CI Financial Reports Financial Results for the First Quarter of 2023
CI Financial Corp. (“CI”) (TSX: CIX) today released financial results for the quarter ended March 31, 2023.
CI also announced this morning that it has agreed to sell a 20% minority stake in its U.S. wealth management business (“CI US”) to a group of prominent institutional investors. Please see the press release “CI Financial Announces pre-IPO Minority Investment in its U.S. Wealth Management Business from Leading Global Institutional Investors” for more information about this transaction.
“The CI US transaction is a significant step in CI’s ongoing strategic transformation and builds on the important progress we have made for the year-to-date,” said Kurt MacAlpine, Chief Executive Officer of CI. “Our U.S. wealth management business now manages more than $198 billion in assets2 with the addition this month of Avalon Advisors, a high-quality Houston-based firm focused on the ultra-high-net-worth segment and one of the largest registered investment advisors in Texas with $11.1 billion under management.
“We have numerous projects underway to both realize synergies from the integration of the U.S. business and to drive its continued strong growth and development,” Mr. MacAlpine said. “The impact is clear – our adjusted U.S. EBITDA1 increased 15% quarter over quarter.
“In Canadian wealth management, our initiative to expand CI Investment Services into the foundation of an integrated platform serving the entire business is proceeding well, and we expect to complete the transfer of client assets at Aligned Capital to the CIIS custody platform by the third quarter.
“In asset management, the Canadian retail business had its third consecutive quarter of net sales with inflows of $0.8 billion in the first quarter,” Mr. MacAlpine said. “We continued to modernize the business with an impressive series of product launches across our mutual fund and ETF lineups, including a unique fund-of-funds private markets solution designed to provide simple one-ticket access to this increasingly important asset class.”
Operating and financial data highlights
[millions of dollars, except share amounts]
As of and for the quarters ended
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Total AUM and Client Assets:
Asset Management AUM
121,987
117,753
114,196
116,065
136,271
Canada Wealth Management assets
81,592
77,421
73,976
74,128
78,957
U.S. Wealth Management assets
187,481
180,579
149,841
143,520
145,768
Total assets
391,060
375,753
338,014
333,712
360,996
Asset Management Net Inflows:
Retail
841
1,621
640
(381)
(861)
Institutional
(177)
(195)
(21)
(3,203)
(264)
Australia
(81)
12
(377)
(122)
(305)
Closed Business
(195)
(169)
(129)
(160)
(203)
U.S. Asset Management
(67)
595
(38)
(195)
402
Total
321
1,864
75
(4,060)
(1,231)
IFRS Results
Net income attributable to shareholders
30.0
(9.5)
14.9
156.2
138.1
Diluted earnings per share
0.16
(0.05)
0.08
0.81
0.70
Pretax income
54.8
33.6
37.8
219.0
185.8
Pretax margin
8.6%
5.4 %
7.4 %
38.6 %
29.3 %
Operating cash flow before the change in operating assets and liabilities
145.6
150.9
64.8
141.2
207.7
Adjusted Results
Adjusted net income
136.8
135.9
135.9
149.1
166.8
Adjusted diluted earnings per share
0.74
0.74
0.73
0.78
0.85
Adjusted EBITDA
250.1
242.7
237.5
251.0
272.9
Adjusted EBITDA margin
41.5%
42.4 %
43.0 %
44.5 %
46.5 %
Free cash flow
155.1
157.9
151.5
176.4
201.6
Average shares outstanding
184,517,832
183,666,579
185,601,752
191,151,896
196,111,771
Ending shares outstanding
184,517,832
184,517,832
183,526,499
189,037,762
192,987,082
Total debt
4,190
4,216
3,949
3,688
3,530
Net debt
4,052
4,059
3,730
3,538
3,352
Net debt to adjusted EBITDA
4.0
4.2
4.0
3.5
3.0
1. Free cash flow, net debt, adjusted net income, adjusted earnings per share and adjusted EBITDA are not standardized earningsmeasures prescribed by IFRS. For further information, see “Non-IFRS Measures” note below. 2.Based on U.S. wealth management assets of $187.5 billion as at March 31, 2023.
Financial highlights
The first quarter net income of $30.2 million compared to a net loss of ($8.3) million in the fourth quarter of 2022. The improvement reflected stronger revenues, lower transaction, integration, restructuring and settlement costs, and a more normalized tax rate partially offset by higher interest expenses. Excluding non-operating items, adjusted net income of $136.8 million in the quarter was little changed from the fourth quarter.
First quarter total net revenues increased 2.8% to $637.8 million in the quarter from $620.3 million in the fourth quarter of 2022. Excluding non-operating items, adjusted total net revenues grew 4.1% to $640.0 million, driven by growth in our Canadian and U.S. Wealth Management segments. Asset Management segment revenues were essentially unchanged as higher average AUM was offset by two fewer days in the quarter and effective fee rate pressure due to Asset mix shift.
First quarter total expenses decreased 0.1% to $583.0 million in the quarter from $586.7 million in the fourth quarter of 2022. Excluding non-operating items, adjusted total expenses were up 4.8% to $431.5 million, reflecting seasonally higher compensation and benefits, higher advisor and dealer fees due to revenue growth, and higher interest expense.
Capital allocation
The Board of Directors declared a quarterly dividend of $0.18 per share, payable on October 13, 2023 to shareholders of record on September 29, 2023. The annual dividend rate of $0.72 per share represented a yield of 5.8% on CI’s closing share price of $12.50 on May 10, 2023.
First quarter business highlights
CI’s common shares ceased trading on the New York Stock Exchange as of January 19, 2023, following CI’s decision to voluntarily delist its shares from the exchange, as announced in November 2022. In support of CI’s strategic priority of modernizing asset management, CI Global asset Management (“CI GAM”) launched a series of investment funds that enhance the firm’s comprehensive product lineup. These included an innovative private markets fund-of-funds solution, a pair of ETFs that seek to minimize downside volatility for equity investors, and a suite of new covered call funds. CI GAM was the recipient of 39 FundGrade A+® Awards, which are presented annually by Fundata Canada Inc. to acknowledge Canadian investment funds that have demonstrated consistent, outstanding risk-adjusted performance.Following quarter-end:
CI acquired Avalon Advisors, LLC of Houston, one of the leading registered investment advisor firms in Texas with US$8.2 billion in client assets under management. Avalon serves ultra-high-net-worth individuals and families, offering a broad range of investment management and wealth planning services characterized by a client-centered approach, service excellence and a robust investment platform that includes access to alternative mandates. The acquisition closed on May 1, 2023. CI reached an agreement to sell its minority stake in Boston-based Congress Wealth Management, LLC (“Congress”) to Audax Private Equity. CI, which first invested in Congress in the third quarter of 2020, agreed to sell its interest because Congress’s ownership structure precluded its full integration into CI Private Wealth, LLC (“CIPW”), CI’s U.S. wealth management subsidiary. CIPW launched CIPW Trust, LLC, a South Dakota chartered Trust company, allowing CIPW advisors across the U.S. to offer a wide array of corporate trustee services through the firm. The ability to integrate Trust solutions into a client’s overall wealth plan is an important enhancement to CIPW’s ability to provide a superior client experience.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: 175331):
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 CI Private Wealth (U.S.), 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.
FundGrade A+® is used with permission from Fundata Canada Inc., all rights reserved. The annual FundGrade A+® Awards are presented by Fundata Canada Inc. to recognize the “best of the best” among Canadian investment funds. The FundGrade A+® calculation is supplemental to the monthly FundGrade ratings and is calculated at the end of each calendar year. The FundGrade rating system evaluates funds based on their risk-adjusted performance, measured by Sharpe Ratio, Sortino Ratio, and Information Ratio. The score for each ratio is calculated individually, covering all time periods from 2 to 10 years. The scores are then weighted equally in calculating a monthly FundGrade. The top 10% of funds earn an A Grade; the next 20% of funds earn a B Grade; the next 40% of funds earn a C Grade; the next 20% of funds receive a D Grade; and the lowest 10% of funds receive an E Grade. To be eligible, a fund must have received a FundGrade rating every month in the previous year. The FundGrade A+® uses a GPA-style calculation, where each monthly FundGrade from “A” to “E” receives a score from 4 to 0, respectively. A fund’s average score for the year determines its GPA. Any fund with a GPA of 3.5 or greater is awarded a FundGrade A+® Award. For more information, see www.FundGradeAwards.com. Although Fundata makes every effort to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Fundata.
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 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
2023
2022
[in thousands of Canadian dollars, except per share amounts]
$
$
REVENUE
Canada asset management fees
377,665
437,623
Trailer fees and deferred sales commissions
(115,896)
(135,289)
Net asset management fees
261,769
302,334
Canada wealth management fees
141,533
138,246
U.S. wealth management fees
201,337
164,479
Other revenues
32,320
21,646
Foreign exchange gain
1,754
11,469
Other losses
(889)
(4,424)
Total net revenues
637,824
633,750
EXPENSES
Selling, general and administrative
304,598
259,260
Advisor and dealer fees
107,822
106,908
Interest and lease finance
47,179
35,876
Amortization and depreciation
12,897
11,376
Amortization of intangible assets from acquisitions
31,345
24,083
Transaction, integration, restructuring and legal
14,175
3,800
Change in fair value of contingent consideration
53,506
3,088
Other
11,507
3,599
Total expenses
583,029
447,990
54,795
185,760
Provision for (recovery of) income taxes
Current
39,069
47,741
Deferred
(14,427)
511
24,642
48,252
Net income for the period
30,153
137,508
Net income (loss) attributable to non-controlling interests
185
(639)
Net income attributable to shareholders
29,968
138,147
Basic earnings per share attributable to shareholders
$0.16
$0.70
Diluted earnings per share attributable to shareholders
$0.16
$0.70
Other comprehensive loss, net of tax
Exchange differences on translation of foreign operations
(2,868)
(6,721)
Total other comprehensive loss, net of tax
(2,868)
(6,721)
Comprehensive income for the period
27,285
130,787
Comprehensive income (loss) attributable to non-controlling interests
153
(1,052)
Comprehensive income attributable to shareholders
27,132
131,839
CONSOLIDATED BALANCE SHEET
As at
As at
March 31, 2023
December 31, 2022
[in thousands of Canadian dollars]
$
$
ASSETS
Current
Cash and cash equivalents
136,969
153,620
Client and trust funds on deposit
1,246,237
1,306,595
Investments
37,374
40,448
Accounts receivable and prepaid expenses
337,246
298,778
Assets held for sale
67,662
—
Income taxes receivable
39,001
33,989
Total current assets
1,864,489
1,833,430
Capital assets, net
60,754
55,587
Right-of-use assets
130,898
139,422
Intangibles
7,192,758
7,227,700
Deferred income taxes
66,183
54,415
Other assets
330,756
397,804
Total assets
9,645,838
9,708,358
LIABILITIES AND EQUITY
Current
Accounts payable and accrued liabilities
319,562
293,246
Current portion of provisions and other financial liabilities
556,266
502,746
CIPW unit liabilities
794,073
765,959
Dividends payable
66,426
66,426
Client and trust funds payable
1,260,097
1,312,640
Income taxes payable
2,233
3,044
Current portion of long-term debt
298,000
320,000
Current portion of lease liabilities
23,386
23,994
Total current liabilities
3,320,043
3,288,055
Long-term debt
3,892,165
3,896,214
Provisions and other financial liabilities
191,351
270,567
Deferred income taxes
479,490
480,500
Lease liabilities
143,287
149,360
Total liabilities
8,026,336
8,084,696
Share capital
1,706,880
1,706,880
Contributed surplus
32,848
30,239
Deficit
(164,135)
(160,572)
Accumulated other comprehensive income
30,388
33,224
Total equity attributable to the shareholders of the Company
1,605,981
1,609,771
Non-controlling interests
13,521
13,891
Total equity
1,619,502
1,623,662
Total liabilities and equity
9,645,838
9,708,358
CONSOLIDATED STATEMENT OF CASH FLOWS
For the three-month period ended March 31
2023
2022
[in thousands of Canadian dollars]
$
$
OPERATING ACTIVITIES (*)
Net income for the period
30,153
137,508
Add (deduct) items not involving cash
Other losses
889
4,424
Change in fair value of contingent consideration
53,506
3,088
Contingent consideration recorded as compensation
1,703
18,210
Amortization of loan guarantees
(255)
—
Recognition of vesting of CIPW unit liabilities
28,968
3,926
Equity-based compensation
3,554
4,536
(4,786)
—
Amortization of equity accounted investments
2,056
—
Amortization and depreciation
12,897
11,376
Amortization of intangible assets from acquisitions
31,345
24,083
Deferred income taxes
(14,427)
511
Cash provided by operating activities before net change in operating assets and liabilities
145,603
207,662
Net change in operating assets and liabilities
(2,214)
(52,856)
Cash provided by operating activities
143,389
154,806
INVESTING ACTIVITIES
Purchase of investments
(642)
(30)
Proceeds on sale of investments
4
94,659
Additions to capital assets
(9,121)
(3,311)
Decrease (increase) in other assets
(3,211)
2,148
Additions to intangibles
(3,104)
(1,564)
Cash paid to settle acquisition liabilities
(74,976)
(18,288)
Acquisitions, net of cash acquired
(7,108)
(5,729)
Cash provided by (used in) investing activities
(98,158)
67,885
FINANCING ACTIVITIES
Repayment of long-term debt
(320,000)
(297,500)
Issuance of long-term debt
298,000
80,000
Repurchase of share capital
—
(91,038)
Payment of lease liabilities
(6,350)
(5,210)
Net issuance of CIPW unit liabilities
523
83,330
Net distributions to non-controlling interest
(523)
(1,489)
Dividends paid to shareholders
(33,531)
(35,511)
Cash used in financing activities
(61,881)
(267,418)
Net decrease in cash and cash equivalents during the period
(16,650)
(44,727)
Cash and cash equivalents, beginning of period
153,619
230,778
Cash and cash equivalents, end of period
136,969
186,051
SUPPLEMENTAL CASH FLOW INFORMATION
(*) Included in operating activities are the following:
Interest paid
20,285
9,665
Income taxes paid
40,126
52,277
ASSETS UNDER MANAGEMENT AND NET FLOWS
[billions of dollars]
Quarters ended
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Beginning AUM
117.8
114.2
116.1
136.3
144.2
Gross inflows
6.9
7.3
4.9
4.8
4.9
Gross outflows
(6.5)
(6.0)
(4.8)
(8.7)
(6.6)
Net inflows/(outflows)
0.4
1.3
0.1
(3.9)
(1.6)
Acquisitions
—
—
—
—
—
Market move and FX
3.8
2.3
(2.0)
(16.3)
(6.3)
Ending AUM
122.0
117.8
114.2
116.1
136.3
Proprietary AUM
33.0
31.9
30.4
30.8
34.5
Non-proprietary AUM
89.0
85.9
83.7
85.2
101.7
Average assets under management
121.9
117.7
119.1
125.4
138.2
Annualized organic growth
1.3 %
4.4 %
0.4 %
(11.4) %
(4.6) %
Gross management fee/average AUM
1.27 %
1.29 %
1.30 %
1.31 %
1.30 %
Net management fee/average AUM
0.86 %
0.87 %
0.88 %
0.89 %
0.88 %
Net Inflows/(Outflows)
Retail
0.8
1.6
0.6
(0.4)
(0.9)
Institutional
(0.2)
(0.2)
—
(3.2)
(0.3)
Closed business
(0.2)
(0.2)
(0.1)
(0.2)
(0.2)
Total Canada net inflows/(outflows)
0.5
1.3
0.5
(3.7)
(1.3)
Australia
(0.1)
—
(0.4)
(0.1)
(0.3)
Total net inflows/(outflows)
0.4
1.3
0.1
(3.9)
(1.6)
RETAIL (ex Closed Business)
[billions of dollars]
Quarters ended
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Beginning AUM
97.1
94.0
95.1
108.4
114.6
Net Flows
0.8
1.6
0.6
(0.4)
(0.9)
Market Move / FX
3.3
1.5
(1.7)
(12.9)
(5.3)
Acquisitions
___
___
___
___
___
Ending AUM
101.2
97.1
94.0
95.1
108.4
Average AUM
100.9
97.0
97.9
101.4
109.6
INSTITUTIONAL
[billions of dollars]
Quarters ended
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Beginning AUM
8.3
8.3
8.4
12.7
13.3
Net Flows
(0.2)
(0.2)
0.0
(3.2)
(0.3)
Market Move / FX
0.4
0.2
(0.1)
(1.1)
(0.3)
Acquisitions
___
___
___
___
___
Ending AUM
8.5
8.3
8.3
8.4
12.7
Average AUM
8.5
8.4
8.6
10.2
12.9
AUSTRALIA
[billions of dollars]
Quarters ended
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Beginning AUM
5.0
4.7
5.1
6.6
7.3
Net Flows
(0.1)
0.0
(0.4)
(0.1)
(0.3)
Market Move / FX
0.0
0.3
0.0
(1.4)
(0.4)
Acquisitions
___
___
___
___
___
Ending AUM
4.9
5.0
4.7
5.1
6.6
Average AUM
5.0
4.8
4.9
5.8
7.0
CLOSED BUSINESS
[billions of dollars]
Quarters ended
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Beginning AUM
7.3
7.3
7.5
8.6
9.1
Net Flows
(0.2)
(0.2)
(0.1)
(0.2)
(0.2)
Market Move / FX
0..3
0.2
(0.1)
(0.9)
(0.3)
Acquisitions
___
___
___
___
___
Ending AUM
7.4
7.3
7.3
7.5
8.6
Average AUM
7.5
7.4
7.6
8.0
8.7
AUM BY ASSET CLASS
[billions of dollars]
Quarters ended
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Balanced
50.8
50.3
49.8
50.9
59.4
43.3
41.6
40.2
41.4
49.3
Fixed income
11.3
11.0
11.2
11.7
13.1
Alternatives
4.0
3.6
3.8
3.6
4.9
Cash/Other
7.7
6.2
4.5
3.4
3.0
Total Canada asset management
117.1
112.8
109.5
111.0
129.7
Australia
4.9
5.0
4.7
5.1
6.6
Total asset management segment
122.0
117.8
114.2
116.1
136.3
CANADA WEALTH MANAGEMENT CLIENT ASSETS
[billions of dollars]
Quarters ended
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Beginning client assets
77.4
74.0
74.1
79.0
80.6
Acquisitions
—
—
—
2.4
—
Net flows and market move
4.2
3.4
(0.2)
(7.2)
(1.7)
Ending client assets
81.6
77.4
74.0
74.1
79.0
Average client assets
80.7
77.3
76.0
77.7
79.0
Wealth management fees/average client assets
0.93 %
0.91 %
0.90 %
0.91 %
0.95 %
U.S. WEALTH MANAGEMENT CLIENT ASSETS
[billions of dollars]
Quarters ended
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Beginning billable client assets
174.3
144.9
138.8
141.2
146.4
Acquisitions
—
24.9
—
7.1
1.1
Net flows and market move
5.6
4.4
6.2
(9.5)
(6.3)
Ending billable client assets
179.9
174.3
144.9
138.8
141.2
Non-billable client assets
7.6
6.3
4.9
4.8
4.6
Total client assets
187.5
180.6
149.8
143.5
145.8
Fees/beginning billable client assets
0.47 %
0.52 %
0.47 %
0.48 %
0.46 %
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 11, 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
Mar. 31, 2023
Dec. 31, 2022
Mar. 31, 2022
Net Income
30.2
(8.3)
137.5
Amortization of intangible assets from acquisitions
31.3
26.5
24.1
Amortization of equity accounted investments
2.1
2.6
—
Change in fair value of contingent consideration
53.5
76.8
3.1
Contingent consideration recorded as compensation
1.7
1.5
18.2
Non-controlling interest reclassification
2.5
1.2
0.9
CIPW adjustments
43.1
27.7
13.2
Severance
5.5
—
—
Amortization of loan guarantees
(0.3)
—
—
FX (gains)/losses
(1.8)
(15.2)
(11.5)
Transaction, integration, restructuring and legal
14.2
41.3
3.8
Other (gains)/losses
1.9
7.1
—
Total adjustments
153.7
169.6
51.7
Tax effect of adjustments
(28.5)
(9.9)
(11.5)
Less: Non-controlling interest
18.5
15.5
10.9
Adjusted net income
136.8
135.9
166.8
Adjusted earnings per share
0.74
0.74
0.85
Adjusted diluted earnings per share
0.74
0.74
0.85
EBITDA, ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
[millions of dollars, except per share amounts]
Quarters ended
Mar. 31, 2023
Dec. 31, 2022
Mar. 31, 2022
Pretax income
54.8
33.6
185.8
Amortization of intangible assets from acquisitions
31.3
26.5
24.1
Amortization of equity accounted investments
2.1
2.6
—
Depreciation and other amortization
12.9
13.1
11.4
Interest and lease finance expense
47.2
41.4
35.9
EBITDA
148.3
117.2
257.1
Change in fair value of contingent consideration
53.5
76.8
3.1
Contingent consideration recorded as compensation
1.7
1.5
18.2
Non-controlling interest reclassification
2.5
1.2
0.9
CIPW adjustments
43.1
27.7
13.2
Severance
5.5
—
—
Amortization of loan guarantees
(0.3)
—
—
FX (gains)/losses
(1.8)
(15.2)
(11.5)
Transaction, integration, restructuring and legal
14.2
41.3
3.8
Other (gains)/losses
1.9
7.1
—
Total adjustments
120.3
140.5
27.7
Less: Non-controlling interest
18.5
15.0
11.9
Adjusted EBITDA
250.1
242.7
272.9
Reported net revenue
637.8
620.3
633.8
Less: FX gains/(losses)
1.8
15.2
11.5
Less: Non-Operating Other gains/(losses)
(1.9)
(7.1)
—
Less: Amortization of equity accounted investments
(2.1)
—
—
Less: Non-controlling interest revenues
37.3
40.6
35.5
Adjusted net revenue
602.7
571.7
586.8
Adjusted EBITDA margin
41.5%
42.4 %
46.5 %
FREE CASH FLOW
[millions of dollars]
Quarters ended
Mar. 31, 2023
Dec. 31, 2022
Mar. 31, 2022
Cash provided by operating activities
143.4
56.7
154.8
Less: Net change in operating assets and liabilities
(2.2)
(94.1)
(52.9)
Operating cash flow before the change in operating assets and liabilities
145.6
150.9
207.7
FX (gains)/losses
(1.8)
(15.2)
(11.5)
Transaction, integration, restructuring and legal
14.2
41.3
3.8
Total adjustments
12.4
26.1
(7.7)
Tax effect (recovery) of adjustments
(1.8)
(18.8)
1.2
Less: Non-controlling interest
1.1
0.3
(0.4)
Free cash flow
155.1
157.9
201.6
NET DEBT
Quarters ended
[millions of dollars]
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Current portion of long-term debt
298.0
320.0
400.5
314.6
225.3
Long-term debt
3,892.2
3,896.2
3,548.2
3,373.5
3,304.7
4,190.2
4,216.2
3,948.7
3,688.1
3,530.0
Less:
Cash and short-term investments
137.0
153.6
220.4
154.8
186.1
Marketable securities
22.6
20.6
17.8
18.1
20.3
Add:
Regulatory capital and non-controlling interests
21.7
16.8
19.9
22.4
28.8
Net Debt
4,052.2
4,058.8
3,730.3
3,537.5
3,352.4
Adjusted EBITDA
250.1
242.7
237.5
251.0
272.9
Adjusted EBITDA, annualized
1,014.2
962.8
942.1
1,006.9
1,106.6
Gross leverage (Gross debt/Annualized adjusted EBITDA)
4.1
4.4
4.2
3.7
3.2
Net leverage (Net debt/Annualized adjusted EBITDA)
4.0
4.2
4.0
3.5
3.0
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,
2023
Dec.
31,
2022
Sep.
30,
2022
Jun.
30,
2022
Mar.
31,
2022
Mar.
31,
2023
Dec.
31,
2022
Sep.
30,
2022
Jun.
30,
2022
Mar.
31,
2022
Revenues
Asset management fees
377.7
378.2
386.7
404.3
437.6
377.7
378.2
386.7
404.3
437.6
Trailer fees and deferred sales commissions
(115.9)
(116.0)
(119.2)
(124.0)
(135.3)
(115.9)
(116.0)
(119.2)
(124.0)
(135.3)
Net asset management fees
261.8
262.2
267.5
280.3
302.3
261.8
262.2
267.5
280.3
302.3
Canada wealth management fees
141.5
133.1
129.2
130.1
138.2
141.5
133.1
129.2
130.1
138.2
U.S. wealth management fees
201.3
190.1
164.1
168.9
164.5
201.3
190.1
164.1
168.9
164.5
Other revenues
32.3
26.2
26.6
21.2
21.6
34.4
28.8
26.6
21.2
21.6
FX gains/(losses)
1.8
15.2
(73.9)
(32.9)
11.5
—
—
—
—
—
Other gains/(losses)
(0.9)
(6.5)
0.1
(1.1)
(4.4)
1.0
0.6
0.1
(2.3)
(4.4)
Total net revenues
637.8
620.3
513.6
566.7
633.8
640.0
614.9
587.5
598.3
622.3
Expenses
Selling, general administrative
304.6
277.2
245.6
238.0
259.3
254.6
248.0
230.3
234.2
227.9
Advisor and dealer fees
107.8
101.1
98.3
99.7
106.9
107.8
101.1
98.3
99.7
106.9
Other
11.5
9.2
17.1
4.7
3.6
9.0
8.1
8.1
3.8
2.7
Interest and lease finance expense
47.2
41.4
38.6
36.2
35.9
47.2
41.4
38.6
36.2
35.9
Depreciation and other amortization
12.9
13.1
13.0
11.9
11.4
12.9
13.1
13.0
11.9
11.4
Amortization of intangible assets from acquisitions
31.3
26.5
27.7
27.4
24.1
—
—
—
—
—
Transaction, integration, restructuring and legal
14.2
41.3
13.1
4.6
3.8
—
—
—
—
—
Change in fair value of contingent consideration
53.5
76.8
22.5
(75.0)
3.1
—
—
—
—
—
Total expenses
583.0
586.7
475.8
347.7
448.0
431.5
411.7
388.2
386.0
384.8
Pretax income
54.8
33.6
37.8
219.0
185.8
208.5
203.2
199.3
212.3
237.5
Income tax expense
24.6
41.9
23.5
60.7
48.3
53.2
51.8
51.3
55.1
59.7
Net income
30.2
(8.3)
14.4
158.3
137.5
155.3
151.4
148.1
157.2
177.8
Less: Non-controlling interest
0.2
1.2
(0.5)
2.1
(0.6)
18.5
15.5
12.1
8.1
10.9
Net income attributable to shareholders
30.0
(9.5)
14.9
156.2
138.1
136.8
135.9
135.9
149.1
166.8
Basic earnings per share
0.16
(0.05)
0.08
0.82
0.70
0.74
0.74
0.73
0.78
0.85
Diluted earnings per share
0.16
(0.05)
0.08
0.81
0.70
0.74
0.74
0.73
0.78
0.85
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,
2023
Dec.
31,
2022
Sep.
30,
2022
Jun.
30,
2022
Mar.
31,
2022
Mar.
31,
2023
Dec.
31,
2022
Sep.
30,
2022
Jun.
30,
2022
Mar.
31,
2022
Revenues
Asset management fees
382.0
382.3
390.9
408.9
442.5
382.0
382.3
390.9
408.9
442.5
Trailer fees and deferred sales commissions
(123.4)
(123.8)
(126.8)
(131.9)
(143.9)
(123.4)
(123.8)
(126.8)
(131.9)
(143.9)
Net asset management fees
258.6
258.5
264.1
277.0
298.6
258.6
258.5
264.1
277.0
298.6
Other revenues
4.0
3.6
6.6
5.6
10.2
4.0
3.6
6.6
5.6
10.2
FX gains/(losses)
2.0
15.5
(74.4)
(32.8)
11.4
—
—
—
—
—
Other gains/(losses)
(0.9)
(6.5)
0.1
(1.1)
(4.4)
1.0
0.6
0.1
(2.3)
(4.4)
Total net revenues
263.6
271.2
196.4
248.7
315.8
263.5
262.8
270.7
280.2
304.4
Expenses
Selling, general administrative
98.9
94.3
98.7
97.3
96.8
98.6
94.3
98.7
97.3
96.8
Other
—
—
7.2
—
—
—
—
—
—
—
Interest and lease finance expense
0.6
0.9
1.0
1.0
1.0
0.6
0.9
1.0
1.0
1.0
Depreciation and other amortization
3.8
4.7
5.0
5.0
5.0
3.8
4.7
5.0
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
1.7
11.0
2.6
2.3
(0.9)
—
—
—
—
—
Change in fair value of contingent consideration
(2.2)
1.6
3.2
(3.9)
4.0
—
—
—
—
—
Total expenses
103.5
113.1
118.2
102.3
106.5
103.0
99.9
104.6
103.3
102.8
Pretax income
160.1
158.0
78.2
146.4
209.3
160.5
162.8
166.1
176.9
201.6
Non-IFRS adjustments
Pretax income
160.1
158.0
78.2
146.4
209.3
160.5
162.8
166.1
176.9
201.6
Amortization of intangible assets from acquisitions
0.6
0.6
0.6
0.6
0.6
—
—
—
—
—
Depreciation and other amortization
3.8
4.7
5.0
5.0
5.0
3.8
4.7
5.0
5.0
5.0
Interest and lease finance expense
0.6
0.9
1.0
1.0
1.0
0.6
0.9
1.0
1.0
1.0
EBITDA
165.1
164.2
84.7
153.0
215.9
164.9
168.4
172.1
183.0
207.6
Change in fair value of contingent consideration
(2.2)
1.6
3.2
(3.9)
4.0
—
—
—
—
—
FX (gains)/losses
(2.0)
(15.5)
74.4
32.8
(11.4)
—
—
—
—
—
Severance
0.5
—
—
—
—
—
—
—
—
—
Amortization of loan guarantees
(0.3)
—
—
—
—
—
—
—
—
—
Transaction, integration, restructuring and legal
1.7
11.0
2.6
2.3
(0.9)
—
—
—
—
—
Other (gains)/losses
1.9
7.1
—
(1.2)
—
—
—
—
—
—
Trading and bad debt
—
—
7.1
—
—
—
—
—
—
—
Total adjustments
(0.2)
4.2
87.3
30.0
(8.3)
—
—
—
—
—
Less: Non-controlling interest
0.2
0.1
0.1
0.3
0.4
0.2
0.1
0.1
0.3
0.4
Adjusted EBITDA
164.7
168.3
172.0
182.7
207.2
164.7
168.3
172.0
182.7
207.2
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,
2023
Dec.
31,
2022
Sep.
30,
2022
Jun.
30,
2022
Mar.
31,
2022
Mar.
31,
2023
Dec.
31,
2022
Sep.
30,
2022
Jun.
30,
2022
Mar.
31,
2022
Revenues
Canada wealth management fees
184.3
176.8
171.7
175.6
185.7
184.3
176.8
171.7
175.6
185.7
Other revenues
31.8
29.1
25.5
21.3
17.1
31.8
29.2
25.5
21.3
17.1
FX gains/(losses)
(0.2)
(0.4)
0.5
—
0.1
—
—
—
—
—
Other gains/(losses)
—
—
—
—
—
—
—
—
—
—
Total net revenues
215.9
205.5
197.7
196.9
202.9
216.2
206.0
197.2
196.9
202.8
Expenses
Selling, general administrative
48.2
46.2
43.8
44.0
41.1
47.7
45.9
43.6
43.9
41.1
Advisor and dealer fees
141.7
136.2
132.4
135.9
145.6
141.7
136.2
132.4
135.9
145.6
Other
9.8
9.3
8.2
4.0
3.2
8.8
8.1
6.3
3.2
2.4
Interest and lease finance expense
0.3
—
—
(0.1)
0.2
0.3
—
—
(0.1)
0.2
Depreciation and other amortization
4.1
3.2
3.2
2.8
2.5
4.1
3.2
3.2
2.8
2.5
Amortization of intangible assets from acquisitions
2.1
2.1
2.1
2.1
1.6
—
—
—
—
—
Transaction, integration, restructuring and legal
0.3
0.2
0.3
0.4
0.8
—
—
—
—
—
Change in fair value of contingent consideration
5.3
1.9
(0.7)
(0.6)
—
—
—
—
—
—
Total expenses
211.8
199.1
189.3
188.5
195.0
202.5
193.4
185.6
185.6
191.7
Pretax income
4.1
6.4
8.4
8.4
7.9
13.7
12.5
11.6
11.4
11.1
Non-IFRS adjustments
Pretax income
4.1
6.4
8.4
8.4
7.9
13.7
12.5
11.6
11.4
11.1
Amortization of intangible assets from acquisitions
2.1
2.1
2.1
2.1
1.6
—
—
—
—
Amortization of equity accounted investments
0.1
0.1
—
—
—
—
—
—
—
—
Depreciation and other amortization
4.1
3.2
3.2
2.8
2.5
4.1
3.2
3.2
2.8
2.5
Interest and lease finance expense
0.3
—
—
(0.1)
0.2
0.3
—
—
(0.1)
0.2
EBITDA
10.7
11.8
13.7
13.1
12.1
18.0
15.8
14.9
14.0
13.8
Change in fair value of contingent consideration
5.3
1.9
(0.7)
(0.6)
—
—
—
—
—
—
Contingent consideration recorded as compensation (included in SG)
0.2
0.2
0.1
0.1
—
—
—
—
—
—
CIPW adjustments (included in SG)
0.2
0.1
0.1
0.1
—
—
—
—
—
—
FX (gains)/losses
0.2
0.4
(0.5)
—
(0.1)
—
—
—
—
—
Severance
0.1
—
—
—
—
—
—
—
—
—
Transaction, integration, restructuring and legal
0.3
0.2
0.3
0.4
0.8
—
—
—
—
—
Non-controlling interest reclassification (included in Other)
1.1
1.2
1.0
0.9
0.9
—
—
—
—
—
Trading and bad debt
—
—
0.8
—
—
—
—
—
—
—
Total adjustments
7.3
4.0
1.2
0.8
1.6
—
—
—
—
—
Less: Non-controlling interest
1.9
1.3
1.2
1.0
0.9
1.9
1.3
1.2
1.0
0.9
Adjusted EBITDA
16.2
14.5
13.7
13.0
12.9
16.2
14.5
13.7
13.0
12.9
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,
2023
Dec.
31,
2022
Sep.
30,
2022
Jun.
30,
2022
Mar.
31,
2022
Mar.
31,
2023
Dec.
31,
2022
Sep.
30,
2022
Jun.
30,
2022
Mar.
31,
2022
Revenues
U.S. wealth management fees
201.3
190.1
164.1
168.9
164.5
201.3
190.1
164.1
168.9
164.5
Other revenues
6.3
2.9
4.2
4.5
4.8
8.3
5.5
4.2
4.5
4.8
FX gains/(losses)
—
—
—
—
—
—
—
—
—
—
Total net revenues
207.7
193.1
168.2
173.4
169.2
209.6
195.6
168.3
173.5
169.2
Expenses
Selling, general administrative
173.0
151.1
117.7
112.8
136.9
123.8
122.2
102.6
109.2
105.5
Other
1.7
(0.1)
1.8
0.7
0.4
0.2
(0.1)
1.8
0.7
0.4
Interest and lease finance expense
0.8
0.8
0.7
0.6
0.5
0.8
0.8
0.7
0.6
0.5
Depreciation and other amortization
5.1
5.2
4.8
4.1
3.9
5.1
5.2
4.8
4.1
3.9
Amortization of intangible assets from acquisitions
28.6
23.8
25.0
24.7
21.9
—
—
—
—
—
Transaction, integration, restructuring and legal
12.2
30.0
10.2
2.0
3.9
—
—
—
—
—
Change in fair value of contingent consideration
50.4
73.3
20.0
(70.5)
(0.9)
—
—
—
—
—
Total expenses
271.7
284.2
180.1
74.4
166.5
129.9
128.1
109.8
114.6
110.3
Pretax income
(64.0)
(91.1)
(11.9)
99.0
2.7
79.7
67.4
58.4
58.9
59.0
Non-IFRS adjustments
Pretax income
(64.0)
(91.1)
(11.9)
99.0
2.7
79.7
67.4
58.4
58.9
59.0
Amortization of intangible assets from acquisitions
28.6
23.8
25.0
24.7
21.9
—
—
—
Amortization of equity accounted investments
2.0
2.5
—
—
—
—
—
—
—
—
Depreciation and other amortization
5.1
5.2
4.8
4.1
3.9
5.1
5.2
4.8
4.1
3.9
Interest and lease finance expense
0.8
0.8
0.7
0.6
0.5
0.8
0.8
0.7
0.6
0.5
EBITDA
(27.5)
(58.8)
18.6
128.4
29.1
85.6
73.5
63.9
63.5
63.4
Change in fair value of contingent consideration
50.4
73.3
20.0
(70.5)
(0.9)
—
—
—
—
—
Contingent consideration recorded as compensation (included in SG)
1.5
1.3
3.7
0.6
18.2
—
—
—
—
—
NCI reclassification (included in SG)
1.4
—
—
—
—
—
—
—
—
—
CIPW adjustments (included in SG)
42.9
27.6
11.4
3.0
13.2
—
—
—
—
—
FX (gains)/losses
—
—
—
—
—
—
—
—
—
—
Severance
4.8
—
—
—
—
—
—
—
—
—
Transaction, integration, restructuring and legal
12.2
30.0
10.2
2.0
3.9
—
—
—
—
—
Total adjustments
113.1
132.2
45.3
(64.9)
34.3
—
—
—
—
—
Less: Non-controlling interest
16.5
13.6
12.1
8.2
10.9
16.5
13.6
12.1
8.2
10.9
Adjusted EBITDA
69.1
59.9
51.8
55.4
52.5
69.1
59.9
51.8
55.4
52.5
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