AGF Management Limited

Good day. Thank you for standing by. And welcome to the fourth quarter 2024 AGF Management Limited Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. As so much, this call is being recorded. I would now like to introduce your host for today's conference. Mr. Tseng, you may begin.

Thank you, Operator, and good morning, everyone. I'm Ken Tsang, Chief Financial Officer at AGF Management Limited. Today, we will be discussing the financial results for the fourth quarter and fiscal 2024. Slides supporting today's call and webcast can be found in the investor relations section of AGF.com. Also speaking on the call today will be Kevin McCready, Chief Executive Officer and Chief Investment Officer. For the question and answer period following the presentation, Judy Goldring, President and Head of Global Distribution, and Ash Lawrence, Head of AGF Capital Partners, will also be available to address questions. Slide four provides the agenda for today's call. After the prepared remarks, we will be happy to take questions. With that, I will now turn the call over to Kevin.

Kevin McCready Thank you, Ken. And thank you, everyone, for joining us today. 2024 was a mixed year with elevated interest rates and consumer prices, which dampened investor sentiment in the first half. This is followed by robust markets and positive flows in the second half as interest rates eased. Against this backdrop, AGF performed very well and ended the year on a very strong note. We concluded the year with approximately $54 billion in AUM and fee-earning assets, which is a 27% increase from the previous year. This growth reflects improvements across all lines of business. Our Canadian retail mutual fund business reported net sales of $14 million in the quarter, marking the second consecutive quarter of positive net sales. Supporting our positive mutual fund flows was our strong investment performance, with one-year performance at the 48th percentile and three-year performance at the 41st percentile. Our capital position remains strong. After completing two transactions earlier this year, We have net cash of $38 million and $235 million available on our credit facility. In addition, we have $341 million in short and long-term investments on our balance sheet. Our strong financial position provides us with the flexibility in our capital allocation strategy. Turning to our financial results, adjusted EBITDA for the year was $166 million, which is 26% higher than the prior year. We also reported adjusted diluted EPS of $0.45 for the quarter. On a full year basis, we reported adjusted diluted EPS of $1.67, which is a 25% increase compared to the prior year. Ken will provide more color on our financials in a moment. We also paid a quarterly dividend of $0.115 per share for the fourth quarter. Starting on slide six, we will provide an update on our business performance. On this slide, we break down our total AUM and fee earning assets in the categories disclosed in our MD&A, and show comparisons to the prior year. Our mutual fund AUM reached $31 billion, up 25% year-over-year, outpacing the industry increase of 20%. Our ETF and SMA AUM increased 73% year-over-year. I'll provide more color on our mutual fund business and ETFs and SMA AUM in a moment. Segregated accounts and subadvisory AUM also increased by 3% compared to the prior year. Our private wealth AUM increased by 17% compared to the prior year to $8.6 billion. And our AGF Capital Partners AUM and fee-earning assets were $4.9 billion at the end of the year, up $2.7 billion from the prior year due to the closing of the Kensington transaction. As a reminder, New Holland Capital's AUM of approximately $8 billion Canadian is not consolidated into AGF's total AUM and fee-earning assets at this time. Turning to slide seven, I'll provide some details on the mutual fund business. The Canadian mutual fund industry experienced net sales of $8 billion in the quarter, recording the second consecutive quarter of positive net sales. AGF's retail mutual fund business also achieved its second consecutive quarter of positive net sales, with $14 million reported this quarter. We are beginning to see the positive effects from interest rate reductions as investor confidence improves and, over time, hardship from elevated interest rates and inflation debates. We're also seeing positive effects from our penetration and higher growth distribution channels as we've diversified our capabilities and offerings. I want to now give a quick update on our investment performance. AGF measures mutual fund performance by comparing gross returns before fees relative to peers within the same category, with the first percentile being the best possible performance. Our one-year performance was in the 48th percentile, and our three-year performance was in the 41st percentile, and approximately 60% of our strategies are outperforming our peers on a three- and five-year basis. Turning now to slide eight. Slide eight shows our ETF and SMA AUM. The AUM in this category has grown 43% on a compounded basis over the last two years. Included in this number are Canadian and U.S.-listed ETFs and SMA platforms globally. The demand for our market-neutral anti-beta ETF, which offers a strategic hedge against volatile markets, has remained strong, and we are seeing growing interest in the ETF series of mutual funds that were launched earlier in 2024. Further, we have seen consistent growth and momentum in the SMA business across the U.S., Canada, and Asia, where many of our strategies are available on leading SMA and wealth management platforms. Turning to slide nine, I'll provide an update on our capital partners business. A decade ago, we began our journey to establish AGF's footprint in alternative investments. In 2022, we formally established AGF Capital Partners, our multi-boutique alternatives business. During 2024, we made a strategic investment into New Holland Capital, which was announced in February of 2024. and acquired a 51% stake in Kensington Capital Partners in March of 2024. Today, our affiliate managers have over $13 billion of AUM and fee-earning assets spread across private equity, private credit, venture capital, and hedge funds. In January, we launched the AGF-NHC Tactical Alpha Fund as part of our next step in our partnership with New Holland Capital as we continue to build and grow our alternatives business and diversify our capabilities. To further support this growth, we also combined the Kensington and AGF Capital Partners Client Solutions teams into a dedicated alternative-focused distribution team as part of an integrated strategy to deliver a full range of alternative and private market solutions to retail, high net worth, and institutional clients in Canada. As we continue to look for acquisitions in the space, partnering firms will also benefit from AGF's scale, brand, and distribution network to drive further growth. With that, I will turn the call over to Ken.