Invesco(US:IVZ)2020-04-23 18:11Financial Data and Key Metrics Changes - The company reported a decline in revenues due to lower average assets under management (AUM) and reduced performance fees, with a pro forma net revenue yield reduction of approximately two basis points in March alone [17][21][40] - The long-term investment performance remained strong, with 60% and 69% of capabilities in the top half of peers for the five-year and ten-year periods, respectively [14] - The company experienced new outflows of only $2 billion despite extreme market volatility, with long-term flows increasing nearly 40% to a record $87.4 billion [9][12] Business Line Data and Key Metrics Changes - The institutional business saw net inflows of $11.2 billion, driven by stable value products and active fixed income mandates [15][28] - Retail flows faced challenges, with net retail outflows of $30.3 billion, primarily due to ETF net outflows of $6 billion [16][39] - The company reported significant net flows of $26.3 billion into liquidity products as clients sought financial flexibility during the crisis [29] Market Data and Key Metrics Changes - The company noted a strong presence in key growth areas, including China and global ETFs, with a diversified platform comprising approximately 90% of business in these areas [8][9] - The company experienced a decline in revenues due to the reduced market value of AUM, with the impact of currency fluctuations also affecting operating expenses [18][22] Company Strategy and Development Direction - The company is focused on maintaining financial strength and flexibility, with a proactive approach to expense management and a reduction in the common dividend to preserve liquidity [12][23] - The integration of Oppenheimer is expected to drive further efficiencies and scale into the operating platform, enhancing the company's competitive position [11][27] - The company aims to leverage its digital engagement model to enhance client interactions and adapt to changing market conditions [7][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2020 is proving to be more challenging than anticipated, but emphasized the company's strong position and proactive measures taken to navigate the crisis [12][42] - The management expressed confidence in the resilience of the business and the ability to meet client needs despite the current environment [9][10] - The company is committed to a sustainable dividend and plans to maintain financial flexibility to support long-term growth [23][26] Other Important Information - The company has a credit facility balance of approximately $500 million and has reduced its quarterly common dividend from $0.31 to $0.155 per share, providing nearly $300 million in cash annually [22][12] - The company plans to redeem approximately $200 million of seed capital from certain investment products to strengthen its liquidity position [11][25] Q&A Session Summary Question: How does the balance sheet and dividend cut impact the institutional business? - Management stated that the balance sheet remains strong and proactive measures around the dividend reinforce the company's stability, which is not a concern for institutional clients [44][46] Question: What are the specifics of the $80 million in additional savings? - Management indicated that the savings are a combination of temporary measures due to the current environment and longer-term structural efficiencies being explored [48][50] Question: Why not consider eliminating the preferred dividend to strengthen the balance sheet? - Management clarified that the 50% reduction in the common dividend was sufficient to maintain flexibility and was a proactive decision, not a reactive one [56][57] Question: How are net flows looking for Q2? - Management refrained from providing specific numbers but indicated that conditions have improved since March [58][60] Question: Can you break down the fee rate impacts? - Management explained that various factors, including inflows into lower fee rate products, have complicated the fee rate dynamics, leading to a guidance of a two basis point reduction [75][76]