- Earnings per share of $2.38 for 2018
- Free cash flow of $656 million for 2018
- Enhanced digital strategy with the acquisition of WealthBar Financial Services
TORONTO (February 8, 2019) − CI Financial Corp. (“CI”) (TSX: CIX) today released audited financial results for the quarter and year ended December 31, 2018.
“Despite a very challenging environment for asset managers in 2018, we were able to report record earnings per share and record free cash flow by focusing on the controllable parts of our business, including managing expenses, while continuing to invest in the business and executing our longer-term corporate strategy,” said Peter W. Anderson, CI Chief Executive Officer.
“Our goal is to be the leading independent Canadian wealth management firm with broad, diverse and competitive business lines,” Mr. Anderson said. “In 2018, we made a number of significant advances towards that objective. We completed the integration of Sentry, adding scale to our business, accelerated the development of our digital strategy with the acquisition of another digital platform in WealthBar Financial Services, and began a multi-year project to simplify and modernize our product lineup and enhance our services to meet the evolving needs of advisors and investors.
“Notably, over the past four months, we successfully launched three new and innovative investment solutions: Alternative products for retail investors, ETFs for the mutual fund advisor channel, and fixed-rate pools for discretionary advisors.”
Financial results
CI reported earnings per share of $0.57 for the fourth quarter of 2018, up 12% from $0.51 for the fourth quarter of 2017, and down 8% from $0.62 for the third quarter of 2018. The fourth quarter last year included provisions for compensation, legal and tax costs, as well as a fair value adjustment to contingent consideration. Excluding these items, earnings per share in the fourth quarter of 2018 were down 10% from $0.63 for the same quarter of 2017. For the year, adjusted earnings per share were $2.38.
CI generated $156.5 million in free cash flow during the quarter ended December 31, 2018, compared to $180.6 million in the quarter ended December 31, 2017 and $169.2 million in the prior quarter. For the year, free cash flow was $655.5 million.
Average assets under management were $129.3 billion for the quarter ended December 31, 2018, down 9% from the quarter ended December 31, 2017 and down 7% from the quarter ended September 30, 2018. The year-over-year decrease was primarily due to challenging market conditions as well as net
redemptions of funds. At December 31, 2018, CI’s assets under advisement were $41.8 billion, down 2% from December 31, 2017.
CI’s Canadian business, excluding products closed to new investors, had $2.6 billion in gross sales and $2.7 billion in net redemptions for the quarter ended December 31, 2018. CI’s international business had $260 million in net sales in the fourth quarter, up $466 million from the same quarter last year. CI’s closed businesses, comprised primarily of segregated fund contracts that are no longer available for sale, had $259 million in net redemptions for the quarter.
During the quarter, CI continued to make strategic investments into its business while maintaining strong controls on expenses. Selling, general and administrative (“SG&A”) expenses were $126.2 million in the fourth quarter, down $5.2 million from the third quarter.
Share repurchases and dividends
In the fourth quarter of 2018, CI repurchased $159.9 million of shares and paid $45.4 million in dividends. Share repurchases for 2018 were $656.9 million, up from $413.2 million in 2017.
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 3.9% on CI’s closing share price of $18.50 on February 7, 2019. As of January 31, 2019, CI had 243,029,442 shares outstanding.
Business highlights
- CI continued to develop its digital strategy with the acquisition of a majority stake in WealthBar Financial Services Inc., a leading Canadian online wealth management and financial planning platform. The transaction was announced December 14, 2018 and closed January 23, 2019. WealthBar continues to operate as a stand-alone business, while its expertise and technology will be used to accelerate digital transformation and innovation across the CI group.
- Following quarter-end, CI companies earned additional industry recognition for investment performance, with 18 mutual and segregated funds managed by CI Investments Inc. and five exchange-traded funds managed by First Asset Investment Management Inc. receiving FundGrade® A+ Awards for 2018. The awards, announced January 24, 2019 by Fundata Canada Inc., honour investment funds that have shown consistent, outstanding risk-adjusted performance through the year.
- In January 2019, CI launched CI Mosaic ETF Portfolios, an investment solution that blends the benefits of ETFs with the accessibility of a mutual fund structure. Mosaic consists of five distinct, actively managed portfolios, designed to meet a range of investor objectives. Mosaic was CI’s third major product launch in four months, with the CI Private Pools and CI Liquid Alternatives platforms being launched in October 2018 and November 2018, respectively.
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 cifinancial.com. Alternatively, investors may listen to the discussion by dialing 1-800-806-5484 or (416) 340-2217 (Passcode: 8907848#). A replay of the call will be available until February 22, 2019 at 11:59 p.m. at 1-800-408-3053 or (905) 694-9451 (Passcode: 8983264#). 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] |
Dec. 31, 2018 |
Sep. 30, 2018 |
Dec. 31, 2017 |
QoQ |
YoY |
| Assets under management |
124,360 |
136,526 |
143,028 |
(9) |
(13) |
| Assets under advisement |
41,813 |
44,359 |
42,699 |
(6) |
(2) |
| Total assets |
166,173 |
180,884 |
185,727 |
(8) |
(11) |
| Average assets under management |
129,316 |
138,322 |
142,469 |
(7) |
(9) |
| Management fees |
474.2 |
509.9 |
532.1 |
(7) |
(11) |
| Total revenues |
529.2 |
569.0 |
594.4 |
(7) |
(11) |
| Selling, general & administrative |
126.2 |
131.4 |
130.8 |
(4) |
(4) |
| Trailer fees |
149.1 |
160.6 |
167.8 |
(7) |
(11) |
| Net income |
140.4 |
158.3 |
139.5 |
(11) |
(1) |
| Adjusted net income1 |
140.3 |
158.2 |
173.7 |
(11) |
(19) |
| Basic earnings per share |
0.57 |
0.62 |
0.51 |
(8) |
12 |
| Diluted earnings per share |
0.57 |
0.62 |
0.51 |
(8) |
12 |
| Adjusted earnings per share1 |
0.57 |
0.62 |
0.63 |
(8) |
(10) |
| Free cash flow1 |
156.5 |
169.2 |
180.6 |
(8) |
(13) |
| Return on equity2 |
37.1% |
39.1% |
39.9% |
(5) |
(7) |
| Dividends paid per share |
0.1800 |
0.2350 |
0.3525 |
(23) |
(49) |
| Dividend yield |
4.2% |
3.5% |
4.7% |
|
|
| Average shares outstanding |
|
|
|
(4) |
(10) |
| Shares outstanding |
|
|
|
(3) |
(10) |
| Share price – High |
|
|
|
(15) |
(31) |
| Share price – Low |
|
|
|
(17) |
(40) |
| Share price – Close |
|
|
|
(16) |
(42) |
| Change in share price |
(15.7%) |
(13.2%) |
9.1% |
|
|
| Total shareholder return |
(15.0%) |
(12.3%) |
10.4% |
|
|
| Market capitalization |
4,212 |
5,164 |
8,094 |
(18) |
(48) |
| P/E ratio2 |
7.3 |
8.4 |
12.5 |
(13) |
(42) |
| Long term debt (including current portion) |
1,503.7 |
1,444.0 |
1,118.1 |
4 |
34 |
| Net debt1 |
1,255.3 |
1,209.3 |
860.9 |
4 |
46 |
| Net debt to adjusted EBITDA1 |
1.51 |
1.30 |
0.86 |
16 |
76 |
1 Adjusted 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.
2 Trailing 12 months, calculated using adjusted net income.
For detailed financial statements for the quarter and year ended December 31, 2018, 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 investorrelations@ci.com.
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, Grant Samuel Funds Management Pty Ltd. of Australia, First Asset Investment Management Inc., and BBS Securities Inc. Further information is available at https://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.
For further information:
Investor Relations
CI Financial
(416) 364-1145
investorrelations@ci.com