CI Financial reports second quarter 2019 results

• Adjusted earnings per share of $0.58, unchanged from the prior quarter
• Free cash flow of $147 million, up 2% quarter over quarter
• New executive leadership team
• Launch of high interest savings ETF and mutual fund

TORONTO, Aug. 8, 2019 /CNW/ - CI Financial Corp. ("CI") (TSX: CIX) today released unaudited financial results for the quarter ended June 30, 2019.

"CI continues to make progress across our businesses," said Peter W. Anderson, CI Chief Executive Officer. "Most importantly, CI has put in place an exciting new executive leadership team with the appointment of Kurt MacAlpine as CEO starting in September and Darie Urbanky as President. We are confident that they have the right strategic expertise and operational experience to ensure that the company continues to thrive in a rapidly changing industry.

"During the second quarter, we delivered on several initiatives as part of our plan to modernize our product lineup and improve the client experience for advisors and investors," Mr. Anderson said. "These included the launch of a new high interest savings ETF and fund, as well as an important simplification of the CI Preferred Pricing program. Additionally, we are encouraged by signs of improvement in sales at CI.

"Our financial results reflect our prudent management of the business in a challenging environment, as we have made further reductions in our expenses, while continuing to invest in areas of opportunity."

Financial results

CI reported adjusted earnings per share of $0.58 for the second quarter of 2019, compared to $0.58 for the first quarter of 2019 and $0.61 for the second quarter of 2018. Adjusted earnings exclude a restructuring provision of $26.6 million ($35.0 million before taxes) in the second quarter of 2019. With the provision, reported earnings per share in the second quarter were $0.47.

The restructuring provision is part of CI's ongoing strategy of controlling expenses, particularly in the mature areas of CI's business, while reinvesting in growing lines of business. During the quarter, CI reduced selling, general and administrative ("SG&A") expenses to $124.8 million from $126.1 million in the first quarter of 2019 and $127.3 million in the second quarter of 2018.

CI generated $146.5 million in free cash flow during the quarter ended June 30, 2019, up 2% from $143.5 million in the quarter ended March 31, 2019, and down from $163.0 million in the same quarter last year.

Average assets under management were $131.1 billion for the quarter ended June 30, 2019, up 2% from the quarter ended March 31, 2019 and down 6% from the quarter ended June 30, 2018. At June 30, 2019, CI's ending assets under management were down 1% and assets under advisement were up 2%, when compared with March 31, 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 Canadian business, excluding products closed to new investors, had $2.7 billion in gross sales and $2.2 billion in net redemptions for the quarter ended June 30, 2019. CI's international business had $187 million in gross sales and $53 million in net sales in the second quarter. CI's closed business, comprised primarily of segregated fund contracts that are no longer available for sale, had $296 million in net redemptions for the quarter. In total, CI's net redemptions improved $352 million over the same quarter of 2018 as a result of an 11% improvement in redemptions.

Share repurchases and dividends

In the second quarter of 2019, CI repurchased $94.8 million of shares and paid $43.3 million in dividends. For the month of July 2019, CI repurchased a further 1.8 million shares, ending the month with 234,986,537 shares outstanding. 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 3.6% on CI's closing share price of $20.08 on August 7, 2019.

Business highlights 

• Kurt MacAlpine has been appointed CEO effective September 1, 2019. He has extensive experience across diverse aspects of the North American and global wealth and asset management sectors, having served as Executive Vice-President and Head of Global Distribution for WisdomTree Asset Management and as a Partner and the Leader of the North American Asset Management Practice at McKinsey & Company.
  
  
• Darie Urbanky was named President and Chief Operating Officer of CI Financial as of June 25, 2019. Mr. Urbanky has 23 years' experience at CI, serving in progressively more senior roles in technology and operations. He was Chief Technology Officer of CI Investments Inc. prior to being named Chief Operating Officer in 2018.
  
  
• CI Investments launched CI First Asset High Interest Savings ETF and CI High Interest Savings Fund in June and July, respectively. The mandate, designed to meet market demand for products that offer a higher level of income while preserving capital and liquidity, has been well received by investors.
  
  
• Assante and Stonegate continue to post strong growth in assets under advisement, up 6% year over year. CI is developing robust operating platforms and specialized products to support the growth of these businesses.
  
  
• CI Preferred Pricing, a program in which clients receive discounted pricing when their assets with CI Investments reach certain thresholds, moved to a fee rebate model, effective August 2. The change significantly reduces the complexity of administering the program for CI, dealers and advisors. The level of the fee reductions and thresholds did not change.

Analysts' conference call

CI will hold a conference call with analysts today at 8:30 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 by visiting www.cifinancial.com. Alternatively, investors may listen to the discussion by dialing 1-800-898-3989 or [phone] (Passcode: 90289#). A replay of the call will be available until August 22, 2019 at 11:59 p.m. at 1-800-408-3053 or [phone] (Passcode: 90289#). 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]	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	QoQ	YoY
Assets under management	130,186	131,309	138,182	(1)	(6)
Assets under advisement	46,606	45,644	43,717	2	7
Total assets	176,792	176,953	181,900	-	(3)
Average assets under management	131,133	128,887	139,487	2	(6)
Management fees	468.5	459.5	506.3	2	(7)
Total revenues	530.3	526.8	564.6	1	(6)
Selling, general & administrative	124.8	126.1	127.3	(1)	(2)
Trailer fees	148.1	144.6	159.6	2	(7)
Net income	111.5	140.0	160.0	(20)	(30)
Adjusted net income^1	138.5	140.0	160.0	(1)	(13)
Basic earnings per share	0.47	0.58	0.61	(19)	(23)
Diluted earnings per share	0.47	0.58	0.60	(19)	(22)
Adjusted earnings per share^1	0.58	0.58	0.61	-	(5)
Free cash flow^1	146.5	143.5	163.0	2	(10)
Return on equity^2	37.8%	37.7%	38.6%
Dividends paid per share	0.1800	0.1800	0.3525	-	(49)
Dividend yield	3.4%	3.9%	6.0%
Average shares outstanding	238,255,145	241,946,976	264,090,648	(2)	(10)
Shares outstanding	235,693,761	240,375,825	260,562,210	(2)	(10)
Share price – High	21.57	19.44	27.71	11	(22)
Share price – Low	17.96	16.92	23.36	6	(23)
Share price – Close	21.34	18.24	23.63	17	(10)
Change in share price	17.0%	5.6%	(14.4%)
Total shareholder return	18.0%	6.6%	(13.2%)
Market capitalization	5,030	4,384	6,157	15	(18)
P/E ratio^2	9.1	7.7	9.7	18	(6)
Long term debt (including current portion)	1,525.3	1,528.5	1,428.5	-	7
Net debt^1	1,269.9	1,268.5	1,126.2	-	13
Net debt to adjusted EBITDA^1	1.51	1.50	1.21	1	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 protected].

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, 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.

Investor Relations, CI Financial, [phone], [email protected]

Related Links

http://www.ci.com/