IGM Financial Inc. · TSX:IGM
IGM Financial — Q1 2018 Earnings Presentation
35 slides from IGM Financial's earnings presentation, May 4, 2018
Slide 1: Q1, 2018 Results
Q1, 2018 Results IGM FINANCIAL M A Y 4 , 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, Investors Group 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 FINANCIAL 6 6
Slide 7: IGM Financial Q1, 2018 Highlights
IGM FINANCIAL Q1, 2018 HIGHLIGHTS 1 Record high Q1 net sales of $1.4B • Continued market share improvement at Investors Group and Mackenzie • Industry mutual fund net sales down approximately 30% versus Q1/17 2 Total ending AUM of $155.8B; down 0.5% year-to-date • Negative investment returns offset
Slide 8: Industry Operating Environment
INDUSTRY OPERATING ENVIRONMENT Q2/18 at Q1/18 Apr 30 IGM Assets Under Management ($B) IGM Investment Return Rate (1.3%) Equity Markets: Total Assets Quarterly Average Canada (S&P / TSX Composite) (5.2%) 1.6% Annual Average S&P TSX U.S. (S&P 500) (1.2%) 0.3% 170 19500 Europe (MSCI Europe) (4.9%) 4.0%
Slide 9: IGM Financial Q1, 2018 Results
IGM FINANCIAL Q1, 2018 RESULTS Net Earnings Net Earnings Per Share ($MM) (₵) Net Earnings of $185.5MM 177.1 185.5 is up 4.8% compared to 74 77 Q1/17 EPS of 77 cents up 4.1% relative to Q1/17; excluding the impact of transition to Q1/17 Q1/18 Q1/17 Q1/18 IFRS 15 EPS would have Average AUM Total N
Slide 10: Operating Segments Q1, 2018 Results
OPERATING SEGMENTS Q1, 2018 RESULTS 178.8 183.0 Adjusted Earnings Before Interest & 41.5 41.6 45.8 33.2 Taxes ($MM) Q1/17 Q1/18 Q1/17 Q1/18 Q1/17 Q1/18 Investors Group Mackenzie Corporate & Other 2 Total Net 997 890 Sales ($MM) 784 1,2 561 997 305 256 39 48 Q1/17 Q1/18 Q1/17 Q1/18 Q1/17 Q1/18 1. Exc
Slide 11: Investors Group
INVESTORS GROUP 11 11
Slide 12: Investors Group Q1, 2018 Highlights
INVESTORS GROUP Q1, 2018 HIGHLIGHTS 1 Continued strong net sales in the context of market volatility and declining industry net sales • Emphasis on High Net Worth segments and managed solutions continues to drive market share gains 2 AUM of $87.1 billion; down 1.0% year-to-date • Negative investment
Slide 13: Investors Group Q1, 2018 Operating Results
INVESTORS GROUP Q1, 2018 OPERATING RESULTS 1 Mutual Fund Gross Sales Long Term Mutual Fund Net Sales Rate ($MM) (LTM, % of Average AUM) Q1 gross sales were 2,932 2,859 Total Industry $2.9B, second highest on Advice Channel record Investors Group 6% Net Sales of $784MM Capturing market share: Q
Slide 14: Continued Emphasis on High Net Worth Solutions and Managed Solutions
CONTINUED EMPHASIS ON HIGH NET WORTH SOLUTIONS AND MANAGED SOLUTIONS Gross Sales of HNW % of Total Sales Managed Solutions Share HNW Solutions of Long Term Funds ($MM) 42% 37% Share of Long Term iProfile (Unbundled) 71.6% Gross Sales Series U (Unbundled) 24% Series J (Bundled) 1,210 Q1/18 Q1/16 Q1/1
Slide 15: Investors Group Client Rate of Return Experience and Historical Redemption Rate
INVESTORS GROUP CLIENT RATE OF RETURN EXPERIENCE AND HISTORICAL REDEMPTION RATE Investors Group Client Account Rate of Return Experience (as at March 31, 2018) 10% 90% of Short-term client return 5.2% clients had experience impacted by 5% returns 2.6% within this market volatility, while 0.9% rang
Slide 16: Mackenzie Investments
MACKENZIE INVESTMENTS 16 16
Slide 17: Mackenzie Q1, 2018 Highlights
MACKENZIE Q1, 2018 HIGHLIGHTS 1 All-time quarter end high investment fund AUM of $57.0B • Total AUM of $65.2B; increase of 1.0% year-to-date 2 Strong net sales momentum across mutual funds, ETFs and institutional • Retail net sales improved despite softer industry sales • #2 in Active & Strategic Be
Slide 18: Mackenzie Q1, 2018 Operating Results
MACKENZIE Q1, 2018 OPERATING RESULTS Mutual Fund Gross Sales Long-term Fund Net Sales Rate ($MM) (LTM, % of Average AUM) Q1 total mutual fund gross 1 2,630 sales up 3.2%1 2,548 Total Industry mutual funds Advice Channel mutual funds Mackenzie mutual funds Strong total net sales of Mackenzie inve
Slide 19: Broad Demand for Mackenzie's Mutual Fund Offering Across Asset Classes
BROAD DEMAND FOR MACKENZIE’S MUTUAL FUND OFFERING ACROSS ASSET CLASSES 1 1 Gross Sales Net Sales $MM Q1/17 Q1/18 % Change Q1/17 Q1/18 $ Change Mutual fund net sales of Income-oriented 273 302 10.6% 18 23 5 positive $286MM; down Balanced Symmetry 504 451 (10.5%) 220 141 (79) slightly from Q1/171 In
Slide 20: Mackenzie's Rapid ETF Growth Is Broad-Based
MACKENZIE’S RAPID ETF GROWTH IS BROAD-BASED ACROSS CHANNELS & INVESTMENT STRATEGIES ETF AUM by Quarter ETF Net Creations by Quarter ($MM) ($MM) 2,004 715 Investors Group & 346 IPC Mutual Funds 241 1,296 596 Mackenzie 389 367 Mutual Funds 906 286 233 Retail & Other 622 1,062 114 234 241 Q1/17 Q2/17 Q
Slide 21: Product Innovation a Key Catalyst for Net Sales & AUM Growth
PRODUCT INNOVATION A KEY CATALYST FOR NET SALES & AUM GROWTH Innovative product launches Launch of Mackenzie Multi-Strategy have delivered $4.6B in net Absolute Return Fund sales over the past 5 years Mackenzie is the first to bring an Total $4.6B Including ~$950MM ETFs Absolute Return product t
Slide 22: Simplified Retail Pricing Structures
SIMPLIFIED RETAIL PRICING STRUCTURES Simplified fee-based pricing for advisors and investors Full Service Broker AUA Move to one fee-based series with one fund code ($B, as at Dec 31) Flat fee from first dollar Commission-based 100.0% Simplified Private Wealth bundled offering, aligned 1,400
Slide 23: Investment Performance Highlights
INVESTMENT PERFORMANCE HIGHLIGHTS Four of Mackenzie’s five largest Core Balanced funds2 are rated 5 stars for series F Mackenzie Mutual Funds in Morningstar Star Ratings1 1st or 2nd Quartile1 (Proportion of Assets) (Proportion of Assets) 31-Dec-17 31-Mar-18 All Morningstar Rated 31-Dec-17 31-Mar-18
Slide 24: Investment Boutique Mutual Fund Performance & Net Sales
INVESTMENT BOUTIQUE MUTUAL FUND PERFORMANCE & NET SALES Mutual Fund AUM by Morningstar Ratings ($MM)1 12,500 Not Rated 1 or 2 Stars 3 Stars 4 or 5 Stars 10,000 7,500 5,000 2,500 0 % 4 or 5: 0% 25% 13% 88% 72% 4% 0% 83% 41% 17% 15% Symmetry Fixed Value-Oriented Quality Growth-Oriented Core & Dividend
Slide 25: Financial Results
FINANCIAL RESULTS 25 25
Slide 26: Overview of IFRS 15 - Revenue from Contracts with Customers
OVERVIEW OF IFRS 15 - REVENUE FROM CONTRACTS WITH CUSTOMERS IFRS 15 Overview: • IFRS 15 specifies the accounting for the incremental costs of obtaining a contract with a customer • Commissions paid on sale of mutual fund units and other client acquisition costs are subject to the standard Previous s
Slide 27: Reminder: Investors Group Consultant Compensation
REMINDER: INVESTORS GROUP CONSULTANT COMPENSATION FORECAST IS FOR ILLUSTRATIVE PURPOSES ONLY; ASSUMES MODEST SALES AND AUM GROWTH 1 Asset-based compensation is rising as a 2 Reducing sales-based 3 We are migrating our business to “unbundled” result of: compensation in 2018, arrangements (Series U) w
Slide 28: IFRS 15 Impact on 2018 & 2019
IFRS 15 IMPACT ON 2018 & 2019 FORECAST IS FOR ILLUSTRATIVE PURPOSES ONLY; ASSUMES MODEST SALES AND AUM GROWTH Sales-based Commissions Paid Sales-based Commission Expense Sales-based Commission Expense ($MM) Under Previous Approach – all Under IFRS 15 – bundled commissions commissions amortized over
Slide 29: Q1, 2018 Financial Results – Impact of IFRS 15
Q1, 2018 FINANCIAL RESULTS – IMPACT OF IFRS 15 IFRS 15 Q1/18 - IFRS 15 Q1/18 Adjust- Previous Adjust- Actual $MM 31-Dec-17 ments 1-Jan-18 $MM (IAS 38) ments (IFRS 15) Balance Sheet Statement of Earnings Capitalized sales commissions 767 (704) 63 Total Revenue 810 810 Other assets 15,732 15,731 Expen
Slide 30: Assets Under Management
ASSETS UNDER MANAGEMENT IGM Assets Under Management Change in IGM Assets Under Management ($B) ($B) Total Assets Quarterly Average Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 LTM Annual Average Investment Fund Assets Opening 142.7 147.5 148.6 150.0 156.5 147.5 Net Sales - Investment Funds 1.1 1.0 0.8 0.7 1.4 4.0
Slide 31: Investors Group Key Profitability Drivers
INVESTORS GROUP KEY PROFITABILITY DRIVERS Average AUM & Rates of AUM Gross Sales & Rates of Sales Non-commission Expenses ($B, unless otherwise stated) ($B, unless otherwise stated) ($MM) (2.0%) Annualized 206.2 205.7 204.7 203.7 202.7 Mgmt. & Adm. 147.7 147.7 Fee Rate (bps) 2.4% 2.5% 2.5% 2.4% 142.
Slide 32: Investors Group Profitability
INVESTORS GROUP PROFITABILITY ($MM, unless otherwise indicated) Change QoQ Change YoY 1 Management and Q1/17 Q4/17 Q1/18 $ % $ % administration fees declined Days in the period 90 92 90 (2.2%) 0.0% 2.0% quarter-over-quarter, Average mutual fund AUM ($ Billions) 82.8 87.2 87.8 0.6 0.7% 5.0 6.0% pri
Slide 33: Mackenzie Key Profitability Drivers
MACKENZIE KEY PROFITABILITY DRIVERS Average AUM & Rates of AUM Mutual Fund Gross Sales & Non-commission Expenses2 ($B, unless otherwise stated) Rates of Sales ($MM) 91.1 ($B, unless otherwise stated) 89.3 87.9 88.1 Annualized Net 85.5 Revenue Rate 10.0% Sales (bps)1,2 0.35% 0.36% 0.40% 0.37% Commiss
Slide 34: Mackenzie Profitability
MACKENZIE PROFITABILITY ($MM, unless otherwise indicated) 1 Quarter-over-quarter Change QoQ Change YoY Q1/17 Q4/17 Q1/18 $ % $ % decline in net revenues Days in the period 90 92 90 (2.2%) 0.0% due to fewer days in the Average AUM ($ Billions): Total 58.7 63.0 65.2 2.2 3.5% 6.5 11.1% period Investm
Slide 35: Q&A
Q&A IGM FINANCIAL M a y 4 , 2 0 1 8 35 35