Power Corporation of Canada (PWCDF) Q4 2024 Earnings Call Highlights: Strong Earnings Growth ...

GuruFocus News

Fri, Mar 21, 2025, 1:02 AM 4 min read

Adjusted Net Earnings (Q4 2024): $829 million, up 20% year-over-year.
Adjusted Net Earnings Per Share (Q4 2024): $1.28, up 21% year-over-year.
Net Asset Value (NAV) (End of Q4 2024): $60.44, up 4% from Q3 2024.
Net Asset Value (NAV) (Early 2025): $65.10, up 8% from end of Q4 2024.
Dividend Increase: 9%, resulting in $0.6125 per share.
Great-West Lifeco Base Earnings (Q4 2024): Exceeded $1.1 billion, up 15% year-over-year.
IGM Financial Shareholder Earnings (Q4 2024): Up 23% year-over-year.
Share Buybacks (2024): Over 400 million shares, including 120 million in Q4.
Cash Balance (End of 2024): $1.6 billion, with $1.3 billion available after dividends.
Return on Equity (ROE) for Great-West Lifeco (2024): 18%.
Great-West Lifeco Dividend Increase: 10% announced in Q4 2024.
IGM Financial Assets Under Management (AUM) and Assets Under Administration (AUA): Record high levels reported.
Wealthsimple AUA Growth (Year-over-Year): Over 100%.
Rockefeller Client Assets Growth (Year-over-Year): 24%.
China AMC AUM Growth: Despite fee reductions, strong asset growth reported.
Northleaf New Commitments (2024): $4.9 billion.
GBL Dividend Increase: 80% for 2025.
Power Corporation Cash Returned to Shareholders (2024): $2 billion.

Warning! GuruFocus has detected 7 Warning Signs with PWCDF.

Release Date: March 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Power Corporation of Canada (PWCDF) reported strong earnings growth, with adjusted net earnings from continuing operations up 20% year-over-year in Q4 2024.
The company announced a 9% dividend increase, reflecting strong financial performance and confidence in future growth.
Great-West Life achieved a 15% year-over-year increase in base earnings, marking the sixth consecutive quarter of growth.
IGM Financial reported a 23% increase in shareholder earnings, driven by record quarter-end assets at IG Wealth and Mackenzie.
Power Corporation of Canada (PWCDF) successfully executed a share buyback program, purchasing over 400 million shares in 2024, which contributed to an increase in net asset value (NAV).

Negative Points

Power Sustainable reported fee-related losses and continued to face challenges in achieving profitability at the asset management level.
GBL's contribution to adjusted net earnings declined year-over-year due to increased share losses from portfolio companies.
The company faced a non-cash impairment charge of $87 million at LNPG due to an uncertain business and macroeconomic environment.
Power Corporation of Canada (PWCDF) acknowledged that its alternative asset management platforms are not yet contributing significantly to earnings.
The company continues to face a 24% discount to net asset value, which has not narrowed since the reorganization five years ago.

Q & A Highlights

Q: With the heavy lifting done at the holdco level, what other levers can be pulled to help clean up the story and potentially reduce the discount to NAV? A: R. Jeffrey Orr, President and CEO, explained that while significant restructuring has been done, the focus will now be on earnings growth, particularly from Great-West and IGM, which are 83% of the gross asset value. The company will continue to invest in strategic areas like Rockefeller and Wealthsimple but will also focus on increasing earnings growth to help reduce the NAV discount.

Q: Can you elaborate on the strategy around Power Sustainable and the drag on adjusted earnings? A: R. Jeffrey Orr noted that Power Sustainable is not yet at scale, which contributes to the drag on earnings. The focus is on growing the underlying strategies to profitability, which will provide more options for the future. The current losses are seen as a rounding error compared to the potential value creation.

Q: How do you balance buybacks with contributions to Sagard and Power Sustainable to increase their profitability? A: R. Jeffrey Orr stated that the approach is balanced. While buybacks are ongoing, the company also invests in strategies that increase NAV. Cash flow from these investments is used to buy back shares, indirectly turning NAV returns into earnings growth.

Q: What is the strategy for monetizing assets, and how does it relate to buybacks? A: R. Jeffrey Orr explained that the company has multiple sources of cash, including returns from seed capital and asset sales, which will continue to fund buybacks. The focus is on maintaining a steady state of proprietary capital while recycling investments to support ongoing buybacks.

Q: Is there potential for IGM to consolidate Power's ownership in businesses like Rockefeller, and how does this affect cash reserves? A: R. Jeffrey Orr acknowledged that while IGM might consider consolidating ownership in certain businesses, the company always evaluates various funding options, including asset sales and leveraging existing cash reserves, to maintain flexibility for potential transactions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

Terms and Privacy Policy

Your Privacy Choices

Utah Privacy Notice

More Info