CI Financial reports third quarter results: Earnings per share increase 26%; dividend raised 5%

CI Financial reports third quarter results: Earnings per share increase 26%; dividend raised 5%

TORONTO, Nov. 6, 2014 – CI Financial Corp. (“CI”) today released unaudited financial results for the quarter ended September 30, 2014.

ASSETS & SALES (in $millions)

Quarter ended

September 30, 2014

Quarter ended

September 30, 2013

%
change

Assets Under Management

100,810

85,557

18

Average Assets Under Management

101,016

84,125

20

Gross Sales

3,042

3,160

(4)

Net Sales

702

853

(18)

       

EARNINGS1 (in $)

     

Net Income (in millions)

135.1

107.8

25

Earnings Per Share

0.48

0.38

26

EBITDA Per Share 2

0.81

0.68

19

Pre-Tax Operating Earnings Per Share2

0.77

0.64

20

Free Cash Flow2

148.0

119.0

24

       

OTHER METRICS

     

Dividends Recorded Per Share (in $)

0.300

0.270

11

Net Debt (in $millions)2

220.2

403.7

(45)

SG&A Expenses3

33.8 bps

37.0 bps

(9)

Return on Equity

26.8%

23.5%

n/a

1 Net of non-controlling interest.
2 EBITDA (earnings before interest, taxes, depreciation and amortization net of non-controlling interest), pre-tax operating earnings, free cash flow and net debt are not standardized measures prescribed by IFRS; however, management uses these financial measures and also 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, investment gains and non-controlling interest plus amortization of deferred sales commissions and fund contracts. CI measures free cash flow as operating cash flow before the change in operating assets and liabilities and the actual cash amount paid for interest and income taxes less deferred sales commissions paid. CI calculates net debt as long-term debt (including the current portion) less cash and marketable securities net of cash required for regulatory purposes and non-controlling interest. CI’s method of calculating these measures may not be comparable to similar measures presented by other companies.  
3  As a percentage of average assets under management.

Average assets under management reached a record $101.0 billion for the third quarter, an increase of 20% from the same quarter in the previous year. At September 30, 2014, CI’s assets under management were $100.8 billion, up 18% from $85.6 billion at September 30, 2013. The S&P/TSX Composite Index returned 20% and the FTSE TMX Universe Bond Index was up 6% over the same period.

“Of particular note,” said Stephen A. MacPhail, CI President and Chief Executive Officer, “was the strong growth in CI’s Assante Wealth Management and Stonegate Private Counsel businesses. Inflows to both firms have been at record levels and are a distinct result of the proactive stance being taken with respect to regulatory reform and their comprehensive financial advisory model.”

Year-to-date total net sales at September 30, 2014 were $3.4 billioncompared to $3.0 billion in the same period in 2013. Net sales in the third quarter of 2014 were $702 million. Retail net sales were the highest of any third quarter in over a decade.

Earnings per share of $0.48 increased 26% from $0.38 in the third quarter of 2013 and 7% from $0.45 per share in the second quarter of 2014. CI reported EBITDA per share of $0.81, a 19% increase from the third quarter of 2013 and a 4% increase from the prior quarter. Pre-tax operating earnings per share were up 20% from the third quarter of 2013 and up 4% from the prior quarter.

CI continued to maintain its discretionary spending below the rate of growth in assets under management. Selling, general and administrative (SG&A) expenses as a percentage of average assets under management fell to 33.8 basis points in the third quarter of 2014, down from 37.0 basis points in the third quarter of last year.

“CI reached a record level of earnings in the third quarter,” said Mr. MacPhail. “CI’s average assets increased 20% from the same period last year yet SG&A only grew at half that pace. At the same time the company continued to reinvest in the business. Our annual Leadership Forum, for example, had a record level of participation with well over 1,000 advisors attending at their own expense.”

CI generated $148.0 million in free cash flow during the quarter ended September 30, 2014 compared to $119.0 million in the third quarter of 2013. CI’s cash flow facilitated the repurchase of $55.6 million in CI shares and the payment of $85.3 million in dividends. In addition, the increase in cash reduced net debt by $32.5 million. Since the end of the third quarter, CI has repurchased an additional $22.3 million in CI shares under its normal course issuer bid. As at October 31, 2014, CI had 282,159,592 shares outstanding.

“CI remains committed to returning value to its shareholders,” Mr. MacPhail said. “Since renewing its normal course issuer bid in June, CI purchased $83.4 million worth of its shares, and today the board declared a 5% increase to CI’s dividend. This is the third dividend increase in the past 12 months. With the increase to the dividend, CI still maintains a considerable cushion in earnings and free cash flow to continue to reinvest in the business and reward its shareholders.”

The Board of Directors declared an increase of $0.005 to the monthly cash dividend to $0.105 per share payable on each of December 15, 2014, January 15 and February 13, 2015 to shareholders of record on November 30, December 31, 2014, and January 31, 2015, respectively. The monthly dividend represents a yield of 3.8% on CI’s closing share price of $33.10 on November 5, 2014.

For detailed financial statements for the quarter ended September 30, 2014, including Management’s Discussion and Analysis which contains discussions of non-IFRS measures, 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. Speaking on the call will be Mr. MacPhail and Douglas Jamieson, Executive Vice-President and Chief Financial Officer. The conference 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 1-866-696-5910  or (416) 340-2217 (passcode: 4726221).

The call will be available for playback later in the day until November 20, 2014, 2014 at (905) 694-9451 or 1-800-408-3053 (passcode: 9813111). 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.

For further information:

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