CI Financial Earnings Conference Call Second Quarter 2019 August 8, 2019
Important Information This presentation 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. This presentation contains non-IFRS financial measures that do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. However, management uses these financial measures and also believes that most shareholders, creditors, other stakeholders and investment analysts prefer to include the use of these financial measures in analyzing CI’s results. These non-IFRS measures are described and/or reconciled to the nearest IFRS measure in CI’s Management’s Discussion and Analysis available at www.cifinancial.com. Figures exclude non-controlling interest, where applicable. Earnings Conference Call | Second Quarter 2019
Conference Call Participants Peter Anderson Douglas Jamieson Chief Executive Officer Chief Financial Officer Available for questions Steven Donald Rohit Mehta Darie Urbanky Sean Roy Ratnavel Jaime Ross Etherington Chief Risk Officer EVP President & Chief EVP & National President CI Financial CI Financial Operating Officer President, Sales Manager CI Private Counsel CI Financial Assante Wealth CI Financial CIIAM Management [ 1 ] Earnings Conference Call | Second Quarter 2019
Kurt MacAlpine New CEO will join CI September 1, 2019 • EVP and Head of Global Distribution for Wisdom Tree • Leader of the North American Asset Management Practice at McKinsey & Company [ 2 ] Earnings Conference Call | Second Quarter 2019
S&P 500 & TSX Composite (Total Index Returns, January 1, 2018 – June 30, 2019) S&P 500 TSX Jan ‘18 Apr ‘18 Jul ‘18 Oct ‘18 Jan ‘19 Apr ‘19 Jun ‘19 Source: Bloomberg [ 3 ] Earnings Conference Call | Second Quarter 2019
Industry Net Sales (YTD June 30, 2019, in $billions) All Funds Equity Balanced Fixed Income 22 9 10 16 15 2 2 (3) 2018 2019 2018 2019 2018 2019 2018 2019 Source: SI Research – Investor Economics Insight [ 4 ] Earnings Conference Call | Second Quarter 2019
Key Priorities • Ease of business – Investment excellence – Modernize product platform and offerings • Integrated distribution platform Advice No advice Supporting technology: [ 5 ] Earnings Conference Call | Second Quarter 2019
Doug Jamieson Chief Financial Officer
Financial Highlights Change [millions, except per share] Q2-2019 Q1-2019 Q2-2018 QoQ YoY Average AUM $131,133 $128,887 $139,487 2% -6% Ending AUM $130,186 $131,309 $138,182 -1% -6% Assets under advisement $46,606 $45,644 $43,717 2% 7% Net income $111.9 $140.0 $159.9 -20% -30% per share $0.47 $0.58 $0.61 -19% -23% Adjusted net income* $138.5 $140.0 $159.9 -1% -13% per share $0.58 $0.58 $0.61 0% -5% Free cash flow $146.5 $143.5 $163.0 2% -10% *Adjusted for a $26.6 million ($35.0 million before tax) restructuring provision [ 7 ] Earnings Conference Call | Second Quarter 2019
SG&A Expenses (in $millions) • Reducing spend on mature business and reinvesting in growing lines of business 135 135 128.9 130 130 127.3 126.1 124.8 125 125 123.5 120 120 115 115 110 110 Q2-2018 Q3-2018 Q4-2018 Q1-2019 Q2-2019 [ 8 ] Earnings Conference Call | Second Quarter 2019
Free Cash Flow & Return to Shareholders (in $millions) 300 250 200 153 189 150 160 100 95 163 169 157 144 147 61 50 94 61 45 44 43 – Q2-2018 Q3-2018 Q4-2018 Q1-2019 Q2-2019 Free Cash Flow Dividends Buybacks [ 9 ] Earnings Conference Call | Second Quarter 2019
Debt 1,800 3.00 Gross Debt to EBITDA* 1,529 1,525 1,504 1,429 1,444 1,500 2.50 Debt to EBITDA* ratio 1,270 1,200 1,268 2.00 1,255 1,209 (in $millions) 1,126 900 1.50 600 1.00 Net Debt to EBITDA* 300 0.50 – – Q3-2018 Q4-2018 Q2-2018 Q1-2019 Q2-2019 Net Debt Gross Debt *Reflects EBITDA adjusted for provisions, where applicable [ 10 ] Earnings Conference Call | Second Quarter 2019
Peter Anderson Chief Executive Officer
Canadian Retail Sales • Redemptions slowing • Improvements: – Investment management performance – New product offerings – IIROC and new advisor sales • CI First Asset: – AUM now exceeds $7 billion • New marketing campaign [ 12 ] Earnings Conference Call | Second Quarter 2019
CI Institutional Asset Management • Redemptions due to: – Previous short-term performance – Shifts in asset allocation – Structural changes in the industry • Aligned with CI Private Counsel • Continued success in placing CI in searches and finals [ 13 ] Earnings Conference Call | Second Quarter 2019
Assante and Stonegate • Solid growth continues – Organic – Advisor recruitment • Ongoing investments, including platforms and products Assets Under Advisement (in $millions) 50,000 40,000 30,000 20,000 10,000 0 Q2 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 [ 14 ] Earnings Conference Call | Second Quarter 2019
Investment Management • Q2: 76% of assets in 1 st /2 nd quartile • Improvements to one and three-year performance [ 15 ] Earnings Conference Call | Second Quarter 2019
GSFM • Returned to positive net sales in Q2 • Large institutional win, majority to fund in Q3-2019 • Excellent opportunities as a result of Royal Commission • Strong investment team performance [ 16 ] Earnings Conference Call | Second Quarter 2019
Digital • WealthBar – Results have exceeded expectations – Assante Connect launched • BBS/Virtual Brokers – Transferred some Assante accounts to BBS – Institutional onboarding continues – Asset growth continues [ 17 ] Earnings Conference Call | Second Quarter 2019
Summary • Kurt MacAlpine will begin September 1 • Sales remains our top priority • $35 million restructuring provision • Continued focus on SG&A • Improved investment management performance • We continue to buy back shares [ 18 ] Earnings Conference Call | Second Quarter 2019
Q&A
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