TORONTO, February 9, 2017 /PRNewswire/ --
Excluding significant
items, third quarter
earnings per common
share of
$0.03[1]
(All dollar amounts are stated in Canadian dollars unless
otherwise indicated)
During the third quarter of fiscal 2017, the quarter ended
December 31, 2016, Canaccord Genuity
Group Inc. (Canaccord Genuity, the Company, TSX: CF) generated
$208.1 million in revenue. Excluding
significant items [1], the Company
recorded net income of $6.3 million
or net income of $2.9 million
attributable to common shareholders [2]
(earnings per common share of $0.03).
Including all expense items, on an IFRS basis, the Company recorded
net income of $4.5 million or net
income of $1.2 million attributable
to common shareholders[2] (earnings per
common share of $0.01).
The results for the quarter included certain non-recurring
charges in the aggregate amount of $6.0
million related to costs associated with the rationalization
of our office space in Toronto,
costs associated with the transition of new investment advisors
onto the Company's wealth management platform in Canada and charges in connection with the
acceleration of certain stock-based awards and contractual
compensation payments. These costs were recorded as general
and administrative expenses in Canaccord Genuity Wealth Management
(North America) ($0.7 million) and as premises and equipment and
incentive compensation expenses in Corporate and Other
($5.3 million). These costs
have not been excluded for purposes of calculating adjusted net
income (referred to as net income excluding significant
items[1]).
"While the long term impact of recent developments in the U.S.
and UK remains to be seen, we are encouraged to see more investors
putting capital to work in the growth sectors of the global
economy, a development that has given us a positive near-term
outlook for our business," said Dan
Daviau, President & CEO of Canaccord Genuity Group Inc.
"As activity levels improved, we have maintained a strong focus on
driving down overall expenses to enhance profitability across our
operations. In addition, we have made meaningful progress to
advance our global wealth management strategy which will further
contribute to long-term earnings stability."
Third Quarter of
Fiscal 2017 vs. Third
Quarter of Fiscal
2016
- Revenue of $208.1 million, an
increase of 14.4% or $26.3 million
from $181.8 million
- Excluding significant items, expenses of $200.3 million, a decrease of 1.9% or
$4.0 million from $204.2 million [1]
- Expenses of $202.4 million, a
decrease of 62.0% or $330.1 million
from $532.5
million[3]
- Excluding significant items, diluted earnings per common share
(EPS) of $0.03 compared to a loss per
common share of $0.25
[1]
- Excluding significant items, net income of $6.3 million compared to a net loss of
$19.1 million
[1]
- Net income of $4.5 million
compared to a net loss of $346.4
million[3]
- Diluted EPS of $0.01 compared to
a loss per common share of $3.91[3]
--------------------------------------------------
1. Figures excluding significant items are non-IFRS measures.
See Non-IFRS measures on page 5.
2. Net income (loss) attributable to common shareholders is
calculated as the net income (loss) adjusted for non-controlling
interests and preferred share dividends.
3. Expenses in Q3/16 included an impairment charge of
$321 million related to goodwill and
other assets.
Third Quarter of
Fiscal 2017 vs Second Quarter
of Fiscal 2017
- Revenue of $208.1 million, an
increase of 7.5% or $14.5 million
from $193.6 million
- Excluding significant items, expenses of $200.3 million, an increase of 5.0% or
$9.6 million from $190.7 million [1]
- Expenses of $202.4 million, an
increase of 5.0% or $9.6 million from
$192.8 million
- Excluding significant items, diluted EPS of $0.03 compared to a loss per common share of
$0.03 [1]
- Excluding significant items, net income of $6.3 million compared to net income of
$2.0 million
[1]
- Net Income of $4.5 million
compared to net income of $0.2
million
- Diluted EPS of $0.01 compared to
a loss per common share of $0.05
Year-to-Date Fiscal 2017 vs. Year-to-Date
Fiscal 2016
(Nine months ended December 31, 2016
vs. Nine months ended December 31,
2015)
- Excluding significant items, revenue of $606.7 million, an increase of 3.4% or
$19.8 million from $586.9 million[1]
- Excluding significant items, expenses of $584.9 million, a decrease of 0.8% or
$4.7 million from $589.6 million [1]
- Revenue of $607.9 million, an
increase of 3.6% or $21.0 million
from $586.9 million
- Expenses of $591.4 million, a
decrease of 36.0% or $332.2 million
from $923.6
million[3]
- Excluding significant items, diluted EPS of $0.05 compared to a loss per common share
$0.15 [1]
- Excluding significant items, net income of $16.5 million compared to a net loss of
$3.9 million
[1]
- Net income of $12.2 million
compared to a net loss of $335.9
million[3]
- Diluted EPS of $0.01 compared to
a loss per common share of $3.78[3]
Financial Condition at End of
Third Quarter Fiscal 2017
vs. Fourth Quarter
Fiscal 2016
- Cash and cash equivalents balance of $470.2 million, an increase of $41.9 million from $428.3
million
- Working capital of $455.9
million, an increase of $74.6
million from $381.3
million
- Total shareholders' equity of $735.6
million, a decrease of $14.3
million from $749.9
million
- Book value per diluted common share of $4.85, a decrease of $0.14 from $4.99[4]
- On February 9, 2017, the Board of
Directors considered the Company's dividend policy in the context
of the market environment and business activity and approved a
continued suspension of the quarterly common dividend. This
suspension will be reviewed quarterly and a determination made on
the basis of business conditions and profitability.
- On February 9, 2017, the Board of
Directors approved a cash dividend of $0.24281 per Series A Preferred Share payable on
March 31, 2017 with a record date of
March 17, 2017, and a cash dividend
of $0.359375 per Series C Preferred
Share payable on March 31, 2017 to
Series C Preferred shareholders of record as at March 17, 2017.
SUMMARY OF OPERATIONS
Corporate
- On October 27, 2016, the Company
closed a private placement of convertible unsecured senior
subordinated debentures in the aggregate principal amount of
$60 million. The Company
intends to use the net proceeds to finance growth in its wealth
management business in Canada
through the recruitment of Investment Advisors and for general
corporate purposes. The debentures bear interest at a rate of
6.50% per annum, payable semi-annually on the last day of June and
December each year commencing December 31,
2016. The debentures are convertible at the holders'
option into the Company's common shares at a conversion price of
$6.50 per share. The debentures
will mature on December 31, 2021 and
may be redeemed by the Company, in certain circumstances, on or
after December 31, 2019.
- On August 11, 2016, Canaccord
Genuity Group Inc. announced the filing of a normal course issuer
bid (NCIB) to purchase up to a maximum of 5,587,378 of its common
shares in accordance with the requirements of the TSX through the
facilities of the TSX and on alternative trading systems during the
period from August 15, 2016 to
August 14, 2017. The purpose of any
purchase under this program is to enable the Company to acquire
shares for cancellation. The maximum number of shares that may be
purchased represented 5.0% of the Company's outstanding common
shares at the time of filing the NCIB. A total of 99,800 shares
have been purchased and cancelled under the terms of the NCIB
during the nine months ended December 31,
2016.
--------------------------------------------------
4. See Non-IFRS Measures on page 5.
Capital Markets
[5]
- Canaccord Genuity participated in 84 investment banking
transactions globally, raising total proceeds of C$10.8 billion[5] during
fiscal Q3/17
- Canaccord Genuity led or co-led 24 transactions globally,
raising total proceeds of C$762
million[5] during
fiscal Q3/17
- Significant investment banking transactions for Canaccord
Genuity during fiscal Q3/17 include:
- AUD$24.9 million for Doray Minerals Ltd. on the ASX
- £329.0 million block trade for Playtech plc on the LSE
- C$186.0 million block trade for a
holder of Great Canadian Gaming Corporation on the TSX
- US$30.0 million for GenMark
Diagnostics, Inc. on NASDAQ
- AUD$62.6 million for Cooper Energy Ltd. on the ASX
- £38.0 million for Rathbone
Brothers plc on the LSE
- US$75.0 million IPO for Obalon
Therapeutics, Inc. on NASDAQ
- C$66.5 million for InPlayOil Corp
on the TSX
- C$29.0 million for Pro Real
Estate Investment Trust on the TSXV
- C$40.3 million for Alterra Power
Corp on the TSX
- US$322.0 million for Twilio Inc.
on the NYSE
- US$123.0 million IPO for iRhythm
Technologies, Inc. on NASDAQ
- US$172.5 million for Advanced
Accelerator Applications S.A. on NASDAQ
- US$134.6 million IPO for
AquaVenture Holdings Limited on the NYSE
- C$400.00 million IPO for Aritzia
Inc. on the TSX
- US$40.0 million IPO for Everspin
Technologies, Inc. on NASDAQ
- AUD$25.0 million IPO for Dreamscape Networks Limited on the
ASX
- C$25.0 million for Aurora
Cannabis Inc. on the TSXV
- C$20.0 million for iAnthus
Capital Holdings Inc. on the CSE
- US$80.5 million for Kratos
Defense & Security Solutions, Inc. on NASDAQ
- C$50.0 million for Supreme
Pharmaceuticals Inc on the CSE
- US$16.5 million for Palatin
Technologies on the NYSE MKT
- AUD$26.5 million for Dacian Gold Limited on the ASX
- C$60.0 million IPO for CanniMed
Therapeutics Inc. on the TSX
- US$126.5 million IPO for Xencor,
Inc. on NASDAQ
- US$35.7 million IPO for TiGenix
on NASDAQ
- In Canada, Canaccord Genuity
participated in raising $233.7
million for government and corporate bond issuances during
fiscal Q3/17
- Advisory fees recorded during fiscal Q3/17 were $17.1 million, a decrease of $21.8 million or 56.0% compared to the same
quarter last year
- During fiscal Q3/17, significant M&A and advisory
transactions included:
- Kier Group plc on the £75 million sale of its infrastructure
engineering and environmental consultancy business to WSP Global
Inc.
- Catapult Environmental Inc. on its private equity sponsorship
by ARC Financial Corp.
- TransGlobe Energy Corporation on its C$80 million Canadian Asset Acquisition
- Only About Children on the divestment of a majority stake to
Bain Capital Private Equity
- PEMCO World Air Services, Inc. on its sale to Airborne
Maintenance and Engineering Services, Inc., a subsidiary of Air
Transport Services Group, Inc.
- InPlay Oil Corp. on the reverse take-over transaction of
TSX-listed Anderson Energy Inc., the closing of a C$47 million asset acquisition and raising
C$70.3 million of gross subscription
receipt proceeds.
- SynCardia Systems, Inc. on its sale to affiliates of Versa
Capital Management, LLC pursuant to §363 of the U.S. Bankruptcy
Code
- Abénex Capital on the disposal of Vulcanic to
Qualium
- ECI Partners on the acquisition of Edenhouse
- Fläkt Woods on its disposal to Triton Partners
--------------------------------------------------
5. Transactions over $1.5 million.
Internally sourced information.
Canaccord Genuity Wealth Management
(Global)
- Globally, Canaccord Genuity Wealth Management generated
$68.5 million in revenue during
Q3/17
- Assets under administration in Canada and assets under management in the UK
& Europe and Australia were $36.1
billion at the end of Q3/17[4], an
increase of 5.0% or $1.7 billion at
the end of the previous quarter and an increase of 5.1% or
$1.7 billion at the end of fiscal
Q3/16
Canaccord Genuity Wealth Management (North America)
- Canaccord Genuity Wealth Management (North America) generated $32.8 million in revenue and, after intersegment
allocations and before taxes, recorded a net loss of $0.5 million during Q3/17. As noted above,
incremental costs associated with the transition of new investment
advisors onto the Company's wealth management platform in the
amount of $0.7 million were recorded
during the quarter and are reflected in this net loss for the
quarter.
- Assets under administration in North
America were $12.0 billion as
at December 31, 2016, an increase of
15.8% from $10.3 billion at the end
of the previous quarter and an increase of 32.5% from $9.0 billion at the end of fiscal
Q3/16[4]
- Assets under management in North
America (discretionary) were $2.5
billion as at December 31
2016, an increase of 107.3% from $1.2
billion at the end of the previous quarter and an increase
of 100.2% from $1.3 billion at the
end of fiscal Q3/16[4] (included in assets
under administration)
- Canaccord Genuity Wealth Management had 139 Advisory
Teams[6]end of fiscal Q3/17, unchanged from September 30, 2016 and a decrease of one team
from December 31, 2015
--------------------------------------------------
6. 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.
Canaccord Genuity Wealth Management (UK
& Europe)
- Wealth management operations in the UK & Europe generated $34.5
million in revenue and, after intersegment allocations, and
excluding significant items, recorded net income of $8.1 million before taxes during
Q3/17[1]
- Assets under management (discretionary and non-discretionary)
were $23.4 billion (£14.1 billion) as
at December 31, 2016, an increase of
0.8% from $23.2 billion (£13.6
billion) as at the end of the previous quarter and a decrease of
4.7% from $24.5 billion (£11.9
billion) as at December 31,
2015[4].
In local currency (GBP), assets under management at December 31, 2016 increased by 3.3% compared to
September 30, 2016 and by 18.2%
compared to Q3/16.
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, as well as gains or losses related to business
disposals including recognition of realized translation gains on
the disposal of foreign operations. Book value per diluted common
share is calculated as total common shareholders' equity adjusted
for assumed proceeds from the exercise of options and warrants and
conversion of convertible debentures divided by the number of
diluted common shares outstanding including estimated amounts in
respect of share issuance commitments including options, warrants
and convertible debentures, and, commencing in Q1/14, adjusted for
shares purchased under the 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.
Selected financial information excluding
significant items[1]