Janus Henderson(JHG) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Assets under management decreased by 1% to $373.2 billion, with market declines partially offset by $2 billion of positive net flows and favorable currency adjustments [6][10] - Adjusted diluted EPS increased by 11% to $0.79 compared to Q1 2024, with operating income up 22% year-over-year [9][23] - Adjusted revenue decreased by 14% compared to the prior quarter but increased by 14% year-over-year due to higher management fees [23][24] Business Line Data and Key Metrics Changes - Net inflows for the quarter were $2 billion, a significant improvement from net outflows of $3 billion a year ago, driven by a 44% increase in gross sales [13][20] - Fixed income net inflows were $5.6 billion, compared to $5.2 billion in the prior quarter, with active fixed income ETFs leading the positive flows [20][21] - Equity flows were negative $4.2 billion, reflecting a challenging environment for active equities [20] Market Data and Key Metrics Changes - The U.S. intermediary channel experienced positive net flows for the seventh consecutive quarter, with contributions from various strategies including active ETFs and U.S. mid-cap growth [15][16] - Asia Pacific intermediary net flows were positive for the third consecutive quarter, marking the best result in over three years [17] - Institutional net inflows were $800 million, including $600 million of ETF net inflows, indicating increased interest from institutional clients [17] Company Strategy and Development Direction - The company announced a strategic partnership with Guardian Life Insurance Company, managing a $45 billion investment-grade public fixed income portfolio, which is expected to enhance growth and institutional reach [42][43] - The strategic pillars focus on protecting and growing core businesses, amplifying strengths, and diversifying where clients provide opportunities [32][34] - The company is actively pursuing M&A opportunities to enhance growth and leverage its strong balance sheet [34][71] Management's Comments on Operating Environment and Future Outlook - Management acknowledged tumultuous market conditions but expressed confidence in navigating uncertainty due to a global footprint and diverse client base [5][6] - The long-term investment performance remains solid, with over 65% of assets beating benchmarks over three, five, and ten-year periods [8][12] - Management emphasized the importance of active management in capitalizing on market dislocations and opportunities [8][86] Other Important Information - The company announced a 3% increase in the quarterly dividend and a new share buyback authorization of up to $200 million through April 2026 [10][30] - Adjusted operating expenses decreased by 9% to $330 million compared to the prior quarter, reflecting cost discipline [24][26] - The liquidity profile remains strong, with cash and cash equivalents at $1.1 billion, a 19% increase year-over-year [29][30] Q&A Session Summary Question: Thoughts on CLO ETF capacity and liquidity - Management noted that they hold about 80% market share in the CLO ETF category and have seen stable flows even during market volatility [52][54] Question: Next steps for institutional channel performance - Management highlighted a significant increase in RFP activity and consultant support, indicating a positive outlook for institutional flows [56][58] Question: Opportunities for growth with Guardian - Management expressed optimism about enhancing Guardian's investment capabilities and leveraging their distribution platform for mutual growth [66][68] Question: M&A interest and market conditions - Management indicated a very active M&A environment and a reduction in the bid-ask spread, while remaining disciplined in their approach [71][73] Question: Organic growth expectations for the insurance client business - Management expects continued growth in the $45 billion AUM from Guardian, emphasizing the potential for further asset acquisition in the insurance sector [77][79] Question: Active management opportunities in 2025 - Management sees significant opportunities arising from market dislocations and a strong demand for active management strategies [84][86] Question: Regional demand differences in intermediary and institutional channels - Management noted stability in institutional channels while acknowledging some volatility in intermediary channels, particularly in EMEA and the U.S. [94][96]