- Record earnings per share of $0.66 in the fourth quarter, up from $0.60 in the prior quarter
- SG&A expenses down 9% from prior quarter to $113.8 million, well below $120 million target
- Free cash flow of $168.3
million versus $144.7 million
in the prior quarter
- Assets under advisement reach record level of $49.8 billion
- Quarterly net Canadian retail sales flows improve by
$1.9 billion year over year
- Strategic initiatives include acquisition of WisdomTree
Canada ETFs and two U.S. RIAs
- Share buybacks of $142 million
in the fourth quarter; dividend of $0.18 per share declared
TORONTO, Feb. 14, 2020 /CNW/ - CI Financial Corp. ("CI")
(TSX: CIX) today released audited financial results for the quarter
and year ended December 31, 2019.
"We achieved a record financial quarter by being diligent in
reducing our SG&A expenses to $113.8
million, a result of right-sizing our business to reflect
the current industry environment," said Kurt MacAlpine, CI Chief Executive Officer.
"With these changes, we will begin to selectively invest in
high-growth opportunities and other initiatives that support our
three strategic priorities of modernizing our asset management
business, expanding our wealth management platform and globalizing
our company. At the same time, we are returning cash to
shareholders through share repurchases, which totalled $142 million in the fourth quarter, and paying a
quarterly dividend of $0.18 a
share.
"Our key initiatives include the acquisition of WisdomTree
Canada, which is scheduled to close soon, growing our ETF assets by
$1 billion to more than $10 billion," Mr. MacAlpine said. "This builds on
the exceptional performance of our existing CI First Asset ETF
business, which posted asset growth of $4.2
billion or 95% in 2019.
"In addition, we've taken the first steps in building our U.S.
wealth management business with the acquisition of majority stakes
in two registered investment advisors: Surevest Wealth Management
and One Capital Management. These are excellent firms that will
form a solid foundation for a growing RIA operation.
"In the fourth quarter," Mr. MacAlpine said, "we saw a
significant improvement in our sales trends. Although the firm
remains in net redemptions, our Canadian retail net sales excluding
closed products improved by $1.0
billion over the prior quarter and by $1.9 billion over the same quarter a year
earlier."
Financial results
CI reported record quarterly earnings per share of $0.66 for the fourth quarter of 2019, up from
$0.60 for the third quarter of 2019
and $0.57 for the fourth quarter of
2018. For the year ended December 31,
2019, CI reported adjusted earnings per share of
$2.41 – also a record for CI. This
compares to $2.38 for the year ended
December 31, 2018. Adjusted earnings
exclude a restructuring provision of $26.6
million ($35.0 million before
taxes) from the second quarter of 2019. With that provision,
reported earnings per share for 2019 were $2.30.
During the quarter, CI's management continued to reduce
discretionary expenses, primarily on the asset management side of
the business. As a result, selling, general and administrative
("SG&A") expenses for the fourth quarter were $113.8 million, down 9% from $124.6 million in the third quarter of 2019 and
8% from $123.5 million in the fourth
quarter of 2018. For the year, SG&A expenses were $489.3 million, down from $512.6 million in 2018.
CI generated $168.3 million in
free cash flow during the quarter ended December 31, 2019, up from $144.7 million in the quarter ended September 30, 2019 and $156.5 million in the quarter ended December 31, 2018. For 2019, CI generated
$603.1 million in free cash flow,
compared with $655.5 million in
2018.
Average assets under management were $130.9 billion for the quarter ended December 31, 2019, up 1% from both comparable
quarters. For the year, average assets under management were
$130.2 billion, down 5% from
$137.2 billion for the prior year. At
December 31, 2019, CI's ending assets
under management were $132.1 billion,
compared with $130.0 billion at
September 30, 2019 and $124.4 billion at December
31, 2018. Assets under advisement were $49.8 billion on December
31, 2019, up 5% when compared with September 30, 2019 and up 19% when compared with
the prior year. CI's assets under advisement include the assets of
Assante Wealth Management (Canada)
Limited, Stonegate Private Counsel, and WealthBar Financial
Services Inc.
CI reported $1.9 billion in
overall net redemptions for the fourth quarter of 2019. CI's
Canadian retail business, excluding products closed to new
investors, had $0.4 billion in net
redemptions, representing an improvement of $1.0 billion over the third quarter of 2019 and
an improvement of $1.9 billion over
the fourth quarter of 2018. CI's Canadian institutional business
had $1.5 billion in net redemptions,
a large proportion of which related to a client that moved assets
to an in-house manager. CI's international business had net sales
of $0.2 billion for the fourth
quarter of 2019, while CI's closed business, comprised primarily of
segregated fund contracts that are no longer available for sale,
had $0.2 billion in net redemptions
for the quarter.
Share repurchases and dividends
In the fourth quarter of 2019, CI repurchased 6.9 million shares
worth $141.5 million and paid
$41.1 million in dividends
($0.18 per share). For the year, CI
repurchased 22.6 million shares worth $447.3
million. For the month of January
2020, CI repurchased a further 1.6 million shares, ending
the month with 220,800,237 shares outstanding.
The Board declared a quarterly dividend of $0.18 per share, payable on July 15, 2020, to shareholders of record on
June 30, 2020. The annual dividend
rate of $0.72 per share represented a
yield of 3.0% on CI's closing share price of $24.36 on February 13,
2020.
Business highlights
- CI reached an agreement in November
2019 to purchase WisdomTree Asset Management Canada, Inc.,
adding 14 ETFs with approximately $1
billion in assets under management to CI's lineup and
boosting total ETF assets to $10
billion. The transaction is scheduled to close later this
month.
- CI First Asset ETFs had assets under management of $8.6 billion at December
31, 2019, representing growth for the year of $4.2 billion or 95%, versus a growth rate of 31%
for the overall Canadian ETF industry.
- CI ended 2019 with record assets under advisement of
$49.8 billion, representing a
year-over-over gain of 19%. This growth reflects strong performance
and positive net sales at Assante and Stonegate, as well as
successful advisor recruitment at Assante and the addition of
WealthBar to the CI group as of January
2019.
- Also in the fourth quarter, CI reached an agreement to acquire
majority interests in two U.S.-based registered investment advisors
(RIAs): Surevest Wealth Management of Phoenix and One Capital Management, LLC of
Westlake Village, California. The
Surevest transaction closed in January and the One Capital
acquisition is expected to close in March.
- CI's other acquisitions and strategic investments during the
fourth quarter included:
-
- The acquisition, through WealthBar, of Snap Projections Inc., a
maker of financial planning software.
- A partnership with d1g1t Inc., a leading fintech firm, in which
CI will adopt d1g1t's platform across its advisory businesses and
make an equity investment of 9.5% in the company.
- The acquisition by Australian subsidiary GSFM Pty Ltd. of a 49%
equity stake in Redpoint Investment Management Pty Ltd., a global
equities manager with approximately A$10
billion in assets under management based in Sydney, Australia.
- In December 2019, CI announced a
partnership with Joseph Coughlin, a
prominent researcher into demographic change and Founder and
Director of the Massachusetts Institute of Technology AgeLab, who
is advising CI on how to better serve aging and retired
clients.
- Following quarter-end:
-
- In January, CI Investments launched ETF versions of its highly
successful liquid alternative mutual funds, which have gathered
over $1.1 billion in assets since
their launch in November 2018.
- On February 6, 2020, CI announced
a sub-advisory relationship with Los
Angeles-based DoubleLine Capital LP, which is led by
Jeffrey Gundlach, a globally
renowned fixed-income manager. The firms are working to develop new
income mandates to add to CI Investments' lineup of mutual funds
and ETFs.
- CI continued to expand its U.S. presence with the signing of
letters of intent to acquire two additional RIA firms.
Analysts' conference call
CI will hold a conference call with analysts today at
9:00 a.m. Eastern Time, led by Chief
Executive Officer Kurt MacAlpine and
Chief Financial Officer Douglas
Jamieson. The call and a slide presentation will be
accessible through a webcast by visiting www.cifinancial.com.
Alternatively, investors may listen to the discussion by dialing
1-800-458-4121 or (647) 484-0477 (Passcode: 5205494). The webcast
will be archived in the Financial Information section of
www.cifinancial.com.
Financial highlights
|
As at and for the
quarters ended
|
Change
(%)
|
[millions of
dollars, except share amounts]
|
Dec. 31,
2019
|
Sep. 30,
2019
|
Dec. 31,
2018
|
QoQ
|
YoY
|
Assets under
management
|
132,130
|
129,998
|
124,360
|
2
|
6
|
Assets under
advisement
|
49,759
|
47,383
|
41,813
|
5
|
19
|
Total
assets
|
181,889
|
177,381
|
166,173
|
3
|
9
|
Average assets under
management
|
130,920
|
129,784
|
129,316
|
1
|
1
|
|
|
|
|
|
|
Management
fees
|
464.4
|
465.6
|
474.2
|
-
|
(2)
|
Total
revenues
|
534.7
|
527.5
|
529.2
|
1
|
1
|
Selling, general
& administrative
|
113.8
|
124.6
|
123.5
|
(9)
|
(8)
|
Trailer
fees
|
145.7
|
146.5
|
149.1
|
(1)
|
(2)
|
Net income
|
147.3
|
138.8
|
140.4
|
6
|
5
|
Basic earnings per
share
|
0.66
|
0.60
|
0.57
|
10
|
16
|
Diluted earnings per
share
|
0.65
|
0.60
|
0.57
|
8
|
14
|
|
|
|
|
|
|
Free cash
flow1
|
168.3
|
144.7
|
156.5
|
16
|
8
|
Return on
equity2
|
37.8%
|
37.6%
|
37.1%
|
|
|
Dividends paid per
share
|
0.18
|
0.18
|
0.18
|
-
|
-
|
Dividend
yield
|
3.3%
|
3.7%
|
4.2%
|
|
|
|
|
|
|
|
|
Average shares
outstanding
|
224,961,509
|
232,140,211
|
246,810,100
|
(3)
|
(9)
|
Share price –
High
|
22.24
|
21.97
|
20.68
|
1
|
8
|
Share price –
Low
|
18.26
|
18.00
|
16.47
|
1
|
11
|
Share price –
Close
|
21.71
|
19.33
|
17.28
|
12
|
26
|
Change in share
price
|
12.3%
|
(9.4%)
|
(15.7%)
|
|
|
Total shareholder
return
|
13.2%
|
(8.6%)
|
(14.9%)
|
|
|
Market
capitalization
|
4,815
|
4,410
|
4,212
|
9
|
14
|
P/E
ratio2
|
9.0
|
8.3
|
7.3
|
8
|
23
|
|
|
|
|
|
|
Long term debt
(including current portion)
|
1,604
|
1,569
|
1,504
|
2
|
7
|
Net
debt1
|
1,383
|
1,341
|
1,255
|
3
|
10
|
Net debt to adjusted
EBITDA1
|
1.56
|
1.62
|
1.51
|
(4)
|
3
|
1Free cash flow, net debt, and
EBITDA are not standardized earnings measures prescribed by IFRS.
Descriptions of these measures, as well as others, and
reconciliations to the nearest IFRS measures, where necessary, are
included in Management's Discussion and Analysis available at
www.cifinancial.com.
|
2Trailing 12 months, calculated
using adjusted net income.
|
For detailed financial statements for the quarter ended
December 31, 2019, including
Management's Discussion and Analysis, which contains discussions of
non-IFRS measures, please refer to CI's website at
www.cifinancial.com under Financial Information, or contact
investorrelations@ci.com.
About CI Financial
CI Financial Corp. (TSX: CIX) is an independent company offering
global asset management and wealth management advisory services.
Its primary operating businesses are CI Investments Inc., Assante
Wealth Management (Canada) Ltd.,
CI Private Counsel LP, GSFM Pty Ltd. of Australia, WealthBar Financial Services Inc.,
and BBS Securities Inc. Further information is available at
www.cifinancial.com.
This press release contains forward-looking statements
concerning anticipated future events, results, circumstances,
performance or expectations with respect to CI Financial Corp.
("CI") and its products and services, including its business
operations, strategy and financial performance and condition.
Forward-looking statements are typically identified by words such
as "believe", "expect", "foresee", "forecast", "anticipate",
"intend", "estimate", "goal", "plan" and "project" and similar
references to future periods, or conditional verbs such as "will",
"may", "should", "could" or "would". These statements are not
historical facts but instead represent management beliefs regarding
future events, many of which by their nature are inherently
uncertain and beyond management's control. Although
management believes that the expectations reflected in such
forward-looking statements are based on reasonable assumptions,
such statements involve risks and uncertainties. The material
factors and assumptions applied in reaching the conclusions
contained in these forward-looking statements include that the
investment fund industry will remain stable and that interest rates
will remain relatively stable. Factors that could cause
actual results to differ materially from expectations include,
among other things, general economic and market conditions,
including interest and foreign exchange rates, global financial
markets, changes in government regulations or in tax laws, industry
competition, technological developments and other factors described
or discussed in CI's disclosure materials filed with applicable
securities regulatory authorities from time to time. The foregoing
list is not exhaustive and the reader is cautioned to consider
these and other factors carefully and not to place undue reliance
on forward-looking statements. Other than as specifically required
by applicable law, CI undertakes no obligation to update or alter
any forward-looking statement after the date on which it is made,
whether to reflect new information, future events or
otherwise.
SOURCE CI Financial Corp.