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Guardian Capital earns $580.18-million in Q1

2023-05-11 20:10 ET - News Release

Mr. Donald Yi reports


Guardian Capital Group Ltd. has released its 2023 first quarter operating results.

All per-share figures disclosed in the attached tables are stated on a diluted basis.

The company successfully closed on March 1, 2023, the previously announced transaction to sell its subsidiaries, Worldsource Financial Management Inc., Worldsource Securities Inc. and IDC Worldsource Insurance Network Inc. (IDC WIN) (altogether, the Worldsource businesses), for $750-million, subject to adjustments for net working capital, less amounts due to minority shareholders of IDC WIN. At the time of entering into an agreement to sell, the company classified the Worldsource businesses as discontinued operations. Its financial results were netted on the statements of operations and presented on one line called "net earnings from discontinued operations," and on the balance sheets as "discontinued operations" in both the assets and liabilities. Comparative periods were restated to reflect this presentation. All other figures referenced in this news release reflect the results of the continuing business of the company.

The company is reporting $553.7-million in net earnings from discontinued operations, including net gains of $619.5-million realized on the disposition of the Worldsource businesses, income tax expense of $69.0-million on the net gains and $3.2-million in operating earnings, net of taxes, for the period up to the closing date.

The company's share of the net proceeds from the sale of the Worldsource businesses were immediately invested into interest-bearing, short-term securities. As a result, the company is reporting fair value of its securities at $1.3-billion ($51.06 per share) as at March 31, 2023, compared with $660-million ($25.31 per share) as at Dec. 31, 2022.

The company's total client assets as at March 31, 2023, were $56.3-billion, which include assets under management and assets under advisement. This is a 6-per-cent increase from $53.3-billion as at Dec. 31, 2022, and a 2-per-cent decrease from $57.4-billion reported as at March 31, 2022.

Net revenue for the current quarter was $54.5-million, a 5-per-cent increase from $51.8-million in the same quarter in the prior year. Interest income earned on the proceeds from the sale of the Worldsource businesses was the biggest driver of the increase, despite it being only a one-month income. Net management and advisory fee revenue decreased by $800,000 in the current quarter to $44.0-million, which includes the addition of RaeLipskie in the current-quarter results. The expenses were 13 per cent higher in the current quarter at $43.3-million. The increase is due to the inclusion of RaeLipskie's expenses, increase in interest expense due to rise in interest rates, and increased strategic investments into the Canadian retail asset management team, the Guardian smart infrastructure team, Guardian Partners Inc. and Modern Advisor Inc., the company's additional expected growth sources for the future.

Operating earnings for the quarter were of $11.2-million, a $2.3-million decrease from the $13.5-million reported in 2022. The operating losses associated with the strategic investments mentioned above were $1.0-million higher at $3.3-million in the current quarter. EBITDA (earnings before interest, taxes, depreciation and amortization) and EBITDA attributable to shareholders were $17.4-million and $16.4-million in the current quarter, compared with $17.5-million and $16.4-million in the comparative period.

Net gains in the current quarter were $18.1-million, compared with net losses of $9.7-million in the same quarter in the prior year, both largely consistent with the impacts of the global equity markets performance.

Net earnings attributable to shareholders were $487.6-million in the current quarter and $4.3-million in the comparative period. The net gains realized on the sale of the Worldsource businesses was the main reason for the increase in the current year.

Adjusted cash flow from operations and adjusted cash flow from operations attributable to shareholders for the current quarter were $18.1-million and $17.1-million, respectively, compared with $16.8-million and $15.6-million, respectively, in the comparative period. During the current quarter, the company returned to shareholders $6.1-million in dividends and $5.4-million in share buybacks.

The company's shareholders' equity as at March 31, 2023, was $1,242-million or $48.73 per share, compared with $768-million or $29.43 per share as at Dec. 31, 2022.

The board of directors is pleased to have declared a quarterly eligible dividend of 34 cents per share, payable on July 18, 2023, to shareholders of record on July 11, 2023.

The company's financial results for the past eight quarters are summarized in the attached table.

Guardian is a global financial services company providing extensive investment management services to institutional, retail, and private high-net-worth and ultra-high-net-worth clients through its subsidiaries. It also manages a proprietary portfolio of securities. Founded in 1962, Guardian's reputation for steady growth and long-term relationships, and its core values of trustworthiness, integrity and stability have been key to its success over six decades. The company's common and Class A shares are listed on the Toronto Stock Exchange as GCG and GCG.A, respectively.

We seek Safe Harbor.

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