Q3 2026 Canaccord Genuity Group Inc Earnings Call

February 17, 2026

Operator: Good morning, ladies and gentlemen, and thank you for standing by. I'd like to welcome everyone to the Canaccord Genuity Group Inc.'s Fiscal 2026 Q3 results conference call. All lines have been placed on mute to prevent any background noise. Following the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you'd like to withdraw your question, please press the pound key. If you have any difficulties hearing the conference, please press star, then zero for the operator assistance at any time. As a reminder, this conference call is being broadcast live online and recorded. I would now like to turn the conference call over to Mr. Dan Daviau. Please go ahead.

Speaker #2: All lines have been placed on mute to prevent any background noise. Following the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply press star, then the number 1 on your telephone keypad.

Speaker #2: If you'd like to withdraw your question, please press the pound key. If you have any difficulties hearing the conference, please press star, then 0 for the operator assistance at any time.

Speaker #2: As a reminder, this conference call is being broadcast live online and recorded. I would now like to turn the conference call over to Mr. Dan Daviau.

Speaker #2: Please go ahead. Thank you, operator, and welcome to everyone joining today's call. As always, I'm joined by our Chief Financial Officer, Nadine Ahn. Our remarks today are complementary to the earnings release and DNA and supplemental financials, copies of which have been made available for download on Cedar Plus and on the Investor Relations section of our website at cgf.com.

Dan Daviau: Thank you, operator, and welcome to everyone joining today's call. As always, I'm joined by our Chief Financial Officer, Nadine Ahn. Our remarks today are complementary to the earnings release, MD&A, and supplemental financials, copies of which have been made available for download on SEDAR+ and on the investor relations section of our website at cgf.com. Within our update, certain reported information has been adjusted to exclude significant items to provide a transparent and comparative view of our operating performance. These adjusted items are non-IFRS measures. Please refer to our notice regarding forward-looking statements and the description of non-IFRS financial measures that appear in our MD&A. With that, let's discuss the Q3 fiscal 2026 results.

Speaker #2: Within our update, certain reported information has been adjusted to exclude significant items, to provide a transparent and comparative view of our operating performance. These adjusted items are non-IFRS measures.

Speaker #2: Please refer to our notice regarding forward-looking statements and the description of non-IFRS financial measures that appear in our MD&A. And with that, let's discuss the third quarter fiscal 2026 results.

Speaker #2: Supportive monetary policy, lower interest rates, and elevated fiscal spending helped lift broader markets during the third quarter. This contributed to a continued improvement across our wealth management and capital markets businesses.

Dan Daviau: Supportive monetary policy, lower interest rates, and elevated fiscal spending helped lift broader markets during Q3, and this contributed to a continued improvement across our wealth management and capital markets businesses. Firm-wide revenue of CAD 616 million for the three-month period increased by 37% year-over-year and by 16% sequentially, representing our second-highest quarterly revenue on record. Contributions were evenly split between our wealth management and capital markets divisions, which recorded year-over-year increases of 30% and 43%, respectively. Most notably, our Q3 financial performance benefited from an excellent environment for mining sector activity, driven by record gold prices and solid demand for industrial metals. On an adjusted basis, capital markets revenue increased by 43% year-over-year to CAD 301 million, mostly from new issue activity.

Speaker #2: Firm-wide revenue of $616 million for the three-month period increased by 37% year over year and by 16% sequentially, representing our second-highest quarterly revenue on record.

Speaker #2: Contributions were evenly split between our wealth management and capital markets divisions, which recorded year-over-year increases of 30% and 43%, respectively. Most notably, our third quarter financial performance benefited from an excellent environment for mining sector activity, driven by record gold prices and solid demand for industrial metals.

Speaker #2: On an adjusted basis, capital markets revenue increased by 43% year over year to $301 million, mostly from new issue activity. This translated into substantial growth in corporate financing revenue across all regions, led by an exceptional quarter from our Australia operations, which accounted for almost 50% of total investment banking revenues for the three-month period.

Dan Daviau: This translated into a substantial growth in corporate financing revenue across all regions, led by an exceptional quarter from our Australia operations, which accounted for almost 50% of total investment banking revenues for the three-month period. More than 80% of this amount was linked to natural resource sector activity. Approximately 13% of investment banking revenue in our Australian operation was attributed to realized and unrealized gains on inventory positions, which are an important component of doing business in the market. We do employ a disciplined execution strategy to monetize these positions while preserving capital and continuing to meet client needs. Although we are pleased with the current and prior quarter's activity levels, I would caution against assuming these activity levels represent a normalized run rate.

Speaker #2: More than 80% of this amount was linked to natural resource sector activity. Approximately 13% of investment banking revenue in our Australian operation was attributed to realized and unrealized gains on inventory positions, which are an important component of doing business in the market.

Speaker #2: We do employ a disciplined execution strategy to monetize these positions while preserving capital and continuing to meet client needs. Although we are pleased with the current and prior quarter’s activity levels, I would caution against assuming these activity levels represent a normalized run rate.

Speaker #2: Certain sector-driven revenues are benefiting from unusually strong conditions that we would not expect to persist at the same levels, and are more likely to moderate in the future.

Dan Daviau: Certain sector-driven revenues are benefiting from unusually strong conditions that we would not expect to persist at the same levels and are more likely to moderate in the future. Revenue growth from our wealth management division was driven primarily by a 32% year-over-year increase in commission and fees, along with a 154% year-over-year increase in investment banking revenue, largely reflecting higher new issue activity in our Canadian and Australian businesses, and bolstered by contributions from our acquisition of Wilsons Advisory, which was completed on 1 October. We ended the quarter with client assets of CAD 145 billion and new records set in each of our geographies. Excluding significant items, firm-wide pre-tax net income for Q3 fiscal quarter doubled when compared to the same period of the prior year to CAD 81 million, which translated to diluted earnings per share of CAD 0.36.

Speaker #2: Revenue growth from our Wealth Management division was driven primarily by a 32% year-over-year increase in commissions and fees, along with a 154% year-over-year increase in investment banking revenue.

Speaker #2: Largely reflecting higher new issue activity in our Canadian and Australian businesses and bolstered by contributions from our acquisition of Wilson Advisory, which was completed on October 1st.

Speaker #2: We ended the quarter with client assets of $145 billion and set new records in each of our geographies. Excluding significant items, firm-wide pre-tax net income for the third fiscal quarter doubled compared to the same period of the prior year, to $81 million.

Speaker #2: Which translated to diluted earnings per share of $0.36. I will note that our Australian business contributed $0.09 to the adjusted EPS in the third quarter, with $0.08 coming in the capital markets division.

Dan Daviau: I will note that our Australian business contributed 9 cents to the adjusted EPS in Q3, with 8 cents coming in the capital markets division. As disclosed in our quarterly filings, our beneficial ownership in this business will decline beginning in Q4. We continued to advance our strategic priorities during the quarter. On 7 November, we completed the sale of our US wholesale market-making business, allowing us to sharpen our focus on our integrated M&A and investment banking capital markets capabilities, while reducing the cost base and risk profile of our US capital markets operations. We also completed our acquisition of the leading renewable energy advisory firm, CRC-IB, which has enabled the formation of a new energy transformation group, deepening our commitment to the sustainability sector clients in all geographies.

Speaker #2: As disclosed in our quarterly filings, our beneficial ownership in this business will decline beginning in the fourth fiscal quarter. We continue to advance our strategic priorities during the quarter.

Speaker #2: On November 7th, we completed the sale of our U.S. wholesale market-making business, allowing us to sharpen our focus on our integrated M&A and investment banking capital markets capabilities, while reducing the cost base and risk profile of our U.S. capital markets operations.

Speaker #2: We also completed our acquisition of the leading renewable energy advisory firm, CRCIB, which has enabled the formation of a new Energy Transformation Group, deepening our commitment to sustainability sector clients in all geographies.

Speaker #2: Finally, we completed our acquisition of Wilson Advisories in Australia. Adding meaningful scale and establishing a truly national footprint in our wealth management business in the region.

Dan Daviau: Finally, we completed our acquisition of Wilsons Advisory in Australia, adding meaningful scale and establishing a truly national footprint in our wealth management business in the region. Before handing things over to Nadine to discuss our financial results in more detail, I'd like to briefly highlight a few additional disclosures from our quarterly results press release. Firstly, we continue to engage with our US regulators on the content and substance of a potential unified resolution of our previously disclosed regulatory enforcement matters. However, the timing of the resolution of these matters remains uncertain. Secondly, at the request of regulators, on 17 October, the company issued a statement in response to media coverage speculating about a potential transaction involving our UK wealth management business, which has contributed to increased volatility in our stock price.

Speaker #2: Before handing things over to Nadine to discuss our financial results in more detail, I'd like to briefly highlight a few additional disclosures from our quarterly results press release.

Speaker #2: Firstly, we continue to engage with our US regulators on the content and substance of a potential unified resolution of our previously disclosed regulatory enforcement matters.

Speaker #2: However, the timing of the resolution of these matters remains uncertain. Secondly, at the request of regulators, on October 17, the company issued a statement in response to media coverage speculating about a potential transaction involving our UK wealth management business, which has contributed to increased volatility in our stock price.

Speaker #2: The company continues to assess options for this business in the context of, among other things, the rights of its strategic and financial minority partner and that partner's investment horizon, as noted in prior company disclosures.

Dan Daviau: The company continues to assess options for this business in the context of, among other things, the rights of its strategic and financial minority partner and that partner's investment horizon, as noted in prior company disclosures, prevailing market and execution conditions, and other relevant industry factors. At this time, there can be no assurance that any discussion will result in a transaction or that such transaction would occur at valuations implied by recent market and transaction activity. With that in mind, we do not intend to comment further on these matters, except as required under applicable regulatory obligations. With that, I'll turn things over to Nadine.

Speaker #2: Prevailing market and execution conditions, and other relevant industry factors. At this time, there can be no assurance that any discussion will result in a transaction, or that such transaction would occur at valuations implied by recent market and transaction activity.

Speaker #2: With that in mind, we do not intend to comment further on these matters except as required under applicable regulatory obligations. And with that, I'll turn things over to Nadine.

Speaker #1: Thank you, Dan, and good morning, everyone. As Dan mentioned, we delivered exceptionally strong revenue in the quarter, which resulted in meaningful earnings growth. Firm-wide pre-tax net income for our third fiscal quarter rose 103% year over year, to $81 million.

Nadine Ahn: Thank you, Dan, and good morning, everyone. As Dan mentioned, we delivered exceptionally strong revenue in the quarter, which resulted in meaningful earnings growth. Firm-wide pre-tax net income for our Q3 rose 103% year-over-year to CAD 81 million, bringing our fiscal year-to-date net income to CAD 174 million, up 49% year-over-year. This translated to adjusted diluted earnings per share of CAD 0.36, up 112% year-over-year, reflecting strong revenue growth across all businesses and lower non-compensation expenses as a percentage of revenue. We continue to focus on cost efficiency initiatives to drive firm-wide margin expansion. While certain costs increased in connection with higher revenue generation, our total expenses as a percentage of revenue declined by 4.3 percentage points compared to the same period of last year.

Speaker #1: Bringing our fiscal year-to-date net income to $174 million up 49% year over year. This translated to adjusted diluted earnings per share of $36. Up 112% year over year, reflecting strong revenue growth across all businesses and lower non-compensation expenses as a percentage of revenue.

Speaker #1: We continue to focus on cost efficiency initiatives to drive firm-wide margin expansion. While certain costs increased in connection with higher revenue generation, our total expenses as a percentage of revenue declined by 4.3 percentage points compared to the same period last year.

Speaker #1: Firm-wide non-compensation expenses excluding significant items decreased by $5 million or 3.2% year over year, to $152 million representing 25% of third quarter revenue. This decline was largely driven by lower interest trading and general and administrative expenses.

Nadine Ahn: Firm-wide non-compensation expenses, excluding significant items, decreased by CAD 5 million or 3.2% year-over-year to CAD 152 million, representing 25% of Q3 revenue. This decline was largely driven by lower interest, trading, and general and administrative expenses. Trading, settlement, and technology costs decreased by CAD 2.5 million, or 5% year-over-year, to CAD 48 million, primarily reflecting a CAD 6.5 million dollar reduction following the sale of the US wholesale market-making business, which was completed during the Q3 fiscal quarter. This was partially offset by higher trading costs in our Australian wealth operations, driven by increased commissions and fees activity.

Speaker #1: Trading settlement and technology costs decreased by two and a half million dollars or 5% year over year, to $48 million. Primarily reflecting a six and a half million dollar reduction following the sale of the US wholesale market-making business, which was completed during the third fiscal quarter.

Speaker #1: This was partially offset by higher trading costs in our Australian wealth operations driven by increased commissions and fees activity. Interest expense declined by 5.2 million dollars or 16.8% year over year, to $26 million.

Nadine Ahn: Interest expense declined by CAD 5.2 million, or 16.8% year-over-year, to CAD 26 million, reflecting lower interest rates and the sale of the US wholesale market-making business. General and administrative expenses also declined by CAD 2.5 million, or 6% year-over-year, due to one-time items in the prior period. Firm-wide compensation ratio on an adjusted basis for the fiscal year to date was 61.1%. The timing of bonus accruals, as well as the impact of changes in the value of certain unvested stock-based compensation awards, negatively impacted the compensation ratio in Q3. Turning to business unit performance, capital markets contributed pre-tax net income of CAD 51 million, representing a 248% improvement from the same period last year.

Speaker #1: Reflecting lower interest rates and the sale of the US wholesale market-making business. General and administrative expenses also declined by two and a half million dollars or 6% year over year, due to one-time items in the prior period.

Speaker #1: Firm-wide compensation ratio on an adjusted basis for the fiscal year-to-date was 61.1%. The timing of bonus accruals as well as the impact of changes in the value of certain unvested stock-based compensation awards negatively impacted the compensation ratio in the third quarter.

Speaker #1: Turning to business unit performance, capital markets contributed pre-tax net income of $51 million representing a 248% improvement from the same period last year. The adjusted pre-tax profit margin improved by 10 percentage points year over year, to 17%.

Nadine Ahn: The adjusted pre-tax profit margin improved by 10 percentage points year-over-year to 17%, with the most notable increases in our Australian and US businesses. On a consolidated basis, capital markets revenue increased by 43% year-over-year to CAD 301 million. As Dan had mentioned, the primary driver of this increase was the 170% increase in investment banking revenue. In connection with higher investment banking activities, commissions and fees revenue also increased by 42% year-over-year to CAD 54 million, the highest level since Q4 fiscal 2021. Advisory revenue of CAD 65 million declined by CAD 6 million or 9% year-over-year.

Speaker #1: With the most notable increases in our Australian and US businesses. On a consolidated basis, capital markets revenue increased by 43% year over year, to $301 million.

Speaker #1: And as Dan had mentioned, the primary driver of this increase was the $170% increase in investment banking revenue. In connection with higher investment banking activities, commissions and fees revenue also increased by 42% year over year, to $54 million.

Speaker #1: The highest level since Q4 fiscal 2021. Advisory revenue of $65 million declined by $6 million, or 9% year over year. Our US operations contributed $43 million, representing a 38% year over year increase, which was partially offset by declines in our Canadian and UK businesses, where results reflected a more challenging year over year comparison period due to several significant mandates completed in the prior-year period.

Nadine Ahn: Our US operations contributed $43 million, representing a 38% year-over-year increase, which was partially offset by declines in our Canadian and UK businesses, where results reflected a more challenging year-over-year comparison period due to several significant mandates completed in the prior year period. Trading revenue declined by 48% year-over-year, primarily due to the sale of the US market-making business, which was completed on 7 November. Contributions from this business reflect approximately 5 weeks of activity prior to the completion of the transaction. With the sale of the US market-making business and the acquisition of CRC-IB now complete, the revenue mix, cost base, and risk profile of our US capital markets business will shift meaningfully, and we expect this will drive a sustained improvement in operating margins in this business.

Speaker #1: Trading revenue declined by 48% year over year, primarily due to the sale of the U.S. market-making business, which was completed on November 7. Contributions from this business reflect approximately five weeks of activity prior to the completion of the transaction.

Speaker #1: With the sale of the U.S. market-making business and the acquisition of CRCIB now complete, the revenue mix, cost base, and risk profile of our U.S. capital markets business will shift meaningfully.

Speaker #1: And we expect this will drive a sustained improvement in operating margins in this business. Turning to our wealth management businesses, revenue of $304 million and adjusted pre-tax net income of $57 million increased by 30% and $57% respectively.

Nadine Ahn: Turning to our wealth management businesses, revenue of CAD 304 million, an adjusted pretax net income of CAD 57 million increased by 30% and 57%, respectively. Included in these amounts are contributions from Wilsons Advisory of CAD 16.1 million in revenue and CAD 1.8 million in adjusted net income before tax. The key drivers of revenue growth during the quarter were a 32% year-over-year increase in commissions and fees revenue to CAD 240 million, driven primarily by higher contributions from our Australian and Canadian operations, and a 154% increase in investment banking revenue to CAD 25 million, with 64% of that amount contributed by our Canadian operations and the remainder from Australia.

Speaker #1: Included in these amounts are contributions from Wilson's advisory of $16.1 million in revenue and $1.8 million in adjusted net income before tax. The key drivers of revenue growth during the quarter were a 32% year-over-year increase in commissions and fees revenue to $240 million, driven primarily by higher contributions from our Australian and Canadian operations.

Speaker #1: And a 154% increase in investment banking revenue to $25 million, with 64% of that amount contributed by our Canadian operations and the remainder from Australia.

Speaker #1: While our UK business remained the largest contributor to pre-tax net income, our Canadian and Australian businesses delivered substantial increases as stronger revenue translated into improved operating leverage.

Nadine Ahn: While our UK business remained the largest contributor to pretax net income, our Canadian and Australian businesses delivered substantial increases as stronger revenue translated into improved operating leverage. Our Canadian business contributed CAD 23 million in adjusted pretax net income, representing a 155% year-over-year increase, while Australia more than tripled its contribution to CAD 7 million. Client assets at the end of the quarter reached a new record of CAD 145 billion, representing a 26% year-over-year increase, driven primarily by market appreciation, acquisitions, and supported by positive net flows. Measured in local currency, assets in our UK wealth management business grew 13% year-over-year to GBP 40 billion. This translated into CAD 75 billion in Canadian dollars, representing a 16% increase compared with the prior year, driven primarily by market appreciation, acquisitions, and foreign exchange movements.

Speaker #1: Our Canadian business contributed $23 million in adjusted pre-tax net income, representing a 155% year-over-year increase, while Australia more than tripled its contribution to $7 million.

Speaker #1: Client assets at the end of the quarter reached a new record of $145 billion, representing a 26% year-over-year increase, driven primarily by market appreciation, acquisitions, and supported by positive net flows.

Speaker #1: Measured in local currency, assets in our UK wealth management business grew 13% year over year, to $40 billion pounds. This translated into $75 billion in Canadian dollars, representing a 16% increase compared with the prior year, driven primarily by market appreciation, acquisitions, and foreign exchange movements.

Speaker #1: Client assets in Canada increased 25% year over year to $53 billion, largely reflecting higher market values, with additional contributions from recruiting. While the business experienced positive net flows during the quarter, fee-generating accounts represented a lower proportion of total client assets, reflecting the higher level of commission-based assets in connection with the increased investment banking activity in this business during the three-month period.

Nadine Ahn: Client assets in Canada increased 25% year-over-year to CAD 53 billion, largely reflecting higher market values with additional contributions from recruiting. While the business experienced positive net flows during the quarter, fee-generating accounts represented a lower proportion of total client assets, reflecting the higher level of commission-based assets in connection with the increased investment banking activity in this business during the three-month period. Assets in our Australian business also reached a new record, increasing to CAD 17 billion from CAD 8 billion a year ago. Approximately CAD 6.7 billion of this increase was attributable to the acquisition of Wilsons Advisory. Strong revenue performance in the current quarter, together with our continued focus on organic and inorganic growth initiatives, has strengthened profit margins across the business and positioned us well relative to our targeted single-digit growth objectives.

Speaker #1: Assets in our Australian business also reached a new record, increasing to $17 billion from $8 billion a year ago. Approximately $6.7 billion of this increase was attributable to the acquisition of Wilson's advisory.

Speaker #1: Strong revenue performance in the current quarter, together with our continued focus on organic and inorganic growth initiatives, has strengthened profit margins across the business and positioned us well relative to our targeted single-digit growth objectives.

Speaker #1: Our nine-month year-to-date performance has exceeded this target, and we remain well positioned relative to our single-digit growth objective for the full fiscal year. Turning to the balance sheet, we maintain sufficient working capital to meet our regulatory commitments, support our strategic priorities and expanded business activity, while preserving the flexibility to reallocate capital as market conditions evolve.

Nadine Ahn: Our 9-month year-to-date performance has exceeded this target, and we remain well positioned relative to our single-digit growth objective for the full fiscal year. Turning to the balance sheet, we maintain sufficient working capital to meet our regulatory commitments, support our strategic priorities, and expanded business activity, while preserving the flexibility to reallocate capital as market conditions evolve. Reflecting this confidence, our board of directors has approved a quarterly common share dividend of CAD 0.085. With that, I will turn things back to Dan.

Speaker #1: Reflecting this confidence, our board of directors has approved a quarterly common share dividend of $0.085. With that, I will turn things back to Dan.

Speaker #2: Thank you, Nadine. We are very pleased with our third quarter performance, which was driven by elevated client activities, strong execution, and improving market conditions.

Dan Daviau: Thank you, Nadine. We are very pleased with our third quarter performance, which was driven by elevated client activities, strong execution, and improving market conditions. Looking ahead, we remain focused on executing our strategic priorities to deliver attractive returns for our shareholders. While we anticipate some moderation from the revenue levels achieved in Q3, we expect market conditions to remain broadly supportive. Commodity prices and improving conditions for small and midcap equity markets continue to underpin improving capital raising and advisory activities across our core capital market sectors. We continue to see strong momentum in advisory, supported by active pipelines and increasing client engagement. Regionally, we expect continued solid performance in our Canadian capital markets business and improving performance in the US and UK, partially offset by the seasonally slower summer period in Australia. In wealth management, we anticipate sustained growth in client assets, bolstered by positive net flows.

Speaker #2: Looking ahead, we remain focused on executing our strategic priorities to deliver attractive returns for our shareholders. While we anticipate some moderation from the revenue levels achieved in Q3, we expect market conditions to remain broadly supportive.

Speaker #2: Commodity prices and improving conditions for small and mid-cap equity markets continue to underpin improving capital raising and advisory activities across our core capital market sectors.

Speaker #2: We continue to see strong momentum in advisory, supported by active pipelines and increasing client engagement. Regionally, we expect continued solid performance in our Canadian capital markets business and improving performance in the US and UK.

Speaker #2: Partially offset by the seasonally slower summer period in Australia. In wealth management, we anticipate sustained growth in client assets, bolstered by positive net flows.

Speaker #2: That said, the increased new issue revenue and some commission revenue remain highly market-dependent, making our Canadian and Australian businesses more sensitive to market conditions.

Dan Daviau: That said, the increased new issue revenue and some commission revenue remain highly market dependent, making our Canadian and Australian businesses more sensitive to market conditions. Even with the intermittent periods of volatility, broadly speaking, markets are functioning well with strong investor engagement. With that, Nadine and I would be pleased to take your questions on the quarter. Operator, you may now open the lines.

Speaker #2: Even with the intermittent periods of volatility, broadly speaking, markets are functioning well with strong investor engagement. With that, Nadine and I would be pleased to take your questions on the quarter.

Speaker #2: Operator, you may now open the lines.

Speaker #3: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the 1 on your touch-tone phone.

Operator: Thank you. Ladies and gentlemen, we'll now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. And your first question comes from Jeff Fenwick from Cormark Securities. Please go ahead.

Speaker #3: You will hear a prompt say your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the 2.

Speaker #3: If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. And your first question comes from Jeff Fenwick from Cormark Securities.

Speaker #3: Please go ahead.

Speaker #4: Hi there. Good morning. I wanted to start off in Australia first in the wealth management area. Obviously, that Wilsons Advisory acquisition was a very complementary addition and gave you some good scale in the market.

Dan Daviau: Hey, Jeff.

Nadine Ahn: Hi, good morning. Wanted to start off in Australia first, in the wealth management area. Obviously, that Wilsons Advisory acquisition was a very complementary addition and gave you some good scale in the market. Could you speak to the opportunity to continue to find other firms like that? Is this a market that's going through consolidation similar to other markets? And how are you thinking about that going forward?

Jeff Fenwick: Hi, good morning. Wanted to start off in Australia first, in the wealth management area. Obviously, that Wilsons Advisory acquisition was a very complementary addition and gave you some good scale in the market. Could you speak to the opportunity to continue to find other firms like that? Is this a market that's going through consolidation similar to other markets? And how are you thinking about that going forward?

Speaker #4: Could you speak to the opportunity to continue to find other firms like that? Is this a market that's going through consolidation similar to other markets, and how are you thinking about that going forward?

Speaker #5: You're going to kill my Australia team, Jeff, with questions like that. That's a big acquisition for us, and there are three new offices, plus integrating three offices into our existing facilities.

Dan Daviau: You're going to kill my Australia feed, Jeff, with questions like that. But it's a big acquisition for us, and you know, there are three new offices plus integrating three offices into our existing facilities.

Dan Daviau: ... You know, I think they're capped out on acquisitions for the time being, but your question isn't, hey, what about next quarter? I hope it's about, you know, long term. Long term, I think we've always said we see the opportunity in Australia similar to the opportunity we see in Canada. You know, I guess the only difference between the two markets is from time to time, we'll find complementary acquisitions in Australia, which are more difficult to come by in Canada. We do have an active recruiting pipeline in Australia. We continue to recruit into that. You know, we've got a bunch of advisors who joined us last quarter and a bunch more that are going to be joining us.

Speaker #5: I think they're capped out on acquisitions for the time being, but your question isn't, 'Hey, what about next quarter?' I hope it's about long term.

Speaker #5: Long term, I think we've always said we see the opportunity in Australia similar to the opportunity we see in Canada. I guess the only difference between the two markets is from time to time we'll find complementary acquisitions.

Speaker #5: In Australia, which are more difficult to come by than in Canada, we do have an active recruiting pipeline in Australia. We continue to recruit into that.

Speaker #5: We've got a bunch of advisors who joined us last quarter, and a bunch more that are going to be joining us. And it's a similar kind of take-on program, maybe a little bit cheaper than it is in Canada to bring on advisors, but we continue to see that.

Dan Daviau: And it's a similar kind of take-on program, and maybe a little bit cheaper than it is in Canada to bring on advisors, but we continue to see that. So we really like the Australia wealth space, and are gonna continue to invest significantly into it. And I think as the business scales up, you'll see margins improve. Yeah, I'd caution you a little bit on the Australia wealth business. It, it tends to be a little bit more transactional. Like Canada, we see a lot of new issue business flow through our wealth business. They're very complementary businesses. You know, they're not segregable. They're, they're one, they're one combined business, our capital markets and wealth businesses.

Speaker #5: So we really like the Australia wealth space. And are going to continue to invest significantly into it. And I think as the business scales up, you'll see margins improve.

Speaker #5: I'd caution you a little bit on the Australia wealth business. It tends to be a little bit more transactional. Like Canada, we see a lot of new issue business flow through our wealth business.

Speaker #5: They're very complementary businesses. They're not segregable. They're one combined business—our capital markets and wealth businesses. So you may see a little bit more volatility in that business than you typically see in a wealth business.

Dan Daviau: So you may see a little bit more volatility in that business than you typically see in a wealth business, simply because, you know, as the business transitions to fee-based, you know, we still continue to play in the new issue business. And, obviously, when things are active, particularly in the, in the resource where you'll see an increase in commission revenue as, you know, assets flow into deals and flow out of deals. But, you know, like I said, the business continues to scale up. We've got now 400 people in our Australia wealth business. It's not a small business anymore. So it's, it's pretty exciting, and, and we like it.

Speaker #5: Simply because, as the business transitions to fee-based, we still continue to play in the new issue business. And obviously, when things are active, particularly in the resource square, you'll see an increase in commission revenue as assets flow into deals and flow out of deals.

Speaker #5: But like I said, the business continues to scale up. We've got now 400 people in our Australia wealth business. It's not a small business anymore.

Speaker #5: So, it's pretty exciting, and we like it.

Speaker #4: Yeah, that's very helpful color. And then, I guess associated with this, you made reference in the release to a rights offering underway in Australia.

[Analyst] (Cormark Securities): Yeah, that's, that's very helpful color. And, and then, I guess, associated with this, you, you, made reference in the release to a rights offering underway in Australia, and, I, I guess more of the employees wanted to gain exposure to a business that's doing well down there.

Jeff Fenwick: Yeah, that's, that's very helpful color. And, and then, I guess, associated with this, you, you, made reference in the release to a rights offering underway in Australia, and, I, I guess more of the employees wanted to gain exposure to a business that's doing well down there.

Speaker #4: And I guess more of the employees wanted to gain exposure to a business that's doing well down there.

Speaker #5: Yeah, I think that's right. As I've said before, Jeff, managing a business that's the antipode of Toronto—the furthest point on Earth away from another point on Earth.

Dan Daviau: Yeah, I think- I think that's right. As, as I've said before, Jeff, managing a business that's the antipode of Toronto, the furthest point on Earth away from another point on Earth, it's good to have local ownership, and it's exciting when our employees want to own more of that business, which they do. We funded the Wilson acquisition with debt and, you know, and free cash flow that we had sitting there. But with, you know, with a significant chunk of debt, we want to bring down that debt as part of that. We are looking at an equity raise to employees and ourselves. Although we see, you know, we see our ownership coming down, as I think we disclosed, we'll retain control. It's a complicated process on how you do a rights deal in Australia to employees.

Speaker #5: It's good to have local ownership, and it's exciting when our employees want to own more of that business, which they do. We funded the Wilson acquisition with debt.

Speaker #5: And free cash flow that we had sitting there. But with a significant chunk of debt, we want to bring down that debt as part of that.

Speaker #5: We are looking at an equity raise to employees and ourselves. Although we see our ownership coming down, as I think we disclosed, we'll retain control.

Speaker #5: It's a complicated process on how you do a rights deal in Australia to employees. So what exactly our equity ownership is, we can't disclose that yet.

Dan Daviau: So, exactly our equity ownership is, we can't disclose that yet, but it will be coming down from its existing 65%.

Speaker #5: But it will be coming down from its existing 65%.

Speaker #4: Okay, thank you. And then maybe we'll pivot to Canada. Obviously, in the wealth management group there, quite a strong performance, and just continuing some positive trends.

[Analyst] (Cormark Securities): Okay, thank you. And then, maybe we'll pivot to Canada. Obviously, in the wealth management group there, quite a strong performance and just continuing some positive trends. But I guess the one thing maybe to take on here is just not really haven't seen much in the way of actual advisor team growth over the last couple of years. And, you've spoken to the desire to recruit, and I think there's been some recruiting, but it's often gain one, lose one. You know, what's the challenge there? Are you happy with the footprint today? Is there a reason why it's a little difficult to roll in teams? Is it maybe just the nature of the profile of the offering versus maybe other thing- other platforms they could be on in the market?

Jeff Fenwick: Okay, thank you. And then, maybe we'll pivot to Canada. Obviously, in the wealth management group there, quite a strong performance and just continuing some positive trends. But I guess the one thing maybe to take on here is just not really haven't seen much in the way of actual advisor team growth over the last couple of years. And, you've spoken to the desire to recruit, and I think there's been some recruiting, but it's often gain one, lose one. You know, what's the challenge there? Are you happy with the footprint today? Is there a reason why it's a little difficult to roll in teams? Is it maybe just the nature of the profile of the offering versus maybe other thing- other platforms they could be on in the market?

Speaker #4: But I guess the one thing maybe to pick on here is just not really haven't seen much in the way of actual advisor team growth over the last couple of years.

Speaker #4: And we've spoken to the desire to recruit, and I think there's been some recruiting, but it's often gain one, lose one. What's the challenge there?

Speaker #4: Are you happy with the footprint today? Is there a reason why it's a little difficult to roll in teams? Is it maybe just the nature of the profile of the offering versus maybe other platforms they could be on in the market?

Speaker #4: Or just any color there you could offer?

[Analyst] (Cormark Securities): Or just any color there you could offer?

Jeff Fenwick: Or just any color there you could offer?

Speaker #5: Yeah, fair questions. I mean, we do continue to recruit teams, although the pipeline goes up and down in terms of the level of activity.

Dan Daviau: Yeah, fair questions. I mean, we do continue to recruit teams, so the pipeline goes up and down in terms of the level of activity. Generally speaking, you don't see growth, because we're recruiting a bigger advisor and cycling out a smaller advisor, or a smaller advisor, you know, retires or what have you. So the average book per advisor continues to grow significantly, and it's at, it's at a record, Nadine. It's currently-

Speaker #5: Generally speaking, you don't see growth because we're recruiting a bigger advisor and cycling out a smaller advisor, or a smaller advisor retires, or what have you.

Speaker #5: So, the average book per advisor continues to grow significantly, and it's at a record—18. It's currently.

Rachelle Smith: 369.

Speaker #6: Standard 69.

Nadine Ahn: 369.

Speaker #5: 370 million dollars. So, that number is at an all-time record. Our average advisory teams are up. You also see we disclose teams, so sometimes two advisors will combine into one team.

Dan Daviau: CAD 370 million. So. And that number is at all-time record, so our average advisory teams are up. You also see we disclose teams, so sometimes two advisors will combine into one team. So that activity is going on, and that's an activity we strongly encourage. So we probably should disclose number of advisors, too, to be honest, Jeff, 'cause I think it'll give you a better transparency on that. But yeah, we're in the market of continuing to bring over great new partners into our franchise. We brought over a couple last quarter. We continue to have a good pipeline. We're in that business, and we continue to be in that business. So, you know, no real color.

Speaker #5: So that activity is going on, and that's an activity we strongly encourage. So we probably should disclose a number of advisors too, to be honest, Jeff, because I think it'd give you better transparency on that.

Speaker #5: But yeah, we're in the market of continuing to bring over great new partners into our franchise. We've brought over a couple last quarter. We continue to have a good pipeline.

Speaker #5: We're in that business. And we continue to be in that business. So no real color. We're very excited by our Canadian wealth business. And its pace of activity and its recruiting pace.

Dan Daviau: We're very excited by our Canadian wealth business and its pace of activity and its recruiting pace, but, you know, it takes time to bring people over.

Speaker #5: But it takes time to bring people over.

Speaker #4: Okay, fair enough. And maybe one last one here, just on the announced acquisition of the environmental-focused or energy transition–focused boutique in the quarter.

[Analyst] (Cormark Securities): Okay, fair enough. And maybe one last one here, just on the announced acquisition of the environmental-focused or energy transition-focused boutique in the quarter. I mean, just given-

Jeff Fenwick: Okay, fair enough. And maybe one last one here, just on the announced acquisition of the environmental-focused or energy transition-focused boutique in the quarter. I mean, just given-

Speaker #4: I mean, just given the—yeah, just given the tone and the actions of the current U.S. administration, it doesn't exactly feel like a growth area right now.

Dan Daviau: CRC.

[Analyst] (Cormark Securities): Yeah, just given the tone and the actions of the current US administration doesn't exactly feel like a growth area right now. So maybe just give us a sense of what you see there, where the opportunity lies longer term and why you'd choose to make that acquisition.

Jeff Fenwick: Yeah, just given the tone and the actions of the current US administration doesn't exactly feel like a growth area right now. So maybe just give us a sense of what you see there, where the opportunity lies longer term and why you'd choose to make that acquisition.

Speaker #4: So maybe just give us a sense of what you see there, what the opportunity lies longer term, and why you'd choose to make that acquisition.

Speaker #5: Yeah. So CRC, we had an option to acquire them for a period of time. In a completely different environment. They significantly performed over what we had expected.

Dan Daviau: Yeah. So CRC, we had an option to acquire them for a period of time, in a completely different environment. They significantly performed over what we had expected, so we certainly exercised our option. We're very cognizant of the tax and other changes in the US. It's a business, you know, how you define sustainability and how you define energy transition, I mean, that's going to go on no matter what. You know, is it tax-driven financing activity, or is it fundamental M&A activity? That business kind of evolves.

Speaker #5: So we certainly exercised our option. We're very cognizant of the tax and other changes in the U.S. It's a business—how you define sustainability and how you define energy transition.

Speaker #5: I mean, that’s going to go on no matter what. Is it tax-driven financing activity? Or is it fundamental M&A activity? That business kind of evolves.

Speaker #5: And just like your own M&A business at your firm or anywhere else, you kind of go where the market's active. And this is a team—a young team, a phenomenal team of partners.

Dan Daviau: And just like your own M&A business at your firm or anywhere else, you know, you kind of go where the market's active, and this is a team, you know, a young team, a phenomenal team of partners that have really shown a remarkable ability to transition their business, and we see that in their existing business. So we're very confident in their ability to keep on delivering, you know, at or better than they've delivered in the past. So, it's certainly an exciting opportunity. You know, and again, even if some of this tax-driven financing disappears, we see their M&A business significantly increasing. So, I mean, energy needs aren't gonna disappear. And, you know, how you facilitate those energy needs, particularly in the US, will be important.

Speaker #5: They have really shown a remarkable ability to transition their business. And we see that in their existing business. So we're very confident in their ability to keep on delivering at or better than they've delivered in the past.

Speaker #5: So it's certainly an exciting opportunity. And again, even if some of the tax-driven financing disappears, we see their M&A business significantly increasing. So I mean, energy needs aren't going to disappear.

Speaker #5: And how you facilitate those energy needs, particularly in the US, will be important. Add to that the fact that we'll have an equity business that flows through from that advisory practice that they have.

Dan Daviau: Add to that the fact that we'll have an equity business that flows through, flows from that, advisory practice that they have, and stapling on the international capabilities. So as we've always said, we're gonna grow in core sectors where we think we've got a unique, global advantage, and this is one of the sectors where we think between our UK, Canadian, and Australian practice, that we can really outperform in. So we're, we're excited by it.

Speaker #5: And stapling on the international capabilities. So as we've always said, we're going to grow in core sectors where we think we've got a unique global advantage.

Speaker #5: And this is one of the sectors where we think, between our UK, Canadian, and Australian practice, that we can really outperform in. So we're excited by it.

Speaker #4: Great. Appreciate the color. Thank you. That's all I had.

Rachelle Smith: Great. Appreciate the color. Thank you. That's all I had.

Jeff Fenwick: Great. Appreciate the color. Thank you. That's all I had.

Speaker #5: Thanks, Jeff.

Dan Daviau: Thanks, Jeff.

Speaker #7: Thank you. And your next question comes from Rob Gaugh from Ventum Capital. Please go ahead.

Operator: Thank you. Your next question comes from Rob Goff from Ventum Capital. Please go ahead.

Rob Goff: Thank you very much.

Speaker #8: Thank you very much. Congrats on the quarter. I hope there's no need for caution on continued momentum in the markets out there.

Rob Goff: Thank you very much.

Dan Daviau: Hi, Rob.

Rob Goff: Congrats on the quarter. I hope there's no need for caution on continued momentum in the markets out there.

Speaker #5: You haven't been doing this business long enough, Rob, if you don't think there's caution on continued momentum.

Dan Daviau: You haven't been doing this business long enough, Rob, if you don't think there's caution on continued momentum.

Speaker #8: I'm still a newbie.

Rob Goff: I'm still a newbie.

Speaker #5: Yeah. I know you're not.

Dan Daviau: Yeah. No, you're not.

Speaker #8: I can pretend. Sometimes with the wealth advisors, when you're out recruiting from the banks, risk tolerances and such are key considerations. How are you finding the flow of either advisors or assets from Canadian banks over to your wealth arm?

Rob Goff: I can pretend. Sometimes with the wealth advisors, when you're out recruiting, like, from the banks, you know, risk tolerances and such are key considerations. How are you finding the flow of either advisors or assets from Canadian banks over to your wealth arm?

Speaker #5: Yeah, like I mentioned a little bit with Jeff, I mean, the pipeline ebbs and flows. Sometimes it's massive, and we're talking to literally a new team every week.

Dan Daviau: Yeah, like, like I mentioned a little bit with Jeff, I mean, the pipeline ebbs and flows. Sometimes it's massive, and we're talking to literally a new team every week, and sometimes it's a little lighter. I'd argue, arguably right now, maybe it's a little lighter. You know, that being said, I'll have a meeting tomorrow, and I'll decide it's, you know, very active again. But, you know, you know, it's fundamentally part of our strategy. It's not. It doesn't happen by accident. It happens because we've got a whole recruiting momentum here. So, you know, I don't think much has really changed. The cost of acquisition hasn't changed. The pace of acquisition hasn't changed. You know, I think it's just gonna be more of the same. Certain quarters will be bigger, and certain quarters will be smaller.

Speaker #5: And sometimes it's a little lighter. I'd argue right now, maybe it's a little lighter. That being said, I'll have a meeting tomorrow and I'll decide it's very active again.

Speaker #5: But it's fundamentally part of our strategy. It doesn't happen by accident. It happens because we've got a whole recruiting momentum here. So I don't think much has really changed.

Speaker #5: The cost of acquisition hasn't changed. The pace of acquisition hasn't changed. I think it's just going to be more of the same. Certain quarters, it'll be bigger.

Speaker #5: And certain quarters, it'll be smaller. That's probably the best way I'd frame it. Is that your question, or is it something deeper than that?

Dan Daviau: That's probably the best way I'd frame it.

Rob Goff: Thank you-

Dan Daviau: Is that your question, or is it something deeper than that?

Rob Goff: I, I'm not that deep down.

Speaker #8: I'm not that deep down.

Speaker #5: Okay. Yes, you are. Okay.

Dan Daviau: Okay. Yes, you are. Okay.

Speaker #8: Thanks. Good luck.

Rob Goff: Thanks. Good luck.

Speaker #5: Thank you.

Dan Daviau: Thank you.

Speaker #8: Cheers.

Rob Goff: Cheers.

Speaker #7: Thank you. And your last question comes from Graham Riding from TD Securities. Please go ahead.

Operator: Thank you. And your last question comes from Graham Riding from TD Securities. Please go ahead.

Speaker #5: Hi, good morning. If I could touch on the US regulatory review—I'm sure it's your favorite topic—just a commentary. Yeah, the commentary seemed to change slightly from last quarter, where you suggested expectation of a resolution in the coming months.

Dan Daviau: Hi, Graham.

Graham Ryding: If I could touch on the US regulatory review, I'm sure it's your favorite topic.

Dan Daviau: Yeah.

Graham Ryding: Just the commentary-

Dan Daviau: I love speaking about.

Graham Ryding: Yeah. The commentary seemed to change slightly from last quarter, where you suggested, you know, expectation of a resolution in the coming months. It seems like you're describing it now as remaining, continuing to remain uncertain. Am I, am I reading too much into this, or has the progress on this front slowed, somewhat?

Speaker #5: It seems like you're describing it now as remaining—continuing to remain—uncertain. Am I reading too much into this, or has the progress on this front slowed somewhat?

Dan Daviau: Yeah, it depends on what day you get us. No, I don't think the progress has slowed. I think it's taken longer than I would have expected. I think you're right, that our commentary in the last couple of quarters would have suggested that at any point in time, we'd be kind of done and over with. I think we're comfortable with the financial provisions we put in. I don't think, you know, if we weren't comfortable with them, you would have seen a change to that. Those are estimates, obviously. We didn't make a change to our financial provisions. You know, I think the difficult part is coming to, I think we use the term, terms and form or form and terms of the regulatory settlement.

Speaker #8: Yeah. It depends on what day you get. No, I don't think the progress is slowed. I think it's taken longer than I would have expected.

Speaker #8: I think you're right that our commentary in the last couple of quarters would have suggested that, at any point in time, we'd be kind of done and over with.

Speaker #8: I think we're comfortable with the financial provisions we put in. I don't think, if we weren't comfortable with them, you would have seen a change to that.

Speaker #8: Those are estimates, obviously. We didn't make a change to our financial provisions. I think the difficult part is coming to—I think we use the term 'terms and form,' or 'form and terms,' of the regulatory settlement.

Dan Daviau: It's you know, just coming up with the right words, and you've got, you know, multiple government shutdowns, and you've got three regulators that we're dealing with. So, you know, I'm still optimistic about, you know, getting to a resolution. There's you know, the, the alternative isn't very attractive. So hopefully, you know, over the, you know, I would have said this last quarter, hopefully over this quarter, we'll get it solved, but you could have heard me say the same thing over the last couple of quarters, too.

Speaker #8: It's just coming up with the right words and you've had multiple government shutdowns and you've got three regulators that we're dealing with. So I'm still optimistic about getting to a resolution.

Speaker #8: The alternative isn't very attractive. So hopefully, over the— I would have said this last quarter— hopefully, over this quarter, we'll get it solved.

Speaker #8: But you could have heard me say the same thing over the last couple of quarters, too.

Speaker #5: Yeah, okay. Fair. There was a deal recently in the UK on the wealth side with NatWest and Evelyn Partners. Would you consider Evelyn a decent comparable for your UK business?

Graham Ryding: Yeah. Okay, fair. There was a deal recently in the UK on the wealth side with NatWest and Evelyn Partners. Would you consider Evelyn a decent comparable for your UK business? Any reason why we should not be viewing that deal as a readthrough into your UK biz?

Speaker #5: Any reason why we should not be viewing that deal as a read-through into your UK business? Didn't I say I'm not going to talk about the UK?

Dan Daviau: Didn't, didn't I say I'm not going to talk about the UK? Yeah, I won't talk about our UK business, but, yeah, the Evelyn transaction, I mean, Evelyn was a bigger firm than ours, arguably, you know, probably double our size, probably a little bit more mature and probably had better organic growth than we had. And probably a slightly stronger influence on planning, than, than... Although we have that, they were probably a little bit more mature from that perspective. So it fit better in with a strategic buyer, like a bank. That doesn't mean that ours wouldn't. So yes, is it comparable? Sure, it's comparable. If you're asking me, hey, would you apply that multiple to your business?

Speaker #5: Yeah, I won't talk about our UK business. But yeah, the Evelyn transaction—I mean, Evelyn was a bigger firm than ours, arguably. Probably double our size, probably a little bit more mature, and probably had better organic growth than we had.

Speaker #5: And probably a slightly stronger influence on planning. Although we have that, they were probably a little bit more mature from that perspective, so it fit better in with a strategic buyer like a bank. That doesn't mean that ours wouldn't.

Speaker #5: So yes, is it comparable? Sure, it's comparable. If you're asking me, "Hey, would you apply that multiple to your business?" That's something I'm not going to comment on.

Dan Daviau: That's something I'm not going to comment on, but because I think that's what you really were asking. But you know, so I won't get into that. But yeah, it's not a completely dissimilar business, if that's your question.

Speaker #5: But because I think that's what you really were asking. But so I won't get into that. But yeah, it's not a completely dissimilar business.

Speaker #5: If that's your question. Yeah. That's helpful. On the UK wealth side, it looked like your pre-tax earnings were a bit lower than what we were looking for and sort of moved sideways a little bit over the last sort of year, relative to your AUA growth.

Graham Ryding: Yeah, that's helpful. On the UK wealth side, it looked like your pre-tax earnings were a bit lower than what we were looking for and sort of moved sideways a little bit over the last sort of year relative to your AUA growth. So I think the margins come down a bit this quarter. Any commentary on just the pre-tax earnings and the margin profile of that business?

Speaker #5: So I think the margins have come down a bit this quarter. Any commentary on just the pre-tax earnings and the margin profile of that business?

Speaker #9: Yeah. I'll take that. Yeah, you're correct. We did note that our pre-tax margins down by about 2.7 or 3 percentage points, primarily that was driven we had running a bit of a higher cost base.

Nadine Ahn: Yeah, I'll take that. You, yeah, you're correct. We did note that our pre-tax margins down, down by about 2.7 or 3 percentage points. Primarily, that was driven. We had been running a bit of a higher cost base. You'll recall we had a number of acquisitions closing just towards the tail end of the year as we're working through the integration of those, which resulted in a bit higher in terms of our pro fees, legal fees, et cetera. So we're running a bit higher, on that basis. So we would have seen our expenses increase relative to what you would have seen on the revenue growth. We obviously benefited on an AUA standpoint, from, from the market growth, and we're continuing to see some positive net flows in that business.

Speaker #9: You'll recall we had a number of acquisitions closing just towards the tail end of the year as we're working through the integration of those, which resulted in a bit higher in terms of our pro fees, legal fees, etc.

Speaker #9: So we're running a bit higher on that basis. So we would have seen our expenses increase relative to what you would have seen on the revenue growth.

Speaker #9: But obviously, benefited on an AUA standpoint from the market growth. And we're continuing to see positive net flows in that business. But the expense creep up is really what drove the shrinkage of margins.

Nadine Ahn: But the expense creep up is really what drove the shrinkage of margins, but we expect that to pivot as we get through some of that cost base.

Speaker #9: But we expect that to pivot as we get through some of that cost base.

Speaker #5: Understood. And you flagged that on the net flow side that there was some intentional outflows due to acquisitions. Have those slowed or stopped or are those continuing to come through?

Graham Ryding: Understood. And you flagged that on the net flow side, that there was some intentional outflows due to acquisitions. Have those slowed or stopped, or are those continuing to come through?

Speaker #9: Yeah. We referenced there would have been one exceptional outflow that we had been signaled to us quite early on that would have come out in the quarter.

Nadine Ahn: Yeah, we referenced there would have been one exceptional outflow that we had, we had been signaled to us quite early on. That would have come out in the quarter. So outside of that, we are seeing positive net flows in the low single digits.

Speaker #9: So outside of that, we are starting to see positive net flows in the low single digits.

Speaker #5: Okay, great. And my last one, if I could, just on the Australian ownership piece. I appreciate that you can't put a pin in what your stake is going to move down to.

Graham Ryding: Okay, great. And my last one, if I could, just, on the Australian ownership piece, I appreciate that you can't put a pin on, what your stake is going to move down to. But will you, maintain more than 50% ownership in that Australian business?

Speaker #5: But will you maintain more than 50% ownership in that Australian business after this write softly?

Dan Daviau: Yep.

Graham Ryding: After this rights offering?

Speaker #9: Yes. We'll retain control, more than 50% ownership.

Dan Daviau: Yes, we'll retain control, more than 50% ownership.

Speaker #5: Okay, that's it for me. Thank you.

Graham Ryding: Okay, that's it for me. Thank you.

Speaker #10: Thanks. Sorry. I wish we could be more precise, but it's just impossible at this stage.

Dan Daviau: Thanks. Sorry, I wish we'd be more precise, but it's just impossible at this stage.

Rachelle Smith: Thank you. There are no further questions at this time. Mr. Dan Daviau, you may continue.

Operator: Thank you. There are no further questions at this time. Mr. Dan Daviau, you may continue.

Speaker #11: Thank you. And there are no further questions at this time. Mr. Dan Daviau, you may continue.

Speaker #10: Okay. Well, thank you all for joining us today. And again, our apologies for reporting on Friday, February 13, in the afternoon. We just had some real scheduling problems with our board this time around.

Dan Daviau: Okay. Well, thank you all for joining us today. And again, our apologies for reporting on Friday, 13 February, in the afternoon. We just had some real scheduling problems with our board, this time around. So I appreciate, you all being on the call this morning, and hopefully, we didn't wreck, a good, long weekend. Appreciate your continued support as always, and Nadine and I are certainly available for, further questions on the quarter as needed. So with that, operator, if you can close the lines, thank you very much.

Speaker #10: So, I appreciate you all being on the call this morning, and hopefully we didn't wreck a good long weekend. Appreciate your continued support, as always.

Speaker #10: And Nadine and I are certainly available for further questions on the quarter as needed. So with that, operator, if you can close the lines, thank you very much.

Speaker #11: Thank you, ladies and gentlemen. This does conclude your conference call for today. We thank you very much for your participation, and you may now disconnect.

Rachelle Smith: Ladies and gentlemen, this does conclude your conference call for today. We thank you very much for your participation. You may now disconnect. Have a great day.

Operator: Ladies and gentlemen, this does conclude your conference call for today. We thank you very much for your participation. You may now disconnect. Have a great day.

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