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AGF Management Limited Reports Third Quarter 2022 Financial Results

September 28, 2022 • Quarterly Reports/Dividends
  • Reported diluted earnings per share of $0.32
  • Mutual fund net sales of $51.0 million for the quarter
  • Announces intention to launch a substantial issuer bid
  • Announced quarterly dividend of $0.10 per share

AGF Management Limited (AGF or the Company) (TSX: AGF.B) today announced financial results for the third quarter ended August 31, 2022.

AGF reported total assets under management and fee-earning assets1 of $39.6 billion compared to $40.3 billion as at May 31, 2022 and $43.4 billion as at August 31, 2021. ”Through another quarter of heightened market uncertainty, we continued to deliver strong investment performance that can be attributed to our disciplined processes and focus on risk management and saw the benefits of our unique liquid alternative strategies,“ said Kevin McCreadie, Chief Executive Officer and Chief Investment Officer, AGF.

“Additionally, we have continued to execute against our strategic imperatives, while looking for opportunities to redeploy capital to deliver continued value to our shareholders and are committed to doing this by considering small acquisitions and partnerships, and returning value to our shareholders through funding share buybacks,” added McCreadie.

The Board has authorized AGF to use up to $40 million of cash in order to return capital to its shareholders through a substantial issuer bid made to all holders of AGF’s Class B non-voting shares (the “Offer”). The Offer may be at a premium to the then-current market price of the Company’s Class B non-voting shares. Holders of the Company’s Class A voting shares and insiders of AGF are not expected to participate in the Offer. Subject to market and other conditions, AGF anticipates that the terms of the Offer will be finalized in early October, with the Offer expected to be completed in November 2022.

AGF’s mutual fund gross sales were $594 million for the quarter compared to $790 million in the comparative period, while net sales were $51 million compared to $288 million in the comparative period. 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.

“As we marked our eighth consecutive quarter of mutual fund net sales, we focused on our strong performance, advancing discussions with key clients and partners and diversifying our relationships across channels,” said, Judy Goldring, President and Head of Global Distribution, AGF. “At the same time, we reconnected with our employees as we transitioned to our new home at CIBC SQUARE and committed to a hybrid model that supports work-life balance. We believe the energy we gain from collaboration and being together in person will serve as a catalyst for our continued success.”

AGF also announced today that Adrian Basaraba, Senior Vice President and Chief Financial Officer, has informed the Company of his decision to leave his position as AGF’s Chief Financial Officer to pursue other opportunities; and that Jenny Quinn has been appointed Interim Chief Financial Officer (CFO), effective September 29th, following AGF’s third quarter reporting cycle.

During his tenure, Adrian contributed to major advances in AGF’s business operations and the successful management of AGF’s capital and liquidity. Coming out of the pandemic with AGF’s finances in solid, stable position, and with strategic priorities progressing positively against plan, Mr. Basaraba felt the timing was right for him to make this career change. Mr. Basaraba and AGF have agreed that he will remain with the Company in an advisory capacity to facilitate the transition of his responsibilities through November 30, 2022.

Mr. Basaraba joined AGF in 2004 and was appointed Chief Financial Officer of AGF Management Limited in July 2016. Ms. Quinn has been with AGF for 15 years and currently serves as the organization’s Chief Accounting Officer. A search process for the new CFO has been initiated.

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 funds.

 

Key Business Highlights:

  • AGF appointed Cybele Negris, CEO and Co-Founder of Webnames.ca Inc., to the AGF Board of Directors effective September 27, 2022. As an accomplished tech entrepreneur and seasoned board member, she further diversifies the collective experience, expertise and perspective of AGF’s Board.
  • 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. This stands as a testament to the rigor of AGF’s responsible investing practices.
  • As of August, AGF has successfully onboarded its SMA strategies on Vestmark, SMArtX Advisory Solutions LLC and Envestnet, three of the leading U.S. turnkey asset management platforms.
  • As AGF’s business continues to evolve, AGF has launched an enhanced brand architecture to better reflect the diversity and reach of its three distinct business lines across the public and private markets: AGF Investments, AGF Private Capital and AGF Private Wealth.
  • During the quarter, AGF moved to its new head office at CIBC SQUARE. The state of the art building has provided employees with a flexible workspace, enhanced collaboration and greater communication, while continuing to advance the reduction of the firm’s office footprint by approximately 22%.
  • As at August 31, 2022, AGF outperformed its one-year and three-year investment targets with average percentiles of 39% (target 50%) and 34% (target 40%), respectively, with 1st percentile being best possible performance.
  • The firm remained active under its Normal Course Issuer Bid (NCIB). During the quarter, AGF repurchased 726,400 AGF.B shares for cancellation.
  • On September 27, 2022, AGF’s Board of Directors approved a quarterly dividend of $0.10 for shareholders of record on October 12, 2022.

 

Financial Highlights:

  • Management, advisory, administration fees and deferred sales charges were $105.6 million for the three months ended August 31, 2022, compared to $112.4 million in 2021. The decrease in revenue is attributable to a 3.9% decrease in average mutual fund assets under management as a result of market volatility.
  • Selling, general and administrative costs were $46.4 million for the three months ended August 31, 2022, compared to $50.1 million in 2021.
  • EBITDA before commissions for the three months ended August 31, 2022 was $33.2 million, compared to $37.5 million in the prior year comparative period.
  • Effective June 1, 2022, the elimination of the payment of upfront sales commissions, including deferred sales charge options, took effect. During the three and nine months ended August 31, 2022, AGF paid commissions of nil and $37.1 million, respectively.
  • Net income for the three months ended August 31, 2022 was $22.1 million ($0.32 diluted EPS), compared to $14.9 million ($0.21 diluted EPS) in the prior year comparative period. Diluted EPS in the quarter of $0.32 reflects the impact of the elimination of DSCs.

Three months ended Nine months ended
(in millions of Canadian dollars, except per share data) August 31, 2022 May 31, 2022 August 31, 2021 August 31, 2022 August 31, 2021
Income
      Management, advisory, administration fees and deferred sales charges  105.6  113.1  112.4  332.8  323.9
      Share of profit (loss) of joint ventures  —  (0.2)  2.2  (0.9)  3.1
      Other income from fee-earning arrangements  0.7  0.7  0.7  2.2  1.1
      Fair value adjustments and other income  6.2  3.9  7.8  20.7  11.7
Total Income  112.5  117.5  123.1  354.8  339.8
 
Selling, general and administrative  46.4  47.3  50.1  143.0  145.2
Deferred selling commissions  —  17.8  14.1  37.1  47.4
EBITDA before commissions1  33.2  35.4  37.5  108.5  92.2
EBITDA  33.2  17.6  23.4  71.4  44.8
Net income   22.1  10.1  14.9  45.1  25.5
Diluted earnings per share   0.32  0.14  0.21  0.64  0.35
Free Cash Flow1  20.6  12.3  21.5  46.2  42.4
Dividends per share  0.10  0.10  0.09  0.29  0.25

 

(end of period) Three months ended
(in millions of Canadian dollars) August 31, 2022 May 31, 2022 February 28, 2022 November 30, 2021 August 31, 2021
Mutual fund assets under management (AUM)2  22,496  22,849  23,625  24,006  23,792
Institutional, sub-advisory and ETF accounts AUM  7,932  8,114  8,751  9,082  10,041
Total AGF Investments AUM  30,428  30,963  32,376  33,088  33,833
AGF Private Wealth AUM  7,000  7,204  7,410  7,366  7,334
AGF Private Capital AUM  60  58  69  73  99
Total AUM  37,488  38,225  39,855  40,527  41,266
AGF Private Capital fee-earning assets3  2,067  2,052  2,100  2,108  2,094
Total AUM and fee-earning assets3  39,555  40,277  41,955  42,635  43,360
 
Net mutual fund sales2  51  132  330  352  288
Average daily mutual fund AUM2  22,207  23,183  24,075  23,896  23,104

1 EBITDA before commissions (earnings before interest, taxes, depreciation, amortization and deferred selling commissions), adjusted EBITDA before commissions, adjusted net income, adjusted diluted earnings per share 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.

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.

 

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/vxofe4c8. Alternatively, the call can be accessed toll-free in Canada by dialing 1 (866) 455-3403 (PIN: 96087375#), or in the United States by dialing 1 (866) 374-5140 (PIN: 96087375#).

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 spanning on the ground in North America, Europe and Asia. With approximately $40 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 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, and its intention to launch a substantial issuer bid. 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 2021 Annual MD&A.

MEDIA
Media Contact

Amanda Marchment
Director, Corporate Communications
Phone: 416-865-4160
Email: amanda.marchment@agf.com

Karrie Van Belle
Chief Marketing & Innovation Officer
Phone: 416-865-4320

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