Toronto-based CI Financial released Q4 earnings for 2022 on Friday morning, providing an overview of the quarter and reassuring investors that a planned U.S. IPO will help ...
...pay down an expanded credit facility and debt ratio over 4%—while also suggesting that an aggressive, years-long acquisition strategy in the states could be slowing.
“In the fourth quarter, robust net flows in our Canadian and U.S. businesses, along with the acquisition of three best-in-class U.S. registered investment advisor firms, drove double-digit asset growth,” said CEO Kurt MacAlpine.
CI increased assets across all three segments by 11.2% over the previous quarter to $275.5 billion (in U.S. currency).
This was driven, in large part, by the U.S. acquisitions of Eaton Vance WaterOak, Inverness Counsel and Kore Private Wealth, which prompted the company to lease a 50,000-square-foot ...
...office space in midtown Manhattan and added approximately $18.4 billion in assets, growing the U.S. wealth management business to nearly $133 billion at year-end.
Those totals are down slightly from the same period the previous year, when CI recorded close to $276 billion in assets across all segments.
“We ended 2022 with strong Q4 results, capping off a successful year where we executed well and made material progress against our strategic initiatives,” MacAlpine said, noting that the company’s adjusted earnings per share came in at 54 cents.
“This reflects lower average AUM in our asset management business, more than offset by stronger profitability from our Canadian and U.S. wealth business for the full year,” said MacAlpine.
“This performance was achieved with significant market headwinds, as 2022 was the worst market performance for a diversified 60/40 portfolio in 85 years.”
The company filed an S-1 with the U.S. Securities and Exchange Commission in late 2022 and de-listed from the New York Stock Exchange in mid-January.
“Debt is up due to the use of our credit facility to close on three RIA acquisitions in the quarter,” said MacAlpine, who repeatedly told investors the U.S. sale would reduce debt in Canada while also noting that the company “recently amended our facility to increase our max leverage to 4.75 times.”
“For us, M&A is a function of the quality of firms that are coming to market at that respective point in time and how they will help us achieve our overall aspiration,” MacAlpine said, adding that there are “no planned cash outlays for the rest of the quarter associated with acquisitions.”
“As we work our way through the process, we’ll get a better sense for what that ultimately looks like,” he said.
“But we don’t have a target percentage that we’re looking to sell or a specific number that we’re managing for. We’re looking to maximize the value for our Canadian shareholders while allowing CI to retain meaningful ongoing participation in that business.”
Maintaining that CI is “not an aggregator,” MacAlpine said company’s goal is to become “the leading integrated ultra-high and high-net-worth manager in the U.S.—period.” This will ...
...be accomplished through strong organic growth and full integration of a new operating platform, he said, in addition to continued targeting of attractive wealth management firms.
CI’s adjusted EBITDA was about $178.2 billion in Q4 2022, compared with $203.5 billion at the end of 2021.
The company’s board declared a quarterly dividend of 13 cents per share for the quarter and the annual dividend rate of 53 cents represents a 4.7% yield on CI’s closing share price on Thursday.
More detailed information on CI financials can be found here and here.