Excluding significant items, third quarter earnings per common share of $0.28(1)
(All dollar amounts are stated in Canadian dollars unless otherwise indicated)
TORONTO, Feb. 13, 2019 /CNW/ - During the third quarter of
fiscal 2019, the quarter ended December 31, 2018, Canaccord Genuity Group Inc. (Canaccord Genuity,
the Company, TSX: CF) generated $331.6 million in revenue. Excluding significant items
(1), the Company recorded net income (3) of $36.8 million or
net income of $34.5 million attributable to common shareholders (2) (earnings
per common share of $0.28). Including all significant items, on an IFRS basis, the Company recorded
net income (3) of $32.5 million or net income attributable to common shareholders
(2) of $30.1 million (earnings per common share of $0.25).
"We delivered another solid quarter of revenue growth in global capital markets and consistent results from our global wealth
management operations, placing us firmly on track for another strong fiscal year performance," said Dan
Daviau, President & CEO of Canaccord Genuity Group Inc. "We have taken important steps to continue adding scale to our
global wealth management businesses and strengthening our capital markets business, with confidence that our efforts will
continue to translate into stronger and more sustainable returns for our shareholders."
Third quarter of Fiscal 2019 vs. Third quarter of Fiscal 2018
- Revenue of $331.6 million, an increase of 7.2% or $22.2 million
from $309.4 million
- Excluding significant items, expenses of $285.7 million, an increase of 10.2% or $26.5 million from $259.2 million(1)
- Expenses of $291.0 million, an increase of 10.8% or $28.4
million from $262.6 million
- Excluding significant items, diluted earnings per common share (EPS) of $0.28 compared to
earnings per common share of $0.31(1)
- Excluding significant items, net income (3) of $36.8 million compared to net
income (3) of $39.2 million (1)
- Net income (3) of $32.5 million compared to net income (3) of
$36.6 million
- Diluted EPS of $0.25 compared to diluted EPS of $0.29
Third quarter of Fiscal 2019 vs Second Quarter of Fiscal 2019
- Revenue of $331.6 million, an increase of 10.5% or $31.6
million from $300.0 million
- Excluding significant items, expenses of $285.7 million, an increase of 9.1% or $23.8 million from $261.9 million (1)
- Expenses of $291.0 million, an increase of 3.8% or $10.7
million from $280.3 million
- Excluding significant items, diluted EPS of $0.28 compared to diluted EPS of $0.23 (1)
- Excluding significant items, net income (3) of $36.8 million compared to net
income (3) of $28.9 million (1)
- Net income (3) of $32.5 million compared to net income (3) of
$13.1 million
- Diluted EPS of $0.25 compared to earnings per common share of $0.09
|
__________________________
|
|
1 Figures excluding significant items are non-IFRS
measures. See Non-IFRS measures on page 5.
|
|
2 Net income attributable to common shareholders is calculated
as the net income adjusted for non-controlling interests and preferred share dividends.
|
|
3 Before non-controlling interests and preferred share
dividends.
|
Year-to-Date Fiscal 2019 vs. Year-to-Date Fiscal 2018
(Nine months ended December 31, 2018 vs. Nine months ended December 31, 2017)
- Revenue of $905.8 million, an increase of 29.2% or $205.0
million from $700.8 million
- Excluding significant items, expenses of $792.4 million, an increase of 23.4% or $150.0 million from $642.4 million (1)
- Expenses of $823.5 million, an increase of 24.3% or $160.8
million from $662.8 million
- Excluding significant items, diluted EPS of $0.69 compared to diluted EPS of $0.33(1)
- Excluding significant items, net income (3) of $90.7 million compared to net
income (3) of $44.3 million (1)
- Net income (3) of $64.2 million compared to net income (3) of
$26.8 million
- Diluted EPS of $0.48 compared to an earnings per common share of $0.17
Financial Condition at end of Third quarter Fiscal 2019 vs. Fourth Quarter Fiscal 2018
- Cash and cash equivalents balance of $930.9 million, an increase of $68.1 million from $862.8 million
- Working capital of $644.4 million, an increase of $68.8 million
from $575.6 million
- Total shareholders' equity of $839.2 million, a decrease of $2.2
million from Q4/18
- Book value per diluted common share of $6.04, an increase of $0.33 from $5.71(4)
- On February 13, 2019, the Board of Directors approved a dividend of $0.01 per common share, payable on March 15, 2019, with a record date of
March 1, 2019
- On February 13, 2019, the Board of Directors approved the following cash dividends:
$0.24281 per Series A Preferred Share payable on April 1, 2019 with
a record date of March 15, 2019; and $0.31206 per Series C
Preferred Share payable on April 1, 2019 with a record date of March 15,
2019
SUMMARY OF OPERATIONS
Corporate
- On August 10, 2018, the Company announced the filing of a normal course issuer bid (NCIB) to
purchase common shares of the Company through the facilities of the TSX and on the alternative Canadian trading systems during
the period from August 15, 2018 to August 14, 2019. The purpose of
any purchases under this program is to enable the Company to acquire shares for cancellation. The maximum number of shares that
may be repurchased are 5,677,589, which represented 5.0% of the Company's outstanding common shares at the time of filing the
NCIB. During the nine months ended December 31, 2018, there were 152,200 shares purchased and
cancelled under the NCIB which commenced August 15, 2017 and ended on August 14, 2018. There were also 876,500 shares that were purchased and cancelled under the current NCIB
during the nine months ended December 31, 2018, and 29,500 shares purchased but not yet cancelled
as of December 31, 2018.
- On December 3, 2018, the Company launched a new brand identity, which has become an integral
part of all firmwide communications, products and experiences. This development honours the transformative changes made across
the organization, as the Company significantly advances its strategy to improve alignment across operations and transform its
business mix with the objective of delivering more predictable and sustainable results.
- On January 29, 2019, the Company announced the addition of McCarthy Taylor Ltd. to its wealth
management operations in the UK & Europe. This development advances Canaccord Genuity
Wealth Management (UK & Europe)'s objective of expanding its national footprint and
broadening its offering of fully integrated investment and wealth planning services.
- On February 13, 2019, the Company announced that it has acquired 100% of the business of a
preeminent New York-based boutique M&A Advisory firm, Petsky Prunier LLC. ("Petsky
Prunier"), in an asset purchase for initial consideration of $40 million (US$30 million) in cash and $20 million (US$15
million) in common shares of the Company to be issued over a three-year period. Additional contingent consideration of
up to $53.2 million (US$40 million) will be paid in cash over a
four-year period subject to meeting certain revenue targets over that period. For the year ended December 31, 2018, Petsky Prunier generated revenue of US$43.0 million.
All key Petsky Prunier partners have entered into employment agreements with the Company.
This development supports the Company's objective of adding scale to its fixed cost base in the region and diversifying its
revenue streams, while enhancing its client offering to capture greater market share in its core areas of strength, primarily
in the mid-market Technology and Healthcare sectors.
- Dvai Ghose will be retiring from his role as Global Head of Research and Head of Strategic Development, effective
March 31, 2019. Derek Dley will assume the role of Director of Canadian Research, effective
April 1, 2019.
- Andrew (Andy) Viles has been appointed an Executive Vice-President and Chief Legal Officer
for Canaccord Genuity Group Inc. In this capacity, he becomes responsible for ensuring unified oversight and coordination of
legal, regulatory and compliance functions across all business and regions where Canaccord Genuity Group operates. Mr. Viles
joined Canaccord Genuity in 2003 and most recently served as Head of North American Capital Markets Compliance. He continues to
serve as General Counsel for the U.S. entity, where he manages all U.S. legal matters, particularly within investment banking
activities. Prior to joining Canaccord Genuity, Mr. Viles was a partner in the national law firm of Goodwin Procter LLP,
working in the firm's Corporate Department. As an experienced securities lawyer, he has extensive experience advising on
mergers & acquisitions, corporate restructurings, corporate finance, and capital markets transactions. Mr. Viles holds a
Bachelor of Arts from Bates College, Lewiston, Maine, and a Juris
Doctor from Boston University School of Law. He is a member of the Massachusetts Bar and the
American Bar Association.
|
________________
|
|
4 See Non-IFRS Measures on page 5.
|
Capital Markets
- Canaccord Genuity Capital Markets generated revenue of $209.4 million, and after intersegment
allocations and excluding significant items, recorded net income before taxes of $31.7 million
(1)
- Canaccord Genuity Capital Markets led or co-led 61 transactions globally, raising proceeds of C$2.3
billion (5) during fiscal Q3/19
- During fiscal Q3/19 including the 61 transactions led globally, Canaccord Genuity Capital Markets participated in 104
investment banking transactions globally, raising total proceeds of C$6.3 billion (5)
- Significant investment banking transactions for Canaccord Genuity Capital Markets during fiscal Q3/19 include:
-
- C$520.1 million for Curaleaf Holdings, Inc on CSE
- US$314.2 million for Acreage Holdings, Inc on CSE
- US$305.0 million for BioPharma Credit plc on LSE
- US$218.1 million for Harvest Health & Recreation on CSE
- C$120.2 million for Tilt Holdings Inc. on CSE
- £108.5 million for Triple Point Social Housing REIT plc on LSE
- C$107.3 million for Cresco Labs, LLC on CSE
- US$85.1 million for Canaccord Genuity Growth Corp. on CSE
- £79.0 million for The Renewables Infrastructure Group Limited on LSE
- C$76.0 million for The Green Organic Dutchman on TSX
- C$75.0 million for MedMen Enterprises on CSE
- AUD$60.6 million for Redbubble Limited on ASX
- C$57.6 million for Wayland Group (MariCann) on CSE
- C$51.8 million for Namaste Technologies Inc on TSXV
- US$42.9 million for VBI Vaccines Inc on NASDAQ
- US$42.2 million for The Lovesac Company on Nasdaq
- C$46.0 million for Patriot One Technologies Inc on TSXV
- C$35.0 million for DionyMed Holdings on CSE
- AUD$33.1 million Placement for Fluence Corporation Limited on ASX
- AUD$23.4 million for Westgold Resources Limited on ASX
- C$23.0 million for Sunniva Inc. on CSE
- C$21.2 million for MJAR Holdings Corp. on CSE
- C$20.8 million for Sproutly Canada, Inc on CSE
- C$20.1 million for Westleaf Cannabis Inc. on TSXV
- £20.0 million for Litigation Capital Management Limited on AIM
- US$17.3 million for CPI Aerostructures, Inc on NYSE American
- US$17.0 million for Histogenics Corporation on NASDAQ
- AUD$15.5 million capital raise for Bellevue Gold Limited on ASX
- 11.7 million Placing for Gresham House plc on AIM
|
_____________________
|
|
5 Transactions over $1.5 million. Internally sourced
information.
|
- In Canada, Canaccord Genuity Capital Markets participated in raising $358.7 million for government and corporate bond issuances during fiscal Q3/19.
- Canaccord Genuity Capital Markets generated advisory revenues of $40.0 million during fiscal
Q3/19, an increase of $8.0 million or 24.8% compared to the same quarter last year
- During Q3/19, significant M&A and advisory transactions included:
-
- Michelin on its US$1.7 billion acquisition of Camso Inc.
- Small World on its sale to Equistone Partners Europe
- Dedalus on its acquisition of DL Sante
- Tawana Resources NL on its merger with Alliance Mineral Assets Ltd.
- ICC Labs Inc. on its C$290 million sale to Aurora Cannabis Inc.
- Reis, Inc. on its acquisition by Moody's Corporation
- Dentressangle on its acquisition of Acteon Group
- Alston Gayler and Co Limited on its sale to Miller Insurance Services Limited, part of
Willis Towers Watson group
- Amplio Energy's Italian solar portfolio to a consortium of Plenium Partners, Equitix and Access Capital Partners
- Eurazeo PME on the disposal of Vignal Lighting Group to EMZ Partners
- MJardin Group, Inc. on its C$293.2 million Acquisition of GrowForce Holdings Inc.
- Tendril Networks, Inc. on securing a majority investment from Rubicon Technology Partners
- Jenkins Shipping on its sale to Alcuin Capital Partners
- Tessi on the €100 million disposal of CPoR
- Mason Resources Corp. on its C$35.0 million sale to Hudbay Minerals Inc
- Sherrill Inc. on its acquisition by Platte River Equity
Canaccord Genuity Wealth Management (Global)
- Globally, Canaccord Genuity Wealth Management generated $116.0 million in revenue in Q3/19
- Assets under administration in Canada and assets under management in the UK &
Europe and Australia were $60.2
billion at the end of Q3/19(4), a decrease of 8.5% from $65.8 billion at the
end of Q2/19 and an increase of 1.7% from $59.2 billion at the end of Q3/18 due to negative
market fluctuations at the end of December 2018
Canaccord Genuity Wealth Management (North America)
- Canaccord Genuity Wealth Management (North America) generated $54.2
million in revenue and, after intersegment allocations and before taxes, recorded net income of $8.9 million in Q3/19
- Assets under administration in Canada were $18.3 billion as
at December 31, 2018 a decrease of 7.5% from $19.7 billion at the
end of the previous quarter and an increase of 26.4% from $14.5 billion at the end of
Q3/18(4)
- Assets under management in Canada (discretionary) were $4.0
billion as at December 31, 2018, a decrease of 4.9% from $4.2
billion at the end of the previous quarter and an increase of 39.3% from $2.8 billion at
the end of Q3/18(4). These assets are included in total assets under administration. The decrease
in assets under management and administration from Q2/19 to Q3/19 was due to a decrease in market value at the end of the
quarter
- Canaccord Genuity Wealth Management had 150 Advisory Teams (6) at the end of fiscal Q3/19, unchanged from
September 30, 2018 and an increase of 16 from December 31,
2017
Canaccord Genuity Wealth Management (UK & Europe)
- Wealth management operations in the UK & Europe generated $61.8
million in revenue and, after intersegment allocations, and excluding significant items, recorded net income of
$10.6 million before taxes in Q3/19(1)
- Assets under management (discretionary and non-discretionary) were $41.2 billion (£23.8
billion) as at December 31, 2018, a decrease of 9.0% from $45.2
billion (£26.9 billion) at the end of the previous quarter and a decrease of 6.0% from $43.8
billion (£25.8 billion) at December 31, 2017. (4) In local currency (GBP),
assets under management at December 31, 2018 decreased by 11.5% compared to September 30, 2018 and by 7.9% compared to December 31, 2017(4). The
decrease in assets under management from Q2/19 to Q3/19 was due to a decrease in market value towards the end of December 2018
Non-IFRS Measures
The non-International Financial Reporting Standards (IFRS) measures presented include assets under administration, assets
under management, book value per diluted common share and figures that exclude significant items. Significant items include
restructuring costs, amortization of intangible assets acquired in connection with a business combination, impairment of goodwill
and other assets and acquisition-related expense items, which include costs recognized in relation to both prospective and
completed acquisitions, gains or losses related to business disposals including recognition of realized translation gains
on the disposal of foreign operations, certain accounting charges related to the change in the Company's long-term incentive plan
as recorded with effect on March 31, 2018, certain incentive-based costs related to the acquisition
of Hargreave Hale recorded under development costs, loss related to the extinguishment of convertible debentures as recorded for
accounting purposes, as well as certain expense items, typically included in development costs, which are considered by
management to reflect a singular charge of a non-operating nature. Book value per diluted common share is calculated as total
common shareholders' equity adjusted for assumed proceeds from the exercise of options and warrants, settlement of a promissory
note issued as purchase consideration in shares at the Company's option and conversion of convertible debentures divided by the
number of diluted common shares that would then be outstanding including estimated amounts in respect of share issuance
commitments including options, warrants, convertible debentures and a promissory note, as applicable, and adjusted
for shares purchased or committed to be purchased under the Company's normal course issuer bid (NCIB) and not yet cancelled and
estimated forfeitures in respect of unvested share awards under share-based payment plans.
Management believes that these non-IFRS measures will allow for a better evaluation of the operating performance of the
Company's business and facilitate meaningful comparison of results in the current period to those in prior periods and future
periods. Figures that exclude significant items provide useful information by excluding certain items that may not be indicative
of the Company's core operating results. A limitation of utilizing these figures that exclude significant items is that the IFRS
accounting effects of these items do in fact reflect the underlying financial results of the Company's business; thus, these
effects should not be ignored in evaluating and analyzing the Company's financial results. Therefore, management believes that
the Company's IFRS measures of financial performance and the respective non-IFRS measures should be considered
together.
|
_________________________
|
|
6 Advisory Teams are normally comprised of one or more
Investment Advisors (IAs) and their assistants and associates, who together manage a shared set of client accounts.
Advisory Teams that are led by, or only include, an IA who has been licensed for less than three years are not included
in our Advisory Team count, as it typically takes a new IA approximately three years to build an average-sized book of
business.
|
Selected financial information excluding significant items (1)
|
|
|
|
|
|
Three months ended
December 31
|
Quarter-
over-
quarter
change
|
Nine months ended
December 31
|
YTD –
over –
YTD
change
|
|
(C$ thousands, except per share and % amounts)
|
2018
|
2017
|
2018
|
2017
|
|
Total revenue per IFRS
|
$331,600
|
$309,442
|
7.2%
|
$905,759
|
$700,797
|
29.2%
|
|
Total expenses per IFRS
|
$290,991
|
$262,559
|
10.8%
|
$823,538
|
$662,752
|
24.3%
|
|
Revenue
|
|
|
|
|
|
|
|
Total revenue excluding significant items
|
$331,600
|
$309,442
|
7.2%
|
$905,759
|
$700,797
|
29.2%
|
|
Expenses
Significant items recorded in Canaccord Genuity
Capital Markets
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
639
|
579
|
10.4%
|
1,857
|
1,738
|
6.7%
|
|
Restructuring costs (2)
|
----
|
--
|
---
|
1,316
|
4,704
|
(72.0) %
|
|
Acquisition related costs
|
---
|
---
|
---
|
1,173
|
---
|
n.m.
|
|
Significant items recorded in Canaccord Genuity Wealth
Management
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
2,745
|
2,820
|
(2.7) %
|
8,353
|
5,406
|
54.5%
|
|
Restructuring costs (2)
|
---
|
---
|
---
|
---
|
2,000
|
(100.0) %
|
|
Acquisition-related costs
|
170
|
---
|
n.m.
|
170
|
6,548
|
(96.0) %
|
|
Incentive based costs related to acquisition (3)
|
1,490
|
---
|
n.m.
|
4,530
|
---
|
n.m.
|
|
Development costs (4)
|
245
|
---
|
n.m.
|
245
|
---
|
n.m.
|
|
Significant items recorded in Corporate and Other
|
|
|
|
|
|
|
|
Loss on extinguishment of convertible debentures
|
---
|
---
|
n.m.
|
13,500
|
---
|
n.m.
|
|
Total significant items
|
5,289
|
3,399
|
55.6%
|
31,144
|
20,396
|
52.7%
|
|
Total expenses excluding significant items
|
285,702
|
259,160
|
10.2%
|
792,394
|
642,356
|
23.4%
|
|
Net income before taxes – adjusted
|
$45,898
|
$50,282
|
(8.7) %
|
$113,365
|
$58,441
|
94.0%
|
|
Income taxes – adjusted
|
9,055
|
11,100
|
(18.4) %
|
22,620
|
14,096
|
60.5%
|
|
Net income – adjusted
|
$36,843
|
39,182
|
(6.0) %
|
$90,745
|
44,345
|
104.6%
|
|
Net income attributable to common shareholders,
adjusted
|
$34,491
|
$34,665
|
(0.5)%
|
$82,433
|
$35,008
|
135.5%
|
|
Earnings per common share – basic, adjusted
|
$0.35
|
$0.38
|
(7.9) %
|
$0.86
|
$0.38
|
126.3%
|
|
Earnings per common share – diluted, adjusted
|
$0.28
|
$0.31
|
(9.7) %
|
$0.69
|
$0.33
|
109.1%
|
|
(1)
|
Fgures excluding significant items are non-IFRS measures. See Non-IFRS
Measures on page 5.
|
|
(2)
|
Restructuring costs for the nine months ended December 31, 2018 were
incurred in connection with our UK capital markets operations. Restructuring costs for the nine months ended December 31,
2017 related to termination benefits incurred as a result of the closing of certain trading operations in the UK &
Europe capital markets operations, staff reductions in our Canadian and US capital markets operations, as well as real
estate and other integration costs related to the acquisition of Hargreave Hale.
|
|
(3)
|
Incentive-based costs related to the acquisition of Hargreave Hale
determined with reference to financial targets and other performance criteria recorded under development
costs.
|
|
(4)
|
Related to costs directly attributable to internal development of software
used in our UK wealth management operations
|
|
n.m..: not meaningful
|
Business segment results for the three months ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
Excluding
significant items
(A)
|
IFRS
|
|
(C$ thousands, except per share amounts)
|
Canaccord
Genuity
Capital
Markets
|
Canaccord
Genuity Wealth
Management
|
Corporate and
Other
|
Total
|
Total
|
|
Revenue
|
$209,373
|
$115,979
|
$6,248
|
$331,600
|
$331,600
|
|
Expenses
|
(173,649)
|
(98,136)
|
(19,206)
|
(290,991)
|
(290,991)
|
|
Inter-segment allocations
|
(4,628)
|
(3,030)
|
7,658
|
---
|
---
|
|
Income (loss) before income taxes and
significant items
|
$31,096
|
$14,813
|
$(5,300)
|
$40,609
|
$40,609
|
|
Significant items (A)
|
|
|
|
|
|
|
Amortization of intangible assets
|
639
|
2,745
|
---
|
3,384
|
---
|
|
Incentive-based costs related to
acquisition
|
---
|
1,490
|
---
|
1,490
|
---
|
|
Development costs
|
---
|
245
|
---
|
245
|
---
|
|
Acquisition related costs
|
---
|
170
|
---
|
170
|
---
|
|
Total significant items
|
639
|
4,650
|
---
|
5,289
|
---
|
|
Income (loss) before income taxes
|
31,735
|
19,463
|
(5,300)
|
45,898
|
40,609
|
|
Income (taxes) recovery (B)
|
(9,142)
|
(4,035)
|
4,122
|
(9,055)
|
(8,151)
|
|
Non-controlling interests
|
(1)
|
---
|
---
|
(1)
|
(1)
|
|
Preferred share dividends (C)
|
(1,513)
|
(838)
|
---
|
(2,351)
|
(2,351)
|
|
Corporate and other (C)
|
(758)
|
(420)
|
1,178
|
---
|
---
|
|
Net income attributable to common
shareholders
|
20,321
|
14,170
|
---
|
34,491
|
30,106
|
|
Dilutive EPS factors
|
|
|
|
|
|
|
Interest on convertible
debentures, net of tax (C)
|
1,095
|
606
|
---
|
1,701
|
1,701
|
|
21,416
|
14,776
|
---
|
36,192
|
31,807
|
|
Average diluted number of shares (D)
|
129,169
|
129,169
|
|
129,169
|
129,169
|
|
Diluted earnings per share, excluding
significant items (A)
|
$0.17
|
$0.11
|
|
$0.28
|
|
|
Diluted earnings per share on an IFRS
basis
|
|
|
|
|
$0.25
|
|
|
|
(A)
|
Figures excluding significant items are non-IFRS measures. See Non-IFRS
Measures on page 5.
|
|
(B)
|
Allocation of consolidated tax provision based on management estimates by
region and by business unit
|
|
(C)
|
Allocation to capital markets and wealth management segments based on
revenue
|
|
(D)
|
This is the diluted share number used to calculate diluted
EPS.
|
Business segment results for the nine months ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
Excluding
significant items
(A)
|
IFRS
|
|
(C$ thousands, except per share
amounts)
|
Canaccord
Genuity
Capital
Markets
|
Canaccord
Genuity
Wealth
Management
|
Corporate and
Other
|
Total
|
Total
|
|
Revenue
|
$544,279
|
$344,681
|
$16,799
|
$905,759
|
$905,759
|
|
Expenses
|
(465,830)
|
(289,129)
|
(68,579)
|
(823,538)
|
(823,538)
|
|
Inter-segment allocations
|
(13,043)
|
(10,048)
|
23,091
|
---
|
---
|
|
Income (loss) before income taxes and
significant items
|
$65,406
|
$45,504
|
$(28,689)
|
82,221
|
82,221
|
|
Significant items (A)
|
|
|
|
|
|
|
Amortization of intangible assets
|
$1,857
|
$8,353
|
---
|
$10,210
|
---
|
|
Restructuring costs
|
1,316
|
|
---
|
1,316
|
---
|
|
Acquisition-related costs
|
1,173
|
170
|
---
|
1,343
|
---
|
|
Loss on extinguishment of
convertible debentures
|
---
|
---
|
13,500
|
13,500
|
---
|
|
Development costs
|
---
|
245
|
---
|
245
|
---
|
|
Incentive-based costs related to
acquisition
|
---
|
4,530
|
---
|
4,530
|
---
|
|
Total significant items
|
4,346
|
13,298
|
13,500
|
31,144
|
---
|
|
Income (loss) before income taxes
|
69,752
|
58,802
|
(15,189)
|
113,365
|
82,221
|
|
Income (taxes) recovery (B)
|
(18,771)
|
(10,449)
|
6,600
|
(22,620)
|
(17,987)
|
|
Non-controlling interests
|
(1,259)
|
--
|
--
|
(1,259)
|
(1,259)
|
|
Preferred share dividends (C)
|
(4,318)
|
(2,735)
|
--
|
(7,053)
|
(7,053)
|
|
Corporate and other (C)
|
(5,259)
|
(3,330)
|
8,589
|
---
|
---
|
|
Net income attributable to common
shareholders
|
40,145
|
42,288
|
---
|
82,433
|
55,922
|
|
Dilutive EPS factors
|
|
|
|
|
|
|
Interest on convertible
debentures, net of tax (C)
|
3,353
|
2,123
|
---
|
5,476
|
5,476
|
|
43,498
|
44,411
|
---
|
87,909
|
61,398
|
|
Average diluted number of shares (D)
|
127,633
|
127,633
|
|
127,633
|
127,633
|
|
Diluted earnings per share, excluding
significant items (A)
|
$0.34
|
$0.35
|
|
$0.69
|
|
|
Diluted earnings per share on an IFRS basis
|
|
|
|
|
$0.48
|
|
|
|
(A)
|
Figures excluding significant items are non-IFRS measures. See Non-IFRS
Measures on page 5.
|
|
(B)
|
Allocation of consolidated tax provision based on management estimates by
region and by business unit
|
|
(C)
|
Allocation to capital markets and wealth management segments based on
revenue
|
|
(D)
|
This is the diluted share number used to calculate diluted
EPS.
|
Fellow Shareholders:
In the final months of 2018, global equities suffered steep declines amidst persistent worries over trade and economic growth.
In fact, the three-month period ended December 31, 2018 was one of the worst quarters for global
equities in many years, as uncertainties over the outlook for the world economy came to a head against a backdrop of tightening
global monetary conditions, US-China trade tensions and political uncertainty in the UK and Europe.
Against this backdrop, we achieved our highest firmwide quarterly revenue of $331.6
million, an increase of 7.2% over the same period a year ago. On an adjusted1 basis, Canaccord Genuity Group Inc.
earned pre-tax income of $45.9 million and diluted earnings per share of $0.28, which brings our adjusted pre-tax income and diluted earnings per share for the first nine months
of this fiscal year to $113.4 million and $0.69 respectively -
well ahead of the 12-month results that we achieved in our previous full fiscal year.
With our continued focus on revenue growth and cost discipline, we have achieved meaningful margin improvement, even as
we have invested for growth. On an adjusted basis, our pre-tax profit margin for the first nine months of fiscal 2019 increased
by 4.2 percentage points when compared to the same period a year ago.
We have also allocated more capital to share buybacks. For the nine months ended December 31,
2018, a total of 1,028,700 shares were purchased and cancelled and we expect to continue our share repurchase program into
our fourth fiscal quarter.
Our results for the third quarter and first nine months of fiscal 2019 reflect our priority of focusing our efforts
on increasing contributions from stable and higher margin businesses, as we pursue opportunities in areas
where we have strong domain expertise
Continuing on this theme, today we announced our acquisition of Petsky Prunier, a premier boutique M&A advisory firm based
in New York, with a focus in the mid-market Technology and Healthcare sectors. For some
time now, we have been evaluating opportunities to add scale to our U.S. capital markets business with a particular emphasis
on growing contributions from higher-margin advisory services. The CG Capital Markets and Petsky Prunier combination
creates a powerful offering for clients of both firms, who will benefit from significantly enhanced advisory capability and
reach, in addition to the globally integrated sales, trading, and equity research capabilities that our broader capital markets
platform provides. Furthermore, this combination is an excellent fit for us culturally and we look forward to significantly
advancing our market position for mid-market advisory services in the region.
We have structured a transaction that encourages the partnership and collaboration that we know are integral to driving growth
and stability across our platform. The transaction will be accretive to our earnings and we feel confident that it will
deliver incremental value for our shareholders, as we diversify our U.S. revenue streams to provide more resiliency in our
financial results.
Advancing our market leadership through unparalleled mid-market execution and advisory capability
Our global capital markets business was the strongest contributor to our third fiscal quarter results, having contributed
62.0% of the adjusted pre-tax net income attributable to our combined operating businesses. Total revenue from these
operations amounted to $209.4 million for the quarter, with the most notable contributions coming
from our Canadian and U.S. businesses.
Performance in our Canadian operations was driven by higher commissions and fees revenue, reflecting increased contributions
by our Jitneytrade operation. While investment banking and advisory revenue decreased modestly compared to the same period a year
ago, we maintained our position as the top underwriter for Canadian equities during the three-month period. Most importantly, I
would like to highlight that Canaccord Genuity was the leading equities underwriter in Canada
for calendar 2018 based on league table data provided by FP Infomart. Our U.S. capital markets business delivered its fifth
consecutive quarter of profitability, driven by revenue increases across all segments, with notable increases in commissions
& fees, investment banking and advisory activities.
|
__________________
|
|
1 Adjusted earnings is a non-GAAP, non-IFRS measure generally
referred to by the company as net income excluding significant items. Refer to non-IFRS measures in the Company's
MD&A.
|
As anticipated, our UK & Europe capital markets operation returned to profitability,
primarily due to the completion of some significant advisory mandates during the third fiscal quarter, which led to a 19.6%
increase year over year in revenue earned by this segment. This business also achieved a notable increase in investment
banking revenue during the quarter, in part due to the contributions from our corporate broking team, which has won seven new
mandates during the third fiscal quarter, contributing to a total of 23 new engagements for the last twelve months. We have
continued to focus on managing this operation to provide more consistent and stable results. Finally, results
in our Australian business were impacted by mark-to-market losses on its fee-based inventory positions. That said, this
business improved its position in the regional league tables and is advancing nicely into its position as a leading independent
mid-market investment bank by deepening domain expertise and relationships in the region to capture additional market share in
our core focus sectors.
All said, the market events during our third fiscal quarter created opportunities for us to showcase the agility that our
independent platform provides, as we continued to establish our strong track record of delivering successful outcomes for growing
companies in varying economic climates.
Continuing to grow our wealth management operations in the UK & Europe and
Canada
Total client assets in our global wealth management businesses at the end of our third fiscal quarter amounted to $60.2 billion, a modest increase compared to the same period a year ago, but a sequential decrease of 8.5%.
This decrease was entirely driven by market depreciation during the period and we note that this drop is less severe than those
observed in global equities. A more stable market backdrop at the start of our fourth fiscal quarter has supported a return to
more normalized valuations, and we continue to add growth across our operations.
Our combined global wealth management operations earned revenue of $116.0 million for our third
quarter, a year-over-year increase of 6.0%, which was primarily driven by higher commission-based and interest revenue in our
Canadian business. Adjusted pre-tax net income was unchanged compared to the same quarter of last year, reflecting higher
compensation expenses and increased hiring incentives in connection with our growth strategy.
Our Canadian wealth management business has delivered its eighth consecutive quarter of profitability. Assets in this business
increased by 26.4% year-over-year, reflecting our recruitment initiatives, in addition to higher market values over the year. At
current asset levels, we have greater confidence that this business will continue to be profitable and we are focused on
initiatives that will drive longer-term margin improvement.
Subsequent to the end of the quarter, we announced that our UK & Europe wealth management
business acquired McCarthy Taylor, an independent financial advisory firm headquartered in Worcester, serving clients across the
UK Midlands. The firm provides bespoke financial planning and discretionary investment management and manages client assets of
approximately £171 million2. In addition to contributing to growth in our client assets, this development advances our
objective of expanding our national footprint and broadening our offering of fully integrated investment and wealth planning
services in this important region. We remain committed to this business and we have a number of opportunities to expand our
offering in the region.
Although we can expect that the impact of market events that began in December 2018 will be
moderately evident in our fourth fiscal quarter results, we continue to add to our client assets and build our professional base
in Canada and explore acquisition opportunities in the UK & Europe. Looking forward, we are focused on achieving sustainable growth and longevity of client assets, and
we are investing in the development of products and strategies to increase our relevance to the clients we serve and capture a
greater share of the wealth wallet.
|
_________________
|
|
2 As of January 4, 2019
|
The global macroeconomic environment continues to have solid near-term fundamentals and we remain constructive in our outlook
for activity levels across our operations over the near- and medium-terms. We see opportunities for productive growth
across our businesses and we are allocating our resources accordingly.
In our global wealth management businesses, we continue to hire strategically while looking for opportunities to add scale. We
are also investing to expand our product offering and provide the resources our investment professionals need to continue doing
great work for our clients. As with any period of change in the market backdrop, we can expect that investor appetite for active
portfolio management and other advice-driven services will increase and we are positioning our business accordingly.
The work we do is essential to supporting a vibrant market for small- and mid-sized companies and the investors who follow
them and we expect to see a continued need for companies and financial sponsors in all our key markets to transact, as they
strive to stay competitive in a rapidly evolving global economy.
We remainon serving all our clients well while we manage the firm for profitable growth. We expect that our efforts will
continue to translate into stronger and more sustainable returns for our shareholders.
Dan Daviau
President & CEO
Canaccord Genuity Group Inc.
ACCESS TO QUARTERLY RESULTS INFORMATION
Interested investors, the media and others may review this quarterly earnings release and supplementary financial
information at https://www.canaccordgenuity.com/investor-relations/investor-resources/financial-reports/
QUARTERLY CONFERENCE CALL AND WEBCAST:
Interested parties are invited to listen to Canaccord Genuity's third quarter results conference call via live webcast or a
toll-free number. The conference call is scheduled for Thursday, February 14, 2019 at 5:00 a.m. Pacific time, 8:00 a.m. Eastern time, 1:00
p.m. UK time, 9:00 p.m. China Standard Time, and midnight Australia EST. During the call,
senior executives will comment on the results and respond to questions from analysts and institutional investors.
The conference call may be accessed live and archived on a listen-only basis at:
https://www.canaccordgenuity.com/investor-relations/news-and-events/conference-calls-and-webcasts/
Analysts and institutional investors can call in via telephone at:
- 647-427-7450 (within Toronto)
- 1-888-231-8191 (toll free outside Toronto)
- 0-800-051-7107 (toll free from the United Kingdom)
- 0-800-91-7449 (toll free from France)
- 10-800-714-1191 (toll free from Northern China)
- 10-800-140-1195 (toll free from Southern China)
- 1-800-287-011 (toll free from Australia)
- 800-017-8071 (toll free from United Arab Emirates)
Please ask to participate in the Canaccord Genuity Group Inc. Q3/19 results call. If a passcode is requested, please use
2376626.
A replay of the conference call will be made available from approximately two hours after the live call on February 14, 2019 until April 14, 2019 at 416-849-0833 or 1-855-859-2056 by
entering passcode 2376626 followed by the (#) key.
ABOUT CANACCORD GENUITY GROUP INC.:
Through its principal subsidiaries, Canaccord Genuity Group Inc. (the "Company") is a leading independent, full-service
financial services firm, with operations in two principal segments of the securities industry: wealth management and capital
markets. Since its establishment in 1950, the Company has been driven by an unwavering commitment to building lasting
client relationships. We achieve this by generating value for our individual, institutional and corporate clients through
comprehensive investment solutions, brokerage services and investment banking services. The Company has Wealth Management
offices located in Canada, the UK, Guernsey, Jersey, the
Isle of Man and Australia. Canaccord Genuity Capital Markets, the international capital
markets division, operates in North America, the UK & Europe, Asia, Australia and the Middle
East.
Canaccord Genuity Group Inc. is publicly traded under the symbol CF on the TSX. Canaccord Genuity Series A Preferred Shares
are listed on the TSX under the symbol CF.PR.A. Canaccord Genuity Series C Preferred Shares are listed on the TSX under the
symbol CF.PR.C. The Company's 6.25% Convertible Unsecured Senior Subordinated Debentures are listed on the TSX under the
symbol CF.DA.A.
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SOURCE Canaccord Genuity Group Inc.
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