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

Our final item of business is an advisory resolution on the company's executive compensation approach. The Board considered this to be an important part of our shareholder engagement process and commits to reviewing the results of the vote when considering further decisions related to executive compensation. Darcy, have we received any questions or comments online?

No, we have not, Chair. Thank you.

Please vote now. [Voting]

That concludes the official business portion of our fiscal 2026 Annual General Meeting. I will pause for a moment while the voting concludes. Thank you. I now declare voting on all matters closed. All motions have been passed and the following directors have been elected as directors of the company to serve until the next Annual General Meeting or until their successors are appointed. Michael Orbach, John Albright, myself, Dan Daviau, Shannon Hussey, Terry Lyons; and Cindy Trip. I will now declare the formal meeting concluded. Thank you once again to my fellow shareholders for your continued trust in our organization. fiscal 2026 demonstrated the strength of our strategy, the resilience of our operating model and the value of our partnership culture. The year began against an uncertain backdrop shaped by shifting trade policy evolving interest rate expectations and geopolitical developments. Although conditions remain volatile, the environment became progressively more constructive as the year unfolded. Throughout this period, we remain focused on delivering market-leading advice and execution for our clients, investing selectively in our platform, managing risk prudently and allocating capital with a long-term perspective. Full year revenue increased 20% to more than $2 billion. Just as importantly, our revenue mix was far more balanced than the last time we achieved this level. Wealth Management contributed 50% of annual revenue compared with prior periods when capital markets generated roughly 2/3 of firm-wide revenue. This diversification underscores the strength of our wealth management platform and highlights the meaningful upside potential in capital markets as activity continues to recover. While improved market conditions supported higher activity levels, disciplined execution and stronger operating leverage drove significantly greater profitability. Adjusted net income to common shareholders increased 115% accompanied by meaningful pretax margin expansion. Throughout fiscal 2026, we continue to invest in and scale our global wealth management platform. We achieved this through acquisitions and targeted recruitment to enhance our capabilities allowing us to do more for our clients. These efforts contributed to a record performance. Revenue increased 26% year-over-year. Adjusted pretax net income increased 40% and client assets grew 23% with new records in each of our geographies. Client asset growth was supported by market appreciation, positive net inflows and deeper client engagement. Each region contributed through distinct and complementary growth drivers. In the U.K. and Crown dependencies, we advanced our organic growth priorities, building on prior acquisitions and talent investments to enhance our financial planning and distribution capabilities. In Canada, increased client activity and greater adviser collaboration supported stronger performance as we continued to grow fee-based revenue while supporting increased transaction volumes. In Australia, strong underlying growth was complemented by the transformative Wilsons Advisory acquisition, which added meaningful scale, expanded our capabilities and established a truly national footprint. Our Capital Markets division also delivered substantially stronger results, reflecting the investments we've made in our people and our platform and the ability of our teams to move decisively as opportunities emerged. Revenue increased 26% year-over-year, while the division's pretax net income contribution more than tripled, demonstrating significantly improved operating leverage. Investment banking revenue increased 93% year-over-year and accounted for 39% of global capital markets revenue. Growth was driven by significantly higher corporate financing activity in all regions, with particularly stronger contributions from Canada and Australia, where we maintain leading metals and mining franchises. While activity strengthened across our core focus sectors, Metals and Mining was a notable driver of growth, supported by constructive market conditions and powerful long-term themes such as electrification, energy transition infrastructure, battery metals and supply chain security. Advisory revenue increased to its highest level since fiscal 2022 and represented 29% of total capital markets revenue. Our U.S. business led this performance benefiting from strong technology activity, and we improved contributions from several other sectors, including metals and mining. We also continue to strengthen the platform through targeted strategic initiatives. These actions included the divestiture of our U.S. wholesale market making business and the acquisition of CRC IB, which expands our capabilities in renewable energy and energy transition advisory. Together, these transactions further sharpen our business mix, increase our focus on higher-value advice-driven offerings and position us to capture growth in attractive long-term markets. During the fiscal year, we also resolved the previously disclosed regulatory enforcement matter related to noncore trading operations in our U.S. Capital Markets business. While these matters did not involve any other U.S. business or any CG operations in other geographies, resolving them required significant effort from teams across the organization and the related penalties and remediation costs affected profitability in our U.S. business during the year. Addressing these issues was just part of our broader multiyear effort to strengthen our compliance framework controls and oversight capabilities. The framework today is stronger, more consistent and better positioned for the future, reflecting the expertise, persistence and commitment of the teams who led this work. Our business is built around a clear purpose, helping growth companies and investors access the advice, capital and relationships they need to achieve their ambitions. The markets we serve support innovation, employment and economic growth and yet they are often underserved by traditional banking channels. I am proud of the work, our more than 3,000 colleagues do every day to support their success and grateful for their unwavering dedication. At the core of our performance is our partnership culture, which supports a long-term approach to serving clients, managing risk and creating shareholder value. During fiscal 2026, our limited partnership increased its ownership incrementally. Following the third round of subscriptions by new and existing employees in June, our ownership increased to 15.3% on an as-converted basis. This further strengthens alignment between our employees and our shareholders and encourages decisions that support long-term value creation. As we entered fiscal 2027, we carried forward considerable momentum from a record fiscal 2026. Yesterday evening, we disclosed a strong first quarter result with meaningfully higher year-over-year contributions from both wealth management and capital markets. Performance was supported by record client assets, stronger capital markets activity across our core advisory and financing verticals and improved operating leverage. PAUSE Earnings growth substantially outpaced revenue growth, and we are comfortably on track to achieve our target operating margin improvement for the current fiscal year. Looking ahead, our priorities remain straightforward. Execute for our clients, deepen partnerships, continue to strengthen our risk and compliance framework and allocate capital thoughtfully. We are also investing in technology, including artificial intelligence to improve how we serve clients and operate our business. Our focus is practical. increasing efficiency, enhancing the speed and quality of our insights and strengthening controls and risk management. We are approaching AI responsibly with strong governance, appropriate data protections and meaningful human oversight. Most importantly, we see AI as a tool to strengthen the capabilities of our people and give them more time to focus on the trusted client relationships that define our business. While the timing and direction of market activity remains difficult to predict, our stronger platform, improved operating leverage and continued expense discipline position us well to respond as opportunities emerge. We also remain committed to evaluating strategic opportunities that can maximize long-term value for our federal shareholders while maintaining continuity and the highest standards for service for our clients. It is my privilege to serve as your Chairman. I'm grateful for the confidence of our shareholders, the partnership of our global operating committee and the guidance of our Board as we continue to advance these priorities. And with that, we would be pleased to take your questions.

Thank you, Mr. Daviau. We will proceed now to the question period. Mr. Chairman, there are no questions from the floor from shareholders or guests at this time.

Okay. Well, thank you all for joining, and that I guess will conclude today's meeting. Thank you.