IGM Financial Inc. · TSX:IGM
IGM Financial — Q2 2018 Earnings Presentation
35 slides from IGM Financial's earnings presentation, Aug 2, 2018
Slide 1: Q2, 2018 Results
Q2, 2018 Results IGM FINANCIAL A U G U S T 2 , 2 0 1 8 1 1
Slide 2: Conference Call Participants
CONFERENCE CALL PARTICIPANTS Jeffrey R. Carney Barry S. McInerney Luke Gould Rhonda Goldberg President & CEO, President & CEO, Executive Vice-President & CFO, SVP, Client and Regulatory Affairs IGM Financial and Mackenzie Investments IGM Financial IGM Financial President & CEO, Investors Group 2 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 und
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: IGM Financial
IGM FINANCIAL 6 6
Slide 7: IGM Financial Q2, 2018 Highlights
IGM FINANCIAL Q2, 2018 HIGHLIGHTS 1 Record high total ending AUM of $159.1B; up 2.2% from Q1 • Driven by favourable investment returns 2 IGM investment fund net sales of $171MM • Challenging industry environment, with industry long-term mutual fund redemptions of $3.0B; down from net sales of $9.8B
Slide 8: Industry Operating Environment
INDUSTRY OPERATING ENVIRONMENT YTD Q3 at Jul Q2/18 Jun/18 31/18 IGM Assets Under Management IGM Client Investment Returns 2.1% 0.7% 0.8% ($B) Equity Markets: Total Assets Annual Average Canada (S&P / TSX Composite) 5.9% 0.4% 1.0% Quarterly Average S&P TSX U.S. (S&P 500) 2.9% 1.7% 3.6% Europe (MSCI E
Slide 9: IGM Financial Q2, 2018 Results
IGM FINANCIAL Q2, 2018 RESULTS Net Earnings Net Earnings Per Share ($MM) (₵) Adjusted EPS of 85 cents Net Earnings Adjusted Net Earnings 1 EPS Adjusted EPS 1 up 10.4% relative to 203.7 203.7 83 77 85 85 Q2/171 200.8 185.9 Total average AUM increased 5.2% Investment fund net sales Q2/17 Q2/18 Q
Slide 10: Operating Segments Q2, 2018 Results
OPERATING SEGMENTS Q2, 2018 RESULTS Adjusted 193.9 197.4 Earnings Before Interest & Taxes ($MM) 48.7 47.1 43.4 35.1 Q2/17 Q2/18 Q2/17 Q2/18 Q2/17 Q2/18 Investors Group Mackenzie Corporate & Other Investment 1 Fund Net 625 580 1,2 435 133 Sales ($MM) 1 447 5 (11) (110) Q2/17 Q2/18 Q2/17 Q2/18 Q2/17 Q
Slide 11: Investors Group
INVESTORS GROUP 11 11
Slide 12: Investors Group Q2, 2018 Highlights
INVESTORS GROUP Q2, 2018 HIGHLIGHTS 1 Record high AUM of $88.8B • Driven by positive investment returns 2 Continued market share gains • Investors Group net redemptions of $110MM in context of industry long-term mutual fund net redemptions of $3.0B during the quarter 3 Continued emphasis on HNW solu
Slide 13: Investors Group Q2, 2018 Operating Results
INVESTORS GROUP Q2, 2018 OPERATING RESULTS 1 Mutual Fund Gross Sales Long Term Mutual Fund Net Sales Rate ($MM) (LTM, % of Average AUM) 2,357 Gross sales of $2.1B 2,084 Total Industry Advice Channel Net redemptions of Investors Group $110MM 6% Capturing market share: net sales rate of 1.5%, Q2
Slide 14: Continued Emphasis on High Net Worth Solutions and Managed Solutions
CONTINUED EMPHASIS ON HIGH NET WORTH SOLUTIONS AND MANAGED SOLUTIONS Gross Sales of HNW % of Total Sales Managed Solutions Share HNW Solutions of Long Term Funds ($MM) 44% 41% 74.5% Share of Long Term iProfile (Unbundled) Gross Sales Series U (Unbundled) 26% Series J (Bundled) Q2/18 Q2/16 Q2/17 45.6
Slide 15: Investors Group Client Rate of Return Experience and Redemption Rate
INVESTORS GROUP CLIENT RATE OF RETURN EXPERIENCE AND HISTORICAL REDEMPTION RATE Investors Group Client Account Rate of Return Experience (as at June 30, 2018) 10% 90% of Short-term client returns 5.8% clients had are positive despite 5% returns 3.3% 3.6% within this market volatility range 0% expe
Slide 16: Mackenzie Investments
MACKENZIE INVESTMENTS 16 16
Slide 17: Mackenzie Q2, 2018 Highlights
MACKENZIE Q2, 2018 HIGHLIGHTS 1 Record high investment fund AUM of $58.7B; up 3.0% from Q1/18 • Driven by investment returns and net investment fund sales 2 Continued market share gains with investment fund net sales of $580MM1 • Strong ETF net creations; Mackenzie ranked #2 in industry • Total net
Slide 18: Mackenzie Q2, 2018 Operating Results
MACKENZIE Q2, 2018 OPERATING RESULTS Mutual Fund Gross Sales Long-term Fund Net Sales Rate ($MM) (LTM, % of Average AUM) Q2 total mutual fund gross sales up 7.5%1 1 Total Industry mutual funds 2,195 2,360 Advice Channel mutual funds Mackenzie mutual funds Strong total net sales of Mackenzie inve
Slide 19: Broad Demand for Mackenzie's Mutual Fund Offering Across Asset Classes
BROAD DEMAND FOR MACKENZIE’S MUTUAL FUND OFFERING ACROSS ASSET CLASSES Gross Sales 1 Net Sales 1 $MM Q2/17 Q2/18 % Change Q2/17 Q2/18 $ Change Mutual fund net sales of Income-oriented 239 390 63.2% 29 117 88 positive $163MM1 Balanced Symmetry 416 334 (19.7%) 148 21 (127) In the context of lower
Slide 20: Mackenzie's Rapid ETF Growth Is Broad-Based
MACKENZIE’S RAPID ETF GROWTH IS BROAD-BASED ACROSS CHANNELS & INVESTMENT STRATEGIES ETF AUM by Quarter ETF Net Creations by Quarter ($MM) ($MM) 2,600 715 2,004 539 Investors Group & 570 IPC Mutual Funds 750 Mackenzie 171 1,296 389 Mutual Funds 367 906 286 153 Retail & Other 622 1,311 246 Q2/17 Q3/17
Slide 21: Product Innovation a Key Catalyst for Net Sales & AUM Growth
PRODUCT INNOVATION A KEY CATALYST FOR NET SALES & AUM GROWTH Innovative product launches May, 2018 launch of Mackenzie Multi-Strategy have delivered $5.4B in net Absolute Return Fund sales over the past 5 years New solution is resonating with advisors and Total $5.4B generating interest Includin
Slide 22: Investment Performance Highlights
INVESTMENT PERFORMANCE HIGHLIGHTS Of Mackenzie’s 20 largest funds, 17 are rated 4/5 star and 8 are rated 5 stars (series F) Mackenzie Mutual Funds in Morningstar Star Ratings1 1st or 2nd Quartile1 (Proportion of Assets) (Proportion of Assets) 31-Mar-18 30-Jun-18 All Morningstar Rated 31-Mar-18 30-Ju
Slide 23: Investment Boutique Mutual Fund Performance & Net Sales
INVESTMENT BOUTIQUE MUTUAL FUND PERFORMANCE & NET SALES Mutual Fund AUM by Morningstar Ratings ($MM)1 12,500 Not Rated 1 or 2 Stars 3 Stars 4 or 5 Stars 10,000 7,500 5,000 2,500 0 % 4 or 5: 0% 5% 0% 88% 90% 1% 0% 0% 78% 39% 3% 27% Symmetry Fixed Value-Oriented Quality Growth-Oriented Core & Dividend
Slide 24: Regulatory Update
Regulatory Update Investors ee& MACKENZIE ISM. Group 7—N ” Investments
Slide 25: Regulatory Update
REGULATORY UPDATE KEY AREAS OF FOCUS FOR IGM WELL-POSITIONED CLIENT REGULATORS FOCUSED STRATEGIES CLIENT 1) Suitability includes putting clients’ interests • Financial planning focus and mandating CFP/Pl.Fin first, with focus on enhanced KYC, holistic at Investors Group equips Consultants to meet FO
Slide 26: Regulatory Update – Next Steps
REGULATORY UPDATE – NEXT STEPS Publication of Some CSA Client Focused rule proposals on jurisdictions may Reform embedded hold in-person Submissions due commissions consultations and on or before expected in roundtables in October 19, 2018 September, 2018 2018-2019 A YEAR OF FURTHER CONSULTATIONS AN
Slide 27: Financial Results
FINANCIAL RESULTS 27 27
Slide 28: IGM Financial Q2, 2018 Financial Highlights
IGM FINANCIAL Q2, 2018 FINANCIAL HIGHLIGHTS 1 Adjusted EPS of 85 cents per share; up 10.4% from Q2/17 • Driven by higher AUM and expense management • IFRS 15 adopted January 1, 2018; if applied retrospectively Q2/18 EPS increased 7.6% • Non-commission expense up 2.5% vs. Q2/17; continue to guide to
Slide 29: Assets Under Management
ASSETS UNDER MANAGEMENT IGM Assets Under Management Change in IGM Assets Under Management ($B) ($B) Total Assets Quarterly Average Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 LTM Annual Average Investment Fund Assets Opening 147.5 148.6 150.0 156.5 155.8 148.6 170 Net Sales - Investment Funds 1.0 0.8 0.7 1.4 0.2
Slide 30: Investors Group Key Profitability Drivers
INVESTORS GROUP KEY PROFITABILITY DRIVERS Average AUM & Rates of AUM Gross Sales & Rates of Sales Non-commission Expenses ($B, unless otherwise stated) ($B, unless otherwise stated) ($MM) (0.5%) Annualized 205.7 204.7 203.7 202.7 202.1 Mgmt. & Adm. 147.7 146.9 Fee Rate (bps) 2.5% 2.5% 2.4% 142.1 138
Slide 31: Investors Group Profitability
INVESTORS GROUP PROFITABILITY ($MM, unless otherwise indicated) Management and Change QoQ Change YoY Q2/17 Q1/18 Q2/18 $ % $ % 1 Days in the period 91 90 91 1.1% 0.0% administration fees increased Average mutual fund AUM ($ Billions) 85.0 87.8 88.0 0.2 0.2% 3.0 3.5% 1.0% quarter-over-quarter Manag
Slide 32: Mackenzie Key Profitability Drivers
MACKENZIE KEY PROFITABILITY DRIVERS Average AUM & Rates of AUM Mutual Fund Gross Sales & Non-commission Expenses2 ($B, unless otherwise stated) Rates of Sales ($MM) ($B, unless otherwise stated) 89.3 87.9 88.1 Annualized Net 85.5 83.6 Revenue Rate 7.7% (bps)1,2 85.8 84.3 66.1 Average AUM 0.36% 0.40%
Slide 33: Mackenzie Profitability
MACKENZIE PROFITABILITY ($MM, unless otherwise indicated) Change QoQ Change YoY Q2/17 Q1/18 Q2/18 $ % $ % 1 Net revenue up slightly Days in the period 91 90 91 1.1% 0.0% quarter-over-quarter Average AUM ($ Billions): Total 60.7 65.2 66.1 0.9 1.4% 5.5 9.0% Investment funds 54.1 57.1 57.9 0.8 1.5% 3
Slide 34: Disclosure Enhancements – Cash Flow Statement
DISCLOSURE ENHANCEMENTS – CASH FLOW STATEMENT Twelve Months Ended Dec 31, 2017 1• Proportionate share of GWL and China AMC Consolidated statement of cash flows ($MM) Prior New earnings exceeds dividends received. GWL Operating activities dividends paid quarterly, China AMC annually. Earnings before
Slide 35: Q&A
Q&A IGM FINANCIAL A U G U S T 2 , 2 0 1 8 35 35