GuruFocus -
- Distributable Earnings (DE) Before Realizations: $1.3 billion or $0.80 per share for the quarter; $4.6 billion or $2.90 per share for the last 12 months.
- Total (EPA:TTEF) Distributable Earnings (DE) Including Realizations: $1.3 billion or $0.84 per share for the quarter; $6 billion or $3.78 per share for the last 12 months.
- Net Income: $1.5 billion for the quarter.
- Asset Management Distributable Earnings: $694 million or $0.44 per share in the quarter; $2.6 billion or $1.64 per share over the last 12 months.
- Fundraising Inflows: $21 billion in the quarter; $135 billion for the last 12 months.
- Fee-Bearing Capital: $539 billion, a 23% increase from 12 months ago.
- Wealth Solutions Distributable Operating Earnings: $364 million or $0.23 per share in the quarter; $1.2 billion or $0.75 per share over the last 12 months.
- Insurance Assets: Over $115 billion at quarter end.
- Investment Portfolio Yield: 5.4%, 1.8% higher than the average cost of capital.
- Real Estate Same-Store Net Operating Income Growth: 4% over the prior-year quarter.
- Real Estate Occupancy Level: 95% in the retail portfolio.
- Asset Sales: Over $17 billion closed or advanced in recent months.
- Unrealized Carried Interest: $2.4 billion generated over the last 12 months; total accumulated unrealized carried interest of $11.5 billion.
- Net Realized Carried Interest: $295 million recognized into income so far this year.
- Shareholder Returns: $203 million returned through dividends and share buybacks during the quarter; approximately $1 billion of shares repurchased over the last 12 months.
- Quarterly Dividend: $0.08 per share declared, payable on December 31, 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Brookfield Corp (NYSE:BN) reported a 19% increase in distributable earnings before realizations, reaching a record $1.3 billion for the quarter.
- The company has committed approximately $20 billion towards new investments, indicating a robust pipeline and growth potential.
- Brookfield Corp (NYSE:BN) has successfully expanded its wealth solutions business, with earnings doubling compared to the prior-year quarter.
- The company has seen strong fundraising momentum, with total inflows of $21 billion in the quarter and $135 billion over the last 12 months.
- Brookfield Corp (NYSE:BN) has executed over $30 billion of financings across the business, demonstrating strong liquidity and access to capital markets.
- The wealth solutions business is still below its target 200-basis-point spread, indicating room for improvement in achieving desired financial metrics.
- The real estate portfolio has seen a decrease in the transition and development bucket, with some properties disposed of, which may impact future growth.
- There is uncertainty regarding the timing of realized carried interest, which could affect cash flow projections.
- The market may misunderstand the value of certain business segments, such as real estate and wealth solutions, leading to a potential undervaluation.
- The insurance business, particularly the P&C segment, faces challenges from weather-related events, although impacts have been minimized through reinsurance.
A: Nick Goodman, President & CFO, clarified that the change in disclosure was merely to better illustrate the complete return of capital. The company has conducted significant share repurchases due to a perceived disconnect between their view of value and market prices, but there is no structural change in strategy implied.
Q: Regarding the wealth solutions business, when do you expect to achieve the target 200-basis-point spread and reach the $2 billion annualized distributable earnings target?
A: Nick Goodman stated that they expect to achieve the target spread and earnings within the next 12 months, as it takes time to reallocate assets into higher-yielding opportunities.
Q: What is the plan for the real estate portfolio, and will there be changes to discount rates given interest rate movements?
A: Nick Goodman explained that the plan is to monetize assets when market conditions are favorable, and while discount rates have been adjusted slightly with interest rate changes, they are not expected to fluctuate significantly as they reflect a long-term view.
Q: How is Brookfield improving BAM's eligibility for US index inclusion, and what is the desired stake in BAM long-term?
A: Nick Goodman mentioned that they are positioning BAM for broad index inclusion in the US, which should benefit shareholders. While they have reduced their stake to 73%, they plan to remain significant long-term owners, with flexibility around ownership levels.
Q: What are the expectations for realized carried interest over the next 12 months with increased monetization activity?
A: Nick Goodman noted that carried interest is realized as funds return capital to shareholders and meet preferred returns. While there will be a gradual increase in realized carried interest, significant steps up are expected beyond 2026 as they progress through fund stages.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.