AGF Management Limited Reports Fourth Quarter and Fiscal Year 2021 Financial Results
- Reported diluted earnings per share of $0.19
- Mutual fund gross sales of $914 million for the fourth quarter of 2021, an improvement of 35% year-over-year
- Mutual fund net sales of $352 million for the quarter
- Total assets under management and fee-earning assets1 of $42.6 billion
AGF reported total assets under management and fee-earning assets1 of $42.6 billion compared to $43.4 billion as at August 31, 2021 and $38.3 billion as at November 30, 2020.
“As we marked our second fiscal year-end of the pandemic, we have continued to work effectively and execute against our long-term strategy and stated goals, including the growth of our private alternatives business and securing key hires intended to help us accelerate our growth,” said Kevin McCreadie, Chief Executive Officer and Chief Investment Officer, AGF. “Over the course of the year we built terrific sales momentum and delivered risk-adjusted performance, while providing our clients with an essential service.”
“Critical to advancing our strategy we will continue to strategically deploy capital to effectively secure our place as an alternatives provider of choice for our clients while looking to maintain, and build upon, the positive sales momentum we have experienced over this past year,” added McCreadie.
AGF’s mutual fund gross sales were $914 million for the quarter compared to $679 million in the comparative period, a 35% improvement year over year. AGF’s gross sales have continued to outpace the industry. Year over year, retail mutual fund gross sales2 improved by 39% compared to 18% for the industry3. AGF’s mutual funds net sales improved $264 million year-over-year, with total net sales of $352 million in Q4 2021, compared to $88 million in Q4 2020.
Mutual fund sales momentum has continued into the first quarter of 2022, with net sales of $115 million as at January 21, 2022, compared to net sales of $104 million for the same time last year. Mutual fund gross sales were up 3% year-over-year.
“This year, we returned retail sales to net inflows, experiencing year-over-year improvements across all channels with strong flows into multiple categories,” said Judy Goldring, President and Head of Global Distribution, AGF.
“I believe this success is the result of evolving our client base across channels and providing products that are responsive to market trends, while addressing growing interest in private alternatives, fee-based series and separately managed accounts.”
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 Retail mutual fund gross sales are calculated as reported mutual fund gross sales less non-recurring institutional gross sales in excess of $5 million invested in our mutual funds.
3 Long-term funds.
Key Business Highlights:
- On November 22, 2021, AGF announced the evolution of its long-standing relationship with PFSL Investments Canada Ltd. (PFSL) with the establishment of a new multi-year product and services distribution arrangement being named as one of only two asset management firms set to initially launch on PFSL’s evolving distribution platform.
- In December, AGF announced that Ash Lawrence will be joining AGF in a new role as Senior Vice-President & Head of Alternatives and as a member of the Executive Management Team. Ash’s leadership combined with AGF’s scale and strong balance sheet position the firm well to strategically deploy capital, and build on its strong momentum, to accelerate the growth of its alternatives business.
- AGF appointed Ian Clarke to its Board of Directors. He is an accomplished leader bringing a wealth of unique experiences in strategic planning, business operations, risk management assessment and corporate transactions that complement the experiences of our current directors.
- During the quarter, Arlette Edmunds also joined AGF in the role of Chief Human Resources Officer bringing experience and tenure to support the evolution of the workplace, including AGF’s focus on advancing its diversity, equity and inclusion agenda.
- AGF finalized an agreement with Vestmark and had its separately managed account (SMA) models approved to be added to the Envestnet platform, providing U.S. clients access to in-demand SMA strategies as the firm continues to expand its offerings and client-base in the U.S.
- AGF became a founding participant in Climate Engagement Canada (CEC) – a finance-led initiative that aims to drive dialogue between the financial community and Canadian corporations to promote a just transition to a net zero economy.
- AGF also joined CDP’s 2021 Science-Based Targets campaign calling on the world’s highest impact companies to urgently set science-based emissions reduction targets in line with 1.5°C warming scenarios. CDP is a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states, and regions to manage their environmental impacts.
- In support of AGF’s continued advocacy for gender equality, the firm became a corporate sponsor of 100 Women in Finance (100WF).
- Management, advisory, administration fees and deferred sales charges were $114.6 million and $438.5 million for the three months and year ended November 30, 2021, compared to $97.5 million and $380.7 million in prior year comparative periods. The increase in revenue is attributable to higher net sales, increase in AUM and a higher average revenue rate as a result of product mix.
- The continued trend of net sales, combined with improved financial results, resulted in higher variable selling, general and administrative costs in the three and twelve months ended November 30, 2021. Selling, general and administrative costs were $49.9 million and $195.1 million for the three months and year ended November 30, 2021, compared to $43.1 million and $174.7 million in prior year comparative periods.
- Adjusted EBITDA before commissions for the three months and year ended November 30, 2021, excluding EBITDA from S&WHL which was sold in 2020, improved 12.3% and 27.8% to $35.5 million and $127.7 million, compared to $31.6 million and $99.9 million in the prior year comparative periods.
- Deferred selling commissions (DSC) for the three months and year ended November 30, 2021 increased to $15.3 million and $62.6 million, compared to $10.3 million and $42.0 million in the prior year comparative periods, driven by higher gross sales.
- Net income for the three months and year ended November 30, 2021 was $13.8 million ($0.19 diluted EPS) and $39.3 million ($0.55 diluted EPS), compared to $110.4 million ($1.43 diluted EPS) and $173.9 million ($2.22 diluted EPS) in the prior year comparative periods. Excluding earnings from S&WHL and one-time items, adjusted diluted earnings per share was $0.19 and $0.42 in the comparative prior year periods.
- EPS in the quarter of $0.19 reflects growth in top line revenue, which was offset in the period by higher DSC and performance-based compensation incurred related to sales growth.
|Three months ended||Years ended|
|November 30,||August 31,||November 30,||November 30,||November 30,|
|(in millions of Canadian dollars, except per share data)||2021||2021||20201||2021||20201|
|Management, advisory, administration fees|
|and deferred sales charges||$||114.6||$||112.4||$||97.5||$||438.5||$||380.7|
|Share of profit of joint ventures||0.1||2.2||1.6||3.1||2.9|
|Other income from fee-earning arrangements||0.8||0.7||–||1.9||–|
|Dividend income, net of currency hedge (S&WHL)||–||–||–||–||45.8|
|Gain on sale of assets classified as held for sale,|
|net of currency hedge (S&WHL)||–||–||104.4||–||104.4|
|Fair value adjustments and other income||6.4||7.8||5.9||18.1||10.1|
|Selling, general and administrative||49.9||50.1||43.1||195.1||174.7|
|Deferred selling commissions||15.3||14.1||10.3||62.6||42.0|
|EBITDA before commissions2||35.5||37.5||137.0||127.7||251.1|
|Adjusted EBITDA before commissions2||35.5||37.5||31.6||127.7||113.2|
|Adjusted net income2||13.8||14.9||15.0||39.3||46.0|
|Diluted earnings per share||0.19||0.21||1.43||0.55||2.22|
|Adjusted diluted earnings per share2||0.19||0.21||0.19||0.55||0.59|
|Free cash flow2||12.5||21.5||9.9||54.8||46.1|
|Dividends per share||0.09||0.09||0.08||0.34||0.32|
|(end of period)||Three months ended||Years ended|
|November 30,||August 31,||November 30,||November 30,||November 30,|
|(in millions of Canadian dollars)||2021||2021||2020||2021||2020|
|Mutual fund Assets Under Management (AUM)3||$||24,006||$||23,792||$||20,322||$||24,006||$||20,322|
|Institutional, sub-advisory and ETF accounts AUM||9,371||10,302||9,638||9,371||9,638|
|Private client AUM||7,077||7,073||6,043||7,077||6,043|
|Private alternatives AUM4||73||99||227||73||227|
|Private alternatives fee-earning assets4,5||2,108||2,094||2,038||2,108||2,038|
|Total AUM and fee-earning assets5||42,635||43,360||38,268||42,635||38,268|
|Mutual fund net sales (redemptions)3||352||288||88||1,432||(371||)|
|Average daily mutual fund AUM3||23,896||23,104||19,487||22,532||18,804|
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 fourth quarter and fiscal year ended November 30, 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.
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/js6kjke3. Alternatively, the call can be accessed toll-free in North America by dialing 1 (800) 708-4540 (Passcode #: 50263502).
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 800,000 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
416-865-4203, [email protected]
647-253-6804, [email protected]
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 2021 Annual MD&A.