Nov. 9, 2010 (Canada NewsWire Group) --
TSX Symbol: CIX
TORONTO, Nov. 9 /CNW/ - CI Financial Corp. ("CI") today released unaudited financial results for the quarter ended September 30, 2010.
September 30, 2010
($ millions except
per share amounts)
September 30, 2009
($ millions except
per share amounts)
|Retail Assets Under Management||65,631||60,612||8|
|Average Retail Assets Under Management||63,527||57,963||10|
|Earnings Per Share||0.26||0.23||13|
|Adjusted Earnings Per Share2||0.27||0.23||17|
|EBITDA1 Per Share||0.56||0.48||17|
|Pre-Tax Operating Earnings1||150.6||133.7||13|
|Pre-Tax Operating Earnings Per Share1||0.52||0.46||13|
|Net Debt Outstanding||653.9||749.0||(13)|
1 Pre-Tax Operating Earnings and EBITDA (earnings before interest, taxes, depreciation and amortization) are not standardized earnings measures prescribed by GAAP; however, management believes that most of its shareholders, creditors, other stakeholders and investment analysts prefer to include the use of these performance measures in analyzing CI's results. CI defines pre-tax operating earnings as income before income taxes less redemption fee revenue, performance fees and investment gains, plus amortization of deferred sales commissions (DSC) and fund contracts, and equity-based compensation expense. CI's method of calculating these measures may not be comparable to similar measures presented by other companies. EBITDA is a measure of operating performance, a facilitator for valuation and a proxy for cash flow.
2 Adjusted for a one time tax adjustment of $3.0 million (or $0.01 per share) in Q3 2010 related to stock option tax deductibility.
Fee-earning assets at September 30, 2010 were $91.5 billion, up 6% from $86.4 billion at September 30, 2009. This increase was attributable to positive fund performance of $3.5 billion and positive net sales of $1.6 billion. Fee-earning assets were comprised of $65.2 billion in investment funds at CI Investments Inc., $389 million in structured products, $3.6 billion in institutional managed assets (which includes assets managed by Altrinsic Global Advisors, LLC), $21.6 billion in dealer assets under administration at Assante Wealth Management (Canada) Ltd., and $592 million in other fee-earning assets.
For the quarter ended September 30, 2010, average retail assets under management were $63.5 billion, an increase of 10% from the third quarter of 2009. Gross sales and net sales of funds for the quarter ended September 30, 2010 were $2.2 billion and $210 million, respectively. For the year-to-date to October 31, 2010, CI's gross sales totalled $8.3 billion and net sales totalled $1.3 billion. At November 8, 2010, CI's retail assets under management totalled $68.7 billion, a gain of $5.2 billion or 8% over the average level of assets in the third quarter of 2010.
On October 21, 2010, CI announced an agreement in which CI will acquire The Hartford Financial Services Group Inc.'s Canadian mutual funds business. The addition of Hartford Mutual Funds would increase CI's retail assets under management to approximately C$70.5 billion.
For the quarter ended September 30, 2010, CI reported EBITDA per share from continuing operations of $0.56, a 17% increase from the third quarter of 2009 and a 7% decrease from the prior quarter. CI recorded an equity-based compensation expense of $3.3 million in the quarter compared to a recovery of $7.9 million in the prior quarter and an expense of $11.6 million in the third quarter of 2009. Adjusted for equity-based compensation, EBITDA per share was $0.57, a 10% increase from the same quarter one year ago and flat from the second quarter of 2010. Pre-tax operating earnings were $0.52 per share in the quarter ended September 30, 2010, an increase of 13% from the same quarter one year ago and flat from the second quarter of 2010.
CI reported earnings per share from continuing operations of $0.26 for the quarter. This compares to $0.23 in the third quarter of 2009 and $0.31 in the second quarter of 2010. During the quarter, CI modified its employee incentive share option plan as a result of changes to the tax treatment of options introduced by the federal government. This led to a one time increase in income tax expense of $3.0 million. Adjusting for this tax increase, net earnings per share would have been $0.27 for the quarter. Adjusting for both the tax increase and equity-based compensation would result in earnings per share of $0.28.
Selling, general and administrative ("SG&A") expenses from continuing operations (adjusted for equity-based compensation) for the quarter were 0.40% of average retail assets under management. This compares to 0.42% in the third quarter of 2009 and 0.40% in the prior quarter. CI's overall operating margin was 0.98% compared to 0.99% in the third quarter of 2009 and 0.99% in the second quarter of 2010.
EBITDA as a percentage of revenues increased to 48% in the third quarter of 2010 from 44% in the third quarter of 2009. Pre-tax income as a percentage of revenues climbed to 33% in the quarter, compared to 28% in the same quarter one year ago.
During the quarter, CI generated $90.5 million in free cash, of which $56.2 million was paid out in dividends. CI also repurchased common shares under its normal course issuer bid at a cost of $10.5 million. At September 30, 2010, CI had net debt outstanding of $653.9 million, a decrease of $95.1 million from the same quarter a year ago.
"Even though average retail assets under management in the third quarter of 2010 were the same as the second quarter, retail assets at the end of the quarter were 7% higher than at the start," said Stephen A. MacPhail, CI President and Chief Executive Officer. "Today, retail assets are up a further 5% since the end of the third quarter. The significant increase in assets under management, combined with CI's focus on cost management, has boosted CI's profitability and positioned us to increase the dividend for the second time this year."
The Board of Directors increased the monthly cash dividend from $0.065 to $0.07 per common share payable on each of December 15, 2010, January 14, 2011, February 15, 2011 and March 15, 2011 to shareholders of record on November 30, 2010, December 31, 2010, January 31, 2011 and, February 28, 2011 respectively. The monthly dividend rate of $0.07 per share represents a yield of 3.9% on CI's closing share price of $21.35 per common share on October 31, 2010.
As of October 31, 2010, CI had 287,583,423 shares outstanding.
For detailed financial statements for the quarter ended September 30, 2010, including Management's Discussion and Analysis, please refer to CI's website at www.ci.com/cix under Reports, or contact firstname.lastname@example.org.
Analysts' Conference Call
CI will hold a conference call with analysts today at 4:00 p.m. Eastern time. Speaking on the call will be Stephen MacPhail, CI President and Chief Executive Officer, Derek Green, President of CI Investments Inc., and Douglas Jamieson, Senior Vice-President and Chief Financial Officer of CI. The conference call and a slide presentation will be accessible through a webcast at www.ci.com/q3. Alternatively, investors may listen to the discussion by dialling 1-800-446-1671 (passcode: 28353997).
The call will be available for playback at 6:30 p.m. today until November 24, 2010 at 1-888-843-7419 (passcode: 28353997). The webcast will be archived at www.ci.com/q3.
CI Financial Corp. (TSX: CIX) is an independent, Canadian-owned wealth management company. CI offers a broad range of investment products and services, including an industry-leading selection of investment funds, and is on the Web at www.ci.com/cix.
This press release contains forward-looking statements with respect to CI and its products and services, including its business operations and strategy and financial performance and condition. Although management believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, including interest rates, business competition, changes in government regulations or in tax laws, and other factors discussed in materials filed with applicable securities regulatory authorities from time to time.
Stephen A. MacPhail
President and Chief Executive Officer
CI Financial Corp.