IGM Financial Inc.
TSX : IGM

IGM Financial Inc.

August 07, 2014 11:46 ET

IGM Financial Inc. Reports Second Quarter Earnings

WINNIPEG, MANITOBA--(Marketwired - Aug. 7, 2014) - Readers are referred to the disclaimer regarding Forward-Looking Statements, Non-IFRS Financial Measures 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 2014.

Operating earnings available to common shareholders, excluding other items(1), for the three months ended June 30, 2014 were $203.9 million or 81 cents per share compared to operating earnings available to common shareholders of $190.9 million or 76 cents per share in 2013.

Net earnings available to common shareholders for the three months ended June 30, 2014 were $190.3 million or 75 cents per share compared to net earnings available to common shareholders of $190.9 million or 76 cents per share for the comparative period in 2013.

Operating earnings available to common shareholders, excluding other items(1), for the six months ended June 30, 2014 were $398.3 million or $1.57 per share compared to operating earnings available to common shareholders of $371.4 million or $1.47 per share in 2013.

Net earnings available to common shareholders for the six months ended June 30, 2014 were $384.7 million or $1.52 per share compared to net earnings available to common shareholders of $371.4 million or $1.47 per share for the comparative period in 2013.

Revenues for the three months ended June 30, 2014 were $720.2 million compared to $667.0 million for the comparative period in 2013. Revenues for the six months ended June 30, 2014 were $1.44 billion compared to $1.32 billion a year ago. Expenses were $479.8 million for the second quarter of 2014 compared to $424.6 million a year ago and $941.5 million for the six month period compared to $843.3 million in 2013.

Total assets under management at June 30, 2014 were $141.4 billion compared to $124.8 billion at June 30, 2013. Mutual fund assets under management at June 30, 2014 were $125.2 billion compared to $107.6 billion at June 30, 2013.

Shareholders' equity at June 30, 2014 was $4.8 billion, compared to $4.5 billion at June 30, 2013. Return on average common equity based on operating earnings for the six months ended June 30, 2014 was 17.3% compared to 17.1% for the comparative period in 2013.

(1) Other items for the three and six months ended June 30, 2014 consisted of an after-tax charge of $13.6 million related to restructuring and other charges.

Investors Group Operations

"Our Consultant Network increased to 4,871 at the end of the quarter as a result of a net increase of 140 in the quarter following four strong previous quarterly increases," said Murray J. Taylor, President and Chief Executive Officer of Investors Group Inc. "Assets under management, which reached record highs during the quarter, were $72.4 billion at June 30, 2014."

Mutual fund sales for the second quarter of 2014 were $1.67 billion compared to $1.49 billion in the prior year, and mutual fund net redemptions for the second quarter were $39 million compared to net redemptions of $167 million a year ago.

Mutual fund sales for the six months ended June 30, 2014 were $3.90 billion compared to $3.53 billion in the prior year, and mutual fund net sales were $371 million compared to net sales of $209 million a year ago.

The twelve month trailing redemption rate (excluding money market funds) was 9.1% at June 30, 2014, compared to 9.3% at March 31, 2014.

Mutual fund assets under management at June 30, 2014 were $72.4 billion compared to $62.5 billion at June 30, 2013.

Mackenzie Operations

Mutual fund sales for the second quarter of 2014 were $1.72 billion, an increase of 18.8% compared to $1.45 billion in the prior year. Mutual fund net sales for the second quarter were $115 million compared to net redemptions of $362 million a year ago.

Mutual fund sales for the six months ended June 30, 2014 were $4.10 billion, an increase of 21.3% compared to $3.38 billion in the prior year. Mutual fund net sales were $469 million compared to net redemptions of $263 million a year ago.

Total sales for the second quarter of 2014 were $4.35 billion compared to $3.42 billion in the prior year. Total net sales for the second quarter were $1.41 billion compared to total net redemptions of $171 million a year ago.

Total sales for the six months ended June 30, 2014 were $8.22 billion compared to $6.70 billion in the prior year. Total net sales were $2.20 billion compared to total net sales of $83 million a year ago.

"Mutual fund assets under management of $49.1 billion, at June 30, 2014, reached the highest quarter end level in the history of Mackenzie," said Jeffrey R. Carney, President and Chief Executive Officer of Mackenzie Financial Corporation. "Solid investment performance and demand for global equities, managed solutions and flexible income products have created strong sales momentum."

Mackenzie's total assets under management at June 30, 2014 were $71.1 billion compared to $63.9 billion at June 30, 2013. Mutual fund assets under management at June 30, 2014 were $49.1 billion compared to $42.1 billion a year ago.

Dividends

The Board of Directors has declared a dividend of 53.75 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, 2014 to shareholders of record on September 30, 2014.

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.

Non-IFRS Financial Measures and Additional IFRS Measures

This release contains non-IFRS financial measures and additional IFRS measures. Net earnings available to common shareholders, which is an additional measure in accordance with International Financial Reporting Standards (IFRS), may be subdivided into two components consisting of:

  • Operating earnings available to common shareholders; and
  • Other items, which include the after-tax impact of any item that management considers to be of a non-recurring nature or that could make the period-over-period comparison of results from operations less meaningful.

Terms by which non-IFRS financial measures are identified include but are not limited to "operating earnings available to common shareholders", "operating earnings per share", "operating return on average common equity" and other similar expressions used to provide management and investors with additional measures to assess earnings performance. However, non-IFRS financial measures do not have standard meanings prescribed by IFRS 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-IFRS financial measures to measures prescribed by IFRS.

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 $142 billion in total assets under management as of July 31, 2014. 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 2014 will be held on Thursday August 7, 2014 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 1-866-225-0198 or 416-340-2216.

IGM FINANCIAL INC.
Consolidated Statements of Earnings
(unaudited)
(in thousands of Canadian dollars, except shares and per share amounts)

Three months ended
June 30

Six months ended
June 30
2014 2013 2014 2013
Revenues
Management fees $ 503,887 $ 451,956 $ 989,653 $ 894,826
Administration fees 99,309 87,859 194,532 173,444
Distribution fees 86,113 79,754 178,524 161,199
Net investment income and other 6,921 26,397 28,923 49,862
Proportionate share of affiliate's earnings 23,995 20,987 43,439 40,320
720,225 666,953 1,435,071 1,319,651
Expenses
Commission 245,699 218,999 488,868 437,028
Non-commission 211,162 182,637 406,939 360,535
Interest 22,964 22,963 45,713 45,712
479,825 424,599 941,520 843,275
Earnings before income taxes 240,400 242,354 493,551 476,376
Income taxes 47,937 49,276 104,427 100,574
Net earnings 192,463 193,078 389,124 375,802
Perpetual preferred share dividends 2,212 2,212 4,425 4,425
Net earnings available to common shareholders $ 190,251 $ 190,866 $ 384,699 $ 371,377
Average number of common shares (in thousands)
- Basic 252,286 251,935 252,327 251,953
- Diluted 253,126 252,451 253,261 252,418
Earnings per share (in dollars)
- Basic $ 0.75 $ 0.76 $ 1.52 $ 1.47
- Diluted $ 0.75 $ 0.76 $ 1.52 $ 1.47
IGM FINANCIAL INC.
Financial Highlights
For the three months
ended June 30
As at and for the six months
ended June 30
(unaudited)20142013 Change 2014 2013 Change
Earnings available to common shareholders ($ millions)
Operating Earnings (1)$ 203.9$ 190.9 6.8%$ 398.3 $ 371.4 7.2%
Net Earnings190.3190.9 (0.3)384.7 371.4 3.6
Diluted earnings per share
Operating Earnings (1)0.810.76 6.6 1.57 1.47 6.8
Net Earnings0.750.76 (1.3)1.52 1.47 3.4
Return on equity
Operating Earnings (1) 17.3%17.1%
Net Earnings 16.7%17.1%
Dividends per share0.53750.5375 - 1.075 1.075 -
Total assets under management (2)($ millions) $ 141,434 $ 124,803 13.3%
Investors Group
Mutual funds 72,400 62,452 15.9
Mackenzie
Mutual funds 49,106 42,098
Sub-advisory, institutional and other accounts 21,975 21,846
Total 71,081 63,944 11.2
Counsel
Mutual funds 3,730 3,053 22.2
Mutual Funds and Institutional Sales ($ millions) Investors
Group
Mackenzie Counsel Total (3)
For the three months ended June 30, 2014 Mutual
Funds
Total
Gross sales $ 1,669 $ 1,724 $ 4,353 $ 181 $ 5,469
Net sales (redemptions) (39)115 1,414 64 1,293
For the six months ended June 30, 2014
Gross sales $ 3,898 $ 4,098 $ 8,219 $ 338 $ 11,187
Net sales (redemptions) 371 469 2,196 104 2,395
(1)Non-IFRS Financial Measures: 2014 operating earnings excluded an after-tax charge of $13.6 million related to restructuring and other charges.
(2)Total assets under management excluded $5.8 billion of assets sub-advised by Mackenzie on behalf of Investors Group and Investment Planning Counsel ($4.6 billion at June 30, 2013).
(3)Total Gross Sales and Net Sales for the three months ended June 30, 2014 excluded $734 million and $146 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, 2014 excluded $1.3 billion and $276 million respectively in accounts sub-advised by Mackenzie on behalf of Investors Group and Investment Planning Counsel.

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