CANACCORD GENUITY GROUP INC. REPORTS FIRST QUARTER FISCAL 2025 RESULTS
Excluding significant items, quarterly earnings per common share of
First quarter dividend of
Our wealth management division delivered record quarterly revenues and consistent earnings in our fiscal first quarter as we continue to make investments to advance our growth priorities in each of our geographies," said
First fiscal quarter highlights:
(All dollar amounts are stated in thousands of Canadian dollars unless otherwise indicated)
- First quarter revenue excluding significant items(1) of
$429.0 million , an increase of 24.9% over the same period in the prior year (on an IFRS basis, revenue was$428.2 million , a year-over-year increase of 24.7%) - First quarter net income before taxes excluding significant items(1) of
$34.8 million , an increase of 5.8% or$1.9 million year-over-year (on an IFRS basis, net income before taxes amounted to$23.5 million , a year-over-year increase of 274.6%) - Diluted earnings per common share excluding significant items(1) for the first fiscal quarter of
$0.13 per share (diluted earnings per common share of$0.02 on an IFRS basis) - Record quarterly wealth management revenue of
$215.9 million , a year-over-year increase of 13.0% - Total client assets(1) in our global wealth management business increased by 8.8% year-over-year to
$105.8 billion , reflecting year-over-year increases of 3.1% inCanada , 11.4% in theUK & Crown Dependencies, and 22.7% inAustralia - First quarter revenue earned in our capital markets division increased by 41.1% year-over-year and primarily reflects a 121.3% increase in revenue from investment banking activities and a 65.7% increase in revenue from advisory activities
- First quarter common share dividend of
$0.085 per share
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Three months ended |
Year-over-year |
Three months ended |
Quarter-over- |
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Q1/25 |
Q1/24 |
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Q4/24 |
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First fiscal quarter highlights- adjusted1 |
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Revenue excluding significant items1 |
|
|
24.9 % |
|
4.8 % |
Expenses excluding significant items1 |
|
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26.9 % |
|
6.5 % |
Diluted earnings per common share excluding significant items1 |
|
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85.7 % |
|
(13.3) % |
Net Income excluding significant items1 |
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30.9 % |
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(17.3) % |
Net Income attributable to common shareholders excluding significant items1,3 |
|
|
76.3 % |
|
(23.2) % |
First fiscal quarter highlights- IFRS |
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Revenue |
|
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24.7 % |
|
4.7 % |
Expenses |
|
|
20.1 % |
|
2.5 % |
Diluted loss per common share |
|
|
113.3 % |
|
128.6 % |
Net Income (loss)2 |
|
|
n.m. |
|
111.3 % |
Net income (loss) attributable to common shareholders,3 |
|
|
117.9 % |
|
136.6 % |
1. Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 5 |
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(1) See Non-IFRS Measures on page 5 |
Core business performance highlights:
The Company's combined global wealth management operations earned record quarterly revenue of
- Wealth management operations in the
UK & Crown Dependencies generated first quarter revenue of$107.5 million , an increase of 4.2% compared to the same period last year and a new quarterly record for this business. Net income before taxes excluding significant items(1) for this business was$22.8 million in Q1/25, down 14.6% year-over-year. -
Canaccord Genuity Wealth Management (North America ) generated$90.0 million in fiscal first quarter revenue, an increase of 24.0% compared to the same quarter a year ago which primarily reflects a 22.8% increase in commissions & fees revenue, in addition to higher investment banking and interest revenue. Excluding significant items(1) net income before taxes for this business was$9.3 million in Q1/25, which represents a year-over-year increase of 2.7%. - Wealth management operations in
Australia generated$18.4 million in fiscal first quarter revenue, an increase of 20.9% compared to the first quarter of last year. Excluding significant items(1) net income before taxes for this business was$1.2 million in Q1/25, up from$0.3 million in Q1/24.
Total client assets in the Company's global wealth management businesses at the end of the first fiscal quarter amounted to
- Client assets in the
UK & Crown Dependencies reached a new record of$60.9 billion (£35.2 billion) as atJune 30, 2024 , a year-over-year increase of 11.4% (an increase of 8.4% in local currency). - Client assets in
North America were$38.3 billion as atJune 30, 2024 , an increase of 3.1% from$37.2 billion atJune 30, 2023 due to net new inflows, recruitment activity and additional assets from our acquisition of Mercer's Canadian Private Wealth business which was completed inMay 2023 . - Client assets(1) in
Australia were$6.6 billion (AUD$ 7.3 billion) atJune 30, 2024 , an increase of 22.7% from the first quarter of fiscal 2024. In addition, client assets(1) totalling$13.9 billion (AUD$ 15.3 billion) are also held on record in less active and transactional accounts through our Australian platform.
On a consolidated basis,
During the three-month period,
Advisory revenue increased by 65.7% year-over-year, mainly due to higher contributions from our US and
Excluding significant items(1), our global capital markets division recorded a net income of
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(1) See Non-IFRS Measures on page 5 |
Summary of Corporate Developments
On
On
On
On
In Q1 2025, certain executive officers and senior revenue producing employees (referred to as Participants herein) entered into loan agreements ("Purchase Loans") with subsidiaries of the Company ("
The Partnership used the proceeds received from the subscription of LP units by the Participants to repay amounts outstanding under the Partnership Loan. As of
Results for the First Quarter of Fiscal 2025 were impacted by the following significant items:
- Fair value adjustments on certain illiquid or restricted marketable securities recorded for IFRS reporting purposes, but which are excluded for management reporting purposes and are not used by management to assess operating performance.
- Certain costs related to changes to the staffing mix in our capital markets businesses,
- Amortization of intangible assets acquired in connection with business combinations.
- Certain incentive-based costs related to acquisitions related to the acquisition and growth initiatives in the US capital markets and CGWM
UK wealth operations - Fair value adjustments to the derivative liability recorded in connection with the convertible debentures
- Certain lease expenses related to premises under construction
- Certain components of the non-controlling interest expense associated with CGWM
UK .
Summary of Results for Q1 Fiscal 2025 and Selected Financial Information Excluding Significant Items( 1 ) :
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Three months ended |
Quarter-over- |
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(C$ thousands, except per share and % amounts) |
2024 |
2023 |
|
Revenue |
|
|
|
Revenue per IFRS |
|
|
24.7 % |
Significant items recorded in Corporate and Other |
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|
|
Fair value adjustments on certain illiquid and restricted marketable securities |
|
|
n.m. |
Total revenue excluding significant item |
|
|
24.9 % |
Expenses |
|
|
|
Expenses per IFRS |
|
|
20.1 % |
Significant items recorded in |
|||
Amortization of intangible assets |
|
|
(55.1) % |
Incentive-based costs related to acquisitions |
|
|
(10.5) % |
Restructuring costs |
|
- |
n.m. |
Lease expenses related to premises under construction |
|
- |
n.m. |
Significant items recorded in |
|
||
Amortization of intangible assets |
|
|
3.4 % |
Incentive-based costs related to acquisitions |
|
|
(35.4) % |
Acquisition-related costs |
|
- |
n.m. |
Significant items recorded in Corporate and Other |
|
|
|
Restructuring costs |
- |
|
(100.0) % |
Development costs |
- |
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(100.0) % |
Lease expenses related to premises under construction |
|
- |
n.m. |
Fair value adjustment of convertible debentures derivative liability |
|
- |
n.m. |
Total significant items – expenses |
|
|
(60.4) % |
Total expenses excluding significant items |
|
|
26.9 % |
Net income before taxes excluding significant items(1) |
|
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5.8 % |
Income taxes – adjusted(1) |
|
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(30.4) % |
Net income excluding significant items(1) |
|
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30.9 % |
Significant items impacting net income attributable to common shareholders |
|
|
|
Non-controlling interests – IFRS |
|
|
11.7 % |
Amortization of equity component of the non-controlling interests in CGWM |
|
|
77.4 % |
Non-controlling interests (adjusted) (1) |
|
|
2.5 % |
Preferred share dividends |
|
|
- |
Net income attributable to common shareholders, excluding significant items(1) |
|
|
76.3 % |
Earnings per common share excluding significant items– basic(1) |
|
|
40.0 % |
Earnings per common share excluding significant items- diluted(1) |
|
|
85.7 % |
1Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 5. |
_______________________________ |
(1) See Non-IFRS Measures on page 5 |
Diluted earnings per common share ("diluted EPS") is computed using the treasury stock method, giving effect to the exercise of all dilutive elements. The Convertible Preferred Shares and preference shares issued by CGWM
Financial Condition at the End of First Quarter Fiscal 2025 vs. Fourth Quarter of Fiscal 2024:
|
|
|
Q1/25 vs Q4/24 |
Cash |
897,368 |
855,604 |
4.9 % |
Working capital(1) |
782,624 |
852,760 |
(8.2) % |
Total assets |
5,879,508 |
6,132,465 |
(4.1) % |
Total liabilities |
4,520,583 |
4,772,354 |
(5.3) % |
Non-controlling interests |
367,581 |
364,466 |
0.9 % |
Total shareholders' equity |
991,344 |
995,645 |
(0.4) % |
(1) The Company's business requires capital for operating and regulatory purposes. The Company's working capital, including cash and cash equivalents, is fully deployed by the Company in its operations to support regulatory capital levels as required and counter-party requirements, including cash deposit requirements, and as needed to maintain current levels of activity, growth initiatives and capital plans. |
Common and Preferred Share Dividends:
On
On
On
Non-IFRS Measures
Certain non-IFRS measures, non-IFRS ratios and supplementary financial measures are utilized by the Company as measures of financial performance. Non-IFRS measures, non-IFRS ratios and supplementary financial measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies.
Management believes that these non-IFRS measures, non-IFRS ratios and supplementary financial measures allow for a better evaluation of the operating performance of the Company's business and facilitate meaningful comparison of results in the current period to those in prior periods and future periods. Non-IFRS measures presented in this earnings release include certain figures from our statement of operations that are adjusted to exclude significant items. Although figures that exclude significant items provide useful information by excluding certain items that may not be indicative of the Company's core operating results, a limitation of utilizing these figures that exclude significant items is that the IFRS accounting effects of these items do in fact reflect the underlying financial results of the Company's business. Accordingly, these effects should not be ignored in evaluating and analyzing the Company's financial results. Therefore, management believes that the Company's IFRS measures of financial performance and the respective non-IFRS measures should be considered together.
Non-IFRS Measures (Adjusted Figures)
Figures that exclude significant items provide useful information by excluding certain items that may not be indicative of the Company's core operating results. Financial statement items that exclude significant items are non-IFRS measures. To calculate these non-IFRS financial statement items, we exclude certain items from our financial results prepared in accordance with IFRS. The items which have been excluded are referred to herein as significant items. The following is a description of the composition of the non-IFRS measures used in this earnings release (note that some significant items excluded may not be applicable to the calculation
of the non-IFRS measures for each comparative period): (i) revenue excluding significant items, which is composed of revenue per IFRS less any applicable fair value adjustments on certain illiquid or restricted marketable securities as recorded for IFRS reporting purposes but which are excluded for management reporting purposes and are not used by management to assess operating performance; (ii) expenses excluding significant items, which is composed of expenses per IFRS less any applicable amortization of intangible assets acquired in connection with a business combination, restructuring costs, certain incentive-based costs related to the acquisitions and growth initiatives in CGWM
A reconciliation of non-IFRS measures that exclude significant items to the applicable IFRS measures from the interim condensed consolidated financial statements for the first quarter of fiscal 2024 can be found above in the table entitled "Summary of results for Q1 fiscal 2025 and selected financial information excluding significant items".
Non-IFRS Ratios
Non-IFRS ratios are calculated using the non-IFRS measures defined above. For the periods presented herein, we have used the following non-IFRS ratios: (i) total expenses excluding significant items as a percentage of revenue, which is calculated by dividing expenses excluding significant items by revenue excluding significant items; (ii) earnings per common share excluding significant items, which is calculated by dividing net income attributable to common shareholders excluding significant items by the weighted average number of common shares outstanding (basic); (iii) diluted earnings per common share excluding significant items which is calculated by dividing net income attributable to common shareholders excluding significant items by the weighted average number of common shares outstanding (diluted); and (iv) pre-tax profit margin which is calculated by dividing net income before taxes excluding significant items by revenue excluding significant items.
Supplementary Financial Measures
Client assets are supplementary financial measures that do not have any definitions prescribed under IFRS but do not meet the definition of a non-IFRS measure or non-IFRS ratio. Client assets, which include both assets under management (AUM) and assets under administration (AUA), is a measure that is common to the wealth management business. Client assets is the market value of client assets managed and administered by the Company from which the Company earns commissions and fees. This measure includes funds held in client accounts as well as the aggregate market value of long and short security positions. The Company's method of calculating client assets may differ from the methods used by other companies, and therefore these measures may not be comparable to other companies. Management uses these measures to assess operational performance of the
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CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This earnings release may contain "forward-looking information" as defined under applicable securities laws ("forward-looking statements"). These statements relate to future events or future performance and reflect the Company's expectations, beliefs,
plans, estimates, intentions and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts, including statements related to potential future transactions, actions by the
In evaluating these statements, readers should specifically consider various factors that may cause actual results to differ materially from any forward-looking statement. These factors include, but are not limited to, the trading price of the Company's shares; the Company's financial condition and earnings; market and general economic conditions (including slowing economic growth, inflation and rising interest rates); the dynamic nature of the financial services industry; and the risks and uncertainties discussed from time to time in the Company's interim condensed and annual consolidated financial statements, its annual report and its annual information form ("AIF") filed on www.sedarplus.ca as well as the factors discussed in the sections entitled "Risk Management" and "Risk Factors" in the AIF, which include market, liquidity, credit, operational, legal and regulatory risks.
Although the forward-looking statements contained in this earnings release are based upon assumptions that the Company believes are reasonable, there can be no assurance that actual results will be consistent with these forward-looking statements. The forward-looking statements contained in this earnings release are made as of the date of this earnings release and should not be relied upon as representing the Company's views as of any date subsequent to the date of this earnings release. Except as may be required by applicable law, the Company does not undertake, and specifically disclaims, any obligation to update or revise any forward-looking statements, whether as a result of new information, further developments or otherwise.
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