Excluding significant items, first quarter earnings per
common share of $0.23
(1)
La version
française du présent communiqué sera déposée sur SEDAR. / A
French-language version of this communication will be made
available on SEDAR
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TORONTO, Ontario, Aug. 6, 2019 /CNW/ - Canaccord Genuity Group Inc.
(Canaccord Genuity Group, the Company, TSX: CF) today announced its
financial results for the first fiscal quarter, ended June 30, 2019.
"We delivered a solid first quarter result and a positive start
to our 2020 fiscal year," said Dan
Daviau, President & CEO, Canaccord Genuity Group Inc.
"We continued to demonstrate improving stability across businesses
and geographies, as we invested into our core strengths and took
steps to deliver improving returns for our shareholders."
First fiscal quarter highlights:
(All dollar
amounts are stated in thousands of Canadian dollars unless
otherwise indicated)
- Quarterly revenue of $325.5
million, a first quarter record
- Revenue from higher-margin advisory activities reached
highest level in three years
- Excluding significant items1, 57% of diluted
earnings per share contributed by global wealth management
operations
- Total client assets of $67.6
billion in global wealth management business, increased 2.1%
from a year ago
- Quarterly dividend increased to $0.05 per common share
- Subsequent to the end of the fiscal quarter, initiated a
Substantial Issuer Bid pursuant to which the Company will offer to
repurchase for cancellation up to $40.0
million of its common shares
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Three months ended
June 30
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Year-over-year
change
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Three months
ended March 31
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Quarter-over-
quarter change
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Q1/20
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Q1/19
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Q4/19
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Revenue
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$325,508
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$274,123
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18.7%
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$284,808
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14.3%
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First fiscal
quarter highlights- adjusted1
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Expenses - excluding
significant items1
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$286,978
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$244,774
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17.2%
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$262,587
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9.3%
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Earnings per common
share – diluted,
excluding significant items1
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$0.23
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$0.19
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21.1%
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$0.12
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91.7%
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Net Income -
excluding significant items1
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$30,654
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$25,035
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22.4%
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$16,610
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84.6%
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Net Income
attributable to common
shareholders – excluding significant items1,3
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$28,218
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$21,651
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30.3%
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$14,466
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95.1%
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First fiscal
quarter highlights- IFRS
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Expenses
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$294,156
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$252,241
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16.6%
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$279,265
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5.3%
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Earnings per common
share – diluted
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$0.18
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$0.14
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28.6%
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$0.00
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n.m.
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Net
Income2
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$24,290
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$18,649
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30.2%
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$2,456
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n.m.
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Net Income
attributable to common
shareholders,3
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$21,854
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$15,265
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43.2%
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$312
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n.m.
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1. Figures excluding
significant items are non-IFRS measures. See Non-IFRS measures on
page 6 of the MD&A
2. Before non-controlling interests and preferred share
dividends
3. Net income attributable to common shareholders is calculated as
the net income adjusted for non-controlling interests and preferred
share dividends
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___________________________________
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1 Figures
excluding significant items are non-IFRS measures. See Non-IFRS
measures on page 6 of the MD&A
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Core business performance highlights:
Canaccord Genuity Wealth Management
The Company's combined global wealth management operations
earned revenue of $129.7 million for
the first fiscal quarter, a year-over-year increase of 15.2%.
Excluding significant items, the pre-tax net income contribution
from this segment improved by 24.5% year-over-year to $23.3 million.
- Wealth management operations in the UK & Europe generated $71.9
million in revenue and, after intersegment allocations, and
excluding significant items1, recorded net income of
$14.0 million before taxes in
Q1/20
- Canaccord Genuity Wealth Management (North America) generated $57.8 million in revenue and, after intersegment
allocations and before taxes, recorded net income of $9.3 million in Q1/20
Revenue in the Company's North American wealth management
business increased by 23.6% year-over-year, reflecting increased
transactional activities and continued asset growth in connection
with Investment Advisor recruiting activities. Notably the pre-tax
profit margin in this business improved to 16.0% for the
three-month period, as non-compensation expenses returned to a more
normalized level. In the UK & Europe, first quarter revenue increased by
9.3% compared to the same period one year ago, primarily due to
higher commissions and fees revenue, and contributions from the
Thomas Miller Wealth Management Limited ("Thomas Miller") and McCarthy Taylor Ltd.
("McCarthy Taylor") acquisitions.
Total client assets in the Company's global wealth management
businesses at the end of the first fiscal quarter amounted to
$67.6 billion.
- Client assets in North America
were $21.2 billion as at June 30, 2019, an increase of 2.7% from
$20.7 billion at the end of the
previous quarter and an increase of 12.2% from $18.9 billion at June 30,
2018
- Client assets in the UK & Europe were $45.6
billion (£27.4 billion) as at June
30, 2019, an increase of 3.1% from $44.2 billion (£25.4 billion) at the end of the
previous quarter and a decrease of 1.9% from $46.4 billion (£26.9 billion) at June 30, 2018. New client assets of approximately
$1.5 billion from the previously
announced acquisition of Thomas
Miller are reflected in the results for Canaccord Genuity
Wealth Management in the UK & Europe.
Canaccord Genuity Capital Markets
Excluding significant items1, this segment
contributed pre-tax net income of $20.4
million for the quarter, an improvement of 55.2% compared to
the same period in the previous fiscal year. Globally, Canaccord
Genuity Capital Markets earned first fiscal quarter revenue of
$190.0 million, an increase of 21.7%
compared to the same period a year ago.
- Canaccord Genuity Capital Markets led or co-led 51 investment
banking transactions globally, raising total proceeds of
C$3.7 billion during fiscal
Q1/20.
- Canaccord Genuity Capital Markets participated in 109
investment banking transactions globally, raising total proceeds of
C$12.7 billion during fiscal
Q1/20.
During the three-month period, revenue earned from investment
banking and advisory fees increased by 21.9% and 117.0%
respectively, compared to the same period last year, with the
largest contributions coming from the Company's Canadian and U.S.
operations. Canaccord Genuity Capital Markets was the leading
equities underwriter in Canada for
the first six months of calendar 2019 based on league table data
provided by FP Infomart. Canaccord Genuity's U.S. capital markets
business earned record quarterly revenue which included a 231%
increase in advisory revenue reflecting organic growth and
contributions from the Petsky Prunier acquisition. The UK &
Europe capital markets operation
operated close to a break-even level, a result of lower overall
expenses following the recent restructuring, in addition to
increased activity levels, most notably in the corporate broking
and advisory segments. Revenue and net income in the Company's
Australian capital markets business were lower on a year-over-year
basis but increased substantially when compared to Q4/19, as
activity levels improved.
Summary of Corporate Developments:
On May 1, 2019, the Company
announced its completion of the acquisition of Thomas Miller Wealth
Management Limited and the private client investment
management business of Thomas Miller Investment (Isle of Man) Limited.
On June 5, 2019 the Company's
Board of Directors implemented a new dividend policy pursuant to
which the Company intends to pay a quarterly dividend of at least
$0.05 per share, subject to
conditions described in the Management Discussions and Analysis
("MD&A"). This development reflects the increasing stability in
the Company's wealth management business and its expected growth
profile.
On June 10, 2019 the Company,
through its Australian operations, announced an agreement to
acquire Patersons Securities Limited, a premier Australian
financial services business, with operations in wealth management
and capital markets. This acquisition will substantially
increase the Company's wealth management business in the region and
establishes a significant platform for expansion in
Australia. The acquisition is expected to be completed during
the quarter ended December 31, 2019
which will be the third quarter of Canaccord Genuity Group's 2020
fiscal year.
On June 28, 2019 the Company
announced that its board of directors of the Company has authorized
the initiation of a substantial issuer bid (the "Offer") pursuant
to which the Company will offer to repurchase for cancellation up
to $40.0 million of its common shares
(the "Common Shares").
On July 3, 2019 the Company
announced the commencement and terms of its Substantial Issuer
Bid. The Offer is being made by way of a "modified Dutch
auction", which will allow shareholders who choose to participate
in the Offer to individually select the price, within a range of
not less than $5.50 per Common Share
and not more than $6.30 per Common
Share (in increments of $0.10 per
Common Share), at which they are willing to sell their Common
Shares. Details of the Offer, including instructions for
tendering Common Shares, are included in the formal offer to
purchase and issuer bid circular, letter of transmittal and notice
of guaranteed delivery (collectively, the "Offer Documents"). The
Offer will expire on August 9, 2019
unless extended or withdrawn.
Results for the first quarter of fiscal 2020 were
impacted by the following significant items:
- Amortization of intangible assets acquired in connection with
business combinations as well as acquisition-related costs for
Thomas Miller and Petsky
Prunier
- Certain incentive-based costs related to the acquisition of
Hargreave Hale
Summary of results for Q1 fiscal 2020 and selected financial
information excluding significant items1
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(C$ thousands, except
per share and % amounts)
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Three months ended
June 30
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Year-over-year
change
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2019
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2018
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Total revenue per
IFRS
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$325,508
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$274,123
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18.7%
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Total expenses per
IFRS
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$294,156
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$252,241
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16.6%
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Revenue
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Total revenue
excluding significant items
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$325,508
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$274,123
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18.7%
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Expenses
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Significant items
recorded in Canaccord Genuity Capital Markets
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Amortization of
intangible assets
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$2,471
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$579
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326.8%
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Restructuring
costs
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-
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$1,316
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-100%
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Acquisition- related
costs
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$177
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$1,173
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-84.9%
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Significant items
recorded in Canaccord Genuity Wealth Management
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Amortization of
intangible assets
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$3,043
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$2,856
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6.5%
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Acquisition-related
costs
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$335
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n.m
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Incentive-based costs
related to acquisition
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$1,152
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$1,543
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-25.3%
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Total significant
items
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$7,178
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$7,467
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-3.9%
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Total revenue
excluding significant items
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$325,508
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$274,123
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18.7%
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Total expenses
excluding significant items
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$286,978
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$244,774
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17.2%
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Net income before
taxes – adjusted
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$38,530
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$29,349
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31.3%
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Income taxes –
adjusted
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$7,876
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$4,314
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82.6%
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Net income -
adjusted
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$30,654
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$25,035
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22.4%
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Net income
attributable to common shareholders, adjusted
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$28,218
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$21,651
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30.3%
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1Figures
excluding significant items are non-IFRS measures. See Non-IFRS
measures in page 6 of the MD&A
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Financial condition at the end of first quarter fiscal 2020
vs. fourth quarter of fiscal 2019
- Cash and cash equivalents balance of $585.5 million, a decrease of $235.2 million from $820.7
million
- Working capital of $547.2
million, a decrease of $76.0
million from $623.2
million
- Total shareholders' equity of $839.7
million, a decrease of $36.7
million from $876.4
million
Common and Preferred Share Dividends:
On August 6, 2019, the Board of
Directors approved a dividend of $0.05 per common share, payable on September 10, 2019, with a record date of
August 30, 2019.
On August 6, 2019, the Board
approved a cash dividend of $0.24281 per Series A Preferred Share
payable on September 30, 2019 to
Series A Preferred shareholders of record as at September 13, 2019.
On August 6, 2019, the Board
approved a cash dividend of $0.31206
per Series C Preferred Share payable on September 30, 2019 to Series C Preferred
shareholders of record as at September 13,
2019.
ACCESS TO QUARTERLY RESULTS INFORMATION
Interested investors, the media and others may review this
quarterly earnings release and supplementary financial information
at
www.canaccordgenuity.com/investor-relations/investor-resources/financial-reports/
CONFERENCE CALL AND WEBCAST PRESENTATION
Interested
parties are invited to listen to Canaccord Genuity's first quarter
fiscal 2020 results conference call via live webcast or a toll-free
number. The conference call is scheduled for Wednesday August 7 at 8:00
a.m. Eastern time. During the call, senior executives will
comment on the results and respond to questions from analysts and
institutional investors.
The conference call may be accessed live and archived on a
listen-only basis at:
www.canaccordgenuity.com/investor-relations/news-and-events/conference-calls-and-webcasts/
Analysts and institutional investors can call in via telephone
at 647-427-7450 (within Toronto),
1-888-231-8191 (toll free outside Toronto), 0-800-051-7107 (toll free from the
United Kingdom), 0-800-91-7449
(toll free from France),
10-800-714-1191 (toll free from Northern
China), 10-800-140-1195 (toll free from Southern China), 1-800-287-011 (toll free from
Australia), 800-017-8071 (toll
free from United Arab
Emirates).
Please ask to participate in the Canaccord Genuity Group Inc.
Q1/20 results call. If a passcode is requested, please use
1558515.
A replay of the conference call will be made available from
approximately two hours after the live call on August 7, 2019, until October 7, 2019 at 416-849-0833 or 1-855-859-2056
by entering passcode 1558515.
ABOUT CANACCORD GENUITY GROUP INC.:
Through its principal subsidiaries, Canaccord Genuity Group Inc.
(the Company) is a leading independent, full-service financial
services firm, with operations in two principal segments of the
securities industry: wealth management and capital markets. Since
its establishment in 1950, the Company has been driven by an
unwavering commitment to building lasting client relationships. We
achieve this by generating value for our individual, institutional
and corporate clients through comprehensive investment solutions,
brokerage services and investment banking services. The Company has
wealth management offices located in Canada, Australia, the UK, Guernsey, Jersey, and the Isle of Man. Canaccord Genuity Capital
Markets, the international capital markets division, operates in
North America, UK &
Europe, Asia, Australia and the Middle East.
Canaccord Genuity Group Inc. is publicly traded under the symbol
CF on the TSX. Canaccord Genuity Series A Preferred Shares are
listed on the TSX under the symbol CF.PR.A. Canaccord Genuity
Series C Preferred Shares are listed on the TSX under the symbol
CF.PR.C. The Company's 6.25% Convertible Unsecured Senior
Subordinated Debentures are listed on the TSX under the symbol
CF.DA.A.
None of the
information on the Company's websites at www.canaccordgenuity.com
should be considered incorporated herein by
reference.
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Investor and media relations inquiries: Christina Marinoff, Vice President, Investor
Relations and Communications, Phone: 416-687-5507, Email:
cmarinoff@cgf.com, www.canaccordgenuity.com/investor-relations