IGM Financial Inc. · TSX:IGM
IGM Financial — Q1 2020 Earnings Presentation
40 slides from IGM Financial's earnings presentation, May 8, 2020
Slide 1: IGM Financial Q1, 2020 Results
IGM Financial Q1, 2020 Results May 8, 2020
Slide 2: Conference Call Participants
CONFERENCE CALL PARTICIPANTS JEFFREY R. CARNEY BARRY S. MCINERNEY LUKE GOULD MARK KINZEL PRESIDENT & CEO PRESIDENT & CEO EXECUTIVE VICE-PRESIDENT EXECUTIVE VICE-PRESIDENT, IGM FINANCIAL MACKENZIE INVESTMENTS & CFO FINANCIAL SERVICES PRESIDENT & CEO IGM FINANCIAL IG WEALTH MANAGEMENT IG WEALTH MANAGE
Slide 3: Caution Concerning Forward-Looking Statements
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS Certain statements in this report other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect IGM Financial’s current expectations. Forward-looking statements are provided to assist the reader in unde
Slide 4: Non-IFRS Financial Measures & Additional IFRS Measures
NON-IFRS FINANCIAL MEASURES & ADDITIONAL IFRS MEASURES Net earnings available to common shareholders, which is an additional measure in accordance with IFRS, may be subdivided into two components consisting of: • Adjusted net earnings available to common shareholders; and • Other items, which includ
Slide 5: Documents Incorporated by Reference
DOCUMENTS INCORPORATED BY REFERENCE This summary document and webcast are meant to discuss, not to serve as a substitute for, information included in these documents. The reader is hereby cautioned to refer to the following documents relating to IGM Financial’s results: 1. Documents related to IGM F
Slide 6: Financial and Operating Results
Financial and Operating Results IGM FINANCIAL Q1, 2020 RESULTS
Slide 7: COVID-19 Firm Response – Supporting Employees, Advisors, Clients and Communities
COVID-19 FIRM RESPONSE – SUPPORTING OUR EMPLOYEES, ADVISORS, CLIENTS AND COMMUNITIES Employees & Advisors Clients Communities a) Safety: Rapid move to work from home for a) Enhanced communication: a) $1 million joint contribution: along with virtually all employees and company Increased support on m
Slide 8: IGM Q1, 2020 Highlights
IGM Q1, 2020 HIGHLIGHTS 1 $147.5B AUM and $168.5B AUA as at March 31, 2020, down approximately 11.5% during Q1 • Client investment returns were negative 11.7% during the first quarter due to the impact of COVID-19 on financial markets • During April 2020, client investment returns were positive 6.2%
Slide 9: Financial Market and Client Investment Returns
FINANCIAL MARKET AND CLIENT INVESTMENT RETURNS IGM Client Return Index1 Investment Performance Q2 at 2.2 2019 Q1/20 Apr 30/20 2020 YTD 2 IGM Client Investment Returns 13.0% (11.7%) 6.2% (6.2%) Equity Markets: 2.0 Canada (S&P / TSX Composite) 19.1% (21.6%) 10.5% (13.4%) U.S. (S&P 500) 28.9% (20.0%) 1
Slide 10: Industry Operating Environment
INDUSTRY OPERATING ENVIRONMENT Industry Net Sales ($B) Q1/19 Q1/20 $ Change Net Sales Rate % Long-term Mutual Funds Q1/20 Annualized Advice channel 0.4 (3.9) (4.3) (2.1) Deposit takers 4.2 2.3 (1.9) 1.3 Other 0.4 0.6 0.2 3.1 Total 5.0 (1.0) (6.0) (0.3) Long-term Mutual Fund Net Sales Rate (Last Twel
Slide 11: IGM Financial Q1, 2020 Results
IGM FINANCIAL Q1, 2020 RESULTS Average Total AUM ($B) Net Earnings ($MM) 163.3 168 161 155.9 Q1/19 Q1/20 Q1/19 Q1/20 Investment Fund Net Sales ($MM) Net Earnings Per Share (₵) 1 70 68 306 260 Q1/19 Q1/20 Q1/19 Q1/20 1) Includes gross sales of $373MM, redemptions of $192MM and net sales of $181MM dur
Slide 12: Operating Segments Q1, 2020 Results
OPERATING SEGMENTS Q1, 2020 RESULTS Earnings Before Interest & Taxes ($MM) IG Wealth Management Mackenzie Corporate & Other 163.3 173.4 35.9 35.7 40.8 27.1 Q1/19 Q1/20 Q1/19 Q1/20 Q1/19 Q1/20 Net Flows ($MM) IG Wealth Net Client Flows1 Mackenzie Investment Fund Net Sales IPC Mutual Fund Net Sales 2
Slide 13: Operating Highlights
Operating Highlights IGM FINANCIAL Q1, 2020 RESULTS
Slide 14: IG Wealth Management Q1, 2020 Highlights
IG WEALTH MANAGEMENT Q1, 2020 HIGHLIGHTS 1 $86.0B in AUA as at March 31, 2020, down 11.6% during the quarter • First quarter client returns of negative 12.0% were partially recovered during April (+6.0%) Record high Q1 gross client inflows of $3.0B, up 21.8% relative to the prior year, driven by 2 c
Slide 15: IG Wealth Management Q1, 2020 Operating Results
IG WEALTH MANAGEMENT Q1, 2020 OPERATING RESULTS Gross Client Net Client Client Assets Under Inflows ($MM) Flows ($MM) Administration ($B) 381 3rd party IG mutual funds ▪ Record high first quarter 3,006 2,467 93.0 97.3 gross client inflows of 3.6 4.1 86.0 4.1 $3.0B, up 21.8% relative to 62 Q1 2019 89
Slide 16: IG Wealth Management April, 2020 Operating Results
IG WEALTH MANAGEMENT APRIL, 2020 OPERATING RESULTS IG Wealth Management Client Flows1 IG Wealth Management Net Flows1 Q1 ($MM) (Last Twelve Month Trailing, $MM) Gross Inflows Gross Outflows Net Flows 2,000 2,932 2,895 3,006 2,229 2,365 2,267 2,467 2,046 1,834 2,034 1,500 588 890 792 504 376 410 467
Slide 17: IG Wealth's Clients Remaining Committed to Financial Plans
IG WEALTH’S CLIENTS REMAINING COMMITTED TO FINANCIAL PLANS, IG FOCUSED ON CLIENT ENGAGEMENT & GAMMA Redemption Rates1 (Last Twelve Month Trailing % of Average Assets) 20% 18% Industry 17.1% (as at March 31, 2020; long-term funds; 16% excluding IG Wealth) 14% 12% IG Investment Return Index 10.7% IG W
Slide 18: Continued Emphasis on High Net Worth Solutions and Managed Solutions
CONTINUED EMPHASIS ON HIGH NET WORTH SOLUTIONS AND MANAGED SOLUTIONS HNW Solutions % of Total Sales Managed Solutions Share of Gross Sales of HNW Solutions ($B) (Last Twelve Month Trailing) Long-term Funds HNW - Bundled Compound Annual Share of Long- HNW - Unbundled Growth Rate term Gross Sales (CAG
Slide 19: Consultant Practice Productivity Up 22%
CONSULTANT PRACTICE PRODUCTIVITY UP 22%; FOCUSING ON LARGER CONSULTANT PRACTICES AND HIGHER QUALITY RECRUITS Consultant Productivity – Gross Sales per Consultant Consultant Network ($MM) 0.41 0.43 3,642 0.35 3,381 3,363 Consultant Recruits 0.27 1,036 (<4 years experience) 1,031 Associates & 0.15 1,0
Slide 20: COVID-19 – Rapid Transition in the Way Distribution Works
COVID-19 – RAPID TRANSITON IN THE WAY DISTRIBUTION WORKS, WHILE IMPROVING THE FINANCIAL WELL-BEING OF CANADIANS Rapid Adaptation to Expanded Support & Continued Focus on Focus on Clients & Work from Home Training Talent Acquisition Productivity a) Successful transformation to a) Health, safety, and
Slide 21: Operating Highlights
Operating Highlights IGM FINANCIAL Q1, 2020 RESULTS
Slide 22: Mackenzie Investments Q1, 2020 Highlights
MACKENZIE INVESTMENTS Q1, 2020 HIGHLIGHTS 1 Total AUM was $63.1B at March 31, 2020, down 10.1% during the quarter • During April 2020, total AUM increased 11.0%, driven by markets and net sales 2 Record high first quarter retail and total mutual fund gross sales of $2.1B and $3.7B, respectively Cont
Slide 23: Mackenzie Investments Q1, 2020 Operating Results
MACKENZIE INVESTMENTS Q1, 2020 OPERATING RESULTS Mutual Fund Gross Sales ($MM) Net Sales ($MM) Retail Strategic alliances & other 1 Q1/19 Q1/20 ▪ Record high Q1 total mutual 3,656 Retail 361 229 fund gross sales of $3.7B, an Strategic alliances & other1 (71) 208 2,505 1,519 increase of 46% relative
Slide 24: Mackenzie Investments April, 2020 Operating Results
MACKENZIE INVESTMENTS APRIL, 2020 OPERATING RESULTS Mackenzie Investment Fund Flows1 Mackenzie Investment Funds Net Flows1 Q1 ($MM) (Last Twelve Month Trailing, $MM) Gross Sales Redemptions Mutual Fund Net Sales ETF Net Flows 3,656 3,000 2,861 Isolated redemption 2,374 2,630 2,505 1,962 1,927 1,973
Slide 25: Mackenzie Retail Investment Fund Net Sales
MACKENZIE RETAIL INVESTMENT FUND NET SALES $MM Mutual Fund Gross Sales Net Sales % $ Retail Investment Funds Q1/19 Q1/20 Q1/19 Q1/20 Change Change Mutual Funds ▪ Mackenzie saw a 23.7% Income 215 195 (9.3) (25) (128) (103) year-over-year increase in Balanced 682 833 22.1 139 118 (21) Canadian Equity
Slide 26: Mackenzie's Continued ETF Growth Across Channels
MACKENZIE’S CONTINUED ETF GROWTH ACROSS CHANNELS ETF AUM by Quarter ($MM) ETF Net Creations by Quarter ($MM) 5,255 1,015 IG, IPC, & Mackenzie 4,749 Mutual Funds Institutional1 4,051 Retail 3,454 2,920 3,330 646 597 933 282 375 444 228 180 1,960 86 39 88 142 40 135 163 34 48 48 Q1/19 Q2/19 Q3/19 Q4/1
Slide 27: Investment Performance Highlights
INVESTMENT PERFORMANCE HIGHLIGHTS 59% of AUM is 4/5 star; 19 of 20 largest funds are rated 4/5 star and 13 of 20 Mackenzie Mutual Funds are rated 5 star (series F) Mackenzie Mutual Funds in 1st or 2nd Quartile1 Morningstar Star Ratings1 (Proportion of Assets) (Proportion of Assets) Dec 2019 Mar 2020
Slide 28: Investment Boutique Retail Mutual Fund Performance & Net Sales
INVESTMENT BOUTIQUE RETAIL MUTUAL FUND PERFORMANCE & NET SALES Fixed Managed Value-Oriented Quality Growth-Oriented Core & Dividend 3rd Party Income Solutions North Global Global Systematic Fixed Multi-Asset 3rd Party Cundill American Ivy Growth Bluewater Resources Quantitative Equity & Strategies I
Slide 29: Financial Highlights
Financial Highlights IGM FINANCIAL Q1, 2020 RESULTS
Slide 30: IGM Financial Q1, 2020 Financial Highlights
IGM FINANCIAL Q1, 2020 FINANCIAL HIGHLIGHTS 1 EPS of 68 cents, slightly below EPS of 70 cents last year • Lower net investment income due to fair value adjustments on seed capital and lower proportionate share of Great-West Lifeco earnings • Slightly elevated Q1 non-commission expenses resulting fro
Slide 31: IGM Is Focused on Responsible Management
IGM IS FOCUSED ON RESPONSIBLE MANAGEMENT Q4 & Q1 Accolades • IGM was the only • IGM named by Corporate • IGM included in stock index • IGM included in stock index Canadian firm named to Knights as one of the 100 of global firms with leading of 50 Canadian companies CDP’s prestigious global “A most s
Slide 32: Assets Under Management
ASSETS UNDER MANAGEMENT IGM Assets Under Management ($B) Change in IGM Assets Under Management ($B) Total Assets Annual Average Quarterly Average Investment Fund Assets Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 LTM 180 Opening 149.1 160.5 162.3 162.5 166.8 160.5 Net Sales - Investment Funds 0.3 (0.4) 0.1 (0.1)
Slide 33: IGM EBIT & Margins
IGM EBIT & MARGINS IGM Adjusted EBIT1 ($MM) IGM Adjusted EBIT Margin1,2 (% of Average AUM) 811.9 816.1 832.7 789.1 782.1 1.92% 1.90% 1.89% 1.88% 1.85% Commission 0.71% 0.69% 0.67% 0.67% 275.8 272.4 278.3 Expenses 0.67% 274.7 270.0 46.1 46.5 53.9 Net Investment 52.9 29.5 497.2 500.5 Income & Share of
Slide 34: IGM Financial Consolidated Profitability
IGM FINANCIAL CONSOLIDATED PROFITABILITY1 ($MM, unless otherwise indicated) Change QoQ Change YoY Q1/19 Q4/19 Q1/20 $ % $ % Days in the period 90 92 91 (1.1%) 1.1% 1▪ Lower net investment Average AUM ($ Billions): income primarily due to fair Total 155.9 164.5 163.3 (1.3) (0.8%) 7.4 4.7% Investment
Slide 35: IG Consultant Compensation Changes Effective January 1, 2020
IG CONSULTANT COMPENSATION CHANGES EFFECTIVE JANUARY 1, 2020 •1 Sales commissions are now based upon Cha nge QoQ Cha nge YoY client contributions to their accounts Q1/19 Q4/19 FY2019 Q1/20 $ % $ % (subject to eligibility requirements) Average AUM ($B) 87.0 91.9 89.9 90.9 (1,021) (1.1%) 3,921 4.5% −
Slide 36: IG Wealth Management Key Profitability Drivers
IG WEALTH MANAGEMENT KEY PROFITABILITY DRIVERS Gross Client Inflows & Average AUM & Rates of AUM Sales Commission Rates3 ▪1 IG asset-based ($B, unless otherwise stated) ($B, unless otherwise stated) compensation rate 1.55% 1.58% 1.56% 4 increase relating to the 1.53% Annualized Sales re-classificati
Slide 37: IG Wealth Management Profitability
IG WEALTH MANAGEMENT PROFITABILITY ($MM, unless otherwise indicated) Change QoQ Change YoY Q1/19 Q4/19 Q1/20 $ % $ % 1▪ Lower net investment Days in the period 90 92 91 (1.1%) 1.1% income due to fair value Average mutual fund AUM ($ Billions) 87.0 91.9 90.9 (1.0) (1.1%) 3.9 4.0% adjustments relating
Slide 38: Mackenzie Key Profitability Drivers
MACKENZIE KEY PROFITABILITY DRIVERS Average AUM & Rates of AUM Mutual Fund Gross Sales & Rates of Sales ($B, unless otherwise stated) ($B, unless otherwise stated) Annualized Net 79.2 79.6 80.1 80.0 Revenue Rate 78.0 (bps) 1 Average AUM 68.2 68.2 69.1 69.4 0.30% 0.24% 0.24% 0.22% Sales 65.6 0.21% Co
Slide 39: Mackenzie Profitability
MACKENZIE PROFITABILITY ($MM, unless otherwise indicated) Change QoQ Change YoY Q1/19 Q4/19 Q1/20 $ % $ % ▪1 Decline in net Days in the period 90 92 91 (1.1%) 1.1% Average AUM ($ Billions): investment income Total 65.6 69.1 69.4 0.3 0.3% 3.8 5.7% relating to fair value Investment funds 58.2 63.0 63.
Slide 40: Q&A
Q&A IGM FINANCIAL Q1, 2020 RESULTS