CANACCORD GENUITY GROUP INC. REPORTS SECOND QUARTER FISCAL 2025 RESULTS

Second quarter dividend of $0.085 per common share

TORONTO, Nov. 7, 2024 /CNW/ - Canaccord Genuity Group Inc. (Canaccord Genuity Group, the Company, (TSX: CF) today announced its financial results for the second fiscal quarter and six months ended September 30, 2024.

"Results for our second quarter and fiscal year-to-date reflect continued improvements across our wealth management and capital markets businesses in all geographies," said Dan Daviau, Chairman & CEO of Canaccord Genuity Group Inc.  "We achieved record revenues and client assets in wealth management while our capital markets business posted stronger performances, driven by increased advisory activity and successful corporate financing transactions. Throughout our second quarter we continued to invest in our core capabilities while carefully managing our expenses."

Second fiscal quarter and six-month fiscal year-to-date highlights:(All dollar amounts are stated in thousands of Canadian dollars unless otherwise indicated)

Second quarter revenue of $428.6 million increased by 27.1% over the same period in the prior year

Global wealth management revenue for the second fiscal quarter increased by 15.6% year-over-year to $216.5 million

Global capital markets revenue for the second fiscal quarter increased by 39.5% year-over-year to $202.1 million

Six-month fiscal year-to-date revenue of $856.8 million, an increase of 25.9% compared to the first six months of fiscal 2024

Second quarter net income before taxes excluding significant items(1) of $42.3 million, an increase of 156.4% compared to Q2/24 (on an IFRS basis Q2/25 net income before taxes was $16.9 million compared to a loss of $0.7 million for Q2/24)

Six-month fiscal year-to-date net income before taxes excluding significant items(1) of $77.1 million, an increase of 56.1% compared to the first six months of fiscal 2024 (on an IFRS basis year-to-date net income before taxes of $40.4 million compared to net income before taxes of $5.6 million in the first six months of fiscal 2024)

Diluted earnings per common share excluding significant items(1) for the second fiscal quarter of $0.20 per common share (diluted loss per common share of $0.05 on an IFRS basis)

Diluted earnings per common share excluding significant items (1) for the first six months of fiscal 2025 of $0.33 per common share (diluted loss per common share of $0.02 on an IFRS basis)

Excluding significant items(1), CG's global wealth management businesses contributed net income before taxes of $38.2 million in the second quarter of fiscal 2025

Excluding significant items(1) CG's global capital markets business contributed second quarter net income before taxes of $14.9 million

Total client assets(1) in our global wealth management business were $110.4 billion at September 30, 2024, a year-over-year increase of 18.3% and reflecting year-over-year increases of 13.1% in Canada, 19.8% in the UK & Crown Dependencies and 37.6% in Australia

Second quarter common share dividend of $0.085 per share

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(1) See Non-IFRS Measures on page 6

 

Three months ended September 30

Year-over-yearchange

Three monthsended June 30

Quarter-over-quarter change

Q2/25

Q2/24

Q1/25

Second fiscal quarter highlights- adjusted1

Revenue excluding significant items1

$427,619

$337,508

26.7 %

$428,961

(0.3) %

Expenses excluding significant items1

$385,333

$321,017

20.0 %

$394,144

(2.2) %

Diluted earnings per common share excluding significant items1,

$0.20

$0.00

n.m.

$0.13

53.8 %

Net Income excluding significant items1,2

$31,804

$10,717

196.8 %

$25,441

25.0 %

Net income (loss) attributable to common shareholders excluding significant items1,3

$20,185

$(299)

n.m.

$13,363

51.1 %

Second fiscal quarter highlights-IFRS

Revenue

$428,636

$337,290

27.1 %

$428,165

0.1 %

Expenses

$411,747

$337,964

21.8 %

$404,632

1.8 %

Diluted (loss) earnings per common share

$(0.05)

$(0.20)

75.0 %

$0.02

n.m.

Net income (loss) 2

$9,166

$(5,867)

256.2 %

$16,721

(45.2) %

Net (loss) income attributable to common shareholders3

$(4,759)

$(18,981)

74.9 %

$2,399

(298.4) %

1. Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 62. Before non-controlling interests and preferred share dividends paid on the Series A and Series C Preferred Shares3. Net income (loss) attributable to common shareholders is calculated as the net income adjusted for non-controlling interests and preferred share dividends

Core business performance highlights:

Canaccord Genuity Wealth Management

The Company's combined global wealth management operations earned revenue of $216.5 million for the second fiscal quarter, a year-over-year increase of 15.6%.  On a year-to-date basis, revenue amounted to $432.4 million, an increase of 14.3% compared to the first six months of the prior fiscal year. Net income before taxes excluding significant items(1) for this segment increased by 16.8% and 4.1%  year-over-year for the three and six month periods ended September 30, 2024, respectively.

Wealth management operations in the UK & Crown Dependencies generated second quarter revenue of $108.8 million, an increase of 7.7% compared to the same period last year, primarily driven by higher commission and fees revenue partially offset by lower interest revenue. Measured in local currency (GBP), revenue was £61.3 million in Q2/25 compared to £59.5 million in Q2/24, an increase of 3.0% compared to the same quarter last year. Fee-related revenue for Q2/25 increased by 5.1% from the same period in the prior year and accounted for 84.2% of the wealth management revenue in the UK & Crown Dependencies during the second quarter of fiscal 2025. Excluding significant items(1), pre-tax net income for this business was $25.2 million in Q2/25 and $48.0 million fiscal year-to-date, a year-over-year increase of 11.0% for the three-month period and a decrease of 2.8% for the six-month period.

Canaccord Genuity Wealth Management (North America) generated $88.0 million in second quarter revenue, a year-over-year increase of 24.2% compared to Q2/24, primarily driven by increases in commissions and fees, investment banking and interest revenue. Fee-related revenue improved by 19.1% year-over-year and accounted for 49.9% of the wealth management revenue in Canada during the second quarter of fiscal 2025. Excluding significant items(1) net income before taxes for this business was $12.0 million in Q2/25 and $21.3 million for the first six months of fiscal 2025, which represents year-over-year increases of 31.0% and 17.0% respectively.

Wealth management operations in Australia generated $19.7 million in second quarter revenue, an increase of 28.0% compared to the second quarter of last year. Fee-related revenue increased by 42.0% year-over-year and accounted for 44.5% of the wealth management revenue in our Australia wealth management operations during the three months ended September 30, 2024. Excluding significant items(1) net income before taxes for this business was $0.9 million in Q2/25 compared to net income of $0.8 million in Q2/24, and net income before taxes of $2.2 million for the first six months of fiscal 2025 compared to net income of $1.1 million for the same period a year ago.

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(1) See Non-IFRS Measures on page 6

Total client assets in the Company's global wealth management businesses at the end of the second fiscal quarter amounted to $110.4 billion, an increase of $17.1 billion or 18.3% from Q2/24.

Client assets in the UK & Crown Dependencies were $63.0 billion (£34.8 billion) as at September 30, 2024, an increase of 19.8% (increase of 9.7% in local currency) from $52.6 billion (£31.7 billion) at September 30, 2023 due to net inflows, market growth and foreign exchange movement. On a sequential basis, client assets increased by 3.4% (decrease of 1.2% in local currency) from $60.9 billion (£35.2 billion) at the end of the previous quarter.

Client assets in North America were $39.9 billion as at September 30, 2024, an increase of 13.1% from $35.3 billion at September 30, 2023 due to net inflows and market growth, and an increase of 4.2% compared to the previous quarter.

Client assets(1) in Australia were $7.5 billion (AUD 8.0 billion) at September 30, 2024, an increase of 13.3% from $6.6 billion (AUD 7.3 billion) at the end of the previous quarter and an increase of 37.6% from $5.5 billion (AUD 6.3 billion) at September 30, 2023 mainly due to net new assets. In addition, client assets(1) totalling $14.9 billion (AUD 15.9 billion) are also held on record in less active and transactional accounts through our Australian platform.

Canaccord Genuity Capital Markets

Globally, Canaccord Genuity Capital Markets earned revenue of $202.1 million for the second fiscal quarter. The year-over-year increase of 39.5% reflects increased revenues from advisory activities, with the most notable increase from our US business, and increased fees from investment banking, which improved in all regions, with the most notable contribution from our Canadian business.

For the six months ended September 30, 2024, revenue increased by 40.3% to $407.7 million as revenue improved across all our core operations.

Canaccord Genuity Capital Markets participated in 186 investment banking transactions globally, including led and co-led deals, raising total proceeds of $17.2 billion fiscal year-to-date.

Advisory revenue for the three-month period was $78.4 million, an increase of 17.4% sequentially and a year-over-year increase of 70.3%. Our US operation was the largest contributor, with advisory fees revenue of $56.3 million in Q2/25, an increase of 50.3%.  Investment banking increased by 66.9% and principal trading increased by 35.9% compared to Q2/24 as revenue improved across all our regions. Commissions and fees revenue decreased by 12.3% year-over-year for the three-month period as an increase of 56.6% in the UK was offset by declines in our Canadian and US operations.   On a fiscal year-to-date basis, investment banking, advisory fees and principal trading revenue increased by 93.5%, 68.2% and 20.9% respectively compared to the same period in the prior year.

Excluding significant items(1),  our global capital markets division recorded net income before taxes of $14.9 million for the quarter, primarily reflecting an increase in revenue, when compared to a net loss excluding significant items(1) of $6.3 million in the same period a year ago. Net income excluding significant items(1) for the six-month period ended September 30, 2024 was $28.0 million compared to a net loss of $14.0 million for the same period in the prior year.

Summary of Corporate Developments

On September 12, 2024, the Company announced that through its wealth management business in the UK & Crown Dependencies, it has entered into a binding agreement with Brooks Macdonald Group plc to acquire its wholly owned operating subsidiary Brooks Macdonald Asset Management (International) Limited ("BMI"). Consideration to be paid to Brooks Macdonald on closing will be cash in the amount of £28.0 million with an additional contingent consideration of up to £22.85 million payable on the second anniversary of completion, subject to meeting certain revenue targets. BMI will be acquired by CGWM UK's international subsidiary, Canaccord Genuity Wealth ...