Mr. Dan Daviau reports
CANACCORD GENUITY GROUP INC. REPORTS FIRST QUARTER FISCAL 2020 RESULTS
Canaccord Genuity Group Inc. has released its financial results for the first fiscal quarter ended June 30, 2019.
"We delivered a solid first quarter result and a positive start to our 2020 fiscal year," said Dan Daviau, president and chief executive officer, Canaccord Genuity Group. "We continued to demonstrate improving stability across businesses and geographies, as we invested into our core strengths and took steps to deliver improving returns for our shareholders."
First fiscal quarter highlights
(all dollar amounts are stated in thousands of dollars unless otherwise indicated):
Quarterly revenue of $325.5-million, a first quarter record;
Revenue from higher-margin advisory activities reached highest level in three years;
Excluding significant items (1), 57 per cent of diluted earnings per share contributed by global wealth management operations;
Total client assets of $67.6-billion in global wealth management business, increased 2.1 per cent from a year ago;
Quarterly dividend increased to five cents per common share;
Subsequent to the end of the fiscal quarter, initiated a substantial issuer bid pursuant to which the company will offer to repurchase for cancellation up to $40.0-million of its common shares.
Three months Three months
ended June 30, ended March
2019 2018 31, 2019
Revenue $325,508 $274,123 $284,808
First fiscal quarter highlights -- adjusted (1)
Expenses -- excluding significant items (1) $286,978 $244,774 $262,587
Earnings per common share -- diluted, excluding significant items (1) $0.23 $0.19 $0.12
Net income -- excluding significant items (1) $30,654 $25,035 $16,610
Net income attributable to common shareholders --
excluding significant items (1, 3) $28,218 $21,651 $14,466
First fiscal quarter highlights -- IFRS
Expenses $294,156 $252,241 $279,265
Earnings per common share -- diluted $0.18 $0.14 $0.00
Net income (2) $24,290 $18,649 $2,456
Net income attributable to common shareholders (3) $21,854 $15,265 $312
(1) Figures excluding significant items are non-international
financial reporting standard measures. See non-IFRS measures on
page 6 of management's discussion and analysis.
(2) Before non-controlling interests and preferred share
(3) Net income attributable to common shareholders is
calculated as the net income adjusted for non-controlling
interests and preferred share dividends.
(1) Figures excluding significant items are non-international financial reporting standard measures. See non-IFRS measures on page 6 of management's discussion and analysis.
Summary of corporate developments
On May 1, 2019, the company announced its completion of the acquisition of Thomas Miller Wealth Management Ltd. and the private client investment management business of Thomas Miller Investment (Isle of Man) Ltd.
On June 5, 2019, the company's board of directors implemented a new dividend policy pursuant to which the company intends to pay a quarterly dividend of at least five cents per share, subject to conditions described in management's discussions and analysis. This development reflects the increasing stability in the company's wealth management business and its expected growth profile.
On June 10, 2019, the company, through its Australian operations, announced an agreement to acquire Patersons Securities Ltd., a premier Australian financial service business, with operations in wealth management and capital markets. This acquisition will substantially increase the company's wealth management business in the region and establishes a significant platform for expansion in Australia. The acquisition is expected to be completed during the quarter ending Dec. 31, 2019, which will be the third quarter of Canaccord Genuity Group's 2020 fiscal year.
On June 28, 2019, the company announced that its board of directors of the company has authorized the initiation of a substantial issuer bid pursuant to which the company will offer to repurchase for cancellation up to $40.0-million of its common shares.
On July 3, 2019, the company announced the commencement and terms of its substantial issuer bid. The offer is being made by way of a modified Dutch auction, which will allow shareholders who choose to participate in the offer to individually select the price, within a range of not less than $5.50 per common share and not more than $6.30 per common share (in increments of 10 cents per common share), at which they are willing to sell their common shares. Details of the offer, including instructions for tendering common shares, are included in the formal offer to purchase and issuer bid circular, letter of transmittal, and notice of guaranteed delivery. The offer will expire on Aug. 9, 2019, unless extended or withdrawn.
Results for the first quarter of fiscal 2020 were impacted by the following significant items:
Amortization of intangible assets acquired in connection with business combinations, as well as acquisition-related costs for Thomas Miller and Petsky Prunier;
Certain incentive-based costs related to the acquisition of Hargreave Hale.
SUMMARY OF RESULTS AND SELECTED FINANCIAL INFORMATION EXCLUDING SIGNIFICANT ITEMS (1)
($ thousands, except per-share and per-cent amounts)
Three months ended June 30,
Total revenue per IFRS $325,508 $274,123
Total expenses per IFRS $294,156 $252,241
Total revenue excluding significant items $325,508 $274,123
Significant items recorded in Canaccord Genuity Capital Markets
Amortization of intangible assets $2,471 $579
Restructuring costs - $1,316
Acquisition-related costs $177 $1,173
Significant items recorded in Canaccord Genuity Wealth Management
Amortization of intangible assets $3,043 $2,856
Acquisition-related costs $335 -
Incentive-based costs related to acquisition $1,152 $1,543
Total significant items $7,178 $7,467
Total revenue excluding significant items $325,508 $274,123
Total expenses excluding significant items $286,978 $244,774
Net income before taxes -- adjusted $38,530 $29,349
Income taxes -- adjusted $7,876 $4,314
Net income -- adjusted $30,654 $25,035
Net income attributable to common shareholders, adjusted $28,218 $21,651
(1) Figures excluding significant items are non-IFRS measures. See non-IFRS measures
on page 6 of the MD&A.
Financial condition at the end of first quarter fiscal 2020 versus fourth quarter of fiscal 2019:
Cash and cash equivalents balance of $585.5-million, a decrease of $235.2-million from $820.7-million;
Working capital of $547.2-million, a decrease of $76.0-million from $623.2-million;
Total shareholders' equity of $839.7-million, a decrease of $36.7-million from $876.4-million.
Common and preferred share dividends
On Aug. 6, 2019, the board of directors approved a dividend of five cents per common share, payable on Sept. 10, 2019, with a record date of Aug. 30, 2019.
On Aug. 6, 2019, the board approved a cash dividend of 24.281 cents per Series A preferred share payable on Sept. 30, 2019, to Series A preferred shareholders of record as at Sept. 13, 2019.
On Aug. 6, 2019, the board approved a cash dividend of 31.206 cents per Series C preferred share payable on Sept. 30, 2019, to Series C preferred shareholders of record as at Sept. 13, 2019.
Access to quarterly results information
Interested investors, the media and others may review this quarterly earnings release and supplementary financial information at the Canaccord Genuity website.
Conference call and webcast presentation
Interested parties are invited to listen to Canaccord Genuity's first quarter fiscal 2020 results conference call by live webcast or a toll-free number. The conference call is scheduled for Aug. 7 at 8 a.m. Eastern Time. During the call, senior executives will comment on the results and respond to questions from analysts and institutional investors.
The conference call may be accessed live and archived on a listen-only basis.
Analysts and institutional investors can call in by telephone at 647-427-7450 (within Toronto), 1-888-231-8191 (toll-free outside Toronto), 0-800-051-7107 (toll-free from the United Kingdom), 0-800-91-7449 (toll-free from France), 10-800-714-1191 (toll-free from northern China), 10-800-140-1195 (toll-free from southern China), 1-800-287-011 (toll-free from Australia) and 800-017-8071 (toll-free from United Arab Emirates).
Please ask to participate in the Canaccord Genuity Group Inc. first quarter 2020 results call. If a passcode is requested, please use 1558515.
A replay of the conference call will be made available from approximately two hours after the live call on Aug. 7, 2019, until Oct. 7, 2019, at 416-849-0833 or 1-855-859-2056 by entering passcode 1558515.
About Canaccord Genuity Group Inc.
Through its principal subsidiaries, Canaccord Genuity Group is a leading independent, full-service financial service firm, with operations in two principal segments of the securities industry: wealth management and capital markets. The company 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, Australia, the United Kingdom, Guernsey, Jersey and the Isle of Man. Canaccord Genuity Capital Markets, the international capital market division, operates in North America, the U.K. and Europe, Asia, Australia, and the Middle East.
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