AGF Management CEO Discusses F3Q2010 Results - Earnings Call Transcript

AGF Management CEO Discusses F3Q2010 Results - Earnings Call Transcript
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AGF Management Limited (AGF.B)

F3Q2010 Earnings Call Transcript

September 29, 2010 11:00 am ET

Executives

Robert Bogart – SVP and CFO

Blake Goldring – Chairman and CEO

Mario Causarano – President and COO, AGF Trust Company

Analysts

Geoff Kwan – RBC Capital Markets

Doug Young – TD Newcrest

John Reucassel – BMO Capital Markets

Paul Holden – CIBC World Markets

Presentation

Operator

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Ladies and gentlemen, thank you for standing by. Welcome to AGF’s third quarter 2010 financial earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. As a reminder, this conference call is being recorded, Wednesday, September 29, 2010. Your speakers for today are Mr. Blake C. Goldring, Chairman and Chief Executive Officer of AGF Management Limited; and, Mr. Robert J. Bogart, Senior Vice President and Chief Financial Officer of AGF Management Limited.

Today's call and accompanying presentation may include forward-looking statements. Such forward-looking statements are given as of the date of this call and involve risks and uncertainties. A number of factors and assumptions were applied in the formulation of such statements and actual results could differ materially. For additional information regarding such forward-looking statements, factors and assumptions, AGF directs you to the caution regarding forward-looking statements, which is contained on page two of the presentation, AGF's MD&A for the three and nine months ended August 31, 2010, and AGF’s most recent annual information form.

I will now turn the call over to Mr. Bogart. Please go ahead, Mr. Bogart.

Robert Bogart

Thank you, operator. Good morning, everybody. I am Bob Bogart, CFO of AGF Management Limited. It's a pleasure to have you join us for today’s call. Please note that the slides supporting today's call and web cast can be found in the Investor Relations section of AGF.com.

Today, Blake Goldring, Chairman and CEO and I will discuss AGF’s third quarter results. Also joining us on the call and available to answer questions is Mario Causarano, President and COO of AGF Trust.

I’ll now turn the call over to Blake.

Blake Goldring

Thank you, Bob, and welcome to everyone listening to today's conference call. Since our last update in late June, equity markets continue to remain somewhat volatile despite some positive activity in September. For example, during our fiscal third-quarter the S&P/TSX was up 1.3%, while the S&P 500 and NASDAQ were down 2.1% and 4.8% respectively. Of course, that is in Canadian dollar terms.

Concerns remain about the global economic recovery being stalled and losing momentum, thus impacting market sentiment. It is expected that global economic growth will be subdued for an extended period of time. Even though the Canadian economy has faired better as far as jobs, addition of jobs, the indicators also point to slower than expected progress for the economy.

It is fair to say that the global recovery is in a transitory phase, where government stimulus is being replaced by a more self-sustaining consumer spending and business investment led recovery. All this means that continued uncertainty for investors and preference for bonds [ph] and income products, which we are also continuing to focus on.

Last quarter, I highlighted a number of new products we launched to address these needs, and we expect to gain traction over time. In the meantime, we continue to forge ahead in our growth plans and our strategic activities. Our goal, as always, is to help investors succeed in all market environments and life stages. Our overall financial picture remains strong, and we continue to plug away at the redemption trend.

Let me begin by providing you with our financial highlights for the last quarter. Similar to the previous quarter, we continue to track well in all fronts. For example, our AUM continues to be up year-over-year. At quarter end, assets under management were $42.6 billion compared to $41 billion for the same period last year. Total consolidated revenue increased to $148.7 million compared to $146.9 million in the third quarter of 2009.

EBITDA also increased by 8.7% year-over-year to $61 million. On the Trust side of the business, our financial picture was equally positive and our capital position remained strong. While loan assets were down year-over-year to $3.2 million, part of the increase was a 34.7% decline in the provision for loan losses for an overall 15.2% increase in EBITDA to $10.6 million.

Our diluted earnings per share were $0.31 in the third quarter compared to $0.25 in the same period last year. On an adjusted basis, our diluted earnings per share were $0.34. Bob will talk about the adjustment later in the presentation.

Finally, in keeping with our commitment to returning value to shareholders, we paid dividends of $0.26 per share and bought back 846,000 shares during the quarter. Moving to the next slide, I want to look at our assets under management as it shows that our diversification strategy is working. We consider diversification to be one of our strengths and essential to being a successful investment management firm.

As you can see from this slide, our asset base is split evenly between institutional, high net worth and retail assets. We have achieved this intentionally because we believe that a diversified business model will deliver the most value to our shareholders. We are diversified by client, by investment style, and by our geography. We serve Canadian and international investors through our retail, institutional, and private counsel businesses.

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