Emilie Blouin - Director, Investor Relations Robert Le Blanc - Senior Managing Director Christopher Govan - Chief Financial Officer Nigel Wright - Managing Director Michael Gelblat - Chief Executive Officer, Onex Credit Partners

Geoff Kwan - RBC Capital Markets Paul Holden - CIBC

Thank you, Kevin. Good morning everyone and thanks for joining us.

We're broadcasting this call on our website. With me today are Bobby Le Blanc, Chris Govan and a number of our managing directors.

Earlier this morning, we issued our third quarter press release, MD&A and consolidated financial statements, which are available on the Shareholders section of our website and have also been filed on SEDAR. Our supplemental information package, which includes the How We Are Invested schedule, Schedule of Fees and Expenses and additional information is also available on our website.

Before we get started, just a reminder that all references to dollar amounts on this call are in U.S. unless otherwise stated.

I must also remind everyone of the usual disclaimer relating to any forward-looking statements contained in today's presentation and remarks. Please refer to our webcast presentation for cautionary factors related to these statements.

With that, I'll now turn the call over to Bobby.

Thanks, Emilie. Good morning, everyone.

I'll start as usual with an update on what we're seeing in the markets, followed by commentary on our recent activity. Year-to-date, global private equity capital deployment has increased, with volume and transaction value of 8% and 16% respectively.

The average EBITDA purchase multiple in the quarter also increased to 11 times, which was half a turn higher than the average multiple over the past year. North American focused private equity funds raised $82 billion in Q3, up more than 50% over the prior quarter.

While overall dollar raised increased significantly, the number of funds close declined, illustrating an ongoing trend towards greater concentration of capital among larger managers. Outstanding leverage loans in the U.S.

now total $1.27 trillion, which is more the amount of high yield bonds outstanding. The heavy demand for floating rate debt as rates increased has made for a very good borrowing environment despite a rising LIBOR rate.

With this as a backdrop, I will now move on to our recent activity. On the capital deployment front we've invested or committed to invest $2.3 billion in nine operating companies this year.

Let's take a look at two of our recent investments, Walter Surface Technologies and Ryan LLC. In September ONCAP acquired Walter, a provider of innovative solutions for the metalworking industry.

For example, industries that require metals to be cut, grinded, sanded or finished using hand-held tools represent potential end markets for Walter's products. The business has been family owned since its founding in 1952 and they were looking to reduce their ownership to focus on other opportunities.

We acquired a 94% interest and the balance remains with the family and company management. Our thesis is to leverage Walter's platform to grow both organically and through acquisitions.

In October, Onex Partners invested in Ryan, which is a global tax services and software provider. We have known the founder, Brent Ryan for several years.

When he approached us looking for an equity partner to help support the company's acquisition plans, we were excited by the opportunity to back an accomplished entrepreneur and invest in a market leading business. Brent was attracted to our culture of strong alignment, our reputation for doing what we'll say we'll do and our successful M&A track record.

Given our investment in Ryan and our pending acquisition of Kids Foundation, we'll now be investing from Onex Partners 5, the $7.15 billion fund we raised last year. We expect to start accruing fees in this fund later this quarter.

I'll leave it for Chris to provide more detail, but this new fee stream will provide meaningful incremental operating leverage for our asset manager. On the realization front, we've returned more than $1.8 billion to Onex and our limited partners.

This includes the pending sale of Tecta America, which is anticipated to close later this year. This realization will result in a multiple of capital of more than three times over the two and half years we've owned the business.

Last month we took SIG Public on the Swiss Stock Exchange. This was the largest IPO in Onex's history and the third largest in Europe this year.

We sold approximately 46 million shares for net proceeds of $511 million and remain a majority shareholder with a 51% interest. Based on recent trading, our multiple uninvested capital including realizations is 1.8 times.

We're pleased with these outcomes and owe a big thank you to the terrific management teams who run both companies. Looking at our private equity portfolio, our performance continues to be mixed and below where we'd like it to be.

Although many of our businesses have seen their value grow this year, others have faced headwinds. When performance lags we can and must drive change when necessary.

Recently, we initiated the replacement of senior leadership at a few of our businesses, including Survitec and Emerald. And we've worked closely with some of our management teams to implement and or expand cost savings plans to offset certain negative economic or industry factors as is the case with Parkdean and Schumacher.

It will take time to see the benefit of this activity, but we think we're on the right track. I would highlight that about 45% of our private equity portfolio was invested in the last two years.

So we're in the early days of our investment thesis for many of our companies. Overall, we remain optimistic that our diversified portfolio of 30 plus businesses will ultimately generate attractive returns.

Turning to credit, our pace of new CLO formation has been quieter this year. As a reminder, we're selective and over the second half of the year we found fewer new loan transactions where pricing and risk seemed right to us.

This is also combined with unattractive prices in the secondary market and recent widening of spreads on CLO liabilities. As with everything we do, our level of activity will vary year-to-year depending on market conditions.

While our private debt fund continues to find attractive opportunities, our activity slowed in the quarter, having deployed a net $75 million. Overall we are pleased with the quality of the portfolio and our pace of investing to-date, which is important for a first time fund building a track record.

We have now invested about $ 800 million of the more than $1 billion of available capital. Finally, one of our key tenants of our story is our team's meaningful personal investment in everything we do.

In total we have $2 billion invested in our shares, operating companies and credit platform, including $120 million invested so far this year. This financial alignment is critical to our culture and overall success.

We all share in the risk and rewards of everything we own. I'll turn the call over to Chris.

Thanks, Bobby and good morning, everyone. I'll review Onex's Q3 performance relative to our shareholder value model.

And remind you we target being about 75% invested, earning blended returns from private equity and credit in the high-teen and generating positive operating leverage from our asset management platforms. So let's start with asset mix.

Changes in Onex's asset mix are driven by the net investment activity at both private equity and credit. A strong year of deploying capital through our PE platforms continued in Q3, with almost $400 million of Onex capital invested in PowerSchool, Walter and Precision.

Net of some smaller realization and combined with about $20 million invested to Onex Credit, we ended the quarter 82% invested ahead of our 75% target. The results of quite a bit of investment activity that closed or was announced after quarter end.

We closed in our investment in Ryan LLC and expect our acquisition of KidsFoundation to be completed later this month. These two investments were balanced with two realizations, the IPO of SIG in early October and the recently announced sale of Tecta.

If you adjust our asset mix for the almost $200 million of net proceeds from these four transactions, Onex moves to 79% invested on a pro forma basis. On to the next component of our shareholder value model, investment returns.

I like reviewing our returns by looking at the quarter-over-quarter changes in the How We Are Invested schedule. Looking at this schedule you will see Onex's investment in private equity was roughly $500 million greater than at the end of Q2.

This was largely due to the investment activity at both Onex Partners and ONCAP discussed earlier. Also contributing to this increase, albeit less so, where our PE returns of 3% in the quarter.

On an LTM basis, Onex's PE investments have return 9%, which contributes to our five year compound returns of 16%. Looking at the schedule as a whole, Onex's Q3 hard NAV per share was $65.62, up 2% since Q2 and 3% in the last 12 months, both of which reflect the recent below target returns from our PE investments.

I'll shift now to discuss the last driver of the shareholder value model, the operation leverage that we achieve from managing fund investor capital. Turning to the schedule of fees and expenses, I'd note that the overall contribution in the September LTM period has improved by $9 million over the Q2 LTM amount.

However, the real story here remains the same as last quarter. Onex's operations are running about breakeven, despite private equity management fees at a trough and carried interest meaningfully below the five year average.

As Bobby mentioned, our new flagship fund, Onex Partners V will begin accruing fees when we close on KidsFoundation later this month. Although the impact will be rather modest in Q4, these new fees will move annual run rate fees across our three asset management platforms to over $200 million, a $55 million improvement.

Now the annual contribution from carried interest is less predictable, but this step function increase in our management fees, positions our asset manager to meaningfully contribute to our NAV growth in the coming years. I always left this last slide, I think it's a good snapshot of our progress and our stocks' performance.

I must admit, I'm disappointed to see our stocks CAGR at 6% actually slightly below our NAV growth given that our fee generating AUM grew an 18% clip over the same period. However, we'll stay focused on growing both our NAV and AUM confident that our stock will reflect our results in the long run.

That completes my comments. We'd now be happy to take any questions.

Hi. Good morning, everyone.

Just wanted to start with a point of clarification on the marks for the private operating companies, I understand that the mark to some extent based on public comparables as of September 30. Is that correct, or I guess what I'm trying to get at is whether the volatility that we've seen in public market multiples subsequent to quarter-end would be reflected in the marks presented on How We Are Invested schedule?

Yes. So Nick, the short answer is, no, they would not be reflected at September 30th.

September 30th is based upon September 30th. And obviously our public holdings, there is a direct drive in terms of their valuations today relative to September 30th.

And you're right, if the equity markets remain down that would be a headwind in terms of marks in the private portfolio as well to some extent at year-end.

Okay, that's helpful. And then I was also wondering, could you give us just a bit of color around the decision to take SIG public.

The length of ownership bit shorter than I think your typical holding period. Is it just the case that you had realized on your value creation strategy with that investment and elected to pursue an exit or whether the consequence of favorable market conditions any color on that decision would be appreciated?

Nigel?

Yes, a lot of things went into the decision to take SIG public, but a key one was an opportunity to delever its own balance sheet to support growth, which both we and management believe that SIG has ahead of it, which could include planned expansions and growth into the new geographic markets you may have seen that they've entered Japan, India and several South American countries recently. So it was a good opportunity to use a public offering to delever their balance sheet and finance their growth plans.

Okay, that's helpful color. One last one for me before I pass the line, I also want to ask one about the credit business.

And I think Bob you'd eluded to a slower pace of CLO issuance in your prepared remarks. But it looks like some of the central banks like in UK and Australia have expressed some concern in the growth to leverage loans to market.

Just wondering if you can kind of expand on how your thoughts might have evolved regarding the CLO business? Is it kind of relates to balancing the growth at that platform and the associated risk considering where we might be in the cycle?

Like do you see CLO issuance continuing to slow on kind of a go-forward basis relative to the past few years?

I'll let Michael to answer that question first.

Sure. So, I think that as Bobby alluded to that our slower pace was driven impart by our seeing less attractive opportunities.

The pace at which we issue CLOs is really as Bobby said market dependent. It's - when we issue CLOs where we source assets from as a combination of new issue and secondary market.

So it depends on the prices we're seeing. Does that answer your question?

Yes. No, that's helpful.

Thanks very much.

Hi, good morning. You mentioned I guess changing some of the management at Survitec and Emerald.

Can you remind me when you did those acquisitions, did you keep the management teams there in place or where those either one of them ones where you had brought in new management at the time of the investment?

No, in both cases the management team was there.

Okay. And then in terms of the companies that you view as not generating the returns that you'd expecting at that point of the various investments, how - like do you think you're at a point or for each of the investments where you're already making some of these changes and the financial results have maybe bottomed or close to the bottomed, and we should see the numbers improve from here or are there certain businesses where you think there may be some additional downside that you try and work these investments out?

There's no sort of rule of thumb, if you will. We're focused all of our portfolio companies the ones that are doing well and the ones that need some work.

There are some that are longer term projects like Save-A-Lot where we knew going in it was going to take longer than normal to get the earnings going the way we wanted to because we have a lot of investing to make. But for the most part we just - that's it we just working them all, good and bad.

Okay. On, I guess the old [indiscernible] had a question there and I know I'm not going to ask about the some of the media articles, but potentially monetizing that.

But I noticed the LTM EBITDA went up quarter-over-quarter also the net debt, was that the case of doing an acquisition and that was the pro forma? Okay.

Yes.

Okay. And just the last question I had is obviously where the share price is at and how you guys were looking at potential opportunities.

Any sort of comments and I think I've seen a little bit of share buybacks in the past filings in the past week or two. Just thoughts on the stock and how active you may want to be in it in the near-term?

Yes. Hey, Geoff, its Chris.

I think as we probably discussed before, our stock buyback is not formulaic and focused on the stock price relative to any particular NAV. A very big driver of our stock buyback activity is really our liquidity and see as an opportunity to invest in our existing portfolio and balancing that with our pipeline and our commitments to our existing funds.

So there's no doubt when the stock trades off, it's more attractive for our stock buyback, but it's not the only factor. And so it's not going to drive a huge change in behavior.

And maybe - if I can maybe sneak in one last question in terms of your comment around liquidity. And obviously, I'm not going to be privy to what you're outlook you think in terms of capital deployment, but is that kind of 25% of NAV as cash kind of where you'd like to be.

So being at 21% pro forma you're a little bit directionally lower on cash than where you kind of would prefer to be?

No, I wouldn't put it that way. I think of the 25% target is sort of a through cycle target.

And in fact, we have to be below 25% for decent length of time to hit that through a cycle. So at pro forma 21 nobody around the table thinking we want to raise some money to get to 25%, we're very comfortable where we're at.

Okay, thank you.

Thank you. Good morning.

So just want to go back to the discussion on CLOs and levered loans because that's become a big topic of conversation in the marketplace and not necessarily particular to Onex, but just generally speaking. So I think what people might be concern about when it comes to Onex is the current exposure on the balance sheet let's call it.

So maybe you can talk to that I am not talking so much about how default rates are trending today, because we know they're trending fine. But what your view is relative to how the central banks are thinking about it and generally how you think about your exposure on balance sheet today?

Sure. Paul, its Chris.

Maybe I'll start with just a little bit of comment from the Onex balance sheet perspective. I think, the way, I think about it and we think about it and to remind you is that these are long-term investments for us, these are cash flow CLOs with really effectively know mark-to-market risk.

And long-term the performance is going to depend upon the default in recovery rates, if you actually held alone through default, across a very diversified portfolio over a fairly long period of time. Now, I would say and I'm sure shareholders appreciate this that in terms of the mark-to-market exposure in our NAV, that's significant.

And if there was a meaningful correction in the senior loan market there's no doubt that the value of our CLO at a point in time that we include in our How We Are Invested schedule and our NAV could meaningfully go down at that point in time. But again, we generally speaking are in control positions in all of our CLOs.

And on top of that, as I said, there's no mark-to-market test that cause you to unwind and sell assets. So I think in terms of personally as a stockholder, I'm very comfortable with our exposure, recognizing that again, there could be a short-term blip that causes a dip in NAV.

Okay. And can you kind of remind us what proportion of the CLO, the equity tranche generally represents?

Yes. Michael correct me, I think it's typically a little less than 10%.

Yes, that's correct, Chris.

Okay. That's all the questions I had.

Thank you.

Thanks Paul.

Thank you.

Thanks everyone. We appreciate your support.

And as always, please feel free to contact Emilie, if you have any questions. We look forward to speaking to you again next quarter.

Have a good weekend.