Janus Henderson(US:JHG)2020-08-02 10:26Financial Data and Key Metrics Changes - The company reported adjusted EPS of $0.67, an increase from $0.60 in the previous quarter and $0.61 a year ago [21][32] - Total adjusted revenues decreased by 7% compared to the prior quarter, primarily due to lower average AUM, although performance fees increased to $17.2 million from $14.6 million in the prior quarter [30][34] - Adjusted operating income was $138 million, down 16% from the prior quarter, with an adjusted operating margin of 33.5% compared to 37.2% in the previous quarter [32][36] Business Line Data and Key Metrics Changes - Net outflows for the quarter were $8.2 billion, an improvement from $12.2 billion in the previous quarter, with positive flows in the intermediary business but significant outflows in institutional [20][24] - Equity net outflows were $4.2 billion, improved from $6.9 billion in the prior quarter, while fixed income saw negative flows of $700 million [26][28] - Multi-asset flows were positive at $700 million, driven by strong performance in the balanced strategy [28] Market Data and Key Metrics Changes - The U.K. business within EMEA posted its first positive result since Q4 2017, indicating a recovery in the market [25] - Intermediary flows were positive across the U.S., EMEA, and Asia Pacific, with a 3% annualized organic growth rate for the quarter [25][50] - The company noted that the institutional pipeline remains diverse, with opportunities for improvement in the second half of the year despite recent outflows [25][64] Company Strategy and Development Direction - The company is focused on a strategy termed "simple excellence," which aims to deliver organic growth and increasing profitability through disciplined execution [43][44] - Key strategic priorities include enhancing investment outcomes, improving client experience, and modernizing infrastructure while maintaining cost discipline [55][57] - The company is committed to diversity and inclusion, having already met its target of 25% women in finance by 2022 [16][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the promise of growth has taken longer to materialize than expected, but they remain confident in their strategy and the potential for improved results [10][13] - The impact of COVID-19 has created delays in institutional funding processes, but management is optimistic about future opportunities [100][101] - The company plans to continue examining its cost structure and make necessary investments to support its strategic goals [58][124] Other Important Information - The company returned $88 million to shareholders through dividends and share repurchases during the quarter [21][41] - Cash and cash equivalents stood at $880 million, with $837 million attributed to Janus Henderson [40] Q&A Session Summary Question: Institutional business performance and growth path - Management noted that institutional flows were impacted by significant redemptions, but they are taking steps to strengthen the non-INTECH parts of the institutional distribution [68][72] Question: Direct channel reopening and investment - The direct channel was reopened to better serve existing shareholders, with cautious optimism about improving flows without significant investment [73][76] Question: Gross sales trends and month-to-month movement - Management indicated that gross sales have fluctuated due to market conditions, with no significant trends drawn from recent changes [78][79] Question: Impact of weaker performance on flows - The weaker performance in U.S. SMID and MID strategies is recognized, but management believes these strategies will recover over time [82][86] Question: Review of cost structure and potential headcount changes - Management emphasized that the review of the cost structure is ongoing, with no pre-judged outcomes regarding headcount reductions [91][94] Question: Institutional outflows and client retention - Management expressed the need to improve efforts to retain assets during client derisking activities, acknowledging the importance of strong client relationships [97][98] Question: Delayed funding in institutional business - Management noted that the process of moving from pipeline to funding has slowed, but they remain hopeful for future opportunities [100][101]