IGM Financial Inc. · TSX:IGM
IGM Financial — Q2 2020 Earnings Presentation
39 slides from IGM Financial's earnings presentation, Aug 6, 2020
Slide 1: IGM Financial Q2, 2020 Results
IGM Financial Q2, 2020 Results August 6, 2020
Slide 2: Conference Call Participants
CONFERENCE CALL PARTICIPANTS JEFFREY R. CARNEY BARRY S. MCINERNEY LUKE GOULD PRESIDENT & CEO PRESIDENT & CEO EXECUTIVE VICE-PRESIDENT IGM FINANCIAL MACKENZIE INVESTMENTS & CFO PRESIDENT & CEO IGM FINANCIAL IG WEALTH MANAGEMENT 2
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 Q2, 2020 RESULTS
Slide 7: IGM Q2, 2020 Highlights
IGM Q2, 2020 HIGHLIGHTS 1 $165.4B AUM and $188.1B AUA as at June 30, 2020, both up approximately 12% during Q2 • Client investment returns were positive 9.7% during the second quarter, and remained positive into July 2 Total net sales were $3.4 billion, including $864MM investment fund net sales1 •
Slide 8: Financial Market and Client Investment Returns
FINANCIAL MARKET AND CLIENT INVESTMENT RETURNS IGM Client Return Index1 Investment Performance 2.2 Q3/20 at 2019 Q1/20 Q2/20 Jul 31/20 2020 YTD IGM Client Investment Returns 2 13.0% (11.7%) 9.7% 3.2% 0.0% Equity Markets: 2.0 Canada (S&P / TSX Composite) 19.1% (21.6%) 16.0% 4.2% (5.2%) U.S. (S&P 500)
Slide 9: Industry Operating Environment
INDUSTRY OPERATING ENVIRONMENT Industry Net Sales ($B) Q2/19 Q2/20 $ Change Net Sales Rate % Long-term Mutual Funds Q2/20 Annualized Advice channel (2.8) 2.4 5.2 1.4 Deposit takers 1.7 4.0 2.3 2.3 Other 0.1 0.4 0.3 2.1 Total (1.0) 6.8 7.8 1.8 ETF Net Creations 7.0 7.7 0.7 Long-term Mutual Fund Net S
Slide 10: IGM Financial Q2, 2020 Results
IGM FINANCIAL Q2, 2020 RESULTS Average Total AUM ($B) Net Earnings ($MM) Net Earnings Per Share (₵) 161.8 163.3 185 184 77 77 159.2 161 68 Q2/19 Q1/20 Q2/20 Q2/19 Q1/20 Q2/20 Q2/19 Q1/20 Q2/20 Adjusted Net Adjusted Net Earnings Investment Fund Net Sales ($MM) Earnings2 ($MM) Per Share2 (₵) 864 1 193
Slide 11: Operating Segments Q2, 2020 Results
OPERATING SEGMENTS Q2, 2020 RESULTS Earnings Before Interest & Taxes ($MM) IG Wealth Management Mackenzie Corporate & Other 194.9 173.4 165.4 44.8 43.5 50.0 35.7 36.7 27.1 Q2/19 Q1/20 Q2/20 Q2/19 Q1/20 Q2/20 Q2/19 Q1/20 Q2/20 Net Flows ($MM) IG Wealth Net Client Flows1 Mackenzie Investment Fund Net
Slide 12: Operating Highlights
Operating Highlights IGM FINANCIAL Q2, 2020 RESULTS
Slide 13: IG Wealth Management Q2, 2020 Highlights
IG WEALTH MANAGEMENT Q2, 2020 HIGHLIGHTS 1 $93.6B in AUA as at June 30, 2020, up 9.0% during the quarter • Second quarter client returns of positive 9.5%, with momentum continuing into July 2 Net client flows of negative $62MM, an improvement of $438MM relative to Q2 2019 • Strong asset retention, w
Slide 14: IG Wealth Management Q2, 2020 Operating Results
IG WEALTH MANAGEMENT Q2, 2020 OPERATING RESULTS Gross Client Gross Client Outflows Net Client Client Assets Under Inflows ($MM) Rate (quarterly annualized) Flows ($MM) Administration ($B) 3rd party IG mutual funds 2,184 11.5% 1,901 93.7 93.6 8.7% 3.5 86.0 4.1 (62) 4.1 (500) Q2/19 Q2/20 90.2 81.9 89.
Slide 15: 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 (as at June 30, 2020; 16% 16.2% long-term funds; excluding IG Wealth) 14% 12% IG Investment Return Index IG Wealth 1
Slide 16: 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 ($B) (Last Twelve Month Trailing) Long-term Funds HNW - Bundled Share of Long- HNW - Unbundled term Gross Sales (last twelve month Other 52% tra
Slide 17: Consultant Practice Productivity Up 3%
CONSULTANT PRACTICE PRODUCTIVITY UP 3%; FOCUSING ON LARGER CONSULTANT PRACTICES AND HIGHER QUALITY RECRUITS Consultant Productivity – Gross Sales per Consultant Consultant Network ($MM) 0.38 0.34 0.34 3,557 3,363 3,318 Consultant 0.25 Recruits (<4 years 1,013 experience) Associates & 0.12 1,035 1,01
Slide 18: New Financial Planning and Advisor Tools Through Conquest Planning and Advisor Portal
NEW FINANCIAL PLANNING AND ADVISOR TOOLS THROUGH PARTNERSHIP WITH CONQUEST PLANNING AND ADVISOR PORTAL Advisor Portal ▪ Starting in Q4 2020, IG to introduce a ▪ Launched in Q4 2019 and the roll-out new best-in-class financial planning is now complete including region collaboration tool that will hel
Slide 19: A Platform in Service to Canadians on the Frontlines
A PLATFORM IN SERVICE TO CANADIANS ON THE FRONTLINES • There’s never been a more important time to be of service to Canadians who desperately need financial knowledge and advice, especially Canadian business owners • They are devoting their lives to answering the call, and that’s why we are focused
Slide 20: Operating Highlights
Operating Highlights IGM FINANCIAL Q2, 2020 RESULTS
Slide 21: Mackenzie to Acquire GLC Asset Management Group (GLC)
MACKENZIE TO ACQUIRE GLC ASSET MANAGEMENT GROUP (GLC) Mackenzie to acquire GLC from Canada Life for $175MM (cash) Pro Forma Mackenzie AUM ($B, as at June 30, 2020) 1) Solidifies Mackenzie as one of Canada’s largest investment managers, with an additional $36B in assets 2) Expands distribution reach
Slide 22: Mackenzie Investments Q2, 2020 Highlights
MACKENZIE INVESTMENTS Q2, 2020 HIGHLIGHTS 1 Total AUM was $73.2B at June 30, 2020, up 16.0% during the quarter and 4.3% year-to-date • During July 2020, total AUM increased 3.6%, driven by markets and net sales 2 Record high net sales of $3.6B, with strong performance across products and channels •
Slide 23: Mackenzie Investments Q2, 2020 Operating Results
MACKENZIE INVESTMENTS Q2, 2020 OPERATING RESULTS Mutual Fund Gross Sales ($MM) Net Sales ($MM) Retail Strategic alliances & other 1 Q2/19 Q2/20 ▪ Record high total net sales of Retail 392 439 2,541 2,505 $3.6B, with strong Strategic alliances & other1 (137) 618 725 909 performance across products IG
Slide 24: Mackenzie Retail Investment Fund Net Sales
MACKENZIE RETAIL INVESTMENT FUND NET SALES $MM Mutual Fund Gross Sales Net Sales % $ Retail Investment Funds Q2/19 Q2/20 Q2/19 Q2/20 Change Change Mutual Funds ▪ Retail investment fund net Income 220 249 13.2 21 102 81 sales were $439MM, Balanced 738 514 (30.4) 189 82 (107) Canadian Equity 138 131 (
Slide 25: Mackenzie's Continued ETF Growth Across Channels
MACKENZIE’S CONTINUED ETF GROWTH ACROSS CHANNELS ETF AUM by Quarter ($MM) ETF Net Creations by Quarter ($MM) IG, IPC, & Mackenzie 6,642 IG, IPC, & Mackenzie Mutual Funds Mutual Funds 1 1 Institutional Institutional 1,015 ▪ Mackenzie partners 5,255 937 Retail Retail with Wealthsimple to 4,749 3,506 l
Slide 26: Investment Performance Highlights
INVESTMENT PERFORMANCE HIGHLIGHTS 55% of AUM is 4/5 star; 17 of 20 largest funds are rated 4/5 star and 7 of 20 Mackenzie Mutual Funds are rated 5 star (series F) Mackenzie Mutual Funds in 1st or 2nd Quartile1 Morningstar Star Ratings1 (Proportion of Assets) (Proportion of Assets) Mar 2020 Jun 2020
Slide 27: Investment Boutique Retail Mutual Fund Performance & Net Sales
INVESTMENT BOUTIQUE RETAIL MUTUAL FUND PERFORMANCE & NET SALES Fixed Managed Value-Oriented Quality Growth-Oriented Core & Dividend 3rd Party Income Solutions North Global Global Systematic Fixed Multi-Asset 3rd Party Cundill American Ivy Growth Bluewater Resources Quantitative Equity & Strategies I
Slide 28: Chinese Mutual Fund Industry AUM Experiencing Strong Growth
CHINESE MUTUAL FUND INDUSTRY AUM EXPERIENCING STRONG GROWTH Chinese Mutual Fund Industry Ending AUM Chinese Mutual Fund Industry Long-term Mutual (RMB Trillions)1 Fund Market Share (% at March 31, 2020)2 CAD/RMB = 5.206 16.6 16.8 Money market funds 14.7 13.7 13.3 13.6 Long-term funds 13.2 12.9 12.3
Slide 29: China AMC's Growth Has Accelerated in 2020
CHINA AMC’S GROWTH HAS ACCELERATED IN 2020 China AMC Ending AUM1 CAD/RMB = 5.206 China AMC Net Earnings (RMB billions) (RMB millions) Very strong AUM growth over past Q2 earnings reflective four quarters 1,248 of growth in AUM 398 1,032 906 918 349 870 880 303 309 310 296 287 298 284 254 Q4/17 Q2/18
Slide 30: Financial Highlights
Financial Highlights IGM FINANCIAL Q2, 2020 RESULTS
Slide 31: Assets Under Management
ASSETS UNDER MANAGEMENT IGM Assets Under Management ($B) Change in IGM Assets Under Management ($B) Total Assets Annual Average Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 LTM Quarterly Average Investment Fund Assets Opening 160.5 162.3 162.5 166.8 147.5 162.3 180 Net Sales - Investment Funds (0.4) 0.1 (0.1) 0.3
Slide 32: IGM EBIT & Margins
IGM EBIT & MARGINS IGM Adjusted EBIT1 ($MM) IGM Adjusted EBIT Margin1,2 (% of Average AUM) 811.9 816.1 832.7 782.1 775.5 1.90% 1.89% 1.88% 1.85% 1.81% Commission 278.3 Expenses 0.69% 0.67% 0.67% 0.67% 275.8 272.4 0.65% 270.0 256.8 46.1 46.5 53.9 Net Investment 29.5 58.6 497.2 500.5 Income & Share of
Slide 33: IGM Financial Consolidated Profitability
IGM FINANCIAL CONSOLIDATED PROFITABILITY1 ($MM, unless otherwise indicated) Change QoQ Change YoY Q2/19 Q1/20 Q2/20 $ % $ % 1▪ Decline in net fee revenue Days in the period 91 91 91 0.0% 0.0% Average AUM ($ Billions): reflects lower average AUM Total 161.8 163.3 159.2 (4.1) (2.5%) (2.6) (1.6%) exper
Slide 34: IG Wealth Management Key Profitability Drivers
IG WEALTH MANAGEMENT KEY PROFITABILITY DRIVERS Gross Client Inflows & Average AUM & Rates of AUM Sales Commission Rates3 ($B, unless otherwise stated) ($B, unless otherwise stated) ▪1 IG sales commissions are Annualized 1.6% 1.6% 1.6% 4 Sales 199.3 198.7 197.8 195.1 194.4 Mgmt. & Admin. 1.1% 1.2% Co
Slide 35: IG Wealth Management Profitability
IG WEALTH MANAGEMENT PROFITABILITY ($MM, unless otherwise indicated) Change QoQ Change YoY Q2/19 Q1/20 Q2/20 $ % $ % 1▪ Sequential decline in Days in the period 91 91 91 0.0% 0.0% management and admin Average mutual fund AUM ($ Billions) 90.2 90.9 87.0 (3.9) (4.3%) (3.2) (3.5%) fee revenue is in-lin
Slide 36: 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) 79.6 80.1 80.0 78.0 1 74.1 Annualized Net Revenue Rate (bps) 2 68.2 68.2 69.1 69.4 69.6 Average AUM Sales 0.24% 0.24% 0.22% 0.21% 0.17%
Slide 37: Mackenzie Profitability
MACKENZIE PROFITABILITY ($MM, unless otherwise indicated) Change QoQ Change YoY Q2/19 Q1/20 Q2/20 $ % $ % ▪1 Net investment income Days in the period 91 91 91 0.0% 0.0% Average AUM ($ Billions): includes favourable fair Total 68.2 69.4 69.6 0.2 0.4% 1.4 2.1% value adjustments on Investment funds 60.
Slide 38: Coming in Q3/20 – New Segment Disclosure Approach with Retroactive Restatement
COMING IN Q3/20 – NEW SEGMENT DISCLOSURE APPROACH WITH RETROACTIVE RESTATEMENT 1) Advisory fee transfer pricing framework established to Wealth Asset Strategic price IG Wealth and Canada Life relationships Management Management Investments & Segment Segment Other 2) In Q3/20 IG Wealth to be recorded
Slide 39: Q&A
Q&A IGM FINANCIAL Q2, 2020 RESULTS