Invesco(IVZ) - 2025 Q2 - Quarterly Report

PART I. Financial Information This section provides Invesco Ltd.'s unaudited condensed consolidated financial statements and management's discussion and analysis for the period ended June 30, 2025 Item 1. Financial Statements This section presents Invesco Ltd.'s unaudited condensed consolidated financial statements, including balance sheets, income, comprehensive income, cash flows, and equity changes, for periods ended June 30, 2025 Condensed Consolidated Balance Sheets Total assets increased to $28.50 billion by June 30, 2025, driven by consolidated investment products, while total equity attributable to Invesco Ltd. decreased to $13.87 billion Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $28,496.9 | $27,008.9 | | Cash and cash equivalents | $922.7 | $986.5 | | Goodwill | $8,583.3 | $8,583.3 | | Investments and other assets of CIP | $9,673.9 | $8,374.5 | | Total Liabilities | $13,538.0 | $11,340.1 | | Debt | $1,883.9 | $890.6 | | Debt and other liabilities of CIP | $8,192.5 | $6,853.1 | | Total Equity Attributable to Invesco Ltd. | $13,873.1 | $14,559.9 | Condensed Consolidated Statements of Income In Q2 2025, Invesco Ltd. reported a net loss of $12.5 million due to a preferred share repurchase, contrasting with net income in Q2 2024 Income Statement Summary (in millions, except EPS) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $1,515.5 | $1,483.3 | $3,044.7 | $2,958.6 | | Operating income | $214.2 | $206.8 | $491.5 | $419.9 | | Net income/(loss) attributable to Invesco Ltd. | $(12.5) | $132.2 | $158.6 | $273.7 | | Diluted EPS | $(0.03) | $0.29 | $0.35 | $0.60 | - A significant cost of $159.3 million was incurred for the repurchase of preferred shares in Q2 2025, leading to a net loss attributable to Invesco Ltd. for the quarter[16] Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities was $463.3 million for the six months ended June 30, 2025, while financing activities included a $1.15 billion preferred share repurchase Six-Month Cash Flow Summary (in millions) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $463.3 | $434.7 | | Net cash provided by/(used in) investing activities | $(367.4) | $57.4 | | Net cash provided by/(used in) financing activities | $(195.5) | $(860.0) | | Increase/(decrease) in cash and cash equivalents | $(99.6) | $(367.9) | - Financing activities in the first half of 2025 were marked by a $1.15 billion repurchase of preferred shares and the issuance of $992.7 million in new bank term loans[21] Notes to the Condensed Consolidated Financial Statements The notes detail accounting policies, fair value measurements, debt, and share capital, highlighting a $1.0 billion preferred stock repurchase and an increased $2.5 billion revolving credit facility - On May 16, 2025, Invesco repurchased $1.0 billion of Series A Preferred Stock held by Massachusetts Mutual Life Insurance Company (MassMutual)[51] - The company amended its revolving credit agreement, increasing its capacity from $2.0 billion to $2.5 billion and extending the maturity to May 2030. It also entered into two new floating-rate bank term loans totaling $1.0 billion[47][48] - The company has undrawn co-invest capital commitments of $779.6 million as of June 30, 2025[62] - A second quarter 2025 dividend of $0.21 per common share was declared on July 21, 2025[78] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, highlighting record $2.0 trillion Assets Under Management (AUM) in Q2 2025, capital management, and a strategic partnership with Barings Executive Overview The company achieved record $2.0 trillion AUM in Q2 2025, repurchased $1.0 billion in preferred shares, and formed a strategic partnership with Barings - The company reached a record $2.0 trillion in Assets Under Management (AUM) in the second quarter of 2025[86] - On May 16, 2025, the company repurchased $1.0 billion of its outstanding Series A preferred shares, funded by $1.0 billion in new 3-year and 5-year bank term loans. The revolving credit agreement was also increased to $2.5 billion and extended to 2030[87] - A strategic partnership with Barings (MassMutual's asset management subsidiary) was announced to expand the private markets business, with MassMutual intending to invest an initial total of $650 million[88] Assets Under Management Total AUM increased to $2,001.4 billion by June 30, 2025, driven by $15.6 billion in net long-term flows and $126.4 billion in market gains AUM Roll-Forward for Q2 2025 (in billions) | Metric | Total AUM | Active | Passive | | :--- | :--- | :--- | :--- | | Beginning Assets (April 1) | $1,844.8 | $1,041.3 | $803.5 | | Net long-term flows | $15.6 | $3.8 | $11.8 | | Total net flows | $15.2 | $0.6 | $14.6 | | Market gains and losses | $126.4 | $33.4 | $93.0 | | Foreign currency translation | $14.0 | $11.2 | $2.8 | | Ending Assets (June 30) | $2,001.4 | $1,087.5 | $913.9 | - For the six months ended June 30, 2025, total net flows were $47.8 billion, with net long-term flows contributing $33.2 billion[106] Results of Operations Q2 2025 operating revenues increased 2.2% to $1.52 billion, with operating income rising 3.6% to $214.2 million, despite a 12.8% increase in employee compensation Q2 2025 vs Q2 2024 Financial Performance (in millions) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total operating revenues | $1,515.5 | $1,483.3 | 2.2% | | Total operating expenses | $1,301.3 | $1,276.5 | 1.9% | | Operating income | $214.2 | $206.8 | 3.6% | - Employee compensation expense increased by $58.1 million (12.8%) YoY in Q2 2025, primarily due to $16.9 million in severance, a $22.4 million increase in deferred compensation mark-to-market expense, and higher variable compensation[155] - General and administrative expenses decreased by $41.2 million (22.8%) YoY in Q2 2025, mainly because the prior-year period included a $50 million accrual for a regulatory settlement[161] - The effective tax rate increased to 28.1% for Q2 2025 from 24.6% in Q2 2024, primarily due to jurisdictional tax rate changes and an unfavorable mix of income[175] Liquidity and Capital Resources Total liquidity reached $3.42 billion by June 30, 2025, supported by a $2.5 billion revolving credit facility, with the company repurchasing $1.0 billion in preferred stock Sources of Liquidity (in millions) | Source | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $922.7 | $986.5 | | Available Revolving credit agreement | $2,500.0 | $2,000.0 | | Total sources of liquidity | $3,422.7 | $2,986.5 | - In H1 2025, the company repurchased 3.2 million common shares for $50 million and $1.0 billion of Series A Preferred Stock[204] - The company maintained strong investment-grade credit ratings of BBB+ (S&P), A3 (Moody's), and A (Fitch), all with stable outlooks[205] - As of June 30, 2025, the company was in compliance with its debt covenants, reporting a leverage ratio of 0.83:1.00 (well below the maximum of 3.25:1.00) and an interest coverage ratio of 26.69:1.00 (above the minimum of 4.00:1.00)[225] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks include AUM market price, securities market, interest rate, and foreign exchange rate risks, with no material changes reported - The company's main market risks are AUM market price risk, securities market risk, interest rate risk, and foreign exchange rate risk, with no material changes reported for the period[235] - Investment management revenues are directly tied to the value of AUM, meaning declines in market prices of securities could significantly reduce revenues[236] - As of June 30, 2025, 47.3% of the company's debt had fixed interest rates, mitigating some exposure to interest rate fluctuations[239] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Based on an evaluation as of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[244] - There were no changes during the six months ended June 30, 2025, that materially affected or are likely to materially affect the company's internal control over financial reporting[245] PART II. Other Information This section covers legal proceedings, risk factors, unregistered sales of equity securities, and a list of exhibits filed with the report Item 1. Legal Proceedings Legal proceedings are referenced in Note 10 of the financial statements, with management expecting no material impact on the company's financial condition - Details regarding legal proceedings are provided in Note 10, "Commitments and Contingencies - Legal Contingencies," within the financial statements[248] Item 1A. Risk Factors No significant changes to the company's risk factors have been reported since the Annual Report on Form 10-K for 2024 - The company reports no significant changes in its risk factors from those previously disclosed in its 2024 Form 10-K[249] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2025, the company repurchased 1,745,987 common shares, with $282.2 million remaining available under the repurchase authorization Common Share Repurchases for Q2 2025 | Month | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | 632,875 | $13.38 | | May 2025 | 543,180 | $14.85 | | June 2025 | 569,932 | $14.85 | | Total | 1,745,987 | N/A | - As of June 30, 2025, $282.2 million remained available under the company's share repurchase authorization[251] Item 6. Exhibits This section indexes all exhibits filed with the Form 10-Q, including corporate governance documents, credit agreements, and CEO/CFO certifications - The exhibits include certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[255]