AGF Management Limited Reports First Quarter 2021 Financial Results
TORONTO, March 31, 2021 (GLOBE NEWSWIRE) --
- Mutual fund gross sales of $1 billion for the first quarter of 2021, an improvement of 85% year over year
- Mutual fund net sales of $385 million for the quarter
- Assets under management of $39.8 billion, 6% higher than prior year
AGF Management Limited (AGF or the Company) (TSX: AGF.B) today announced financial results for the first quarter ended February 28, 2021.
AGF reported total assets under management (AUM) of $39.8 billion compared to $37.4 billion as at February 29, 2020.
“This quarter marked one-year of managing our business through a pandemic. We acted swiftly to protect the health and safety of our employees, made effective use of technology and accelerated our digital transformation to put our clients first and position ourselves for success,” said Kevin McCreadie, Chief Executive Officer and Chief Investment Officer, AGF.
“A year later, we are seeing the results of our efforts with higher retails sales numbers, strong investment performance and an improving share price,” added McCreadie.
AGF’s mutual funds net sales improved $729 million year over year, with total net sales of $385 million in Q1 2021, compared to net redemptions of $344 million in Q1 2020. Excluding net flows from institutional clients invested in mutual funds, retail mutual fund net sales were $376 million for the quarter compared to net redemptions of $141 million in the comparative period of 2020. AGF mutual fund gross sales totaled $1,042 million, an 85% improvement over prior year. Gross sales for long-term mutual funds improved 84% year-over-year, outpacing the industry year-over-year improvement of 36%.
Mutual fund sales momentum continued into March with AGF reporting mutual fund net sales of $211 million as at March 29, 2021 compared to net redemptions of $73 million for the same time last year. Retail mutual fund gross sales were up 120% year-over-year.
“This quarter was our strongest retail sales quarter in over a decade,” said Judy Goldring, President and Head of Global Distribution, AGF. “I believe this is a testament to the quality and diversity of our relationships across channels, our consistent investment performance and a product line-up that is relevant, competitive and responsive to market trends with offerings through mutual funds, ETFs and separately managed accounts.”
Key Business Highlights:
- March 2021 marked the one-year anniversary of AGF operating as a mostly virtual firm as a result of the COVID-19 pandemic. Over the last 12 months, AGF continually evolved and embraced new ways of doing business while staying true to its legacy of delivering strong relative investment performance.
- Effective March 1, AGF reduced management fees for AGF Global Real Assets Class (Series F) and AGF Global Real Assets Fund (Series F and W).
- Subject to securityholder approval (at a meeting to be held on April 14, 2021), AGF is proposing changes to the investment objectives of AGF Diversified Income Class and AGF Diversified Income Fund to become sustainable balanced strategies.
- AGF remains committed to building its private alternatives business and as part of its extended partnership with SAF Group is operationally ready and beginning fundraising for the launch of a direct lending private credit strategy in Canada. AGF expects to seed the private credit offering and complete the first close in Q3 2021.
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Financial Highlights:
“We delivered strong mutual fund sales in the quarter, which will lead to future top line revenue growth, while having an initial short-term impact on profitability,” added McCreadie.
- The significant increase in mutual fund sales drove higher selling, general and administrative costs in the period associated with variable sales and investment performance-based compensation. Selling, general and administrative costs were $48.0 million for the three months ended February 28, 2021, compared to $45.3 million in 2020. In addition, the increase in the AGF.B share price during the quarter resulted in higher share-based compensation, which is marked to market. This increase in variable costs was partially offset by management’s continued focus on cost control as well as lower travel and entertainment costs as a result of the ongoing pandemic.
- EBITDA before commissions for the three months ended February 28, 2021 was $26.8 million, compared to $30.2 million in the prior year comparative period. Excluding Smith & Williamson (S&WHL), EBITDA before commissions for the three months ended February 28, 2021 was $26.8 million, compared to $25.7 million in the prior year comparative period.
- Management, advisory, administration fees and deferred sales charges were $102.9 million for the three months ended February 28, 2021, compared to $99.4 million in 2020. The increase in revenue is attributable to higher sales, increase in daily average mutual fund AUM and higher average revenue rate as a result of product mix.
- AGF’s interest in private alternative managers generated EBITDA of $0.8 million for the three months ended February 28, 2021 (2020 − $0.1 million), an increase of $0.7 million, as a result of the Company’s equity earnings in its private alternative managers.
- Adjusted net income for the three months ended February 28, 2021 was $5.6 million ($0.08 adjusted diluted EPS), compared to $10.8 million ($0.13 adjusted diluted EPS) in the prior year comparative period. Excluding S&WHL, net income for the prior year comparative period was $6.3 million ($0.07 adjusted diluted EPS). The significant growth in mutual fund sales as well as the increase in the Company’s stock price in the current quarter resulted in a short-term increase in variable sales compensation, DSC commissions and stock compensation, which were fully recognized in the period, resulting in a $0.06 negative impact to EPS.
| Three months ended | |||||||||
| February 28, | November 30, | February 29, | |||||||
| (in millions of Canadian dollars, except per share data) | 2021 | 20201 | 20201 | ||||||
| Income | |||||||||
| Management, advisory, administration fees | |||||||||
| and deferred sales charges | $ | 102.9 | $ | 97.5 | $ | 99.4 | |||
| Share of profit of joint ventures | 0.8 | 1.6 | 0.1 | ||||||
| Dividend income (S&WHL) | – | – | 4.5 | ||||||
| Gain on sale of assets classified as held for sale, | |||||||||
| net of currency hedge (S&WHL) | – | 104.4 | – | ||||||
| Fair value adjustments and other income | 3.6 | 5.9 | 2.7 | ||||||
| Total Income | 107.3 | 209.4 | 106.7 | ||||||
| Selling, general and administrative | 48.0 | 43.1 | 45.3 | ||||||
| EBITDA before commissions2 | 26.8 | 137.0 | 30.2 | ||||||
| Adjusted EBITDA before commissions2 | 26.8 | 31.6 | 30.2 | ||||||
| Net income | 5.6 | 110.4 | 10.8 | ||||||
| Adjusted net income2 | 5.6 | 15.0 | 10.8 | ||||||
| Diluted earnings per share | 0.08 | 1.43 | 0.13 | ||||||
| Adjusted diluted earnings per share2 | 0.08 | 0.19 | 0.13 | ||||||
| Free cash flow2 | 10.5 | 9.9 | 14.5 | ||||||
| Dividends per share | 0.08 | 0.08 | 0.08 | ||||||
| Long-term debt | – | – | 216.9 | ||||||
| (end of period) | Three months ended | ||||||||||||||
| February 28, | November 30, | August 31, | May 31, | February 29, | |||||||||||
| (in millions of Canadian dollars) | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||
| Mutual fund assets under management (AUM)3 | $ | 21,394 | $ | 20,322 | $ | 19,232 | $ | 18,259 | $ | 18,492 | |||||
| Institutional, sub-advisory and ETF accounts AUM | 9,403 | 9,638 | 9,252 | 9,591 | 10,313 | ||||||||||
| Private client AUM | 6,300 | 6,043 | 5,773 | 5,624 | 5,905 | ||||||||||
| Private alternatives AUM4 | 2,689 | 2,810 | 2,755 | 2,862 | 2,716 | ||||||||||
| Total AUM, including private alternatives AUM | 39,786 | 38,813 | 37,012 | 36,336 | 37,426 | ||||||||||
| Net mutual fund sales (redemptions)3 | 385 | 88 | (22) | (93) | (344) | ||||||||||
| Average daily mutual fund AUM3 | 21,118 | 19,487 | 18,879 | 17,386 | 19,462 | ||||||||||
| 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), 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 . |
| 3 | Mutual fund AUM includes retail AUM, pooled fund AUM and institutional client AUM invested in customized series offered within mutual funds. |
| 4 | Represents fee-earning committed and/or invested capital from AGF and external investors held through joint ventures. AGF’s portion of this AUM is $175.9 million. Of the $2.7 billion of AUM, 20% are non-fee earning assets. |
For further information and detailed financial statements for the first quarter ended February 28, 2021, including Management’s Discussion and Analysis, which contains discussions of non-IFRS measures, please refer to AGF’s website at under ‘About AGF’ and ‘Investor Relations’ and at .
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 or at . Alternatively, the call can be accessed toll-free in North America by dialing 1 (800) 708-4540 (Passcode #: 50108057).
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 nearly $40 billion in total assets under management, 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,
Baoqin Guo
Vice-President, Finance
416-865-4228,
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.
