CI Financial Corp. Reports Fourth Quarter 2024 Financial Results
CI Financial Corp. (“CI”) (TSX: CIX) has released its financial results for the fourth quarter ending December 31, 2024. The report provides insights into the company’s performance during the quarter, outlining financial highlights, capital allocation strategies, and updates on the Mubadala Capital transaction. The results reflect various accounting charges associated with the company’s take-private transaction and currency-related fluctuations due to the strengthening of the U.S. dollar against the Canadian dollar.
Financial Performance Overview
CI’s fourth-quarter financial results reflect key accounting charges associated with the ongoing take-private transaction, including:
- Revaluation of Preferred Share Liability: This adjustment was made in response to the anticipated redemption of preferred shares occurring sooner than initially projected.
- Stock-Based Compensation: The acceleration of outstanding equity awards upon the closing of the transaction led to an increase in stock-based compensation expenses.
- Deal-Related Costs: Additional expenses were incurred due to the legal and administrative requirements associated with the take-private transaction.
- Currency-Related Charges: Fluctuations in foreign exchange rates, particularly the strengthening of the U.S. dollar against the Canadian dollar, led to increased currency-related charges.
Net Loss and Adjusted Net Income
For the fourth quarter of 2024, CI Financial reported a net loss attributable to shareholders of $405.4 million. This was a significant increase compared to the net loss of $27.6 million reported in the third quarter of 2024. The substantial increase in net loss is largely CI Financial attributed to the aforementioned accounting charges and deal-related costs associated with the Mubadala Capital transaction.
However, when non-operating items are excluded, the adjusted net income attributable to shareholders stood at $153.9 million for the fourth quarter. This marks a 9.0% increase from the previous quarter, demonstrating the company’s underlying operational strength despite the temporary impacts of the transaction-related costs.
Revenue Performance
Total net revenues for the fourth quarter amounted to $677.8 million, a decrease from the $785.4 million recorded in the third quarter of 2024. The decline in total net revenues reflects the impact of non-operating items, including transaction-related charges.
On an adjusted basis, total net revenues (excluding non-operating items) reached $799.5 million, representing a 5.9% increase from the adjusted total net revenues of $754.9 million in the third quarter. This growth was primarily driven by:
- Capital Markets Strength: A favorable market environment contributed to an increase in investment gains.
- Performance Fees in Asset Management: The Asset Management segment recorded performance fees, boosting revenues.
- Recent Acquisitions at Corient: The expansion and integration of newly acquired firms within CI’s Corient division also played a role in increasing revenue.
Expense Analysis
Total expenses for the fourth quarter increased to $1,046.7 million, up from $778.1 million in the third quarter. This rise in expenses can be attributed to higher transaction-related costs, stock-based compensation, and currency fluctuations.
When excluding non-operating items, adjusted total expenses for the quarter stood at $534.0 million. This represents a 4.1% increase from the adjusted total expenses of $513.2 million in the third quarter. The primary drivers of the increase in adjusted expenses include:
- Higher SG&A (Selling, General, and Administrative) Expenses: Operational costs, including marketing and corporate expenses, increased during the quarter.
- Increased Advisor and Dealer Fees: The company’s growth strategy and acquisitions resulted in a rise in advisor and dealer compensation costs.
Capital Allocation Strategies
Dividend Payments
In line with its commitment to returning capital to shareholders, CI Financial paid $28.7 million in dividends during the fourth quarter, maintaining a dividend rate of $0.20 per share. Additionally, a quarterly dividend of $0.20 per share was paid on January 15, 2025, to shareholders of record as of December 31, 2024.
Share Repurchases
During the fourth quarter, CI Financial engaged in substantial share repurchase activities, further demonstrating its capital management strategy:
- Under a Substantial Issuer Bid that expired on October 3, 2024, the company repurchased 2,157,201 common shares at a price of $18.25 per share, totaling approximately $39.4 million.
- Through its Normal Course Issuer Bid and Automatic Securities Purchase Plan, CI repurchased an additional 1,217,437 shares at a cost of $25.0 million, reflecting an average cost of $20.50 per share.
These buybacks reflect CI’s ongoing efforts to enhance shareholder value and optimize its capital structure.
Mubadala Capital Transaction
One of the most significant developments for CI Financial in recent months has been its agreement with an affiliate of Mubadala Capital to take the company private. This strategic move is being executed through a plan of arrangement under the Business Corporations Act (Ontario).
Shareholder and Court Approval
- On February 12, 2025, CI shareholders overwhelmingly approved the take-private transaction.
- The agreement subsequently received approval from the Ontario Superior Court of Justice (Commercial List) on February 18, 2025.
Given the pending status of this transaction, CI Financial has decided not to hold an earnings conference call for the fourth-quarter results. Additionally, the company does not plan to provide further monthly updates regarding its asset levels unless the definitive agreement is terminated.
The fourth quarter of 2024 was a transitional period for CI Financial as it navigates the complexities of the take-private process while maintaining operational momentum. The CI Financial company’s focus on optimizing its financial structure, executing its capital allocation strategies, and growing its core asset management and advisory businesses remains strong.
Key focus areas moving forward include:
- Completion of the Take-Private Transaction: The company is committed to successfully closing the Mubadala Capital transaction, ensuring a smooth transition for stakeholders.
- Operational Efficiency and Cost Management: Despite the rise in expenses, CI aims to implement strategic cost-saving measures to enhance profitability.
- Continued Growth through Acquisitions: The company will continue exploring acquisition opportunities to strengthen its wealth management and asset management divisions.
- Shareholder Value Optimization: CI remains dedicated to returning capital to shareholders through dividends and share buybacks, as reflected in its recent activities.
Despite the reported net loss in the fourth quarter, CI Financial demonstrated resilience in its core operations. The company’s strong adjusted net income, strategic acquisitions, and commitment to shareholder value signal a positive trajectory for the future. As the Mubadala Capital transaction progresses, CI remains focused on executing its long-term vision and sustaining growth in the evolving financial landscape.
