- Reported diluted earnings per share of $0.21
- Mutual fund gross sales of $790 million for the third quarter of 2021, an improvement of 61% year-over-year
- Mutual fund net sales of $288 million for the quarter
- Total assets under management and fee-earning assets1 of $43.4 billion
AGF Management Limited (AGF or the Company) (TSX: AGF.B) today announced financial results for the third quarter ended August 31, 2021.
AGF reported total assets under management and fee-earning assets1 of $43.4 billion compared to $36.5 billion as at August 31, 2020.
“As we head into the final months of 2021, we are well-positioned to execute against our strategic priorities and will aim to continue to gain momentum with a focus on increasing sales, evolving our client-base and looking for opportunities to diversify our business,” said Kevin McCreadie, Chief Executive Officer and Chief Investment Officer, AGF.
“Despite the challenges of the pandemic, this year we have made strides expanding into the private alternatives space and are seeing the results of growing interest into our fee-based series and separately managed accounts,” added McCreadie.
AGF’s mutual funds net sales improved $310 million year-over-year, with total net sales of $288 million in Q3 2021, compared to net redemptions of $22 million in Q3 2020. Excluding net flows from institutional clients invested in mutual funds, retail mutual fund net sales were $288 million for the quarter compared to net redemptions of $4 million in the comparative period of 2020. AGF mutual fund gross sales for the quarter totaled $790 million, a 61% improvement over prior year.
Mutual fund sales momentum continued into September with AGF reporting mutual fund net sales of $80 million as at September 24, 2021 compared to net redemptions of $11 million for the same time last year. Mutual fund gross sales were up 51% year-over-year.
“Delivering on our strategic growth strategy, this quarter we deployed capital and diversified partnerships within our private alternatives business,” said Adrian Basaraba, Senior Vice-President and Chief Financial Officer. “The opportunities within this space have allowed us to realize value for our shareholders and grow our assets and revenue streams.”
“We are targeting continued growth while keeping expense management top of mind with the goal of improving margins,” added Basaraba.
Key Business Highlights:
- AGF in partnership with the SAF Group (SAF) announced the launch of AGF SAF Private Credit Limited Partnership and AGF SAF Private Credit Trust. The new offerings provide both institutional and retail investors access to the benefit of private credit investing.
- AGF announced an evolution of its strategic partnership with SAF. The partnership is focused on providing investors access to unique private alternative opportunities leveraging AGF’s operations and distribution reach coupled with SAF’s private credit investment management expertise. AGF and SAF have agreed to a definitive agreement along with a distribution arrangement as an alternative to AGF exercising its option to acquire management contracts of select SAF funds.
- In June 2021, one of AGF’s long-term private alternative investments, SAF Jackson Management LP (SAFJM LP), was fully monetized, with a final cash distribution of $5.9 million received. As part of this transaction, AGF through its joint venture ownership interest in the manager received $2.4 million of carried interest.
- AGF announced a strategic private equity partnership with First Ascent Ventures (First Ascent) focused on investing in emerging technology companies that are building the next generation of disruptive, fast growing enterprise B2B software companies. AGF has made a $30 million cornerstone investor commitment to First Ascent’s second fund and is a member of the Limited Partner Advisory Committee of the fund.
- AGF International Advisors Company Limited has been accepted as a signatory to the UK Stewardship Code, recognized globally as a best-practice benchmark in investment stewardship.
- Building on its commitment to diversity and inclusion, AGF announced a multi-year partnership for the creation of the AGF Scholarship Fund for Indigenous students with Indspire, a national Indigenous organization that invests in the education of Indigenous people, enabling their success through financial awards, resources and role models.
- Judy Goldring, AGF’s President and Head of Global Distribution, was elected Vice-Chair of The Investment Funds Institute of Canada (IFIC)’s Board of Directors. She will serve a two-year term supporting IFIC’s commitment to further strengthen the integrity of Canada’s investment funds industry and foster a strong, stable investment sector for the benefit of investors and the association’s Members.
For further information on AGF’s pandemic response plan statement visit AGF.com.
Financial Highlights:
“When it comes to expense management, we continue to take a thoughtful approach that has allowed our core expenses and operations to remain relatively consistent as we continue to see an increase in success-based expenses,” added Basaraba.
- Management, advisory, administration fees and deferred sales charges were $112.4 million for the three months ended August 31, 2021, compared to $94.9 million in 2020. The increase in revenue is attributable to higher net sales, increase in AUM and higher average revenue rate as a result of product mix.
- The continued increase in mutual fund sales in the third quarter along with increased corporate development activity drove higher selling, general and administrative costs in the period. Selling, general and administrative costs were $50.1 million for the three months ended August 31, 2021, compared to $46.1 million in 2020. This increase in variable costs was partially offset by management’s continued focus on cost control.
- EBITDA before commissions for the three months ended August 31, 2021 was $37.5 million, compared to $62.6 million in the prior year comparative period. Excluding reported earnings from S&WHL, adjusted EBITDA before commissions for the three months ended August 31, 2021 was $37.5 million, compared to $21.3 million in the prior year comparative period.
- DSC commissions for the three months ended August 31, 2021 were $14.1 million, compared to $8.9 million in the prior year comparative period.
- Net income for the three months ended August 31, 2021 was $14.9 million ($0.21 diluted EPS), compared to $47.3 million ($0.60 diluted EPS) in the prior year comparative period. Adjusted net income for the three months ended August 31, 2021 was $14.9 million ($0.21 adjusted diluted EPS), compared to $14.8 million ($0.19 adjusted diluted EPS) in the prior year comparative period. Excluding reported earnings from S&WHL, adjusted diluted earnings per share was $0.08 in the comparative prior year period. The increase is primarily due to the growth in mutual fund sales as well as the income generated from AGF’s interest in private alternative managers and long-term investments.
| Three months ended | Nine months ended | |||||||||||||||
| August 31, | May 31, | August 31, | August 31, | August 31, | ||||||||||||
| (in millions of Canadian dollars, except per share data) | 2021 | 2021 | 20201 | 2021 | 20201 | |||||||||||
| Income | ||||||||||||||||
| Management, advisory, administration fees | ||||||||||||||||
| and deferred sales charges | $ | 112.4 | $ | 108.6 | $ | 94.9 | $ | 323.9 | $ | 283.2 | ||||||
| Share of profit of joint ventures | 2.2 | 0.1 | 0.6 | 3.1 | 1.3 | |||||||||||
| Other income from fee-earning arrangements | 0.7 | 0.4 | – | 1.1 | – | |||||||||||
| Dividend income (S&WHL) | – | – | 41.3 | – | 45.8 | |||||||||||
| Fair value adjustments and other income | 7.8 | 0.4 | 1.9 | 11.7 | 4.3 | |||||||||||
| Total Income | $ | 123.1 | $ | 109.5 | $ | 138.7 | $ | 339.8 | $ | 334.6 | ||||||
| Selling, general and administrative | 50.1 | 47.1 | 46.1 | 145.2 | 131.6 | |||||||||||
| Deferred selling commissions | 14.1 | 17.7 | 8.9 | 47.4 | 31.7 | |||||||||||
| EBITDA before commissions2 | 37.5 | 28.2 | 62.6 | 92.2 | 114.1 | |||||||||||
| Adjusted EBITDA before commissions2 | 37.5 | 28.2 | 30.1 | 92.2 | 81.6 | |||||||||||
| EBITDA | 23.4 | 10.5 | 53.7 | 44.8 | 82.4 | |||||||||||
| Net income | 14.9 | 5.0 | 47.3 | 25.5 | 63.5 | |||||||||||
| Adjusted net income2 | 14.9 | 5.0 | 14.8 | 25.5 | 31.0 | |||||||||||
| Diluted earnings per share | 0.21 | 0.07 | 0.60 | 0.35 | 0.80 | |||||||||||
| Adjusted diluted earnings per share2 | 0.21 | 0.07 | 0.19 | 0.35 | 0.39 | |||||||||||
| Free cash flow2 | 21.5 | 10.4 | 15.5 | 42.4 | 36.1 | |||||||||||
| Dividends per share | 0.09 | 0.08 | 0.08 | 0.25 | 0.24 | |||||||||||
| Long-term debt | – | – | 194.3 | – | 194.3 | |||||||||||
| (end of period) | Three months ended | |||||||||||||||
| August 31, | May 31, | February 28, | November 30, | August 31, | ||||||||||||
| (in millions of Canadian dollars) | 2021 | 2021 | 2021 | 2020 | 2020 | |||||||||||
| Mutual fund assets under management (AUM)3 | $ | 23,792 | $ | 22,290 | $ | 21,394 | $ | 20,322 | $ | 19,232 | ||||||
| Institutional, sub-advisory and ETF accounts AUM | 10,302 | 9,713 | 9,403 | 9,638 | 9,252 | |||||||||||
| Private client AUM | 7,073 | 6,689 | 6,300 | 6,043 | 5,773 | |||||||||||
| Private alternatives AUM4,5 | 99 | 134 | 142 | 227 | 178 | |||||||||||
| Total AUM4 | $ | 41,266 | $ | 38,826 | $ | 37,239 | $ | 36,230 | $ | 34,435 | ||||||
| Private alternatives fee-earning assets4,5 | 2,094 | 1,983 | 2,012 | 2,038 | 2,029 | |||||||||||
| Total AUM and fee-earning assets5 | $ | 43,360 | $ | 40,809 | $ | 39,251 | $ | 38,268 | $ | 36,464 | ||||||
| Net mutual fund sales (redemptions)3 | 288 | 408 | 385 | 88 | (22) | |||||||||||
| Average daily mutual fund AUM3 | 23,104 | 22,011 | 21,118 | 19,487 | 18,879 | |||||||||||
1 Refer to Note 3 in the 2020 Consolidated Financial Statements for more information on the adoption of IFRS 16.
2 EBITDA before commissions (earnings before interest, taxes, depreciation, amortization and deferred selling commissions), 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.
3 Mutual fund AUM includes retail AUM, pooled fund AUM and institutional client AUM invested in customized series offered within mutual funds.
4 Total AUM and Private alternatives AUM have been reclassified and restated to exclude co-investment AUM for comparative purposes.
5 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, 2021, 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/
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. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.
AGF has investment operations and client servicing teams on the ground in North America, Europe and Asia. With over $43 billion in total assets under management and fee-earning assets, AGF serves more than 700,000 investors. AGF trades on the Toronto Stock Exchange under the symbol AGF.B.
AGF Management Limited shareholders, analysts and media, please contact:
Adrian Basaraba
Senior Vice-President and Chief Financial Officer
416-865-4203, InvestorRelations@agf.com
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 2020 Annual MD&A.
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.
