Brookfield Finance Inc. 4.50% P Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Bruce Flatt highlighted strong second quarter results with distributable earnings before realizations increasing 13% y-o-y to $1.3 billion. Announced acquisition of Just Group in the UK to accelerate growth in the country. Macro environment is constructive with global equities at highs, credit spreads tightened, and interest rates stable. $55 billion of asset sales year-to-date and $94 billion of financings. Key themes of digitalization, deglobalization, decarbonization are accelerating with $177 billion of deployable capital. Launching AI infrastructure strategy with AI factories. $180 billion of own capital on balance sheet focused on backstopping insurance operations.
• Nick Goodman discussed financial results with distributable earnings before realizations $1.3 billion, $0.80 per share. Asset Management fundraising momentum, Wealth Solutions growth with insurance assets at $135 billion, operating businesses stable cash flows. Strong monetization with $55 billion assets sold year-to-date. Capital allocation included returning $432 million to shareholders via dividends and share buybacks. Board declared quarterly dividend of $0.09 per share and approved 3-for-2 stock split.

Segment Performance

• Asset Management: Generated distributable earnings of $650 million or $0.41 per share in the quarter and $2.7 billion or $1.72 per share over the last 12 months. Fee-bearing capital grew to $563 billion, resulting in fee-related earnings of $676 million, an increase of 10% and 16% respectively over the prior year quarter. Fundraising momentum is expected to continue into the second half of 2025.
• Wealth Solutions: Distributable operating earnings were $391 million or $0.25 per share in the quarter and $1.6 billion or $1.02 per share over the last 12 months. Originated over $4 billion of retail and institutional annuities, bringing total insurance assets to $135 billion. Deployed $3.5 billion into Brookfield managed strategies at an average net yield of 8%, with an investment portfolio yield of 5.8% and spread earnings 1.8% higher than average cost of funds.
• Operating Businesses: Generated distributable earnings of $350 million or $0.22 per share in the quarter and $1.7 billion or $1.07 per share over the last 12 months. Supported by strong underlying fundamentals. Example: signed a landmark agreement with Google for up to 3,000 megawatts of hydroelectric capacity. Real estate: North American residential moderated, but core portfolio same-store NOI growth, strong office/retail leasing, with rents in premium space high.

Guidance

• Bruce Flatt emphasized focus on using balance sheet to back growing insurance operations, with capital increasingly coming from individual investors via insurance float. Intention to fund insurance operations from Brookfield Corporation balance sheet. Nick Goodman stated financial results were strong and expect continued growth, Board declared dividend and 3-for-2 stock split.

Risks

• Forward-looking statements made are subject to known and unknown risks, and future events and results may differ materially from such statements. For further information on risks, see filings with securities regulators.