Canaccord Genuity Group Inc. · TSX:CF
Canaccord Genuity — Q3 2019 Earnings Presentation
29 slides from Canaccord Genuity's earnings presentation, February 2019
Slide 1: Fiscal Third Quarter 2019 Investor Presentation
Fiscal Third Quarter 2019 INVESTOR PRESENTATION | February 2019
Slide 2: Forward looking statements and non-IFRS measures
/ Forward looking statements and non-IFRS measures This document may contain ‘‘forward-looking statements’’ (as defined under applicable securities laws). These statements relate to future events or future performance and reflect management’s expectations, beliefs, plans, estimates, intentions and s
Slide 3: How We Are Creating Shareholder Value
/ How We Are Creating Shareholder Value Strong culture Expanding wealth management Improving stability Continuing to build a stable and scalable Remaining agile wealth management business and a focused and independent mid- Disciplined expense market management investment bank Creating a dominant mid
Slide 4: An Excellent Investment Proposition
/ (TSX:CF): An Excellent Investment Proposition Committed to driving value for clients, employees and shareholders Shares are attractively valued Opportunity to participate in market for emerging high-growth sectors Allocating more capital to share buybacks; purchased and cancelled 1,028,700 sha
Slide 5: Overview of Canaccord Genuity Group Inc.
/ Overview of Canaccord Genuity Group Inc. A leading independent financial services firm with a global presence WEALTH MANAGEMENT HOW WE CAPITAL MARKETS Comprehensive wealth management DIFFERENTIATE Provides leading investment banking, solutions to help individual investors, Solid partnership cultur
Slide 6: Financial Overview
/ Financial Overview: $331.6 M $60.2 B $45.9 M $0.28 Third quarter Assets under administration Q3/19 pre-tax Q3/19 diluted earnings per revenue and management net income1 common share1 Stronger performances Executing on our strategy to Improved business mix is Driving stronger returns for across ope
Slide 7: Our firmwide cultural shift
/ Our firmwide cultural shift We perform to our full potential in any market environment We are partners We are entrepreneurial We are collegial We work hard Driven by your success. We operate with integrity We are earnings focused Page 7
Slide 8: Expanding Global Wealth Management
/ Expanding Global Wealth Management Positioned for margin expansion and enhanced earnings as we increase scale across wealth management UK & Europe Canada London | Jersey | Guernsey | | Isle of Man Blackpool | Lancaster | Llandudno | Norwich Vancouver | Toronto |Calgary | Montreal Nottingham | Worc
Slide 9: Improve Stability
/ Improve Stability Stabilizing our business for performance in all market cycles GLOBAL WEALTH MANAGEMENT INCREASING PREDICTABILITY GLOBAL CAPITAL MARKETS REDUCING VOLATILITY Recurring revenue from fee-based assets offsets inherent volatility of capital markets business Lean, focused platfo
Slide 10: Remain Agile
/ Remain Agile Independence allows us to adjust our business mix and stay competitive as client demands evolve Capital markets revenues by region Capital markets revenues by activity Q3 2019 Q3 2019 FOCUSED WHERE WE CAN BE MOST RELEVANT TO OUR CLIENTS Canada Commissions AND PROVIDE SUPERIOR REVENUE
Slide 11: Dominant Mid-market Capital Markets Competitor
/ Dominant Mid-market Capital Markets Competitor Leverage competitive strengths across businesses to drive stronger outcomes for clients CANADA US #1 ranked Canadian equity underwriter1 for calendar 2018 Alignment of core teams provides more intensive focus on driving profitability in Leading
Slide 12: Global operating businesses
/ Global operating businesses F2016 F2017 F2018 Q3/18 Q3/19 Wealth Management Canada Revenue $108,208 $132,292 $168,882 $48,428 $52,202 Pre-tax net income (loss)1 $(7,490) $1,964 $20,190 $7,498 $8,861 Pre-tax profit margin1 (6.9)% 1.5% 12.0% 15.5% 16.3% UK & Europe Revenue $138,359 $134,819 $201,383
Slide 13: Complete alignment with Shareholders
/ Complete alignment with Shareholders Significant equity participation by Executives, Employees and Board of Directors Compensation Linked to Successful Delivery of Strategic Objectives • Executive compensation has large performance-based element Defined and well articulated performance objective
Slide 14: An Excellent Investment Proposition
/ (TSX:CF): An Excellent Investment Proposition Committed to driving value for clients, employees and shareholders Shares are attractively valued Driving earnings power by transforming business mix and growing global wealth management Creating a more predictable business with consistency of earnings
Slide 15: Analyst Coverage
/ Analyst Coverage Cormark Securities TD Securities Inc. Jeff Fenwick Graham Ryding Canaccord Genuity Group Inc. is followed by the analysts listed above. Please note that any opinions, estimates or forecasts regarding Canaccord Genuity's performance made by these analysts are theirs alone and do no
Slide 16: Acquisition of Petsky Prunier LLC
Acquisition of Petsky Prunier LLC Enhancing scale and stability in our U.S. Capital Markets operations Page 16
Slide 17: Acquisition of Petsky Prunier
/ Acquisition of Petsky Prunier Summary of transaction terms • Canaccord Genuity Group Inc. to acquire 100% of the business of Petsky Prunier LLC Transaction • FINRA approval not required • Initial consideration of $40.0 million (US$30.0 million) in cash and $20 million (US$15.0 million) in common s
Slide 18: CG and Petsky Prunier: Advancing our strategic objectives
/ CG and Petsky Prunier: Advancing our strategic objectives Enhanced long-term value for clients and shareholders Adds scale with limited fixed costs and increases focus on higher margin revenue sources • Acquisition serves to improve stability by increasing earnings power through cycles • Reduces v
Slide 19: About Petsky Prunier
/ About Petsky Prunier Strong expertise and relationships backed by a disciplined and focused approach #1 Top 10 Top 15 M&A for M&A for M&A for U.S. mid-market Internet & U.S. Mid-market U.S. Mid-market Technology2 Advertising1 TMT2 A leading specialist investment bank to the U.S. mid-market Non Spo
Slide 20: Canaccord Genuity in the U.S.
/ Canaccord Genuity in the U.S. A significant and growing contributor to our global success U.S. Trading, Advisory, ECM and Corporate Access Strategic rationale for acquisition of Petsky Prunier capabilities are integral to Canaccord Genuity’s global • Leverages fixed costs over a larger revenue bas
Slide 21: Significant opportunity for continued growth
/ Significant opportunity for continued growth Increasing our presence in a growing segment of the market Strategic combination creates a top-tier Opportunity to capture greater share of a mid-market M&A franchise growing segment 17% 12% U.S. Mid-market 2 TMT M&A Deal Counts Rank Firm 2016 2017 2018
Slide 22: Financial Performance
Financial Performance Capital Metrics, Quarterly performance, Annual performance CG Capital Markets - Financial snapshot CG Wealth Management – Financial snapshot Page 22
Slide 23: Canaccord Genuity Group Inc.: Financial Snapshot
/ Canaccord Genuity Group Inc.: Financial Snapshot CANACCORD GENUITY GROUP INC.: GLOBAL MEASURES Key Metrics F2016 F2017 F2018 Q3/18 Q3/19 Gross Revenue $787,805 $878,353 $1,022,877 $309,442 $331,600 Total Expenses1 $793,862 $817,096 $912,270 $259,160 $285,702 Incentive Compensation1 $417,876 $454,9
Slide 24: Solid Capital Position
/ Solid Capital Position Well capitalized for continued investment in key priorities • Able to support increasing business activities and invest in opportunities to capture additional market share • Closed $133M convertible debenture offering1 in August, 2018; provides additional capital to invest i
Slide 25: Financial Performance
/ Financial Performance Q3 Fiscal 2019 Revenue Net Income1 Diluted EPS1 (C$ millions) (C$ millions) (C$) $332 $322 Diluted EPS 1 $309 $300 $39 $37 $37 $0.31 $272 $274 $33 $0.28 $29 $0.27 $0.28 $25 $0.23 $214 $0.19 $201 $206 $194 $208 $191 $182 $200 $13 $192 $0.10 $8 $6 $0.05 $2 $4 $2 $0.03 $2 $0.01
Slide 26: Canaccord Genuity Wealth Management: Financial Snapshot
/ Canaccord Genuity Wealth Management: Financial Snapshot Canada¹: Wealth Management Key Metrics FY2018 Q3/18 Q2/19 Q3/19 (C$) Gross Revenue $168.9M $48.4 M $52.2 M $54.2M Income (Loss) 2 $20.2 M $7.5 M $7.7 M $8.9 M (after intersegment allocations and before income taxes) Assets under Administratio
Slide 27: Wealth Management: UK & Europe
/ Wealth Management: UK & Europe Client assets Revenue $64.9 $65.8 $63.9 C$ and GBP£, billions $60.9 $61.8 C$ millions $46.4 $45.2 $43.8 $44.9 $40.8 $41.2 $38.0 $37.5 $35.0 $34.9 $33.2 $34.0 $34.5 $33.1 $24.5 $24.5 $25.8 £24.4 £25.8 £24.8 £26.9 £26.9 $22.8 $22.4 $23.2 $23.4 £23.8 £15.3 £13.6 £14.1 £
Slide 28: Wealth Management: Canada
/ Wealth Management: Canada Client assets Revenue C$ billions $54.2 C$ millions $51.4 $52.2 $48.4 $46.8 $40.3 $19.7 $36.9 $18.9 $18.3 $32.8 $32.1 $29.5 $29.7 $15.6 $14.5 $25.6 $25.5 $13.2 $12.7 $12.8 $12.0 $9.8 $10.3 $9.0 $9.2 Pre-tax net income1 On track to become leading independent Canadian wealt
Slide 29: Canaccord Genuity Global Capital Markets: Financial Snapshot
/ Canaccord Genuity Global Capital Markets: Financial Snapshot CANACCORD GENUITY: GLOBAL MEASURES Key Metrics (C$) FY2018 Q3/181 Q2/191 Q3/191 Gross Revenue1,2 $637.6 M $196.2 M $178.7 M $209.4 M Income (Loss)3 (after intersegment allocations and $62.5 M $34.8 M $24.9 M $31.7 M before income taxes)
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