Q1-2020 Earnings Call May 6, 2020 Important Information This - - PowerPoint PPT Presentation

q1 2020 earnings call
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Q1-2020 Earnings Call May 6, 2020 Important Information This - - PowerPoint PPT Presentation

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)


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Q1-2020 Earnings Call

May 6, 2020

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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.

Important Information

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Conference Call Participants

Kurt MacAlpine Chief Executive Officer Douglas Jamieson Chief Financial Officer

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Topics for Discussion

  • Pandemic response update
  • Q1 highlights and challenges
  • Q1 financial performance review
  • Q2 sales update
  • Corporate strategy update
  • Q&A
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Pandemic response update

Employees Clients Community

  • Transitioned 90% of employees to a remote working model as of March

16th, 95%+ as of March 23rd

  • Employees who are in person are provided with transportation

assistance and meals, delivered safely on-site to prevent them from entering public places

  • Launched Be Well Advised campaign where our Assante Advisors and

corporate experts are providing free financial counseling to Canadians

  • Donating to help families in Canada’s most impoverished communities

cope with the impact of COVID-19

  • All service and operational support has been maintained / increased

from pre-COVID-19 levels

  • Remained very active communicating with our clients across our CI

Investments and advisor businesses

  • Hosting weekly calls with Advisors throughout COVID-19
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  • Closed on acquisition of Surevest Wealth Management
  • Closed purchase of WisdomTree’s Canadian ETF business
  • Announced exclusive product partnership with Jeffrey Gundlach and

DoubleLine (launching May 12th)

  • Announced exclusive product partnership with Adams Street
  • Completed initial build of predictive / advanced analytics database
  • Launched new marketing strategy to support three strategic priorities

Q1 Highlights and Challenges

Strong financial performance Net flows Capital Allocation Corporate strategy

  • Adjusted earnings per share of $0.58, or $0.63 excluding unrealized

marketable securities losses

  • Comparable SG&A expenses down $11.5M vs.Q1, 2019
  • January and February Canadian retail flows improve $830 million or 70% year-
  • ver-year

, March decline of 112%

  • Canadian institutional quarterly flows improve $705 million or 48% compared

to the prior quarter

  • Repurchased 5.3 million shares for $104 million during the quarter
  • Repaid $119 million of debt since the beginning of April; credit facility

will be fully repaid in May

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Quarterly Financial Review

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%)

  • %

Change

All numbers in millions, except per share

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SG&A

Asset Management

All numbers in $millions 29.4 29.7 30.1 29.4 30.1

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020

Wealth Management

96.6 95.1 94.5 84.4 84.9 Q2 - 2019 Q1- 2020 Q3 - 2019 Q1 - 2019 Q4 - 2019

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Free Cash Flow & Return to Shareholders

144 44 147 43 145 42 168 41 144 40 61 95 150 142 104 Q1-2019 Q2-2019 Q3-2019 Q4-2019 138 Q1-2020 193 144 105 183 Dividends Free cash flow Buybacks

All numbers in $millions

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Q1-2019 Q3-2019 Q1-2020 Q2-2019 Q4-2019

Debt

*Reflects EBITDA adjusted for provisions, where applicable

1,268 1,270 1,341 1,383 1,464 1,569 1,529 1,525 1,604 1,745 Gross debt Net debt

1.5 2.2 1.9 1.8 1.8 1.6 1.5 1.8 1.6

Gross debt to EBITDA Net debt to EBITDA

All numbers in $millions, except debt ratios

1.9

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Debt repayment progress and strategy

[$millions]

Total debt outstanding at March 31, 2020 $1,745 Public debentures Credit facility

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

$1,570 $175 Expected debt outstanding at May 31, 2020 $1,570 Credit facility repayment in April Expected repayment of credit facility in May $119 $56 Liquid marketable securities on hand $100

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Q2-2020 Sales Update

April net sales [$millions] Canadian retail (436) Canadian institutional (94) International (95) Closed business (40) Total (665) Canadian retail net sales improvement April-2020 vs. April-2019 Canadian institutional net sales improvement April-2020 vs. April-2019

12% 41%

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Recap: Corporate Strategic Priorities With Associated Rationale

Modernize our asset management business Expand our wealth management platform Globalize our company

  • Scale is becoming

increasingly important, and difficult to achieve in Canada

  • Investors want to be

serviced and supported globally

  • Talent acquisition from

global markets

  • Role of advisor is more

important than ever

  • Our breadth of

capabilities uniquely positions us to be Canada's market leader

  • Consumers' lives are

becoming increasingly complex and digital

  • Evolving demographics
  • Shifts in investor

preferences

  • Changing expectations for

servicing and support

  • Ongoing regulatory

change

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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

  • ur clients and prospects

This initiative will be rolled out over the coming months

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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
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Summarizing our changes.

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CI Today

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▪ Retained elements of the historical logo ▪ Icon prominently frames and showcases CI ▪ Modern font and text layout ▪ Designed to be leveraged and scaled

across business lines and new acquisitions

▪ Provides consistency to create and build

an integrated global family

CI Tomorrow

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Asset Management Today Asset Management Tomorrow

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HNW Today HNW Tomorrow

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Wealth Management Today Wealth Management Tomorrow

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Digital / Direct Today Digital / Direct Tomorrow

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Asset Servicing Today Asset Servicing Tomorrow

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Putting it all together.

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Question & Answer