Record earnings per share of $0.66 in the fourth quarter, up from $0.60 in the prior quarter
SG&A expenses down 9% from prior quarter to $113.8 million, well below $120 million target
Free cash flow of $168.3 million versus $144.7 million in the prior quarter
Assets under advisement reach record level of $49.8 billion
Quarterly net Canadian retail sales flows improve by $1.9 billion year over year
Strategic initiatives include acquisition of WisdomTree Canada ETFs and two U.S. RIAs
Share buybacks of $142 million in the fourth quarter; dividend of $0.18 per share declared
TORONTO, Feb. 14, 2020 /CNW/ - CI Financial Corp. ("CI") (TSX: CIX) today released audited financial results for the quarter and year ended December 31, 2019.
"We achieved a record financial quarter by being diligent in reducing our SG&A expenses to $113.8 million, a result of right-sizing our business to reflect the current industry environment," said Kurt MacAlpine, CI Chief Executive Officer. "With these changes, we will begin to selectively invest in high-growth opportunities and other initiatives that support our three strategic priorities of modernizing our asset management business, expanding our wealth management platform and globalizing our company. At the same time, we are returning cash to shareholders through share repurchases, which totalled $142 million in the fourth quarter, and paying a quarterly dividend of $0.18 a share.
"Our key initiatives include the acquisition of WisdomTree Canada, which is scheduled to close soon, growing our ETF assets by $1 billion to more than $10 billion," Mr. MacAlpine said. "This builds on the exceptional performance of our existing CI First Asset ETF business, which posted asset growth of $4.2 billion or 95% in 2019.
"In addition, we've taken the first steps in building our U.S. wealth management business with the acquisition of majority stakes in two registered investment advisors: Surevest Wealth Management and One Capital Management. These are excellent firms that will form a solid foundation for a growing RIA operation.
"In the fourth quarter," Mr. MacAlpine said, "we saw a significant improvement in our sales trends. Although the firm remains in net redemptions, our Canadian retail net sales excluding closed products improved by $1.0 billion over the prior quarter and by $1.9 billion over the same quarter a year earlier."
CI reported record quarterly earnings per share of $0.66 for the fourth quarter of 2019, up from $0.60 for the third quarter of 2019 and $0.57 for the fourth quarter of 2018. For the year ended December 31, 2019, CI reported adjusted earnings per share of $2.41 – also a record for CI. This compares to $2.38 for the year ended December 31, 2018. Adjusted earnings exclude a restructuring provision of $26.6 million ($35.0 million before taxes) from the second quarter of 2019. With that provision, reported earnings per share for 2019 were $2.30.
During the quarter, CI's management continued to reduce discretionary expenses, primarily on the asset management side of the business. As a result, selling, general and administrative ("SG&A") expenses for the fourth quarter were $113.8 million, down 9% from $124.6 million in the third quarter of 2019 and 8% from $123.5 million in the fourth quarter of 2018. For the year, SG&A expenses were $489.3 million, down from $512.6 million in 2018.
CI generated $168.3 million in free cash flow during the quarter ended December 31, 2019, up from $144.7 million in the quarter ended September 30, 2019 and $156.5 million in the quarter ended December 31, 2018. For 2019, CI generated $603.1 million in free cash flow, compared with $655.5 million in 2018.
Average assets under management were $130.9 billion for the quarter ended December 31, 2019, up 1% from both comparable quarters. For the year, average assets under management were $130.2 billion, down 5% from $137.2 billion for the prior year. At December 31, 2019, CI's ending assets under management were $132.1 billion, compared with $130.0 billion at September 30, 2019 and $124.4 billion at December 31, 2018. Assets under advisement were $49.8 billion on December 31, 2019, up 5% when compared with September 30, 2019 and up 19% when compared with the prior year. CI's assets under advisement include the assets of Assante Wealth Management (Canada) Limited, Stonegate Private Counsel, and WealthBar Financial Services Inc.
CI reported $1.9 billion in overall net redemptions for the fourth quarter of 2019. CI's Canadian retail business, excluding products closed to new investors, had $0.4 billion in net redemptions, representing an improvement of $1.0 billion over the third quarter of 2019 and an improvement of $1.9 billion over the fourth quarter of 2018. CI's Canadian institutional business had $1.5 billion in net redemptions, a large proportion of which related to a client that moved assets to an in-house manager. CI's international business had net sales of $0.2 billion for the fourth quarter of 2019, while CI's closed business, comprised primarily of segregated fund contracts that are no longer available for sale, had $0.2 billion in net redemptions for the quarter.
Share repurchases and dividends
In the fourth quarter of 2019, CI repurchased 6.9 million shares worth $141.5 million and paid $41.1 million in dividends ($0.18 per share). For the year, CI repurchased 22.6 million shares worth $447.3 million. For the month of January 2020, CI repurchased a further 1.6 million shares, ending the month with 220,800,237 shares outstanding.
The Board declared a quarterly dividend of $0.18 per share, payable on July 15, 2020, to shareholders of record on June 30, 2020. The annual dividend rate of $0.72 per share represented a yield of 3.0% on CI's closing share price of $24.36 on February 13, 2020.
CI reached an agreement in November 2019 to purchase WisdomTree Asset Management Canada, Inc., adding 14 ETFs with approximately $1 billion in assets under management to CI's lineup and boosting total ETF assets to $10 billion. The transaction is scheduled to close later this month.
CI First Asset ETFs had assets under management of $8.6 billion at December 31, 2019, representing growth for the year of $4.2 billion or 95%, versus a growth rate of 31% for the overall Canadian ETF industry.
CI ended 2019 with record assets under advisement of $49.8 billion, representing a year-over-over gain of 19%. This growth reflects strong performance and positive net sales at Assante and Stonegate, as well as successful advisor recruitment at Assante and the addition of WealthBar to the CI group as of January 2019.
Also in the fourth quarter, CI reached an agreement to acquire majority interests in two U.S.-based registered investment advisors (RIAs): Surevest Wealth Management of Phoenix and One Capital Management, LLC of Westlake Village, California. The Surevest transaction closed in January and the One Capital acquisition is expected to close in March.
CI's other acquisitions and strategic investments during the fourth quarter included:
The acquisition, through WealthBar, of Snap Projections Inc., a maker of financial planning software.
A 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.
The acquisition by Australian subsidiary GSFM Pty Ltd. of a 49% equity stake in Redpoint Investment Management Pty Ltd., a global equities manager with approximately A$10 billion in assets under management based in Sydney, Australia.
In December 2019, CI announced a partnership with Joseph Coughlin, a prominent researcher into demographic change and Founder and Director of the Massachusetts Institute of Technology AgeLab, who is advising CI on how to better serve aging and retired clients.
In January, CI Investments launched ETF versions of its highly successful liquid alternative mutual funds, which have gathered over $1.1 billion in assets since their launch in November 2018.
On February 6, 2020, CI announced a sub-advisory relationship with Los Angeles-based DoubleLine Capital LP, which is led by Jeffrey Gundlach, a globally renowned fixed-income manager. The firms are working to develop new income mandates to add to CI Investments' lineup of mutual funds and ETFs.
CI continued to expand its U.S. presence with the signing of letters of intent to acquire two additional RIA firms.
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 1-800-458-4121 or (647) 484-0477 (Passcode: 5205494). 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]
Dec. 31, 2019
Sep. 30, 2019
Dec. 31, 2018
Assets under management
Assets under advisement
Average assets under management
Selling, general & administrative
Basic earnings per share
Diluted earnings per share
Free cash flow1
Return on equity2
Dividends paid per share
Average shares outstanding
Share price – High
Share price – Low
Share price – Close
Change in share price
Total shareholder return
Long term debt (including current portion)
Net debt to adjusted EBITDA1
1Free 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 December 31, 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 protected].
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.
SOURCE CI Financial Corp.
For further information: Investor Relations, CI Financial, (416) 364-1145, [email protected]