Invesco Ltd · NYSE:IVZ
Invesco — FY2008 Earnings Presentation
38 slides from Invesco's earnings presentation, Jan 30, 2009
Slide 1: Full Year 2008 and Fourth Quarter Results
Invesco Full Year 2008 and Fourth Quarter Results January 30, 2009 Martin L. Flanagan, Chief Executive Officer Loren M. Starr, Chief Financial Officer
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, earnings, expenses, liquidity, cash flow and capital expendit
Slide 3: Discussion Topics
Discussion Topics 1. Full Year 2008 and 4Q08 Results 2. Improving Our Competitive Position 3. Questions and Answers 4. Appendix 3
Slide 4: FY 2008 and Fourth Quarter Overview
FY 2008 and Fourth Quarter Overview Focus on disciplined management in a challenging environment: Continued execution of our multi-year strategy Strengthened investment performance Avoided major credit and liquidity problems for our clients and our company Stabilized asset flows Maintained
Slide 5: Financial Highlights – 2008
Financial Highlights – 2008 2008 2007 Vs. 2007 Ending AUM $357.2bn $500.1bn (28.6)% Operating Revenues $3,308mn $3,879mn (14.7)% Operating Income $748mn $994mn (24.8)% Diluted EPS $1.21 $1.64 (26.2)% Net Operating 31.6% 36.0% (4.4) points Margin* *See the Schedule of Non-GAAP Information in the appe
Slide 6: We Are Diversified As A Firm
We Are Diversified As A Firm Delivering a diverse set of solutions to meet a broad set of global investment needs By Client Domicile By Channel By Asset Class Money Balanced Market 9.2% 23.6% Canada 6.7% Retail U.S. 41.8% Fixed 65.1% U.K. Income 15.9% Equity Institutional 17.0% 54.4% 36.0% Europe Pr
Slide 7: Quarterly Flows
Quarterly Flows Net long-term flows are generally stable despite challenging markets In 4Q08, lower long-term net flows largely due to decreased gross sales Total net flows (long-term plus institutional money market) improved by $9.1bn quarter over quarter Quarterly Long-Term Flows ($ billions
Slide 8: Investment Performance – Overview
Investment Performance – Overview Aggregate Performance Analysis (3-year) – Asset Weighted Strong overall peer group performance (asset-weighted) – 76%, 76%, and 77% of assets are in the top-half of peer groups for the 1, 3, and 5-year time periods as of December 31, 2008. % Assets in Top Half of Pe
Slide 9: Investment Performance Highlights
Investment Performance Highlights Morningstar ratings at highest level since 10/31/00 Invesco Flagship Charter Fund is top decile over 1, 3 and 5 years Aim Approximately half of AUM is in the top Lipper quartile over 1, 3 and 5 years Strong improvement with 81% of AUM in top half of peers In
Slide 10: Key Areas of Investment Performance Improvement
Key Areas of Investment Performance Improvement Morningstar ratings at highest level since 10/31/00 on an asset weighted basis Continued strength in international and sector funds with improved performance in core and growth styles are driving our improved ratings Morningstar Ratings 12/31/08 9/
Slide 11: Key Areas of Investment Performance Improvement
Key Areas of Investment Performance Improvement Invesco Quantitative Strategies Performance relative to benchmark improved in 2008 compared to 2007 Strength in US equity products is driving the improved performance 3 and 5 year relative performance declined modestly as strong performance in 20
Slide 12: Fixed Income Opportunities
Fixed Income Opportunities There are tremendous opportunities in the fixed income market worldwide: Market for fixed income assets is large and growing Aging investor population Investors seeking broad range of fixed income products Potential search activity increase 12
Slide 13: Invesco Worldwide Fixed Income
Invesco Worldwide Fixed Income $150.7 billion in assets under management 124 investment professionals Operating in six cities across four countries: Louisville, New York, Houston, London, Frankfurt, Melbourne Diversified Investment Strategies More Aggressive Opportunistic CLO/CDO/CSO Global Hi
Slide 14: Invesco Strategic Priorities
Invesco Strategic Priorities Strategic Priorities Key Highlights Significantly improving investment Achieve strong performance and leveraging centers of investment performance expertise Deliver Aligning our investment capabilities investment against client needs, delivered the way capabilities g
Slide 15: Financial Highlights – 4Q08
Financial Highlights – 4Q08 4Q08 3Q08 Vs. 3Q08 AUM $357.2bn $409.6bn (12.8)% Operating Revenues $634.4mn $827.2mn (23.3)% Operating Income $84.5mn $195.2mn (56.7)% Decline in operating income due to $21.1 ($3.3) $21.1mn in Q4 charges (3Q credit:$3.3mn)* Diluted EPS $0.08 $0.33 (75.5)% Decline in dil
Slide 16: Assets Under Management – 4Q08 vs. 3Q08
Assets Under Management – 4Q08 vs. 3Q08 ($ billions) 4Q08 3Q08 % Change Beginning Assets $409.6 $461.3 (11.2)% Long-Term Inflows 15.5 16.8 (7.7)% Long-Term Outflows (19.9) (19.8) (0.5)% Long-Term Net flows (4.4) (3.0) (46.7)% Net flows in Money Market Funds 2.4 (8.1) N/A Market Gains/Reinvestment (3
Slide 17: Operating Results – 4Q08 vs. 3Q08
Operating Results – 4Q08 vs. 3Q08 ($ millions) 4Q08 3Q08 % Change* Investment Management Fees 479 665 (28.0)% Performance Fees 24 18 31.5% Service and Distribution Fees 101 129 (21.6)% Other 31 15 107.4% Total Operating Revenues 634 827 (23.3)% Employee Compensation 236 264 (10.6)% Third-Party Distr
Slide 18: Continued Strength in Our Capital Position
Continued Strength in Our Capital Position EBITDA and Credit Facility Financial 12/31/08 09/30/08 Covenants* 12/31/08 09/30/08 Debt $1.2bn $1.4bn EBITDA $937.6mn $1,166mn Cash $585mn $741mn Leverage Ratio 1.28 1.17 Not greater than 3.25 Drawn $12mn $172mn Interest Coverage Ratio 12.20 15.19 Credit N
Slide 19: Expense Guidance 2009
Expense Guidance 2009 $450 Million in Expense Decrease Third Party Employee Distribution, Compensation Service & 48% Advisory 35% $ millions $2,885 $2,560 $450 17% $2,110 Other (17.6)% Discretionary Expense Saving 50% 2007 2008 2009 Expense G&A Forecast 6% Property Office & 44% Technology Marketing
Slide 20: 2008-2009 Expense Guidance Rollforward
2008-2009 Expense Guidance Rollforward 2009 guidance assumes continuation of year-end 2008 business environment 2008 ending AUM was $357.2b, 18.9% lower than 2008 average AUM of $440.6b while 2009 expenses are estimated to decrease 17.6% (including additional investments into the business) 200
Slide 21: Discussion Topics
Discussion Topics 1. Full Year 2008 and 4Q08 Results 2. Improving Our Competitive Position 3. Questions and Answers 4. Appendix 21
Slide 22: Focus on improving our competitive position
Focus on improving our competitive position Continuing to execute our multi-year strategy through a disciplined management approach Continued focus on strengthening our investment management capabilities Further aligning our business with the needs of our clients Accelerating emphasis on ope
Slide 23: Questions & Answers
Questions & Answers Full Year 2008 and Fourth Quarter Results January 30, 2009 Martin L. Flanagan, Chief Executive Officer Loren M. Starr, Chief Financial Officer
Slide 24: Discussion Topics
Discussion Topics 1. Full Year 2008 and 4Q08 Results 2. Improving Our Competitive Position 3. Questions and Answers 4. Appendix 24
Slide 25: Focusing on Investment Excellence
Focusing on Investment Excellence By Investment Objective* % of AUM 1st quartile above 2nd quartile Equities benchmark US Core US Growth US Value Sector 100% 95% 94% 92% 79% 64% 64% 83% 75% 82% 43% 30% 28% 25% 32% 44% 27% 36% 19% 13% 17% 16% 14% 12% 16% 13% 11% 8% 3% 0% 4% 4% 3% 3% 1-yr 3-yr 5-yr 1-
Slide 26: Focusing on Investment Excellence
Focusing on Investment Excellence By Investment Objective* % of AUM 1st quartile above Equities Balanced benchmark 2nd quartile Global Ex US and Global Emerging Markets Balanced 100% 96% 97% 92% 84% 62% 58% 67% 8% 56% 39% 53% 51% 53% 5% 71% 41% 55% 16% 34% 36% 32% 12% 32% 19% 8% 10% 0% 1-yr 3-yr 5-y
Slide 27: The Value We Deliver To Our Clients
The Value We Deliver To Our Clients Specialized investment capabilities globally One of Invesco’s greatest competitive advantages is the combined power of our distinctive worldwide investment management capabilities. With offices worldwide, capabilities in virtually every asset class and investment
Slide 28: Assets Under Management – Annual
Assets Under Management – Annual ($ billions) 2008 2007 % Change 2006 Beginning Assets $500.1 $462.6 8.1% $386.3 Long-Term Inflows 72.7 119.9 (39.4)% 85.8 Long-Term Outflows (94.6) (123.3) (23.3)% (87.2) Long-Term Net flows (21.9) (3.4) N/A% (1.4) Net flows in Money Market Funds and Other 8.4 10.1 (
Slide 29: Operating Results – Annual
Operating Results – Annual ($ millions) 2008 2007 % Change* 2006 Investment Management Fees 2,618 3,080 (15.0)% 2,508 Performance Fees 75 70 6.8% 82 Service and Distribution Fees 513 593 (13.6)% 535 Other 102 135 (24.5)% 122 Total Operating Revenues 3,308 3,879 (14.7)% 3,247 Employee Compensation 1,
Slide 30: Assets Under Management – 2008 by Channel
Assets Under Management – 2008 by Channel ($ billions) Total Retail Institutional PWM December 31, 2006* $462.6 $239.0 $206.9 $16.7 Inflows 119.9 86.6 28.2 5.1 Outflows (123.3) (80.6) (37.4) (5.3) Net flows (3.4) 6.0 (9.2) (0.2) Net flows in Money Market Funds 10.1 (0.3) 10.4 -- and Other Market Gai
Slide 31: Assets Under Management – 2008 by Asset Class
Assets Under Management – 2008 by Asset Class Fixed Money ($ billions) Total Equity Income Balanced Market Alternative December 31. 2006* $462.6 $215.2 $83.1 $46.6 $65.3 $52.4 Inflows 119.9 74.6 14.7 10.1 1.5 19.0 Outflows (123.3) (64.2) (35.1) (9.6) (2.1) (12.3) Net flows (3.4) 10.4 (20.4) 0.5 (0.6
Slide 32: Assets Under Management – 2008 by Client Domicile
Assets Under Management – 2008 by Client Domicile ($ billions) Total U.S. Canada U.K. Europe Asia December 31, 2006* $462.6 $280.4 $43.3 $73.8 $38.5 $26.6 Inflows 119.9 48.2 6.7 22.0 21.4 21.6 Outflows (123.3) (64.7) (6.8) (10.0) (25.6) (16.2) Net flows (3.4) (16.5) (0.1) 12.0 (4.2) 5.4 Net flows in
Slide 33: Operating Results – Quarterly
Operating Results – Quarterly ($ millions) 4Q08 3Q08 % Change* 2Q08 1Q08 4Q07 3Q07 2Q07 1Q07 Investment Management Fees 479 665 (28.0)% 737 738 816 792 766 706 Performance Fees 24 18 31.5% 22 11 13 4 34 19 Service and Distribution Fees 101 129 (21.6)% 143 138 151 151 148 143 Other 31 15 107.4% 33 23
Slide 34: Assets Under Management - Quarterly
Assets Under Management - Quarterly ($ billions) 4Q08 3Q08 % Change 2Q08 1Q08 4Q07 Beginning Assets $409.6 $461.3 (11.2)% $470.3 $500.1 $507.2 Long-Term Inflows 15.5 16.8 (7.7)% 19.4 20.8 30.9 Long-Term Outflows (19.9) (19.8) (0.5)% (25.6) (29.2) (35.9) Long-Term Net flows (4.4) (3.0) (46.7)% (6.2)
Slide 35: Assets Under Management – by Channel
Assets Under Management – by Channel ($ billions) Total Retail Institutional PWM June 30, 2008* $461.3 $225.4 $219.6 $16.3 Long-Term Inflows 16.8 12.0 3.7 1.1 Long-Term Outflows (19.8) (14.2) (4.6) (1.0) Long-Term Net flows (3.0) (2.2) (0.9) 0.1 Net flows in Money Market Funds (8.1) 0.1 (8.2) -- Mar
Slide 36: Assets Under Management – by Asset Class
Assets Under Management – by Asset Class Fixed Money ($ billions) Total Equity Income Balanced Market Alternative June 30, 2008* $461.3 $203.4 $64.9 $44.9 $89.9 $58.2 Long-Term Inflows 16.8 9.2 3.1 2.0 0.8 1.7 Long-Term Outflows (19.8) (12.4) (2.4) (2.2) (0.7) (2.1) Long-Term Net flows (3.0) (3.2) 0
Slide 37: Assets Under Management – by Client Domicile
Assets Under Management – by Client Domicile ($ billions) Total U.S. Canada U.K. Europe Asia June 30, 2008* $461.3 $279.5 $38.9 $80.1 $31.8 $31.0 Inflows 16.8 8.8 0.5 4.4 1.9 1.2 Outflows (19.8) (10.5) (2.1) (2.6) (2.8) (1.8) Long-Term Net flows (3.0) (1.7) (1.6) 1.8 (0.9) (0.6) Net flows in Money M
Slide 38: Schedule of Non-GAAP Information
Schedule of Non-GAAP Information For the three months ended For year ended Dec 31, Sep 30, Dec 31, Dec 31, Dec 31, 2008 2008 2007 2008 2007 Operating revenues, GAAP $634.4 $827.2 $1,023.1 $3,307.6 $3,878.9 basis Third-party distribution, service and advisory expenses (162.6) (220.9) (284.9) (875.5)