CI Financial Corp.

Hello, everyone, and welcome to the CI Financial fourth quarter 2022 earnings conference call. My name is Bruno, and I will be operating your call today. During the presentation, you can register to ask a question by pressing star one on your telephone keypad. I will now hand over to your host, Kurt McAlpine, CEO of CI Financial. Please go ahead.

Good morning, everyone, and welcome to CI Financial's fourth quarter earnings call. Joining me is our CFO, Amit Muni. Together we'll cover the following, an overview of the highlights of the quarter, a review of our financial performance during the quarter, an update on the execution of select items of our corporate strategy. Then we will take your questions. We ended 2022 with strong Q4 results, capping off a successful year where we executed well and made material progress against our strategic initiatives. Our adjusted EPS of 74 cents represents a one cent increase from the prior quarter. This reflects lower average AUM in our asset management business, more than offset by stronger profitability from our Canadian and U.S. wealth businesses. For the full year, 2022 represented the second highest EPS result in the firm's history, only 1% below last year's record result and 27% higher than the next best year. This performance was achieved with significant market headwinds as 2022 was the worst market performance for a diversified 60-40 portfolio in 85 years. Adjusted EBITDA per share increased 3% while free cash flow was up 5% from the prior quarter. Capital allocation during the quarter was focused on M&A as we completed the acquisitions of three high-quality US RAs and made other deferred and earned out payments related to prior deals. Our asset management business generated net inflows for the second consecutive quarter. Within Canadian retail, our inflows of $1.6 billion were once again a stark contrast to the billions of outflows endured by the Canadian mutual fund and ETF industry. Our wealth businesses continue to generate consistently positive inflows. Despite the market volatility and risk-off sentiment in 2022, we generated a record $10.4 billion net inflows, which is 4 billion more than the previous record achieved last year. As a reminder, given our business model, flows into our U.S. wealth management business come at similar margins to asset managers, not Canadian wealth managers. We also continue to execute well against our three strategic priorities to modernize asset management, expand wealth management, and globalize the company. We progressed towards the IPO of our U.S. wealth business with the submission of an S-1 to the SEC last year. We continue to work through the regulatory approval process. In connection with the planned offering, we delisted from the NYSE effective mid-January. As we discussed last quarter, post-IPO, our Canadian business will trade exclusively on the Toronto Stock Exchange, and our U.S. business will trade exclusively on a U.S. exchange. During the quarter, we closed on the acquisitions of Eaton Vance Investment Council, Inverness Council, and Core Private Wealth, adding $25 billion of assets. Before I turn the call over to Amit to discuss the financial results, I want to highlight two corporate awards we received recently. Our goal is to create a high-performance culture by providing our colleagues with meaningful and exciting opportunities for growth and development. So we're proud to be recognized for our programs and practices by being named in December a Greater Toronto Top Employer for 2023. In addition, we were granted the 2022 Digital Transformation Award by ITWC, reflecting the success we've had in implementing digital technologies and processes across our business. I'll now turn the call over to Ahmed.

Thank you, Kurt, and good morning, everyone. Turning to slide four, our global assets end of the quarter at $376 billion. up due to net inflows in all our three business lines and positive market movement, as well as from the acquisitions of three RIAs. Turning to our financial results on the next slide, I'll focus my comments on our adjusted results. Adjusted net income was $136 million, or 74 cents per share for the quarter. Net revenues increased to $572 million, and adjusted EBITDA was $243 million for the quarter. Turning to the next slide, I'll highlight the revenue drivers for our three segments. On a comparable basis, revenues were up slightly as higher Canada and U.S. wealth revenues due to positive flows and market movement were partly offset by lower asset management revenues due to negative markets. We generated $23 million of additional revenues from the three acquisitions in the quarter. Turning to expenses on the next slide. On a fully comparable basis, total expenses increased 2.7 percent. Three million of the increase was due to higher revenue payouts to our Canada and our Canada wealth segment due to higher revenues. SG&A was up six million in total, which is primarily comprised of a one-time year-end true-up of compensation in our U.S. wealth management segment as we sunset a few legacy plans, which was partly offset by cost control measures. Expenses increased $13 million due to the impact of acquisitions in the quarter. Turning to slide eight, we generated free cash flows of $158 million for the quarter and paid dividends of $153 million. Turning to the next slide, we can review our debt and leverage. At the end of the quarter, we had approximately $4.1 billion of net debt outstanding. Net debt is up due to the use of our credit facility to close on three RA acquisitions in the quarter. Our credit facility leverage is 4.1 times. Normalizing for the one-time year-end true-up in our U.S. compensation, our EBITDA would have been higher and our credit facility leverage would be closer to four times. We recently amended our facility to increase our max leverage to 4.75 times. As a reminder, the weighted average maturity of our debt is 11.5 years, primarily at an average fixed rate of 4.1%. and 92% of our debt is covenant-free. As we previously stated, we intend to use the proceeds from the IPO to reduce our debt and leverage. Thank you. Now let me turn the call back to Curt.