Source: Onex Corporation

Onex Reports First-Quarter 2013 Results

TORONTO, ONTARIO--(Marketwired - May 10, 2013) -

All amounts in U.S. dollars unless otherwise stated

Onex Corporation ("Onex") (TSX:OCX) today announced its consolidated financial results for the first quarter ended March 31, 2013 and an update on matters following quarter-end.

Highlights

  • Including realizations and distributions, the value of Onex' interest in Onex Partners' and ONCAP's private investments grew by 5% and 4%, respectively, in the first quarter. Overall, Onex' proprietary capital, including $1.25 billion of cash and near-cash items, grew by 3% on a per share basis to $42.81.

  • Onex agreed to acquire Nielsen Expositions, one of the largest operators of business-to-business tradeshows in the U.S., in a transaction valued at $950 million.

  • Onex Credit Partners completed its third collateralized loan obligation ("CLO") offering, raising approximately $512 million, including $24 million from Onex.

  • Onex established Meridian Aviation, which will purchase aircraft to be leased to commercial airlines and managed by BBAM, an Onex Partners III investment.

  • Onex completed the sale of its interest in RSI Home Products, resulting in a multiple of invested capital of 1.5 times.

  • Onex' Board of Directors approved a 36% increase in the quarterly dividend to C$0.0375 per share.

  • In the four months ended April 30, Onex repurchased 945,400 shares for approximately C$42 million at an average cost per share of C$44.41.

Acquiring and Building Businesses

"After investing $1.5 billion in five businesses in the fourth quarter of last year, we have been busy working with our management teams to execute our investment plans," said Gerald W. Schwartz, Chairman and Chief Executive Officer of Onex. "The first couple of years following an acquisition are often the busiest for Onex. For each of the five businesses just acquired, we have a specific plan for improvement and growth."

"As we build value at our existing businesses, we also continue to look for new acquisition opportunities. Earlier this week, we announced the acquisition of Nielsen Expositions from its parent company," said Mr. Schwartz. "Corporate carve-outs are probably our favourite type of transaction, and we believe that this business will be in a stronger position to grow as a stand-alone company under our ownership."

Based in San Juan Capistrano, California, Nielsen Expositions produces more than 65 business-to-business tradeshows and conference events each year across nine diversified end-markets. Its strength is evidenced by its high renewal rates, long-standing exhibitor relationships, and the brand strength of the underlying shows. Onex Partners III will make an equity investment of approximately $350 million, of which Onex' share is approximately $85 million as a Limited Partner in the Fund. The transaction is anticipated to close in the second quarter, subject to customary closing conditions.

By transforming good businesses into industry leaders, Onex has generated a 29-year gross IRR of 28% and an average multiple of 2.8 times invested capital from realized, substantially realized and publicly traded investments.

At Onex, we all share in the success and failure of our operating companies through the team's significant investment in everything we buy. At March 31, 2013, the value of the team's investment in Onex' businesses and its shares was approximately $1.8 billion.

Managing and Growing Third-Party Capital

Onex earns recurring management fees and/or carried interest on $9.4 billion of third-party assets under management. In 2012, combined management fees and carried interest received offset ongoing operating expenses.

At March 31, 2013, the value of Onex' unrealized carried interest was approximately $58 million based on the traded market values of Onex Partners' public companies and a further $104 million based on the quarter-end valuations of the private businesses. The amount of carried interest ultimately realized by Onex depends on the overall performance of each Fund.

Including the pending acquisition of Nielsen Expositions, Onex Partners III will be more than 90% invested. We are in a position to begin fundraising for Onex Partners IV sometime this year.

We continue to grow our credit investing platform. In March, Onex Credit Partners completed its third CLO offering, raising $512 million, including $24 million from Onex. This increased Onex Credit Partners' third-party capital under management to $2.3 billion. As market conditions permit, we expect Onex Credit Partners to launch additional CLOs, which would represent an additional source of recurring management fees to Onex.

Creating Value for Shareholders

Over time, we hope that the value of Onex' shares reflects both growth in the value of our assets and the intrinsic value of our asset management capabilities. At March 31, 2013, Onex' Subordinate Voting Shares closed at C$48.44, a 16% increase from December 31, 2012. This compares to a 10% increase in the S&P 500 and a 3% increase in the S&P/TSX Composite Index.

The Company paid a first-quarter dividend of C$0.0275 per Subordinate Voting Share on April 30, 2013 to shareholders of record on April 10, 2013. On May 9, Onex' Board of Directors approved a 36% increase in the quarterly dividend to C$0.0375 per Subordinate Voting Share, reflecting the Company's success and ongoing commitment to its shareholders. The increased dividend is payable on July 31, 2013 to shareholders of record on July 10, 2013.

In the first four months of 2013, Onex repurchased 945,400 Subordinate Voting Shares under its Normal Course Issuer Bids for a total cost of C$42 million or an average cost per share of C$44.41.

Consolidated Results

Onex' quarterly and full-year consolidated financial results do not follow any specific trends due to acquisitions and dispositions of businesses, changes in the value of its publicly traded and privately held operating companies and varying business cycles at its operating companies.

On a consolidated basis for the first quarter, revenues increased 6% to $7.2 billion compared to the same period of the prior year. Onex reported a consolidated net loss of $271 million compared to net earnings of $173 million in the first quarter of 2012. Cash used in operations was $68 million in the first quarter of 2013 compared to $263 million of cash generated from operations in the same period of 2012.

Attached are the Unaudited Interim Consolidated Balance Sheets, Statements of Earnings, Statements of Cash Flows and information by industry segment for the quarter ended March 31, 2013 and 2012 as prepared under International Financial Reporting Standards. The complete financial statements, including Management's Discussion and Analysis of the results, are posted on Onex' website, www.onex.com, and are also available on SEDAR at www.sedar.com. Also attached is the "How We Are Invested" schedule, which details Onex' $5.1 billion of proprietary capital and provides private company performance information.

Webcast

Onex management will host a conference call to review Onex' first-quarter 2013 results on Friday, May 10 at 11:00 a.m. ET. A live webcast of this conference call will be available in listen-only mode on its website, www.onex.com.

About Onex

With offices in Toronto, New York and London, Onex is one of the oldest and most successful private equity firms. Onex acquires and builds high-quality businesses in partnership with talented management teams. The Company has approximately $16 billion of assets under management, including $5 billion of proprietary capital, in private equity, credit securities and real estate. Onex invests its proprietary capital directly and as a substantial limited partner in its Funds.

Onex' businesses have assets of $44 billion, generate annual revenues of $37 billion and employ approximately 243,000 people worldwide. Onex shares trade on the Toronto Stock Exchange under the stock symbol OCX. For more information on Onex, visit its website at www.onex.com. The Company's security filings can also be accessed at www.sedar.com.

This news release may contain forward-looking statements that are based on management's current expectations and are subject to known and unknown uncertainties and risks, which could cause actual results to differ materially from those contemplated or implied by such forward-looking statements. Onex is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.

The securities sold in the third CLO offering have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration under that Act. Any future CLO offerings will be made in similar private placement transactions subject to the same restrictions.

ONEX
How We Are Invested
Unless otherwise noted, all amounts are in
millions of U.S. dollars except per share data.
Proprietary Capital
As atMarch 31, 2013December 31, 2012
Private Equity
Onex Partners
Private Companies(1)$1,747$1,862
Public Companies(2) 803 704
Unrealized Carried Interest on Onex Partners Investments(3) 162 140
ONCAP(4) 418 409
Direct Investments
Private Companies(5) 151 148
Public Companies(2) 144 145
3,425 3,408
Onex Real Estate Partners(6) 150 192
Onex Credit Partners(7) 197 171
347 363
Other Investments 109 108
Cash and Near-Cash(8) 1,250 1,141
Onex Corporation Debt - -
$5,131$5,020
Proprietary Capital per Share (March 31, 2013 - C$43.49; December 31, 2012 - C$41.21)(9)$42.81$41.42

Public Companies

As at March 31, 2013
Shares Subject
to Carried
Interest
(millions)

Shares Held
by Onex
(millions)

Closing Price
per Share
(10)

Market Value
of Onex'
Investment
Onex Partners
Skilled Healthcare Group(11)10.7 3.5 $6.57 $23
Spirit AeroSystems(11)11.9 6.5 $18.99 123
TMS International(11)13.2 9.3 $13.20 122
Allison Transmission(11)33.5 23.4 $24.01 563
831
Estimated Management Investment Plan Liability (28)
803
Direct Investments - Celestica- 17.8(12) $8.09 144
$947

Significant Private Companies


As at March 31, 2013

Onex'
and its
Limited
Part-
ners'
Owner-
ship

LTM
EBITDA
(13)

Net Debt

Cumul-
ative
Distribu-
tions

Onex'
Econ-
omic
Owner-
ship


Original
Cost of
Onex'
Invest-
ment
Onex Partners
The Warranty Group91% $113(14) $248(14) $338 29% $154
Carestream Health93% 436 1,544 561 37% 186
Tropicana Las Vegas82% (11) 41 - 18% 70
Tomkins56% 499(15) 1,547 1,180(16) 14% 315
ResCare98% 144 336 - 20% 41
JELD-WEN65%(17) 175(18) 639(18) - 16%(17) 212(19)
SGS International94% 104(20) 591 - 24% 66
USI91% 255(20) 1,659 - 25% 170(21)
BBAM50% 74 - - 13% 55(22)
KraussMaffei97% EUR92 EUR266 - 25% 90
1,359
Direct Investments - Sitel Worldwide70% $126 $714 $- 70% 251
$1,610
Notes to Tables
(1) Based on the US$ fair value of the investments in Onex Partners' financial statements net of the estimated Management Investment Plan ("MIP") liability on these investments of $55 million (2012 − $39 million). RSI, which was sold in February 2013, was included in private companies of Onex Partners at December 31, 2012.
(2) Based on the closing market values and net of the estimated MIP liability on these investments.
(3) Represents Onex' share of the unrealized carried interest on public and private companies in the Onex Partners Funds.
(4)Based on the C$ fair value of the investments in ONCAP's financial statements net of the estimated MIP liability on these investments of $28 million (2012 − $25 million) and a US$/C$ exchange rate of 1.0160 (2012 - 0.9949).
(5) Based on the fair value.
(6) Based on the fair value of Onex Real Estate Partners' investments.
(7) Based on the market values of investments in Onex Credit Partners' Funds and Onex Credit Partners Collateralized Loan Obligations. Excludes $334 million (2012 − $328 million) invested in a segregated Onex Credit Partners' unleveraged senior secured loan strategy fund, which is included with cash and near-cash items.
(8) Includes $334 million (2012 − $328 million) invested in a segregated Onex Credit Partners' unleveraged senior secured loan strategy fund.
(9) Calculated on a fully diluted basis.
(10) Closing prices on March 31, 2013.
(11) Excludes Onex' potential participation in the carried interest and includes shares related to the MIP.
(12) Excludes shares held in connection with the MIP.
(13) EBITDA is a non-GAAP measure and is based on the local GAAP of the individual operating companies. These adjustments may include non-cash costs of stock-based compensation and retention plans, transition and restructuring expenses including severance payments, the impact of derivative instruments that no longer qualify for hedge accounting, the impacts of purchase accounting and other similar amounts.
(14) Amount presented for The Warranty Group is net earnings rather than EBITDA and total debt rather than net debt.
(15) LTM EBITDA excludes EBITDA from businesses divested as of March 31, 2013.
(16) Onex, Onex Partners III, Onex management, certain limited partners and others received distributions of $663 million from Tomkins.
(17) Onex' and its limited partners' investment is in convertible preferred shares. The ownership percentage is presented on an as-converted basis.
(18) LTM EBITDA and net debt are presented for JELD-WEN Holding, inc. Net debt excludes $125 million of convertible notes, including accrued interest, held by Onex, Onex Partners III, Onex management, certain limited partners and others. In April 2013, JELD-WEN repaid $54 million of its convertible notes, including accrued interest, and the remaining convertible notes, including accrued interest, were converted into additional equity of JELD-WEN.
(19) Net of $83 million of the amount originally invested in JELD-WEN that was sold by Onex to certain limited partners and others as a co-investment in February 2012 and $15 million return of capital on the convertible promissory notes to March 31, 2013.
(20) LTM EBITDA for SGS International and USI are presented on a pro-forma basis to reflect the impact of acquired businesses.
(21) Net of $84 million of the amount originally invested in USI that was sold by Onex to certain limited partners and others as a co-investment in March 2013.
(22) Included in Onex' cost is $5 million that was invested in FLY Leasing Limited (NYSE:FLY) and $8 million that was invested in Meridian Aviation Partners Limited. These investments were made in conjunction with the investment in BBAM.
Onex Corporation
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in millions of U.S. dollars)
As at
March 31,
2013
As at
December 31,
2012
As at
January 1,
2012
Assets
Current assets
Cash and cash equivalents$2,822$2,656$2,448
Short-term investments 759 730 749
Accounts receivable 3,981 3,858 3,272
Inventories 4,662 4,519 4,428
Other current assets 1,292 1,443 1,154
13,516 13,206 12,051
Property, plant and equipment 5,474 5,495 5,102
Long-term investments 6,787 6,424 5,415
Other non-current assets 1,966 1,986 1,776
Intangible assets 4,784 4,833 2,599
Goodwill 4,298 4,358 2,434
$36,825$36,302$29,377
Liabilities and Equity
Current liabilities
Accounts payable and accrued liabilities$4,600$4,549$3,893
Current portion of provisions 323 347 263
Other current liabilities 1,290 1,340 909
Current portion of long-term debt of operating companies, without recourse
to Onex Corporation 347 286 482
Current portion of warranty reserves and unearned premiums 1,349 1,366 1,400
7,909 7,888 6,947
Non-current portion of provisions 256 264 180
Long-term debt of operating companies, without recourse to Onex Corporation 10,647 10,184 6,479
Non-current portion of warranty reserves and unearned premiums 1,751 1,774 1,727
Other non-current liabilities 2,918 2,852 2,368
Deferred income taxes 1,703 1,683 1,059
Limited Partners' Interests 6,468 6,208 4,980
31,652 30,853 23,740
Equity
Share capital 356 358 360
Non-controlling interests 3,927 3,822 3,863
Retained earnings and accumulated other comprehensive earnings 890 1,269 1,414
5,173 5,449 5,637
$36,825$36,302$29,377

Onex Corporation
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited) Three months ended March 31
(in millions of U.S. dollars except per share data) 2013 2012
Revenues$7,212 $6,817
Cost of sales (excluding amortization of property, plant and equipment, intangible assets and deferred charges) (5,611) (5,408)
Operating expenses (1,047) (829)
Interest income 25 10
Amortization of property, plant and equipment (164) (140)
Amortization of intangible assets and deferred charges (141) (83)
Interest expense of operating companies (183) (137)
Increase in value of investments in joint ventures and associates at fair value, net 276 608
Stock-based compensation expense (122) (88)
Other items (108) (47)
Limited Partners' Interests charge (374) (486)
Earnings (loss) before income taxes (237) 217
Provision for income taxes (34) (44)
Net Earnings (Loss) for the Period$(271)$173
Net Earnings (Loss) attributable to:
Equity holders of Onex Corporation$(308)$58
Non-controlling Interests 37 115
Net Earnings (Loss) for the Period$(271)$173
Net Earnings (Loss) per Subordinate Voting Share of Onex Corporation
Basic and Diluted:
Net Earnings (Loss) for the Period $ (2.71) $ 0.51
Onex Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) Three months ended March 31
(in millions of U.S. dollars) 2013 2012
Operating Activities
Earnings (loss) for the period$(271)$173
Adjustments to earnings (loss):
Provision for income taxes 34 44
Interest income (25) (10)
Interest expense of operating companies 183 137
Net earnings (loss) before interest and provision for income taxes (79) 344
Cash taxes paid (51) (48)
Items not affecting cash and cash equivalents:
Amortization of property, plant and equipment 164 140
Amortization of intangible assets and deferred charges 141 83
Amortization of deferred warranty costs 4 11
Increase in value of investments in associates at fair value, net (276) (608)
Stock-based compensation expense 68 75
Limited Partners' Interests charge 374 486
Change in provisions 42 54
Other 62 20
449 557
Changes in non-cash working capital items:
Accounts receivable (157) (163)
Inventories (184) (254)
Other current assets 60 52
Accounts payable, accrued liabilities and other current liabilities (226) 49
Decrease in cash and cash equivalents due to changes in working capital items (507) (316)
Decrease in other operating activities (12) (10)
Increase in warranty reserves and premiums 2 32
(68) 263
Financing Activities
Issuance of long-term debt 696 659
Repayment of long-term debt (187) (458)
Cash interest paid (116) (97)
Cash dividends paid (3) (3)
Repurchase of share capital of Onex Corporation (23) (1)
Repurchase of share capital of operating companies - (60)
Financing provided by Limited Partners 66 92
Issuance of share capital by operating companies 34 5
Distributions paid to non-controlling interests and Limited Partners (215) (231)
Change in restricted cash for distribution to Limited Partners 35 (6)
Decrease due to other financing activities (10) (19)
277 (119)
Investing Activities
Acquisitions, net of cash and cash equivalents in acquired companies of nil (2012 - nil) (4) (20)
Purchase of property, plant and equipment (195) (166)
Proceeds from sale of investments in associates at fair value 323 326
Cash interest and dividends received 11 1
Net purchases of investments and securities (228) (357)
Increase due to other investing activities 61 4
(32) (212)
Increase (Decrease) in Cash and Cash Equivalents for the Period 177 (68)
Increase (decrease) in cash due to changes in foreign exchange rates (11) 4
Cash and cash equivalents, beginning of the period 2,656 2,448
Cash and Cash Equivalents, End of the Period$2,822 $2,384
Onex Corporation
INFORMATION BY INDUSTRY SEGMENT
FOR THE THREE MONTHS ENDED MARCH 31, 2013

(Unaudited)
(in millions of U.S. dollars)
Three months ended March 31, 2013
Electronics
Manufacturing
Services
Aerostructures Healthcare Insurance
Provider
Customer
Care
Services
Metal
Services
Building
Products
Other(a) Consolidated
Total
Revenues$1,372 $1,442 $1,155 $297 $365 $590 $770 $1,221 $7,212
Cost of sales (excluding amortization of property, plant and equipment, intangible assets and deferred charges) (1,268) (1,239) (817) (152) (236) (535) (649) (715) (5,611)
Operating expenses (52) (56) (213) (96) (92) (14) (120) (404) (1,047)
Interest income - - 1 - - - 1 23 25
Amortization of property, plant and equipment (15) (34) (31) (1) (7) (16) (26) (34) (164)
Amortization of intangible assets and deferred charges (3) (8) (39) (3) (5) (3) (4) (76) (141)
Interest expense of operating companies (1) (17) (43) (1) (25) (7) (19) (70) (183)
Increase in value of investments in joint ventures and associates at fair value, net - - - - - - - 276 276
Stock-based compensation expense (10) (4) (2) (1) - (1) (7) (97) (122)
Other items (8) (19) (33) 3 (10) - 19 (60) (108)
Limited Partners' Interests charge - - - - - - - (374) (374)
Earnings (loss) before income taxes 15 65 (22) 46 (10) 14 (35) (310) (237)
Recovery of (provision for) income taxes (5) (17) (2) (17) (2) (5) 2 12 (34)
Net earnings (loss) for the period$10 $48 $(24)$29 $(12)$9 $(33)$(298)$(271)
`
Net earnings (loss) attributable to:
Equity holders of Onex Corporation$1 $6 $(24)$26 $(9)$5 $(24)$(289)$(308)
Non-controlling interests 9 42 - 3 (3) 4 (9) (9) 37
Net earnings (loss) for the period$10 $48 $(24)$29 $(12)$9 $(33)$(298)$(271)
Total assets$2,643 $5,479 $3,902 $4,864 $625 $1,001 $2,650 $15,661 $36,825
Long-term debt(b)$20 $1,133 $2,538 $257 $723 $317 $647 $5,359 $10,994
(a)Includes Tropicana Las Vegas, SGS International, USI, KraussMaffei, ONCAP II, ONCAP III, Flushing Town Center, OCP CLO-1, OCP CLO-2, OCP CLO-3 and the parent company. Investments in joint ventures and associates recorded at fair value include Allison Transmission, BBAM, RSI (sold in February 2013), Tomkins, Cypress and certain Onex Real Estate investments.
(b)Long-term debt includes current portion, excludes finance leases and is net of financing charges.
Onex Corporation
INFORMATION BY INDUSTRY SEGMENT
FOR THE THREE MONTHS ENDED MARCH 31, 2012

(Unaudited)
(in millions of U.S. dollars)

Three months ended March 31, 2012
Electronics
Manufacturing
Services
Aerostructures Healthcare Insurance
Provider
Customer
Care
Services
Metal
Services
Building
Products
Other(a) Consolidated
Total
Revenues$1,691 $1,266 $1,209 $293 $364 $747 $731 $516 $6,817
Cost of sales (excluding amortization of property, plant and equipment, intangible assets and deferred charges) (1,559) (1,011) (841) (148) (233) (693) (609) (314) (5,408)
Operating expenses (55) (54) (235) (103) (93) (17) (114) (158) (829)
Interest income 1 1 8 10
Amortization of property, plant and equipment (17) (28) (32) (1) (6) (13) (26) (17) (140)
Amortization of intangible assets and deferred charges (3) (7) (42) (4) (7) (3) (4) (13) (83)
Interest expense of operating companies (1) (18) (48) (1) (22) (21) (15) (11) (137)
Increase in value of investments in joint ventures and associates at fair value, net 608 608
Stock-based compensation expense (10) (5) (3) (70) (88)
Other items 1 3 (3) 6 (2) (25) (27) (47)
Limited Partners' Interests charge (486) (486)
Earnings (loss) before income taxes$47 $146 $6 $42 $1 $ $(61)$36 $217
Recovery of (provision for) income taxes (4) (46) 9 (16) (3) 2 14 (44)
Net earnings (loss) for the period$43 $100 $15 $26 $(2)$ $(59)$50 $173
`
Net earnings (loss) attributable to:
Equity holders of Onex Corporation$4 $16 $9 $24 $(1)$ $(41)$47 $58
Non-controlling interests 39 84 6 2 (1) (18) 3 115
Net earnings (loss) for the period$43 $100 $15 $26 $(2)$ $(59)$50 $173
Total assets at December 31, 2012$2,659 $5,371 $3,971 $4,903 $632 $989 $2,626 $15,151 $36,302
Long-term debt at December 31, 2012(b)$55 $1,133 $2,540 $258 $725 $306 $547 $4,906 $10,470
(a)Includes Tropicana Las Vegas, ONCAP II, ONCAP III, Flushing Town Center, OCP CLO-1 and the parent company. Investments in joint ventures and associates recorded at fair value include Allison Transmission, Hawker Beechcraft, RSI (sold in February 2013), Tomkins, Cypress and certain Onex Real Estate investments.
(b)Long-term debt includes current portion, excludes finance leases and is net of financing charges.

Contact Information:

Onex Corporation
Emma Thompson
Vice President, Investor Relations
416.362.7711
www.onex.com