CI Financial Corp.

Adjusted net income was $128 million, or $0.81 per share. Adjusted EBITDA was $239 million and adjusted EBITDA margin was 41.7%. Comparable revenue decreased slightly to $664 million. Segment EBITDA was $156 million for asset management, $20 million for Canada wealth, and $100 million pre-NCI for U.S. wealth. For the year, management said U.S. wealth adjusted EBITDA grew 33%, and Kurt said the business delivered 42% year-over-year adjusted EBITDA growth overall in 2023. Global assets ended at $445 billion, up 5% in the quarter. Net debt was $3.4 billion on a face-value basis, with reported net leverage at 3.5x and fair-value net debt leverage at 2.7x. Looking ahead, management guided first-quarter 2024 interest expense to $42 million to $44 million. On capital needs, they said Canada has $281 million of U.S. acquisition-related obligations in 2024, plus $118 million of projected dividends and up to $85 million of buybacks, totaling $400 million to $485 million in 2024 obligations they believe can be funded from free cash flow.

Kurt MacAlpine framed the quarter as further proof that CI’s transformation is working: the firm is now materially more diversified, with wealth management becoming a much larger share of economics and assets. He repeatedly emphasized operating leverage in the U.S. wealth business, stronger investment performance in asset management, and the ability to continue buying back stock and deleveraging because the company sees value in its debt and equity. His tone was confident and strategic, with a strong focus on capital separation, selective M&A, and longer-term multiple re-rating as the business mix shifts toward wealth management.

Amit Muni focused on the numbers behind the quarter and balance sheet. He highlighted $128 million of adjusted net income, $239 million of adjusted EBITDA, and 41.7% adjusted EBITDA margin, while noting comparable revenue of $664 million. He said asset management EBITDA was $156 million with a 61.6% margin, Canada wealth EBITDA was $20 million with a 9.7% margin, and U.S. wealth pre-NCI EBITDA was $100 million with a 42.3% margin; he also noted the U.S. segment’s strong 33% EBITDA growth for the year. On capital structure, he said the company reduced acquisition-related liabilities by over $200 million, completed a $100 million substantial issuer bid, increased the credit facility to $800 million from $450 million, and ended with $3.4 billion of face-value net debt and $2.7 billion of fair-value leverage. He also guided to Q1 2024 interest expense of $42 million to $44 million and said Canada can fund its 2024 obligations with free cash flow, with the expanded credit line as a backstop.

Analysts focused on how much more margin expansion remains in U.S. wealth after a strong 2023. Management said most integration work is done, with only a few remaining areas to finish in 2024, and declined to give specific margin guidance, but said operating leverage should continue as the platform scales. Several questions probed capital allocation and debt reduction: management said it will stay dynamic, likely target the bond tranches offering the best shareholder accretion, and could either borrow at the parent and assign to Corient or seek consent to remove covenants on smaller 2025/2027 tranches. Analysts also asked about custody growth, U.S. organic flows, and the quarter’s weaker U.S. revenue cadence; management said custody assets are now north of $25 billion from about $1 billion in 2019, U.S. organic growth was several billion in 2023, and Q4 revenue was affected by billing timing tied to October 1 market levels.