POW.PR.E Power Corp of Canada

MONTRÉAL, Nov. 12, 2024 /CNW/ - Power Corporation of Canada (Power Corporation or the Corporation) (TSX: POW) (TSX: POW.PR.E) today reported earnings results for the three and nine months ended September 30, 2024.

HIGHLIGHTS

POWER CORPORATION

• Net earnings from continuing operations ^[1] for the third quarter of 2024 were $371 million or $0.58 per share ^[2], compared with $997 million or $1.50 per share in the third quarter of 2023.
  Adjusted net earnings from continuing operations ^[1][3][4] were $542 million or $0.84 per share, compared with $1,006 million or $1.52 per share in the third quarter of 2023.
• Adjusted net asset value per share ^[3] was $57.92 at September 30, 2024, compared with $53.53 at December 31, 2023.
  The Corporation's book value per share ^[5] was $34.00 at September 30, 2024, compared with $32.49 at December 31, 2023.
• In 2024, the Corporation purchased for cancellation 8.0 million subordinate voting shares for a total of $309 million at September 30, 2024.

GREAT-WEST LIFECO INC. (LIFECO)

• Third quarter net earnings from continuing operations were $859 million, compared with $936 million in the third quarter of 2023.
  Adjusted net earnings from continuing operations ^[6] were $1,061 million, compared with $950 million in the third quarter of 2023.
• Third quarter adjusted net earnings increased for the sixth consecutive quarter, reflecting strong underlying momentum across all of Lifeco's segments and the execution of key actions to support and accelerate Lifeco's growth strategies in both the United States and Canada.

IGM FINANCIAL INC. (IGM OR IGM FINANCIAL)

• Third quarter net earnings were $239.2 million, compared with $209.8 million in the third quarter of 2023.
  Adjusted net earnings ^[3] were $244.1 million, compared with $220.5 million in the third quarter of 2023.
• Assets under management and advisement ^[5] were at a record high of $264.9 billion, an increase of 16.5% from the third quarter of 2023 and 4.9% from June 30, 2024.
• Assets under management and advisement including strategic investments ^[5] were $461.6 billion at September 30, 2024, compared with $431.7 billion at June 30, 2024 and $373.8 billion at September 30, 2023.

GROUPE BRUXELLES LAMBERT (GBL)

• GBL reported a net asset value ^[5] of €16.3 billion or €117.99 per share at September 30, 2024, compared with €16.7 billion or €113.64 per share at December 31, 2023.
• In 2024, GBL completed €190 million of share buybacks at September 30, 2024, and cancelled 8.3 million treasury shares.

SAGARD HOLDINGS INC. (SAGARD) AND POWER SUSTAINABLE CAPITAL INC. (POWER SUSTAINABLE)

• Sagard and Power Sustainable, the alternative asset investment platforms, have raised $1.9 billion in new commitments ^[7] in 2024.
• In the third quarter, Sagard completed the first close of Portage Ventures IV and Sagard Private Credit, raising commitments of US$359 million and $50 million, respectively.

STANDALONE BUSINESSES

• On September 30, 2024, Peak Achievement Athletics Inc. (Peak) announced that Sagard will sell its 42.6% interest in Peak ^[8].

 

Third Quarter

Net earnings from continuing operations attributable to participating shareholders were $371 million or $0.58 per share, compared with $997 million or $1.50 per share in 2023.

Adjusted net earnings from continuing operations attributable to participating shareholders ^[1] were $542 million or $0.84 per share, compared with $1,006 million or $1.52 per share in 2023.

Net earnings attributable to participating shareholders were $371 million or $0.58 per share, compared with $975 million or $1.47 per share in 2023.

Publicly traded operating companies: contribution to net earnings from continuing operations was $638 million and to adjusted net earnings from continuing operations was $784 million, representing a decrease of 41.3% and 28.5%, respectively, from the third quarter of 2023:

Lifeco: contribution to net earnings decreased by 8.3% and contribution to adjusted net earnings increased by 11.6%.

IGM: contribution to net earnings and adjusted net earnings increased by 14.5% and by 11.7%, respectively.

GBL: negative contribution to net earnings of $62 million in the third quarter of 2024, compared with a positive contribution of $315 million in 2023. In the third quarter of 2024, Imerys SA disposed of its assets serving the paper market, resulting in a non-cash loss from the reclassification of the related cumulative translation adjustment in earnings. The Corporation's share of this loss was $45 million. The third quarter of 2023 included the Corporation's share of a gain on deconsolidation of Webhelp of $323 million, which included the reversal of the liability to Webhelp's minority shareholders.

Sagard and Power Sustainable: Sagard had a contribution to net earnings and adjusted net earnings of nil and Power Sustainable's contribution to net earnings and adjusted net earnings were negative $65 million and negative $40 million, respectively.

Standalone businesses: negative contribution to net earnings of $107 million includes a negative contribution from LMPG Inc. (LMPG) of $93 million, primarily related to the Corporation's share of a non-cash impairment charge at LMPG.

 

Adjustments in the third quarter of 2024, excluded from adjusted net earnings from continuing operations, were a negative net impact to earnings of $171 million or $0.26 per share, mainly related to the Corporation's share of adjustments of Lifeco and Power Sustainable. In the third quarter of 2023, Adjustments were a negative net impact to earnings of $9 million or $0.02 per share, mainly related to the Corporation's share of Lifeco's adjustments.

Nine Months

Net earnings from continuing operations attributable to participating shareholders were $1,859 million or $2.87 per share, compared with $1,873 million or $2.82 per share in 2023.

Adjusted net earnings from continuing operations attributable to participating shareholders ^[1] were $2,006 million or $3.09 per share, compared with $2,436 million or $3.66 per share in 2023.

Net earnings attributable to participating shareholders were $1,810 million or $2.79 per share, compared with $1,789 million or $2.69 per share in 2023.

GREAT-WEST LIFECO INC.

Third Quarter

Net earnings from continuing operations attributable to common shareholders were $859 million or $0.92 per share, compared with $936 million or $1.01 per share in 2023.

Adjusted net earnings from continuing operations ^[1] attributable to common shareholders were $1,061 million or $1.14 per share, compared with $950 million or $1.02 per share in 2023.

Net earnings attributable to common shareholders were $859 million or $0.92 per share, compared with $905 million or $0.97 per share in 2023.

Adjustments in the third quarter of 2024, excluded from adjusted net earnings, were a net negative impact of $202 million, compared with a net negative impact of $14 million in 2023. Lifeco's adjustments consisted of:

• Assumption changes and management actions of negative $203 million;
• Amortization of acquisition-related finite life intangible assets of $36 million; and
• Business transformation impacts of negative $4 million;
• Partially offset by market experience relative to expectations of positive $41 million.

IGM FINANCIAL INC.

Third Quarter

Net earnings available to common shareholders were $239.2 million or $1.01 per share, compared with $209.8 million or $0.88 per share in 2023.

Adjusted net earnings attributable to common shareholders were $244.1 million or $1.03 per share, compared with $220.5 million or $0.92 per share in 2023.

Assets under management and advisement (AUM&A) ^[2][3] at September 30, 2024 were $264.9 billion, an increase of 4.9% from June 30, 2024 and an increase of 16.5% from the third quarter of 2023.

GROUPE BRUXELLES LAMBERT

Third Quarter

GBL reported a net loss of €224 million, compared with net earnings of €1,276 million in 2023. In the third quarter of 2024, Imerys, a consolidated operating company of GBL, disposed of its assets serving the paper market, resulting in a non-cash loss of €302 million from the reclassification of the related cumulative translation adjustment in earnings. GBL's share of this loss was €166 million. Net earnings in the third quarter of 2023 included a gain on deconsolidation of Webhelp of approximately €1.3 billion, including the reversal of the liability to Webhelp's minority shareholders.

GBL reported a net asset value ^[2] of €16,330 million or €117.99 per share at September 30, 2024, compared with €16,671 million or €113.64 per share at December 31, 2023.

Third Quarter

Net loss of the alternative asset investment platforms was $65 million, compared with a net loss of $11 million in 2023. The adjusted net loss of the alternative asset investment platforms was $40 million, compared with an adjusted net loss of $13 million in 2023.

The adjusted net loss is comprised of:

• A contribution of nil from Sagard comprised of a positive contribution of $6 million from asset management activities and a negative contribution of $6 million from investing activities; and
• A negative contribution of $40 million from Power Sustainable comprised of a negative contribution of $24 million from asset management activities and a negative contribution of $16 million from investing activities. Adjustments in the third quarter of 2024, excluded from adjusted net earnings, were a negative impact of $25 million, compared with a net positive impact of $2 million in 2023. Power Sustainable adjustments consisted of a revaluation of non-controlling interests liabilities ^[1] within the Power Sustainable Energy Infrastructure Partnership (PSEIP).

Summary of assets under management ^[2] (including unfunded commitments):

Third Quarter

The net loss from standalone businesses was $107 million, compared with net earnings of $2 million in 2023. The net loss in the third quarter of 2024 includes a negative contribution from Lion of $30 million, including a non-cash impairment charge of $11 million on the Corporation's investment in Lion, which reflects a decline in market value at September 30, 2024, and a negative contribution from LMPG of $93 million, primarily related to the Corporation's share of a non-cash impairment charge recognized on goodwill by LMPG. The negative contributions from Lion and LMPG were partially offset by a positive contribution from Peak of $16 million.

On September 30, 2024, Peak announced that Fairfax Financial Holdings Limited will acquire Sagard's 42.6% interest in Peak. On close of the transaction, the Corporation expects proceeds of approximately US$325 million and to recognize a gain in net earnings of approximately US$195 million, representing a 3x multiple on invested capital since the original investment in Peak ^[4]. The transaction is expected to close in the fourth quarter of 2024, subject to customary closing conditions.

At September 30, 2024, the fair value of standalone businesses was $0.7 billion, compared with $0.9 billion at September 30, 2023.

Adjusted Net Asset Value

The Corporation's adjusted net asset value per share was $57.92 at September 30, 2024, compared with $53.53 at December 31, 2023, representing an increase of 8.2%.

Participating Shareholders' Equity

The Corporation's book value per participating share was $34.00 at September 30, 2024, compared with $32.49 at December 31, 2023, representing an increase of 4.6%.

Dividend on Power Corporation Participating Shares

The Board of Directors declared a quarterly dividend of 56.25 cents per share on the Participating Preferred Shares and the Subordinate Voting Shares of the Corporation, payable January 31, 2025 to shareholders of record December 31, 2024.

Dividends on Power Corporation Non-Participating Preferred Shares

The Board of Directors also declared quarterly dividends on the Corporation's preferred shares, payable January 15, 2025 to shareholders of record at December 24, 2024:

Investor Information

About Power Corporation

Power Corporation is an international management and holding company that focuses on financial services in North America, Europe and Asia. Its core holdings are leading insurance, retirement, wealth management and investment businesses, including a portfolio of alternative asset investment platforms. To learn more, visit www.powercorporation.com.

At September 30, 2024, Power Corporation held the following economic interests:

Earnings Summary

Sagard and Power Sustainable

Corporate operations and Other

BASIS OF PRESENTATION

The condensed consolidated interim financial statements of the Corporation have been prepared in accordance with International Financial Reporting Standards (IFRS) unless otherwise noted and are the basis for the figures presented in this news release, unless otherwise noted.

NON-IFRS FINANCIAL MEASURES

Net earnings from continuing operations attributable to participating shareholders are comprised of:

• Adjusted net earnings from continuing operations (adjusted net earnings) attributable to participating shareholders; and
• Adjustments, which include the after-tax impact of any item that in management's judgment, including those identified by management of its publicly traded operating companies, would make the period-over-period comparison of results from operations less meaningful. Includes the Corporation's share of Lifeco's impact of market-related impacts, where actual market returns in the current period are different than longer-term expected returns, assumption changes and management actions that impact the measurement of assets and liabilities, realized gains (losses) on the sale of assets measured at FVOCI, direct equity and interest rate impacts on the measurement of surplus assets and liabilities, and amortization of acquisition-related finite life intangible assets, as well as items that management believes are not indicative of the underlying business results which include those identified by a subsidiary or a jointly controlled corporation. Items that management and management of its subsidiaries believe are not indicative of the underlying business results include business transformation impacts (including restructuring or reorganization and integration costs, acquisition and divestiture costs), material legal settlements, material impairment charges, impacts of income tax rate changes on the remeasurement of deferred tax assets and liabilities and other tax impairments, certain non-recurring material items, net gains, losses or costs related to the disposition or acquisition of a business, and other items that, when removed, assist in explaining underlying operating performance.

Adjusted net earnings from continuing operations (or adjusted net earnings) represents net earnings from continuing operations excluding Adjustments. Effective the first quarter of 2024, the Corporation modified the definition of adjusted net earnings to better reflect the underlying operating performance of the Corporation. The definition of Adjustments, used to calculate adjusted net earnings, was modified to include the impact of the revaluation of non-controlling interests liabilities related to PSEIP which result from changes in fair value of assets held within the fund, and the share of earnings (losses) from the consolidated activities of PSEIP attributable to third-party investors. The comparative periods have been restated to reflect this change.

Management uses these financial measures in its presentation and analysis of the financial performance of Power Corporation, and believes that they provide additional meaningful information to readers in their analysis of the results of the Corporation. Adjusted net earnings, as defined by the Corporation, assists the reader in the comparison of the current period's results to those of previous periods as it reflects management's view of the operating performance of the Corporation and its subsidiaries, excluding items that are not considered to be part of the underlying business results.

Fee-related earnings is presented for Sagard and Power Sustainable and includes revenues from management fees earned across all asset classes, less investment platform expenses which include i) fee-related compensation including salary, bonus, and benefits, and ii) operating expenses. Fee-related earnings is presented on a gross basis, including non-controlling interests. Fee-related earnings excludes i) share-based compensation expenses, ii) amortization of acquisition-related intangible assets, iii) foreign exchange-related gains and losses, iv) net interest, and v) other items that in management's judgment are not indicative of underlying operating performance of the alternative asset investment platforms, which include restructuring costs, transaction and integration costs related to business acquisitions and certain non-recurring material items. Management uses this measure to assess the profitability of the asset management activities of the alternative asset investment platforms. This financial measure provides insight as to whether recurring revenues from management fees, which are not based on future realization events, are sufficient to cover associated operating expenses.

Adjusted net asset value is commonly used by holding companies to assess their value. Adjusted net asset value represents the fair value of the participating shareholders' equity of Power Corporation. Adjusted net asset value is calculated as the fair value of the assets of the combined Power Corporation and Power Financial holding company less their net debt and preferred shares. The investments held in public entities (including Lifeco, IGM and GBL) are measured at their market value and investments in private entities and investment funds are measured at management's estimate of fair value. This measure presents the fair value of the participating shareholders' equity of the holding company, and assists the reader in determining or comparing the fair value of investments held by the holding company or its overall fair value.

Adjusted net earnings attributable to participating shareholders, fee-related earnings, adjusted net asset value, gross asset value, adjusted net earnings from continuing operations per share (adjusted net earnings per share) and adjusted net asset value per share are non-IFRS financial measures and ratios that do not have a standard meaning and may not be comparable to similar measures used by other entities.

Presentation of Holding Company Activities

The Corporation's reportable segments include Lifeco, IGM and GBL, which represent the Corporation's investments in publicly traded operating companies, as well as the holding company. These reportable segments, in addition to the asset management activities, reflect Power Corporation's management structure and internal financial reporting. The Corporation evaluates its performance based on the operating segment's contribution to earnings.

The holding company comprises the corporate activities of the Corporation and Power Financial, on a combined basis, and presents the investment activities of the Corporation. The investment activities of the holding company, including the investments in Lifeco, IGM and controlled entities within the alternative asset investment platforms, are presented using the equity method. The holding company activities present the holding company's assets and liabilities, including cash, investments, debentures and non-participating shares. The discussions included in the sections Financial Position and Cash Flows of the Corporation's most recent MD&A present the segmented balance sheets and cash flow statements of the holding company, which are presented in Note 20 of the Interim Consolidated Financial Statements. This presentation is useful to the reader as it presents the holding company's (parent) results separately from the results of its consolidated operating subsidiaries.

RECONCILIATIONS OF NON-IFRS FINANCIAL MEASURES

Power Corporation

Adjusted net earnings from continuing operations

Adjustments (excluded from Adjusted net earnings)

Adjusted net asset value

The following table presents a reconciliation of the participating shareholders' equity reported in accordance with IFRS to the adjusted net asset value, a non-IFRS financial measure:

The Corporation's adjusted net asset value per share was $57.92 at September 30, 2024, compared with $53.53 at December 31, 2023, representing an increase of 8.2%. The Corporation's book value per participating share was $34.00 at September 30, 2024, compared with $32.49 at December 31, 2023, representing an increase of 4.6%.

This news release also contains other non-IFRS financial measures which are publicly disclosed by the Corporation's subsidiaries including adjusted net earnings and adjusted net earnings per share. The section below includes the description and reconciliation of the non-IFRS financial measures included in this news release as reported by the Corporation's subsidiaries. The information below is derived from Lifeco's and IGM's third quarter MD&As, as prepared and disclosed by the respective companies in accordance with applicable securities legislation, and which are also available either directly from SEDAR+ (www.sedarplus.ca) or from their websites, www.greatwestlifeco.com and www.igmfinancial.com.

Adjusted net earnings (loss) from continuing operations attributable to Lifeco's common shareholders

Adjusted net earnings (loss) from continuing operations ^[1] (adjusted net earnings (loss)) reflects Lifeco management's view of the underlying business performance of Lifeco and provides an alternate measure to understand the underlying business performance compared with IFRS net earnings. Adjusted net earnings (loss) excludes the following items from IFRS-reported net earnings:

• Market-related impacts, where actual market returns in the current period are different than longer-term expected returns;
• Assumption changes and management actions that impact the measurement of assets and liabilities;
• Business transformation impacts which include acquisition and divestiture costs and restructuring and integration costs;
• Material legal settlements, material impairment charges related to goodwill and intangible assets, impacts of income tax rate changes on the remeasurement of deferred tax assets and liabilities and other tax impairments, net gains, losses or costs related to the disposition or acquisition of a business, and net earnings (loss) from discontinued operations;
• Realized gains (losses) on the sale of assets measured at fair value through other comprehensive income;
• The direct equity and interest rate impacts on the measurement of surplus assets and liabilities;
• Amortization of acquisition-related finite life intangible assets; and
• Other items that, when removed, assist in explaining Lifeco's underlying business performance.

 

Adjusted net earnings attributable to IGM's common shareholders

Adjusted net earnings attributable to common shareholders excludes Adjustments, which includes the after‐tax impact of any item that management of IGM considers to be of a non‐recurring nature, or that could make the period‐over‐period comparison of results from operations less meaningful.

Effective in the first quarter of 2024, adjusted net earnings also excludes IGM's proportionate share of items that Lifeco excludes from its IFRS-reported net earnings in arriving at Lifeco's base earnings. Comparative periods have been restated to reflect this change.

OTHER MEASURES

This news release and other continuous disclosure documents also include other measures used to discuss activities of the Corporation, its consolidated publicly traded operating companies and alternative asset investment platforms including, but not limited to, "assets under management", "assets under administration", "assets under management and advisement", "assets under management and advisement including strategic investments", "book value per participating share", "carried interest", "net asset value", and "unfunded commitments". Refer to the section "Other Measures" in the Corporation's most recent MD&A, which can be located in the Corporation's profile on SEDAR+ at www.sedarplus.ca, for definitions of such measures, which definitions are incorporated herein by reference.

ELIGIBLE DIVIDENDS

For purposes of the Income Tax Act (Canada) and any similar provincial legislation, all of the above dividends on the Corporation's preferred shares (including the Participating Preferred Shares) and Subordinate Voting Shares are eligible dividends.

FORWARD-LOOKING STATEMENTS

Certain statements in this news release, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect the Corporation's current expectations, or with respect to disclosure regarding the Corporation's public subsidiaries, reflect such subsidiaries' disclosed current expectations. Forward-looking statements are provided for the purposes of assisting the reader in understanding the Corporation's financial performance, financial position and cash flows as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future, and the reader is cautioned that such statements may not be appropriate for other purposes. These statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of the Corporation and its subsidiaries, capital commitments to strategies of the investment platforms, as well as the proposed sale of the Corporation's interest in Peak and the timing thereof. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "plans", "believes", "estimates", "seeks", "intends", "targets", "projects", "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could".

By its nature, this information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, many of which are beyond the Corporation's and its subsidiaries' control, affect the operations, performance and results of the Corporation and its subsidiaries and their businesses, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in North America and internationally, fluctuations in interest rates, inflation and foreign exchange rates, monetary policies, business investment and the health of local and global equity and capital markets, management of market liquidity and funding risks, risks related to investments in private companies and illiquid securities, risks associated with financial instruments, changes in accounting policies and methods used to report financial condition (including uncertainties associated with significant judgments, estimates and assumptions), the effect of applying future accounting changes, business competition, operational and reputational risks, technological changes, cybersecurity risks, changes in government regulation and legislation, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, man-made disasters, terrorist attacks, wars and other conflicts, or an outbreak of a public health pandemic or other public health crises, the Corporation's and its subsidiaries' ability to complete strategic transactions, integrate acquisitions and implement other growth strategies, the Corporation's and its subsidiaries' success in anticipating and managing the foregoing factors and with respect to forward-looking statements of the Corporation's subsidiaries disclosed in this news release, the factors identified by such subsidiaries in their respective MD&A.

The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements. Information contained in forward-looking statements is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, and that strategic transactions, acquisitions, divestitures or other growth or optimization strategies will be completed on expected terms, including that any required approvals will be received when and on such terms as are expected, as well as other considerations that are believed to be appropriate in the circumstances, including that the list of risks and uncertainties in the previous paragraph, collectively, are not expected to have a material impact on the Corporation and its subsidiaries and with respect to forward-looking statements of the Corporation's subsidiaries disclosed in this news release, the risks identified by such subsidiaries in their respective MD&A and Annual Information Form most recently filed with the securities regulatory authorities in Canada and available at www.sedarplus.ca. While the Corporation considers these assumptions to be reasonable based on information currently available to management, they may prove to be incorrect.

Other than as specifically required by applicable Canadian law, the Corporation undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

Additional information about the risks and uncertainties of the Corporation's business and material factors or assumptions on which information contained in forward-looking statements is based is provided in its disclosure materials, including its most recent MD&A and Annual Information Form, filed with the securities regulatory authorities in Canada and available at www.sedarplus.ca.

SOURCE Power Corporation of Canada