- EPS of $0.55 for the quarter;
adjusted EPS of $0.58
- Excluding impact from marketable securities, adjusted EPS
was $0.63, compared to $0.64 in Q4 and $0.55 in Q1-2019
- SG&A expenses down $11.1
million or 9% compared to Q1-2019
- Repurchased 5.3 million shares during the quarter at a cost
of $104 million
- Reduced debt outstanding by $119
million since the start of Q2-2020
- Executed against strategic priority of modernizing asset
management by announcing strategic partnerships with DoubleLine and
Adams Street, and closing WisdomTree Canada ETF
acquisition
- Executed against strategic priorities of expanding wealth
management and globalizing our business by announcing strategic
investment in The Cabana Group and closing the Surevest
transaction
- Supporting Canadians struggling during COVID through Be
Well-Advised program and financial donations to support people in
need
TORONTO, May 6, 2020 /CNW/ - CI Financial Corp. ("CI")
(TSX: CIX) today released unaudited financial results for the
quarter ended March 31, 2020.
"CI has successfully transitioned to the current environment due
to our extensive pandemic preparation and early adoption of
measures to protect employees and business partners," said
Kurt MacAlpine, CI Chief Executive
Officer. "Today, over 97% of our employees are working from home
and, after eight weeks, we continue to operate efficiently and
effectively, including achieving high levels of service and
engagement with advisors and clients. I continue to be very
impressed with how well our employees are performing during these
challenging times and I thank them for their hard work and
dedication.
"As a result, we have not paused in the execution of our
strategic priorities and have made significant progress in the
three areas of modernizing our asset management business, expanding
our wealth management platform and globalizing our company," Mr.
MacAlpine said. "This includes closing the acquisition of
WisdomTree Canada's ETF business, the continued growth of our U.S.
RIA business through the purchase of a majority interest in
Surevest and making a strategic investment in The Cabana Group,
along with establishing relationships with DoubleLine Capital and
Adams Street Partners that will result in compelling and innovative
new products for the CI lineup.
"In addition to these important developments, we are moving
ahead on a number of projects to enhance our operations across the
company in areas that include sales, marketing and investment
management," Mr. MacAlpine said.
"On the financial side of the business, our results benefited
from outstanding cost discipline, where we reduced our selling,
general and administrative expenses by $11.1
million or 9% compared to the same quarter a year ago, while
continuing to invest in our strategic growth initiatives."
Financial results
CI reported quarterly adjusted earnings per share of
$0.58 for the first quarter of 2020,
compared to $0.66 for the fourth
quarter of 2019 and $0.58 for the
first quarter of 2019. Adjusted earnings exclude a restructuring
provision of $6.2 million
($8.5 million before taxes) in the
first quarter of 2020. Adjusted net income for the quarter ended
March 31, 2020 included a
$12.6 million unrealized loss on the
value of investments ($11.0 million
after-tax), compared to a gain of $3.0
million ($2.6 million
after-tax) in the fourth quarter of 2019 and a gain of $8.4 million ($7.3
million after-tax) in the first quarter of 2019. Excluding
gains and losses on investments, CI's adjusted earnings per share
were $0.63 for the quarter ended
March 31, 2020, $0.64 per share for the quarter ended
December 31, 2019, and $0.55 per share for the quarter ended
March 31, 2019.
Selling, general and administrative ("SG&A") expenses for
the first quarter of $115.0 million,
which includes SG&A increases associated with closing Surevest
LLC and WisdomTree Canada, were up 1% from $113.8 million in the fourth quarter of 2019 and
down 9% from $126.1 million in the
first quarter of 2019.
CI generated $143.7 million in
free cash flow during the quarter ended March 31, 2020, down from $168.3 million in the quarter ended December 31, 2019 and up from $143.5 million in the quarter ended March 31, 2019. Free cash flow for the quarter
ended December 31, 2019 included a
$12.3 million reversal of deferred
tax expense recoveries. Excluding the reversal, free cash flow was
$156.0 million for the quarter ended
December 31, 2019.
Average assets under management were $127.2 billion for the quarter ended March 31, 2020, down 3% from the quarter ended
December 31, 2019 and down 1% from
the quarter ended March 31, 2019. At
March 31, 2020, CI's ending assets
under management were $111.1 billion,
compared with $131.7 billion at
December 31, 2019 and $130.9 billion at March
31, 2019. Assets under administration were $44.6 billion on March 31,
2020, down 12% when compared with December 31, 2019 and down 4% when compared with
the prior-year quarter-end. CI's assets under administration
include the assets of Assante Wealth Management (Canada) Limited, CI Private Counsel LP,
WealthBar Financial Services Inc., Virtual Brokers, and Surevest
LLC.
CI reported $2.7 billion in
overall net redemptions for the first quarter of 2020. CI's
Canadian retail business, excluding products closed to new
investors, had $1.3 billion in net
redemptions, representing an increase in redemptions of
$0.8 billion over the fourth quarter
of 2019 and an improvement of $0.4
billion over the first quarter of 2019. CI's Canadian
institutional business posted net redemptions of $0.8 billion, representing an improvement of
$0.7 billion from the fourth quarter
of 2019 and an increase of $0.6
billion from the first quarter a year ago. CI's
international business had net redemptions of $0.4 billion for the first quarter of 2020, while
CI's closed business, comprised primarily of segregated fund
contracts that are no longer available for sale, had $0.3 billion in net redemptions for the
quarter.
Capital Allocation
In the first quarter of 2020, CI repurchased 5.3 million shares
at a cost of $104.2 million and paid
$40.0 million in dividends
($0.18 per share). CI did not
repurchase additional shares in the month of April 2020, ending the month with 217,569,337
shares outstanding. During the month of April, CI repaid debt of
$119 million.
The Board declared a quarterly dividend of $0.18 per share, payable on October 15, 2020, to shareholders of record on
September 30, 2020. The annual
dividend rate of $0.72 per share
represented a yield of 5.2% on CI's closing share price of
$13.86 on May
5, 2020.
Business highlights
- During the quarter, CI successfully implemented a pandemic
response plan and technology solutions that allowed the firm, its
companies and affiliated advisors to continue operating at a high
level and providing service to clients. More than 95% of corporate
employees were working from home by mid-March, with CI taking
additional steps to protect employees whose duties require them to
attend our offices.
- CI announced a sub-advisory relationship in February with
DoubleLine Capital LP ("DoubleLine"), one of the world's leading
asset managers and a firm known for its fixed-income expertise.
DoubleLine will manage new income mandates to be offered by CI and
launched as both mutual funds and exchange-traded funds.
- On February 19, CI completed its
acquisition of WisdomTree Asset Management Canada, Inc., adding 14
Toronto Stock Exchange-listed ETFs with approximately $1 billion in assets under management to CI's ETF
lineup.
- CI completed the acquisition of a majority interest in Surevest
LLC, a registered investment advisor (RIA) that offers wealth
management services to high-net-worth investors through offices in
Phoenix and Los Angeles.
- In January, CI Investments received 38 FundGrade A+® Awards,
which are presented annually by Fundata Canada Inc. to acknowledge
Canadian investment funds that have maintained an exceptional
performance rating over the entire previous calendar year. Winning
funds included five CI mutual funds and pools, eight CI First Asset
exchange-traded funds, and 25 segregated funds managed by CI. Of
those segregated funds, 16 invest in underlying CI mutual
funds.
Following quarter-end:
- CI announced a partnership with Adams Street Partners, LLC
("Adams Street"), a leader in private markets investment management
with offices around the world. Adams Street will be developing
investment solutions exclusively for CI that provide Canadian
investors access to private equity and private credit investments
globally.
- CI agreed to make a strategic investment in The Cabana Group
("Cabana") of Fayetteville,
Arkansas, an RIA with US$1.1
billion in assets under management (as of April 17, 2020). Cabana offers its own lineup of
risk-managed portfolios and has an exceptional track record of
growth, being ranked by Financial Advisor magazine as the
fastest-growing RIA in the U.S. in 2018 and the second
fastest-growing in 2019.
- To help Canadians affected by the financial impact of the
pandemic, CI and Assante launched the Be Well-Advised program in
which advisors will donate their time and expertise to provide free
advice to Canadians experiencing financial hardship. In addition,
CI has made donations through the Second Harvest organization,
which assists food-insecure individuals.
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
1-888-208-1711 or (647) 484-0478 (Passcode: 9691157). 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]
|
Mar. 31,
2020
|
Dec. 31,
2019
|
Mar. 31,
2019
|
QoQ
|
YoY
|
Assets under
management
|
111,065
|
131,741
|
130,944
|
(16)
|
(15)
|
Assets under
administration
|
44,611
|
50,505
|
46,393
|
(12)
|
(4)
|
Total
assets
|
155,675
|
182,246
|
177,338
|
(15)
|
(12)
|
Average assets under
management
|
127,163
|
130,542
|
128,521
|
(3)
|
(1)
|
|
|
|
|
|
|
Management
fees
|
422.6
|
447.3
|
442.4
|
(6)
|
(4)
|
Total
revenues
|
499.3
|
534.7
|
526.8
|
(7)
|
(5)
|
Selling, general
& administrative
|
115.0
|
113.8
|
126.1
|
1
|
(9)
|
Trailer
fees
|
130.4
|
138.1
|
136.4
|
(6)
|
(4)
|
Net income
|
119.9
|
147.3
|
140.0
|
(19)
|
(14)
|
Adjusted net
income1
|
126.5
|
147.3
|
140.0
|
(14)
|
(10)
|
Basic earnings per
share
|
0.55
|
0.66
|
0.58
|
(17)
|
(5)
|
Diluted earnings per
share
|
0.54
|
0.65
|
0.58
|
(17)
|
(7)
|
Adjusted earnings per
share1
|
0.58
|
0.66
|
0.58
|
(12)
|
-
|
|
|
|
|
|
|
Free cash
flow1
|
143.7
|
168.3
|
143.5
|
(15)
|
-
|
Return on
equity2
|
36.6%
|
37.8%
|
37.7%
|
|
|
Dividends paid per
share
|
0.18
|
0.18
|
0.18
|
-
|
-
|
Dividend
yield
|
5.2%
|
3.3%
|
3.9%
|
|
|
|
|
|
|
|
|
Average shares
outstanding
|
219,550,908
|
224,961,509
|
241,946,976
|
(2)
|
(9)
|
Share price –
High
|
25.81
|
22.24
|
19.44
|
16
|
33
|
Share price –
Low
|
11.12
|
18.26
|
16.92
|
(39)
|
(34)
|
Share price –
Close
|
13.97
|
21.71
|
18.24
|
(36)
|
(23)
|
Change in share
price
|
(35.7%)
|
12.3%
|
5.6%
|
|
|
Total shareholder
return
|
(34.8%)
|
13.2%
|
6.6%
|
|
|
Market
capitalization
|
3,026
|
4,815
|
4,384
|
(37)
|
(31)
|
P/E
ratio2
|
5.8
|
9.0
|
7.7
|
(36)
|
(25)
|
|
|
|
|
|
|
Long term debt
(including current portion)
|
1,745
|
1,604
|
1,529
|
9
|
14
|
Net
debt1
|
1,464
|
1,383
|
1,268
|
6
|
15
|
Net debt to adjusted
EBITDA1
|
1.86
|
1.56
|
1.50
|
19
|
24
|
|
1Free cash flow, net debt,
adjusted net income, adjusted earnings per
share and adjusted 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
March 31, 2020, 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., WealthBar Financial Services
Inc., BBS Securities Inc. and Surevest LLC. 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.
FundGrade A+® is used with permission from Fundata Canada
Inc., all rights reserved. The annual FundGrade A+® Awards are
presented by Fundata Canada Inc. to recognize the "best of the
best" among Canadian investment funds. The FundGrade A+®
calculation is supplemental to the monthly FundGrade ratings and is
calculated at the end of each calendar year. The FundGrade rating
system evaluates funds based on their risk-adjusted performance,
measured by Sharpe Ratio, Sortino Ratio, and Information Ratio. The
score for each ratio is calculated individually, covering all time
periods from 2 to 10 years. The scores are then weighted equally in
calculating a monthly FundGrade. The top 10% of funds earn an A
Grade; the next 20% of funds earn a B Grade; the next 40% of funds
earn a C Grade; the next 20% of funds receive a D Grade; and the
lowest 10% of funds receive an E Grade. To be eligible, a fund must
have received a FundGrade rating every month in the previous year.
The FundGrade A+® uses a GPA-style calculation, where each monthly
FundGrade from "A" to "E" receives a score from 4 to 0,
respectively. A fund's average score for the year determines its
GPA. Any fund with a GPA of 3.5 or greater is awarded a FundGrade
A+® Award. For more information, see www.FundGradeAwards.com.
Although Fundata makes every effort to ensure the accuracy and
reliability of the data contained herein, the accuracy is not
guaranteed by Fundata.
SOURCE CI Financial Corp.