IGM Financial Inc. · TSX:IGM
IGM Financial — Q4 2019 Earnings Presentation
36 slides from IGM Financial's earnings presentation, Feb 14, 2020
Slide 1: IGM Financial Q4, 2019 Results
IGM Financial Q4, 2019 Results February 14, 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 Q4, 2019 RESULTS
Slide 7: IGM 2019 Highlights
IGM 2019 HIGHLIGHTS 1 Record high quarter-end total AUM of $166.8B and AUA of $190.2B, both up 12% in 2019 2 Investment fund net redemptions of $142MM, reflecting challenging industry environment • Industry advice channel long-term mutual fund net redemptions of $4.4B during 2019 • Industry environm
Slide 8: IGM Q4, 2019 Highlights
IGM Q4, 2019 HIGHLIGHTS 1 Record high quarter-end total AUM of $166.8B and AUA of $190.2B, both up 3% during Q4 2 Investment fund net redemptions of $141MM1, an improvement from $225MM last year • Industry advice channel long-term mutual fund net redemptions of $0.8B during Q4/19 3 EPS of 80 cents a
Slide 9: Assets Under Management & Financial Markets
ASSETS UNDER MANAGEMENT & FINANCIAL MARKETS IGM Assets Under Management ($B) Investment Performance Q1 at Total Assets Annual Average 2018 Q4/19 2019 Jan 31/20 IGM Client Investment Returns 1 (5.3%) 2.8% 13.0% 1.1% Quarterly Average S&P TSX Equity Markets: 180 Canada (S&P / TSX Composite) (11.6%) 2.
Slide 10: Industry Operating Environment
INDUSTRY OPERATING ENVIRONMENT Long-term Mutual Fund Net Sales Rate (LTM, % of Average AUM) Total Industry Advice Channel 6% Industry Net Sales ($B) 4% Q4/18 Q4/19 $ Change Net Sales Rate % Long-term Mutual Funds Q4/19 Annualized 2% Advice channel (8.2) (0.8) 7.4 (0.4) Deposit takers (6.8) 4.4 11.2
Slide 11: IGM Financial Q4, 2019 Results
IGM FINANCIAL Q4, 2019 RESULTS Average Total AUM ($B) Net Earnings ($MM) Net Earnings Per Share (₵) 153.0 164.5 192 180 75 80 Q4/18 Q4/19 Q4/18 Q4/19 Q4/18 Q4/19 Adjusted Net Adjusted Net Earnings Investment Fund Net Sales ($MM) Earnings2 ($MM) Per Share2 (₵) 201 180 84 75 (141)1 (225) Q4/18 Q4/19 Q
Slide 12: Operating Segments Q4, 2019 Results
OPERATING SEGMENTS Q4, 2019 RESULTS Adjusted Earnings Before Interest & Taxes ($MM) IG Wealth Management Mackenzie Corporate & Other 206.3 172.1 35.4 41.4 42.6 40.7 Q4/18 Q4/19 Q4/18 Q4/19 Q4/18 Q4/19 Investment Fund Net Sales ($MM) IG Wealth Management Mackenzie IPC 2 Mutual Funds ETFs 3011 (65) (1
Slide 13: Operating Highlights
Operating Highlights IGM FINANCIAL Q4, 2019 RESULTS
Slide 14: IG Wealth Management Highlights
IG WEALTH MANAGEMENT HIGHLIGHTS 1 Record high quarter-end AUM of $93.2B, up 12.1% in 2019 and 2.6% during Q4/19 • Driven by strong client investment returns of 13.4% Gross client inflows were up 7.7%, driven by continued momentum in HNW and mass affluent 2 client segments • Gross sales into IG Wealt
Slide 15: IG Wealth Management Q4, 2019 Operating Results
IG WEALTH MANAGEMENT Q4, 2019 OPERATING RESULTS Gross Client Net Client Client Assets Under Inflows ($MM) Flows ($MM) Administration ($B) 2,463 IG 3rd party ▪ Gross client inflows of 2,287 94.5 97.3 $2.5B, up 7.7% relative to 86.3 3.7 4.1 3.2 Q4 2018 (7) (112) 90.8 93.2 ▪ Net client outflows were 83
Slide 16: Continued Emphasis on High Net Worth Solutions and Managed Solutions
CONTINUED EMPHASIS ON HIGH NET WORTH SOLUTIONS AND MANAGED SOLUTIONS Managed Solutions Share of Gross Sales of HNW Solutions ($B) HNW Solutions % of Total Sales Long-term Funds Compound HNW - Bundled Annual HNW - Unbundled Growth Rate 58% (CAGR) 48% Share of 84% Other 3-year 1-year 45% Long-term 2.3
Slide 17: Focusing on High Net Worth Opportunity and Ensuring High Standard of Service
FOCUSING ON HIGH NET WORTH OPPORTUNITY AND ENSURING HIGH STANDARD OF SERVICE FOR ALL CLIENT SEGMENTS Mutual Fund Gross & Net Sales from New Client Acquisition (LTM, $MM) IG National Service Centre ▪ Salaried, credentialed financial advisory model to Discontinued DSC / emphasis & offer Softer market
Slide 18: Consultant Productivity Up 24% Overall
CONSULTANT PRODUCTIVITY UP 24% OVERALL; FOCUSING ON LARGER CONSULTANT PRACTICES AND HIGHER QUALITY RECRUITS Consultant Productivity – Gross Sales per Consultant Average Number of Consultants ($MM) 0.41 3,784 0.35 0.32 3,453 Consultant Recruits 1,032 (<4 year) 0.20 Associates & 2,752 1,020 Regional D
Slide 19: Significant Strategic Transformation Milestones Achieved During Q4, 2019
SIGNIFICANT STRATEGIC TRANSFORMATION MILESTONES ACHIEVED DURING Q4, 2019 Launched IG Advisory Launched IG Outsourced fund Account (IGAA) Advisor Portal services to CIBC Mellon ▪ Unbundled fee • Customer Relationship (IGM-wide) arrangements now available Management platform • Financial benefits reali
Slide 20: Strong Investment Performance in IG Wealth Management's Series U Managed Solutions
STRONG INVESTMENT PERFORMANCE IN IG WEALTH MANAGEMENT’S SERIES U MANAGED SOLUTIONS 9 of 14 IG Wealth Portfolios are rated 4 or 5 stars by Morningstar Morningstar Star Ratings reflect performance of Series U as of December 31, 2019. The indicated rates of return are the historical annual compounded t
Slide 21: Operating Highlights
Operating Highlights IGM FINANCIAL Q4, 2019 RESULTS
Slide 22: Mackenzie Investments Highlights
MACKENZIE INVESTMENTS HIGHLIGHTS Record high quarter-end investment fund AUM of $64.0B, up 15.3% over the year and 3.0% in 1 Q4/19 • Mackenzie’s ETF platform is the sixth largest in Canada with $4.7B • AUM in alternatives reached $1.3B $1.4 billion1 investment fund net sales during 2019, driven by c
Slide 23: Mackenzie Investments Q4, 2019 Operating Results
MACKENZIE INVESTMENTS Q4, 2019 OPERATING RESULTS Mutual Fund Gross Sales ($MM) Net Sales ($MM) Q4/18 Q4/19 1 Mutual Funds (146) 541 2,328 2,458 ETFs 137 646 ▪ Q4 total mutual fund gross Mackenzie mutual fund investment in ETFs (82) (399) sales of $2.5B1, an increase Investment Funds2 (91) 3011 of 5.
Slide 24: Mackenzie Retail Investment Fund Net Sales
MACKENZIE RETAIL INVESTMENT FUND NET SALES Retail Gross Sales $MM Mutual Fund Gross Sales Net Sales Capture Rate 1 % $ Retail Investment Funds Q4/18 Q4/19 Q4/18 Q4/19 Change Q4/18 Q4/19 Change Change ▪ Mackenzie’s share of Mutual Funds Income 269 210 (21.9) 7.8% 3.6% (4.2%) 30 (16) (46) advice chann
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) 4,749 IG, IPC, & Mackenzie Mutual Funds 646 4,051 597 Institutional1 3,454 2,286 Retail 3,330 2,949 282 444 336 228 180 137 86 39 26 88 2,127 142 40 135 163 111 48 Q4/18 Q1/19 Q2/19 Q3/19 Q4/
Slide 26: Investment Performance Highlights
INVESTMENT PERFORMANCE HIGHLIGHTS 47% of AUM is 4/5 star; 15 of 20 largest funds are rated 4/5 star and 8 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) Sep 2019 Dec 2019
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: Financial Highlights
Financial Highlights IGM FINANCIAL Q4, 2019 RESULTS
Slide 29: Assets Under Management
ASSETS UNDER MANAGEMENT IGM Assets Under Management ($B) Change in IGM Assets Under Management ($B) Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 LTM Opening 159.7 149.1 160.5 162.3 162.5 149.1 Total Assets Annual Average Net Sales - Investment Funds (0.2) 0.3 (0.4) 0.1 (0.1) (0.1) Quarterly Average Investment Fund
Slide 30: IGM EBIT & Margins
IGM EBIT & MARGINS IGM Adjusted EBIT1 ($MM) IGM Adjusted EBIT Margin1,2 (% of Average AUM) 811.9 816.1 832.7 791.5 789.1 1.93% 1.92% 1.90% 1.89% 1.88% Commission 0.71% 0.71% 0.69% 0.67% 0.67% 275.8 272.4 278.3 Expenses 272.4 274.7 46.1 46.5 53.9 Net Investment 47.8 52.9 Income & Share of 490.0 497.2
Slide 31: IGM Financial Consolidated Profitability
IGM FINANCIAL CONSOLIDATED PROFITABILITY1 ($MM, unless otherwise indicated) Change QoQ Change YoY 1▪ Net fee revenue up Q4/18 Q3/19 Q4/19 $ % $ % sequentially and year-over- Days in the period 92 92 92 0.0% 0.0% Average AUM ($ Billions): year, driven by higher Total 153.0 162.1 164.5 2.5 1.5% 11.5 7
Slide 32: IG Wealth Management Key Profitability Drivers
IG WEALTH MANAGEMENT KEY PROFITABILITY DRIVERS Average AUM & Rates of AUM Gross Sales & Adjusted Rates of Sales4 ($B, unless otherwise stated) ($B, unless otherwise stated) 201.4 201.4 Annualized 199.3 198.7 197.8 Mgmt. & Admin. Fee Rate (bps) 90.2 90.4 91.9 Average AUM 1.67% 87.0 1.53% 1.55% 1.58%
Slide 33: IG Wealth Management Profitability
IG WEALTH MANAGEMENT PROFITABILITY ($MM, unless otherwise indicated) Change QoQ Change YoY 1▪ Year-over-year change Q4/18 Q3/19 Q4/19 $ % $ % in mutual fund Days in the period 92 92 92 0.0% 0.0% Average mutual fund AUM ($ Billions) 85.1 90.4 91.9 1.6 1.7% 6.8 8.0% commission expenses includes transi
Slide 34: 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 80.5 79.2 79.6 80.1 80.0 Revenue Rate (bps) 1 68.2 68.2 69.1 Average AUM 0.30% Sales 65.6 0.24% 0.24% 0.24% 0.22% 64.6 Co
Slide 35: Mackenzie Profitability
MACKENZIE PROFITABILITY ($MM, unless otherwise indicated) Change QoQ Change YoY Q4/18 Q3/19 Q4/19 $ % $ % ▪1 Net revenue increased Days in the period 92 92 92 0.0% 0.0% Average AUM ($ Billions): with higher average Total 64.6 68.2 69.1 0.9 1.4% 4.5 7.0% AUM Investment funds 57.1 61.8 63.0 1.2 1.9% 5
Slide 36: Q&A
Q&A IGM FINANCIAL Q4, 2019 RESULTS