Fiera Capital A ((TSE:FSZ)) has held its Q4 earnings call. Read on for the main highlights of the call.
Fiera Capital’s recent earnings call presented a mixed sentiment, reflecting both achievements and challenges. The company reported growth in assets under management and private markets, alongside recognition for top-performing strategies. However, this positive outlook was tempered by a decline in performance fees, an increase in net debt, challenges in public market strategies, and rising SG&A expenses.
Increase in Assets Under Management
Fiera Capital’s assets under management (AUM) reached $167.1 billion by the end of the year, marking a quarterly increase of $1.6 billion and a yearly increase of $5.4 billion or 3.3%. This growth highlights the company’s ability to attract and manage substantial investments, contributing to its overall financial health.
Growth in Private Markets
The private markets segment experienced a notable growth of nearly 7% during the year, reaching $19.7 billion. This increase was driven by new mandates and positive market actions, underscoring the company’s strategic focus on expanding its private markets footprint.
Recognition in Global Manager Research
Fiera Capital’s excellence was acknowledged as two of its funds and one strategy were recognized as top performers in the Global Manager Research 2024 Top Performer Awards for the second consecutive year. This recognition reinforces the company’s reputation for delivering high-quality investment strategies.
Increase in Base Management Fees
Base management fees rose to $157 million in Q4, reflecting a 6% year-over-year increase. The full year saw an increase of $19.8 million, driven by higher average AUM and a strategic shift towards higher fee mandates, enhancing revenue streams.
Private Markets Revenue Growth
Private markets contributed over $241 million in revenues for 2024, up $17 million or 8% from the previous year. Despite accounting for just 12% of total AUM, this segment’s revenue growth highlights its significant contribution to the company’s financial performance.
Decline in Performance Fees
Total revenues in Q4 were $184 million, a decline of $27 million or 13% year-over-year, primarily due to lower performance fees. This decrease reflects the challenge of matching the significant outperformance seen in 2023.
Net Debt Increase
Net debt rose to $651 million by the end of the quarter, an increase of approximately $47 million from the same period last year. This rise in net debt may pose challenges for the company’s financial flexibility moving forward.
Challenges in Public Market Strategies
Some public market strategies, including those sub-advised by PineStone, underperformed their benchmarks, resulting in significant outflows that impacted revenues. This underperformance highlights the need for strategic adjustments in public market operations.
SG&A Expenses Increase
SG&A expenses reached $140 million in Q4, increasing by 3% year-over-year. Share-based compensation contributed to this rise, indicating higher operational costs that could affect profitability.
Forward-Looking Guidance
Fiera Capital provided guidance on key metrics, with AUM ending the year at $167.1 billion, reflecting growth in both private and public markets. Despite net outflows in public markets and anticipated transfers to PineStone, the company remains optimistic about achieving sustainable net inflows by leveraging its decentralized distribution model.
In summary, Fiera Capital’s earnings call highlighted a balanced mix of growth and challenges. While the company demonstrated robust growth in assets under management and private markets, it faces hurdles with declining performance fees and increased net debt. The forward-looking guidance suggests cautious optimism, with a focus on sustainable growth strategies.