CI Financial Reports Financial Results for the Second Quarter of 2023

CI Financial Corp. (“CI”) (TSX: CIX) today released financial results for the quarter ended June 30, 2023.

“The second quarter was marked by several significant accomplishments across our business lines,” said Kurt MacAlpine, CI Chief Executive Officer.

“Our U.S. wealth management segment reported exceptional results, with year-over-year adjusted EBITDA¹ growth of 42% for the first half of the year. Organic growth continued to be strong, with robust net flows. These results reflect the outstanding quality of the business and the progress we have made in integrating our acquired firms and leveraging our size and scale to enhance our capabilities and services.

“We continue to build on that success, acquiring three RIA firms in the past three months, adding approximately $14.2 billion in assets,” Mr. MacAlpine said. “Earlier this month, we rebranded CI Private Wealth as Corient, giving us a unified brand that better reflects our integrated, national platform and our unique vision for growth.

“The U.S. investment and the sale of our minority stake in Congress Wealth Management delivered a total of $1.5 billion in cash to CI. We repaid $1 billion in debt in the quarter, meeting our goal of materially deleveraging the company, and returned another $229 million to shareholders by buying back 17 million shares, at an average cost per share of $13.51.

“Our Canadian wealth management business reached a milestone in July with the successful conversion of Aligned Capital client assets to the CI Investment Services’ custody platform,” Mr. MacAlpine said. “This accomplishment, the culmination of 18 months of work, boosted CI Investment Services’ custody assets to $25 billion and represents an important step in the development of an industry-leading, integrated Canadian wealth management platform. Additionally, our Canadian advisory businesses continue to attract strong flows, a testament to the expertise and value provided by our advisor teams.”

In the Asset Management segment, CI’s Canadian retail business had slightly positive net sales in the second quarter, representing the fourth consecutive quarter of net sales and a contrast to net redemptions of $4.7 billion for the overall Canadian industry, as reported by the Investment Funds Institute of Canada. For the first half of the year, Canadian retail had net sales of $0.8 billion, while the Asset Management segment had net sales of $0.3 million.

Financial highlights

Second quarter net income was $51.0 million compared to $30.0 million in the first quarter of 2023. Excluding non-operating items, adjusted net income¹ was $136.0 million in the second quarter, little changed from the first quarter.

Second quarter total net revenues increased 21.7% to $776.1 million in the quarter from $637.8 million in the first quarter of 2023. Excluding non-operating items, adjusted total net revenues¹ grew 2.3% to $654.8 million, driven by growth in the U.S. Wealth Management segment due to acquisitions during the quarter, as well as from the Canadian Wealth Management segment due to higher average assets. Asset Management segment revenues were essentially unchanged as higher average AUM was offset by fee rate decline due to asset mix shift.

First quarter total expenses increased 13.8% to $663.6 million in the quarter from $583.0 million in the first quarter of 2023. Excluding non-operating items, adjusted total expenses¹ were up 1.9% to $439.9 million, reflecting higher SG&A due to U.S. segment acquisitions during the quarter as well as higher stock-based compensation.

Capital allocation

In the second quarter of 2023, CI repurchased 17.0 million shares at a cost of $228.8 million, for an average cost of $13.51 per share, and paid $32.9 million in dividends at a rate of $0.18 per share.

CI completed tender offers for three series of debentures, repurchasing $234,775,000 of its outstanding 3.215% Debentures due 2024, $370,762,000 of its outstanding 3.759% Debentures due 2025 and $97,531,000 of its outstanding 3.904% Debentures due 2027. CI also completely paid down its credit facility.

Dividend increase

The Board of Directors declared a $0.02 increase to its quarterly dividend to $0.20 per share, payable on January 15, 2024 to shareholders of record on December 29, 2023.

Second quarter business highlights

• CI completed the sale of a 20% minority investment in its U.S. wealth management business to a diversified group of leading institutional investors, including a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA), Bain Capital, Flexpoint Ford, Ares Management funds, the State of Wisconsin, and others for proceeds of approximately $1.34 billion (US$1.0 billion).
• CI completed the acquisitions of two U.S. registered investment advisor (“RIA”) firms with combined assets of approximately $11.9 billion. The firms were Avalon Advisors, LLC of Houston, and La Ferla Group, LLC, which is based in Garden City, New York, and has offices in Bethesda, Maryland, and Macon, Georgia.
• CI sold its minority stake in Boston-based Congress Wealth Management, LLC (“Congress”) to Audax Private Equity. CI first invested in Congress in the third quarter of 2020.
• CI’s U.S. subsidiary, now known as Corient, launched a South Dakota trust company, allowing it to offer a variety of corporate trustee services to clients across the country.
• CI Global Asset Management enhanced its product lineup with the launch of the CI Asset Allocation ETFs, a suite of six low-cost all-in-one portfolio solutions. The ETFs leverage CI GAM’s professional management and deep expertise in asset allocation to provide portfolios meeting a range of investor profiles. CI GAM also continued to expand its alternatives offerings with the introduction of mutual fund series for CI Auspice Broad Commodity Fund, a liquid alternative fund previously available only as an ETF.

Following quarter-end:

• CI Private Wealth (U.S.) rebranded as Corient, which represents “client oriented” and expresses its commitment to helping clients achieve their financial goals. The new brand better reflects Corient’s capabilities as national integrated wealth management firm and clarifies for clients that they benefit from the expertise of the firm’s entire network. Corient now serves as the brand for all of the company’s offices, as it has discontinued co-branding with its legacy firm names. Corient is the trade name for Corient Private Wealth LLC.
• CI acquired Intercontinental Wealth Advisors, LLC, in July 2023. The firm, with approximately $2.3 billion in client assets, is based in San Antonio, Texas and has an office in Ft. Lauderdale, Florida. The firm provides comprehensive wealth management services to high-net-worth and ultra-high-net-worth clients and has developed expertise in serving those with international financial interests.
• CI reached an agreement to acquire Coriel Capital Inc. (“Coriel”), a Montreal-based wealth management firm serving ultra-high-net-worth Canadians. The firm, founded and led by women, operates as a “Chief Investment Officer” for wealthy families, and manages approximately $1.3 billion in client assets.
• The assets held by clients of Aligned Capital Partners were converted to the CI Investment Services (“CIIS”) custody and clearing platform. As a result, CIIS now administers over $25 billion in client assets.
• CI GAM implemented a series of changes to simplify and strengthen the competitiveness of its lineup of money market funds, including launching two money market ETFs.

Analysts’ conference call

CI will hold a conference call with analysts today at 9:00 a.m. EDT, led by Chief Executive Officer Kurt MacAlpine and Chief Financial Officer Amit Muni. A live webcast of the call and slide presentation can be accessed here, or through the Investor Relations section of CI’s website.

Alternatively, investors may listen to the discussion through the following numbers (access code: 861639):

• Canada toll-free: 1-833-950-0062
• United States toll-free: 1-833-470-1428
• All other locations: 1-929-526-1599.

A recording of the webcast will be archived on CI’s Investor Relations site.

About CI Financial

CI Financial Corp. is a diversified global asset and wealth management company operating primarily in Canada, the United States and Australia. Founded in 1965, CI has developed world-class portfolio management talent, extensive capabilities in all aspects of wealth planning, and a comprehensive product suite.

CI operates in three segments:

• Asset Management, which includes CI Global Asset Management, which operates in Canada, and GSFM Pty Ltd., which operates in Australia.
• Canadian Wealth Management, which includes the operations of CI Assante Wealth Management, Aligned Capital Partners, CI Private Wealth (Canada), Northwood Family Office, CI Direct Investing and CI Investment Services.
• U.S. Wealth Management, which includes Corient Private Wealth, an integrated wealth management firm providing comprehensive solutions to ultra-high-net-worth and high-net-worth clients across the United States.

CI is headquartered in Toronto and listed on the Toronto Stock Exchange (TSX: CIX). To learn more, visit CI’s website or LinkedIn page.

Commissions, trailing commissions, management fees and expenses all may be associated with an investment in mutual funds and exchange-traded funds (ETFs). Please read the prospectus before investing. Important information about mutual funds and ETFs is contained in their respective prospectus. Mutual funds and ETFs are not guaranteed; their values change frequently, and past performance may not be repeated. You will usually pay brokerage fees to your dealer if you purchase or sell units of an ETF on recognized Canadian exchanges. If the units are purchased or sold on these Canadian exchanges, investors may pay more than the current net asset value when buying units of the ETF and may receive less than the current net asset value when selling them.

This press release contains forward-looking statements concerning anticipated future events, results, circumstances, performance or expectations with respect to CI Financial Corp. (“CI”) and its products and services, including its business operations, strategy and financial performance and condition. Forward-looking statements are typically identified by words such as “believe”, “expect”, “foresee”, “forecast”, “anticipate”, “intend”, “estimate”, “goal”, “plan” and “project” and similar references to future periods, or conditional verbs such as “will”, “may”, “should”, “could” or “would”. These statements are not historical facts but instead represent management beliefs regarding future events, many of which by their nature are inherently uncertain and beyond management’s control. Although management believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, such statements involve risks and uncertainties. The material factors and assumptions applied in reaching the conclusions contained in the forward-looking statements include that the acquisition of Coriel will be completed and that asset levels will remain stable. The foregoing list is not exhaustive and the reader is cautioned to consider these and other factors carefully and not to place undue reliance on forward-looking statements. Other than as specifically required by applicable law, CI undertakes no obligation to update or alter any forward-looking statement after the date on which it is made, whether to reflect new information, future events or otherwise.

This communication is provided as a general source of information and should not be considered personal, legal, accounting, tax or investment advice, or construed as an endorsement or recommendation of any entity or security discussed. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies.

CI Global Asset Management is a registered business name of CI Investments Inc.