AGF MANAGEMENT LIMITED AGF MANAGEMENT LIMITED EARNINGS CONFERENCE - - PowerPoint PPT Presentation

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AGF MANAGEMENT LIMITED AGF MANAGEMENT LIMITED EARNINGS CONFERENCE - - PowerPoint PPT Presentation

MARCH 2013 AGF MANAGEMENT LIMITED AGF MANAGEMENT LIMITED EARNINGS CONFERENCE CALL EARNINGS CONFERENCE CALL FIRST QUARTER 2013 MARCH 27, 2013 CAUTION REGARDING FORWARD-LOOKING STATEMENTS The forward looking information is provided as of


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SLIDE 1

AGF MANAGEMENT LIMITED

MARCH 2013

AGF MANAGEMENT LIMITED

EARNINGS CONFERENCE CALL EARNINGS CONFERENCE CALL FIRST QUARTER – 2013 MARCH 27, 2013

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SLIDE 2

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

The forward looking information is provided as of March 27, 2013. Certain information presented in these remarks and in this presentation that is not historical factual information may constitute forward-looking information within the meaning

  • f securities laws Actual results could differ materially from a conclusion forecast or projection contained in such
  • f securities laws. Actual results could differ materially from a conclusion, forecast or projection contained in such

forward-looking information. Forward-looking information may relate to our future outlook and anticipated events or results and may include statements about AGF Management Limited ("AGF") or the investment funds it manages (the "Funds"), including 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,’ ‘anticipates,’ ‘intends,’ ‘plans,’ ‘believes,’ or negative versions thereof and similar expressions or future or conditional verbs such as ‘may,’ ‘will,’ ‘should,’ ‘would,’ or ‘could.’ In addition, any statement that may be made concerning future financial performance (including revenues, earnings or growth rates), ongoing business t t i t d ibl f t ti t i l f d l ki t t t y g p ( g g g ) g g strategies or prospects, and possible future action on our part, is also a forward-looking statement. Forward-looking statements are based on certain material factors and assumptions, including expected growth, results

  • f 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 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, 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 interest and foreign exchange rates, taxation, changes in government regulations, unexpected judicial or regulatory proceedings, and our ability to complete strategic transactions and integrate acquisitions. We caution that the foregoing list is not exhaustive. The reader is cautioned to id th d th f t f ll d t l d li f d l ki t t t Oth th g q g g 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 AGF’s most recent financial statements and MD&A and, for the Funds, to each Fund’s most recent prospectus and MRFP, as applicable, all available on www.sedar.com.

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SLIDE 3

CONFERENCE CALL PARTICIPANTS CONFERENCE CALL PARTICIPANTS

  • Blake C. Goldring, M.S.M., CFA, Chairman

Blake C. Goldring, M.S.M., CFA, Chairman & Chief Executive Officer

  • Robert J. Bogart, Executive Vice-President

& Chief Financial Officer

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SLIDE 4
  • Highlights of the 1st Quarter

TODAY’S DISCUSSION

  • Highlights of the 1 Quarter
  • Business Updates

– Investment Management Investment Management – Retail Business – Institutional Business

  • Financial Results
  • Capital & Liquidity
  • Priorities Exiting Q1 2013

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SLIDE 5

Q1 2013 HIGHLIGHTS Q1-2013 HIGHLIGHTS

Ind str gross flo s ere strong and reflected increased acti it in eq ities

  • AUM was flat over the quarter at $39B

Industry gross flows were strong and reflected increased activity in equities

  • Gross flows of $1.3B in Q1-13 as compared to $1.4B a year ago
  • Investment performance weakened slightly over the quarter

Fi d I t ti t l d i t l

  • Fixed Income category continues to lead in net sales
  • Institutional business experienced outflows
  • EPS of $0.17; Free cash flow remains strong

$ ; g

  • Board confirmed $0.27 dividend
  • CRA proposed assessment notice

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SLIDE 6

INVESTMENT PERFORMANCE INVESTMENT PERFORMANCE

AGF funds gave back some performance in Q1-13 – overall trend is moving in the right direction as this remains our #1 priority

Y t j t

1-yr Performance (% of Funds Above Median) 3 P f (% f F d Ab M di )

  • Year-over-year trajectory on a

1- and 3-year basis are positive – performance fell off slightly in Q1-13.

39%

40% 50% 60%

3-yr Performance (% of Funds Above Median)

  • Goal: 50% AUM in top two

quartiles by end of 2013 for 1-year performance.

23% 38%

20% 30% 40%

  • Key categories and flagship

funds continue to perform.

17%

0% 10% y 12 h 12 il 12 y 12 e 12 y 12 t 12 r 12 r 12 r 12 r 12 y 13 y 13

6

February March Apri May June July Augus Septembe Octobe Novembe December January February

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SLIDE 7

RETAIL BUSINESS REVIEW RETAIL BUSINESS REVIEW

We expect the gap between gross sales and redemptions to lessen throughout 2013 Gross Sales We expect the gap between gross sales and redemptions to lessen throughout 2013 – performance of funds will be a critical component

  • Gross sales - 2.6% of AUM in 2013 vs 2.4% in 2012
  • New product offerings are showing strength
  • Stronger sales push into IIROC and bank channels

g

  • Marketing and brand awareness campaign launched

Redemptions Redemptions

  • Redemptions still remain high – need to close the gap
  • Emerging Market redemptions in-line with industry and more stable relative

to 2012

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SLIDE 8

INSTITUTIONAL BUSINESS REVIEW & PIPELINE INSTITUTIONAL BUSINESS REVIEW & PIPELINE

Three large redemptions in February offset improving gross flows; we expect f h ddi i l fl i Q2 h b “b i further additional outflows in Q2 – however, we expect to be more “business as usual” as we exit Q2 2013

  • $470 million of gross flows in Q1
  • Funnel opportunities are robust

– RFP activity is up significantly – Consultants are beginning to place EM in active searches Consultants are beginning to place EM in active searches

  • Global Core and Global Dividend are in demand
  • Q1 2013 net redemptions of $848 million
  • Committed institutional pipeline currently negative at $231 million

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FINANCIAL RESULTS FINANCIAL RESULTS

LTM Trending Results Quarter vs Quarter

($ millions, except per share amounts)

Q2’12 Q3’12 Q4’12 Q1’13 Q1’13 Q1’12 Change Revenue 133 5 119 8 125 0 122 5 122 5 132 0 (7 2%) Revenue 133.5 119.8 125.0 122.5 122.5 132.0 (7.2%) SG&A 47.0 49.8 41.3 44.1 44.1 43.2 2.1% EBITDA 50.3 36.3 50.0 45.3 45.3 52.5 (13.7%) EBITDA Margin 37.7% 30.3% 40.0% 37.0% 37.0% 39.8% (7.1%)

ing Operations

  • ns

EBITDA (adjusted) 50.3 42.2 49.2 45.3 45.3 52.5 (13.7%) EBITDA Margin (adjusted) 37.7% 35.2% 39.4% 37.0% 37.0% 39.8% (7.1%) Free Cash Flow 33.2 17.6 22.2 28.2 28.2 31.3 (10.2%)

Continu

Continuing Operatio

Net Income 23.8 (13.3) 15.7 15.6 15.6 17.3 (9.8%) EPS Diluted 0.25 (0.14) 0.17 0.17 0.17 0.18 (5.6%) EPS Diluted (adjusted) 0.25 0.17 0.20 0.17 0.17 0.18 (5.6%)

Consolidated Operations C

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SLIDE 10

REVENUE & EBITDA

80 0 150

132 0 133 5

65 0 70.0 75.0 80.0 135 140 145 150

Revenue EBITDA EBITDA (Adjusted) 132.0 133.5 119.8 125.0 122.5 50.0 52.5 50.3

50 0 55.0 60.0 65.0 120 125 130 135 TDA $ millions) venue $ millions)

36 3 42.2 49.2 45.3

35.0 40.0 45.0 50.0 105 110 115 120 (EBIT (Rev

EBITDA Margin 39 8% 37 7% 30 3% 40 0% 37 0%

(1)

36.3

30.0 100 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 10 10

EBITDA Margin 39.8% 37.7% 30.3% 40.0% 37.0%

  • Adj. EBITDA -
  • 35.2% 39.4%
  • (1)

Q3-12 EBITDA adjusted for $5.9m of one-time items related to restructuring (2) Q4-12 EBITDA adjusted for reversal of $0.8m of restructuring cost accrual

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FINANCIAL RESULTS – BPS DETAIL

A shift to more retail AUM mix drove revenue rate higher; reductions in fixed cost

(bps of average AUM)

Q1-13 Q1-12 TTM Q1-13 A shift to more retail AUM mix drove revenue rate higher; reductions in fixed cost base partially offset impact of lower AUM levels. Average AUM ($ billions) 39.6 46.5 42.3 Average Retail 20.1 22.7 20.9 A I tit ti l d HNW 19 5 23 8 21 4 Average Institutional and HNW 19.5 23.8 21.4 Revenue (bps) 126 115 120 Less: Trailer Fees (bps) 32 30 31 SG&A (bps)

(1)(2)

47 39 46 EBITDA (b )

(2)

47 46 43 EBITDA (bps)

(2)

47 46 43

(1) Includes investment advisory fees. (2) Adjusted to exclude one-time expenses.

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SLIDE 12

FREE CASH FLOW

AGF’s payout ratio will benefit from increased cash flow resulting from stronger AGF s payout ratio will benefit from increased cash flow resulting from stronger equity markets and share buyback activity

106%

50 60

Free Cash Flow Dividend % of Free Cash Flow (Payout Ratio)

400

$356m 41.7 39.2 33.2 28.2 60% 65% 76% 85%

30 40 50

($ millions)

22.2

10 20

Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Balance Sheet Cash

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SLIDE 13

FOCUS & PRIORITIES FOR 2013

As we move through 2013 we expect more stability in our operating businesses

Key Execution Priorities

As we move through 2013 we expect more stability in our operating businesses relative to 2012 and expect market gains to drive improving profitability

Key Execution Priorities

  • Track for 50% of funds above median by end of 2013
  • Fall launch of innovative product
  • Expect Q2 2013 gross and net sales to improve relative to 2012

Expect Q2 2013 gross and net sales to improve relative to 2012

  • Expect Institutional flows to be positive run-rate exiting 2013
  • Selective share repurchases throughout 2013
  • Maintain dividend

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SLIDE 14

QUESTIONS