This conference is being recorded. Cette conférence est enregistrée. All participants, please stand by. Your meeting is ready to begin. Good morning, ladies and gentlemen. Welcome to RF Capital Group's Q1 2024 earnings conference call. I would now like to turn the meeting over to Mr. Tim Wilson, Chief Financial Officer. Please go ahead, Mr. Wilson. Thank you, Giselle. Good morning, and welcome to RF Capital's Q1 2024 earnings call. I'd like to remind you that our remarks may contain forward-looking information, and actual results could differ materially. Forward-looking information is subject to many risks and uncertainties. Certain factors or assumptions applied in forward-looking information can be found in our latest AIF and MD&A. These documents are available on our website and at sedarplus.ca. Today, I'm joined by our President and CEO, Kish Kapoor, and our Chief Operating Officer, Dave Kelly. Kish will share key takeaways from the quarter, and I will cover our detailed financial results and financial outlook. Kish will then end with closing remarks, following which Kish, Dave, and I will open the call to questions from analysts. If you have questions once this call is complete, please reach out to investor relations. Our contact information can be found at the end of our earnings release. I will now turn the call over to Kish. Good morning, everyone. 2024 got off to a promising start. After industry veteran Dave Kelly joined us as Chief Operating Officer in January, we welcomed his former colleague from both TD and Gluskin Sheff, Kevin Shubley, as VP, Business Strategy and Analysis. Kevin is a long tenure in our industry and previously oversaw a line of business at TD that managed over CAD 37 billion in AUM for high net worth and institutional clients. Weeks later, we welcomed Steve Hunter as branch manager for Southwestern Ontario. He comes from TD and most recently led two branches that grew to over CAD 7 billion in AUA under his leadership. Collectively, Dave, Kevin, and Steve, and the rest of our leadership team have the depth of expertise to help drive growth in all areas of our business and enhance our advisors' overall experience. They're currently learning about our company and systems, as well as visiting our offices across the country to meet our advisor teams, and will soon be positioned to build on the momentum we are seeing in our Q1 results. AUA reached CAD 37 billion at the end of the Q1, up CAD 1.8 billion or 5% this year, and up 3% relative to the Q1 of 2023. Net new assets were CAD 415 million in the Q1, the highest level since the Q2 of 2022. In addition to net new asset inflows, recent recruits onboarded CAD 477 million of AUA, a level we haven't seen since the end of 2021. We onboarded two new advisors in the quarter, Dan Rosentreter in Winnipeg from TD Bank and Shivika Sharma in Calgary from RBC, and expect to announce many more in the coming quarters, including some marquee additions in the Q2. This quarter, we also benefited from strength in equity markets. Over the long term, the compounding of equity returns is a key driver of growth in our AUA and a remarkable part of the fee-based wealth management model. On the other side of the coin, advisors representing approximately CAD 600 million of AUA decided to leave Richardson Wealth in January and February. There were no departures in March or April. Overall, AUA growth drove a 5% year-over-year increase in fee revenue and a 2% increase in total revenue. Along with the operating leverage delivered this quarter, that revenue growth drove a 4% increase in Adjusted EBITDA to CAD 13.5 million and CAD 7.5 million of Free Cash Flow available for growth. I'm excited by the momentum, and Dave and his team intend to build on that when our advisors and their teams come to Toronto for our annual conference on June third and fourth. The conference will be a great opportunity for us to speak more about our progress against our strategy and for our advisors to share best practices and learn from others in the industry. We're expecting a record turnout, including from more than 25 high-quality Canadian and global companies that will be in attendance. This turnout reflects the enthusiasm that our teams and business partners have about our brand, our advisor-centric culture, and our shift towards growth. While our business and results continue to get stronger, we're disappointed that our stock price remains disconnected from intrinsic value and private company valuations in our industry. Recently, we've seen private company valuations from comparable wealth managers at close to 3% of AUA, compared to our quarter end enterprise value AUA of... A value to AUA of 0.7%. To narrow the gap, we continue to focus on that which we can control, and that is delivering on our organic, recruiting, and inorganic growth ambitions. With that, I will pass the call over to Tim. Thank you, Kish. For the Q1 of 2024, we reported CAD 89.4 million in revenue, an increase of 2% as compared to the Q1 of 2023. Fee revenue, the largest component of our revenue, increased 5% compared to last year, driven by the increase in AUA.... Looking at the other components of revenue, we are currently experiencing more consistent firm-wide adoption of insurance solutions, resulting in a 21% increase in insurance revenue over last year. Corporate finance revenue increased from the prior year, even though it remains near trough levels, and interest revenue was down 19% from the prior year, as client cash and margin balances have declined, a trend that we have discussed in the last two quarters. Adjusted EBITDA was CAD 13.5 million, as compared to CAD 13.1 million in Q1 2023. This 4% increase reflects continued vigilance in managing our operating costs and realizing some of the operating leverage in our business. It was also helped by CAD 900,000 of mark-to-market recoveries on RSUs and DSUs. Adjusted EBITDA was down 7% from Q4, driven by a CAD 2.6 million increase in statutory benefits costs. Benefits always rise by that amount in Q1 due to the reset of CPP and EI contributions in January, then drop to more normal levels in Q2. If you were to normalize headline adjusted EBITDA for mark-to-market amounts and benefits costs, Q1 adjusted EBITDA would actually be the highest that we delivered in over a year. Cash flow available for growth increased 4% over Q1 2023 to CAD 7.5 million, consistent with the increase in adjusted EBITDA. Free cash flow increased CAD 10 million to CAD 3.9 million, primarily due to the absence of transformation costs and reduced capital expenditures. CapEx was elevated in the Q1 of last year as we completed our Toronto and Kitchener office renovations, two legs of our multi-year transformation journey. Turning to our financial outlook for the remainder of 2024, AUA will continue to be driven by growth in client assets and is expected to correlate highly with equity market returns and with recruiting activity. At the time of this call, equity markets remain favorable relative to last year, even though they were off slightly post-quarter end. We remain confident that recruiting activity will accelerate over the year. With respect to interest revenue, we believe client cash and margin balances stabilized during the quarter, but that interest revenue could still decline. The how much, and that's, of course, driven by interest rates. The how much and when will depend on the movements in benchmark rates, which is an open question right now. Corporate finance revenue is expected to remain at lower levels in the first half of 2024. We hope that activity will pick up in the back half of the year. Turning to operating expenses, we are committed to delivering operating leverage from the investments we've made across our platform, despite the impact of inflation on certain core operating expenses. Expenses will also continue to be subject to mark-to-market movements, hopefully not recoveries, on RSUs and DSUs. Cash flow for growth will be driven by the factors impacting Adjusted EBITDA and will primarily be deployed towards adding new advisors to the Richardson Wealth platform. With that, I'll now pass the call back to Kish. Thanks, Tim. Looking ahead, we're laser focused on our three-pillar growth strategy. Q1 offered great momentum in AUA growth, and we look forward to building on that momentum with higher levels of organic growth and the addition of new advisor teams in the coming months. That concludes our prepared remarks. Operator, please open the line for questions for Dave, Tim, and myself. Thank you. Please press star one at this time if you have a question. First question is from Mr. Jeff Fenwick from Cormark Securities. Please go ahead. Hi, good morning, everyone. So, I guess, Kish, or maybe Tim, just starting off my questions here on, you referenced, alongside the higher average assets year-over-year. You saw some nice uptick in the fee-based revenue alongside of that. It looks like the fee revenue growth outstripped that growth in the assets. So I'm just wondering, is there something in the mix there that might cause that, or there's some added fees that maybe hit through the beginning of the year that we should be taking into account here in terms of that run rate? Yeah, very perceptive, Jeff. Happy to answer that question. Yeah, you're... That's exactly the dynamic that we're seeing, which is a mix shift underlying the total AUA. What we've seen is a mix shift away from our transactional type accounts to fee-based. So continued, it's a continued trend over the past few years. We saw it over the course of the past 12 months. Traditional assets or trading accounts typically have a lower yield on them. So as assets move over, skew more towards fee-based, our average yield goes up, and fee revenue grows more quickly than AUA does. And again, the other thing I would add to that is that as we recruit people, we're recruiting advisor teams that are generally already fee-based. So we're onboarding fee-based assets, as we're attracting teams on. That's very helpful. Thanks. And I guess the follow along with that is, when I look at the variable compensation associated with that, that's a bit... It might have been a bit lower. But again, maybe, is there a bit of that dynamic at play there as well? ... Really, we're seeing, there's a lot of subtleties underneath the gross revenue number. But we're seeing when we look at true commissionable revenue and advisor compensation as a percentage of that, we are seeing a very stable number over the course of the past five quarters. Thanks for that. And then, maybe let's talk about some of the ongoing initiatives you have there. I guess you highlighted your new executives coming in here. Is there a period of time where they're going through and doing their own sort of review of things that maybe the platform could take advantage of or look to invest in? And, you know, or there may be some plans on the horizon here, that might be put into place on the back of that. And I do note, in your release, you mentioned some investment in things like, I think it was AI and analytics that you've been making. Yeah, well, great question. I'm going to actually get Dave Kelly to comment on some of the things that he's been doing, you know, in his first 90 days at the firm. Which includes having now gone across the Western Canadian offices that we have and certainly engaged with a lot of the team members. So maybe, Dave, comment about your first 90 days. I know it's probably a little too early for Steve Hunter- because he's only been here for about a month, and Kevin's also been on some other months, so. Yeah. Yeah, no, I'm happy to share some insight. So, so all of the above, and Jeff, I would say, right? It's a, it's a review of platforms, tools, technology from a couple of perspectives. One is, you know, just what are the tools and how well are they working? I think as importantly, what's the adoption? How are advisors incorporating them into their practices, and what do we need to do to support them on further transition? I, I would say the same lens is being applied on, on processes as well. So just do, do we have best-in-class processes in place across the organization? That early observation is we've, we've got some opportunity for quick wins to improve the experience for clients, advisors, and associates that don't involve big investments. So they'll be in the process space as opposed to the tools and technology space. Kevin's really focused on analytics and reporting and making sure advisors and leaders have the information they need to grow great practices over time. And so he's been sort of up to his elbows in data. We've got lots of terrific data at Richardson Wealth. It's just organizing in a way that aligns to the strategy and helping advisors grow. And then Steve's really been focused on meeting the advisors in his region, getting a good feel for culture, and getting a sense for how to accelerate the growth. Dave, you intend to showcase some of the early work at the conference in June, right? Mm-hmm. Absolutely. We'll be focused just on a lot of the process workflows. And I describe that as, you know, how easy is it to do business at Richardson Wealth, whether you're a client, advisor, or associate. And we'll be able to highlight some of the observations and where we plan to make improvements in June. Jeff, based on discussions I've had with Dave, you know, clearly, we've put the technology and the investments in place, but we need to continue to enhance the experience and utilization of the platforms. We clearly still have some teething pains, I would call them, in our platform and our process, and we're addressing them. He's now got good line of sight of what those are in terms of the priorities that we're going to deploy or set. But you'll hear more about that, both in our June conference, and you'll certainly hear it at our next conference call when he, you know, now has a chance to put his arms around just about everything. Okay, thank you. That's very helpful color. And maybe just one last one on the recruiting outlook. You did provide us with some comments there, Kish, on that. I mean, historically, you've quoted a very big number in terms of the AUA that you're pursuing. Just, you know, any thoughts around has that mix of targets changed? I think you suggested we might start to see some incremental news of teams joining through Q2 even, and into the mid part of this year. But what's your feel in terms of the recruiting market out there and are there any changes in that environment? So I would say now that our platform is in place, our story is in place, our leaders are starting to be in place, and certainly, I now have personally more capacity to work with our recruiting team, to go out there and be even more aggressive. I think even Dave has now met with more than nine teams that some of them are billion-dollar teams. We're seeing a lot of activity and lots of interest, not only at our firm, but we're starting to see interest in the entire independent ecosystem, which is good for us all. We're seeing success stories. We hope that you will see some of that success story in our firm. We are confident, in fact, that you'll see it here in the Q2 with some high-quality teams joining us. Probably the best position we've been in both our recruiting efforts and the kind of talent that we're now starting to see knocking at our doorstep. I think 2024 will probably be our best recruiting year. Certainly, if I look at the activities, Natalie Bisset sent us a report, which we shared with our board yesterday. We have, you know, active conversations with people that are managing just about CAD 5 billion today in the Q1, so active, engaged discussions. And the advisors that we've otherwise spoken to or had some conversations with for the Q1 or the first four months, certainly were managing in excess of CAD 20 billion. So you know, lots of activity, which is really key. And, you know, we keep talking about what our conversion rates would be on that activity. And, I think this year, some of the conversations we had last year are going to start translating into benefits for us. Okay, great. Thank you for that color. I'll requeue. Thank you. Once again, please press star one on your device keypad if you have a question. Next question is from Jim Byrne, Acumen Capital. Please go ahead. Good morning, guys. I guess a kind of a follow-on to Jeff's question in terms of the teams. You've, you've lost some teams, I guess, in the last quarter, couple of quarters as well. Do you feel like you've kind of maybe bottomed out in terms of departures, or is, you know, is that still normal course of business? You know, teams and, and people will ultimately leave, but where do you feel like in terms of the departures? Well, you know, if I look back in 2023, we had an abnormally large number of teams that left us last year. That, I would say, was greater than what we think is our long-term expectation on departures. I think, you know, as we think about our business, and Tim can probably add to that, 3% of our AUA on an annual steady state would be what we think would be a departed IAs. We hope that we, you know, never really achieve that number, but or that happens to us. But we are always mindful that every person here has lots of choice. We work tirelessly to try to find a way to provide them a platform that's extraordinary, that they can be successful here better than anywhere else. And I think, you know, given that in March and April we didn't experience any departures, I think we're now at a stage with a large community of people here. You know, and I think the statistic I shared with the board is that people who controlled 90% of our assets in October 2020 continue to be here, which is really the core group of people who value the brand, who value this advisor-centric culture, who value the investments we're making, and certainly value the, you know, the priorities that we're setting. And now that we've added people like Dave Kelly and Kevin Shubley and Steve Hunter, who are essentially validating the quality and the strength of our platform relative to the other firms that they had choices to join, all of which is starting to attract a lot more attention for us. So I think, you know, it's, you know, the life of a CEO at a wealth management firm is never easy. You're always working tirelessly to satisfy our, our clients, and that's the advisor, and inspiring them that this is a better place than anywhere else. Okay, that's great, Kish. And then, just about the expense control, and obviously Q1 you've highlighted, it's got some statutory benefits and things like that. But, you know, what are you doing specifically, if you could highlight maybe a couple initiatives, and/or do we, you know, should we anticipate seeing, you know, the operating leverage, you know, if, again, barring a dramatic shift in equity markets, you know, should we see that operating leverage coming through in 2024? Well, let me speak at a 30,000-foot level here, and then Tim, you can talk about the specific initiatives. We believe that we now have a very scalable platform. You know, we've built the technology, we've outsourced our back office, we have all the people that we need, and certainly the physical premises that we need, that we could probably attract and absorb another CAD 10 billion-CAD 15 billion of recruited assets without increasing our fixed cost structure at all, right? Especially when you think about people costs. I think our people costs and the teams that we need to operate are here to be able to digest that sort of growth. So, I think that is the biggest thing, given premises and our people costs are our single largest cost. But we're feeling very comfortable that we're doing the right things. And other than that, there's a whole host of discretionary things that we're managing, and, Tim, maybe you can talk about those. Yeah. Yeah, Jim, I think, again, at a high level, I think you are going to see operating leverage over the coming quarters, and it's going to be primarily generated through revenue growth as opposed to expense reductions. So as we grow revenue, to Kish's point, our focus is on keeping fixed costs flat, right? So realizing the benefits of the investments that we've already made in our platform and our premises. That said, we are looking at fine-tuning our spending in certain areas. So we've got you know, a real focus, especially with Dave on board, of now looking at our processes very critically and saying: Are we working as smart as we can be? Are the processes working well? Are there any opportunities to extract efficiencies from them? We've got to focus on discretionary cost management. It's not visible in our financial results, but when you look at our purely discretionary costs, so traditional categories like consulting, travel, entertainment, conferences, we brought those down by 18% quarter-over-quarter and 20% year-over-year. It's a bit of fine-tuning, but again, the major focus is on just keeping our fixed cost growth constrained as we grow the business. Dave, do you have anything to add to that? No, I think that's right. I think there's good, there's good discipline on the big line items, but I think there's equally strong discipline on the small line items, and so plus a good focus on making sure we've got the right environment in place for expense control. Okay, that's great, guys. And then, maybe last one for you, Tim. Just remind us again on capital expenditures this year, plans for any office upgrades or expansions. Yeah. We think CapEx will be significantly down from the past 2 years, mainly because we've come through a transformation, so the need to spend is lower. I think it'll be in the neighborhood of CAD 6-8 million over the course of the year. Some of that is in enhancements of platforms like Envestnet, and then we've got CAD 2 million assigned against our Halifax office, expanding our footprint there, to thinking in future and thinking about accommodating growth in incoming periods. I think the new offices, Tim, as an addition to the renovations that we're going to make are in Winnipeg and Montreal, right? Yeah. So we're planning ahead for those. Those will likely be in 2025. So, a much reduced level of CapEx. Okay, that's great. Thanks, guys. Thank you. There are no further questions at this time. I would now like to turn the meeting back over to Mr. Kish Kapoor. Thanks, operator. Thanks, everyone, for participating in today's call, and please feel free to contact us with any follow-up questions. Before we end the call, I would like to invite everyone at our to attend our AGM on June the fourth. We will be hosting the AGM during our annual advisor conference at the Board of Trade, located in the same building as our head office at 100 Queens Quay East. After the forum part of the meeting, we will be giving a presentation and taking questions. Hope to see many of you there, and please visit our website under the Annual Report tab to see my CEO message, where I talk about what's happened in 2023 and what we're planning for in 2024. And until we speak next, go, Leafs, go! Thank you. Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.