Q1-2020 Earnings Call May 6, 2020
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, stra tegy 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 con ditional verbs such as “will”, “may”, “should”, “could” or “would”. These statements are not historical facts but instead represent ma nagement beliefs regarding future events, many of which by their nature are inherently uncertain and beyond management’s control. Alth ough 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. 1
Conference Call Participants Kurt MacAlpine Douglas Jamieson Chief Executive Officer Chief Financial Officer 2
Topics for Discussion • Pandemic response update • Q1 highlights and challenges • Q1 financial performance review • Q2 sales update • Corporate strategy update • Q&A 3
Pandemic response update • Transitioned 90% of employees to a remote working model as of March 16 th , 95%+ as of March 23 rd • Employees Employees who are in person are provided with transportation assistance and meals, delivered safely on-site to prevent them from entering public places • All service and operational support has been maintained / increased from pre-COVID-19 levels • Clients Remained very active communicating with our clients across our CI Investments and advisor businesses • Hosting weekly calls with Advisors throughout COVID-19 • Launched Be Well Advised campaign where our Assante Advisors and corporate experts are providing free financial counseling to Canadians Community • Donating to help families in Canada’s most impoverished communities cope with the impact of COVID-19 4
Q1 Highlights and Challenges • Adjusted earnings per share of $0.58, or $0.63 excluding unrealized Strong financial marketable securities losses performance • Comparable SG&A expenses down $11.5M vs.Q1, 2019 • Repurchased 5.3 million shares for $104 million during the quarter Capital • Repaid $119 million of debt since the beginning of April; credit facility Allocation will be fully repaid in May • January and February Canadian retail flows improve $830 million or 70% year- over-year , March decline of 112% Net flows • Canadian institutional quarterly flows improve $705 million or 48% compared to the prior quarter • Closed on acquisition of Surevest Wealth Management • Closed purchase of WisdomTree’s Canadian ETF business • Announced exclusive product partnership with Jeffrey Gundlach and Corporate DoubleLine (launching May 12 th ) strategy • Announced exclusive product partnership with Adams Street • Completed initial build of predictive / advanced analytics database • Launched new marketing strategy to support three strategic priorities 5
Quarterly Financial Review All numbers in millions, except per share Change Q1-2020 Q4-2019 Q1-2019 QoQ YoY Average AUM $127,163 $130,542 $128,521 (3%) (1%) Ending AUM $111,065 $131,741 $130,944 (16%) (15%) Assets under administration $44,611 $50,505 $46,393 (12%) (4%) Adjusted net income $126.5 $147.5 $140.0 (14%) (10%) • per share $0.58 $0.66 $0.58 (12%) -% Free cash flow $143.7 $168.3 $143.5 (15%) -% 6
SG&A All numbers in $millions Asset Management Wealth Management 96.6 95.1 94.5 84.9 84.4 30.1 30.1 29.7 29.4 29.4 Q1 Q2 Q3 Q4 Q1 Q1 - Q2 - Q3 - Q4 - Q1- 2019 2019 2019 2019 2020 2019 2019 2019 2019 2020 7
Free Cash Flow & Return to Shareholders All numbers in $millions 193 183 168 147 144 144 145 144 138 150 105 142 104 95 61 44 43 42 41 40 Q1-2019 Q2-2019 Q3-2019 Q4-2019 Q1-2020 Free cash flow Buybacks Dividends 8
Debt All numbers in $millions, except debt ratios 1,745 1,604 1,569 1,529 1,525 2.2 1.9 1.8 1.9 1.8 1.8 1.6 1.6 1.5 1.5 1,464 1,383 1,341 1,268 1,270 Q1-2019 Q2-2019 Q3-2019 Q4-2019 Q1-2020 Net debt to EBITDA Gross debt Net debt Gross debt to EBITDA *Reflects EBITDA adjusted for provisions, where applicable 9
Debt repayment progress and strategy [$millions] Public debentures $1,570 Credit facility $175 Total debt outstanding at March 31, 2020 $1,745 Credit facility repayment in April $119 Expected repayment of credit facility in May $56 Expected debt outstanding at May 31, 2020 $1,570 Liquid marketable securities on hand $100 While credit markets have improved considerably over the past few weeks, we are maintaining our conservative stance but are continuously monitoring and will re-evaluate based on market conditions 10
Q2-2020 Sales Update April net sales [$millions] Canadian retail (436) Canadian retail net 41% sales improvement April-2020 vs. April-2019 Canadian institutional (94) Canadian institutional 12% International (95) net sales improvement April-2020 vs. April-2019 Closed business (40) Total (665) 11
Recap: Corporate Strategic Priorities With Associated Rationale Expand our wealth Globalize our Modernize our asset management platform company management business • • Scale is becoming Role of advisor is more • Evolving demographics increasingly important, important than ever • Shifts in investor and difficult to achieve in • Our breadth of preferences Canada capabilities uniquely • Changing expectations for • Investors want to be positions us to be servicing and support Canada's market leader serviced and supported • Ongoing regulatory globally • Consumers' lives are change • Talent acquisition from becoming increasingly global markets complex and digital 12
Marketing / Branding – Key messages As part of our new corporate strategy, we are transforming CI into an integrated, global asset and wealth management company The current brands and names that we are using for our various businesses do not allow us to effectively communicate to the marketplace the breadth and depth of our capabilities – Today, we market ~20 brands in total, most of which have no affiliation to CI, adding a lot of unnecessary confusion, complexity, and costs, while significantly reducing our marketing return on investment In addition, consumer preferences have changed considerably over the past few years with clients gravitating to at-scale companies and those with simple and clearly articulated value propositions Over the past few months, we have been working on a brand enhancement strategy designed to modernize and change the perception of CI and streamline, simplify, and clarify our communications to our clients and prospects This initiative will be rolled out over the coming months 13
Current state of our brands • Limited / no consistency across brands, logos, or names • Most logos have not been refreshed over time and are out of date • Diminished recognition of some brands due to inability to invest at scale across all brands • Few brands tie back to CI; missed opportunity to scale brands through unified theme 14
Summarizing our changes.
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