CI Financial Reports Record Financial Results for the First Quarter of 2021

Rhea-AI Summary

CI Financial Corp. (TSX:CIX, NYSE:CIXX) announced its financial results for Q1 2021, showcasing record adjusted earnings per share of $0.73, a 30% increase year-over-year. The company's adjusted revenue rose 22% to $603.2 million, driven by higher asset levels and strategic acquisitions. CI's assets reached $240.6 billion, increasing 55% year-over-year, while total wealth management assets hit a record $102.1 billion. CI repurchased 6.6 million shares and paid dividends of $0.18 per share, reflecting strong capital allocation efforts.

Positive

• Adjusted earnings per share rose to $0.73, up 30% year-over-year.
• Adjusted revenue increased by 22% to $603.2 million.
• Total assets reached $240.6 billion, a 55% year-over-year increase.
• Wealth management assets hit a record $102.1 billion, growing 129% year-over-year.
• Successful share repurchase of 6.6 million shares at $112.7 million.

Negative

• SG&A expenses increased to $133.4 million, up from $116.7 million in the previous quarter.

CI Financial Corp. (“CI”) (TSX:CIX, NYSE:CIXX) today released financial results for the quarter ended March 31, 2021.

“Our record financial results speak to the tremendous progress we have made in executing on our strategic priorities over the past 15 months,” said Kurt MacAlpine, CI Chief Executive Officer. “CI has been fundamentally transformed into a much larger, more global firm with increasingly diversified businesses and sources of revenue and earnings.

“Core to our strategy has been our rapid growth in U.S. wealth management and we continued that momentum in the first quarter with three transactions that have added $39 billion to our U.S. assets (as of April 30, 2021). As CI has grown, it has become more balanced between regions and between asset management and wealth management.

“We have also made significant advances in modernizing our asset management business this year, launching innovative new products that included an industry-leading suite of cryptocurrency ETFs and funds, a private equity fund and a gold bullion ETF,” Mr. MacAlpine said. “Our success in ETFs, where we are among the top five companies in Canada by assets and a sales leader, has contributed to a strong improvement in our sales, as CI had its best quarter for net flows since the third quarter of 2017.”

Mr. MacAlpine also said, “We continue to take a dynamic approach to capital allocation and repurchased 6.6 million shares in the first quarter while at the same time reducing and reorganizing our debt through the early redemption of debentures due over the next two years in favor of longer-term notes.”

Financial results

CI reported adjusted earnings per share¹ for the first quarter of $0.73, an all-time high for CI. This compares to adjusted earnings per share of $0.71 for the fourth quarter and $0.56 for the first quarter of 2020. Basic earnings per share were $0.60 for the first quarter of 2021, an increase of 20% from $0.50 for the previous quarter and an increase of 9% from $0.55 for the first quarter of 2020. Adjusted earnings per share are earnings per share attributable to common shareholders excluding amortization of acquisition-related intangibles, the change in fair value of acquisition liabilities, and foreign exchange gains and losses associated with the translation of balance sheet and income statement items related to acquisitions, and net of other provisions and adjustments.

Adjusted revenue¹ was $603.2 million in the first quarter of 2021, an increase of 9% from $554.1 million in the fourth quarter and an increase of 22% from $493.0 million in first quarter of 2020. The increases reflect higher asset levels and, when compared to the prior quarter, contributions from Doyle Wealth Management, LLC, RGT Wealth Advisors, LLC, The Roosevelt Investment Group, LLC and Stavis & Cohen Private Wealth, LLC, which were acquired effective December 31, 2020.

SG&A expenses for the first quarter were $133.4 million, up from $116.7 million in the fourth quarter and $115.0 million in the same quarter a year ago. The increases are due in part to the inclusion of newly acquired firms.

CI generated $155.6 million in free cash flow¹ during the first quarter, an increase of 7% from $145.6 million in the previous quarter and an increase of 8% from $144.7 million in the same quarter a year ago.

As at March 31, 2021, total assets were a record $240.6 billion, up 4% from December 31, 2020 and up $85 billion or 55% year over year, reflecting organic growth and acquisitions in wealth management.

Assets under management at the end of the quarter were $138.5 billion, representing an increase of 3% from December 31, 2020 and 25% from March 31, 2020. Core assets under management, which consist of assets managed by CI’s Canadian and Australian subsidiaries, were $132.6 billion at March 31, 2021, an increase of 2% from the previous quarter-end and an increase of 19% year over year. U.S. assets under management were $5.9 billion at March 31, 2021, up 8% over the quarter.

Total average assets under management were $137.1 billion in the first quarter, up 4% from the fourth quarter and up 8% from the first quarter of 2020. Core average assets under management were $131.6 billion in the first quarter, compared to $126.2 billion for the previous quarter and $127.2 billion for the year-ago quarter.

Total wealth management assets as at March 31, 2021 were $102.1 billion, which also represents an all-time quarter-end high for CI. They increased by 6% from December 31, 2020 and by $57.5 billion or 129% from a year earlier.

Canadian wealth management assets were $71.1 billion at the end of the first quarter, representing increases of 6% from December 31, 2020 and 61% from March 31, 2020. The year-over-year increase is a result of net sales, market growth and the acquisition of Aligned Capital Partners Inc. in October 2020. This also includes the assets of CI Assante Wealth Management, CI Private Counsel LP, CI Direct Investing and Virtual Brokers.

U.S. wealth management assets were $31.0 billion at March 31, 2021, compared to $29.2 billion at December 31, 2020 and $0.5 billion at March 31, 2020. The year-over-year change is due to CI’s acquisitions of U.S. registered investment advisor firms over the period.

In the first quarter, CI had its best quarterly net flows since the third quarter of 2017. Overall net redemptions were $0.9 billion, compared to net redemptions of $2.1 billion and $2.7 billion in the fourth and first quarters of 2020, respectively. CI’s Canadian retail business, excluding products closed to new investors, had $0.6 billion in net redemptions for the first quarter of 2021, an improvement of $0.7 billion over both the fourth quarter of 2020 and the first quarter of 2020. CI’s Canadian institutional business had net redemptions of $0.4 billion for the first quarter of 2021, an improvement of $0.5 billion over the fourth quarter of 2020 and an improvement of $0.4 billion from the same quarter a year ago. GSFM had net sales of $46 million in the first quarter of 2021, improving $0.5 billion from the same quarter a year ago, and CI’s U.S. RIA business had $0.3 billion in net sales. CI’s closed business, comprised primarily of segregated fund contracts that are no longer available for sale, had $0.2 billion in net redemptions for the quarter.

Capital allocation

In the first quarter of 2021, CI repurchased 6.6 million shares at a cost of $112.7 million, for an average cost of $17.17 per share, and paid $37.9 million in dividends at a rate of $0.18 a share.

The Board of Directors declared a quarterly dividend of $0.18 per share, payable on October 15, 2021 to shareholders of record on September 30, 2021. The annual dividend rate of $0.72 per share represented a yield of 3.6% on CI’s closing share price of $20.23 on May 12, 2021.

During the quarter, CI issued US$260 million in notes in a re-opening of its 3.200% notes due 2030, which were originally issued in December 2020, raising the aggregate principal amount of the notes to US$960 million. CI also completed the early redemption of $200 million of debentures maturing in November 2021 and $325 million of debentures due in July 2023. Additionally, CI repurchased $44 million principal amount of debentures maturing in July 2024. As a result, CI has reduced its debt level while extending the overall maturity of its debt and locking in favorable long-term rates. Long-term debt (including the current portion) declined by 10% during the quarter to $2.2 billion.

First quarter business highlights

• CI’s U.S. expansion accelerated in the first quarter of 2021 with agreements to acquire three RIAs with combined assets of $39.4 billion, more than doubling CI’s U.S. asset base to $74 billion.² The acquisitions, which were completed on April 30, 2021, included:
  • Segall Bryant & Hamill, LLC of Chicago, which provides wealth management services and institutional investment management services to a broad array of clients from offices in Chicago, Denver, Philadelphia, St. Louis and Naples, FL.
  • Barrett Asset Management, LLC of New York, which delivers high-touch wealth management services to families, trusts and charitable organizations.
  • Brightworth, LLC of Atlanta, which provides comprehensive investment advisory and financial planning services to high-net-worth individuals, families, business owners, trusts, estates, charitable organizations, pension and profit-sharing plans from offices in Atlanta and Charlotte, NC.
• In an important step in modernizing CI’s asset management business and enhancing its product lineup, CI Global Asset Management (“CI GAM”) launched the CI Galaxy Bitcoin ETF (TSX:BTCX) in March, with the competitive advantage of having the lowest management fee of any bitcoin ETF at 0.40%.
• Other enhancements to the product lineup included the launch of a private equity product with Adams Street Partners, CI Gold Bullion Fund (TSX:VALT), an ETF that invests in physical gold, and retail series of CI Munro Global Growth Equity Fund.

Following quarter-end:

• CI agreed to acquire Dowling & Yahnke, LLC, a San Diego-based registered investment advisor firm with US$5.1 billion in assets³. The firm was founded in 1991 and serves over 1,300 clients, primarily individuals, families, and non-profit organizations.
• CI supported the acquisition by Congress Wealth Management, LLC (“CWM”) of Pinnacle Advisory Group, Inc. of Columbia, MD, an RIA with US$2.4 billion in assets³ and offices in Columbia and Miami. CI holds a strategic interest in CWM.
• CI acquired full ownership of Lawrence Park Asset Management (“Lawrence Park”), a Toronto-based alternative fixed-income investment firm. CI previously held a minority interest in Lawrence Park, which manages approximately $600 million of assets in credit-focused strategies.
• CI continued to build out an industry-leading suite of cryptocurrency solutions with the launch of CI Galaxy Ethereum ETF, the world’s first ETF to invest directly in Ether, as well as CI Bitcoin Fund, North America’s first bitcoin mutual fund, and CI Ethereum Fund, the world’s first Ethereum mutual fund. The launches made CI GAM the only company in the world to offer convenient, low-cost and secure exposure to the two largest cryptocurrencies through both ETFs and mutual funds.
• CI GAM and The Empire Life Insurance Company launched the CI Empire Life Concentric GIF family of segregated funds, which combine the diversification, risk management, and growth potential of actively managed mutual funds with the security of insurance benefit guarantees.

Analysts’ conference call

CI will hold a conference call with analysts today at 9:00 a.m. Eastern Time, led by Chief Executive Officer Kurt MacAlpine and Chief Financial Officer Douglas Jamieson. The call and a slide presentation will be accessible through a webcast or by visiting the Investor Relations page on www.cifinancial.com. Alternatively, investors may listen to the discussion by dialing 1-800-437-2398 or 647-792-1240 (Passcode: 2096170). A replay of the call will be available for one year following the presentation (Passcode: 2096170). The webcast will be archived in the Financials section of www.cifinancial.com.

Financial highlights

	As at and for the quarters ended			Change (%)
[millions of dollars, except share amounts]	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020	QoQ	YoY
Core assets under management (Canada and Australia)	132,626	129,591	111,065	2	19
U.S. assets under management	5,916	5,461	-	8	n/a
Total assets under management	138,541	135,052	111,065	3	25
Canadian wealth management	71,066	67,257	44,150	6	61
U.S. wealth management	31,013	29,230	461	6	6,627
Total wealth management assets	102,078	96,487	44,611	6	129
Total assets	240,620	231,539	155,675	4	55
Core average assets under management	131,569	126,233	127,163	4	3
Total average assets under management	137,142	131,246	127,163	4	8
Total net flows	(883)	(2,140)	(2,721)
Net income attributable to shareholders	124.2	105.0	120.2	18	3
Adjusted net income1	151.6	148.7	124.0	2	22
Basic earnings per share	0.60	0.50	0.55	20	9
Diluted earnings per share	0.59	0.50	0.54	18	9
Adjusted earnings per share1	0.73	0.71	0.56	3	30
Free cash flow1	155.6	145.6	144.7	7	8
Share repurchases	112.7	29.8	103.9	278

FAQ

What were CI's earnings per share for Q1 2021?

CI reported adjusted earnings per share of $0.73 for Q1 2021.

How much did CI's total assets grow year-over-year?

CI's total assets grew by 55% year-over-year to reach $240.6 billion.

What was the total revenue reported by CI for Q1 2021?

CI reported adjusted revenue of $603.2 million for Q1 2021.

What is the record for wealth management assets reported by CI?

CI reported a record $102.1 billion in total wealth management assets.

How many shares did CI repurchase in Q1 2021?

CI repurchased 6.6 million shares during Q1 2021.