Mr. Kish Kapoor reports

RF CAPITAL ANNOUNCES CEO & CFO SUCCESSION PLAN & REPORTS SECOND QUARTER 2024 RESULTS

RF Capital Group Inc. has arranged an executive succession plan that will see president and chief executive officer Kish Kapoor step down as of Oct. 1, after having overseen the company's successful transformation and implementation of a new growth strategy. He will be succeeded by chief operating officer Dave Kelly, a respected and experienced leader in the wealth management industry that Mr. Kapoor attracted to the firm as part of his succession plan. In addition, chief financial officer Tim Wilson has made the decision to depart for another opportunity in the financial services sector. Egon Zehnder is conducting the executive search for a new CFO and can be contacted by e-mail at RFCapitalCFO@EgonZehnder.com.

The company had strong results with revenue of $91.2-million in the second quarter of 2024, up 3 per cent as compared with the prior year. The increase in revenue was driven by a 4-per-cent growth in assets under administration (AUA), as strong equity markets and recruiting over the past 12 months offset adviser attrition. In the most recent quarter, the company recruited five adviser teams, representing $970-million of expected AUA. With this revenue growth and with a modest increase in adjusted operating expenses, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was up 1 per cent.

For more details on the company's results, please refer to its MD&A (management's discussion and analysis) and unaudited interim condensed consolidated financial statements for the period ending June 30, 2024. For more information on the succession plan, please refer to the message from the president and CEO in the quarterly report to shareholders for the same period.

CEO and CFO succession plan:

• Mr. Kapoor to step down as president and CEO on Oct. 1, 2024, having led the successful transformation of the company and implemented a new growth strategy. Mr. Kapoor will be succeeded by Mr. Kelly;
• Mr. Kelly is an accomplished leader in the financial services industry, whom Mr. Kapoor inspired to join the company in January after a 25-year career in progressively senior roles in the industry (see the announcement of Mr. Kelly's hiring on the company website);
• Mr. Kapoor will continue to serve on the board of RF Capital and Richardson Financial Group Ltd.;
• Mr. Wilson has decided to depart in the third quarter (Q3) to become the CFO of a privately held bank and trust company. Commencement of a search for his successor is under way.

Q2 (second quarter) 2024 financial highlights (as compared with the Q2 2023)

AUA and revenue:

• Ending AUA increased to $37.1-billion, up 4 per cent or $1.3-billion, driven by strong equity markets and recruiting;
• Total revenue increased 3 per cent to $91.2-million, led by a 5-per-cent increase in fee revenue.

Profitability and cash flow:

• Gross margin increased 4 per cent to $53.6-million, in line with the increase in revenue;
• Net income from continuing operations was $2.7-million, compared with a $1.4-million loss;
• Adjusted EBITDA of $15.1-million was $100,000;
• Cash from operating activities was $5.2-million, as compared with $25.7-million;
• Free cash flow available for growth declined 1 per cent to $8.6-million;
• Free cash flow was down by $5.2-million to $2.0-million, due to higher recruiting payments.

Balance sheet:

• Net working capital was $92.3-million, effectively unchanged.

Mr. Kapoor commented on the succession plan: "With the company having completed its transformation, and with the strengthened foundations and strategy for growth now in place, the time has come to make way for a new leader who will take the business forward. When I hired Dave, I knew his deep understanding of our business, his focus on execution and his strategic insight would make him perfectly suited to lead our firm toward our goals of being the leading independent wealth management firm in the country, and the destination of choice for Canada's top advisers and their clients."

Mr. Kapoor continued: "I would also like to say thank you on behalf of everyone at the company to Tim Wilson, whose leadership, sage advice and hard work have been a vital part of all we have accomplished in recent years. We all wish Tim the very best as he departs to take on an exciting new role in the financial services sector."

Don Wright, chairman of the RF Capital board, commented: "On behalf of the board and everyone at our company, I want to express our tremendous gratitude to Kish for his tireless work and dedication. He has led the transformation of our business to ready it for further growth, created a stronger and more entrepreneurial culture, brought unmatched enthusiasm and energy to the job, and recruited his successor. We also want to thank Tim for all he has done and wish him every success in his new role."

Mr. Wright continued, "Dave is a talented and proven leader in the wealth management industry and, since Kish inspired him to join the company earlier this year, he has demonstrated that he is the right choice to deliver on our growth strategy and unlock the intrinsic value of the company."

Hartley T. Richardson, executive chair, president and CEO of James Richardson & Sons Ltd., commented: "I want to thank Kish for his contributions as president and CEO of RF Capital Group, and his success at positioning Richardson Wealth as the leading independent investment wealth management firm in Canada, including inviting Dave Kelly to join Richardson Wealth earlier this year as part of his succession plan. As a member of both the board of RF Capital and the team at Richardson Financial Group, I am delighted that Kish will continue to support us as Dave Kelly leads Richardson Wealth to new levels of excellence and success."

Mr. Kelly commented: "I'm honoured to have the opportunity to lead this outstanding organization forward, building on the tremendous hard work done by Kish and the team to transform the company and ready it for even more success and growth. Since joining the company in January, what I have seen has only served to drive home what I already knew -- that this is a talented team and a great platform, and that we can accomplish incredible things as the leading independent wealth management firm in Canada."

Mr. Kapoor added the following comments on the company's financial results: "We continue to build momentum in 2024, with AUA reaching $37.1-billion at the end of Q2 and growing to $38.0-billion at the time of the release. Our growth was supported by recruiting efforts, as we on boarded five new teams, the highest number since Q4 2021. On the shoulders of this AUA growth, we experienced a 5-per-cent increase in recurring fee-based revenue versus last year."

Outlook and key performance drivers

The company's view with respect to the drivers of its financial performance and profitability in 2024 is as follows:

• AUA is highly correlated with equity market movements but will also be supported by growth in the company's existing advisers' client assets and by recruiting. RF Capital expects to maintain a high pace of recruiting over the coming quarters.
• Interest revenue is likely to follow prime rate trends, which economists expect to continue declining from current levels throughout the year.
• Transaction activity underlying RF Capital's corporate finance revenue could rebound later this year but is more likely than not to remain subdued.
• Although RF Capital expects inflation to continue at elevated rates, the company is committed to finding operating cost savings and efficiencies in its business as a partial offset.
• Free cash flow for growth is expected to be deployed toward adviser recruitment.

Preferred share dividend

On July 31, 2024, the board of directors approved a cash dividend of 23.3313 cents per Series B preferred share for a total of $1,073, payable on Sept. 27, 2024, to preferred shareholders of record on Sept. 13, 2024.

Q2 2024 conference call

A conference call and live audio webcast to discuss RF Capital's second quarter 2024 financial results will be held on Thursday, Aug. 1, 2024, at 10 a.m. EST. Interested parties are invited to access the conference call on a listen-only basis by dialling 416-340-2217 or 1-800-806-5484 (toll-free), and entering participant passcode 3676882 followed by the pound key, or via live audio webcast on the Richardson Wealth website. A recording of the conference call will be available until Wednesday, Sept. 4, 2024, by dialling 905-694-9451 or 1-800-408-3053, and entering access code 8773599 followed by the pound key. The audio webcast will be archived on the Richardson Wealth website.

Select financial information

An attached table presents the company's financial results for Q2 2024, Q1 (first quarter) 2024 and Q2 2023.

Quarterly results

An attached table presents selected quarterly financial information for the company's eight most recently completed financial quarters.

About RF Capital Group Inc.

RF Capital is a Toronto Stock Exchange-listed wealth management-focused company. Operating under the Richardson Wealth brand, the company is one of the largest independent wealth management firms in Canada with $37.1-billion in assets under administration (as of June 30, 2024) and 22 offices across the country. The firm's adviser teams are focused exclusively on providing strategic wealth advice and innovative investment solutions customized for high-net-worth or ultrahigh-net-worth families and entrepreneurs. The company is committed to maintaining exceptional fiduciary standards and has earned certification -- determined annually -- from the Centre for Fiduciary Excellence for its separately managed and portfolio management account platforms. Richardson Wealth has also been recognized as a Great Place to Work, a Best Workplace for Women, a Best Workplace in Canada and Ontario, and a Best Workplace for Mental Wellness, for Financial Services and Insurance, and for Hybrid Work.