Mr. Dan Daviau reports

CANACCORD GENUITY GROUP INC. REPORTS THIRD QUARTER FISCAL 2024 RESULTS

Canaccord Genuity Group Inc. has released its financial results for the third fiscal quarter and nine months ended Dec. 31, 2023.

"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 Dan Daviau, president and chief executive officer of Canaccord Genuity. "While we are encouraged by improving stabilization in our operating environment, we anticipate a slow build towards normalized activity levels as markets await a clear inflection point."

Highlights for the third fiscal quarter and the first nine months (year to date (YTD)) of fiscal 2024 (all dollar amounts stated in thousands of Canadian dollars unless otherwise indicated):

• Third quarter revenue of $389.1-million, an increase of 1.8 per cent compared with the same period in the prior year and 15.4 per cent compared with Q2 2024;
• Global wealth management revenue for the third fiscal quarter increased by 8.5 per cent year over year to $195.0-million;
• Global capital markets revenue for the third fiscal quarter decreased by 3.6 per cent year over year and increased by 31.1 per cent sequentially to $189.8-million, reflecting modest improvement in revenue from investment banking, advisory and principal trading;
• Nine-month revenue of $1.1-billion, a decrease of 0.9 per cent compared with 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 per cent compared with Q3 2023 and an increase of 171.1 per cent compared with Q2 2024 (on an IFRS (international financial reporting standards) basis, Q3 2024 net income before taxes of $37.1-million, compared with a net loss before taxes of $80.8-million for Q3 2023 and a net loss before taxes of $700,000 for Q2 2024);
• Nine-month net income before taxes, excluding significant items (1), of $94.1-million, a decrease of 14.1 per cent compared with the first nine months of fiscal 2023 (on an IFRS basis, year-to-date net income before taxes of $42.7-million, compared with 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 20 cents per share (diluted earnings per common share of 14 cents on an IFRS basis);
• Diluted earnings per common share, excluding significant items (1), for the first nine months of fiscal 2024 of 27 cents (diluted loss per common share of 20 cents on an IFRS basis);
• Excluding significant items (1), Canaccord Genuity'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), Canaccord Genuity'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 Canaccord Genuity's global wealth management business were $99.2-billion at Dec. 31, 2023, a year-over-year increase of 5.1 per cent, reflecting year-over-year increases of 4.5 per cent in Canada, 4.4 per cent in the United Kingdom and Crown dependencies, and 16.6 per cent in Australia;
• Third quarter common share dividend of 8.5 cents per share.

Core business performance highlights

Canaccord Genuity wealth management (CGWM)

The company's combined global wealth management operations earned revenue of $195.0-million for the third fiscal quarter, a year-over-year increase of 8.5 per cent. On a year-to-date basis, revenue in this division amounted to $573.3-million, an increase of 12.1 per cent compared with the first nine months of the prior fiscal year. Net income before taxes, excluding significant items (1), for this segment increased by 3.7 per cent and 19.8 per cent year over year for the three- and nine-month periods ended Dec. 31, 2023, respectively:

• Wealth management operations in the U.K. and Crown dependencies generated third quarter revenue of $101.8-million, an increase of 18.8 per cent compared with 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 (British pounds sterling), revenue was 60.2 million pounds sterling in Q3 2024, compared with 53.7 million pounds sterling in Q3 2023, an increase of 12.1 per cent compared with the same quarter last year. Excluding significant items (1), pretax net income for this business was $25.5-million in Q3 2024 and $74.9-million fiscal year to date, year-over-year increases of 11.3 per cent and 25.3 per cent, respectively.
• Canaccord Genuity wealth management (North America) generated $77.0-million in third quarter revenue, a year-over-year decrease of 0.4 per cent compared with Q3 2023 and an increase of 8.8 per cent compared with Q2 2024. Fee-related revenue for the third fiscal quarter grew by 5.4 percentage points year over year to 50.9 per cent. Excluding significant items (1), net income before taxes for this business was $10.8-million in Q3 2024 and $29.0-million for the first nine months of fiscal 2024, representing a year-over-year decrease of 12.6 per cent and an increase of 1.5 per cent, respectively.
• Wealth management operations in Australia generated $16.2-million in third quarter revenue, a decrease of 2.7 per cent compared with the third quarter of last year and an increase of 5.0 per cent compared with Q2 2024. Excluding significant items (1), net income before taxes for this business was $1.5-million in Q3 2024, compared with a net income of $1.2-million in Q3 2023, and net income before taxes of $2.6-million for the first nine months of fiscal 2024, compared with a net income of $500,000 for the same period a year ago.

Total client assets in the company's global wealth management businesses at the end of the third fiscal quarter amounted to $99.2-billion, an increase of $4.8-billion or 5.1 per cent from Q3 2023:

• Client assets (1) in the U.K. and Crown dependencies were $56.8-billion (33.7 billion pounds sterling) as at Dec. 31, 2023, an increase of 4.4 per cent (increase of 1.4 per cent in local currency) from $54.4-billion (33.2 billion pounds sterling) at Dec. 31, 2022. On a sequential basis, client assets increased by 8.0 per cent (increase of 6.0 per cent in local currency) from $52.6-billion (31.7 billion pounds sterling) 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 at Dec. 31, 2023, an increase of 4.5 per cent from $34.7-billion at Dec. 31, 2022, and an increase of 2.8 per cent compared with the previous fiscal quarter, due to increases in market values and net new assets.
• Client assets (1) in Australia were $6.1-billion ($6.8-billion (Australian)) at Dec. 31, 2023, an increase of 12.0 per cent from $5.5-billion ($6.3-billion (Australian)) at the end of the previous quarter and an increase of 16.6 per cent from $5.3-billion ($5.7-billion (Australian)) at Dec. 31, 2022. In addition, client assets (1) totalling $14.5-billion ($16.0-billion (Australian)) are also held on record in less active and transactional accounts through Canaccord Genuity's Australian platform.

Canaccord Genuity capital markets (CGCM)

Globally, Canaccord Genuity capital markets earned revenue of $189.8-million for the third fiscal quarter, a decrease of 3.6 per cent compared with Q3 2023 and an increase of 31.1 per cent sequentially, reflecting improving levels of investment banking, advisory and principal trading activities when compared with the second quarter of this fiscal year. For the nine months ended Dec. 31, 2023, revenue decreased by 15.2 per cent to $480.3-million, driven by lower advisory fees and principal trading revenue, and partially offset by higher interest, commissions and fees, and investment banking revenue.

Canaccord Genuity capital markets participated in 241 investment banking transactions globally, including led and co-led deals, raising total proceeds of $12.4-billion for the fiscal year to date.

Advisory revenue for the three-month period was $74.6-million, a slight year-over-year decrease of 0.8 per cent and an increase of 62.1 per cent sequentially, reflecting improving contributions from Canaccord Genuity's Canadian, United States and U.K. businesses. Investment banking revenue increased by 5.8 per cent compared with Q3 2023 and by 29.2 per cent sequentially, reflecting a modest increase in new issue activity in Canada, the U.S. and the U.K., offset by a slight decrease in Australia. Commissions and fees revenue decreased by 4.9 per cent year over year for the three-month period due to lower contributions from the U.S., partially offset by higher contributions from Canaccord Genuity's Canadian and U.K. operations. Principal trading revenue decreased by 14.7 per cent year over year as a result of reduced market-wide trading activity but increased by 47.0 per cent compared with Q2 2024, reflecting traditionally higher trading volumes at the end of the calendar year. Interest revenue decreased by 16.2 per cent and increased by 58.4 per cent, respectively, for the three-month and nine-month periods ended Dec. 31, 2023, due to the higher-interest-rate environment compared with last year, offset by reduced stock lending activity on a quarter-over-quarter basis.

All Canaccord Genuity capital markets businesses achieved profitability in the third fiscal quarter. Excluding significant items (1), Canaccord Genuity's global capital markets division recorded a net income before taxes of $16.7-million for the third fiscal quarter, which compares favourably with the $5.9-million recorded in Q3 2023 and primarily reflects the impact of lower compensation and fixed costs when compared with the same period a year ago. Net income, excluding significant items (1), for the nine-month period ended Dec. 31, 2023, was $2.7-million, compared with $36.3-million for the same period in the prior year.

Summary of corporate developments

On Nov. 9, 2023, the company announced that through CGWM U.K., it has entered into a share purchase agreement to acquire Intelligent Capital. Founded in 1999, Intelligent Capital is a financial planning business based in Glasgow, Scotland, with approximately 220.0 million pounds sterling in client assets. Upon completion of the transaction, the professionals and clients of Intelligent Capital will operate under the Adam & Company brand, which represents the Scottish operating business of CGWM U.K. The acquisition is expected to be completed within the first half of calendar 2024.

In the third quarter, Rod Phillips, a director of the company, entered into a consulting agreement with Canaccord Genuity Corp. to provide services to the company's Canadian investment banking group. As part of the agreement and subject to receipt of regulatory approval, Mr. Phillips will serve on the board of directors of Canaccord Genuity Corp. in the role of vice-chairman. Mr. Phillips also remains a director of the company but has ceased to be member of any of the committees of the board.

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 U.S. and U.K. capital markets and CGWM U.K.;
• Certain components of the non-controlling interest expense associated with CGWM U.K. recorded for IFRS purposes.

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) Ltd. are factored into these measures by adjusting net income attributable to common shareholders of the company to reflect Canaccord Genuity's proportionate share of CGWM U.K.'s earnings on an as-converted basis if the calculation is dilutive. For the quarter and nine months ended Dec. 31, 2023, the effect of reflecting Canaccord Genuity's proportionate share of CGWM U.K.'s earnings is anti-dilutive under IFRS but dilutive for figures excluding significant items (1). As such, the diluted EPS and net income attributable to common shareholders under IFRS for Q3 and YTD fiscal 2024 is computed based on net income attributable to common shareholders less accrued dividends on the convertible preferred shares and preference shares issued by CGWM U.K. Net income attributable to common shareholders, excluding significant items (1), and diluted EPS, excluding significant items (1), for the three and nine months ended Dec. 31, 2023, reflect the company's proportionate share of CGWM U.K.'s net income, excluding significant items (1), on an as-converted basis.

Common and preferred share dividends

On Feb. 7, 2024, the board of directors approved a dividend of 8.5 cents per common share, payable on March 15, 2024, with a record date of March 1, 2024.

On Feb. 7, 2024, the board approved a cash dividend of 25.175 cents per Series A preferred share, payable on April 1, 2024, to Series A preferred shareholders of record as at March 15, 2024.

On Feb. 7, 2024, the board approved a cash dividend of 42.731 cents per Series C preferred share, payable on April 1, 2024, to Series C preferred shareholders of record as at March 15, 2024.

(1) 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 with 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 Canaccord Genuity's 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.

Access to quarterly results information

Interested parties are invited to listen to Canaccord Genuity's third fiscal quarter results conference call via live webcast or a toll-free number. The conference call is scheduled for Thursday, Feb. 8, 2024, at 8 a.m. Eastern Time (1 p.m. U.K. time) (12 a.m. Australian EDT).

The conference call may be accessed live and will also be archived on a listen-only basis on Canaccord Genuity's website.

Analysts and institutional investors can call in via telephone at:

• 416-764-8609 (within Toronto);
• 888-390-0605 (toll-free in North America outside Toronto);
• 0-800-652-2435 (toll-free from the U.K.);
• 1-800-076-068 (toll-free from Australia).

Please ask to participate in the Canaccord Genuity Q3 2024 results call. If a passcode is requested, please use 15128077.

A replay of the conference call will be made available from approximately two hours after the live call on Feb. 8, 2024, until March 8, 2024, at 416-764-8677 or 1-888-390-0541 by entering passcode 128077 followed by the pound key.

About Canaccord Genuity Group Inc.

Through its principal subsidiaries, Canaccord Genuity is a leading independent, full-service financial services firm, with operations in two principal segments of the securities industry: wealth management and capital markets. Since its establishment in 1950, the company has been driven by an unwavering commitment to building lasting client relationships. Canaccord Genuity achieves this by generating value for its individual, institutional and corporate clients through comprehensive investment solutions, brokerage services and investment banking services. The company has wealth management offices located in Canada, the U.K., Guernsey, Jersey, the Isle of Man and Australia. The company's international capital markets division operates in North America, the U.K. and Europe, Asia, and Australia.

Canaccord Genuity is publicly traded under the symbol CF on the Toronto Stock Exchange.

We seek Safe Harbor.