CI Financial reports first quarter results; Earnings per share up 35%

TSX Symbol: CIX

TORONTO, May 10 /CNW/ - CI Financial Corp. ("CI") today released unaudited financial results for the quarter ended March 31, 2011.

HIGHLIGHTS

Quarter ended
March 31, 2011
(millions except
per share amounts)
Quarter ended
December 31, 2010
(millions except
per share amounts)
% change Quarter ended
March 31, 2010
(millions except
per share amounts)
% change
Assets Under Management $  75,455 $  72,825 4 $  65,684 15
Average Assets Under Management 74,114 69,297 7 64,276 15
SG&A Expenses 1 71.5 70.2 2 63.5 13
EBITDA Per Share 2 0.66 0.62 6 0.54 22
Pre-Tax Operating Earnings Per Share2 0.59 0.56 5 0.51 16
Earnings Per Share 0.35 0.30 17 0.26 35

1 Adjusted for equity-based compensation expense.
2 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, and equity-based compensation expense. CI's method of calculating these measures may not be comparable to similar measures presented by other companies. EBITDA is a measure of operating performance, a facilitator for valuation and a proxy for cash flow.

Total assets at March 31, 2011 were $98.8 billion, up 13% from $87.4 billion at March 31, 2010. This increase was attributable to improving markets, positive net sales of funds and the acquisition of Hartford Investments Canada Corp. in December 2010 (which was rebranded Castlerock Investments in February 2011). Total assets were comprised of $75.5 billion in assets under management and $23.3 billion in assets under administration.

For the quarter ended March 31, 2011, average assets under management were $74.1 billion, an increase of 15% from the first quarter of 2010 and an increase of 7% over the previous quarter. Gross sales and net sales of funds for the quarter ended March 31, 2011 were $3.0 billion and $465 million, respectively. Assets under management at April 30, 2011 were $75.6 billion, up $1.5 billion over the average level of assets in the first quarter of 2011.

For the quarter ended March 31, 2011, CI reported EBITDA per share of $0.66, a 22% increase from the first quarter of 2010 and a 6% increase from the prior quarter. During the quarter ended March 31, 2011, CI received an insurance settlement towards matters previously expensed. The proceeds, in the amount of $4.9 million ($3.5 million after tax), is recorded in other income. CI sold some of its seed capital in the Castlerock funds and incurred a loss of $0.9 million ($0.7 million after tax). EBITDA per share, adjusted for these items was $0.65.

CI reported earnings per share of $0.35 for the quarter, up 35% from $0.26 in the first quarter of 2010. After adjusting for the items discussed earlier, CI earned $0.34 per share in the quarter ended March 31, 2011. Pre-tax operating earnings per share, which include adjustments for non-recurring items and equity-based compensation, were up 16% and 5% from the first quarter of 2010 and the prior quarter, respectively.

During the quarter, CI made progress on several important projects, including an expansion of CI's portfolio management teams, enhancements to key areas of sales and marketing, the move of a majority of its staff to new, state-of-the-art office facilities, and the commencement of several product development and system improvement initiatives. However, CI continued to control expenses so that they grew in line with the growth in AUM. SG&A expenses (adjusted for equity-based compensation) grew by 13% year over year compared to an average AUM increase of 15%, while the increase in spending was only 2% from the fourth quarter of 2010, much less than the 7% increase in average AUM during the first quarter of 2011.

For the quarter ended March 31, 2011, CI generated $98.2 million in free cash flow, facilitating a reduction in net debt to $685.8 million and a total dividend payment of $60.5 million. During the first quarter of last year, CI generated free cash flow of $68.2 million.

"The first quarter of 2011 has been one of the best quarters this company has experienced," said Stephen A. MacPhail, CI President and Chief Executive Officer. "Our assets under management reached record levels and the profitability of our business was exceptional. We have invested significantly in enhancing our sales, marketing and investment management expertise, and it has paid off in positive sales in both retail and institutional products. Our position in the marketplace is as strong as it has ever been."

"The only negative would have to be the challenge we face with the Bank of Nova Scotia and the hostile position they and their board are taking towards CI. We anticipate a strong vote in favour of the Rights Plan by CI's independent shareholders at our June 1, 2011 Annual Meeting to protect them against hostile advances of the Bank. Hopefully that will allow us to return to normal business."

The Board of Directors declared monthly cash dividends of $0.075 per share payable on each of June 15, 2011, July 15, 2011 and August 15, 2011 to shareholders of record on May 31, 2011 June 30, 2011 and July 31, 2011, respectively. The monthly dividend represented a yield of 3.9% on CI's share price of $23.16 on April 30, 2011.

As of April 30, 2011, CI had 288,079,660 shares outstanding.

For detailed financial statements for the quarter ended March 31, 2011, including Management's Discussion and Analysis, please refer to CI's website at www.ci.com/cix 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. Speaking on the call will be Stephen MacPhail, CI President and Chief Executive Officer, Derek Green, President of CI Investments Inc., and Douglas Jamieson, Senior Vice-President and Chief Financial Officer of CI. The conference call and a slide presentation will be accessible through a webcast at www.ci.com/q1. Alternatively, investors may listen to the discussion by dialling 1-800-446-2782 (passcode: 28764785).

The call will be available for playback at 6:30 p.m. today until May 25 at 1-888-843-7419 (passcode: 29718799). The webcast will be archived at www.ci.com/q1.

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.ci.com/cix.

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


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