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Good afternoon, ladies and gentlemen. At this time, I would like to welcome everyone to the CI Financial 2018 First Quarter Results Webcast. [Operator Instructions] Please take note of the cautionary language regarding forward-looking statements and non-IFRS measures on the second page of the presentation. I would now like to turn the call over to Mr. Peter Anderson, CEO of CI Financial. Mr. Anderson, you may begin.
Thanks very much, and welcome to the CI Financial Conference Call for the First Quarter of 2018. Joining me on the call, as always, is Doug Jamieson, CI's Chief Financial Officer. He'll provide a financial update for the quarter and for the ongoing integration of Sentry Investments. Also available on the call are members of CI's executive team to answer your questions on our various business lines.In the first quarter, we continued to execute on our various strategic initiatives. Among other things, in the last few months, we've almost completed the successful integration of Sentry. We realigned the retail sales team across Canada to support both CI and Sentry products. We incorporated the core Sentry portfolio management groups into our lineup of investment teams. And also, we began the integration of parts of First Asset and BBS into our various CI businesses.In the first quarter, higher level of volatility returned to the financial markets after an unusually stable year in 2017. Last year, the S&P declined more than 1% on just roughly 2% of the trading days. In Q1 of this year, that has increased to more than 15%. This has both positive and negative implications for firms like CI.Before handing the call over to Doug, there are several important points I want to address first. First, as I said, the Sentry integration continues to go well. Although retail sales remains in redemptions, the overall integration is well ahead of schedule, and it delivered everything in more than we forecast. Doug will get into a lot more detail shortly.Second, with regards to our Canadian retail business, both CI Investments and Sentry funds were in redemptions for the quarter. I can point to several factors for this. And as I said in the last call, in Q1 -- Q4, we expected to be in redemptions in 2018, with improvements coming on second half of the year. This continues to be our outlook. However, we are very pleased with the strong gross sales we see in all of CI's retail business and -- all of CI's business and especially, our retail business. And I'll talk about this later on in the call. And then, finally, the short-term performance of some of our funds continues to impact retail sales. Certain asset classes, namely Canadian equity, income and balance funds have relied in the U.S. and global markets in the recent years. And these categories are in redemptions, not only at -- with CI, but across the industry. CI has large funds in all of these categories.The performance numbers show that our short term -- or -- sorry, the performance numbers show that our portfolio managers have proven themselves in the longer term. 50 of our funds have 4- and 5-star ratings from Morningstar. These funds cap well over 50% of our core assets and represent most investment categories and portfolio management teams. I remain fully confident in all of our portfolio management groups. Finally, I want to confirm our ongoing commitment to buying back CI shares. Last quarter, we purchased roughly $150 million in shares after buying back a similar amount of Q4. At this time, we continue to believe there's no better use of our cash flows buying back our stock. With that, I'll pass the call over to Doug.
Thank you, Peter. Looking at Q1 compared to Q4 of 2017, average AUM decreased 0.4% to $141.9 billion from $142.5 billion. Net income was $159 million or $0.59 per share compared to adjusted net income of $173.7 million or $0.63 per share, as last quarter, we booked the provisions noted at the bottom of the slide.Our accounting change impacted the comparative figures, and I'll get into those details in a minute. Free cash flow was down a similar amount to $166.9 million. The main reasons for the decline in earnings are the impact to revenue of 2 fewer days in the quarter; an increase in SG&A, primarily related to compensation and investments in technology; marking to market, our marketable securities portfolio; and a decline in other revenue related to distributions received last quarter on seed capital investments.Now looking at Q1 year-over-year highlights. Average assets under management were up 19% from $119.4 billion in last year's first quarter. Net income was up 9% from $146.5 million, and free cash flow grew 9% as well. The increase over the prior year is primarily attributable to the acquisition of Sentry, boosting CI's AUM, offset by a decline in margins as net management fees in basis points were down about 4% year-over-year and SG&A in basis points was up about 6% in the asset management segment.We disclosed on the last call that CI would be making an accounting change this quarter, and I'd like to further explain the impact of that change on CI's results. Effective January 1, CI wrote off the entire balance of deferred sales commissions and the related deferred tax to retained earnings. On the income statement, DSC is now treated as a period expense and not capitalized and amortized. This was applied retrospectively, meaning that it's as if DSC was always treated this way from an accounting viewpoint. So CI's comparative quarters have all been adjusted. The impact has been to increase historic net income by about $11 million or $12 million each quarter last year or about $0.04 to $0.05 per share. It also reduced EBITDA by the amount of spend during each quarter as it became an expense instead of amortization.CI's total SG&A increased from $130.8 million last quarter to $135.2 million in the first quarter, and in basis points, increased from 36.4 to 38.7. In the asset management segment, spend increased $1.2 million as the continued realization of synergies from the integration of Sentry were more than offset by compensation and spend on technology.In the asset management segment, spend was up $3.3 million as a result of the inclusion of BBS for an entire quarter as well as increased compensation.As CI looks to invest in key areas of the business, most of which will improve service and convenience for our clients and employees and some of which will provide for cost efficiencies down the road, we are targeting a 4% annual increase in SG&A.CI's Q4 SG&A was just over $130 million or $520 million annualized. So we're looking at the $540 million range for all of 2018, depending on those PM expenses that are calculated on basis points of assets managed.For each of the past 5 quarters shown here, CI's quarterly free cash flow and then some has been returned to shareholders. As I stated last quarter, we continue to favor buybacks over dividend increases and expect this level of reproduce to continue. We are comfortable with CI's debt level at 1.1x net debt-to-EBITDA and would remain so, even up to 1.5x or more, indicating that we have the runway to continue buying back stock at this pace. I'll now turn it back to Peter.
Thanks, Doug. At CI, we remain focused on our strategy, with a goal to exceed investor's long-term goals while creating value for shareholders of our company. Q1 was challenging for the industry as evidenced by share performance of most asset managers in North America. However, we remain confident CI Financial is moving in the right direction. Our acquisitions the -- over the last 2.5 years, First Asset, GSFM, Sentry and BBS have met our goal of adding scale and optionality for CI. We are responding to the same industry challenges I mentioned on every call, including the passive versus active debate; increased regulation; fees; market volatility; overcapacity of active managers; and the bank market share. At CI, we're confident our company is well positioned to meet these challenges and continue to be a leader in our industry. Now let me take you through the results of our business lines.Assante, Stonegate and private client continue to be solid growth engines for our business. Although market volatility has marginally slowed sales, the metrics we control, including adviser recruitment, continue to be very positive. We expect to exceed last year's recruitment results, measured by the number of new advisers and new assets in 2018. Through the remainder of this year, we'll be executing on several growth plans for the business, including launching new products and other services for advisers and our clients.First Asset, our active ETF business had another strong quarter. Sales in Q1 were almost double of those in Q1 of 2017. We are maintaining a strong share in the active managed -- actively managed ETF market, even as more competitors enter the space. Last quarter, we announced our intention to integrate First Asset into CI by the end of Q2, including sales, marketing, product development and portfolio management. This project is proceeding very well and with our ETFs being supported by our larger sales force, we expect First Asset to continue to gain momentum in the broker and other channels.CI Institutional Asset Management posted excellent results, reporting higher growth and net sales in Q1. We said on the Q4 call that 2018 was setting up to be another solid year for our institutional business, and we still expect that to be the case. There is $0.25 billion of investments that have yet -- have been committed but is yet to be funded. In addition, we have been shortlisted for substantial number of potential new opportunities, and our list of RFPs is at an all-time high.Grant Samuel Fund (sic) [ Funds ] Management, or GSFM in Australia continues to meet our expectations. We had positive net sales in both its retail and institutional businesses in the first quarter. As I mentioned on the last call, one of the balances of this acquisition is the ability to offer CI portfolio managers in Australia and GSFM managers in Canada. At the end of 2017, GSFM launched a fund managed by CI Cambridge team into the retail and institutional channels in Australia. As well, we expect to bring one of their portfolio management teams, Munro Partners, to the Canadian market later this year. CI through GSFM has an ownership position in Monroe. And last evening, we learned they won best new emerging manager in Australia in the Australian market. We continue to be extremely impressed with the team at BBS Securities, and we're very pleased with the integration to date. Assets under administration and account openings have grown significantly since we've closed that transaction, in part because they are now part of the CI family but also because of their superior technology and product offerings. We are working to take advantage of many opportunities to leverage their knowledge and technology throughout CI, especially at Assante, Stonegate and CI private client. However, we can't forget that this is a viral and growing stand-alone business.Finally, our primary retail business, CI Investments. While our gross sale levels continues to be strong, this was a challenging quarter for our net redemptions standpoint. However, without making any excuses, the factors that contribute to this include: first, many of our portfolio management teams have taken a conservative approach to the equity markets, leading to less exposure to technology on a global basis, causing short-term underperformance compared to their -- to other growth -- to growth managers; second, continuing the focus mandate, equity balance and income on redemptions throughout the industry today. This is impacting some of our largest funds. Third, our closed block of business. Given our segregated fund business, not open to new sale, it will continue to be a drag on our retail net sales. And finally, the Sentry acquisition. Without a doubt, the Sentry acquisitions over the short term has had an effect on our business. The acquisition has created change and uncertainty for advisers, leading them to re-examine the business with CI and Sentry. Sentry was in redemptions when we acquired this business, and we expected this, and we assumed it is in all of the models that we did prior in the acquisition. We believe these are short-term issues, and Sentry continues, in our opinion, to look like a very good acquisition.[ Only ] there are very -- also, some very positive metrics, which confirm to what's been our current strategy, is producing results. Consider the following. As I said earlier, our current plans have very competitive, longer-term performance as shown by Morningstar. We continue to see very strong gross sales throughout CI, especially in our retail sales business, a very positive sign. And we're very encouraged by the number of new advisers buying CI products for the first time. We attribute this partly to the new relationships we have made during the -- as a result of the Sentry transaction. We remain very confident in our retail strategy and in our large retail sales team and management led by Roy Ratnavel.So in summary, we were successful in Q1 in executing our strategy so integrating the Sentry acquisition to continue to grow our business. Unfortunately, their success was overshadowed by 2 significant short-term challenges: our redemption in the retail sales and some performance issues with portfolio managers.I think these are also interconnected. We remain committed to our portfolio management teams, who have provided investors with exceptional long-term performance, and we're achieving the growth of CI assets in the past. And with regard to our sales -- retail sales team, as I said earlier, we remain confident in our current strategy and their people. In our operational parts of our business, we are focused on expense management and the prudent use of cash flow. We are investing, and we'll continue to invest in areas where we expect solid returns, including sales, technology, operations and distribution. We are positive with our position in the Canadian market and are focused on exceeding expectations of our investors, advisers, employees and shareholders. And finally, we're planning to change the buyback CI stock. We believe this is an excellent use of our cash flows today. And with that, I conclude my remarks, and we will be pleased to take any of your questions.
[Operator Instructions] Our first question is from Gary Ho from Desjardins.
First question, just going back to the SG&A here. I guess the BBS and Sentry inclusion and the annual comp increased, but you also mentioned technology spend. Can you elaborate what you are spending on specifically? And also, second part to that, is the 4% increase in SG&A a medium-term target that we should think about as kind of reinvestment in the business as well?
Gary, it's Doug. First off, yes, I'd say that, short- to medium-term target, I'd say, for 2018, as we're looking for, we do -- as Peter said, we still look for ways to find cost saving, but we are looking to reinvest in the business. I mentioned technology. And in specific, we have initiatives looking at our -- enhancing our website, our mobile access, and then we have longer-term initiatives looking at AI and Big Data as well as systems all throughout the company and the middle office and the back office. So there's quite a few things going on in the technology area.
Okay. And then second question is on the average management fee side. I guess there's a shift to more of a fee-based, and that put pressure on fees, but as well, you're gaining more assets on the institutional side and more of the redemptions on the retail side. What impact does that have on your fee compression? Are we still looking in that 3 to 5 basis points per year range?
Yes. And as we've seen over the past year, it was about 4 basis points drop in our net management fees. So 3 to 5 range, we -- unless we see some other reason to change that trajectory, that's what we expect.
Okay. And then just lastly, just quick one. It's on the Canadian retail of those $1.6 billion. Just wondering if you can break that down between the legacy, CI, First Assets and Sentry? Or not -- just kind of color between those 3 buckets would be good.
Gary, it's Peter. So I'm not going to get into the large detail, but I would certainly say is that we had redemptions in Sentry. Retail, we had redemptions in CI retail, and we were in net sales with First Asset.
The following question is from Geoff Kwan from RBC Capital Markets.
Peter, just wanted to confirm your comment earlier. So you're still sticking that you think, on the Canadian retail open products, that it be positive net sales on a monthly basis by the end of this year. Is that correct?
Yes. I think we will see improved sales by the end of the year. I mean, I'm not saying that we're going to be in net sales for the year. But I think that we will be in -- we will see positive sales monthly towards the end of the year.
Okay. Okay. And then, just -- I mean, given the flows. I mean, it sounds like everything's on track, despite maybe what we saw in Q1. Do you think that there is anything that -- say, on the sales and marketing side, whether or not spending a little bit more than you are right now might accelerate that return, or are you comfortable with kind of the plans on spending to get yourselves back to the black?
Well, I mean, we spend a lot of -- Geoff, we spent a lot of money already. And we've increased our wholesaling team by, probably, 30%? 25% to 30% in the last 1.5 years. We brought a large number of wholesalers over from Sentry. We had already done a -- quite a large growth plan the year before. We have reduced the territories by wholesalers. We've created a -- we've created a compensation model that's much different now. That's paid on sales. We've -- where -- we've created a prospecting program for our wholesalers, which is working out really well. So we are spending more even today. We're doing a -- we're on the road with our portfolio managers quite a lot. So no, I think we're spending a lot of money. And I'd add to that. We've also training our sales team, both the external sales team and our internal sales team more than we ever have done before. And we've -- finally, we've increased our management. We have individuals now that head our inside sales team. We have people that oversee the IIROC channel, the MFDA Sun Life. So we're very focused on our real core distribution channels to ensuring that we're doing everything we can. So yes, I'm quite confident in our strategy we have today, and I think we are investing more money today in sale than we ever have.
Okay. And then, when I take a look at the last 2 quarters so if I'm looking at Q4 and Q1, and I take your operating cash flow, take off CapEx, which you had in DSC in Q4 and then also after paying the dividend, so for those 2 quarters, I get to roughly about positive $30 million. And when I look at your share buybacks over the last 2 quarters, it's roughly about $300 million. So effectively kind of either using up $270 million in either cash or taking on some debts to do the share buyback. Is that the right math, or is there something -- a nuance that might give a different response?
It's -- yes, I'm not sure what the $30 million is. You said you subtracted CapEx?
So yes, I'm taking your operating cash flow. Taking off the CapEx, which isn't that much.
Right.
Taking off the working cap changes and the interest and then income taxes paid as well as the dividend. So getting more of a net, yes.
Yes. We don't subtract the working capital. We feel like that fluctuates with no changes. We calculate our free cash flow just by adding back -- previously adding back or deducting the sales commissions, and now it's just free cash flow, it's similar to the operating cash flow for work changes and working capital. But we look at it as -- at the level of buyback we're doing now, debt would go up by $80 million to $100 million a quarter.
Right. Okay. Okay, so that's helpful. And just one last thing with just -- It would be helpful, I guess, when you guys are putting your future quarters, if you're able to also include the net redemptions from the closed business in the press release, that would kind of make it easier for us to gauge kind of the total in aggregate. Now we're going to -- I know the issues that you talk about on the closed business.
Okay.
The following question is from Paul Holden from CIBC.
So maybe I'll just go back to the conversation on the share repurchases and the increase in debt. How high are you willing to take that net debt-to-EBITDA for share repurchases alone. Is it still 1.5x or are you willing to go to something higher?
Depending on the situation. I mean, we're very comfortable up to 1.5x net debt-to-EBITDA. Now if we went above that, we would have to have a very good reason or a good way to get back towards 1.5x, but we certainly and [ we will see ourself ] as mildly underleveraged at the moment though.
Understood. Okay. I'll try to get to -- And then, want to also circle back to an earlier -- on questioning around fee compression. So the average management fee is one way to look at it and another way to look at it, which I think, I guess, the way you more look at sort of fuel the net revenue capture rate. So average fee minus trailer fees. With your increasing mix towards institutional and fee-based, will that net revenue capture change significantly?
No. I mean, this -- the net revenue is really just -- I mean, it is the mix of institutional, it's the mix of ETF. It's the mix of retail mutual fund. We just take out the trailer fee as if everything we sold was -- on the mutual fund side, was Class F. So the change in that is really, unless we actually cut fees, it's really just the mix of the business.
Correct. So that's what I'm trying to get at. That 3 to 5 basis points per year is not a net negative, that's just a top line negative. Is that correct?
No because the top line may go down as we get more front-end business or -- I'm sorry, fee-based business and then...
Okay. Okay. So put another way, your margins on fee-based and your margins on institutional are lower than traditional Class A mutual funds?
No, the fee-based could be the same margin as traditional. Yes.
Okay. Okay. So the net revenue rate then will not change for mix. Okay. Last question. So when I think about the factors you highlighted that are influencing net redemptions in the Canadian retail, I would argue a lot of those factors -- or at least some of those factors are out of your control. And probably a matter of timing in terms of playing the market more conservatively for now. So then my question would be, given that case, why spend as much as you are on sales today? Like why not wait until the opportunity is more ripe to push hard on sales?
I don't think you can mark a time, the sort of a sales teams to spend and when not to spend. I mean, today, with the acquisition of Sentry, we had the opportunity of increasing number of wholesalers that we had and bring their talents to -- over to the company. The one thing I would say was sort of an anecdotal, but the sales team that we brought over, and the ones that are still with us are exceptional sales people that would have -- if we didn't keep them, they would have gone somewhere else. So you can't -- I don't think you can mark a time. We see that the value of the team, even today -- I mean, we have -- we're -- like I said earlier, we're seeing significant growth in new advisers that we never did business with before, which is positive. And that's only started in the last quarter since we really geared up this team. So we don't think you can sort of -- you can take your -- in terms of people, you can take your foot off the pedal and then step on the gas again. I just think that you got to be consistent. And we -- over 2 years ago, we're definitely under-resourced on the sales side. Today, I think we're properly resourced.
Our following question is from Tom MacKinnon from BMO Capital Markets.
It sounds like, with respect to the net outflows issue, especially given that you've got strong gross sales, I'm trying to square this with the fact that you talk about performance issues -- short-term performance issues. Or -- Why wouldn't that be impacting your gross sales? And so you're getting good gross sales despite the short-term performance issues, but you seem to be having more of a redemption issue here. So I'm just trying to marry these statements that you're making and determine really what's driving this continued net sales lead?
Tom, Neal Kerr here. I guess, addressing the trailing fund performance first, as we indicated, we've got a variety of managers that are defensibly positioned. We also have a fair amount of value style in our -- in some of our larger products as well as a Canadian bias in those products. So there are a number of funds that are $4 billion or $5 billion each in size that are Canadian-focused with a value tilt. And so those are generally out of favor across the industry, including at CI. So that's the outflow story. On the inflow story, we have an incredible number of funds today that have 4- and 5-star ratings from Morningstar. It's actually 50 funds at the end of Q1 that have those ratings across a whole variety asset classes. And we could look at 10 different asset classes and find at least one CI fund with a 5-star rating. So therefore, we've got a good product. It's available on a variety of platforms. And using an extensive sales team across all channels, we're continuing to drive gross sales.
And I'll just add to that. It's Roy Ratnavel, head of retail sales. In addition to what Neal -- the comments made by Neal and, as you heard from Peter earlier, that we'll have a profiting strategy within our sales team, so we're going to ask advisers who do not have any assets to CI, so the gross sales really coming from that segment of the client. The outflows coming from clients who have got us here through the balance funds and equity income fund that we have been popular for, for the last decade. And that's really the story here.
And how come you can't keep some of those balance and income, old CI advisers and have them flip to some of these newer, faster -- these newer growth funds?
We are capturing some of it. And we can capture all of them, sometimes when people make allocation to their portfolios. The convert of -- switch out of the product and then go into, perhaps, a different platforms as people's business model change and expectation changes. But for us, we are catching some of it, and we do know that. and -- But we are getting significant traction on some of the global and global fixed-income products.
And how long do you think you're going to -- we're going to continue to see a drag from some of these Canadian value funds?
I mean, who knows. I mean, I just -- I want -- I can't even answer that question. I mean, I think our portfolio managers are -- their performances is improving. I think there's still headwinds of a shift in asset classes, as we talked about before, from Canadian equity, balance and income to global. We see that. We're seeing traction in our -- as Roy said, in our prospecting and in new advisers coming to use CI. I can't answer it. I mean, I like to be -- have more clarity, but we're certainly seeing what we're focusing on in our Canadian retail business. We are seeing that the work that we're doing is working. So that's why optimistic. That's for me, as a CEO, it's quite -- I'm quite pleased with what I've seen. It's just going to take time.
Okay. And then one more question about the buyback. How much more room, Doug, do you think you might be able to have before you hit 1.5x net debt EBITDA? It looks like -- maybe, do you think you can continue at this pace for another 3 quarters and buying 5 million shares per quarter? And then you would hit that?
Obviously, it's dependent on our free cash flow each quarter, but yes, considering, at 1.1x, we can get to 1.5x in 3 or 4 quarters.
Okay. And then what? And then what do you do? Then it's not buying back stock anymore? Just bring the leverage down and then crank it up again?
Well, maybe, we don't buy back 5 million shares. We certainly still have a lot of free cash flow.
The following question is from Graham Ryding from TD Securities.
Maybe I could just clarify a couple of things. The SG&A growth, I think, in your slide, it says 5%, 2018, but I thought I heard your comment say 4%. Just maybe some clarity on what's the growth for this year?
Yes. I was just seeing if people were both listening and watching at the same time. It wasn't really an official test, but -- I'd say, we're trending pretty close to 4% right now. And we're certainly comfortable at -- in the 4% to 5% range and...
So call it 4.5%?
The issue is part of our spend is determined by the level of assets under management, so that the -- some of our PM costs are asset-dependent. So if our assets go up, we'd probably be closer to the 5%.
Okay. That works. The -- Just Sentry, you mentioned it was in redemptions before the acquisition closed. So obviously been in redemptions since then. I just -- Why are you confident that this is a short-term issue? Is it your investments in the sales and marketing? Or what is it that's giving you the confidence that this trend is going to reverse?
Well, I mean, we're seeing some signs that the redemption levels over at Sentry are stabilizing. So that's improving. I look at our entire business line. I don't look at Sentry versus CI versus whatever, I include them all. But I -- we do certainly break that out. So, yes, I think we're seeing some signs that the Sentry business as a stand-alone is leveling off and improving slightly. So that's where I see the confidence. That's why I get some confidence.
Okay. If I just make some assumptions about fund performance in April, looks like you had redemptions in April. Is that accurate?
Well, I would say that we are still at -- we remain in redemption, yes.
Okay. And then, your BBS general leverage of the technology there into your Assante and Stonegate channels. Can you give us some examples of what you're looking at on that front?
I mean, I don't really want to get into too much detail, but I mean, suffice it to say, that the technology that's there and throughout BBS is exactly what we were looking for internal -- or when -- before we bought it. So whether it's a separate account platform or even a back-office, it's there or will be there. There is a -- we were also -- it can also be the back-end of the global platform that we're just -- we're already -- it's not -- it can be and will be the back-office. So -- and then finally, we've got discretionary. I mean, we're building our discretionary platform. This will be our -- this will be the technology for our discretionary platform for Assante, Stonegate and private clients. So as you can see, for a little investment that we almost didn't buy because we didn't see it. At first, we didn't see the use. This is then a -- it's an extraordinary opportunity for it, one, I think, is going to have a tighter payback for long time.
Our following question is from Scott Chan from Canaccord Genuity.
Lot of questions on the capital and buybacks, but what about the other side in terms of dividend? How you think about dividend growth and acquisitions since you've been very busy on that front over the past 1.5 years?
Scott, so on the dividend question. I mean, as you know, we always review the dividend quarterly. We continue to believe the use of our cash flow today is better by buying back our stock. But that doesn't mean that, next quarter, we wouldn't reverse that and look at something different. But today -- as of today, we think the best use of our capital is our cash flow [indiscernible] is we're buying back our stock. And then the second question on acquisitions. There are a lot of things that are -- that we see on a daily basis, some of them, I just think more -- the investment bankers just bringing them in because they're hoping something will happen. But there's lots going on out there. Right now, we're very focused on the core part of our business today. And so we're not actively or aggressively looking for things in Canada or outside. But that doesn't mean that if something came to us that we saw that fit well into our business, that we wouldn't take a really -- a real keen interest. I mean, we've done 4 in 2.5 years, and I still believe all 4 of them are added value to the business in -- for various reasons. And we wouldn't stop that. We are -- we grew this business through acquisitions, and we don't plan to stop that. We're just -- I think that we're just not looking -- we're not looking at anything particular right now.
And just lastly, just on distribution last year, you talked about the IIROC channel, Sentry closing, potentially improve that distribution channel. Can you just give us an update on the progress there, some of the challenges and some of the things that you're trying to do to improve penetration within that channel?
Scott, it's Roy Ratnavel again. So as you know that the Sentry investments had a lot more IIROC-tilted business. And we -- one of the reasons for us to get into that is to really get access to those clients that we never had access to. And just by looking at some of the strategies we put in place, focus people on it and also product focus as well as the process that we put in to recruit new advisers to the business. And just looking at the trend line, the numbers are all higher on gross sales on those segment of the advisers, and we're also seeing some switch from some of the Sentry assets that were leaking out of CI before now just coming into our product. So those 2 things are very positive.
But with gross sales about 12% year-over-year, but if you exit Sentry last year, what was the organic growth rate?
So I'm going to ask it back to you. I don't know the exact number.
[Operator Instructions] Our next question is from Jack Barnes.
Jack Barnes, Samlyn Capital. I just want to follow-up on the net sales question. The April AUM update seemed to point to net redemptions that were a bit worse than what you saw in the first quarter. I think you have something like $800 million in the month if my math is right. So I guess 2 questions: one, could you confirm if that math is roughly right? And two, I know you talked about Sentry improving, but just given the fairly sharp pace in that redemptions, can you talk about all the factors and size the factors that you expect to drive the sharp improvement in net sales later this year?
Jack, I'll go into the second question because I -- you're going to have to remind me on the first one. But the second question, I just want to remind everybody that when we look at sales, we look at the business as a whole. So what I'm saying is that we expect to see better sales towards the end of the year for the entire business, not just Sentry or CI. And on the first question, again, on sales in the quarter, we're not going to -- we don't talk about the exact numbers until the quarter. However, I would say to you that, as we've already acknowledged, that redemption in our business continue.
So we have no further questions registered at this time. I would now like to turn the meeting back over to Mr. Anderson.
Okay. Well, thank you very much, everybody, for taking the time. And we look forward to our Q2 call in August. Thanks very much.
Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.