AGF Management Limited Reports Third Quarter 2023 Financial Results
TORONTO, Sept. 27, 2023 (GLOBE NEWSWIRE) —
- Reported quarterly diluted earnings per share of $0.34
- AGF reported mutual fund net redemptions of $151 million
- AGF saw growth of 43% in its ETFs and SMA AUM year over year
- Quarterly dividend of $0.11 per share
AGF Management Limited (AGF or the Company) (TSX: AGF.B) today announced financial results for the third quarter ended August 31, 2023.
AGF reported total assets under management and fee-earning assets1 of $42.3 billion compared to $41.2 billion as at May 31, 2023 and $39.6 billion as at August 31, 2022.
“We continue to see the results of implementing our long-term strategic plan to diversify our business across asset classes and client channels allowing us to persevere through different market cycles,” said Kevin McCreadie, Chief Executive Officer and Chief Investment Officer, AGF. “Our flows continue to exceed the industry at a time of heightened market volatility and against a backdrop where investors are feeling pressure due to higher inflation and higher interest rates.”
AGF’s mutual fund gross sales were $633 million for the quarter compared to $594 million in the comparative period. Mutual fund net redemptions were $151 million compared to sales of $51 million in the comparative period. AGF reported ETFs and SMA AUM of $1.3 billion as at August 31, 2023 as compared to $0.9 billion in the comparative period.
“Key to our continued success during this time of market uncertainty is the diversification of our product lineup,” said Judy Goldring, President and Head of Global Distribution, AGF. “As our clients embrace different ways of accessing our investment capabilities, we are seeing the benefits of our vehicle agnostic approach in the form of consistent, strong growth in separately managed accounts both here in Canada as well as in the U.S.”
Key Business Highlights:
- In August, AGF Investments Inc. expanded its lineup with the launch of AGF Enhanced U.S. Equity Income Fund, which is available as a mutual fund with an ETF series option. As the firm takes a more vehicle agnostic approach, this is the first in a series of strategies expected to launch or to be made available in a mutual fund and ETF.
- AGF continued to experience a better than industry redemption rate of 13% in Canadian mutual funds, compared to the industry average of 15% for IFIC reporting firms.2
- The firm celebrated 55 years of AGF Management Limited’s stock being listed on the TSX with a Market Open event at the TMX. This longevity is a testament to AGF’s history of innovation, a disciplined investment approach and an unwavering commitment to our clients.
- AGF International Advisors Company Limited, a subsidiary of AGF, was once again accepted as a signatory to the UK Stewardship Code, a best-practice benchmark in investment stewardship.
- Judy Goldring has been named Chair of the Investment Funds Institute of Canada (IFIC). In this role, she leads an experienced Board that provides oversight and guidance to IFIC as it carries out its important advocacy work as the voice of Canada’s investment funds industry.
1 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 Long-term mutual funds in the Canadian mutual fund industry on a trailing-twelve-months basis as of June 2023. Source: IFIC and Investor Economics.
Financial Highlights:
- EBITDA for the three months ended August 31, 2023, was $33.8 million, compared to $33.2 million in the prior year comparative period.
- Net management, advisory and administration fees were $73.8 million for the three months ended August 31, 2023, compared to $70.9 million for the comparative prior year period. Net management, advisory and administration fees are directly related to our AUM levels, the proportion of AUM invested in various strategies (i.e., equity fund vs. fixed income fund) and commission fee structures (i.e., fee-based, front-end, or deferred sales commission basis).
- Revenue from Private Capital for the three months ended August 31, 2023, was $7.3 million, compared to $6.6 million for the comparative prior year period. Of the $7.3 million, $2.5 million was generated from AGF’s interest in Private Capital Managers and $4.8 million was generated from AGF’s investment in Private Capital long-term investments, compared to $0.7 million and $5.9 million in the comparative prior year period.
- Selling, general and administrative costs were $50.2 million for the three months ended August 31, 2023, compared to $46.4 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.
- Net income for the three months ended August 31, 2023, was $23.0 million ($0.34 diluted EPS), compared to $22.1 million ($0.32 diluted EPS) in the prior year comparative period.
| Three months ended | Nine months ended | ||||||||||||||||||
| (in millions of Canadian dollars, | August 31, | May 31, | August 31, | August 31, | August 31, | ||||||||||||||
| except per share data) | 2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Revenues | |||||||||||||||||||
| Management, advisory and administration fees | $ | 107.4 | $ | 109.8 | $ | 103.8 | $ | 324.0 | $ | 327.4 | |||||||||
| Trailing commissions and investment advisory fees | (33.6 | ) | (34.1 | ) | (32.9 | ) | (101.5 | ) | (103.3 | ) | |||||||||
| Net management, advisory and administration fees1 | $ | 73.8 | $ | 75.7 | $ | 70.9 | $ | 222.5 | $ | 224.1 | |||||||||
| Deferred sales charges | 1.8 | 2.1 | 1.8 | 5.7 | 5.4 | ||||||||||||||
| Revenue from Private Capital1 | 7.3 | 18.0 | 6.6 | 29.4 | 19.6 | ||||||||||||||
| Other revenue1 | 1.1 | – | 0.3 | 2.4 | 2.4 | ||||||||||||||
| Total net revenue1 | 84.0 | 95.8 | 79.6 | 260.0 | 251.5 | ||||||||||||||
| Selling, general and administrative | 50.2 | 53.0 | 46.4 | 156.2 | 143.0 | ||||||||||||||
| Deferred selling commissions | – | – | – | – | 37.1 | ||||||||||||||
| EBITDA before commissions1 | 33.8 | 42.8 | 33.2 | 103.8 | 108.5 | ||||||||||||||
| EBITDA1 | 33.8 | 42.8 | 33.2 | 103.8 | 71.4 | ||||||||||||||
| Net income | 23.0 | 30.3 | 22.1 | 70.9 | 45.1 | ||||||||||||||
| Diluted earnings per share | 0.34 | 0.45 | 0.32 | 1.05 | 0.64 | ||||||||||||||
| Free cash flow1 | 23.0 | 19.8 | 20.6 | 62.1 | 46.2 | ||||||||||||||
| Dividends per share | 0.11 | 0.11 | 0.10 | 0.32 | 0.29 | ||||||||||||||
| (end of period) | Three months ended | ||||||||||||||||||
| August 31, | May 31, | February 28, | November 30, | August 31, | |||||||||||||||
| (in millions of Canadian dollars) | 2023 | 2023 | 2023 | 2022 | 2022 | ||||||||||||||
| Mutual fund assets under management (AUM)2 | $ | 24,377 | $ | 23,631 | $ | 24,029 | $ | 23,898 | $ | 22,496 | |||||||||
| ETFs and SMA AUM | 1,332 | 1,400 | 1,394 | 1,236 | 930 | ||||||||||||||
| Segregated accounts and sub-advisory AUM | 7,058 | 6,876 | 7,045 | 7,204 | 6,930 | ||||||||||||||
| Total AGF Investments AUM | 32,767 | 31,907 | 32,468 | 32,338 | 30,356 | ||||||||||||||
| AGF Private Wealth AUM | 7,360 | 7,162 | 7,324 | 7,349 | 7,072 | ||||||||||||||
| AGF Private Capital AUM | 42 | 48 | 54 | 55 | 60 | ||||||||||||||
| Total AUM | $ | 40,169 | $ | 39,117 | $ | 39,846 | $ | 39,742 | $ | 37,488 | |||||||||
| AGF Private Capital fee-earning assets3 | 2,090 | 2,087 | 2,082 | 2,077 | 2,067 | ||||||||||||||
| Total AUM and fee-earning assets3 | $ | 42,259 | $ | 41,204 | $ | 41,928 | $ | 41,819 | $ | 39,555 | |||||||||
| Net mutual fund sales2 | (151 | ) | 77 | 221 | 251 | 51 | |||||||||||||
| Average daily mutual fund AUM2 | 24,168 | 24,017 | 23,782 | 22,504 | 22,207 | ||||||||||||||
1 Net management, advisory and administration fees, revenue from Private Capital, other revenue, 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 third quarter ended August 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/zwqr45mo. 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. Our companies deliver excellence in investing in the public and private markets through 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 across its businesses. The firm’s collective 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 $42 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.
Commissions, trailing commissions, management fees and expenses all may be associated with investment fund investments. Please read the prospectus before investing. Investment funds are not guaranteed, their values change frequently, and past performance may not be repeated.
AGF Management Limited shareholders, analysts and media, please contact:
Courtney Learmont
Vice-President, Finance
647-253-6804, 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.
