"We delivered our strongest quarterly result of the fiscal year, as our wealth management division continued to provide stable and growing earnings and our capital markets businesses returned to profitability, with a notable uptick in underwriting and advisory activities," said
Third fiscal quarter and nine-month fiscal year-to-date highlights:
(All dollar amounts are stated in thousands of Canadian dollars unless otherwise indicated)
- Third quarter revenue of
$389.1 million , an increase of 1.8% compared to the same period in the prior year and 15.4% compared to Q2/24 - Global wealth management revenue for the third fiscal quarter increased by 8.5% year-over-year to
$195.0 million - Global capital markets revenue for the third fiscal quarter decreased by 3.6% year-over- year and increased by 31.1% sequentially to
$189.8 million reflecting modest improvement in revenue from investment banking, advisory and principal trading - Nine-month fiscal year-to-date revenue of
$1.1 billion , a decrease of 0.9% compared to the first nine months of fiscal 2023 - Third quarter net income before taxes excluding significant items(1) of
$44.7 million , an increase of 42.0% compared to Q3/23 and an increase of 171.1% compared to Q2/24 (on an IFRS basis Q3/24 net income before taxes of$37.1 million compared to a net loss before taxes of$80.8 million for Q3/23 and a net loss before taxes of$0.7 million for Q2/24) - Nine-month fiscal year-to-date net income before taxes excluding significant items(1) of
$94.1 million , a decrease of 14.1% compared to the first nine months of fiscal 2023 (on an IFRS basis year-to-date net income before taxes of$42.7 million compared to a net loss before taxes of$39.9 million in the first nine months of fiscal 2023) - Diluted earnings per common share excluding significant items(1) for the third fiscal quarter of
$0.20 per share (diluted earnings per common share of$0.14 on an IFRS basis) - Diluted earnings per common share excluding significant items (1) for the first nine months of fiscal 2024 of
$0.27 (diluted loss per common share of$0.20 on an IFRS basis) - Excluding significant items(1), CG's global wealth management businesses contributed net income before taxes of
$37.8 million in the third quarter of fiscal 2024 - Excluding significant items(1) CG's global capital markets business contributed third quarter net income before taxes of
$16.7 million , with all regions returning to profitability - Total client assets(1) in our global wealth management business were
$99.2 billion atDecember 31, 2023 , a year-over-year increase of 5.1%, reflecting year-over-year increases of 4.5% inCanada , 4.4% in theUK & Crown Dependencies and 16.6% inAustralia - Third quarter common share dividend of
$0.085 per share
______________ |
(1) See Non-IFRS Measures on page 5 |
Three months ended | Year-over-year | Three months | Quarter-over- | ||
Q3/24 | Q3/23 | Q3/24 | |||
Third fiscal quarter highlights- adjusted1 | |||||
Revenue excluding significant items1 | 1.9 % | 15.4 % | |||
Expenses excluding significant items1 | (1.7) % | 7.4 % | |||
Diluted earnings per common share excluding significant items1,2 | 25.0 % | n.m. | |||
Net Income excluding significant items1 | 18.1 % | 210.8 % | |||
Net income (loss) attributable to common shareholders excluding significant items1,3 | 25.4 % | n.m. | |||
Third fiscal quarter highlights-IFRS | |||||
Revenue | 1.8 % | 15.4 % | |||
Expenses | (23.9) % | 4.2 % | |||
Diluted earnings (loss) per common share | 112.7 % | 170.0 % | |||
Net income (loss) 2 | 134.1 % | n.m. | |||
Net income (loss) attributable to common shareholders3 | 115.1 % | 175.6 % | |||
1. Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 5 |
Core business performance highlights:
The Company's combined global wealth management operations earned revenue of
- Wealth management operations in the
UK & Crown Dependencies generated third quarter revenue of$101.8 million , an increase of 18.8% compared to the same period last year, primarily driven by higher quarterly interest income offset by a small decrease in commissions and fees revenue. Measured in local currency (GBP), revenue was £60.2 million in Q3/24 compared to £53.7 million in Q3/23, an increase of 12.1% compared to the same quarter last year. Excluding significant items(1), pre-tax net income for this business was$25.5 million in Q3/24 and$74.9 million fiscal year-to-date, year-over-year increases of 11.3% and 25.3%, respectively. Canaccord Genuity Wealth Management (North America ) generated$77.0 million in third quarter revenue, a year-over-year decrease of 0.4% compared to Q3/23 and an increase of 8.8% compared to Q2/24. Fee-related revenue for the third fiscal quarter grew by 5.4 p.p. year-over-year to 50.9%. Excluding significant items(1) net income before taxes for this business was$10.8 million in Q3/24 and$29.0 million for the first nine months of fiscal 2024, which represents a year-over-year decrease of 12.6% and an increase of 1.5% respectively.- Wealth management operations in
Australia generated$16.2 million in third quarter revenue, a decrease of 2.7% compared to the third quarter of last year and an increase of 5.0% compared to Q2/24. Excluding significant items(1) net income before taxes for this business was$1.5 million in Q3/24 compared to net income of$1.2 million in Q3/23, and net income before taxes of$2.6 million for the first nine months of fiscal 2024 compared to net income of$0.5 million for the same period a year ago.
_______________________ |
(1) See Non-IFRS Measures on page 5 |
Total client assets in the Company's global wealth management businesses at the end of the third fiscal quarter amounted to
- Client assets(1) in the
UK & Crown Dependencies were$56.8 billion (£33.7 billion) as atDecember 31, 2023 , an increase of 4.4% (increase of 1.4% in local currency) from$54.4 billion (£33.2 billion) atDecember 31, 2022 . On a sequential basis, client assets increased by 8.0% (increase of 6.0% in local currency) from$52.6 billion (£31.7 billion) at the end of the previous quarter primarily due to improvements in market values and foreign exchange movement. - Client assets(1) in
North America were$36.3 billion as atDecember 31, 2023 , an increase of 4.5% from$34.7 billion atDecember 31, 2022 and an increase of 2.8% compared to the previous fiscal quarter due to increases in market values and net new assets. - Client assets(1) in
Australia were$6.1 billion (AUD 6.8 billion) atDecember 31, 2023 , an increase of 12.0% from$5.5 billion (AUD 6.3 billion) at the end of the previous quarter and an increase of 16.6% from$5.3 billion (AUD 5.7 billion) atDecember 31, 2022 . In addition, client assets(1) totalling$14.5 billion (AUD 16.0 billion) are also held on record in less active and transactional accounts through our Australian platform.
Globally,
Advisory revenue for the three-month period was
All CG capital markets businesses achieved profitability in the third fiscal quarter. Excluding significant items(1), our global capital markets division recorded net income before taxes of
Summary of Corporate Developments
On
In the third quarter,
Results for the Third Quarter of Fiscal 2024 were impacted by the following significant items:
- Fair value adjustments on certain warrants and illiquid or restricted marketable securities recorded for IFRS reporting purposes in prior periods net of adjustments recorded in the current period, but which are excluded for management reporting purposes and are not used by management to assess operating performance
- Amortization of intangible assets acquired in connection with business combinations
- Certain incentive-based costs related to acquisitions in US and
UK capital markets and CGWMUK - Certain components of the non-controlling interest expense associated with CGWM
UK recorded for IFRS purposes
Summary of Results for Q3 and YTD Fiscal 2024 and Selected Financial Information Excluding Significant Items(1):
Three months ended | Quarter- | Nine months ended | YTD over | ||||
(C$ thousands, except per share and % amounts) | 2023 | 2022 | 2023 | 2022 | |||
Revenue | |||||||
Revenue per IFRS | 1.8 % | (0.9) % | |||||
Significant items recorded in Corporate and Other | |||||||
Fair value adjustments on certain warrants and illiquid or restricted marketable securities | 54.5 % | (94.6) % | |||||
Total revenue excluding significant item(1) | 1.9 % | (2.1) % | |||||
Expenses | |||||||
Expenses per IFRS | (23.9) % | (8.3) % | |||||
Significant items recorded in | |||||||
Amortization of intangible assets | (83.0) % | (78.7) % | |||||
Acquisition- related costs | - | - | - | - | (100.0) % | ||
Incentive-based costs related to acquisitions | 1.7 % | 10.6 % | |||||
Change in fair value of contingent consideration | - | - | - | - | n.m. | ||
Restructuring costs | - | - | - | - | n.m. | ||
Impairment of goodwill and intangible assets | - | (100.0) % | - | (100.0) % | |||
Significant items recorded in | |||||||
Amortization of intangible assets | (2.1) % | 6.1 % | |||||
Acquisition-related costs | - | - | - | - | (100.0) % | ||
Incentive-based costs related to acquisitions | 11.6 % | 17.5 % | |||||
Restructuring costs | - | - | - | - | n.m. | ||
Significant items recorded in Corporate and Other | |||||||
Restructuring costs | - | - | - | - | n.m. | ||
Fair value adjustment of non-controlling interest derivative liability | - | - | - | - | n.m. | ||
Development costs(2) | - | (100.0) % | n.m. | ||||
Total significant items – expenses(1) | (93.5) % | (62.9) % | |||||
Total expenses excluding significant items(1) | (1.7) % | (0.7) % | |||||
Net income before taxes excluding significant items(1) | 42.0 % | (14.1) % | |||||
Income taxes – adjusted(1) | 248.1 % | 17.9 % | |||||
Net income excluding significant items(1) | 18.1 % | (24.1) % | |||||
Significant items impacting net income attributable to common shareholders | |||||||
Non-controlling interests – IFRS | 0.9 % | 14.9 % | |||||
Amortization of equity component of the non-controlling interests in CGWM | (23.4) % | (16.3) % | |||||
Non-controlling interests (adjusted) (1) | 4.8 % | 22.5 % | |||||
Preferred share dividends | 19.3 % | 19.3 % | |||||
Net (loss) income attributable to common shareholders, excluding significant items(1) | 25.4 % | (48.5) % | |||||
Earnings per common share excluding significant items – basic(1) | 20.0 % | (47.6) % | |||||
Earnings per common share excluding significant items – diluted(1) | 25.0 % | (49.1) % | |||||
(1) Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 5. (2) Primarily professional fees and other costs related to the expired management take-over bid |
___________________ |
(1) See Non-IFRS Measures on page 5 |
Diluted earnings per common share ("diluted EPS") and net income attributable to common shareholders are computed using the treasury stock method, giving effect to the exercise of all dilutive elements. The Convertible Preferred Shares and Preference Shares issued by Canaccord Genuity Wealth Management Holdings (Jersey) Limited are factored into these measures by adjusting net income attributable to common shareholders of the Company to reflect our proportionate share of CGWM
Financial conditions
|
| Q3/24 vs Q2/24 | Q3/24 vs Q4/23 | ||
Cash and cash equivalent | 662,174 | 469,783 | 41.0 % | 1,008,432 | (34.3) % |
Working capital* | 719,928 | 699,718 | 2.9 % | 749,571 | (4.0) % |
Total assets | 4,884,749 | 5,460,190 | (10.5) % | 6,302,400 | (22.5) % |
Total liabilities | 3,540,298 | 4,135,250 | (14.4) % | 4,903,763 | (27.8) % |
Non-controlling interests | 350,263 | 346,169 | 1.2 % | 343,998 | 1.8 % |
Total shareholders' equity | 994,188 | 978,771 | 1.6 % | 1,054,639 | (5.7) % |
*As of |
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, certain costs included in Corporate & Other development costs related to the expired management-led takeover bid for the common shares of the Company, 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 third quarter of fiscal 2024 can be found above in the table entitled "Summary of results for Q3 fiscal 2024 and year-to-date fiscal 2024 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
ACCESS TO QUARTERLY RESULTS INFORMATION
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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 press 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 press release are made as of the date of this press release and should not be relied upon as representing the Company's views as of any date subsequent to the date of this press 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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None of the information on the Company's websites at www.cgf.com should be considered incorporated herein by reference.
Des exemplaires en français du présent rapport et des documents d'information connexes pour l'exercice 2024 peuvent être obtenus à l'adresse : www.canaccordgenuity.com/fr/relations-investisseurs/relations-investisseurs/rapports-financiers
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