RF Capital Reports Fourth Quarter and Fiscal 2024 Results
Canada NewsWire
TORONTO, Feb. 27, 2025
2024 Financial Highlights
(as compared with 2023)
AUA(1,2) and Revenue
-- Ending AUA1,2 increased to $39.5 billion, up 12% or $4.3 billion
-- Revenue of $369.3 million increased 5%, led by 8% higher fee revenue and
despite an 18% decline in interest revenue
Profitability and Cash Flow
-- Net income from continuing operations of $0.6 million improved from a net
loss of $9.8 million
-- Adjusted EBITDA1 of $57.3 million decreased 4% as gross margin grew 4%
while adjusted operating expenses1 rose 6%
-- Free cash flow1 of $18.5 million improved from negative free cash flow of
$2.6 million
Balance Sheet
-- Net working capital1 of $88.7 million increased 9% driven by higher free
cash flow
TORONTO, Feb. 27, 2025 /CNW/ - RF Capital Group Inc. (RF Capital or the Company) (TSX: RCG) today reported revenue of $369.3 million in fiscal 2024, up 5% from prior year. The increase in revenue was driven by 12% growth in AUA(1,2) , as strong equity markets and recruiting over the past 12 months offset advisor attrition. Adjusted EBITDA(1) decreased 4% due to a 6% increase in adjusted operating expenses, despite a 5% revenue increase.
In the fourth quarter of 2024, the Company generated revenue of $96.9 million, up $10.1 million or 12% compared to the same period in 2023. Revenue benefited from a $9.7 million or 15% increase in fee revenue, offset by a $2.1 million or 19% decline in interest income mainly due to lower benchmark rates. This revenue growth more than offset $2.5 million or 7% higher adjusted operating expenses, leading to adjusted EBITDA of $16.2 million or growth of $1.7 million or 12% compared to prior year.
For more detail on the Company's results, please refer to our 2024 MD&A.
1. Considered to be non-GAAP or supplementary financial
measures, which do not have any standardized meaning
prescribed by GAAP under IFRS and are therefore unlikely
to be comparable to similar measures presented by
other issuers. For further information, please see
the "Non-GAAP and Supplementary Financial Measures"
section of this release.
2. AUA is a measure of client assets and is common in
the wealth management industry. It represents the
market value of client assets that we administer.
Dave Kelly, President and Chief Executive Officer, commented, "We achieved a major milestone in 2024, reaching $40 billion of AUA. Our next milestone objective is to reach $50 billion of AUA. With a concentrated effort on two of the three core pillars of our growth strategy: pillar one -- double down on support for advisory teams; and pillar two -- continue to drive recruitment, our path is set. For the third pillar -- acquiring or partnering with like-minded firms -- we will continue to identify and evaluate all opportunities that align with our strategy and generate shareholder value."
Outlook and Key Performance Drivers
Our current view on the drivers of our financial performance and profitability for 2025 is as follows:
-- AUA1,2 is highly correlated with equity market movements which are
inherently difficult to predict and can be impacted by broader economic
conditions. AUA will also be supported by growth in our existing
advisors' client assets and by recruiting and attrition. We expect to
maintain recruiting momentum over the coming quarters.
-- Interest revenue is impacted by prime rate trends, which economists
expect to continue to decline before stabilizing later in 2025
-- Transaction activity underlying our corporate finance revenue could
rebound but is more likely to remain subdued
-- We expect inflation to remain in the target range for 2025, and we remain
committed to finding operating cost savings and efficiencies in our
business
-- Free cash flow available for growth1 is expected to be deployed towards
advisor recruitment
Preferred Share Dividend
On February 27, 2025, the board of directors approved a cash dividend of $0.233313 per Series B Preferred Share for a total of $1,073,000 payable on March 28, 2025(3) to preferred shareholders of record on March 14, 2025.
Q4 and Fiscal 2024 Conference Call
A conference call and live audio webcast to discuss RF Capital's fourth quarter and fiscal 2024 financial results will be held on Friday, February 28, 2025, at 10:00 a.m. $(EST.UK)$. Interested parties are invited to access the quarterly conference call on a listen-only basis by dialing 416-406-0743 or 1-800-898-3989 (toll free) and entering participant passcode 7715540#. The conference call will also be accessible as a live audio webcast through the Investor Relations section of the Company's website at https://richardsonwealth.com/investor-relations/financial-information/. A recording of the conference call will be available until Sunday, March 30, 2025, by dialing 905-694-9451 or 1-800-408-3053 (toll free) and entering access code 9059350#. The webcast will be archived at https://richardsonwealth.com/investor-relations/financial-information/.
1. Considered to be non-GAAP or supplementary financial
measures, which do not have any standardized meaning
prescribed by GAAP under IFRS and are therefore unlikely
to be comparable to similar measures presented by
other issuers. For further information, please see
the "Non-GAAP and Supplementary Financial Measures"
section of this release.
2. AUA is a measure of client assets and is common in
the wealth management industry. It represents the
market value of client assets that we administer.
3. In the event that the payment date is not a business
day, such dividend shall be paid on the next succeeding
day that is a business day
Select Financial Information
The following table presents the Company's financial results for fiscal 2024 and the two preceding periods.
2024 vs 2023 2023 vs 2022
($000s, except as 2024 2023 2022 Increase/(decrease)
otherwise
indicated)
Key performance
drivers(1) :
AUA - ending(2) ($
millions) 39,527 35,236 34,950 12 % 1 %
AUA - average(2)
($ millions) 37,723 35,567 35,418 6 % 0 %
Fee revenue(3) (%) 90 90 89 -- +100 bps
Adjusted operating
expense ratio(4) +200
(%) 73.1 71.1 69.8 bps +130 bps
Adjusted EBITDA (140) (50)
margin(5) (%) 15.5 16.9 17.4 bps bps
+1
Asset yield(6) (%) 0.86 0.86 0.85 -- bps
Advisory teams(7)
(#) 152 155 161 (2 %) (4 %)
Operating
Performance
Reported results:
Revenue 369,335 351,119 353,972 5 % (1 %)
Gross margin(8) 213,095 205,842 204,224 4 % 1 %
Operating
expenses(1,9) 155,755 150,854 151,208 3 % (0 %)
EBITDA(1) 57,340 54,988 53,016 4 % 4 %
Income/(loss)
before income
taxes 5,061 (5,509) (3,110) n/m 77 %
Net income/(loss)
from continuing
operations 568 (9,828) (4,803) n/m 105 %
Net income/(loss)
from discontinued
operations(10) -- (2,064) -- (100 %) n/a
Net
income/(loss)(10) 568 (11,892) (4,803) n/m 148 %
Net income/(loss)
per common share
from continuing
operations(11) (0.24) (0.93) (0.95) (74 %) (2 %)
Net income/(loss)
per common share
from continuing
operations -
diluted(11) (0.24) (0.93) (0.95) (74 %) (2 %)
Net income/(loss)
per common
share(10,11) (0.24) (1.07) (0.95) (78 %) 13 %
Net income/(loss)
per common share
- diluted(10,11) (0.24) (1.07) (0.95) (78 %) 13 %
Adjusted
results(1) :
Operating
expenses(9) 155,755 146,340 142,574 6 % 3 %
EBITDA 57,340 59,502 61,650 (4 %) (3 %)
Income/(loss)
before income
taxes 18,113 12,054 18,574 50 % (35 %)
Net income/(loss) 10,160 3,108 11,098 227 % (72 %)
Net income/(loss)
per common share
- diluted(11) 0.37 (0.08) 0.43 n/m n/m
Select balance
sheet information:
Total assets 1,458,681 1,379,983 1,699,654 6 % (19 %)
Debt 110,922 110,922 110,922 -- --
Shareholders'
equity 326,982 330,539 346,921 (1 %) (5 %)
Net working
capital(1,12) 88,729 81,208 95,224 9 % (15 %)
Common share
information:
Book value per
common share ($) 13.65 14.02 14.80 (3 %) (5 %)
Closing share
price ($) 7.51 7.52 11.50 (0 %) (35 %)
Weighted-average
number of common
shares
outstanding
- diluted(11)
(millions) 15.7 15.6 15.9 1 % (2 %)
Common share
market
capitalization ($
millions) 118 117 182 1 % (36 %)
Cash flow:
Cash provided
by/(used in)
operating
activities 23,755 (268,497) (107,402) n/m 150 %
Free cash flow
available for
growth(1) 31,471 35,400 40,198 (11 %) (12 %)
Free cash flow(1) 18,518 (2,564) (9,896) n/m (74 %)
1. Considered to be non-GAAP or SFMs, which do not have
any standardized meaning prescribed by GAAP under
IFRS and are therefore unlikely to be comparable to
similar measures presented by other issuers. For further
information, please see the "Non-GAAP and Supplementary
Financial Measures" section of this release.
2. AUA is a measure of client assets and is common in
the wealth management industry. It represents the
market value of client assets that we administer.
3. Calculated as fee revenue divided by commissionable
revenue. Commissionable revenue includes fee revenue,
trading commissions, and commissions earned in connection
with the placement of new issues and the sale of insurance
products.
4. Calculated as adjusted operating expenses divided
by gross margin
5. Calculated as adjusted EBITDA divided by revenue
6. Calculated as fee revenue, trading commissions, and
interest on cash, divided by average AUA
7. Prior periods have been revised to reflect the internal
consolidation of certain teams
8. Calculated as revenue less advisor variable compensation.
We use gross margin to measure operating profitability
on the revenue that accrues to the Company after making
advisor payments that are directly linked to revenue
9. Operating expenses include employee compensation and
benefits, selling, general, and administrative expenses,
and transformation costs and other provisions. Adjusted
operating expenses are calculated as operating expenses
less transformation costs and other provisions.
10. In Q2 2023, we recorded a provision for a legacy employment
litigation matter related to the 2019 sale of our
capital markets business to Stifel Nicolaus Canada
Inc. See Note 25 to the 2023 Annual Financial Statements.
11. In 2022, we consolidated our common shares at a 10:1
ratio. Prior period common share information has been
adjusted to reflect this consolidation.
12. Calculated as current assets less current liabilities.
For further information, please see the "Liquidity"
section of this release.
Quarterly Results
The following table presents select financial information for our eight most recently completed financial quarters.
2024 2023
($000s, except as Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
otherwise
indicated)
Key performance
drivers(1) :
AUA - ending(2) ($
millions) 39,527 39,004 37,125 37,010 35,236 34,726 35,788 35,965
AUA - average(2)
($ millions) 39,760 38,065 36,974 36,060 34,926 35,630 35,880 35,872
Fee revenue(3) (%) 90 91 90 92 89 92 90 88
Adjusted operating
expense ratio(4)
(%) 70.5 75.8 71.9 74.3 71.5 67.3 70.9 74.7
Adjusted EBITDA
margin(5) (%) 16.8 13.6 16.5 15.2 16.7 19.3 16.9 14.9
Asset yield(6) (%) 0.84 0.85 0.86 0.88 0.87 0.87 0.86 0.87
Advisory teams(7)
(#) 152 155 154 153 155 157 156 157
Operating
Performance:
Reported results:
Revenue 96,887 91,871 91,216 89,361 86,752 87,836 88,832 87,700
Variable advisor
compensation 41,814 40,183 37,650 36,593 35,866 36,012 37,305 36,095
Gross margin(8) 55,073 51,688 53,566 52,768 50,886 51,824 51,527 51,605
Operating
expenses(1,9) 38,835 39,195 38,496 39,229 36,368 34,892 36,946 42,647
EBITDA(1) 16,238 12,493 15,070 13,539 14,518 16,932 14,581 8,958
Advisor award and
loan amortization 3,211 3,103 2,909 3,161 5,844 4,457 3,884 4,201
Interest 3,649 3,725 3,413 3,750 3,994 3,527 3,675 3,511
Depreciation of
premises and
equipment 2,677 2,660 2,749 3,049 3,385 3,414 3,366 3,549
Amortization of
intangibles 3,607 3,563 3,537 3,516 3,464 3,442 3,439 3,346
Income/(loss)
before income
taxes 3,094 $(558.SI)$ 2,462 63 (2,169) 2,092 217 (5,649)
Net income/(loss)
from continuing
operations 1,290 (2,309) 2,714 (1,127) (2,882) (189) (1,425) (5,332)
Net income/(loss) -- -- -- -- -- -- (2,064) --
from discontinued
operations(10)
Net
income/(loss)(10) 1,290 (2,309) 2,714 (1,127) (2,882) (189) (3,489) (5,332)
Net income/(loss)
per common share
from continuing
operations 0.01 (0.22) 0.11 (0.14) (0.26) (0.10) (0.20) (0.51)
Net income/(loss)
per common share
from continuing
operations -
diluted 0.01 (0.22) 0.10 (0.14) (0.26) (0.10) (0.20) (0.51)
Net income/(loss)
per common
share(10) 0.01 (0.22) 0.11 (0.14) (0.26) (0.10) (0.37) (0.51)
Net income/(loss)
per common share
- diluted(10) 0.01 (0.22) 0.10 (0.14) (0.26) (0.10) (0.37) (0.51)
Adjusted
results(1) :
Operating
expenses(9) 38,835 39,195 38,496 39,229 36,368 34,892 36,533 38,546
EBITDA 16,238 12,493 15,070 13,539 14,518 16,932 14,994 13,059
Income/(loss)
before income
taxes 6,357 2,705 5,725 3,326 1,094 5,355 3,893 1,715
Net income/(loss) 3,688 89 5,112 1,271 (483) 2,209 1,279 105
Cash flow:
Cash provided
by/(used in)
operating
activities 14,442 15,977 5,162 (11,826) 2,836 16,624 25,741 (313,698)
Free cash flow
available for
growth(1) 9,154 6,242 8,620 7,455 8,312 11,180 8,746 7,162
Free cash flow(1) 8,763 3,856 2,011 3,888 (9,612) 6,151 7,206 (6,309)
1. Considered to be non-GAAP or SFMs, which do not have
any standardized meaning prescribed by GAAP under
IFRS and are therefore unlikely to be comparable to
similar measures presented by other issuers. For further
information, please see the "Non-GAAP and Supplementary
Financial Measures" section of this release.
2. AUA is a measure of client assets and is common in
the wealth management industry. It represents the
market value of client assets that we administer.
3. Calculated as fee revenue divided by commissionable
revenue. Commissionable revenue includes fee revenue,
trading commissions, and commissions earned in connection
with the placement of new issues and the sale of insurance
products.
4. Calculated as adjusted operating expenses divided
by gross margin
5. Calculated as Adjusted EBITDA divided by revenue
6. Calculated as fee revenue, trading commissions, and
interest on cash, divided by average AUA
7. Prior periods have been revised to reflect the internal
consolidation of certain teams
8. Calculated as revenue less advisor variable compensation.
We use gross margin to measure operating profitability
on the revenue that accrues to the Company after making
advisor payments that are directly linked to revenue.
9. Operating expenses include employee compensation and
benefits, selling, general, and administrative expenses,
and transformation costs and other provisions. Adjusted
operating expenses are calculated as operating expenses
less transformation costs and other provisions.
10. In Q2 2023, we recorded a provision for a legacy employment
litigation matter related to the 2019 sale of our
capital markets business to Stifel Nicolaus Canada
Inc. See Note 25 to the 2023 Annual Financial Statements.
Non-GAAP and Supplementary Financial Measures
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