Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Janus Henderson Group PLC (JHG, Financial) reported a 37% increase in adjusted diluted EPS to $0.85 compared to the same period a year ago.
- Net inflows of $1.7 billion for the quarter, marking the second quarter out of the last six with positive flows.
- Assets under management (AUM) increased by 3% to $361.4 billion, the highest quarterly AUM figure in over two years.
- Strong investment performance with 63% of assets beating respective benchmarks on a 1, 3, 5, and 10-year basis.
- The company has a strong and stable balance sheet, generating over $220 million in cash flows from operations in the second quarter.
Negative Points
- Equity flows were negative $1.4 billion, reflecting a challenging environment for active equities.
- Net outflows for the self-directed channel remained flat at $900 million compared to the prior quarter.
- Adjusted non-compensation operating expenses increased by 5% compared to the prior quarter due to higher G&A and marketing expenses.
- The UK intermediary segment continued to experience net outflows, unlike other regions which showed improvement.
- Net management fee margin declined slightly from the prior quarter, indicating some fee pressure in the asset management industry.
Q & A Highlights
Q: Can you talk about the statistical relevance of brand improvement for gross and net sale opportunities across different channels?
A: Ali Dibadj, CEO: While there's no one-to-one correlation, being in the consideration set is crucial. Improved brand rankings help in being considered by institutional clients, consultants, and intermediaries. We are very focused on ROI and have a lot to say about Janus Henderson's strengths, which is positively impacting our business.
Q: Could you elaborate on the M&A pipeline and the economics of Privacore?
A: Ali Dibadj, CEO: M&A is a tool to deliver on our strategy, not a strategy itself. We focus on client-led opportunities, performance, processes, people, and culture. Roger Thompson, CFO: Privacore has partnered with significant alternative asset managers and completed a private placement. We currently own 49% and have the option to purchase the remaining 51% in the future.
Q: How do you see the non-US ETF business growing, especially with the recent acquisition of Tabula?
A: Ali Dibadj, CEO: We see similar growth patterns in Europe as in the US. Tabula's strong team and existing presence in multiple countries provide a platform to grow both fixed income and equity ETFs, primarily in the active realm. This acquisition also allows us to expand into key growth markets like Latin America, the Middle East, and APAC.
Q: Can you discuss the momentum in the business and flow trends for the second half of the year?
A: Ali Dibadj, CEO: While projections are difficult, we are seeing proof points that our strategy is bearing fruit. This includes positive indicators in both intermediary and institutional channels. Roger Thompson, CFO: We are seeing positive trends globally, including in Europe, Latin America, Asia, and Australia, although the path may not be linear.
Q: How is the institutional channel evolving, and do you have the right team in place?
A: Ali Dibadj, CEO: We had positive flows in 2023 and are rebuilding the pipeline. This quarter, we had over 10 distinct fundings, demonstrating our efforts are working. Consultant relationships are also growing, which should drive future growth.
Q: What specific products are driving improvement in the LATAM intermediary?
A: Ali Dibadj, CEO: We are leveraging our US intermediary experience in LATAM. Strengths include European equities, fixed income, and balanced funds. Roger Thompson, CFO: European equity, thematics, global technology, and sustainable equity products are seeing strong flows.
Q: How does the institutional new win and redemption pipeline look for the second half?
A: Roger Thompson, CFO: The pipeline is developing as expected, with no significant inflows or outflows on the horizon. Ali Dibadj, CEO: We are always looking to add talent to attract more flows into the institutional channel.
Q: What is the long-term potential of Privacore, and how meaningful could it be for Janus Henderson?
A: Ali Dibadj, CEO: Privacore sits at the nexus of democratizing alternatives for the wealth channel. The potential market is enormous, and we aim to be a significant player in this space. While it's difficult to quantify, the opportunity is substantial.
Q: How do you plan to optimize the balance sheet and capital allocation?
A: Roger Thompson, CFO: Our capital profile allows us to invest in the business both organically and inorganically while returning capital to shareholders. We expect to complete the current buyback program and maintain our capital philosophy.
Q: How long does it take for improved performance in the balanced fund to show up in inflows?
A: Ali Dibadj, CEO: Improved performance generally leads to better flows over time, although it's not immediate. Roger Thompson, CFO: We are seeing an improving trend in outflows and new client interest, which is encouraging.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
