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CI Financial Reports Financial Results for the Second Quarter of 2022

  • Diluted EPS of $0.81, adjusted EPS1 of $0.78
  • Pre-tax income of $219.0 million, adjusted EBITDA1 of $251.0 million
  • Operating cash flow of $141.2 million, free cash flow1 of $176.4 million
  • Total assets of $333.7 billion, a year-over-year increase of 12%
  • Completed acquisitions of two U.S. RIAs with $7.7 billion in combined assets
  • Completed acquisition of Northwood Family Office, a Canadian leader in the family office segment
  • Repurchased 4.1 million shares for $59.8 million
  • Paid quarterly dividend of $0.18 a share, totalling $34.7 million

All financial amounts in Canadian dollars at June 30, 2022, unless stated otherwise. Financial amounts for the quarter are unaudited.

CI Financial Corp. (“CI”) (TSX: CIX, NYSE: CIXX) today released financial results for the quarter ended June 30, 2022.

“These results validate our corporate strategy and capital allocation policies,” said Kurt MacAlpine, CI Chief Executive Officer. “Our expansion in wealth management in the United States and Canada has added stability and diversification to our business, with our U.S. operations making increasing contributions to revenues and earnings. Despite continued volatility in capital markets, we achieved year-over-year growth in overall EBITDA, earnings per share and free cash flow per share.1

“While the Canadian fund industry had total redemptions of $19 billion during the quarter, our flows in Canadian retail asset management were relatively stable, supported by improving overall investment performance and several successful product launches,” Mr. MacAlpine said.

“We continue to advance our U.S. wealth management strategy, both through acquisitions of selected, high-quality RIAs and through an array of initiatives to capture synergies, expand our services and support to clients, and foster organic growth. The success of these programs can be seen in the attractive, growing margins of our U.S. business.”

Operating and financial data highlights

 

[millions of dollars, except share amounts]

As of and for the quarters ended

Jun. 30, 2022

Mar. 31, 2022

Dec. 31, 2021

Sep. 30, 2021

Jun. 30, 2021

Total AUM and Client Assets:

 

 

 

 

 

Asset Management AUM

116,065

136,271

144,247

139,380

138,187

Canada Wealth Management assets

74,128

78,957

80,633

76,859

75,521

U.S. Wealth Management assets

143,520

145,768

151,339

96,974

83,764

Total assets

333,712

360,996

376,219

313,213

297,472

 

 

 

 

 

 

Asset Management Net Inflows:

 

 

 

 

 

Retail

(381)

(861)

142

684

530

Institutional

(3,203)

(264)

(331)

(126)

(360)

Australia

(122)

(305)

82

159

(33)

Closed Business

(160)

(203)

(195)

(146)

(194)

U.S. Asset Management

(195)

402

260

250

413

Total

(4,060)

(1,231)

(42)

821

356

 

 

 

 

 

 

IFRS Results

 

 

 

 

 

Net income attributable to shareholders

156.2

138.1

123.7

43.8

117.6

Diluted earnings per share

0.81

0.70

0.62

0.22

0.57

Pretax income

219.0

185.8

175.1

82.4

166.6

Pretax margin

38.6 %

29.3 %

28.3 %

15.9 %

31.7 %

Operating cash flow before the change in operating assets and liabilities

141.2

207.7

179.2

135.2

158.1

 

 

 

 

 

 

Adjusted Results

 

 

 

 

 

Adjusted net income

149.1

166.8

171.0

159.2

153.0

Adjusted diluted earnings per share

0.78

0.85

0.86

0.79

0.74

Adjusted EBITDA

251.0

272.9

277.2

258.1

242.3

Adjusted EBITDA margin

44.5 %

46.5 %

47.7 %

47.0 %

48.4 %

Free cash flow

176.4

201.6

187.1

180.9

164.1

 

 

 

 

 

 

Average shares outstanding

191,151,896

196,111,771

196,816,227

199,321,002

203,039,536

Ending shares outstanding

189,037,762

192,987,082

197,422,270

197,443,135

201,327,517

 

 

 

 

 

 

Total debt

3,688

3,530

3,776

3,408

3,350

Net debt

3,538

3,352

3,453

2,655

2,461

Net debt to adjusted EBITDA

3.5

3.0

3.1

2.6

2.5

  1. Free cash flow, net debt, adjusted net income, adjusted earnings per share and adjusted EBITDA are not standardized earnings measures prescribed by IFRS. For further information, see “Non-IFRS Measures” note below.

Financial highlights

Net income grew to $156.2 million in the quarter from $138.1 million in the first quarter. Excluding non-operating items, adjusted net income declined to $149.1 million in the quarter from $166.8 million in the first quarter of 2022 as higher earnings in CI’s U.S. and Canadian wealth businesses were more than offset by lower earnings from the Asset Management segment due to the pressure on global financial assets.

Second quarter total net revenues declined 10.6% to $566.7 million in the quarter from $633.8 million in the first quarter of 2022. Excluding non-operating items, adjusted total net revenue fell 3.9% to $598.3 million, primarily driven by lower revenues from the Asset Management segment due to lower average AUM.

Second quarter total expenses declined 22.4% to $347.7 million in the quarter from $448.0 million in the first quarter of 2022. Excluding non-operating items, adjusted total expenses were essentially unchanged at $386.0 million, reflecting disciplined cost controls in a challenging operating environment, partially offset by the impact of acquisitions that closed during the quarter.

Capital allocation

In the second quarter of 2022, CI repurchased 4.1 million shares at a cost of $59.8 million, for an average cost of $14.67 per share, and paid $34.7 million in dividends at a rate of $0.18 per share.

The Board of Directors declared a quarterly dividend of $0.18 per share, payable on January 13, 2023 to shareholders of record on December 30, 2022. The annual dividend rate of $0.72 per share represented a yield of 4.9% on CI’s closing share price of $14.67 on August 10, 2022.

Second quarter business highlights

  • CI announced its intention to sell up to 20% of its U.S. wealth management business via a U.S. initial public offering (“IPO”). CI stated that it intends to use the net proceeds from the IPO to pay down debt, and that a final decision on the IPO size, conditions and timing is pending and will be subject to market conditions.
  • CI completed the acquisitions of two registered investment advisors (“RIAs”): Corient Capital Partners, LLC, of Newport Beach, California, which serves ultra-high-net-worth individuals and families across the United States, and Galapagos Partners, LP of Houston, a multi-family office serving wealthy families and individuals. Both transactions closed on April 29, 2022.
  • CI Private Wealth US, LLC applied for a charter to establish and operate a South Dakota trust company, which, when granted, will allow CI’s wealth management business to offer administrative trust solutions.
  • CI completed the acquisition of Toronto-based Northwood Family Office Ltd., giving CI a leading presence in the country’s multi-family office segment. The transaction was completed on April 1, 2022.
  • In the latest initiatives to modernize CI’s asset management business, CI Global Asset Management (“CI GAM”) continued to enhance and broaden its product lineup. The firm introduced a private infrastructure investment solution managed by HarbourVest Partners, a global leader in private markets investing. CI GAM also launched CI Galaxy Blockchain ETF, CI Galaxy Metaverse ETF and CI Floating Rate Income Fund (ETF Series).
  • Additionally, CI GAM claimed compliance with the Global Investment Performance Standards (“GIPS®”) from CFA Institute. The GIPS standards are universal and voluntary standards based on the fundamental principles of full disclosure and fair representation of investment performance.
  • CI’s success in implementing innovative technologies and processes across its organization was recognized through a 2022 Digital Transformation Award (Large Private Sector category) from IT World Canada.
  • CI joint venture Axia Real Assets launched a new U.S. real estate fund, the Axia U.S. Grocery Net Lease Fund II LP, through a private placement. The investment vehicle will be used to acquire a portfolio of dominant net lease grocery real estate assets across the U.S.

Analysts’ conference call

CI will hold a conference call with analysts today at 9:00 a.m. EDT, led by Chief Executive Officer Kurt MacAlpine and Chief Financial Officer Amit Muni. A live webcast of the call and slide presentation can be accessed here, or through the Investor Relations section of CI’s website.

Alternatively, investors may listen to the discussion through the following numbers (access code: 884850):

  • Canada toll-free: 1-833-950-0062
  • United States toll-free: 1-844-200-6205
  • United States (New York local): 1-646-904-5544
  • All other locations: 1-929-526-1599.

A recording of the webcast will be archived on CI’s Investor Relations site.

About CI Financial

CI Financial Corp. is an integrated global wealth and asset management company. CI’s primary asset management businesses are CI Global Asset Management (CI Investments Inc.) and GSFM Pty Ltd., and it operates in Canadian wealth management through CI Assante Wealth Management (Assante Wealth Management (Canada) Ltd.), CI Private Counsel LP, Aligned Capital Partners Inc., Northwood Family Office Ltd., CI Direct Investing (WealthBar Financial Services Inc.), and CI Investment Services Inc.

CI’s U.S. wealth management businesses consist of Barrett Asset Management, LLC, Balasa Dinverno Foltz LLC, Bowling Portfolio Management LLC, Brightworth, LLC, BRR OpCo, LLC (Budros, Ruhlin & Roe), The Cabana Group, LLC, Corient Capital Partners, LLC, CPWM, LLC (Columbia Pacific Wealth Management), Columbia Pacific Advisors, LLC, Congress Wealth Management LLC, Dowling & Yahnke, LLC, Doyle Wealth Management, LLC, Galapagos Partners, LP, GLASfunds, LLC, Gofen & Glossberg, LLC, Matrix Capital Advisors, LLC, McCutchen Group LLC, OCM Capital Partners, LLC, Portola Partners Group LLC, Radnor Financial Advisors, LLC, RegentAtlantic Capital, LLC, The Roosevelt Investment Group, LLC, RGT Wealth Advisors, LLC, R.H. Bluestein & Co., Segall Bryant & Hamill, LLC, Stavis & Cohen Private Wealth, LLC, and Surevest LLC.

CI is listed on the Toronto Stock Exchange under CIX and on the New York Stock Exchange under CIXX. Further information is available at www.cifinancial.com.

Commissions, trailing commissions, management fees and expenses all may be associated with an investment in mutual funds and exchange-traded funds (ETFs). Please read the prospectus before investing. Important information about mutual funds and ETFs is contained in their respective prospectus. Mutual funds and ETFs are not guaranteed; their values change frequently, and past performance may not be repeated. You will usually pay brokerage fees to your dealer if you purchase or sell units of an ETF on recognized Canadian exchanges. If the units are purchased or sold on these Canadian exchanges, investors may pay more than the current net asset value when buying units of the ETF and may receive less than the current net asset value when selling them.

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 and its intention to conduct an IPO of its US wealth management business. 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 CI will proceed with the IPO, that all outstanding acquisitions will be completed and their asset levels will remain stable, 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, the risk that the IPO may not occur in its expected timeframe or at all, 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.

This communication is provided as a general source of information and should not be considered personal, legal, accounting, tax or investment advice, or construed as an endorsement or recommendation of any entity or security discussed. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies.

CI Global Asset Management is a registered business name of CI Investments Inc.

CONSOLIDATED STATEMENT OF INCOME

 

 

For the three-month period ended June 30

 

 

 

2022

2021

[in thousands of Canadian dollars, except per share amounts]

$

$

REVENUE

 

 

Canada asset management fees

404,279

441,139

Trailer fees and deferred sales commissions

(123,952)

(137,685)

Net asset management fees

280,327

303,454

Canada wealth management fees

130,103

119,901

U.S. wealth management fees

168,949

71,400

Other revenues

21,210

17,982

Foreign exchange gains (losses)

(32,864)

8,174

Other gains (losses)

(1,069)

3,830

Total net revenues

566,656

524,741

 

 

 

EXPENSES

 

 

Selling, general and administrative

239,521

173,936

Advisor and dealer fees

99,711

93,412

Interest and lease finance

36,235

24,249

Amortization and depreciation

11,909

9,702

Amortization of intangible assets from acquisitions

27,436

11,669

Transaction, integration, restructuring and legal settlements

4,587

17,543

Change in fair value of contingent consideration

(74,977)

22,410

Other

3,230

5,258

Total expenses

347,652

358,179

Income before income taxes

219,004

166,562

 

 

 

Provision for (recovery of) income taxes

 

 

Current

46,835

54,764

Deferred

13,901

(6,614)

 

60,736

48,150

Net income for the period

158,268

118,412

Net income attributable to non-controlling interests

2,057

792

Net income attributable to shareholders

156,211

117,620

Basic earnings per share attributable to shareholders

$0.82

$0.58

Diluted earnings per share attributable to shareholders

$0.81

$0.57

 

 

 

Other comprehensive income (loss), net of tax

 

 

Exchange differences on translation of foreign operations

17,662

(10,475)

Total other comprehensive income (loss), net of tax

17,662

(10,475)

Comprehensive income for the period

175,930

107,937

Comprehensive income attributable to non-controlling interests

2,996

792

Comprehensive income attributable to shareholders

172,934

107,145

CONSOLIDATED BALANCE SHEET

 

 

 

As at

As at

 

June 30, 2022

December 31, 2021

[in thousands of Canadian dollars]

$

$

ASSETS

 

 

Current

 

 

Cash and cash equivalents

154,844

230,779

Client and trust funds on deposit

1,462,148

1,199,904

Investments

37,981

131,772

Accounts receivable and prepaid expenses

247,057

272,962

Income taxes receivable

12,556

3,607

Total current assets

1,914,586

1,839,024

Capital assets, net

54,687

52,596

Right-of-use assets

140,266

142,606

Intangibles

6,471,980

6,185,237

Deferred income taxes

45,887

56,901

Other assets

439,440

383,187

Total assets

9,066,846

8,659,551

LIABILITIES AND EQUITY

 

 

Current

 

 

Accounts payable and accrued liabilities

283,796

369,081

Current portion of provisions and other financial liabilities

321,062

572,432

Redeemable non-controlling interests

598,130

Dividends payable

68,054

71,072

Client and trust funds payable

1,467,614

1,202,079

Income taxes payable

12,841

19,035

Current portion of long-term debt

314,573

444,486

Current portion of lease liabilities

20,390

20,216

Total current liabilities

3,086,460

2,698,401

Long-term debt

3,373,540

3,331,552

Provisions and other financial liabilities

248,414

379,641

Deferred income taxes

484,511

480,777

Lease liabilities

150,921

153,540

Total liabilities

7,343,846

7,043,911

Equity

 

 

Share capital

1,742,376

1,810,153

Contributed surplus

35,374

28,368

Deficit

(72,182)

(226,715)

Accumulated other comprehensive loss

(12,629)

(23,289)

Total equity attributable to the shareholders of the Company

1,692,939

1,588,517

Non-controlling interests

30,061

27,123

Total equity

1,723,000

1,615,640

Total liabilities and equity

9,066,846

8,659,551

STATEMENT OF CASH FLOWS

 

 

For the three-month period ended June 30

 

 

 

2022

2021

[in thousands of Canadian dollars]

$

$

OPERATING ACTIVITIES (*)

 

 

Net income for the period

158,268

118,412

Add (deduct) items not involving cash

 

 

Other (gains) losses

1,069

(5,307)

Change in fair value of contingent consideration

(74,977)

22,410

Contingent consideration recorded as compensation

670

939

Recognition of vesting of redeemable non-controlling interests

(3,420)

Equity-based compensation

6,325

6,660

Amortization and depreciation

39,345

21,371

Deferred income taxes

13,901

(6,614)

Loss on repurchases of long-term debt

212

Cash provided by operating activities before net change in operating assets and liabilities

141,181

158,083

Net change in operating assets and liabilities

22,929

(27,989)

Cash provided by operating activities

164,110

130,094

 

 

 

INVESTING ACTIVITIES

 

 

Purchase of investments

(78)

(1,384)

Proceeds on sale of investments

71

6,194

Additions to capital assets

(5,553)

(1,255)

Decrease (increase) in other assets

13,287

(41,780)

Additions to intangibles

(2,713)

(2,113)

Cash paid to settle acquisition liabilities

(38,626)

(45,468)

Acquisitions, net of cash acquired

(155,828)

(371,958)

Cash used in investing activities

(189,440)

(457,764)

 

 

 

FINANCING ACTIVITIES

 

 

Repayment of long-term debt

(16,514)

Issuance of long-term debt

85,000

1,075,460

Repurchase of long-term debt

(4,779)

Repurchase of share capital

(59,248)

(132,043)

Payment of lease liabilities

(5,110)

(4,203)

Issuance of redeemable non-controlling interest

9,577

Net distributions to non-controlling interest

(1,348)

(580)

Dividends paid to shareholders

(34,748)

(36,728)

Cash provided by (used in) financing activities

(5,877)

880,613

Net increase (decrease) in cash and cash equivalents during the period

(31,207)

552,943

Cash and cash equivalents, beginning of period

186,051

248,394

Cash and cash equivalents, end of period

154,844

801,337

(*) Included in operating activities are the following:

 

 

Interest paid

55,574

30,281

Income taxes paid

54,951

46,401

ASSETS UNDER MANAGEMENT AND NET FLOWS

[billions of dollars]

Quarters ended

Jun. 30, 2022

Mar. 31, 2022

Dec. 31, 2021

Sep. 30, 2021

Jun. 30, 2021

Beginning AUM

136.3

144.2

139.4

138.2

132.6

Gross inflows

4.8

4.9

5.2

5.1

6.1

Gross outflows

8.7

6.6

5.5

4.5

6.1

Net inflows/(outflows)

(3.9)

(1.6)

(0.3)

0.6

(0.1)

Acquisitions

0.2

Market move and FX

(16.3)

(6.3)

5.2

0.6

5.5

Ending AUM

116.1

136.3

144.2

139.4

138.2

Proprietary AUM

30.8

34.5

36.2

34.7

34.5

Non-proprietary AUM

85.3

101.8

108.0

104.7

103.7

Average assets under management

125.4

138.2

143.0

141.1

135.9

Annualized organic growth

(11.4) %

(4.6) %

(0.9) %

1.6 %

(0.2) %

 

 

 

 

 

 

Gross management fee/average AUM

1.31 %

1.30 %

1.30 %

1.31 %

1.31 %

Net management fee/average AUM

0.89 %

0.88 %

0.88 %

0.88 %

0.88 %

 

 

 

 

 

 

Net Inflows

 

 

 

 

 

Retail

(0.4)

(0.9)

0.1

0.7

0.5

Institutional

(3.2)

(0.3)

(0.3)

(0.1)

(0.4)

Closed business

(0.2)

(0.2)

(0.2)

(0.1)

(0.2)

Total Canada net inflows

(3.7)

(1.3)

(0.4)

0.4

Australia

(0.1)

(0.3)

0.1

0.2

Total net inflows/(outflows)

(3.9)

(1.6)

(0.3)

0.6

(0.1)

RETAIL (ex Closed Business)

[billions of dollars]

Quarters ended

Jun. 30, 2022

Mar. 31, 2022

Dec. 31, 2021

Sep. 30, 2021

Jun. 30, 2021

Beginning AUM

108.4

114.6

110.4

109.1

103.9

Net Flows

(0.4)

(0.9)

0.1

0.7

0.5

Market Move / FX

(12.9)

(5.3)

4.1

0.6

4.5

Acquisitions

___

___

___

0.2

___

Ending AUM

95.1

108.4

114.6

110.4

109.1

Average AUM

101.4

109.6

113.8

111.8

106.8

INSTITUTIONAL

[billions of dollars]

Quarters ended

Jun. 30, 2022

Mar. 31, 2022

Dec. 31, 2021

Sep. 30, 2021

Jun. 30, 2021

Beginning AUM

12.7

13.3

13.0

13.0

12.7

Net Flows

(3.2)

(0.3)

0.3

(0.1)

(0.4)

Market Move / FX

(1.1)

(0.3)

0.6

0.1

0.7

Acquisitions

___

___

___

___

___

Ending AUM

8.4

12.7

13.3

13.0

13.0

Average AUM

10.2

12.9

13.2

13.3

13.0

AUSTRALIA

[billions of dollars]

Quarters ended

Jun. 30, 2022

Mar. 31, 2022

Dec. 31, 2021

Sep. 30, 2021

Jun. 30, 2021

Beginning AUM

6.6

7.3

7.0

6.9

7.1

Net Flows

(0.1)

(0.3)

0.1

0.1

(0.0)

Market Move / FX

(1.4)

(0.4)

0.2

0.0

(0.2)

Acquisitions

___

___

___

___

___

Ending AUM

5.1

6.6

7.3

7.0

6.9

Average AUM

5.8

7.0

7.1

7.0

7.1

CLOSED BUSINESS

[billions of dollars]

Quarters ended

Jun. 30, 2022

Mar. 31, 2022

Dec. 31, 2021

Sep. 30, 2021

Jun. 30, 2021

Beginning AUM

8.6

9.1

9.0

9.1

8.9

Net Flows

(0.2)

(0.2)

(0.2)

(0.2)

(0.2)

Market Move / FX

(0.9)

(0.3)

0.3

(0.0)

0.4

Acquisitions

___

___

___

___

___

Ending AUM

7.5

8.6

9.1

8.9

9.1

Average AUM

8.0

8.7

9.0

9.0

9.0

AUM BY ASSET CLASS

[billions of dollars]

Quarters ended

Jun. 30, 2022

Mar. 31, 2022

Dec. 31, 2021

Sep. 30, 2021

Jun. 30, 2021

Balanced

50.9

59.4

62.1

60.3

60.3

Equity

41.4

49.3

52.3

50.1

49.8

Fixed income

11.7

13.1

14.2

14.1

13.9

Alternatives

3.6

4.9

5.7

5.0

4.3

Cash/Other

3.4

3.0

2.7

2.8

2.9

Total Canada asset management

111.0

129.7

137.0

132.4

131.3

Australia

5.1

6.6

7.3

7.0

6.9

Total asset management segment

116.1

136.3

144.2

139.4

138.2

CANADA WEALTH MANAGEMENT CLIENT ASSETS

[billions of dollars]

Quarters ended

Jun. 30, 2022

Mar. 31, 2022

Dec. 31, 2021

Sep. 30, 2021

Jun. 30, 2021

Beginning client assets

79.0

80.6

76.9

75.5

71.1

Acquisitions

2.4

Net flows and market move

(7.2)

(1.7)

3.8

1.3

4.5

Ending client assets

74.1

79.0

80.6

76.9

75.5

Average client assets

77.7

79.0

78.9

77.0

73.1

Wealth management fees/average client assets

0.91 %

0.95 %

0.93 %

0.94 %

0.91 %

U.S. WEALTH MANAGEMENT CLIENT ASSETS

[billions of dollars]

Quarters ended

Jun. 30, 2022

Mar. 31, 2022

Dec. 31, 2021

Sep. 30, 2021

Jun. 30, 2021

Beginning billable client assets

141.2

146.4

96.1

82.9

30.7

Acquisitions

7.1

1.1

49.3

10.1

49.5

Net flows and market move

(9.5)

(6.3)

1.0

3.1

2.7

Ending billable client assets

138.8

141.2

146.4

96.1

82.9

Unbillable client assets

4.8

4.6

4.9

0.9

0.8

Total client assets

143.5

145.8

151.3

97.0

83.8

Fees/beginning billable client assets1

0.48 %

0.46 %

0.50 %

0.52 %

0.71 %

  1. 2Q/21 adjusted for the timing of Segall Bryant & Hamill acquisition.

 

 

NON-IFRS MEASURES

In an effort to provide additional information regarding our results as determined by IFRS, we also disclose certain non-IFRS information which we believe provides useful and meaningful information. Our management reviews these non-IFRS financial measurements when evaluating our financial performance and results of operations; therefore, we believe it is useful to provide information with respect to these non-IFRS measurements so as to share this perspective of management. Non-IFRS measurements do not have any standardized meaning, do not replace nor are superior to IFRS financial measurements and may not be comparable to similar measures presented by other companies. The non-IFRS financial measurements include:

  • Adjusted net income and adjusted basic and diluted earnings per share
  • Adjusted EBITDA and adjusted EBITDA margin
  • Free cash flow
  • Net debt.

These non-IFRS measurements exclude the following revenues and expenses which we believe allows investors a consistent way to analyze our financial performance, allows for better analysis of core operating income and business trends and permits comparisons of companies within the industry, normalizing for different financing methods and levels of taxation:

  • gains or losses related to foreign currency fluctuations on our cash balances
  • costs related to our acquisitions including:
    • amortization of intangible assets
    • change in fair value of contingent consideration
    • related advisory fees
    • contingent consideration classified as compensation per IFRS
  • restructuring charges including organizational expenses for the establishment of CIPW
  • legal provisions for a class action related to market timing
  • certain gains or losses in assets and investments
  • costs related to issuing or retiring debt obligations
  • expenses associated with CIPW redeemable units.

Further explanations of these Non-IFRS measures can be found in the “Non-IFRS Measures” section of Management’s Discussion and Analysis dated August 11, 2022 available on SEDAR at www.sedar.com or at www.cifinancial.com.

ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE

[millions of dollars, except per share amounts]

Quarters ended

Jun. 30, 2022

Mar. 31, 2022

Jun. 30, 2021

Net Income

158.3

137.5

118.4

Amortization of intangible assets from acquisitions

27.4

24.1

12.0

Change in fair value of contingent consideration

(75.0)

3.1

22.4

Contingent consideration recorded as compensation

0.7

18.2

0.9

Non-controlling interest reclassification

0.9

0.9

CIPW adjustments

3.1

13.2

FX (gains)/losses

32.9

(11.5)

(8.2)

Transaction, integration, restructuring and legal

4.6

3.8

17.5

Other (gains)/losses

(1.2)

(1.4)

Bond redemption costs

0.2

Total adjustments1

(6.7)

51.7

43.6

Tax effect of adjustments

5.6

(11.5)

(8.2)

Less: Non-controlling interest

8.1

10.9

0.8

Adjusted net income

149.1

166.8

153.0

Adjusted earnings per share

0.78

0.85

0.75

Adjusted diluted earnings per share

0.78

0.85

0.74

  1. Adjustment effects on income statement line items: bond redemption costs are included in other expense, CIPW adjustments and contingent consideration recorded as compensation are included in SG&A, amortization of intangible assets from acquisitions, change in fair value of contingent consideration, FX (gains)/losses, other (gains)/losses, and bond redemption costs are included in the line items of the same description.

EBITDA, ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN

[millions of dollars, except per share amounts]

Quarters ended

Jun. 30, 2022

Mar. 31, 2022

Jun. 30, 2021

Pretax income

219.0

185.8

166.6

Amortization of intangible assets from acquisitions

27.4

24.1

12.1

Depreciation and other amortization

11.9

11.4

9.7

Interest and lease finance expense

36.2

35.9

24.2

EBITDA

294.6

257.1

212.6

Change in fair value of contingent consideration

(75.0)

3.1

22.4

Contingent consideration recorded as compensation

0.7

18.2

0.9

Non-controlling interest reclassification

0.9

0.9

CIPW adjustments

3.1

13.2

FX (gains)/losses

32.9

(11.5)

(8.2)

Transaction, integration, restructuring and legal

4.6

3.8

17.5

Other (gains)/losses

(1.2)

(1.4)

Bond redemption costs

0.2

Total adjustments

(34.1)

27.7

31.6

Non-controlling interest

9.5

11.9

1.9

Adjusted EBITDA

251.0

272.9

242.3

 

 

 

 

Reported net revenue

566.7

633.8

524.7

Less: FX gains/(losses)

(32.9)

11.5

8.2

Less: Non-Operating Other gains/(losses)

1.2

1.4

Less: NCI revenues

34.8

35.5

15.0

Adjusted net revenue

563.5

586.8

500.2

Adjusted EBITDA margin

44.5 %

46.5 %

48.4 %

FREE CASH FLOW

[millions of dollars]

Quarters ended

Jun. 30, 2022

Mar. 31, 2022

Jun. 30, 2021

Cash provided by operating activities

164.1

154.8

130.1

Net change in operating assets and liabilities

(22.9)

52.9

28.1

Operating cash flow before the change in operating assets and liabilities

141.2

207.7

158.1

FX (gains)/losses

32.9

(11.5)

(8.2)

Transaction, integration, restructuring and legal

4.6

3.8

17.5

Other (gains)/losses

Total adjustments

37.5

(7.7)

9.3

Tax effect (recovery) of adjustments

(5.7)

1.2

(1.4)

Less: Non-controlling interest

(3.4)

(0.4)

1.9

Free cash flow

176.4

201.6

164.1

NET DEBT

 

 

 

 

 

 

Quarters ended

[millions of dollars]

Jun. 30, 2022

Mar. 31, 2022

Dec. 31, 2021

Sep. 30, 2021

Jun. 30, 2021

Current portion of long-term debt

314.6

225.3

444.5

74.2

Long-term debt

3,373.5

3,304.7

3,331.6

3,334.2

3,350.2

 

3,688.1

3,530.0

3,776.0

3,408.4

3,350.2

Less:

 

 

 

 

 

Cash and short-term investments

154.8

186.1

230.8

653.9

801.3

Marketable securities

18.1

20.3

116.9

122.5

121.1

Add:

 

 

 

 

 

Regulatory capital and non-controlling interests

22.4

28.8

25.0

23.1

33.4

Net Debt

3,537.5

3,352.4

3,453.4

2,655.1

2,461.2

 

 

 

 

 

 

Adjusted EBITDA

251.0

272.9

277.2

258.1

242.3

Adjusted EBITDA, annualized

1,006.9

1,106.6

1,099.8

1,024.1

971.9

Gross leverage (Gross debt/Annualized adjusted EBITDA)

3.7

3.2

3.4

3.3

3.4

Net leverage (Net debt/Annualized adjusted EBITDA)

3.5

3.0

3.1

2.6

2.5

SUMMARY OF QUARTERLY RESULTS

[millions of dollars, except per share amounts]

IFRS Results

Adjusted Results

 

For the quarters ended

For the quarters ended

 

Jun. 30, 2022

Mar. 31, 2022

Dec. 31, 2021

Sep. 30, 2021

Jun. 30, 2021

Jun. 30, 2022

Mar. 31, 2022

Dec. 31, 2021

Sep. 30, 2021

Jun. 30, 2021

Revenues

 

 

 

 

 

 

 

 

 

 

Asset management fees

404.3

437.6

464.9

460.9

441.1

404.3

437.6

464.9

460.9

441.1

Trailer fees and deferred sales commissions

(124.0)

(135.3)

(143.6)

(143.4)

(137.7)

(124.0)

(135.3)

(143.6)

(143.4)

(137.7)

Net asset management fees

280.3

302.3

321.3

317.5

303.5

280.3

302.3

321.3

317.5

303.5

Canada wealth management fees

130.1

138.2

134.9

132.5

119.9

130.1

138.2

134.9

132.5

119.9

U.S. wealth management fees

168.9

164.5

120.9

108.1

71.4

168.9

164.5

120.9

108.1

71.4

Other revenues

21.2

21.6

27.3

11.2

18.0

21.2

21.6

27.3

11.2

18.0

FX gains/(losses)

(32.9)

11.5

3.1

(50.3)

8.2

Other gains/(losses)

(1.1)

(4.4)

11.9

(1.1)

3.8

(2.3)

(4.4)

(4.9)

(1.1)

2.5

Total net revenues

566.7

633.8

619.3

517.9

524.7

598.3

622.3

599.4

568.2

515.2

Expenses

 

 

 

 

 

 

 

 

 

 

Selling, general & administrative

239.5

259.6

214.6

201.9

173.9

235.7

228.2

212.5

197.7

173.0

Advisor and dealer fees

99.7

106.9

104.8

103.4

93.4

99.7

106.9

104.8

103.4

93.4

Other

3.2

3.2

5.7

6.5

5.3

2.4

2.4

5.7

6.5

5.0

Interest and lease finance expense

36.2

35.9

32.5

31.6

24.2

36.2

35.9

32.5

31.6

24.2

Depreciation and other amortization

11.9

11.4

10.9

10.3

9.7

11.9

11.4

10.4

10.0

9.4

Amortization of intangible assets from acquisitions

27.4

24.1

18.2

16.4

11.7

Transaction, integration, restructuring and legal

4.6

3.8

13.6

3.9

17.5

Change in fair value of contingent consideration

(75.0)

3.1

43.9

61.4

22.4

Total expenses

347.7

448.0

444.2

435.5

358.2

386.0

384.8

365.9

349.2

305.1

Pretax income

219.0

185.8

175.1

82.4

166.6

212.3

237.5

233.4

219.0

210.1

Income tax expense

60.7

48.3

51.3

37.0

48.2

55.1

59.7

62.5

58.1

56.4

Net income

158.3

137.5

123.7

45.4

118.4

157.2

177.8

171.0

160.9

153.7

Non-controlling interest

2.1

(0.6)

1.6

0.8

8.1

10.9

1.6

0.8

Net income attributable to shareholders

156.2

138.1

123.7

43.8

117.6

149.1

166.8

171.0

159.2

153.0

Basic earnings per share

0.82

0.70

0.63

0.22

0.58

0.78

0.85

0.87

0.80

0.75

Diluted earnings per share

0.81

0.70

0.62

0.22

0.57

0.78

0.85

0.86

0.79

0.74

 

RESULTS OF OPERATIONS – ASSET MANAGEMENT SEGMENT

 

[millions of dollars, except per share amounts]

IFRS Results

Adjusted Results

For the quarters ended

For the quarters ended

Jun. 30, 2022

Mar. 31, 2022

Dec. 31, 2021

Sep. 30, 2021

Jun. 30, 2021

Jun. 30, 2022

Mar. 31, 2022

Dec. 31, 2021

Sep. 30, 2021

Jun. 30, 2021

Revenues

 

 

 

 

 

 

 

 

 

 

Asset management fees

408.9

442.5

469.6

465.6

445.5

408.9

442.5

469.6

465.6

445.5

Trailer fees and deferred sales commissions

(131.9)

(143.9)

(152.6)

(152.4)

(146.3)

(131.9)

(143.9)

(152.6)

(152.4)

(146.3)

Net asset management fees

277.0

298.6

316.9

313.2

299.3

277.0

298.6

316.9

313.2

299.3

Other revenues

5.6

10.2

19.9

3.2

12.2

5.6

10.2

19.9

3.2

12.2

FX gains/(losses)

(32.8)

11.4

(1.4)

(19.0)

1.2

Other gains/(losses)

(1.1)

(4.4)

12.0

(1.1)

3.8

(2.3)

(4.4)

(4.8)

(1.1)

2.5

Total net revenues

248.7

315.8

347.5

296.3

316.5

280.2

304.4

332.1

315.3

313.9

Expenses

 

 

 

 

 

 

 

 

 

 

Selling, general & administrative

97.3

96.8

108.7

109.6

104.9

97.3

96.8

108.7

109.6

104.9

Other

(0.5)

1.6

0.2

(0.5)

1.6

0.2

Interest and lease finance expense

1.0

1.0

0.5

0.5

0.6

1.0

1.0

0.5

0.5

0.6

Depreciation and other amortization

5.0

5.0

5.4

5.5

5.5

5.0

5.0

5.4

5.5

5.5

Amortization of intangible assets from acquisitions

0.6

0.6

0.6

0.6

0.6

Transaction, integration, restructuring and legal

2.3

(0.9)

10.4

0.4

14.6

Change in fair value of contingent consideration

(3.9)

4.0

14.2

1.9

10.0

Total expenses

102.3

106.5

139.3

120.2

136.4

103.3

102.8

114.1

117.2

111.1

Pretax income

146.4

209.3

208.1

176.1

180.1

176.9

201.6

218.0

198.1

202.8

 

 

 

 

 

 

 

 

 

 

 

Non-IFRS adjustments

 

 

 

 

 

 

 

 

 

 

Pretax income

146.4

209.3

208.1

176.1

180.1

176.9

201.6

218.0

198.1

202.8

Amortization of intangible assets from acquisitions

0.6

0.6

0.6

0.6

0.6

Depreciation and other amortization

5.0

5.0

5.4

5.5

5.5

5.0

5.0

5.4

5.5

5.5

Interest and lease finance expense

1.0

1.0

0.5

0.5

0.6

1.0

1.0

0.5

0.5

0.6

EBITDA

153.0

215.9

214.7

182.7

186.7

183.0

207.6

223.9

204.1

208.8

Contingent consideration recorded as compensation (included in SG&A)

(3.9)

4.0

14.2

1.9

10.0

FX (gains)/losses

32.8

(11.4)

1.4

19.0

(1.2)

Transaction, integration, restructuring and legal

2.3

(0.9)

10.4

0.4

14.6

Other (gains)/losses

(1.2)

(16.8)

(1.4)

Total adjustments

30.0

(8.3)

9.2

21.4

22.1

Less: Non-controlling interest

0.3

0.4

0.1

0.5

0.2

0.3

0.4

0.1

0.5

0.2

Adjusted EBITDA

182.7

207.2

223.8

203.6

208.6

182.7

207.2

223.8

203.6

208.6

RESULTS OF OPERATIONS – CANADA WEALTH MANAGEMENT SEGMENT

 

[millions of dollars, except per share amounts]

IFRS Results

Adjusted Results

For the quarters ended

For the quarters ended

Jun. 30, 2022

Mar. 31, 2022

Dec. 31, 2021

Sep. 30, 2021

Jun. 30, 2021

Jun. 30, 2022

Mar. 31, 2022

Dec. 31, 2021

Sep. 30, 2021

Jun. 30, 2021

Revenues

 

 

 

 

 

 

 

 

 

 

Canada wealth management fees

175.6

185.7

184.3

181.7

166.5

175.6

185.7

184.3

181.7

166.5

Other revenues

21.3

17.1

16.0

14.8

13.9

21.3

17.1

16.0

14.8

13.9

FX gains/(losses)

0.1

0.8

0.7

0.7

Other gains/(losses)

(0.1)

(0.1)

Total net revenues

196.9

202.9

201.1

197.2

181.1

196.9

202.8

200.3

196.5

180.4

Expenses

 

 

 

 

 

 

 

 

 

 

Selling, general & administrative

45.5

41.4

39.9

37.8

35.7

45.3

41.4

39.9

37.8

35.7

Advisor and dealer fees

135.9

145.6

145.2

143.5

131.3

135.9

145.6

145.2

143.5

131.3

Other

2.6

2.9

3.2

1.8

1.3

1.7

2.0

3.2

1.8

1.3

Interest and lease finance expense

(0.1)

0.2

0.2

0.2

0.1

(0.1)

0.2

0.2

0.2

0.1

Depreciation and other amortization

2.8

2.5

2.3

2.4

2.5

2.8

2.5

2.3

2.4

2.5

Amortization of intangible assets from acquisitions

2.1

1.6

1.5

1.7

1.3

Transaction, integration, restructuring and legal

0.4

0.8

0.1

0.1

Change in fair value of contingent consideration

(0.6)

Total expenses

188.5

195.0

192.6

187.5

172.3

185.6

191.7

191.0

185.7

171.0

Pretax income

8.4

7.9

8.5

9.7

8.8

11.4

11.1

9.3

10.8

9.5

 

 

 

 

 

 

 

 

 

 

 

Non-IFRS adjustments

 

 

 

 

 

 

 

 

 

 

Pretax income

8.4

7.9

8.5

9.7

8.8

11.4

11.1

9.3

10.8

9.5

Amortization of intangible assets from acquisitions

2.1

1.6

1.6

1.8

1.4

0.1

0.1

0.1

Depreciation and other amortization

2.8

2.5

2.3

2.4

2.5

2.8

2.5

2.3

2.4

2.5

Interest and lease finance expense

(0.1)

0.2

0.2

0.2

0.1

(0.1)

0.2

0.2

0.2

0.1

EBITDA

13.1

12.1

12.6

14.0

12.8

14.0

13.8

11.9

13.5

12.2

Change in fair value of contingent consideration

(0.6)

Contingent consideration recorded as compensation

0.1

CIPW adjustments (included in SG&A)

0.1

FX (gains)/losses

(0.1)

(0.8)

(0.7)

(0.7)

Transaction, integration, restructuring and legal

0.4

0.8

0.1

0.1

NCI reclassification (included in Other)

0.9

0.9

Total adjustments

0.8

1.6

(0.7)

(0.6)

(0.6)

Less: Non-controlling interest

1.0

0.9

(1.5)

0.7

0.5

1.0

0.9

(1.5)

0.7

0.5

Adjusted EBITDA

13.0

12.9

13.5

12.8

11.6

13.0

12.9

13.5

12.8

11.6

RESULTS OF OPERATIONS – U.S. WEALTH MANAGEMENT SEGMENT

 

[millions of dollars, except per share amounts]

IFRS Results

Adjusted Results

For the quarters ended

For the quarters ended

Jun. 30, 2022

Mar. 31, 2022

Dec. 31, 2021

Sep. 30, 2021

Jun. 30, 2021

Jun. 30, 2022

Mar. 31, 2022

Dec. 31, 2021

Sep. 30, 2021

Jun. 30, 2021

Revenues

 

 

 

 

 

 

 

 

 

 

U.S. wealth management fees

168.9

164.5

120.9

108.1

71.4

168.9

164.5

120.9

108.1

71.4

Other revenues

4.5

4.8

1.3

2.6

0.9

4.5

4.8

1.3

2.6

0.9

FX gains/(losses)

3.7

(31.9)

6.3

Total net revenues

173.4

169.2

125.9

78.8

78.6

173.5

169.2

122.2

110.7

72.3

Expenses

 

 

 

 

 

 

 

 

 

 

Selling, general & administrative

112.8

136.9

80.8

68.8

46.9

109.2

105.5

78.7

64.6

46.0

Other

0.7

0.4

2.9

3.1

3.5

0.7

0.4

2.9

3.1

3.5

Interest and lease finance expense

0.6

0.5

0.4

0.4

0.2

0.6

0.5

0.4

0.4

0.2

Depreciation and other amortization

4.1

3.9

3.1

2.5

1.7

4.1

3.9

3.1

2.5

1.7

Amortization of intangible assets from acquisitions

24.7

21.9

16.1

14.1

9.8

Transaction, integration, restructuring and legal

2.0

3.9

3.1

3.4

2.9

Change in fair value of contingent consideration

(70.5)

(0.9)

29.7

59.5

12.4

Total expenses

74.4

166.5

136.1

151.7

77.4

114.6

110.3

85.2

70.5

51.4

Pretax income

99.0

2.7

(10.2)

(72.9)

1.2

58.9

59.0

37.0

40.2

20.9

 

 

 

 

 

 

 

 

 

 

 

Non-IFRS adjustments

 

 

 

 

 

 

 

 

 

 

Pretax income

99.0

2.7

(10.2)

(72.9)

1.2

58.9

59.0

37.0

40.2

20.9

Amortization of intangible assets from acquisitions

24.7

21.9

16.5

14.4

10.1

0.5

0.3

0.3

Depreciation and other amortization

4.1

3.9

3.1

2.5

1.7

4.1

3.9

3.1

2.5

1.7

Interest and lease finance expense

0.6

0.5

0.4

0.4

0.2

0.6

0.5

0.4

0.4

0.2

EBITDA

128.4

29.1

9.9

(55.6)

13.2

63.5

63.4

41.0

43.4

23.1

Change in fair value of contingent consideration

(70.5)

(0.9)

29.7

59.5

12.4

Contingent consideration recorded as compensation (included in SG&A)

0.6

18.2

2.1

4.2

0.9

CIPW adjustments (included in SG&A)

3.0

13.2

FX (gains)/losses

(3.7)

31.9

(6.3)

Transaction, integration, restructuring and legal

2.0

3.9

3.1

3.4

2.9

Total adjustments

(64.9)

34.3

31.1

99.0

9.9

Less: Non-controlling interest

8.2

10.9

1.0

1.7

1.0

8.2

10.9

1.0

1.7

1.0

Adjusted EBITDA

55.4

52.5

40.0

41.7

22.1

55.4

52.5

40.0

41.7

22.1

 

These results validate our corporate strategy and capital allocation policies. Our expansion in wealth management in the United States and Canada has added stability and diversification to our business.

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