Janus Henderson Group Plc · NYSE:JHG
Janus Henderson — Q2 2020 Earnings Presentation
43 slides from Janus Henderson's earnings presentation, Jul 29, 2020
Slide 1: Janus Henderson Group 2Q20 results presentation
Dick Weil Chief Executive Officer Roger Thompson Chief Financial Officer Janus Henderson Group 2Q20 results presentation Wednesday 29 July 2020
Slide 2: Progress since the merger; Next steps: Simple Excellence
1 Progress since the merger Next steps: ‘Simple Excellence’ ✓ While growth and net flows have not met expectations, recent results are showing positive momentum Building on the encouraging signs of growth, powered by the execution of our Simple Excellence strategy ✓ Successfully created a unified co
Slide 3: Business and financial update
Roger Thompson Chief Financial Officer 2Q20 results presentation Business and financial update
Slide 4: 2Q20 results
3 2Q20 results • Investment performance is solid over 1, 3 and 5 years • AUM increased 14% to US$336.7bn as improved global markets offset net outflows • Adjusted diluted EPS of US$0.67 • Declared US$0.36 per share dividend and completed US$22m of share buybacks 2Q20 1Q20 3-year investment outperfor
Slide 5: Investment performance
4 Capability 1 year 3 years 5 years Equities Fixed Income Quantitative Equities Multi-Asset Alternatives Total Capability 1 year 3 years 5 years Equities Fixed Income Quantitative Equities Multi-Asset Alternatives Total Investment performance Firmwide investment performance remains solid; 1-year imp
Slide 6: Net flows improved quarter over quarter and year over year
5 17.1 17.7 16.6 15.6 15.6 15.3 18.7 21.4 17.9 (19.8) (22.0) (25.0) (23.0) (25.4) (18.8) (25.4) (33.6) (26.1) (2.7) (4.3) (8.4) (7.4) (9.8) (3.5) (6.7) (12.2) (8.2) 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Total flows Total flows 2Q18 to 2Q20 (US$bn) Redemptions Sales Net sales / (redemptions) 1
Slide 7: 2Q20 flows by capability
6 7.9 6.3 0.4 2.5 0.8 (12.1) (7.0) (4.3) (1.8) (0.9) (4.2) (0.7) (3.9) 0.7 (0.1) Equities Fixed Income Quantitative Equities Multi-Asset Alternatives 2Q20 flows by capability 2Q20 flows by capability (US$bn) Annualised gross sales¹ Redemptions Sales Net sales / (redemptions) 21% 39% 5% 29% 36% (32%)
Slide 8: Statement of income US GAAP and adjusted
7 Statement of income US GAAP and adjusted US GAAP Adjustments Adjusted Revenue Management fees 407.7 Performance fees 17.2 Shareowner servicing fees 47.3 Other revenue 45.8 Total revenue 518.0 (104.7) 413.3 Operating expenses Employee compensation and benefits 145.8 Long-term incentive plans 49.1 D
Slide 9: Summary financial results
8 US$, except margin data 2Q20 1Q20 Change 2Q20 vs 1Q20 2Q19 Change 2Q20 vs 2Q19 Average AUM 323.0bn 352.7bn (8%) 357.7bn (10%) Total revenue 518.0m 554.9m (7%) 535.9m (3%) Operating income (loss) 106.7m (332.4)m nm 118.5m (10%) Operating margin 20.6% (59.9%) nm 22.1% (1.5ppt) US GAAP diluted EPS 0.
Slide 10: 2Q20 adjusted revenue drivers
9 367.5 395.5 17.2 14.6 8.3 9.2 20.3 23.4 413.3 442.7 2Q20 1Q20 Management fees Performance fees Shareowner servicing fees Other revenue 2Q20 adjusted revenue drivers Revenue 2Q20 adjusted revenue reflects lower average assets Adjusted revenue – 1Q20 vs 2Q20 (US$m) Note: See adjusted financial measu
Slide 11: Operating expenses
10 274.9 278.2 15.6 0.9 0.2 (8.9) (3.0) (8.1) 1Q20 Compensation and benefits LT incentive plans Investment administration Marketing General, admin. and occupancy Depreciation and amortisation 2Q20 Adjusted operating expenses – 1Q20 vs 2Q20 (US$m) Operating expenses Note: See adjusted financial measu
Slide 12: Balance sheet
11 802.2 880.4 799.4 851.3 1,601.6 1,731.7 315.5 314.8 Cash and investments Debt Cash and investments Debt 1 Includes seed investments of US$694.6m (including investment securities of consolidated variable interest entities of US$548.8m), investments related to deferred compensation plans of US$99.5
Slide 13: Strategy Update
Dick Weil Chief Executive Officer Strategy Update
Slide 14: Our strategy: Simple Excellence
13 Delivering on our strategy of Simple Excellence Produce dependable investment outcomes Excel in client experience Focus and increase operational efficiency Proactive risk and control environment Develop new growth initiatives Our strategy: Simple Excellence Strengthening our core foundation while
Slide 15: Produce dependable investment outcomes
14 Produce dependable investment outcomes Focus on quality and stability of investment performance Key execution highlights Filling key investment roles ✓ Head of US Fixed Income, Director of Research and several analyst additions or replacements Investing to modernise ✓ New technology enhancing por
Slide 16: Excel in client experience
15 Excel in client experience Key execution highlights Revitalised leadership ✓ Global Head of Distribution, Global Head of Institutional, Head of Asia and a Global Distribution COO Investing to modernise ✓ Expansive upgrades to CRM, data / client analytics, global web platform, PCS and Business Int
Slide 17: Focus and increase operational efficiency
16 Focus and increase operational efficiency Standardise the global model and modernise our infrastructure Rationalising our portfolio Simplicity and efficiency Infrastructure modernisation Product rationalisations Continual focus on costs Investment technology Consolidating or winding down sub- sca
Slide 18: Proactive risk and control environment
17 Proactive risk and control environment This work, together with our infrastructure investments, is critical to building a long-term growth foundation and supporting a more active pursuit of future expansion opportunities Embedding a deep sense of understanding and ownership of risk and controls t
Slide 19: Develop new growth initiatives
18 Develop new growth initiatives Build the businesses of tomorrow Focus on initiatives that build on our investment and distribution strengths Led by our clients in determining where and how we invest to grow Profitable growth forms the foundation of our expansion philosophy Thoughtfully balancing
Slide 20: Q&A
GSuVHS JOCIIMON Q&A Janus Henderson
Slide 21: Appendix
Appendix KNOWLEDGE ll SHARED
Slide 22: Assets under management as at 30 Jun 2020
21 53% 21% 12% 11% 3% Equities Fixed Income Multi-Asset Quantitative Equities Alternatives Assets under management as at 30 Jun 2020 47% 33% 20% Intermediary Institutional Self-directed 56% 30% 14% North America EMEA & LatAm Asia Pacific By client type By capability By client location US$179.1bn US$
Slide 23: Investment management capabilities
22 Investment management capabilities Diversified product range Equities US$179.1bn AUM 30 Jun 2020 US$336.7bn Fixed Income US$70.2bn Multi-Asset US$40.3bn Self-directed Intermediary Institutional Institutional Institutional Quantitative Equities US$37.5bn Institutional Alternatives US$9.6bn Equitie
Slide 24: Largest strategies by capability
23 Capability Strategy AUM (US$bn) 30 Jun 2020 US Mid Cap Growth 25.8 US Concentrated Growth 19.9 US Research Growth Equity 17.2 US SMID Cap Growth 11.7 Global Life Sciences 11.1 Absolute Return Income 10.1 Buy & Maintain Credit 9.8 Global Strategic Fixed Income 7.8 Core Plus Fixed Income 7.1 Austra
Slide 25: Flows: Equities and Fixed Income
24 5.5 6.1 5.6 8.0 6.3 (5.2) (4.7) (8.4) (11.4) (7.0) 0.3 1.4 (2.8) (3.4) (0.7) 2Q19 3Q19 4Q19 1Q20 2Q20 6.9 6.0 9.4 8.8 7.9 (12.9) (8.0) (10.7) (15.7) (12.1) (6.0) (2.0) (1.3) (6.9) (4.2) 2Q19 3Q19 4Q19 1Q20 2Q20 (27%) (17%) (23%) (31%) (32%) Flows: Equities and Fixed Income Equities (US$bn) Fixed
Slide 26: Flows: Quantitative Equities, Multi-Asset and Alternatives
25 2.1 2.4 2.7 3.5 2.5 (1.5) (2.0) (1.3) (2.5) (1.8) 0.6 0.4 1.4 1.0 0.7 2Q19 3Q19 4Q19 1Q20 2Q20 0.2 0.3 0.3 0.4 0.4 (4.3) (2.7) (3.6) (2.4) (4.3) (4.1) (2.4) (3.3) (2.0) (3.9) 2Q19 3Q19 4Q19 1Q20 2Q20 0.9 0.5 0.7 0.7 0.8 (1.5) (1.4) (1.4) (1.6) (0.9) (0.6) (0.9) (0.7) (0.9) (0.1) 2Q19 3Q19 4Q19 1Q
Slide 27: Total net flows by capability
26 Total net flows by capability 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Equities Fixed Income Quantitative Equities Multi-Asset Alternatives Total net flows by capability 2Q18 to 2Q20 (US$bn) (12.2) (2.7) (4.3) (7.4) (8.4) (9.8) (3.5) (6.7) (8.2)
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 2019 188.8 72.5 49.6 33.4 13.0 357.3 Sales 6.9 5.5 0.2 2.1 0.9 15.6 Redemptions (12.9) (5.2) (4.3) (1.5) (1.5) (25.4) Net sales / (redemptions) (6.0) 0.3 (4.1) 0.6 (
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 55 56 45 44 42 43 52 51 44 46 51 54 50 51 41 23 22 38 25 25 25 23 31 40 22 30 28 26 28 37 78 78 83 69 67 68 74 82 84 67 81 82 76 79 78 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 % of mutual fund AUM in top 2 Morning
Slide 32: Mutual fund investment performance (cont'd)
31 38 40 29 3 3 3 3 4 4 40 4 4 3 23 57 22 7 3 53 19 54 56 47 57 15 42 4 61 97 22 37 3 3 57 22 57 60 51 97 19 46 8 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 Mutual fund investment performance (cont’d) Fixed Income 38 42 19 37 41 27 41 29 52 64 21 35 28 44 41 12 11 51
Slide 33: Mutual fund investment performance (cont'd)
32 Mutual fund investment performance (cont’d) % of mutual fund AUM in top 2 Morningstar quartiles Alternatives 31 5 29 64 31 31 31 56 32 31 24 25 47 2 38 31 69 34 27 6 43 5 68 27 32 95 73 48 32 38 36 98 98 58 37 74 60 100 58 56 95 98 96 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q
Slide 34: Capital management
33 Capital management Continued commitment to return of capital – US$186m year to date Note: JHG purchases shares on market for the annual share grants associated with variable compensation, which is not included in the above share repurchases. Numbers may not cast due to rounding. 1 Total shares ou
Slide 35: US GAAP: statement of income
34 US GAAP: statement of income 3 months ended 30 Jun 2020 31 Mar 2020 30 Jun 2019 Revenue Management fees 407.7 439.6 446.4 Performance fees 17.2 14.6 3.5 Shareowner servicing fees 47.3 50.3 38.3 Other revenue 45.8 50.4 47.7 Total revenue 518.0 554.9 535.9 Operating expenses Employee compensation a
Slide 36: Alternative performance measures
35 Alternative performance measures Reconciliation of adjusted financial measures Note: Reconciliation to be used in conjunction with slide 36. Footnotes included on slide 37. 3 months ended 30 Jun 2020 31 Mar 2020 30 Jun 2019 Reconciliation of revenue to adjusted revenue Revenue 518.0 554.9 535.9 M
Slide 37: Alternative performance measures (cont'd)
36 Alternative performance measures (cont’d) Reconciliation of adjusted financial measures Note: Reconciliation to be used in conjunction with slide 35. Footnotes included on slide 37. 3 months ended 30 Jun 2020 31 Mar 2020 30 Jun 2019 Reconciliation of net income (loss) attributable to JHG to adjus
Slide 38: Footnotes to reconciliation of adjusted financial measures
37 Alternative performance measures (cont’d) Footnotes to reconciliation of adjusted financial measures 1 JHG contracts with third-party intermediaries to distribute and service certain of its investment products. Fees for distribution and JHG contracts with third-party intermediaries to distribute
Slide 39: Performance fees
38 2Q20 (US$m) 1Q20 (US$m) 2Q19 (US$m) AUM generating 2Q20 pfees (US$bn) # of funds generating 2Q20 pfees Frequency Timing SICAVs 9.2 0.2 1.5 6.3 11 23 annually; 2 quarterly 23 at June; 2 on quarters Offshore Absolute Return – 4.0 ––– Quarterly / Annually Various Segregated Mandates1 9.3 11.0 5.5 14
Slide 40: Mutual funds with performance fees
39 Mutual funds with performance fees¹ AUM 30 Jun 2020 US$m Benchmark Base fee Performance fee2 Performance cap/(floor) vs benchmark 2Q20 P&L impact US$’000 Forty Fund and Portfolio 16,551 Russell 1000® Growth Index 0.64% ± 15 bps ± 8.50% 24 Research Fund 15,847 Russell 1000® Growth Index 0.64% ± 15
Slide 41: Long-term incentive compensation
40 Long-term incentive compensation Estimated future long-term incentive compensation amortisation Note: Annual grants generally vest over three and four years. Assumed no forfeitures in future periods. Assumed no change in future values related to market or currency, which would impact expense rela
Slide 42: Contacts
41 Contacts Investor enquiries 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.horton@janushenderson.com Investor Relations investor.relations@janushenderson.com Media enquiries Steph
Slide 43: Forward looking information
42 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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