IGM Financial Inc. · TSX:IGM
IGM Financial — Q3 2018 Earnings Presentation
34 slides from IGM Financial's earnings presentation, Nov 2, 2018
Slide 1: Q3, 2018 Results
Q3, 2018 Results IGM FINANCIAL N o v e m b e r 2 , 2 0 1 8 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 FINANCTAL 15M,
Slide 7: IGM Financial Q3, 2018 Highlights
IGM FINANCIAL Q3, 2018 HIGHLIGHTS 1 Record high total ending AUM of $159.7B; up 0.4% from Q2 • AUM as at October 31, 2018 is $153.1B, down 4.1% from September 30 2 IGM investment fund net sales of $137MM • Challenging industry environment, with industry long-term mutual fund redemptions of $2.7B; do
Slide 8: Industry Operating Environment
INDUSTRY OPERATING ENVIRONMENT YTD Q4 at Q3/18 Sep/18 Oct 31/18 IGM Assets Under Management IGM Client Investment Returns 0.5% 1.3% (4.2%) ($B) Equity Markets: Total Assets Annual Average Canada (S&P / TSX Composite) (1.3%) (0.8%) (6.5%) U.S. (S&P 500) 7.2% 9.0% (6.9%) Quarterly Average S&P TSX Euro
Slide 9: IGM Financial Q3, 2018 Results
IGM FINANCIAL Q3, 2018 RESULTS Net Earnings Net Earnings Per Share Average Total AUM ($MM) (₵) ($B) 9% 14% 14% 147.8 160.4 198 82 173 72 Q3/17 Q3/18 Q3/17 Q3/18 Q3/17 Q3/18 Adjusted Net Adjusted Net Investment Fund 1 Earnings 1 Earnings Per Share Net Sales ($MM) (₵) ($MM) 28% 28% 92 829 223 173 72 2
Slide 10: Operating Segments Q3, 2018 Results
OPERATING SEGMENTS Q3, 2018 RESULTS 18% 213.5 Adjusted 180.9 Earnings Before Interest & 16% 55% Taxes ($MM) 52.7 49.8 45.4 32.2 Q3/17 Q3/18 Q3/17 Q3/18 Q3/17 Q3/18 IG Wealth Management Mackenzie Corporate & Other Investment Fund Net 539 523 1,2 Sales ($MM) 287 265 1 258 3 (64) (6) Q3/17 Q3/18 Q3/17
Slide 11: IG Wealth Management
IG Wealth Management WEALTH 11 MANAGEMENT
Slide 12: IG Wealth Management Q3, 2018 Highlights
IG WEALTH MANAGEMENT Q3, 2018 HIGHLIGHTS 1 Record high AUM of $89.0B • Driven by positive investment returns 2 Continued market share gains and emphasis on HNW and mass affluent • IG Wealth Management net redemptions of $64MM in context of industry long-term mutual fund net redemptions of $2.7B duri
Slide 13: IG Wealth Management Q3, 2018 Operating Results
IG WEALTH MANAGEMENT Q3, 2018 OPERATING RESULTS 1 Mutual Fund Gross Sales Long Term Mutual Fund Net Sales Rate ($MM) (LTM, % of Average AUM) ▪ Gross sales of $2.0B 2,090 2,014 Total Industry Advice Channel ▪ Net redemptions of IG Wealth Management $64MM 6% ▪ Capturing market share: net sales rate of
Slide 14: Continued Emphasis on High Net Worth Solutions and Managed Solutions
CONTINUED EMPHASIS ON HIGH NET WORTH SOLUTIONS AND MANAGED SOLUTIONS Gross Sales of HNW % of Total Sales Managed Solutions Share HNW Solutions 48% of Long Term Funds ($MM) 43% iProfile (Unbundled) 78% Series U (Unbundled) 27% Share of Long Term Series J (Bundled) Gross Sales Q3/18 Q3/16 Q3/17 47% 96
Slide 15: 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 September 30, 2018) 10% ▪ IG Wealth 90% of Management’s clients 5% 4.8% 5.1% clients had 3.1% returns have seen an extended within this 0% range
Slide 16: IG Wealth Management Brand Launch
IG WEALTH MANAGEMENT BRAND LAUNCH 16 16
Slide 17: Mackenzie Investments
MACKENZIE INVESTMENTS 17 17
Slide 18: Mackenzie Q3, 2018 Highlights
MACKENZIE Q3, 2018 HIGHLIGHTS 1 Record high investment fund AUM of $59.5B; up 1.4% from Q2/18 • Driven by investment returns and net investment fund sales 2 Continued market share gains with investment fund net sales of $523MM1 • Strong ETF net creations; Mackenzie fourth best in the industry 3 Mack
Slide 19: Mackenzie Q3, 2018 Operating Results
MACKENZIE Q3, 2018 OPERATING RESULTS Mutual Fund Gross Sales Long-term Fund Net Sales Rate ($MM) (LTM, % of Average AUM) ▪ Q3 total mutual fund gross sales up 21.3%1 1 Total Industry mutual funds 2,224 Advice Channel mutual funds 1,834 Mackenzie mutual funds ▪ Strong total net sales of Mackenzie inv
Slide 20: Broad Demand for Mackenzie's Mutual Fund Offering Across Asset Classes
BROAD DEMAND FOR MACKENZIE’S MUTUAL FUND OFFERING ACROSS ASSET CLASSES Gross Sales 1 Net Sales 1 $MM Q3/17 Q3/18 % Change Q3/17 Q3/18 $ Change ▪ Mutual fund net sales of Income-oriented 180 329 82.9% (2) 88 90 positive $208MM1 Balanced Symmetry 335 274 (18.2%) 116 0 (116) ▪ In the context of lower O
Slide 21: Mackenzie's Rapid ETF Growth Is Broad-Based
MACKENZIE’S RAPID ETF GROWTH IS BROAD-BASED ACROSS CHANNELS & INVESTMENT STRATEGIES ETF AUM by Quarter ETF Net Creations by Quarter ($MM) ($MM) 2,963 2,600 715 587 Investors Group & 570 2,004 IPC Mutual Funds 813 Mackenzie 1,296 Mutual Funds 367 377 286 51 906 Retail & Other 62 1,563 264 Q3/17 Q4/17
Slide 22: Investment Performance Highlights
INVESTMENT PERFORMANCE HIGHLIGHTS Of Mackenzie’s 20 largest funds, 17 are rated 4/5 star and 6 are rated 5 stars (series F) Mackenzie Mutual Funds in Morningstar Star Ratings1 1st or 2nd Quartile1 (Proportion of Assets) (Proportion of Assets) 30-Jun-18 30-Sep-18 All Morningstar Rated 30-Jun-18 30-Se
Slide 23: Investment Boutique Mutual Fund Performance & Net Sales
INVESTMENT BOUTIQUE MUTUAL FUND PERFORMANCE & NET SALES Mutual Fund AUM by Morningstar Ratings ($MM)1 12,500 Not Rated 1 or 2 Stars 3 Stars 4 or 5 Stars 10,000 7,500 5,000 2,500 0 % 4 or 5: 0% 6% 2% 88% 88% 29% 0% 0% 61% 34% 4% 31% Fixed Managed Value-Oriented Quality Growth-Oriented Core & Dividend
Slide 24: 2018 Environics Advisor Perception Study
2018 ENVIRONICS ADVISOR PERCEPTION STUDY Mutual Fund Advisor Perception 2015 2017 2018 Study – Mackenzie Results Overall Perception Rank 5th 3rd 3rd Brand Equity Rank 2nd 2nd 2nd 2 2 Overall Quality of Wholesaler Rank 7th 2nd 1st MFDA Penetration1 50% | 3rd 52% | 2nd 57% | 2nd 2 IIROC Penetration1 3
Slide 25: Financial Results
FINANCIAL RESULTS 25 25
Slide 26: IGM Financial Q3, 2018 Financial Highlights
IGM FINANCIAL Q3, 2018 FINANCIAL HIGHLIGHTS 1 Reported EPS of 82 cents per share, includes: • Restructuring and other charges of $16.7 million after-tax ($22.7 million pre-tax) resulting from the re-engineering of North American equity offerings and associated personnel changes, as well as other ini
Slide 27: Assets Under Management
ASSETS UNDER MANAGEMENT IGM Assets Under Management Change in IGM Assets Under Management ($B) ($B) Total Assets Quarterly Average Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 LTM Annual Average Investment Fund Assets Opening 148.6 150.0 156.5 155.8 159.1 150.0 Net Sales - Investment Funds 0.8 0.7 1.4 0.2 0.1 2.4
Slide 28: IGM EBIT & Margins
IGM EBIT & MARGINS IGM Adjusted EBIT1 IGM Adjusted EBIT Margin1,2 ($MM) (% of Average AUM) 806.7 809.6 816.0 832.0 773.3 1.99% 1.98% 1.96% 1.93% 1.92% Commission Expenses 0.74% 0.74% 0.74% 0.69% 0.67% 270.1 270.1 288.1 286.1 276.0 56.2 55.8 Net Investment 32.5 36.7 52.1 506.1 Income & Share of 1.25%
Slide 29: IGM Financial Consolidated Profitability
IGM FINANCIAL CONSOLIDATED PROFITABILITY1 ($MM, unless otherwise indicated) Change QoQ Change YoY Q3/17 Q2/18 Q3/18 $ % $ % Days in the period 92 91 92 1.1% 0.0% 1 ▪ Total fee revenue Average AUM ($ Billions): increased 4.8% year- Total Investment funds 147.8 142.4 157.5 150.9 160.4 154.0 2.9 3.1 1.
Slide 30: 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) Annualized 204.7 203.7 202.7 202.1 201.7 Mgmt. & Adm. Fee Rate (bps) 2.5% 2.4% 89.4 Average 87.2 87.8 88.0 Sales AUM 1.8% 1.8% 1.7% Commi
Slide 31: IG Wealth Management Profitability
IG WEALTH MANAGEMENT PROFITABILITY ($MM, unless otherwise indicated) Change QoQ Change YoY 1 ▪ Management and Q3/17 Q2/18 Q3/18 $ % $ % administration fees increased Days in the period 92 91 92 1.1% 0.0% 2.5% quarter-over-quarter Average mutual fund AUM ($ Billions) 83.8 88.0 89.4 1.4 1.6% 5.6 6.7%
Slide 32: Mackenzie Key Profitability Drivers
MACKENZIE KEY PROFITABILITY DRIVERS Average AUM & Rates of AUM Mutual Fund Gross Sales & ($B, unless otherwise stated) Rates of Sales 87.9 88.1 ($B, unless otherwise stated) 85.5 Annualized Net 83.6 80.9 Revenue Rate (bps)1,2 Average AUM 0.40% 0.32% 0.37% 65.2 66.1 67.6 0.26% 0.26% Sales 63.0 Sub-ad
Slide 33: Mackenzie Profitability
MACKENZIE PROFITABILITY ($MM, unless otherwise indicated) Change QoQ Change YoY 1 ▪ Net revenue up 3.7% Q3/17 Q2/18 Q3/18 $ % $ % Days in the period 92 91 92 1.1% 0.0% year-over-year Average AUM ($ Billions): Total 60.0 66.1 67.6 Q3/18 Non-commission 1.5 2.3% 7.6 12.7% Investment funds 53.4 57.9 59.
Slide 34: Q&A
Q&A IGM FINANCIAL N o v e m b e r 2 , 2 0 1 8 34 34