TORONTO, ONTARIO — (Marketwire) — 02/22/13 — All amounts in U.S. dollars unless otherwise stated
Onex Corporation (“Onex”) (TSX: OCX) today announced its consolidated financial results for the fourth quarter and full year ended December 31, 2012 and an update on matters following year-end.
Highlights
Acquiring and Building Businesses
“2012 was a busy year for Onex with the acquisition of five businesses,” said Gerald W. Schwartz, Chairman and Chief Executive Officer of Onex. “These investments reflect years of effort evaluating industry sectors and developing relationships with management teams.”
USI, the ninth largest insurance broker in the United States, offers a broad range of property and casualty, and employee benefits insurance products to middle-market businesses. Onex- acquisition follows seven years researching the insurance brokerage sector. USI has a unique fully-integrated operating model and a proven add-on acquisition strategy, completing three acquisitions since the closing of Onex- investment. Onex Partners III invested $510 million, of which Onex- share was $128 million as a limited partner in the Fund. Including an additional $126 million co-investment, Onex- initial investment was $254 million. A process is underway to offer a portion of the co-investment to third-party limited partners and employees of USI.
BBAM is a leading manager of leased commercial aircraft. Over its 23-year history, the company has provided fleet and financing solutions to over 200 airline customers in more than 50 countries. BBAM provides asset management services to leasing companies, aviation investors and financial institutions covering more than 450 aircraft valued in excess of $13 billion. The BBAM investment is a proprietary opportunity that resulted from several years evaluating the aircraft leasing sector. Onex Partners III acquired a 50% interest in BBAM for $165 million, of which Onex- share was $42 million. In connection with this transaction, Onex Partners III also invested $20 million in newly issued shares of FLY Leasing Limited (“FLY”) (NYSE: FLY), a global lessor of commercial jet aircraft managed by BBAM. Onex- share of the investment in FLY was $5 million.
With no debt and $1.1 billion of cash and near-cash items, Onex is in a very strong financial position. Onex also has $1.3 billion of undrawn, committed capital from limited partners in Onex Partners III and ONCAP III. Combined, we have the resources to pursue just about any attractive opportunity.
In 2012, Onex- operating companies paid down approximately $1.8 billion of debt and distributed approximately $1.6 billion, including a $1.2 billion distribution from Tomkins following the sale of several non-core assets. Our businesses also made capital expenditures and add-on acquisitions of approximately $1.1 billion, including JELD-WEN-s acquisition of CraftMaster, the world-s third-largest integrated manufacturer of interior doors and door facings.
Onex- interest in Onex Partners- and ONCAP-s private companies grew by 17% and 23%, respectively, in 2012. Overall, Onex- proprietary capital, including $1.1 billion of cash and near-cash items, grew by 12% on a per share basis during the year.
By transforming good businesses into industry leaders, Onex has generated a 28-year gross IRR of 28% and an average multiple of 2.9 times invested capital from realized, substantially realized and publicly traded investments. At Onex, we all share in the success and failure of our investments. At December 31, 2012, the value of the Onex team-s investment in Onex- shares and its businesses was approximately $1.7 billion.
Managing and Growing Third-Party Capital
Onex earns recurring management fees and/or carried interest on $8.8 billion of third-party assets under management. In 2012, Onex Partners, ONCAP and Onex Credit Partners earned a total of $113 million in management and other fees. Onex also received $3 million of carried interest as a result of the realization of Center for Diagnostic Imaging. Combined fees and carried interest received offset ongoing operating expenses in 2012.
At December 31, 2012, the value of Onex- unrealized carried interest was approximately $50 million based on the traded market values of Onex Partners- public companies and a further $90 million based on the year-end valuations of the private businesses. Onex- share of the total unrealized carried interest grew by $47 million in 2012. The amount of carried interest ultimately realized by Onex depends on the overall performance of each Fund.
With Onex Partners III more than 75% invested, Onex is in a position to fundraise for Onex Partners IV.
Onex Credit Partners completed two CLO offerings in 2012, raising approximately $840 million, including $58 million from Onex. These CLOs increased Onex Credit Partners- third-party capital under management to $1.8 billion. In the last few years, the market for CLOs has significantly consolidated and favours well-capitalized, diversified sponsors. As market conditions permit, we expect Onex Credit Partners to launch additional CLOs, which would represent an additional source of recurring management fees.
Creating Value for Shareholders
Over time, we hope that the value of Onex- shares reflects both growth in the value of our assets and the intrinsic value of our asset management capabilities. At December 31, 2012 Onex- Subordinate Voting Shares closed at C$41.87, a 26% increase from December 31, 2011. This compares to a 13% increase in the S&P 500 and a 4% increase in the S&P/TSX Composite Index.
The Company paid a fourth-quarter dividend of C$0.0275 per Subordinate Voting Share on January 31, 2013 to shareholders of record on January 10, 2013.
In 2012, Onex repurchased 627,061 Subordinate Voting Shares under its Normal Course Issuer Bids for a total cost of C$24 million or an average cost per share of C$38.59. In January 2013, Onex repurchased 545,400 shares for a total cost of C$23 million or an average cost per share of C$42.51.
Consolidated Results
Onex- quarterly and full-year consolidated financial results do not follow any specific trends due to acquisitions and dispositions of businesses, changes in the value of its publicly traded and privately held operating companies and varying business cycles at its operating companies.
On a consolidated basis for the fourth quarter, revenues increased 2% to $6.9 billion compared to the same period of the prior year. Onex reported a consolidated net loss of $77 million compared to a loss of $113 million in the fourth quarter of 2011. Cash from operations was $784 million in the fourth quarter of 2012 compared to $707 million in 2011.
On a consolidated basis for the full year ended December 31, 2012, revenues increased 11% to $27.4 billion. The acquisitions completed in 2011, including JELD-WEN, contributed to this year-over-year revenue increase. Net earnings for the year were $39 million compared to $1.6 billion for 2011, which included $1.7 billion of earnings relating to the sales of Husky International and Emergency Medical Services Corporation. Cash flow from operations was $2.0 billion in 2012 compared to $1.2 billion in the prior year.
Attached are the Consolidated Balance Sheets, Statements of Earnings, Statements of Cash Flows and information by industry segment for the full year ended December 31, 2012 and 2011 as prepared under International Financial Reporting Standards. The complete financial statements, including Management-s Discussion and Analysis of the results, are posted on Onex- website, , and are also available on SEDAR at . Also attached are the “How We Are Invested” schedule, which details Onex- $5.0 billion of proprietary capital and provides private company performance information, and the Schedule of Fees and Expenses.
Webcast
Onex management will host a conference call to review Onex- fiscal 2012 results on Friday, February 22 at 11:00 a.m. ET. A live webcast of this conference call will be available in listen-only mode on its website, .
About Onex
With offices in Toronto, New York and London, Onex is one of the oldest and most successful private equity firms. Onex acquires and builds high-quality businesses in partnership with talented management teams. The Company has approximately $15 billion of assets under management, including $5 billion of proprietary capital, in private equity, credit securities and real estate. Onex invests its proprietary capital directly and as a substantial limited partner in its Funds.
Onex- businesses have assets of $43 billion, generate annual revenues of $37 billion and employ approximately 250,000 people worldwide. Onex shares trade on the Toronto Stock Exchange under the stock symbol OCX. For more information on Onex, visit its website at . The Company-s security filings can also be accessed at .
This news release may contain forward-looking statements that are based on management-s current expectations and are subject to known and unknown uncertainties and risks, which could cause actual results to differ materially from those contemplated or implied by such forward-looking statements. Onex is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.
Contacts:
Onex Corporation
Emma Thompson
Vice President, Investor Relations
416.362.7711