Wendel SE (WNDLF) (Q2 2024) Earnings Call Highlights: Strong Asset Growth and Strategic Buyback ...

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In This Article:

  • Contribution to Net Earnings: EUR 365 million, up 9.4% restated from Concentra Flexibles sale.

  • Fee-Related Earnings: EUR 29.5 million from asset management activities.

  • Assets Under Management (AUM): EUR 20.4 billion managed by Wendel Group.

  • Fully Diluted Net Asset Value (NAV) per Share: EUR 175.2, up 7.9% year-to-date.

  • Loan-to-Value Ratio: 5.9% pro forma, -6.2% as of June 30, 2024.

  • Share Buyback Program: New EUR 100 million program announced.

  • Listed Asset Value Increase: 19% in the first half.

  • Unlisted Asset Value Change: Slightly down by 1%.

  • Net Income Group Share: EUR 388 million.

  • Sales Growth: Up 13% during the period.

  • Investment Capacity: EUR 1.4 billion available.

  • Internal Rate of Return (IRR) for Bureau Veritas: 24.8% per year since investment.

  • Principal Investment Value Creation: EUR 16 per share.

  • Fee-Paying AUM Growth: Up 16% since the beginning of the year.

  • Dividend Yield: 4.8% on share price, 2.5% on NAV.

  • Debt Profile: Average maturity of 4.1 years, average cost of 2.4%.

Release Date: August 01, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Wendel SE (WNDLF) reported a 9.4% increase in contributions from portfolio companies, demonstrating resilience in a challenging environment.

  • The company successfully raised close to EUR 2 billion in funds, showing strong growth in asset management activities.

  • Wendel SE (WNDLF) announced a new EUR 100 million share buyback program, indicating confidence in its financial position.

  • The company reported a 19% increase in the value of listed assets, driven by strong performance from Bureau Veritas.

  • Wendel SE (WNDLF) has a significant investment capacity of EUR 1.4 billion, providing flexibility for future strategic investments.

Negative Points

  • The value of unlisted assets decreased by 1%, reflecting challenges in certain market segments.

  • Scalian faced a decline in sales and EBITDA, attributed to a slowdown in the global consulting market.

  • The asset management segment reported a negative impact of EUR 0.1 per share due to transaction fees linked to acquisitions.

  • The company's cash operation and net financing result had a negative impact of EUR 0.7 per share.

  • There is uncertainty regarding the timeline for deploying sponsor money in the asset management business, which could affect future earnings.

Q & A Highlights

Q: Could you remind us about the long-term vision for the asset management business? Are you looking to acquire new verticals or specialists in verticals? A: Laurent Mignon, Bureau Veritas SA - Director: We aim to create a platform offering complementary strategies to LPs, not competing teams. We are open to adding verticals like infrastructure or debt funds, but not another buyout firm. Our focus is on organic growth and strategic acquisitions to enhance our asset management platform.

Q: The asset management fees seem high compared to industry standards. Can you explain the dynamics there? A: Laurent Mignon, Bureau Veritas SA - Director: We charge standard private equity fees. The mix between fee-paying AUM and global AUM affects the average fee rate. We maintain competitive fees without discounts, supported by strong LP interest and co-investment opportunities.

Q: Regarding the share buyback program, what has changed since Q1 when you ruled out additional shareholder distributions? A: Laurent Mignon, Bureau Veritas SA - Director: There's no change in strategy. We see the current discount as an opportunity for value creation through buybacks, while maintaining enough capital for acquisitions and strategic growth.

Q: Can you provide insights into the valuation changes of your unlisted assets? A: Laurent Mignon, Bureau Veritas SA - Director: Valuation changes are primarily driven by EBITDA movements. We use book value and comparable listed companies to assess our assets. Negative margin movements impact valuations, but overall, the decline was marginal.

Q: What are the key segments you are looking to enhance in your asset management portfolio? A: Laurent Mignon, Bureau Veritas SA - Director: We are focusing on debt, infrastructure, and secondary markets. Our goal is to achieve EUR 150 million in fee-related earnings by 2027, expanding our asset management capabilities.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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