Fiera Capital Q1 2026 Earnings Call Transcript

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Provided by Quartr
May 8, 2026

Key Takeaways

  • Positive Sentiment: Private markets AUM grew ~1% with CAD 140M of new mandates, ~CAD 120M net inflows, ~CAD 300M deployed and a CAD 2B undeployed pipeline, and the firm closed on buying the remaining 25% of Fiera Infrastructure (CAD 17.5M upfront) to accelerate private growth.
  • Positive Sentiment: Expense discipline drove structural savings (SG&A ex‑SBC down 7% YoY) and expanded adjusted EBITDA margin to 27.9% (up 130 bps YoY), supporting improved profitability despite revenue headwinds.
  • Negative Sentiment: Total AUM fell to CAD 160.2B (down ~2.4% QoQ) due to March equity volatility, CAD 1.3B net outflows, the planned wind‑down of a CAD 650M small‑cap strategy, and two post‑quarter transfers totaling CAD 3.6B from the sub‑advised business to Pinestone.
  • Negative Sentiment: Revenues were CAD 153M (down 6% YoY) and adjusted net earnings CAD 23.5M, with performance fees negligible in Q1, which pressured sequential revenue and EPS compared with seasonally stronger Q4 results.
  • Positive Sentiment: Balance sheet actions included net debt of ~CAD 700M (3.6x), a CAD 100M private debenture placement to FTQ and hybrid redemption, repurchases of ~558K shares (CAD 3.2M), and a plan to allocate ~50% of excess free cash flow to debt reduction while maintaining the CAD 0.108/share quarterly dividend.
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Earnings Conference Call
Fiera Capital Q1 2026
00:00 / 00:00

There are 6 speakers on the call.

Speaker 5

Good morning, and welcome to Fiera Capital's earnings call to discuss financial results for the first quarter of 2026. I will now turn the conference over to Anik Chamberland, Director, Investor Relations. You may begin your conference.

Operator

Thank you. Good morning, everyone. Welcome to the Fiera Capital conference call to discuss our financial and operating results for the first quarter. A copy of today's presentation can be found in the investor relations section of our website. Comments made on today's call, including replies to certain questions, may deal with forward-looking statements which are subject to risks and uncertainties that may cause actual results to differ from expectations. Please refer to the forward-looking statements on page 2 of the presentation. Our speakers today are Maxime Ménard, Global President and CEO, and Lucas Pontillo, Executive Director, Global CFO, and Head of Corporate Strategy. Also available to answer questions will be John Valentini, President and CEO, Private Markets. I will now turn the call over to Maxime.

Speaker 4

Good morning, and thank you for joining us today. Before we begin, I would like to briefly acknowledge my return following a period of medical leave. I want to thank Gabriel Castiglio for his leadership during my absence and to recognize the management team and colleagues across the firm for their professionalism and continued focus. I am excited to be back, and I'm eager to continue to expand on the momentum we have built in the recent months. With that, let me turn to our first quarter results. Our results reflect resilience in an unpredictable market and macroeconomic environment. Our private markets platform delivered AUM growth for the quarter, highlighting the benefit of private investment strategies during times of market turbulence. We continue to streamline operations, reducing expenses by 7% year-over-year, and we produce year-over-year margin growth.

Speaker 4

I will expand on our progress against our strategic priorities later in the call. Turning to our assets under management. Total AUM ended the quarter at CAD 160.2 billion, down approximately 2.4% from the end of prior quarter. Mostly reflecting equity market volatility in the last month of the quarter, along with net outflows of CAD 1.3 billion. AUM was also reduced by CAD 650 million from the planned wind down of our Canadian Equity Small Cap Core strategy during the quarter. Excluding the previously announced wind down of select strategies, AUM was flat year-over-year as positive market performance was largely offset by net outflows from sub-advised AUM. Turning to AUM and flows by platform.

Speaker 4

Public market AUM ended the quarter at CAD 137.9 billion, down 3% from the prior quarter, primarily as a result of equity market volatility in March and the wind down of our Canadian Equity Small Cap Core strategy. We generated close to CAD 350 million in new mandates during the quarter, mostly into equity strategies. We also captured an additional CAD 100 million in net inflows from new Canadian sub-advisory relationships that were established over the last year. We expect that growing exposure to the sub-advisory intermediary space will benefit support organic growth and contribute to our more consistent flow profile. Excluding sub-advised AUM, net outflows were approximately CAD 800 million in the quarter. Our fixed income strategies saw positive flows. These were more than offset by outflows from equities, reflecting client portfolio rebalancing given the run-up in equity markets and interest rates.

Speaker 4

Excluding sub-advised AUM on a trailing 12-month basis, net organic growth improved CAD 2.4 billion from the same period last year, reflecting good flow momentum in our core public market business. Subsequent to quarter end, within our sub-advised business, we have received notification from two clients who intend to transfer assets totaling CAD 3.6 billion directly to Pinestone. We continue to expect transfers to Pinestone in 2026 to be lower than direct transfers in the prior year. Turning to our private market platform. Private markets AUM increased approximately 1% during the quarter. We raised CAD 140 million of new mandates, primarily into real estate and private credit strategies. In particular, our market-leading Canadian core real estate strategy saw good demand in the quarter, benefiting from broad consultant support.

Speaker 4

We generated approximately CAD 120 million of net inflows, which were offset by disciplined return of capital in our closed-end fund business. During the quarter, close to CAD 300 million of capital was deployed into new projects, and our pipeline of undeployed capital remains strong at CAD 2 billion. Early in the second quarter, we began deploying capital into our Canadian Built Opportunities funds, and we expect fees earned from investments in this fund to begin contributing to earnings in the second quarter and gradually increase as additional capital is deployed. We continue to view private markets as a key driver of long-term value creation.

Speaker 4

Over the last 5 years, private markets AUM has grown at a 10% compound annual rate while revenue have expanded at a 15% rate, reflecting both scale and improved revenue mix. On the trailing 12-month basis, private markets contributed 37% to total revenue while representing 14% of AUM. During the quarter, we took the opportunity to buy out the remaining 25% of Fiera Infrastructure, giving us full ownership of the business. An upfront payment of CAD 17.5 million was made, and the transaction was closed early in the second quarter. The final amount is expected to be paid in the third quarter to account for minority earnings up to the closing date and any purchase price adjustment following an independent valuation. The transaction directly supports our strategy of growing private markets by reinvesting in high-quality strategies we know well and believe in.

Speaker 4

Taking a closer look at our Canadian business. Canada remains the foundation of our franchise, where we benefit from established scale, broad distribution, and a multi-strategy platform that serves institutional intermediaries and private wealth clients. Ontario and Quebec together represents more than 80% of AUM, with strong penetration across both regions. Importantly, client growth outside these core markets, particularly in Western Canada, is accelerating, highlighting meaningful white space opportunities. Within our Canadian business, outside of sub-advised AUM, we have seen clear trends towards improvement in net organic growth, supported efficient distribution and our multi-strategy platform. Outside Canada, we have seen good traction in the U.S. Our U.S. fixed income strategy with net contribution of close to CAD 200 million in the quarter. We also captured new mandates into our global emerging market equity strategies on the back of solid investment performance.

Speaker 4

In EMEA, we saw net organic growth of more than CAD 200 million into global emerging market equities and integrated fixed income strategies. Turning to investment performance. Global equity markets began constructively in the 1st quarter of 2026, but weakened through the quarter amid rising geopolitical tension and renewed concerns around AI-driven valuation and credit market volatility. Most indices ended the quarter down, although losses have more than recovered in the 2nd quarter to date. Against this backdrop, our public market equity performance relative to benchmarks remained challenged. Over the past year, market gains have been increasingly narrow and driven by a small group of higher-beta, lower-quality stocks, creating a difficult backdrop for high-conviction, quality-focused managers such as Fiera. Year-to-date performance has further been influenced by geopolitical developments and the associated energy shock where relative underexposure weighted on results.

Speaker 4

More positively, our emerging markets and Canadian equity core strategies have been performing well, generating first quartile results versus their respective peers in Q1. With the latter recently taking steps to further align the strategy to a more core focus offering for clients. In contrast to the equity landscape, our fixed income platform delivered strong absolute and relative performance. 96% of our fixed income AUM outperformed benchmarked over the one-year period. Our private market strategies continue to perform in line with expectations, with nearly all flagship strategies boasting positive returns in the quarter. Before I move on, I want to briefly address private credit, given the broader market focus on the sector. We view recent headlines as idiosyncratic events rather than indicators of systemic issues.

Speaker 4

Our private credit teams operate with rigorous underwriting standards and robust portfolio monitoring practices with a consistent focus on downside protection, documentation discipline, and proactive risk management. Moreover, Fiera's investor base is primarily institutions and high-net-worth clients who are accredited investors with established relationships with Fiera advisors. Our funds are not sold to retail investors, and our private credit strategies have no exposure to software, which is where sector concerns mostly lie. With that, I'll turn over the call to Lucas to walk us through the financials.

Speaker 3

Thank you, Maxim. Good morning, everyone. Market volatility in the quarter underscored the importance of expense discipline. We stayed focused on what we could control and executed effectively in a challenging market environment. As a result, we delivered year-over-year adjusted EBITDA margin growth and continued to make progress against our strategic priorities. Turning first to profitability. Adjusted EBITDA was CAD 42.7 million for the quarter, down slightly from CAD 43.4 million in the same quarter last year, as lower revenues were offset by lower employee compensation costs and sub-advisory fees. Adjusted EBITDA margin was 27.9% in the quarter, up 130 basis points from the same quarter last year. Adjusted EBITDA was down from CAD 54.7 million in the prior quarter, reflecting lower revenues, mostly due to performance fees largely recognized in the fourth quarter.

Speaker 3

On a last twelve-month basis, our adjusted EBITDA margin improved to 29.2% for the current quarter, up 80 basis points from the same quarter last year and up 40 basis points from the prior quarter. This margin expansion has been delivered by deliberate and disciplined cost control. SG&A expenses, excluding share-based compensation of CAD 111 million, declined by CAD 8.9 million or 7% year-over-year, reflecting lower employee compensation costs along with lower sub-advisory fees. SG&A, excluding share-based compensation, was down CAD 14.8 million or 12% from the prior quarter, largely due to higher year and variable compensation in the fourth quarter. We note that most of these year-over-year savings are structural in nature. As revenues grow, this leaner cost base should allow for a greater portion of incremental revenues to flow through to profitability. Turning to revenues and key drivers by segment.

Speaker 3

Total revenues were CAD 153 million in the first quarter, down 6% year-over-year, reflecting lower base management fees from sub-advised mandates and lower share of earnings in joint ventures. This was partly offset by an increase in base management fees in non-sub-advised mandates in public markets. Sequentially, revenues declined 15%, mostly reflecting the absence of seasonal performance fees in the fourth quarter. During the quarter, performance fees were de minimis like in the prior year quarter and CAD 13.5 million in the fourth quarter. Commitment and transaction fees of CAD 1.3 million were down from CAD 2.4 million in the prior year quarter and were down sequentially by approximately CAD 6 million due to lower volume of deals and renewals in the first quarter.

Speaker 3

Share of earnings from joint ventures and associates was close to CAD 1 million in the quarter, down from CAD 2.6 million in the prior quarter and up from CAD 600,000 last quarter. Other revenues were CAD 3.9 million for the quarter, up from just over CAD 3 million in the prior year quarter, largely due to realized losses on foreign exchange derivatives last year. The revenues were down slightly from CAD 4.3 million last quarter. Looking more closely at base management fees. Public markets base management fees of CAD 98 million in the quarter were down 7% year-over-year and down 5% sequentially, primarily reflecting a decline in our sub-advised AUM. Private markets base management fees were CAD 49 million in the first quarter, down 1% from the prior year and down 2% sequentially.

Speaker 3

Private market base management fee rate declined in the first quarter, largely due to a foreign exchange impact at approximately one-third of fees collected in U.S. dollars and due to temporary impact of a fund closure where we still held on to the AUM, but collected reduced fees. Year-over-year, our fee rate also reflects a higher share of undeployed assets in the current quarter. Overall, stability in public market net fee rates combined with growing share of private markets AUM has resulted in our overall net management base fee rate trending upwards over the last three years. That revenue backdrop in mind, I will now turn to net earnings. On an adjusted basis, net earnings for the quarter were CAD 23.5 million, down from CAD 25.4 million in the same quarter last year and CAD 29.9 million in the prior quarter.

Speaker 3

On a diluted per share basis, adjusted net earnings were CAD 0.21 for the quarter, up CAD 0.01 from the same quarter last year and down CAD 0.03 from the prior quarter. Fully diluted shares outstanding in the prior year quarter reflect share dilution from our 6% and 8.25% hybrid debenture, while diluted shares outstanding in the prior year quarter reflect share dilution from only our 6% hybrid debenture. Looking at cash flow and capital allocation. We generated last twelve months free cash flow of CAD 96 million, up CAD 9 million from CAD 87 million in the same quarter last year. The increase was a result of lower than dividends paid to non-controlling interests and lower lease payments as a result of proactive expense measures.

Speaker 3

Last twelve months free cash flow was also up CAD 17 million sequentially due to lower dividends paid to non-controlling interests and mainly changes in non-cash working capital, mostly due to the timing of revenue collections along with lower interest paid on debt. During the quarter, we repurchased approximately 558,000 shares for CAD 3.2 million, demonstrating our confidence in the intrinsic value of our business. Our dividend payout ratio remained comfortably below our LTM free cash flow payment. Brings me to our balance sheet. Net debt ended the quarter at approximately CAD 700 million, down CAD 3 million from the same quarter last year. Net debt increased CAD 36 million from the prior quarter due to higher cash used in operating activities from the timing of variable compensation and benefit payments that occur in the first quarter.

Speaker 3

As a reminder, our net debt fluctuates seasonally through the year and historically increasing in the first quarter as variable compensation and benefits are paid and decreasing in the second half of the year as free cash flow is directed towards debt repayment. Our net debt ratio was 3.6 times flat year-over-year and up 3.4 times in the prior quarter due to the timing of disbursements as previously mentioned. Subsequent to the end of the quarter, we completed private placement of a senior subordinated unsecured debenture of CAD 100 million to the Fonds de solidarité FTQ and concurrently redeemed our 6% hybrid debenture also held by the FTQ. Our priority remains building balance sheet capacity and through deleveraging.

Speaker 3

After paying dividends, we expect to allocate approximately half of excess free cash flows towards debt reduction, with the remainder allocated between reinvestment in the business and opportunistic share repurchases. Finally, the board approved a quarterly dividend of CAD 0.108 per share, payable on June 18th, 2026 to shareholders of record of May 21st, 2026. With that, I'll turn the call back to Maxime Ménard.

Speaker 4

Thank you, Lucas. I'll close by touching on the progress we have made on our 3-year strategic plan. We remain focused on refining and right-sizing our distribution and strengthening our investment performance management processes and tools. We continue to optimize our operations through prudent expense management, and as a result, we were able to drive margin expansion in a volatile market environment. We also kept net debt steady year-over-year, which is expected to drive deleveraging in the second half of 2026. Lastly, our acquisitions of the remaining 25% of our Fiera Infrastructure and initial deployment of capital from our Canadian Built Opportunities Fund support our goal to drive growth in private markets.

Speaker 4

Before I hand it off for questions, I wanted to announce that as part of a planned leadership evolution, Rob Petty is transitioning from CEO of Fiera Asia to a senior advisor role, where he will continue to support select strategic initiatives and key international client relationships. Rob has played an important role in building our Asia credit platform, and we are grateful for his many contributions. At the same time, Klaus Schuster's mandate as CEO of EMEA will now include Asia, bringing both regions under a unified leadership structure. Importantly, our investment teams, strategies, and client commitments in these regions remain unchanged. I will now turn the call over to the operator for questions.

Speaker 5

Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star one on your telephone keypad. If you'd like to withdraw your question, press star two. One moment please for your first question. Your first question comes from Etienne Ricard from BMO Capital Markets. Please go ahead.

Speaker 1

Thank you and good morning. To circle back on the two client requests for transfers at PineStone Asset Management, are these new clients asking for a transfer or have these clients already made transfers in the past?

Speaker 4

No, they haven't made transfers in the past. These are existing clients transferring directly.

Speaker 1

Okay. How much is still in your AUM figure, excluding the CAD 3.6 from these two clients?

Speaker 3

Well, in terms of what's left in the figure, what do you mean? Sorry.

Speaker 1

These clients are asking for transfers of CAD 3.6.

Speaker 3

Yeah.

Speaker 1

How much would they still have left?

Speaker 3

Oh, it's the total. That's what I wanted to clarify.

Speaker 1

Yeah.

Speaker 3

It's the total amount that they're holding.

Speaker 4

Yeah, they're transferring the total relationships directly.

Speaker 1

Okay. Okay, understood. The fee rate in public markets did experience a decrease this quarter. What explains this move and where do you anticipate fee rates to trend over the foreseeable future?

Speaker 3

I think there's really two things impacting this. It's the mix on the equity versus fixed income side. Obviously, we've seen some pressure from the sub-advised mandates. If you look at this quarter in particular as well, we had net inflows on the fixed income side, but we had net outflows on the equity side. Again, that's causing the mix change in terms of the overall fee rate for public markets. You know, the market pressure that we experienced obviously put pressure on the equity AUM base for those equity strategies as well. That could be something you see quickly reverse as the market kicks back as it already has in the month of April and early May, in Q2.

Speaker 1

Okay. Helpful. Maxime Ménard, last one from me. In terms of distribution, what are priorities for you for the rest of the year?

Speaker 4

Yeah. I think we've already started the year with a pretty good momentum with over near 50 RFPs in the different asset classes. We want to continue to, as I said, capture some of the market opportunities in the Canadian market where we've seen significant uptick in the sub-advisory business. We think that we also have a, as mentioned, a white space opportunity in the Western Canada. We're doing in Canada, cross-selling. Obviously, we're going to focus on retentions in the face of some performance challenges on a relative basis based mostly on style. We're going to focus on retention, some market opportunity. Within the international, U.S. and also the EMEA market, we've seen some opportunities in select products.

Speaker 4

The goal obviously is to continue to accelerate our market footprint in these different markets. I think in, you know, we have some very ambitious goals in private markets and also public and we're well on the way to meet those.

Speaker 1

Thank you very much.

Speaker 5

Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star one. Your next question comes from Graham Ryding from TD Securities. Please go ahead.

Speaker 2

Oh, hi, good morning. Max, welcome back. Nice to see you back and healthy. That's good news.

Speaker 4

Thank you.

Speaker 2

You raised a debenture this quarter to redeem the outstanding hybrid debenture. Any impact, Lucas, on your overall cost of debt there?

Speaker 3

Yeah, I mean, obviously, there's a rate differential there. We, when we financed that original debenture with FTQ, you'll recall that was really at the sort of at the trough of the interest rate environment before it started to rise. It was obviously, you know, cheaper paper at 6%. At the 7 and 7.4% rate that we got, we felt that this was quite competitive in the current market environment that we are in now. We went ahead and refinanced, you know, in anticipation of the volatile markets. As a reminder, all our debt has to be renewed or refinanced 1 year in advance of its face value expiration date. That's a working capital requirement we have with our regulator, the AMF.

Speaker 3

This really was gonna be coming due for us at the end of June. As I said, we took advantage of a great partnership that we have with the Fonds de solidarité and got that done a couple of months earlier.

Speaker 2

Okay, great. I think you commented on, but I didn't quite catch it. Your fully diluted share count was down quite a bit quarter-over-quarter. Can you just sort of remind us what drives that? Is that movement in the share price? I'm just wondering with now that you're redeeming this hybrid, is that sort of sensitivity gonna be the same going forward, or does that change now?

Speaker 3

Yeah, I mean, it usually comes down to the hybrids in terms of which ones are in and which ones are out every quarter. It's a test that we have to do every quarter. To your point, it's share price dependent on one end, it's interest rate cost dependent on the other. As a result, you know, depending where net income lines up in terms of its dilution or accretion, that therefore impacts whether or not the instrument gets included for the diluted calculation. You're right. We've gone through a couple of quarters now where we had one quarter where both were included, one wasn't.

Speaker 3

As I said, it's just one of those things where every quarter, depending on how that dilution calc is coming out, the instrument either gets added or not, for the dilution calculation.

Speaker 2

Are you replacing the existing hybrid with a new hybrid, or are you only gonna have one hybrid going forward that sort of impacts this share count?

Speaker 3

No, no. We'll have the same setup that we have now, which is one publicly listed hybrid and one private placement hybrid. This one that we just refinanced is a private placement replacement of the original private placement. The composition on the cap structure remains the same. It's CAD 100 million on the private placement, and it's, you know, call it mid-70s on the public one.

Speaker 2

Okay. That is helpful. Thank you.

Speaker 5

We have no further questions registered at this time. That concludes today's call. Thank you all for joining.

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