CI Financial Corp

TSX:CIX

Earnings Call Analysis

CI Financial Reports Record Q2 Performance with Strong U.S. Growth

CI Financial celebrated its 30th anniversary with record financial performance in Q2 2024, highlighted by a 5% rise in adjusted EPS to $0.90 and a 5% increase in adjusted EBITDA per share to $1.68. The company achieved strong free cash flow of $1.01 per share. Net investor inflows and positive market trends drove a 3% increase in global assets to $489 billion. Significant share buybacks and bond retirements were executed, returning $30 million to shareholders via dividends. CI's U.S. wealth management segment excelled with a 6% quarterly EBITDA growth, bolstered by strategic acquisitions adding $14 billion in client assets.

Quarterly Growth Highlights

In the most recent quarter, CI Financial continues to demonstrate solid performance, with total client assets increasing by 3% to reach $489 billion. This growth has been fueled by favorable market conditions and net inflows, primarily in the U.S. and Canadian wealth segments. The company reported an adjusted net income of $136 million or $0.90 per share, marking a quarterly record and a 5% increase from the previous quarter. Additionally, the adjusted EBITDA rose to $252 million, translating to an impressive adjusted EBITDA margin of 40.1%.

Sector Performance Insights

The financial results indicate variability across sectors. Asset management generated stable EBITDA of $159 million, albeit with slight margin reductions attributed to seasonal compensation expenses. In contrast, the Canadian wealth segment saw a modest decline in EBITDA to $18 million due to ongoing investments in its custody platform. On a brighter note, the U.S. wealth segment showed strength, with EBITDA rising to $115 million and maintaining a margin of 42.6%, reflecting a robust sequential growth of 21% when compared to the same quarter last year.

Revenue Dynamics

On a comparable basis, CI Financial experienced a 4% increase in revenues, totaling $757 million for the quarter. This uptick was complemented by marginal growth in asset management revenues alongside increased fees spurred by higher asset levels and positive market flows in both Canadian and U.S. wealth management. Notably, recent acquisitions added $2 million to the revenue stream, showcasing the effective integration of new assets.

Expense Adjustments and Guidance

Despite revenue growth, total expenses rose approximately 8% largely due to higher compensation expenses related to merit increases and stock-based compensation, alongside investments in marketing across three business segments. Going forward, the company expects interest and lease financing expenses to be around $59 million to $60 million in the next quarter, primarily driven by recent bond issuance. Additionally, depreciation and amortization are projected between $18 million and $21 million, reflecting ongoing integration capital expenditures.

Capital Allocation and Shareholder Returns

CI Financial has actively managed capital allocation, having acquired two Registered Investment Advisors (RIAs) in the quarter. Notably, the company retired over $860 million in bonds, creating a pretax gain of $280 million for shareholders. This proactive approach is complemented by share buybacks, with almost $10 million of shares repurchased since April, alongside a $30 million dividend declaration for the quarter, amounting to $0.20 per share payable in January 2025.

Strategic Developments and Future Plans

Reflecting growing operational synergies, Corient, CI Financial's subsidiary, reported a 6% quarter-over-quarter growth in adjusted EBITDA. Recent acquisitions have broadened the firm's reach, adding approximately $14 billion in client assets. Forward-looking initiatives include further mergers, continued improvements in custody services, and enhanced technology to improve client experience. The management emphasizes a dynamic approach to capital allocation to sustain long-term shareholder value.

Market Position and Performance Assessment

Investment performance remains a cornerstone, with over 70% of assets under management (AUM) surpassing peers over a three-year horizon. This accomplishment highlights CI Financial's successful transition to an integrated global asset manager, diverging from a series of competing entities. As the firm aims to modernize asset management, the resultant outcomes from structural changes are likely to boost competitiveness in key market segments.

Conclusion and Investor Outlook

As CI Financial approaches its 30th anniversary as a public entity, it showcases stability and growth in its diversified wealth management approach. Investors can look forward to ongoing share buybacks, strategic acquisitions, and solid market execution, making CI Financial a compelling option in the asset management sector. With consistent revenue growth, disciplined expense management, and strategic focus, the company exemplifies potential for sustained long-term value creation.

Earnings Call Transcript 2024-Q2

[Operator]

Good morning, ladies and gentlemen. Thank you for joining today's CI Financial Q2 2024 Earnings Call. My name is Tia, and I will be your moderator for today's call. [Operator Instructions] I would now like to pass the call over to your host, Kurt MacAlpine, CEO of CI Financial.

[Kurt MacAlpine, executive]

Joining me is our CFO, Amit Muni. Together, we will cover the highlights of the quarter, a review of our financial performance during the quarter, including the impact of our capital allocation decisions. An update on Corient business performance and recent M&A activity, a discussion on the progress against our strategic priorities, then we will take your questions. This June marked the 30th anniversary of CI Financial's IPO. Known at the time of CI fund management, the firm managed just under $4 billion in assets across 13 mutual ones. In the tree decades since CI has grown into a large and leading diversified wealth and asset management company, ending July with over $500 billion of client assets with more than $325 billion of that coming since we began executing our new strategy in 2020.





Along with our 30th anniversary milestone, the second quarter produced a number of record financial results. Adjusted EPS of $0.90 is a quarterly record, up 5% from the first quarter, which was our previous quarterly record. Earnings growth reflected the continued strength in capital markets, expansion of the U.S. business and the benefit of recent share repurchases. Adjusted EBITDA per share attributable to shareholders also increased 5% sequentially to a record of $1.68 per share. We generated free cash flow of $1.01 per share, reflecting strong cash generation of our business. Capital allocation remained active during the quarter. We acquired two RIAs and settled deferred considerations. We retired greater than $860 million of bonds through a tender offer of our 2051 bonds and market repurchases of our 2030 and 2051 bonds crystallizing a $280 million pretax gain for shareholders.





Since April, we repurchased $9.9 million shares through two substantial issuer bids, one for $4.9 million shares in April and one for $5 million shares completed in July. Finally, we returned $30 million to shareholders through our dividend in the quarter. The Board also declared a dividend of $0.20 a share payable in January, reflecting the normal cadence of declaring dividends one quarter ahead. Our Canadian retail asset management business experienced $331 million in net redemptions in the quarter. While still negative on the quarter. This is a meaningful improvement from Q1. Our wealth businesses in both Canada and the U.S. continue to generate strong net inflows in the second quarter. We executed well against our three strategic priorities: to modernize asset management, expand wealth management and globalize the company.





Investment performance across the business remained strong with over 70% of our AUM outperforming our peers on a three-year basis. The sustained strong performance highlights the impact that the transformation we made from a series of competing boutiques to an integrated global asset manager has had for our clients. Corient had another strong quarter, delivering adjusted EBITDA growth of 6% quarter-over-quarter. In May, Corinent completed the acquisition of two RIAs and on July 31, we closed on the acquisitions of two more, adding a combined $14 billion of client assets across the four firms. I'll now turn the call over to Amit to discuss our financial results.

[Amit Muni, executive]

Turning to Slide 4. Our global assets ended the quarter up 3% to $489 billion driven by positive markets across our three segments as well as net inflows into our U.S. and Canadian wealth segments. Turning to our financial results on the next slide, I'll focus my comments on our adjusted results. Adjusted net income was $136 million or $0.90 per share for the quarter. Adjusted EBITDA increased to $252 million for the quarter, and our adjusted EBITDA margin was 40.1%. Turning to the next slide, I'll highlight the segment results and the key drivers of EBITDA and margins. Asset Management EBITDA was relatively stable and came in at $159 million for the quarter.





Margins were down due to seasonal compensation items, which I'll go through later. Canada Wealth EBITDA was down slightly to $18 million for the quarter, and margins were down due to our previously disclosed investments we are making into our custody platform. In the U.S., pre-NCI EBITDA increased to $115 million and margins were relatively flat at 42.6%. Compared to the second quarter of last year, EBITDA has increased 21%, which is greater than the invested group's preferred return. We have some variability in our U.S. NCI this quarter due to the timing of expenses between quarters and whether the expenses were incurred within our Corient partnership or our U.S. holding company, which each have different levels of NCI ownership. A better go-forward number is looking at our first half NCI, which removes that variability.







For purposes of modeling noncontrolling interest of our U.S. segment for future quarters, we estimate noncontrolling interest of 37% of U.S. adjusted EBITDA when calculating our U.S. segment adjusted EBITDA. For purposes of modeling noncontrolling interest for our U.S. segment's contribution to EPS, we estimate noncontrolling interest of 30% of U.S. segment adjusted EBITDA. Turning to the next slide, I'll walk through the changes in revenue. Revenues on a comparable basis increased 4% to $757 million. Asset Management revenues were up $3 million due to positive markets, which were partly offset by slightly lower fee capture and the effect of net outflows. Canada and U.S. wealth management fees increased due to higher asset levels from positive flows and positive markets.





Acquisitions in the U.S. added $2 million in revenue in the quarter. Turning to the next slide, we can review the major changes in expenses. On a comparable basis, total expenses increased about 8%. That increased due to higher compensation related to higher compensation-related expenses, in particular, we incurred the full quarter effect of merit increases and stock-based compensation for awards granted in the first quarter in addition to higher headcount to support the build-out of our custody platform as we guided last quarter. We also had higher costs for investments in marketing and sales to support our three business segments and higher external professional fees. Adviser and dealer fees increased due to higher revenue earned in our Canada Wealth segment.





Interest expense increased because of the new bond offering as well as borrowings to fund acquisition-related obligation payments and stock buybacks. Depreciation and amortization increased due to higher depreciation of hardware and computer equipment as part of integration and new lease office space at Corient, which we discussed on last quarter's call. Looking forward to the next few quarters, we anticipate interest and lease finance expenses to be in the range of $59 million–$60 million in the third quarter, primarily due to interest costs from our recent bond issuance and borrowings from our credit facility to settle acquisition obligations. Also as a reminder from last quarter, we expect higher depreciation and amortization of $18 million–$21 million over the next few quarters, reflecting the impact from integration capital expenditures.







This guidance is unchanged from last quarter. Turning to Slide 9, we can review our debt and leverage. Our debt was relatively unchanged at $3.5 billion as the new bonds we raised in May were offset by a reduction in our long-dated U.S. dollar bonds, which were tendered during the quarter and lower credit facility balance. FX headwinds increased debt by $24 million. Our net leverage was also unchanged at 3.5x on a reported basis. Turning to Slide 10. I'll review new information we are providing on the separation of debt and acquisition liabilities for Canada and the U.S. As we've previously discussed, Canada and the U.S. have different capital priorities. The table on the right of this slide reflects the cash, debt and M&A obligations for Canada and the U.S. at the end of the quarter. The U.S. has borrowed $154 million from Canada to primarily fund acquisitions.





The U.S. also had $151 million in contingent consideration obligations. Canada has $164 million remaining to pay for U.S. acquisitions. These will be fully paid off by early next year, with a large portion of running loss in the third quarter. Canada also has $70 million in other Canadian acquisition obligations. We will update this information quarterly, so you can track how we're using the respective cash flows of the businesses to pay down this obligation deployed to other strategic priorities.

[Kurt MacAlpine, executive]

As discussed frequently, we take a dynamic approach to our capital allocation priorities. The second quarter was very active on this front. In addition to share buybacks, M&A and settling deferred considerations, one of the actions we took was to crystallize the $282 million pretax gain for our shareholders through a tender offer of our 2051 bonds along with open market purchases of our 2030 and 2051 bonds. We felt the second quarter with the opportune time to realize this large gain for our shareholders as it is likely that any unrealized gains will be reduced as interest rates contract.





Currently, additional opportunities exist for us to continue to achieve accelerated deleveraging through the repurchases of the remaining bonds that are trading at a discount to par. We continue to rapidly scale our U.S. Wealth Management business. Since the minority investments in Corient last May, the business has grown EBITDA at a 26% compound annual growth rate. The EBITDA growth was driven primarily from a combination of organic growth and our integration efforts as until recently, M&A activity was running below historical levels. As we discussed last quarter, we are nearing the completion of major real estate integrations. In May, we consolidated our New York City office footprint into new office space at 101 Park Avenue.



In two weeks, we will move into a new space in Boston, which will be followed by Chicago in September and Miami later this year. The consolidation of office space is important for elevating the client experience, driving collaboration, culture and unity across Corient. As mentioned earlier, we've supplemented our strong organic growth with the completion of four transactions in recent months, adding nearly $14 billion in client assets. In the second quarter, we closed on the acquisition of Fort Lauderdale based Socius Family Office, which specializes in serving NFL and NBA players.



We also closed on the acquisition of Cleveland-based multifamily office, Paragon Advisors. Paragon focuses on ultra-high net worth families with average assets of greater than $80 million. At the end of July, we closed on two additional acquisitions. Byron Financial is a Charlotte-based high net worth RIA focused on comprehensive financial planning that will deepen our presence in North Carolina. Emerald is South Florida-based and focuses on providing comprehensive wealth management services to families with greater than $200 million in net worth. All four of these acquisitions were fully integrated at the time of closing, driving immediate benefits for clients and synergies for our business. We continue to make progress executing against our strategic priorities. In Asset Management, we've been active on the product front, both streamlining our existing lineup and launching innovative new strategies, including the global AI ETF, which quickly scaled past $500 million in assets.



Our private market solution continues to gain traction as it is addressing an unmet need in the marketplace, providing Canadians with access to the world's leading alternatives managers via single solution. In addition, we maintained strong financial discipline with EBITDA margins essentially flat to the first half of the year despite the cyclical pressure we've endured on fee rates as a result of asset mix shift. In Canadian wealth, we continue to have success recruiting advisers to both our Assante and Aligned capital platforms. In aggregate, recruited assets are up over 75% in the first half of the year. We also continue to invest to further scale our custody business and leverage technology to provide a better client experience. We are working toward onboarding the remainder of our wealth assets and are having constructive conversations with a number of third parties. At Corient, we're making progress against our strategic plan and the investments we've made to scale and fully integrate our business are reflected in our financial results.



Our EBITDA grew 6% quarter-over-quarter. Our net flows remained strong and our solutions and alternatives offerings are growing rapidly. Margins in the business are showing the benefit of our integration efforts with adjusted EBITDA margins up 120 basis points in the first half of the year. As we discussed on the previous slide, we've accelerated growth with the acquisition and integration of four high-quality firms so far in 2024. On the 30th anniversary of CI as a public company, we're incredibly proud of the success we've had since our inception and couldn't be more excited about how well diversified and how well positioned the firm is going forward. We thank you for your interest in CI, and we'd be happy to take your questions.

[Operator]

[Operator Instructions] First question comes from the line of Kyle Voight with KBW.

[Kyle Voigt, analyst]

First question, you've noted in the past the importance of Corient to have access to issuing debt on a stand-alone basis. I know the business is now rated but should we expect debt to actually be issued at the sublevel near term? Any update on how we should think about leverage targets of that subsidiary. Second part of the balance sheet question is really related to total company net leverage, relatively flat sequentially despite some of the moves around retiring debt.



I guess with the 3Q uses of capital between U.S. wealth acquisitions, you've already announced repurchases that have also been announced and M&A obligations that will also be paid out. It seems like we may see net leverage tick up again in 3Q. Is that correct? Or should we expect further moves on the debt retirement to offset this, as you noted, was possible in the prepared remarks.

[Kurt MacAlpine, executive]

The first question as it relates to, call it, the separation of debt. We feel we made considerable progress from when we took the initial minority investment about a year ago. At that point, all of our cash flows were effectively comingled. We had competing priorities across our Canadian business and our U.S. business, and we've taken very considerable steps to effectively ready the businesses from a total separation standpoint. As I've touched on before, Corient has a separate Board, as a separate management team, separate equity, obviously, and now we've fully separated the debt. The disclosures that Amit had shared a few moments ago, we've effectively taken the debt and now fully assigned it to each of our respective businesses.





In terms of the entity itself that ultimately issues the debt, I'd say over time, it's wait and see. There's nothing pressing that would cause us to go to markets right now from a Corient perspective on a stand-alone basis. Even if we did, let's just say go to market for something in the future. The question would be where is it more attractive for our shareholders? Is that doing it from a Corient perspective on a stand-alone basis? Or would it be doing it at the CI level with the debt fully attributed to Corient as we disclosed in the new table. We're ready to do it, I guess, to summarize if that's something that we choose to pursue but we have flexibility as to ensuring it's the most attractive financially for our shareholders with the debt fully assigned to each entity in the unit of a separation in the future.





As it relates to capital allocation, I'd say the easiest way to think of this, we're just maintaining a very dynamic approach. Last quarter was obviously a lot of different moving pieces, as you mentioned. We bought $9.9 million shares back effectively since April. We pursued some M&A. We settled some deferred considerations as Canada's obligations to the U.S. have runoff. Then we did the bond issuance and simultaneous bond tender, which was able to fund all of those priorities while keeping the aggregate leverage flat. As we move forward, we're going to continue to look at what provides the best long-term value creation for our shareholders and what is the ideal sequencing for us to ultimately capture those actions. We'll continue to monitor and communicate that what we've done on a quarterly basis.

[Operator]

The next question comes from the line of Graham Ryding with TD Securities.

[Graham Ryding, analyst]

Just wondering if you're obviously targeting a lot of share buybacks currently. Would you consider at all paying off some of the preferred equity, just given it is a higher cost of capital as well relative to some of your debt or other capital options.

[Kurt MacAlpine, executive]

The way we're thinking similar to feedback apologies for being a bit redundant with Kyle's question, but we're very dynamic with our capital allocation priorities. We're asking and looking at the preferred, call it, in the short term over the next couple of quarters, the growth rate that we've been able to achieve is effectively double the expected return of the preferred. As I mentioned, until the end of May, we didn't close any acquisitions.



The last acquisition we closed prior to that was October of 2023, and we have, call it, a huge outperformance relative to those expectations. I would say in the short term, as it relates to capital priorities, that wouldn't be at the top of the list, but it will be something that we continue to monitor as we get closer to, call it, the third anniversary of that investment.

[Graham Ryding, analyst]

The RIA is that you've sought year-to-date. How did you fund those? Did you use debt at CI level to fund those? Or have you actually allocated some debt to directly Corient already?

[Amit Muni, executive]

As Kurt said, we borrow at the CI level and then we loan money down to the U.S. business. That new segmented balance sheet, you can see how much of the borrowings U.S. has taken from Canada to fund those acquisitions. It comes from the Canadian business, borrowing on the credit facility and then loading it down to the U.S. business.

[Graham Ryding, analyst]

Your noncontrolling I think it was down fairly notably versus your guidance last quarter. What drove that? Should we expect the guidance that you've given us here to be a reasonable run rate going forward? Or is this potentially going to move around?

[Kurt MacAlpine, executive]

What you'll see, ran the guidance Amit gave in the prepared remarks was effectively. There's a lot of moving pieces as it relates to NCI. There's NCI, its authority investors, then there's the partnership NCI. We're settling earnout obligations in stock, which increases ownership in the partnership plus expense attribution and other things. The cleanest way that Amit articulated in the remarks was to use the blend of the two and there's guidance that he's outlined on that page for modeling purposes.

[Graham Ryding, analyst]

3.5x leverage, are you comfortable at this level? Or would you consider pushing it higher if you found some further M&A that you wanted to pursue?

[Kurt MacAlpine, executive]

Yes, we're comfortable in the range that we're at. If you look at what our capital priorities are, they're distinct for Canada and for the U.S. Canada's priorities are buybacks and deleveraging. We're not pursuing large-scale M&A in the Canadian marketplace. In the U.S. it's either thoughtful M&A that aligns with our strategy or the distribution of capital for the purposes of meeting Canada's obligation. It really depends upon what opportunities get presented to us and how we can best capitalize on them for long-term value creation for shareholders. We're looking at it dynamically across the two, but very clear stated strategic priorities for each of the two businesses.

[Operator]

The next question comes from the line of Nik Priebe with CBIC.

[Nikolaus Priebe, analyst]

I just wanted to ask what your take is on the emerging theme in the U.S. around cash sweep for broker-dealers. Do you foresee the focus ever shifting to anything that might impact the Corient business in the future as it relates to the fee structure there?

[Kurt MacAlpine, executive]

Yes. Corient is a fee-only RIA. We actually don't even have a broker-dealer and we don't sell custody. 100% of our assets are fees on the assets that we manage on behalf of our clients. Part of the reason that we chose to pursue that business model in the U.S. was that entire business is held to the fiduciary standard, which is the highest standard of care anywhere globally for the wealth management industry, and there's never been a regulatory reform or change that is proposed pushing the standard of care beyond the one that we're already operating in. Without getting into opining on impacts for other businesses, it's really just not relevant for us because 100% of our revenue is driven on the fees that we generate from the assets we manage.

[Nikolaus Priebe, analyst]

Then just in the context of the refinancing that you undertook in the quarter, I understand why you took out the longest dated piece of the debt stack because it had the largest embedded gain. Would you also consider refinancing any other series like the 2030 notes. Is that option on the table as well?

[Kurt MacAlpine, executive]

Yes, it certainly exists. If we look at what we were looking to do and what we accomplished, I should say, in the second quarter was we were able to crystallize or realize an unrealized gain that we have been communicating existed for a period of time. We anticipate that gain will shrink as interest rates contract, and we wanted to make sure that we were able to take advantage of as much of it as we possibly could. Obviously, we got on a per dollar basis, the greatest bang for our buck focused on the 2051, and we're able to retire a significant portion of those. That trade still does exist for us on the 2030 bonds as well, and it's something that we'll continue to monitor relative to other capital allocation.

[Nikolaus Priebe, analyst]

Then in the prepared remarks, you alluded to the ongoing initiative to consolidate certain RIAs into regional offices. I noticed that CapEx is trending a bit higher than usual. Was that related to that specific project in the quarter? For how long would you expect this higher level of spend to continue?

[Kurt MacAlpine, executive]

Yes, part of that was the upfront investment in the build-out of the real estate expenses, which are effectively coming online now. In some of those markets, we have some excess capacity to facilitate the integration of future acquisitions. In spaces like New York, as an example, we have some excess capacity that's fully built out and ready if we ultimately do other acquisitions in the marketplace. You'll see, call it, a bit of a headwind. With the upfront expenses will run off as the space comes on, you'll see a bit of a headwind as it relates at the amortization of those expenses as the capacity goes from unbilled to billed over time.

[Operator]

The next question comes from the line of Tom MacKinnon with BMO Capital.

[Tom MacKinnon, analyst]

Just a couple of questions. First on Canadian asset management, continued ee pressure here, asset mix shift related. We haven't seen anything change in terms of net revenue there over the last several quarters, yet the assets are up. How should we be thinking about this going forward in terms of fee rates, modest pressure, I assume but can you help me figure that out?

[Kurt MacAlpine, executive]

It's really two parts to it, Tom, to think about. One is the, call it, the cyclical factors as people have taken a much more conservative stance to investing, allocating more to fixed income cash like products, which come with lower fee capture. Some of that or a lot of that is cyclical. The second part of it is structural changes, new products that are typically launched in our industry, which is true for us as well at lower price points and products that were launched historically. It's really just hopefully a combination of the cyclical, which has probably magnified it a little bit a bit more given the market environment plus some of the structural elements as well. One of the things we started to do a couple of quarters ago was to share our average fee capture for the business and disclose that with our quarter-end results, just to provide visibility and ease of that information to all of you looking at that.

[Tom MacKinnon, analyst]

Just help me understand with respect to a potential IPO of Corient. Is the intention to have debt reside at the Corient level? As a follow-up to that in terms of the minority investors, in terms of their liquidation preference, is that just strictly cash? Or are they able to take any of this debt that's been lended down to the U.S. side?

[Kurt MacAlpine, executive]

The reason we've started to separate the debt is that debt that's assigned to Corient in a separation of the businesses will ultimately travel with Corient. Whether that be an IPO, whether that's via another, call it, form of exit, the debt is intended to ultimately travel. What you'll see over time is us given our stated priorities for CI's share of the debt will decline over time and Corient's share of the debt, assuming we continue to do the acquisitions will grow in whatever portion is assigned to Corient at that point, will ultimately travel with the business.



As it relates to, call it, next action for the business, the minority investors have the opportunity to participate or roll into the IPO and convert their shares into common equity shares in a publicly traded company as part of that exit.

[Tom MacKinnon, analyst]

Now they have a liquidation preference. Is that taken out in terms of cash when that happens?

[Kurt MacAlpine, executive]

Well, it depends. If we took them out, we would settle at cash. If we took the company public, that would roll into ownershipof the company. We don't have to settle that it's not debt on the equity of travels and that will either convert in a private sale liquidated or convert into private sale, convert in an IPO, and it would settle in cash to the extent that we chose to just take them out.

[Operator]

The next question comes from the line of Geoff Kwan with RBC Capital Markets.

[Geoffrey Kwan, analyst]

First question I had was you had a good start with the new AI ETF. Just was wondering if there's anything share on potential and/or upcoming new product launches that you're working on?

[Kurt MacAlpine, executive]

Yes, we don't give a lot just given the competitive nature of product launches. We don't give a lot of visibility into what's on the come. Hopefully, people have seen we've demonstrated strong scaler capability and product innovation, whether that's been thematic ETFs, first-mover advantage that we took in both liquid and illiquid alternatives, crypto and obviously, more recently, our AI strategy. We're constantly looking for opportunities to launch or bring strategies to market for Canadian investors that don't otherwise exist or exist and deliver in a highly differentiated way. It's a huge priority for us and something that you'll continue to see us push the envelope on as it be.

[Geoffrey Kwan, analyst]

My second question was over the past decade, the company has bought back, I think it's roughly half the shares outstanding. As you look forward, it seems like you're continuing to be quite active buying back stock. How do you think about that balance between the share liquidity versus the share buyback activity that you want to be doing?

[Kurt MacAlpine, executive]

When you look at our stock today, it's still a very liquid stock, and that creates the two mechanisms by which we buy back stock, one is via a substantial issuer bid as part of the process for filing for the tender. We have to do various liquidity tests that we have to meet. We've comfortably cleared all those liquidity tests, which is just reflective of the volume that we've seen in the marketplace on a backward-looking manner. We have a normal course issuer bid that we renewed a few weeks ago. That obviously allows us to buy shares in the open marketplace. To date, we haven't seen anything that has prevented us from getting access to the shares that we ultimately want.



If and when we get to a point where liquidity dries up, we can take a look at it at that point in time. Right now, we're just singularly focused on how well is the business performing operationally and how well is that reflected in our share price. If those two things align, you won't see us buying a lot of shares. There's a meaningful gap between those two things. You'll see us buying and then liquidity will be assessed on an ongoing basis as that share count continues to reduce.

[Operator]

There are no additional questions left at this time. I will now pass the call back to Kurt MacAlpine for closed remarks

[Kurt MacAlpine, executive]

Thanks, everyone, for your interest in CI. We look forward to chatting with you next quarter.

[Operator]

That concludes today's conference call. Thank you. You may now disconnect your lines.