CANACCORD GENUITY GROUP INC. REPORTS FIRST QUARTER FISCAL 2023 RESULTS
Excluding significant items, quarterly earnings per common share of
First quarter dividend of
"The abrupt deceleration in global markets impacted first fiscal quarter financial performance in all of our capital markets businesses and to a lesser degree, our wealth management businesses," said
"Looking forward, we expect that economic conditions will continue to tighten before they improve but we continue to be active globally and we feel good about our market position, the outlook for our wealth management businesses and a continuance of strong M&A activity in our capital markets businesses."
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
$328.8 million , a decrease of 37.2% over the same period in the prior year - First quarter net income before taxes excluding significant items(1) of
$27.5 million , a decrease of 75.9% ($1.9 million and a quarter-over-quarter decrease of 98.1% on an IFRS basis) - Diluted earnings per common share excluding significant items(1) for the first fiscal quarter of
$0.11 per share (diluted loss per common share of$0.14 on an IFRS basis), a decrease of 84.9% compared to the first quarter of fiscal 2022 - Advisory revenue in the Company's global capital markets division increased 8.7% year-over-year reflecting increased contributions from our US and
UK &Europe businesses - Capital markets revenues were impacted by sharp declines in the market value of certain inventory and warrant positions related to our investment banking activities in
Canada andAustralia as well as certain market value adjustments related to our facilitation activity inCanada - On
May 31, 2022 , the Company completed its acquisition ofPunter Southall Wealth Limited (PSW) to increase the long-term value and market position of its wealth management position in theUK & Crown Dependencies - Total client assets(1) in our global wealth management business of
$90.7 billion , a decrease of 4.4% from Q1/22 reflecting year-over-year decreases of 2.1% inCanada and 6.2% in theUK & Crown Dependencies, primarily attributable to the decline in market values during the three-month period and the impact of changes in foreign exchange rates on the value of client assets recorded in GBP, partially offset by the addition of new assets in connection with the acquisition of PSW - Purchased 502,000 common shares for cancellation under the normal course issuer bid (NCIB) during the three months ended
June 30, 2022 - First 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- |
|
|
Q1/23 |
Q1/22 |
|
Q4/22 |
|
First fiscal quarter highlights- adjusted1 |
|||||
Revenue excluding significant items1 |
|
|
(37.2) % |
|
(33.0) % |
Expenses excluding significant items1 |
|
|
(26.5) % |
|
(23.9) % |
Diluted earnings per common share |
|
|
(84.9) % |
|
(78.8) % |
Net Income excluding significant items1 |
|
|
(76.5) % |
|
(70.2) % |
Net Income attributable to common |
|
|
(85.4) % |
|
(78.3) % |
First fiscal quarter highlights- IFRS |
|||||
Revenue |
|
|
(38.8) % |
|
(36.5) % |
Expenses |
|
|
(24.7) % |
|
(21.8) % |
Diluted (loss) earnings per common share |
|
|
(122.2) % |
|
(126.4) % |
Net Income2 |
|
|
(104.1) % |
|
(104.4) % |
Net (Loss) income attributable to |
|
|
(118.0) % |
|
(122.3) % |
1. Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 5 |
Canaccord Genuity Wealth Management
The Company's combined global wealth management operations earned revenue of
- Wealth management operations in the
UK & Crown Dependencies generated first quarter revenue of$73.3 million , a decrease of 8.7% compared to Q4/22 and unchanged compared to the same period last year. Measured in local currency (GBP), revenue was £45.7 million in Q1/23 compared to £42.7 million in Q1/22, an increase of 7.0% compared to the same quarter last year. Because the acquisition of PSW closed mid-way through the quarter, revenue associated with PSW will be fully reflected in the results of our next fiscal quarter (Q2/23) compared to the current quarter (Q1/23). Net income before taxes excluding significant items(1) for this business was$18.7 million in Q1/23, down 3.5% year-over-year. - Canaccord Genuity Wealth Management (
North America ) generated$73.0 million in first quarter revenue, a decrease of 4.2% compared to Q4/22, and because revenue in Q1/22 was at an elevated level with the significant investment banking revenue in that quarter, Q1/23 revenue represented a year-over-year decrease of 30.0% compared to Q1/22. Excluding significant items(1) net income before taxes for this business was$6.5 million in Q1/23, which represents a year-over-year decrease of 75.2% because of the elevated investment banking activity in the comparable quarter and a sequential increase of 27.4%. - Wealth management operations in
Australia generated$15.9 million in first quarter revenue, a decrease of 9.1% compared to the first quarter of last year. Excluding significant items(1) net loss before taxes for this business was$0.5 million in Q1/23, down from net income of$2.6 million in Q1/22.
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 were$52.2 billion (£33.3 billion) as atJune 30, 2022 , a decrease of 1.3% (increase of 3.5% in local currency) from$52.8 billion (£32.1 billion) at the end of the previous quarter, and a decrease of 6.2% (increase of 2.6% in local currency) from$55.6 billion (£32.4 billion) atJune 30, 2021 primarily attributable to the decline in market values, offset by net inflows and new assets from our acquisition of PSW and, when measured in CAD, changes in GBP/CAD foreign exchange rates. - Client assets in
North America were$33.9 billion as atJune 30, 2022 , a decrease of 10.6% from$37.9 billion at the end of the previous quarter and a decrease of 2.1% from$34.6 billion atJune 30, 2021 due to the decline in market values, partially offset by net new inflows and new assets from existing IAs and new recruits. - Client assets(1) in
Australia were$4.7 billion (AUD 5.3 billion) atJune 30, 2022 , a decrease of 12.3% from$5.4 billion (AUD 5.7 billion) at the end of the previous quarter, also reflecting the decline in market values. In addition, client assets(1) totalling$13.3 billion (AUD 15.0 billion) are also held on record in less active and transactional accounts through our Australian platform.
|
_________________________________________ |
|
(1) See Non-IFRS Measures on page 5 |
|
|
Globally,
-
Canaccord Genuity Capital Markets participated in 80 investment banking transactions globally, including led or co-led, raising total proceeds of$6.2 billion during Q1/23.
The Company's US capital markets business was the largest contributor of revenue for the three-month period, with revenue of
Revenue in our
First quarter revenue of
First quarter revenue earned by our Australian capital markets business decreased 101.0% year-over-year, reflecting a 118.7% decrease in investment banking revenue when compared to the same period a year ago. In addition to lower new issue activity, investment banking revenue was negatively impacted by a net loss of approximately
On
On
Subsequent to the end of the quarter, on
|
_________________________________________ |
|
(1) See Non-IFRS Measures on page 5 |
|
|
Results for the First Quarter of Fiscal 2023 were impacted by the following significant items:
- Fair value adjustments on certain illiquid or restricted marketable securities recorded for IFRS reporting purposes, but which are excluded for management reporting purposes and are not used by management to assess operating performance
- Amortization of intangible assets acquired in connection with business combinations
- Acquisition-related costs in connection with the acquisition of PSW
- Certain incentive-based costs related to acquisitions
- Certain components of the non-controlling interest expense associated with CGWM
UK
|
Three months ended June 30 |
Quarter-over- |
|
(C$ thousands, except per share and % amounts) |
2022 |
2021 |
|
Revenue |
|
|
|
Revenue per IFRS |
|
|
(38.8) % |
Significant items recorded in Corporate and Other |
|
|
|
Fair value adjustments on certain illiquid and restricted |
11,447 |
|
128.9 % |
Total revenue excluding significant item |
|
|
(37.2) % |
Expenses |
|
|
|
Expenses per IFRS |
|
|
(24.7) % |
Significant items recorded in |
|||
Amortization of intangible assets |
|
|
n.m. |
Incentive-based costs related to acquisitions(2) |
|
- |
n.m. |
Significant items recorded in Canaccord Genuity Wealth Management |
|
||
Amortization of intangible assets |
|
|
37.0 % |
Acquisition-related costs |
|
- |
n.m. |
Incentive-based costs related to acquisitions(2) |
|
|
67.0 % |
Significant items recorded in Corporate and Other |
|
|
|
Costs in connection with redemption of convertible |
- |
|
(100.0) % |
Total significant items – expenses |
|
|
52.5 % |
Total expenses excluding significant items |
|
|
(26.5) % |
Net income before taxes excluding significant items(1) |
|
|
(75.9) % |
Income taxes – adjusted |
|
|
(74.3) % |
Net income excluding significant items |
|
|
(76.5) % |
Significant items impacting net income attributable |
|
|
|
Non-controlling interests – IFRS |
|
|
n.m. |
Amortization of equity component of the non-controlling |
|
- |
n.m. |
Non-controlling interests (adjusted) ( 1) |
|
|
n.m. |
Net income attributable to common shareholders, |
|
|
(85.4) % |
Earnings per common share excluding significant items – |
|
|
(84.5) % |
Earnings per common share excluding significant items – |
|
|
(84.9) % |
|
1 Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 5. |
2 Incentive-based costs related to the acquisitions and growth initiatives in the US capital markets and |
|
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 issued by CGWM
|
_________________________________________ |
|
(1) See Non-IFRS Measures on page 5 |
|
|
- Cash and cash equivalents balance of
$1.0 billion , a decrease of$753.5 million from$1.8 billion - Working capital of
$730.6 million , a decrease of$63.8 million from$794.4 million - Total shareholders' equity of
$1.1 billion , a decrease of$88.1 million from$1.2 billion
On
On
On
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, acquisition-related expense items, 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 2023 can be found above in the table entitled "Summary of results for Q1 fiscal 2023 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 Canaccord Genuity Wealth Management business segment.
Interested parties are invited to listen to
The conference call may be accessed live online and will also be archived on a listen-only basis at: www.cgf.com/investor-relations/news-and-events/conference-calls-and-webcasts/
Analysts and institutional investors can call in via telephone at:
- 416-764-8609 (within
Toronto ) - 888-390-0605 (toll free in
North America outsideToronto ) - 0-800-652-2435 (toll free from the
United Kingdom ) - 0-800-916-834 (toll free from
France ) - 10-800-714-1938 (toll free from
Northern China ) - 10-800-140-1973 (toll free from
Southern China ) - 1-800-076-068 (toll free from
Australia ) - 80-003-570-3632 (toll free from
United Arab Emirates )
Please ask to participate in the
A replay of the conference call will be made available from approximately two hours after the live call on
Through its principal subsidiaries,
Investor and media relations inquiries:
Vice President, Investor Relations
Phone: 416-687-5507, Email: cmarinoff@cgf.com
www.cgf.com/investor-relations
None of the information on the Company's websites at www.cgf.com should be considered incorporated herein by reference. |
For further information: Investor and media relations inquiries:
