IGM Financial Inc. · TSX:IGM
IGM Financial — Q3 2019 Earnings Presentation
36 slides from IGM Financial's earnings presentation, Nov 1, 2019
Slide 1: IGM Financial Q3, 2019 Results
IGM Financial Q3, 2019 Results November 1, 2019
Slide 2: Conference Call Participants
CONFERENCE CALL PARTICIPANTS JEFFREY R. CARNEY BARRY S. MCINERNEY LUKE GOULD RHONDA GOLDBERG PRESIDENT & CEO PRESIDENT & CEO EXECUTIVE VICE-PRESIDENT EXECUTIVE VICE-PRESIDENT IGM FINANCIAL MACKENZIE INVESTMENTS & CFO GENERAL COUNSEL PRESIDENT & CEO IGM FINANCIAL IGM FINANCIAL IG WEALTH MANAGEMENT 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 unde
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: Financial and Operating Results
Financial and Operating Results IGM FINANCIAL Q3, 2019 RESULTS
Slide 7: IGM Financial Q3, 2019 Highlights
IGM FINANCIAL Q3, 2019 HIGHLIGHTS 1 Record high quarter-end total AUM of $162.5B, up 0.1% during Q3 and 9.0% year-to-date Investment fund net sales of $103MM, reflecting improving HNW client acquisition at IG Wealth 2 and continued strong retail results at Mackenzie Investments • Industry advice cha
Slide 8: Assets Under Management & Financial Markets
ASSETS UNDER MANAGEMENT & FINANCIAL MARKETS IGM Assets Under Management ($B) Investment Performance YTD Sep Total Assets Annual Average 2018 Q1/19 Q2/19 Q3/19 30/19 Quarterly Average S&P TSX IGM Client Investment Returns 1 (5.3%) 7.5% 1.5% 0.8% 10.0% 170 Equity Markets: Canada (S&P / TSX Composite)
Slide 9: Industry Operating Environment
INDUSTRY OPERATING ENVIRONMENT Industry Net Sales ($B) Q3/18 Q3/19 $ Change Net Sales Rate % Long-term Mutual Funds Q3/19 Annualized Advice channel (1.7) (1.3) 0.5 (0.7) Deposit takers 0.2 3.3 3.1 1.9 Other (0.2) 0.3 0.5 1.6 Total (1.7) 2.4 4.1 0.6 ETF Net Creations 5.2 5.0 (0.2) Long-term Mutual Fu
Slide 10: IGM Financial Q3, 2019 Results
IGM FINANCIAL Q3, 2019 RESULTS Average Total AUM ($B) Net Earnings ($MM) Net Earnings Per Share (₵) 160.4 161.8 162.1 198 202 82 85 185 77 Q3/18 Q2/19 Q3/19 Q3/18 Q2/19 Q3/19 Q3/18 Q2/19 Q3/19 Adjusted Net Adjusted Net Earnings Investment Fund Net Sales ($MM) Earnings2 ($MM) Per Share2 (₵) 223 193 2
Slide 11: Operating Segments Q3, 2019 Results
OPERATING SEGMENTS Q3, 2019 RESULTS Adjusted Earnings Before Interest & Taxes ($MM) IG Wealth Management Mackenzie Corporate & Other 213.5 205.8 194.9 52.7 44.8 46.4 49.8 36.7 37.2 Q3/18 Q2/19 Q3/19 Q3/18 Q2/19 Q3/19 Q3/18 Q2/19 Q3/19 Investment Fund Net Sales ($MM) IG Wealth Management Mackenzie IP
Slide 12: IGM Well Prepared for Client-Focused Reforms NI 31-103
IGM WELL PREPARED FOR CLIENT-FOCUSED REFORMS NI 31-103 KEY AREAS OF FOCUS IGM WELL-POSITIONED P CLIENTS’ INTEREST comes first with enhanced focus on KYC and Suitability ▪ Financial planning ▪ Simplified and aligned ▪ Enhanced sub- ▪ Suitability includes putting clients’ interests first, focus and ma
Slide 13: Operating Highlights
Operating Highlights IGM FINANCIAL Q3, 2019 RESULTS
Slide 14: IG Wealth Management Q3, 2019 Highlights
IG WEALTH MANAGEMENT Q3, 2019 HIGHLIGHTS 1 Record high quarter-end AUM of $90.8B, up 9.2% year-to-date • Driven by strong client investment returns, including 0.9% during Q3/19 2 Net redemptions of $291MM during Q3/19, improving relative to $537MM in Q2/19 • $69MM of net flows into high interest sav
Slide 15: IG Wealth Management Q3, 2019 Operating Results
IG WEALTH MANAGEMENT Q3, 2019 OPERATING RESULTS Mutual Fund Mutual Fund Client Assets Under Gross Sales ($MM) Net Sales ($MM) Administration ($B) IG 3rd party ▪ Mutual fund gross sales of 2,014 2,045 2,077 92.4 93.8 94.5 $2.1B 3.4 3.7 3.7 ▪ Mutual fund net (64) 89.0 90.2 90.8 redemptions of $291MM (
Slide 16: Continued Emphasis on High Net Worth Solutions and Managed Solutions
CONTINUED EMPHASIS ON HIGH NET WORTH SOLUTIONS AND MANAGED SOLUTIONS Managed Solutions Share of Gross Sales of HNW Solutions ($MM) HNW Solutions % of Total Sales Long-term Funds Compound HNW - Bundled Annual HNW - Unbundled Growth Rate (CAGR) 54% Share of 48% 81% Other 43% Long-term 3-year 1-year Gr
Slide 17: IG Wealth Management's Historical Redemption Rate
IG WEALTH MANAGEMENT’S HISTORICAL REDEMPTION RATE Redemption Rate on Long-term Mutual Funds1 (Last Twelve Month Trailing % of Average Assets Under Management) Industry excluding IG Wealth Management IG Wealth Management ▪ IG Wealth 20% Management’s last 18% twelve month trailing 17.4% 16% long-term
Slide 18: Launched IG Living Plan Snapshot
LAUNCHED IG LIVING PLAN SNAPSHOTTM – AN ONLINE RESOURCE THAT PROVIDES A 0-100 SCORE ON FIVE DIMENSIONS OF A HOUSEHOLD’S FINANCIAL LIFE 18
Slide 19: Operating Highlights
Operating Highlights IGM FINANCIAL Q3, 2019 RESULTS
Slide 20: Mackenzie Investments Q3, 2019 Highlights
MACKENZIE INVESTMENTS Q3, 2019 HIGHLIGHTS 1 Record high investment fund AUM of $62.2B, up 1.2% during Q3 and 12.0% year-to-date • Driven by investment returns and investment fund net sales Continued market share gains relative to advice channel peers with investment fund net sales of 2 $491MM1 3 Con
Slide 21: Mackenzie Investments Q3, 2019 Operating Results
MACKENZIE INVESTMENTS Q3, 2019 OPERATING RESULTS Mutual Fund Gross Sales ($MM) Net Sales ($MM) Q3/18 Q3/19 Mutual Funds 2081 139 1 2,224 2,253 ETFs 377 597 ▪ Q3 total mutual fund gross Mackenzie mutual fund investment in ETFs (62) (245) sales of $2.3B, an increase Investment Funds2 5231 491 of 1.3%
Slide 22: Mackenzie Retail Investment Fund Net Sales
MACKENZIE RETAIL INVESTMENT FUND NET SALES Retail Gross Sales $MM Mutual Fund Gross Sales Net Sales Capture Rate 1 % $ Retail Investment Funds Q3/18 Q3/19 Q3/18 Q3/19 Change Q3/18 Q3/19 Change Change ▪ Mackenzie’s share of Mutual Funds Income 227 206 (9.3) 6.3% 3.7% (2.6%) 88 24 (64) Q3/19 advice ch
Slide 23: Mackenzie's Continued ETF Growth Across Channels
MACKENZIE’S CONTINUED ETF GROWTH ACROSS CHANNELS ETF AUM by Quarter ($MM) ETF Net Creations by Quarter ($MM) 4,051 Traditional Beta ETFs 3,454 597 3,330 TOBAM 1,383 Strategic 2,963 2,949 Beta ETFs Active ETFs 377 459 921 228 137 88 35 1,746 103 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q3/18 Q4/18 Q1/19 Q2/19 Q
Slide 24: 2019 Advisor Perception Results Show Continued Momentum
2019 ADVISOR PERCEPTION RESULTS SHOW CONTINUED MOMENTUM Mutual Fund Advisor Perception 2013 2015 2017 2018 2019 Study – Mackenzie Results Overall Perception Rank 12th 5th 3rd 3rd 3rd Brand Equity Rank N/A 2nd 2nd 2nd 2nd 2 2 2 Overall Quality of Sales Organization 12th 7th 2nd 1st 2nd MFDA Sales Pen
Slide 25: Investment Performance Highlights
INVESTMENT PERFORMANCE HIGHLIGHTS 48% of AUM is 4/5 star; 18 of 20 largest funds are rated 4/5 star and 8 of 20 Mackenzie Mutual Funds are rated 5 star (series F) Mackenzie Mutual Funds in 1st or 2nd Quartile1 Morningstar Star Ratings1 (Proportion of Assets) (Proportion of Assets) Jun 2019 Sep 2019
Slide 26: Investment Boutique Mutual Fund Performance & Retail Net Sales
INVESTMENT BOUTIQUE MUTUAL FUND PERFORMANCE & RETAIL NET SALES Fixed Managed Value-Oriented Quality Growth-Oriented Core & Dividend 3rd Party Income Solutions North Global Global Systematic Fixed Multi-Asset 3rd Party Cundill American Ivy Growth Bluewater Resources Quantitative Equity & Strategies I
Slide 27: Financial Highlights
Financial Highlights IGM FINANCIAL Q3, 2019 RESULTS
Slide 28: Assets Under Management
ASSETS UNDER MANAGEMENT IGM Assets Under Management ($B) Change in IGM Assets Under Management ($B) Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 LTM Opening 159.1 159.7 149.1 160.5 162.3 159.7 Total Assets Annual Average Net Sales - Investment Funds 0.1 (0.2) 0.3 (0.4) 0.1 (0.2) Quarterly Average Investment Fund A
Slide 29: IGM EBIT & Margins
IGM EBIT & MARGINS IGM Adjusted EBIT1 ($MM) IGM Adjusted EBIT Margin1,2 (% of Average AUM) 832.0 811.9 816.1 791.5 789.1 1.92% 1.93% 1.92% 1.90% 1.89% Commission 0.67% 0.71% 0.71% 0.69% 0.67% 270.1 275.8 272.4 Expenses 272.4 274.7 55.8 46.1 46.5 Net Investment 47.8 52.9 Income & Share of 506.1 490.0
Slide 30: IGM Financial Consolidated Profitability
IGM FINANCIAL CONSOLIDATED PROFITABILITY1 ($MM, unless otherwise indicated) Change QoQ Change YoY Q3/18 Q2/19 Q3/19 $ % $ % 1▪ Fee revenue up quarter- Days in the period 92 91 92 1.1% 0.0% over-quarter, driven by an Average AUM ($ Billions): increase in average AUM Total 160.4 161.8 162.1 0.3 0.2% 1
Slide 31: 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) 201.7 201.4 201.4 Annualized 199.3 198.7 Mgmt. & Admin. Fee Rate (bps) 89.4 90.2 90.4 Average AUM 1.70% 1.67% 87.0 1.53% 1.55% 1.58% Sale
Slide 32: IG Wealth Management Profitability
IG WEALTH MANAGEMENT PROFITABILITY ($MM, unless otherwise indicated) Change QoQ Change YoY 1▪ Year-over-year change Q3/18 Q2/19 Q3/19 $ % $ % in mutual fund Days in the period 92 91 92 1.1% 0.0% Average mutual fund AUM ($ Billions) 89.4 90.2 90.4 0.2 0.2% 1.0 1.0% commission expenses includes transi
Slide 33: Mackenzie Key Profitability Drivers
MACKENZIE KEY PROFITABILITY DRIVERS Average AUM & Rates of AUM Mutual Fund Gross Sales & Rates of Sales ($B, unless otherwise stated) ($B, unless otherwise stated) Annualized Net 80.9 80.5 79.2 79.6 80.1 Revenue Rate (bps) 1 68.2 68.2 Average AUM 0.30% Sales 67.6 0.26% 0.24% 0.24% 0.24% 64.6 65.6 Co
Slide 34: Mackenzie Profitability
MACKENZIE PROFITABILITY ($MM, unless otherwise indicated) Change QoQ Change YoY Q3/18 Q2/19 Q3/19 $ % $ % ▪1 Net investment income Days in the period 92 91 92 1.1% 0.0% Average AUM ($ Billions): & other of ($1.4MM) Total 67.6 68.2 68.2 - 0.0% 0.6 1.0% primarily relates to Investment funds 59.5 60.8
Slide 35: IGM Financial Strategic Investments
IGM FINANCIAL STRATEGIC INVESTMENTS Opening Ending ($MM, unless otherwise indicated) In-period change due to: Balance Balance Proportionate share Other 1▪ $10MM investment of earnings Change in June 30, Investment Dividends compre- market September in Wealthsimple 2019 / (sales) Non- hensive 30, 201
Slide 36: Q&A
Q&A IGM FINANCIAL Q3, 2019 RESULTS