Guardian Capital Group Limited (TSX: GCG; GCG.A) Announces 2023 First Quarter Operating Results
TORONTO, May 11, 2023 (GLOBE NEWSWIRE) —
All per share figures disclosed below are stated on a diluted basis.
| For the three months ended March 31, | 2023 | 2022 | |||||
| ($ in thousands, except per share amounts) | Restated | ||||||
| Net revenue | $ | 54,493 | $ | 51,824 | |||
| Operating earnings | 11,240 | 13,507 | |||||
| Net gains (losses) | 18,134 | (9,749 | ) | ||||
| Net earnings from continuing operations | 26,442 | 224 | |||||
| Net earnings from discontinued operations | 553,743 | 5,591 | |||||
| Net earnings | 580,185 | 5,815 | |||||
| EBITDA(1) | $ | 17,371 | $ | 17,504 | |||
| Adjusted cash flow from operations(1) | 18,097 | 16,778 | |||||
| Attributable to shareholders: | |||||||
| Net earnings (loss) from continuing operations | $ | 26,114 | $ | (353 | ) | ||
| Net earnings | 487,603 | 4,262 | |||||
| EBITDA(1) | 16,395 | 16,390 | |||||
| Adjusted cash flow from operations (1) | 17,113 | 15,635 | |||||
| Per share, diluted: | |||||||
| Net earnings (loss) from continuing operations | $ | 1.02 | $ | (0.01 | ) | ||
| Net earnings | 18.79 | 0.16 | |||||
| EBITDA(1) | 0.65 | 0.64 | |||||
| Adjusted cash flow from operations (1) | 0.67 | 0.61 | |||||
| As at | 2023 | 2022 | |||||
| ($ in millions, except per share amounts) | March 31 | December 31 | March 31 | ||||
| Restated | |||||||
| Assets under management | $ | 52,261 | $ | 49,587 | $ | 53,123 | |
| Assets under advisement | 4,065 | 3,716 | 4,272 | ||||
| Total client assets | 56,326 | 53,303 | 57,395 | ||||
| Shareholders’ equity | $ | 1,242 | $ | 768 | $ | 828 | |
| Securities | 1,301 | 660 | 741 | ||||
| Per share (diluted) | |||||||
| Shareholders’ equity (1) | $ | 48.73 | $ | 29.43 | $ | 31.27 | |
| Securities (1) | 51.06 | 25.31 | 27.97 | ||||
The Company successfully closed on March 1, 2023, the previously announced transaction to sell its subsidiaries, Worldsource Financial Management Inc., Worldsource Securities Inc. and IDC Worldsource Insurance Network Inc. (“IDC WIN”) (altogether, the “Worldsource Businesses”) for $750 million, subject to adjustments for net working capital, less amounts due to minority shareholders of IDC WIN. At the time of entering into an agreement to sell, the Company classified the Worldsource Businesses as discontinued operations. Its financial results were netted on the Statements of Operations and presented on one line called, “Net earnings from discontinued operations” and on the Balance Sheets as “Discontinued operations” in both the assets and liabilities. Comparative periods were restated to reflect this presentation. All other figures referenced below reflect the results of the continuing business of the Company.
The Company is reporting $553.7 million in Net earnings from discontinued operations, which includes net gains of $619.5 million realized on the disposition of the Worldsource Businesses, income tax expense of $69.0 million on the net gains and $3.2 million in operating earnings, net of taxes, for the period up to the closing date.
The Company’s share of the net proceeds from the sale of the Worldsource Businesses were immediately invested into interest-bearing, short-term securities. As a result, the Company is reporting fair value of its Securities at $1.3 billion ($51.06 per share) as at March 31, 2023, compared to $660 million ($25.31 per share) as at December 31, 2022.
The Company’s total client assets as at March 31, 2023, were $56.3 billion, which include assets under management and assets under advisement. This is a 6% increase from $53.3 billion as at December 31, 2022, and a 2% decrease from $57.4 billion reported as at March 31, 2022.
Net revenue for the current quarter was $54.5 million, a 5% increase from $51.8 million in the same quarter in the prior year. Interest income earned on the proceeds from the sale of the Worldsource Businesses was the biggest driver of the increase, despite it being only one month’s income. Net management and advisory fee revenue decreased by $0.8 million in the current quarter to $44.0 million, which includes the addition of RaeLipskie in the current quarter results. The expenses were 13% higher in the current quarter at $43.3 million. The increase is due to the inclusion of RaeLipskie’s expenses, increase in interest expense due to rise in interest rates, and increased strategic investments into the Canadian Retail Asset Management team, the Guardian Smart Infrastructure team, Guardian Partners Inc. and Modern Advisor Inc., our additional expected growth sources for the future.
Operating earnings for the quarter were of $11.2 million, a $2.3 million decrease from the $13.5 million reported in 2022. The Operating losses associated with the strategic investments mentioned above were $1.0 million higher at $3.3 million in the current quarter.
EBITDA(1) and EBITDA attributable to shareholders(1) were $17.4 million and $16.4 million in the current quarter, compared to $17.5 million and $16.4 million in the comparative period.
Net gains in the current quarter were $18.1 million, compared to Net losses of $9.7 million in the same quarter in the prior year, both largely consistent with the impacts of the global equity markets performance.
Net earnings attributable to shareholders were $487.6 million in the current quarter and $4.3 million in the comparative period. The net gains realized on the sale of the Worldsource Businesses was the main reason for the increase in the current year.
Adjusted cash flow from operations(1) and Adjusted cash flow from operations attributable to shareholders(1) for the current quarter were $18.1 million and $17.1 million, respectively, compared to $16.8 million and $15.6 million, respectively, in the comparative period. During the current quarter, the Company returned to shareholders $6.1 million in dividends and $5.4 million in share buybacks.
The Company’s Shareholders’ equity as at March 31, 2023 was $1,242 million, or $48.73 per share(1), compared to $768 million, or $29.43 per share(1) as at December 31, 2022.
The Board of Directors is pleased to have declared a quarterly eligible dividend of $0.34 per share, payable on July 18, 2023, to shareholders of record on July 11, 2023.
The Company’s financial results for the past eight quarters are summarized in the following table.
| Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | |||||||||||||
| Restated | Restated | Restated | Restated | Restated | Restated | |||||||||||||||
| As at ($ in millions) | ||||||||||||||||||||
| Assets under management | $ | 52,261 | $ | 49,587 | $ | 47,814 | $ | 46,931 | $ | 53,123 | $ | 56,341 | $ | 53,113 | $ | 51,641 | ||||
| Assets under advisement | 4,065 | 3,716 | 3,788 | 3,944 | 4,272 | 4,338 | 5,061 | 5,542 | ||||||||||||
| Total client assets | 56,326 | 53,303 | 51,602 | 50,875 | 57,395 | 60,679 | 58,174 | 57,183 | ||||||||||||
| For the three months ended ($ in thousands) | ||||||||||||||||||||
| Net revenue | $ | 54,493 | $ | 50,681 | $ | 48,434 | $ | 50,056 | $ | 51,824 | $ | 52,961 | $ | 50,873 | $ | 47,437 | ||||
| Operating earnings | 11,240 | 8,790 | 10,419 | 11,404 | 13,507 | 14,086 | 15,385 | 14,134 | ||||||||||||
| Net gains (losses) | 18,134 | 18,225 | (21,148 | ) | (91,545 | ) | (9,749 | ) | 51,408 | (8,960 | ) | 55,915 | ||||||||
| Net earnings (losses) from continuing operations | 26,442 | 25,249 | (11,582 | ) | (73,463 | ) | 224 | 57,909 | 4,005 | 61,193 | ||||||||||
| Net earnings from discontinued operations | 553,743 | 6,386 | 5,034 | 5,239 | 5,591 | 6,542 | 4,592 | 5,638 | ||||||||||||
| Net earnings (losses) | 580,185 | 31,635 | (6,548 | ) | (68,224 | ) | 5,815 | 64,451 | 8,597 | 66,831 | ||||||||||
| Net earnings (loss) from continuing operations attributable to shareholders | 26,114 | 24,679 | (11,780 | ) | (74,053 | ) | (353 | ) | 56,999 | 3,268 | 60,681 | |||||||||
| Net earnings (loss) attributable to shareholders | 487,603 | 29,961 | (7,608 | ) | (69,698 | ) | 4,262 | 62,422 | 7,054 | 65,138 | ||||||||||
| Per share (in $) | ||||||||||||||||||||
| Net earnings (loss) from continuing operations attributable to shareholders | ||||||||||||||||||||
| Basic | $ | 1.09 | $ | 1.02 | $ | (0.49 | ) | $ | (3.03 | ) | $ | (0.01 | ) | $ | 2.30 | $ | 0.13 | $ | 2.41 | |
| Diluted | 1.02 | 0.96 | (0.49 | ) | (3.03 | ) | (0.01 | ) | 2.15 | 0.12 | 2.25 | |||||||||
| Net earnings (loss) attributable to shareholders: | ||||||||||||||||||||
| Basic | $ | 20.27 | $ | 1.24 | $ | (0.31 | ) | $ | (2.85 | ) | $ | 0.17 | $ | 2.52 | $ | 0.28 | $ | 2.59 | ||
| Diluted | 18.79 | 1.16 | (0.31 | ) | (2.85 | ) | 0.16 | 2.35 | 0.27 | 2.42 | ||||||||||
| Dividends paid | $ | 0.34 | $ | 0.24 | $ | 0.24 | $ | 0.24 | $ | 0.18 | $ | 0.18 | $ | 0.18 | $ | 0.18 | ||||
| As at | ||||||||||||||||||||
| Shareholders’ equity ($ in millions) | $ | 1,242 | $ | 768 | $ | 743 | $ | 743 | $ | 828 | $ | 839 | $ | 781 | $ | 780 | ||||
| Per share (in $) | ||||||||||||||||||||
| Basic | $ | 52.42 | $ | 31.84 | $ | 30.82 | $ | 30.68 | $ | 33.67 | $ | 33.89 | $ | 31.56 | $ | 31.15 | ||||
| Diluted | 48.73 | 29.43 | 28.88 | 28.74 | 31.27 | 31.53 | 29.40 | 29.09 | ||||||||||||
| Total Class A and Common shares outstanding | ||||||||||||||||||||
| (shares in thousands) | 26,113 | 26,246 | 26,246 | 26,342 | 26,892 | 26,954 | 26,968 | 27,263 | ||||||||||||
Guardian Capital Group Limited (Guardian) is a global financial services company providing extensive investment management services to institutional, retail and private high and ultra-high-net worth clients through its subsidiaries. It also manages a proprietary portfolio of securities. Founded in 1962, Guardian’s reputation for steady growth, long-term relationships and its core values of trustworthiness, integrity and stability have been key to its success over six decades. Its Common and Class A shares are listed on the Toronto Stock Exchange as GCG and GCG.A, respectively. To learn more about Guardian, visit www.guardiancapital.com.
For further information, contact:
| Donald Yi | George Mavroudis |
| Chief Financial Officer | President and Chief Executive Officer |
| (416) 350-3136 | (416) 364-8341 |
| Investor Relations: investorrelations@guardiancapital.com. | |
Caution Concerning Forward-Looking Information
Certain information included in this press release constitutes forward-looking information within the meaning of applicable Canadian securities laws. All information other than statements of historical fact may be forward-looking information. Forward-looking information is often, but not always, identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plan”, “continue”, or similar expressions suggesting future outcomes or events or the negative thereof. Forward-looking information in this press release includes, but is not limited to, statements with respect to management’s beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations. Such forward-looking information reflects management’s beliefs and is based on information currently available. All forward-looking information in this press release is qualified by the following cautionary statements.
Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves known and unknown risks and uncertainties which may cause the Company’s actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking information. Important factors that could cause actual results to differ materially include but are not limited to: general economic and market conditions, including interest rates, business competition, changes in government regulations or in tax laws, the outbreak and severity of pandemics, such as COVID 19, the ongoing conflict in the Ukraine, as well as those risk factors discussed or referred to in the disclosure documents filed by the Company with the securities regulatory authorities in certain provinces of Canada and available at www.sedar.com. The reader is cautioned to consider these factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking information, as there can be no assurance that actual results will be consistent with such forward-looking information.
The forward-looking information included in this press release is made as of the date of this press release and should not be relied upon as representing the Company’s views as of any date subsequent to the date of this press release.
(1) Non IFRS Measures
The Company’s management uses EBITDA, EBITDA attributable to shareholders, including the per share amount, Adjusted cash flows from operations, Adjusted cash flow from operations attributable to shareholders, including the per share amount, Shareholders’ equity per share and Securities per share to evaluate and assess the performance of its business. These measures do not have standardized measures under International Financial Reporting Standards (“IFRS”), and are therefore unlikely to be comparable to similar measures presented by other companies. However, management believes that most shareholders, creditors, other stakeholders and investment analysts prefer to include the use of these measures in analyzing the Company’s results. The Company defines EBITDA as net earnings before interest, income taxes, amortization, and stock-based compensation expenses, net gains or losses and net earnings from discontinued operations. EBITDA attributable shareholders as EBITDA less the amounts attributable to non-controlling interests. The Company defines Adjusted cash flow from operations as net cash from operating activities, net of changes in non-cash working capital items and cash flows from discontinued operations. Adjusted cash flow from operations attributable to shareholders as Adjusted cash flow from operations less the amounts attributable to non-controlling interests. A reconciliation between these measures and the most comparable IFRS measure are as follows:
| For the three months ended March 31, ($ in thousands) | 2023 | 2022 | ||||||
| Restated | ||||||||
| Net earnings | $ | 580,185 | $ | 5,815 | ||||
| Add (deduct): | ||||||||
| Net earnings from discontinued operations | (553,743 | ) | (5,591 | ) | ||||
| Income tax expense | 2,932 | 3,534 | ||||||
| Net (gains) losses | (18,134 | ) | 9,749 | |||||
| Stock-based compensation | 916 | 662 | ||||||
| Interest expense | 1,929 | 545 | ||||||
| Amortization | 3,286 | 2,790 | ||||||
| EBITDA | 17,371 | 17,504 | ||||||
| Less attributable to non-controlling interests in continuing operations | (976 | ) | (1,114 | ) | ||||
| EBITDA attributable to shareholders | $ | 16,395 | $ | 16,390 | ||||
| For the three months ended March 31, ($ in thousands) | 2023 | 2022 | ||||||
| Restated | ||||||||
| Net cash from operating activities | $ | 10,187 | $ | (692 | ) | |||
| Add (deduct): | ||||||||
| Net cash from operating activities, discontinued operations | (10,087 | ) | (9,848 | ) | ||||
| Net change in non-cash working capital items | 8,284 | 20,641 | ||||||
| Net change in non-cash working capital items, discontinued operations | 9,713 | 6,677 | ||||||
| Adjusted cash flow from operations | 18,097 | 16,778 | ||||||
| Less attributable to non-controlling interests, continuing operations | (984 | ) | (1,143 | ) | ||||
| Adjusted cash flow from operations attributable to shareholders | $ | 17,113 | $ | 15,635 | ||||
The per share amounts for EBITDA attributable to shareholders, Adjusted cash flow from operations attributable to shareholders, Shareholders’ equity and Securities are calculated by dividing the amounts by diluted shares, which is calculated in a manner similar to net earnings attributable to shareholders per share. More detailed descriptions of these non-IFRS measures are provided in the Company’s Management’s Discussion and Analysis, including a reconciliation of these measures to their most comparable IFRS measures.
