- Record earnings per share of $0.62, up 2% over the previous quarter and 3% year over year
- Free cash flow of $169 million, up 4% over the previous quarter and 6% year over year
- Significant enhancements to the product lineup
Toronto (November 8, 2018) – CI Financial Corp. (“CI”) (TSX: CIX) today released unaudited financial results for the quarter ended September 30, 2018.
“CI continues to produce strong results despite increasing volatility on global financial markets and a challenging environment for global asset managers,” said Peter W. Anderson, CI Chief Executive Officer. “Most impressively, our free cash flow has continued to grow, reaching a record $499 million for the first nine months of the year, while earnings per share also hit a record level of 62 cents for the third quarter.
“We are making major strides in improving the efficiency and effectiveness of our operations and enhancing our product lineup, with numerous initiatives underway across CI,” Mr. Anderson said. “Over the last two weeks, for example, we launched CI Private Pools and liquid alternatives – two new product platforms designed to meet the needs of investors and advisors in today’s evolving environment. With liquid alternatives, we are among the earliest entrants into this exciting new market. Additional enhancements to our product lineup are in the works and will launch in the coming months.
“Events in the quarter reinforced our decision to introduce a new capital allocation policy in August. In the third quarter we repurchased 8.8 million shares and we’ll continue to take advantage of market conditions to buy back shares at attractive valuations.”
Financial results
CI reported record earnings per share of $0.62 for the third quarter of 2018, up 2% from $0.61 for the second quarter of 2018, and up 3% from $0.60 for the third quarter of 2017. Net income attributable to shareholders was $158.2 million for the quarter ended September 30, 2018, compared with $159.9 million in the previous quarter and $153.6 million for the same quarter last year.
CI generated $169.2 million in free cash flow during the quarter ended September 30, 2018, compared to $163.0 million in the second quarter of 2018 and $159.1 million in the same period of 2017. For the first nine months of 2018, free cash flow was $499.0 million, a record for CI.
Average assets under management were $138.3 billion for the quarter ended September 30, 2018, up 15% from the quarter ended September 30, 2017 and down 1% from the quarter ended June 30, 2018. The year-over-year increase was primarily due to the acquisition of Sentry Investments Corp. (“Sentry”) in October 2017. At September 30, 2018, CI’s assets under advisement were $44.4 billion, a record for CI, and up $3.6 billion from September 30, 2017.
CI’s Canadian business, excluding products closed to new investors, had $2.7 billion in gross sales and $2.4 billion in net redemptions for the quarter ended September 30, 2018, a $216 million improvement from the prior quarter. CI’s international business had $186 million in net sales in the third quarter, up $201 million from the same quarter last year. CI’s closed businesses, comprised primarily of segregated fund contracts that are no longer available for sale, had $227 million in net redemptions for the quarter.
During the quarter, CI continued to make significant strategic investments into its business while maintaining strong controls on expenses. Selling, general and administrative (“SG&A”) expenses increased only slightly from the second to the third quarter of 2018, increasing from $129.7 million to $131.4 million. The increase in SG&A expenses from $108.7 million for the same quarter a year ago primarily reflected the additions of Sentry and BBS Securities Inc., as well as the investments in CI’s business.
Share repurchases and dividend update
On August 9, 2018, CI announced that its Board of Directors had unanimously approved a new capital allocation strategy that would allow CI to re-allocate a greater portion of its cash flow to repurchasing shares under its normal course issuer bid. In the third quarter of 2018, CI repurchased $188.8 million of shares and paid $61.1 million in dividends. Share repurchases for the first nine months of 2018 were $497.0 million, representing CI’s largest-ever spend on share repurchases over that period of time.
In August 2018, the Board of Directors declared a quarterly dividend of $0.18 per share to be paid for the remainder of 2018 and for all of 2019. The annual dividend rate of $0.72 per share represented a yield of 3.7% on CI’s closing share price of $19.22 on November 7, 2018. As of October 31, 2018, CI had 248,896,042 shares outstanding.
Business highlights
- Following quarter-end, on October 30, CI Investments announced the launch of CI Private Pools, a platform of 17 focused mandates designed to meet the needs of affluent and high net worth investors. This broad lineup, which offers a simplified flat-fee pricing model, allows investors and advisors to construct tailored portfolios to suit their individual needs.
- Earlier this week, CI Investments launched three liquid alternative solutions. These funds are based on the Canadian Securities Administrators’ “alternative mutual funds” proposals under National Instrument 81-102 Investment Funds. They provide retail investors access to alternative investment strategies that have typically only been available to institutional and accredited investors. CI Investments’ new alternatives are Lawrence Park Alternative Investment Grade Credit Fund, Marret Alternative Absolute Return Bond Fund and Munro Alternative Global Growth Fund.
- Changes to CI’s product lineup during the quarter included a reduction in management fees on 33 CI Investments funds ranging from five to 55 basis points (0.05-0.55%), effective August 1, 2018. In addition, effective October 1, 2018, CI Investments lowered investment minimums for the CI Preferred Pricing™ program to $100,000 from $150,000, making the program accessible to a larger number of investors.
- Funds managed by CI companies were recognized with six 2018 Thompson Reuters Lipper Fund Awards, announced last night in Toronto. The awards recognize funds that have excelled in delivering consistently strong risk-adjusted performance, relative to peers. Portfolio managers of the winning funds included Cambridge Global Asset Management and Sentry Investment Management (both divisions of CI Investments), as well as First Asset Investment Management.
- Finally, as of September 24, 2018, the Sentry-branded investment funds were switched to the CI Investments administrative platform, providing investors and advisors with expanded choice and greater ease of doing business with CI. This also marked the final step in the integration of the former Sentry Investments into CI Investments. Sentry Investments was acquired by CI in October 2017.
Analysts’ conference call
CI will hold a conference call with analysts today at 9:00 a.m. Eastern Time, led by Chief Executive Officer Peter Anderson and Chief Financial Officer Douglas Jamieson. The call and a slide presentation will be accessible through a webcast available by visiting www.cifinancial.com. Investors may listen to the discussion by dialing 1-866-696-5894 or (416) 340-2217 (Passcode: 8543815#)
A replay of the call will be available until November 22, 2018 at 11:59 p.m. at 1-800-408-3053 (Passcode: 5507027#). The webcast will be archived in the Financial Information section of www.cifinancial.com.
Financial highlights
| |
As at and for the quarters ended |
Change |
| [millions of dollars, except share amounts] |
Sep. 30, 2018 |
Jun. 30, 2018 |
Sep. 30, 2017 |
QoQ |
YoY |
| Assets under management |
136,526 |
138,182 |
121,725 |
(1) |
12 |
| Assets under advisement |
44,359 |
43,717 |
40,759 |
1 |
9 |
| Total assets |
180,884 |
181,900 |
162,484 |
(1) |
11 |
| Average assets under management |
138,322 |
139,487 |
120,304 |
(1) |
15 |
| |
|
|
|
|
|
| Management fees |
509.9 |
506.3 |
452.9 |
1 |
13 |
| Total revenues |
569.0 |
564.6 |
504.1 |
1 |
13 |
| Selling, general & administrative |
131.4 |
129.7 |
108.7 |
1 |
21 |
| Trailer fees |
160.6 |
159.6 |
139.3 |
1 |
15 |
| Net income |
158.3 |
160.0 |
153.6 |
(1) |
3 |
| Adjusted net income1 |
158.2 |
159.9 |
153.6 |
(1) |
3 |
| Basic earnings per share |
0.62 |
0.61 |
0.60 |
2 |
3 |
| Adjusted earnings per share1 |
0.62 |
0.61 |
0.60 |
2 |
3 |
| Diluted earnings per share |
0.62 |
0.60 |
0.60 |
3 |
3 |
| |
|
|
|
|
|
| Free cash flow1 |
169.2 |
163.0 |
159.1 |
4 |
6 |
| Return on equity2 |
39.1% |
38.6% |
40.5% |
1 |
(3) |
| Dividends paid per share |
0.2350 |
0.3525 |
0.3525 |
(33) |
(33) |
| Dividend yield |
3.5% |
6.0% |
5.2% |
|
|
| |
|
|
|
|
|
| Average shares outstanding |
256,739,584 |
264,090,648 |
257,630,053 |
(3) |
– |
| Shares outstanding |
251,755,586 |
260,562,210 |
255,752,744 |
(3) |
(2) |
| Share price – High |
24.38 |
27.71 |
28.19 |
(12) |
(14) |
| Share price – Low |
19.95 |
23.36 |
25.79 |
(15) |
(23) |
| Share price – Close |
20.51 |
23.63 |
27.29 |
(13) |
(25) |
| Change in share price |
(13.2%) |
(14.4%) |
(1.3%) |
|
|
| Total shareholder return |
(12.3%) |
(13.2%) |
0.0% |
|
|
| Market capitalization |
5,164 |
6,157 |
6,979 |
(16) |
(26) |
| P/E ratio (adjusted earnings)2 |
8.4 |
9.7 |
11.7 |
(13) |
(28) |
| |
|
|
|
|
|
| Long term debt (including current portion) |
1,444.0 |
1,428.5 |
1,067.9 |
1 |
35 |
| Net debt1 |
1,209.3 |
1,126.2 |
691.1 |
7 |
75 |
| Net debt to adjusted EBITDA1 |
1.30 |
1.21 |
0.80 |
7 |
63 |
1 Adjusted net income, free cash flow, net debt, and EBITDA are not standardized earnings measures prescribed by IFRS. Descriptions of these measures, as well as others, and reconciliations to the nearest IFRS measures, where necessary, are included in Management’s Discussion and Analysis available at www.cifinancial.com.
2 Trailing 12 months, calculated using adjusted net income.
For detailed financial statements for the quarter ended September 30, 2018, including Management’s Discussion and Analysis, which contains discussions of non-IFRS measures, please refer to CI’s website at www.cifinancial.com under Financial Information, or contact investorrelations@ci.com.
About CI Financial
CI Financial Corp. (TSX: CIX) is an independent Canadian company offering global asset management and wealth management advisory services. Its primary operating businesses are CI Investments Inc., Assante Wealth Management (Canada) Ltd., CI Private Counsel LP, Grant Samuel Funds Management Pty Ltd. of Australia, First Asset Investment Management Inc., and BBS Securities Inc. Further information is available at http://www.cifinancial.com.
This press release contains forward-looking statements with respect to CI and its products and services, including its business operations and strategy and financial performance and condition. Although management believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, including interest rates, business competition, changes in government regulations or in tax laws, and other factors discussed in materials filed with applicable securities regulatory authorities from time to time.
For further information:
Investor Relations
CI Financial
(416) 364-1145
investorrelations@ci.com