TORONTO — Onex Corp. (TSX:OCX) is eager for an investment opportunity to come along as it sits on about $1.5 billion in cash following the sale of two of its key assets in the most recent quarter.
The Toronto-based investment and private equity firm said Wednesday it earned US$1.8 billion in its second quarter, but the results included a $1.7-billion gain from the sale of injection equipment maker Husky International and EMSC, a U.S. ambulance operator.
Net earnings amounted to $14.09 per share, compared with profits of US$174 million or 83 cents a year ago. Stripping out discontinued operations and income taxes, earnings actually fell to $131 million from $240 million a year earlier, the company said.
Revenue increased 27 per cent to $6.2 billion from $4.89 billion a year ago.
Onex’s cash flow for acquisitions and stock buybacks is now bigger than at any time in its history, Seth Mersky, managing director at Onex, said on a conference call.
“Though the cash balance as a percentage of total assets is a bit higher than we’d like — given the recent extraordinary market turmoil, it feels pretty good to be very liquid and debt free,” he said.
“We’re comfortable for now and hopeful that we’re going to see some great opportunities.”
But he added that the company would be disappointed in itself if it finished the year with the same $1.5 billion in cash.
Credit markets are no longer as robust as they were in the first quarter as a violent downturn in equity markets took credit markets out as well, Mersky said. That’s a bonus for Onex because it means fewer competitors for prime asset that the firm might try to scoop up.
Onex is best known for acquiring and attempting to turn around businesses that have fallen on hard times.
It often only owns a minority equity interest, but retains voting control that allows it to manage the business on behalf of itself and its partners, which include pension funds and other institutional investors.
At the end of June, Onex sold Husky International for US$2.1 billion. Husky makes injection moulding machines for manufacturers and was sold to the private equity arm of the Ontario Municipal Employees Retirement System and Berkshire Partners, a Boston-based private equity firm.
Onex’s net cash proceeds from that sale was $583 million. In May, Onex received $342 million for the sale of its remaining stake in EMSC.
The Toronto-based private equity firm recently increased its investment in door and window manufacturer JELD-WEN Holdling Inc. by 28 per cent to US$864 million. It will now hold a 58 per cent stake in the company.
The deal is expected to close in the third quarter. Onex will appoint four of eight members of its board of directors.
Onex also recently sold some 2.7 million shares of aircraft parts maker Spirit AeroSystems Holdings Inc. (NYSE:SPR).
Onex’s businesses — which include the Celestica contract electronics maker and Hawker Beechcraft and Spirit Aerosystems aircraft industry companies —generate US$35 billion of annual revenues and employ 210,000 people around the world.
Onex holds investments in everything from electronics manufacturing services through Celestica Inc. (TSX:CLS), to automotive and aerospace manufacturing, to real estate, health care and financial services.
Onex shares closed up 1.2 per cent or 39 cents at $32.52 each Wednesday on the Toronto Stock Exchange.