Janus Henderson(US:JHG)2022-05-08 08:15Financial Data and Key Metrics Changes - Adjusted revenue in Q1 2022 decreased by 13% compared to the prior quarter due to lower average AUM and performance fees [26] - Adjusted operating income in Q1 2022 was $180 million, down 25% over the prior quarter, primarily driven by lower revenue [26] - First quarter adjusted operating margin was 37.4% [26] - Cash and cash equivalents decreased by approximately $324 million to $782 million as of March 31, 2022, primarily due to the payment of annual variable compensation [35] Business Line Data and Key Metrics Changes - Net outflows excluding Intech were $6.2 billion in Q1 2022, compared to $1 billion in the prior quarter, driven primarily by outflows in equities and institutional redemptions [16][11] - Equity net outflows for Q1 2022 were $3.8 billion, compared to $3.2 billion in the prior quarter [21] - Flows into fixed income were flat in the quarter, which is considered a good result against a tough backdrop for bonds [22] - Total net outflows for multi-asset were $2.2 billion, entirely due to a one-off redemption in the balanced strategy [22] Market Data and Key Metrics Changes - In the US, intermediary flows were negative, with $1.7 billion in net outflows, while Asia Pacific saw positive flows [17] - Institutional outflows were $3.6 billion, primarily due to a $2.2 billion redemption of the balanced strategy [19] - The SMA channel in the US had $800 million of net inflows, primarily from the concentrated growth strategy [18] Company Strategy and Development Direction - The company is focused on organic growth and has completed the sale of Intech, which is expected to streamline operations [8][12] - The active ETF franchise continues to grow, with assets exceeding $5 billion [9] - The company is committed to returning excess cash to shareholders, with a new buyback authorization of $200 million [12][36] - The firm is investing in sustainable products and has expanded its ESG team significantly [107][110] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging environment due to market conditions and geopolitical factors, such as the Russian invasion of Ukraine [19] - The outlook for performance fees in 2022 is negative, with expectations of approximately negative $60 million for US mutual fund performance fees [30] - Management remains optimistic about the institutional pipeline, despite recent outflows, and is focused on stabilizing the platform [44][56] Other Important Information - The company announced a $0.01 increase in the quarterly dividend to $0.39 per share, aligning with its progressive dividend policy [12][36] - The firm is cautious about leveraging its balance sheet and aims to maintain flexibility for future opportunities [62] Q&A Session Summary Question: Follow-up on flows and institutional pipeline - Management clarified that the $7.3 billion mandate will be redeemed throughout 2022, with $2 billion already redeemed in April [40] - The real estate transaction is expected to impact Q2 results positively [41] Question: Cost management and capital management - Management confirmed that the capital management philosophy remains consistent, with a focus on progressive dividends and share buybacks [49] - There is an expectation of higher non-comp costs due to a return to normal operations post-COVID [50] Question: Institutional business outlook post-Intech sale - The institutional business, excluding Intech, remains sizable at $82 billion and is well diversified [56] - Management is focused on building client relationships and enhancing product offerings [56] Question: Performance fee outlook - Management expects Q2 performance fees to be significantly weaker than the previous year due to current performance trends [84] Question: Acquisition appetite for growth - Management emphasized maximizing existing capabilities before considering acquisitions, focusing on investment capabilities rather than distribution [80] Question: ESG product development - The company is investing heavily in ESG initiatives and has launched several sustainable products, with a significant increase in the ESG team [107][110]