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Gluskin Sheff + Associates Inc. Announces Third Quarter Fiscal 2019 Results

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TORONTO–(BUSINESS WIRE)–Gluskin Sheff + Associates Inc. (the “Company”) announced today its
results for the three and nine months ended March 31, 2019.

Financial Highlights:

       
                 
Assets Under Management As At As At
($ in millions)           Mar 31, 2019   Mar 31, 2018
 
 
$   8,330     $   8,949  
 
                 
Income Statement Information 3 Months 3 Months 9 Months 9 Months
($ in thousands except for per share amounts)   Ended   Ended   Ended   Ended
Mar 31, 2019 Mar 31, 2018 Mar 31, 2019 Mar 31, 2018
 
 
Revenue:
Base Management Fees $   25,726 $   27,382 $   80,457 $   81,741
Performance Fees 601 580 1,453 30,246
Investment & Other Income 726 725 2,123 2,003
Reimbursement From Pooled Funds     1,002         903       2,686         2,682  
Total Revenue $ 28,055 $ 29,590 $ 86,719 $ 116,672
 
Net Income attributable to shareholders $ 4,127 $ 6,903 $ 19,513 $ 31,799
Amortization of Restricted Share Units (RSUs) 830 1,265 3,264 6,395
Other amortization 1,350 1,564 4,938 4,890
RSU portion of current period’s Base bonus (798 ) (757 ) (1,663 ) (2,389 )
Special RSUs (375 ) (150 ) (375 )
Stock option and post-retirement obligation / Founders’ retirement
obligation provision
39 372 117 2,479
Performance fees net of related cash bonus (361 ) (369 ) (883 ) (19,681 )
Provision for income taxes     1,630         2,717       7,508         12,902  
Base EBITDA $ 6,817 $ 11,320 $ 32,644 $ 36,020
 
Basic Earnings per Share $ 0.14 $ 0.23 $ 0.64 $ 1.05
 
Diluted Earnings per Share   $   0.13     $   0.22     $   0.62     $   1.02  

The Company’s revenues are derived from Base Management Fees, calculated
as a percentage of Assets Under Management (“AUM”), Performance Fees,
which are earned when the Company exceeds pre-specified rates of return,
Other Income and Reimbursement from Pooled Funds.

During the quarter, AUM increased by $139 million to $8.3 billion as at
March 31, 2019, from $8.2 billion as at December 31, 2018. High net
worth clients comprise 88% of AUM as at March 31, 2019, compared to 89%
as at December 31, 2018.

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Base Management Fees for the three months ended March 31, 2019,
decreased year-over-year to $25.7 million from $27.4 million in the
prior year period as Average AUM for the quarter decreased to $8.4
billion from $9.0 billion, partially offset by an increase in the
Average Base Management Fee Percentage to 1.24% from 1.23% for the same
quarter last year.

For the three months ended March 31, 2019, net income was $4.1 million,
and represented earnings per share, basic and diluted, of $0.14 and
$0.13, respectively. Net income for the three months ended March 31,
2018, was $6.9 million, and represented earnings per share, basic and
diluted, of $0.23 and $0.22, respectively.

Total expenses increased $2.3 million from the prior fiscal period due
to $0.7 million in expense related to the acquisition of the Company by
Onex Corporation and an increase in compensation expense of $2.7 million.

Base EBITDA eliminates the effect of Performance Fees, Performance Fee
related expenses, post-retirement obligations, stock option expense and
amortization of RSU awards, and deducts the dollar value of the base
bonus RSUs to be awarded in respect of the current period and special
RSUs awarded in the period. Base EBITDA was $6.8 million for the three
months ended March 31, 2019, compared with $11.3 million for the three
months ended March 31, 2018. The decrease was primarily due to lower
Base Management Fees and higher Base bonuses, partially offset by lower
other cash Base operating expenses.

Following the turbulent fourth quarter of 2018, there has been a strong
rebound in global capital markets in the first few months of this
calendar year. Given this recent appreciation, we have positioned our
portfolios more conservatively,” commented Jeff Moody, President & Chief
Executive Officer. “We remain fully focused on our current business, and
are very enthusiastic about the possibilities of our future with Onex.”

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Gluskin Sheff + Associates Inc. is one of Canada’s pre-eminent wealth
management firms. Founded in 1984 and serving high net worth private
clients and institutional investors, the Company is dedicated to meeting
clients’ needs by delivering strong risk-adjusted returns together with
the highest level of personalized client service. The Company’s Common
Shares are listed on the Toronto Stock Exchange under the symbol “GS”.
For more information about the Company, please visit our website at www.gluskinsheff.com.

This press release may contain forward-looking statements relating to
Gluskin Sheff + Associates Inc.’s business and the environment in which
it operates. These statements are based on the Company’s expectations,
estimates, forecasts and projections. They are not guarantees of future
performance and involve risks and uncertainties that are difficult to
control or predict. These risks and uncertainties are discussed in the
Company’s regulatory filings available on the Company’s website at
www.gluskinsheff.com
or at
www.sedar.com.
Actual outcomes and results may differ materially from those expressed
in these forward-looking statements. Readers, therefore, should not
place undue reliance on any such forward-looking statements. Further, a
forward-looking statement speaks only as of the date on which such
statement is made. The Company undertakes no obligation to publicly
update any such statement or to reflect new information or the
occurrence of future events or circumstances; except as required by
applicable law.

Non-IFRS Measures

Included in this press release are certain financial terms (including
Base EBITDA and AUM) that the Company utilizes to assess the financial
performance of its business that are not measures recognized under
International Financial Reporting Standards (IFRS).
These
non-IFRS measures do not have any standardized meanings prescribed by
IFRS and
should not be considered alternatives to net income or
any other measure of performance determined in accordance with IFRS.
Therefore,
these non-IFRS measures are unlikely to be comparable to similar
measures presented by other issuers. For additional information
regarding the Company’s use of non-IFRS measures, including the
calculation of these measures, please refer to the “Non-IFRS financial
measures” section of the Company’s Management’s Discussion and Analysis
and its financial statements available on the Company’s website and on
the SEDAR website located at
www.sedar.com.

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Contacts

For more information, please contact:
David R. Morris
Chief
Financial Officer and Secretary

1.416.681.6036


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