Janus Henderson(JHG) - 2024 Q3 - Quarterly Results

Executive Summary & Highlights Key Financial & Operational Highlights Janus Henderson Group plc reported solid Q3 2024 results, marked by strong investment performance, consecutive net inflows, and significant AUM growth, while also increasing capital returns to shareholders - Investment performance: 75% of assets under management (AUM) outperformed relevant benchmarks on a one-year basis as of September 30, 2024[1] - Net inflows: US$0.4 billion in the third quarter 2024, marking consecutive quarters of net inflows[1] - AUM increased 6% quarter over quarter and 24% year over year to US$382.3 billion as of September 30, 2024[1] - Adjusted diluted EPS of US$0.91, an increase of 42% year over year[1] - Returned US$102 million in capital to shareholders through dividends and share buybacks in third quarter 2024[1] - Board declared a quarterly dividend of US$0.39 per share and approved a US$50 million increase to the Company's existing common stock repurchase authorization[1] CEO Statement CEO Ali Dibadj highlighted solid quarterly results driven by market gains, strong investment performance, positive net flows, and effective strategy execution, emphasizing the company's healthy balance sheet and cash flow generation for continued investment and shareholder returns - The results reflect market gains, solid investment performance, a second consecutive quarter of positive net flows, and productivity from all operating and support areas[3] - Teams have worked together to execute the strategy to Protect & Grow, Amplify, and Diversify the business, delivering growth across channels and regions[3] - A healthy balance sheet and strong cash flow generation provide flexibility to continue to invest in the business (organically and inorganically) and return cash to shareholders[3] Financial Performance Summary of GAAP & Adjusted Financial Results The company reported Q3 2024 GAAP revenue of US$624.8 million and operating income of US$164.7 million, with adjusted figures showing revenue of US$488.1 million and operating income of US$170.5 million, and adjusted diluted EPS increasing significantly year-over-year Q3 2024 GAAP and Adjusted Financial Highlights (US$ millions, except per share data) | Metric | 30 Sep 2024 (GAAP) | 30 Sep 2024 (Adjusted) | 30 Jun 2024 (GAAP) | 30 Jun 2024 (Adjusted) | 30 Sep 2023 (GAAP) | 30 Sep 2023 (Adjusted) | |:-----------------------------|:-------------------|:-----------------------|:-------------------|:-----------------------|:-------------------|:-----------------------| | Revenue | 624.8 | 488.1 | 588.4 | 458.3 | 521.0 | 405.0 | | Operating expenses | 460.1 | 317.6 | 424.1 | 293.6 | 399.3 | 279.6 | | Operating income | 164.7 | 170.5 | 164.3 | 164.7 | 121.7 | 125.4 | | Operating margin | 26.4% | 34.9% | 27.9% | 35.9% | 23.4% | 31.0% | | Net income attributable to JHG | 27.3 | 144.7 | 129.7 | 135.2 | 93.5 | 106.7 | | Diluted earnings per share | 0.17 | 0.91 | 0.81 | 0.85 | 0.56 | 0.64 | - Q3 2024 diluted earnings per share of US$0.17 was impacted by a US$111.9 million non-cash, non-operating, accounting expense release of accumulated foreign currency translation adjustments[2] Share Repurchase and Dividend The Board declared a quarterly dividend of US$0.39 per share and increased the share repurchase authorization by US$50 million, bringing the total to US$200 million, with the company repurchasing US$40 million of common stock in Q3 2024 - A dividend of US$0.39 per share for the quarter ended September 30, 2024, was declared on October 30, 2024[6] - JHG purchased 1.1 million of its common stock for approximately US$40 million in Q3 2024 as part of the US$150 million share repurchase program[7] - The Board approved a US$50 million increase to the existing share repurchase program, raising the total authorization to up to US$200 million[7] Assets Under Management (AUM) and Flows Total AUM and Flows Janus Henderson's AUM grew to US$382.3 billion by September 30, 2024, driven by US$0.4 billion in net sales and US$19.4 billion from market/FX movements, along with US$1.1 billion from acquisitions Total Comparative AUM and Flows (in US$ billions) | Metric | 30 Sep 2024 | 30 Jun 2024 | 30 Sep 2023 | |:--------------------------|:------------|:------------|:------------| | Opening AUM | 361.4 | 352.6 | 322.1 | | Sales | 16.1 | 18.1 | 11.8 | | Redemptions | (15.7) | (16.4) | (14.4) | | Net sales / (redemptions) | 0.4 | 1.7 | (2.6) | | Market / FX | 19.4 | 7.1 | (11.2) | | Acquisitions | 1.1 | — | — | | Closing AUM | 382.3 | 361.4 | 308.3 | - Net sales were positive at US$0.4 billion in Q3 2024, following US$1.7 billion in Q2 2024, a significant improvement from net redemptions of US$2.6 billion in Q3 2023[10] AUM and Flows by Capability Equities remained the largest capability by AUM, while Fixed Income showed positive net sales in Q3 2024, and Alternatives also recorded positive net sales Q3 2024 AUM and Net Flows by Capability (in US$ billions) | Capability | AUM 30 Sep 2024 | Net sales / (redemptions) Q3 2024 | |:-------------|:----------------|:----------------------------------| | Equities | 237.1 | (1.5) | | Fixed Income | 81.3 | 2.2 | | Multi-Asset | 53.5 | (0.4) | | Alternatives | 10.4 | 0.1 | | Total | 382.3 | 0.4 | - Fixed Income had the highest net sales of US$2.2 billion in Q3 2024, while Equities experienced net redemptions of US$1.5 billion[11] Average AUM by Capability Average AUM across all capabilities increased in Q3 2024 compared to the previous quarter and year, with Equities and Fixed Income showing the most significant growth Average AUM by Capability (in US$ billions) | Capability | 30 Sep 2024 | 30 Jun 2024 | 30 Sep 2023 | |:-------------|:------------|:------------|:------------| | Equities | 229.6 | 220.8 | 196.9 | | Fixed Income | 78.5 | 71.7 | 66.1 | | Multi-Asset | 52.1 | 50.7 | 47.7 | | Alternatives | 9.7 | 8.9 | 9.4 | | Total | 369.9 | 352.1 | 320.1 | Investment Performance AUM Outperformance vs. Benchmarks Janus Henderson demonstrated strong investment performance, with a significant majority of AUM outperforming relevant benchmarks across all time horizons as of September 30, 2024 % of AUM Outperforming Benchmark (as of September 30, 2024) | Capability | 1-year | 3-year | 5-year | 10-year | |:-------------|:-------|:-------|:-------|:--------| | Equities | 63% | 61% | 54% | 80% | | Fixed Income | 98% | 81% | 89% | 93% | | Multi-Asset | 97% | 96% | 97% | 97% | | Alternatives | 84% | 94% | 100% | 100% | | Total | 75% | 71% | 67% | 85% | - Fixed Income, Multi-Asset, and Alternatives capabilities showed particularly strong outperformance, with 98%, 97%, and 84% respectively outperforming benchmarks over a 1-year period[13] Mutual Fund Performance (Morningstar Quartiles) A high percentage of Janus Henderson's mutual fund AUM ranked in the top two Morningstar quartiles across most capabilities and timeframes, indicating strong relative performance % of Mutual Fund AUM in Top 2 Morningstar Quartiles (as of September 30, 2024) | Capability | 1-year | 3-year | 5-year | 10-year | |:-------------|:-------|:-------|:-------|:--------| | Equities | 77% | 73% | 80% | 87% | | Fixed Income | 81% | 57% | 67% | 71% | | Multi-Asset | 96% | 95% | 95% | 96% | | Alternatives | 37% | 87% | 42% | 100% | | Total | 80% | 74% | 81% | 87% | - Overall, 80% of total mutual fund AUM was in the top 2 Morningstar quartiles for the 1-year period, and 87% for the 10-year period[15] Company Overview & Investor Information Q3 2024 Results Briefing Information Details for the Q3 2024 results conference call and webcast, scheduled for October 31, 2024, are provided for investors and media - Chief Executive Officer Ali Dibadj and Chief Financial Officer Roger Thompson will present Q3 2024 results on a conference call and webcast[17] - The briefing is scheduled for October 31, 2024, at 9:00 a.m. ET[17] - Access to the webcast and accompanying slides will be available via the investor relations section of Janus Henderson's website (ir.janushenderson.com)[17] About Janus Henderson Janus Henderson Group is a global active asset manager with approximately US$382 billion in AUM, over 2,000 employees, and a presence in 24 cities worldwide, focused on delivering superior financial outcomes for clients - Janus Henderson Group is a leading global active asset manager[18] - As of September 30, 2024, Janus Henderson had approximately US$382 billion in assets under management[18] - The firm has more than 2,000 employees and offices in 24 cities worldwide[18] Investor & Media Contacts Contact information for investor relations and media relations is provided for inquiries - Investor enquiries can be directed to Jim Kurtz, Head of Investor Relations, at +1 303 336 4529 or jim.kurtz@janushenderson.com[19] - Media enquiries can be directed to Candice Sun, Global Head of Media Relations, at +1 303 336 5452 or candice.sun@janushenderson.com, or Nicole Mullin, Media Relations Director, UK, EMEA, LatAm & APAC, at +44 (0)20 7818 2511 or nicole.mullin@janushenderson.com[19] Detailed Financial Statements Condensed Consolidated Statements of Comprehensive Income (GAAP) The GAAP income statement shows total revenue of US$624.8 million and operating income of US$164.7 million for Q3 2024, with net income attributable to JHG at US$27.3 million, leading to a diluted EPS of US$0.17 Q3 2024 GAAP Condensed Consolidated Statements of Comprehensive Income Highlights (US$ millions) | Metric | 30 Sep 2024 | 30 Jun 2024 | 30 Sep 2023 | |:-------------------------------------------|:------------|:------------|:------------| | Total Revenue | 624.8 | 588.4 | 521.0 | | Operating Expenses | 460.1 | 424.1 | 399.3 | | Operating Income | 164.7 | 164.3 | 121.7 | | Net Income Attributable to JHG | 27.3 | 129.7 | 93.5 | | Diluted Earnings Per Share (US$) | 0.17 | 0.81 | 0.56 | - Performance fees significantly improved from a negative US$15.8 million in Q3 2023 to US$8.6 million in Q3 2024[20] Reconciliation of Non-GAAP Financial Information This section provides a detailed reconciliation from GAAP to adjusted financial measures, highlighting specific adjustments made to revenue, operating expenses, net income, and diluted EPS, which management uses to evaluate ongoing operations Reconciliation of GAAP to Adjusted Financial Metrics (US$ millions, except EPS) | Metric | 30 Sep 2024 (GAAP) | Adjustments | 30 Sep 2024 (Adjusted) | |:--------------------------------------------|:-------------------|:------------|:-----------------------| | Revenue | 624.8 | (136.7) | 488.1 | | Operating Expenses | 460.1 | (142.5) | 317.6 | | Operating Income | 164.7 | 5.8 | 170.5 | | Net Income Attributable to JHG | 27.3 | 117.4 | 144.7 | | Diluted Earnings Per Share (US$) | 0.17 | 0.74 | 0.91 | - Adjustments to revenue primarily include the deduction of distribution and servicing fees, reflecting their pass-through nature[23] - Operating expense adjustments include acquisition-related expenses and accelerated long-term incentive plan expenses, which management believes are not representative of ongoing operations[24] - Adjustments to other non-operating income primarily consist of the release of accumulated foreign currency translation adjustments related to liquidated entities[26] Condensed Consolidated Balance Sheets (GAAP) The balance sheet shows total assets increased to US$7,263.8 million as of September 30, 2024, from US$6,496.6 million at December 31, 2023, primarily driven by increases in cash and cash equivalents, intangible assets and goodwill, and assets of consolidated variable interest entities Condensed Consolidated Balance Sheet Highlights (US$ millions) | Metric | 30 Sep 2024 | 31 Dec 2023 | |:------------------------------------------|:------------|:------------| | Cash and cash equivalents | 1,483.8 | 1,152.4 | | Investments | 305.0 | 334.2 | | Property, equipment and software, net | 38.8 | 44.2 | | Intangible assets and goodwill, net | 3,799.8 | 3,721.6 | | Assets of consolidated variable interest entities | 749.0 | 405.9 | | Other assets | 887.4 | 838.3 | | Total Assets | 7,263.8 | 6,496.6 | | Long-term debt | 698.6 | 304.6 | | Deferred tax liabilities, net | 576.3 | 570.8 | | Liabilities of consolidated variable interest entities | 7.2 | 3.2 | | Other liabilities | 855.0 | 762.5 | | Redeemable noncontrolling interests | 493.5 | 317.2 | | Total equity | 4,633.2 | 4,538.3 | | Total liabilities, redeemable noncontrolling interests and equity | 7,263.8 | 6,496.6 | - Long-term debt increased significantly from US$304.6 million at year-end 2023 to US$698.6 million by Q3 2024[29] Condensed Consolidated Statements of Cash Flows (GAAP) The cash flow statement indicates strong cash provided by operating activities at US$228.5 million for Q3 2024, with investing activities resulting in a net outflow of US$215.0 million, while financing activities provided US$424.6 million Condensed Consolidated Statements of Cash Flows Highlights (US$ millions) | Activity | 30 Sep 2024 | 30 Jun 2024 | 30 Sep 2023 | |:------------------------|:------------|:------------|:------------| | Operating activities | 228.5 | 223.8 | 216.9 | | Investing activities | (215.0) | (60.4) | 16.0 | | Financing activities | 424.6 | (50.9) | (91.5) | | Effect of exchange rate changes | 31.9 | — | (25.5) | | Net change during period | 470.0 | 112.5 | 115.9 | - The net change in cash during Q3 2024 was US$470.0 million, significantly higher than previous quarters, largely due to financing activities[30] Notes & Disclaimers Basis of Preparation The condensed consolidated financial statements are prepared in accordance with GAAP and SEC rules, with certain information condensed or omitted as permitted, and should be read in conjunction with the annual Form 10-K - The condensed consolidated financial statements are prepared in accordance with GAAP and instructions to Form 10-Q pursuant to SEC rules[32] - Certain information and footnote disclosures normally included in GAAP financial statements have been condensed or omitted[32] - The financial statements should be read in conjunction with Janus Henderson's Annual Report on Form 10-K for the year ended December 31, 2023[32] Forward-Looking Statements Disclaimer The report contains forward-looking statements subject to known and unknown risks and uncertainties, which could cause actual results to differ materially, and readers are cautioned not to place undue reliance on these statements - Statements not based on historical facts are 'forward-looking statements' subject to known and unknown risks and uncertainties[34] - Readers should not place undue reliance on forward-looking statements, which speak only as of the date they are made and are not guarantees of future performance[34] - Various risks, uncertainties, assumptions, and factors that could cause future results to differ materially are discussed in the Annual Report on Form 10-K and other SEC filings[35]