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Onex Corporation (ONEX) reported robust financial performance in its Q2 2025 earnings call, showcasing significant growth in asset management and credit platforms. Currently trading at $81.83, InvestingPro analysis suggests the stock is fairly valued. The company’s stock saw a modest rise of 0.81% following the announcement, contributing to an impressive 27.46% return over the past year. Onex’s investing capital per share returned 4% this quarter, contributing to a 7% return for the first half of 2025. The company also highlighted its strategic share repurchases and strong liquidity position.
Key Takeaways
- Onex’s fee-generating assets under management increased by 16% in 2025.
- The company raised $4.5 billion in new fee-generating assets in credit.
- Onex anticipates a double-digit fee-related earnings run rate by year-end.
- The firm completed 17 credit transactions, including 7 new issues.
Company Performance
Onex Corporation demonstrated solid performance in Q2 2025, driven by strategic asset management and credit platform expansion. The company reported a 4% return on investing capital per share for the quarter, aligning with its long-term goal of compounding net asset value. With a current ratio of 6.63 and virtually no debt-to-equity ratio, Onex’s strong liquidity position of $1.5 billion, representing 18% of its investing capital, underscores its financial stability. The company maintains a healthy gross profit margin of 77% and trades at an attractive price-to-book ratio of 0.66.
Financial Highlights
- Investing capital per share: $121.23
- 5-year total return: 15%
- Repurchased 3.2 million shares, valued at CAD $215 million
- Liquidity position: $1.5 billion
Outlook & Guidance
Onex remains optimistic about its future, targeting a double-digit fee-related earnings run rate by the end of 2025. According to InvestingPro, management has been aggressively buying back shares, and the company has maintained dividend payments for 39 consecutive years - just two of several ProTips available to subscribers. The company plans to continue share buybacks while its stock price remains below intrinsic value. Onex also expects more asset realizations in the second half of the year, focusing on compounding NAV and increasing fee-related earnings.
Executive Commentary
CEO Bobby LeBlanc expressed satisfaction with the company’s performance, stating, "We are pleased with the outcome, which we view as an endorsement of OP’s demonstrated ability to create value." CFO Chris Govan emphasized the company’s strategic focus, saying, "We remain focused on compounding our investing capital, growing fee-related earnings, and delivering returns."
Risks and Challenges
- Market volatility could impact asset valuations and investment returns.
- Regulatory changes in the financial sector may affect operations.
- Competition in the asset management industry remains intense.
- Economic downturns could influence demand for credit products.
Onex’s Q2 2025 earnings call highlights its strategic growth in asset management and credit platforms, setting a positive tone for the remainder of the year. The company’s focus on expanding its fee-related earnings and maintaining a strong liquidity position positions it well for future growth. For deeper insights into Onex’s financial health (rated GOOD by InvestingPro), including exclusive ProTips and comprehensive valuation metrics, investors can access the detailed Pro Research Report, part of the extensive analysis available for over 1,400 US equities.
Full transcript - Onex Corp (ONEX) Q2 2025:
Conference Operator: Thank you for standing by and welcome to the Onex Corporation Second Quarter Earnings Results Conference Call. At this time, participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. As a reminder, today’s program is being recorded. And now I’d like to introduce your host for today’s program, Jill Homenick, Shareholder Relations and Communications.
Please go ahead.
Jill Homenick, Shareholder Relations and Communications, Onex Corporation: Thank you. Good morning, everyone, and thanks for joining us. We’re broadcasting this call on our website. Hosting the call today are Bobby LeBlanc, Onex’s Chief Executive Officer and Chris Govan, our Chief Financial Officer. Earlier this morning, we issued our second quarter twenty twenty five press release, MD and A and consolidated financial statements, which are available in the Shareholders section of our website and have also been filed on SEDAR.
Our supplemental information package is also available on our website. As a reminder, all references to dollar amounts on this call are in U. S, unless otherwise stated. I must also point everyone to our webcast presentation for our usual disclaimer and cautionary factors relating to any forward looking statements contained in today’s presentation and remarks. With that, I’ll now turn the call over to Bobby.
Bobby LeBlanc, Chief Executive Officer, Onex Corporation: Good morning, everyone. Onex delivered a solid quarter in Q2. The focus on our firm wide priorities of compounding NAV and increasing fee related earnings is evident in our first half performance. While creating near term value is foremost for our teams, we also remain active on identifying appropriate capital allocation strategies to drive long term enterprise and shareholder value. Investing capital per share returned 4% in Q2, driven by gains in private equity and credit.
For the first half of the year, investing capital per share returned 7%. We continued to see growth in fee generating AUM this quarter. So far in 2025, fee generating AUM has increased by 16% with solid contributions from structured credit and our PE platforms. Turning now to private equity. After the completion of successful fundraisers in each of OP and ONCAT earlier this year, the teams are now focused on driving performance within their portfolios, identifying new opportunities for investment and securing realizations to return capital to Onex and our investors.
On the return of capital front, Onex Partners pending partial sale of WestJet to a consortium of three prominent global airlines has received positive feedback from our shareholders and LPs. The transaction, which is expected to close this year, will result in OP returning all of its original investment, while still owning 75% of its original stake. When announced, the sale price represented more than a 40% premium to our Q1 mark, reflecting both the strategic nature of the transaction and WestJet’s performance potential. We are pleased with the outcome, which we view as an endorsement of OP’s demonstrated ability to create value in its core verticals independent of macro events. In July, completed the sale of 80% of our stake in Precision Concepts.
The transaction returned more than three times ONCAP’s initial investment over the seven point five year hold period, demonstrating the team’s ability to compound capital at high rates of return, and once again, validating OnCAP’s differentiated subsector expertise. OnCap continues to produce significant returns of capital for investors, which in both 2023 and 2024 average over 20% of net asset value. Investing performance of both OP and ONCAF was good this quarter, with a combined return of 4%. Although it’s still early days, the performance of the Onex Partners Opportunity Fund was a particular highlight. Overall, the team’s performances are contributing to meaningful gains and unrealized carried interest.
Since the end of the year, unrealized carried interest across PE has increased by 22% or nearly $60,000,000 Within credit, the team had another impressive quarter, increasing both fee generating assets and fee related earnings. Since we reported our Q1 results, our structured credit team has executed another seven transactions, bringing the total for the year to 17, including seven new issues. In aggregate, the credit team has raised $4,500,000,000 of new fee generating assets and extended another $3,800,000,000 Across the industry, CLO issuance has been strong amidst ongoing demand from global investors. Within this dynamic, Honest is continuing to gain market share. Building on our strong performance in recent years, we expect to again be a top 10 global CLO issuer in 2025.
Honest Credit is now approaching $30,000,000,000 in assets under management. The team has done a nice job of continuing to scale our platform by offering differentiated products, strengthening its relationships with leading institutional investors and delivering strong risk adjusted returns for our clients. I am pleased with the results the Onex team delivered in the first half of the year. Staying focused within our core strengths will lead to increased shareholder value. We also know that we need to be strategic and proactive in how we deploy our capital to build for the future.
I’ll now turn it over to Chris.
Chris Govan, Chief Financial Officer, Onex Corporation: Thanks, Bobby, good morning, everyone. On X ended Q2 with investing capital per share of $121.23 a return of 4% in the quarter and 7% for the first, six months of twenty twenty five. These returns were driven by investing gains from private equity and credit as well as accretive share repurchases. The five year tagger on investing capital per share is 15% in line with our target range. We repurchased 1,800,000.0 shares in Q2 at prices meaningfully below hard.
Since the beginning of the year, we bought back 3,200,000.0 shares, allowing us to capture about Canadian $215,000,000 of hard for continuing shareholders. We expect buybacks to remain part of our capital allocation plans. So, long as the disconnect between intrinsic value and share price persists. Now, looking at our investing returns, our portfolio returned 4% in the quarter with gains broad based across the portfolio. With the largest contributions coming from partners five and on cap four.
As Bobby mentioned, the partners opportunities fund has experienced strong early results. With an annualized return over 20% driven by the strong performance at its first, two investments. Our teams have continued to surface strong realizations at or above our marks. In May, on its partners announced the strategic sale of a 25% interest in West yet to a consortium of airlines and in July on cap completed the sale of a majority interest in precision concepts international. These two transactions will provide on X with approximately $145,000,000 of net proceeds.
Adding to our strong liquidity position, which stood at 1,500,000,000.0 or 18% of investing capital at quarter end. Turning to the credit results, our credit investments delivered a $33,000,000 net gain or a 4% return in Q2. This was largely driven by gains in our structured credit strategies, including some favorable foreign exchange gains on the euro. The asset management side of the business Onyx ended the quarter with $41,000,000,000 of fee generating with private equity and credit increasing by approximately 2014% respectively. Since year end, the increases primarily reflect new commitments made to on cap five and the partners opportunities fund.
And the issuance of new. Within credit structured credit continued its strong start to the year raising or extending over $7,000,000,000 in fee generating assets through June 30. The team is currently in market with additional new issues in Europe and The US and is on a pace similar to 2024, which was a record year for the platform. Onyx credit is well positioned to continue building on its leadership position in structured credit. As Bobby mentioned, including transactions priced in July, the credit platform is nearing 30,000,000,000 in total an increase of 50% or roughly $10,000,000,000 since the 2023.
This is a meaningful achievement and has been accomplished with relatively modest growth in the platforms, operating costs and essentially no increase in the capital allocated from onyx’s balance sheet. Looking at the asset management results, the segment generated earnings of $36,000,000 in Q2 of which 6,000,000 was fee related earnings from the PE and credit platforms. After factoring in the costs associated with managing on its corporations capital and maintaining the public company total was a loss of $2,000,000 in the quarter. And break even for the first, months, notably from structured credit increased $3,000,000 sequentially to 15,000,000 for Q2, reflecting an annual run rate contribution of about 60,000,000 up roughly $7,000,000 or 13% in the quarter. Finally, an update on Onyx’s incentive fee and carried interest opportunity.
We ended Q2 with $346,000,000 of accrued carry, which reflects $38,000,000 accrued in the quarter. Onyx now has almost $40,000,000,000 of private equity and credit subject to carrier incentive fees, Providing a meaningful opportunity for value creation going forward in summary. We’ve made considerable progress in the ’25 with our diverse investment portfolio and strong financial position serving us well, in today’s markets. We remain focused on compounding our investing capital, growing fee related earnings and delivering returns to our shareholders and partners. That concludes the prepared remarks will now be happy to take any questions.
Conference Operator: Certainly, and as a reminder, ladies and gentlemen, if you do have a question at this time, press 11 on your telephone. And our first question for today comes from the line of Graham Ryding from TD Securities. Your question please.
Graham Ryding, Analyst, TD Securities: Can I just confirm on the credit side, it sounded like new fundraising was $4,500,000,000 and then over $7,000,000,000 in total if you include extended CLOs, extending CLOs? Is that correct?
Bobby LeBlanc, Chief Executive Officer, Onex Corporation: Chris, I think you’re on mute.
Chris Govan, Chief Financial Officer, Onex Corporation: Sorry. Was on mute. Sorry. Yes, those are the amounts through the end of Q2. Bobby cited some total amounts that included some July activity, and that’s more like total a little over eight.
Graham Ryding, Analyst, TD Securities: Okay, understood. And then so maybe just what’s the outlook for further fundraising in the second half of this year? The same pace or how’s On the pipeline
Bobby LeBlanc, Chief Executive Officer, Onex Corporation: the structured credit side, the demand is still really high for CLOs. And again, we’re also focused on growing some of our more subscale products that’ll have a differentiated impact on the bottom line. In other words, the more fee generating AUM we get from our non structured products will have a disproportionate amount of impact on profitability. So I feel pretty unless unless the market’s dislocated, I don’t expect, the credit team to slow down on the pace that they’re on right now.
Graham Ryding, Analyst, TD Securities: Okay. And so that is you know, you’re seeing stronger demand this year than than you expected coming out of 2024. Is that a fair characterization?
Bobby LeBlanc, Chief Executive Officer, Onex Corporation: Yeah, well, especially if you were to have asked me that question in January or February when the world was highly uncertain. Think that’s really they’ve actually been able to do a really good job continuing to gain share and to get their product out there.
Graham Ryding, Analyst, TD Securities: Great. And then just the outlook for FRE, with this AUM growth broke even for the first half of the year, what’s the outlook for the second half on the FRE front overall?
Chris Govan, Chief Financial Officer, Onex Corporation: Yeah. So overall, Graham, we’re run rating right now just about breakeven overall. But we do have, as Bobby mentioned, fundraising plans for the back half of the year. And so I would expect that if we hit targets that overall run rate for the entire business should get into double digits by the end of the year. As you know, we had a goal out of Investor Day to see the credit business as a whole run rate at about 55,000,000 out of the back half at the back end of this year.
So if we hit that target, then overall FRE should be around $10,000,000 or so run rate.
Graham Ryding, Analyst, TD Securities: Okay. Excellent. And then my last question, just what’s the outlook here for on PE side for further realizations, maybe just some color on the market backdrop and how your pipeline looks on that front?
Bobby LeBlanc, Chief Executive Officer, Onex Corporation: Yeah, M and A market has actually gotten better over the last three months in spite of the continued uncertainty and noise around tariffs and other geopolitical issues. I do expect to be able to announce more realizations in the back half of the year. I’m not gonna give you sizes, but we have several things in process that, again, absent a a a strange dislocation in the near term should come to fruition.
Graham Ryding, Analyst, TD Securities: Great. That’s it for me. Thank you.
Bobby LeBlanc, Chief Executive Officer, Onex Corporation: Thank you.
Conference Operator: Thank you. This does conclude the question and answer session of today’s program. I’d like to hand the program back to Bobby LeBlanc for any further remarks.
Bobby LeBlanc, Chief Executive Officer, Onex Corporation: Thanks everybody for your time and I hope you enjoy the rest of the summer, seems to be flying by. And we look forward to catching up. If you’ve got any questions, feel free to reach out to me, Chris or Jill, and we’ll get right back to you. Thanks.
Conference Operator: Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.
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