AGF Management Limited Earnings Call NUGGETS: SG&A Reduction, Restructuring Costs

On Wednesday, AGF Management Limited (AGF.B) reported its third quarter earnings and discussed the following topics in its earnings conference call. Take a look.

SG&A Reduction

Geoffrey Kwan – RBC Capital Markets: Just had a question on when you were talking about the reductions in SG&A. So I think previously you’ve been talking about SG&A for this year coming in around $180 million. So was that talk about SG&A next year coming in more around $170 million?

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Robert J. Bogart – EVP and CFO: That’s right, Geoff.

Geoffrey Kwan – RBC Capital Markets: With respect to Highstreet you mentioned obviously there has been some redemptions in that product, can you talk about where the AUM is left in Highstreet today on a total basis and of that, how much of it would be on the institutional side?

Robert J. Bogart – EVP and CFO: There is roughly $2 billion of assets under management at Highstreet and roughly 50% of that’s in the institutional space.

Geoffrey Kwan – RBC Capital Markets: Then the last question I had was on the NCIB you’ve talked about being active with that, and your NCIB I believe comes up at the end of January. Given the amount of cash you’ve got there, is it a fair statement to say that you’re probably going to max out both this year and even potentially next year on the NCIB?

Blake C. Goldring – Chairman and CEO: That’s the plan as it stands today. Certainly, we fully expect to utilize the NCIB, the current NCIB to its fullest and then as part of the year plan obviously our capital plan, which has to go to the Board and get approved that’s something that we’ll be recommending.

Geoffrey Kwan – RBC Capital Markets: Sorry, actually if I can ask one more question. Just with the new hires that you’ve had to the global team, has there been kind of any initial responses back from on the Institutional side to the new hires that you had on the team?

Blake C. Goldring – Chairman and CEO: Absolutely. We’ve been very active Jeff in meeting our existing clients and very, very favorably received.

Restructuring Costs 

Stephen Boland – GMP Securities: Just a few quick questions. I guess the $3 million you took in restructurings this quarter, it sounds like with the ongoing savings anticipation should we expect further restructuring costs in subsequent quarters?

Robert J. Bogart – EVP and CFO: As it stands today Steve no, that $3.8 million, that we’ve highlighted would produce the $10 million save through the next 12 quarters. If there were further restructuring then we would have to take it up at that time.

Stephen Boland – GMP Securities: I think you mentioned that out of the institutional pipeline, majority of that $1.5 million is expected to come out, a lot of that I think is coming from Highstreet, so will there be another goodwill adjustment?

Robert J. Bogart – EVP and CFO: No, no that was taken into consideration as part of this accounting write-down.

Stephen Boland – GMP Securities: I guess when I look at your debt-to-EBITDA, the numbers have gone quite – kind of doubled over the last year, I’m not really familiar with the covenants on your debt, hasn’t really been an issue before, should we be concerned about that and will that impact your ability to buy back stock?

Robert J. Bogart – EVP and CFO: No it will not Steve. We have plenty of coverage under all of our debt covenants and you got to make sure that you’re looking at on adjusted EBITDA figure as opposed to the EBITDA we reported for the quarter.

Stephen Boland – GMP Securities: Could you disclose what those covenants are Bob.

Robert J. Bogart – EVP and CFO: I don’t believe we do.

Stephen Boland – GMP Securities: Would you like to disclose them now.

Robert J. Bogart – EVP and CFO: I don’t believe I will.

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