Ci financial reports financial results for the second quarter of 2022
Toronto--(business wire)--ci financial corp. (“ci”) (tsx: cix, nyse: cixx) today released financial results for the quarter ended june 30, 2022. “these results validate our corporate strategy and capital allocation policies,” said kurt macalpine, ci chief executive officer. “our expansion in wealth management in the united states and canada has added stability and diversification to our business, with our u.s. operations making increasing contributions to revenues and earnings. despite continued volatility in capital markets, we achieved year-over-year growth in overall ebitda, earnings per share and free cash flow per share.1 “while the canadian fund industry had total redemptions of $19 billion during the quarter, our flows in canadian retail asset management were relatively stable, supported by improving overall investment performance and several successful product launches,” mr. macalpine said. “we continue to advance our u.s. wealth management strategy, both through acquisitions of selected, high-quality rias and through an array of initiatives to capture synergies, expand our services and support to clients, and foster organic growth. the success of these programs can be seen in the attractive, growing margins of our u.s. business.” operating and financial data highlights [millions of dollars, except share amounts] as of and for the quarters ended jun. 30, 2022 mar. 31, 2022 dec. 31, 2021 sep. 30, 2021 jun. 30, 2021 total aum and client assets: asset management aum 116,065 136,271 144,247 139,380 138,187 canada wealth management assets 74,128 78,957 80,633 76,859 75,521 u.s. wealth management assets 143,520 145,768 151,339 96,974 83,764 total assets 333,712 360,996 376,219 313,213 297,472 asset management net inflows: retail (381) (861) 142 684 530 institutional (3,203) (264) (331) (126) (360) australia (122) (305) 82 159 (33) closed business (160) (203) (195) (146) (194) u.s. asset management (195) 402 260 250 413 total (4,060) (1,231) (42) 821 356 ifrs results net income attributable to shareholders 156.2 138.1 123.7 43.8 117.6 diluted earnings per share 0.81 0.70 0.62 0.22 0.57 pretax income 219.0 185.8 175.1 82.4 166.6 pretax margin 38.6 % 29.3 % 28.3 % 15.9 % 31.7 % operating cash flow before the change in operating assets and liabilities 141.2 207.7 179.2 135.2 158.1 adjusted results adjusted net income 149.1 166.8 171.0 159.2 153.0 adjusted diluted earnings per share 0.78 0.85 0.86 0.79 0.74 adjusted ebitda 251.0 272.9 277.2 258.1 242.3 adjusted ebitda margin 44.5 % 46.5 % 47.7 % 47.0 % 48.4 % free cash flow 176.4 201.6 187.1 180.9 164.1 average shares outstanding 191,151,896 196,111,771 196,816,227 199,321,002 203,039,536 ending shares outstanding 189,037,762 192,987,082 197,422,270 197,443,135 201,327,517 total debt 3,688 3,530 3,776 3,408 3,350 net debt 3,538 3,352 3,453 2,655 2,461 net debt to adjusted ebitda 3.5 3.0 3.1 2.6 2.5 financial highlights net income grew to $156.2 million in the quarter from $138.1 million in the first quarter. excluding non-operating items, adjusted net income declined to $149.1 million in the quarter from $166.8 million in the first quarter of 2022 as higher earnings in ci’s u.s. and canadian wealth businesses were more than offset by lower earnings from the asset management segment due to the pressure on global financial assets. second quarter total net revenues declined 10.6% to $566.7 million in the quarter from $633.8 million in the first quarter of 2022. excluding non-operating items, adjusted total net revenue fell 3.9% to $598.3 million, primarily driven by lower revenues from the asset management segment due to lower average aum. second quarter total expenses declined 22.4% to $347.7 million in the quarter from $448.0 million in the first quarter of 2022. excluding non-operating items, adjusted total expenses were essentially unchanged at $386.0 million, reflecting disciplined cost controls in a challenging operating environment, partially offset by the impact of acquisitions that closed during the quarter. capital allocation in the second quarter of 2022, ci repurchased 4.1 million shares at a cost of $59.8 million, for an average cost of $14.67 per share, and paid $34.7 million in dividends at a rate of $0.18 per share. the board of directors declared a quarterly dividend of $0.18 per share, payable on january 13, 2023 to shareholders of record on december 30, 2022. the annual dividend rate of $0.72 per share represented a yield of 4.9% on ci’s closing share price of $14.67 on august 10, 2022. second quarter business highlights ci announced its intention to sell up to 20% of its u.s. wealth management business via a u.s. initial public offering (“ipo”). ci stated that it intends to use the net proceeds from the ipo to pay down debt, and that a final decision on the ipo size, conditions and timing is pending and will be subject to market conditions. ci completed the acquisitions of two registered investment advisors (“rias”): corient capital partners, llc, of newport beach, california, which serves ultra-high-net-worth individuals and families across the united states, and galapagos partners, lp of houston, a multi-family office serving wealthy families and individuals. both transactions closed on april 29, 2022. ci private wealth us, llc applied for a charter to establish and operate a south dakota trust company, which, when granted, will allow ci’s wealth management business to offer administrative trust solutions. ci completed the acquisition of toronto-based northwood family office ltd., giving ci a leading presence in the country’s multi-family office segment. the transaction was completed on april 1, 2022. in the latest initiatives to modernize ci’s asset management business, ci global asset management (“ci gam”) continued to enhance and broaden its product lineup. the firm introduced a private infrastructure investment solution managed by harbourvest partners, a global leader in private markets investing. ci gam also launched ci galaxy blockchain etf, ci galaxy metaverse etf and ci floating rate income fund (etf series). additionally, ci gam claimed compliance with the global investment performance standards (“gips®”) from cfa institute. the gips standards are universal and voluntary standards based on the fundamental principles of full disclosure and fair representation of investment performance. ci’s success in implementing innovative technologies and processes across its organization was recognized through a 2022 digital transformation award (large private sector category) from it world canada. ci joint venture axia real assets launched a new u.s. real estate fund, the axia u.s. grocery net lease fund ii lp, through a private placement. the investment vehicle will be used to acquire a portfolio of dominant net lease grocery real estate assets across the u.s. analysts’ conference call ci will hold a conference call with analysts today at 9:00 a.m. edt, led by chief executive officer kurt 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: 884850): canada toll-free: 1-833-950-0062 united states toll-free: 1-844-200-6205 united states (new york local): 1-646-904-5544 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 an integrated global wealth and asset management company. ci’s primary asset management businesses are ci global asset management (ci investments inc.) and gsfm pty ltd., and it operates in canadian wealth management through ci assante wealth management (assante wealth management (canada) ltd.), ci private counsel lp, aligned capital partners inc., northwood family office ltd., ci direct investing (wealthbar financial services inc.), and ci investment services inc. ci’s u.s. wealth management businesses consist of barrett asset management, llc, balasa dinverno foltz llc, bowling portfolio management llc, brightworth, llc, brr opco, llc (budros, ruhlin & roe), the cabana group, llc, corient capital partners, llc, cpwm, llc (columbia pacific wealth management), columbia pacific advisors, llc, congress wealth management llc, dowling & yahnke, llc, doyle wealth management, llc, galapagos partners, lp, glasfunds, llc, gofen & glossberg, llc, matrix capital advisors, llc, mccutchen group llc, ocm capital partners, llc, portola partners group llc, radnor financial advisors, llc, regentatlantic capital, llc, the roosevelt investment group, llc, rgt wealth advisors, llc, r.h. bluestein & co., segall bryant & hamill, llc, stavis & cohen private wealth, llc, and surevest llc. ci is listed on the toronto stock exchange under cix and on the new york stock exchange under cixx. further information is available at www.cifinancial.com. 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. this press release contains forward-looking statements concerning anticipated future events, results, circumstances, performance or expectations with respect to ci financial corp. (“ci”) and its products and services, including its business operations, strategy and financial performance and condition and its intention to conduct an ipo of its us wealth management business. 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 beliefs regarding future events, many of which by their nature are inherently uncertain and beyond management’s control. 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 these forward-looking statements include that ci will proceed with the ipo, that all outstanding acquisitions will be completed and their asset levels will remain stable, that the investment fund industry will remain stable and that interest rates will remain relatively stable. 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, the risk that the ipo may not occur in its expected timeframe or at all, 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. 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. this communication is provided as a general source of information and should not be considered personal, legal, accounting, tax or investment advice, or construed as an endorsement or recommendation of any entity or security discussed. individuals should seek the advice of professionals, as appropriate, regarding any particular investment. investors should consult their professional advisors prior to implementing any changes to their investment strategies. ci global asset management is a registered business name of ci investments inc. consolidated statement of income for the three-month period ended june 30 2022 2021 [in thousands of canadian dollars, except per share amounts] $ $ revenue canada asset management fees 404,279 441,139 trailer fees and deferred sales commissions (123,952) (137,685) net asset management fees 280,327 303,454 canada wealth management fees 130,103 119,901 u.s. wealth management fees 168,949 71,400 other revenues 21,210 17,982 foreign exchange gains (losses) (32,864) 8,174 other gains (losses) (1,069) 3,830 total net revenues 566,656 524,741 expenses selling, general and administrative 239,521 173,936 advisor and dealer fees 99,711 93,412 interest and lease finance 36,235 24,249 amortization and depreciation 11,909 9,702 amortization of intangible assets from acquisitions 27,436 11,669 transaction, integration, restructuring and legal settlements 4,587 17,543 change in fair value of contingent consideration (74,977) 22,410 other 3,230 5,258 total expenses 347,652 358,179 income before income taxes 219,004 166,562 provision for (recovery of) income taxes current 46,835 54,764 deferred 13,901 (6,614) 60,736 48,150 net income for the period 158,268 118,412 net income attributable to non-controlling interests 2,057 792 net income attributable to shareholders 156,211 117,620 basic earnings per share attributable to shareholders $0.82 $0.58 diluted earnings per share attributable to shareholders $0.81 $0.57 other comprehensive income (loss), net of tax exchange differences on translation of foreign operations 17,662 (10,475) total other comprehensive income (loss), net of tax 17,662 (10,475) comprehensive income for the period 175,930 107,937 comprehensive income attributable to non-controlling interests 2,996 792 comprehensive income attributable to shareholders 172,934 107,145 consolidated balance sheet as at as at june 30, 2022 december 31, 2021 [in thousands of canadian dollars] $ $ assets current cash and cash equivalents 154,844 230,779 client and trust funds on deposit 1,462,148 1,199,904 investments 37,981 131,772 accounts receivable and prepaid expenses 247,057 272,962 income taxes receivable 12,556 3,607 total current assets 1,914,586 1,839,024 capital assets, net 54,687 52,596 right-of-use assets 140,266 142,606 intangibles 6,471,980 6,185,237 deferred income taxes 45,887 56,901 other assets 439,440 383,187 total assets 9,066,846 8,659,551 liabilities and equity current accounts payable and accrued liabilities 283,796 369,081 current portion of provisions and other financial liabilities 321,062 572,432 redeemable non-controlling interests 598,130 — dividends payable 68,054 71,072 client and trust funds payable 1,467,614 1,202,079 income taxes payable 12,841 19,035 current portion of long-term debt 314,573 444,486 current portion of lease liabilities 20,390 20,216 total current liabilities 3,086,460 2,698,401 long-term debt 3,373,540 3,331,552 provisions and other financial liabilities 248,414 379,641 deferred income taxes 484,511 480,777 lease liabilities 150,921 153,540 total liabilities 7,343,846 7,043,911 equity share capital 1,742,376 1,810,153 contributed surplus 35,374 28,368 deficit (72,182) (226,715) accumulated other comprehensive loss (12,629) (23,289) total equity attributable to the shareholders of the company 1,692,939 1,588,517 non-controlling interests 30,061 27,123 total equity 1,723,000 1,615,640 total liabilities and equity 9,066,846 8,659,551 statement of cash flows for the three-month period ended june 30 2022 2021 [in thousands of canadian dollars] $ $ operating activities (*) net income for the period 158,268 118,412 add (deduct) items not involving cash other (gains) losses 1,069 (5,307) change in fair value of contingent consideration (74,977) 22,410 contingent consideration recorded as compensation 670 939 recognition of vesting of redeemable non-controlling interests (3,420) — equity-based compensation 6,325 6,660 amortization and depreciation 39,345 21,371 deferred income taxes 13,901 (6,614) loss on repurchases of long-term debt — 212 cash provided by operating activities before net change in operating assets and liabilities 141,181 158,083 net change in operating assets and liabilities 22,929 (27,989) cash provided by operating activities 164,110 130,094 investing activities purchase of investments (78) (1,384) proceeds on sale of investments 71 6,194 additions to capital assets (5,553) (1,255) decrease (increase) in other assets 13,287 (41,780) additions to intangibles (2,713) (2,113) cash paid to settle acquisition liabilities (38,626) (45,468) acquisitions, net of cash acquired (155,828) (371,958) cash used in investing activities (189,440) (457,764) financing activities repayment of long-term debt — (16,514) issuance of long-term debt 85,000 1,075,460 repurchase of long-term debt — (4,779) repurchase of share capital (59,248) (132,043) payment of lease liabilities (5,110) (4,203) issuance of redeemable non-controlling interest 9,577 — net distributions to non-controlling interest (1,348) (580) dividends paid to shareholders (34,748) (36,728) cash provided by (used in) financing activities (5,877) 880,613 net increase (decrease) in cash and cash equivalents during the period (31,207) 552,943 cash and cash equivalents, beginning of period 186,051 248,394 cash and cash equivalents, end of period 154,844 801,337 (*) included in operating activities are the following: interest paid 55,574 30,281 income taxes paid 54,951 46,401 assets under management and net flows [billions of dollars] quarters ended jun. 30, 2022 mar. 31, 2022 dec. 31, 2021 sep. 30, 2021 jun. 30, 2021 beginning aum 136.3 144.2 139.4 138.2 132.6 gross inflows 4.8 4.9 5.2 5.1 6.1 gross outflows 8.7 6.6 5.5 4.5 6.1 net inflows/(outflows) (3.9) (1.6) (0.3) 0.6 (0.1) acquisitions — — — — 0.2 market move and fx (16.3) (6.3) 5.2 0.6 5.5 ending aum 116.1 136.3 144.2 139.4 138.2 proprietary aum 30.8 34.5 36.2 34.7 34.5 non-proprietary aum 85.3 101.8 108.0 104.7 103.7 average assets under management 125.4 138.2 143.0 141.1 135.9 annualized organic growth (11.4) % (4.6) % (0.9) % 1.6 % (0.2) % gross management fee/average aum 1.31 % 1.30 % 1.30 % 1.31 % 1.31 % net management fee/average aum 0.89 % 0.88 % 0.88 % 0.88 % 0.88 % net inflows retail (0.4) (0.9) 0.1 0.7 0.5 institutional (3.2) (0.3) (0.3) (0.1) (0.4) closed business (0.2) (0.2) (0.2) (0.1) (0.2) total canada net inflows (3.7) (1.3) (0.4) 0.4 — australia (0.1) (0.3) 0.1 0.2 — total net inflows/(outflows) (3.9) (1.6) (0.3) 0.6 (0.1) retail (ex closed business) [billions of dollars] quarters ended jun. 30, 2022 mar. 31, 2022 dec. 31, 2021 sep. 30, 2021 jun. 30, 2021 beginning aum 108.4 114.6 110.4 109.1 103.9 net flows (0.4) (0.9) 0.1 0.7 0.5 market move / fx (12.9) (5.3) 4.1 0.6 4.5 acquisitions ___ ___ ___ 0.2 ___ ending aum 95.1 108.4 114.6 110.4 109.1 average aum 101.4 109.6 113.8 111.8 106.8 institutional [billions of dollars] quarters ended jun. 30, 2022 mar. 31, 2022 dec. 31, 2021 sep. 30, 2021 jun. 30, 2021 beginning aum 12.7 13.3 13.0 13.0 12.7 net flows (3.2) (0.3) 0.3 (0.1) (0.4) market move / fx (1.1) (0.3) 0.6 0.1 0.7 acquisitions ___ ___ ___ ___ ___ ending aum 8.4 12.7 13.3 13.0 13.0 average aum 10.2 12.9 13.2 13.3 13.0 australia [billions of dollars] quarters ended jun. 30, 2022 mar. 31, 2022 dec. 31, 2021 sep. 30, 2021 jun. 30, 2021 beginning aum 6.6 7.3 7.0 6.9 7.1 net flows (0.1) (0.3) 0.1 0.1 (0.0) market move / fx (1.4) (0.4) 0.2 0.0 (0.2) acquisitions ___ ___ ___ ___ ___ ending aum 5.1 6.6 7.3 7.0 6.9 average aum 5.8 7.0 7.1 7.0 7.1 closed business [billions of dollars] quarters ended jun. 30, 2022 mar. 31, 2022 dec. 31, 2021 sep. 30, 2021 jun. 30, 2021 beginning aum 8.6 9.1 9.0 9.1 8.9 net flows (0.2) (0.2) (0.2) (0.2) (0.2) market move / fx (0.9) (0.3) 0.3 (0.0) 0.4 acquisitions ___ ___ ___ ___ ___ ending aum 7.5 8.6 9.1 8.9 9.1 average aum 8.0 8.7 9.0 9.0 9.0 aum by asset class [billions of dollars] quarters ended jun. 30, 2022 mar. 31, 2022 dec. 31, 2021 sep. 30, 2021 jun. 30, 2021 balanced 50.9 59.4 62.1 60.3 60.3 equity 41.4 49.3 52.3 50.1 49.8 fixed income 11.7 13.1 14.2 14.1 13.9 alternatives 3.6 4.9 5.7 5.0 4.3 cash/other 3.4 3.0 2.7 2.8 2.9 total canada asset management 111.0 129.7 137.0 132.4 131.3 australia 5.1 6.6 7.3 7.0 6.9 total asset management segment 116.1 136.3 144.2 139.4 138.2 canada wealth management client assets [billions of dollars] quarters ended jun. 30, 2022 mar. 31, 2022 dec. 31, 2021 sep. 30, 2021 jun. 30, 2021 beginning client assets 79.0 80.6 76.9 75.5 71.1 acquisitions 2.4 — — — — net flows and market move (7.2) (1.7) 3.8 1.3 4.5 ending client assets 74.1 79.0 80.6 76.9 75.5 average client assets 77.7 79.0 78.9 77.0 73.1 wealth management fees/average client assets 0.91 % 0.95 % 0.93 % 0.94 % 0.91 % u.s. wealth management client assets [billions of dollars] quarters ended jun. 30, 2022 mar. 31, 2022 dec. 31, 2021 sep. 30, 2021 jun. 30, 2021 beginning billable client assets 141.2 146.4 96.1 82.9 30.7 acquisitions 7.1 1.1 49.3 10.1 49.5 net flows and market move (9.5) (6.3) 1.0 3.1 2.7 ending billable client assets 138.8 141.2 146.4 96.1 82.9 unbillable client assets 4.8 4.6 4.9 0.9 0.8 total client assets 143.5 145.8 151.3 97.0 83.8 fees/beginning billable client assets1 0.48 % 0.46 % 0.50 % 0.52 % 0.71 % non-ifrs measures in an effort to provide additional information regarding our results as determined by ifrs, we also disclose certain non-ifrs information which we believe provides useful and meaningful information. our management reviews these non-ifrs financial measurements when evaluating our financial performance and results of operations; therefore, we believe it is useful to provide information with respect to these non-ifrs measurements so as to share this perspective of management. non-ifrs measurements do not have any standardized meaning, do not replace nor are superior to ifrs financial measurements and may not be comparable to similar measures presented by other companies. the non-ifrs financial measurements include: adjusted net income and adjusted basic and diluted earnings per share adjusted ebitda and adjusted ebitda margin free cash flow net debt. these non-ifrs measurements exclude the following revenues and expenses which we believe allows investors a consistent way to analyze our financial performance, allows for better analysis of core operating income and business trends and permits comparisons of companies within the industry, normalizing for different financing methods and levels of taxation: gains or losses related to foreign currency fluctuations on our cash balances costs related to our acquisitions including: amortization of intangible assets change in fair value of contingent consideration related advisory fees contingent consideration classified as compensation per ifrs amortization of intangible assets change in fair value of contingent consideration related advisory fees contingent consideration classified as compensation per ifrs restructuring charges including organizational expenses for the establishment of cipw legal provisions for a class action related to market timing certain gains or losses in assets and investments costs related to issuing or retiring debt obligations expenses associated with cipw redeemable units. further explanations of these non-ifrs measures can be found in the “non-ifrs measures” section of management’s discussion and analysis dated august 11, 2022 available on sedar at www.sedar.com or at www.cifinancial.com. adjusted net income and adjusted earnings per share [millions of dollars, except per share amounts] quarters ended jun. 30, 2022 mar. 31, 2022 jun. 30, 2021 net income 158.3 137.5 118.4 amortization of intangible assets from acquisitions 27.4 24.1 12.0 change in fair value of contingent consideration (75.0) 3.1 22.4 contingent consideration recorded as compensation 0.7 18.2 0.9 non-controlling interest reclassification 0.9 0.9 — cipw adjustments 3.1 13.2 — fx (gains)/losses 32.9 (11.5) (8.2) transaction, integration, restructuring and legal 4.6 3.8 17.5 other (gains)/losses (1.2) — (1.4) bond redemption costs — — 0.2 total adjustments1 (6.7) 51.7 43.6 tax effect of adjustments 5.6 (11.5) (8.2) less: non-controlling interest 8.1 10.9 0.8 adjusted net income 149.1 166.8 153.0 adjusted earnings per share 0.78 0.85 0.75 adjusted diluted earnings per share 0.78 0.85 0.74 ebitda, adjusted ebitda and adjusted ebitda margin [millions of dollars, except per share amounts] quarters ended jun. 30, 2022 mar. 31, 2022 jun. 30, 2021 pretax income 219.0 185.8 166.6 amortization of intangible assets from acquisitions 27.4 24.1 12.1 depreciation and other amortization 11.9 11.4 9.7 interest and lease finance expense 36.2 35.9 24.2 ebitda 294.6 257.1 212.6 change in fair value of contingent consideration (75.0) 3.1 22.4 contingent consideration recorded as compensation 0.7 18.2 0.9 non-controlling interest reclassification 0.9 0.9 — cipw adjustments 3.1 13.2 — fx (gains)/losses 32.9 (11.5) (8.2) transaction, integration, restructuring and legal 4.6 3.8 17.5 other (gains)/losses (1.2) — (1.4) bond redemption costs — — 0.2 total adjustments (34.1) 27.7 31.6 non-controlling interest 9.5 11.9 1.9 adjusted ebitda 251.0 272.9 242.3 reported net revenue 566.7 633.8 524.7 less: fx gains/(losses) (32.9) 11.5 8.2 less: non-operating other gains/(losses) 1.2 — 1.4 less: nci revenues 34.8 35.5 15.0 adjusted net revenue 563.5 586.8 500.2 adjusted ebitda margin 44.5 % 46.5 % 48.4 % free cash flow [millions of dollars] quarters ended jun. 30, 2022 mar. 31, 2022 jun. 30, 2021 cash provided by operating activities 164.1 154.8 130.1 net change in operating assets and liabilities (22.9) 52.9 28.1 operating cash flow before the change in operating assets and liabilities 141.2 207.7 158.1 fx (gains)/losses 32.9 (11.5) (8.2) transaction, integration, restructuring and legal 4.6 3.8 17.5 other (gains)/losses — — — total adjustments 37.5 (7.7) 9.3 tax effect (recovery) of adjustments (5.7) 1.2 (1.4) less: non-controlling interest (3.4) (0.4) 1.9 free cash flow 176.4 201.6 164.1 net debt quarters ended [millions of dollars] jun. 30, 2022 mar. 31, 2022 dec. 31, 2021 sep. 30, 2021 jun. 30, 2021 current portion of long-term debt 314.6 225.3 444.5 74.2 — long-term debt 3,373.5 3,304.7 3,331.6 3,334.2 3,350.2 3,688.1 3,530.0 3,776.0 3,408.4 3,350.2 less: cash and short-term investments 154.8 186.1 230.8 653.9 801.3 marketable securities 18.1 20.3 116.9 122.5 121.1 add: regulatory capital and non-controlling interests 22.4 28.8 25.0 23.1 33.4 net debt 3,537.5 3,352.4 3,453.4 2,655.1 2,461.2 adjusted ebitda 251.0 272.9 277.2 258.1 242.3 adjusted ebitda, annualized 1,006.9 1,106.6 1,099.8 1,024.1 971.9 gross leverage (gross debt/annualized adjusted ebitda) 3.7 3.2 3.4 3.3 3.4 net leverage (net debt/annualized adjusted ebitda) 3.5 3.0 3.1 2.6 2.5 summary of quarterly results [millions of dollars, except per share amounts] ifrs results adjusted results for the quarters ended for the quarters ended jun. 30, 2022 mar. 31, 2022 dec. 31, 2021 sep. 30, 2021 jun. 30, 2021 jun. 30, 2022 mar. 31, 2022 dec. 31, 2021 sep. 30, 2021 jun. 30, 2021 revenues asset management fees 404.3 437.6 464.9 460.9 441.1 404.3 437.6 464.9 460.9 441.1 trailer fees and deferred sales commissions (124.0) (135.3) (143.6) (143.4) (137.7) (124.0) (135.3) (143.6) (143.4) (137.7) net asset management fees 280.3 302.3 321.3 317.5 303.5 280.3 302.3 321.3 317.5 303.5 canada wealth management fees 130.1 138.2 134.9 132.5 119.9 130.1 138.2 134.9 132.5 119.9 u.s. wealth management fees 168.9 164.5 120.9 108.1 71.4 168.9 164.5 120.9 108.1 71.4 other revenues 21.2 21.6 27.3 11.2 18.0 21.2 21.6 27.3 11.2 18.0 fx gains/(losses) (32.9) 11.5 3.1 (50.3) 8.2 — — — — — other gains/(losses) (1.1) (4.4) 11.9 (1.1) 3.8 (2.3) (4.4) (4.9) (1.1) 2.5 total net revenues 566.7 633.8 619.3 517.9 524.7 598.3 622.3 599.4 568.2 515.2 expenses selling, general & administrative 239.5 259.6 214.6 201.9 173.9 235.7 228.2 212.5 197.7 173.0 advisor and dealer fees 99.7 106.9 104.8 103.4 93.4 99.7 106.9 104.8 103.4 93.4 other 3.2 3.2 5.7 6.5 5.3 2.4 2.4 5.7 6.5 5.0 interest and lease finance expense 36.2 35.9 32.5 31.6 24.2 36.2 35.9 32.5 31.6 24.2 depreciation and other amortization 11.9 11.4 10.9 10.3 9.7 11.9 11.4 10.4 10.0 9.4 amortization of intangible assets from acquisitions 27.4 24.1 18.2 16.4 11.7 — — — — — transaction, integration, restructuring and legal 4.6 3.8 13.6 3.9 17.5 — — — — — change in fair value of contingent consideration (75.0) 3.1 43.9 61.4 22.4 — — — — — total expenses 347.7 448.0 444.2 435.5 358.2 386.0 384.8 365.9 349.2 305.1 pretax income 219.0 185.8 175.1 82.4 166.6 212.3 237.5 233.4 219.0 210.1 income tax expense 60.7 48.3 51.3 37.0 48.2 55.1 59.7 62.5 58.1 56.4 net income 158.3 137.5 123.7 45.4 118.4 157.2 177.8 171.0 160.9 153.7 non-controlling interest 2.1 (0.6) — 1.6 0.8 8.1 10.9 — 1.6 0.8 net income attributable to shareholders 156.2 138.1 123.7 43.8 117.6 149.1 166.8 171.0 159.2 153.0 basic earnings per share 0.82 0.70 0.63 0.22 0.58 0.78 0.85 0.87 0.80 0.75 diluted earnings per share 0.81 0.70 0.62 0.22 0.57 0.78 0.85 0.86 0.79 0.74 results of operations – asset management segment [millions of dollars, except per share amounts] ifrs results adjusted results for the quarters ended for the quarters ended jun. 30, 2022 mar. 31, 2022 dec. 31, 2021 sep. 30, 2021 jun. 30, 2021 jun. 30, 2022 mar. 31, 2022 dec. 31, 2021 sep. 30, 2021 jun. 30, 2021 revenues asset management fees 408.9 442.5 469.6 465.6 445.5 408.9 442.5 469.6 465.6 445.5 trailer fees and deferred sales commissions (131.9) (143.9) (152.6) (152.4) (146.3) (131.9) (143.9) (152.6) (152.4) (146.3) net asset management fees 277.0 298.6 316.9 313.2 299.3 277.0 298.6 316.9 313.2 299.3 other revenues 5.6 10.2 19.9 3.2 12.2 5.6 10.2 19.9 3.2 12.2 fx gains/(losses) (32.8) 11.4 (1.4) (19.0) 1.2 — — — — — other gains/(losses) (1.1) (4.4) 12.0 (1.1) 3.8 (2.3) (4.4) (4.8) (1.1) 2.5 total net revenues 248.7 315.8 347.5 296.3 316.5 280.2 304.4 332.1 315.3 313.9 expenses selling, general & administrative 97.3 96.8 108.7 109.6 104.9 97.3 96.8 108.7 109.6 104.9 other — — (0.5) 1.6 0.2 — — (0.5) 1.6 0.2 interest and lease finance expense 1.0 1.0 0.5 0.5 0.6 1.0 1.0 0.5 0.5 0.6 depreciation and other amortization 5.0 5.0 5.4 5.5 5.5 5.0 5.0 5.4 5.5 5.5 amortization of intangible assets from acquisitions 0.6 0.6 0.6 0.6 0.6 — — — — — transaction, integration, restructuring and legal 2.3 (0.9) 10.4 0.4 14.6 — — — — — change in fair value of contingent consideration (3.9) 4.0 14.2 1.9 10.0 — — — — — total expenses 102.3 106.5 139.3 120.2 136.4 103.3 102.8 114.1 117.2 111.1 pretax income 146.4 209.3 208.1 176.1 180.1 176.9 201.6 218.0 198.1 202.8 non-ifrs adjustments pretax income 146.4 209.3 208.1 176.1 180.1 176.9 201.6 218.0 198.1 202.8 amortization of intangible assets from acquisitions 0.6 0.6 0.6 0.6 0.6 — — — — — depreciation and other amortization 5.0 5.0 5.4 5.5 5.5 5.0 5.0 5.4 5.5 5.5 interest and lease finance expense 1.0 1.0 0.5 0.5 0.6 1.0 1.0 0.5 0.5 0.6 ebitda 153.0 215.9 214.7 182.7 186.7 183.0 207.6 223.9 204.1 208.8 contingent consideration recorded as compensation (included in sg&a) (3.9) 4.0 14.2 1.9 10.0 — — — — — fx (gains)/losses 32.8 (11.4) 1.4 19.0 (1.2) — — — — — transaction, integration, restructuring and legal 2.3 (0.9) 10.4 0.4 14.6 — — — — — other (gains)/losses (1.2) — (16.8) — (1.4) — — — — — total adjustments 30.0 (8.3) 9.2 21.4 22.1 — — — — — less: non-controlling interest 0.3 0.4 0.1 0.5 0.2 0.3 0.4 0.1 0.5 0.2 adjusted ebitda 182.7 207.2 223.8 203.6 208.6 182.7 207.2 223.8 203.6 208.6 results of operations – canada wealth management segment [millions of dollars, except per share amounts] ifrs results adjusted results for the quarters ended for the quarters ended jun. 30, 2022 mar. 31, 2022 dec. 31, 2021 sep. 30, 2021 jun. 30, 2021 jun. 30, 2022 mar. 31, 2022 dec. 31, 2021 sep. 30, 2021 jun. 30, 2021 revenues canada wealth management fees 175.6 185.7 184.3 181.7 166.5 175.6 185.7 184.3 181.7 166.5 other revenues 21.3 17.1 16.0 14.8 13.9 21.3 17.1 16.0 14.8 13.9 fx gains/(losses) — 0.1 0.8 0.7 0.7 — — — — — other gains/(losses) — — (0.1) — — — — (0.1) — — total net revenues 196.9 202.9 201.1 197.2 181.1 196.9 202.8 200.3 196.5 180.4 expenses selling, general & administrative 45.5 41.4 39.9 37.8 35.7 45.3 41.4 39.9 37.8 35.7 advisor and dealer fees 135.9 145.6 145.2 143.5 131.3 135.9 145.6 145.2 143.5 131.3 other 2.6 2.9 3.2 1.8 1.3 1.7 2.0 3.2 1.8 1.3 interest and lease finance expense (0.1) 0.2 0.2 0.2 0.1 (0.1) 0.2 0.2 0.2 0.1 depreciation and other amortization 2.8 2.5 2.3 2.4 2.5 2.8 2.5 2.3 2.4 2.5 amortization of intangible assets from acquisitions 2.1 1.6 1.5 1.7 1.3 — — — — — transaction, integration, restructuring and legal 0.4 0.8 0.1 0.1 — — — — — — change in fair value of contingent consideration (0.6) — — — — — — — — — total expenses 188.5 195.0 192.6 187.5 172.3 185.6 191.7 191.0 185.7 171.0 pretax income 8.4 7.9 8.5 9.7 8.8 11.4 11.1 9.3 10.8 9.5 non-ifrs adjustments pretax income 8.4 7.9 8.5 9.7 8.8 11.4 11.1 9.3 10.8 9.5 amortization of intangible assets from acquisitions 2.1 1.6 1.6 1.8 1.4 — — 0.1 0.1 0.1 depreciation and other amortization 2.8 2.5 2.3 2.4 2.5 2.8 2.5 2.3 2.4 2.5 interest and lease finance expense (0.1) 0.2 0.2 0.2 0.1 (0.1) 0.2 0.2 0.2 0.1 ebitda 13.1 12.1 12.6 14.0 12.8 14.0 13.8 11.9 13.5 12.2 change in fair value of contingent consideration (0.6) — — — — — — — — — contingent consideration recorded as compensation 0.1 — — — — — — — — — cipw adjustments (included in sg&a) 0.1 — — — — — — — — — fx (gains)/losses — (0.1) (0.8) (0.7) (0.7) — — — — — transaction, integration, restructuring and legal 0.4 0.8 0.1 0.1 — — — — — — nci reclassification (included in other) 0.9 0.9 — — — — — — — — total adjustments 0.8 1.6 (0.7) (0.6) (0.6) — — — — — less: non-controlling interest 1.0 0.9 (1.5) 0.7 0.5 1.0 0.9 (1.5) 0.7 0.5 adjusted ebitda 13.0 12.9 13.5 12.8 11.6 13.0 12.9 13.5 12.8 11.6 results of operations – u.s. wealth management segment [millions of dollars, except per share amounts] ifrs results adjusted results for the quarters ended for the quarters ended jun. 30, 2022 mar. 31, 2022 dec. 31, 2021 sep. 30, 2021 jun. 30, 2021 jun. 30, 2022 mar. 31, 2022 dec. 31, 2021 sep. 30, 2021 jun. 30, 2021 revenues u.s. wealth management fees 168.9 164.5 120.9 108.1 71.4 168.9 164.5 120.9 108.1 71.4 other revenues 4.5 4.8 1.3 2.6 0.9 4.5 4.8 1.3 2.6 0.9 fx gains/(losses) — — 3.7 (31.9) 6.3 — — — — — total net revenues 173.4 169.2 125.9 78.8 78.6 173.5 169.2 122.2 110.7 72.3 expenses selling, general & administrative 112.8 136.9 80.8 68.8 46.9 109.2 105.5 78.7 64.6 46.0 other 0.7 0.4 2.9 3.1 3.5 0.7 0.4 2.9 3.1 3.5 interest and lease finance expense 0.6 0.5 0.4 0.4 0.2 0.6 0.5 0.4 0.4 0.2 depreciation and other amortization 4.1 3.9 3.1 2.5 1.7 4.1 3.9 3.1 2.5 1.7 amortization of intangible assets from acquisitions 24.7 21.9 16.1 14.1 9.8 — — — — — transaction, integration, restructuring and legal 2.0 3.9 3.1 3.4 2.9 — — — — — change in fair value of contingent consideration (70.5) (0.9) 29.7 59.5 12.4 — — — — — total expenses 74.4 166.5 136.1 151.7 77.4 114.6 110.3 85.2 70.5 51.4 pretax income 99.0 2.7 (10.2) (72.9) 1.2 58.9 59.0 37.0 40.2 20.9 non-ifrs adjustments pretax income 99.0 2.7 (10.2) (72.9) 1.2 58.9 59.0 37.0 40.2 20.9 amortization of intangible assets from acquisitions 24.7 21.9 16.5 14.4 10.1 — — 0.5 0.3 0.3 depreciation and other amortization 4.1 3.9 3.1 2.5 1.7 4.1 3.9 3.1 2.5 1.7 interest and lease finance expense 0.6 0.5 0.4 0.4 0.2 0.6 0.5 0.4 0.4 0.2 ebitda 128.4 29.1 9.9 (55.6) 13.2 63.5 63.4 41.0 43.4 23.1 change in fair value of contingent consideration (70.5) (0.9) 29.7 59.5 12.4 — — — — — contingent consideration recorded as compensation (included in sg&a) 0.6 18.2 2.1 4.2 0.9 — — — — — cipw adjustments (included in sg&a) 3.0 13.2 — — — — — — — — fx (gains)/losses — — (3.7) 31.9 (6.3) — — — — — transaction, integration, restructuring and legal 2.0 3.9 3.1 3.4 2.9 — — — — — total adjustments (64.9) 34.3 31.1 99.0 9.9 — — — — — less: non-controlling interest 8.2 10.9 1.0 1.7 1.0 8.2 10.9 1.0 1.7 1.0 adjusted ebitda 55.4 52.5 40.0 41.7 22.1 55.4 52.5 40.0 41.7 22.1
