CI Financial Reports Financial Results for the First Quarter of 2022
CI Financial Corp. (“CI”) (TSX: CIX, NYSE: CIXX) today released financial results for the quarter ended March 31, 2022.
“Achieving these strong results during a period of high economic and market uncertainty demonstrates the strength and resilience of our business model,” said Kurt MacAlpine, CI Chief Executive Officer. “Over the past two-and-a-half years, we have transformed and diversified the company, with wealth management now accounting for over 60% of our assets and U.S. wealth management becoming our largest business line by assets. These changes have made CI a larger, stronger firm and are having an increasingly positive impact on our revenues and earnings each quarter.
“The changes we made to our investment management platform continue to pay off – our investment performance relative to our peers is the highest in years and the redemptions in our mutual fund products were 50% lower than in the first quarter of 2021.”
“In Canadian wealth management, we acquired the country’s leading multi-family office in Northwood Family Office Ltd.” Mr. MacAlpine said. “The common theme in our most recent acquisitions is that they are all high-quality wealth management firms focused on the very attractive ultra-high-net-worth segment.”
“We continue to execute on our strategy and achieved significant milestones in U.S. wealth management during the first quarter. We launched the CI Private Wealth partnership, which will be key to driving the profitable growth of that business, and we reached agreements to acquire three registered investment advisors with more than $21 billion in client assets.
“We continue to take a balanced approach to allocating capital between dividends, share repurchases and debt reduction. During the quarter, we prioritized deleveraging and reduced debt by $246 million while also repurchasing shares and paying our regular dividend.”
Starting this quarter, CI has expanded its segment reporting to three segments and changed its income statement format. As CI’s strategy has rapidly evolved over the past two years, the company has reached a level of scale in its U.S. business that warrants separate disclosures and greater visibility into the performance of the business. CI has also expanded its asset management segment disclosures to provide more insight around the composition of assets under management. While prior periods have been restated to conform with the new presentation format, there is no change to consolidated financial results.
Operating and financial data highlights
FINANCIAL AND OPERATING HIGHLIGHTS
[millions of dollars, except share amounts]
As of and for the quarters ended
Mar. 31, 2022
Dec. 31, 2021
Sep. 30, 2021
Jun. 30, 2021
Mar. 31, 2021
Total AUM and Client Assets:
Asset Management AUM
136,271
144,247
139,380
138,187
132,626
Canada Wealth Management assets
78,957
80,633
76,859
75,521
71,066
U.S. Business assets
145,768
151,339
96,974
83,764
31,013
Total assets
360,996
376,219
313,213
297,472
234,704
Asset Management Net Inflows:
Retail
(861
)
142
684
530
(601
)
Institutional
(264
)
(331
)
(126
)
(360
)
(390
)
Australia
(305
)
82
159
(33
)
46
Closed Business
(203
)
(195
)
(146
)
(194
)
(222
)
U.S. Asset Management
402
260
250
413
284
Total
(1,231
)
(42
)
821
356
(883
)
IFRS Results
Net income
137.5
123.7
45.4
118.4
124.8
Diluted earnings per share
0.70
0.63
0.22
0.58
0.60
Pretax income
185.8
175.1
82.4
166.6
162.2
Pretax margin
29.3
%
28.3
%
15.9
%
31.7
%
31.9
%
Cash flow from operating activities
207.7
179.2
135.2
158.1
177.8
Adjusted Results1
Adjusted net income
166.8
171.0
159.2
153.0
151.6
Adjusted diluted earnings per share
0.85
0.86
0.79
0.74
0.72
Adjusted EBITDA
272.9
277.2
258.1
242.3
236.3
Adjusted EBITDA margin
46.4
%
47.7
%
47.0
%
48.4
%
50.2
%
Free cash flow
201.6
187.1
180.9
164.1
155.6
Average shares outstanding
196,111,771
196,816,227
199,321,002
203,039,536
207,476,125
Ending shares outstanding
192,987,082
197,422,270
197,443,135
201,327,517
203,944,785
Total debt
3,530
3,776
3,408
3,350
2,201
Net debt
3,352
3,453
2,655
2,461
1,856
Net debt to adjusted EBITDA
3.0
3.1
2.6
2.5
1.9
Free cash flow, net debt, adjusted net income, adjusted earnings per share and adjusted EBITDA are not standardized earnings measures prescribed by IFRS. For further information, see “Non-IFRS Measures” note below.
Financial highlights
Net income grew to $137.5 million in the quarter from $123.7 million in the fourth quarter. Excluding non-operating items, adjusted net income declined slightly to $166.8 million in the quarter from $171.0 million in the fourth quarter of 2021 as higher earnings in our U.S. Wealth Management segment due to recent acquisitions were offset by lower earnings primarily from our Asset Management segment.
First quarter total net revenues grew 2.3% to $633.8 million in the quarter from $619.3 million in the fourth quarter of 2021. Excluding non-operating items, adjusted total net revenue increased 3.8% to $622.3 million, primarily driven by higher revenues from our U.S. Wealth Management segment due to recent acquisitions, partly offset by lower management fees from our Asset Management segment due to lower average AUM.
First quarter total expenses increased 1.0% to $448.0 million in the quarter from $444.2 million in the fourth quarter of 2021. Excluding non-operating items, adjusted total expenses increased 5.1% to $384.8 million primarily due to acquisitions in our U.S. Wealth Management segment.
Capital allocation
In the first quarter of 2022, CI repurchased 4.5 million shares at a cost of $92.0 million, for an average cost of $20.21 per share, and paid $35.5 million in dividends at a rate of $0.18 per share. In addition, the company reduced debt by $246 million.
The Board of Directors declared a quarterly dividend of $0.18 per share, payable on October 14, 2022 to shareholders of record on September 30, 2022. The annual dividend rate of $0.72 per share represented a yield of 4.8% on CI’s closing share price of $14.68 on May 11, 2022.
First quarter business highlights
CI Private Wealth US, LLC (“CIPW”) is the entity through which CI holds its interests in its U.S. RIAs. CIPW is structured as a limited liability company in which CI is majority owner. Certain employees of CIPW and its affiliates subscribed for membership interests in the firm which interests were issued effective January 1, 2022. This unique model aligns the interests of all member partners and incentivizes them to collaborate, realize synergies, and drive the profitable growth of the firm as a whole. CI agreed to acquire three U.S. registered investment advisors (“RIAs”) with combined assets of approximately $21.6 billion. They include: Certain assets of Eaton Vance WaterOak Advisors, formerly Eaton Vance Investment Counsel (“EVIC”). The Boston-based EVIC team joining CI acts as advisor on behalf of families, endowments, foundations and other institutions. The transaction is expected to be completed in the fourth quarter of 2022. Corient Capital Partners, LLC, of Newport Beach, California, which serves ultra-high-net-worth individuals and families across the United States. This transaction was completed on April 29, 2022. Galapagos Partners, LP of Houston, a multi-family office serving wealthy families and individuals. This transaction also closed on April 29, 2022. CI agreed to acquire Toronto-based Northwood Family Office Ltd. (“Northwood”), Canada’s leading multi-family office. The transaction was completed on April 1, 2022. Northwood manages and co-ordinates the integrated financial, investment and personal affairs of wealthy Canadian and global families and oversees approximately $2.2 billion of investment assets. In February 2022, Euromoney announced that Northwood has been ranked as the #1 family office in both Canada and North America in the prestigious Euromoney Private Banking and Wealth Management Survey for 2022. CI expanded its capabilities in digital assets with the acquisition of a minority stake in Newton Crypto Ltd., a Canadian crypto asset trading platform. CI Global Asset Management (“CI GAM”) continued to broaden its ETF lineup with the launch of several thematic ETFs: CI Galaxy Multi-Crypto ETF, CI Bio-Revolution ETF and CI Digital Security ETF. CI GAM received securityholder approval for the merger of 21 mutual funds and six exchange-traded funds into other CI GAM investment funds. The mergers, which were implemented on April 8, 2022, were an important step in modernizing CI’s asset management business as they reduced product duplication and simplified the lineup for CI GAM’s advisor and investor clients.Following quarter-end:
CI announced its intention to sell up to 20% of its U.S. wealth management business via a U.S. initial public offering (“IPO”). CI stated that it intends to use the net proceeds from the IPO to pay down debt, and that a final decision on the IPO size, conditions and timing is pending and will be subject to market conditions. CI subsidiary CI Private Wealth US, LLC applied for a charter to establish and operate a South Dakota trust company. Once chartered, the trust company will offer administrative trust solutions through CI’s U.S. wealth management platform. Products introduced by CI GAM included CI Galaxy Blockchain ETF, CI Galaxy Metaverse ETF and CI Floating Rate Income Fund (ETF Series).Analysts’ conference call
CI will hold a conference call with analysts today at 9:00 a.m. EDT, led by Chief Executive Officer Kurt MacAlpine and Chief Financial Officer Amit Muni. A live webcast of the call and slide presentation can be accessed here, or through the Investor Relations section of CI’s website. Alternatively, investors may listen to the discussion through the following numbers (access code: 581835):
Canada toll-free: 1-833-950-0062 United States toll-free: 1-844-200-6205 United States (New York local): 1-646-904-5544. All other locations: 1-929-526-1599.About CI Financial
CI Financial Corp. is an integrated global wealth and asset management company. CI’s primary asset management businesses are CI Global Asset Management (CI Investments Inc.) and GSFM Pty Ltd., and it operates in Canadian wealth management through CI Assante Wealth Management (Assante Wealth Management (Canada) Ltd.), CI Private Counsel LP, Aligned Capital Partners Inc., Northwood Family Office Ltd., CI Direct Investing (WealthBar Financial Services Inc.), and CI Investment Services Inc.
CI’s U.S. wealth management businesses consist of Barrett Asset Management, LLC, Balasa Dinverno Foltz LLC, Bowling Portfolio Management LLC, Brightworth, LLC, BRR OpCo, LLC (Budros, Ruhlin & Roe), The Cabana Group, LLC, Corient Capital Partners, LLC, CPWM, LLC (Columbia Pacific Wealth Management), Congress Wealth Management LLC, Dowling & Yahnke, LLC, Doyle Wealth Management, LLC, Galapagos Partners, LP, Gofen & Glossberg, LLC, Matrix Capital Advisors, LLC, McCutchen Group LLC, OCM Capital Partners, LLC, Portola Partners Group LLC, Radnor Financial Advisors, LLC, RegentAtlantic Capital, LLC, The Roosevelt Investment Group, LLC, RGT Wealth Advisors, LLC, R.H. Bluestein & Co., Segall Bryant & Hamill, LLC, Stavis & Cohen Private Wealth, LLC, and Surevest LLC.
CI is listed on the Toronto Stock Exchange under CIX and on the New York Stock Exchange under CIXX. Further information is available at www.cifinancial.com.
Commissions, trailing commissions, management fees and expenses all may be associated with an investment in mutual funds and exchange-traded funds (ETFs). Please read the prospectus before investing. Important information about mutual funds and ETFs is contained in their respective prospectus. Mutual funds and ETFs are not guaranteed; their values change frequently, and past performance may not be repeated. You will usually pay brokerage fees to your dealer if you purchase or sell units of an ETF on recognized Canadian exchanges. If the units are purchased or sold on these Canadian exchanges, investors may pay more than the current net asset value when buying units of the ETF and may receive less than the current net asset value when selling them.
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 and its intention to conduct an IPO of its US wealth management business. 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 CI will proceed with the IPO, that all outstanding acquisitions will be completed and their asset levels will remain stable, 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, the risk that the IPO may not occur in its expected timeframe or at all, 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.
This communication is provided as a general source of information and should not be considered personal, legal, accounting, tax or investment advice, or construed as an endorsement or recommendation of any entity or security discussed. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies.
CI Global Asset Management is a registered business name of CI Investments Inc.
CONSOLIDATED STATEMENT OF INCOME
For the three-month period ended March 31
[in thousands of Canadian dollars, except per share amounts]
2022
$
2021
$
REVENUE
Canada asset management fees
437,623
425,122
Trailer fees and deferred sales commissions
(135,289
)
(132,700
)
Net asset management fees
302,334
292,422
Canada wealth management fees
138,246
119,570
U.S. wealth management fees
164,479
44,688
Other revenues
21,646
26,684
Foreign exchange gains
11,469
20,201
Other gains (losses)
(4,424
)
4,136
Total net revenues
633,750
507,701
EXPENSES
Selling, general and administrative
259,633
151,889
Advisor and dealer fees
106,908
95,092
Interest and lease finance
35,876
21,322
Amortization and depreciation
11,376
10,029
Amortization of intangible assets from acquisitions
24,083
9,554
Transaction, integration, restructuring and legal settlements
3,800
854
Change in fair value of contingent consideration
3,088
22,209
Other
3,226
34,603
Total expenses
447,990
345,552
Income before income taxes
185,760
162,149
Provision for income taxes
Current
47,741
49,636
Deferred
511
(12,275
)
48,252
37,361
Net income for the period
137,508
124,788
Net income (loss) attributable to non-controlling interests
(639
)
613
Net income attributable to shareholders
138,147
124,175
Basic earnings per share attributable to shareholders
$
0.70
$
0.60
Diluted earnings per share attributable to shareholders
$
0.70
$
0.59
Other comprehensive loss, net of tax
Exchange differences on translation of foreign operations
(6,721
)
(15,953
)
Total other comprehensive loss, net of tax
(6,721
)
(15,953
)
Comprehensive income for the period
130,787
108,835
Comprehensive income (loss) attributable to non-controlling interests
(1,052
)
294
Comprehensive income attributable to shareholders
131,839
108,541
CONSOLIDATED BALANCE SHEET
[in thousands of Canadian dollars]
As at
March 31, 2022
$
As at
December 31, 2021
$
ASSETS
Current
Cash and cash equivalents
186,051
230,779
Client and trust funds on deposit
1,347,616
1,199,904
Investments
35,311
131,772
Accounts receivable and prepaid expenses
275,167
272,962
Income taxes receivable
3,607
3,607
Total current assets
1,847,752
1,839,024
Capital assets, net
52,676
52,596
Right-of-use assets
136,827
142,606
Intangibles
6,113,366
6,185,237
Deferred income taxes
60,162
56,901
Other assets
452,646
383,187
Total assets
8,663,429
8,659,551
LIABILITIES AND EQUITY
Current
Accounts payable and accrued liabilities
303,990
369,081
Current portion of provisions and other financial liabilities
293,951
572,432
Redeemable non-controlling interests
564,064
—
Dividends payable
69,475
71,072
Client and trust funds payable
1,363,874
1,202,079
Income taxes payable
13,621
19,035
Current portion of long-term debt
225,268
444,486
Current portion of lease liabilities
19,617
20,216
Total current liabilities
2,853,860
2,698,401
Long-term debt
3,304,702
3,331,552
Provisions and other financial liabilities
246,998
379,641
Deferred income taxes
478,849
480,777
Lease liabilities
148,253
153,540
Total liabilities
7,032,662
7,043,911
Equity
Share capital
1,777,507
1,810,153
Contributed surplus
31,018
28,368
Deficit
(172,743
)
(226,715
)
Accumulated other comprehensive loss
(29,352
)
(23,289
)
Total equity attributable to the shareholders of the Company
1,606,430
1,588,517
Non-controlling interests
24,337
27,123
Total equity
1,630,767
1,615,640
Total liabilities and equity
8,663,429
8,659,551
STATEMENT OF CASH FLOWS
[in thousands of Canadian dollars]
2022
$
2021
$
OPERATING ACTIVITIES (*)
Net income for the period
137,508
124,788
Add (deduct) items not involving cash
Other gains (losses)
4,424
(4,214
)
Change in fair value of contingent consideration
3,088
22,209
Contingent consideration recorded as compensation
18,210
—
Recognition of vesting of redeemable non-controlling interests
3,926
—
Equity-based compensation
4,536
3,008
Amortization and depreciation
35,459
19,583
Deferred income taxes
511
(12,275
)
Loss on repurchases of long-term debt
—
24,708
Cash provided by operating activities before net change in operating assets and liabilities
207,662
177,807
Net change in operating assets and liabilities
(52,856
)
11,869
Cash provided by operating activities
154,806
189,676
INVESTING ACTIVITIES
Purchase of investments
(30
)
(104
)
Proceeds on sale of investments
94,659
—
Additions to capital assets
(3,311
)
(1,881
)
Increase in other assets
2,148
1,905
Additions to intangibles
(1,564
)
(3,615
)
Cash paid to settle acquisition liabilities
(18,288
)
—
Acquisitions, net of cash acquired
(5,729
)
(2,314
)
Cash provided by (used in) investing activities
67,885
(6,009
)
FINANCING ACTIVITIES
Repayment of long-term debt
(297,500
)
(549,695
)
Issuance of long-term debt
80,000
331,836
Repurchase of long-term debt
—
(45,953
)
Repurchase of share capital
(91,038
)
(112,744
)
Payment of lease liabilities
(5,210
)
(3,934
)
Redeemable non-controlling interest
83,330
—
Net distributions to non-controlling interests
(1,489
)
(512
)
Dividends paid to shareholders
(35,511
)
(37,869
)
Cash used by financing activities
(267,418
)
(418,871
)
Net decrease in cash and cash equivalents during the period
(44,727
)
(235,204
)
Cash and cash equivalents, beginning of period
230,778
483,598
Cash and cash equivalents, end of period
186,051
248,394
(*) Included in operating activities are the following:
Interest paid
9,665
18,983
Income taxes paid
52,277
44,855
ASSETS UNDER MANAGEMENT AND NET FLOWS
[billions of dollars]
Quarters ended
Mar. 31, 2022
Dec. 31, 2021
Sep. 30, 2021
Jun. 30, 2021
Mar. 31, 2021
Beginning AUM
144.2
139.4
138.2
132.6
129.6
Gross inflows
4.9
5.2
5.1
6.1
5.7
Gross outflows
6.6
5.5
4.5
6.1
6.9
Net inflows/(outflows)
(1.6
)
(0.3
)
0.6
(0.1
)
(1.2
)
Acquisitions
—
—
—
0.2
—
Market move and FX
(6.3
)
5.2
0.6
5.5
4.2
Ending AUM
136.3
144.2
139.4
138.2
132.6
Proprietary AUM
34.5
36.2
34.7
34.5
32.7
Non-proprietary AUM
101.8
108.0
104.7
103.7
99.9
Average assets under management
138.2
143.0
141.1
135.9
131.6
Annualized organic growth
(4.6
) %
(0.9
) %
1.6
%
(0.2
) %
(3.7
) %
Gross management fee/average AUM
1.30
%
1.30
%
1.31
%
1.31
%
1.32
%
Net management fee/average AUM
0.88
%
0.88
%
0.88
%
0.88
%
0.89
%
Net Inflows
Retail
(0.9
)
0.1
0.7
0.5
(0.6
)
Institutional
(0.3
)
(0.3
)
(0.1
)
(0.4
)
(0.4
)
Closed business
(0.2
)
(0.2
)
(0.1
)
(0.2
)
(0.2
)
Total Canada net inflows
(1.3
)
(0.4
)
0.4
—
(1.2
)
Australia
(0.3
)
0.1
0.2
—
—
Total net inflows/(outflows)
(1.6
)
(0.3
)
0.6
(0.1
)
(1.2
)
RETAIL (ex Closed Business)
[billions of dollars]
Quarters ended
Mar. 31, 2022
Dec. 31, 2021
Sep. 30, 2021
Jun. 30, 2021
Mar. 31, 2021
Beginning AUM
114.6
110.4
109.1
103.9
95.1
Net Flows
(0.9
)
0.1
0.7
0.5
(0.6
)
Market Move / FX
(5.3
)
4.1
0.6
4.5
9.4
Acquisitions
___
___
0.2
___
___
Ending AUM
108.4
114.6
110.4
109.1
103.9
Average AUM
109.6
113.8
111.8
106.8
102.8
INSTITUTIONAL
[billions of dollars]
Quarters ended
Mar. 31, 2022
Dec. 31, 2021
Sep. 30, 2021
Jun. 30, 2021
Mar. 31, 2021
Beginning AUM
13.3
13.0
13.0
12.7
12.6
Net Flows
(0.3
)
0.3
(0.1
)
(0.4
)
(0.4
)
Market Move / FX
(0.3
)
0.6
0.1
0.7
0.5
Acquisitions
___
___
___
___
___
Ending AUM
12.7
13.3
13.0
13.0
12.7
Average AUM
12.9
13.2
13.3
13.0
12.8
AUSTRALIA
[billions of dollars]
Quarters ended
Mar. 31, 2022
Dec. 31, 2021
Sep. 30, 2021
Jun. 30, 2021
Mar. 31, 2021
Beginning AUM
7.3
7.0
6.9
7.1
7.0
Net Flows
(0.3
)
0.1
0.1
(0.0
)
0.0
Market Move / FX
(0.4
)
0.2
0.0
(0.2
)
0.1
Acquisitions
___
___
___
___
___
Ending AUM
6.6
7.3
7.0
6.9
7.1
Average AUM
7.0
7.1
7.0
7.1
7.1
CLOSED BUSINESS
[billions of dollars]
Quarters ended
Mar. 31, 2022
Dec. 31, 2021
Sep. 30, 2021
Jun. 30, 2021
Mar. 31, 2021
Beginning AUM
9.1
9.0
9.1
8.9
8.9
Net Flows
(0.2
)
(0.2
)
(0.2
)
(0.2
)
(0.2
)
Market Move / FX
(0.3
)
0.3
(0.0
)
0.4
0.3
Acquisitions
___
___
___
___
___
Ending AUM
8.6
9.1
8.9
9.1
8.9
Average AUM
8.7
9.0
9.0
9.0
8.9
AUM BY ASSET CLASS
[billions of dollars]
Quarters ended
Mar. 31, 2022
Dec. 31, 2021
Sep. 30, 2021
Jun. 30, 2021
Mar. 31, 2021
Balanced
59.4
62.1
60.3
60.3
58.5
Equity
49.3
52.3
50.1
49.8
46.9
Fixed income
13.1
14.2
14.1
13.9
13.3
Alternatives
4.9
5.7
5.0
4.3
3.6
Cash/Other
3.0
2.7
2.8
2.9
3.2
Total Canada asset management
129.7
137.0
132.4
131.3
125.5
Australia
6.6
7.3
7.0
6.9
7.1
Total asset management segment
136.3
144.2
139.4
138.2
132.6
CANADA WEALTH MANAGEMENT CLIENT ASSETS
[billions of dollars]
Quarters ended
Mar. 31, 2022
Dec. 31, 2021
Sep. 30, 2021
Jun. 30, 2021
Mar. 31, 2021
Beginning client assets
80.6
76.9
75.5
71.1
67.3
Acquisitions
—
—
—
—
—
Net flows and market move
(1.7
)
3.8
1.3
4.5
3.8
Ending client assets
79.0
80.6
76.9
75.5
71.1
Average client assets
79.0
78.9
77.0
73.1
68.8
Wealth management fees/average client assets
0.95
%
0.93
%
0.94
%
0.91
%
0.97
%
U.S. WEALTH MANAGEMENT CLIENT ASSETS
[billions of dollars]
Quarters ended
Mar. 31, 2022
Dec. 31, 2021
Sep. 30, 2021
Jun. 30, 2021
Mar. 31, 2021
Beginning billable client assets
146.4
96.1
82.9
30.7
29.0
Acquisitions
1.1
49.3
10.1
49.5
0.0
Net flows and market move
(6.3
)
1.0
3.1
2.7
1.7
Ending billable client assets
141.2
146.4
96.1
82.9
30.7
Unbillable client assets
4.6
4.9
0.9
0.8
0.4
Total client assets
145.8
151.3
97.0
83.8
31.0
Fees/beginning billable client assets1
0.46
%
0.50
%
0.52
%
0.71
%
0.63
%
12Q/21 adjusted for the timing of Segall Bryant & Hamill acquisition
NON-IFRS MEASURES
In an effort to provide additional information regarding our results as determined by IFRS, we also disclose certain non-IFRS information which we believe provides useful and meaningful information. Our management reviews these non-IFRS financial measurements when evaluating our financial performance and results of operations; therefore, we believe it is useful to provide information with respect to these non-IFRS measurements so as to share this perspective of management. Non-IFRS measurements do not have any standardized meaning, do not replace nor are superior to IFRS financial measurements and may not be comparable to similar measures presented by other companies. The non-IFRS financial measurements include:
Adjusted net income and adjusted basic and diluted earnings per share Adjusted EBITDA and adjusted EBITDA margin Free cash flow Net debt.These non-IFRS measurements exclude the following revenues and expenses which we believe allows investors a consistent way to analyze our financial performance, allows for better analysis of core operating income and business trends and permits comparisons of companies within the industry, normalizing for different financing methods and levels of taxation:
gains or losses related to foreign currency fluctuations on our cash balances costs related to our acquisitions including: amortization of intangible assets change in fair value of contingent consideration related advisory fees contingent consideration classified as compensation per IFRS restructuring charges including organizational expenses for the establishment of CIPW legal provisions for a class action related to market timing certain gains or losses in assets and investments costs related to issuing or retiring debt obligations expenses associated with CIPW redeemable units.Further explanations of these Non-IFRS measures can be found in the “Non-IFRS Measures” section of Management’s Discussion and Analysis dated May 12, 2022 available on SEDAR at www.sedar.com or at www.cifinancial.com.
ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE
[millions of dollars, except per share amounts]
Quarters ended
Mar. 31, 2022
Dec. 31, 2021
Mar. 31, 2021
Net Income
137.5
123.7
124.8
Amortization of intangible assets from acquisitions
24.1
18.7
9.9
Change in fair value of contingent consideration
3.1
43.9
22.2
Contingent consideration recorded as compensation
—
2.1
—
CIPW adjustments
32.2
—
—
FX (gains)/losses
(11.5
)
(3.1
)
(20.2
)
Transaction, integration, restructuring and legal
3.8
13.6
0.8
Other (gains)/losses
—
(16.8
)
7.1
Bond redemption costs
—
—
24.7
Total adjustments1
51.7
58.4
44.5
Tax effect of adjustments
(11.5
)
(11.1
)
(17.0
)
Less: Non-controlling interest
10.9
—
0.7
Adjusted net income
166.8
171.0
151.6
Adjusted earnings per share
0.85
0.87
0.73
Adjusted diluted earnings per share
0.85
0.86
0.72
1Adjustment effects on income statement line items: bond redemption costs are included in other expense, CIPW adjustments and contingent consideration recorded as compensation are included in SG&A, amortization of intangible assets from acquisitions, change in fair value of contingent consideration, FX (gains)/losses, other (gains)/losses, and bond redemption costs are included in the line items of the same description.
EBITDA, ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
[millions of dollars, except per share amounts]
Quarters ended
Mar. 31, 2022
Dec. 31, 2021
Mar. 31, 2021
Pretax income
185.8
175.1
162.2
Amortization of intangible assets from acquisitions
24.1
18.7
9.9
Depreciation and other amortization
11.4
10.9
10.0
Interest and lease finance expense
35.9
32.5
21.3
EBITDA
257.1
237.2
203.4
Change in fair value of contingent consideration
3.1
43.9
22.2
Contingent consideration recorded as compensation
18.2
2.1
—
CIPW adjustments
3.9
—
—
FX (gains)/losses
(11.5
)
(3.1
)
(20.2
)
Transaction, integration, restructuring and legal
3.8
13.6
0.8
Other (gains)/losses
—
(16.8
)
7.1
Bond redemption costs
—
—
24.7
Total adjustments
17.5
39.6
34.6
Non-controlling interest
1.8
(0.4
)
1.7
Adjusted EBITDA
272.9
277.2
236.3
Reported net revenue
633.8
619.3
507.7
Less: FX gains/(losses)
11.5
3.1
20.2
Less: Non-Operating Other gains/(losses)
—
16.8
—
Less: NCI revenues
34.5
17.9
17.0
Adjusted net revenue
587.8
581.5
470.5
Adjusted EBITDA margin
46.4
%
47.7
%
50.2
%
FREE CASH FLOW
[millions of dollars]
Quarters ended
Mar. 31, 2022
Dec. 31, 2021
Mar. 31, 2021
Cash provided by operating activities
154.8
163.7
189.7
Net change in operating assets and liabilities
52.9
15.5
(11.8
)
Operating cash flow before the change in operating assets and liabilities
207.7
179.2
177.8
FX (gains)/losses
(11.5
)
(3.1
)
(20.2
)
Transaction, integration, restructuring and legal
3.8
13.6
0.8
Other (gains)/losses
—
—
7.1
Total adjustments
(7.7
)
10.5
(12.3
)
Tax effect (recovery) of adjustments
1.2
(2.6
)
(8.3
)
Less: Non-controlling interest
(0.4
)
—
1.7
Free cash flow
201.6
187.1
155.6
NET DEBT
Quarters ended
[millions of dollars]
Mar. 31, 2022
Dec. 31, 2021
Sep. 30, 2021
Jun. 30, 2021
Mar. 31, 2021
Current portion of long-term debt
225.3
444.5
74.2
—
—
Long-term debt
3,304.7
3,331.6
3,350.2
3,350.2
2,200.9
3,530.0
3,776.0
3,408.4
3,350.2
2,200.9
Less:
Cash and short-term investments
186.1
230.8
653.9
801.3
248.4
Marketable securities
20.4
116.9
122.5
121.1
122.0
Add:
Regulatory capital and non-controlling interests
28.8
25.0
23.1
33.4
25.9
Net Debt
3,352.3
3,453.4
2,655.1
2,461.2
1,856.4
Adjusted EBITDA
272.9
277.2
258.1
242.3
236.3
Adjusted EBITDA, annualized
1,106.8
1,099.8
1,024.1
971.9
958.3
Gross leverage (Gross debt/Annualized adjusted EBITDA)
3.2
3.4
3.3
3.4
2.3
Net leverage (Net debt/Annualized adjusted EBITDA)
3.0
3.1
2.6
2.5
1.9
SUMMARY OF QUARTERLY RESULTS
[millions of dollars, except per share amounts]
IFRS Results
Adjusted Results
For the quarters ended
For the quarters ended
Mar.
31,
2022
Dec.
31,
2021
Sep.
30,
2021
Jun.
30,
2021
Mar.
31,
2021
Mar.
31,
2022
Dec.
31,
2021
Sep.
30,
2021
Jun.
30,
2021
Mar.
31,
2021
Revenues
Asset management fees
437.6
464.9
460.9
441.1
425.1
437.6
464.9
460.9
441.1
425.1
Trailer fees and deferred sales commissions
(135.3
)
(143.6
)
(143.4
)
(137.7
)
(132.7
)
(135.3
)
(143.6
)
(143.4
)
(137.7
)
(132.7
)
Net asset management fees
302.3
321.3
317.5
303.5
292.4
302.3
321.3
317.5
303.5
292.4
Canada wealth management fees
138.2
134.9
132.5
119.9
119.6
138.2
134.9
132.5
119.9
119.6
U.S. wealth management fees
164.5
120.9
108.1
71.4
44.7
164.5
120.9
108.1
71.4
44.7
Other revenues
21.6
27.3
11.2
18.0
26.7
21.6
27.3
11.2
18.0
26.7
FX gains/(losses)
11.5
3.1
(50.3
)
8.2
20.2
—
—
—
—
—
Other gains/(losses)
(4.4
)
11.9
(1.1
)
3.8
4.1
(4.4
)
(4.9
)
(1.1
)
2.5
11.2
Total net revenues
633.8
619.3
517.9
524.7
507.7
622.3
599.4
568.2
515.2
494.6
Expenses
Selling, general & administrative
259.6
214.6
201.9
173.9
151.9
241.4
212.5
197.7
173.0
151.9
Advisor and dealer fees
106.9
104.8
103.4
93.4
95.1
106.9
104.8
103.4
93.4
95.1
Other
3.2
5.7
6.5
5.3
34.6
(10.8
)
5.7
6.5
5.0
9.9
Interest and lease finance expense
35.9
32.5
31.6
24.2
21.3
35.9
32.5
31.6
24.2
21.3
Depreciation and other amortization
11.4
10.9
10.3
9.7
10.0
11.4
10.4
10.0
9.4
9.7
Amortization of intangible assets from acquisitions
24.1
18.2
16.4
11.7
9.6
—
—
—
—
—
Transaction, integration, restructuring and legal
3.8
13.6
3.9
17.5
0.8
—
—
—
—
—
Change in fair value of contingent consideration
3.1
43.9
61.4
22.4
22.2
—
—
—
—
—
Total expenses
448.0
444.2
435.5
358.2
345.6
384.8
365.9
349.2
305.1
287.9
Pretax income
185.8
175.1
82.4
166.6
162.2
237.5
233.4
219.0
210.1
206.7
Income tax expense
48.3
51.3
37.0
48.2
37.4
59.7
62.5
58.1
56.4
54.3
Net income
137.5
123.7
45.4
118.4
124.8
177.8
171.0
160.9
153.8
152.4
Non-controlling interest
(0.6
)
—
1.6
0.8
0.6
10.9
—
1.6
0.8
0.7
Net income attributable to shareholders
138.1
123.7
43.8
117.6
124.2
166.8
171.0
159.2
153.0
151.6
Basic earnings per share
0.70
0.63
0.22
0.58
0.60
0.85
0.87
0.80
0.75
0.73
Diluted earnings per share
0.70
0.62
0.22
0.57
0.59
0.85
0.86
0.79
0.74
0.72
RESULTS OF OPERATIONS - ASSET MANAGEMENT SEGMENT
[millions of dollars, except per share amounts]
IFRS Results
Adjusted Results
For the quarters ended
For the quarters ended
Mar.
31,
2022
Dec.
31,
2021
Sep.
30,
2021
Jun.
30,
2021
Mar.
31,
2021
Mar.
31,
2022
Dec.
31,
2021
Sep.
30,
2021
Jun.
30,
2021
Mar.
31,
2021
Revenues
Asset management fees
442.5
469.6
465.6
445.5
429.2
442.5
469.6
465.6
445.5
429.2
Trailer fees and deferred sales commissions
(143.9
)
(152.6
)
(152.4
)
(146.3
)
(141.1
)
(143.9
)
(152.6
)
(152.4
)
(146.3
)
(141.1
)
Net asset management fees
298.6
316.9
313.2
299.3
288.2
298.6
316.9
313.2
299.3
288.2
Other revenues
10.2
19.9
3.2
12.2
20.8
10.2
19.9
3.2
12.2
20.8
FX gains/(losses)
11.4
(1.4
)
(19.0
)
1.2
8.2
—
—
—
—
—
Other gains/(losses)
(4.4
)
12.0
(1.1
)
3.8
4.2
(4.4
)
(4.8
)
(1.1
)
2.5
4.2
Total net revenues
315.8
347.5
296.3
316.5
321.4
304.4
332.1
315.3
313.9
313.2
Expenses
Selling, general & administrative
96.8
108.7
109.6
104.9
102.8
96.8
108.7
109.6
104.9
102.8
Other
—
(0.5
)
1.6
0.2
0.3
—
(0.5
)
1.6
0.2
0.3
Interest and lease finance expense
1.0
0.5
0.5
0.6
0.6
1.0
0.5
0.5
0.6
0.6
Depreciation and other amortization
5.0
5.6
5.5
5.5
6.7
5.0
5.6
5.5
5.5
6.7
Amortization of intangible assets from acquisitions
0.6
0.6
0.6
0.6
0.5
—
—
—
—
—
Transaction, integration, restructuring and legal
(0.9
)
10.4
0.4
14.6
0.1
—
—
—
—
—
Change in fair value of contingent consideration
4.0
14.2
1.9
10.0
—
—
—
—
—
—
Total expenses
106.5
139.4
120.2
136.4
111.1
102.8
114.2
117.2
111.1
110.4
Pretax income
209.3
208.0
176.1
180.1
210.3
201.6
217.9
198.1
202.8
202.8
Non-IFRS adjustments
Pretax income
209.3
208.0
176.1
180.1
210.3
201.6
217.9
198.1
202.8
202.8
Amortization of intangible assets from acquisitions
0.6
0.6
0.6
0.6
0.5
—
—
—
—
—
Depreciation and other amortization
5.0
5.6
5.5
5.5
6.7
5.0
5.6
5.5
5.5
6.7
Interest and lease finance expense
1.0
0.5
0.5
0.6
0.6
1.0
0.5
0.5
0.6
0.6
EBITDA
215.9
214.7
182.7
186.7
218.1
207.6
223.9
204.1
208.8
210.0
Change in fair value of contingent consideration
4.0
14.2
1.9
10.0
—
—
—
—
—
—
FX (gains)/losses
(11.4
)
1.4
19.0
(1.2
)
(8.2
)
—
—
—
—
—
Transaction, integration, restructuring and legal
(0.9
)
10.4
0.4
14.6
0.1
—
—
—
—
—
Other (gains)/losses
—
(16.8
)
—
(1.4
)
—
—
—
—
—
—
Total adjustments
(8.3
)
9.2
21.4
22.1
(8.1
)
—
—
—
—
—
Less: Non-controlling interest
0.4
0.1
0.5
0.2
—
0.4
0.1
0.5
0.2
—
Adjusted EBITDA
207.2
223.8
203.6
208.6
210.0
207.2
223.8
203.6
208.6
210.0
RESULTS OF OPERATIONS - CANADA WEALTH MANAGEMENT SEGMENT
[millions of dollars, except per share amounts]
IFRS Results
Adjusted Results
For the quarters ended
For the quarters ended
Mar.
31,
2022
Dec.
31,
2021
Sep.
30,
2021
Jun.
30,
2021
Mar.
31,
2021
Mar.
31,
2022
Dec.
31,
2021
Sep.
30,
2021
Jun.
30,
2021
Mar.
31,
2021
Revenues
Canada wealth management fees
185.7
184.3
181.7
166.5
164.4
185.7
184.3
181.7
166.5
164.4
Other revenues
17.1
16.0
14.8
13.9
13.9
17.1
16.0
14.8
13.9
13.9
FX gains/(losses)
0.1
0.8
0.7
0.7
1.2
—
—
—
—
—
Other gains/(losses)
—
(0.1
)
—
—
—
—
(0.1
)
—
—
—
Total net revenues
202.9
201.1
197.2
181.1
179.5
202.8
200.3
196.5
180.4
178.3
Expenses
Selling, general & administrative
41.4
39.9
37.8
35.7
34.6
41.4
39.9
37.8
35.7
34.6
Advisor and dealer fees
145.6
145.2
143.5
131.3
131.4
145.6
145.2
143.5
131.3
131.4
Other
2.9
3.2
1.8
1.3
8.5
2.9
3.2
1.8
1.3
1.4
Interest and lease finance expense
0.2
0.2
0.2
0.1
0.1
0.2
0.2
0.2
0.1
0.1
Depreciation and other amortization
2.5
2.3
2.4
2.5
2.4
2.5
2.3
2.4
2.5
2.4
Amortization of intangible assets from acquisitions
1.6
1.5
1.7
1.3
1.0
—
—
—
—
—
Transaction, integration, restructuring and legal
0.8
0.1
0.1
—
0.5
—
—
—
—
—
Change in fair value of contingent consideration
—
—
—
—
—
—
—
—
—
—
Total expenses
195.0
192.6
187.5
172.3
178.4
192.6
191.0
185.7
171.0
169.8
Pretax income
7.9
8.5
9.7
8.8
1.1
10.2
9.3
10.8
9.5
8.5
Non-IFRS adjustments
Pretax income
7.9
8.5
9.7
8.8
1.1
10.2
9.3
10.8
9.5
8.5
Amortization of intangible assets from acquisitions
1.6
1.6
1.8
1.4
1.1
—
0.1
0.1
0.1
0.1
Depreciation and other amortization
2.5
2.3
2.4
2.5
2.4
2.5
2.3
2.4
2.5
2.4
Interest and lease finance expense
0.2
0.2
0.2
0.1
0.1
0.2
0.2
0.2
0.1
0.1
EBITDA
12.1
12.6
14.0
12.8
4.6
12.9
11.9
13.5
12.2
11.0
FX (gains)/losses
(0.1
)
(0.8
)
(0.7
)
(0.7
)
(1.2
)
—
—
—
—
—
Transaction, integration, restructuring and legal
0.8
0.1
0.1
—
0.5
—
—
—
—
—
Other (gains)/losses
—
—
—
—
7.1
—
—
—
—
—
Total adjustments
0.8
(0.7
)
(0.6
)
(0.6
)
6.4
—
—
—
—
—
Less: Non-controlling interest
—
(1.5
)
0.7
0.5
0.3
—
(1.5
)
0.7
0.5
0.3
Adjusted EBITDA
12.9
13.5
12.8
11.6
10.7
12.9
13.5
12.8
11.6
10.7
RESULTS OF OPERATIONS - U.S. WEALTH MANAGEMENT SEGMENT
[millions of dollars, except per share amounts]
IFRS Results
Adjusted Results
For the quarters ended
For the quarters ended
Mar.
31,
2022
Dec.
31,
2021
Sep.
30,
2021
Jun.
30,
2021
Mar.
31,
2021
Mar.
31,
2022
Dec.
31,
2021
Sep.
30,
2021
Jun.
30,
2021
Mar.
31,
2021
Revenues
U.S. wealth management fees
164.5
120.9
108.1
71.4
44.7
164.5
120.9
108.1
71.4
44.7
Other revenues
4.8
1.3
2.6
0.9
0.5
4.8
1.3
2.6
0.9
0.5
FX gains/(losses)
—
3.7
(31.9
)
6.3
10.7
Other gains/(losses)
—
—
—
—
(0.1
)
—
—
—
—
(0.1
)
Total net revenues
169.2
125.9
78.8
78.6
55.9
169.2
122.2
110.7
72.3
45.2
Expenses
Selling, general & administrative
136.9
80.8
68.8
46.9
27.3
114.8
78.7
64.6
46.0
27.3
Advisor and dealer fees
—
—
—
—
—
—
—
—
—
—
Other
0.4
2.9
3.1
3.5
1.1
0.4
2.9
3.1
3.5
1.1
Interest and lease finance expense
0.5
0.4
0.4
0.2
0.1
0.5
0.4
0.4
0.2
0.1
Depreciation and other amortization
3.9
3.1
2.5
1.7
1.0
3.9
3.1
2.5
1.7
1.0
Amortization of intangible assets from acquisitions
21.9
16.1
14.1
9.8
8.0
Transaction, integration, restructuring and legal
3.9
3.1
3.4
2.9
0.2
Change in fair value of contingent consideration
(0.9
)
29.7
59.5
12.4
22.2
—
—
—
—
—
Total expenses
166.5
136.1
151.7
77.4
59.9
119.6
85.2
70.5
51.4
29.5
Pretax income
2.7
(10.2
)
(72.9
)
1.2
(4.0
)
49.7
37.0
40.2
20.9
15.7
Non-IFRS adjustments
Pretax income
2.7
(10.2
)
(72.9
)
1.2
(4.0
)
49.7
37.0
40.2
20.9
15.7
Amortization of intangible assets from acquisitions
21.9
16.5
14.4
10.1
8.3
—
0.5
0.3
0.3
0.3
Depreciation and other amortization
3.9
3.1
2.5
1.7
1.0
3.9
3.1
2.5
1.7
1.0
Interest and lease finance expense
0.5
0.4
0.4
0.2
0.1
0.5
0.4
0.4
0.2
0.1
EBITDA
29.1
9.9
(55.6
)
13.2
5.4
54.1
41.0
43.4
23.1
17.0
Change in fair value of contingent consideration
(0.9
)
29.7
59.5
12.4
22.2
—
—
—
—
—
Contingent consideration recorded as compensation
18.2
2.1
4.2
0.9
—
—
—
—
—
—
CIPW adjustments
3.9
—
—
—
—
—
—
—
—
—
FX (gains)/losses
—
(3.7
)
31.9
(6.3
)
(10.7
)
—
—
—
—
—
Transaction, integration, restructuring and legal
3.9
3.1
3.4
2.9
0.2
—
—
—
—
—
Total adjustments
25.0
31.1
99.0
9.9
11.6
—
—
—
—
—
Less: Non-controlling interest
1.3
1.0
1.7
1.0
1.4
1.3
1.0
1.7
1.0
1.4
Adjusted EBITDA
52.8
40.0
41.7
22.1
15.6
52.8
40.0
41.7
22.1
15.6
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