Janus Henderson(JHG) - 2025 Q1 - Quarterly Report

PART I. Financial Information Financial Statements This section presents Janus Henderson Group plc's unaudited condensed consolidated financial statements for Q1 2025, including balance sheets, income, cash flow, and equity statements Condensed Consolidated Balance Sheets Total assets increased to $7.12 billion as of March 31, 2025, from $6.96 billion, with total equity growing to $4.83 billion from $4.72 billion Condensed Consolidated Balance Sheet Highlights | Account | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :--- | :--- | :--- | | Total Assets | $7,117.4 | $6,963.1 | | Cash and cash equivalents | $1,083.6 | $1,217.2 | | Investments | $362.7 | $337.1 | | Goodwill | $1,587.2 | $1,550.4 | | Intangible assets, net | $2,480.4 | $2,473.3 | | Total Liabilities | $1,755.4 | $1,880.0 | | Long-term debt | $395.2 | $395.0 | | Total Equity | $4,826.5 | $4,718.1 | Condensed Consolidated Statements of Comprehensive Income Q1 2025 total revenue increased to $621.4 million, but net income attributable to JHG decreased to $120.7 million, resulting in diluted EPS of $0.77 Q1 2025 vs. Q1 2024 Income Statement | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Total Revenue | $621.4 | $551.7 | | Management fees | $513.0 | $459.4 | | Performance fees | $(3.6) | $(13.1) | | Operating Income | $153.6 | $119.2 | | Net Income Attributable to JHG | $120.7 | $130.1 | | Diluted EPS | $0.77 | $0.81 | Condensed Consolidated Statements of Cash Flows Q1 2025 generated $2.8 million from operations, used $227.3 million in investing, and gained $79.6 million from financing, resulting in a net cash decrease of $129.1 million Q1 2025 vs. Q1 2024 Cash Flow Summary | Cash Flow Activity | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Net cash from Operating Activities | $2.8 | $(5.0) | | Net cash used for Investing Activities | $(227.3) | $(54.3) | | Net cash from (used for) Financing Activities | $79.6 | $(179.2) | | Net Change in Cash | $(129.1) | $(245.8) | Condensed Consolidated Statements of Changes in Equity Total equity increased from $4.72 billion to $4.83 billion in Q1 2025, driven by net income and comprehensive income, offsetting dividends and share buybacks - Total equity increased by $108.4 million during Q1 2025, from $4,718.1 million to $4,826.5 million[16] - Key drivers of the equity change included net income of $120.7 million, offset by dividends of $61.5 million and share buybacks of $26.8 million[16] Notes to the Condensed Consolidated Financial Statements The notes provide detailed disclosures supporting the financial statements, covering acquisitions, investments, fair value measurements, goodwill, debt, tax information, and a pending class action lawsuit - JHG completed the acquisition of a 55% voting interest in Victory Park Capital Advisors (VPC) for $114.0 million in cash and JHG common stock, plus contingent consideration, expanding into private credit markets[23][24] - The company's debt primarily consists of $400.0 million in principal of 5.450% Senior Notes due 2034, with a $200 million revolving credit facility undrawn[67][68] - The effective tax rate for Q1 2025 was 22.0%, compared to 18.8% for Q1 2024, mainly due to the absence of a significant reclassification benefit[69] - The company is a defendant in a class action lawsuit, Schissler v. Janus Henderson US (Holdings) Inc., alleging breach of fiduciary duties related to its 401(k) plan, which it intends to vigorously defend[91][92] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 performance, highlighting a 6% year-over-year AUM increase to $373.2 billion, $2.0 billion net inflows, 13% revenue growth, and 29% operating income rise First Quarter 2025 Summary Q1 2025 saw 77% of AUM outperforming benchmarks, AUM growth to $373.2 billion with $2.0 billion net inflows, a strategic partnership with Guardian, and a 3% dividend increase - Achieved solid investment performance, with 77%, 65%, and 73% of AUM outperforming benchmarks on a three-, five-, and 10-year basis, respectively[102] - AUM increased to $373.2 billion, up 6% from March 31, 2024, with Q1 2025 net inflows of $2.0 billion[102] - Announced a strategic partnership with Guardian, which includes managing a $45 billion investment-grade public fixed income portfolio[102] - The Board approved a 3% increase in the quarterly dividend to $0.40 per share and a new $200 million share buyback program[102] Assets Under Management AUM was $373.2 billion as of March 31, 2025, a 1% decrease from Q4 2024 due to negative market performance, partially offset by $2.0 billion net inflows and FX impact AUM and Flows by Capability - Q1 2025 | Capability | AUM Dec 31, 2024 (in billions) | Net Sales (in billions) | Markets (in billions) | FX (in billions) | AUM Mar 31, 2025 (in billions) | | :--- | :--- | :--- | :--- | :--- | :--- | | Equities | $229.4 | $(4.2) | $(9.5) | $1.7 | $217.4 | | Fixed Income | $82.7 | $5.6 | $0.9 | $0.3 | $89.5 | | Multi-Asset | $53.1 | $(0.6) | $(1.1) | $0.2 | $51.6 | | Alternatives | $13.5 | $1.2 | $(0.2) | $0.2 | $14.7 | | Total | $378.7 | $2.0 | $(9.9) | $2.4 | $373.2 | Average AUM by Capability | Capability | Q1 2025 (in billions) | Q1 2024 (in billions) | % Change | | :--- | :--- | :--- | :--- | | Equities | $231.1 | $212.7 | 9% | | Fixed Income | $87.8 | $70.6 | 24% | | Multi-Asset | $53.4 | $50.0 | 7% | | Alternatives | $14.1 | $8.6 | 64% | | Total | $386.4 | $341.9 | 13% | Results of Operations Q1 2025 revenue increased 13% year-over-year to $621.4 million, with operating expenses up 8%, leading to a 29% rise in operating income to $153.6 million Revenue Breakdown - Q1 2025 vs Q1 2024 | Revenue Type | Q1 2025 (in millions) | Q1 2024 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Management fees | $513.0 | $459.4 | 12% | | Performance fees | $(3.6) | $(13.1) | 73% | | Shareowner servicing fees | $61.4 | $57.2 | 7% | | Other revenue | $50.6 | $48.2 | 5% | | Total revenue | $621.4 | $551.7 | 13% | Operating Expenses Breakdown - Q1 2025 vs Q1 2024 | Expense Type | Q1 2025 (in millions) | Q1 2024 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Employee compensation and benefits | $181.5 | $165.8 | 9% | | Long-term incentive plans | $44.1 | $50.4 | (13)% | | Distribution expenses | $132.1 | $122.4 | 8% | | Total operating expenses | $467.8 | $432.5 | 8% | - For FY2025, the company anticipates an adjusted compensation to revenue ratio of 43% to 44% and mid- to high-single-digit growth in adjusted non-compensation expenses[127][134] Non-GAAP Financial Measures Q1 2025 adjusted operating income was $156.6 million with a 32.2% margin, and adjusted diluted EPS increased to $0.79 year-over-year GAAP to Non-GAAP Reconciliation Highlights - Q1 2025 vs Q1 2024 | Metric | Q1 2025 (Adjusted, in millions) | Q1 2024 (Adjusted, in millions) | | :--- | :--- | :--- | | Adjusted Revenue | $486.5 | $426.8 | | Adjusted Operating Income | $156.6 | $128.2 | | Adjusted Operating Margin | 32.2% | 30.0% | | Adjusted Net Income Attributable to JHG | $124.6 | $114.4 | | Adjusted Diluted EPS | $0.79 | $0.71 | Liquidity and Capital Resources As of March 31, 2025, the company held $1.07 billion in cash, maintaining a strong capital position with a $340.8 million surplus above regulatory requirements Key Liquidity Data | Account | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :--- | :--- | :--- | | Cash and cash equivalents held by the Company | $1,072.9 | $1,190.9 | | Investments held by the Company | $540.5 | $474.1 | | Long-term debt | $395.2 | $395.0 | - The company holds capital of £264.0 million ($340.8 million) above its FCA-supervised regulatory group requirement as of March 31, 2025[150] - On April 30, 2025, the Board approved a new share buyback program authorizing the repurchase of up to $200.0 million of common stock[152] Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk exposure were reported compared to the prior year's Annual Report on Form 10-K - There were no material changes in the company's market risk exposure compared to the 2024 year-end report[168] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - Based on an evaluation as of March 31, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[169] - No material changes to internal control over financial reporting occurred during the first quarter of 2025[170] PART II. Other Information Legal Proceedings Information regarding legal proceedings, including a class action lawsuit concerning the 401(k) plan, is detailed in Note 16 of the financial statements - Information regarding legal proceedings is provided in Note 16 of the financial statements[171] Risk Factors This section refers to the risk factors discussed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - There are no new risk factors presented; the report refers to the risks discussed in the Annual Report on Form 10-K for the year ended December 31, 2024[172] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 619,423 shares at an average price of $43.23 in Q1 2025, with a new $200 million buyback program approved in April 2025 - On April 30, 2025, the Board of Directors approved a new share buyback program authorizing the repurchase of up to $200.0 million of common stock[174] Common Stock Repurchases - Q1 2025 | Period | Total Shares Purchased | Average Price Paid | Value of Shares Remaining (in millions) | | :--- | :--- | :--- | :--- | | Jan 2025 | 426,000 | $42.60 | $62 | | Feb 2025 | 193,423 | $44.63 | $53 | | Mar 2025 | 0 | $0.00 | $53 | | Total | 619,423 | $43.23 | - | Other Information No director or Section 16 officer adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - No director or Section 16 officer adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025[181] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents for financial reporting - Key exhibits filed include certifications from the CEO (Ali Dibadj) and CFO (Roger Thompson) pursuant to Sarbanes-Oxley Sections 302 and 906[182]