IGM Financial Inc.

IGM Financial Inc.

May 01, 2009 10:00 ET

IGM Financial Inc. Reports First Quarter Earnings

Readers are referred to the disclaimer regarding Forward-Looking Statements and financial measures not in accordance with Canadian generally accepted accounting principles (Non-GAAP Financial Measures) at the end of this Release.

TORONTO, ONTARIO--(Marketwire - May 1, 2009) - IGM Financial Inc. (IGM or the Company) (TSX:IGM) today announced earnings results for the first quarter of 2009.

Net income for the three months ended March 31, 2009 was $133.5 million compared to net income of $211.2 million a year ago and adjusted net income of $140.1(1) million in the prior quarter. Earnings per share were 51 cents compared to 79 cents a year ago and compared to adjusted earnings per share of 53(1) cents in the prior quarter.

Gross revenues for the three months ended March 31, 2009 were $559.1 million compared to $714.2 million a year ago and $583.9 million in the prior quarter. Operating expenses were $373.8 million for the first quarter, compared to $424.4 million a year ago and $393.4 million in the prior quarter.

Total assets under management at March 31, 2009 were $98.7 billion. This compared with total assets under management of $119.0 billion at March 31, 2008 and $101.7 billion at December 31, 2008.

Shareholders' equity at March 31, 2009 was $4.2 billion, unchanged from March 31, 2008 and compared to $4.1 billion at December 31, 2008. Return on average common equity for the three months ended March 31, 2009 was 12.9% compared with 20.2% for the same period in 2008 and compared to adjusted return on equity of 13.4% in the prior quarter.


The number of Investors Group Consultants was 4,486 at March 31, 2009 up from 4,479 at December 31, 2008 and up from 4,342 at March 31, 2008.

"Our Consultant network continued to expand for the 19th consecutive quarter," said Murray J. Taylor, President and Chief Executive Officer of Investors Group Inc. "Although our clients' fund values have been affected by the global stock market volatility, total redemption amounts for the first quarter of 2009 were the lowest in the last ten years' comparative periods and demonstrate our clients' continued confidence in their overall plans and Consultant support."

Mutual fund sales for the first quarter were $1.4 billion compared to $2.0 billion in the prior year and mutual fund net sales for the first quarter were $309 million compared to $510 million a year ago and $60 million in the prior quarter.

Investors Group's twelve month trailing redemption rate (excluding money market funds) was 7.7% at March 31, 2009, compared to 7.4% at March 31, 2008 and 7.9% at December 31, 2008.

Investors Group's mutual fund assets under management at March 31, 2009 were $46.6 billion compared to $58.6 billion at March 31, 2008 and $47.5 billion at December 31, 2008.


Total sales for first quarter of 2009 were $2.9 billion compared to $3.1 billion in the prior year. Total net redemptions for the first quarter were $299 million compared to total net redemptions of $102 million in the prior year and total net redemptions of $1.5 billion in the prior quarter.

"In this period of revenue compression, we have been successful in completely integrating the acquired operations of Saxon Financial and streamlining a number of other activities while enhancing our future operating capabilities. Year over year operating expenses declined by more than $32 million or 19.2%," said Charles R. Sims, President and Chief Executive Officer of Mackenzie Financial Corporation.

Mackenzie's total assets under management at March 31, 2009 totalled $52.6 billion. This compares with assets under management of $60.9 billion at March 31, 2008 and $54.7 billion at December 31, 2008. Mutual fund assets under management at March 31, 2009 were $33.7 billion compared to $44.6 billion a year ago and $35.8 billion at December 31, 2008.


The Board of Directors declared a quarterly dividend of $0.359375 per share on the Company's 5.75% Non-Cumulative First Preferred Shares, Series "A" payable on June 30, 2009 to shareholders of record on May 29, 2009 and has declared a dividend of 51.25 cents per share on the Company's common shares payable on July 31, 2009 to shareholders of record on June 22, 2009.

(1) Adjusted net income in the prior quarter excluded a $60.3 million after-tax charge related to the Company's equity interest in Great-West Lifeco Inc. Net income without adjustment was $79.8 million and earnings per share on this basis were 30 cents.


Certain statements in this Release, 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 for the purposes of assisting the reader in understanding the Company's financial position and results of operations as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. These statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of the Company, as well as the outlook for North American and international economics, for the current fiscal year and subsequent periods. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "plans", "believes", "estimates", "seeks", "intends", "targets", "projects", "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could".

This information is based upon certain material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking statements, including the perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances.

By its nature, this information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved.

A variety of material factors, many of which are beyond the Company's, and its subsidiaries' control, affect the operations, performance and results of the Company, and its subsidiaries, and their businesses, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, management of market liquidity and funding risks, changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates), the effect of applying future accounting changes (including adoption of International Financial Reporting Standards), operational and reputational risks, business competition, technological change, changes in government regulations and legislation, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, the Company's ability to complete strategic transactions, integrate acquisitions and implement other growth strategies, and the Company's success in anticipating and managing the foregoing factors.

The reader is cautioned that the foregoing list of factors is not exhaustive of the factors that may affect any of the Company's forward-looking statements. The reader is also cautioned to consider these and other factors, uncertainties and potential events carefully and not place undue reliance on forward-looking statements.

Other than as specifically required by law, the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statements are made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

Additional information about the risks and uncertainties of the Company's business is provided in its disclosure materials filed with the securities regulatory authorities in Canada, available at www.sedar.com.

This release contains non-GAAP financial measures. Terms by which non-GAAP financial measures are identified include but are not limited to "adjusted net income", "adjusted earnings per share", "adjusted return on average common equity", "net income without adjustment" and other similar expressions. Non-GAAP financial measures are used to provide management and investors with additional measures of performance. However, non-GAAP financial measures do not have standard meanings prescribed by GAAP and are not directly comparable to similar measures used by other companies. Please refer to the attached Financial Highlights for the appropriate reconciliations of these non-GAAP financial measures to measures prescribed by GAAP.

A review of activities and performance for IGM Financial Inc., together with financial details and a management discussion, will be published in the Company's 2009 First Quarter Report to Shareholders which should be mailed to shareholders on or about May 14, 2009.

IGM Financial Inc. is one of Canada's premier personal financial services companies, and one of the country's largest managers and distributors of mutual funds and other managed asset products, with over $98 billion in total assets under management as of March 31, 2009. Its activities are carried out principally through Investors Group, Mackenzie Financial Corporation and Investment Planning Counsel. IGM Financial Inc. is a member of the Power Financial Corporation group of companies.

Media Note: A live webcast of IGM's Analyst conference call for the First Quarter 2009 will be held Friday, May 1, 2009, at 2:30 P.M. (ET) at www.igmfinancial.com. Media and interested parties may alternatively choose to listen to the live analyst teleconference call by dialing 1-866-226-1792 or (416) 340-2216.


Consolidated Statements of Income

(unaudited) Three months ended
(in thousands of dollars, except March 31 December 31 March 31
shares and per share amounts) 2009 2008 2008

Fee and net investment income
Management $365,419 $396,325 $490,649
Administration 82,322 84,248 87,502
Distribution 62,336 67,364 75,687
Net investment income and other 48,977 36,012 60,315
Total fee and net investment income 559,054 583,949 714,153
Operating expenses
Commission expense 192,376 206,421 234,994
Non-commission expense 158,515 162,566 167,411
Interest expense 22,893 24,448 21,990
Total operating expenses 373,784 393,435 424,395
185,270 190,514 289,758
Proportionate share of affiliate's
impairment charge, net of tax - 60,346 -
Income before income taxes 185,270 130,168 289,758
Income taxes 51,743 50,367 78,555
Net income $133,527 $ 79,801 $211,203

Average number of common shares
(in thousands)
- Basic 262,417 262,389 264,116
- Diluted 263,264 263,355 266,154

Earnings per share (in dollars)
- Basic $ 0.51 $ 0.30 $ 0.80
- Diluted $ 0.51 $ 0.30 $ 0.79


Financial Highlights
% Change
As at and for the
three months ended 2009 2008 2008 2008 2008
(unaudited) March 31 December 31 March 31 December 31 March 31

Net income
($ millions)
Adjusted(1) $ 133.5 $ 140.1 $ 211.2 (4.7)% (36.8)%
GAAP 133.5 79.8 211.2 67.3 (36.8)
Diluted earnings
per share
Adjusted(1) 0.51 0.53 0.79 (3.8) (35.4)
GAAP 0.51 0.30 0.79 70.0 (35.4)
Return on equity
Adjusted(1) 12.9% 13.4% 20.2%
GAAP 12.9% 7.7% 20.2%
Dividends per share 0.5125 0.5125 0.4875 - 5.1

Total assets under
($ millions) $ 98,655 $ 101,742 $118,957 (3.0)% (17.1)%
Investors Group
Mutual funds 46,574 47,491 58,582 (1.9) (20.5)
Mutual funds 33,659 35,814 44,555
and other
accounts 18,943 18,846 16,325
Total 52,602 54,660 60,880 (3.8) (13.6)
Counsel Group
of Funds
Mutual funds 1,670 1,740 2,180 (4.0) (23.4)

For the three months Counsel
ended March 31, 2009 Investors Group of
Group Mackenzie Funds Total(3)
Mutual Funds and
Institutional Sales
($ millions)
Gross sales $ 1,427 $ 2,860 $ 67 $ 4,201
Net sales
(redemptions) 309 (299) 9 (52)


(1) Non-GAAP Financial Measures:
Results for the three months ended December 31, 2008 excluded a $60.3
million charge which represented the Company's proportionate share of
Great-West Lifeco Inc.'s after-tax impairment charge related to goodwill
and intangible assets.
(2) Total assets under management excluded $2.2 billion of assets
sub-advised by Mackenzie on behalf of Investors Group and Investment
Planning Counsel ($2.1 billion at December 31, 2008 and $2.7 billion at
March 31, 2008).
(3) Total Gross Sales and Net Redemptions excluded $153 million and $71
million respectively in accounts sub-advised by Mackenzie on behalf of
Investors Group and Investment Planning Counsel.

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