Canaccord Genuity Group Inc. · TSX:CF
Canaccord Genuity — Investor Presentation (March 2019)
27 slides from Canaccord Genuity's investor presentation, March 2019
Slide 1: Investor Presentation
Investor Presentation MARCH, 2019
Slide 2: Forward-looking statements
This document may contain ‘‘forward-looking statements’’ (as defined under applicable securities laws). These statements relate to future events or future performance and reflect management’s expectations, beliefs, plans, estimates, intentions and similar statements concerning anticipated future eve
Slide 3: Driven to deliver superior client outcomes
/ Driven to deliver superior client outcomes / Driven to strengthen employee engagement / Driven to become more profitable / Driven to increase shareholder value Page 3
Slide 4: A leading independent financial services firm with a global presence
A leading independent financial services firm with a global presence WEALTH MANAGEMENT CAPITAL MARKETS HOW WE Comprehensive wealth management DIFFERENTIATE Provides leading investment banking, solutions to help individual investors, equity research and sales and trading private clients and charities
Slide 5: Focusing our business for long-term value creation
Focusing our business for long-term value creation Diversify Restructure & Refocus Balance business mix Sustainable, profitable growth 2010 to 2014 2015 - 2016 2017 - 2018 2019 and beyond • Redeploy capital across fewer • Expand global footprint • Align global business leaders • Significantly grow g
Slide 6: Results for the first nine months of fiscal 2019
Results for the first nine months of fiscal 2019 exceeding pace for fiscal 2018 Revenue Net Income C$ millions, fiscal years ended March 31 C$ millions, fiscal years ended March 31 $90.7 $81.7 $1,022.9 $878.4 $905.8 $49.2 $787.8 ($0.6) 2016 2017 2018 9M 2019 2016 2017 2018 9M 2019 Diluted EPS1 Total
Slide 7: Build a dominant independent wealth management and capital markets business
Build a dominant independent wealth management and capital markets business • Add scale through acquisitions and recruiting • Drive significant margin improvement and increase profitability • Increase specialization in existing areas of strength • Diversify revenue streams to improve stability throu
Slide 8: Fully independent investment planning and wealth management services and solutions
Fully independent investment planning and wealth management services and solutions UK & Europe: London, Jersey, Guernsey, Isle of Man, Blackpool, Overview Lancaster, Llandudno, Norwich, Nottingham, Worcester, York • Increased client assets to over $60 billion from $33 billion in fiscal 2016 • Proven
Slide 9: Mission 2022
Trailing 12 months Mission 2022 To December 31, 2018 $60 bn $80 bn Client Client Assets Assets • Recruiting • Acquisitions & Tuck-ins • Expand geographic footprint $461 M $600 M Revenue Revenue • Increase fee-based contributions • Grow share of wallet 17% 20% Pre-tax Pre-tax profit profit margin1 ma
Slide 10: A Top 10 wealth manager in an industry where scale matters
A Top 10 wealth manager in an industry where scale matters Client Assets C$ and GBP£, billions ⚫ Focused on mass-affluent investors and intermediaries $46.4 $45.2 $44.9 ⚫ Excellent model for the growth and business mix we aim to achieve in other $40.8 $43.8 $41.2 geographies ⚫ Capable of delivering
Slide 11: Successful track record of integrating new businesses
Successful track record of integrating new businesses • Announced Q4 F2019; Targeted closing Q1 F2020 • Wealth management, financial planning and select private client investment management services • Client portfolios valued at approximately £1 billion • January, 2019 • Expands Midlands presence an
Slide 12: On track to become leading independent Canadian wealth management business
On track to become leading independent Canadian wealth management Client Assets business C$ billions • Focused on mass affluent clients seeing wealth creation and wealth $19.7 management $18.9 $18.3 • Scale, capabilities and economics give us competitive advantages in attracting $14.5 $15.6 *Q3/19 d
Slide 13: Recruiting environment increasingly favourable as banks increase limitations on IAs
Recruiting environment increasingly favourable as banks increase limitations on IAs Significant opportunity to grow market share of full-service retail brokerage assets / Canada’s full-service retail brokerage segment represents $1.3 tn1 (C$, billions) in client assets. / As banks commoditize wealth
Slide 14: Moving toward delivering stability and sustainable profitability through market cycles
Moving toward delivering stability and sustainable profitability through market cycles Income (loss) before income taxes1 C$ millions, fiscal quarters $36.9 $34.8 $36.0 $31.7 $24.9 $13.2 $7.0 $5.8 ($1.9) ($1.9) ($6.4) ($3.2) Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/
Slide 15: Dominant independent investment bank on every measure
Dominant independent investment bank on every measure U.S. Trading, Advisory, ECM and Corporate Access capabilities are integral to Unparalleled origination and placement Canaccord Genuity’s global capital markets platform capability ⚫ #1 ranked Canadian equity underwriter1 for calendar 2018 Canadia
Slide 16: A significant and growing contributor to our global success
A significant and growing contributor to our global success U.S. Trading, Advisory, ECM and Corporate Access capabilities are integral to Canaccord Genuity’s global capital markets platform Strategic combination creates a top-tier mid-market M&A franchise • Aligned business focused in four key secto
Slide 17: Independence allows us to adjust our business mix and stay competitive
Independence allows us to adjust our business mix and stay competitive as client demands change Capital markets revenue by region Capital markets revenue by activity 9M fiscal 2019 9M fiscal 2019 FOCUSED WHERE WE CAN BE MOST RELEVANT TO OUR CLIENTS Commissions AND PROVIDE SUPERIOR REVENUE Canada and
Slide 18: Creating a lower risk business model with growing contributions from wealth management
Creating a lower risk business model with growing contributions from wealth management Revenue by business segment EPS contribution by business segment1,2 9M fiscal 2019 9M fiscal 2019 / Stable wealth 39% management foundation enhances 51% 49% earnings stability 61% throughout market cycles Wealth M
Slide 19: Committed to driving value for clients, employees and shareholders
Committed to driving value for clients, employees and shareholders Shares are attractively valued Driving earnings power by transforming business mix and growing global wealth management Creating a more predictable business with consistency of earnings Increasing market share across our operations S
Slide 20: Analyst coverage
Cormark Securities TD Securities Inc. Jeff Fenwick Graham Ryding Canaccord Genuity Group Inc. is followed by the analysts listed above. Please note that any opinions, estimates or forecasts regarding Canaccord Genuity's performance made by these analysts are theirs alone and do not represent opinion
Slide 21: Third quarter and nine months fiscal 2019
Third quarter and nine months fiscal 2019 Page 21
Slide 22: On track for strong fiscal 2019 performance
On track for strong fiscal 2019 performance • Record quarterly revenue of $331.6 million in Q3/19 • Added 15 Investment Advisor teams in Canadian wealth management fiscal YTD • Acquisition of Petsky Prunier to increase contributions from higher-margin Advisory activities • 9M YTD pre-tax profit marg
Slide 23: Pre-tax net income
Revenue by Activity Pre-tax net income1 and profit margin1 C$ millions, fiscal quarters $40 25% $30 20% $200 15% Pre-tax net income Pre-tax profit margin $150 $20 C$ millions 10% $100 $10 5% $0 $50 0% -$10 $0 -5% -$20 -10% Commissions & Fees Investment Banking Advisory Trading Interest & Other Pre-t
Slide 24: Revenue by region
Revenue by region Pre-tax net income1 and profit margin1 C$ millions $20 20% $120 18% 16% $15 Pre-tax profit margin Pre-tax net income 14% 12% C$ millions $80 $10 10% 8% 6% $40 $5 4% 2% $0 0% $0 Pre-tax net income Pre-tax profit margin UK & Europe Canada Sequential Y/ Y Q3/ 19 Q2/ 19 Change Q3/ 18 Y
Slide 25: Profitability growing faster than expenses as business activity increases
Profitability growing faster than expenses as business activity increases Compensation ratio1 Non-compensation ratio1 64.4% 64.4% 64.2% 34.1% 34.7% 34.2% 62.8% 61.5% 59.8% 60.7% 33.0% 58.3% 58.7% 59.7% 59.1% 31.3% 28.6% 27.1% 27.6% 27.1% 25.1% 23.9% Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1
Slide 26: Well capitalized for continued investment in key priorities
Well capitalized for continued investment in key priorities • Able to support increasing business activities and invest in opportunities to capture additional market share • Closed $133M convertible debenture offering1 in August 2018; Provides additional capital to invest in growing global wealth ma
Slide 27: Trading at a significant discount compared to independent peer group
Trading at a significant discount compared to independent peer group CDN/US wealth managers EPS PE x 03/11/2019 FactSet Financials DPS FactSet Financials Share Basic Market Basic shares most recent Company Ticker Currency Year-end price Cap (in MM) O/S (in MM) FY19 FY20 LTM annualized FY19 FY20 LTM
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