CI Financial Reports Financial Results for the Fourth Quarter of 2023

• Q4 diluted EPS of ($0.40), adjusted EPS¹ of $0.81
• 2023 diluted EPS of $0.03, adjusted EPS¹ of $3.11, up $0.01 from 2022
• Q4 EBITDA of $60.5 million, adjusted EBITDA attributable to shareholders¹ of $238.7 million
• Q4 EBITDA per share of $0.38 and record adjusted EBITDA attributable to shareholders¹ per share of $1.51
• Q4 operating cash flow of $68.6 million, free cash flow¹ of $170.9 million
• 2023 operating cash flow per share of $2.61 and record free cash flow¹ per share of $3.78
• Record total assets of $444.8 billion, up $61.2 billion or 16.0% from a year earlier
• Repurchased over 6.5 million shares under $100-million substantial issuer bid
• Announcing new substantial issuer bid to repurchase up to $85 million in shares
• Announcing Corient received a bond rating of A- (Stable) from KBRA (Kroll)
• Paid $28.6 million in dividends at $0.18 per share in Q4; rate increased to $0.20 per share in January
• Completed acquisitions of Coriel Capital of Montreal and Windsor Wealth Management of Indianapolis in Q4

All financial amounts in Canadian dollars as at December 31, 2023, unless stated otherwise. Financial amounts for the quarters and year ended 2023 are unaudited.

TORONTO–(BUSINESS WIRE)–$CIX #CIFinancial—CI Financial Corp. (“CI”) (TSX: CIX) today released financial results for the quarter and year ended December 31, 2023.

“Strong fourth quarter results capped a successful year for CI, with year-over-year gains in adjusted earnings per share, free cash flow¹ and total assets,” said Kurt MacAlpine, CI Chief Executive Officer. “There were numerous achievements across our business segments, demonstrating continued progress in executing on CI’s strategic priorities.

“In asset management, we had $340 million in Canadian retail net sales for 2023, a notable accomplishment when the Canadian fund industry had its worst year on record for mutual fund net redemptions. We were the most awarded investment manager in Canada by both Lipper and FundGrade, reflecting the strength of our investment performance and the integrated global investment platform we have built. CI continued to be active in product development, enhancing its existing lineup as well as launching innovative new solutions. These included two best-in-class private markets solutions that bring the world’s leading alternatives mangers to Canadian retail investors.

“A key initiative in Canadian wealth management during the year was the rapid scaling of our custody business with the conversion of Aligned Capital assets to the CI Investment Services platform,” Mr. MacAlpine said. “Through a combination of external and internal growth, our custody business has increased to $26 billion in assets from just over $1 billion in 2018. This has helped to transform the economics of the Canadian wealth management segment, which generated $72.2 million in adjusted EBITDA¹ for 2023, a 33% increase over 2022 and up from effectively zero in 2019. We also continued to build on CI Private Wealth’s position as a leading destination for ultra-high-net-worth Canadians with the acquisition of Coriel Capital of Montreal.

“In U.S. wealth management, we continue to integrate the business and realize synergies while greatly expanding the services available to clients. Though the most visible accomplishment was the adoption a new unified brand in Corient, there were many important developments behind the scenes in 2023, including the adoption of a centralized reporting structure and a common technology platform. New services during the year included an alternative investments offering, the launch of Corient Trust company, a wealth transfer practice, and a personal CFO service providing bill payment, accounting and related services. Our integration initiatives allowed us to increase the adjusted EBITDA¹ margin by 440 basis points in 2023.

“We also achieved the full separation of the U.S. business from our Canadian operations, supported by the sale of a minority stake to leading institutional investors and now with the establishment of an independent credit rating for Corient,” Mr. MacAlpine said. “The Kroll debt rating of A- (Stable) reflects the strong cash flow profile and robust EBITDA¹ growth of the Corient business.

“We continue to use our cash flow to repurchase shares due to the disconnect between our share price and the underlying value of the company. Last year, we substantially completed our annual normal course issuer bid and a $100-million substantial issuer bid, and today we are announcing a new substantial issuer bid, under which we will repurchase up to $85 million in shares.

“Over the past four years, CI has transitioned from a highly concentrated business, where most of our assets and virtually all our earnings came from Canadian Asset Management, to a much more diversified business,” Mr. MacAlpine said. “Today, the majority of our assets are in wealth management, our business is well balanced between Canada and the U.S., and wealth management is a very large and rapidly growing contributor to our earnings.

“Given the strategic progress across our business lines and the strength of our capital position, CI is incredibly well positioned for another successful year in 2024.”

1. Free cash flow, net debt, adjusted net income, adjusted earnings per share, adjusted EBITDA, adjusted net revenues and adjusted expenses are not standardized earnings measures prescribed by IFRS. For further information, see “Non-IFRS Measures” note below.
2. Includes $33.2 billion, $31.8 billion, $32.8 billion, $33.0 billion, and $31.9 billion of assets managed by CI and held by clients of advisors with CI Assante Wealth Management, CI Private Counsel (CIPC) and Aligned Capital Partners as at December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively.
3. Includes $21.5 billion, $19.7 billion, $5.4 billion, $5.0 billion, and $4.6 billion of assets advised by CI and held by clients of advisors with Assante, CIPC, CI Direct Investing and Aligned Capital as at December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively. Prior to July 2023, custody assets were historically not included as part of reported assets for Canada wealth management or consolidated total assets.
4. Month-end USD/CAD exchange rates of 1.3250, 1.3582, 1.3248, 1.3515, and 1.3540 for December 2023, September 2023, June 2023, March 2023, and December 2022, respectively.
5. Includes 100% of flows from CI’s minority investments in Columbia Pacific Advisors, OCM Capital Partners, The Cabana Group and GLASfunds Holdings.

Financial highlights

Fourth quarter net loss attributable to shareholders was $63.5 million compared to a net loss of $12.4 million in the third quarter of 2023. Excluding non-operating items, adjusted net income attributable to shareholders¹ was $128.2 million in the fourth quarter, down 3.5% from the third quarter.

Fourth quarter total net revenues increased 16.1% to $715.6 million in the quarter from $616.5 million in the third quarter of 2023. Excluding non-operating items, adjusted total net revenues¹ declined slightly to $666.7 million from $669.6 million as higher revenues from the Canada Wealth Management segment were offset by lower Asset Management segment revenues.

Fourth quarter total expenses increased 26.5% to $753.7 million in the quarter from $595.9 million in the third quarter of 2023. Excluding non-operating items, adjusted total expenses¹ were up slightly to $448.7 million from $445.8 million as a result of higher costs related to new leased office space, interest expense, and higher advisor and dealer fees due to higher Canada Wealth Management revenues.

Capital allocation

In December 2023, CI completed its substantial issuer bid under which it purchased for cancellation 6,544,502 common shares at a purchase price of $15.28 per share, for an aggregate price of approximately $100 million.

CI paid $28.6 million in dividends at a rate of $0.18 per share. The annual dividend rate of $0.72 per share represented a yield of 4.5% on CI’s closing share price of $15.83 on February 22, 2024. The Board of Directors of CI (the “Board”) declared a quarterly dividend of $0.20 per share, payable on July 15, 2024 to shareholders of record as of June 28, 2024. As announced in August 2023, the Board declared a $0.02 increase to the quarterly dividend to $0.20 per share, which was paid on January 15, 2024 to shareholders of record as of December 29, 2023.

Substantial issuer bid

The Board has approved the commencement of a substantial issuer bid (the “Offer”), pursuant to which CI will offer to purchase up to 4,857,142 of its outstanding common shares from holders for cash, at a purchase price of $17.50 per share.

The Offer will not be conditional upon any minimum number of shares being tendered, but will be subject to other conditions and CI will reserve the right, subject to applicable laws, to withdraw or amend the Offer, if, at any time prior to the payment for deposited shares, certain events occur as will be described in the formal offer to purchase and issuer bid circular and other related documents (the “Offer Documents”).

Details of the Offer, including instructions for tendering shares to the Offer and the factors considered by the Board in making its decision to approve the Offer, will be included in the Offer Documents. The Offer is expected to commence and the Offer Documents are expected to be mailed to shareholders and filed on SEDAR+ at www.sedarplus.com, on or about February 26, 2024. Shareholders should carefully read the Offer Documents prior to making a decision with respect to the Offer.

CI has engaged National Bank Financial Inc. (“NBF”) to act as dealer manager and financial advisor in connection with the Offer. CI has also engaged Computershare Investor Services Inc. to act as depositary for the Offer.

None of CI, its Board, NBF or the depositary makes any recommendation to any shareholder as to whether to deposit or refrain from depositing shares under the Offer. Shareholders are urged to evaluate carefully all information in the Offer, consult their own financial, legal, investment and tax advisors, and make their own decisions as to whether to deposit shares under the Offer, and, if so, how many shares to deposit. The disclosure in this press release regarding the Offer is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell shares. The solicitation and the offer to buy shares will only be made pursuant to the Offer Documents.

Fourth quarter business highlights

• CI completed the acquisitions of Coriel Capital Inc., a Montreal-based wealth management firm serving ultra-high-net-worth Canadians, and Windsor Wealth Management Inc., a registered investment advisor based in Indianapolis.
• CI announced that Marc-André Lewis, Chief Investment Officer of CI Global Asset Management (“CI GAM”), will assume the position of co-head of CI GAM in addition to his responsibilities as CIO, effective January 1, 2024. The appointment follows the decision by Darie Urbanky, CI President and Chief Operating Officer and Head of CI GAM, to retire on or before December 31, 2024.
• CI GAM investment funds received 19 LSEG Lipper Fund Awards for Canada for 2023, more than any other fund company. The awards recognize mutual funds and ETFs that have provided consistently strong risk-adjusted performance, relative to peers.
• As part of CI’s strategic priority of modernizing asset management, CI GAM undertook a series of initiatives to streamline and enhance its product lineup, including improvements to selected funds and a proposal to merge 19 mutual funds and ETFs into other mandates. New products launched by CI GAM during the quarter included the First Home Savings Account.

Following quarter-end:

• CI GAM led the industry in receiving 35 FundGrade A+® Awards for 2023. These awards are presented annually by Fundata Canada Inc. to acknowledge Canadian investment funds that have demonstrated consistent, outstanding risk-adjusted performance.
• CI GAM continued to be active in product development, launching products that included mutual fund versions of its popular CI WisdomTree Quality, Dividend Growth ETFs and two ETFs providing targeted exposure to U.S. momentum and value stocks. CI GAM also introduced a commodity-focused alternative fund designed to provide returns that are uncorrelated to traditional asset classes, extending the firm’s broad selection of alternative investment funds.

Analysts’ conference call

CI will hold a conference call with analysts today at 10:00 a.m. EST, led by Mr. MacAlpine and Chief Financial Officer Amit Muni. A live webcast of the call and slide presentation can be accessed here or through the Investor Relations section of CI’s website.

Alternatively, investors may listen to the discussion through the following numbers (access code: 019307):

• Canada toll-free: 1-833-950-0062
• United States toll-free: 1-833-470-1428
• All other locations: 1-929-526-1599.

A recording of the webcast will be archived on CI’s Investor Relations site.

About CI Financial

CI Financial Corp. is a diversified global asset and wealth management company operating primarily in Canada, the United States and Australia. Founded in 1965, CI has developed world-class portfolio management talent, extensive capabilities in all aspects of wealth planning, and a comprehensive product suite.

CI operates in three segments:

• Asset Management, which includes CI Global Asset Management, which operates in Canada, and GSFM Funds Management, which operates in Australia.
• Canadian Wealth Management, which includes the operations of CI Assante Wealth Management, Aligned Capital Partners, CI Private Wealth (Canada), Northwood Family Office, Coriel Capital, CI Direct Investing and CI Investment Services.
• U.S. Wealth Management, which includes Corient Private Wealth, an integrated wealth management firm providing comprehensive solutions to ultra-high-net-worth and high-net-worth clients across the United States.

CI is headquartered in Toronto and listed on the Toronto Stock Exchange (TSX: CIX). To learn more, visit CI’s website or LinkedIn page.

Commissions, trailing commissions, management fees and expenses all may be associated with an investment in mutual funds and exchange-traded funds (ETFs). Please read the prospectus before investing. Important information about mutual funds and ETFs is contained in their respective prospectus. Mutual funds and ETFs are not guaranteed; their values change frequently, and past performance may not be repeated. You will usually pay brokerage fees to your dealer if you purchase or sell units of an ETF on recognized Canadian exchanges. If the units are purchased or sold on these Canadian exchanges, investors may pay more than the current net asset value when buying units of the ETF and may receive less than the current net asset value when selling them.

The LSEG Lipper Fund Awards, granted annually, highlight funds and fund companies that have excelled in delivering consistently strong risk-adjusted performance relative to their peers. The LSEG Lipper Fund Awards are based on the Lipper Leader for Consistent Return rating, which is a risk-adjusted performance measure calculated over 36, 60 and 120 months. The fund with the highest Lipper Leader for Consistent Return (Effective Return) value in each eligible classification wins the LSEG Lipper Fund Award. For more information, see lipperfundawards.com. Although LSEG makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by LSEG Lipper.

FundGrade A+® is used with permission from Fundata Canada Inc., all rights reserved. The annual FundGrade A+® Awards are presented by Fundata Canada Inc. to recognize the “best of the best” among Canadian investment funds. The FundGrade A+® calculation is supplemental to the monthly FundGrade ratings and is calculated at the end of each calendar year. The FundGrade rating system evaluates funds based on their risk-adjusted performance, measured by Sharpe Ratio, Sortino Ratio, and Information Ratio. The score for each ratio is calculated individually, covering all time periods from 2 to 10 years. The scores are then weighted equally in calculating a monthly FundGrade. The top 10% of funds earn an A Grade; the next 20% of funds earn a B Grade; the next 40% of funds earn a C Grade; the next 20% of funds receive a D Grade; and the lowest 10% of funds receive an E Grade. To be eligible, a fund must have received a FundGrade rating every month in the previous year. The FundGrade A+® uses a GPA-style calculation, where each monthly FundGrade from “A” to “E” receives a score from 4 to 0, respectively. A fund’s average score for the year determines its GPA. Any fund with a GPA of 3.5 or greater is awarded a FundGrade A+® Award. For more information, see www.FundGradeAwards.com. Although Fundata makes every effort to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Fundata.

This press release contains “forward-looking information” within the meaning of applicable Canadian securities law. Forward looking information may relate to CI’s future outlook and anticipated future events, results, circumstances, performance or expectations and its products and services, including its business operations, strategy and financial performance and condition. Forward-looking statements are typically identified by words such as “believe”, “expect”, “foresee”, “forecast”, “anticipate”, “intend”, “estimate”, “goal”, “plan” and “project” and similar references to future periods, or conditional verbs such as “will”, “may”, “should”, “could” or “would”. These statements are not historical facts but instead represent management’s beliefs regarding future events, many of which are by their nature inherently uncertain and beyond management’s control. These statements include, without limitation, statements regarding CI’s intentions and expectations with respect to the Offer, the terms and conditions of the Offer, the number and aggregate dollar amount of Shares to be purchased for cancellation under the Offer, the expected expiration date of the Offer and purchases thereunder and the effects and benefits of purchases under the Offer. Although management believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, such statements involve risks and uncertainties. The material factors and assumptions applied in reaching the conclusions contained in the forward-looking statements include beliefs that asset levels will remain stable, that the investment fund industry and wealth management industry will remain stable and that interest rates will remain relatively stable. In addition, factors that could cause actual results to differ materially from expectations include, among other things, general economic and market conditions, including interest and foreign exchange rates, global financial markets, changes in government regulations or in tax laws, industry competition, technological developments and other factors described or discussed in CI’s disclosure materials filed with applicable securities regulatory authorities from time to time. The foregoing list is not exhaustive and the reader is cautioned to consider these and other factors carefully and not to place undue reliance on forward-looking statements. Additional information about the risks and uncertainties of the CI’s business and material risk factors or assumptions on which information contained in forward‐looking statements is based is provided in the CI’s disclosure materials, including CI’s most recently filed annual information form and any subsequently filed interim management’s discussion and analysis, which are available under CI’s profile on SEDAR+ at www.sedarplus.com. Other than as specifically required by applicable law, CI undertakes no obligation to update or alter any forward-looking statement after the date on which it is made, whether to reflect new information, future events or otherwise.

Undue reliance should not be placed on forward-looking information. The forward-looking information in this press release is based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we currently believe are appropriate and reasonable in the circumstances. Despite a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. Further, forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to, those described in this press release. The belief that the investment fund industry and wealth management industry will remain stable and that interest rates will remain relatively stable are material factors made in preparing the forward-looking information and management’s expectations contained in this press release and that may cause actual results to differ materially from the forward-looking information disclosed in this press release.

Contacts

Investor Relations
Jason Weyeneth, CFA

Vice-President, Investor Relations & Strategy

416-681-8779

[email protected]

Media
Canada

Murray Oxby

Vice-President, Communications

416-681-3254

[email protected]

United States

Jimmy Moock

Managing Partner, StreetCred

610-304-4570

[email protected]
[email protected]

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