Igm Financial Inc. · TSX:IGM
Igm Financial — Q4 2023 Earnings Presentation
51 slides from Igm Financial's earnings presentation, Feb 16, 2024
Slide 1: IGM Financial Q4, 2023 Results
IGM Financial Q4, 2023 Results February 16th, 2024
Slide 2: Conference call participants
Conference call participants JAMES O‘SULLIVAN DAMON MURCHISON LUKE GOULD KEITH POTTER 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 Inc.’s (IGM Financial, IGM or the Company) and, where applicable, its subsidiaries’ and str
Slide 4: Non-IFRS financial measures & other financial measures
Non-IFRS financial measures & other financial measures This report contains Non-IFRS financial measures and non-IFRS ratios that do not have standard meanings prescribed by IFRS and may not be directly comparable to similar measures used by other companies. These measures and ratios are used to prov
Slide 5: Non-IFRS financial measures & other financial measures
Non-IFRS financial measures & other financial measures Other items Other items for the year ended December 31, 2023 consisted of: • A gain on the sale of IPC of $220.7 million recorded in the fourth quarter. • Restructuring and other charges of $76.2 million after-tax ($103.3 million pre-tax), recor
Slide 6: 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 7: James O’Sullivan
James O’Sullivan President and CEO IGM Financial 7
Slide 8: IGM Financial 2023 highlights
IGM Financial 2023 highlights 2023 operational highlights Positioned for growth EPS • Adjusted EPS1 of $3.44 $4.82 • Reported EPS includes one-time items related to gains on sales, organizational restructuring and IFRS 17 adjustments +32.8% vs. 2022 • Realigned segments, focusing IGM Financial as a
Slide 9: 2024 forward view
2024 forward view WEALTH MANAGEMENT ASSET MANAGEMENT Focusing on industry wealth drivers, growing the Leveraging investment excellence and product 2024 Areas segmented advice model and leveraging leading innovation to win in Canadian retail and of Focus technologies to drive market share gains provi
Slide 10: IGM Financial Q4, 2023 highlights
IGM Financial Q4, 2023 highlights Fourth quarter operational highlights Additional highlights EPS • Adjusted EPS1 of $0.84 • Re-instated Normal Course Issuer Bid $1.76 • Includes a negative fair value adjustment in mortgage banking operations • IGM Financial 2023 Investor Day hosted on December 5th
Slide 11: Financial market and client investment returns
Financial market and client investment returns IGM Client Return Index1 Investment Performance 2024 YTD 2.6 at Jan 2022 Q4/23 2023 31/24 2.4 IGM Client Investment Returns 2,3 (9.9%) 6.7% 9.9% 0.7% Equity Markets: 2.2 Canada (S&P / TSX Composite) (5.8%) 8.1% 11.8% 0.6% U.S. (S&P 500) (18.1%) 11.7% 26
Slide 12: Industry operating environment
Industry operating environment Fourth Quarter Industry Long-term Net Sales ($B) Total Industry Industry Asset Manager Peers 16.7 12.7 Categories Q4 2022 Q4 2023 $ Change 8.0 6.5 5.7 4.1 7.2 6.0 Balanced (5.2) (8.1) (2.9) 2.8 2.4 4.1 1.1 0.3 Foreign Equity (3.6) (3.3) 0.3 (0.4) Canadian Equity (0.7)
Slide 13: IGM Financial Q4, 2023 results
IGM Financial Q4, 2023 results Net Earnings Adj. Net Earnings2 ($MM) ($MM) Total AUM&A 1 ($B) 225 Daily AUM&A Annual Average AUM&A 420 199 Quarterly Average AUM&A 260 225 250 240 230 220 Net Earnings Adj. Net Earnings 210 Per Share ($) Per Share2 ($) 200 1.76 0.94 0.84 190 180 0.94 170 160 2021 2022
Slide 14: Adjusted net earnings available to common shareholders by segment ($MM)
Adjusted net earnings available to common shareholders1 by segment ($MM) Wealth Management2 Asset Management Corporate & Other3 IGM Consolidated4 Year-over-year change includes Year-over-year change includes 224.7 -11% the impact of the additional impact of the partial sale of equity interest in Chi
Slide 15: Fourth quarter ending AUM&A (CAD $B)
Fourth quarter ending AUM&A (CAD $B) Consolidated AUM&A incl. strategic Wealth Management Asset Management investments1,4 1,2 1,2 1,2 1,2 35% Sub-advised AUM to Wealth Management: 341.0 389.4 337.6 Q4/23 $76.8B (Q4/22 Q4/22 $73.5B) Q4/23 288.3 Additional AUM&A not 186.6 195.7 3 included in consolida
Slide 16: Wealth Management
WEALTH MANAGEMENT Damon Murchison President & CEO IG Wealth Management 16
Slide 17: Wealth management Q4, 2023 highlights
Wealth management Q4, 2023 highlights IG Wealth ending AUM&A of $121.2B increased 6.1% during the quarter • Increase is driven by strong client returns of positive 6.7% • Q4/23 client asset growth up 9.4% with year-to-date growth of 24.7%2 IG Wealth Q4 gross inflows of $3.1B represent another • IG W
Slide 18: Net flows at IG Wealth Management
1 In January 2024, the IG defined benefit pension plan redeemed $177MM from Net flows at IG Wealth Management IG funds that were re-allocated into an SMA managed by Mackenzie. Excluding this activity, IG Wealth’s net outflows were $91MM in January 2024. IG Wealth Management Gross and Net flows1 ($MM
Slide 19: IG Wealth Management Q4, 2023 operating results
IG Wealth Management Q4, 2023 operating results Asset Under Gross Inflows ($MM) Gross Outflows Rate Net Flows ($MM) Advisement ($B) (Quarterly annualized) 429 Cash, GICs, HISAs 11.3% 3rd party 3,031 3,089 9.4% IGM Solutions (AUM) 3 114.2 121.2 (228) 110.8 5.7 6.1 5.3 7.5 5.4 6.6 Q4/22 Q4/23 Net Flow
Slide 20: Sales growth driven by strong high-net-worth & mass affluent client acquisition
Sales growth driven by strong high-net-worth & mass affluent client acquisition Gross Flows from Newly Acquired Clients (Annual, $MM) Gross Flows from New Acquired Clients (LTM, $MM) By Client Assets Brought to IG Wealth By Client Assets Brought to IG Wealth <$100K $100-500K $500-1,000K >$1,000K Gro
Slide 21: Focus on industry wealth drivers
Focus on industry wealth drivers Q4/23 launch of the iProfile Enhanced Monthly Income Portfolios iProfile Enhanced Industry wealth drivers Monthly Income Portfolios deliver… Philanthropy and Tax Planning and Legacy Planning Optimization Predictable INCOME 6 1 Retirement Readiness Focus on PERFORMANC
Slide 22: Strong advisor productivity
Strong advisor productivity Gross Inflows per Advisor Recruit Gross Inflows per Advisor Practice with <4 years experience ($MM) with >4 years experience1 ($MM) Productivity in-focus 1.69 1.60 • Scaling our segmented advice model to 0.68 1.49 0.66 help provide consistent services to all 1.38 clients
Slide 23: Rockefeller Q4 & FY23 update
Rockefeller Q4 & FY23 update Q4 and FY2023 Highlights 2023 Full Year Client Asset1 Growth Advisor Team Growth (US$ B) 1 ▪ Year-to-date organic growth 137 3 drove US$3.9B in client assets 2 116 2 ▪ Strong year-to-date inorganic growth 1 91 ▪ US$12.2B client assets, including US$3.1B during Q4 60 3 ▪
Slide 24: Wealthsimple Q4 & FY23 update
Wealthsimple Q4 & FY23 update Q4 and FY2023 Highlights AUA by Quarter ($B) Client Count by Quarter1 (000s) 31.0 2,255 2,228 2 1▪ Wealthsimple’s AUA grew to 1 2,116 2,169 2,031 $31.0B, up 24% sequentially 1,965 2,002 1,910 and 69% year-over-year 24.9 1,753 23.4 21.3 ▪ Record AUA growth of $6.1B in 19
Slide 25: Asset Management
ASSET MANAGEMENT Luke Gould President & CEO Mackenzie Investments 25
Slide 26: Asset management Q4, 2023 highlights
Asset management Q4, 2023 highlights Mackenzie ending AUM of $195.7B, up 5.0% versus September 30, 2023 • Increase is driven by market return of positive 6.5% • ChinaAMC long-term mutual fund AUM growth of 3% during Q4, exceeding industry growth1,2 Investment fund net redemptions of $826MM, • ChinaA
Slide 27: Mackenzie Investments net flows
Mackenzie Investments net flows Mackenzie Adjusted Investment Fund Flows1 ($MM) Mackenzie Adjusted Investment Fund Net Flows1 (in $MM) MF Gross Sales MF Redemptions MF Net Sales ETF Net Flows (Last Twelve Month Trailing, as at January 31, 2024) Month of January Total Retail 1,261 698 804 716 994 981
Slide 28: Mackenzie Q4, 2023 operating results
Mackenzie Q4, 2023 operating results Retail Mutual Fund Gross Sales ($MM) Net Sales ($MM)1,2 Q4/22 Q4/23 1,352 1,382 Retail mutual Funds (815) (890) ▪ Total net redemptions were $1.0B Retail ETFs 118 33 ▪ (3.5%) long-term investment fund net sales rate Retail investment funds (697) (857) over the tw
Slide 29: 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 ChinaAMC, Global Equity Multi-Asset Cundill American Ivy Growth Bluewater Resources Greenchip Quantitative F
Slide 30: Chinese mutual fund industry AUM and net flows
Chinese mutual fund industry AUM and net flows; ChinaAMC is an industry leader, and consistently among the top five in the league tables Growth Chinese Mutual Fund Industry Top 10 Long-term Chinese Mutual Fund Industry Mutual Fund Provider Market Shares (% at December 31, 2023) QoQ 1-year CAD/RMB =
Slide 31: A leading Chinese asset manager – total AUM continuity
A leading Chinese asset manager – total AUM continuity ChinaAMC Ending AUM1 (RMB billions) 1 Other (primarily institutional) Q4/23 long-term mutual Money-market funds fund net sales of 49B RMB3 Growth QoQ 1yr Long-term mutual funds 1,802 1,826 1,824 0% 6% 1,740 1,733 1,772 1,722 1,662 1,607 1,581 1,
Slide 32: Capital Partners
Capital Partners Q4 and 2023 Highlights Northleaf AUM History1 Northleaf YTD AUM Continuity1 $Billions $Billions ▪ Strong fundraisings of $0.8B for the quarter ended December 31, 26.6 2023 24.1 ▪ Northleaf AUM has grown at a 19.5 22.3% compound annual growth rate (CAGR) since the partnership with Ma
Slide 33: Keith Potter
Keith Potter Executive Vice-President & CFO IGM Financial 33
Slide 34: IGM Financial Q4, 2023 financial highlights
IGM Financial Q4, 2023 financial highlights • Adjusted EPS1 of $0.84 EPS • Includes a $9MM (pre-tax) negative fair value adjustment in mortgage banking operations $1.76 • Reported EPS includes gains related to the closing of the sale of IPC to Canada Life • AUM&A now reflects closing on IPC sale +87
Slide 35: Total assets under management & advisement
Total assets under management & advisement IGM Assets Under Management & Advisement1 ($B) Change in IGM AUM&A1 ($B) Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 LTM Daily AUM&A Annual Average AUM&A Quarterly Average AUM&A Opening AUM&A excluding sub-advisory to Canada Life 160.3 177.2 185.5 186.8 181.5 177.2 IG We
Slide 36: IGM Financial consolidated profitability
IGM Financial consolidated profitability Lower Wealth management revenues relative to $ Millions (unless otherwise noted): Change QoQ Change YoY IGM Financial Consolidated Q4/22 Q3/23 Q4/23 $ % $ % 1▪ Average AUM & AUA ($ Billions) Wealth Management AUM & AUA 109.6 116.9 117.1 0.2 0.1% 7.5 6.8% Q3 d
Slide 37: IG Wealth Management - key profitability drivers
IG Wealth Management - key profitability drivers Daily Average Assets ($B), Advisory and Product & Key Revenue & Expenses as bps of Respective Program Fee Rate (bps)1 Driver (AUA or AUM)1 114.7 116.1 116.9 117.1 109.6 102.8 11.8 12.2 12.9 102.4 102.2 102.1 102.1 11.3 Other AUA 10.4 103.3 104.2 104.7
Slide 38: IG Wealth Management profitability
IG Wealth Management profitability $ Millions (unless otherwise noted): IG Wealth Management Q4/22 Q3/23 Q4/23 Change QoQ $ % $ Change YoY % 1▪ Q4/23 mortgage operations revenues decrease Average assets under advisement ($B) 109.6 116.9 117.1 0.2 0.1% 7.5 6.8% driven by a $9MM (pre-tax) negative fai
Slide 39: Mackenzie - key profitability drivers
Mackenzie - key profitability drivers Net Asset Management Fee Rates1 Average AUM ($B), Net Asset Management Fees (bps)1 (as bps of respective AUM) Sub-advisory and 193.1 AUM to Wealth Third-party 192.0 191.9 189.3 82.3 80.8 80.9 81.1 186.3 Management 80.4 Excluding Canada Life Third Party AUM Overa
Slide 40: Mackenzie profitability
Mackenzie profitability $ Millions (unless otherwise noted): Change QoQ Change YoY Mackenzie Investments Q4/22 Q3/23 Q4/23 $ % $ % Average assets under management ($B) Third Party AUM 112.7 115.5 114.1 (1.4) (1.2%) 1.5 1.3% 1▪ 2023 full-year expense growth of 1.4% below Sub-advisory and AUM to Wealt
Slide 41: 2024 expense guidance
2024 expense guidance Guidance and Outlook1: Combined Operations & Support and Business Development Expenses IGM Consolidated2 2024 expense growth of 3.5% plus (year-over-year change) 0.5% related to expense re- 5-year technology & 2023 expense growth of 1.7%, below alignment (geography change vs. o
Slide 42: ChinaAMC – AUM and earnings
ChinaAMC – AUM and earnings ChinaAMC Ending AUM1 IGM Share of ChinaAMC Earnings (RMB billions) (CAD millions) Additional share due to increased ownership Other (primarily institutional) Additional share due to increased ownership Money-market funds 1-Year Long-term mutual funds Growth 28.1 27.7 1,77
Slide 43: Adjusted net earnings available to common shareholders by segment and company ($MM)
Adjusted net earnings available to common shareholders1 by segment and company ($MM) Wealth Asset Corporate IGM Management2 Management3 & Other4 Consolidated5 Year-over-year change Year-over-year change includes impact of the includes the impact of partial sale of IGM’s 224.7 -11% the additional equ
Slide 44: Summary: Segment breakdown
Summary: Segment breakdown Adj. Earnings by Segment Strategic Investments – Ownership and value Q4/22 Adj. Q4/23 Adj. YoY Ownership Accounting Q4/23 Net Q4/23 Value Assumption Earnings4 Earnings4 Change Q4/23 | Q4/22 Basis Carrying Value Fair Value All $ in millions WEALTH MANAGEMENT IG $104.6 $101.
Slide 45: Q&A
- Wealth Wealth Management Asset Management Financial Q&A This way to better > y,
Slide 46: Appendix
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Slide 47: IGM Financial adjusted EBIT & margins
IGM Financial adjusted EBIT & margins Excludes discontinued operations IGM Adjusted EBIT1 ($MM) IGM Adjusted EBIT Margin1,2,5 (% of AUM&A) Direct advisor/dealer 770.8 compensation 3 & sub- 767.6 754.9 762.7 768.8 1.22% 1.23% 1.23% 1.21% advisory expenses 1.21% Share of associates’ 0.34% 0.34% 0.35%
Slide 48: Adjusted net earnings available to common shareholders by segment and company ($MM)
Adjusted net earnings available to common shareholders by segment and company ($MM) Corporate IGM Wealth Management Asset Management2 & Other3 Consolidated4,5 Year-over-year change includes the impact of the additional equity interest in ChinaAMC and the partial sale of IGM’s -5% 2022 equity interes
Slide 49: Adjusted net earnings available to common shareholders by segment and company ($MM)
Adjusted net earnings available to common shareholders by segment and company ($MM) Adjusted Net Earnings Available to Common Shareholders1 5 887.1 2023 820.7 Analyst 459.6 Consensus2 432.4 2024 204.4 210.0 8.9 FVTOCI 93.7 103.9 13.9 15.4 66.9 89.3 3 7.7 (0.7) Figures in table may not add due to rou
Slide 50: EBITDA before sales commission
EBITDA before sales commission1 Change QoQ Change YoY IGM Financial Inc. Q4/22 Q3/23 Q4/23 $ % $ % Adjusted EBIT 313.6 304.3 290.1 (14.3) (4.7%) (23.6) (7.5%) EBIT - discontinued operations 5.4 6.8 4.1 (2.7) (39.9%) (1.3) (24.6%) Adjusted EBIT - continuing and discontinued operations 319.0 311.1 294
Slide 51: Segment re-alignment
Segment re-alignment Mapping changes in Supplemental information package Strategic Investments & Other Segment FOR ILLUSTRATIVE PURPOSES ONLY: Results presented using historical Segment presentation, which was revised in Q4 2023. Legend to New Location ▪ The historical “Strategic Operating Results O