- Solid long-term investment performance, with 61% and 73% of
assets under management (‘AUM’) outperforming relevant benchmarks
on a three- and five-year basis, respectively, as at 30 September
2020
- AUM increased 6% to US$358.3 billion compared to the prior
quarter, reflecting positive markets partially offset by net
outflows of US$(2.9) billion
- Completed US$50 million of share buybacks during the third
quarter
- Board declared quarterly dividend of US$0.36 per share
Janus Henderson Group plc (NYSE/ASX: JHG; ‘JHG’, ‘the Group’)
published its third quarter 2020 results for the period ended 30
September 2020.
Third quarter 2020 operating income was US$156.5 million
compared to US$106.7 million in the second quarter 2020 and
US$143.6 million in the third quarter 2019. Adjusted operating
income, adjusted for one-time, acquisition and transaction related
costs, was US$162.1 million in the third quarter 2020 compared to
US$138.4 million in the second quarter 2020 and US$160.2 million in
the third quarter 2019.
Third quarter 2020 diluted earnings per share was US$0.65
compared to US$0.55 in the second quarter 2020 and US$0.58 in the
third quarter 2019. Adjusted diluted earnings per share of US$0.70
in the third quarter 2020 increased 4% compared to US$0.67 in the
second quarter 2020 and increased 9% versus US$0.64 in the third
quarter 2019.
Dick Weil, Chief Executive
Officer of Janus Henderson Group plc, stated:
“Our third quarter results reflect solid long-term investment
performance, improved flows, strong financials and a continuation
of returning excess cash to shareholders.
“Importantly, we are making excellent progress toward our goal
of building a strong and resilient foundation to support profitable
growth. We are encouraged by the flow momentum we are seeing in
several areas of the business, the unified culture of the firm, the
ongoing efforts to simplify the way we operate our business and the
support of new growth initiatives.
“It is clear that we are on the right path to success, and I am
proud of the progress we have made as an organization toward
achieving organic growth, driving greater profitability and
building a business for the long term.”
SUMMARY OF FINANCIAL RESULTS
(unaudited) (in US$ millions, except per share data or as
noted)
The Group presents its financial results in US$ and in
accordance with accounting principles generally accepted in the
United States of America (‘US GAAP’ or ‘GAAP’). However, JHG
management evaluates the profitability of the Group and its ongoing
operations using additional non-GAAP financial measures. Management
uses these performance measures to evaluate the business, and
adjusted values are consistent with internal management reporting.
See ‘Reconciliation of non-GAAP financial information’ below for
additional information.
Three months ended
30 Sep
30 Jun
30 Sep
2020
2020
2019
GAAP
basis:
Revenue
568.5
518.0
536.0
Operating expenses
412.0
411.3
392.4
Operating income
156.5
106.7
143.6
Operating margin
27.5
%
20.6
%
26.8
%
Net income attributable to JHG
118.9
102.9
112.1
Diluted earnings per share
0.65
0.55
0.58
Adjusted
basis:
Revenue
449.7
413.3
433.2
Operating expenses
287.6
274.9
273.0
Operating income
162.1
138.4
160.2
Operating margin
36.0
%
33.5
%
37.0
%
Net income attributable to JHG
129.6
126.6
124.7
Diluted earnings per share
0.70
0.67
0.64
Third quarter 2020 adjusted revenue of US$449.7 million
increased from the second quarter 2020 result of US$413.3 million
due to higher average AUM, partially offset by lower performance
fees. Third quarter 2020 adjusted net income attributable to JHG of
US$129.6 million increased 2% from US$126.6 million in the second
quarter 2020, as higher revenue was offset by an increase in
operating expenses and lower net investment gains compared to the
second quarter 2020.
DIVIDEND AND SHARE
BUYBACK
On 28 October 2020, the Board declared a third quarter dividend
in respect of the three months ended 30 September 2020 of US$0.36
per share. Shareholders on the register on the record date of 9
November 2020 will be paid the dividend on 23 November 2020. Janus
Henderson does not offer a dividend reinvestment plan.
As part of the US$200 million on-market buyback programme
approved by the Board in February 2020, JHG purchased approximately
2.4 million of its ordinary shares on the NYSE and its CHESS
Depositary Interests (CDIs) on the ASX in the third quarter, for a
total outlay of US$50.2 million.
Net tangible assets per share
US$
30 Sep 2020
31 Dec 2019
Net tangible assets / (liabilities) per
ordinary share
2.94
1.68
Net tangible assets are defined by the ASX as being total assets
less intangible assets less total liabilities ranking ahead of, or
equally with, claims of ordinary shares.
AUM AND FLOWS (in US$ billions)
FX reflects movement in AUM resulting from changes in foreign
currency rates as non-US$ denominated AUM is translated into US$.
Redemptions include impact of client switches.
Total Group comparative AUM and
flows
Three months ended
30 Sep
30 Jun
30 Sep
2020
2020
2019
Opening AUM
336.7
294.4
359.8
Sales
15.8
17.9
15.3
Redemptions
(18.7
)
(26.1
)
(18.8
)
Net sales / (redemptions)
(2.9
)
(8.2
)
(3.5
)
Market / FX
24.5
50.5
(0.2
)
Closing AUM
358.3
336.7
356.1
Quarterly AUM and flows by
capability
Fixed
Quantitative
Equities
Income
Equities
Multi-Asset
Alternatives
Total
AUM 30 Sep 2019
188.2
75.0
45.6
36.3
11.0
356.1
Sales
9.4
5.6
0.3
2.7
0.7
18.7
Redemptions
(10.7
)
(8.4
)
(3.6
)
(1.3
)
(1.4
)
(25.4
)
Net sales / (redemptions)
(1.3
)
(2.8
)
(3.3
)
1.4
(0.7
)
(6.7
)
Market / FX
17.1
2.6
2.9
2.1
0.7
25.4
AUM 31 Dec 2019
204.0
74.8
45.2
39.8
11.0
374.8
Sales
8.8
8.0
0.4
3.5
0.7
21.4
Redemptions
(15.7
)
(11.4
)
(2.4
)
(2.5
)
(1.6
)
(33.6
)
Net sales / (redemptions)
(6.9
)
(3.4
)
(2.0
)
1.0
(0.9
)
(12.2
)
Market / FX
(43.2
)
(6.1
)
(8.6
)
(5.3
)
(0.8
)
(64.0
)
Acquisitions / (disposals)
(4.0
)
—
—
(0.2
)
—
(4.2
)
AUM 31 Mar 2020
149.9
65.3
34.6
35.3
9.3
294.4
Sales
7.9
6.3
0.4
2.5
0.8
17.9
Redemptions
(12.1
)
(7.0
)
(4.3
)
(1.8
)
(0.9
)
(26.1
)
Net sales / (redemptions)
(4.2
)
(0.7
)
(3.9
)
0.7
(0.1
)
(8.2
)
Market / FX
33.5
5.6
6.8
4.3
0.3
50.5
Reclassification1
(0.1
)
—
—
—
0.1
—
AUM 30 Jun 2020
179.1
70.2
37.5
40.3
9.6
336.7
Sales
5.8
5.9
1.3
2.3
0.5
15.8
Redemptions
(10.9
)
(4.1
)
(1.4
)
(1.7
)
(0.6
)
(18.7
)
Net sales / (redemptions)
(5.1
)
1.8
(0.1
)
0.6
(0.1
)
(2.9
)
Market / FX
14.9
3.1
3.3
2.7
0.5
24.5
AUM 30 Sep 2020
188.9
75.1
40.7
43.6
10.0
358.3
________________
1
Reflects reclassification of an
existing fund from Equities to Alternatives.
Average AUM
Three months ended
30 Sep
30 Jun
30 Sep
2020
2020
2019
Equities
188.5
168.7
189.5
Fixed Income
74.8
68.7
74.4
Quantitative Equities
40.0
38.0
47.0
Multi-Asset
42.7
38.3
35.8
Alternatives
10.0
9.3
11.5
Total
356.0
323.0
358.2
INVESTMENT PERFORMANCE
% of AUM outperforming benchmark (at 30
September 2020)
Capability
1 year
3 years
5 years
Equities
38
%
53
%
71
%
Fixed Income
88
%
92
%
97
%
Quantitative Equities
64
%
8
%
8
%
Multi-Asset
93
%
93
%
95
%
Alternatives
97
%
97
%
100
%
Total
58
%
61
%
73
%
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 of fees vs zero for
absolute return strategies, (2) fund net of fees vs primary index
or (3) fund net of fees vs Morningstar peer group average or
median. Non-discretionary and separately managed account assets are
included with a corresponding composite where applicable.
Cash management vehicles, ETFs, Managed CDOs, Private Equity
funds and custom non-discretionary accounts with no corresponding
composite are excluded from the analysis. Excluded assets represent
5% of AUM as at 30 September 2020. Capabilities defined by Janus
Henderson.
% of mutual fund AUM in top 2
Morningstar quartiles (at 30 September 2020)
Capability
1 year
3 years
5 years
Equities
60
%
68
%
76
%
Fixed Income
76
%
78
%
72
%
Quantitative Equities
4
%
30
%
4
%
Multi-Asset
91
%
92
%
92
%
Alternatives
100
%
100
%
100
%
Total
68
%
74
%
78
%
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 Australian Managed Investment Schemes. The top two Morningstar
quartiles represent funds in the top half of their category based
on total return. On an asset-weighted basis, 82%, 82%, 86%, 86% and
88% of total mutual fund AUM were in the top 2 Morningstar
quartiles for the 10-year periods ended 30 September 2019, 31
December 2019, 31 March 2020, 30 June 2020 and 30 September 2020,
respectively. For the 1-, 3-, 5- and 10-year periods ending 30
September 2020, 58%, 62%, 58% and 69% of the 201, 193, 184 and 147
total mutual funds, respectively, were in the top 2 Morningstar
quartiles.
Analysis based on ‘primary’ share class (Class I Shares,
Institutional Shares or share class with longest history for US
Trusts; Class A Shares or share class with longest history for
Dublin based; primary share class as defined by Morningstar for
other funds). Performance may vary by share class. Rankings may be
based, in part, on the performance of a predecessor fund or share
class and are calculated by Morningstar using a methodology that
differs from that used by Janus Henderson. Methodology differences
may have a material effect on the return and therefore the ranking.
When an expense waiver is in effect, it may have a material effect
on the total return, and therefore the ranking for the period.
ETFs and funds not ranked by Morningstar are excluded from the
analysis. Capabilities defined by Janus Henderson. © 2020
Morningstar, Inc. All Rights Reserved.
FOURTH QUARTER AND FULL-YEAR 2020
RESULTS
Janus Henderson intends to publish its fourth quarter and
full-year 2020 results on 4 February 2021.
THIRD QUARTER 2020 RESULTS
BRIEFING INFORMATION
Chief Executive Officer Dick Weil and Chief Financial Officer
Roger Thompson will present these results on 29 October 2020 on a
conference call and webcast to be held at 8am EDT, 12pm GMT, 11pm
AEDT.
Those wishing to participate should call:
United Kingdom
0800 358 6377 (toll free)
US & Canada
800 239 9838 (toll free)
Australia
1 800 573 793 (toll free)
All other countries
+1 323 794 2551 (this is not a
toll free number)
Conference ID
7246170
Access to the webcast and accompanying slides will be available
via the investor relations section of Janus Henderson’s website
(ir.janushenderson.com).
About Janus Henderson
Janus Henderson Group is a leading global active asset manager
dedicated to helping investors achieve long-term financial goals
through a broad range of investment solutions, including equities,
fixed income, quantitative equities, multi-asset and alternative
asset class strategies.
At 30 September 2020, Janus Henderson had approximately US$358
billion in assets under management, more than 2,000 employees, and
offices in 27 cities worldwide. Headquartered in London, the
company is listed on the New York Stock Exchange (NYSE) and the
Australian Securities Exchange (ASX).
FINANCIAL DISCLOSURES
Condensed consolidated statements of
comprehensive income (unaudited)
Three months ended
30 Sep
30 Jun
30 Sep
(in US$ millions, except per share data
or as noted)
2020
2020
2019
Revenue:
Management fees
457.7
407.7
446.2
Performance fees
7.0
17.2
1.4
Shareowner servicing fees
53.7
47.3
39.3
Other revenue
50.1
45.8
49.1
Total revenue
568.5
518.0
536.0
Operating expenses:
Employee compensation and benefits
154.9
145.8
147.9
Long-term incentive plans
42.7
49.1
42.2
Distribution expenses
118.8
104.7
102.8
Investment administration
13.1
12.6
11.2
Marketing
5.3
3.7
5.5
General, administrative and occupancy
65.6
58.0
67.6
Impairment of goodwill and intangible
assets
—
26.4
—
Depreciation and amortisation
11.6
11.0
15.2
Total operating expenses
412.0
411.3
392.4
Operating income
156.5
106.7
143.6
Interest expense
(3.2
)
(3.2
)
(3.5
)
Investment gains, net
25.5
50.3
4.0
Other non-operating income (expense),
net
(0.9
)
8.6
4.7
Income before taxes
177.9
162.4
148.8
Income tax provision
(40.8
)
(30.1
)
(35.7
)
Net income
137.1
132.3
113.1
Net income attributable to noncontrolling
interests
(18.2
)
(29.4
)
(1.0
)
Net income attributable to JHG
118.9
102.9
112.1
Less: allocation of earnings to
participating stock-based awards
(3.5
)
(3.0
)
(3.1
)
Net income attributable to JHG common
shareholders
115.4
99.9
109.0
Basic weighted-average shares outstanding
(in millions)
178.4
181.8
187.9
Diluted weighted-average shares
outstanding (in millions)
178.8
182.1
188.3
Diluted earnings per share (in
US$)
0.65
0.55
0.58
Reconciliation of non-GAAP financial information
In addition to financial results reported in accordance with
GAAP, we compute certain financial measures using non-GAAP
components, as defined by the SEC. These measures are not in
accordance with, or a substitute for, GAAP, and our financial
measures may be different from non-GAAP financial measures used by
other companies. We have provided a reconciliation of our non-GAAP
components to the most directly comparable GAAP components. The
following are reconciliations of US GAAP revenue, operating
expenses, operating income, net income attributable to JHG and
diluted earnings per share to adjusted revenue, adjusted operating
expenses, adjusted operating income, adjusted net income
attributable to JHG and adjusted diluted earnings per share.
Three months ended
30 Sep
30 Jun
30 Sep
(in US$ millions, except per share data
or as noted)
2020
2020
2019
Reconciliation of revenue to adjusted
revenue
Revenue
568.5
518.0
536.0
Management fees1
(47.9
)
(40.2
)
(45.6
)
Shareowner servicing fees1
(42.8
)
(39.0
)
(30.4
)
Other revenue1
(28.1
)
(25.5
)
(26.8
)
Adjusted revenue
449.7
413.3
433.2
Reconciliation of operating expenses to
adjusted operating expenses
Operating expenses
412.0
411.3
392.4
Employee compensation and benefits2
(0.3
)
(0.5
)
(5.4
)
Long-term incentive plans2
0.1
0.2
0.2
Distribution expenses1
(118.8
)
(104.7
)
(102.8
)
General, administration and occupancy2
(3.5
)
(2.8
)
(4.1
)
Impairment of goodwill and intangible
assets3
—
(26.4
)
—
Depreciation and amortisation3
(1.9
)
(2.2
)
(7.3
)
Adjusted operating expenses
287.6
274.9
273.0
Adjusted operating income
162.1
138.4
160.2
Operating margin
27.5
%
20.6
%
26.8
%
Adjusted operating margin
36.0
%
33.5
%
37.0
%
Reconciliation of net income
attributable to JHG to adjusted net income attributable to
JHG
Net income attributable to JHG
118.9
102.9
112.1
Employee compensation and benefits2
0.3
0.5
5.4
Long-term incentive plans2
(0.1
)
(0.2
)
(0.2
)
General, administration and occupancy2
3.5
2.8
4.1
Impairment of goodwill and intangible
assets3
—
26.4
—
Depreciation and amortisation3
1.9
2.2
7.3
Interest expense4
—
—
0.4
Investment gains (losses), net
—
—
(1.0
)
Other non-operating income (expense),
net4
(0.5
)
(0.6
)
(0.2
)
Income tax benefit (provision)5
5.6
(7.4
)
(3.2
)
Adjusted net income attributable to
JHG
129.6
126.6
124.7
Less: allocation of earnings to
participating stock-based awards
(3.8
)
(3.7
)
(3.4
)
Adjusted net income attributable to JHG
common shareholders
125.8
122.9
121.3
Weighted-average diluted common shares
outstanding – diluted (two class) (in millions)
178.8
182.1
188.3
Diluted earnings per share (two class)
(in US$)
0.65
0.55
0.58
Adjusted diluted earnings per share
(two class) (in US$)
0.70
0.67
0.64
________________
1
JHG contracts with third-party
intermediaries to distribute and service certain of its investment
products. Fees for distribution and servicing related activities
are either provided for separately in an investment product’s
prospectus or are part of the management fee. Under both
arrangements, the fees are collected by JHG and passed through to
third-party intermediaries who are responsible for performing the
applicable services. The majority of distribution and servicing
fees collected by JHG are passed through to third-party
intermediaries. JHG management believes that the deduction of
distribution and service fees from revenue in the computation of
adjusted revenue reflects the pass-through nature of these
revenues. In certain arrangements, JHG performs the distribution
and servicing activities and retains the applicable fees. Revenues
for distribution and servicing activities performed by JHG are not
deducted from GAAP revenue.
2
Adjustments primarily represent
integration costs in relation to the Merger, including severance
costs, legal costs and consulting fees. JHG management believes
these costs are not representative of the ongoing operations of the
Group.
3
Investment management contracts
have been identified as a separately identifiable intangible asset
arising on the acquisition of subsidiaries and businesses. Such
contracts are recognised at the net present value of the expected
future cash flows arising from the contracts at the date of
acquisition. For segregated mandate contracts, the intangible asset
is amortised on a straight-line basis over the expected life of the
contracts. Adjustments also include impairment charges of our
goodwill and certain mutual fund investment management agreements
and client relationships. JHG management believes these non-cash
and acquisition-related costs are not representative of the ongoing
operations of the Group.
4
Adjustments primarily relate to
contingent consideration adjustments associated with prior
acquisitions and increased debt expense as a consequence of the
fair value uplift on debt due to acquisition accounting. JHG
management believes these costs are not representative of the
ongoing operations of the Group.
5
The tax impact of the adjustments
is calculated based on the applicable US or foreign statutory tax
rate as it relates to each adjustment. Certain adjustments are
either not taxable or not tax-deductible.
Condensed consolidated balance sheets
(unaudited)
30 Sep
31 Dec
(in US$ millions)
2020
2019
Assets:
Cash and cash equivalents
909.0
733.9
Investment securities
290.8
253.5
Property, equipment and software, net
81.4
84.7
Intangible assets and goodwill, net
3,999.4
4,592.9
Assets of consolidated variable interest
entities
197.2
1,010.9
Other assets
949.3
945.8
Total assets
6,427.1
7,621.7
Liabilities, redeemable noncontrolling
interests and equity:
Long-term debt
314.0
316.2
Deferred tax liabilities, net
613.3
729.1
Liabilities of consolidated variable
interest entities
10.3
57.1
Other liabilities
870.2
935.2
Redeemable noncontrolling interests
86.2
677.9
Total equity
4,533.1
4,906.2
Total liabilities, redeemable
noncontrolling interests and equity
6,427.1
7,621.7
Condensed consolidated statements of
cash flows (unaudited)
Three months ended
30 Sep
30 Jun
30 Sep
(in US$ millions)
2020
2020
2019
Cash provided by (used for):
Operating activities
183.0
204.6
173.2
Investing activities
135.0
(166.8
)
(36.1
)
Financing activities
(291.2
)
37.4
(107.5
)
Effect of exchange rate changes
19.3
3.0
13.1
Net change during period
46.1
78.2
42.7
STATUTORY DISCLOSURES
Associates and joint
ventures
At 30 September 2020, the Group holds interests in the following
associates and joint ventures managed through shareholder
agreements with third party investors, accounted for under the
equity method:
- LongTail Alpha LLC. Ownership 20%
Basis of preparation
In the opinion of management of Janus Henderson Group plc, the
condensed consolidated financial statements contain all normal
recurring adjustments necessary to fairly present the financial
position, results of operations and cash flows of JHG in accordance
with US GAAP. Such financial statements have been prepared in
accordance with the instructions to Form 10-Q pursuant to the rules
and regulations of the SEC. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with GAAP have been condensed or omitted pursuant to
such rules and regulations. The financial statements should be read
in conjunction with the annual consolidated financial statements
and notes presented in Janus Henderson Group’s Annual Report on
Form 10‑K for the year ended 31 December 2019, on file with the SEC
(Commission file no. 001-38103). Events subsequent to the balance
sheet date have been evaluated for inclusion in the financial
statements through the issuance date and are included in the notes
to the condensed consolidated financial statements.
Corporate governance principles
and recommendations
In the opinion of the Directors, the financial records of the
Group have been properly maintained, and the Condensed Consolidated
Financial Statements comply with the appropriate accounting
standards and give a true and fair view of the financial position
and performance of the Group. This opinion has been formed on the
basis of a sound system of risk management and internal control
which is operating effectively.
FORWARD-LOOKING STATEMENTS
DISCLAIMER
Past performance is no guarantee of future results. Investing
involves risk, including the possible loss of principal and
fluctuation of value.
This document includes statements concerning potential future
events involving Janus Henderson Group plc that could differ
materially from the events that actually occur. The differences
could be caused by a number of factors including those factors
identified in Janus Henderson Group’s Annual Report on Form 10-K
for the fiscal year ended 31 December 2019 and in other filings or
furnishings made by the Company with the Securities and Exchange
Commission from time to time (Commission file no. 001-38103),
including those that appear under headings such as ‘Risk Factors’
and ‘Management’s Discussion and Analysis of Financial Condition
and Results of Operations’. Many of these factors are beyond the
control of JHG and its management. Any forward-looking statements
contained in this document are as at the date on which such
statements were made. Janus Henderson Group undertakes no
obligation to publicly update or revise any forward-looking
statements after the date they are made, whether as a result of new
information, future events or otherwise, except as required by
law.
Annualised, pro forma, projected and estimated numbers are used
for illustrative purposes only, are not forecasts and may not
reflect actual results.
The information, statements and opinions contained in this
document do not constitute a public offer under any applicable
legislation or an offer to sell or solicitation of any offer to buy
any securities or financial instruments or any advice or
recommendation with respect to such securities or other financial
instruments.
Not all products or services are available in all
jurisdictions.
Mutual funds in the US are distributed by Janus Henderson
Distributors.
Please consider the charges, risks, expenses and investment
objectives carefully before investing. For a US fund prospectus or,
if available, a summary prospectus containing this and other
information, please contact your investment professional or call
800.668.0434. Read it carefully before you invest or send
money.
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