Janus Henderson Group Plc · NYSE:JHG
Janus Henderson — Q2 2019 Earnings Presentation
44 slides from Janus Henderson's earnings presentation, Jul 31, 2019
Slide 1: Janus Henderson Group 2Q19 results presentation
Dick Weil Chief Executive Officer Roger Thompson Chief Financial Officer Janus Henderson Group 2Q19 results presentation Wednesday 31 July 2019
Slide 2: 2Q19 results
1 2Q19 results • 3 year investment performance strengthened in 2Q19 • AUM of US$359.8bn reflects impact of stronger markets partially offset by net outflows during the quarter • Adjusted diluted EPS of US$0.61 • Declared US$0.36 per share dividend and completed US$75m of share buybacks 2Q19 1Q19 3 y
Slide 3: Business and financial results
Roger Thompson Chief Financial Officer 2Q19 results presentation Business and financial results
Slide 4: Investment performance
3 Capability 1 year 3 years 5 years Equities Fixed Income Quantitative Equities Multi-Asset Alternatives Total Capability 1 year 3 years 5 years Equities Fixed Income Quantitative Equities Multi-Asset Alternatives Total Investment performance Total company investment performance improved in 2Q19 % o
Slide 5: Total flows 2Q17 to 2Q19
4 20.2 18.3 20.0 19.7 17.1 17.7 16.6 15.6 15.6 (21.2) (17.6) (22.9) (22.4) (19.8) (22.0) (25.0) (23.0) (25.4) (1.0) 0.7 (2.9) (2.7) (2.7) (4.3) (8.4) (7.4) (9.8) 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Total flows Total flows 2Q17 to 2Q19 (US$bn) Redemptions Sales Net sales / (redemptions) 24%
Slide 6: Principal components of 2Q19 net flows
5 (9.8) (4.1) (2.5) (1.0) (0.8) (1.4) Total Company Net Flows Quantitative Equities Global Emerging Markets Core Plus Fixed Income European Equities Remaining Business Principal components of 2Q19 net flows 2Q19 net flows driven by weakness in four known areas 14.8 13.6 14.7 (20.3) (17.0) (16.1) (5.
Slide 7: Statement of income
6 Statement of income Note: See adjusted financial measures reconciliation on slide 36 for additional information. US GAAP and adjusted US GAAP Adjustments Adjusted Revenue Management fees 446.4 Performance fees 3.5 Shareowner servicing fees 38.3 Other revenue 47.7 Total revenue 535.9 (101.5) 434.4
Slide 8: Summary financial results
7 US$, except margin data 2Q19 1Q19 Change 2Q19 vs 1Q19 2Q18 Change 2Q19 vs 2Q18 Average AUM 357.7bn 350.0bn 2% 369.1bn (3%) Total revenue 535.9m 519.3m 3% 592.4m (10%) Operating income 118.5m 124.5m (5%) 175.3m (32%) Operating margin 22.1% 24.0% (1.9ppt) 29.6% (7.5ppt) US GAAP diluted EPS 0.56 0.48
Slide 9: 2Q19 adjusted revenue drivers
8 2Q19 adjusted revenue drivers Revenue 2Q19 adjusted revenue reflects higher assets and improved performance Pro forma adjusted revenue – 1Q19 vs 2Q19 (US$m) Note: See adjusted financial measures reconciliation on slide 36 for additional information. 1 Net margin based on management fees net of dis
Slide 10: Operating expenses
9 282.4 (0.7) 274.0 2.7 0.8 0.6 4.6 0.4 1Q19 Compensation and benefits LT incentive plans Investment administration Marketing General, admin. and occupancy Depreciation and amortisation 2Q19 Adjusted operating expenses – 1Q19 vs 2Q19 (US$m) Operating expenses Note: See adjusted financial measures re
Slide 11: Capital management
10 Capital management Continued commitment to return of capital – US$244m year to date Note: JHG purchases shares on market for the annual share grants associated with variable compensation, which is not included in the above share repurchases. 1 Total shares outstanding reflect amounts disclosed on
Slide 12: Strategic priorities update
Dick Weil Chief Executive Officer 2Q19 results presentation Strategic priorities update
Slide 13: Our path to success: Excellence and execution
12 Our path to success: Excellence and execution Produce dependable investment outcomes Excel in client experience Focus and increase operational efficiency Proactive risk and control environment Develop new growth initiatives Focus on quality and stability of investment performance Embed understand
Slide 14: Produce dependable investment outcomes
13 Produce dependable investment outcomes A legacy of exceptional investment thinking that… … spans multiple asset classes … is not tied by a central or dominant investment style or philosophy … incorporates differing approaches to creating alpha Ensuring the success of a global, diversified investi
Slide 15: Excel in client experience
14 Enhancing a culture of excellence by weaving client experience into everything we do as a firm Excel in client experience • Embedding client-centric values into all of our policies, procedures and processes Building client experience capabilities • Enhancing client relationship journeys and redes
Slide 16: Focus and increase operational efficiency
15 Focus • Focusing our product portfolio • Standardising global operating model and systems • Consolidating to a strategic data architecture • Streamlining and reducing operational complexity Focus and increase operational efficiency Proactive risk and control environment What we are working on • B
Slide 17: Develop new growth initiatives
16 Develop new growth initiatives Building the foundations for future businesses • Appointed Head of Multi-Asset and Alternatives • Organising existing capabilities and developing new ones for the future Multi-Asset and Alternatives ETFs Asia Pacific region • Supporting our growing business with imp
Slide 18: Our outlook remains encouraging
17 Our outlook remains encouraging Net outflows mask many encouraging results we see across our business Investment performance People and talent Winning new business Financial strength • Total company investment performance is strong • 66%, 72% and 80% of AUM beating benchmarks over the 1, 3 and 5
Slide 19: Q&A
QsauVHS ‘ADGIIMONy Q&A Janus Henderson
Slide 20: Appendix
Appendix SHARED ll KNOWLEDGE.
Slide 21: Assets under management as at 30 Jun 2019
20 53% 21% 13% 10% 3% Equities Fixed Income Quantitative Equities Multi-Asset Alternatives Assets under management as at 30 Jun 2019 54% 30% 16% North America EMEA & LatAm Asia Pacific By client type By capability By client location US$191.3bn US$73.5bn US$47.6bn US$35.1bn US$12.3bn US$159.5bn US$13
Slide 22: Investment management capabilities
21 Investment management capabilities Diversified product range Equities US$191.3bn AUM 30 Jun 2019 US$359.8bn Fixed Income US$73.5bn Multi-Asset US$35.1bn Self-directed Intermediary Institutional Institutional Institutional Quantitative Equities US$47.6bn Equities • Wide range of equity strategies
Slide 23: Largest pooled funds by capability
22 Largest pooled funds by capability Capability Fund Product Strategy AUM (US$bn) 30 Jun 2019 JnsHnd Enterprise US Mutual Fund Mid Cap Growth 21.2 JnsHnd Research US Mutual Fund US Research Growth Equity 14.5 JnsHnd Forty US Mutual Fund Concentrated Growth 13.2 JnsHnd Triton US Mutual Fund Small-Mi
Slide 24: 2Q19 flows by capability
23 2Q19 flows by capability 6.9 5.5 0.2 2.1 0.9 (12.9) (5.2) (4.3) (1.5) (1.5) (6.0) 0.3 (4.1) 0.6 (0.6) Equities Fixed Income Quantitative Equities Multi-Asset Alternatives 2Q19 flows by capability (US$bn) Annualised gross sales¹ Redemptions Sales Net sales / (redemptions) 15% 30% 2% 25% 28% (27%)
Slide 25: Flows: Equities and Fixed Income
24 Flows: Equities and Fixed Income 8.5 6.8 8.6 6.9 6.9 (9.6) (9.9) (12.7) (9.8) (12.9) (1.1) (3.1) (4.1) (2.9) (6.0) 2Q18 3Q18 4Q18 1Q19 2Q19 5.0 6.0 4.7 4.9 5.5 (5.6) (7.6) (6.0) (7.7) (5.2) (0.6) (1.6) (1.3) (2.8) 0.3 2Q18 3Q18 4Q18 1Q19 2Q19 Equities (US$bn) Fixed Income (US$bn) Redemptions Sale
Slide 26: Flows: Quantitative Equities, Multi-Asset and Alternatives
25 1.8 2.2 2.3 2.2 2.1 (1.3) (1.3) (2.0) (1.5) (1.5) 0.5 0.9 0.3 0.7 0.6 2Q18 3Q18 4Q18 1Q19 2Q19 0.4 1.3 0.3 0.7 0.2 (1.2) (1.3) (1.4) (1.7) (4.3) (0.8) (0.0) (1.1) (1.0) (4.1) 2Q18 3Q18 4Q18 1Q19 2Q19 1.4 1.4 0.7 0.9 0.9 (2.1) (1.9) (2.9) (2.3) (1.5) (0.7) (0.5) (2.2) (1.4) (0.6) 2Q18 3Q18 4Q18 1Q
Slide 27: Total net flows by capability
26 Total net flows by capability 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Equities Fixed Income Quantitative Equities Multi-Asset Alternatives (1.0) Total net flows by capability 2Q17 to 2Q19 (US$bn) Note: Data for 2Q17 presents pro forma flows of JHG as if the merger had occurred at the beginni
Slide 28: AUM and flows by capability
27 AUM and flows by capability All data in US$bn Equities Fixed Income Quantitative Equities Multi-Asset Alternatives Total AUM 31 Mar 2018 190.7 80.0 50.4 31.8 19.0 371.9 Sales 8.5 5.0 0.4 1.8 1.4 17.1 Redemptions (9.6) (5.6) (1.2) (1.3) (2.1) (19.8) Net sales / (redemptions) (1.1) (0.6) (0.8) 0.5
Slide 29: Investment performance
28 Investment performance % of AUM outperforming benchmark Note: Outperformance is measured based on composite performance gross of fees vs primary benchmark, except where a strategy has no benchmark index or corresponding composite in which case the most relevant metric is used: (1) composite gross
Slide 30: Mutual fund investment performance
29 Mutual fund investment performance % of mutual fund AUM in top 2 Morningstar quartiles Note: Includes Janus Investment Fund, Janus Aspen Series and Clayton Street Trust (US Trusts), Janus Henderson Capital Funds (Dublin based), Dublin and UK OEIC and Investment Trusts, Luxembourg SICAVs and Austr
Slide 31: Mutual fund investment performance (cont'd)
30 Mutual fund investment performance (cont’d) Group 23 21 39 30 55 40 35 30 44 43 51 50 47 55 51 37 50 26 48 23 17 26 32 23 25 17 31 33 26 30 60 71 65 78 78 57 60 62 67 68 68 81 80 81 81 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 % of mutual fund AUM in top 2 Morning
Slide 32: Mutual fund investment performance (cont'd): Fixed Income
31 38 42 52 39 38 38 3 5 3 3 48 4 4 20 17 46 24 23 16 2 12 53 55 52 93 47 58 59 98 63 61 54 5 17 3 3 53 55 100 97 51 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 Mutual fund investment performance (cont’d) Fixed Income 10 11 33 37 38 9 19 14 24 27 13 14 15 18 21 32 52 1
Slide 33: Mutual fund investment performance (cont'd): Multi-Asset
32 Mutual fund investment performance (cont’d) Multi-Asset 90 81 84 82 83 80 82 83 84 84 79 82 84 84 85 2 5 4 2 4 3 6 6 2 2 4 6 5 4 3 92 86 89 84 87 83 88 89 86 87 83 88 88 88 88 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 % of mutual fund AUM in top 2 Morningstar quar
Slide 34: Balance sheet
33 739.9 731.0 568.1 557.9 1,308.0 1,288.9 318.4 317.7 Cash and investments Debt Cash and investments Debt 1 Includes seed investments of US$442.7m (including investment securities of consolidated variable interest entities of US$297.4m), investments related to deferred compensation plans of US$125.
Slide 35: US GAAP: statement of income
34 US GAAP: statement of income Note: 2Q18 reflects the reclassification of certain revenue amounts from ‘Other revenue’ to ‘Shareowner servicing fees’. 3 months ended 30 Jun 2019 31 Mar 2019 30 Jun 2018 Revenue Management fees 446.4 441.9 493.5 Performance fees 3.5 (5.6) 13.5 Shareowner servicing f
Slide 36: Adjusted: statement of income
35 Adjusted: statement of income Note: 2Q18 reflects the reclassification of certain revenue amounts from ‘Other revenue’ to ‘Shareowner servicing fees’. See adjusted financial measures reconciliation on slides 36 and 37 for additional information. 3 months ended 30 Jun 2019 31 Mar 2019 30 Jun 2018
Slide 37: Alternative performance measures
36 Alternative performance measures Reconciliation of adjusted financial measures 3 months ended 30 Jun 2019 31 Mar 2019 30 Jun 2018 Reconciliation of revenue to adjusted revenue Revenue 535.9 519.3 592.4 Distribution expenses1 (101.5) (101.9) (114.7) Adjusted revenue 434.4 417.4 477.7 Reconciliatio
Slide 38: Alternative performance measures (cont'd)
37 Alternative performance measures (cont’d) Reconciliation of adjusted financial measures 3 months ended 30 Jun 2019 31 Mar 2019 30 Jun 2018 Reconciliation of net income to adjusted net income, attributable to JHG Net income attributable to JHG 109.4 94.1 140.6 Employee compensation and benefits2,3
Slide 39: Footnotes to reconciliation of adjusted financial measures
38 Alternative performance measures (cont’d) Footnotes to reconciliation of adjusted financial measures 1 Substantially all distribution expenses are paid to financial intermediaries for the distribution of JHG’s investment products. JHG management believes that the deduction of third- party distrib
Slide 40: Performance fees
39 2Q19 (US$m) 1Q19 (US$m) 2Q18 (US$m) AUM generating 2Q19 pfees (US$bn) # of funds generating 2Q19 pfees Frequency Timing SICAVs 1.5 – 4.2 4.9 12 23 annually; 2 quarterly 23 at June; 2 on quarters Offshore Absolute Return – – 1.5 – – Quarterly / Annually Various Segregated Mandates1 5.5 3.3 4.4 13.
Slide 41: US mutual funds with performance fees
40 US mutual funds with performance fees Mutual funds with performance fees¹ AUM 30 Jun 2019 US$m Benchmark Base fee Performance fee2 Performance cap/(floor) vs benchmark 2Q19 P&L impact US$’000 Research Fund³ 14,503 Russell 1000® Growth Index 0.64% ± 15 bps ± 5.00% (4,031) Forty Fund³ and Portfolio
Slide 42: Long-term incentive compensation
41 Long-term incentive compensation Estimated future long-term incentive compensation amortisation US$m Amount remaining to expense 2019 2020 2021 2022 2023 2016 annual grant 7 7 – – – – 2017 annual grant 23 18 5 – – – 2018 annual grant 82 52 24 6 – – 2019 annual grant 148 72 49 22 4 1 Other¹ 110 36
Slide 43: Contacts
42 Contacts Investor enquiries John Groneman Global Head of Investor Relations +44 (0) 20 7818 2106 john.groneman@janushenderson.com Jim Kurtz US Investor Relations Manager +1 (303) 336 4529 jim.kurtz@janushenderson.com Melanie Horton Non-US Investor Relations Manager +44 (0) 20 7818 2905 melanie.ho
Slide 44: Forward looking information
43 Past performance is no guarantee of future results. Investing involves risk, including the possible loss of principal and fluctuation of value. Forward looking information This presentation includes statements concerning potential future events involving Janus Henderson Group plc that could diffe
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