Invested
On Track to Achieve Record Inflows of Close to
BROOKFIELD, NEWS,
He added, “We continue to differentiate our franchise with nearly
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 (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
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
Regular Dividend Declaration
The Board declared a quarterly dividend for the Corporation of
Operating Highlights
DE before realizations were
Asset Management:
-
Distributable earnings were $604 million in the quarter and
$2 .7 billion over the LTM. -
Fee-related earnings increased by 16%, when excluding performance fees, compared to the prior year.
-
Fundraising momentum remains strong with inflows of $37 billion year to date and $74 billion for the LTM. Fee-bearing capital was $440 billion as of
June 30, 2023 , an increase of $48 billion or 12% over the LTM. -
Our fundraising efforts are expected to accelerate in the second half of this year which, when combined with insurance inflows, should allow us to raise a record of close to $150 billion of capital in 2023.
Insurance Solutions:
-
Distributable operating earnings were $160 million in the quarter and $634 million over the LTM.
-
During the quarter, spread earnings expanded by 20 bps with our average investment portfolio yield now 5.4% on approximately $45 billion of assets, about 220 bps higher than the average cost of capital.
-
We remain on track to achieving annualized earnings from this business of $800 million by the end of 2023, with a further step change in earnings expected from the closes of
Argo Group and the recently announced acquisition ofAmerican Equity Life . With these recently announced acquisitions, our Insurance Solutions business will grow to over$100 billion of assets and the earnings base to a stabilized run-rate of approximately $2 billion annually.
Operating Businesses:
-
Distributable earnings were $397 million for the quarter and
$1 .5 billion over the LTM. -
Operating Funds from Operations within our renewable power & transition and infrastructure businesses increased by 23% over the LTM, supporting stable and growing cash distributions. Our private equity business continues to deliver resilient and high-quality cash flows.
-
Strong leasing momentum within our real estate business drove NOI growth of 8% in our core portfolio compared to the prior year. Although cash flows continue to be impacted by interest rates in the near term, we have deep conviction in the value of our real estate portfolio over the long term.
Earnings from realizations of mature assets were $174 million for the quarter and $889 million for the LTM.
-
Transacted on approximately $15 billion of asset sales during the first half of the year, bringing the total monetizations completed over the LTM to around
$30 billion—all transacting at values higher than our IFRS carrying values, providing strong support for the carrying values of our investments and more than$20 billion of carried interest we forecast to realize into income over the next 10 years. -
Year to date, we have recognized $376 million of net realized carried interest into income and continue to see a path to realize over $500 million of net realized carried interest into income this year.
-
Total accumulated unrealized carried interest now stands at
$9 .5 billion, representing an increase of $104 million during the quarter, net of carried interest realized into income.
We ended the quarter with nearly $120 billion of capital available to deploy into new investments.
-
In addition to reinvesting back into our businesses, we returned $146 million to shareholders through regular dividends and share repurchases during the quarter. In the LTM, we have repurchased $536 million of Class A shares in the open market.
-
We have significant group-wide liquidity of nearly
$120 billion , which includes$34 billion of cash, financial assets and undrawn credit lines at the Corporation and our affiliates. Our balance sheet remains conservatively capitalized, with a weighted-average term of 13 years and modest maturities through to the end of 2024.
| CONSOLIDATED BALANCE SHEETS | ||||||||
| Unaudited (US$ millions) |
||||||||
| 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 | ||||||
|
|
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 (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 | |||||||||||
-
Direct costs exclude depreciation and amortization expenses disclosed above.
-
Interest expense from acquisitions, net of dispositions, and upfinancings completed over the twelve months ended
June 30, 2023 .
SUMMARIZED FINANCIAL RESULTS
| DISTRIBUTABLE EARNINGS | |||||||||||||||
| Unaudited For the periods ended (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 | |||||||
- Non-IFRS measure – see Non-IFRS and Performance Measures section on page 8.
| RECONCILIATION OF NET INCOME TO DISTRIBUTABLE EARNINGS | |||||||||||||||
| Unaudited For the periods ended (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 | |||||||
-
Amounts attributable to non-controlling interests are calculated based on the economic ownership interests held by non-controlling interests in consolidated subsidiaries. By adjusting DE attributable to non-controlling interests, we are able to remove the portion of DE earned at non-wholly owned subsidiaries that is not attributable to Brookfield.
-
Non-IFRS measure – see Non-IFRS and Performance Measures section on page 8.
-
Includes our share of Oaktree’s distributable earnings attributable to realized carried interest.
| EARNINGS PER SHARE | |||||||||||||||
| Unaudited For the periods ended (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 | |||||||
-
Excludes dividends paid on perpetual subordinated notes of $2 million (2022 – $2 million) and $10 million (2022 – $9 million) for the three and twelve months ended
June 30, 2023 , which are recognized within net income. -
Includes management share option plan and escrowed stock plan.
-
Per share amounts are inclusive of dilutive effect of mandatorily redeemable preferred shares held in a consolidated subsidiary.
Additional Information
The Letter to Shareholders and the company’s Supplemental Information for the three and twelve months ended
The statements contained herein are based primarily on information that has been extracted from our financial statements for the quarter and twelve months ended
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
About
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: Tel: (212) 618-3469 Email: [email protected] |
Investor Relations: Tel: (416) 359-8647 Email: [email protected] |
|
Non-IFRS and Performance Measures
This news release and accompanying financial information are based on International Financial Reporting Standards (“IFRS”), as issued by the
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:
-
Realized Carried Interest represents our contractual share of investment gains generated within a private fund after considering our clients’ minimum return requirements. Realized carried interest is determined on third-party capital that is no longer subject to future investment performance.
-
Realized Disposition Gains from principal investments are included in DE because we consider the purchase and sale of assets from our directly held investments to be a normal part of the company’s business. Realized disposition gains include gains and losses recorded in net income and equity in the current period, and are adjusted to include fair value changes and revaluation surplus balances recorded in prior periods which were not included in prior period DE.
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:
-
Operating FFO represents the company’s share of revenues less direct costs and interest expenses; excludes realized carried interest and disposition gains, fair value changes, depreciation and amortization and deferred income taxes; and includes our proportionate share of FFO from operating activities recorded by equity accounted investments on a fully diluted basis. We present this measure as we believe it assists in describing our results and variances within FFO.
-
Realized Carried Interest as defined above.
-
Realized Disposition Gains are included in FFO because we consider the purchase and sale of assets to be a normal part of the company’s business. Realized disposition gains include gains and losses recorded in net income and equity in the current period, and are adjusted to include fair value changes and revaluation surplus balances recorded in prior periods which were not included in prior period FFO.
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 |
- Consolidated basis – includes amounts attributable to non-controlling interests.
- Excludes amounts attributable to non-controlling interests.
- See Reconciliation of Net Income to Distributable Earnings Before Realizations and Distributable Earnings on page 5 and Non-IFRS and Performance Measures section on page 8.
- Distributable earnings before realizations, including per share amounts, for the three months ended
June 30, 2022 and the twelve months endedJune 30, 2023 and 2022 were adjusted for the special distribution of 25% of our asset management business onDecember 9, 2022 .
Notice to Readers
This news release contains “forward-looking information” within the meaning of Canadian provincial securities laws and “forward-looking statements” within the meaning of the
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
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
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
Certain of the information contained herein is based on or derived from information provided by independent third-party sources. While
Source:
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English |