Invested $50 billion and Monetized $15 billion of Assets YTD
On Track to Achieve Record Inflows of Close to $150 billion in 2023
BROOKFIELD, NEWS, Aug. 10, 2023 (GLOBE NEWSWIRE) -- Brookfield Corporation (NYSE: BN, TSX: BN) today announced financial results for the quarter ended June 30, 2023.
Nick Goodman, President of Brookfield Corporation, stated, “Financial performance was very strong during the second quarter, as our operations continued to generate stable and growing cash flows. Momentum continues to grow across the business; so far this year we have announced more than $50 billion of acquisitions, sold approximately $15 billion of assets, and are on track to achieve a record of close to $150 billion of inflows in 2023.”
He added, “We continue to differentiate our franchise with nearly $120 billion of liquidity, strong access to large scale capital, and our deep investment and operating expertise—all of which enables us to further scale our operations with the goal of having one of the largest pools of discretionary capital globally.”
Operating Results
Distributable earnings (“DE”) before realizations increased by 21% compared to the prior year, after adjusting for the special distribution of 25% of our asset management business that we completed in December last year.
Unaudited For the periods ended June 30 (US$ millions, except per share amounts) | Three Months Ended | Last Twelve Months Ended | |||||||||
2023 | 2022 | 2023 | 2022 | ||||||||
Net income1 | $ | 1,512 | $ | 1,475 | $ | 2,696 | $ | 10,618 | |||
Distributable earnings before realizations2,3 | 1,013 | 1,009 | 4,316 | 3,881 | |||||||
– Adjusted for the special distribution2,3,4 | 1,013 | 881 | 4,078 | 3,381 | |||||||
– Per Brookfield share2,3,4 | 0.64 | 0.54 | 2.56 | 2.09 | |||||||
Distributable earnings2,3 | 1,187 | 1,186 | 5,205 | 4,911 | |||||||
– Per Brookfield share2,3 | 0.75 | 0.73 | 3.26 | 3.03 |
See endnotes on page 8.
Net income in the second quarter was $1.5 billion. DE before realizations were $1.0 billion for the quarter and $4.3 billion for the last twelve months (“LTM”). Both benefiting from the strong financial performance and resilient nature of our underlying businesses with the comparative period net income for the LTM including higher valuation gains.
Our asset management business benefited from another strong quarter of fundraising and deployment, increasing fee-related earnings by 16%, when excluding performance fees, compared to the prior year.
Our insurance solutions business delivered a very strong quarter as we continue to focus on expanding the investment returns of our existing assets by redeploying our short-duration investment portfolio into higher yielding assets.
Our operating businesses generated stable and recurring cash flows, reflecting the strong underlying fundamentals of our high-quality businesses. This was supported by the earnings growth across our renewable power & transition, infrastructure, and private equity businesses and same-store net operating income (“NOI”) growth in our real estate business.
During the quarter and over the LTM, earnings from realizations were $174 million and $889 million, respectively, with total DE for the quarter and LTM of $1.2 billion and $5.2 billion, respectively.
Regular Dividend Declaration
The Board declared a quarterly dividend for the Corporation of $0.07 per share, payable on September 29, 2023 to shareholders of record as at the close of business on August 31, 2023. The Board also declared the regular monthly and quarterly dividends on its preferred shares.
Operating Highlights
DE before realizations were $1.0 billion for the quarter and $4.3 billion for the LTM, representing an increase of 21% over the prior year, after adjusting for the special distribution of 25% of our asset management business. Total DE for the quarter was $1.2 billion and $5.2 billion for the LTM.
Asset Management:
Insurance Solutions:
Operating Businesses:
Earnings from realizations of mature assets were $174 million for the quarter and $889 million for the LTM.
We ended the quarter with nearly $120 billion of capital available to deploy into new investments.
CONSOLIDATED BALANCE SHEETS | ||||||||
Unaudited (US$ millions) | June 30 | December 31 | ||||||
2023 | 2022 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 12,427 | $ | 14,396 | ||||
Other financial assets | 29,466 | 26,899 | ||||||
Accounts receivable and other | 31,747 | 30,208 | ||||||
Inventory | 13,006 | 12,843 | ||||||
Equity accounted investments | 52,141 | 47,094 | ||||||
Investment properties | 119,780 | 115,100 | ||||||
Property, plant and equipment | 127,462 | 124,268 | ||||||
Intangible assets | 41,217 | 38,411 | ||||||
Goodwill | 32,329 | 28,662 | ||||||
Deferred income tax assets | 3,559 | 3,403 | ||||||
Total Assets | $ | 463,134 | $ | 441,284 | ||||
Liabilities and Equity | ||||||||
Corporate borrowings | $ | 13,068 | $ | 11,390 | ||||
Accounts payable and other | 60,016 | 57,941 | ||||||
Non-recourse borrowings | 206,085 | 202,684 | ||||||
Subsidiary equity obligations | 4,049 | 4,188 | ||||||
Deferred income tax liabilities | 24,333 | 23,190 | ||||||
Equity | ||||||||
Non-controlling interests in net assets | $ | 110,982 | $ | 98,138 | ||||
Preferred equity | 4,103 | 4,145 | ||||||
Common equity | 40,498 | 155,583 | 39,608 | 141,891 | ||||
Total Liabilities and Equity | $ | 463,134 | $ | 441,284 |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
Unaudited For the periods ended June 30 (US$ millions, except per share amounts) | Three Months Ended | Six Months Ended | |||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenues | $ | 23,668 | $ | 23,256 | $ | 46,965 | $ | 45,138 | |||||||
Direct costs1 | (17,692 | ) | (17,955 | ) | (35,324 | ) | (34,839 | ) | |||||||
Other income and gains | 1,483 | 465 | 1,864 | 494 | |||||||||||
Equity accounted income | 401 | 564 | 830 | 1,407 | |||||||||||
Interest expense | |||||||||||||||
– Corporate borrowings | (154 | ) | (124 | ) | (290 | ) | (241 | ) | |||||||
– Non-recourse borrowings | |||||||||||||||
Same-store | (3,160 | ) | (2,281 | ) | (5,845 | ) | (4,302 | ) | |||||||
Acquisitions, net of dispositions2 | (299 | ) | — | (782 | ) | — | |||||||||
Upfinancings2 | (151 | ) | — | (460 | ) | — | |||||||||
Corporate costs | (23 | ) | (26 | ) | (37 | ) | (59 | ) | |||||||
Fair value changes | 62 | (397 | ) | 100 | 1,383 | ||||||||||
Depreciation and amortization | (2,214 | ) | (1,886 | ) | (4,402 | ) | (3,697 | ) | |||||||
Income tax | (409 | ) | (141 | ) | (683 | ) | (849 | ) | |||||||
Net income | $ | 1,512 | $ | 1,475 | $ | 1,936 | $ | 4,435 | |||||||
Net income attributable to: | |||||||||||||||
Brookfield shareholders | $ | 81 | $ | 590 | $ | 201 | $ | 1,949 | |||||||
Non-controlling interests | 1,431 | 885 | 1,735 | 2,486 | |||||||||||
$ | 1,512 | $ | 1,475 | $ | 1,936 | $ | 4,435 | ||||||||
Net income per share | |||||||||||||||
Diluted | $ | 0.03 | $ | 0.34 | $ | 0.08 | $ | 1.16 | |||||||
Basic | 0.03 | 0.35 | 0.08 | 1.20 |
SUMMARIZED FINANCIAL RESULTS
DISTRIBUTABLE EARNINGS | |||||||||||||||
Unaudited For the periods ended June 30 (US$ millions) | Three Months Ended | Last Twelve Months Ended | |||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Asset management | $ | 604 | $ | 768 | $ | 2,721 | $ | 2,919 | |||||||
Insurance solutions | 160 | 46 | 634 | 85 | |||||||||||
BEP | 105 | 100 | 410 | 390 | |||||||||||
BIP | 80 | 75 | 310 | 289 | |||||||||||
BBU | 9 | 9 | 36 | 27 | |||||||||||
BPG | 196 | 218 | 778 | 921 | |||||||||||
Other | 7 | (23 | ) | (22 | ) | (99 | ) | ||||||||
Operating businesses | 397 | 379 | 1,512 | 1,528 | |||||||||||
Corporate costs and other | (148 | ) | (184 | ) | (551 | ) | (651 | ) | |||||||
Distributable earnings before realizations1 | 1,013 | 1,009 | 4,316 | 3,881 | |||||||||||
Realized carried interest, net | 170 | 48 | 755 | 463 | |||||||||||
Disposition gains from principal investments | 4 | 129 | 134 | 567 | |||||||||||
Distributable earnings1 | $ | 1,187 | $ | 1,186 | $ | 5,205 | $ | 4,911 |
RECONCILIATION OF NET INCOME TO DISTRIBUTABLE EARNINGS | |||||||||||||||
Unaudited For the periods ended June 30 (US$ millions) | Three Months Ended | Last Twelve Months Ended | |||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net income | $ | 1,512 | $ | 1,475 | $ | 2,696 | $ | 10,618 | |||||||
Financial statement components not included in DE: | |||||||||||||||
Equity accounted fair value changes and other items | 703 | 535 | 2,586 | 1,500 | |||||||||||
Fair value changes | (62 | ) | 397 | 2,260 | (4,063 | ) | |||||||||
Depreciation and amortization | 2,214 | 1,886 | 8,388 | 7,053 | |||||||||||
Deferred income taxes | (151 | ) | (189 | ) | (288 | ) | 956 | ||||||||
Non-controlling interests in the above items1 | (3,127 | ) | (2,857 | ) | (10,574 | ) | (11,100 | ) | |||||||
Realized disposition gains in fair value changes or prior periods | 283 | 152 | 782 | 1,169 | |||||||||||
Less: total disposition gains | (416 | ) | (197 | ) | (1,196 | ) | (1,232 | ) | |||||||
Less: realized carried interest, net | (170 | ) | (48 | ) | (755 | ) | (463 | ) | |||||||
Cash retained in (returned from) businesses | 227 | (145 | ) | 417 | (557 | ) | |||||||||
Distributable earnings before realizations2 | 1,013 | 1,009 | 4,316 | 3,881 | |||||||||||
Realized carried interest, net3 | 170 | 48 | 755 | 463 | |||||||||||
Disposition gains from principal investments | 4 | 129 | 134 | 567 | |||||||||||
Distributable earnings2 | $ | 1,187 | $ | 1,186 | $ | 5,205 | $ | 4,911 |
EARNINGS PER SHARE | |||||||||||||||
Unaudited For the periods ended June 30 (US$ millions) | Three Months Ended | Last Twelve Months Ended | |||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net income | $ | 1,512 | $ | 1,475 | $ | 2,696 | $ | 10,618 | |||||||
Non-controlling interests | (1,431 | ) | (885 | ) | (2,388 | ) | (6,754 | ) | |||||||
Net income attributable to shareholders | 81 | 590 | 308 | 3,864 | |||||||||||
Preferred share dividends1 | (41 | ) | (37 | ) | (158 | ) | (147 | ) | |||||||
Dilutive effect of conversion of subsidiary preferred shares | — | — | — | (1 | ) | ||||||||||
Net income available to common shareholders | 40 | 553 | 150 | 3,716 | |||||||||||
Dilutive impact of exchangeable shares of affiliate | — | 1 | — | 5 | |||||||||||
Net income available to common shareholders including dilutive impact of exchangeable shares | $ | 40 | $ | 554 | $ | 150 | $ | 3,721 | |||||||
Weighted average shares | 1,564.0 | 1,564.4 | 1,568.3 | 1,562.3 | |||||||||||
Dilutive effect of conversion of options and escrowed shares using treasury stock method2and exchangeable shares of affiliate | 14.4 | 52.7 | 16.2 | 58.6 | |||||||||||
Shares and share equivalents | 1,578.4 | 1,617.1 | 1,584.5 | 1,620.9 | |||||||||||
Diluted earnings per share3 | $ | 0.03 | $ | 0.34 | $ | 0.09 | $ | 2.30 |
Additional Information
The Letter to Shareholders and the company’s Supplemental Information for the three and twelve months ended June 30, 2023, contain further information on the company’s strategy, operations and financial results. Shareholders are encouraged to read these documents, which are available on the company’s website.
The statements contained herein are based primarily on information that has been extracted from our financial statements for the quarter and twelve months ended June 30, 2023, which have been prepared using IFRS, as issued by the IASB. The amounts have not been audited by Brookfield Corporation’s external auditor.
Brookfield Corporation’s Board of Directors have reviewed and approved this document, including the summarized unaudited consolidated financial statements prior to its release.
Information on our dividends can be found on our website under Stock & Distributions/Distribution History.
Quarterly Earnings Call Details
Investors, analysts and other interested parties can access Brookfield Corporation’s 2023 Second Quarter Results as well as the Shareholders’ Letter and Supplemental Information on Brookfield Corporation’s website under the Reports & Filings section at www.bn.brookfield.com.
To participate in the Conference Call today at 10:00 a.m. ET, please pre-register at https://register.vevent.com/register/BIf5973af872c94d779ebaa4984cdb3e25. Upon registering, you will be emailed a dial-in number, and unique PIN. The Conference Call will also be webcast live at https://edge.media-server.com/mmc/p/w4ycvbgx. For those unable to participate in the Conference Call, the telephone replay will be archived and available until August 10, 2024. To access this rebroadcast, please visit: https://edge.media-server.com/mmc/p/w4ycvbgx.
About Brookfield Corporation
Brookfield Corporation (NYSE: BN, TSX: BN) is focused on compounding capital over the long term to earn attractive total returns for our shareholders. Today, our capital is deployed across three businesses – Asset Management, Insurance Solutions and our Operating Businesses, generating substantial and growing free cash flows, all of which is underpinned by a conservatively capitalized balance sheet.
Please note that Brookfield Corporation’s previous audited annual and unaudited quarterly reports have been filed on EDGAR and SEDAR and can also be found in the investor section of its website at www.brookfield.com. Hard copies of the annual and quarterly reports can be obtained free of charge upon request.
For more information, please visit our website at www.bn.brookfield.com or contact:
Communications & Media: Kerrie McHugh Hayes Tel: (212) 618-3469 Email: kerrie.mchugh@brookfield.com | Investor Relations: Linda Northwood Tel: (416) 359-8647 Email: linda.northwood@brookfield.com | |
Non-IFRS and Performance Measures
This news release and accompanying financial information are based on International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), unless otherwise noted.
We make reference to Distributable Earnings (“DE”). We define DE as the sum of distributable earnings from our asset management business, distributable operating earnings from our insurance solutions business, distributions received from our ownership of investments, realized carried interest and disposition gains from principal investments, net of earnings from our Corporate Activities, preferred share dividends and equity-based compensation costs. We also make reference to DE before realizations, which refers to DE before realized carried interest and realized disposition gains from principal investments. We believe these measures provide insight into earnings received by the company that are available for distribution to common shareholders or to be reinvested into the business.
Realized carried interest and realized disposition gains are further described below:
We make reference to Funds from Operations (“FFO”). We define FFO as net income attributable to shareholders prior to fair value changes, depreciation and amortization, and deferred income taxes, and it includes realized disposition gains that are not recorded in net income as determined under IFRS. FFO also includes the company’s share of equity accounted investments’ FFO on a fully diluted basis.
FFO consists of the following components:
We use DE and FFO to assess our operating results and the value of Brookfield Corporation’s business and believe that many shareholders and analysts also find these measures of value to them.
We also make reference to Net Operating Income (“NOI”), which refers to the revenues from our operations less direct expenses before the impact of depreciation and amortization within our real estate business. We present this measure as we believe it is a key indicator of our ability to impact the operating performance of our properties. As NOI excludes non-recurring items and depreciation and amortization of real estate assets, it provides a performance measure that, when compared to prior periods, reflects the impact of operations from trends in occupancy rates and rental rates.
We disclose a number of financial measures in this news release that are calculated and presented using methodologies other than in accordance with IFRS. These financial measures, which include DE and FFO, should not be considered as the sole measure of our performance and should not be considered in isolation from, or as a substitute for, similar financial measures calculated in accordance with IFRS. We caution readers that these non-IFRS financial measures or other financial metrics are not standardized under IFRS and may differ from the financial measures or other financial metrics disclosed by other businesses and, as a result, may not be comparable to similar measures presented by other issuers and entities.
We provide additional information on key terms and non-IFRS measures in our filings available at www.bn.brookfield.com.
End Notes |
Notice to Readers
Brookfield Corporation is not making any offer or invitation of any kind by communication of this news release and under no circumstance is it to be construed as a prospectus or an advertisement.
This news release contains “forward-looking information” within the meaning of Canadian provincial securities laws and “forward-looking statements” within the meaning of the U.S. Securities Act of 1933, the U.S. Securities Exchange Act of 1934, and, “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 and in any applicable Canadian securities regulations. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, include statements which reflect management’s expectations regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies, capital management and outlook of Brookfield Corporation and its subsidiaries, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods, and include words such as “expects,” “anticipates,” “plans,” “believes,” “estimates,” “seeks,” “intends,” “targets,” “projects,” “forecasts” or negative versions thereof and other similar expressions, or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.” In particular, the forward-looking statements contained in this news release include statements referring the impact of current market or economic conditions on our operating businesses, the future state of the economy or the securities market and expected future deployment of capital and dispositions as well as statements regarding future earnings.
Although we believe that our anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, which may cause the actual results, performance or achievements of Brookfield Corporation or Brookfield Asset Management Ltd. to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.
Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: (i) returns that are lower than target; (ii) the impact or unanticipated impact of general economic, political and market factors in the countries in which we do business including as a result of COVID-19 and related global economic disruptions; (iii) the behavior of financial markets, including fluctuations in interest and foreign exchange rates; (iv) global equity and capital markets and the availability of equity and debt financing and refinancing within these markets; (v) strategic actions including acquisitions and dispositions; the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits; (vi) changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates); (vii) the ability to appropriately manage human capital; (viii) the effect of applying future accounting changes; (ix) business competition; (x) operational and reputational risks; (xi) technological change; (xii) changes in government regulation and legislation within the countries in which we operate; (xiii) governmental investigations; (xiv) litigation; (xv) changes in tax laws; (xvi) ability to collect amounts owed; (xvii) catastrophic events, such as earthquakes, hurricanes and epidemics/pandemics; (xviii) the possible impact of international conflicts and other developments including terrorist acts and cyberterrorism; (xix) the introduction, withdrawal, success and timing of business initiatives and strategies; (xx) the failure of effective disclosure controls and procedures and internal controls over financial reporting and other risks; (xxi) health, safety and environmental risks; (xxii) the maintenance of adequate insurance coverage; (xxiii) the existence of information barriers between certain businesses within our asset management operations; (xxiv) risks specific to our business segments including real estate, renewable power and transition, infrastructure, private equity, and credit; and (xxv) factors detailed from time to time in our documents filed with the securities regulators in Canada and the United States.
We caution that the foregoing list of important factors that may affect future results is not exhaustive and other factors could also adversely affect its results. Readers are urged to consider the foregoing risks, as well as other uncertainties, factors and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such forward-looking information. Except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that may be as a result of new information, future events or otherwise.
Past performance is not indicative nor a guarantee of future results. There can be no assurance that comparable results will be achieved in the future, that future investments will be similar to historic investments discussed herein, that targeted returns, growth objectives, diversification or asset allocations will be met or that an investment strategy or investment objectives will be achieved (because of economic conditions, the availability of appropriate opportunities or otherwise).
Target returns and growth objectives set forth in this news release are for illustrative and informational purposes only and have been presented based on various assumptions made by Brookfield Corporation in relation to the investment strategies being pursued, any of which may prove to be incorrect. There can be no assurance that targeted returns or growth objectives will be achieved. Due to various risks, uncertainties and changes (including changes in economic, operational, political or other circumstances) beyond Brookfield Corporation’s control, the actual performance of the business could differ materially from the target returns and growth objectives set forth herein. In addition, industry experts may disagree with the assumptions used in presenting the target returns and growth objectives. No assurance, representation or warranty is made by any person that the target returns or growth objectives will be achieved, and undue reliance should not be put on them. Prior performance is not indicative of future results and there can be no guarantee that Brookfield Corporation will achieve the target returns or growth objectives or be able to avoid losses.
Certain of the information contained herein is based on or derived from information provided by independent third-party sources. While Brookfield Corporation believes that such information is accurate as of the date it was produced and that the sources from which such information has been obtained are reliable, Brookfield Corporation makes no representation or warranty, express or implied, with respect to the accuracy, reasonableness or completeness of any of the information or the assumptions on which such information is based, contained herein, including but not limited to, information obtained from third parties.