Janus Henderson(US:JHG)2022-10-27 19:33Financial Data and Key Metrics Changes - The company reported a decrease in adjusted revenue of 8% compared to the prior quarter, primarily due to lower average AUM [24] - Adjusted operating income for the third quarter was $125 million, down 16% from the prior quarter, driven by lower average assets [28] - Adjusted diluted EPS was $0.61 [28] Business Line Data and Key Metrics Changes - Net outflows for the quarter were $5.8 billion, an improvement from $7.8 billion in the previous quarter [14] - Equity net outflows were $4.1 billion, down from $5.8 billion in the second quarter, driven by global technology strategies [20] - Fixed income net outflows were $1.2 billion, reflecting a $900 million institutional redemption [21] Market Data and Key Metrics Changes - The company experienced approximately $2.6 billion in net outflows from the institutional channel, primarily driven by the EMEA region [17] - The APAC region saw $800 million in positive net inflows, including $500 million from an Asian client [18] - The US intermediary channel had net outflows of $2.5 billion, an improvement from $5.7 billion in the second quarter [15] Company Strategy and Development Direction - The company aims to protect and grow its core businesses, amplify strengths, and diversify where clients provide the right to win [37] - A strategic framework was established to identify opportunities for organic growth and attractive operating margins [39] - The company plans to invest in areas such as product offerings, branding, and organizational structure to capture market share [47] Management's Comments on Operating Environment and Future Outlook - The management noted that market conditions remain difficult due to tightening monetary policy, inflation, and geopolitical tensions [6] - The company expects management fees to be lower in the fourth quarter due to significantly lower closing AUM compared to year-to-date average AUM [29] - Management expressed confidence in the potential for long-term success despite current challenges, emphasizing the importance of client service and investment acumen [60] Other Important Information - The company identified $40 million to $45 million in gross run rate cost efficiencies, with plans to reinvest most of these savings back into the business [32] - Cash and cash equivalents were approximately $1 billion as of September 30, an increase of $170 million [34] - The Board declared a $0.39 per share dividend to be paid on November 23 [35] Q&A Session Summary Question: Follow-up on expense initiatives - Management discussed $40 million to $45 million in gross savings, with a focus on not disrupting client services or regulatory obligations [65][66] Question: Protect and grow strategy in the US intermediary channel - Management acknowledged losing market share and emphasized the need for a more focused approach to improve relationships and sales [71][74] Question: Cash balance and M&A opportunities - Management confirmed a strong balance sheet with room for M&A, while emphasizing a disciplined approach to potential acquisitions [80] Question: UK domiciled AUM and impact of liquidity needs - Management indicated that approximately $500 million of outflows were related to clients requiring cash for collateral calls, with total UK pension AUM around $10 billion [81][82] Question: Strategy changes and their significance - Management acknowledged that the strategy is more evolutionary than revolutionary, focusing on improving existing capabilities and client service [87][88] Question: FX hedging and its impact - Management explained that the P&L is relatively naturally hedged, with a slight short position in non-US dollars [97][98] Question: Marketing and admin spend reductions - Management attributed lower marketing and admin spend to cost control measures and a careful approach to spending in a challenging market [103][104]