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IGM Financial Inc.: IGM Financial Inc. Reports Second Quarter Earnings

^{Published on 2009-07-29 14:32:17, Last Modified on 2009-07-29 14:32:27 - Market Wire}
 

WINNIPEG, MANITOBA--(Marketwire - July 29, 2009) - IGM Financial Inc. (IGM or the Company) (TSX:IGM) today announced earnings results for the second quarter of 2009.

Net income for the three months ended June 30, 2009 was $144.5 million compared to adjusted net income of $216.1(1) million a year ago and net income of $133.5 million in the prior quarter. Earnings per share were 55 cents compared to adjusted earnings per share of 81(1) cents a year ago and earnings per share of 51 cents in the prior quarter.

Net income for the six months ended June 30, 2009 was $278.0 million compared to adjusted net income of $427.3(1) million for the comparative period in 2008. Earnings per share were $1.05 in 2009 compared to adjusted earnings per share of $1.61(1) in 2008.

Gross revenues for the three months ended June 30, 2009 were $587.8 million compared to $720.7 million a year ago and $559.1 million in the prior quarter. Operating expenses were $384.1 million for the second quarter of 2009, compared to $419.3 million a year ago and $373.8 million in the prior quarter.

Gross revenues for the six months ended June 30, 2009 were $1.15 billion compared to $1.43 billion a year ago. Operating expenses were $757.9 million for the six months ended June 30, 2009 compared to $843.7 million a year ago.

Total assets under management at June 30, 2009 were $109.6 billion. This compared with total assets under management of $119.7 billion at June 30, 2008 and $98.7 billion at March 31, 2009.

Shareholders' equity at June 30, 2009 was $4.3 billion, unchanged from June 30, 2008 and compared to $4.2 billion at March 31, 2009. Return on average common equity for the six months ended June 30, 2009 was 13.4% and for the comparative period in 2008 adjusted return on equity was 20.2%.

INVESTORS GROUP OPERATIONS

The number of Investors Group Consultants was 4,511 at June 30, 2009 up from 4,479 at December 31, 2008 and up from 4,360 at June 30, 2008.

"Our Consultant network continued to expand for the 20th consecutive quarter," said Murray J. Taylor, President and Chief Executive Officer of Investors Group Inc. "Increasing stock market values in the second quarter led to our average client investment values being up 12.9%, the strongest quarter in 26 years."

Mutual fund sales for the second quarter were $1.1 billion compared to $1.5 billion in the prior year and mutual fund net redemptions for the second quarter were $95 million compared to net redemptions of $6 million a year ago and net sales of $309 million in the prior quarter.

Mutual fund sales for the six months ended June 30, 2009 were $2.5 billion compared to $3.4 billion in the prior year and mutual fund net sales were $214 million compared to $504 million a year ago.

Investors Group's twelve month trailing redemption rate (excluding money market funds) was 7.5% at June 30, 2009, compared to 7.6% at June 30, 2008 and 7.7% at March 31, 2009.

Investors Group's mutual fund assets under management at June 30, 2009 were $52.5 billion compared to $59.0 billion at June 30, 2008 and $46.6 billion at March 31, 2009.

MACKENZIE OPERATIONS

Total sales for the second quarter of 2009 were $3.4 billion compared to $3.3 billion in the prior year. Total net redemptions for the second quarter were $535 million compared to total net sales of $199 million in the prior year and total net redemptions of $299 million in the prior quarter.

Total sales for the six months ended June 30, 2009 were $6.3 billion compared to $6.5 billion in the prior year. Total net redemptions were $834 million compared to total net sales of $97 million in the prior year.

"As the markets have improved this quarter, we have been pleased with the investment performance of our products relative to their benchmarks. We continued to focus on streamlining a number of activities while enhancing our future operating capabilities. Year over year operating expenses for the quarter declined by $24 million or 15%," said Charles R. Sims, President and Chief Executive Officer of Mackenzie Financial Corporation.

Mackenzie's total assets under management at June 30, 2009 totalled $57.8 billion. This compares with total assets under management of $61.2 billion at June 30, 2008 and $52.6 billion at March 31, 2009. Mutual fund assets under management at June 30, 2009 were $37.2 billion compared to $43.7 billion a year ago and $33.7 billion at March 31, 2009.

DIVIDENDS

The Board of Directors declared a quarterly dividend of $0.359375 per share on the Company's 5.75% Non-Cumulative First Preferred Shares, Series "A" payable on September 30, 2009 to shareholders of record on August 28, 2009 and has declared a dividend of 51.25 cents per share on the Company's common shares payable on October 30, 2009 to shareholders of record on September 28, 2009.

(1) Adjusted net income for the three and six month periods ended June 30, 2008 excluded a $25.0 million gain which represented the Company's proportionate share of Great-West Lifeco Inc.'s after-tax gain on the sale of its healthcare business, Great-West Healthcare. Net income without adjustment was $241.1 million and $452.3 million for the three and six month periods. Earnings per share on this basis were 91 cents and $1.70, respectively.

FORWARD-LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES

Certain statements in this Release, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect IGM Financial's current expectations. Forward-looking statements are provided for the purposes of assisting the reader in understanding the Company's financial position and results of operations as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. These statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of the Company, as well as the outlook for North American and international economics, for the current fiscal year and subsequent periods. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "plans", "believes", "estimates", "seeks", "intends", "targets", "projects", "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could".

This information is based upon certain material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking statements, including the perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances.

By its nature, this information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved.

A variety of material factors, many of which are beyond the Company's, and its subsidiaries' control, affect the operations, performance and results of the Company, and its subsidiaries, and their businesses, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, management of market liquidity and funding risks, changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates), the effect of applying future accounting changes (including adoption of International Financial Reporting Standards), operational and reputational risks, business competition, technological change, changes in government regulations and legislation, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, the Company's ability to complete strategic transactions, integrate acquisitions and implement other growth strategies, and the Company's success in anticipating and managing the foregoing factors.

The reader is cautioned that the foregoing list of factors is not exhaustive of the factors that may affect any of the Company's forward-looking statements. The reader is also cautioned to consider these and other factors, uncertainties and potential events carefully and not place undue reliance on forward-looking statements.

Other than as specifically required by law, the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statements are made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

Additional information about the risks and uncertainties of the Company's business is provided in its disclosure materials filed with the securities regulatory authorities in Canada, available at [ www.sedar.com ].

This release contains non-GAAP financial measures. Terms by which non-GAAP financial measures are identified include but are not limited to "adjusted net income", "adjusted earnings per share", "adjusted return on average common equity", "net income without adjustment" and other similar expressions. Non-GAAP financial measures are used to provide management and investors with additional measures of performance. However, non-GAAP financial measures do not have standard meanings prescribed by GAAP and are not directly comparable to similar measures used by other companies. Please refer to the attached Financial Highlights for the appropriate reconciliations of these non-GAAP financial measures to measures prescribed by GAAP.

A review of activities and performance for IGM Financial Inc., together with financial details and a management discussion, will be published in the Company's 2009 Second Quarter Report to Shareholders which should be mailed to shareholders on or about August 13, 2009.

IGM Financial Inc. is one of Canada's premier personal financial services companies, and one of the country's largest managers and distributors of mutual funds and other managed asset products, with over $109 billion in total assets under management as of June 30, 2009. Its activities are carried out principally through Investors Group, Mackenzie Financial Corporation and Investment Planning Counsel. IGM Financial Inc. is a member of the Power Financial Corporation group of companies.

Media Note: A live webcast of IGM's Analyst conference call for the Second Quarter 2009 will be held Thursday July 30, 2009, at 9:30 A.M. (ET) at [ www.igmfinancial.com ]. Media and interested parties may alternatively choose to listen to the live analyst teleconference call by dialing 1-866-226-1792 or (416) 340-2216.

IGM FINANCIAL INC.
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Consolidated Statements of Income

(unaudited)
(in thousands of dollars,
 except shares and per Three months ended Six months ended
 share amounts) ----------------------------- ----------------------
 June 30 March 31 June 30 June 30
 2009 2009 2008 2009 2008
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Fee and net investment
 income
 Management $ 399,340 $ 365,419 $ 503,320 $ 764,759 $ 993,969
 Administration 86,902 82,322 89,401 169,224 176,903
 Distribution 62,337 62,336 72,395 124,673 148,082
 Net investment income
 and other 39,184 48,977 55,552 88,161 115,867
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Total fee and net
 investment income 587,763 559,054 720,668 1,146,817 1,434,821
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Operating expenses
 Commission expense 197,309 192,376 234,803 389,685 469,797
 Non-commission expense 158,252 158,515 162,500 316,767 329,911
 Interest expense 28,582 22,893 21,990 51,475 43,980
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Total operating
 expenses 384,143 373,784 419,293 757,927 843,688
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Income before income
 taxes and
 proportionate share
 of affiliate's gain 203,620 185,270 301,375 388,890 591,133
Income taxes 59,116 51,743 85,277 110,859 163,832
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Net income before
 proportionate share
 of affiliate's gain 144,504 133,527 216,098 278,031 427,301
Proportionate share
 of affiliate's gain - - 25,003 - 25,003
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Net income $ 144,504 $ 133,527 $ 241,101 $ 278,031 $ 452,304
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Average number of
 common shares
 (in thousands)
 - Basic 262,925 262,417 263,609 262,673 263,863
 - Diluted 264,102 263,264 265,751 263,600 265,934

Earnings per share
 (in dollars)
 Excluding
 proportionate share
 of affiliate's gain
 - Basic $ 0.55 $ 0.51 $ 0.82 $ 1.06 $ 1.62
 - Diluted $ 0.55 $ 0.51 $ 0.81 $ 1.05 $ 1.61
Including
 proportionate share
 of affiliate's gain
 - Basic $ 0.55 $ 0.51 $ 0.91 $ 1.06 $ 1.71
 - Diluted $ 0.55 $ 0.51 $ 0.91 $ 1.05 $ 1.70
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IGM FINANCIAL INC.
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Financial Three Months ended Six Months ended
 Highlights --------------------------------- ------------------------
 % Change % Change
 ------------ --------
 2009 2009 2008 2009 2008 2009 2008 2008
 June March June March June June June June
(unaudited) 30 31 30 31 30 30 30 30
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Net income
 ($ millions)
 Adjusted (1) $144.5 $133.5 $216.1 8.2% (33.1)% $278.0 $427.3 (34.9)%
 GAAP 144.5 133.5 241.1 8.2 (40.1) 278.0 452.3 (38.5)

Diluted earnings
 per share
 Adjusted (1) 0.55 0.51 0.81 7.8 (32.1) 1.05 1.61 (34.8)
 GAAP 0.55 0.51 0.91 7.8 (39.6) 1.05 1.70 (38.2)

Return on
 equity
 Adjusted (1) 13.4% 20.2%
 GAAP 13.4% 21.4%

Dividends per
 share 0.5125 0.5125 0.4875 - 5.1 1.025 0.975 5.1
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 % Change
 -------------------
 2009 2009 2008 2009 2008
($ millions) June 30 March 31 June 30 March 31 June 30
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Total assets under
 management (2) $109,647 $ 98,655 $119,669 11.1% (8.4)%
 Investors Group
 Mutual funds 52,498 46,574 59,006 12.7 (11.0)
 Mackenzie
 Mutual funds 37,249 33,659 43,716
 Sub-advisory,
 institutional and
 other accounts 20,550 18,943 17,484
 Total 57,799 52,602 61,200 9.9 (5.6)
 Counsel Group of Funds
 Mutual funds 1,838 1,670 2,139 10.1 (14.1)
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 Counsel
Mutual Funds and Investors Group of
 Institutional Sales Group Mackenzie Funds Total (3)

 For the three months ended
 June 30, 2009
 Gross sales $ 1,105 $ 3,393 $ 69 $ 4,501
 Net sales (redemptions) (95) (535) 11 (641)

 For the six months ended
 June 30, 2009
 Gross sales $ 2,532 $ 6,252 $ 136 $ 8,701
 Net sales (redemptions) 214 (834) 20 (693)

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(1) Non-GAAP Financial Measures:
 Results for the three and six months ended June 30, 2008 excluded a 
 $25.0 million gain which represented the Company's proportionate share
 of Great-West Lifeco Inc.'s after-tax gain on the sale of its healthcare
 business, Great-West Healthcare.
(2) Total assets under management excluded $2.5 billion of assets
 sub-advised by Mackenzie on behalf of Investors Group and Investment
 Planning Counsel ($2.2 billion at March 31, 2009 and $2.6 billion at
 June 30, 2008).
(3) Total Gross Sales and Net Redemptions for the three months ended June
 30, 2009 excluded $66 million and $22 million respectively in accounts
 sub-advised by Mackenzie on behalf of Investors Group and Investment
 Planning Counsel.
 Total Gross Sales and Net Redemptions for the six months ended June 30,
 2009 excluded $219 million and $93 million respectively in accounts
 sub-advised by Mackenzie on behalf of Investors Group and Investment
 Planning Counsel.