CI Financial Reports Financial Results for the Second Quarter of 2023
CI Financial Corp. (“CI”) (TSX: CIX) today released financial results for the quarter ended June 30, 2023.
“The second quarter was marked by several significant accomplishments across our business lines,” said Kurt MacAlpine, CI Chief Executive Officer.
“Our U.S. wealth management segment reported exceptional results, with year-over-year adjusted EBITDA1 growth of 42% for the first half of the year. Organic growth continued to be strong, with robust net flows. These results reflect the outstanding quality of the business and the progress we have made in integrating our acquired firms and leveraging our size and scale to enhance our capabilities and services.
“We continue to build on that success, acquiring three RIA firms in the past three months, adding approximately $14.2 billion in assets,” Mr. MacAlpine said. “Earlier this month, we rebranded CI Private Wealth as Corient, giving us a unified brand that better reflects our integrated, national platform and our unique vision for growth.
“The U.S. investment and the sale of our minority stake in Congress Wealth Management delivered a total of $1.5 billion in cash to CI. We repaid $1 billion in debt in the quarter, meeting our goal of materially deleveraging the company, and returned another $229 million to shareholders by buying back 17 million shares, at an average cost per share of $13.51.
“Our Canadian wealth management business reached a milestone in July with the successful conversion of Aligned Capital client assets to the CI Investment Services’ custody platform,” Mr. MacAlpine said. “This accomplishment, the culmination of 18 months of work, boosted CI Investment Services’ custody assets to $25 billion and represents an important step in the development of an industry-leading, integrated Canadian wealth management platform. Additionally, our Canadian advisory businesses continue to attract strong flows, a testament to the expertise and value provided by our advisor teams.”
In the Asset Management segment, CI’s Canadian retail business had slightly positive net sales in the second quarter, representing the fourth consecutive quarter of net sales and a contrast to net redemptions of $4.7 billion for the overall Canadian industry, as reported by the Investment Funds Institute of Canada. For the first half of the year, Canadian retail had net sales of $0.8 billion, while the Asset Management segment had net sales of $0.3 million.
Operating and financial data highlights
[millions of dollars, except share amounts]
As of and for the quarters ended
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Total AUM and Client Assets:
Asset Management AUM2
122,377
121,987
117,753
114,196
116,065
Canada Wealth Management assets
82,566
81,592
77,421
73,976
74,128
U.S. Wealth Management assets3
193,980
187,481
180,579
149,841
143,520
Total assets
398,923
391,060
375,753
338,014
333,712
Asset Management Net Inflows:
Retail
7
841
1,621
640
(381)
Institutional
(14)
(177)
(195)
(21)
(3,203)
Australia
55
(81)
12
(377)
(122)
Closed Business
(174)
(195)
(169)
(129)
(160)
Total Asset Management Segment
(126)
388
1,269
113
(3,866)
U.S. Asset Management4
(266)
(67)
595
(38)
(195)
IFRS Results
Net income attributable to shareholders
51.0
30.0
(9.5)
14.9
156.2
Diluted earnings per share
0.28
0.16
(0.05)
0.08
0.81
Pretax income
112.5
54.8
33.6
37.8
219.0
Pretax margin
14.5%
8.6 %
5.4 %
7.4 %
38.6 %
Operating cash flow before the change in operating
126.9
145.6
150.9
64.8
141.2
assets and liabilities
Adjusted Results
Adjusted net income
136.0
136.8
135.9
135.9
149.1
Adjusted diluted earnings per share
0.76
0.74
0.74
0.73
0.78
Adjusted EBITDA
272.3
268.6
257.7
250.9
260.5
Adjusted EBITDA margin
40.6 %
42.0 %
42.1 %
42.7 %
43.5 %
Adjusted EBITDA attributable to shareholders
245.3
250.1
242.7
237.5
251.0
Free cash flow
143.3
155.1
157.9
151.5
176.4
Average shares outstanding
179,640,506
184,517,832
183,666,579
185,601,752
191,151,896
Ending shares outstanding
167,640,863
184,517,832
184,517,832
183,526,499
189,037,762
Total debt
3,132
4,190
4,216
3,949
3,688
Net debt
2,887
4,052
4,059
3,730
3,538
Net debt to adjusted EBITDA
2.9
4.0
4.2
4.0
3.5
1. Free cash flow, net debt, adjusted net income, adjusted earnings per share, adjusted EBITDA, adjusted net revenues and adjusted expenses are not standardized earnings measures prescribed by IFRS. For further information, see “Non-IFRS Measures” note below.2. Includes assets managed by CI and held by clients of advisors with Assante, CIPC, Aligned Capital of $32.8 billion, $33.0 billion, $31.9 billion, $30.4 billion, $30.8 billion as at June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022, and June 30, 2022, respectively.
3. Quarter-end USD/CAD exchange rates of 1.3248, 1.3515, 1.3540, 1.3813, 1.2872 for Q2-23, Q1-23, Q4-22, Q3-22, and Q2-22, respectively. 4. Includes 100% of inflows from CI’s minority investments in Columbia Pacific Advisors, OCM Capital Partners, The Cabana Group, and GLASfunds Holdings.Financial highlights
Second quarter net income was $51.0 million compared to $30.0 million in the first quarter of 2023. Excluding non-operating items, adjusted net income1 was $136.0 million in the second quarter, little changed from the first quarter.
Second quarter total net revenues increased 21.7% to $776.1 million in the quarter from $637.8 million in the first quarter of 2023. Excluding non-operating items, adjusted total net revenues1 grew 2.3% to $654.8 million, driven by growth in the U.S. Wealth Management segment due to acquisitions during the quarter, as well as from the Canadian Wealth Management segment due to higher average assets. Asset Management segment revenues were essentially unchanged as higher average AUM was offset by fee rate decline due to Asset mix shift.
First quarter total expenses increased 13.8% to $663.6 million in the quarter from $583.0 million in the first quarter of 2023. Excluding non-operating items, adjusted total expenses1 were up 1.9% to $439.9 million, reflecting higher SG due to U.S. segment acquisitions during the quarter as well as higher stock-based compensation.
Capital allocation
In the second quarter of 2023, CI repurchased 17.0 million shares at a cost of $228.8 million, for an average cost of $13.51 per share, and paid $32.9 million in dividends at a rate of $0.18 per share.
CI completed tender offers for three series of debentures, repurchasing $234,775,000 of its outstanding 3.215% Debentures due 2024, $370,762,000 of its outstanding 3.759% Debentures due 2025 and $97,531,000 of its outstanding 3.904% Debentures due 2027. CI also completely paid down its credit facility.
Dividend increase
The Board of Directors declared a $0.02 increase to its quarterly dividend to $0.20 per share, payable on January 15, 2024 to shareholders of record on December 29, 2023.
Second quarter business highlights
CI completed the sale of a 20% minority investment in its U.S. wealth management business to a diversified group of leading institutional investors, including a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA), Bain Capital, Flexpoint Ford, Ares Management funds, the State of Wisconsin, and others for proceeds of approximately $1.34 billion (US$1.0 billion). CI completed the acquisitions of two U.S. registered investment advisor (“RIA”) firms with combined assets of approximately $11.9 billion. The firms were Avalon Advisors, LLC of Houston, and La Ferla Group, LLC, which is based in Garden City, New York, and has offices in Bethesda, Maryland, and Macon, Georgia. CI sold its minority stake in Boston-based Congress Wealth Management, LLC (“Congress”) to Audax Private Equity. CI first invested in Congress in the third quarter of 2020. CI’s U.S. subsidiary, now known as Corient, launched a South Dakota trust company, allowing it to offer a variety of corporate trustee services to clients across the country. CI Global Asset Management enhanced its product lineup with the launch of the CI Asset Allocation ETFs, a suite of six low-cost all-in-one portfolio solutions. The ETFs leverage CI GAM’s professional management and deep expertise in Asset allocation to provide portfolios meeting a range of investor profiles. CI GAM also continued to expand its alternatives offerings with the introduction of mutual fund series for CI Auspice Broad Commodity Fund, a liquid alternative fund previously available only as an ETF.Following quarter-end:
CI Private Wealth (U.S.) rebranded as Corient, which represents “client oriented” and expresses its commitment to helping clients achieve their financial goals. The new brand better reflects Corient’s capabilities as national integrated wealth management firm and clarifies for clients that they benefit from the expertise of the firm’s entire network. Corient now serves as the brand for all of the company’s offices, as it has discontinued co-branding with its legacy firm names. Corient is the trade name for Corient Private Wealth LLC. CI acquired Intercontinental Wealth Advisors, LLC, in July 2023. The firm, with approximately $2.3 billion in client assets, is based in San Antonio, Texas and has an office in Ft. Lauderdale, Florida. The firm provides comprehensive wealth management services to high-net-worth and ultra-high-net-worth clients and has developed expertise in serving those with international financial interests. CI reached an agreement to acquire Coriel Capital Inc. (“Coriel”), a Montreal-based wealth management firm serving ultra-high-net-worth Canadians. The firm, founded and led by women, operates as a “Chief Investment Officer” for wealthy families, and manages approximately $1.3 billion in client assets. The assets held by clients of Aligned Capital Partners were converted to the CI Investment Services (“CIIS”) custody and clearing platform. As a result, CIIS now administers over $25 billion in client assets. CI GAM implemented a series of changes to simplify and strengthen the competitiveness of its lineup of money market funds, including launching two money market ETFs.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: 861639):
Canada toll-free: 1-833-950-0062 United States toll-free: 1-833-470-1428 All other locations: 1-929-526-1599.A recording of the webcast will be archived on CI’s Investor Relations site.
About CI Financial
CI Financial Corp. is a diversified global asset and wealth management company operating primarily in Canada, the United States and Australia. Founded in 1965, CI has developed world-class portfolio management talent, extensive capabilities in all aspects of wealth planning, and a comprehensive product suite.
CI operates in three segments:
Asset Management, which includes CI Global Asset Management, which operates in Canada, and GSFM Pty Ltd., which operates in Australia. Canadian Wealth Management, which includes the operations of CI Assante Wealth Management, Aligned Capital Partners, CI Private Wealth (Canada), Northwood Family Office, CI Direct Investing and CI Investment Services. U.S. Wealth Management, which includes Corient Private Wealth, an integrated wealth management firm providing comprehensive solutions to ultra-high-net-worth and high-net-worth clients across the United States.CI is headquartered in Toronto and listed on the Toronto Stock Exchange (TSX: CIX). To learn more, visit CI’s website or LinkedIn page.
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. 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 the forward-looking statements include that the acquisition of Coriel will be completed and that asset levels will remain stable. 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 June 30
2023
2022
[in thousands of Canadian dollars, except per share amounts]
$
$
REVENUE
Canada asset management fees
375,835
404,279
Trailer fees and deferred sales commissions
(114,874)
(123,952)
Net asset management fees
260,961
280,327
Canada wealth management fees
144,092
130,103
U.S. wealth management fees
216,759
168,949
Other revenues
31,326
21,210
Foreign exchange gains (losses)
36,462
(32,864)
Other gains (losses)
86,483
(1,069)
Total net revenues
776,083
566,656
EXPENSES
Selling, general and administrative
345,904
238,039
Advisor and dealer fees
108,175
99,711
Interest and lease finance
46,137
36,235
Amortization and depreciation
13,330
11,909
Amortization of intangible assets from acquisitions
33,077
27,436
Transaction, integration, restructuring and legal
55,783
4,587
Change in fair value of contingent consideration
15,249
(74,977)
Change in fair value of preferred equity
35,000
—
Other
10,949
4,712
Total expenses
663,604
347,652
112,479
219,004
Provision for (recovery of) income taxes
Current
65,149
46,835
Deferred
(4,048)
13,901
61,101
60,736
Net income for the period
51,378
158,268
Net income attributable to non-controlling interests
425
2,057
Net income attributable to shareholders
50,953
156,211
Basic earnings per share attributable to shareholders
$0.28
$0.82
Diluted earnings per share attributable to shareholders
$0.28
$0.81
Other comprehensive income (loss), net of tax
Exchange differences on translation of foreign operations
(23,530)
17,662
Total other comprehensive income (loss), net of tax
(23,530)
17,662
Comprehensive income for the period
27,848
175,930
Comprehensive income attributable to non-controlling interests
58
2,996
Comprehensive income attributable to shareholders
27,790
172,934
CONSOLIDATED BALANCE SHEET
As at
As at
June 30, 2023
December 31, 2022
[in thousands of Canadian dollars]
$
$
ASSETS
Current
Cash and cash equivalents
240,496
153,620
Client and trust funds on deposit
1,067,714
1,306,595
Investments
37,701
40,448
Accounts receivable and prepaid expenses
359,795
298,778
Income taxes receivable
18,536
33,989
Total current assets
1,724,242
1,833,430
Capital assets, net
64,802
55,587
Right-of-use assets
132,643
139,422
Intangibles
7,454,253
7,227,700
Deferred income taxes
70,382
54,415
Other assets
309,840
397,804
Total assets
9,756,162
9,708,358
LIABILITIES AND EQUITY
Current
Accounts payable and accrued liabilities
330,027
293,246
Current portion of provisions and other financial liabilities
633,208
502,746
Dividends payable
60,351
66,426
Client and trust funds payable
1,073,918
1,312,640
Income taxes payable
16,064
3,044
CIPW unit liabilities
940,948
765,959
Preferred equity
1,359,750
—
Current portion of long-term debt
—
320,000
Current portion of lease liabilities
22,627
23,994
Total current liabilities
4,436,893
3,288,055
Long-term debt
3,131,528
3,896,214
Provisions and other financial liabilities
161,572
270,567
Deferred income taxes
481,669
480,500
Lease liabilities
149,482
149,360
Total liabilities
8,361,144
8,084,696
Share capital
1,551,851
1,706,880
Contributed surplus
37,203
30,239
Deficit
(213,059)
(160,572)
Accumulated other comprehensive income
7,226
33,224
Total equity attributable to the shareholders of the Company
1,383,221
1,609,771
Non-controlling interests
11,797
13,891
Total equity
1,395,018
1,623,662
Total liabilities and equity
9,756,162
9,708,358
CONSOLIDATED STATEMENT OF CASH FLOWS
For the three-month period ended June 30
2023
2022
[in thousands of Canadian dollars]
$
$
OPERATING ACTIVITIES (*)
Net income for the period
51,378
158,268
Add (deduct) items not involving cash
Other gains (losses)
(86,483)
1,069
Change in fair value of contingent consideration
15,249
(74,977)
Change in fair value of preferred equity
35,000
—
Contingent consideration recorded as compensation
812
670
Amortization of loan guarantees
(1,762)
—
Recognition of non-cash vesting of CIPW unit liabilities
63,096
(3,420)
Equity-based compensation
6,889
6,325
(996)
—
Amortization of equity accounted investments
1,404
—
Amortization and depreciation
13,330
11,909
Amortization of intangible assets from acquisitions
33,077
27,436
Deferred income taxes
(4,048)
13,901
Cash provided by operating activities before net change in operating assets and liabilities
126,946
141,181
Net change in operating assets and liabilities
14,979
22,929
Cash provided by operating activities
141,925
164,110
INVESTING ACTIVITIES
Cash paid to settle acquisition liabilities
(170,508)
(38,626)
Acquisitions, net of cash acquired
(41,557)
(155,828)
Proceeds on sale of equity-accounted investment
130,458
—
Purchase of investments
(172)
(78)
Proceeds on sale of investments
22
71
Additions to capital assets
(6,910)
(5,553)
Decrease (increase) in other assets
(14,870)
13,287
Additions to intangibles
(4,533)
(2,713)
Cash used in investing activities
(108,070)
(189,440)
FINANCING ACTIVITIES
Repayment of long-term debt
(298,000)
—
Issuance of long-term debt
—
85,000
Repurchase of long-term debt
(694,671)
—
Repurchase of share capital
(228,774)
(59,248)
Payment of lease liabilities
(6,352)
(5,110)
Issuance of CIPW unit liabilities, net of redemptions
(18,187)
—
Net distributions to non-controlling interest
(1,750)
(1,348)
Dividends paid to shareholders
(32,895)
(34,748)
Issuance of preferred equity
1,350,300
—
Cash provided by (used in) financing activities
69,671
(15,454)
Net increase (decrease) in cash and cash equivalents during the period
103,526
(40,784)
Cash and cash equivalents, beginning of period
136,970
186,051
Cash and cash equivalents, end of period
240,496
145,267
SUPPLEMENTAL CASH FLOW INFORMATION
(*) Included in operating activities are the following:
Interest paid
73,899
55,574
Income taxes paid
33,909
54,951
ASSETS UNDER MANAGEMENT AND NET FLOWS
[billions of dollars]
Quarters ended
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Beginning AUM
122.0
117.8
114.2
116.1
136.3
Gross inflows
6.1
6.9
7.3
4.9
4.8
Gross outflows
(6.2)
(6.5)
(6.0)
(4.8)
(8.7)
Net inflows/(outflows)
(0.1)
0.4
1.3
0.1
(3.9)
Acquisitions
—
—
—
—
—
Market move and FX
0.5
3.8
2.3
(2.0)
(16.3)
Ending AUM
122.4
122.0
117.8
114.2
116.1
Proprietary AUM
32.8
33.0
31.9
30.4
30.8
Non-proprietary AUM
89.6
89.0
85.9
83.7
85.2
Average assets under management
122.1
121.9
117.7
119.1
125.4
Annualized organic growth
(0.4) %
1.3 %
4.4 %
0.4 %
(11.4) %
Gross management fee/average AUM
1.25 %
1.27 %
1.29 %
1.30 %
1.31 %
Net management fee/average AUM
0.85 %
0.86 %
0.87 %
0.88 %
0.89 %
Net Inflows/(Outflows)
Retail
—
0.8
1.6
0.6
(0.4)
Institutional
—
(0.2)
(0.2)
—
(3.2)
Closed business
(0.2)
(0.2)
(0.2)
(0.1)
(0.2)
Total Canada net inflows/(outflows)
(0.2)
0.5
1.3
0.5
(3.7)
Australia
0.1
(0.1)
—
(0.4)
(0.1)
Total net inflows/(outflows)
(0.1)
0.4
1.3
0.1
(3.9)
RETAIL (ex Closed Business)
[billions of dollars]
Quarters ended
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Beginning AUM
101.2
97.1
94.0
95.1
108.4
Net Flows
0.0
0.8
1.6
0.6
(0.4)
Market Move / FX
0.5
3.3
1.5
(1.7)
(12.9)
Acquisitions
___
___
___
___
___
Ending AUM
101.7
101.2
97.1
94.0
95.1
Average AUM
101.3
100.9
97.0
97.9
101.4
INSTITUTIONAL
[billions of dollars]
Quarters ended
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Beginning AUM
8.5
8.3
8.3
8.4
12.7
Net Flows
(0.0)
(0.2)
(0.2)
0.0
(3.2)
Market Move / FX
0.0
0.4
0.2
(0.1)
(1.1)
Acquisitions
___
___
___
___
___
Ending AUM
8.5
8.5
8.3
8.3
8.4
Average AUM
8.5
8.5
8.4
8.6
10.2
AUSTRALIA
[billions of dollars]
Quarters ended
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Beginning AUM
4.9
5.0
4.7
5.1
6.6
Net Flows
0.1
(0.1)
0.0
(0.4)
(0.1)
Market Move / FX
0.0
0.0
0.3
0.0
(1.4)
Acquisitions
___
___
___
___
___
Ending AUM
5.0
4.9
5.0
4.7
5.1
Average AUM
5.0
5.0
4.8
4.9
5.8
CLOSED BUSINESS
[billions of dollars]
Quarters ended
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Beginning AUM
7.4
7.3
7.3
7.5
8.6
Net Flows
(0.2)
(0.2)
(0.2)
(0.1)
(0.2)
Market Move / FX
0.0
0..3
0.2
(0.1)
(0.9)
Acquisitions
___
___
___
___
___
Ending AUM
7.2
7.4
7.3
7.3
7.5
Average AUM
7.3
7.5
7.4
7.6
8.0
AUM BY ASSET CLASS
[billions of dollars]
Quarters ended
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Balanced
49.8
50.8
50.3
49.8
50.9
43.0
43.3
41.6
40.2
41.4
Fixed income
11.1
11.3
11.0
11.2
11.7
Alternatives
5.1
4.0
3.6
3.8
3.6
Cash/Other
8.4
7.7
6.2
4.5
3.4
Total Canada asset management
117.4
117.1
112.8
109.5
111.0
Australia
5.0
4.9
5.0
4.7
5.1
Total asset management segment
122.4
122.0
117.8
114.2
116.1
CANADA WEALTH MANAGEMENT CLIENT ASSETS
[billions of dollars]
Quarters ended
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Beginning client assets
81.6
77.4
74.0
74.1
79.0
Acquisitions
—
—
—
—
2.4
Net flows and market move
1.0
4.2
3.4
(0.2)
(7.2)
Ending client assets
82.6
81.6
77.4
74.0
74.1
Average client assets
81.9
80.7
77.3
76.0
77.7
Wealth management fees/average client assets
0.91 %
0.93 %
0.91 %
0.90 %
0.91 %
U.S. WEALTH MANAGEMENT CLIENT ASSETS
[billions of dollars]
Quarters ended
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Beginning billable client assets
179.9
174.3
144.9
138.8
141.2
Acquisitions/divestitures
4.0
—
24.9
—
7.1
Net flows and market move
1.1
5.6
4.4
6.2
(9.5)
Ending billable client assets
185.0
179.9
174.3
144.9
138.8
Non-billable client assets
9.0
7.6
6.3
4.9
4.8
Total client assets
194.0
187.5
180.6
149.8
143.5
Fees/beginning billable client assets
0.48 %
0.47 %
0.52 %
0.47 %
0.48 %
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 August 10, 2023 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
Jun. 30, 2023
Mar. 31, 2023
Jun. 30, 2022
Net Income
51.4
30.2
158.3
Amortization of intangible assets from acquisitions
33.1
31.3
27.4
Amortization of intangible assets for equity accounted investments
1.4
2.1
—
Change in fair value of contingent consideration
15.2
53.5
(75.0)
Change in fair value of preferred equity
35.0
—
—
Interest on redeemable shares issued in connection with acquisitions
2.2
—
—
Contingent consideration recorded as compensation
0.8
1.7
0.7
Non-controlling interest reclassification
2.4
2.5
0.9
CIPW adjustments
79.6
43.1
3.1
Severance
1.4
5.5
—
Amortization of loan guarantees
(1.8)
(0.3)
—
FX (gains)/losses
(36.5)
(1.8)
32.9
Transaction, integration, restructuring and legal
55.8
14.2
4.6
Other (gains)/losses
(70.0)
1.9
(1.2)
Gain on debt retirement
(16.2)
—
—
Total adjustments
102.5
153.7
(6.7)
Tax effect of adjustments
6.3
(28.5)
5.6
Less: Non-controlling interest
24.2
18.5
8.1
Adjusted net income
136.0
136.8
149.1
Adjusted earnings per share
0.76
0.74
0.78
Adjusted diluted earnings per share
0.76
0.74
0.78
Average diluted shares outstanding
190.4
185.1
191.8
Shares convertible into common in connection with an acquisition
(10.8)
—
—
Adjusted average diluted shares outstanding
179.6
185.1
191.8
EBITDA, ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
[millions of dollars, except per share amounts]
Quarters ended
Jun. 30, 2023
Mar. 31, 2023
Jun. 30, 2022
Pretax income
112.5
54.8
219.0
Amortization of intangible assets from acquisitions
33.1
31.3
27.4
Amortization of intangible assets for equity accounted investments
1.4
2.1
—
Depreciation and other amortization
13.3
12.9
11.9
Interest and lease finance expense
46.1
47.2
36.2
EBITDA
206.4
148.3
294.6
Change in fair value of contingent consideration
15.2
53.5
(75.0)
Change in fair value of preferred equity
35.0
—
—
Contingent consideration recorded as compensation
0.8
1.7
0.7
Non-controlling interest reclassification
2.4
2.5
0.9
CIPW adjustments
79.6
43.1
3.1
Severance
1.4
5.5
—
Amortization of loan guarantees
(1.8)
(0.3)
—
FX (gains)/losses
(36.5)
(1.8)
32.9
Transaction, integration, restructuring and legal
55.8
14.2
4.6
Other (gains)/losses
(70.0)
1.9
(1.2)
Gain on debt retirement
(16.2)
—
—
Total adjustments
65.9
120.3
(34.1)
Adjusted EBITDA
272.3
268.6
260.5
Less: Non-controlling interest
27.0
18.5
9.5
Adjusted EBITDA attributable to shareholders
245.3
250.1
251.0
Reported net revenue
776.1
637.8
566.7
Less: FX gains/(losses)
36.5
1.8
(32.9)
Less: Non-Operating Other gains/(losses)
70.0
(1.9)
1.2
Less: Amortization of equity accounted investments
(1.4)
(2.1)
—
Adjusted net revenue
671.0
640.0
598.3
Adjusted EBITDA margin
40.6 %
42.0 %
43.5 %
FREE CASH FLOW
[millions of dollars]
Quarters ended
Jun. 30, 2023
Mar. 31, 2023
Jun. 30, 2022
Cash provided by operating activities
141.9
143.4
164.1
Less: Net change in operating assets and liabilities
15.0
(2.2)
22.9
Operating cash flow before the change in operating assets and liabilities
126.9
145.6
141.2
FX (gains)/losses
(36.5)
(1.8)
32.9
Transaction, integration, restructuring and legal
55.8
14.2
4.6
Total adjustments
19.3
12.4
37.5
Tax effect (recovery) of adjustments
(1.5)
(1.8)
(5.7)
Less: Non-controlling interest
1.4
1.1
(3.4)
Free cash flow
143.3
155.1
176.4
NET DEBT
Quarters ended
[millions of dollars]
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Current portion of long-term debt
—
298.0
320.0
400.5
314.6
Long-term debt
3,131.5
3,892.2
3,896.2
3,548.2
3,373.5
3,131.5
4,190.2
4,216.2
3,948.7
3,688.1
Less:
Cash and short-term investments
240.5
137.0
153.6
220.4
154.8
Marketable securities
23.0
22.6
20.6
17.8
18.1
Add:
Regulatory capital and non-controlling interests
18.6
21.7
16.8
19.9
22.4
Net Debt
2,886.6
4,052.2
4,058.8
3,730.3
3,537.5
Adjusted EBITDA
245.3
250.1
242.7
237.5
251.0
Adjusted EBITDA, annualized
983.8
1,014.2
962.8
942.1
1,006.9
Gross leverage (Gross debt/Annualized adjusted EBITDA)
3.2
4.1
4.4
4.2
3.7
Net leverage (Net debt/Annualized adjusted EBITDA)
2.9
4.0
4.2
4.0
3.5
SUMMARY OF QUARTERLY RESULTS
[millions of dollars, except per share amounts]
IFRS Results
Adjusted Results
For the quarters ended
For the quarters ended
Jun.
30,
2023
Mar.
31,
2023
Dec.
31,
2022
Sep.
30,
2022
Jun.
30,
2022
Jun.
30,
2023
Mar.
31,
2023
Dec.
31,
2022
Sep.
30,
2022
Jun.
30,
2022
Revenues
Asset management fees
375.8
377.7
378.2
386.7
404.3
375.8
377.7
378.2
386.7
404.3
Trailer fees and deferred sales commissions
(114.9)
(115.9)
(116.0)
(119.2)
(124.0)
(114.9)
(115.9)
(116.0)
(119.2)
(124.0)
Net asset management fees
261.0
261.8
262.2
267.5
280.3
261.0
261.8
262.2
267.5
280.3
Canada wealth management fees
144.1
141.5
133.1
129.2
130.1
144.1
141.5
133.1
129.2
130.1
U.S. wealth management fees
216.8
201.3
190.1
164.1
168.9
216.8
201.3
190.1
164.1
168.9
Other revenues
31.3
32.3
26.2
26.6
21.2
32.7
34.4
28.8
26.6
21.2
FX gains/(losses)
36.5
1.8
15.2
(73.9)
(32.9)
—
—
—
—
—
Other gains/(losses)
86.5
(0.9)
(6.5)
0.1
(1.1)
0.3
1.0
0.6
0.1
(2.3)
Total net revenues
776.1
637.8
620.3
513.6
566.7
654.8
640.0
614.9
587.5
598.3
Expenses
Selling, general administrative
345.9
304.6
277.2
245.6
238.0
265.9
254.6
248.0
230.3
234.2
Advisor and dealer fees
108.2
107.8
101.1
98.3
99.7
108.2
107.8
101.1
98.3
99.7
Other
10.9
11.5
9.2
17.1
4.7
8.5
9.0
8.1
8.1
3.8
Interest and lease finance expense
46.1
47.2
41.4
38.6
36.2
44.0
47.2
41.4
38.6
36.2
Depreciation and other amortization
13.3
12.9
13.1
13.0
11.9
13.3
12.9
13.1
13.0
11.9
Amortization of intangible assets from acquisitions
33.1
31.3
26.5
27.7
27.4
—
—
—
—
—
Transaction, integration, restructuring and legal
55.8
14.2
41.3
13.1
4.6
—
—
—
—
—
Change in fair value of contingent consideration
15.2
53.5
76.8
22.5
(75.0)
—
—
—
—
—
Change in fair value of preferred equity
35.0
—
—
—
—
—
—
—
—
—
Total expenses
663.6
583.0
586.7
475.8
347.7
439.9
431.5
411.7
388.2
386.0
Pretax income
112.5
54.8
33.6
37.8
219.0
215.0
208.5
203.2
199.3
212.3
Income tax expense
61.1
24.6
41.9
23.5
60.7
54.8
53.2
51.8
51.3
55.1
Net income
51.4
30.2
(8.3)
14.4
158.3
160.1
155.3
151.4
148.1
157.2
Less: Non-controlling interest
0.4
0.2
1.2
(0.5)
2.1
24.2
18.5
15.5
12.1
8.1
Net income attributable to shareholders
51.0
30.0
(9.5)
14.9
156.2
136.0
136.8
135.9
135.9
149.1
Basic earnings per share
0.28
0.16
(0.05)
0.08
0.82
0.76
0.74
0.74
0.73
0.78
Diluted earnings per share
0.28
0.16
(0.05)
0.08
0.81
0.76
0.74
0.74
0.73
0.78
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
Jun.
30,
2023
Mar.
31,
2023
Dec.
31,
2022
Sep.
30,
2022
Jun.
30,
2022
Jun.
30,
2023
Mar.
31,
2023
Dec.
31,
2022
Sep.
30,
2022
Jun.
30,
2022
Revenues
Asset management fees
380.2
382.0
382.3
390.9
408.9
380.2
382.0
382.3
390.9
408.9
Trailer fees and deferred sales commissions
(122.5)
(123.4)
(123.8)
(126.8)
(131.9)
(122.5)
(123.4)
(123.8)
(126.8)
(131.9)
Net asset management fees
257.8
258.6
258.5
264.1
277.0
257.8
258.6
258.5
264.1
277.0
Other revenues
5.1
4.0
3.6
6.6
5.6
5.1
4.0
3.6
6.6
5.6
FX gains/(losses)
37.5
2.0
15.5
(74.4)
(32.8)
—
—
—
—
—
Other gains/(losses)
16.1
(0.9)
(6.5)
0.1
(1.1)
0.3
1.0
0.6
0.1
(2.3)
Total net revenues
316.5
263.6
271.2
196.4
248.7
263.1
263.5
262.8
270.7
280.2
Expenses
Selling, general administrative
101.0
98.9
94.3
98.7
97.3
102.6
98.6
94.3
98.7
97.3
Other
—
—
—
7.2
—
—
—
—
—
—
Interest and lease finance expense
(1.5)
0.6
0.9
1.0
1.0
(1.5)
0.6
0.9
1.0
1.0
Depreciation and other amortization
5.4
3.8
4.7
5.0
5.0
5.4
3.8
4.7
5.0
5.0
Amortization of intangible assets from acquisitions
0.6
0.6
0.6
0.6
0.6
—
—
—
—
—
Transaction, integration, restructuring and legal
34.6
1.7
11.0
2.6
2.3
—
—
—
—
—
Change in fair value of contingent consideration
0.7
(2.2)
1.6
3.2
(3.9)
—
—
—
—
—
Total expenses
140.8
103.5
113.1
118.2
102.3
106.6
103.0
99.9
104.6
103.3
Pretax income
175.7
160.1
158.0
78.2
146.4
156.5
160.5
162.8
166.1
176.9
Non-IFRS adjustments
Pretax income
175.7
160.1
158.0
78.2
146.4
156.5
160.5
162.8
166.1
176.9
Amortization of intangible assets from acquisitions
0.6
0.6
0.6
0.6
0.6
—
—
—
—
—
Depreciation and other amortization
5.4
3.8
4.7
5.0
5.0
5.4
3.8
4.7
5.0
5.0
Interest and lease finance expense
(1.5)
0.6
0.9
1.0
1.0
(1.5)
0.6
0.9
1.0
1.0
EBITDA
180.2
165.1
164.2
84.7
153.0
160.5
164.9
168.4
172.1
183.0
Change in fair value of contingent consideration
0.7
(2.2)
1.6
3.2
(3.9)
—
—
—
—
—
CIPW adjustments
—
—
—
—
—
—
—
—
—
—
FX (gains)/losses
(37.5)
(2.0)
(15.5)
74.4
32.8
—
—
—
—
—
Severance
0.1
0.5
—
—
—
—
—
—
—
—
Amortization of loan guarantees
(1.8)
(0.3)
—
—
—
—
—
—
—
—
Transaction, integration, restructuring and legal
34.6
1.7
11.0
2.6
2.3
—
—
—
—
—
Other (gains)/losses
0.3
1.9
7.1
—
(1.2)
—
—
—
—
—
Gain on debt retirement
(16.2)
—
—
—
—
—
—
—
—
—
Trading and bad debt
—
—
—
7.1
—
—
—
—
—
—
Total adjustments
(19.8)
(0.2)
4.2
87.3
30.0
—
—
—
—
—
Adjusted EBITDA
160.5
164.9
168.4
172.1
183.0
160.5
164.9
168.4
172.1
183.0
Less: Non-controlling interest
0.2
0.2
0.1
0.1
0.3
0.2
0.2
0.1
0.1
0.3
Adjusted EBITDA attributable to shareholders
160.3
164.7
168.3
172.0
182.7
160.3
164.7
168.3
172.0
182.7
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
Jun.
30,
2023
Mar.
31,
2023
Dec.
31,
2022
Sep.
30,
2022
Jun.
30,
2022
Jun.
30,
2023
Mar.
31,
2023
Dec.
31,
2022
Sep.
30,
2022
Jun.
30,
2022
Revenues
Canada wealth management fees
186.8
184.3
176.8
171.7
175.6
186.8
184.3
176.8
171.7
175.6
Other revenues
30.5
31.8
29.1
25.5
21.3
30.6
31.8
29.2
25.5
21.3
FX gains/(losses)
(0.5)
(0.2)
(0.4)
0.5
—
—
—
—
—
—
Other gains/(losses)
—
—
—
—
—
—
—
—
—
—
Total net revenues
216.8
215.9
205.5
197.7
196.9
217.4
216.2
206.0
197.2
196.9
Expenses
Selling, general administrative
50.3
48.2
46.2
43.8
44.0
49.3
47.7
45.9
43.6
43.9
Advisor and dealer fees
142.5
141.7
136.2
132.4
135.9
142.5
141.7
136.2
132.4
135.9
Other
9.3
9.8
9.3
8.2
4.0
8.0
8.8
8.1
6.3
3.2
Interest and lease finance expense
—
0.3
—
—
(0.1)
—
0.3
—
—
(0.1)
Depreciation and other amortization
2.9
4.1
3.2
3.2
2.8
2.9
4.1
3.2
3.2
2.8
Amortization of intangible assets from acquisitions
2.2
2.1
2.1
2.1
2.1
—
—
—
—
—
Transaction, integration, restructuring and legal
0.1
0.3
0.2
0.3
0.4
—
—
—
—
—
Change in fair value of contingent consideration
1.0
5.3
1.9
(0.7)
(0.6)
—
—
—
—
—
Total expenses
208.4
211.8
199.1
189.3
188.5
202.7
202.5
193.4
185.6
185.6
Pretax income
8.5
4.1
6.4
8.4
8.4
14.7
13.7
12.5
11.6
11.4
Non-IFRS adjustments
Pretax income
8.5
4.1
6.4
8.4
8.4
14.7
13.7
12.5
11.6
11.4
Amortization of intangible assets from acquisitions
2.2
2.1
2.1
2.1
2.1
—
—
—
—
Amortization of intangible assets for equity accounted investments
0.1
0.1
0.1
—
—
—
—
—
—
—
Depreciation and other amortization
2.9
4.1
3.2
3.2
2.8
2.9
4.1
3.2
3.2
2.8
Interest and lease finance expense
—
0.3
—
—
(0.1)
—
0.3
—
—
(0.1)
EBITDA
13.6
10.7
11.8
13.7
13.1
17.6
18.0
15.8
14.9
14.0
Change in fair value of contingent consideration
1.0
5.3
1.9
(0.7)
(0.6)
—
—
—
—
—
Contingent consideration recorded as compensation
(included in SG)
0.2
0.2
0.2
0.1
0.1
—
—
—
—
—
CIPW adjustments (included in SG)
0.2
0.2
0.1
0.1
0.1
—
—
—
—
—
FX (gains)/losses
0.5
0.2
0.4
(0.5)
—
—
—
—
—
—
Severance
0.7
0.1
—
—
—
—
—
—
—
—
Transaction, integration, restructuring and legal
0.2
0.3
0.2
0.3
0.4
—
—
—
—
—
Non-controlling interest reclassification (included in
Other)
1.3
1.1
1.2
1.0
0.9
—
—
—
—
—
Trading and bad debt
—
—
—
0.8
—
—
—
—
—
—
Total adjustments
4.0
7.3
4.0
1.2
0.8
—
—
—
—
—
Adjusted EBITDA
17.6
18.0
15.8
14.9
14.0
17.6
18.0
15.8
14.9
14.0
Less: Non-controlling interest
1.4
1.9
1.3
1.2
1.0
1.4
1.9
1.3
1.2
1.0
Adjusted EBITDA attributable to shareholders
16.2
16.2
14.5
13.7
13.0
16.2
16.2
14.5
13.7
13.0
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
Jun.
30,
2023
Mar.
31,
2023
Dec.
31,
2022
Sep.
30,
2022
Jun.
30,
2022
Jun.
30,
2023
Mar.
31,
2023
Dec.
31,
2022
Sep.
30,
2022
Jun.
30,
2022
Revenues
U.S. wealth management fees
216.8
201.3
190.1
164.1
168.9
216.8
201.3
190.1
164.1
168.9
Other revenues
5.4
6.3
2.9
4.2
4.5
6.7
8.3
5.5
4.2
4.5
FX gains/(losses)
(0.6)
—
—
—
—
—
—
—
—
—
Other gains/(losses)
70.4
—
—
—
—
—
—
—
—
—
Total net revenues
291.9
207.7
193.1
168.2
173.4
223.5
209.6
195.6
168.3
173.5
Expenses
Selling, general administrative
209.5
173.0
151.1
117.7
112.8
128.8
123.8
122.2
102.6
109.2
Other
1.6
1.7
(0.1)
1.8
0.7
0.5
0.2
(0.1)
1.8
0.7
Interest and lease finance expense
3.2
0.8
0.8
0.7
0.6
3.2
0.8
0.8
0.7
0.6
Depreciation and other amortization
5.0
5.1
5.2
4.8
4.1
5.0
5.1
5.2
4.8
4.1
Amortization of intangible assets from acquisitions
30.3
28.6
23.8
25.0
24.7
—
—
—
—
—
Transaction, integration, restructuring and legal
21.1
12.2
30.0
10.2
2.0
—
—
—
—
—
Change in fair value of contingent consideration
13.5
50.4
73.3
20.0
(70.5)
—
—
—
—
—
Change in fair value of preferred equity
35.0
—
—
—
—
—
—
—
—
—
Total expenses
319.3
271.7
284.2
180.1
74.4
137.6
129.9
128.1
109.8
114.6
Pretax income
(27.3)
(64.0)
(91.1)
(11.9)
99.0
85.9
79.7
67.4
58.4
58.9
Non-IFRS adjustments
Pretax income
(27.3)
(64.0)
(91.1)
(11.9)
99.0
85.9
79.7
67.4
58.4
58.9
Amortization of intangible assets from acquisitions
30.3
28.6
23.8
25.0
24.7
—
—
—
Amortization of intangible assets for equity accounted investments
1.3
2.0
2.5
—
—
—
—
—
—
—
Depreciation and other amortization
5.0
5.1
5.2
4.8
4.1
5.0
5.1
5.2
4.8
4.1
Interest and lease finance expense
3.2
0.8
0.8
0.7
0.6
3.2
0.8
0.8
0.7
0.6
EBITDA
12.5
(27.5)
(58.8)
18.6
128.4
94.2
85.6
73.5
63.9
63.5
Change in fair value of contingent consideration
13.5
50.4
73.3
20.0
(70.5)
—
—
—
—
—
Change in fair value of preferred equity
35.0
—
—
—
—
—
—
—
—
—
Contingent consideration recorded as compensation (included in SG)
0.6
1.5
1.3
3.7
0.6
—
—
—
—
—
NCI reclassification (included in SG)
1.2
1.4
—
—
—
—
—
—
—
—
CIPW adjustments (included in SG)
79.4
42.9
27.6
11.4
3.0
—
—
—
—
—
FX (gains)/losses
0.6
—
—
—
—
—
—
—
—
—
Severance
0.7
4.8
—
—
—
—
—
—
—
—
Transaction, integration, restructuring and legal
21.1
12.2
30.0
10.2
2.0
—
—
—
—
—
Other (gains)/losses
(70.3)
—
—
—
—
—
—
—
—
—
Total adjustments
81.7
113.1
132.2
45.3
(64.9)
—
—
—
—
—
Adjusted EBITDA
94.2
85.6
73.5
63.9
63.5
94.2
85.6
73.5
63.9
63.5
Less: Non-controlling interest
25.4
16.5
13.6
12.1
8.2
25.4
16.5
13.6
12.1
8.2
Adjusted EBITDA attributable to shareholders
68.8
69.1
59.9
51.8
55.4
68.8
69.1
59.9
51.8
55.4
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