AGF Management Limited (AGF or the Company) (TSX: AGF.B) today
announced financial results for the second quarter ended May 31,
2023.
AGF reported total assets under management and
fee-earning assets1 of $41.2 billion compared
to $41.9 billion as at February 28, 2023 and $40.3
billion as at May 31, 2022.
“Today we are seeing the results of our
collective teams’ efforts and we have made significant progress
against our strategic imperatives,” said Kevin McCreadie, Chief
Executive Officer and Chief Investment Officer, AGF. “We remain
focused on the continued diversification of our business including
the build out of our private markets platform, AGF Private Capital,
and the onboarding of new clients across all channels.”
AGF’s mutual fund gross sales were $819 million
for the quarter compared to $818 million in the comparative period.
Mutual fund net sales were $77 million compared to $132 million in
the comparative period, marking the 11th consecutive quarter of
positive net sales. AGF’s sales have continued to outpace the
industry. During the quarter, the industry2 reported net
redemptions, while AGF mutual funds remained in net sales.
“Given current market volatility and industry
pace, we are pleased with the continued success of our sales
strategy,” said Judy Goldring, President and Head of Global
Distribution, AGF. “The solid execution of our sales strategy has
allowed us to diversify and expand our client base and focus on
evolving our product offerings and varying product structures to
provide access to our investment capabilities in multiple ways to
meet their unique needs.”
“We continue to take a thoughtful approach to
expense management, focusing on maintaining core expenses while
also recognizing the importance of investing in our strategic
growth areas including rewarding employees who contribute to the
acceleration of our sales strategy and deliver investment
outperformance, “added McCreadie.
Key Business Highlights:
- AGF announced the appointment of
industry veteran Ken Tsang to the position of Chief Financial
Officer. He is a respected and seasoned leader with nearly 30
years of experience as a strategic finance and corporate
development leader in Financial Services.
- As part of an ongoing product
review and AGF’s commitment to ensuring its lineup is responsive to
market trends and regulatory changes, while also delivering
competitive pricing, AGF Investments Inc. announced a host of
product-related updates to its Canadian lineup, including selective
pricing changes, preliminary prospectus filings for new funds and
select fund/series closures.
- AGF’s separately managed accounts (SMA) business continued to
gain momentum over the quarter as the firm onboarded a sustainable
investment strategy onto the U.S. SMA platform of a large global
wealth management firm.
- The firm relocated its Boston
office to 99 High Street. The expanded space will deliver the same
seamless in-office and at-home working experience offered to
employees at CIBC SQUARE and AGF’s other locations while supporting
the continued build-out of AGF’s U.S. business.
Financial Highlights:
- Total net revenue was $95.8 million
for the three months ended May 31, 2023, compared to $82.7 million
in the prior year. The increase was influenced by higher income on
Private Capital long-term investments, which can be variable
quarter to quarter and impacted by the timing of monetizations and
cash distributions.
- Selling, general and administrative
costs were $53.0 million for the three months ended May 31, 2023,
compared to $47.3 million in 2022. The year-over-year increase in
SG&A was impacted by higher incentive compensation as a result
of our track record of investment outperformance and the successful
execution of our sales strategy, which is to increase our presence
in the investment dealer channel. In addition, the increase
incorporates strategic investments made into the business to
support our growth plan, including Private Capital, as well as
increases driven by the market environment. AGF is committed
to being an employer of choice, which means looking at responsible
practices and initiatives to attract, develop and reward
employees.
- EBITDA before commissions for the
three months ended May 31, 2023, was $42.8 million, compared to
$35.4 million in the prior year comparative period.
- Net income for the three months
ended May 31, 2023, was $30.3 million ($0.45 diluted EPS), compared
to $10.1 million ($0.14 diluted EPS) in the prior year
comparative period.
1 |
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Fee-earning assets represents assets in which AGF has carried
interest ownership and earns recurring fees but does not have
ownership interest in the managers. |
2 |
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Total long-term mutual funds in
the Canadian mutual funds industry per Investment Funds Institute
of Canada (IFIC). |
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Three months ended |
Six months ended |
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May 31, |
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February 28, |
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May 31, |
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May 31, |
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May 31, |
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(in
millions of Canadian dollars, except per share data) |
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2023 |
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2023 |
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2022 |
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2023 |
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2022 |
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Revenues |
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Management, advisory and administration fees |
$ |
109.8 |
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$ |
106.8 |
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$ |
111.0 |
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$ |
216.6 |
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$ |
223.6 |
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Trailing commissions and investment advisory fees |
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(34.1) |
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(33.8) |
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(34.8) |
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(67.9) |
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(70.4) |
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Net management, advisory and administration fees1 |
$ |
75.7 |
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$ |
73.0 |
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$ |
76.2 |
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$ |
148.7 |
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$ |
153.2 |
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Deferred sales charges |
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2.1 |
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1.8 |
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2.1 |
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3.9 |
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3.6 |
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Share of profit (loss) of joint ventures |
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0.8 |
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0.3 |
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(0.2) |
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1.1 |
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(0.8) |
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Other income from fee-earning arrangements |
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0.9 |
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0.7 |
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0.7 |
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1.6 |
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1.5 |
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Fair value adjustments and other income |
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16.3 |
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4.3 |
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3.9 |
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20.6 |
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14.5 |
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Total net revenue1 |
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95.8 |
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80.1 |
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82.7 |
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175.9 |
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172.0 |
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Selling, general and
administrative |
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53.0 |
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53.0 |
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47.3 |
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106.0 |
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96.6 |
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Deferred selling
commissions |
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– |
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– |
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17.8 |
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– |
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37.1 |
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EBITDA before
commissions1 |
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42.8 |
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27.1 |
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35.4 |
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69.9 |
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75.4 |
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EBITDA1 |
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42.8 |
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27.1 |
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17.6 |
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69.9 |
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38.3 |
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Net income |
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30.3 |
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17.6 |
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10.1 |
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47.9 |
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23.0 |
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Diluted earnings per
share |
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0.45 |
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0.26 |
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0.14 |
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0.71 |
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0.32 |
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Free cash flow1 |
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19.8 |
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19.3 |
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12.3 |
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39.1 |
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25.6 |
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Dividends per share |
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0.11 |
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0.10 |
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0.10 |
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0.21 |
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0.19 |
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(end of period) |
Three months ended |
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May 31, |
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February 28, |
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November 30, |
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August 31, |
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May 31, |
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(in
millions of Canadian dollars) |
|
2023 |
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2023 |
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2022 |
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2022 |
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2022 |
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Mutual fund assets under
management (AUM)2 |
$ |
23,631 |
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$ |
24,029 |
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$ |
23,898 |
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$ |
22,496 |
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$ |
22,849 |
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Institutional, sub-advisory and ETF accounts AUM |
|
8,276 |
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8,439 |
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8,440 |
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7,860 |
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8,039 |
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Total AGF Investments AUM |
|
31,907 |
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|
32,468 |
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32,338 |
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30,356 |
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30,888 |
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AGF Private Wealth AUM |
|
7,162 |
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7,324 |
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7,349 |
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|
7,072 |
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|
7,279 |
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AGF
Private Capital AUM |
|
48 |
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|
54 |
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|
55 |
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|
60 |
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|
58 |
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Total AUM |
$ |
39,117 |
|
$ |
39,846 |
|
$ |
39,742 |
|
$ |
37,488 |
|
$ |
38,225 |
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AGF
Private Capital fee-earning assets3 |
|
2,087 |
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|
2,082 |
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|
2,077 |
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|
2,067 |
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|
2,052 |
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Total AUM and fee-earning
assets3 |
$ |
41,204 |
|
$ |
41,928 |
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$ |
41,819 |
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$ |
39,555 |
|
$ |
40,277 |
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Net mutual fund sales2 |
|
77 |
|
|
221 |
|
|
251 |
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|
51 |
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|
132 |
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Average
daily mutual fund AUM2 |
|
24,017 |
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|
23,782 |
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|
22,504 |
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|
22,207 |
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|
23,183 |
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1 |
|
Net management, advisory and
administration fees, total net revenue, EBITDA before commissions,
EBITDA, and free cash flow are not standardized measures prescribed
by IFRS. The Company utilizes non-IFRS measures to assess our
overall performance and facilitate a comparison of quarterly and
full-year results from period to period. They allow us to assess
our investment management business without the impact of
non-operational items. These non-IFRS measures may not be
comparable with similar measures presented by other companies.
These non-IFRS measures and reconciliations to IFRS, where
necessary, are included in the Management’s Discussion and Analysis
available at www.agf.com. |
2 |
|
Mutual fund AUM includes retail
AUM, pooled fund AUM and institutional client AUM invested in
customized series offered within mutual funds. |
3 |
|
Fee-earning assets represents
assets in which AGF has carried interest ownership and earns
recurring fees but does not have ownership interest in the
managers. |
For further information and detailed financial
statements for the second quarter ended May 31, 2023, including
Management’s Discussion and Analysis, which contains discussions of
non-IFRS measures, please refer to AGF’s website at www.agf.com
under ‘About AGF’ and ‘Investor Relations’ and at
www.sedar.com.
Conference Call
AGF will host a conference call to review its
earnings results today at 11 a.m. ET.
The live audio webcast with supporting materials
will be available in the Investor Relations section of AGF’s
website at www.agf.com or
at https://edge.media-server.com/mmc/p/wpgusrjc.
Alternatively, the call can be accessed over the phone
by registering here or in the Investor Relations section
of AGF’s website at www.agf.com, to receive the dial-in
numbers and unique PIN.
A complete archive of this discussion along with
supporting materials will be available at the same webcast address
within 24 hours of the end of the conference call.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is
an independent and globally diverse asset management firm
delivering excellence in investing in the public and private
markets through its three distinct business lines: AGF Investments,
AGF Private Capital and AGF Private Wealth.
AGF brings a disciplined approach focused on
providing an exceptional client experience and incorporating sound
responsible and sustainable practices. The firm’s investment
solutions, driven by its fundamental, quantitative and private
investing capabilities, extends globally to a wide range of
clients, from financial advisors and their clients to high-net
worth and institutional investors including pension plans,
corporate plans, sovereign wealth funds, endowments and
foundations.
Headquartered in Toronto, Canada, AGF has
investment operations and client servicing teams on the ground in
North America and Europe. With over $41 billion in total assets
under management and fee-earning assets, AGF serves more than
800,000 investors. AGF trades on the Toronto Stock Exchange under
the symbol AGF.B.
AGF Management Limited shareholders, analysts and media,
please contact:
Courtney LearmontVice-President,
Finance647-253-6804, InvestorRelations@agf.com
Caution Regarding Forward-Looking
Statements
This press release includes forward-looking
statements about the Company, including its business operations,
strategy and expected financial performance and condition.
Forward-looking statements include statements that are predictive
in nature, depend upon or refer to future events or conditions, or
include words such as ‘expects,’ ‘estimates,’ ‘anticipates,’
‘intends,’ ‘plans,’ ‘believes’ or negative versions thereof and
similar expressions, or future or conditional verbs such as ‘may,’
‘will,’ ‘should,’ ‘would’ and ‘could.’ In addition, any statement
that may be made concerning future financial performance (including
income, revenues, earnings or growth rates), ongoing business
strategies or prospects, fund performance, and possible future
action on our part, is also a forward-looking statement.
Forward-looking statements are based on certain factors and
assumptions, including expected growth, results of operations,
business prospects, business performance and opportunities. While
we consider these factors and assumptions to be reasonable based on
information currently available, they may prove to be incorrect.
Forward-looking statements are based on current expectations and
projections about future events and are inherently subject to,
among other things, risks, uncertainties and assumptions about our
operations, economic factors and the financial services industry
generally. They are not guarantees of future performance, and
actual events and results could differ materially from those
expressed or implied by forward-looking statements made by us due
to, but not limited to, important risk factors such as level of
assets under our management, volume of sales and redemptions of our
investment products, performance of our investment funds and of our
investment managers and advisors, client-driven asset allocation
decisions, pipeline, competitive fee levels for investment
management products and administration, and competitive dealer
compensation levels and cost efficiency in our investment
management operations, as well as general economic, political and
market factors in North America and internationally, interest and
foreign exchange rates, global equity and capital markets, business
competition, taxation, changes in government regulations,
unexpected judicial or regulatory proceedings, technological
changes, cybersecurity, the possible effects of war or terrorist
activities, outbreaks of disease or illness that affect local,
national or international economies (such as COVID-19), natural
disasters and disruptions to public infrastructure, such as
transportation, communications, power or water supply or other
catastrophic events, and our ability to complete strategic
transactions and integrate acquisitions, and attract and retain key
personnel. We caution that the foregoing list is not exhaustive.
The reader is cautioned to consider these and other factors
carefully and not place undue reliance on forward-looking
statements. Other than specifically required by applicable laws, we
are under no obligation (and expressly disclaim any such
obligation) to update or alter the forward-looking statements,
whether as a result of new information, future events or otherwise.
For a more complete discussion of the risk factors that may impact
actual results, please refer to the ‘Risk Factors and Management of
Risk’ section of the 2022 Annual MD&A.
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