Brookfield Corp. Q4 FY2024 earnings call

Business Performance

• Strong 2024 with record financial results: Distributable earnings before realizations increased 15% to $4.9 billion, total distributable earnings up 31% to $6.3 billion. Manager had over $135 billion of inflows. Wealth solutions established as top-tier annuity writer in US; operating businesses generate stable cash flows.

Economic Environment

• Markets constructive despite volatility; inflation tempered, short-term rates stabilizing. Capitalized on backdrop with $135 billion debt financing and $40 billion asset sales. Outlook for 2025 constructive with record deployable capital of approximately $160 billion.

Intrinsic Value and Share Repurchases

• Intrinsic value per share up approximately $100. Repurchased approximately $1 billion of shares in 2024 and over $200 million in 2025. Businesses continue creating value, e.g., Clarios dividend distribution and recapitalization.

Market Trends

• Shift from active to passive investing. Some companies not in indexes acquired at good value. Efforts to simplify asset management business structure for index eligibility.

Monetization and Carried Interest

• Monetized approximately $40 billion of assets in 2024. Accumulated unrealized carried interest $11.5 billion. Expect to recognize approximately $20 billion of cash flows over the next five years. Recognized approximately $400 million of net realized carried interest in 2024.

Balance Sheet and Liquidity

• Record deployable capital of approximately $160 billion. Completed approximately $1 billion of share buybacks in 2024 and over $200 million in 2025. Active in capital markets with $135 billion financings, including notable debt issuances and loans.

Asset Management

• Distributable earnings before realizations: $2.6 billion or $1.67 per share for the year. Total inflows in 2024 were over $135 billion, fee-bearing capital ended at $539 billion with an 18% increase, and fee-related earnings grew 17% compared to the prior year.

Wealth Solutions

• Distributable operating earnings: $1.4 billion or $0.85 per share for the year, nearly double the prior year. Originated approximately $19 billion of retail and annuities, insurance assets exceeded $120 billion. Average investment yield on assets was 5.4%, and spread earnings are expected to increase to approximately 2% in the near term.

Operating Businesses

• Distributable earnings: $1.6 billion or $1.03 per share for the year. Funds from operations in renewable power and transition infrastructure and infrastructure businesses increased 10% over the prior year. Real estate core portfolio had 4% growth in same-store net operating income. Monetized a land parcel in North American residential operations contributing approximately $125 million to distributable earnings in the fourth quarter.

• 2024 had strong financial results: Distributable earnings before realizations up 15% to $4.9 billion, total distributable earnings up 31% to $6.3 billion.
• 2025 outlook strong with record deployable capital ~$160 billion, constructive market backdrop, expected continued recovery in transaction activity, strong deployment outlook. Confident in earnings and cash flow growth leading to increased intrinsic value.
• Wealth solutions expected to continue scaling, asset management to hold final closes for flagship funds and deploy capital. Operating businesses to continue generating stable cash flows. Real estate earnings and valuations expected to strengthen. Board declared 13% increase in quarterly dividend to $0.09 per share payable end of March 2025.

• Forward-looking statements subject to known and unknown risks; future results may differ materially.
• Market volatility, geopolitical factors, policy changes may impact financial performance.
• Indexing trends affecting listed businesses; potential trade and policy uncertainties impacting investment opportunities.

Q: Ken Worthington from JPMorgan on capital management, insurance, infrastructure and renewables A: Nick Goodman on combination of organic growth, M&A, and significant investment opportunity in infrastructure/renewables Q: Michael Cyprys from Morgan Stanley on real estate monetizations, ten-year treasury yield, wealth solutions organic growth A: Nick Goodman on improving real estate markets, liquidity, strong demand in wealth solutions, diversified distribution channels Q: Robert Kwan from RBC Capital Markets on carried interest realization, listed affiliates A: Nick Goodman on carried interest realization pace, focus on underlying value creation in listed affiliates Q: Cherilyn Radbourne from TD Cowen on intrinsic value increase, private wealth market A: Nick Goodman on broad-based growth, focus on sustainable products and returns Q: Mario Saric from Scotiabank on intrinsic value, share buybacks, near-term growth A: Nick Goodman on broad-based business growth, opportunistic share repurchases, strong performance in wealth solutions and asset management Q: Sohrab Movahedi from BMO Capital Markets on monetization preference, investment opportunities and caution A: Nick Goodman on opportunistic approach, broad-based opportunities, operations insulated from current uncertainty