Q2 2025 Onex Corp Earnings Call
After the speaker's presentation, there will be a question and answer session to ask a question. During this session you will need to press star one on your telephone. If your question has been answered and you'd like to remove yourself from the queue simply press Star One again as a reminder, today's program is being recorded and now I'd like to introduce your host for today's <unk>.
Graham Joe harmonic shareholder relations and communications. Please go ahead.
Thank you good morning, everyone and thanks for joining US we're broadcasting this call on our website hosting the call today are Bobby Le Blanc, Onyx as Chief Executive Officer, and Chris <unk>, Our Chief Financial Officer.
Earlier. This morning, we issued our second quarter 2025 press release, MD&A and consolidated financial statements, which are available on the shareholders section of our 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.
Must also point, everyone to our webcast presentation for our usual disclaimer and cautionary factors relating to any forward looking statements contained in today's presentation and remarks.
With that I'll now turn the call over to Bobby.
Good morning, everyone.
<unk> delivered a solid quarter in Q2.
The focus on our firm wide priorities of compounding Doug.
And increasing fee related earnings is evident in our first half performance.
While creating near term value is foremost for our teams.
We also remain active in identifying appropriate capital allocation strategies to drive long term enterprise and shareholder value.
Invest in capital per share.
<unk>, 4% in Q2.
Driven by gains in private equity and credit.
For the first half of the year investing capital per share returns 7%.
We continued to see.
Growth in fee generating AUM this quarter.
So far in 2025 fee generating AUM has increased by 16%.
With solid contributions from structured credit and R. P E platforms.
Turning now to private equity.
After the completion of successful fundraisers and each of <unk> earlier this year.
The teams are now focused on driving performance within their portfolios.
Identifying new opportunities for investment.
And securing realizations to return capital to Onyx and our investors.
On the return of capital front.
On X partners pending partial sale of Westwood.
growth in fee, generating AUM, this quarter,
For a consortium of three prominent global Airlines has.
<unk> has received positive feedback from our shareholders and Lps.
So far in 2025 fee, generating AUM has increased by 16%.
The transaction, which is expected to close this year.
For solid contributions from structured credit and our PE platforms.
The result in OLED, returning all of its original investment.
Turning out to private equity.
While still owning 75% of its original stake.
One announced the sale price represented more than a 40% premium to our Q1 Mark.
after the completion of successful fundraisers in each of op, and on cap earlier this year,
the teams are now focused on driving performance within their portfolios.
Afflicting, both the strategic nature of the transaction and.
Identifying new opportunities for investment.
And west just performance potential.
We are pleased with the outcome, which we view as an endorsement of <unk> demonstrated ability to create value in its core verticals independent of macro events.
And securing realizations to return capital to Onyx and our investors.
On the return of capital front.
Onex Partners pending partial sale of WestJet.
In July on cap completed the sale of 80% of our stake in precision concepts.
To a Consortium of 3 prominent Global Airlines.
Has received positive feedback from our shareholders and LPS.
The transaction returned more than three times on <unk> initial investment over the seven and a half year whole period demonstrating.
The transaction which is expected to close this year.
Is an Opa returning, all of its original investment.
Demonstrating the team's ability to compound capital at high rates of return.
While still owning 75% of its original state.
And once again validating on cash differentiated sub sector expertise.
<unk> continues to produce significant return of capital for investors.
When announced the sale price represented more than a 40% premium to our q1 Mark reflecting both the Strategic nature of the transaction.
Which in both 2023 and 2024.
And WestJet performance potential.
Average over 20% of net asset value.
Investing performance of both <unk> capital was good this quarter with a combined return of 4%.
We are pleased with the outcome which we view as an endorsement of op's. Demonstrated ability to create value in its core verticals, independent of macro events.
Although it is still early days the performance of the Onyx partners opportunities Fund was a particular highlight.
In July, we completed the sale of 80% of our stake in Precision Concepts.
Overall, the tenants' performances are contributing to meaningful gains and unrealized carried interest.
The transaction returned more than 3 times on caps initial investment over the 7 and a half year whole period.
Since the end of the year.
Demonstrating the team's ability to compound Capital at high rates of return.
Unrealized carried interest across P/e has increased by 22% or nearly $60 million.
And once again validating on catch differentiated sub-sector expertise.
Okay.
Within credit the team had another impressive quarter increase.
On cap continues to produce significant returns of capital for investors.
Increasing both fee generating assets and fee related earnings.
Which in both 2023 and 2024.
Since we reported our Q1 results.
Averaged over 20% of that asset value.
Our structured credit team has executed another seven in transactions.
Bringing the total for the year 2017, including seven new issues.
Investing performance of both op and on cap was good. This quarter with a combined return of 4%.
In aggregate the credit team has raised $4 5 billion of new fee generating assets and extended another $3 8 billion.
Of those still early days, the performance of the Onyx Partners opportunities fund was a particular highlight.
Across the industry.
Overall, the team's performances are contributing to meaningful gains and unrealized carried interest.
Low issuance has been strong I mean, it's ongoing demand from global investors.
Within this dynamic.
Honest is continuing to gain market share.
At the end of the year. Unrealized carried interest across PE as increased by 22% for nearly 60 million dollars.
Building on our strong performance in recent years, we expect to again be a top 10 global CLO issuer in 2025.
Within credit, the team had another impressive quarter.
increasing both fee, generating assets and fee, related earnings
Since we reported our q1 results.
Honest credit is now approaching $30 billion in assets under management.
Our structured credit team has executed another 7 transactions.
The team has done a nice job of continuing to scale our platform.
By offering differentiated products.
Bringing the total for the year to 17 including 7, new issues.
Strengthening its relationships with leading institutional investors.
In delivering strong risk adjusted returns for our clients.
8 billion.
I am pleased with the results of the Onyx team delivered in the first half of the year.
Across the industry.
Staying focused within our core strengths will lead to increased shareholder value.
Clo issuance has been strong. I mean, it's ongoing demand from Global Investors.
Within this dynamic.
We also know that we need to be strategic and proactive in how we deploy our capital to build for the future.
Honest is continuing to gain market share.
Building on our strong performance in recent years.
I'll now turn it over to Chris.
Thanks, Bobby and good morning, everyone.
We expect to again, be a top 10 Global CL issuer in 2025.
<unk> ended Q2 with investing capital per share of $121 and 23.
Honest credit is not approaching 30 billion in assets under management.
A return of 4% in the quarter and 7% for the first six months of 2025.
The team is doing a nice job of continuing to scale our platform by offering differentiated products.
These returns were driven by investing gains from private equity and credit as well as accretive share repurchases.
Strengthening its relationships with leading institutional investors.
And delivering strong risk, adjusted returns for our clients.
The five year CAGR on investing capital per share is 15% in line with our target range.
I am pleased with the results of the Onyx team delivered, in the first half of the year.
We repurchased one 8 million shares in Q2 at prices meaningfully below our NAV.
Staying focused within our core streams will lead to increase shareholder value.
Since the beginning of the year, we bought back $3 2 million shares, allowing us to capture about Canadian $215 million of hard NAV for continuing shareholders.
We also know that we need to be strategic and proactive in how we deploy our Capital to build for the future.
I'll now turn it over to Chris.
Good morning, everyone.
We expect buybacks to remain part of our capital allocation plans. So long as the disconnect between intrinsic value and share price persists.
Onex ended Q2 with investing capital per share of $121.23, representing a return of 4% from the quarter and 7% for the first six months of 2025.
Okay.
Now looking at our investing returns.
Our PE portfolio returned 4% in the quarter with gains broad based across the portfolio.
These returns were driven by investing games from private equity and credit as well as a Creed of share repurchases.
With the largest contributions coming from Onyx partners five and on Cat four.
The 5-year tagger on investing Capital per share is 15% in line with our target range.
As Bobby mentioned, the Onyx partners opportunities fund has experienced strong early results with an annualized return over 20% driven by the strong performance at its first two investments.
We repurchased 1.8 million shares in Q2 at prices meaningfully below, part nav.
Our teams have continued to serve as strong realizations.
Since the beginning of the year we've bought back 3.2 million shares allowing us to capture about Canadian, 215 million of rnav for continuing shareholders.
Our marks.
<unk> on X partners announced the strategic sale of.
25% interest in west yet to consortium of Airlines and.
We expect BuyBacks to remain part of our Capital, allocation plans, so long as the disconnect between intrinsic value and share price persists.
And in July on tap completed the sale of a majority interest in precision concepts international.
now, looking at our investing returns,
These two transactions will provide on X with approximately $145 million of net proceeds adding.
Our PE portfolio returned 4% in the quarter, with gains broad-based across the portfolio.
With the largest contributions coming from Onex Partners 5 and Onex Partners 4.
Adding to our strong liquidity position, which stood at $1 5 billion or 18% of investing capital at quarter end.
As Bobbi mentioned the Onyx Partners opportunities fund has experienced strong early results.
Yeah.
Turning to the credit results.
With an annualized return over 20%, driven by the strong performance at its first two investments.
Our credit investments delivered a $33 million net gain or a 4% return in Q2.
This was largely driven by gains in our structured credit strategies, including some favorable foreign exchange gains on the Euro CLO.
Our PE teams have continued to surface, strong realizations, at or above our marks.
On the asset management side of the business.
In May Onex Partners announced this prestigic sale of a 25 interest in WestJet to a Consortium of Airlines.
<unk> ended the quarter with $41 billion of fee generating AUM with private equity and credit increasing by approximately 20% and 14% respectively since year end.
And in July on cap completed the sale of a majority interest in Precision Concepts International.
These two transactions will provide Onyx with approximately $145 million of net proceeds.
The increases primarily reflect new commitments made to on <unk> and the Onyx partners opportunities fund and the issuance of new CLO.
Adding to our strong liquidity position, which stood at $1.5 billion or 18% of investing capital at quarter-end.
Turning to the credit results.
Within credit structured credit continued its strong start to the year, raising or extending over $7 billion in fee generating assets through June 30.
Our credit investments delivered a $33 million net gain, or a 4% return, in Q2.
The team is currently in market with additional new issues in Europe, and the U S and is on a pace similar to 2024, which was a record year for the platform.
this was largely driven by gains in our structured credit strategies including some favorable foreign exchange gains on the Euro cos
On the asset management side of the business.
<unk> credit is well positioned to continue building on its leadership position in structured credit.
As Bobby mentioned, including transactions priced in July the credit platform is nearing $30 billion in total AUM, an increase of 50% or roughly $10 billion since the end of 2023.
Onyx ended the quarter with 41 billion dollars of fee, generating AUM with private equity and credit increasing by approximately 20% and 14% respectively since year end.
the increases primarily reflect new, commitments made to on cap 5 and the Onyx Partners opportunities fund and the issuance of new, cos
This is a meaningful achievement and it's been accomplished with relatively modest growth in the platforms operating costs and essentially no increase in the capital allocated from Onyx is balance sheet.
Within credit structured credit continued its strong start to the year raising or extending over 7 billion dollars in fee generating assets through June 30th.
Yeah.
Looking at the asset management results.
The segment generated earnings of $36 million in Q2 of which $6 million with fee related earnings from the PE and credit platforms.
The team is currently in Market with additional new issues in Europe and the us and is on a pace similar to 2024, which was a record year for the platform.
After factoring in the costs associated with managing on X corporations capital and maintaining the public company total FRE was a loss of $2 million in the quarter and breakeven for the first six months.
Onex credit is, well, positioned to continue building on its leadership position in structured credit.
Notably <unk>.
Sorry from structured credit increased $3 million sequentially to $15 million for Q2, reflecting an annual run rate FRE contribution of about $60 million up roughly $7 million or 13% in the quarter.
As Bobbi mentioned, including transactions priced in July. The credit platform is nearing 30 billion dollars. In total AUM, an increase of 50% or roughly 10 billion dollars since the end of 2023.
Is balance sheet.
Finally, an update on on X as incentive fee and carried interest opportunity.
Looking at the asset management results.
We ended Q2 with $346 million of accrued carry which reflects $38 million accrued in the quarter.
The segment generated earnings of 36 million in Q2 of which 6 million was fee related, earnings, from the PE and credit platforms.
On X now has almost $40 billion of private equity and credit AUM subject to carrier incentive fees, providing a meaningful opportunity for value creation going forward.
After factoring in the costs associated with managing Onyx corporations capital and maintaining the public company.
Total FR was a loss of million dollars in the quarter and break even for the first 6 months.
In summary.
We've made considerable progress in the first half of 'twenty five with our diverse investment portfolio and strong financial position, serving us well in today's markets.
We remain focused on compounding our invested capital growing fee related earnings and delivering returns to our shareholders and partners.
Notably, F from structured credit increased sequentially to $15 million per Q2, reflecting an annual run rate FR contribution of about $60 million, up roughly $7 million, or 13%, in the quarter.
Finally, an update on onyx's incentive fee and carried interest opportunity.
That concludes the prepared remarks, we will now be happy to take any questions.
Certainly and as a reminder, ladies and gentlemen, if you do have a question at this time. Please press star one on your telephone. If your question has been answered and you'd like to move yourself from the queue simply press Star One again and our first question for today comes from the line of Graham Ryding from TD Securities. Your question. Please.
We ended Q2 with 346 million of acred carry, which reflects 38 million acred in the quarter.
Onyx now has almost 40 billion dollars of private equity and credit AUM subject to carrier incentive fees, providing a meaningful opportunity for Value creation going forward.
In summary.
Can I just confirm the credit credit side it sounded like new fundraising was.
$4 5 billion and then over 7 billion in total if you include extended.
We've made considerable progress in the first half of 25 with our diverse Investment Portfolio and strong financial position serving us. Well in today's markets,
Sealers extending Sheila this is that correct.
We've remained focused on compounding, our investing capital growing fee-related earnings and delivering returns to our shareholders and partners.
Okay. Thank you sorry, I was on mute sorry, yes.
That concludes the prepared remarks. We'll now be happy to take any questions.
Yes, those are the the amounts through the end of Q2, Bobby cited some total amounts that included some July activity and Thats more like total little over eight.
Okay understood and then so maybe just what's the outlook.
For further fundraising.
Certainly. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star 1, 1 on your telephone. If your question has been answered and you'd like to move yourself from the queue, simply press star, 1, 1, 1 again. And our first question for today, comes from the line of Graham writing from TD security, is your question please?
In the second half of this year.
On the same pace or.
Yes, those are pipeline looking on the structured credit side the demand is still really high.
Um, can I just confirm that on the credit credit side? It sounded like new fundraising was
For <unk>.
Again, we're also focused on growing some of our more sub scale products that will have a differentiated impact on the on the bottom line in other words the more.
4 and a half billion and then over 7 billion uh in total if you include extended uh Sheila's extending Sheila's is that correct?
Fee generating AUM, we get from our non structured products will have a disproportionate amount of impact on our profitability, So I feel pretty lesser and lesser markets Dislocate I don't expect.
The credit team to slowdown the pace that theyre on right now.
Yes, I think you're having you, sorry, I was on mute, sorry. Um, yes, those are the, the amounts, uh, through, uh, the end of Q2 Bobby cited, some total amounts that included some July, uh, activity. Uh, and that's more like total little over 8.
Okay.
And so that is youre seeing stronger demand. This year, then than you expected coming out of 2024 is that.
Is that a fair characterization, yes, well, especially if you were to have asked me that question in January and February when the world.
Uh okay. Understood and then. So maybe just what's the Outlook um for further fundraising um in the second half of this year, um, the same Pace or
<unk>.
Highly uncertain.
Really.
They've actually been able to do a really good job of continuing to gain share and to get their product.
Their product out there.
Point looking on the structured credit side, the demand is still really high um, for for cos. And again we're also focused on growing. Some of the more subscale products that'll have a differentiated, um, impact on the on the bottom line. In other words, the more
Great and then just the outlook for FRE with this AUM growth.
Broke even for the first half of the year, what's the outlook for the second half on the FRE front, where overall.
Feed generating. A a we get from our non-structured products, we'll have a disproportionate amount of impact on profitability. So I I feel pretty unless unless the Market's dislocated I don't expect, um, the credit team to slow down the pace that they're on right now.
Yes, so overall Graham were run rating right now just about breakeven overall.
But we do have as Bobby mentioned fund raising plans for the back half of the year.
And so I would.
I would expect that if we hit targets.
Overall run rate.
For the entire business should get into double digits by the end of the year as you know.
We had a goal out of Investor day to see if a credit business as a whole run rate at about $55 million.
Okay. Um, and so that is, you know, you're seeing stronger demand this year than than you expected coming out of 2024. Is that, is that a fair characterization? Yeah, well especially if you were to ask me that question in January or February when when the world, um, you know, was was highly uncertain. I I it's really that maybe we've actually been able to do a really good job continuing to gain share and, and to get their product, um, get their product out there.
Out of the back half at the back end of this year. So if we hit that target and overall FRE should be around $10 million or so run rate.
Great. And then just the outlook for f, uh, you know, with this AUM growth, um,
Broke. Even for the first half of the Year. What's the outlook for the second half on the FR front overall?
Okay excellent and then my last question just.
Let's see I'll look here for on the on the <unk> side for further realizations, maybe just some color on the market backdrop and how your how your pipeline looks on that front.
Yes.
The M&A market has actually gotten better.
Over the last three months in spite of the continued uncertainty and noise around tariffs and other geopolitical issues.
I do expect.
We will be able to announce more.
Realizations.
Back half of the year I'm not going to give you a sizes, but we have several things in process that again.
During the dislocation in the near term should come to fruition.
Yeah, so, oh, overall, Graham were run rating right now just about Break, Even overall. Um, but we do have as Bobbi mentioned fundraising plans for the back half of the year. Um, and, um, so, you know, I I would, I would expect that if we hit targets, um, that, you know, overall run rate, um, for the, for the entire business should get into double digits. Um, by the end of the year, um, as you know, uh, we had a goal out of industrial day to see if the credit business as a whole run rate at about 55 million. Um, out of the back at the back end of this year. So if we hit that Target then overall F should be around, you know, 10 million or so, run rate.
Great. That's it for me. Thank you. Thank.
Thank you.
Thank you. This does conclude the question and answer session of today's program I'd like to hand, the program back to Bobby Le Blanc for any further remarks.
Thanks, everybody for your time and I hope you enjoy the rest of the summer, but youre seeing that.
Market backdrop and how your pipeline looks on that front.
It would be flying by.
And we look forward to catching up you have any questions feel free to reach out to me, Chris or Joe.
Right bucket. Thanks.
Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.
Yeah, the the m&a market has actually gotten better, um, over the last 3 months in spite of the continued, uncertainty and noise around tariffs and other geopolitical issues. Um, I do expect, um, to be able to announce more, um, realization and this back half of the year. I'm not going to give you a sizes, but we have several things in process that, again, that's an a strange dislocation in the near term. Should come to fruition.
Great. That's it to me. Thank you.
Thank you.
Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Bobby LeBlanc for any further remarks.
Thanks everybody for your time and I hope you enjoy the rest of the Summers, but you seem to be it seems to be flying by um and we look forward to catching up. If you have any questions, feel free to reach out to me. Chris or Jill and we'll get right back to you, thanks.