IGM Financial Inc.
TSX : IGM

IGM Financial Inc.

August 04, 2016 09:28 ET

IGM Financial Inc. Reports Second Quarter Earnings

WINNIPEG, MANITOBA--(Marketwired - Aug. 4, 2016) - Readers are referred to the disclaimer regarding Forward-Looking Statements and Additional IFRS Measures at the end of this Release.

IGM Financial Inc. (IGM or the Company) (TSX:IGM) today announced earnings results for the second quarter of 2016.

Net earnings available to common shareholders for the three months ended June 30, 2016 were $172.9 million or 72 cents per share compared to net earnings available to common shareholders of $198.5 million or 80 cents per share for the comparative period in 2015.

Net earnings available to common shareholders for the six months ended June 30, 2016 were $339.9 million or $1.40 per share compared to net earnings available to common shareholders of $398.8 million or $1.59 per share for the comparative period in 2015.

Revenues for the three months ended June 30, 2016 were $744.3 million compared to $763.2 million a year ago. Revenues for the six months ended June 30, 2016 were $1.47 billion compared to $1.52 billion a year ago. Expenses were $521.8 million for the second quarter of 2016 compared to $506.5 million a year ago and $1.03 billion for the six month period compared to $1.01 billion a year ago.

Total assets under management at June 30, 2016 were $134.7 billion compared to $136.0 billion at June 30, 2015. Mutual fund assets under management at June 30, 2016 were $128.7 billion compared to $129.7 billion at June 30, 2015.

Shareholders' equity at June 30, 2016 was $4.7 billion, compared to $4.8 billion at June 30, 2015. Return on average common equity for the six months ended June 30, 2016 was 14.7% compared to 17.0% for the comparative period in 2015.

Investors Group Operations

"Mutual fund assets under management at June 30, 2016 reached $76.2 billion, largely on the strength of strong investment returns in the quarter," said Jeffrey R. Carney, President and Chief Executive Officer of Investors Group Inc. and IGM Financial Inc. "The Maestro Portfolio funds, which combine a long-term investment management outlook with dynamic asset allocation strategies, continued to grow in the quarter, reaching $2.2 billion at June 30, 2016 since their launch one year ago."

Mutual fund sales for the second quarter of 2016 were $1.8 billion, a decrease of 6.1% compared to $1.9 billion in the prior year and mutual fund net redemptions for the second quarter of 2016 were $168 million compared to net sales of $27 million a year ago.

Mutual fund sales for the six months ended June 30, 2016 were $4.0 billion, a decrease of 5.0% compared to $4.3 billion in the prior year and mutual fund net sales were $299 million compared to net sales of $615 million a year ago.

The twelve month trailing redemption rate (excluding money market funds) was 8.8% at June 30, 2016, compared to 8.7% at March 31, 2016.

Mutual fund assets under management at June 30, 2016 were $76.2 billion compared to $75.8 billion at June 30, 2015.

Mackenzie Operations

Mutual fund sales for the second quarter of 2016 were $1.5 billion compared to $1.9 billion in the prior year. Mutual fund net redemptions for the second quarter were $375 million compared to net redemptions of $545 million a year ago.(1)

Mutual fund sales for the six months ended June 30, 2016 were $3.3 billion compared to $3.8 billion in the prior year. Mutual fund net redemptions were $573 million compared to net redemptions of $651 million a year ago. (1)

Total net redemptions for the second quarter of 2016 were $291 million compared to total net redemptions of $10.7 billion a year ago. Total net redemptions for the six months ended June 30, 2016 were $678 million compared to total net redemptions of $10.1 billion a year ago. Excluding rebalance activities,(1)(2) total net sales in 2015 were $84 million for the second quarter and $653 million for the six months ending June 30, 2015.

"Mackenzie continued to focus on meeting investor needs through high quality and innovative product solutions with the inaugural launch of six exchange traded funds as well as four new mutual funds during the quarter," said Jeffrey R. Carney, President and Chief Executive Officer of IGM Financial Inc. "As previously announced, Barry McInerney has now assumed the role of CEO of Mackenzie and I look forward to working with him closely as he leads the company into the future."

Mackenzie's total assets under management at June 30, 2016 were $61.7 billion compared to $63.0 billion at June 30, 2015. Mutual fund assets under management at June 30, 2016 were $48.2 billion compared to $49.9 billion a year ago.

(1) During the second quarter of 2015, certain third party programs which include Mackenzie mutual funds made fund allocation changes which resulted in net redemptions of $456 million.
(2) During the second quarter of 2015, MD Financial Management ("MD") reassigned sub-advisory responsibilities on four fixed income mandates (totalling $10.3 billion) advised by Mackenzie. The impact on Mackenzie's pre-tax earnings from these mandate changes is not meaningful. Following the changes, Mackenzie continues to advise MD on a number of fixed income, balanced and equity mandates.

Dividends

The Board of Directors has declared a dividend of 56.25 cents per share on the Company's common shares and has declared a dividend of $0.36875 per share on the Company's 5.90% Non-Cumulative First Preferred Shares, Series "B". The common share dividend and the preferred share dividend are payable on October 31, 2016 to shareholders of record on September 30, 2016.

Forward-Looking Statements

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 to assist 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. 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 economies, 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. While the Company considers these assumptions to be reasonable based on information currently available to management, they may prove to be incorrect.

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, 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 and its subsidiaries' success in anticipating and managing the foregoing factors.

The reader is cautioned that the foregoing list 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 applicable Canadian 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 and material factors or assumptions on which information contained in forward-looking statements is based is provided in its disclosure materials filed with the securities regulatory authorities in Canada, available at www.sedar.com.

Additional IFRS Measures

This release contains additional IFRS measures. Terms by which additional IFRS measures are identified include "earnings before income taxes" and "net earnings available to common shareholders". Additional IFRS measures are used to provide management and investors with additional measures to assess earnings performance. These measures are considered additional IFRS measures as they are in addition to the minimum line items required by IFRS and are relevant to an understanding of the entity's financial performance.

The Consolidated Financial Statements and Management's Discussion and Analysis (MD&A) of operating results are available on IGM Financial Inc.'s website at www.igmfinancial.com.

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 $138 billion in total assets under management as of July 31, 2016. 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 Second Quarter 2016 will be held on Thursday August 4, 2016 at 2:00 P.M. (ET) at www.igmfinancial.com. Media and interested parties may alternatively choose to listen to the live analyst teleconference call by dialing 1-866-223-7781 or 416-340-2216.

IGM FINANCIAL INC.
Consolidated Statements of Earnings
(unaudited)
(in thousands of Canadian
dollars, except shares
Three months
ended June 30
Six months
ended June 30
and per share amounts) 2016 2015 2016 2015
Revenues
Management fees $ 497,386 $ 517,279 $ 981,222 $ 1,026,390
Administration fees 104,328 105,995 204,678 208,231
Distribution fees 96,342 95,286 191,310 189,819
Net investment income and other 22,409 15,161 38,286 44,242
Proportionate share of affiliate's earnings 23,876 29,508 51,684 55,410
744,341 763,229 1,467,180 1,524,092
Expenses
Commission 267,128 267,687 528,643 534,554
Non-commission 231,740 215,853 459,607 429,475
Interest 22,913 22,964 45,826 45,714
521,781 506,504 1,034,076 1,009,743
Earnings before income taxes 222,560 256,725 433,104 514,349
Income taxes 47,457 56,051 88,825 111,116
Net earnings 175,103 200,674 344,279 403,233
Perpetual preferred share dividends 2,212 2,212 4,425 4,425
Net earnings available to common shareholders $ 172,891 $ 198,462 $ 339,854 $ 398,808
Average number of common shares
(in thousands)
- Basic 241,071 248,957 242,100 250,076
- Diluted 241,221 249,128 242,197 250,266
Earnings per share (in dollars)
- Basic $ 0.72 $ 0.80 $ 1.40 $ 1.59
- Diluted $ 0.72 $ 0.80 $ 1.40 $ 1.59
IGM FINANCIAL INC.
Financial Highlights
For the three months ended June 30 As at and for the six months ended June 30
(unaudited) 2016 2015 Change 2016 2015 Change
Net earnings available to common shareholders
($ millions)
$ 172.9 $ 198.5 (12.9 )% $ 339.9 $ 398.8 (14.8 )%
Diluted earnings per share 0.72 0.80 (10.0 ) 1.40 1.59 (11.9 )
Return on equity 14.7 % 17.0 %
Dividends per share 0.5625 0.5625 - 1.125 1.125 -
Total assets under management (1)
($ millions)
$ 134,681 $ 135,971 (0.9 )%
Investors Group
Mutual funds 76,203 75,844 0.5
Mackenzie
Mutual funds 48,210 49,853
Sub-advisory, institutional and other accounts 13,457 13,172
Total 61,667 63,025 (2.2 )
Counsel
Mutual funds 4,316 4,053 6.5
Mutual Funds and Institutional Sales ($ millions) Investors Group Mackenzie Counsel Total (2 )
For the three months ended
June 30, 2016
Mutual
Funds
Total
Gross sales $ 1,778 $ 1,494 $ 3,013 $ 213 $ 4,519
Net sales (redemptions) (168 ) (375 ) (291 ) 31 (501 )
For the six
months ended
June 30, 2016
Gross sales $ 4,045 $ 3,335 $ 5,696 $ 475 $ 9,191
Net sales (redemptions) 299 (573 ) (678 ) 110 (435 )
(1) Total assets under management excluded $7.5 billion of assets sub-advised by Mackenzie on behalf of Investors Group and Investment Planning Counsel ($6.9 billion at June 30, 2015).
(2) Total Gross Sales and Net Sales for the three months ended June 30, 2016 excluded $485 million and $73 million, respectively, in accounts sub-advised by Mackenzie on behalf of Investors Group and Investment Planning Counsel.
Total Gross Sales and Net Sales for the six months ended June 30, 2016 excluded $1.0 billion and $166 million, respectively, in accounts sub-advised by Mackenzie on behalf of Investors Group and Investment Planning Counsel.

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