CI Financial reports third quarter 2019 results
- Earnings per share of $0.60, up from $0.58 (adjusted) for the prior quarter
- $928 million net sales improvement compared with the prior quarter
- Share repurchases total $150 million in the quarter
- Dividend of $0.18 per share declared for March 31, 2020 record date
- CI advances digital strategy with launch of Assante Connect, new partnerships
- ETF assets to reach $8.9 billion with acquisition of WisdomTree Canada
TORONTO (November 7, 2019) − CI Financial Corp. (“CI”) (TSX: CIX) today released unaudited financial results for the quarter ended September 30, 2019.
“While we experienced redemptions in the third quarter, we have seen a considerable improvement in our net flows on both a quarter-over-quarter and year-over-year basis,” said Kurt MacAlpine, CI Chief Executive Officer.
“In addition, we have taken a number of early steps to transform our business and position it for growth in high-potential segments of the industry. These include boosting our ETF assets to almost $9 billion with the agreement to purchase WisdomTree Canada, and reaching $1 billion in assets in liquid alternative funds, establishing a leadership position in this new market. We expanded our range of digital services with the launch of Assante Connect, an online investment platform managed by WealthBar (acquired by CI in January 2019) for clients of Assante, and we continue to enhance and build our online services through new initiatives and partnerships.
“CI continues to produce high levels of free cash flow, which we are allocating in a prudent manner,” Mr. MacAlpine said. “This quarter we repurchased $150 million in shares and paid a dividend of $0.18 per share.”
CI reported earnings per share of $0.60 for the third quarter of 2019, compared to $0.47 for the second quarter of 2019 and $0.62 for the third quarter of 2018. The prior quarter included a restructuring provision of $26.6 million ($35.0 million before taxes). Excluding this provision, earnings per share in the second quarter were $0.58.
Selling, general and administrative (“SG&A”) expenses for the third quarter were $124.6 million, down from $124.8 million in the second quarter of 2019 and $128.9 million in the third quarter of 2018.
CI generated $144.7 million in free cash flow during the quarter ended September 30, 2019, down slightly from $146.5 million in the quarter ended June 30, 2019.
Average assets under management were $129.8 billion for the quarter ended September 30, 2019, down 1% from the quarter ended June 30, 2019 and down 6% from the quarter ended September 30, 2018. At September 30, 2019, CI’s ending assets under management were $130.0 billion, compared with $130.2 billion at June 30, 2019. Assets under advisement were $47.4 billion on September 30, 2019, up 2% when compared with June 30, 2019. CI’s assets under advisement include the assets of Assante Wealth Management (Canada) Limited, Stonegate Private Counsel, and WealthBar Financial Services Inc.
CI’s overall net redemptions in the third quarter were $1.5 billion, an improvement of $0.9 billion over both the prior quarter and the same quarter last year. CI’s Canadian business, excluding products closed to new investors, had $3.0 billion in gross sales in the third quarter of 2019, an improvement of $0.3 billion over both the prior quarter and the same quarter last year. Redemptions in this segment decreased, resulting in net redemptions of $1.8 billion for the third quarter of 2019, an improvement of $0.6 billion over the third quarter of 2018. CI’s international business had $594 million in gross sales and $495 million in net sales in the third quarter due to a large institutional investment. CI’s closed business, comprised primarily of segregated fund contracts that are no longer available for sale, had $225 million in net redemptions for the quarter.
Share repurchases and dividends
In the third quarter of 2019, CI repurchased $150.2 million of shares (7.7 million) and paid $42.5 million in dividends ($0.18 per share). For the month of October 2019, CI repurchased a further 2.3 million shares, ending the month with 227,063,037 shares outstanding.
The Board of Directors declared a quarterly dividend of $0.18 per share, payable on April 15, 2020, to shareholders of record on March 31, 2020. Previously, in August 2018, the Board 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 3.6% on CI’s closing share price of $20.20 on November 6, 2019.
- In September, CI Liquid Alternatives™ exceeded $1 billion in assets under management, just 10 months after launching. CI Investments Inc. was an early entrant in this new and fast-growing market.
- CI Investments took a significant step in its continuing initiative to modernize and simplify its product lineup with the September announcement of a proposal to merge 30 funds into other mandates.
- To meet the increasing demand for socially responsible investing options, CI Investments launched CI First Asset MSCI World ESG Impact ETF and CI MSCI World ESG Impact Fund in September.
- Assante and WealthBar launched Assante Connect, a new online investing platform designed for clients of Assante financial advisors, in September. The service illustrates CI’s unique position in being able to combine a leading advisory business with a state-of-the-art digital platform.
- CI announced other important developments in its digital strategy following quarter-end, including:
- The acquisition, through WealthBar, of Snap Projections Inc., a company that creates software for wealth professionals to help build customized wealth and retirement plans for their clients.
- A strategic partnership with d1g1t Inc., a leading fintech firm, in which CI will adopt d1g1t’s platform across its advisory businesses and make an equity investment of 9.5% in the company. With d1g1t, CI will provide a modern advisory technology platform that supports advanced portfolio analytics for high-net-worth clients, and which will significantly enhance the client and advisor experience. Its capabilities include offering separately managed accounts.
- Today, CI announced an agreement to acquire WisdomTree Asset Management Canada, Inc., the investment fund manager of WisdomTree’s Canadian exchange-traded funds. The purchase will add 14 ETFs with $958 million in assets under management to CI’s lineup.
- In October, Australian subsidiary GSFM Pty Ltd. acquired a 49% equity stake in Redpoint Investment Management Pty Ltd., a boutique global equities manager with approximately A$10 billion in assets under management based in Sydney, Australia.
Analysts’ conference call
CI will hold a conference call with analysts today at 9:00 a.m. Eastern Time, led by Chief Executive Officer Kurt MacAlpine and Chief Financial Officer Douglas Jamieson. The call and a slide presentation will be accessible through a webcast by visiting www.cifinancial.com. Alternatively, investors may listen to the discussion by dialing 1-800-806-5484 or (416) 406-0743 (Passcode: 4557322#). A replay of the call will be available until November 21, 2019 at 11:59 p.m. at 1-800-408-3053 or (905) 694-9451 (Passcode: 5557861#). The webcast will be archived in the Financial Information section of www.cifinancial.com.
|As at and for the quarters ended
|[millions of dollars, except share amounts]||Sep. 30, 2019||June 30, 2019||Sep. 30, 2018||QoQ||YoY|
|Assets under management||129,998||130,186||136,526||-||(5)|
|Assets under advisement||47,383||46,606||44,359||2||7|
|Average assets under management||129,784||131,133||138,322||(1)||(6)|
|Selling, general & administrative||124.6||124.8||128.9||-||(3)|
|Adjusted net income1||139.0||138.5||158.2||-||(12)|
Basic earnings per share
|Diluted earnings per share||0.60||0.47||0.62||28||(3)|
|Adjusted earnings per share1||0.60||0.58||0.62||3||(3)|
|Free cash flow1||144.7||146.5||169.2||(1)||(14)|
|Return on equity2||37.6%||37.8%||39.1%|
|Dividends paid per share||0.1800||0.1800||0.2350||-||(23)|
|Average shares outstanding||232,140,211||
|Share price – High||21.97||21.57||24.38||2||(10)|
|Share price – Low||18.00||17.96||19.95||-||(10)|
|Share price – Close||19.33||21.34||20.51||(9)||(6)|
|Change in share price||(9.4%)||17.0%||(13.2%)|
|Total shareholder return||(8.6%)||18.0%||(12.3%)|
|Long term debt (including current portion)||1,569.2||1,525.3||1,444.0||3||9|
|Net debt to adjusted EBITDA1||1.62||1.51||1.30||7||25|
1Adjusted 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.
2Trailing 12 months, calculated using adjusted net income.
For detailed financial statements for the quarter ended June 30, 2019, 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 email@example.com.
About CI Financial
CI Financial Corp. (TSX: CIX) is an independent 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, GSFM Pty Ltd. of Australia, WealthBar Financial Services Inc., and BBS Securities Inc. Further information is available at www.cifinancial.com.
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 these forward-looking statements include 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, 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.
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