Canaccord Genuity Group Inc. (CF) Earnings Call Transcript & Summary

We have not chair. Thank you.

Please vote now. That concludes the official business portion of our Annual General Meeting. I will pause for a moment while the voting concludes. [Voting]

Thank you. I now declare voting on all matters closed, and I declare the formal meeting concluded. Before I pass things over to Dan, I'd like to say a few words about our near-term outlook in the context of our long-term strategy. Alongside our clients and shareholders, we are navigating a market environment, which includes rising interest rates, inflation, a continued tightening of monetary policy and ongoing market disruptions driven by the devastating war in Ukraine. This backdrop has injected significant uncertainty into the markets and has reduced activity levels in our core mid-market focus areas. However, I am pleased to say that we have maintained a strong competitive position in each of our businesses and geographies. Against this backdrop, I am confident that our business has stronger downside protection than at any time in our history. Just as our recent successes were many years in the making, we have spent years shaping our business to deliver predictable performance in uncertain times. My confidence comes from our scale and enhanced business mix, with the powerful combination of our people and culture. Of course, underpinning all our efforts is a strong and properly managed balance sheet and a disciplined risk management framework. Across the organization, we have the expertise, tools and resources to manage short-term challenges for our business and for our clients. It has always been our priority to deploy capital in ways that increase the long-term value of our business and optimize value for our fellow shareholders. During fiscal 2022, we returned $176 million to shareholders through common share dividends and buybacks, which represents an amount equal to over 57% of our adjusted net income for the 12-month period. The continued growth and profitability of our global wealth management businesses has supported steady dividend growth over 4 consecutive years and in fiscal 2022, we increased our common share dividend payout by 28%. We are fortunate to enter this period from a position of strength which allows us to be opportunistic and pursue opportunities for targeted and disciplined growth on our core focus areas. By increasing our market position in each of our geographies, we also recognize that we have a greater impact on the communities where we operate. While we have historically factored various environmental, social and governance considerations into our decision-making processes this year, ESG was added to the formal mandate with the Board of Directors. Going forward, we are committed to intensifying our efforts and increasing transparency on important matters such as diversity and inclusion, ethics and integrity, risk management and sustainable business practices. On the topic of our enhanced governments, I'd also like to take this opportunity to officially welcome Michael Auerbach, our incoming Independent Director. Michael is an accomplished entrepreneur, investor, business consultant and private diplomat with deep experience in financial services, strategic intelligence, advisory and risk management. Your Board, in addition to Dan and myself has a group of 7 deeply experienced independent directors with 4 women and 3 men. Together, we are committed to representing the very best interest of you, our valued shareholders as we continue to shape our business for long-term profitable growth. And finally, thank you to those of you who have joined us today. We value your continued support and confidence in Canaccord Genuity. With that, I will turn things over to our President and CEO, Dan Daviau.

Thank you, David, and welcome, everybody. Michael, I'd like to officially welcome you to our Board of Directors. We're looking forward to the benefit of your experience and insights as we advance our strategic priorities with a focus on creating compelling long-term value for our shareholders. I'd like to begin by extending my deep appreciation to the entire CG team, not only for the excellent results you helped deliver in fiscal 2022, but for your steadfast commitment to helping our clients and each other navigate substantially more challenging market realities as we begin our current fiscal year. As many of you are aware, we released our fiscal 2023 1st quarter results last night and the impact of the abrupt deceleration in global markets impacted financial performance in all of our capital markets businesses and, to a lesser degree, our wealth management businesses. After a prolonged period of low interest rates and unprecedented stimulus, the markets are responding in a way that was broadly anticipated, but I think we can all agree, it just doesn't feel as good as it once did. Despite this, we remain committed as ever to helping our clients achieve their business and financial goals and manage risk. As an organization, we find incredible purpose in uncertain times. Every one of our 2,500-plus employees knows that we have an important role in supporting companies and investors in the most dynamic growth sectors of the global economy, and we take our role seriously. Undoubtedly, our work becomes more difficult when markets are less accommodate, but our advice and perspective are more needed and valued. As David highlighted, we've been taking targeted actions over several years to improve our long-term profitability and our competitive position. We have allocated capital and resources to areas of our business that we believe are best positioned to deliver strong returns for our clients and shareholders. These include investments to increase the scale and capability in our global wealth management businesses and materially grow our Capital Markets Advisory segment. To date, these initiatives have provided enhanced reoccurring revenues and contributions from less cyclical businesses, helping to offset the inherent volatility of our new issue business. And of course, we have a strong risk management culture, which requires close collaboration from people in each of our businesses and geographies. To put it simply, we are a much stronger business today. I've said before that the business we have built is capable of delivering higher highs in buoyant markets and higher lows in softer markets. If you compare our fiscal 2022 performance with our results from more than 5 years ago, you will see impressive improvement driven by our enhanced business mix and importantly, steadily improving earnings stability. You will also see that we have delivered substantially higher returns for our shareholders in strong markets demonstrating our ability to extract greater value from our platform than most of our peers. This is key, not only for evaluating the performance in the current market, but also in setting expectations for what we can achieve when capital market activity eventually recovers, coupled with the ongoing growth in our wealth management businesses. And finally, our balance sheet provides our ability to deliver market-leading services to our clients while maintaining ample flexibility to invest in the areas that we expect will provide lasting benefits for our shareholders. We also began the year with a lower common share count, which supports strong earnings per share in any market environment. Looking ahead, we expect that economic conditions will continue to tighten before they improve and we will navigate more volatility and uncertainty along with our clients. The change in market backdrop does not impact our long-term strategy. We know that in times like this, our clients need us more than ever and many of our most productive relationships have been formed during periods of dislocation. We're committed to investing in our core capabilities, which have been proven to deliver differentiated value for our clients through economic cycles. We are also managing our capital and expenses prudently to ensure the best use of our resources for continued balance sheet strength. While our efforts may not be wholly reflected in the number of transactions we execute for clients in the current market environment, our capabilities and competitive position have never been stronger. I know I speak for everyone at CG when I say that we are excited for the opportunities ahead of us. Together, we will continue to advance our strategic priorities while we help our clients manage through the downturn with confidence in their future. We remain committed to operating a highly focused business that is thoughtful in the way it deploys capital and one where all employees are aligned with shareholders in their incentives. On behalf of my fellow directors, I would also like to extend my sincere appreciation to our outgoing directors, Mike Harris; Terry Lyons; and Merri Jones. Over the course of his 18-year tenure, Mike has been the Chair of the Corporate Governance and Compensation Committee and provided invaluable advice, wisdom and judgment to our management and Board. Since 2004, Terry has been the lead independent Director and Chair of the Audit Committee and has served on several of our subsidiary boards. Both Mike and Terry have contributed greatly to our success over countless hours of service through numerous economic cycles and more recently, our company's transformation. And to my fellow shareholders, we are driven to create enduring value for you in everything we do. Thank you for your continued support.

Thank you, Mr. Daviau. We will now proceed to the question period.

Mr. Chairman, I can confirm that there are no questions submitted through the web portal from either shareholders or guests at this time.

Great. As no questions have been submitted, that concludes this year's Annual General Meeting. We continue to welcome your questions through our Investor Relations divisions. Contact details are available on our website and in your annual and quarterly materials. Thank you, [ Daviau ], Don, D'Arcy, and thanks to everybody who have joined us today. We hope to see you all again next year.