CI Financial reports third quarter results

TSX Symbol: CIX

TORONTO, Nov. 6, 2012 /CNW/ - CI Financial Corp. ("CI") today released unaudited financial results for the quarter ended September 30, 2012.

HIGHLIGHTS

Quarter ended
September 30, 2012
(millions except
per share amounts)
Quarter ended
June 30, 2012
(millions except
per share amounts)
%
change
Quarter ended
September 30, 2011
(millions except
per share amounts)
%
change
Assets Under Management $   73,866 $  71,559 3 $   67,386 10
Average Assets Under Management 72,437 71,385 1 70,823 2
EBITDA Per Share 1 0.62 0.61 2 0.61 2
Pre-Tax Operating Earnings Per Share1 0.56 0.55 2 0.56 0
Adjusted Earnings Per Share2 0.32 0.32 0 0.32 0
Earnings Per Share 0.32 0.25 28 0.32 0
SG&A Expenses 38.4 bps 39.8 bps (4) 40.4 bps (5)
Net Debt 3 552.8 614.2 (10) 694.5 (20)
Dividends Recorded Per Share 0.240 0.240 0 0.225 7
1 Pre-Tax Operating Earnings and EBITDA (earnings before interest, taxes, depreciation and amortization) are not standardized earnings measures prescribed by IFRS; however, management believes that most of its shareholders, creditors, other stakeholders and investment analysts prefer to include the use of these performance measures in analyzing CI's results. CI defines pre-tax operating earnings as income before income taxes less redemption fee revenue, non-recurring items, performance fees and investment gains, plus amortization of deferred sales commissions (DSC) and fund contracts. CI's method of calculating these measures may not be comparable to similar measures presented by other companies.
2 Adjusted for an $18.8 million income tax expense in Q2 2012 related to Ontario tax rate changes.
3 Net of cash and marketable securities not required for regulatory working capital.

For the quarter ended September 30, 2012, CI reported net income of $91.3 million ($0.32 per share), an increase from $71.3 million ($0.25 per share) for the quarter ended June 30, 2012 and $90.8 million ($0.32 per share) for the quarter ended September 30, 2011. Adjusted for a non-recurring tax expense in the second quarter of 2012, net income increased to $91.3 million in the third quarter of 2012 from $90.1 million in the second quarter of 2012 and $90.8 million in the third quarter of 2011. These increases are largely in line with the growth in average assets under management. Average assets for the third quarter of 2012 were $72.4 billion, 1% higher than the average assets for the quarter ended June 30, 2012 and 2% higher than the average assets for the quarter ended September 30, 2011.

For the quarter ended September 30, 2012, EBITDA per share was $0.62, an increase of 2% from the prior quarter and 2% from the third quarter of 2011. Pre-tax operating earnings per share, which include adjustments for non-recurring items, were up 2% from the prior quarter and level with the third quarter of 2011.

CI maintained its firm cost controls during the quarter, with selling, general and administrative ("SG&A") expenses declining 1% and 3% from the prior quarter and the third quarter of last year, respectively. As a percentage of average assets under management, SG&A expenses dropped to 38.4 basis points in the third quarter, a decline of 4% from the prior quarter and 5% from the third quarter of last year.

CI generated $110.4 million in free cash flow during the quarter ended September 30, 2012 compared to $104.7 million in the second quarter of 2012. Along with an improvement in working capital, free cash flow facilitated a reduction in net debt by $61.4 million, the payment of $68.0 million in dividends and the repurchase of $5.9 million worth of shares in the quarter.

"The third quarter results were very encouraging for CI," said Stephen A. MacPhail, President and Chief Executive Officer. "Not only did we experience growth in our assets, but CI's assets at September 30, 2012 were 2% higher than the average for the quarter. Further growth in the month of October has left CI well positioned for the fourth quarter of 2012."

"In addition," Mr. MacPhail said, "the outstanding performance of CI funds has continued, with 73% of long-term assets under management having first or second-quartile returns for the year-to-date and 75% in the first or second-quartile over the 10 years ending September 30, 2012. This strong performance has been reflected in net sales of CI's products. CI experienced an improvement in all sales channels compared to the same quarter one year ago and to the second quarter of 2012. CI also generated positive net retail sales every month during the quarter and in October."

Gross sales of funds for the quarter ended September 30, 2012 were $2.4 billion compared with gross sales of $1.8 billion in the third quarter of 2011. Total redemptions were $2.1 billion in the third quarter of 2012 compared with $1.9 billion in the third quarter of 2011. Net sales were $358.5 million in the quarter ended September 30, 2012 compared to net redemptions of $91.0 million in the third quarter of 2011.

The Board of Directors declared monthly cash dividends of $0.08 per share payable on December 14, 2012, January 15, 2013 and February 15, 2013 to shareholders of record on November 30, 2012, December 31, 2012, and January 31, 2013, respectively. The monthly dividend represented a yield of 4.1% on CI's share price of $23.34 on October 31, 2012.

As of October 31, 2012, CI had 283,074,620 shares outstanding.

For detailed financial statements for the quarter ended September 30, 2012, including Management's Discussion and Analysis, please refer to CI's website at www.cifinancial.com under Reports, or contact investorrelations@ci.com.

Analysts' Conference Call

CI will hold a conference call with analysts today at 4 p.m. Eastern time. President and Chief Executive Officer Stephen MacPhail and Chief Financial Officer Douglas Jamieson will be presenting CI's results. The call and a slide presentation will be accessible through a webcast at www.ci.com/q3. Alternatively, investors may listen to the discussion by dialling (416) 695-7806 or 1-888-789-9572 (passcode: 3550981).

The call will be available for playback until November 20, 2012 at (905) 694-9451 or 1-800-408-3053 (passcode: 3747746). The webcast will be archived at www.ci.com/q3.

CI Financial Corp. (TSX: CIX) is an independent, Canadian-owned wealth management company. CI offers a broad range of investment products and services, including an industry-leading selection of investment funds, and is on the Web at 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.

 

 

SOURCE: CI Financial Corp.

For further information:

Stephen A. MacPhail
President and Chief Executive Officer
CI Financial Corp.
(416) 364-1145