Release Date: August 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Pacific Current Group Ltd (TSRUF, Financial) achieved a significant reduction in ongoing operating expenses by over 40% through strategic asset sales and externalizing investment management.
- The company saw a solid growth in revenues and underlying profits in FY24, with underlying EBITDA growing 18% and underlying NPAT growing 24%.
- Successful transactions included the sale of its entire stake in GQG, yielding total proceeds of AUD257.3 million, and the partial sale of its investment in Pennybacker Capital, yielding 1.75 times the initial investment.
- The company declared dividends of $0.38 per share, maintaining a steady return to shareholders.
- Pacific Current Group Ltd (TSRUF) is flush with cash and plans to return capital to shareholders via an off-market stock buyback of up to $300 million, subject to regulatory approval.
Negative Points
- The company's statutory results were heavily skewed by gains from asset sales, making it challenging to assess underlying performance.
- The sale of multiple assets has led to a notable change in the company's financial structure, with future financial results expected to be significantly different.
- The company's cost structure, while reduced, still faces potential future cost reduction initiatives, indicating ongoing operational adjustments.
- The timing of several transactions and regulatory approvals remains uncertain, potentially impacting financial planning and projections.
- Dividends declared are unfranked due to the lack of remaining franking credits, which may be less attractive to some shareholders.
Q & A Highlights
Highlights of Pacific Current Group Ltd (TSRUF) Earnings Call
Q: Can you discuss the pro forma fair value NAVs and the expected uplift from the Carlisle and Victory Park transactions?
A: The fair value estimate for both Carlisle and Victory Park at June 30, 2024, already assumes these transactions had occurred. There is a slight discount applied to Carlisle's value to reflect the need for regulatory approval.
Q: What is the timing on the debt repayment, and will there be a penalty?
A: The debt has about 16 months to run before it can be repaid without penalty. The penalty would make up for the interest that would be foregone. The decision to repay early and incur a penalty is still under discussion by the Board.
Q: What opportunities exist for further cost base reductions as divestments continue?
A: There are further cost reductions expected beyond the $6 million previously announced. The investment management fee will decrease as the portfolio size decreases. The pro forma P&L shows an estimated cost reduction, with potential for more savings.
Q: Where do you see the business in five years? Will it hold direct stakes or invest in multiple GP staking firms?
A: The business is not on a wind-up path nor solely focused on GP stakes investments. It will continue with direct investments and may diversify over time. The strategy will always consider quality, valuation, and growth opportunities.
Q: Can you provide details on the earnout provisions for the Victory Park stake and the nature of the consideration?
A: The earnout provisions are based on the performance of the underlying business acquired by Janus Henderson. There is a minimum payment schedule with potential upside. The consideration will be predominantly cash, with some scrip element.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
