AGF Management Q1 2026 Earnings Call Transcript

Quartr
Provided by Quartr
April 14, 2026

Key Takeaways

  • Positive Sentiment: AUM and fee‑earning assets exceeded CAD 60 billion, up 12% year‑over‑year; AGF Investments' Canadian mutual fund AUM was CAD 36 billion (+15% YoY) and ETF/SMA AUM grew ~54% YoY.
  • Positive Sentiment: Strong cash generation and balance sheet — free cash flow of CAD 36 million in Q1 (CAD 122 million TTM), net debt of CAD 48 million, CAD 432 million in short/long‑term investments, and an 8% quarterly dividend increase to CAD 0.135 plus continued buybacks.
  • Negative Sentiment: -CAD 16.8 million fair value adjustment to long‑term investments (net -CAD 10.6M after distributions) drove AGF Capital Partners’ Adjusted EPS to -CAD 0.05 and management trimmed near‑term long‑term investment return guidance to ~5–6% for FY26.
  • Neutral Sentiment: Kensington amendments lifted its redemption suspension, eliminated the redemption queue and implemented a new liquidity framework (aiming to make ~5% available per quarter) to better align redemptions with asset liquidity.
  • Neutral Sentiment: Leadership and strategic optionality — John Porter joins as CIO effective May 1, 2026, and AGF is actively evaluating an option to increase its stake in New Holland Capital (window open through H1 2027) after New Holland’s AUM rose to ~CAD 10 billion.
AI Generated. May Contain Errors.
Earnings Conference Call
AGF Management Q1 2026
00:00 / 00:00

Transcript Sections

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Operator

Thank you for standing by, and Welcome to the Q1 2026 AGF Management Limited earnings conference call. At this time, all participants are in 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 one one on your telephone. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Mr. Tsang. You may begin.

Ken Tsang
Ken Tsang
CFO at AGF Management Limited

Thank you, operator. Good morning, everyone. I'm Ken Tsang, Chief Financial Officer of AGF Management Limited. Today, we will be discussing the financial results for the first quarter of 2026. 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 Judy Goldring, Chief Executive Officer. For the Q&A period following the presentation, Ash Lawrence, Head of AGF Capital Partners, and David Stonehouse, Interim Chief Investment Officer, 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 Judy.

Judy Goldring
Judy Goldring
CEO at AGF Management Limited

Good morning, thank you for joining us. Before we get into the specifics of the quarter, I'd like to touch on some exciting news for AGF Investments announced late yesterday. Following a comprehensive global search, we are thrilled to welcome John Porter as Chief Investment Officer for AGF Investments, effective May 1, 2026. John brings decades of investment management and leadership experience overseeing investment management teams across markets and asset classes. John will also join AGF's Executive Management Team and will report directly to me. I want to sincerely thank David Stonehouse for his contributions as Interim Chief Investment Officer. David provided steady leadership that helped ensure disciplined execution and oversight of the investment management team during a pivotal period for the firm.

Judy Goldring
Judy Goldring
CEO at AGF Management Limited

Looking ahead, I am confident that under John's leadership, the investment team culture of high performance, collaboration, and risk management will continue positioning the firm for future growth. Continuing with our Q1 highlights, against the backdrop of significant market volatility, AGF continued to demonstrate the durability of our business. Outside of the impact of long-term investments, which I will speak to shortly, Q1 was a solid quarter. AUM and fee-earning assets were over CAD 60 billion at the end of Q1, up 12% from a year ago. AGF Investments' retail mutual fund business reported net sales of CAD 237 million in the quarter, marking our seventh consecutive quarter of positive retail mutual fund net sales. Seven of AGF's investment funds earned FundGrade A+ awards, which are given annually to investment funds that have delivered consistent, outstanding risk-adjusted performance throughout the year.

Judy Goldring
Judy Goldring
CEO at AGF Management Limited

The seven award-winning funds span across our suite of equities, balanced, and fixed income strategies. We continue to generate strong free cash flows, totaling CAD 36 million in the quarter, which is up 14% from last quarter. Free cash flows were CAD 122 million over the trailing 12 months. Our balance sheet remains strong, with CAD 432 million in short and long-term investments, net debt of CAD 48 million, with CAD 160 million available on our credit facility. The strength of our balance sheet and capital position provides us with flexibility to deploy capital thoughtfully in line with our strategic priorities. On the back of our strong capital position, the Board unanimously declared a CAD 0.135 per share quarterly dividend for Q1 2026, representing an 8% increase. This is the sixth consecutive year where we have increased our dividend.

Judy Goldring
Judy Goldring
CEO at AGF Management Limited

Following the quarter, we were pleased to see AGF added to the Nasdaq Broad Canadian Dividend Achievers Index, reflecting our track record of consistent dividend growth and our ongoing focus on returning capital to shareholders. During the quarter, we did see revenue from our long-term investments decrease to CAD -10.6 million. This represents a 2.5% decline in the value of our long-term investments during the period. As a consequence, our Adjusted EPS from AGF Capital Partners was CAD -0.05 per share. Excluding AGF Capital Partners Adjusted EPS was CAD 0.35, which is up 21% year-over-year. Our Adjusted Diluted EPS was CAD 0.30 in the quarter. Starting on slide six, we will provide updates on our business performance.

Judy Goldring
Judy Goldring
CEO at AGF Management Limited

On this slide, we break down our total AUM and fee-earning assets into categories disclosed in our MD&A and show comparisons to the prior year. AGF Investments' Canadian Mutual Fund AUM was CAD 36 billion, up 15% year-over-year, outpacing the industry increase of 14%. The growth of our ETF and SMA AUM globally remains strong, up 54% year-over-year. I'll provide more color on our mutual fund sales and ETF and SMA AUM in a moment. Segregated accounts and sub-advisory AUM decreased by 9% compared to the prior year. The decrease is driven by the redemptions from two institutional clients, as disclosed in previous quarters. Consequent to quarter-end, we saw inflows of CAD 350 million from an institutional client.

Judy Goldring
Judy Goldring
CEO at AGF Management Limited

We continue to see strong interest in our strategies in the institutional space with a number of existing clients. Our private wealth AUM increased by 13% compared to prior year to approximately CAD 10 billion. Our AGF Capital Partners AUM and fee-earning assets were CAD 4.5 billion at the end of the quarter. As a reminder, New Holland Capital's AUM of approximately CAD 10 billion 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 mutual fund sales. The mutual fund industry in Canada saw net positive sales of CAD 19 billion in the quarter. AGF Investments retail mutual funds delivered the seventh consecutive quarter of positive net sales, totaling CAD 237 million, in line with the industry net sales rate of 0.7% of AUM.

Judy Goldring
Judy Goldring
CEO at AGF Management Limited

Since Q1 2024, the Canadian mutual fund industry has recorded approximately CAD 55 billion of net sales, representing 2.5% of AUM. Over that same time period, AGF's retail mutual fund business generated roughly CAD 1 billion of net sales, or 3.3% of AUM, demonstrating our ability to continually grow market share. The strength of our retail mutual fund sales reflects the successful execution of our distribution strategy and our strong investment performance. Let me provide a brief update on our investment performance. AGF Investments 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 35th percentile, our three-year performance was in the 46th percentile, our five-year performance was in the 39th percentile, and nearly 2/3 of our funds are outperforming our peers on the three and five-year basis.

Judy Goldring
Judy Goldring
CEO at AGF Management Limited

Turning now to slide eight. In addition to our retail mutual fund net flows of CAD 237 million, the AUM in our ETF and SMA vehicles, which has now reached CAD 4.5 billion, have grown at 64% on a compounded basis over the last two years. We continue to see consistent growth and momentum in our SMA vehicles across U.S., Canada, and Asia, where many of our strategies are available on leading wealth management platforms. In January, we launched ETF series of AGF Global Select and AGF American Growth Fund here in Canada, two funds with long-standing and proven track records. The launch expands our Canadian ETF lineup and addresses growing advisor demand for more choice in how they access our capabilities for investors. I will now pass it over to Ken to discuss our financial results.

Ken Tsang
Ken Tsang
CFO at AGF Management Limited

Thanks, Judy. Slide nine reflects a summary of our financial results with sequential quarter and year-over-year comparisons. The financial results in these periods are adjusted to exclude severance, corporate development, non-cash acquisition-related expenses, as well as other adjustments as noted in our MD&A. Adjusted EBITDA for the quarter was CAD 30 million, down CAD 22 million from the prior quarter, and CAD 18 million from the prior year, primarily reflecting lower net revenues from AGF Capital Partners long-term investments, which we will expand on in a moment. SG&A was CAD 65 million, down CAD 3 million from the prior quarter and up CAD 1 million from the prior year. The decrease from the prior quarter was attributable to lower non-compensation and performance-based compensation, offset in part by the seasonally higher government benefits recorded in this quarter.

Ken Tsang
Ken Tsang
CFO at AGF Management Limited

The increase from the prior year was primarily due to higher non-compensation expenses, reflecting the impact of inflation, as well as increased sales and marketing and other AUM-driven costs. Net income attributable to equity owners for the quarter was CAD 20 million, and adjusted diluted EPS was CAD 30 cents. Free cash flows for the quarter was CAD 36 million, which is CAD 4.5 million higher than the prior year and prior quarter, reflecting strong cash generation. As a reminder, free cash flows excludes non-cash items such as fair value mark-to-market adjustments on our long-term investments. Slide 10 provides a further breakdown of our net revenues. Within our traditional asset and wealth management businesses, net management fees were CAD 93 million for the quarter, which is CAD 2 million lower than the prior quarter and CAD 7 million higher than the prior year.

Ken Tsang
Ken Tsang
CFO at AGF Management Limited

Sequential quarter decrease in net revenue rates reflect the timing of fund expenses as well as one less day in the quarter. Revenue from AGF Capital Partners was CAD 0.8 million this quarter, which decreased by CAD 22 million against the prior quarter and CAD 23 million against the prior year, driven primarily by lower revenues in our long-term investments. This quarter, we recorded a CAD -16.8 million fair value adjustment of long-term investments, partially offset by CAD 6.6 million in distribution income, resulting in revenues from long-term investments of CAD -10.6 million. This was primarily driven by our legacy long-term investments in the infrastructure space. While these investments have returned over CAD 36 million in distributions over the last 36 months, the sector has not been immune from the economic and trade environment.

Ken Tsang
Ken Tsang
CFO at AGF Management Limited

As a reminder, AGF is an investor in these legacy long-term investments where we also have retained an economic interest, but not the management of the funds. We view these as long-dated investments, and as we have seen in prior quarters, fair value adjustments can be lumpy, but we remain pleased with the long-term performance. Since inception, these investments have generated returns of over 11% per annum, exceeding our target annual returns of 8%-10%. In addition, this quarter we recorded CAD 4.6 million in other fair value and income, mostly related to our share of the 2025 profits earned at New Holland Capital. On slide 11, we outline adjustments to our EBITDA. As you might recall, M&A transactions in the AGF Capital Partners business gives rise to various LTIP contingent consideration and put obligation liabilities. These liabilities are fair valued each quarter with the difference flowing through to the P&L.

Ken Tsang
Ken Tsang
CFO at AGF Management Limited

These accruals and fair value adjustments have no immediate cash impact, which is why we've adjusted for these items to facilitate easier comparisons of our quarterly results. Adjusting for these items, along with severance and other adjustments, our Adjusted EBITDA for this quarter is CAD 30 million. Turning to slide 12, I will walk through the yield on our business in terms of basis points. This slide shows our average AUM net management fees, adjusted SG&A and EBITDA as basis points on our average AUM in the current quarter, previous quarter and trailing 12 months. This view excludes AUM and related results from AGF Capital Partners, as well as DSC revenues, other income, and any other one-time adjustments. The EBITDA yield this quarter was 24 basis points, which is consistent with the prior quarter and trailing 12 months.

Ken Tsang
Ken Tsang
CFO at AGF Management Limited

Turning to slide 13, I will discuss our free cash flows and capital uses. This slide represents the last five quarters of consolidated free cash flows on a trailing 12-month basis, as shown by the orange bars on the chart. The black line represents the percentage of free cash flows that was paid out as dividends. Our trailing 12-month free cash flows was CAD 122 million, and our dividend paid as a percentage of free cash flows was 26%. In the same period, we returned CAD 71 million to shareholders, consisting of CAD 32 million in dividends and CAD 39 million in share buybacks.

Ken Tsang
Ken Tsang
CFO at AGF Management Limited

During the quarter, we repurchased over one million shares under our NCIB. We ended the quarter with net debt of CAD 48 million. We also have CAD 432 million in short-term and long-term investments and have CAD 150 million remaining on our credit facility, which provides credit to a maximum of CAD 250 million.

Ken Tsang
Ken Tsang
CFO at AGF Management Limited

Our future capital allocation will be balanced and includes return of capital to shareholders in the form of dividends, share buybacks, as well as investing in areas of growth. Before I pass it back to Judy, let me take a minute on slide 14 to look at our valuation. AGF's current enterprise value is approximately CAD 1.3 billion. Taking into account our CAD 432 million of short and long-term investments with a conservative 10% discount, our remaining enterprise value is about CAD 945 million. This implies a 7x EV to EBITDA multiple on our fiscal 2025 Adjusted EBITDA, excluding income from our long-term and short-term investments. Comparing this multiple to those of other traditional and alternative asset managers and recent acquisitions would suggest further potential upside to our valuation, despite the strong positive share movement over the past few quarters.

Ken Tsang
Ken Tsang
CFO at AGF Management Limited

When we do see volatility in our stock, we continue to be very active and will continue to look for opportunities to buy back shares opportunistically. I will now pass it back to Judy to close out the presentation.

Judy Goldring
Judy Goldring
CEO at AGF Management Limited

To sum up this first quarter, we continue to make progress against our strategic objectives. Our traditional asset and wealth management business remains strong. Our AUM and fee-earning assets continue to climb, reaching over CAD 60 billion or 12% higher from prior year. Our investment performance remains solid, and our sales momentum remains strong. We are confident in the progress and direction of our private capital and alternatives business, notably its contribution to the diversification of AGF's overall business. We remain disciplined in our expense management while investing for growth. We increased our quarterly dividend by 8%, continuing a six-year track record of dividend growth. The strength of our balance sheet and capital position provides us with the flexibility in our capital allocation strategy and the resilience to weather different market environments. I would also like to take a moment to thank our AGF team for all their hard work.

Judy Goldring
Judy Goldring
CEO at AGF Management Limited

We will now take your questions.

Operator

Thank you. If you have a question at this time, please press star one one on your touch-tone telephone. One moment for our questions. Our first question comes from Gary Ho with Desjardins Capital Markets. Your line is open.

Gary Ho
Research Analyst of Financial Services at Desjardins Capital Markets

Thanks. Good morning. Just wanted to start off with a question on your private alt side. Just wondering if you can walk us through that CAD 16.8 million of non-cash fair value adjustment loss in the quarter. I know you carry infrastructure assets, private equity through Kensington and some private credit exposure. Can you maybe just break down what that relates to? I know there's sometimes DCF kind of involved in valuing these assets. Is it lower expected cash flows looking out or higher discount rates? Are the marks appropriate now in your view, and what gives you that confidence?

Ash Lawrence
Ash Lawrence
Head of AGF Capital Partners at AGF Management Limited

Hi, Gary. It's Ash here. I'll take that question.

Ash Lawrence
Ash Lawrence
Head of AGF Capital Partners at AGF Management Limited

As mentioned in Judy and Ken's earlier comments, the net CAD 10.6 million in fair value adjustments after the distributions, that was largely driven by markdowns in our legacy infrastructure fund holdings. Based on recent discussions we've had with the general partner for those funds, those adjustments were largely driven by the impact around the current economic environment in certain sectors, as well as the continued uncertainty through the end of last year with the cross-border tariff environment, and that is impacting certain businesses within their portfolio. I would also note that the net adjustment amount, the CAD 10.6 million, equates to a pretty modest 2.5% adjustment in the value of our long-term investments. Ken mentioned this in his comments as well, but over the long term, our long-term investment portfolio has produced an 11% return to AGF.

Ash Lawrence
Ash Lawrence
Head of AGF Capital Partners at AGF Management Limited

As with most private investments, we have a long-term perspective on these investments, and we continue to be pretty pleased with the performance that they're giving us. That said, we are reducing our expectations for returns on the portfolio for this fiscal year, for fiscal 2026, from our typical long-term guidance around 8%-10%, to a more modest 5%-6% for this year. Just to remind you again, our infrastructure investments, these are legacy fund investments where while we do retain an interest in certain fund economics, we do not have an ownership in the manager of these funds.

Gary Ho
Research Analyst of Financial Services at Desjardins Capital Markets

Okay. Thanks for that, Ash. Maybe just to clarify that 5%-6%, does that include the -2.5% in Q1? Also the infrastructure assets that you mentioned, any Middle East exposure there, or are they all North American?

Ash Lawrence
Ash Lawrence
Head of AGF Capital Partners at AGF Management Limited

Yeah. On your first question, that does include the 2.5%. There is no direct Middle East exposure. Certain assets in that business will have energy market exposure, which obviously at some point will tie back to what's going on in the Middle East.

Gary Ho
Research Analyst of Financial Services at Desjardins Capital Markets

Okay. Got it. Okay, great. My second question, I did see decent retail flows in the quarter, which included the RSP season. Can you elaborate on the retail environment today, and also last quarter? What are you seeing through your distribution channels? I know the markets have been choppy of late, geopolitical risk. Has that put a dent in the retail flows at all, or how's the retail side holding up?

Judy Goldring
Judy Goldring
CEO at AGF Management Limited

Yeah, thanks, Gary. Judy here. Well, we did comment, we saw CAD 237 million of net sales for the quarter. That was adjusted for one institutional outflow that occurred during the quarter as well. That being said, we found were quite pleased because we were right at market at 0.7% of AUM, which is the same as what industry saw. As well, mutual funds are obviously a primary source for us. We do see continued growth in our SMAs. I think as we look to the industry and as it continues to evolve, looking to how we count for the SMA flows is something that I think a number of our market participants are trying to deal with. Really, we would've seen double of our net sales had we included our SMAs.

Judy Goldring
Judy Goldring
CEO at AGF Management Limited

Quarter to date, I can just let you know we're about CAD 40 million net positive quarter to date. What we are seeing is a bit of skittishness with investors as they sort of assess where this market turmoil, and the economy generally is going given the volatility. We're still seeing strength in our SMA business, a little bit of softness on the mutual fund side.

Gary Ho
Research Analyst of Financial Services at Desjardins Capital Markets

Okay.

Ash Lawrence
Ash Lawrence
Head of AGF Capital Partners at AGF Management Limited

Gary, the CAD 40 million of quarter-to-date net sales excludes the SMA flows.

Gary Ho
Research Analyst of Financial Services at Desjardins Capital Markets

Yeah, got it. Okay. Maybe if I can sneak one more in for Ash. I believe you've passed the lock-up terms for the ability to increase your stake in New Holland Capital. I would've expected an announcement by now, but given the outperformance there, is there something that we're missing or talks are just ongoing? Just would appreciate an update there.

Ash Lawrence
Ash Lawrence
Head of AGF Capital Partners at AGF Management Limited

Yeah. Hi, Gary. You are correct. We are in a position, starting in the first half of this year, to exercise an option to increase our ownership in New Holland Capital. One thing to note, that window remains open through the first half of 2027 as well. It is not a one-time singular event. We have a window to exercise. We are actively evaluating that option. I think we've mentioned this on prior calls, but we are pretty pleased with our partnership and with the progress that New Holland has made over the last couple of years. In Canadian dollar terms, we've seen their AUM increase from approximately CAD 7 billion when we made our initial investment to around CAD 10 billion today. We are in active analysis and discussions around that option now.

Gary Ho
Research Analyst of Financial Services at Desjardins Capital Markets

Okay, great. No, thanks for the update. I'll jump back in the line. Thank you.

Operator

Thank you. Our next question comes from Bart Dziarski with RBC Capital Markets. Your line is open.

Bart Dziarski
Bart Dziarski
Diversified Financials Analyst at RBC Capital Markets

Great. Thanks. Good morning, everyone. I just wanted to ask around AGF Capital Partners. The recurring manager earnings of CAD 6.3 million, they're down sequentially and year-over-year. Could you just help us understand what's driving that trend?

Ash Lawrence
Ash Lawrence
Head of AGF Capital Partners at AGF Management Limited

Yeah. Hi, Bart. It's Ash again. That trend is largely due to some fair market value adjustments in Kensington's Evergreen private equity and venture portfolio. That obviously results in lower net asset values, on which the fee rate is applied for those vehicles. Depending on exactly which historic period you're comparing to, there may also be a little bit of impact from capital that was redeemed from that same fund in Q1 of 2025. That impact is largely driving that reduction you're seeing.

Bart Dziarski
Bart Dziarski
Diversified Financials Analyst at RBC Capital Markets

Okay, great. Thanks. Just a clarification, how big is the Evergreen PE venture portfolio?

Ash Lawrence
Ash Lawrence
Head of AGF Capital Partners at AGF Management Limited

That vehicle's approximately CAD 1.2 million of NAV.

Bart Dziarski
Bart Dziarski
Diversified Financials Analyst at RBC Capital Markets

Okay. Thank you. If we could just get an update on Kensington, the redemption suspension, is there any line of sight or clarity that you can give us as to when we could sort of get through that?

Ash Lawrence
Ash Lawrence
Head of AGF Capital Partners at AGF Management Limited

Yeah, absolutely. There is an update. On March 25th, actually, Kensington held a unitholder vote to pass certain amendments to the terms of the private equity fund. As a result of that vote passing, the suspension is actually lifted now. It also eliminated the redemption queue, and it implements a new redemption framework that will allow the fund to operate without the need to further suspend redemptions. The amendments basically allow the fund to manage liquidity in a manner that's more consistent with the underlying investments, while also avoiding the pressure to liquidate assets, either at inopportune times or at discounts. This sort of preserves the long-term value for all the unitholders in the fund. We are now in a position where the Kensington team is focused on the underlying assets again and managing that fund for its objectives for its unitholders.

Bart Dziarski
Bart Dziarski
Diversified Financials Analyst at RBC Capital Markets

Got it. Thanks, Ash, very helpful. That's it for me.

Operator

Thank you. Our next question comes from John Aiken with Jefferies. Your line is open.

John Aiken
John Aiken
Director of Research Canada and FIG Equity Research of Canadian Financials at Jefferies

Hi. Thank you for taking the questions. I just have a question on the CAD 4.3 million of special interest income that you received from New Holland. Assuming that you don't convert to notes, should we expect another CAD 4 million-CAD 5 million of interest income in Q1 2027?

Ken Tsang
Ken Tsang
CFO at AGF Management Limited

Yeah. Hi, it's Ken Tsang. The short answer is no. The CAD 4.5 million represents some our proportionate share of the earnings of New Holland above and beyond kind of the coupon that's collected. You will note that this is an increase. I think in the prior year, we would have recorded a similar revenue amount to about CAD 1 million. There is some volatility, depending on sort of the overall profitability of New Holland. 2025 was a good year for them. Part of those earnings were driven in part by the strong performance fees that they would have earned in the year as well.

John Aiken
John Aiken
Director of Research Canada and FIG Equity Research of Canadian Financials at Jefferies

Okay, got it. Thanks. The other question I had was, when we're looking at the investment management fee rate that you're collecting, I think in the past you've mentioned that you're expecting 2 basis points of annual compression. Is that still relevant today? Are we still seeing two basis points of annual compression on that management fee? What would that compression look like on the revenue basis only?

Ken Tsang
Ken Tsang
CFO at AGF Management Limited

Yeah. We do still expect a roughly two basis point annualized rate of decline in a year. That's driven in part by the success and the growth of our fee-based IIROC channels as assets shift from MF series to F series, as well as what Judy alluded to earlier of just the tremendous success in the SMA business, which has grown by more than 50% since last year. As a consequence, you will see that while our revenue basis points will trend lower, our overall revenues will increase over time. This quarter was compounded by some volatility in terms of the level of AUM that we saw. Just in the way it's calculated, the fees are determined based on daily AUM, but the denominator of that calculation is calculated based on simple averages for each of the months.

Ken Tsang
Ken Tsang
CFO at AGF Management Limited

That volatility does create a bit of noise in that number for this particular quarter.

John Aiken
John Aiken
Director of Research Canada and FIG Equity Research of Canadian Financials at Jefferies

Okay, got it. All right. Thank you for answering.

Operator

Thank you. Our next question comes from Graham Ryding with TD Securities. Your line is open.

Graham Ryding
Graham Ryding
Equity Research Analyst of Diversified Financials at TD Securities

Hi, good morning. Ash, maybe if you could just go back to the Kensington, just maybe a little bit more color on how you're managing those redemption requests going forward while still preserving the performance of the fund. Can you give us a little more detail on what the specific changes are?

Ash Lawrence
Ash Lawrence
Head of AGF Capital Partners at AGF Management Limited

Yeah, sure. The structure they've implemented going forward really provides the manager a little more flexibility in terms of making capital available for investor redemptions that is more consistent or in line with the cash management needs of the fund. It also basically eliminates an ongoing queue from ramping up, which can have sort of spiral effects on vehicles of this type. From a long-term perspective, that allows them to manage the fund consistent with what are generally illiquid assets below. It will require, from a cash management perspective, ensuring that there is liquidity available to investors on a relatively consistent basis, but it just doesn't put you in a vise grip at certain points in time in the market.

Graham Ryding
Graham Ryding
Equity Research Analyst of Diversified Financials at TD Securities

Okay. Is there any sort of quarterly limit to redemptions in place or is the entire structure fluid going forward?

Ash Lawrence
Ash Lawrence
Head of AGF Capital Partners at AGF Management Limited

It's a little more fluid going forward. The fund will endeavor to make 5% a quarter available. That is neither a cap nor an obligation.

Graham Ryding
Graham Ryding
Equity Research Analyst of Diversified Financials at TD Securities

Understood. Okay. The earnings that you earn from, I guess, New Holland Capital this quarter, that's based on 2025 earnings for that business. Does that reflect your 25% sort of interest in that entity? Is that the right way to think about it? Is it safe to assume that the earnings run rate is higher than what's implied with that CAD 4.6 million that you received?

Ken Tsang
Ken Tsang
CFO at AGF Management Limited

Yeah. Hi, Graham. Yes, the earnings from New Holland does represent our 25% stake. I will sort of highlight that a proportion of that is related to performance fees. These earnings again could be lumpy as a consequence.

Graham Ryding
Graham Ryding
Equity Research Analyst of Diversified Financials at TD Securities

Okay, understood. Last question, just for Judy. With the new hire of John Porter, can you just maybe elaborate a little bit on what it was about his track record or his skill set that sort of makes you think he's going to be a good fit for AGF and the right person for the role of CIO going forward?

Judy Goldring
Judy Goldring
CEO at AGF Management Limited

Yeah, thank you, Graham. We're really excited that John has joined us. He'll start May 1st. He comes from Boston, the U.S. He has decades, years of experience in investment management. He's been in leadership positions as well and certainly has overseen investment management teams across different markets and asset classes. The combination of sort of his passion, his capabilities, his leadership strength, being a talented portfolio manager, understanding the role of a CIO, I think he'll make a very strong addition to our investment team. We're really excited by that. I certainly want to make sure I give credit to David Stonehouse as well for his significant contributions. It really was truly valued during a very pivotal period of our firm. Again, thank you to David for his work as Interim CIO.

Graham Ryding
Graham Ryding
Equity Research Analyst of Diversified Financials at TD Securities

Okay, that's it for me. Thank you.

Operator

Thank you. Again, if you have a question, please press star one one on your touch-tone telephone. Again, that is star one one to ask a question. Our next question comes from Tom MacKinnon with BMO Capital. Your line is open.

Tom MacKinnon
Tom MacKinnon
Managing Director in Insurance and Diversified Financials at BMO Capital Markets

Yeah, thanks. Good morning. Just to follow up with respect to the March 25th agreement, with respect to Kensington, I think you mentioned about clearing the redemption queue. Were there any redemptions then? What does that mean in terms of where the AGF Capital AUM, which was sitting at CAD 4.465 billion at the end of Q1, how should we be thinking about where that would be sitting right now as a result of clearing that redemption queue?

Ash Lawrence
Ash Lawrence
Head of AGF Capital Partners at AGF Management Limited

Hi, Tom, it's Ash. Good question. Let me clarify. When I say cleared the redemption queue, I should have said eliminated the redemption queue. No redemptions were paid out as a result of the amendment passing on March 25th. That AUM going forward, or at least for now, until liquidity is made available for redemptions, will generally go forward reflecting fair market value adjustments in the portfolio, until such time as liquidity is available for redemptions.

Tom MacKinnon
Tom MacKinnon
Managing Director in Insurance and Diversified Financials at BMO Capital Markets

Is there any in order to get that agreement, was there any reduction in fees that Kensington can get?

Ash Lawrence
Ash Lawrence
Head of AGF Capital Partners at AGF Management Limited

There was no reduction in fees. There was a consolidation of two classes that had a very nominal impact on fee levels for one of those classes that got a little bit lower from a result of that consolidation, but nothing material, no.

Tom MacKinnon
Tom MacKinnon
Managing Director in Insurance and Diversified Financials at BMO Capital Markets

Okay. Just a question with respect to severance and other expenses. These are supposed to be part of normal course, but like in the last couple of years, they seem to be running about 2% of your overall expenses. They're closer to 5% in this quarter. Is there anything to call out and should we continue to kind of see these below-the-line severance expenses going forward?

Ken Tsang
Ken Tsang
CFO at AGF Management Limited

Yeah. Hi, Tom. Yeah, the elevated expenses this quarter reflected some targeted workforce adjustments that we've made to align our portfolio and repositioning for our initiatives. We make these tactical adjustments periodically in an effort to focus on improving efficiency while investing for growth. The number is quite lumpy. Just to give you a sense, last quarter it was virtually zero. Right? In this quarter it was CAD 3.5, which is why we've adjusted it out. It doesn't represent a normalized EBITDA run rate for the business.

Tom MacKinnon
Tom MacKinnon
Managing Director in Insurance and Diversified Financials at BMO Capital Markets

Everybody's always investing in the business, but what's the decision then to move some of these below the line?

Ken Tsang
Ken Tsang
CFO at AGF Management Limited

I think a number of firms actually do adjust out severance just because the point of making the adjustment is to provide more of a run rate EBITDA number for valuation purposes. To my earlier point, similar to how we view fair value adjustments on the liabilities, which again, can be lumpy, we try to just eliminate that noise as it's one of the few adjustments we make to the EBITDA. It's a fairly short list, but we felt that it's appropriate to do that for the investors to better evaluate our core underlying business from an EBITDA perspective.

Tom MacKinnon
Tom MacKinnon
Managing Director in Insurance and Diversified Financials at BMO Capital Markets

All right. Thanks.

Operator

Thank you. Again, if you have a question, please press star one one on your touch-tone telephone. Again, that is star one one on your touch-tone telephone if you have a question. I'm not showing any further questions at this time.

Judy Goldring
Judy Goldring
CEO at AGF Management Limited

Thank you very much for your questions. In closing, our investment performance and sales momentum remain strong. Our strong balance sheet and strong cash flow position provides flexibility to return capital to shareholders, continue investing in the long-term growth, and remain resilient through challenging market conditions. We continue here at AGF to make progress against our strategic objectives, and we look forward to our Q2 earnings call on June 24th, 2026.

Operator

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.

Executives
    • Ash Lawrence
      Ash Lawrence
      Head of AGF Capital Partners
    • Judy Goldring
      Judy Goldring
      CEO
    • Ken Tsang
      Ken Tsang
      CFO
Analysts
    • Bart Dziarski
      Diversified Financials Analyst at RBC Capital Markets
    • Gary Ho
      Research Analyst of Financial Services at Desjardins Capital Markets
    • Graham Ryding
      Equity Research Analyst of Diversified Financials at TD Securities
    • John Aiken
      Director of Research Canada and FIG Equity Research of Canadian Financials at Jefferies
    • Tom MacKinnon
      Managing Director in Insurance and Diversified Financials at BMO Capital Markets
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