IGM Financial Inc. · TSX:IGM
IGM Financial — Q2 2019 Earnings Presentation
34 slides from IGM Financial's earnings presentation, Aug 1, 2019
Slide 1: IGM Financial Q2, 2019 Results
IGM Financial Q2, 2019 Results August 1, 2019
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 August 1, 2019 IGM FINANCIAL Q2, 2019 RESULTS
Slide 7: IGM Financial Q2, 2019 Highlights
IGM FINANCIAL Q2, 2019 HIGHLIGHTS 1 Record high quarter-end total AUM of $162.3B, up 1.2% during Q2 and 8.9% year-to-date 2 Investment fund net redemptions of $364MM (annualized net redemption rate of 0.9%) • IGM gained market share with a net sales rate better than advice channel peers1 • Industry
Slide 8: Assets Under Management & Financial Markets
ASSETS UNDER MANAGEMENT & FINANCIAL MARKETS IGM Assets Under Management ($B) Investment Performance Total Assets Annual Average YTD June 2018 Q1/19 Q2/19 30/19 Quarterly Average S&P TSX IGM Client Investment Returns 1 (5.3%) 7.5% 1.3% 9.0% 170 Equity Markets: Canada (S&P / TSX Composite) (11.6%) 12.
Slide 9: Industry Operating Environment
INDUSTRY OPERATING ENVIRONMENT Industry Net Sales ($B) Q2/18 Q2/19 $ Change Net Sales Rate % Long-term Mutual Funds Q2/19 Annualized Advice channel (1.8) (2.8) (1.0) (1.5) Deposit takers (1.0) 1.7 2.7 1.0 Other 0.6 0.0 (0.5) 0.1 Total (2.2) (1.1) 1.1 (0.3) ETF Net Creations 1.8 7.0 5.2 Long-term Mut
Slide 10: IGM Financial Q2, 2019 Results
IGM FINANCIAL Q2, 2019 RESULTS Average Total AUM ($B) Net Earnings ($MM) Net Earnings Per Share (₵) 204 85 157.5 155.9 161.8 185 77 168 70 Q2/18 Q1/19 Q2/19 Q2/18 Q1/19 Q2/19 Q2/18 Q1/19 Q2/19 Adjusted Net Adjusted Net Earnings Investment Fund Net Sales ($MM) Earnings2 ($MM) Per Share2 (₵) Mutual Fu
Slide 11: Operating Segments Q2, 2019 Results
OPERATING SEGMENTS Q2, 2019 RESULTS Adjusted Earnings Before Interest & Taxes ($MM) IG Wealth Management Mackenzie Corporate & Other 197.4 194.9 163.3 48.7 44.8 47.1 40.8 36.7 35.9 Q2/18 Q1/19 Q2/19 Q2/18 Q1/19 Q2/19 Q2/18 Q1/19 Q2/19 Investment Fund Net Sales ($MM) IG Wealth Management Mackenzie IP
Slide 12: Operating Highlights
Operating Highlights August 1, 2019 IGM FINANCIAL Q2, 2019 RESULTS
Slide 13: IG Wealth Management Q2, 2019 Highlights
IG WEALTH MANAGEMENT Q2, 2019 HIGHLIGHTS 1 Record high quarter-end AUM of $90.2B, up 8.5% year-to-date • Driven by strong client investment returns, including 1.3% during Q2/19 2 IG Wealth Management net redemptions of $537MM during Q2/19 • Continued low investor confidence as the industry remains i
Slide 14: IG Wealth Management Q2, 2019 Operating Results
IG WEALTH MANAGEMENT Q2, 2019 OPERATING RESULTS Mutual Fund Mutual Fund Client Assets Under Gross Sales ($MM) Net Sales ($MM) Administration ($B) ▪ Mutual fund gross sales of $2.0B 2,084 2,045 IG 3rd party ▪ Mutual fund net 92.0 93.8 3.3 3.7 redemptions of $537MM (110) ▪ $62MM net flows into high 88
Slide 15: IG Wealth Management's Historical Redemption Rate
IG WEALTH MANAGEMENT’S HISTORICAL REDEMPTION RATE Redemption Rate on Long-term Mutual Funds1 (Last Twelve Month Trailing % of Average Assets Under Management) Industry excluding IG Wealth Management IG Wealth Management ▪ IG Wealth 20% Management’s last 18% twelve month trailing 17.2% 16% long-term
Slide 16: Continued Emphasis on High Net Worth Solutions and Managed Solutions
CONTINUED EMPHASIS ON HIGH NET WORTH SOLUTIONS AND MANAGED SOLUTIONS Managed Solutions Share of Gross Sales of HNW Solutions ($MM) HNW Solutions % of Total Sales Long-term Funds iProfile (Unbundled) 52% Series U (Unbundled) 44% 41% Series J (Bundled) Share of Long-term 80% Gross Sales 1,058 Q2/19 Q2
Slide 17: Operating Highlights
Operating Highlights August 1, 2019 IGM FINANCIAL Q2, 2019 RESULTS
Slide 18: Mackenzie Investments Q2, 2019 Highlights
MACKENZIE INVESTMENTS Q2, 2019 HIGHLIGHTS 1 Record high investment fund AUM of $61.4B, up 2.1% during Q2 and 10.6% year-to-date • Driven by investment returns and investment fund net sales Continued market share gains relative to advice channel peers with investment fund net sales of 2 $284MM1 Macke
Slide 19: Mackenzie Investments Q2, 2019 Operating Results
MACKENZIE INVESTMENTS Q2, 2019 OPERATING RESULTS Mutual Fund Gross Sales ($MM) Net Sales ($MM) Q2/18 Q2/19 2,541 Mutual Funds 1633 207 2,360 3 ETFs 570 88 ▪ Q2 total mutual fund gross Mackenzie mutual fund (153) (11) sales of $2.5B, an increase investment in ETFs of 7.7% relative to Q2 Investment Fu
Slide 20: Mackenzie Retail Mutual Fund Gross Sales Capture Rates Improved
MACKENZIE RETAIL MUTUAL FUND GROSS SALES CAPTURE RATES IMPROVED ACROSS MAJOR ASSET CLASSES Retail Gross Sales $MM Mutual Fund Gross Sales Net Sales Capture Rate 1 % $ Retail Investment Funds Q2/18 Q2/19 Q2/18 Q2/19 Change Q2/18 Q2/19 Change Change Mutual Funds Income 248 220 (11.3) 5.2% 3.6% -1.6% 8
Slide 21: 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) 3,454 3,330 Traditional Beta ETFs 2,963 2,949 TOBAM 915 Strategic 570 2,600 Beta ETFs Active ETFs 876 377 228 137 93 1,664 88 90 (95) Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q2/18 Q3/18 Q4/18 Q1/19 Q2/
Slide 22: Liquid Alternative Strategies & Alternative Assets
LIQUID ALTERNATIVE STRATEGIES & ALTERNATIVE ASSETS U.S. Experience - Alternative Mutual Fund & ETF AUM1 (US$MM) Mackenzie Alternatives: $1.1B AUM Liquid CAGR • Growth in alternatives over Alternative $0.7B AUM in Liquid Alternative Asset Classes 705 16.0% Asset Classes Mackenzie Funds: the past 10 y
Slide 23: Investment Performance Highlights
INVESTMENT PERFORMANCE HIGHLIGHTS 46% of AUM is 4/5 star; 18/20 largest funds are rated 4/5 star and 8/20 Mackenzie Mutual Funds are rated 5 star (series F) Mackenzie Mutual Funds in 1st or 2nd Quartile1 Morningstar Star Ratings1 (Proportion of Assets) (Proportion of Assets) March 2019 June 2019 Mar
Slide 24: Investment Boutique Mutual Fund Performance & Retail Net Sales
INVESTMENT BOUTIQUE MUTUAL FUND PERFORMANCE & RETAIL NET SALES Fixed Managed Value-Oriented Quality Growth-Oriented Core & Dividend 3rd Party Income Solutions North Global Global Systematic Fixed Multi-Asset 3rd Party Cundill American Ivy Growth Bluewater Resources Quantitative Equity & Strategies I
Slide 25: Financial Highlights
Financial Highlights August 1, 2019 IGM FINANCIAL Q2, 2019 RESULTS
Slide 26: Assets Under Management
ASSETS UNDER MANAGEMENT IGM Assets Under Management ($B) Change in IGM Assets Under Management ($B) Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 LTM Total Assets Annual Average Opening 155.8 159.1 159.7 149.1 160.5 159.1 Quarterly Average Investment Fund Assets Net Sales - Investment Funds 0.2 0.1 (0.2) 0.3 (0.4)
Slide 27: IGM EBIT & Margins
IGM EBIT & MARGINS IGM Adjusted EBIT1 ($MM) IGM Adjusted EBIT Margin1,2 (% of Average AUM) 816.0 832.0 811.9 791.5 789.1 1.93% 1.92% 1.93% 1.92% 1.90% Commission 0.69% 0.67% 0.71% 0.71% 0.69% 270.1 270.1 275.8 Expenses 272.4 274.7 56.2 55.8 46.1 Net Investment 47.8 52.9 Income & Share of 489.7 506.1
Slide 28: IGM Financial Consolidated Profitability
IGM FINANCIAL CONSOLIDATED PROFITABILITY1 ($MM, unless otherwise indicated) Change QoQ Change YoY Q2/18 Q1/19 Q2/19 $ % $ % 1▪ Net investment income Days in the period 91 90 91 1.1% 0.0% down $2.3MM sequentially, Average AUM ($ Billions): primarily due to gains on Total 157.5 155.9 161.8 5.9 3.8% 4.
Slide 29: IG Wealth Management Key Profitability Drivers
IG WEALTH MANAGEMENT KEY PROFITABILITY DRIVERS Average AUM & Rates of AUM Gross Sales & Rates of Sales ($B, unless otherwise stated) ($B, unless otherwise stated) 202.1 201.7 201.4 201.4 Annualized 199.3 Mgmt. & Admin. Fee Rate (bps) 1.78% 1.70% 88.0 89.4 87.0 90.2 Average AUM 1.67% 1.53% 1.55% Sale
Slide 30: IG Wealth Management Profitability
IG WEALTH MANAGEMENT PROFITABILITY ($MM, unless otherwise indicated) ▪1 Sales-based Change QoQ Change YoY Q2/18 Q1/19 Q2/19 $ % $ % commission expenses Days in the period 91 90 91 1.1% 0.0% declined quarter-over Average mutual fund AUM ($ Billions) 88.0 87.0 90.2 3.2 3.6% 2.2 2.5% quarter due to Man
Slide 31: 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) 83.6 Annualized Net 80.9 80.5 79.2 79.6 Revenue Rate (bps) 1 68.2 Average AUM 0.30% Sales 66.1 67.6 65.6 0.26% 0.26% 0.24% 0.24% 64.6 Co
Slide 32: Mackenzie Profitability
MACKENZIE PROFITABILITY ($MM, unless otherwise indicated) Change QoQ Change YoY Q2/18 Q1/19 Q2/19 $ % $ % Days in the period 91 90 91 1.1% 0.0% ▪1 Sales-based Average AUM ($ Billions): commissions down Total 66.1 65.6 68.2 2.6 3.9% 2.1 3.1% Investment funds 57.9 58.2 60.8 2.6 4.5% 2.9 5.0% from Q1 d
Slide 33: IGM Financial Strategic Investments
IGM FINANCIAL STRATEGIC INVESTMENTS Opening Ending ($MM, unless otherwise indicated) In-period change due to: Balance Balance Proportionate share 1▪ $11MM investment Other of earnings Change in March 31, Investment Loss on sale Dividends compre- market June 30, in Portag3 and 2019 / (sales) hensive
Slide 34: Q&A
Q&A August 1, 2019 IGM FINANCIAL Q2, 2019 RESULTS