Invesco Ltd · NYSE:IVZ
Invesco — Q2 2018 Earnings Presentation
48 slides from Invesco's earnings presentation, Jul 26, 2018
Slide 1: Invesco second quarter 2018 results
Invesco second quarter 2018 results Martin L. Flanagan President and Chief Executive Officer Loren M. Starr Chief Financial Officer July 26, 2018
Slide 2: Forward-looking statements
Forward-looking statements This presentation, and comments made in the associated conference call today, may include “forward- looking statements.” Forward-looking statements include information concerning future results of our operations, expenses, earnings, liquidity, cash flow and capital expendi
Slide 3: Presentation of second quarter 2018 results
Presentation of second quarter 2018 results This presentation includes the following non-GAAP performance measures: net revenue (and by calculation, net revenue yield on AUM), adjusted operating income, adjusted operating margin, adjusted net income attributable to Invesco Ltd., and adjusted diluted
Slide 4: Discussion topics
Discussion topics Second quarter overview Financial results Strengthening competitive advantage for growth Appendix 4
Slide 5: Highlights for today's discussion
Highlights for today’s discussion ▪ Achieved gross sales of $54.4 billion during the quarter, up 32% from second quarter 2017. Redemptions up as well, reflecting market dynamics ▪ Market dynamics impacting near-term relative performance in three of Invesco’s value- based equity strategies that we’re
Slide 6: Second quarter overview – highlights
Second quarter overview – highlights Investment ▪ 70% and 71% of actively managed assets in top half of peer group on a 3- and 5- Performance year basis Assets under ▪ June 30, 2018 AUM of $963.3 billion, up from $934.2 billion at March 31, 2018 management ▪ Average AUM was $973.9 billion, up from $
Slide 7: Investment performance – overview
Investment performance – overview Aggregate performance analysis – asset weighted Percent of actively managed assets in top half of peer group* 1-Year 3-Year 5-Year Assets top half of peer group Assets bottom half of peer group * Excludes passive products, closed-end funds, private equity limited pa
Slide 8: A growing dispersion between value and growth performance
A growing dispersion between value and growth performance Value stocks out of favor in late stage of the bull market Difference between value-based and growth-based equity performance 300 249.369 250 200 169.545 150 100 50 0 Russell 2000 Growth Index Russell 2000 Value Index Source: Bloomberg data a
Slide 9: Quarterly long-term flows
Quarterly long-term flows Strong gross sales offset by higher redemption levels Quarterly long-term flows ($billions) Total Active Passive Retail (a) Institutional (b) (a) Retail AUM and flows are distributed by the company’s retail sales team and generally includes retail products in the U.S., Cana
Slide 10: Discussion topics
Discussion topics Second quarter overview Financial results Strengthening competitive advantage for growth Appendix 10
Slide 11: Total assets under management – Q2-18 vs. Q1-18
Total assets under management – Q2-18 vs. Q1-18 ($ billions) Q2-18 Q1-18 % Change Beginning Assets $934.2 $937.6 (0.4)% Long-Term Inflows 54.4 56.6 (3.9)% Long-Term Outflows (62.4) (56.3) 10.8% Long-Term Net Flows (8.0) 0.3 N/A Net flows in non-management fee earning AUM* 0.9 (0.4) N/A Net flows in
Slide 12: US GAAP operating results – Q2-18 vs. Q1-18
US GAAP operating results – Q2-18 vs. Q1-18 ($ millions) Q2-18 Q1-18 % Change Operating Revenues Investment Management Fees 1,050.5 1,043.7 0.7% Service and Distribution Fees 242.9 246.1 (1.3)% Performance Fees 11.6 9.1 27.5% Other 55.6 56.9 (2.3)% Total Operating Revenues 1,360.6 1,355.8 0.4% Opera
Slide 13: Non-GAAP operating results – Q2-18 vs. Q1-18
Non-GAAP operating results – Q2-18 vs. Q1-18 ($ millions) Q2-18 Q1-18 % Change Adjusted Revenues Investment Management Fees 1,074.0 1,066.8 0.7% Service and Distribution Fees 242.9 246.1 (1.3)% Performance Fees 12.9 9.1 41.8% Other 57.0 58.1 (1.9)% Third-Party Distribution, Service and Advisory Expe
Slide 14: Discussion topics
Discussion topics Second quarter overview Financial results Strengthening competitive advantage for growth Appendix 14
Slide 15: Several macro-trends are transforming the investment management industry
Several macro-trends are transforming the investment management industry Macro themes Client sophistication – Clients are seeking greater transparency, enhanced service, and outcomes-based partnerships Next-generation passives – Passives have proliferated, but the market is evolving beyond cap-weigh
Slide 16: Our key strengths position us ahead of key trends within the industry
Our key strengths position us ahead of key trends within the industry Elements of our strong foundation Differentiated strengths ▪ High-quality, tenured teams in key locations across the globe with proven and Investment consistent track records platform ▪ Broad diversity of high-conviction investmen
Slide 17: We continue to invest to strengthen our competitive advantage
We continue to invest to strengthen our competitive advantage and grow the business long term Key driver Opportunity Invesco position Recent highlights ▪ A $5 trillion market1 expected to ▪ $211 billion in global ETF AUM; ▪ Launched a new suite of 8 fixed ETFs continue to grow rapidly fourth-largest
Slide 18: We continue to invest to strengthen our competitive advantage
We continue to invest to strengthen our competitive advantage and grow the business long term Key driver Opportunity Invesco position Recent highlights ▪ In 2022, 66% of global AUM are ▪ Early mover and an industry ▪ Jemstep is live with 20+ clients Digital expected to be advisor assisted 1 leader i
Slide 19: Highlights for today's discussion
Highlights for today’s discussion ▪ Achieved gross sales of $54.4 billion during the quarter, up 32% from second quarter 2017. Redemptions up as well, reflecting market dynamics ▪ Market dynamics impacting near-term relative performance in three of Invesco’s value- based equity strategies that we’re
Slide 20: Discussion topics
Discussion topics Second quarter overview Financial results Strengthening competitive advantage for growth Appendix 20
Slide 21: We are diversified as a firm
We are diversified as a firm Delivering a diverse set of solutions to meet client needs By client domicile By channel By asset class 15% 3% 10% 66% 65% 47% 34% 24% 13% 9% 8% 6% 1-Yr 1-Yr ($ billions) Change ($ billions) Change ($ billions) 1-Yr Change Equity $446.9 14.2% U.S. $622.1 11.2% Retail $63
Slide 22: Investment performance by investment objective
Investment performance By investment objective (actively managed assets)* Equities AUM above benchmark 1st quartile 2nd quartile 100% 100% 1-Yr 3-Yr 5-Yr 1-Yr 3-Yr 5-Yr 100% 100% 1-Yr 3-Yr 5-Yr 1-Yr 3-Yr 5-Yr * Excludes passive products, closed-end funds, private equity limited partnerships, non-dis
Slide 23: Investment performance by investment objective (continued)
Investment performance By investment objective (actively managed assets)* (CONTINUED) Equities Other 100% 100% 100% 100% 1-Yr 3-Yr 5-Yr 1-Yr 3-Yr 5-Yr 1-Yr 3-Yr 5-Yr 1-Yr 3-Yr 5-Yr Fixed income 100% 100% 100% 100% 1-Yr 3-Yr 5-Yr 1-Yr 3-Yr 5-Yr 1-Yr 3-Yr 5-Yr 1-Yr 3-Yr 5-Yr * Excludes passive product
Slide 24: Investment performance (5-year) by investment objective
Investment performance (5-year) By investment objective (actively managed assets)* Percentages in parentheses represent % AUM of each investment objective as a ratio of all objectives (Total ranked AUM of $475.2 billion) Equities * Excludes passive products, closed-end funds, private equity limited
Slide 25: Investment performance (5-year) by investment objective (continued)
Investment performance (5-year) By investment objective (actively managed assets)* (CONTINUED) Percentages in parentheses represent % AUM of each investment objective as a ratio of all objectives (Total ranked AUM of $475.2 billion Equities Other Fixed income * Excludes passive products, closed-end
Slide 26: US GAAP operating results – quarterly
US GAAP operating results – quarterly ($ millions) Q2-18 Q1-18 % Change* 4Q-17 3Q-17 2Q-17 1Q-17 4Q-16 3Q-16 Investment Management Fees 1,051 1,044 0.7% 1,099 1,062 1,010 955 947 966 Service and Distribution Fees 243 246 (1.3)% 218 218 211 206 209 213 Performance Fees 12 9 27.5% 43 42 17 11 18 3 Oth
Slide 27: Non-GAAP operating results – quarterly
Non-GAAP operating results– quarterly ($ millions) Q2-18 Q1-18 % Change* 4Q-17 3Q-17 2Q-17 1Q-17 4Q-16 3Q-16 Investment Management Fees 1,074 1,067 0.7% 1,119 1,082 1,028 974 965 983 Service and Distribution Fees 243 246 (1.3)% 218 218 211 206 209 213 Performance Fees 13 9 41.8% 43 43 18 18 18 4 Oth
Slide 28: Total assets under management – quarterly
Total assets under management – quarterly ($ billions) Q2-18 Q1-18 % Change 4Q-17 3Q-17 2Q-17 1Q-17 4Q-16 3Q-16 Beginning Assets $934.2 $937.6 (0.4)% $917.5 $858.3 $834.8 $812.9 $820.2 $779.6 Long-Term Inflows* 54.4 56.6 (3.9)% 50.8 45.0 41.1 46.4 45.1 49.1 Long-Term Outflows (62.4) (56.3) 10.8% (52
Slide 29: Total assets under management – by asset class
Total assets under management – by asset class ($ billions) Total Equity Fixed Income Balanced Money Market Alternatives December 31, 2017 $937.6 $431.2 $225.8 $57.7 $78.7 $144.2 Long-Term Inflows 56.6 25.6 14.9 5.4 1.7 9.0 Long-Term Outflows (56.3) (31.3) (12.6) (2.9) (1.4) (8.1) Long-Term Net flow
Slide 30: Total assets under management – by asset class
Total assets under management – by asset class ($ billions) Total Equity Fixed Income Balanced Money Market Alternatives June 30, 2017 $858.3 $391.2 $208.9 $52.2 $76.1 $129.9 Long-Term Inflows 45.0 19.1 12.4 3.1 1.3 9.1 Long-Term Outflows (40.9) (22.5) (8.5) (3.0) (1.1) (5.8) Long-Term Net flows 4.1
Slide 31: Total assets under management – by channel
Total assets under management – by channel ($ billions) Total Retail Institutional December 31, 2017 $937.6 $637.0 $300.6 Long-Term Inflows 56.6 43.7 12.9 Long-Term Outflows (56.3) (45.8) (10.5) Long-Term Net flows 0.3 (2.1) 2.4 Net flows in non-management fee earning AUM* (0.4) (0.1) (0.3) Net flow
Slide 32: Total assets under management – by channel
Total assets under management – by channel ($ billions) Total Retail Institutional June 30, 2017 $858.3 $572.4 $285.9 Long-Term Inflows 45.0 35.8 9.2 Long-Term Outflows (40.9) (33.0) (7.9) Long-Term Net flows 4.1 2.8 1.3 Net flows in non-management fee earning AUM* 0.9 (1.0) 1.9 Net flows in Inst. M
Slide 33: Total assets under management – by client domicile
Total assets under management – by client domicile Continental ($ billions) Total U.S. Canada U.K. Asia Europe December 31, 2017 $937.6 $585.4 $26.8 $110.9 $127.1 $87.4 Long-Term Inflows 56.6 26.1 1.5 4.1 17.3 7.6 Long-Term Outflows (56.3) (28.6) (1.6) (5.2) (15.2) (5.7) Long-Term Net flows 0.3 (2.5
Slide 34: Total assets under management – by client domicile
Total assets under management – by client domicile Continental ($ billions) Total U.S. Canada U.K. Asia Europe June 30, 2017 $858.3 $559.2 $24.8 $103.8 $86.6 $83.9 Long-Term Inflows 45.0 20.6 1.0 4.3 13.8 5.3 Long-Term Outflows (40.9) (20.9) (1.1) (3.2) (10.5) (5.2) Long-Term Net flows 4.1 (0.3) (0.
Slide 35: Passive assets under management – by asset class
Passive assets under management – by asset class ($ billions) Total Equity Fixed Income Balanced Money Market Alternative December 31, 2017 $199.0 $128.4 $57.3 $— $— $13.3 Long-Term Inflows 16.5 10.3 3.3 — — 2.9 Long-Term Outflows (14.7) (10.6) (2.8) — — (1.3) Long-Term Net flows 1.8 (0.3) 0.5 — — 1
Slide 36: Passive assets under management – by asset class
Passive assets under management – by asset class ($ billions) Total Equity Fixed Income Balanced Money Market Alternative June 30, 2017 $156.6 $103.5 $46.5 $— $— $6.6 Long-Term Inflows 9.9 5.9 2.8 — — 1.2 Long-Term Outflows (8.6) (6.3) (1.7) — — (0.6) Long-Term Net flows 1.3 (0.4) 1.1 — — 0.6 Net fl
Slide 37: Passive assets under management – by channel
Passive assets under management – by channel ($ billions) Total Retail Institutional December 31, 2017 $199.0 $182.0 $17.0 Long-Term Inflows 16.5 16.5 — Long-Term Outflows (14.7) (14.7) — Long-Term Net flows 1.8 1.8 — Net flows in non-management fee earning AUM* (0.4) (0.1) (0.3) Net flows in Inst.
Slide 38: Passive assets under management – by channel
Passive assets under management – by channel ($ billions) Total Retail Institutional June 30, 2017 $156.6 $141.5 $15.1 Long-Term Inflows 9.9 9.9 — Long-Term Outflows (8.6) (8.6) — Long-Term Net flows 1.3 1.3 — Net flows in non-management fee earning AUM* 0.9 (1.0) 1.9 Net flows in Inst. Money Market
Slide 39: Passive assets under management – by client domicile
Passive assets under management – by client domicile Continental ($ billions) Total U.S. Canada U.K. Asia Europe December 31, 2017 $199.0 $167.3 $0.6 $— $30.0 $1.1 Long-Term Inflows 16.5 9.4 — — 7.1 — Long-Term Outflows (14.7) (8.4) (0.1) — (6.2) — Long-Term Net flows 1.8 1.0 (0.1) — 0.9 — Net flows
Slide 40: Passive assets under management – by client domicile
Passive assets under management – by client domicile Continental ($ billions) Total U.S. Canada U.K. Europe Asia June 30, 2017 $156.6 $152.8 $0.6 $— $2.1 $1.1 Long-Term Inflows 9.9 6.1 0.1 — 3.7 — Long-Term Outflows (8.6) (5.1) (0.1) — (3.4) — Long-Term Net flows 1.3 1.0 — — 0.3 — Net flows in non-m
Slide 41: Reconciliation of US GAAP to non-GAAP – three months ended June 30, 2018
Reconciliation of US GAAP results to non-GAAP results – three months ended June 30, 2018 Please refer to pages 8-10 in the 2Q 2018 earnings press release for a description of the adjustments ($ millions) Proportional 3rd party distribution, Market appreciation / Consolidated Other US GAAP Business N
Slide 42: Reconciliation of US GAAP to non-GAAP – three months ended March 31, 2018
Reconciliation of US GAAP results to non-GAAP results - Invesco three months ended March 31, 2018 Please refer to pages 8-10 in the 10 2018 earnings press release for a description of the adjustments ($ millions) ‘Other Meee Seis Seiten cS, euch ret innate rene St? Operating Revenues is Joint Ventur
Slide 43: Reconciliation of US GAAP to non-GAAP – three months ended December 31, 2017
Reconciliation of US GAAP results to non-GAAP results – three months ended December 31, 2017 Please refer to pages 9-12 in the 4Q 2017 earnings press release for a description of the adjustments ($ millions) Proportional 3rd party distribution, Market appreciation / Consolidated Other US GAAP Busine
Slide 44: Reconciliation of US GAAP to non-GAAP – three months ended September 30, 2017
Reconciliation of US GAAP results to non-GAAP results – three months ended September 30, 2017 Please refer to pages 8-10 in the 3Q 2017 earnings press release for a description of the adjustments ($ millions) Proportional 3rd party distribution, Market appreciation / Consolidated Other US GAAP Busin
Slide 45: Reconciliation of US GAAP to non-GAAP – three months ended June 30, 2017
Reconciliation of US GAAP results to non-GAAP results – three months ended June 30, 2017 Please refer to pages 8-10 in the 2Q 2017 earnings press release for a description of the adjustments ($ millions) Proportional 3rd party distribution, Market appreciation / Consolidated Other US GAAP Business N
Slide 46: Reconciliation of US GAAP to non-GAAP – three months ended March 31, 2017
Reconciliation of US GAAP results to non-GAAP results – three months ended March 31, 2017 Please refer to pages 7-9 in the 1Q 2017 earnings press release for a description of the adjustments ($ millions) Other US GAAP Proportional 3rd party distribution, Market appreciation / Consolidated Business N
Slide 47: Reconciliation of US GAAP to non-GAAP – three months ended December 31, 2016
Reconciliation of US GAAP results to non-GAAP results – three months ended December 31, 2016 Please refer to pages 9-11 in the 4Q 2016 earnings press release for a description of the adjustments ($ millions) Other US GAAP Proportional 3rd party distribution, Market appreciation / Consolidated Busine
Slide 48: Reconciliation of US GAAP to non-GAAP – three months ended September 30, 2016
Reconciliation of US GAAP results to non-GAAP results – three months ended September 30, 2016 Please refer to pages 8-10 in the 3Q 2016 earnings press release for a description of the adjustments ($ millions) Other US GAAP Proportional 3rd party distribution, Market appreciation / Consolidated Busin