Canaccord Genuity Group Inc Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jeff Fenwick - Cormark Securities Inc. - Analyst : Good morning, everyone.

Question: Jeff Fenwick - Cormark Securities Inc. - Analyst : So Dan, just wanted to circle back on the employee share purchase program that you just articulated there for us. I see in the description there in your release that there's now a component that's, I think, a top-up provision. It looks like. And of course, it's going to be participating as the employees' payback by topping up some permits. So can you just maybe speak about that? I think that's a bit of a new wrinkle versus what we heard from you guys before.

Question: Jeff Fenwick - Cormark Securities Inc. - Analyst : Thank you. That's helpful. And I was a little confused on that front. And then I guess going forward, I mean, does it change? Does the comp model change at all going forward with respect to other stock-based comp in like incentives that you typically pay out? Or how do we think about? I guess this is a follow on there.

Question: Jeff Fenwick - Cormark Securities Inc. - Analyst : And then maybe the follow-on to that is a bit more of a philosophical question. Just about the obviously importance of retaining and incenting your existing employee base versus investing for growth. You could have raised $100 million or $110 million and put that towards acquisitions and UK wealth or Canada wealth. How do you think about where you are at this point? We haven't seen growth in some areas like Canadian wealth, for example, in a while. And how do you think about managing that balance within the firm?

Question: Jeff Fenwick - Cormark Securities Inc. - Analyst : That's helpful. Thank you. And then maybe just one last one on this front. Can you give us an estimate of then on the -- if we think about like sort of the ownership here if we include the efforts you just did by insiders, where does it settle out, I guess, on a fully diluted?

Question: Jeff Fenwick - Cormark Securities Inc. - Analyst : Well, thanks for that color. I will re-queue.

Question: Tanvi Gabriel - Echelon Wealth Partners - Analyst : Hi, morning. I'll be subbing in for my analyst, Rob Goff. And one of the first questions that I have is, could you please elaborate on your outlook in terms of both the underwriting pipelines and the advisory pipeline?

Question: Tanvi Gabriel - Echelon Wealth Partners - Analyst : Right. Okay. And just on the wealth management side and specifically in the UK, do you see any notable trends that are affecting the client portfolios? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 06, 2024 / 12:00PM, CF.TO - Q4 2024 Canaccord Genuity Group Inc Earnings Call

Question: Tanvi Gabriel - Echelon Wealth Partners - Analyst : Right. Okay. Thank you.

Question: Stephen Boland - Raymond James Ltd. - Analyst : Good morning. Dan, I just want to talk about the changes at the Board. When I look at Canaccord, this organization is more complex than ever. You've got some outstanding regulatory issues yet this may be the smallest Board that the company as maybe ever had, at least from my memory over the past several years. And the team members you brought in certainly have expertise, but there's no real continuity of the events of the past couple of years. So I just wondering, I mean, are you -- I guess, is there any risk that you're spread too thin here? Like you're going to have these Board members on multiple committees, I presume. So is there a risk that you are going to be to spread on governance, too many tasks to take on with a five-person Board?

Question: Stephen Boland - Raymond James Ltd. - Analyst : Okay. So just to be clear, you don't expect to add any members during the next -- for the next 12 months?

Question: Stephen Boland - Raymond James Ltd. - Analyst : Okay. And maybe just onto some operational. I mean, I think in your comments, you definitely said that -- well, I think you said, I was going to say definitely -- that you passed the trough on new issue and for new issue and advisories in the past. In the past, I would say cycles when there's a particular segment that becomes -- where underwriting becomes very, very hot, M&A, whether it's cannabis or crypto, Canaccord has always, I would say, had a first mover advantage by adding resources to those segments. Do you see that in your horizon here that you're going to need resources, that whether it's metals, whether it's technology, something that is a certain segment that is in your mind, hitting that point where we need to be prepared for a material increase in activity? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 06, 2024 / 12:00PM, CF.TO - Q4 2024 Canaccord Genuity Group Inc Earnings Call

Question: Stephen Boland - Raymond James Ltd. - Analyst : Okay. I just want to make sure it's clear. It's probably buried in the MD&A somewhere. But is it fair to say that each wealth management business did report net inflows in the quarter?

Question: Stephen Boland - Raymond James Ltd. - Analyst : Okay. That's great. That's all for me. Thanks, guys.

Question: Graham Ryding - TD Securities Inc. - Analyst : Hi, good morning. I just wanted to -- can hear me okay?

Question: Graham Ryding - TD Securities Inc. - Analyst : Okay, great. I just wanted to follow up on just the sort of capital markets activity and make sure I'm sort of getting the message right now. So in fiscal Q1 '25, what you've seen today because we're almost through the quarter, is it reasonable to expect that on a sort of quarter-over-quarter basis, you've seen better activity on the equity underwriting and M&A side? But your outlook sort of going forward is cautiously optimistic. Am I framing the sort of description correctly? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 06, 2024 / 12:00PM, CF.TO - Q4 2024 Canaccord Genuity Group Inc Earnings Call

Question: Graham Ryding - TD Securities Inc. - Analyst : Yes. Okay, that's fair. You mentioned 40%. You estimate employee ownership at 40%. Is that after the recent like -- are you factoring in the recent 80 million of shares that were taken up by the employee trust?

Question: Graham Ryding - TD Securities Inc. - Analyst : Okay, understood. And on the compensation ratio line, I think for fiscal '24, you were 58%, which is low for you guys relative to sort of looking at the last five years. Is that because the share price was weaker this year? Was that a factor? Because I've always thought sort of closer to 60% is what you would target. And is that still the right number?

Question: Graham Ryding - TD Securities Inc. - Analyst : Okay. That makes a lot of sense. My last question would just be on the HBS partner in your UK wealth business. Can you remind us of the timeline for the -- I think there's a liquidity preference there that sort of expires after five years. Can you remind us of the timing of that and perhaps what are your options or most likely scenarios for HBS to sort of monetize their investment here? Should we be thinking of you guys likely exploring some transaction around the time of that five-year expiry?

Question: Graham Ryding - TD Securities Inc. - Analyst : Okay. Understood. And I believe they have some rights after five years to initiate a liquidity event. Like how material is that? Can they --

Question: Graham Ryding - TD Securities Inc. - Analyst : Okay.

Question: Graham Ryding - TD Securities Inc. - Analyst : I will, I will. Sounds good. What about just my last question? Net flows that UK wealth business or organic growth, is there some number you can give us for maybe what you're able to deliver in fiscal '24?

Question: Graham Ryding - TD Securities Inc. - Analyst : Perfect. That's helpful. That's it for me. Thank you.