AGF Management (AGF) Q2 2024 earnings summary

Executive summary

• AUM and fee-earning assets reached $47.8 billion as of May 31, 2024, up 16% year-over-year, driven by strong investment performance, improved mutual fund flows, and the acquisition of Kensington Capital Partners Limited (KCPL), which was consolidated this quarter.

• Adjusted diluted EPS was $0.35 for Q2 2024; net debt stood at $36 million, and the financial position remains robust with $329 million in investments.

• Board declared a $0.115 per share dividend for Q2 2024, up from $0.110 in the prior quarter.

• Mutual fund net redemptions were $112 million for the quarter, an improvement from $125 million in the prior quarter but down from net sales of $77 million a year ago.

• AGF received industry recognition, including awards and finalist nominations for several investment strategies.

Financial highlights

• Adjusted EBITDA for Q2 2024 was $37.0 million, down from $49.5 million in Q1 2024 and $43.9 million in Q2 2023; adjusted EBITDA margin was 28.0%.

• Net management, advisory, and administration fees were $81.2 million, up from $74.9 million in Q1 2024 and $75.7 million in Q2 2023.

• Adjusted net income attributable to equity owners was $23.6 million, down from $33.7 million in Q1 2024 and $31.2 million in Q2 2023.

• Free cash flow for the quarter was $17.2 million, compared to $19.8 million a year ago.

• Adjusted SG&A expenses rose to $60.0 million, reflecting strategic investments, KCPL consolidation, and higher compensation.

Outlook and guidance

• Expense guidance for 2024 increased by $18 million to account for acquisitions, with adjusted SG&A on track.

• Management continues to monitor capital and liquidity closely, with sufficient resources to fund business plans and commitments.

• Industry flows expected to pick up in the latter half of the year as rate cuts materialize, with positive indicators in gross sales and performance.

• Plans to build a diversified private capital and alternatives business while maintaining sales momentum.

• Capital allocation will balance shareholder returns and growth investments.