- AUM and Fee Earning Assets: $49.7 billion, up 18% year-over-year.
- Adjusted Diluted EPS: $0.37 for Q3 2024.
- Short and Long Term Investments: $332 million.
- Retail Mutual Fund Net Sales: $19 million in Q3 2024.
- Mutual Fund AUM: $28 billion, up 15% year-over-year.
- ETF and SMA AUM: Increased 60% year-over-year.
- Segregated Accounts and Sub-Advisory AUM: Decreased by 9% year-over-year.
- Private Wealth AUM: $8.2 billion, up 11% year-over-year.
- AGF Capital Partners AUM and Fee Earning Assets: $4.9 billion, up $2.7 billion from the prior year.
- Net Income Attributable to Equity Owners: $24.5 million, up $0.9 million from Q2 and $1.6 million from the prior year.
- Net Revenues (Traditional Asset and Wealth Management): $81.3 million, $3.7 million lower than Q2 but $4.6 million higher than the prior year.
- Adjusted SG&A: Decreased by $0.4 million from Q2 to Q3 2024.
- Recurring Manager Earnings: $9.3 million, up due to the acquisition of Kensington.
- Revenues from Long Term Investments: $7.5 million in Q3 2024.
- Net Management Fee Yield: 71 basis points in Q3 2024.
- Free Cash Flows: $94 million on a trailing 12-month basis.
- Dividends and Share Repurchases: $41 million returned to shareholders in the form of dividends and share repurchases under NCIB.
- Net Cash: $3 million (cash of $48 million and long-term debt of $45 million).
- Credit Facility: $105 million remaining, with a maximum of $150 million.
- Enterprise Value: Approximately $550 million.
Release Date: September 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- AGF Management Ltd (AGFMF, Financial) reported an 18% increase in AUM and fee-earning assets, reaching $49.7 billion.
- Adjusted diluted EPS for the quarter was $0.37.
- The company declared an 11.5% share dividend for Q3 2024.
- Mutual fund AUM increased by 15% year-over-year, outpacing the industry growth of 13%.
- AGF Capital Partners AUM and fee-earning assets rose to $4.9 billion, driven by the Kensington transaction.
Negative Points
- Segregated accounts and sub-advisory AUM decreased by 9% compared to the prior year due to a redemption from an institutional client.
- Net management fees were flat compared to Q2, excluding performance fees and timing of certain fund costs.
- Adjusted SG&A decreased by only $0.4 million from Q2 to Q3 2024.
- The net management fee yield decreased by 4 basis points from the previous quarter.
- Performance fees and carried interest can vary significantly due to the subdued private equity market.
Q & A Highlights
Q: Can you clarify how performance fees are recognized and earned at Kensington?
A: Performance fees at Kensington are tied to the monetization of underlying investments and distribution of gains to investors. For Q3, a $3.6 million performance fee was recognized, of which AGF shareholders capture about 20% after deducting non-controlling interests and other allocations. (Ken Tsang, CFO)
Q: Is the full-year adjusted SG&A guidance of $227 million realistic given the current trends?
A: The SG&A guidance remains unchanged. While there has been an increase in performance-based compensation due to higher sales and AUM, the overall SG&A is expected to align with the guidance by year-end. (Ken Tsang, CFO)
Q: Are you seeing evidence of a rotation from GICs and high-yielding products into long-term fund sales?
A: Yes, we are starting to see a rotation, particularly into fixed income. As rates continue to come down, we expect further movement from money market funds into fixed income and equities. (Judy Goldring, President and Head of Global Distribution)
Q: Can you provide more color on the $3.6 million performance fee and expectations for the rest of the year?
A: The performance fee was related to a monetization of a direct investment within a co-investment vehicle managed by Kensington. Performance fees can vary based on the transaction market, which has been subdued but is showing signs of improvement. We expect performance fees to be between 5% and 10% of current size annually. (Ash Lawrence, Head of AGF Capital Partners)
Q: What are you seeing in the M&A pipeline and your expectations going forward?
A: We continue to canvas the market with an active pipeline, focusing on opportunities in the US for better scale. Deal cycles are long, typically 8 to 14 months, due to the relationship-driven nature of these transactions. (Ash Lawrence, Head of AGF Capital Partners)
Q: What is the outlook for revenue from long-term investments?
A: We expect annual returns in the 8% to 10% range, though quarterly results can fluctuate. Gains are primarily from our infrastructure portfolio, with stable returns from credit investments and a stabilizing venture sector. (Ash Lawrence, Head of AGF Capital Partners)
Q: What are the current trends in fund flows for the quarter to date?
A: Quarter-to-date, fund flows are essentially flat. We expect fluctuations but anticipate improvement as interest rates come down. (Judy Goldring, President and Head of Global Distribution; Kevin McCreadie, CEO and CIO)
Q: Can you provide more details on the SG&A guidance and its components?
A: Core compensation is flat year-over-year, but performance-based compensation is higher due to increased sales and investment performance. We are monitoring the market and will adjust guidance if necessary. (Kevin McCreadie, CEO and CIO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
