What Fiera Capital (FSZ) Said on Its Q3 Earnings Call

Key Points

• Fiera Capital is discontinuing its quarterly dividend to prioritize debt reduction, a move management said will free up more than CAD 45 million annually for that purpose.
• Third-quarter assets under management fell 7.4% sequentially to CAD 151.4 billion, reflecting CAD 8.3 billion in net outflows and adverse market effects; revenue declined 10% year over year to CAD 150 million.
• Lower expenses helped lift adjusted EBITDA 2.1% from the prior quarter to CAD 42.9 million and improve the margin to 28.5%, even as adjusted EBITDA remained 15% below a year earlier.

Fiera Capital TSE: FSZ is discontinuing its quarterly dividend to accelerate debt reduction after investment outflows contributed to a decline in third-quarter assets under management and revenue.

The asset manager ended the third quarter of 2026 with CAD 151.4 billion in assets under management, down 7.4% from the previous quarter. The decline reflected CAD 8.3 billion in net outflows and a CAD 3.5 billion adverse market impact, largely tied to rising rates in fixed income strategies, Global President and CEO Maxime Ménard said on the earnings call.

Global CFO Lucas Pontillo said ending the dividend would provide more than CAD 45 million a year in additional debt-reduction capacity. “Debt reduction is the first priority here,” he said, while noting that the company also wants flexibility to reinvest in growth.

Sub-advised mandates drive outflows

Ménard said quality-oriented equity strategies faced industrywide challenges during the quarter. In public markets, Fiera recorded CAD 5.2 billion in net outflows from sub-advised mandates and CAD 2.5 billion from directly managed assets, with the latter concentrated in Canadian large-cap equities.

The sub-advised outflows included CAD 3 billion in client rebalancing in the U.S. and Asia and CAD 2.2 billion in lost mandates. About CAD 1.5 billion of the lost mandates had been announced previously and transferred directly to PineStone, Ménard said.

Fiera expects direct transfers to PineStone in 2026 to be lower than in 2025, but Pontillo clarified during the question-and-answer session that the expectation did not apply to all sub-advised outflows. Ménard said challenging investment performance had become the principal driver of withdrawals from those mandates.

Sub-advised assets represented 16% of total assets under management, down from 27% two years earlier. Less than a quarter of the remaining sub-advised assets were held by clients with mandates exceeding CAD 1 billion, according to Ménard. Pontillo said the smaller size of remaining accounts would reduce the impact of individual client departures.

In private markets, assets under management fell approximately CAD 400 million, or 1.8%. New mandates of nearly CAD 200 million were more than offset by returns of capital and the loss of CAD 300 million in undeployed capital after a client decided to manage a U.K. real estate mandate internally.

Lower costs lift quarterly margin

Third-quarter revenue was CAD 150 million, down 3% from the prior quarter and 10% from a year earlier. Pontillo attributed the year-over-year decline primarily to lower base management fees from sub-advised mandates and lower private-market performance fees.

Performance fees fell to CAD 600,000 from CAD 2.1 million in the preceding quarter and CAD 7 million a year earlier. Pontillo declined to provide fourth-quarter performance fee guidance, citing market volatility.

Expenses fell faster than revenue on a sequential basis. Selling, general and administrative expenses excluding share-based compensation declined 5% from the prior quarter to CAD 107.4 million. That included a CAD 2.8 million reversal of previously recognized variable compensation costs.

Adjusted earnings before interest, taxes, depreciation and amortization rose 2.1% from the second quarter to CAD 42.9 million, while the adjusted EBITDA margin improved to 28.5% from 27.1%. Adjusted EBITDA was down 15% from a year earlier. Pontillo said the current expense run rate was fair to use for the fourth quarter, while expense optimization would continue.

Net earnings attributable to shareholders were CAD 6.7 million, or CAD 0.06 per share, compared with CAD 3.5 million, or CAD 0.03 per share, in the preceding quarter. Adjusted net earnings were CAD 23.9 million, flat sequentially.

Balance sheet and performance priorities

Net debt ended the quarter at CAD 689 million, down CAD 34 million from the prior quarter as Fiera paid down its credit facility. The net debt ratio was unchanged at 3.8 times, while the funded debt ratio fell to 3.1 times from 3.3 times.

Ménard said Fiera is focusing its distribution teams more heavily on existing clients and adjusting its presence outside Canada. It is also broadening its investment offering, including through core and quantitative strategies, and focusing private-market fundraising on areas with the strongest demand.

Fiera has added three members to its Canadian large-cap equity team, including Charles Nadim as head of Canadian equities. Ménard said the firm had maintained all but one of its consultant ratings and saw no additional outflow pipeline for those mandates at the time of the call.

He also cited preliminary improvement in public equity performance after quarter-end. Canadian Equity Core outperformed its benchmark by more than 500 basis points in October, he said, while cautioning that one month did not establish a trend.

About Fiera Capital (TSE:FSZ)

Fiera Capital Corporation is an employee owned investment manager. The firm primarily provides its services to institutional investors, mutual funds, charitable organizations, and private clients. It manages separate client-focused equity, fixed income, and balanced portfolios. The firm also launches and manages equity, fixed income, and balanced mutual funds and income trusts for its clients. It invests in the public equity and fixed income markets across the globe with a focus on Canada. The firm primarily invests in growth and value stocks of small-cap companies.

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