IGM Financial Inc. · TSX:IGM
IGM Financial — Q1 2019 Earnings Presentation
36 slides from IGM Financial's earnings presentation, May 3, 2019
Slide 1: Q1, 2019 Results
Q1, 2019 Results IGM FINANCIAL M a y 3 , 2 0 1 9 1 1
Slide 2: Conference Call Participants
CONFERENCE CALL PARTICIPANTS Jeffrey R. Carney Barry S. McInerney Luke Gould President & CEO, President & CEO, Executive Vice-President & CFO, IGM Financial and Mackenzie Investments IGM Financial President & CEO, IG Wealth Management 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 Q1, 2019 Highlights
IGM FINANCIAL Q1, 2019 HIGHLIGHTS 1 Record high quarter-end total AUM of $160.5B, driven by significant investment returns earned by our clients • AUM as at April 30, 2019 increased by 1.9% to $163.5B 2 Investment fund net sales of $260 million (net sales rate of 0.7%) • Challenging environment with
Slide 8: Assets Under Management & Financial Markets
ASSETS UNDER MANAGEMENT & FINANCIAL MARKETS IGM Assets Under Management Investment Performance ($B) Q2 at 2018 Q1/19 Apr 30/19 2019 YTD Total Assets Annual Average 1 IGM Client Investment Returns (5.3%) 7.5% 2.1% 9.8% Quarterly Average S&P TSX Equity Markets: 170 Canada (S&P / TSX Composite) (11.6%)
Slide 9: Industry Operating Environment
INDUSTRY OPERATING ENVIRONMENT Industry Net Sales ($B) Q1/18 Q1/19 $ Change Net Sales Rate % Long-term Mutual Funds Q1/19 Annualized Advice channel 3.5 0.1 (3.4) 0.1 Deposit takers 7.8 4.2 (3.6) 2.4 Other 0.7 0.4 (0.3) 2.3 Total 12.0 4.7 (7.3) 1.3 ETF Net Creations 8.2 4.1 (4.1) Long-term Mutual Fun
Slide 10: IGM Financial Q1, 2019 Results
IGM FINANCIAL Q1, 2019 RESULTS Average Total AUM Net Earnings ($B) ($MM) 156.8 155.9 186 168 Q1/18 Q1/19 Q1/18 Q1/19 Investment Fund Net Earnings Per Share Net Sales (₵) ($MM) Mutual Funds ETFs 77 1,359 70 241 1,118 260 142 118 Q1/18 Q1/19 Q1/18 Q1/19 10 10
Slide 11: Operating Segments Q1, 2019 Results
OPERATING SEGMENTS Q1, 2019 RESULTS Adjusted IG Wealth Management Mackenzie Corporate & Other Earnings 183.0 Before 163.3 Interest & Taxes ($MM) 41.6 35.9 45.8 40.8 Q1/18 Q1/19 Q1/18 Q1/19 Q1/18 Q1/19 Investment IG Wealth Management Mackenzie IPC Fund Net Sales ($MM) 784 768 1 Mutual Funds ETFs 2 48
Slide 12: Enhance IGM's Long-Term Growth Potential with 25.2% Equity Interest in Personal Capital
ENHANCE IGM’S LONG-TERM GROWTH POTENTIAL WITH 25.2% EQUITY INTEREST IN PERSONAL CAPITAL 1 VIEW 2 UNDERSTAND 3 PLAN 4 ACT PERSONAL FINANCIAL INVESTMENT ANALYTIC FINANCE PLANNING MANAGEMENT SOFTWARE SOFTWARE SOFTWARE SOFTWARE Financial Dashboard Cashflow Manager Retirement Planner Risk Profiling Accou
Slide 13: Personal Capital Has a Strong Track Record of AUM Growth
PERSONAL CAPITAL HAS A STRONG TRACK RECORD OF AUM GROWTH AUM Tracked Account Values ▪ AUM has grown to (US$ Billions) (US$ Billions) $9.2B, up 18% in 9.2 Q1/19 May 19, 2016 - 703 IGM’s initial ▪ IGM has now invested 7.8 637 investment in a total of $189MM Personal Capital (~US$145MM); current fair v
Slide 14: IG Wealth Management
IG Wealth Management WEALTH 14 MANAGEMENT
Slide 15: IG Wealth Management Q1, 2019 Highlights
IG WEALTH MANAGEMENT Q1, 2019 HIGHLIGHTS 1 Record high quarter-end AUM of $89.4B, up 7.5% from Q4/18 • Driven by strong client investment returns 2 Maintained market share relative to advice channel peers; continue to emphasize HNW and mass affluent • IG Wealth Management net redemptions of $14MM, i
Slide 16: IG Wealth Management Q1, 2019 Operating Results
IG WEALTH MANAGEMENT Q1, 2019 OPERATING RESULTS Mutual Fund Gross Sales Mutual Fund Net Sales Client Assets Under ($MM) ($MM) Administration ($B) ▪ Mutual fund gross sales of 2,859 IG 3rd party $2.35B 2,350 90.2 93.0 784 3.1 3.6 ▪ Mutual fund net redemptions of $14MM 87.1 89.4 (96.5%) (96.2%) ▪ $101
Slide 17: Continued Emphasis on High Net Worth Solutions and Managed Solutions
CONTINUED EMPHASIS ON HIGH NET WORTH SOLUTIONS AND MANAGED SOLUTIONS Gross Sales of HNW Solutions % of Managed Solutions Share HNW Solutions Total Sales of Long-term Funds ($MM) 46% 42% 37% iProfile (Unbundled) Share of Long-term 77% Series U (Unbundled) Gross Sales Series J (Bundled) 1,210 Q1/19 Q1
Slide 18: IG Wealth Management's Client Rate of Return Experience and Historical Redemption Rate
IG WEALTH MANAGEMENT’S CLIENT RATE OF RETURN EXPERIENCE AND HISTORICAL REDEMPTION RATE IG Wealth Management Client Account Rate of Return Experience (as at March 31, 2019) 15% ▪ Median client account 10% 90% of rate of return was 7.5% 7.5% clients had 5% 4.4% returns within in Q1/19 3.0% 3.4% this r
Slide 19: Mackenzie Investments
MACKENZIE INVESTMENTS 19 19
Slide 20: Mackenzie Investments Q1, 2019 Highlights
MACKENZIE INVESTMENTS Q1, 2019 HIGHLIGHTS 1 Record high investment fund AUM of $60.1B; up 8.3% from Q4/18 • Driven by investment returns and investment fund net sales 2 Continued market share gains relative to advice channel peers with investment fund net sales of $376MM1 3 Mackenzie’s retail net sa
Slide 21: Mackenzie Q1, 2019 Operating Results
MACKENZIE Q1, 2019 OPERATING RESULTS Mutual Fund Gross Sales Net Sales ($MM) ($MM) ▪ Q1 total mutual fund Q1/18 Q1/19 2,630 Mutual Funds 286 148 gross sales of $2.5B 2,505 ETFs 715 228 Mackenzie mutual fund ▪ Investment fund net (233) 0 investment in ETFs sales of $376MM1 Investment Funds1 768 376 I
Slide 22: Retail Mutual Fund Gross Sales Capture Rates Improved Across Major Asset Classes
RETAIL MUTUAL FUND GROSS SALES CAPTURE RATES IMPROVED ACROSS MAJOR ASSET CLASSES Retail Gross Sales Mutual Fund Gross Sales Net Sales Mackenzie’s share of Q1/19 $MM Capture Rate1 % $ ▪ Retail Investment Funds Q1/18 Q1/19 Q1/18 Q1/19 Change Q1/18 Q1/19 advice channel long-term Change Change Mutual Fu
Slide 23: Mackenzie's Continued ETF Growth Is Broad-Based Across Channels & Investment Strategies
MACKENZIE’S CONTINUED ETF GROWTH IS BROAD- BASED ACROSS CHANNELS & INVESTMENT STRATEGIES ETF AUM by Quarter ETF Net Creations by Quarter ($MM) ($MM) 3,330 2,963 2,949 IG Wealth 715 628 2,600 Management & 570 IPC Mutual Funds 2,004 898 Mackenzie 377 Mutual Funds Retail & Other 228 1,804 137 86 142 Q1
Slide 24: Product Innovation a Key Catalyst for Net Sales & AUM Growth
PRODUCT INNOVATION A KEY CATALYST FOR NET SALES & AUM GROWTH 5 Year Rolling Net Six Key Global January 2019 - Launched Mackenzie Sales from New Industry Trends Global Growth Balanced Fund Investment Funds1 ▪ Actively managed by Mackenzie Bluewater Multi-asset Team and Mackenzie Fixed Income Team, To
Slide 25: Investment Performance Highlights
INVESTMENT PERFORMANCE HIGHLIGHTS 45% of AUM is 4/5 star; 14/20 largest funds are rated 4/5 star and 8/20 are rated 5 star (series F) Mackenzie Mutual Funds in Morningstar Star Ratings1 1st or 2nd Quartile1 (Proportion of Assets) (Proportion of Assets) 31-Dec-18 31-Mar-19 All Morningstar Rated 31-De
Slide 26: 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 Systematic Global Equity Multi-Asset 3rd Party Cundill American Ivy Growth Bluewater Resources Quantitative Fixed Income Strateg
Slide 27: Financial Results
FINANCIAL RESULTS 27 27
Slide 28: IGM Financial Q1, 2019 Financial Highlights
IGM FINANCIAL Q1, 2019 FINANCIAL HIGHLIGHTS 1 EPS of 70 cents • Non-commission expenses affected by timing of spend relating to technology initiatives and continuation of IG Wealth Management brand re-launch • Maintaining full-year 2019 non-commission expense growth guidance of 4% • First quarter of
Slide 29: Assets Under Management
ASSETS UNDER MANAGEMENT IGM Assets Under Management Change in IGM Assets Under Management ($B) ($B) Total Assets Quarterly Average Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 LTM Annual Average Investment Fund Assets Opening 156.5 155.8 159.1 159.7 149.1 155.8 Net Sales - Investment Funds 1.4 0.2 0.1 (0.2) 0.3 0.
Slide 30: IGM EBIT & Margins
IGM EBIT & MARGINS IGM Adjusted EBIT1 IGM Adjusted EBIT Margin1,2 ($MM) (% of Average AUM) 809.6 816.0 832.0 791.5 789.1 1.96% 1.93% 1.92% 1.93% 1.92% Commission Expenses 0.74% 0.69% 0.67% 0.71% 0.71% 270.1 270.1 286.1 272.4 274.7 56.2 55.8 Net Investment 52.1 47.8 52.9 506.1 Income & Share of 1.25%
Slide 31: IGM Financial Consolidated Profitability
IGM FINANCIAL CONSOLIDATED PROFITABILITY ($MM, unless otherwise indicated) Change QoQ Change YoY Q1/18 Q4/18 Q1/19 Net investment income $ % $ % 1 ▪ Days in the period 90 92 90 (2.2%) 0.0% Average AUM ($ Billions): up $7.0MM sequentially, Total 156.8 153.0 155.9 2.9 1.9% (0.9) (0.6%) primarily due t
Slide 32: IG Wealth Management Key Profitability Drivers
IG WEALTH MANAGEMENT KEY PROFITABILITY DRIVERS Average AUM & Rates of AUM Gross Sales & Rates of Sales ($B, unless otherwise stated) ($B, unless otherwise stated) 1 ▪ As previously Annualized 1 disclosed, expect a 3 202.7 202.1 1.8% 1.8% 201.7 201.4 201.4 Mgmt. & Admin. 1.7% 1.7% bps decrease in Q2
Slide 33: IG Wealth Management Profitability
IG WEALTH MANAGEMENT PROFITABILITY ($MM, unless otherwise indicated) Change QoQ Change YoY Q1/18 Q4/18 Q1/19 $ % $ % 1 ▪ $4.0MM sequential Days in the period 90 92 90 (2.2%) 0.0% decline in distribution Average mutual fund AUM ($ Billions) 87.8 85.1 87.0 1.9 2.2% (0.8) (1.0%) fees offset by $3.0MM M
Slide 34: Mackenzie Key Profitability Drivers
MACKENZIE KEY PROFITABILITY DRIVERS Average AUM & Rates of AUM Mutual Fund Gross Sales & ($B, unless otherwise stated) Rates of Sales ($B, unless otherwise stated) 85.5 83.6 Annualized Net 80.9 80.5 79.2 Revenue Rate (bps) 1 0.37% 0.26% 0.26% Sales 67.6 64.6 65.6 Average AUM 0.24% 0.30% 65.2 66.1 Co
Slide 35: Mackenzie Profitability
MACKENZIE PROFITABILITY ($MM, unless otherwise indicated) Change QoQ Change YoY 1 ▪ Sales-based commissions Q1/18 Q4/18 Q1/19 $ % $ % up from Q4 due to sales Days in the period 90 92 90 (2.2%) 0.0% Average AUM ($ Billions): seasonality Total 65.2 64.6 65.6 1.0 1.5% 0.4 0.6% Investment funds 57.1 57.
Slide 36: Q&A
Q&A IGM FINANCIAL M a y 3 , 2 0 1 9 36 36