank you Emily.
Marie-France Gay: Good morning, everyone.
Speaker Change: Good morning, everyone knows what that Kid.
Marie-France Gay: Bonjour à tous. Bienvenue à l'appel de conférence de Fiera Capital pour discuter des résultats financiers du quatrième trimestre de 2019. Welcome to the FIERA Capital Conference Call to discuss our financial results for the fourth quarter.
Speaker Change: They've not identical.
Speaker Change: I think it's been.
Speaker Change: Now she gets the emptiness they make them.
Speaker Change: Welcome to the fear of capital conference call to discuss our financial results for the fourth quarter of 2024.
Marie-France Gay: Note that today's call will be held in a Before we begin, I invite you to download a copy of today's presentation, which can be found in the Investor Relations section of your computer. of our website at ir.fieracapital.com.
Speaker Change: Note that today's call will be held in English.
Before we begin I invite you to download a copy of today's presentation.
Speaker Change: Which can be found in the Investor Relations section of our website at IR PR capital Dot com.
Marie-France Gay: Also note that comments made on today's including replies to certain questions. may deal with forward-looking statements, which are subject to risks and uncertainty. that may cause actual results.
Speaker Change: Also note that comments made on today's call including.
Speaker Change: Including retiring certain question.
May deal with forward looking statements, which are subject to risks and uncertainties uncertainties that may cause actual results to differ from expectations.
Marie-France Gay: I would ask you to take a moment to read the forward-looking statement on page 2.
Speaker Change: I would ask you to take a moment to read the forward looking statements on page two of the presentation.
Jean-Guy Desjardins: On today's call, we will discuss our Q4 2024. Starting with an update on our AUM flows. followed by highlights of our public and private market supply. as well as our private We will then review our findings.
Speaker Change: On today's call, we will discuss our Q4 'twenty 'twenty four results.
Speaker Change: With an update on are you I'm close.
Speaker Change: All of the highlights of our public and private markets platforms.
Speaker Change: Well I, just havent wealth business.
Speaker Change: We will then review our financial performance.
Jean-Guy Desjardins: Our speakers today are Mr. Jean-Yves Desjardins, Chair of the Board and Global Director. and Mr. Lucas Contilho, Executive Director and Global Partner. Also available to answer questions following the prepared will be Jean-Michel, President and CIO, Public. and Maxime Minard, President and CEO of Fiera Canada and Global.
Johnny: Our speakers today are Mr. Johnny did yesterday.
Speaker Change: Chairman of the board and global CEO.
Lucas: And Mr. Lucas can to your executive director and global CFO.
Speaker Change: Also available to answer questions. Following the prepared remarks will be xiaomi shell.
Speaker Change: And CIO public market.
Speaker Change: Next to me now President and CEO up here in Canada.
Speaker Change: In global private requests.
Jean-Guy Desjardins: With that, I will now turn the call.
Speaker Change: With that I will now turn the call over to John.
Jean-Guy Desjardins: Thank you, Marie-France.
John: Thank you, Matt and good morning, everyone. Thank you for joining us today as we report.
Jean-Guy Desjardins: Good morning, everyone. Thank you for joining us today as we report our results for the fourth quarter and for the year of 24. So global equity markets had an impressive year in 2024 with investors spending much of the year bracing for a soft economic lending and aggressive rate cuts. Stocks lost some gains towards year-end as pricing pressures and an inflation is policy agenda from the U.S. administration brought into question the extent of rate cuts from the Federal Reserve in the coming years. Fixed income markets also generated positive results in 2024, but retreated somewhat towards the end of the year.
Speaker Change: Our results for the fourth quarter and full year of 24.
John: So global equity markets at an impressive year in 'twenty 'twenty four which.
John: Investors are spending much of the year bracing for a soft economic landing and aggressive rate cuts.
John: Stocks lost some gains towards year end.
John: Pricing pressures and inflation is.
John: Policy agenda from the U S administration brought into question the extent of rate cuts from the federal reserve in the coming year.
John: Fixed income markets also generated positive results in 'twenty to 'twenty, four but retreated somewhat towards the end of the year.
Jean-Guy Desjardins: The impact of the Federal Reserve's 100 basis points of rate cuts in 24. was contoured by concerns about persistent inflation. with the potential for wider budget deficits and higher tariffs adding to the upside inflation risk. That saw investors rein in their expectations for rate cuts in 2021. Canadian bonds outperformed their U.S. counterparts. With the spread between the Canadian and U.S. bond yields, widening drastic. against the backdrop of higher markets.
John: The impact of the federal reserves 100 basis points of rate cuts in 'twenty four.
John: Wisconsin by concerns about persistent inflation.
John: With the potential for why their budget deficits and Italian retirees.
John: And to the upside inflation risks.
John: That's our investors to rein in their expectations for rate cuts in 2025.
John: Canadian bonds outperformed their U S counterparts.
John: With the spread between the Canadian and U S bond yields widening drastically.
Against the backdrop of higher markets.
Jean-Guy Desjardins: Our assets under management ended the year at $167.1 billion. representing an increase of $1.6 billion for the quarter. and an increase of 5.4 billion or 3.3% for the year. Assets in our private markets platform grew 1% during the quarter. and nearly 7% during the year. to end the year at $19.7 billion, driven by new mandates and positive market In our public markets, assets under management of $147.4 billion increased 1% during the quarter and 3% for the year. as market appreciation was partly offset by net outflows which were largely Pinestone related. Excluding assets under management, sub advised by Feinstein.
Our assets under management ended the year at under the $67 1 billion.
John: Representing an increase of one 6 billion for the quarter.
John: And an increase of $5 4 billion or three 3% for the year.
John: I said, it's in our private markets platform grew 1% during the quarter.
John: And nearly 7% during the year to.
John: To end the year at $19 7 billion.
Reuben: Reuben, but new mandates and positive market action.
Reuben: And our public markets assets under management.
Of the $147 4 billion increased 1% during the quarter and 3% for the year.
Reuben: As market appreciation was partially offset by net outflows, which were largely clean stone related.
Reuben: Excluding assets under management sub advise clients too.
Jean-Guy Desjardins: Our public markets assets increased 2% for the quarter and 5.5% for the full year.
Reuben: Our public markets assets increased 2% for the quarter and five 5% for the full year.
Jean-Guy Desjardins: I will now turn to highlights of our commercial and investment performance across our asset class. So starting with public markets platform. Public markets, excluding assets under management sub-advised by Pinestone, saw good cross-mandate activity in the quarter. With more than 900 million of new mandates awarded. Primary relief from clients investing in our global and large-cap equity mandate. We saw positive net organic growth in the equity platform, excluding PineStone, for both the quarter and the year. Gross mandates were offset by lost mandates and negative net contributions. from clients, redeeming from fixed income mandates resulting in approximately 800 million of net outflows for the quarter.
Reuben: I will now turn to highlights of our commercial and investment performance across our asset classes.
Reuben: So starting with public markets platform.
Reuben: Both of these markets excluding assets under management sub advised pipeline stone saw good cross mandate activity in the quarter.
Reuben: With more than 900 million of new mandates awarded.
Primarily from clients in this thing.
Reuben: Oh, well in large cap equity mandates.
Reuben: We saw positive net organic growth in the equity platform.
Reuben: Excluding thin stone for both the quarter and the year.
Reuben: Gross mandates were offset by lost mandates a negative net contributions from clients redeeming from fixed income mandates, resulting in approximately 800 million of net outflows for the quarter.
Jean-Guy Desjardins: With respect to assets under management sub-advised by PineStone, net outflows were $1.3 billion. 300 million of which were outflows transferred directly to Pointstone. And the balance being mostly related to client rebalancing. and moving to other managers. as we previously announced in January of this year. 5.7 billion of Pinestone equity mandates from Canoo were withdrawn and transferred directly to Pinestone. Client concentration in PineStone has been reduced meaningfully over the last two years. Canoe was the last large. single mandate client. Of the 25 largest clients currently invested in PineStone, under one-third are single-mandate clients with assets under management greater than $1 billion.
Reuben: With respect to assets under management sub advised by thin stone.
Reuben: Net outflows were $1 3 billion.
Reuben: 300 million of which we're at slows transferred directly to find something.
Reuben: And their.
Reuben: The balance.
Reuben: Being mostly related to client rebalancing.
Reuben: And moving to other managers.
Reuben: As we've seen.
Reuben: Previously announced in January of this year.
Reuben: $5 7 billion of Finestone equity mandates from Kalou.
Reuben: Were withdrawn and transferred directly to find stuff.
Reuben: Client concentration and find someone that has been reduced meaningfully over the last two years.
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Reuben: It was the last large.
Reuben: Single mandate client.
Reuben: Of the 25 largest clients currently invested in buying stone.
Reuben: Under one third are single mandate clients.
Reuben: With assets under management greater than $1 billion.
Jean-Guy Desjardins: For the rest of 2025. We expect direct transfers to PineStone could be up to an additional $1 billion. We continue to execute. on our Decentralized Distribution Model. And with large fine stone redemptions now behind us. work towards returning to a sustained level of net inflows going forward.
Reuben: So for the rest of 'twenty or 'twenty five.
Reuben: We expect direct transfers to find stone could be up to an additional $1 billion.
Reuben: We continue to execute.
Reuben: And our decentralized distribution model.
Reuben: And with large finestone redemptions not behind us.
Reuben: Working towards returning to a sustained level of net inflows going forward.
Jean-Guy Desjardins: Now turning to investment performance in public markets. Despite it being a challenging quarter for odd performance, many key public market strategies generated alpha over the one-year period, and nearly all outperformed over the longer three- and five-year period. Our Canadian fixed income strategies continued to perform well. with our strategic core and integrated core strategies adding value for the quarter. and all three of our flagship Canadian fixed income strategies adding value over the one, three and five-year period. Foreign fixed income strategies encountered a more challenging fourth quarter. The global multi-sector income strategy lagged its benchmark in the fourth quarter, although it still managed to add more than 200 basis points of value added over the one-year period.
Reuben: Now turning to investment performance and public markets.
Reuben: Despite it being a challenging quarter for outperformance many key public market strategies generated alpha over the one year period, and nearly all outperform over the longer three and five year periods.
Reuben: Or can you just fixed income strategies continue to perform well.
Reuben: With our strategic core and integrated core strategies, I think value for the quarter.
Reuben: And all three of our flagship Canadian fixed income strategies, I think values over the one three and five year periods.
Reuben: Foreign fixed income strategies and gone through a more challenging fourth quarter.
Reuben: The global multi sector income strategy lagged its benchmark in the fourth quarter.
Reuben: Although it's still managed to add more than 200 basis points of value added over the one year period.
Jean-Guy Desjardins: The High-Grade Core Intermediate Fund and the Tax-Efficient Core Plus Fund also came in below benchmark in the fourth quarter, but continue to outperform over the three- and five-year period. While 2024 was a strong year for global equity markets, it was a challenging year for odd performing, as more than half of the 25% gain of the S&P 500 for the year were driven by the magnificent seven. under exposure to this group largely resulted in returns that lagged The U.S. equity market is currently near its most concentrated level in 100 years. with the top 10 stocks in the S&P 500, comprising more than 35% of the index.
Reuben: The high grade core intermediate fun and the tax efficient core plus fund also came in below benchmark in the fourth quarter, but continued to outperform over the three and five year periods.
Reuben: Well, it's 124 was a strong year for global equity markets.
Reuben: It was a challenging year for us performing as more than half of the 25% gain of the S&P 500 for the year were driven by the magnificent seven.
Reuben: Under exposure to this group largely resulted in returns that lagged benchmarks.
Reuben: U S equity market is currently near it's most concentrated level in 100 years.
Reuben: With the top 10 stocks in the S&P 500, comprising more than 35% of the index.
Jean-Guy Desjardins: creating a very challenging environment for generating short-term alpha relative to that income. After a long record of odd performance, the three strategies sub-advised by Pinestone Asset Management underperformed their benchmarks for the quarter. And for the year, the U.S. and global strategy underperformed, while the EFII strategy added value, mainly as a result of their underexposure to the Magnificent Seven and in the Our Canadian equity strategy also underperformed its benchmark for the quarter, mostly as a result of non-exposure to a security which rallied more than 60% in the second half of 2004. but however remains in the top quartile for the period versus its peer group.
Reuben: Creating a very challenging environment for generating short term alpha relative to that index.
Reuben: Yeah.
Reuben: After a long record of outperformance the three strategies sub advised by Pine Stone asset management underperformed their benchmarks for the quarter.
Reuben: And for the year, the U S and global strategy underperformed, while the easy strategy added value.
Reuben: Mainly as a result of their under exposure to the magnificent seven and industrials.
Reuben: Yeah.
Reuben: Yeah.
Reuben: Oh occasion equity strategy also underperformed as a benchmark for the quarter, mostly as a result of another exposure to a security what's rallied more than 60% in the second half of 'twenty four.
Reuben: But whatever remains in the top quartile for the period versus its peer group.
Jean-Guy Desjardins: Despite a rare period of underperformance for our frontier markets strategy. in the fourth quarter. The strategy continues to deliver notably strong relative performance across all medium and long-term periods. Lastly, the Emerging Markets Select Strategy fell slightly short of its benchmark in the fourth quarter, despite significantly outpacing it over the one-year period and two years. The strategy continues to post an impressive track record, outperforming its benchmark. by over 9.5%. since its inception in 2021.
Reuben: Despite a ramp period of underperformance for our frontier markets strategy.
Reuben: In the fourth quarter.
This strategy continues to deliver a notably strong performance across all medium and long term periods.
Lastly, the emerging market select strategy fell slightly short of its benchmark in the fourth quarter.
Reuben: Despite significantly outpacing it over the one year period and two years.
Reuben: This strategy continues to pose an impressive track record of outperforming its benchmark by one.
Reuben: Over nine 5%.
Reuben: Since its inception in 2021.
Jean-Guy Desjardins: So before moving on, I am pleased to highlight that two FIERA funds and one FIERA strategy. have been recognized as top performers in the Global Manager Research 2024 Top Performer Award. This is the second consecutive year Fiera Capital has been recognized as a top performer by Global Manager Research. and is a testament to the effectiveness of our public market strategies, all of which are built on diligent research, proactive management, and a strong commitment to sustainable growth.
Reuben: So before moving on I am I am pleased to highlight that to fear of funds and the one Shire strategy.
Reuben: I have been recognized as top performers in the global manager Research 'twenty 'twenty four top performer awards.
Reuben: This is the second consecutive year.
Reuben: <unk> capital has been recognized.
Reuben: As a top performer by global manager research.
Reuben: And is a testament to the effectiveness of our public market strategies, all of which are built on diligent research proactive management and a strong commitment to sustainable growth.
Jean-Guy Desjardins: Now turning to our private market platform. Private markets delivered positive net organic growth during the quarter of approximately $200 million and close to $1.4 billion for the year after returning capital. of $184 million and $556 million, respectively, to invest. So growth was driven by new mandates of more than $300 million for the quarter and $1.7 billion for the year. primarily from clients into real estate. private debt, and agriculture. Close to $600 million was deployed in the quarter, and we maintain a pipeline of roughly $900 million available for future deployment into future opportunities.
Reuben: Now turning to our private market platform.
Reuben: Brother markets delivered positive net organic growth during the quarter of approximately 200 million.
Reuben: And close to 1.4 billion for the year.
Reuben: After returning capital.
Reuben: Honored and $84 million.
Reuben: And 556 million respectively to investors.
Reuben: So growth was driven by new mandates of more than 300 million for the quarter and 1.7 billion for the year.
Reuben: Primarily from clients into real estate.
Reuben: Private debt and agriculture.
Reuben: Yes.
Close to 600 million was deployed in the court was deployed in the quarter and we maintain a pipeline of roughly $900 million available.
Reuben: For future deployment into future opportunities.
Jean-Guy Desjardins: So with respect to investment performance. Our key private market strategies perform well in the quarter, with nearly all strategies generating positive returns for the quarter and producing absolute returns of 4% to 12% for the year. Private equity performed well in the quarter and produced a one-year return of 11%. Our approach here remains focused on selective investment in high growth sectors with particular investor interest in technology and health services. Our global agriculture strategy performed well in the quarter and generated a 9% return for the year. with the strategy maintaining a robust pipeline of new partnerships and potential bolt-on opportunities.
Reuben: So with respect to investment performance.
Reuben: Our key private market strategies performed well in the quarter with nearly all strategies generating positive returns for the quarter and producing absolute returns of 4% to 12% for the year.
Reuben: Private equity performed well in the quarter and produced a one year return of 11%.
Reuben: Our approach here remains focused on selective investments in high growth sectors.
Speaker Change: Particular, investor interest in technology and health services.
Speaker Change: Our global Agriculture, Agriculture strategy performed well in the quarter and generated a 9% return for the year.
Speaker Change: With this strategy of maintaining a robust pipeline of new partnerships and potential bolt on opportunities.
Jean-Guy Desjardins: Our infrastructure strategy generated a positive return in the quarter and returned 9% for the year. In real estate, markets in Canada and the UK showed further evidence of recovery in the quarter after weathering a difficult valuation environment from 2022 to early 2024, enhanced by rate cuts and improved liquidity conditions. We remain strategically heavily weighted towards multi-residential and industrial sectors with limited exposure to the still-challenged office sector.
Speaker Change: Our infrastructure strategy generated a positive return in the quarter.
Speaker Change: And return 9% for the year.
Speaker Change: In real estate markets in Canada, and the U K showed further evidence of recovery in the quarter after weathering a difficult valuation environment from 'twenty to 'twenty two early 'twenty, four and enhanced by rate cuts and improved liquidity conditions.
Speaker Change: We remain strategically heavily weighted towards multi residential and industrial sectors with limited exposure to this still challenge office sector.
Jean-Guy Desjardins: Now, lastly, nearly all of our private credit strategy. generated positive returns for the quarter. in particular. Our real estate debt strategies performed well, generating attractive low volatility returns, as well as steady cash distribution. Central banks and the markets that we operate have continued to cut rates and signal for more potential rate cuts over the coming months, and we are continuing to see demand for loans ramp up as lower rates and costs are allowing more projects to become economically attractive.
Speaker Change: Lastly, nearly all of our private credit strategies.
Speaker Change: Generated positive returns for the quarter.
Speaker Change: In particular our.
Real estate debt strategies performed well generating attractive.
Speaker Change: And.
Speaker Change: Low volatility returns as well as steady cash distributions.
Speaker Change: Central banks in the markets that we operate have continued to cut rates and signal for more potential rate cuts over the coming months.
Speaker Change: And we are continuing to see demand for loans ramp up as lower rates and costs are allowing more projects to become economically attractive.
Jean-Guy Desjardins: Private wealth assets under management increased by approximately $300 million in the fourth quarter to close at $14.6 billion. Assets under management were up close to $1 billion on the year, driven by market appreciation and approximately $700 million in gross new mandate. We continue to refine and simplify the theme and value proposition to strengthen client relationships and drive sales growth.
Speaker Change: Private wealth assets under management increased by approximately 300 million in the fourth quarter to close at.
Speaker Change: $14 6 billion.
Speaker Change: Assets under management were up close to 1 billion under year.
Speaker Change: Driven by market appreciation and approximately 700 million and gross new mandates.
Speaker Change: We continue to refine and simplify and simplified the team and value proposition to strengthen client relationships and drive sales growth.
Lucas Contilho: Now with that, I will turn it over to Lucas to review our financial performance.
Speaker Change: Now with that I will turn it over to Lucas to review our financial performance.
Lucas Contilho: Thank you, Jean-Guy, and good morning, everyone. I will now review the financial results for the fourth quarter and full year. which were driven by solid year-over-year growth and base management. in both our public and private markets.
Lucas: Thank you Jackie and good morning, everyone I will now review the financial results for the fourth quarter and full year, which were driven by solid year over year growth of base management fees in both our public and private markets platforms.
Lucas Contilho: starting with total revenue. Across our investment platforms, total revenues of $184 million in the fourth quarter declined by $27 million. 13 percent year-over-year, primarily reflecting lower performance fees in the fourth quarter of 2024 when compared to the same quarter last year. Lower performance fees from the investment strategies in our public markets drove the year-over-year performance fee decline, particularly when compared to a significant outperformance we experienced in 2020. With a full year, total revenue increased $2 million to $689 million. as good growth and base management fees and higher other revenues were largely offset by the lower price.
Speaker Change: Starting with total revenues.
Speaker Change: Across our investment platforms total revenues of $184 million in the fourth quarter declined by $27 million or 13% year over year, primarily reflecting lower performance fees in the fourth quarter of 2024, when compared to the same quarter last year.
Speaker Change: Lower performance fees from the investment strategies, and our public markets drove the year over year performance fee decline, particularly when compared to a significant outperformance we experienced in 2023.
Speaker Change: For the full year total revenue increased $2 million to $689 million.
Speaker Change: As good growth in base management fees and higher other revenues were largely offset by the lower performance fees.
Speaker Change: Yeah.
Lucas Contilho: Base management fees rose to $157 million in the quarter, increasing 6% year-over-year, reflecting growth in both public and private markets AUM. For the year, base management fees were $612 million, up 3%, or $19.8 million, from the prior year, driven by higher average AUM, along with a higher share of fees from asset mix shift into private markets and towards higher fee management. The average fee rate increased to 37.4 basis points for 2024 when compared with 36.6 basis points for the prior year.
Speaker Change: Base management fees rose to $157 million in the quarter, increasing 6% year over year, reflecting growth in both public and private markets.
Speaker Change: For the year base management fees were $612 million up 3% or $19 8 million from the prior year driven by higher average AUM.
Speaker Change: Long with a higher share of fees from asset mix shift into private markets and towards higher fee mandates as.
Speaker Change: As a result, our average fee rate increased to 37 four basis points for 2024, one compared with $36 six basis points for the prior year.
Lucas Contilho: Turning to Public Market Review. base management fees of $108 million in the quarter increased by more than $5 million or 5% year-over-year. primarily due to higher revenues from financial intermediary clients in the US and institutional clients in Canada and Asia. For the year, base management fees of $424 million were almost $6 million higher compared to with 2020. This, despite sizable outflows experienced during the first half of the year, related to Pinestone's sub-advisement. performance fees of just over $5 million for the quarter were down significantly from strong fees of $32 million earned in the same quarter last year.
Speaker Change: Turning to public market revenues.
Speaker Change: Base management fees of $108 million in the quarter increased by more than $5 million or 5% year over year, primarily due to higher revenues from financial intermediary clients in the U S and institutional clients in Canada and Asia.
Speaker Change: For the year base management fees of $424 million were almost 6 million higher compared to with 2023.
Speaker Change: This despite sizable outflows experienced during the first half of the year related to Pine stone sub advised mandates.
Speaker Change: Performance fees of just over $5 million for the quarter were down significantly from strong fees of $32 million earned in the same quarter last year.
Lucas Contilho: as emerging markets performance was challenged in the latter half of 2024, particularly during the fourth. full year performance fees of $8 million were $26 million lower from the prior year. Other revenues of $3 million in the quarter were essentially flat to the same quarter last year and increased by $6 million. mostly reflecting revenues related to a prior year in While we are disappointed by the ultimate level of performance fees earned for the year, we are nonetheless pleased with the resilience of the base management fees generated by our public market. which despite the adverse impact of outflows related to the Pinestone sub-advised mandates and lower-fee fixed income strategies, were positively impacted by $1.5 billion in new mandates across our Canadian, U.S.
Speaker Change: As emerging markets performance was challenged in the latter half of 2024, particularly during the fourth quarter.
For the full year performance fees of $8 million were $26 million lower from the prior year.
Other revenue was a $3 million in the quarter were essentially flat to the same quarter last year and increased by $6 million for the year.
Speaker Change: Mostly reflecting revenues related to a prior year insurance claims.
Speaker Change: While we are disappointed by the ultimate level of performance fees earned for the year. We are nonetheless pleased with the resilience of the base management fees generated by our public markets platform.
Speaker Change: Which despite the adverse impact of outflows related to the finestone sub advised mandates and lower fee fixed income strategies were positively impacted by $1 5 billion of new mandate wins across our Canadian U S and Atlas global equity strategies.
Lucas Contilho: and Atlas global equities. Positive market environment for the year further helped us grow our public markets equity platform, X-Pinestone, from $29 billion at the beginning of the year to $35.4 billion by the end of the year.
Speaker Change: Positive market environment for the year further helped us grow our public markets equity platform explained stone from 29 billion at the beginning of the year to $35 4 billion by the end of the year.
Lucas Contilho: Now turning to private markets. Base management fees increased by $4 million, or 9% year-over-year, to $49 million for the management fees for the year of $188 million were $14 million or 8% higher compared to 2023. The increase was largely driven by higher institutional assets under management in our agriculture, real estate, and infrastructure sectors. Performance fees were $8 million during the quarter, or $2 million lower year-over-year, mostly due to the timing of performance fees recognized from agriculture and private credit as a portion was recognized in the third quarter, as mentioned in our last On a full year basis, performance fees were close to $17 million or $1 million higher from the prior year.
Now turning to private markets revenues.
Speaker Change: Base management fees increased by $4 million or 9% year over year to $49 million for the quarter base.
Speaker Change: Base management fees for the year of $188 million were $14 million or 8% higher compared to 2023.
Speaker Change: The increase was largely driven by higher institutional assets under management in our agriculture real estate and infrastructure strategies.
Speaker Change: Performance fees were $8 million during the quarter or $2 million lower year over year, mostly due to the timing of performance fees recognized from agriculture, and private credit funds as a portion was recognized in the third quarter as mentioned on our last earnings call.
Speaker Change: On a full year basis performance fees were close to $7 million $17 million or $1 million higher from the prior year.
Lucas Contilho: Year-over-year, commitment and transaction fees were flat for the quarter at $7 million. On a full-year basis, commitment and transaction fees were just over $16 million, down by $2.5 million. Share of earnings in joint ventures related to our UK real estate business were $2 million in the quarter, a decrease of $7 million year-over-year related to the timing and completion of our joint venture project. However, for the year, share earnings and joint ventures of $12.5 million were up $1 million from the prior quarter. Overall, we were very pleased with the results of our Private Markets Platform for the year, which contributed revenues of over $241 million in 2024, up $17 million or 8% from the prior year.
Speaker Change: Year over year commitment and transaction fees were flat for the quarter at $7 million on a full year basis commitment and transaction fees were just over $16 million down by $2 5 million versus last year.
Speaker Change: Share of earnings in joint ventures related to our UK real estate business were $2 million in the quarter, a decrease of $7 million year over year related to the timing of completion of our joint venture projects. However for the year share of earnings in joint ventures of $12 5 million were up $1 million from the prior period.
Speaker Change: Overall, we were very pleased with the results of our private markets platform for the year, which contributed revenues of over $241 million in 2024 up $17 million or 8% from the prior year.
Lucas Contilho: Revenues from private markets contributed 37% of our total revenues for the fourth quarter and 35% of total revenues for the year, despite accounting for just 12% of our total assets under management. In today's unpredictable economic and political environment, our private markets platforms continues to provide attractive revenue diversification and margin growth to our businesses.
Speaker Change: News from private markets contributed 37% of our total revenues for the fourth quarter and 35% of total revenues for the year. Despite accounting for just 12% of our total assets under management.
Speaker Change: And today's unpredictable economic and political environments are private markets platforms continues to provide attractive revenue diversification and margin growth to our business.
Lucas Contilho: Turning to SG&A. fourth quarter, SG&A expense of $140 million, increased just 3% year-over-year. important to note that when excluding share-based compensation expense of $9.5 million during the order, SG&A was actually down 2% year-on-year. The higher share-based compensation for the quarter was due to the acceleration of certain long-term incentive awards and is not reflected of the expected run rate for share-based compensation expense going forward.
Speaker Change: Turning to SG&A.
Speaker Change: For the fourth quarter SG&A expense of $140 million increased just 3% year over year.
Important to note that when excluding share based compensation expense of $9 5 million during the quarter SG&A was actually down 2% year over year.
Speaker Change: The higher share based compensation for the quarter was due to acceleration of certain long term incentive awards and is not reflected of the expected run rate for share based compensation expense going forward.
Lucas Contilho: For the year, our SG&A expense totaled $514 million, up $21 million, or 4% from the prior higher expenses were largely from higher compensation costs and higher travel and marketing costs related to our regional platform expansion, partly offset by lower sub-advisory fees related to lower performance fees generated during Turning to Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA of the quarter was $53.4 million, decreased $24 million or 31% from the same quarter last year. full year adjusted EBITDA was $196 million, down $10 million, or 5%. reflecting the impact of lower performance fees and adjusted EBITDA margin was 29% for the quarter, and for the year adjusted EBITDA margin was 28.4%, down from 30% in the prior year.
Speaker Change: For the year, our SG&A expense totaled $514 million up $21 million or 4% from the prior year.
Speaker Change: Higher expenses were largely from higher compensation costs, and higher travel and marketing costs related to our regional platform expansion, partly offset by lower sub advisory fees related to lower performance fees generated during the year.
Speaker Change: Okay.
Speaker Change: Turning to adjusted EBITDA and adjusted EBITDA margin.
Speaker Change: Just that EBITDA for the quarter was $53 $4 million decreased $24 million or <unk>, 31% from the same quarter last year.
Speaker Change: For the full year, our adjusted EBITDA was $196 million down $10 million or 5%, reflecting the impact of lower performance fees in public markets.
Speaker Change: Our adjusted EBITDA margin was 29% for the quarter and for the year adjusted EBITDA margin was 28, 4%.
Speaker Change: Down 30% in the prior year.
Lucas Contilho: We note that excluding the impact of performance fees from total revenues and performance fee related expenses, full-year adjusted EBITDA increased 3% in 2024, and our margin was comparable from the prior year.
Speaker Change: We note that excluding the impact of performance fees from total revenues and performance fee.
Speaker Change: Related expenses full year, adjusted EBITDA increased 3% in 2024, and our margin was comparable from the prior year.
Lucas Contilho: Now looking at her. On an adjusted basis, net earnings were $23 million, or $0.21 per share, diluted for the quarter. down from $50 million, or $0.37 per share, in the same quarter last year, largely reflecting lower performance fees and the impact foreign exchange revaluation had on balance sheets. For the year, adjusted net earnings were $103 million, down 19% from $126 million for the prior year. fully diluted per share basis. Adjusted net earnings were 94 cents. on the dollar.
Speaker Change: Now looking at earnings.
Speaker Change: On an adjusted basis net earnings were 23 million or <unk> 21 per share diluted for the quarter.
Speaker Change: Down from $50 million or <unk> 37 per share in the same quarter last year.
Speaker Change: <unk>, reflecting lower performance fees and the impact of foreign exchange revaluation had on balance sheet items.
Speaker Change: For the year adjusted net earnings were $103 million down 19% from $126 million for the prior year and on a fully diluted per share basis. Adjusted net earnings were <unk> 94.
Speaker Change: Down six 6% on the dollar from the prior year.
Speaker Change: Yeah.
Lucas Contilho: turning to our financial leverage. Net debt was $651 million at the end of the quarter, up approximately $47 million from the same period last year, but down $4 million from the prior quarter. our net debt ratio increased to 3.3 times from 2.9 times from the prior year and increased from just under 3 times in the prior year. The year-over-year increase in net debt was primarily driven by negative impact from depreciation in the Canadian dollar through the year, the settlement of share-based compensation in cash, and the repurchase shares via our NCA. Funded Debt Ratio, as defined by your credit facility, increased marginally to 3.06%.
Speaker Change: Turning to our financial leverage.
Speaker Change: Net debt was $651 million at the end of the quarter.
Speaker Change: Approximately $47 million from the same period last year, but down $4 million from the prior quarter.
Speaker Change: Debt ratio increased to three three times from two nine times from the prior year and increased from just under three times in the prior quarter.
Speaker Change: Year over year increase in net debt was primarily driven by negative impact from depreciation in the Canadian dollars through the year the settlement of share based compensation and cash and the repurchase shares via our in CIB.
Speaker Change: Our funded debt ratio as defined by our credit facility increased marginally to 3.06 from 293 times in the prior quarter.
Lucas Contilho: 2.93 times in the prior year. Our last 12 months' free cash flow of $87 million is down slightly by $2 million from the same period last year. The decrease was due to marginally lower cash from operating activities and higher interest payments on debt, the timing of these payments being the main contributing factor. year-over-year interest expense was relatively low.
Speaker Change: Our last 12 months free cash flow of $87 million is down slightly by $2 million from the same period last year. The decrease was due to marginally lower cash from operating activities and higher interest payments on debt. The timing of these payments being the main contributing factor as year over year interest expense was relatively.
Speaker Change: Right.
Lucas Contilho: We remain committed to delivering value to our shareholders as a fundamental pillar of our strategy. We repurchased approximately 770,000 shares during the year for a total consideration of $6.1 million.
Speaker Change: We remain committed to delivering value to our shareholders is a fundamental pillar of our strategy.
Speaker Change: We repurchased approximately 770000 shares during the year for total consideration of $6 1 million.
Lucas Contilho: Lastly, the Board has declared a quarterly dividend of $0.216 per share, able on April 10, 2025. to shareholders of record on March.
Speaker Change: Lastly, the board has declared a quarterly dividend of <unk> $21 six per share payable on April 10, 2025 to shareholders of record on March 10 2025.
Jean-Guy Desjardins: I'll now turn the call back to Jean-Guy for his closing remarks. stemming from political agendas and policy implementation from the U.S. We saw risk appetite deteriorate significantly following the U.S. threats to impose tariffs on Canada, Mexico, and China. with investors flocking to the safety of bonds, the U.S. dollar and gold. have the potential to inject volatility across global equity markets and non-U.S. dollar currencies such as the Keynesian dollar. The risk-reward trade-off. is not currently attracted. for traditional stocks and bonds.
John: I'll now turn the call back to John for his closing remarks.
John: Thank you Lucas looking forward.
John: The rest of 2025.
John: The economy and financial markets are facing increased uncertainty.
John: Going from political agendas and policy implementation from the U S.
John: We saw a risk appetite deteriorate significantly.
John: Knowing the U S threats to impose tariffs on Canada, Mexico and China.
John: With investors flocking to the safety of bonds.
John: U S dollar and gold.
John: These developments have the potential to inject volatility across global equity markets and non U S dollar currencies such as the change in zoning.
John: The risk reward tradeoff.
John: It is not currently attractive.
John: For traditional stocks and bonds.
Jean-Guy Desjardins: This volatile backdrop highlights the case for non-traditional sources of income such as private credit and real estate. given their stable return profile, low volatility, and diversification benefit. with inflation set to remain higher than it's been for the past several decades. Real assets will play a critical role in protecting purchasing power. Farmland and agricultural commodities generate value in real term as prices rise, and our global agricultural fund is poised to benefit with minimal exposure to countries targeted by tariffs.
John: This volatile backdrop highlights the case for non traditional sources of income such as private credit and real assets given their stable return profile low volatility and diversification benefits.
John: With inflation set to remain higher than it's been for the past several decades.
John: Real assets will play a critical role in protecting purchasing power farmland in agriculture agricultural commodities.
John: Great value in the real term as prices rise.
John: Our global Agricultural fund is poised to benefit with minimal exposure to countries targeted by terrorists.
Jean-Guy Desjardins: Infrastructure has the potential. to yield predictable cash flows that are uncorrelated to the economic cycle with contracts that frequently include built-in protections against inflation.
John: Infrastructure has the potential to.
John: So yield predictable cash flows.
John: The higher uncorrelated to the economic cycle with contracts that frequently and cool include built in protections against inflation.
Jean-Guy Desjardins: And finally, real estate, which has long been considered a good hedge against inflation, is set for recovery in the coming years as interest rates are poised to decline. The depth and breadth of FIERA's investment offers. provides a unique opportunity for our clients and provides us with a diverse revenue stream during times of financial markets uncertain. with the drag of significant Pinestone-related odd flows largely behind us. We expect to return to a sustainable level. of organic net inflows, leveraging the strength of our regionalized distribution model.
John: And finally real estate, which has long been considered a good hedge against inflation.
John: Is set for a recovery in the coming years as interest rates are posed poised to decline.
John: The depth and breadth of Sierra's investment offering.
John: Provides a unique opportunity for our clients and.
John: And provides us with a diverse revenue stream during times of financial market uncertainty.
John: With the drag of significant finestone related outflows largely behind us.
John: We expect to return to a sustainable level.
Organic net inflows leveraging the strength of our regionalized regionalized distribution model.
Emily: So I will now turn the call back to the operator for the question. Thank you ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press the star followed by the 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question.
John: So I will now turn the call back to the operator for the question period.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one on your Touchtone phone you will hear a prompt that your hand, that's been raised should you wish to decline from the polling process. Please press the star followed by the two.
John: You are using a speakerphone. Please let the handset before pressing any Keith one moment. Please for your first question and your first question comes from Gary Ho from Digital Bank capital markets. Please go ahead.
Jean-Guy Desjardins: And your first question comes from Gary Ho from Desjardins Capital Markets. Please go ahead. Thanks, and good morning. Jean-Guy, thanks for your comments, especially kind of the latter comments that you're seeing in the market more recently. And I think you mentioned private credit and real assets, agriculture, etc. Are you seeing increased interest from clients wanting to put capital into these strategies? And how quickly can you deploy these into those asset class?
Speaker Change: Thanks, and good morning, Shanghai, Thanks for your comments, especially.
Kind of the latter.
Speaker Change: Comments that youre seeing in the market more recently and I think you mentioned private credit and real assets agriculture et cetera.
Speaker Change: Are you seeing increased interest from clients wanted to put capital into these strategies and how quickly can you deploy these into both asset class.
Jean-Guy Desjardins: Yeah, would like to hear some comments from yourself and or John. We're I'll answer it, but I'll pass it on to Max, because he sees a lot of that in the Canadian division. We're seeing a lot of interest and increased activity. on the U.S. side. in our, especially in our agricultural fund. as a result of two new consultant organizations. putting our ag strategy on their buy list. And we are already seeing a significant impact from that, as you know, it's very often the door to a successful distribution. So that's quite encouraging to see that. But overall, we are seeing a lot of activity on the Ag Fund.
Speaker Change: Yeah.
Speaker Change: I'd like to hear some comments from yourself I know John.
Speaker Change: Well.
Speaker Change: Yes.
Speaker Change: I'll answer it so I'll pass it on to Max because he sees a lot of that.
Speaker Change: Gains in that division.
Speaker Change: We're seeing we're seeing.
Speaker Change: A lot of interest and increased activity.
Speaker Change: Under U S site.
Speaker Change: In our especially in our agricultural fund.
Speaker Change: As a result of that.
Speaker Change:
Speaker Change: Two new.
Speaker Change: Yeah.
Speaker Change: <unk>.
Speaker Change: Consultant organizations.
Speaker Change: Putting our our AG strategy.
Speaker Change: Thereby list and we.
Speaker Change: We are already seeing a significant impact from that.
Speaker Change: As you know.
It's very often the door to a successful distribution, so thats quite encouraging to see that but overall, we are seeing a lot of activity on the AG fun.
Maxime Minard: We're seeing a lot of activity on our credit funds. And these days, especially the corporate credit one. where we're continuing to raise a significant amount of money in our Fund 7 and we have some very significant and interesting prospects. from a couple of insurance companies that are seriously looking at investing in the fund. And we're also seeing quite a bit of activity on the real estate side, because as you know, our two, I'd say, leading real estate strategies, which is the core and the industrial fund, are rated, perform number one and number two in the competitive, or in the survey of our competitors.
Speaker Change: We're seeing a lot of activity on our credit funds.
Speaker Change: These days, especially the corporate credit one.
Speaker Change: Wow.
Speaker Change: Continuing to raise.
Speaker Change: A significant amount of money in our fund seven.
Speaker Change: We have some very significant and interesting prospects.
Speaker Change: From a couple of insurance companies.
Speaker Change: Seriously looking at.
Speaker Change: Investing in the fund.
Speaker Change: And we're also seeing quite a bit of activity on the real estate side, because as you know.
Speaker Change: Our two.
Speaker Change: I would say, leading real estate strategies, which is the core and the industrial funds.
Speaker Change: I rented perform number one and number two.
Max: And the competitive or in the survey of our competitors. So maybe a Max you can add to that.
Maxime Minard: So maybe Max, you can add to what I just said. Yeah, so just to add to this, yeah, so the consulting community is really important in our ability to introduce product. being a positive momentum in reviewing the agriculture. not a new asset class but it's a sort of less understood asset class. We have probably one of the best fund worldwide so we have something very interesting to offer the market. We're seeing a pick up on the consulting side and that triggers. interest from the client base so this is real activity not only here in Canada.
Speaker Change: What I just said.
Speaker Change: Yes.
Speaker Change: So just to add to this yes. So the consulting community is really important in our ability to introduce private market solutions as John had mentioned we are seeing a positive momentum in reviewing the agriculture, which is not a new asset class, but it's sort of less understood asset class, we have probably one of the best fund worldwide. So.
Speaker Change: We have something very interesting to offer the market, but we're seeing a pickup on the consulting side and that triggers.
Speaker Change: Immediate interest from the client base of this is real activity not only here in Canada, but in important markets like the U S and also the EMEA market on the corporate side as <unk> mentioned in our corporate credit side. We are we are a finalist in a number of fairly large.
Maxime Minard: For more information visit www.fiera-capital.com tickets and then we are unfolding a very effective cross-sell initiative across our existing clients. The key composition of your success and having real estate and some of our strategy being some of the best is very important and again, consultants are driving that. We're seeing a good pipeline. should result in a positive. Okay, great. Thanks for that.
Speaker Change: Tickets and then we are unfolding is very effective.
Ross cell initiative across our existing client book of business to introduce private markets generally so the performance is obviously.
Speaker Change: Hey, Keith composition of your success in having real estate in some of our strategy being some of the best is very important again consultants are driving this the searches. So we're seeing your bid pipeline, which should results in.
Speaker Change: Positive flows over the next few quarters.
Speaker Change: Okay, great. Thanks for that and then my second question just wanted to ask about the performance fee Delta in Q4, this year versus 2023.
Graham Riding: And then my second question just wanted to ask about the performance fee delta in Q4 this year versus 2023. So that's roughly $28-29 million.
Speaker Change: So that's roughly 2820 $9 million. So maybe two part question perhaps for Lucas.
Lucas Contilho: So maybe two-part question perhaps for Lukas. One, what was the cash flow impact of the $28-$29 million performance fees? Is 50% a good kind of ballpark if we kind of back out compensation related expenses?
Speaker Change: One what was the cash flow impact of the 28 $29 million performance fees is 50% a good kind of ballpark, if we kind of back out compensation related expenses and then two if we look at slide 22, where you show your LTM free cash flow of $87 million.
Lucas Contilho: And then two, if we look at slide 22, where you show your LTM free cash flow of $87 million for Q4-24 LTM. Remind me, that still includes last year's performance fees and not just one. Let's see if you can confirm. Yeah, thanks, Kerry. That's a great question. So let me break that down for you. I guess to your first part, sort of the expense ratio on those fees in particular. Yes, your assumption is correct. So 50% is a good number. When you get into the cash flow, there's a couple of intricacies. sort of we need to recognize that the quarter in which the performance fee is earned, it helps your operating cash flow before working cap, but it's a drag on your working cap from the perspective up until the time that you collect the performance fee.
Speaker Change: For Q4 24.
Speaker Change: Tim remind me that still includes last year's performance fees and not 2024, just wanted see if you can confirm this.
Speaker Change: Yes, Thanks, Gary that's a great question. So let me break that down for you.
Gary Ho: To your first part sort of the expense ratio on those fees in particular, yes. Your assumption is correct. So 50% is a good number.
Gary Ho: When you get into the cash flow wherever there is a couple of intricacies.
Gary Ho: We need to recognize that the quarter in which the performance fee is earned.
Gary Ho: It helps your operating cash flow before working cap, but it is a drag on your working cap from the perspective up until the time that you collect the performance fee. So as Youll recall last year actually we had a pretty significant drag on free cash flow and thats because of the drag on the working cap that we had.
Lucas Contilho: So as you'll recall, last year, actually, we had a pretty significant drag on free cash flow, and that's because of the drag on the working cap that we had. So that 50-50 doesn't apply to the cash flow. So while it's true on the face from an EBITDA perspective, there's a mechanic there that happens with the cash. separates the timing.
Gary Ho: So that's 50 50 doesn't apply to the cash flow statement and so while it's true on the face from an EBITDA perspective, Theres a mechanic there that happens with the cash flow that separates the timing.
Lucas Contilho: You know, I think at the heart of your question is sort of where is free cash flow going. Right now I can tell you that we're predicting to have Q1 be in line with where we were in Q4 and not suffer a decrease the way we saw last year. say, the timing of the collection of those performances. So, sorry, maybe a finer point. Why wouldn't, because that's an LTM number, why wouldn't that 87 decrease? Is it maybe a Q2 event then? No, because what happens is, yes, while we had a lower year relative to performance fees, keep in mind that our base management fees are up almost $20 million going into the year.
Gary Ho: I think at the heart of your question is sort of where it's free cash flow going.
Gary Ho: Right now I can tell you that we are predicting to have Q1 be in line with where we were in Q4 and not suffer a decrease the way we saw last year as I say the timing of the collection of those performance fees and other fees in Q1 of last year caused some distortion.
Gary Ho: Okay. So sorry, maybe as a final point why why wouldn't because thats. The LTM number why wouldn't that 87.
Gary Ho: Decrease is it may be a Q2 event then.
Gary Ho: No because what happens is yes, while we had a lower year relative to performance fees keep in mind that our base management fees are up almost $20 million going into the year.
Lucas Contilho: So we're entering into the first quarter of 2025. that base management fee increment and that AUM rolling into the first quarter. As long as markets keep up the way they have so far, and that actually even factors in the Pinestone outflow to Canoe, which we're already exploring. As I say, we're targeting to be on par in the Okay, that's helpful. Thanks.
Gary Ho: So we're entering into the first quarter of 2025.
Gary Ho: Our base management fee incremental AUM rolling into the first quarter and so as long as markets keep up the way they play out so far and that actually even factors in the pipestone outflow to canoe, which we're already expecting.
Gary Ho: So as I say, we are targeting to be on par in the first quarter with free cash flow.
Speaker Change: Okay. That's helpful. Thanks, that's all my questions.
Graham Riding: Those are my questions.
Emily: Once again, if you have a question, please press star 1.
Speaker Change: Once again, if you have a question. Please press star one and your next question comes from Graham Ryding from TD. Please go ahead.
Graham Riding: And your next question comes from Graham Riding from TD. Please go ahead. Good morning. Maybe just a little bit of color or commentary around the flows in the quarter. I thought the commentary coming out of last quarter was the pipeline looked pretty good looking into Q4.
Speaker Change: Yes.
Graham Ryding: Hi, Good morning, maybe just a little bit color.
Speaker Change: Color or commentary around the flows.
Speaker Change: In the quarter I thought the commentary coming out of last quarter was the pipeline looked pretty good looking into Q4, just wondering where theres. Some outflows that surfaced in the quarter that were may be a surprise or were there any mandates that maybe got pushed into Q1.
Jean-Guy Desjardins: I'm just wondering were there some outflows that surfaced in the quarter that were maybe a surprise or were there any mandates that maybe got pushed into Q1 and it's a timing issue? Yeah, I think it's a combination of all the above. We got Q4, a bit of a surprise, on one of the outflows from the fine-tone transfer. And I think, and again, like, just to manage expectations, but some of the pipeline was transferred in Q1, of which we're currently tracking favorably.
Speaker Change: As a timing issue.
Speaker Change: Yes, I think it's a law and it's a combination of all of the above.
Speaker Change: I think we got to Q4, a bit of a surprise them on one of the outflows.
Speaker Change: By its own transfer.
Speaker Change: And.
Speaker Change: I think and again like just to manage expectations based on some of the pipeline was transferred in in Q1.
Speaker Change: Of which we are currently tracking favorably so.
Jean-Guy Desjardins: You know Q4 sometimes things are a little tough to sign up So the strong pipeline was transferred over the next quarter and NOR should be on the second quarter first half of 2025, you should see some of that pipeline material. And on the negative net contribution, which was really the offset there, we had some rebalancing and fixed income again, particularly in LDI. Again, while we had new mandates positive of $1.2 billion for the quarter, it was really the negative net contribution. Okay. All right, Anderson, it's helpful.
Speaker Change: Q4, sometimes things are a little tough to sign up so the strong pipeline that was transferred over the next quarter or.
Speaker Change: <unk> for the second quarter is the worst but first half of 2005.
Speaker Change: <unk> see some of that pipeline materialize.
Speaker Change: Yes, and on the negative net contribution which was really the offset there we had some rebalancing in fixed income again, particularly in ODI.
Speaker Change: So again, while we add new mandates positive of $1 2 billion for the quarter. It was really the negative net contributions of negative two five that hurt us.
Speaker Change: Okay.
Speaker Change: Alright understood that's helpful.
Lucas Contilho: Sharebase comp, can you just reiterate or flesh out what drove the elevation this quarter and what's a reasonable run rate? Yeah, so we had a couple of plans that we accelerated this year just by virtue of shifting structure going into 2025. So that easily contributed about $4 million to that number. And then on top of that, we had an extra 2 million increment, which was really based on sort of the valuation. When we calculate our share-based compensation, it's sort of, we take the price of the share at the end of December. which was at a pretty good level, certainly compared to where we are today.
Speaker Change: Share based comp can you just reiterate our flush out what drove the elevation this corner.
Speaker Change: And what's a reasonable run rate.
Speaker Change: Yes, So we had a couple of plans that we accelerated this year just by virtue of shifting structure going into 2025.
So.
Speaker Change: Easily contributed about $4 million so that number.
Speaker Change: And then on top of that we had an extra $2 million increment, which was really based on sort of evaluation.
Speaker Change: When we calculate our share based compensation.
Speaker Change: We take the price of the share it at the end of December.
Speaker Change: Which was that a pretty good level, certainly compared to where we are today. So that added about $2 million of pressure to the calculation of share based comp I would say that for the year a good run rate going into next year would be about $20 million as youll recall. This year, we had very low share based compensation in the first couple of quarters.
Lucas Contilho: So that added about $2 million of pressure to the calculation.
Lucas Contilho: I would say that for the year, a good run rate going into next year would be about $20 million. As you'll recall, this year we had very low share-based compensation in the first couple of quarters. I would say factoring in $4 to $5 million per quarter is a good number.
Speaker Change: So I would say factoring in $4 million to $5 million per quarter is a good good direction to take.
Speaker Change: Yes.
Speaker Change: Okay.
Graham Riding: Okay, that's it for me.
Speaker Change: Okay. That's it for me thank you.
Emily: Thank you.
Jamie Gloyne: And your next question comes from Jamie Gloyne from National Bank Financial. Please go ahead. Yes, good morning. Sorry if I missed this in the prepared remarks, but just wanted to get your perspectives on the on the leverage ratio, ticking higher this quarter to 3.33. And if I recall, correct me if I'm wrong, but the bank covenant is three and a half. So correct me if I'm wrong on that. And then just some thoughts around how you're thinking through leverage for for the Yeah, so the 3.3 is the overall net debt ratio. By the bank coverage ratio we were under 3.1, and that's the one to compare to the 3.5.
And your next question comes from Jamie <unk> from National Bank Financial. Please go ahead.
Speaker Change: Okay.
Speaker Change: Yes, good morning.
Speaker Change: Sorry, if I missed this in the prepared remarks, but just wanted to get your perspective on the on the leverage ratio ticking.
Speaker Change: Taking higher this quarter to 333.
Speaker Change: If I recall correct me, if I'm wrong, but.
Speaker Change: Bank Covenant is three and a half.
Speaker Change: So correct me if I'm wrong on that and then just some thoughts around how you're thinking through leverage for for the coming year.
Speaker Change: Yes, so the three <unk>.
Speaker Change: <unk> is the overall net debt ratio by bank coverage ratio, we were under three one and thats the want to compare it to the three five.
Lucas Contilho: And quarter over quarter, the actual amount of debt was consistent. While you're seeing an uptick in the ratio is actually what happens is, you know, as you're calculating the ratio, we're now going into a lower revenue quarter compared to fourth quarter of last year. So that's effectively impacting the EBITDA in your calculation, but it hasn't changed the denominator, the numerator in the calculation, if you will. So that's why you're seeing the uptick, quarter over quarter, with the absolute level of debt that's consistent from Q3. And I mean, in terms of how we're thinking about it going forward, I think was your last sort of depending on working capital needs for the next two quarters.
Speaker Change: And quarter over quarter, the actual amount of deaths was consistent while youre seeing an uptick in the ratio was actually what happens is as youre calculating.
The ratio, we're now going into a lower revenue quarter compared to fourth quarter of last year. So that's effectively impacting the EBITDA in your calculation, but it hasnt changed.
Speaker Change: The denominator and added.
Speaker Change: Numerator and the calculation if you will in terms of the debt. So thats why youre seeing the uptick quarter over quarter, but the absolute level of debt is consistent from Q3.
Speaker Change: And I mean in terms of how we're thinking about it going forward I think was your last question.
Speaker Change: Depending on working capital needs for the next two quarters.
Lucas Contilho: Again, as you know, our first two quarters of the year are usually always our heaviest. First quarter with regards to benefit charges, second quarter with regards to the two dividend payments that need to be made.
Speaker Change: Again as you know our first two quarters of the euro usually always our heaviest.
Speaker Change: First quarter with regards to benefit charges second quarter with regards to the two dividend payments that need to be made so while we could see an uptick again in the next couple of quarters, we always expect that to normalize and go back down in the third or fourth quarter of the year.
Lucas Contilho: So while we could see an uptick again in the next couple of quarters, we always expect that to normalize and go back down in the third or fourth quarter. Okay, okay. So still comfortable with the level today and not expecting anything to shift that view is my takeaway there.
Speaker Change: Okay. Okay. So it's still comfortable with the level today and not expecting anything.
Speaker Change: Due to shift back to you Mike.
Speaker Change: My takeaway there.
Jamie Gloyne: Crap. Yeah, so the next question is just, I mean, you're you're speaking, I hear the confidence in the tone around Pimestone, that it, you know, it'll be a billion sort of this year, and I guess maybe annually for a couple of years. You provided some color around that, and I think I got tripped up on some of the numbers that you guys were providing, but maybe if you can kind of flesh that out where it sounded like you still have several mandates that are a billion in size or roughly around a billion would give you confidence that you're not going to see one of these mandates look to take their AUM to Pinestone at some point in 2025 or even a couple in 26 or something along those lines.
Speaker Change: Correct.
Speaker Change: Yes, so the.
Speaker Change: Next question is just I mean.
Speaker Change: Youre speaking I hear the confidence in the tone around poundstone.
Speaker Change: Got it it will be a $1 billion this year and I guess maybe.
Speaker Change: For a couple of years.
Speaker Change: You try eight we provided some color around that and I think I got tripped up on some of the numbers that you guys are providing but.
Speaker Change: Maybe if you can kind of flesh that out where it sounded like you still have several mandates that are $1 billion in size or roughly around 1 billion. So what gives you confidence that.
Speaker Change: Youre not going to see one of these mandates.
Speaker Change: Look too.
Speaker Change: Take care take care of our AUM declined somewhat at some point in 2025.
Speaker Change: Even given a couple in 'twenty six or something along those lines just wanted to get more confidence from you guys on that just given the tone that youre presenting.
Jean-Guy Desjardins: Just wanted to get more confidence from you guys on that, just given the tone that you're presenting.
Speaker Change: And I'll take some of it and maybe Lucas you can.
Jean-Guy Desjardins: I'll take some of it and maybe Lucas you can... Either correct me or add to it, you know. since over the last three years when the leakage started. which is 22, 23, 24. 85% of the leakage that went to Pinestone are intermediary. We can easily understand why, I don't have to go through it. I think it's a low fee business. And that requires a lot of, I'd say, time, effort, and service from the manager, doing roadshows and all that stuff, because they're all intermediaries, it's all mutual fund stuff being distributed to the retail market. So, uh...
Lucas: Either correct me or add to it too.
Speaker Change: Yes.
Speaker Change: Since over the last three years, when the leakage started which.
Speaker Change: Which is 'twenty two 'twenty three 'twenty four.
Speaker Change: 85% of the leakage that went to bind stone our intermediaries.
Speaker Change: And.
Speaker Change: We can easily understand why.
Speaker Change: I don't have to go through it but.
Speaker Change: I think it's a low fee business.
Speaker Change: And.
Speaker Change: That requires a lot of.
Speaker Change: I would say.
Speaker Change: Time effort effort in service from the manager.
Speaker Change: Doing roadshows and all that stuff.
Speaker Change: Because they're all.
Speaker Change: Germany's area. So it's all it's all in mutual fund stuff being distributed to the retail market.
Speaker Change: So.
Jean-Guy Desjardins: The rest 15% has been institutional time. So if you exclude intermediaries, there's been very little leakage from institutional clients and without going through it, we have good reasons to explain for that. It has to do with the fact that many of the clients who are still with us, we do more than one investment strategy with them, so the relationship is much broader than just the Pine Stone relationship. And also because they obviously seem to be quite comfortable and satisfied with the value added that we bring to the relationship over and above the portfolio management expertise that Pointstone offers to the client.
Speaker Change: There is 15% has been.
Speaker Change: Institutional client.
Speaker Change: So if you exclude intermediaries theres been very little leakage from institutional clients.
Speaker Change: Without going through it.
Speaker Change: Have good reasons to.
Speaker Change: To explain for that.
Speaker Change: It has to do with the fact that many many of the clients who are still with us.
Speaker Change: We do more than one investment strategy with them. So the relationship is much broader than just buying solid relationship.
Speaker Change: And also because they obviously seem to be quite comfortable and satisfied with the value added that we bring to their relationship over and above the portfolio management expertise that finestone offers to the client through us.
Jean-Guy Desjardins: So there's been a pretty much high degree of stability from our non-intermediary clients over the last three years.
Speaker Change: So there has been a.
Speaker Change: Pretty much high degree of stability from our non intermediary clients over the last three years.
Jean-Guy Desjardins: and uh Do me a favor, Clarence. There's one left. uh... with whom we have a very very solid relationship and have a very high degree of confidence that it's uh... not considering leaking to Pine Stone other than that there's none So looking at our experience of the last three years. Plus a number of other variables that I don't think need to be mentioned here. We are pretty optimistic. that the level of leakage going into 2026 because as you know this year we already were impacted by canoe this year 5.5 so but if you if you look at it post canoe okay starting next month We expect that the pace of leakage, the rate at which leakage will occur, will be significantly lower based on our experience of the last three years as it relates to non-intermediary clients, which I think is a reasonable assumption to make at this point.
Speaker Change: <unk>.
Speaker Change: Intermediary clients, there's one left.
Speaker Change: With whom we have a very very solid relationship and they have a very high degree of confidence.
Speaker Change: That is not considering leaking too so other than that theres none okay.
Speaker Change: So looking at our experience over the last three years.
Speaker Change: Plus number over there are variables.
Speaker Change: Thank you need to be mentioned here.
Speaker Change: We are pretty optimistic.
Speaker Change: The level of.
Speaker Change: Leakage.
Speaker Change: Uh huh.
Speaker Change: Going into 2026, because as you know this year, we already were impacted by two new this year $5 five so well issue. If you look at it post can you starting next month.
Speaker Change: We expect that.
Speaker Change: Yeah.
Speaker Change: The pace of leakage the rate at which leakage will occur will be significantly lower based on our experience of the last three years as it relates to none.
Speaker Change: Intermediary clients.
Speaker Change: Which I think is.
Speaker Change: A reasonable assumption to make at this stage so.
Jean-Guy Desjardins: So, you know, we're always ready for the bad surprise. But we're also at the same time optimistic that the worst is well behind us.
Speaker Change: No. We're all we're always ready for the bad surprise.
Speaker Change: But.
Speaker Change: We're also at the same time optimistic that the worst is well behind us there.
Lucas Contilho: Lucas, you want to add something? Okay, I'll go back in the transcript and catch some of the data points that you shared earlier on. Okay. I think that's good for me.
Speaker Change: Lucas.
Lucas: Absolutely nothing good that's good.
Lucas: Okay I'll go back in the transcript.
Lucas: And catch some of the data points that you shared earlier on.
Lucas: Alright, I think thats good for me thanks, guys.
Emily: Thanks, guys. Once again, if you have any questions, press star 1. There are no further questions at this time.
Lucas: Once again, if you have any question press star one.
Speaker Change: There are no further questions at this time, we have one more question from Jamie <unk> from National Bank. Please go ahead.
Jamie Gloyne: Oh, we have one more question from Jamie Gloyne from National Bank. Please go ahead. Yes, sir. I thought I would turn it over, but I'll sneak one more in just around the regionalized distribution model and the confidence and let's call them core net flows coming through in the Q1 or potentially in H1. Are you able to share any color thus far in like so far through almost two months of the quarter? Like what has been the experience or the results thus far? Can you give us an indication or a hint as to the strength of the non-Pinestone?
Jamie: Yes, sorry, I thought I would turn it over but I'll sneak one more in.
Speaker Change: Just around the regionalized distribution model and the confidence in.
Jamie: And let's call them core net net flows coming through in.
Speaker Change: In Q1 or potentially in each one.
Jamie: Are you able to share any color thus far in <unk>.
Jamie: So far through almost two months of the quarter like what what has been the experience and the results. Thus far can you give us an indication of our hand as to the strength of the.
Jamie: The non price dawn.
Jean-Guy Desjardins: net flows so far.
Jamie: Net flows so far.
Jamie: Uh huh.
Jean-Guy Desjardins: I'll just share with you what I said to the board going back. to the beginning of 2023. where I presented to the board and they approved the decentralization of our distribution. of our distribution capabilities into a regional model. spent pretty much all of 2023 to put it in place. where the last two regional leaders, Maxim being one and Eric in the U.S. who is running the U.S. one, came in very, very late in the year. and said to the board that 2024 would be obviously a year in transition with the new four leaders on board, EMEA, Asia, US and Canada.
Speaker Change: I'll just share with you what I said to the board going back.
Speaker Change: Two the beginning of 2023.
Speaker Change: Where.
Speaker Change: I presented to the board and they approved the decentralization of our distribution.
Speaker Change: Although our distribution capabilities into a regional model.
Speaker Change: And <unk>.
Speaker Change: Spent pretty much all of 2023 to put it in place.
Speaker Change: Sure.
Speaker Change: The last two regional leaders Maxim.
Speaker Change: Being one.
Speaker Change: <unk>.
Speaker Change: Eric in the U S.
Speaker Change: Who is running the U S. One.
Speaker Change: It came in very very late in the year.
Speaker Change: <unk> said to reward that 'twenty 'twenty four it would be obviously a year of transition with the new.
Speaker Change: Four leaders on Board EMEA Asia U S and Canada.
Jean-Guy Desjardins: and that as long as we can see the beginning of some progress. In 2024, 2025 would be a very important year to pass judgment on whether the model is the right model, but very importantly, whether the four regional leaders were the right ones to execute and make things happen. And right now, you said after two months this year, where I could have said by the. somewhat the third and fourth quarter last year, I could see that the momentum was building up, that the business model was doing what it was supposed to do, which is generating a lot of activity, building up the pipeline, and getting a lot more attention.
Speaker Change: And that.
Speaker Change: As long as we can see the beginning of some progress.
Speaker Change: In 2024% to 2025 would be a very important year to pass judgment on whether the model is the right model, but very importantly, whether the four regional leaders.
Speaker Change: Who are the right ones to execute and make things happen.
Speaker Change: And right now.
Speaker Change: You said that after two months of this year, where I could have said.
Speaker Change: Some have somewhat the third and fourth quarter last year I could see that the.
Speaker Change: The momentum was building up that the business model was doing what it was supposed to do which is generating a lot of activity building up the pipeline and getting a lot more attention and honestly over and above that a much higher degree of professionalism and being close to the market that where youre trying to distribute.
Jean-Guy Desjardins: And honestly, over and above that, a much higher degree of professionalism and being close to the market that where you're trying to distribute your strategies. So I am quite optimistic at this stage. that I have at least two of... Three of my four original leaders I'm very, very happy with and have proven themselves enough at this stage. One of them, I still believe, is the right one, but is a little bit late against the other three. which leads us to us, me, my partners here, and the board to be quite optimistic about the results and the impact that we will be experiencing in 2025 from that significant initiative.
Speaker Change: Your strategies so.
Speaker Change: I am quite optimistic at this stage that.
Speaker Change: <unk>.
Speaker Change: All I have.
Speaker Change: At least two of our.
Speaker Change: Sure.
Speaker Change: Three of my four regional leaders I'm, very very happy with and have proven themselves enough at this stage.
Speaker Change: One of them I still believe is the right one but is it a little bit late.
Against the other three.
Speaker Change: Which leaves.
Speaker Change: It leads us to our us Mi my partners here and the board to be quite optimistic.
Speaker Change: About the results and the impact that we will be experience that we will be experiencing in 2025 from.
Speaker Change: That.
Speaker Change: So that's significant initiative, we invested quite a bit of money in that.
Jean-Guy Desjardins: You know, we invested quite a bit of money in that restructuring and moving to that regional distribution model.
Speaker Change: The restructuring and <unk>.
Speaker Change: Moving to the regional distribution model.
Emily: And in fact, where we can see the greatest immediate impact under Maxime's leadership is in our Canadian division, which is really doing well. OK. Thank you. There are no further questions at this time.
Speaker Change: And in fact.
Speaker Change: Where we can see the greatest immediate impact under <unk> leadership is on our Canadian Division, which is.
Speaker Change: Which is which is really doing well.
Speaker Change: Okay. Thank you.
Ms. Jay: There are no further questions at this time Ms. Jay I will now turn the call back over to you.
Marie-France Gay: Ms. Gay, I will now turn the call back over to you. Thank you, Emily.
Speaker Change: Thank you Emily that concludes our call today.
Marie-France Gay: That concludes our call today. And if you'd like more information, do not hesitate to take advantage of our website at ir.fieracapital.com. Thank you for joining us.
Ms. Jay: And if you'd like more information do not hesitate to take advantage of our web site.
Speaker Change: <unk> dot.
Speaker Change: Dot com.
Speaker Change: You for joining us.
Emily: Ladies and gentlemen, this concludes the conference. You may now disconnect your lines.
Speaker Change: Ladies and gentlemen. This concludes the conference you may now disconnect your lines.