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

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TORONTO, Aug. 09, 2018 (GLOBE NEWSWIRE) -- All per share figures disclosed below are stated on a diluted basis.

         
For the periods ended June 30 Three months Six months
($ in thousands, except per share amounts)   2018   2017     2018   2017
         
Net revenue $   42,924 $   37,208   $   84,440 $   75,826
Operating earnings     11,302     12,160       21,806     24,618
Net gains (loss)     20,800      (3,603 )     4,868     22,977
Net earnings (loss) attributable to shareholders     25,385     7,242       19,177     40,527
         
         
EBITDA(1) $   13,313 $   13,470   $   25,784 $   26,776
Adjusted cash flow from operations(1)     10,310     10,859       19,074     20,981
         
         
Per share:        
Net earnings (loss) attributable to shareholders $   0.90 $   0.25   $   0.68 $   1.39
EBITDA(1)     0.47     0.46       0.91     0.92
Adjusted cash flow from operations(1)     0.37     0.37       0.68     0.72
         
         
As at     2018     2017
($ in millions, except per share amounts)   June 30 December 31 June 30
         
Assets under management   $   29,731   $   27,250 $   26,379
Assets under administration       17,980       17,795     17,073
Shareholders' equity       645       634     603
Securities       670       652     627
         
         
Per share:        
Shareholders' equity(1)   $   22.74   $   21.88 $   20.54
Securities(1)       23.63       22.49     21.35
         
         

The Company's operating earnings for the quarter ended June 30, 2018 were $11.3 million, compared to $12.2 million during the same quarter in the prior year.  The total revenue increased to $42.9 million in the current quarter, $5.7 million higher than $37.2 million in the same quarter in the prior year.  Both the management fee income and commission revenue increased compared to the prior year.  Included in the management fee income this quarter is $4.5 million contribution from the recently acquired Alta business, accounting for substantially all of the increased management fee income compared to the prior year.  Substantially all of the increase in commission revenue was contributed by the MGA business through its organic growth and successful recruitment of new advisors. 

The expenses for the quarter were higher than the prior year by $6.6 million.  Included in the current quarter's expenses were increased expenses related to the new technology platform and a further one-time expense related to its implementation in the Dealers business, operating expenses of Alta and the associated amortization and interest expenses and general growth in expenses to support the growth of our businesses.  The impact of the one-time technology platform implementation cost to the Company's operating earnings was approximately $1.0 million. 

The adoption of IFRS 9 by the Company on January 1, 2018, introduced significant volatility to net gains (losses).  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 $20.8 million being recorded in the current quarter, compared to net losses of $3.6 million in the prior year. 

As a result of the net gains described above, the Company is reporting net earnings attributable to shareholders in the current quarter of $25.4 million, compared to net earnings attributable to shareholders of $7.2 million in the prior year.

The Company's AUM was $29.7 billion as at June 30, 2018, compared to $27.3 billion at the end of 2017 and $26.4 billion as at June 30, 2017.  The increase in AUM is due largely to the addition of assets managed by Alta in 2018, positive financial market performance, partially offset by outflow of assets.   The Company's assets under administration were $18.0 billion as at June 30, 2018, compared to $17.8 billion at the end of 2017 and $17.1 billion as at June 30, 2017. 

EBITDA(1) for the current quarter was $13.3 million, or $0.47 per share, compared to $13.5 million, or $0.46 per share for 2017.  Adjusted cash flow from operations(1) for the current quarter was $10.3 million, or $0.37 per share, compared to $10.9 million, or $0.37 per share for 2017.  

The Company's shareholders' equity as at June 30, 2018 was $645 million, or $22.74 per share(1), compared to $634 million, or $21.88 per share(1)  as at December 31, 2017, and $603 million, or $20.54 per share(1), as at June 30, 2017. The fair value of the Company's Securities as at June 30, 2018 was $670 million, or $23.63 per share(1), compared to $652 million, or $22.49 per share(1), as at December 31, 2017, and $627 million or $21.35 per share(1), as at June 30, 2017.   

The Board of Directors has declared a quarterly eligible dividend of $0.125 per share, payable on October 18, 2018, to shareholders of record on October 11, 2018. 

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

                 
For the three months ended Jun 30,
2018
Mar 31,
2018
Dec 31,
2017
Sep 30,
2017
Jun 30,
2017
Mar 31,
2017
Dec 31,
2016
Sep 30,
2016
($ in thousand, except per share amounts)
                 
Net revenue $   42,924 $   41,516   $   39,097 $   36,315 $   37,208   $   38,618 $   38,240 $   35,185
Operating earnings     11,302     10,504       13,046     10,505     12,160       12,458     12,371     10,646
Net gains (losses)(2)     20,800     (15,932 )     38,186     4,068     (3,603 )     25,871     45,511     26,492
Net earnings (loss)(2)     26,245     (5,279 )     44,466     12,555     7,493       33,800     49,514     32,197
Net earnings (loss) attributable to shareholders(2)     25,385     (6,208 )     43,982     12,310     7,242       33,285     49,072     32,075
Shareholders' equity     644,956     623,511       634,416     608,013     603,428       605,039     580,177     545,339
                 
                 
Per Class A and Common share (in $)                
Net earnings (loss) attributable to shareholders(2)                
Basic $   0.95 $   (0.23 ) $   1.59 $   0.44 $   0.26   $   1.21 $   1.74 $   1.13
Diluted     0.90     (0.23 )     1.51     0.42     0.25       1.14     1.65     1.07
                 
Shareholders' equity (1)                
Basic $   24.06 $   23.27   $   23.20 $   21.87 $   21.75   $   21.81 $   20.75 $   19.11
Diluted     22.74     21.98       21.88     20.67     20.54       20.58     19.62     18.07
                 
Dividends paid $   0.125 $   0.100   $   0.100 $   0.100 $   0.100   $   0.085 $   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
Chief Financial Officer
(416) 350-3136
George Mavroudis
President and Chief Executive Officer
(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 $26,245 for the three months ended June 30, 2018 (2017 - $7,493), and Net cash from operating activities, which was $16,877 for the three months ended June 30, 2018 (2017 - $14,541).  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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