Q4 2026 Canaccord Genuity Group Inc Earnings Call

June 4, 2026

Vincent Mezière: Vincent?

Operator: Good morning, ladies and gentlemen. Thank you for standing by. I'd like to welcome everyone to the Canaccord Genuity Group Inc. Fiscal 2026 Q4 results conference call. All lines have been placed on mute to prevent any background noise. Following the speaker's prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number 1 on your telephone keypad. If you would like to withdraw your question, press the star then the number 2. If you have any difficulties hearing the conference, please press star then 0 for 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, Chairman and CEO. Please go ahead, Mr. Daviau.

Speaker #1: Vincent.

Speaker #2: Good morning, ladies and gentlemen. Thank you for standing by. I'd like to welcome everyone to the Canaccord Genuity Group Inc. fiscal 2026 fourth quarter results conference call.

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

Speaker #2: If you would like to withdraw your question, press the star, then the number 2. If you have any difficulties hearing the conference, please press star, then 0 for 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, Chairman and CEO.

Speaker #2: Please go ahead, Mr. Daviau.

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 complimentary to our 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 measures that appear in our MD&A. With that, let's discuss the Q4 and fiscal 2026 results. Q4 began on a constructive note, with the markets rising in January on strong earnings and enthusiasm around AI-driven productivity.

Speaker #3: 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 our earnings release, MD&A, 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.

Speaker #3: 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 adjustment items are non-IFRS measures.

Speaker #3: Please refer to our notice regarding forward-looking statements and the description of non-IFRS measures that appear in our MD&A. And with that, let's discuss the fourth quarter and fiscal 2026 results.

Speaker #3: Q4 began on a constructive note, with the markets rising in January on strong earnings and enthusiasm around AI-driven productivity. Sentiment weakened over the balance of the three-month period as geopolitical conflict, sharp moves in oil, bond, and currency markets, and a rotation away from growth in technology weighed on investor confidence.

Dan Daviau: Sentiment weakened over the balance of the three-month period as geopolitical conflict, sharp moves in oil, bond, and currencies, and a rotation away from growth and technology weighed on investor confidence. Gold prices also reflected the broader volatility, reaching a record high in January before entering a multi-week sell-off and declining nearly 17% by quarter end. Against this backdrop, our teams remained focused on disciplined execution, supporting a solid quarterly result and a strong finish to the fiscal year. Firm-wide revenue of CAD 613 million for the three-month period increased 33% year-over-year, representing our third highest quarterly revenue on record. For the full fiscal year, revenue reached a record CAD 2.2 billion, reflecting an operating model designed to protect shareholder value across market cycles. The Q4 revenue contribution from our Capital Markets division increased by 37% year-over-year.

Speaker #3: Gold prices also reflected the broader volatility, reaching a record high in January before entering a multi-week selloff and declining nearly 17% by quarter-end.

Speaker #3: Against this backdrop, our teams remained focused on disciplined execution, supporting a solid quarterly result and a strong finish to the fiscal year. Firm-wide revenue of $613 million for the three-month period increased 33% year over year, representing our third-highest quarterly revenue on record.

Speaker #3: For the full fiscal year, revenue reached a record $2.2 billion, reflecting an operating model designed to protect shareholder value across market cycles. The fourth quarter revenue contribution from our Capital Markets division increased by 37% year over year.

Dan Daviau: This reflected stronger investment banking and commission and fees revenue led by our Canadian and Australian businesses, where mining sector activity remained robust, although modestly below the exceptional levels achieved in the prior quarter. Our Canadian business also delivered an exceptional advisory result in the quarter. For fiscal 2026, capital markets revenue increased to its highest level since fiscal 2022. This performance reflected robust underwriting activity in Australia, strong underwriting and advisory activity in Canada, and disciplined execution across our global platform. We continue to rank among the league table leaders in our target sectors and continue to maintain our position as the most active mid-market dealer globally. During the year, we participated in 472 capital-raising transactions, raising more than CAD 63 billion for growth companies, a 70% increase over the prior year.

Speaker #3: This reflected stronger investment banking and commission and fees revenue, led by our Canadian and Australian businesses, where mining sector activity remained robust, although modestly below the exceptional levels achieved in the prior quarter.

Speaker #3: Our Canadian business also delivered an exceptional advisory result in the quarter. For fiscal 2026, capital markets revenue increased to its highest level since fiscal 2022.

Speaker #3: This performance reflected robust underwriting activity in Australia, strong underwriting and advisory activity in Canada, and disciplined execution across our global platform. We continue to rank among the league table leaders in our target sectors, and we continue to maintain our position as the most active mid-market dealer globally.

Speaker #3: During the year, we participated in 472 capital-raising transactions, raising more than $63 billion for growth companies—a 70% increase over the prior year.

Dan Daviau: Our wealth management division delivered its 10th consecutive quarter of revenue growth, which brought fiscal 2026 revenue earned by this division to a record CAD 1.1 billion, up 24% from fiscal 2025. Growth in the three and 12-month period was led by stronger commission and fee revenue, reflecting higher client engagement levels as market conditions improved. Results in our Canadian and Australian business also benefited from elevated transaction-based revenue, particularly from new issue activity, which typically carries higher margins, but is more market-dependent. While this has been a positive contributor in recent quarters, margin progression in these businesses may moderate as activity levels normalize.

Speaker #3: Our wealth management division delivered its 10th consecutive quarter of revenue growth, which brought fiscal 2026 revenue earned by this division to a record $1.1 billion.

Speaker #3: Up 24% from fiscal 2025. Growth in the three- and 12-month periods was led by stronger commission and fee revenue, reflecting higher client engagement levels as market conditions improved.

Speaker #3: Results in our Canadian and Australian business also benefited from elevated transaction-based revenue, particularly from new issue activity, which typically carries higher margins but is more market-dependent.

Speaker #3: While this has been a positive contributor in recent quarters, margin progression in these businesses may moderate as activity levels normalize. We ended the year with record client assets of $148 billion, up 23% year over year, driven by market appreciation, strong organic net inflows, and the addition of Wilson Advisory in Australia.

Dan Daviau: We ended the year with record client assets of CAD 148 billion, up 23% year over year, driven by market appreciation, strong organic net inflows, and the addition of Wilsons Advisory in Australia. We continued to invest in and scale this platform through targeted recruitment, expanded product capabilities, and selective acquisitions, strengthening our ability to attract and retain assets, drive net inflows, and improve the quality of earnings over time. Across the organization, we continue to manage expenses carefully while maintaining disciplined investment in areas that support long-term growth. Excluding significant items, firm-wide pre-tax net income increased 176% year over year to CAD 89 million in Q4, and adjusted diluted earnings per share rose 300% to CAD 0.48. For the full year, adjusted diluted earnings per share were CAD 1.26, up 107%, reflecting stronger operating leverage and improved profitability across the platform.

Speaker #3: We continued to invest in and scale this platform through targeted recruitment, expanded product capabilities, and selective acquisitions. This has strengthened our ability to attract and retain assets, drive net inflows, and improve the quality of earnings over time.

Speaker #3: Across the organization, we continue to manage expenses carefully while maintaining disciplined investment in areas that support long-term growth. Excluding significant items, firm-wide pre-tax net income increased 176% year over year to $89 million in the fourth quarter, and adjusted diluted earnings per share rose 300% to $0.48.

Speaker #3: For the full year, adjusted diluted earnings per share were $1.26, up 107%, reflecting stronger operating leverage and improved profitability across the platform. Throughout the year, we took deliberate steps to allocate resources and capital to the areas where we can deliver the greatest value to clients and compete most effectively.

Dan Daviau: Throughout the year, we took deliberate steps to allocate resources and capital to the areas where we can deliver the greatest value to clients and compete most effectively. In Australia, the Wilsons Advisory acquisition materially strengthened our platform, adding 60 advisors and establishing a truly national wealth management footprint, bringing complementary talent and relationships to our capital markets business in the region. In the US, the acquisition of CRC enabled the formation of our new Energy Transformation group, deepening our capabilities in higher growth advisory segments while strengthening our offering for sustainability sector clients and related mandates across our broader sector platform. With that, I will turn things over to Nadine.

Speaker #3: In Australia, the Wilson's Advisory acquisition materially strengthened our platform, adding 60 advisors and establishing a truly national wealth management footprint. It brought complementary talent and relationships to our capital markets business in the region.

Speaker #3: In the US, the acquisition of CRC enabled the formation of our new energy transformation group, deepening our capabilities in higher-growth advisory segments, while strengthening our offering for sustainability sector clients and related mandates across our broader sector platform.

Speaker #3: And with that, I will turn things over to Nadine.

Nadine Ahn: Thank you, Dan. Good morning, everyone. As Dan mentioned, we delivered very strong Q4 results and capped the year with record revenue and materially improved profitability. Firm-wide pre-tax net income for the Q4 fiscal quarter increased 176% year over year to CAD 89 million, bringing full-year pre-tax net income to CAD 263 million, up 76% from fiscal 2025. This translated to adjusted diluted earnings per share of CAD 0.48 in the quarter, up 300% year over year, and CAD 1.26 for fiscal 2026, an increase of 107% over the prior year. While a more supportive market backdrop contributed to top-line growth, operating discipline drove significantly stronger profitability. For fiscal 2026, our pre-tax operating margin improved by 3.5 percentage points compared to fiscal 2025.

Speaker #1: Thank you, Dan, and good morning, everyone. As Dan mentioned, we delivered very strong fourth quarter results and capped the year with record revenue and materially improved profitability.

Speaker #1: Firm-wide pre-tax net income for the fourth fiscal quarter increased 176% year over year to $89 million, bringing full-year pre-tax net income to $263 million, up 76% from fiscal 2025.

Speaker #1: This translated to adjusted diluted earnings per share of $0.48 in the quarter, up 300% year over year, and $1.26 for fiscal 2026, an increase of 107% over the prior year.

Speaker #1: While a more supportive market backdrop contributed to top-line growth, operating discipline drove significantly stronger profitability. For fiscal 2026, our pre-tax operating margin improved by 3.5 percentage points compared to fiscal 2025.

Nadine Ahn: Firm-wide non-compensation expenses, excluding significant items, were CAD 155 million in Q4, and CAD 601 million for fiscal 2026, with the full-year increase reflecting acquisition-related growth, higher activity levels, and continued investment in our platforms. Our non-compensation expense ratio improved by 5.6 percentage points year over year to 27.2%. Compensation expense increased with stronger performance across the organization in addition to changes in our revenue mix, while share-based compensation increased year over year, primarily due to mark-to-market changes in the valuation of certain awards. Our firm-wide compensation ratio was 60.9% for fiscal 2026. Turning to business unit performance, capital markets contributed adjusted pre-tax net income of CAD 58 million in Q4, bringing the fiscal 2026 contribution to CAD 141 million, an increase of 222% from the prior year. The adjusted pre-tax profit margin in this division was 20% in Q4, driven by stronger revenue and improved operating leverage.

Speaker #1: Firm-wide non-compensation expenses, excluding significant items, were $155 million in the fourth quarter, and $601 million for fiscal 2026, with the full-year increase reflecting acquisition-related growth, higher activity levels, and continued investment in our platforms.

Speaker #1: Our non-compensation expense ratio improved by 5.6 percentage points year-over-year to 27.2%. Compensation expense increased with stronger performance across the organization, in addition to changes in our revenue mix, while share-based compensation increased year-over-year, primarily due to mark-to-market changes in the valuation of certain awards.

Speaker #1: Our firm-wide compensation ratio was 60.9% for fiscal 2026. Turning to business unit performance, Capital Markets contributed adjusted pre-tax net income of $58 million in the fourth quarter.

Speaker #1: Bringing the fiscal 2026 contribution to $141 million, an increase of 222% from the prior year. The adjusted pre-tax profit margin in this division was 20% in the fourth quarter, driven by stronger revenue and improved operating leverage.

Nadine Ahn: Fiscal 2026 margin was 13.5%, up 8.2 percentage points from the prior year. On a consolidated basis, capital markets revenue increased 37% year over year to CAD 292 million in Q4, and 26% to CAD 1 billion for Fiscal 2026. The year over year increase in the quarter was driven primarily by higher investment banking revenue up 161%, along with stronger advisory and commissions and fees revenue. Activity in the metals and mining sector continued to support stronger performance in Canada and Australia, where we have established sector depth. We are also seeing improvement across our other core sectors, although the pace and consistency of activity remain more variable, particularly in the US and UK. Advisory revenue was CAD 119 million in Q4, up 32% year over year, with our US operations remaining the largest contributor and Canada delivering a particularly strong quarter.

Speaker #1: Fiscal 2026 margin was 13.5%, up 8.2 percentage points from the prior year. On a consolidated basis, capital markets revenue increased 37% year over year to $292 million in the fourth quarter, and 26% to $1 billion for fiscal 2026.

Speaker #1: The year-over-year increase in the quarter was driven primarily by higher investment banking revenue, up 161%, along with stronger advisory and commissions and fees revenue.

Speaker #1: Activity in the metals and mining sector continued to support stronger performance in Canada and Australia, where we have established sector debt. We are also seeing improvement across our other core sectors, although the pace and consistency of activity remain more variable.

Speaker #1: Particularly in the US and UK. Advisory revenue was $119 million in the fourth quarter, up 32% year over year, with our US operations remaining the largest contributor, and Canada delivering a particularly strong quarter.

Nadine Ahn: For fiscal 2026, advisory revenue of CAD 312 million represented the third highest annual result on record for this business line. Commissions and fees revenue increased 26% year-over-year to CAD 53 million in the quarter, and by 25% for the full year. While trading revenue declined materially, primarily due to the sale of the US wholesale market-making business. With the sale of that business and the addition of CRC, the revenue mix and earnings quality of our US capital markets franchise improved during fiscal 2026. We expect those changes to support stronger margin performance over time. Turning to wealth management, revenue of CAD 307 million in Q4 and CAD 1.1 billion for fiscal 2026 represented year-over-year increases of 28% and 24% respectively, and new records for each period.

Speaker #1: For fiscal 2026, advisory revenue of $312 million represented the third-highest annual result on record for this business line. Commissions and fees revenue increased 26% year over year to $53 million in the quarter, and by 25% for the full year.

Speaker #1: While trading revenue declined materially, primarily due to the sale of the U.S. wholesale market-making business, with the sale of that business and the addition of CRC, the revenue mix and earnings quality of our U.S. capital markets franchise improved during fiscal 2026. We expect those changes to support stronger margin performance over time.

Speaker #1: Turning to wealth management, revenue of $307 million in the fourth quarter and $1.1 billion for fiscal 2026 represented year-over-year increases of 28% and 24% respectively, and set new records for each period.

Nadine Ahn: Q4 revenue growth was driven primarily by commissions and fees revenue of CAD 248 million, up 30% year-over-year, reflecting higher contributions from all geographies as well as higher investment banking revenue in Canada and Australia. For the fiscal year, we recorded meaningful increases in all regions. Enhanced performance in Australia also reflected contributions from our acquisition of Wilsons Advisory, which was completed in the H2 of our fiscal year. The adjusted pre-tax net income for our Global Wealth Management Division increased 10% year-over-year to CAD 45 million in the Q4, bringing the full-year contribution to CAD 195 million, up 31% from fiscal 2025. The UK remained the largest contributor to Wealth Management earnings in the three and 12-month periods, while Canada delivered strong year-over-year improvement and Australia continued to scale following the Wilsons acquisition.

Speaker #1: Fourth quarter revenue growth was driven primarily by commissions and fees revenue of $248 million, up 30% year over year, reflecting higher contributions from all geographies, as well as higher investment banking revenue in Canada and Australia.

Speaker #1: For the fiscal year, we recorded meaningful increases in all regions. Enhanced performance in Australia also reflected contributions from our acquisition of Wilson Advisory, which was completed in the second half of our fiscal year.

Speaker #1: The adjusted pre-tax net income for our Global Wealth Management division increased 10% year over year to $45 million in the fourth quarter, bringing the full-year contribution to $195 million, up 31% from fiscal 2025.

Speaker #1: The UK remained the largest contributor to wealth management earnings in the three- and 12-month periods, while Canada delivered strong year-over-year improvement, and Australia continued to scale following the Wilsons acquisition.

Nadine Ahn: As Dan noted, Canada and Australia produced particularly strong operating leverage, while margins in the UK and Crown dependencies declined modestly. This reflected higher general and administrative and development costs to support growth initiatives, as well as higher compensation ratio driven by increased fixed compensation to support higher headcount. Client assets ended the year at a record CAD 148 billion, up 23% year-over-year. Growth was driven by market appreciation, acquisitions, and positive net inflows across the platform. In the UK and Crown dependencies, client assets finished the year at CAD 74 billion, or GBP 40 billion in local currency, up 7% and 8% year-over-year respectively, supported by market growth and positive net new asset flows. Client assets in Canada reached a new record of CAD 56 billion, up 30% year-over-year, reflecting higher market values, positive net flows, and enhanced advisor productivity. The average book per investment advisor team grew 29% year-over-year.

Speaker #1: As Dan noted, Canada and Australia produced particularly strong operating leverage, while margins in the UK and Crown Dependencies declined modestly. This reflected higher general and administrative and development costs to support growth initiatives, as well as a higher compensation ratio driven by increased fixed compensation to support higher headcount.

Speaker #1: Client assets ended the year at a record $148 billion, up 23% year over year. Growth was driven by market appreciation, acquisitions, and positive net inflows across the platform.

Speaker #1: In the UK and Crown Dependencies, client assets finished the year at $74 billion, or £40 billion in local currency, up 7% and 8% year over year, respectively.

Speaker #1: Supported by market growth and positive net new asset flows. Client assets in Canada reached a new record of $56 billion, up 30% year over year, reflecting higher market values, positive net flows, and enhanced advisory productivity.

Nadine Ahn: The average book per investment advisor team grew 29% year-over-year. Client assets in Australia reached a new record of CAD 18 billion, increasing CAD 10 billion or 113% year-over-year, with approximately CAD 7 billion of that increase attributable to Wilsons Advisory. Across the wealth platform, increased scale, improving asset levels, and continued investment in growth initiatives position the business well as we move into fiscal 2027. Margin progression will continue to vary by geography depending on investment levels and revenue mix. During Q4, in connection with the completion of the Wilsons acquisition, the holding company for Australian operations completed a rights offering. As expected, this reduced our ownership percentage in the Australian business, with our beneficial ownership decreasing from 65% to 52.4%.

Speaker #1: The average book per investment advisory team grew 29% year over year. Client assets in Australia reached a new record of $18 billion, increasing $10 billion, or 113% year over year, with approximately $7 billion of that increase attributable to Wilson's advisory.

Nadine Ahn: Client assets in Australia reached a new record of CAD 18 billion, increasing CAD 10 billion or 113% year-over-year, with approximately CAD 7 billion of that increase attributable to Wilsons Advisory. Across the wealth platform, increased scale, improving asset levels, and continued investment in growth initiatives position the business well as we move into fiscal 2027. Margin progression will continue to vary by geography depending on investment levels and revenue mix. During Q4, in connection with the completion of the Wilsons acquisition, the holding company for Australian operations completed a rights offering. As expected, this reduced our ownership percentage in the Australian business, with our beneficial ownership decreasing from 65% to 52.4%. For accounting purposes, our ownership as of 31 March is reflected at 54.6%, which includes shares held in an employee trust controlled by the Australian holding company, compared to 68.4% a year ago.

Speaker #1: Across the wealth platform, increased scale, improving asset levels, and continued investment in growth initiatives position the business well as we move into fiscal 2027.

Speaker #1: Although margin progression will continue to vary by geography, depending on investment levels and revenue mix, during the fourth quarter, in connection with the completion of the Wilson's acquisition, the holding company for Australian operations completed a rights offering.

Speaker #1: As expected, this reduced our ownership percentage in the Australian business, with our beneficial ownership decreasing from 65% to 52.4%. For accounting purposes, our ownership as of March 31 is reflected at 54.6%, which includes shares held in an employee trust controlled by the Australian holding company.

Nadine Ahn: For accounting purposes, our ownership as of 31 March is reflected at 54.6%, which includes shares held in an employee trust controlled by the Australian holding company, compared to 68.4% a year ago. Turning to the balance sheet, we ended the year with cash and cash equivalents of CAD 2 billion and working capital of CAD 787 million, maintaining ample liquidity to support regulatory requirements, strategic priorities, and ongoing business activity. For fiscal 2027, we expect our firm-wide pre-tax operating margin to improve by low single digits, supported by continued progress against our strategic priorities, improvements in operating leverage, and ongoing firm-wide expense discipline. With that, I'll turn things back to Dan.

Speaker #1: Compared to 68.4% a year ago. Turning to the balance sheet, we ended the year with cash and cash equivalents of $2.0 billion and working capital of $787 million.

Nadine Ahn: Turning to the balance sheet, we ended the year with cash and cash equivalents of CAD 2 billion and working capital of CAD 787 million, maintaining ample liquidity to support regulatory requirements, strategic priorities, and ongoing business activity. For fiscal 2027, we expect our firm-wide pre-tax operating margin to improve by low single digits, supported by continued progress against our strategic priorities, improvements in operating leverage, and ongoing firm-wide expense discipline. With that, I'll turn things back to Dan.

Speaker #1: Maintaining ample liquidity to support regulatory requirements, strategic priorities, and ongoing business activity. For fiscal 2027, we expect our firm-wide pre-tax operating margin to improve by low single digits, supported by continued progress against our strategic priorities, improvements in operating leverage, and ongoing firm-wide expense discipline.

Speaker #1: With that, I'll turn things back to Dan.

Dan Daviau: Thank you, Nadine. We are very pleased with our Q4 performance and the momentum we carried through fiscal 2026, which reflected strong execution, broader contributions across the platform, and materially improved profitability. At the core of that performance is our partnership culture, which supports a long-term approach to servicing clients and driving value for our fellow shareholders. In wealth management, our priorities remain to grow client assets, deepen fee-based relationships, and continue to improve operating leverage while making selective investments to support long-term growth and a stronger reoccurring revenue mix. We expect conditions across our core capital markets activities to remain broadly supportive, recognizing that geopolitical uncertainty, market volatility, and shifts in investor sentiment could affect the pace and timing of activity.

Speaker #2: Thank you, Nadine. We are very pleased with our fourth-quarter performance and the momentum we carried through fiscal 2026, which reflected strong execution, broader contributions across the platform, and materially improved profitability.

Speaker #2: At the core of that performance is our partnership culture, which supports a long-term approach to servicing clients and driving value for our fellow shareholders.

Speaker #2: In wealth management, our priorities remain to grow client assets, deepen fee-based relationships, and continue to improve operating leverage, while making selective investments to support long-term growth and a stronger recurring revenue mix.

Speaker #2: We expect conditions across our core capital markets activities to remain broadly supportive, recognizing that geopolitical uncertainty, market volatility, and shifts in investor sentiment could affect the pace and timing of activity.

Dan Daviau: We have good visibility on strong advisory pipelines in Canada and the US, and our outlook for corporate financing remains constructive, supported by improving activity levels across our core focus sectors. We also continue to evaluate strategic opportunities with the objective of maximizing long-term value for our shareholders while maintaining continuity and high standards of service for our clients. As previously disclosed, this includes our ongoing assessment of a range of strategic options for our wealth management business in the UK and Crown dependencies. To date, our activities have been limited to discussions and assessment of potential opportunities, and we expect this work to continue on an ongoing basis with no fixed timeline for completion. The business remains a meaningful contributor to our financial performance, and we continue to see value in its role within our global wealth management operation.

Speaker #2: We have good visibility on strong advisory pipelines in Canada and the U.S., and our outlook for corporate financing remains constructive, supported by improving activity levels across our core focus sectors.

Speaker #2: We also continue to evaluate strategic opportunities with the objective of maximizing long-term value for our shareholders, while maintaining continuity and high standards of service for our clients.

Speaker #2: As previously disclosed, this includes our ongoing assessment of a range of strategic options for our wealth management business in the UK and Crown Dependencies.

Speaker #2: To date, our activities have been limited to discussions and assessment of potential opportunities. We expect this work to continue on an ongoing basis, with no fixed timeline for completion.

Speaker #2: The business remains a meaningful contributor to our financial performance, and we continue to see value in its role within our global wealth management operation.

Dan Daviau: Having said that, I would direct you to the full statement included in last night's quarterly press release, and we will not be commenting further on this matter. Overall, the structural improvements we've made in our capital markets business, together with disciplined execution and selective investment in our wealth management platform, leaves us well-positioned to capture market share and support continued earnings momentum. Reflecting this confidence in our outlook, our board has approved a 17.6% increase to our quarterly common share dividend to CAD 0.10 per share, as disclosed in last night's release. With that, Nadine and I would be pleased to take your questions. Operator, you may open the lines.

Speaker #2: Having said that, I would direct you to the full statement included in last night’s quarterly press release, and we will not be commenting further on this matter.

Speaker #2: Overall, the structural improvements we have made in our capital markets business, together with disciplined execution and selective investment in our wealth management platform, leave us well positioned to capture market share and support continued earnings momentum.

Speaker #2: Reflecting this confidence in our outlook, our Board has approved a 17.6% increase to our quarterly common share dividend, to $0.10 per share, as disclosed in last night's release.

Speaker #2: With that, Nadine and I would be pleased to take your questions. Operator, you may open the lines.

Operator: Thank you. Ladies and gentlemen, we will now conduct a question-and-answer session. If you would like to ask a question, please press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star then the number two. There will be a brief pause while we compile the Q&A roster. First question comes from the line of Stephen Boland from Raymond James. Please go ahead.

Speaker #3: Thank you, ladies and gentlemen. We will now conduct a question-and-answer session. If you would like to ask a question, please press star, then the number one on your telephone keypad.

Speaker #3: If you would like to withdraw a question, please press star, then the number two. There will be a brief pause while we compile the Q&A roster.

Speaker #3: The first question comes from the line of Steven Boland from Raymond James. Please go ahead.

Stephen Boland: Good morning. Nadine, you threw a lot of numbers out there on expenses. I wonder if you could maybe just separate the Canada and the US expenses and the improvement. Obviously, the Canadian expenses even quarter over quarter were pretty flat. Non-compensation, I am talking about. Is that just a combination of you guys are working on a lot of projects on technology, compliance? Maybe just start with Canada first, that this is kind of the flat run rate that we can expect. Obviously, you grow, you are going to probably incur more expenses. I am just trying to get a bit of a breakdown on Canada. May I have a specific question on US expenses as well.

Speaker #4: Good morning. Nadine has thrown a lot of numbers out there on expenses, so I'm wondering if you could maybe just separate the Canada and the U.S. expenses, and the improvement.

Speaker #4: Obviously, the Canadian expenses, even quarter over quarter, were pretty flat. And non-compensation, I'm talking about. So is that just a combination of you guys were working on a lot of projects on technology, compliance, maybe just start with Canada first, that this is kind of the flat run rate that we can expect?

Speaker #4: Obviously, to grow, you're going to probably incur more expenses. I'm just trying to get a bit of a breakdown on Canada, and then I may have a specific question on U.S. expenses as well.

Nadine Ahn: Sure. Thank you. In terms of Canada, yes, we were running at a bit of an elevated. We did have some one-time costs in there related to some pro fees, given some of the activities we were engaging in from a strategic perspective. In addition, we were running at probably a higher technology cost base due to some of our vendor contracts that we are working on remitting in terms of into fiscal 2027. For Canada, we do expect to see continued margin improvement, particularly in the Wealth Management business. In Capital Markets, you would expect that we would have seen the operating margin improvement costing come down. We've been managing, particularly in discretionary areas on some of our G&A as it relates to managing our travel and expense. Our productivity actually improved quite significantly in Canada on our Capital Markets side of things.

Speaker #5: Sure. Thank you. So, in terms of Canada, yes, we were running at a bit of an elevated— we did have some one-time costs in there related to some pro fees given some of the activities we were engaging in from a strategic perspective.

Speaker #5: But in addition, we were running at probably a higher technology cost base due to some of our vendor contracts that are only remitting in terms of into fiscal 2027.

Speaker #5: So, for Canada, we do expect to see continued margin improvement, particularly in the wealth management business. In capital markets, you would expect that we would have seen operating margin improvement.

Speaker #5: Costs did come down. We've been managing, particularly in discretionary areas, and some of our general and admin, as it relates to managing our travel and expense.

Speaker #5: So, our productivity actually improved quite significantly in Canada on our capital markets side of things. So, from a run-rate perspective, you would expect to see on the Canadian wealth side some decrease there related to some of our business-related non-comp expenses.

Nadine Ahn: From a run rate perspective, you would expect to see on the Canadian wealth some decrease there related to some of our business-related non-comp expenses, just given some of the one-time items that we had in place. Also we expect to see improvement in margins just with some of our revenue scale as well.

Speaker #5: Just given some of the one-time items that we had in margins, along with some of our revenue scale as well.

Stephen Boland: Okay.

Nadine Ahn: Do you mind if I go to the US?

Stephen Boland: Yeah. Just on the US, you sold the trading business, we're getting, I guess, used to a new run rate. Is it the same story in the US that you had some elevated, obviously through the remediation, one-time costs as well as the trading business? How structural is this run rate now for this quarter? There was a meaningful drop in the non-compensation expenses.

Speaker #4: Yeah. Just on the US, I mean, you saw the trading because we're getting, I guess, used to a new run rate. But is it the same story in the US that you had some elevated, obviously, through the remediation one-time costs as well as the trading business?

Speaker #4: How structural is this run rate now for this quarter? Because there was a meaningful drop in the non-compensation expenses.

Nadine Ahn: Yeah, a lot of that would have been driven, as you noted, off of the sale of our wholesale market-making-based business. The trading costs coming down there, as well as our interest cost as it relates to the dividend positions. Going forward, though, in addition to the IEG removal, we expect to see, given our elevated pro fees as we had completed our remediation work in the US, so we expect to see that move to a more normalized run rate that we would have seen a number of years ago. That's going to benefit from a margin perspective overall. In addition, we'll start to see, given the revenue mix shift, in particular, we expect to see that margin improvement going into fiscal 2027 with, I would say, an improvement in the mid-single digits on that margin. It's an assertive focus area going forward in that regard.

Speaker #5: Yeah, a lot of that would have been driven, as you noted, by the sale of our wholesale market business, so the trading costs are coming down there.

Speaker #5: As well as our interest costs as it relates to the dividend positions. Going forward, though, in addition to the IEG removal, we expect to see, given our elevated pro fees as we completed our remediation work in the US.

Speaker #5: So we're expecting to see that move to a more normalized run rate that we would have seen a number of years ago. So that's going to benefit from a margin perspective.

Speaker #5: Overall, in addition, we'll start to see, given the revenue mix shift, in particular, we expect to see that margin improvement going into fiscal 2027 with some, I would say, an improvement in the mid-single digits on that margin.

Speaker #5: But it's a concerted focus area going forward in that regard.

Stephen Boland: Okay. Appreciate that. Dan, one for you, I guess. In your outlook, maybe I'm just reading this a little bit different, but kind of a mixed message about the outlook in terms of, I'm not sure if it's the economy, the ability to capital raise, but it was kind of a little bit more negative at the beginning, and then in the last paragraph, it was very kind of positive for mid-market capital raising advisory. So I'm just trying to get, maybe in your own words, what your outlook is, just say for the next 12 months.

Speaker #4: Okay, appreciate that. And Dan, one for you, I guess. In your outlook—I don't know, maybe I'm just reading this a little bit differently—but it seems kind of a mixed message.

Speaker #4: About the outlook in terms of I'm not sure if it's the economy, the ability to capital raise, but it was kind of a little bit more negative at the beginning and then in the last paragraph, it was very kind of positive for mid-market capital advisory.

Speaker #4: And so, I'm just trying to get, maybe in your own words, what your outlook is—just say for the next 12 months.

Dan Daviau: Yeah. I think, and you'd know better than most, capital markets is difficult to predict even in a good time. We obviously have great visibility on M&A. The equity business is more difficult to predict, particularly in volatile markets. We've got wars going on. We've got the economies flying around. We've got a trade negotiation coming up. If you're hearing some cautiousness, it's just nobody knows. Our M&A pipeline continues to be really strong. Some of that stuff gets pushed off occasionally, depending on what's happening in cross-border wars and all that kind of stuff. Our M&A pipeline continues to be really strong. We feel pretty confident there. The new issue pipeline, in addition to everything else I said, is heavily concentrated into the mining sector. You can see that.

Speaker #6: Yeah, yeah. I think, and you know better than most, I mean, capital markets are difficult to predict even in a good time. We obviously have great visibility on M&A.

Speaker #6: The equity business is more difficult to predict, particularly in volatile markets. We've got wars going on. We've got economies flying around. We've got a trade negotiation coming up.

Speaker #6: So if you're hearing some cautiousness, it's just that nobody knows. Our M&A pipeline continues to be really strong. Some of that stuff gets pushed off occasionally depending on what's happening with cross-border wars and all that kind of stuff.

Speaker #6: But our M&A pipeline continues to be really strong. We feel pretty confident there. And the new issue pipeline, in addition to everything else I said, is heavily concentrated in the mining sector.

Dan Daviau: Half Nadine, roughly this quarter, of our business is tied to the mining sector in Canada and Australia. When you've got that kind of exposure, not that I have any reason not to be super excited by it, but you just would express some cautiousness around that. I think we feel reasonably good about our business, reasonably good about our numbers, but it's just a tough business to predict. Unlike our wealth business, which is an incredibly easy business to predict.

Speaker #6: You can see that. I mean, Nadine, roughly half—this quarter—of our business is tied to the mining sector in Canada and Australia.

Speaker #6: And when you've got that kind of exposure, not that I have any reason not to be super excited by it, but you just would express some cautiousness around that.

Speaker #6: So I think we feel reasonably good about our business, reasonably good about our numbers. But it's just a tough business to predict, unlike our wealth business, which is an incredibly easy business to predict.

Stephen Boland: Okay. Thanks very much.

Speaker #4: Okay. Thanks very much.

Operator: Your next question comes from Jeff Fenwick from ATB Cormark. Please go ahead.

Speaker #1: Your next question comes from Jeff Fenwick from ADB Coremark. Please go ahead.

Jeff Fenwick: Hi, good morning, everyone.

Dan Daviau: Morning, Jeff.

Speaker #7: morning, everyone.

Speaker #6: Good morning, Jeff.

Jeff Fenwick: Wanted to start off asking about the Canadian wealth management unit there. Client inflows have been a very material contributor over the last year and quite an impressive result overall.

Speaker #7: Wanted to start off by asking a bit about the Canadian wealth management unit there. Quite an inflow has been a very material contributor over the last year.

Speaker #7: And quite an impressive result overall. Just wondering, was there something that was done there operationally, or from a program perspective—around maybe a new CRM platform or assistance with client outreach—that assisted that?

Dan Daviau: Yeah.

Jeff Fenwick: Just wondering, was there something that was done there operationally or from a program perspective around maybe a new CRM platform or assistance with client outreach that assisted that? What were the levers being pulled there? Maybe it was just more related to the fact the market was doing very well and that just encouraged the inflows as well. Any color you could offer there.

Speaker #7: Or, what were the levers being pulled there? Or maybe it was just more related to the fact the market was doing very well, and that just encouraged the inflows as well.

Speaker #7: But any color you could offer there?

Dan Daviau: Yeah, in fairness, it's probably both, Jeff, but we have an immense number of programs going around to increase our net organic assets. We obviously get our assets from three ways. We recruit advisors. That growth has been not significant this year. It continues, but it hasn't been the primary driver. The market increase obviously drives assets, and it's been a good year in the market. Finally, net organic flows. The cheapest way to grow your business is net organic flows. Have your existing advisors grow. We give them a lot of tools to increase their business. We've got a very phenomenal group of advisors who are incredibly entrepreneurial, who are materially increasing their operations. You've seen the average size of book per advisor grow substantially this year. That's not all market. That's mainly net new assets.

Speaker #6: Yeah. In fairness, it's probably both, Jeff. But we have an immense number of programs going on to increase our net organic assets. So we obviously get our assets from three ways.

Speaker #6: We recruit advisors. That growth has not been significant this year. It continues, but it hasn't been the primary driver. The market increase, obviously, drives assets.

Speaker #6: And it's been a good year in the market. And then finally, net organic flows—the cheapest way to grow your business is net organic flows.

Speaker #6: We help our existing advisors grow. So, we give them a lot of tools to increase their business. We've got a phenomenal group of advisors, who are incredibly entrepreneurial and are materially increasing their operations.

Speaker #6: You've seen the average size of book for advisor grow substantially this year. That's not all market; that's mainly net new assets. So we've got a great business there, they've got a great set of tools, and we've got a great set of partners who will continue to grow.

Dan Daviau: We've got a great business there, and they've got a great set of tools, and we've got a great set of partners who will continue to grow. You haven't seen an increase so much in the number of teams because it's just the cycle out, bigger advisors for smaller advisors. We're not looking to add a bunch of real estate and stuff like that. That strategy continues to play out the way it has played out for the last decade, to be honest. Continue to be very excited by our Canadian wealth business and the prospects in front of it, and you can see that reflected in the numbers. As Nadine mentioned on the cost, we continue to spend money there.

Speaker #6: You haven't seen an increase so much in the number of teams because it's just the cycle—the bigger advisors for smaller advisors. We're not looking to add a bunch of real estate and stuff like that.

Speaker #6: So that strategy continues to play out the way it has played out for the last decade, to be honest. So, we continue to be very excited by our Canadian wealth business and the prospects in front of it.

Speaker #6: And you can see that reflected in the numbers. And as Nadine mentioned on the cost, we continue to spend money there. When you see those costs not going down, it's because we're investing in that side of the business, and we'll continue to invest in that side of the business.

Dan Daviau: When you see those costs not going down, it's because we're investing in that side of the business, and we'll continue to invest in that side of the business.

Jeff Fenwick: Okay. That's helpful color. Thank you. Then maybe I'll sort of go back onto the OpEx discussion here. Maybe in the UK, that's one where we've seen the G&A line sort of progressively creep higher here. Maybe just some commentary on that, where the focus has been there and what we can expect going forward.

Speaker #1: Okay, that's helpful color. Thank you. And then maybe I'll circle back to the OPEX discussion here. Maybe in the UK—that's one where we've seen the G&A line sort of progressively creep higher.

Speaker #1: Maybe some commentary on that—where the focus has been there, and what we can expect going forward.

Nadine Ahn: Yeah. In the UK, we've built out quite a bit in terms of our tools to support our advisors there as well. That continues to be an investment that we make within the firm. Also, I noted that there was some increased headcount just in terms of as we not only take on new acquisitions, but also upskill some of our complement in terms of helping to manage the size and scale of the business that we have right now. You would have noticed that just some of the one-time cost items that we had come through, particularly in Q4, did have a negative impact on margins. We do expect that to rebound into fiscal 2027. There's a huge focus on cost and as well as looking for increased productivity and efficiency with these tools that we've brought in.

Speaker #3: Yeah. In the UK, I mean, we've built out quite a bit in terms of our tools to support our advisors there as well. So that continues to be an investment that we make within the firm.

Speaker #3: Also, I noted that there was some increased headcount, just in terms of as we not only take on new acquisitions, but also upskill some of our complement in terms of helping to manage the size and scale of the business that we have right now.

Speaker #3: You would have noticed that just some of the one-time cost items that we had come through, particularly in the fourth quarter, did have a negative impact on margins.

Speaker #3: We do expect that to rebound in fiscal 2027. There's a huge focus on costs, as well as looking for increased productivity and efficiency with these tools that we've brought in.

Nadine Ahn: For UK, I would say that the expectation is that we will start to revert back to those healthier margins that you're used to seeing in that business into fiscal 2027.

Speaker #3: So, for the UK, I would say that the expectation is that we will start to revert back to those healthier margins that you used to see in that business into fiscal 2027.

Dan Daviau: Yeah. Again, just like our Canadian business, we're investing in growth in that business, net organic asset growth. To Nadine's point, that doesn't come free. You invest in tools, you invest in technology, you invest in people. You're seeing those investments play out on the cost side in the UK a little bit. As Nadine also noted, we have invested already. You'd expect those costs to come down.

Speaker #6: Yeah. And again, just like our Canadian business, we're investing in growth in that business—net organic asset growth. To Nadine's point, that doesn't come free.

Speaker #6: You invest in tools. You invest in technology. You invest in people. So you're seeing those investments play out on the cost side in the UK a little bit.

Speaker #6: But as Nadine also noted, we have invested already. So you'd expect those costs to come down.

Jeff Fenwick: Okay. Thank you. Maybe one more. Excuse me. On the compensation front, I believe there's a certain cadence around awards paid out to employees, and then the recycle some of that into purchasing units in the partners LP. Can you just remind us of that? It expanded its position in Canaccord ownership overall by a fair amount last year. Is there sort of a similar cycle that we'll see play out here?

Speaker #1: Okay, thank you. And then maybe one more, excuse me, on the compensation front. I believe there's a certain cadence around awards paid out to employees, and then the recycle of some of that into purchasing units and the partners' LP.

Speaker #1: Can you just remind us of that? I mean, it expanded its position in Canaccord ownership overall by a fair amount last year. And is there sort of a similar cycle that we'll see play out here?

Dan Daviau: The policy of the board, having just got through the board meetings, is there's a repayment of those loans that go on every year. Those are fully recourse interest-bearing loans. These aren't anything other than that. The loans help people buy partnership units. The partnership, in turn, buys equity of Canaccord Genuity. That equity stays inside that partnership, and it's kind of, I don't want to say gone forever, but it stays inside the partnership. We're up to about 14%. There will be a loan repayment this year that's already happening as we speak through bonuses being paid to people. They're repaying their loans. Those loans will be recycled again. That partnership will increase its ownership in Canaccord Genuity again this year. Last year it was about 2%. This year it'll be about the same number.

Speaker #6: Yeah. The policy of the board, having just got through the board meetings, is there's a repayment of those loans that goes on every year.

Speaker #6: Those are fully recourse interest-bearing loans. These aren't anything other than that. And the loans help people buy partnership units. The partnership, in turn, buys equity of CANACORD Genuity.

Speaker #6: That equity stays inside that partnership, and it's kind of I don't want to say gone forever, but it stays inside the partnership. So we're up to about 14%.

Speaker #6: There will be a loan repayment this year. That's already happening as we speak, through the bonuses being paid to people. So they're repaying their loans.

Speaker #6: Those loans will be recycled again. That partnership will increase its ownership in Canaccord Genuity again this year. Last year, it was about 2%. This year, it will be about the same number.

Dan Daviau: That's the plan for the foreseeable future, is that partnership will continue to accumulate stock of the underlying company. Does that answer your question?

Speaker #6: That's the plan for the foreseeable future—that the partnership will continue to accumulate stock of the underlying company. Does that answer your question?

Jeff Fenwick: Yeah, that's helpful. Thank you very much. Maybe we'll just squeeze a quick one in there as well on OpEx. I meant to ask about Australia. We've had only really one quarter after the Wilsons acquisition there. Is the OpEx in the quarter there somewhat representative of the run rate going forward, or were there some integration costs there as you integrated that business?

Speaker #1: Yeah. That's helpful. Thank you very much. And then maybe I'll just squeeze a quick one in there as well on OPEX. I meant to ask about Australia.

Speaker #1: I mean, we've had only really one quarter after the Wilson acquisition there. Is the OPEX in the quarter there somewhat representative of the run rate going forward, or were there some somatic costs there as you integrated that business?

Nadine Ahn: Yes, there were definitely some increased costs as it related to the Wilsons acquisition, but that has been fully integrated now. We do expect that the margin expansion, just given the scale of that business, will start to improve closer to what you would see from a peer average.

Speaker #3: Yes, there were definitely some increased costs as it related to the Wilson acquisition, but that has been fully integrated now. So, we do expect that the margin expansion, just given the scale of that business, will start to improve closer to what you would see from a peer average.

Dan Daviau: Yeah. You remember, this business started at a CAD 1 billion business five years ago. We're up to CAD 18 billion. We're starting to achieve scale. It's not the CAD 55 billion we are in Canada or whatever, it's starting to get the scale that we're looking for. Margins will improve in that business over time.

Speaker #6: Yeah. You remember, this business started out at $1 billion business five years ago. We're up to $18 billion. We're starting to achieve scale. It's not the 55 billion we are in Canada or whatever, but it's starting to get the scale that we're looking for.

Speaker #6: So, margins will improve in that business over time.

Jeff Fenwick: Okay. Thanks for that color. I'll requeue.

Speaker #1: Okay, thanks for that color. I'll read you.

Dan Daviau: Thank you.

Speaker #6: Thank you.

Operator: Your next question comes from Graham Ryding from TD Securities. Please go ahead.

Speaker #1: Your next question comes from Graham Writing from TD Securities. Please go ahead.

Graham Ryding: Hello. Good morning.

Dan Daviau: Morning, Graham.

Speaker #6: Good morning. Maybe I could start with UK Wealth. It looks like the AUM there was flat quarter over quarter, up 8% year over year in constant currency.

Graham Ryding: Maybe I could start with UK Wealth. It looks like the AUM there was flat quarter-over-quarter, up 8% year-over-year in constant currency. That seems to have underperformed the FTSE market as a benchmark. The growth profile there is lower than your other platforms in Canada, Australia. Any color or anything to call out for why you're seeing lower growth in UK Wealth?

Speaker #6: That seems to have underperformed the FTSE market as a benchmark. And it's the growth profile there is lower than your other platforms in Canada, Australia.

Speaker #6: Any color or anything to call out for why you're seeing lower growth in the UK wealth?

Nadine Ahn: I think in terms of the UK market overall, it's been struggling a bit. I think going forward, the focus that we've had, not only from some of the discussion we've had around the tools we're bringing in from our advisors, is really around growing the net new assets. Obviously, we've been growing the business significantly through M&A and integrating those quite well, and the focus now as we start to build out our planning business in conjunction with the rest of the team, that we expect to see that improvement in our net new asset growth, which you'll start to see that trajectory start to really amplify.

Speaker #3: I think in terms of the UK market overall, it's been struggling a bit. But I think going forward, the focus that we've had, not only from some of the discussion we've had around the tools we're bringing in from our advisors, is really around growing the net new assets.

Speaker #3: Obviously, we've been growing the business significantly through M&A and integrating those quite well. And the focus now, as we start to build out our planning business in conjunction with the rest of the team that we expect to see that improvement in our net new asset growth, which we'll start to see that trajectory start to really amplify.

Dan Daviau: Yeah. Graham, two points, and we should get you better details on this, so my apologies. There's two points to note. We have integrated a couple of acquisitions in. Ultimately, when we integrate these acquisitions in, we know we're losing some assets. We exceptionalize that in our internal management reporting, but we know we're intentionally losing some assets, so to speak. You don't see that in our public numbers. You just see the flat assets. Our own internal numbers would reflect higher growth than that, number one. Number two, the portfolios aren't just UK-based portfolios. These are fully managed portfolios with international equities, fixed income. I will have to give you the proportions of that so that you can do the right analysis. We don't think this business is flat. We don't think this business is shrinking.

Speaker #6: Yeah, Graham, two points—and we should get you better details on this, so my apologies. But there are two points to note: we have integrated a couple of acquisitions in.

Speaker #6: Ultimately, when we integrate these acquisitions in, we know we're losing some assets. We exceptionalize that in our internal management reporting. But we know we're losing intentionally losing some assets, so to speak.

Speaker #6: So you don't see that in our public numbers. You just see the flat assets. But our own internal numbers would reflect higher growth than that, number one.

Speaker #6: Number two, the portfolios aren't just UK-based portfolios. These are fully managed portfolios, right, with international equities, fixed income, so we'll have to give you the proportions of that so that you can do the right analysis.

Speaker #6: But we don't think this business is flat. We don't think this business is shrinking. Our management benchmarks show this business to continue to increase and, in fact, in Q4 had a phenomenally good Q4 in terms of net new assets and growth.

Dan Daviau: Our management benchmark showed this business to continue to increase, and in fact, in Q4, had a phenomenally good Q4 in terms of net new assets and growth. We feel pretty excited by the business where it sits today.

Speaker #6: So we feel pretty excited by the business where it sits today. Okay. And then in your presentation, you do show 4.2% organic flows, and then you flag a negative 2.1% as exceptional.

Graham Ryding: Okay. In your presentation, you do show 4.2% organic flows, and then you flag a -2.1% as exceptional. Is that what you're talking about?

Speaker #6: Is that what you're talking about? Is that—yeah, exactly what I'm talking about. Yeah, understood. Then maybe the acquisition of CRC was quite sizable—$130 million Canadian.

Dan Daviau: Yeah. That's exactly what I'm talking about. Yeah.

Graham Ryding: Understood. Maybe the acquisition of CRC was quite sizable, CAD 130 million. What is the earnings contribution that you expect from that platform? Just any sort of high-level color on where in particular that platform is quite strong and why you think this is a good investment.

Speaker #6: What is the earnings contribution that you expect from that platform? And then, just any sort of high-level color on where, in particular, that platform is quite strong and why you think this is a good investment?

Dan Daviau: First of all, on the acquisition, I know you know how acquisition accounting works. A huge portion of that purchase price is earn out purchase price. You take a provision for it at the beginning. If they hit it, great. If they don't, you take it back. That's a balance sheet item, not an income statement item. The actual purchase price was significantly less, think half of that amount. That's the first thing. You hope they hit the earn out because it's free money, so to speak. You're strongly encouraged for that. That's the first thing. The second thing, they are in the energy transition space. This is the way we define it at our organization. You can say it's sustainability or whatever.

Speaker #6: Yeah. So first of all, in the acquisition, I think our acquisition I know you know how acquisition accounting works. A huge portion of that purchase price is earn-out purchase price.

Speaker #6: You take a provision for it at the beginning. If they hit it, great. If they don't, you take it back. And that's a balance sheet item, not an income statement item.

Speaker #6: So the actual purchase price was significantly less. Think half. Of that amount. So that's the first thing. And you hope they hit their earn-out because it's free money.

Speaker #6: So to speak. So you're strongly encouraged for that. That's the first thing. The second thing, they are in the energy transition space. This is the way we define it at our organization.

Speaker #6: You can say it's sustainability or whatever. And either we're geniuses or we got lucky. But that energy transition space is massive right now and continues to grow.

Dan Daviau: Either we're geniuses or we got lucky, but that energy transition space is massive right now and continues to grow. AI, data centers, crypto, these things all need power. It's not all just traditional power. There's a lot of different types of power. That's where these guys are particularly strong and particularly active. The business is very robust. When we first entered into our original loan agreement with these people, which was our new partners, which was more than 18 months ago, a long time ago. We had lent them some money to buy out their initial partners. When we entered into that deal, compared to what they're doing today, they're probably doing 50% more revenue than they were doing back then. It's been a very positive experience. It'll continue to be a very positive experience.

Speaker #6: AI, data centers, crypto, this all these things all need power. And it's not all just traditional power. There's a lot of different types of power.

Speaker #6: That's where these guys are particularly strong and particularly active. So the business is very robust. When we first entered into our original loan agreement with these people, which was our new partners, which was, I don't know, more than 18 months ago, a long time ago, we had lent them some money to buy out their initial partners.

Speaker #6: When we entered into that deal, compared to what they're doing today, they're probably doing 50% more revenue than they were doing back then. So it was it's been a very positive experience.

Speaker #6: It’ll continue to be a very positive experience. Their existing run rates right now—we closed the deal in December, Nadine, or early January? Or late December?

Dan Daviau: Their existing run rates right now, we closed the deal in December, Nadine, or early January or late December.

Nadine Ahn: January close, yeah.

Dan Daviau: January close. The performance has been very good, and it'll continue to be strong. We anticipate that more than offsetting the lost revenue from the principal trading business that we sold, and quite frankly, at a margin level that would be more significant than what we lost. That's not a big bar to climb over. We see it materially helping not only our U.S. business and our M&A franchise in the U.S., but there's incredible synergies between that business and the rest of our global footprint into Canada. Everyone's going through the same energy transition, whether it's Canada, the UK, ultimately Australia. We see a really good partnership there, but they're going flat out on just existing North American business right now.

Speaker #6: January closed. The performance has been very good and they'll continue to be strong. We anticipate that more than offsetting the lost revenue. From the principal trading business that we sold and, quite frankly, at a margin at a margin level that would be more significant than what we than what we lost.

Speaker #6: That's not a big bar to climb over. But so, we see it materially helping not only our US business and our M&A franchise in the US, but there are incredible synergies between that business and the rest of our global footprint into Canada.

Speaker #6: Everyone's going through the same energy transition, whether it's Canada, the UK, ultimately Australia. So we see a really good partnership there. But they're going flat out on just existing North American business right now.

Graham Ryding: Okay, great. Appreciate the color. I don't want to hold you to any hard numbers, but did you say you expect this to replace your wholesale trading business, which I think was sort of running at about CAD 30 million a quarter?

Speaker #6: Okay, great. Appreciate the color. Sorry, I don't want to hold you to any hard numbers, but did you say you expect this to replace your wholesale trading business, which I think was sort of running at about $30 million a quarter?

Dan Daviau: No, it wasn't running at CAD 30 million a quarter. I wish it was. Maybe there was a quarter or two where it was running at CAD 30 a quarter? CAD 20? No, still not. That business is volatile. It had ups and downs quarters. No, that's a business that's going to do our CRC business, the business that we bought. Nadine's giving me an evil eye. We'll get back to you, Graham Ryding, as opposed to me answering that question. I can answer it. I'm just not allowed to.

Speaker #6: No, it wasn't running at $30 million a quarter. I wish it was. Maybe there was a quarter or two where it was running at, oh, $30 million Canadian a quarter?

Speaker #6: 20? No. Still not. It wasn't that business is volatile. It had ups and downs quarters. But no, that's a business that's going to do our CRC business.

Speaker #6: That business that we bought, that's a—I'm trying to... Nadine's giving me, Nadine's giving me an evil eye. So we'll get back to you, Graham, as opposed to me screaming that question.

Speaker #6: I can answer it; I'm just not allowed to. Sounds good.

Graham Ryding: Sounds good.

Operator: There are no further questions. I'll turn the call back over to Mr. Daviau.

Speaker #1: There are no further questions. I'll turn the call back over to Mr. Daviau.

Dan Daviau: Good. Well, thanks everyone for joining today. Again, thanks for your continued support. Graham and others, we're available for future questions on the quarter as needed. Otherwise, we're going to update you not too far away. Given this was our year-end, we'll be reporting again in early August. Look forward to talking to everyone then. If you can close the line to operator, that'd be great.

Speaker #6: Oh, good. Well, thanks, everyone, for joining today. And again, thanks for your continued support. Graham and others, we're available for future questions on the quarter as needed.

Speaker #6: Otherwise, we’re going to update you not too far from now. As this was our year-end, we’ll be reporting again in early August, so we look forward to talking to everyone then.

Speaker #6: If you can close the lines, operator, that'd be great.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. Please disconnect your lines.

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