Guardian Capital Group Limited (TSX: GCG; GCG.A) Announces 2018 Third Quarter Operating Results

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TORONTO, Nov. 08, 2018 (GLOBE NEWSWIRE) — All per share figures disclosed below are stated on a diluted basis.

         
For the periods ended September 30 Three months Nine months
($ in thousands, except per share amounts) 2018 2017 2018 2017
         
Net revenue $   42,773 $ 36,315 $   127,213 $ 112,141
Operating earnings     12,444   10,505     34,250   35,123
Net gains (loss)(2)     28,481   4,068     33,349   27,045
Net earnings (loss) attributable to shareholders(2)     34,320   12,310     53,497   52,837
         
         
EBITDA(1) $   15,562 $ 11,811 $   41,346 $ 38,587
Adjusted cash flow from operations(1)     11,083   9,064     30,157   30,045
         
         
Per share:        
Net earnings (loss) attributable to shareholders(2) $   1.21 $ 0.42 $   1.89 $ 1.81
EBITDA(1)     0.55   0.40     1.46   1.32
Adjusted cash flow from operations(1)     0.39   0.31     1.07   1.03
         
         
As at   2018 2017
($ in millions, except per share amounts)   September 30 December 31 September 30
         
Assets under management   $   29,185 $ 27,250 $ 26,335
Assets under administration       18,096   17,795   17,271
Shareholders’ equity       670   634   608
Securities       688   652   621
         
         
Per share:        
Shareholders’ equity(1)   $   23.57 $ 21.88 $ 20.67
Securities(1)       24.20   22.49   21.12
         

The Company’s operating earnings for the quarter ended September 30, 2018 were $12.4 million, compared to $10.5 million during the same quarter in the prior year.  The total revenue increased to $42.8 million in the current quarter, $6.5 million higher than $36.3 million in the same quarter in the prior year.  All of the main components of revenue increased compared to the prior year.  Included in the management fee income this quarter is $4.6 million from the recently acquired US-based investment management business (“Alta”), accounting for substantially all of the increased management fee income compared to the prior year.  Substantially all of the increase in commission revenue in the Financial Advisory Segment was contributed by the life insurance Managing General Agency business, through its organic growth and successful recruitment of new advisors.

The expenses for the quarter were higher than the prior year by $4.5 million.  Included in the current quarter’s expenses were $3.1 million of operating expenses of Alta, additional costs in the Financial Advisory Segment associated with the continuing costs of the new technology platform and higher amortization expenses arising from significant recruitments of advisors in prior quarters, and increased interest expenses in the Corporate Segment resulting from increased financing used to acquire Alta.

The adoption of IFRS 9 by the Company on January 1, 2018, introduced significant volatility to net gains (losses) resulting from the financial markets.  As a result, we continued to see fluctuations in net gains (losses) in the current quarter.  The fair value of the securities increased significantly, including the shares of Bank of Montreal, resulting in net gains of $28.5 million being recorded in the current quarter, compared to net gains of $4.1 million in the prior year. 

As a result of the net gains and improved operating earnings as described above, the Company is reporting net earnings attributable to shareholders in the current quarter of $34.3 million, compared to net earnings attributable to shareholders of $12.3 million in the prior year.

The Company’s AUM was $29.2 billion as at September 30, 2018, compared to $27.3 billion at the end of 2017 and $26.3 billion as at September 30, 2017.  The increase in AUM is due largely to the addition of assets managed by Alta, positive financial market performance, partially offset by outflow of assets.   The Company’s assets under administration were $18.1 billion as at September 30, 2018, compared to $17.8 billion at the end of 2017 and $17.3 billion as at September 30, 2017. 

EBITDA(1) for the current quarter was $15.6 million, or $0.55 per share, compared to $11.8 million, or $0.40 per share for 2017.  Adjusted cash flow from operations(1) for the current quarter was $11.1 million, or $0.39 per share, compared to $9.1 million, or $0.31 per share  for 2017.

The Company’s shareholders’ equity as at September 30, 2018 was $670 million, or $23.57 per share(1), compared to $634 million, or $21.88 per share(1)  as at December 31, 2017, and $608 million, or $20.67 per share(1), as at September 30, 2017. The fair value of the Company’s Securities as at September 30, 2018 was $688 million, or $24.20 per share(1), compared to $652 million, or $22.49 per share(1), as at December 31, 2017, and $621 million or $21.12 per share(1), as at September 30, 2017.   

The Board of Directors has declared a quarterly eligible dividend of $0.125 per share, payable on January 18, 2019, to shareholders of record on January 11, 2019.

The following table summarizes the Company’s financial results for the past eight quarters.

                 
For the three months ended Sep 30,
2018
Jun 30,
2018
Mar 31,
2018
Dec 31,
2017
Sep 30,
2017
Jun 30,
2017
Mar 31,
2017
Dec 31,
2016
($ in thousand, except per share amounts)
                 
Net revenue $   42,773 $ 42,924 $ 41,516   $ 39,097 $ 36,315 $ 37,208   $ 38,618 $ 38,240
Operating earnings     12,444   11,302   10,504     13,046   10,505   12,160     12,458   12,371
Net gains (losses)(2)     28,481   20,800   (15,932 )   38,186   4,068   (3,603 )   25,871   45,511
Net earnings (loss)(2)     35,079   26,245   (5,279 )   44,466   12,555   7,493     33,800   49,514
Net earnings (loss) attributable to shareholders(2)     34,320   25,385   (6,208 )   43,982   12,310   7,242     33,285   49,072
Shareholders’ equity     670,382   644,956   623,511     634,416   608,013   603,428     605,039   580,177
                 
                 
Per Class A and Common share (in $)                
Net earnings (loss) attributable to shareholders(2) $   1.21 $ 0.90 $ (0.23 ) $ 1.51 $ 0.42 $ 0.25   $ 1.14 $ 1.65
                 
Shareholders’ equity (1) $   23.57 $ 22.74 $ 21.98   $ 21.88 $ 20.67 $ 20.54   $ 20.58 $ 19.62
                 
Dividends paid $   0.125 $ 0.125 $ 0.100   $ 0.100 $ 0.100 $ 0.100   $ 0.085 $ 0.085
                 
                 

Guardian Capital Group Limited is a diversified financial services company founded in 1962.  The Company provides institutional and high net worth investment management services to clients; financial services to international investors; and services to financial advisors in its national mutual fund dealer, securities dealer, and insurance distribution network.  Its Common and Class A shares are listed on The Toronto Stock Exchange.

For further information, contact:  
         
Donald Yi     George Mavroudis  
Chief Financial Officer     President and Chief Executive Officer  
(416) 350-3136     (416) 364-8341  
         
         


(1)
The Company’s management uses EBITDA, EBITDA per share, Adjusted cash flow from operations, Adjusted cash flow from operations per share, 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, stock-based compensation, net gains or losses, less 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 non-controlling interests.  The most comparable IFRS measures are Net earnings, which were $35,079 for the three months ended September 30, 2018 (2017 – $12,555), and Net cash from operating activities, which was $18,101 for the three months ended September 30, 2018 (2017 – $16,203).  The per share amounts for EBITDA, Adjusted cash flow from operations, Shareholders’ equity and Securities are calculated by dividing the amounts by diluted shares, which Is calculated in a similar manner as net earnings available to shareholders per share.  More detailed descriptions of these non-IFRS measures are provided in the Company’s quarterly Management’s Discussions and Analysis, including a reconciliation of these measures to their most comparable IFRS measures.

(2) Prior period figures have been restated to reflect the retrospective application of IFRS 9, which was adopted by the Company on January 1, 2018. 

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