TORONTO, March 25, 2020 (GLOBE NEWSWIRE/Knowledge Bylanes) —
- Reported assets under management of $37.4 billion
- Private Alternatives AUM increased 5.3% in the quarter to $2.7 billion
- Reported diluted EPS of $0.13 for the first quarter of 2020
AGF Management Limited (AGF or the Company) (TSX: AGF.B) today announced financial results for the first quarter ended February 29, 2020.
AGF reported total assets under management (AUM) of $37.4 billion compared to $38.8 billion in the same period in 2019. Average daily mutual fund AUM increased to $19.5 billion compared to $18.5 billion in the same period in 2019.
In a challenging environment, AGF reported gross mutual funds sales of $562.0 million, an increase of 9.3% compared to prior year comparative quarter. Reported mutual funds net redemptions were $344.0 million for the quarter, compared to net redemptions of $104.0 million in Q1 2019. Excluding net flows from institutional clients invested in mutual funds1, net redemptions were $141.0 million, compared to net redemptions of $104.0 million in Q1 2019.
“Global markets continue to exhibit substantial turmoil in response to the spread of the COVID-19 illness around the world,” said Kevin McCreadie, CEO and Chief Investment Officer, AGF. “First and foremost, as a firm we are focused on delivering the best possible stewardship across our investment solutions and our business through aggressive continuity measures and risk management processes.”
“Alongside these efforts, we continue to make progress against our stated strategic imperatives including our focus on growing our presence in the U.S. through strategic hires and embracing new technologies and digital strategies to drive further efficiencies across our businesses,” added McCreadie.
Key Business Highlights:
- In January, AGF Global Convertible Bond Fund, AGF Global Select Fund and AGFiQ Global Income ETF Portfolio (QMY) earned FundGrade A+ Awards, which are given annually to investment funds and their managers who have shown consistent, outstanding, risk-adjusted performance throughout the year. AGF Global Convertible Bond Fund was a recipient of this award in 2018 as well.
- As at February 29, 2020 AGF Emerging Markets Equity Composite, AGF Global Select Composite, AGF Fixed Income Composite, and AGF Global Sustainable Growth Equity Composite were exceeding their respective benchmarks on a one-, two-, and three-year basis.
- AGF announced proposed fund mergers, portfolio manager changes and series terminations on February 19 to support efforts to further streamline its product suite. These changes reflect AGF’s commitment to continually review its lineup to ensure clients have access to products that are relevant, competitive and responsive to market trends.
- On March 2, Damion Hendrickson joined AGF as Managing Director for the U.S. business to drive growth in key institutional markets.
- On the U.S. side, one of our funds is a finalist for 2019 ETF of the Year by ETF.com. The fund uses a long-short strategy to create a market neutral stance that has outperformed in the current environment.
While the precise impact of the recent novel coronavirus: COVID-19 outbreak remains unknown, it has introduced uncertainty and volatility in global markets and economies. AGF is monitoring developments and is prepared for any impacts related to COVID-19. The firm has a comprehensive pandemic and business continuity plan that ensures its readiness to appropriately address and mitigate any business risks and impacts to clients and employees.
“To minimize business disruption, the vast majority of our employees have the capabilities to work remotely,” said Chris Jackson, Chief Operating Officer, AGF. “Maintaining business continuity for our employees, clients and partners is critical and we are confident in the measures we are taking across the firm through strategic deployment of key functions to primary and secondary locations and improved technology platforms to support the remainder of employees being asked to work from home.”
Furthermore, with the recent volatility in the markets, AGF is monitoring the potential impact of market risk to its capital position and profitability if these levels were sustained or continued to decline. A significant portion of AGF’s revenue is driven by its total average AUM excluding private alternatives. These AUM levels are impacted by both net sales and changes in the market. In general, for every $1.0 billion reduction in average AUM excluding private alternatives, management fee revenues, net of trailer fees, would decline by approximately $7.4 million.
“On the fund side, we actively manage for and stress test all of our portfolios on a regular basis with the flexibility to review daily given current market conditions,” added McCreadie. “By testing high redemption levels under various market volume scenarios, we are able to effectively control for our liquidity management needs across our suite of investment solutions.”
Income for the three months ended February 29, 2020 was $106.7 million, compared to $105.0 million for the three months ended February 28, 2019. EBITDA before commissions was $30.2 million for the three months ended February 29, 2020, compared to $12.9 million for the same period in 2019. Adjusting for one-time items and IFRS 16 adjustments, adjusted EBITDA before commissions was $30.2 million, compared to $28.5 million for the same period in 2019.
Diluted earnings per share (EPS) for the three months ended February 29, 2020 was $0.13, compared to nil for the comparative period. Adjusting for one-time items and IFRS 16 adjustments, adjusted diluted EPS for the three months ended February 29, 2020 was $0.13, compared to $0.14 for the same period in 2019.
For the three months ended February 29, 2020, AGF declared an eight cent per share dividend on Class A Voting common shares and Class B Non-Voting shares payable on April 20, 2020 to shareholders on record as at April 10, 2020.
|(from continuing operations)||Three months ended|
|February 29,||November 30,||February 28,|
|(in millions of dollars, except per share data)||2020||2019||2019|
|Net income (loss)||10.8||22.2||(0.2||)|
|EBITDA before commissions2||30.2||38.7||12.9|
|Adjusted EBITDA before commissions2||30.2||35.8||28.5|
|Diluted earnings per share||0.13||0.28||–|
|Adjusted diluted earnings per share2||0.13||0.24||0.14|
|Free Cash Flow2||14.5||18.3||16.6|
|Dividends per share||0.08||0.08||0.08|
|(end of period)||Three months ended|
|February 29,||November 30,||August 31,||May 31,||February 28,|
|(in millions of dollars)||2020||2019||2019||2019||2019|
|Mutual fund assets under management (AUM)3||$||18,492||$||19,346||$||18,839||$||18,725||$||19,028|
|Institutional, sub-advisory and ETF accounts AUM||10,313||10,755||10,391||11,712||12,023|
|Private client AUM||5,905||6,100||5,778||5,722||5,633|
|Private alternatives AUM4||2,716||2,580||2,413||2,179||2,140|
|Total AUM, including private alternatives AUM||37,426||38,781||37,421||38,338||38,824|
|Net mutual fund redemptions3||(344||)||(181||)||(103||)||(498||)||(104||)|
|Average daily mutual fund AUM3||19,462||19,015||18,915||19,250||18,451|
1 Net sales (redemptions) in retail mutual funds are calculated as reported mutual fund net sales (redemptions) less non-recurring institutional net sales (redemptions) in excess of $5.0 million invested in our mutual funds.
2 EBITDA before commissions (earnings before interest, taxes, depreciation, amortization and deferred selling commissions), adjusted EBITDA before commissions, 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.
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 commitment is $207.4 million, of which $146.1 million has been funded as at February 29, 2020.
For further information and detailed financial statements for the first quarter ended February 29, 2020, 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.
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, alternatives 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 $37 billion in total assets under management, AGF serves more than one million investors. AGF trades on the Toronto Stock Exchange under the symbol AGF.B.
AGF Management Limited shareholders, analysts and media, please contact:
Senior Vice-President and Chief Financial Officer
Caution Regarding Forward-Looking Statements
This Management’s Discussion and Analysis (MD&A) 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 2019 Annual MD&A.