Power Co. of Canada Q2 Earnings Call Highlights

Key Points

• Power Corp. delivered record Q2 results: Adjusted EPS rose 12% year over year to C$1.55, while adjusted net earnings increased 10% to C$974 million, supported by growth at Great-West Lifeco and IGM Financial, portfolio valuation gains and a lower share count.
• Core operating businesses posted strong growth: Great-West’s contribution rose 10%, with Empower client assets exceeding C$2 trillion, while IGM’s contribution jumped 34% and assets under management and administration reached a record C$622 billion.
• Capital returns and simplification remain central priorities: Power returned C$1.5 billion to shareholders in the first half, views its shares—trading at a 20% discount to NAV—as attractive for buybacks, and plans to pursue multiyear efforts to simplify its corporate structure.

Power Co. of Canada TSE: POW reported record second-quarter adjusted earnings per share of C$1.55, up 12% from a year earlier, as earnings growth at Great-West Lifeco and IGM Financial, higher valuations for certain portfolio investments and a lower share count supported results.

Adjusted net earnings totaled C$974 million, up 10% year over year. Reported net earnings were C$690 million, or C$1.10 per share. Net asset value per share reached C$112.94 at the end of the quarter, up 74% from a year earlier and 34% from the prior quarter. As of the prior night's market close, adjusted NAV per share stood at C$116.01, Chief Financial Officer Jake Lawrence said.

James O'Sullivan, who became president and chief executive officer on July 1, said the company does not anticipate major strategic changes. He said Power will continue emphasizing active ownership, organic investment in existing businesses, selective mergers and acquisitions, dividends and share repurchases.

“Power has made strong progress against its value creation strategy,” O'Sullivan said, adding that transparency and investor communication would remain priorities.

Operating businesses post double-digit growth

Great-West contributed C$871 million to Power's adjusted net earnings, up 10% from the prior year. Great-West reported base EPS of C$1.42, a 15% increase, while its base return on equity was 19.3%, exceeding its stated medium-term objective of more than 19% for a second consecutive quarter.

Lawrence said the results reflected double-digit base-earnings growth at Empower and strong growth in Great-West's capital and risk solutions business. Empower's retirement-business client assets surpassed C$2 trillion during the quarter.

Empower also announced an agreement to acquire Milliman's defined benefit business. The transaction, expected to close in the second half of 2026, is expected to add 1.5 million participants and C$130 billion in client assets. Great-West had C$2.5 billion of cash at its holding company at quarter-end and repurchased C$925 million of shares year to date.

IGM contributed C$211 million to Power's adjusted net earnings, an increase of 34% from the prior year. IGM reported record adjusted EPS of C$1.41, up 32%, with double-digit earnings growth across wealth management, asset management and corporate and other operations.

IGM's net flows across IG Wealth and Mackenzie totaled C$2.2 billion, while assets under management and administration, including strategic investments, reached a record C$622 billion. IGM returned C$386 million to shareholders through dividends and share repurchases during the first half.

O'Sullivan said he would be comfortable with Power's ownership interest in IGM increasing if Power does not participate in IGM's repurchases. He said IGM's planned 5% buyback provides support to minority shareholders while allowing Power to own more of a business he described as having strong core and strategic operations.

Portfolio valuations rise as Wealthsimple expands

Power increased the fair value of its direct Wealthsimple holding by 15% during the quarter to C$1.7 billion, net of carried interest. Across Power's group of companies, the collective Wealthsimple interest was valued at C$4.4 billion, including C$2.6 billion held by IGM and C$1.7 billion held directly by Power.

Wealthsimple's assets under administration rose C$30.8 billion from the first quarter, the largest quarterly increase in its history, driven by about C$17 billion of net flows. O'Sullivan said growth was broad-based across trading, investing, savings, banking, cryptocurrency and tax products.

He said Wealthsimple's value is reviewed each quarter through a process led by IGM that includes Power personnel and external participants. The 15% increase reflected performance against plan and the outlook for the business, he said, adding that Power expects to provide more disclosure as the investment becomes a larger portion of IGM and Power's value.

The fair value of Power's Sagard investment increased 11% during the quarter. Lawrence said the higher valuation reflected growth in management fees and carry, including gains related to Wealthsimple and other venture capital and private-equity investments, as well as Sagard's expanding capabilities.

Sagard closed its acquisition of Unigestion on April 2, adding C$15.1 billion of assets under management. Its total AUM was C$69.4 billion at quarter-end, and it raised approximately C$2.6 billion in the first half despite what Lawrence described as a challenging fundraising environment. Sagard Credit Partners III announced US$1 billion of initial commitments toward a C$2 billion target, while Sagard also launched a $150 million artificial intelligence fund.

Capital returns and simplification remain priorities

Power returned C$1.5 billion to shareholders in the first half of 2026 and more than C$12 billion through dividends and repurchases since 2020, according to O'Sullivan. The company had C$2.2 billion of cash and cash equivalents at quarter-end, including C$1.8 billion of available cash.

O'Sullivan said Power's shares were trading at a 20% discount to NAV and characterized buybacks as an attractive use of capital. He said management believes the discount could narrow as the company continues to grow NAV, simplify its structure and communicate the value created through active ownership.

The company also agreed to sell its interest in LMPG, resulting in a C$41 million reduction in NAV. Lawrence said the business had been carried at just under C$90 million and proceeds were expected to be about half that amount. The proceeds are expected later in the third quarter and will become part of Power's general capital allocation pool.

On simplification, O'Sullivan said management will consider whether investments held in more than one entity can be consolidated or whether similar businesses can be brought together. He called simplification a multiyear effort but did not identify specific future initiatives or a timetable.

About Power Co. of Canada (TSE:POW)

Power Corporation is an international management and holding company that focuses on financial services in North America, Europe and Asia. Its core holdings are leading insurance, retirement, wealth management and investment businesses, including a portfolio of alternative asset investment platforms.

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