Mr. Jean-Guy Desjardins reports

FIERA CAPITAL REPORTS SECOND QUARTER 2023 RESULTS

Fiera Capital Corp. has released its financial results for the second quarter ended June 30, 2023.

"Our investment teams continue to be amongst the leaders in the industry in terms of investment performance, with 95 per cent and 91 per cent of equity and fixed-income strategies beating their benchmark over a one-year period respectively. Despite this, the environment for flows remained challenged during the quarter given the persistent macroeconomic uncertainty and clients' continued overweighting to cash. However, we maintained our consistent track record of positive organic growth in our private markets platform," said Jean-Guy Desjardins, chairman of the board and global chief executive officer. "We have also made progress toward the regionalization of our distribution model with the hiring of an executive director and chief executive officer for EMEA and the appointment of an executive director and chief executive officer for Asia. We also expect to conclude the hiring of regional CEOs in Canada and the U.S. by the end of the third quarter."

"As we navigate uncertain market conditions in 2023, we are seeing the results of our collective teams' efforts towards a prudent approach to cost management with an adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] margin of 28.4 per cent, a marked improvement from last quarter and a return to consistent levels compared to the same period last year," said Lucas Pontillo, executive director and global chief financial officer. "We continued to optimize our capital structure and maintain our financial flexibility through the closing of our $65-million 8.25 per cent public debt offering this quarter with proceeds used towards the redemption of our $110-million hybrid maturing in 2024. I am also pleased to announce that the board of directors has approved a dividend of 21.5 cents per share, payable on Sept. 20, 2023."

Highlights:

• AUM (assets under management) of $164.2-billion decreased by $500-million, or 0.3 per cent, compared with March 31, 2023, due to negative net organic growth in public markets AUM, partly offset by a favourable market impact primarily from equities and positive net organic growth in private markets AUM.
• AUM increased by $5.7-billion, or 3.6 per cent, compared with Dec. 31, 2022, due to a favourable market impact and new mandates, partly offset by outflows principally related to AUM subadvised by PineStone Asset Management Inc.

Second quarter financial highlights

The company's financial highlights reflect the following major items for the second quarter of 2023:

• Revenue increased by $2.7-million, or 1.7 per cent, compared with Q1 2023. The increase was primarily due to higher base management fees as a result of higher average AUM in the quarter and higher commitment and transaction fees, partly offset by lower performance fees in private markets. Revenue decreased by $4-million, or 2.4 per cent, compared with Q2 2022. The decrease was primarily due to lower performance fees crystallized in Europe and Canada and lower share of earnings in joint ventures and associates, due to timing of completion for certain projects.
• Adjusted EBITDA increased by $6.7-million, or 17.3 per cent, compared with 2023, principally due to higher revenue and lower employee compensation costs. Adjusted EBITDA was marginally lower compared to Q2 2022 due to the decrease in revenues, but offset by a reduction in expenses, as reflected by an adjusted EBITDA margin of 28.4 per cent in the quarter.
• Adjusted net earnings increased by $5.2-million, or 22.1 per cent, compared with Q1 2023, primarily due to higher revenues, lower SG&A (selling, general and administrative), excluding share-based compensation, and favourable foreign exchange revaluation, partly offset by higher income tax expense:
  • Adjusted net earnings decreased by $2.9-million, or 9.2 per cent, compared with Q2 2022, primarily due to lower revenues, higher interest on long-term debt and debentures, and higher-income tax expense, partly offset by lower SG&A, excluding share-based compensation.
• Net earnings attributable to the company's shareholders increased by $13-million compared with Q1 2023, primarily due to a lower provision related to certain claims, lower restructuring, acquisition related and other costs, favourable foreign exchange revaluation, higher revenues, and lower SG&A, partly offset by higher income tax expense:
  • Net earnings attributable to the company's shareholders decreased by $300,000 compared with Q2 2022.
• LTM free cash flow decreased by $64.6-million compared with Q2 2022. The decrease was mainly due to lower cash generated by operating activities, higher interest paid on long-term debt and debentures, lower distributions received from joint ventures and associates, and higher dividends and other distributions to non-controlling interest.

Year-to-date financial highlights

The company's financial highlights reflect the following major items for the six-month period ended June 30, 2023, compared with the six-month period ended June 30, 2022:

• Revenue decreased by $19.3-million, or 5.7 per cent, primarily due to lower base management fees in public markets from lower average AUM, lower share of earnings in joint ventures and associates, and lower performance fees primarily in public markets, partly offset by higher base management fees in private markets.
• Adjusted EBITDA decreased by $9.5-million, or 10.1 per cent, primarily due to lower revenues, partly offset by net lower employee compensation costs and subadvisory fees.
• Adjusted net earnings decreased by $12.5-million, or 19.3 per cent, primarily due to lower revenues and higher interest on long-term debt and debentures, partly offset by lower SG&A.
• Net earnings attributable to the company's shareholders decreased by $6.2-million. Items which impacted the six-month period ended June 30, 2023, compared with the same period last year included:
  • A lower contribution from adjusted EBITDA of $9.5-million;
  • A provision of $6.2-million related to certain claims recorded in the current year;
  • A $6.3-million increase in interest on long-term debt and debentures, due to rising interest rates.
• These items were partly offset by lower accretion and change in the fair value of purchase price obligations and promissory note.

Second quarter business highlights

Issuance of 8.25 per cent senior subordinated unsecured hybrid debentures

On June 29, 2023, the company entered into an agreement, whereby a syndicate of underwriters have agreed to purchase $65-million aggregate principal amount of senior subordinated unsecured hybrid debentures due Dec. 31, 2026, at a price of $1,000 per debenture. The debentures bear interest at a rate of 8.25 per cent per annum. The net proceeds of this offering was used to partially finance the redemption of the company's $110-million aggregate principal amount of 5.60 per cent senior subordinated unsecured debentures due July 31, 2024, which redemption was completed on July 31, 2023. Subsequent to the quarter-end, on July 28, 2023, the company issued 2,250 senior subordinated unsecured hybrid debentures following the exercise of the overallotment option for gross proceeds of $2.25-million, also maturing on Dec. 31, 2026.

Redemption of 5.6 per cent hybrid debentures announced

On June 29, 2023, the company announced that it will redeem all issued and outstanding 2024 debentures on July 31, 2023. The $110-million aggregate principal amount was redeemed at par.

Leadership announcements

As part of the company's global expansion strategy, the company appointed Klaus Schuster as executive director and chief executive officer, EMEA, effective May 30, 2023. Mr. Schuster is responsible for driving the end-to-end market strategy for this key region. He directly leads the company's distribution and marketing teams across EMEA and provides executive leadership for all employees across all functions in the region.

Subsequent to June 30, 2023

Normal course issuer bid (NCIB)

The company announces that the Toronto Stock Exchange approved the renewal of the company's NCIB to purchase for cancellation up to four million of its Class A shares over the 12-month period commencing on Aug. 16, 2023, and ending no later than Aug. 15, 2024, and representing approximately 4.67 per cent of its 85,694,246 issued and outstanding Class A shares as at Aug. 3, 2023.

Under the NCIB that will expire Aug. 15, 2023, and pursuant to which the company was authorized to purchase up to four million Class A shares, Fiera Capital did not purchase any shares under the NCIB.

The board of directors of the company believes that the repurchase of Class A shares, which the company may carry out from time to time, represents a responsible investment and the NCIB will provide Fiera Capital with the flexibility to purchase Class A shares as it considers advisable.

Purchases under the NCIB will be made on the open market through the facilities of the TSX and through Canadian alternative trading systems, as well as outside the facilities of the TSX pursuant to exemptions available under applicable securities legislation or exemption orders issued by securities regulatory authorities. The price that the company will pay for the Class A shares will be the market price of such shares at the time of the acquisition as per the requirements of the market where the trade is made and applicable securities laws, except for purchases effected outside the facilities of the TSX pursuant to exemptions available under applicable securities legislation or exemption orders issued by securities regulatory authorities which will be at a discount to the prevailing market price.

The average daily trading volume (ADTV) of the Class A shares over the last six complete calendar months was 241,288 Class A shares. Accordingly, under TSX rules and policies, Fiera Capital is entitled on any trading day to purchase on the TSX up to 60,322 Class A shares. Fiera Capital may also purchase, once a week and in excess of the foregoing daily repurchase limit of 25 per cent of the ADTV, blocks of Class A shares that are not owned by any insiders, in accordance with the TSX rules and policies.

Dividend declared

On Aug. 9, 2023, the board of directors declared a quarterly dividend of 21.5 cents per Class A share and Class B share, payable on Sept. 20, 2023, to shareholders of record at the close of business on Aug. 22, 2023. The dividend is an eligible dividend for income tax purposes.

Conference call

Live

Fiera Capital will hold a conference call at 10 a.m. ET on Thursday, Aug. 10, 2023, to discuss its financial results. The dial-in number to access the conference call from Canada and the United States is 1-888-390-0620 (toll-free) and 1-416-764-8651 from outside North America.

The conference call will also be accessible through webcast in the investor relations section of Fiera Capital's website, under events and presentations.

Replay

An audio replay of the call will be available until Aug. 17, 2023, by dialling 1-888-390-0541 (toll-free), access code 896532 followed by the number sign.

The webcast will remain available for three months following the call and can be accessed in the investor relations section of Fiera Capital's website under events and presentations.

About Fiera Capital Corp.

Fiera Capital is a leading independent asset management firm with a growing global presence and approximately $164.2-billion in assets under management as of June 30, 2023. The company delivers customized and multiasset solutions across public and private market asset classes to institutional, financial intermediary and private wealth clients across North America, Europe and key markets in Asia.

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