Igm Financial Inc. · TSX:IGM
Igm Financial — Q3 2021 Earnings Presentation
45 slides from Igm Financial's earnings presentation, Nov 5, 2021
Slide 1: IGM Financial Q3, 2021 Results
IGM Financial Q3, 2021 Results November 5, 2021
Slide 2: Conference Call Participants
Conference Call Participants JAMES O‘SULLIVAN DAMON MURCHISON BARRY MCINERNEY LUKE GOULD PRESIDENT & CEO PRESIDENT & CEO PRESIDENT & CEO EXECUTIVE VICE-PRESIDENT IGM FINANCIAL IG WEALTH MANAGEMENT MACKENZIE INVESTMENTS & CFO IGM FINANCIAL 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: IGM Financial
IGM FINANCIAL JAMES O‘SULLIVAN PRESIDENT & CEO IGM FINANCIAL IGM FINANCIAL Q3, 2021 RESULTS
Slide 7: IGM Financial Q3, 2021 Highlights
IGM Financial Q3, 2021 Highlights 1 Record high quarter end AUM&A of $265.2B; up 1.2% in the quarter and 10.5% year-to-date • Client investment returns of 0.5% and net flows of $1.9B 2 Record high Q3 total net flows of $1.9B; record high investment fund net flows of $1.7B • Record high IG Wealth Man
Slide 8: Financial Market and Client Investment Returns
Financial Market and Client Investment Returns IGM Client Return Index1 2.6 2.4 Investment Performance Q4/21 at Oct 31 Q1/21 Q2/21 Q3/21 Oct 31 2021 YTD 2.2 IGM Client Investment Returns 2 2.7% 4.5% 0.5% 2.0% 10.0% Equity Markets: Canada (S&P / TSX Composite) 7.3% 7.8% (0.5%) 4.8% 20.7% 2.0 U.S. (S&
Slide 9: Industry Operating Environment
Industry Operating Environment Third Quarter Industry Long-term Net Sales ($B) Total Industry Industry Asset Manager Peers 24.5 11.9 6.4 5.2 7.8 5.3 5.2 5.4 9.9 0.8 1.3 2.5 2.6 1.7 2.1 0.7 0.0 (1.7) (1.1) (1.9) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Long-term Mutual Fund Net Sales Rate (L
Slide 10: IGM Financial Q3, 2021 Results
IGM Financial Q3, 2021 Results Up 41% from last year Net Earnings ($MM) Net Earnings Per Share ($) Daily Total AUM & AUA ($B) Daily AUM&A 271 1.13 Annual Average AUM&A 0.80 191 Quarterly Average AUM&A 290 280 270 260 250 Q3/20 Q3/21 Q3/20 Q3/21 240 Net acquisitions of $30.3B 230 (GLC/Greenchip/QGOF)
Slide 11: Adjusted Net Earnings by Segment and Company ($MM)
Adjusted Net Earnings Available to Common Shareholders by Segment and Company ($MM) Wealth Management Asset Management Strategic Investments & Other1 IGM Consolidated 2 3 +26% 270.8 +20% 214.2 140.9 117.3 +47% 71.0 48.3 +7% 33.0 35.3 +62% +59% 9.4 15.3 3.7 5.9 - 2.9 Q3/20 Q3/21 Q3/20 Q3/21 Q3/20 Q3/
Slide 12: Third Quarter Net Flows ($MM)
Third Quarter Net Flows ($MM) Wealth Management Asset Management IGM Consolidated Record high +1,530 net flows 1,938 +1,023 Record high Record high 1,014 Record high +155 net flows net flows net flows 782 627 +404 408 258 (9) (146) Q3/20 Q3/21 Q3/20 Q3/21 Q3/20 Q3/21 Q3/20 Q3/21 12
Slide 13: IG Wealth Management
IG WEALTH MANAGEMENT DAMON MURCHISON PRESIDENT & CEO IG WEALTH MANAGEMENT IGM FINANCIAL Q3, 2021 RESULTS
Slide 14: IG Wealth Management Q3, 2021 Highlights
IG Wealth Management Q3, 2021 Highlights 1 Record high quarter end AUM&A of $114.0B, up 1.6% during Q3 and 10.3% year-to-date • Client returns of 0.7% and record high Q3 net flows of $1.0B 2 Record high Q3 net flows of $1.0B and gross inflows of $3.1B • Momentum on net flows continues to be strong i
Slide 15: Continued Net Flow Momentum at IG Wealth Management
Continued Net Flow Momentum at IG Wealth Management IG Wealth Management Gross and Net Flows1 ($MM) IG Wealth Management Flows Gross Inflows Gross Outflows IGM Product Other Net Flows (Last Twelve Month Trailing, $B) Month of October: Total Net Flows IGM Product Net Flows 1,029 728 825 783 875 4.0 6
Slide 16: IG Wealth Management Q3, 2021 Operating Results
IG Wealth Management Q3, 2021 Operating Results Gross Outflows Rate Assets Under Gross Inflows ($MM) (quarterly annualized) Net Flows ($MM) Advisement ($B) +47% 1,014 3rd party IG mutual funds 3,141 112.2 114.0 97.5 7.0 7.4 8.8% (9) 2,132 7.4% 4.6 Q3/20 Q3/21 Net Flows Q3/20 Q3/21 105.2 106.6 92.9 I
Slide 17: IG Wealth Management Assets Under Advisement & Net Flows
IG Wealth Management Assets Under Advisement & Net Flows IG Wealth Management AUA Continuity by Investment Category ($MM) 1▪ Cash balances can now be held AUA Total 112,185 1,014 – 759 113,958 in client accounts (nominee 1 dealer platform) Deposits 2▪ Third party funds and securities & HISA (1.8% co
Slide 18: Accelerating Consultant Productivity
Accelerating Consultant Productivity Gross Inflows per Consultant Gross Inflows per Consultant Recruit with <4 years experience Practice with >4 years experience Key Initiatives ($MM) ($MM) Driving Productivity • Elimination of DSC (2017), removing 0.55 1.53 competitive impediment • Tightened recrui
Slide 19: Sales Growth Driven by Accelerating High-Net-Worth Client Acquisition
Sales Growth Driven by Accelerating High-Net-Worth Client Acquisition Gross Flows from Newly Acquired Clients Gross Flows from Newly Acquired Clients (Q3, $MM) (Last Twelve Month Trailing, $MM) By Client Assets Brought to IG Wealth By Client Assets Brought to IG Wealth Growth >$500K $100-500K <$100K
Slide 20: New IG Climate Action Portfolios Aligned with Net Zero By 2050
New IG Climate Action Portfolios Aligned with Net Zero By 2050 Enables clients to positively impact the world while taking advantage of sustainable investing opportunities 20
Slide 21: Leading Investment Solutions at IG Wealth
Leading Investment Solutions at IG Wealth Managed by Top Global Public and Private Markets Asset Managers with Strong Investment Performance Expanded use of private market investments and liquid alternatives in iProfile solutions during 2021 47% of assets rated 4 or 5 star by Morningstar 80% of asse
Slide 22: Mackenzie Investments
MACKENZIE INVESTMENTS BARRY MCINERNEY PRESIDENT & CEO MACKENZIE INVESTMENTS IGM FINANCIAL Q3, 2021 RESULTS
Slide 23: Mackenzie Investments Q3, 2021 Highlights
Mackenzie Investments Q3, 2021 Highlights 1 Record high quarter end AUM of $203.3B, up 0.8% from June 30, 2021 • Organic growth through investment returns of 0.3% and net flows of $782 million Record high total net flows of $782 million and record investment fund net sales of $1.1B; 2 gaining market
Slide 24: Continued Strong Momentum at Mackenzie
Continued Strong Momentum at Mackenzie Mackenzie Adjusted Investment Fund Flows1 ($MM) Mackenzie Adjusted Investment Fund Net Flows1 Gross Sales Redemptions Mutual Fund Net Sales ETF Net Flows (Last Twelve Month Trailing, $MM) Month of October: 1,164 874 841 746 811 Total Retail 456 542 519 507 512
Slide 25: Mackenzie Q3, 2021 Operating Results
Mackenzie Q3, 2021 Operating Results Retail Mutual Fund Gross Sales ($MM) Net Sales ($MM)1,2 ▪ $919MM retail investment fund net sales, up $80MM +24% Q3/20 Q3/21 2,093 Retail mutual Funds 440 704 ▪ Gaining share; 10.2% long-term 1,689 investment fund net sales rate over the Retail ETFs 399 215 twelv
Slide 26: Investment Boutique Retail Mutual Fund Performance & Net Sales
Investment Boutique Retail Mutual Fund Performance & Net Sales Fixed Managed 3rd Party Value-Oriented Quality Growth-Oriented Sustainable Core & Dividend Income Solutions & Other North Global Global CAMC, Fixed Multi-Asset Putnam, Cundill American Ivy Growth Bluewater Resources Greenchip Quantitativ
Slide 27: Five Areas of Product Emphasis for Mackenzie
Five Areas of Product Emphasis for Mackenzie – Q3/21 Highlights on Sustainable Investing, Private Investments, and China Themes • New Mackenzie Betterworld boutique Recent steps in support of the global Areas of Macro announced, including the launch of goal to reach net zero by 2050 Emphasis Thesis
Slide 28: Financial Highlights
IGM FINANCIAL Financial Highlights LUKE GOULD EXECUTIVE VICE-PRESIDENT & CFO IGM FINANCIAL IGM FINANCIAL Q3, 2021 RESULTS
Slide 29: Total Assets Under Management & Advisement
Total Assets Under Management & Advisement IGM Assets Under Management & Advisement ($B) Change in IGM AUM & AUA ($B) Daily AUM&A Annual Average AUM&A Q3/20 Q4/20 Q1/21 Q2/21 Q3/21 LTM Quarterly Average AUM&A Opening AUM & AUA 188.3 196.4 240.0 248.5 262.0 196.4 290 IG Wealth Management Net Flows (0
Slide 30: IGM Financial Adjusted EBIT & Margins
IGM Financial Adjusted EBIT & Margins IGM Adjusted EBIT1 ($MM) IGM Adjusted EBIT Margin1,2 (% of AUM&A) 890.9 Direct advisor/dealer 843.9 compensation3 & sub- 779.5 800.5 1.44% 1.44% 753.4 advisory expenses 243.5 1.26% 1.25% 232.0 Share of associates’ 0.41% 0.42% 1.24% 213.4 224.8 earnings and net 2
Slide 31: IGM Financial Consolidated Profitability
IGM Financial Consolidated Profitability1 $ Millions (unless otherwise noted): Change YoY Change QoQ IGM Financial Consolidated Q3/20 Q2/21 Q3/21 $ % $ % Days in the period 92 91 92 0.0% 1.1% Average AUM & AUA ($ Billions) Wealth Management AUM & AUA 124.3 140.2 146.5 22.2 17.9% 6.4 4.5% Asset Manag
Slide 32: IG Wealth Management Key Profitability Drivers
IG Wealth Management Key Profitability Drivers Average Assets ($B), Advisory and Key Revenue & Expenses as bps of Respective Product & Program Fee Rate (bps)1 Driver (AUA or AUM or Gross Inflows)1 114.8 105.9 105.0 104.3 104.2 102.6 109.7 105.5 7.2 6.6 Other AUA Advisory 100.3 86.2 85.8 85.9 86.0 86
Slide 33: IG Wealth Management Profitability
IG Wealth Management Profitability $ Millions (unless otherwise noted): 1 Change YoY Change QoQ IG Wealth Management Q3/20 Q2/21 Q3/21 $ % $ % Days in the period 92 91 92 0.0% 1.1% Average assets under advisement ($B) 97.0 109.7 114.8 17.8 18.3% 5.2 4.7% Average assets under management ($B) 92.5 103
Slide 34: Asset Management Key Profitability Drivers
Asset Management Key Profitability Drivers Key Revenue as bps of Respective Driver1 Average AUM ($B), Net Asset Management Fees (bps)1 (Third-party AUM or Sub-advisory AUM to Wealth Mgmt.) 204.9 Sub-advisory AUM 196.6 to Wealth 187.2 Management 71.0 70.8 Third Party AUM 79.7 149.5 77.3 144.5 74.5 Ne
Slide 35: Mackenzie Retail Mutual Fund Sales & Business Development Expenses
Mackenzie Retail Mutual Fund Sales & Business Development Expenses Retail Mutual Fund Sales Retail Mutual Fund Sales Retail Mutual Fund Sales Last twelve month trailing ($MM) Quarters ($B) Full Years ($MM) Gross Sales Net Sales 12,000 6,000 Mutual Fund Gross Sales Net +50% sales rates Mutual Fund Ne
Slide 36: Asset Management Segment Profitability
Asset Management Segment Profitability $ Millions (unless otherwise noted):1 Change YoY Change QoQ Asset Management Q3/20 Q2/21 Q3/21 $ % $ % Days in the period 92 91 92 0.0% 1.1% ▪1 Mackenzie full year 2021 Average assets under management ($B) Excluding sub-advisory to Wealth Management 73.7 119.3
Slide 37: ChinaAMC Profitability and Northleaf AUM Growth
ChinaAMC Profitability and Northleaf AUM Growth IGM Share of ChinaAMC Earnings (CAD millions) Northleaf YTD AUM Continuity1 C$ Billions 17.0 15.0 Q3 1.1 Q2 1.7 12.6 Q1 1.5 11.9 10.3 10.5 8.9 Q1/20 Q2/20 Q3/20 Q4/20 Q1/21 Q2/21 Q3/21 Dividends Declared ($MM): 13.7 26.9 Dividend payout ratio:2 45% 65%
Slide 38: Adjusted Net Earnings by Segment and Company ($MM)
Adjusted Net Earnings Available to Common Shareholders by Segment and Company ($MM) Wealth Management Asset Management Strategic Investments & Other IGM Consolidated Adjusted Net Earnings Available to Common +26% Shareholders 270.8 Q3/20 Q3/21 214.2 +20% 140.9 117.3 +47% 71.0 +7% 48.3 Not applicable
Slide 39: Adjusted Net Earnings and Valuation by Segment and Company
Adjusted Net Earnings Available to Common Shareholders and Valuation by Segment and Company ($MM) Wealth Management Asset Management Strategic Investments & Other1 IGM Consolidated Adjusted Net Earnings +23% Available to Common 937 Shareholders +19% 763 2020 517 434 +43% Not applicable +9% 2021 +39%
Slide 40: IGM Financial Common Dividends
IGM Financial Common Dividends ▪ Traditionally IGM has increased dividends at pay-out of 60-65% of earnings ▪1 IGM’s dividend pay-out is high relative to peers ▪ There is currently ~$150 million difference between reported net earnings ▪2 Dividend yield of 4.5% is attractive1 and cash earnings ▪ IGM
Slide 41: Q&A
Q&A IGM FINANCIAL Q3, 2021 RESULTS
Slide 42: Appendix
Appendix IGM FINANCIAL Q3, 2021 RESULTS
Slide 43: IGM Financial Operations & Support and Business Development Expenses
IGM Financial Operations & Support and Business Development Expenses1 2019 2020 % Change 2021 Guidance (expressed as change relative to 2020) Business development expenses IG Wea l th 207.3 199.1 (4.0%) Down ~3% IPC 27.3 28.8 5.8% 20% Ma ckenzi e 79.9 80.2 0.4% ~15% (~20% variable with sales & ~20%
Slide 44: Wealthsimple AUA and Client Growth
• Wealthsimple’s AUA has grown 70% year-to-date September 30, 2021 to $16.6 billion • The number of clients served by Wealthsimple has more than doubled during 2021 and currently stands at over 1.3 million (excluding Wealthsimple Tax users)1 Wealthsimple AUA of CAD $16.6B1 Wealthsimple Clients Surpa
Slide 45: Capital Partners
Capital Partners • Strong year-to-date fundraising of $4.3B, driving Northleaf’s AUM up 27% since December 31, 2020 • Together, IGM and GWO have committed capital across each of Northleaf’s mid-market private market platforms (private equity, private credit and infrastructure) Northleaf Capital Rais