POW Power Corp of Canada

MONTRÉAL, Aug. 8, 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 six months ended June 30, 2024.

HIGHLIGHTS

POWER CORPORATION

• Net earnings from continuing operations ^[1] for the second quarter of 2024 were $730 million or $1.12 per share ^[2], compared with $550 million or $0.82 per share in the second quarter of 2023.
  Adjusted net earnings from continuing operations ^[1][3][4] were $761 million or $1.17 per share, compared with $842 million or $1.26 per share in the second quarter of 2023.
• Adjusted net asset value per share ^[3] was $50.48 at June 30, 2024, compared with $53.53 at December 31, 2023.
  The Corporation's book value per share ^[5] was $33.53 at June 30, 2024, compared with $32.49 at December 31, 2023.
• In 2024, the Corporation has purchased for cancellation 4.9 million subordinate voting shares for a total of $189 million at June 30, 2024.
• Contribution to net earnings from continuing operations from the publicly traded operating companies was $827 million in the second quarter, compared with $545 million in the second quarter of 2023.
  Contribution to adjusted net earnings from continuing operations from the publicly traded operating companies was $853 million in the second quarter, compared with $840 million in the second quarter of 2023.

GREAT-WEST LIFECO INC. (LIFECO)

• Second quarter net earnings from continuing operations were $1,005 million, compared with $569 million in the second quarter of 2023.
  Record adjusted net earnings from continuing operations ^[6] of $1,038 million, compared with $920 million in the second quarter of 2023.
• Net earnings and adjusted net earnings exceeded $1 billion, reflecting solid growth across all Lifeco segments. Lifeco's U.S. segment is on course to become its largest segment, reporting double-digit earnings growth.

IGM FINANCIAL INC. (IGM OR IGM FINANCIAL)

• Second quarter net earnings were $216.2 million, compared with $138.2 million in the second quarter of 2023.
  Adjusted net earnings ^[3] were $220.4 million, compared with $211.4 million in the second quarter of 2023.
• Assets under management and advisement including strategic investments ^[5] were $431.7 billion at June 30, 2024, compared with $422.8 billion at March 31, 2024 and $376.1 billion at June 30, 2023.

GROUPE BRUXELLES LAMBERT (GBL)

• GBL reported a net asset value ^[5] of €15.8 billion or €113.90 per share at June 30, 2024, compared with €16.7 billion or €113.64 per share at December 31, 2023.
• In 2024, GBL completed a total of €103 million of share buybacks at June 30, 2024, and cancelled 8.3 million treasury shares.
• GBL is proposing a record-high dividend of €5.00 per share ^[7], an increase of over 80%, including an exceptional dividend, funded from its cash earnings and the €630 million net capital gains realized in 2024 from reducing its interest in adidas.

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

• Sagard and Power Sustainable, the alternative asset investment platforms, raised over $1 billion in new commitments ^[8] in 2024, including:
  • Sagard's final close of Sagard Senior Lending Partners, raising commitments of US$163 million, increasing total committed capital to US$501 million;
  • Sagard's close of Portage Capital Solutions, raising additional commitments of US$95 million;
  • Sagard's subsidiary, Performance Equity Management, raised additional commitments of US$280 million across its strategies;
  • Power Sustainable's final close of Power Sustainable Lios, raising commitments of $51 million, increasing total committed capital to $285 million; and
  • Power Sustainable Infrastructure Credit strategy raised an additional US$120 million committed through a separately managed account.
• In June 2024, Sagard announced it will launch ^[9] Sagard Private Credit Fund, an evergreen credit investment fund designed for accredited investors, leveraging Sagard's credit origination capabilities.

Second Quarter

Net earnings from continuing operations attributable to participating shareholders were $730 million or $1.12 per share, compared with $550 million or $0.82 per share in 2023.

Adjusted net earnings from continuing operations attributable to participating shareholders ^[1] were $761 million or $1.17 per share, compared with $842 million or $1.26 per share in 2023.

Net earnings attributable to participating shareholders were $730 million or $1.12 per share, compared with $501 million or $0.75 per share in 2023.

Publicly traded operating companies: contribution to net earnings from continuing operations was $827 million and to adjusted net earnings from continuing operations was $853 million, representing an increase of 51.7% and 1.5%, respectively, from the second quarter of 2023:

Lifeco: contribution to net and adjusted net earnings increased by 76.8% and 12.7%, respectively.  

IGM: contribution to net earnings and adjusted net earnings increased by 57.0% and by 3.8%, respectively.

GBL: contribution to net earnings of $21 million in the second quarter of 2024, compared with $90 million in 2023.

Sagard and Power Sustainable: Sagard had a positive contribution to net earnings and adjusted net earnings of $27 million, mainly driven by fair value changes in the private equity portfolio. Power Sustainable's contribution to net earnings and adjusted net earnings were negative $32 million and $27 million, respectively.

Adjustments in the second quarter of 2024, excluded from adjusted net earnings from continuing operations, were a negative net impact to earnings of $31 million or $0.05 per share, mainly related to the Corporation's share of adjustments of Lifeco. In the second quarter of 2023, Adjustments were a negative net impact to earnings of $292 million or $0.44 per share, mainly related to the Corporation's share of Lifeco's and IGM's adjustments.

Six Months

Net earnings from continuing operations attributable to participating shareholders were $1,488 million or $2.29 per share, compared with $876 million or $1.31 per share in 2023.

Adjusted net earnings from continuing operations attributable to participating shareholders ^[1] were $1,464 million or $2.25 per share, compared with $1,430 million or $2.14 per share in 2023.

Net earnings attributable to participating shareholders were $1,439 million or $2.21 per share, compared with $814 million or $1.22 per share in 2023.

GREAT-WEST LIFECO INC.

Second Quarter

Net earnings from continuing operations attributable to common shareholders were $1,005 million or $1.08 per share, compared with $569 million or $0.61 per share in 2023.

Adjusted net earnings from continuing operations ^[1] attributable to common shareholders were $1,038 million or $1.11 per share, compared with $920 million or $0.99 per share in 2023.

Net earnings attributable to common shareholders were $1,005 million or $1.08 per share, compared with $498 million or $0.53 per share in 2023.

Adjustments in the second quarter of 2024, excluded from adjusted net earnings, were a net negative impact of $33 million, compared with a net negative impact of $351 million in 2023. Lifeco's adjustments consisted of:

• Amortization of acquisition-related finite life intangible assets of $37 million;
• A negative earnings impact from tax legislative changes of $34 million ^[2]; and
• A negative earnings impact from business transformation impacts of $29 million.

       Partially offset by:

• Market experience relative to expectations of positive $28 million; and
• Assumption changes and management actions of positive $39 million.

IGM FINANCIAL INC.

Second Quarter

Net earnings available to common shareholders were $216.2 million or $0.91 per share, compared with $138.2 million or $0.58 per share in 2023.

Adjusted net earnings attributable to common shareholders were $220.4 million or $0.93 per share, compared with $211.4 million or $0.89 per share in 2023.

Assets under management and advisement (AUM&A) ^[3][4] at June 30, 2024 were $252.4 billion, comparable with March 31, 2024 and an increase of 7.6% from the second quarter of 2023.

GROUPE BRUXELLES LAMBERT

Second Quarter

GBL reported net earnings of €85 million, compared with net earnings of €373 million in 2023.

GBL reported a net asset value ^[3] of €15,764 million or €113.90 per share at June 30, 2024, compared with €16,671 million or €113.64 per share at December 31, 2023.

Net loss of the alternative asset investment platforms was $5 million, compared with net earnings of $3 million in 2023. The adjusted net loss of the alternative asset investment platforms was nil, same as in 2023.

The adjusted net loss is comprised of:

• A positive contribution of $27 million from Sagard comprised of a positive contribution of $1 million from asset management activities and a positive contribution of $26 million from investing activities, mainly related to fair value changes in the private equity portfolio; and
• A negative contribution of $27 million from Power Sustainable comprised of a negative contribution of $18 million from asset management activities and a negative contribution of $9 million from investing activities. Adjustments in the second quarter of 2024, excluded from adjusted net earnings, were a net negative impact of $5 million, compared with a net positive impact of $3 million in 2023. Power Sustainable adjustments mainly 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):

Net earnings of other investments and standalone businesses were $14 million, compared with $110 million in 2023.

The net loss of the standalone businesses was $5 million, compared with net earnings of $8 million in 2023. The net loss in the second quarter of 2024 includes the Corporation's share of losses of Lion and LMPG and a non-cash impairment charge of $36 million after tax ($42 million pre-tax) on the Corporation's investment in Lion, which reflects a decline in market value at June 30, 2024. The negative contribution from Lion and LMPG was partially offset by a positive contribution from Peak of $56 million, mainly resulting from a gain on the disposal of its minority interest in Rawlings Sporting Goods Company Inc.

At June 30, 2024, the fair value of standalone businesses was $0.8 billion, same as at June 30, 2023.

Adjusted Net Asset Value

The Corporation's adjusted net asset value per share was $50.48 at June 30, 2024, compared with $53.53 at December 31, 2023, representing a decrease of 5.7%.

The Corporation's book value per participating share was $33.53 at June 30, 2024, compared with $32.49 at December 31, 2023, representing an increase of 3.2%.

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 November 1, 2024 to shareholders of record September 27, 2024.

Dividends on Power Corporation Non-Participating Preferred Shares

The Board of Directors also declared quarterly dividends on the Corporation's preferred shares, payable October 15, 2024 to shareholders of record at September 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 June 30, 2024, Power Corporation held the following economic interests:

Earnings Summary

Sagard and Power Sustainable

Other Investments and Standalone Businesses

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.

GMT legislation was enacted in Canada on June 20, 2024 and applies retroactively to January 1, 2024. As a result, in the second quarter of 2024, the impact of the GMT including the retroactive amount related to the first quarter was recognized in net earnings. The comparative results for adjusted net earnings and Adjustments for the first quarter of 2024 are presented on a pro forma basis to reflect the related first quarter impact as if the legislation had been enacted in the first quarter of 2024.

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 $50.48 at June 30, 2024, compared with $53.53 at December 31, 2023, representing a decrease of 5.7%. The Corporation's book value per participating share was $33.53 at June 30, 2024, compared with $32.49 at December 31, 2023, representing an increase of 3.2%.

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 second 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 ^[1], 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", "net 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, and the impact of the strategic partnership transaction in Power Sustainable Manager Inc., capital commitments to strategies of the investment platforms, as well as GBL's proposed dividend. 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, 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