Record quarterly revenues driven by strong trading and new
issue activities
Excluding significant items,
first quarter earnings per common share of $0.25
(1)
La version française du présent communiqué sera déposée sur
SEDAR. / A French-language version of this communication will be
made available on SEDAR
TORONTO, Aug. 6, 2020 /PRNewswire/ -- Canaccord Genuity
Group Inc. (Canaccord Genuity Group, the Company) (TSX: CF) today
announced its financial results for the first fiscal quarter, ended
June 30, 2020.
"Our performance for the fiscal first quarter reflects our agile
and defensive business mix that allows us to shift resources where
needed to ensure excellent client experiences in any environment,"
said Dan Daviau, President & CEO
of Canaccord Genuity Group Inc. "We achieved record quarterly
revenues, with all businesses contributing to our profitability,
and, in keeping with our commitment to increase shareholder
returns, we increased our quarterly common share dividend by ten
percent."
First fiscal quarter highlights:
(All dollar
amounts are stated in thousands of Canadian dollars unless
otherwise indicated)
- First quarter revenue of $377.7
million, highest quarterly revenue on record
- Quarterly investment banking revenue increased 30%
year-over-year, driven by strong new-issue activities across all
geographies with increased activity levels in the life sciences,
technology and mining sectors
- Australian capital markets business delivered record revenue of
$42.5 million, reflecting stronger
investment banking activity across small-cap focus sectors, with
established leadership in mining
- Excluding significant items1, diluted earnings per
common share for the first fiscal quarter was $0.25 per share ($0.22 per share on an IFRS basis)
- Excluding significant items1, 48% of diluted
earnings per share contributed by global wealth management
operations
- Total client assets in our global wealth management business
increased to $68.9 billion, an
increase of 13.4% from Q4/20
- First quarter common share dividend of $0.055 per common share
|
Three months ended
June 30
|
Year-over-year
change
|
Three months
ended March 31
|
Quarter-over-
quarter change
|
|
Q1/21
|
Q1/20
|
|
Q4/20
|
|
Revenue
|
$377,728
|
$325,508
|
16.0%
|
$319,648
|
18.2%
|
First fiscal
quarter highlights- adjusted1
|
Expenses - excluding
significant items1
|
$335,965
|
$286,978
|
17.1%
|
$294,703
|
14.0%
|
Earnings per common
share – diluted, excluding significant items1
|
$0.25
|
$0.23
|
8.7%
|
$0.17
|
47.1%
|
Net Income -
excluding significant items1
|
$32,897
|
$30,654
|
7.3%
|
$21,451
|
53.4%
|
Net Income
attributable to common shareholders – excluding significant
items1,3
|
$29,065
|
$28,218
|
3.0%
|
$19,142
|
51.8%
|
First fiscal
quarter highlights- IFRS
|
Expenses
|
$340,674
|
$294,156
|
15.8%
|
$289,430
|
17.7%
|
Earnings per common
share – diluted
|
$0.22
|
$0.18
|
22.2%
|
$0.21
|
4.8%
|
Net
Income2
|
$28,964
|
$24,290
|
19.2%
|
$26,246
|
10.4%
|
Net Income
attributable to common shareholders,3
|
$25,132
|
$21,854
|
15.0%
|
$23,937
|
5.0%
|
1. Figures excluding
significant items are non-IFRS measures. See Non-IFRS measures on
page 6 of the MD&A
2. Before non-controlling interests and preferred share
dividends
3. Net income attributable to common shareholders is calculated as
the net income adjusted for non-controlling interests and preferred
share dividends
|
Core business performance highlights:
Canaccord Genuity Wealth Management
The Company's combined global wealth management operations
earned revenue of $137.9 million for
the first fiscal quarter, a year-over-year increase of 6.3%.
Excluding significant items1, the pre-tax net income
contribution from this segment increased by 4.4% year-over-year to
$24.3 million.
- Wealth management operations in the UK & Europe generated $68.0
million in revenue and, after intersegment allocations, and
excluding significant items1, recorded net income of
$16.0 million before taxes in Q1/21
up from $13.0 million for Q4/20
- Canaccord Genuity Wealth Management (North America) generated $57.0 million in revenue and, after intersegment
allocations, recorded net income of $7.6
million before taxes in Q1/21 up from $2.7 million for Q4/20
- Wealth management operations in Australia generated $13.0 million in revenue and, after intersegment
allocations and excluding significant items1, recorded
net income of $0.7 million before
taxes in Q1/21 down slightly from $0.9
million for Q4/20
First quarter revenue in the Company's UK & Europe wealth management business decreased by
5.5% compared to Q1/20, mainly driven by a decline in fee-based
revenue resulting from slightly lower market values for client
assets due to current market conditions and reduced interest income
due to lower rates. Despite the decline in revenue, pre-tax
income excluding significant items 1 increased by 14.2%
compared to the three months ended June 30,
2019 due to a decrease in overhead expenses. On an
adjusted1 basis, the pre-tax profit margin was 23.6%, an
increase of 4.1 percentage points year over year and an increase of
3.2 percentage points from the average for fiscal 2020.
Revenue in the Company's North American wealth management
business decreased slightly by 1.5% in Q1/21 compared to the same
period in the prior year. The pre-tax profit margin was
13.3%, a decline of 2.7 percentage points from Q1/20 although an
increase of 2.5 percentage points from the average for fiscal
2020.
Our Australian wealth management operations earned revenue of
$13.0 million and pre-tax income
excluding significant items1 of $0.7 million in the first quarter of fiscal 2021,
reflecting contributions from the acquisition of Patersons
Securities Limited in Q3/20.
Total client assets in the Company's global wealth management
businesses at the end of the first fiscal quarter amounted to
$68.9 billion.
- Client assets in North America
were $22.2 billion as at June 30, 2020, an increase of 20.6% from
$18.4 billion at the end of the
previous quarter and an increase of 4.8% from $21.2 billion at June 30,
2019
- Client assets in the UK & Europe were $43.6
billion (£25.9 billion) as at June
30, 2020, an increase of 9.2% from $39.9 billion (£22.7 billion) at the end of the
previous quarter and a decrease of 4.4% from $45.6 billion (£27.4 billion) at June 30, 2019
- Client assets in Australia
were $3.1 billion (AUD 3.3 billion)
as at June 30, 2020, an increase of
27.7% from $2.4 billion (AUD 2.8
billion) at the end of the previous quarter. In addition, client
assets totalling $11.8 billion are
also held in other accounts on our Australian wealth management
trading platform
Canaccord Genuity Capital Markets
Excluding significant items1, this segment
contributed pre-tax net income of $34.4
million for the quarter, an improvement of 68.4% compared to
the same period in the previous fiscal year. Globally, Canaccord
Genuity Capital Markets earned first fiscal quarter revenue of
$234.9 million, an increase of 23.6%
compared to the same period a year ago.
- Canaccord Genuity Capital Markets led or co-led 79 investment
banking transactions globally, raising total proceeds of
C$2.3 billion during fiscal
Q1/21.
- Canaccord Genuity Capital Markets, including led or co-led,
participated in 133 investment banking transactions globally,
raising total proceeds of C$15.8
billion during fiscal Q1/21.
Revenue in the Company's US capital markets business increased
by 20.8% for the three months ended June 30,
2020 compared to Q1/20. This included an increase of
$32.3 million in principal trading
revenue over Q1/20 and an increase of $10.4
million in commissions and fees revenue, both increases
attributable to the increased levels of trading volumes during the
quarter. Investment banking revenue in this business increased by
4.6% year-over-year reflecting robust new-issue activity,
particularly in in the healthcare and technology sectors. These
increases were partially offset by a decline in advisory fees of
$24.1 million from Q1/20.
Revenue in our Australia
operations increased from $9.2
million in Q1/20 to $42.5
million in the first quarter of fiscal 2021. The
significant increase in the current quarter was largely driven by
increased investment banking activity in our focus sectors,
including mining and resource companies, and includes unrealized
gains in certain inventory and warrant positions earned in respect
of investment banking activity.
First quarter revenue in our Canadian capital markets operation
increased by 41.1% when compared to the most recent fiscal quarter
but decreased by $9.0 million or
14.1% year-over-year, when compared to the exceptionally strong
performance in Q1/20. Investment banking revenue for the
three-month period was 122.8% higher than in the most recent fiscal
quarter.
Our UK & Europe capital
markets business achieved a revenue increase of 4.8%
year-over-year. Despite a softer environment for advisory
activities in the region, investment banking and principal trading
revenues increased by 205.6% and 52.1% respectively. Pre-tax profit
was $1.0 million for the three months
ended June 30, 2020 compared to a
loss of $0.2 million in the same
period a year ago.
Summary of Corporate Developments:
On June 11, 2020, the Company
announced that Gene McBurney has
been appointed to lead the firm's Investment Banking efforts in
Latin America and the Caribbean and enhance our market leading
mining franchise.
Total compensation expense as a percentage of revenue increased
from 59.9% in Q1/20 and 60.3% in fiscal 2020 to 66.9% in Q1/21. The
increase in the compensation ratio for the current quarter was due
to an increase in the fair value of performance share units (PSUs)
granted in prior periods as a component of the Company's overall
executive compensation program. The fair value of the PSUs is based
upon progress against certain pre-determined three-year performance
metrics, including share price relative to the market, as measured
at the time of vesting. The PSUs are awarded annually and vest
after three years and are paid in cash at the time of vesting in an
amount calculated with reference to the share price at the time of
vesting and, accordingly, the value will vary with share price
performance. Changes to the fair value of the PSUs as
measured in future periods may increase or decrease from the fair
value as recorded at June 30, 2020
and such changes will be recorded through compensation expense.
Results for the first quarter of fiscal 2021 were
impacted by the following significant items:
- Amortization of intangible assets acquired in connection with
business combinations
- Certain incentive-based costs related to the acquisitions and
growth initiatives in the UK & Europe wealth business
In addition, the Company's effective tax rate returned to a
normalized level of 22%, following the recognition of deferred tax
assets in fiscal 2020 that had previously been unrecognized due to
historical losses.
Summary of results for Q1 fiscal 2021 and selected financial
information excluding significant items1
|
Three months ended
June 30
|
Year-over-year
change
|
(C$ thousands, except
per share and % amounts)
|
2020
|
2019
|
Total revenue per
IFRS
|
$377,728
|
$325,508
|
16.0%
|
Total expenses per
IFRS
|
$340,674
|
$294,156
|
15.8%
|
Revenue
|
|
|
|
Total revenue
excluding significant items
|
$377,728
|
$325,508
|
16.0%
|
Expenses
Significant items
recorded in Canaccord Genuity Capital Markets
|
|
|
|
Amortization of
intangible assets
|
$748
|
$2,471
|
(69.7)%
|
Restructuring
costs
|
-
|
-
|
-
|
Acquisition- related
costs
|
-
|
$177
|
(100)%
|
Significant items
recorded in Canaccord Genuity Wealth Management
|
|
Amortization of
intangible assets
|
$3,326
|
$3,043
|
9.3%
|
Acquisition-related
costs
|
-
|
$335
|
(100)%
|
Incentive-based costs
related to acquisition
|
$635
|
$1,152
|
(44.9)%
|
Total significant
items
|
$4,709
|
$7,178
|
(34.4)%
|
Total revenue
excluding significant items
|
$377,728
|
$325,508
|
16.0%
|
Total expenses
excluding significant items
|
$335,965
|
$286,978
|
17.1%
|
Net income before
taxes – adjusted
|
$41,763
|
$38,530
|
8.4%
|
Income taxes –
adjusted
|
$8,866
|
$7,876
|
12.6%
|
Net income -
adjusted
|
$32,897
|
$30,654
|
7.3%
|
Net income
attributable to common shareholders, adjusted
|
$29,065
|
$28,218
|
3.0%
|
1Figures
excluding significant items are non-IFRS measures. See Non-IFRS
measures in page 6 of the MD&A
|
Financial condition at the end of first quarter fiscal 2021
vs. fourth quarter of fiscal 2020
- Cash and cash equivalents balance of $782.3 million, a decrease of $214.8 million from $997.1
million
- Working capital of $543.1
million, a decrease of $4.2
million from $547.3
million
- Total shareholders' equity of $918.0
million, a decrease of $10.6
million from $928.6
million
Common and Preferred Share Dividends:
On August 5, 2020, the Board of
Directors approved a dividend of $0.055 per common share, payable on September 10, 2020, with a record date of
August 28, 2020.
On August 5, 2020, the Board
approved a cash dividend of $0.24281 per Series A Preferred Share
payable on September 30, 2020 to
Series A Preferred shareholders of record as at September 18, 2020.
On August 5, 2020, the Board
approved a cash dividend of $0.31206
per Series C Preferred Share payable on September 30, 2020 to Series C Preferred
shareholders of record as at September
18, 2020.
ACCESS TO QUARTERLY RESULTS INFORMATION
Interested investors, the media and other stakeholders may
review the earnings release and supplementary financial information
at
www.cgf.com/investor-relations/investor-resources/financial-reports/
QUARTERLY CONFERENCE CALL AND WEBCAST PRESENTATION
Interested parties are invited to listen to Canaccord Genuity's
first quarter fiscal 2021 results conference call via live webcast
or a toll-free number. The conference call is scheduled for
Thursday August 6, 2020 at
8:00 a.m. Eastern time, 5:00 a.m. Pacific time, 1:00 p.m. UK time, 8:00
p.m. China Standard Time, and 10:00
p.m. Australia EST. During the call, senior executives will
comment on the results and respond to questions from analysts and
institutional investors.
The conference call may be accessed live and will also be
archived on a listen-only basis at:
www.cgf.com/investor-relations/news-and-events/conference-calls-and-webcasts/
Analysts and institutional investors can call in via telephone
at:
- 647-427-7450 (within Toronto)
- 1-888-231-8191 (toll free outside Toronto)
- 0-800-051-7107 (toll free from the United Kingdom)
- 0-800-917-449 (toll free from France)
- 10-800-714-1191 (toll free from Northern China)
- 10-800-140-1195 (toll free from Southern China)
- 1-800-287-011 (toll free from Australia)
- 800-017-8071 (toll free from United
Arab Emirates)
Please ask to participate in the Canaccord Genuity Group Inc.
Q1/21 results call. If a passcode is requested, please use
5558518.
A replay of the conference call will be made available from
approximately two hours after the live call on August 6, 2020 until October 6, 2020 at 416-849-0833 or 1-855-859-2056
by entering passcode 5558518 followed by the (#) key.
ABOUT CANACCORD GENUITY GROUP INC.:
Through its principal subsidiaries, Canaccord Genuity Group Inc.
(the "Company") is a leading independent, full-service financial
services firm, with operations in two principal segments of the
securities industry: wealth management and capital markets. Since
its establishment in 1950, the Company has been driven by an
unwavering commitment to building lasting client relationships. We
achieve this by generating value for our individual, institutional
and corporate clients through comprehensive investment solutions,
brokerage services and investment banking services. The Company has
Wealth Management offices located in Canada, the UK, Guernsey, Jersey, the Isle of Man and Australia. The Company's international capital
markets division operates in North
America, UK & Europe,
Asia, Australia and the Middle East.
Canaccord Genuity Group Inc. is publicly traded under the symbol
CF on the TSX. Canaccord Genuity Series A Preferred Shares are
listed on the TSX under the symbol CF.PR.A. Canaccord Genuity
Series C Preferred Shares are listed on the TSX under the symbol
CF.PR.C. The Company's 6.25% Convertible Unsecured Senior
Subordinated Debentures are listed on the TSX under the symbol
CF.DA.A.
___________________________
|
1 Figures
excluding significant items are non-IFRS measures. See Non-IFRS
measures on page 6 of the MD&A
|
Investor and media relations inquiries: Christina Marinoff, Vice President, Investor
Relations and Communications, Phone: 416-687-5507, Email:
cmarinoff@cgf.com, www.cgf.com/investor-relations