Janus Henderson Group Plc Q2 FY2024 earnings call

Management Statement and Operational Highlights

• Investment Performance: Consistently solid, with 63% of assets beating benchmarks over various time periods.
• AUM and Flows: AUM increased 3% to $361.4 billion, net flows were positive $1.7 billion, improving from intermediary and institutional channels.
• Financial Results: Adjusted diluted EPS was $0.85, a 37% increase year-over-year. Adjusted operating income rose 36%, EPS up 37% year-over-year.
• Strategic Pillars: Focus on Protect & Grow, Amplify, and Diversify. Progress includes acquisition of Tabula and joint venture Privacore.
• Brand Strength: Improvements in surveys like Broadridge, NMG Consulting, and Citywire Pro Buyer, indicating a stronger brand profile.

Segment Performance

• Investment Performance: 63% of assets beat benchmarks on 1, 3, 5, and 10-year bases.
• Assets Under Management (AUM): Increased 3% to $361.4 billion, the highest quarterly AUM in over two years, 12% higher year-over-year.
• Net Flows: Positive $1.7 billion, with improvement from intermediary and institutional channels. Institutional had over 10 distinct mandate fundings ranging from $100 million to $400 million.
• Flows by Client Type:
  • Intermediary Channel:
    • U.S. intermediary: Positive for 4th consecutive quarter, best quarterly gross sales in over two years, net inflows in strategies like active ETFs, multisector credit.
    • EMEA and Latin American intermediary: Net flows improved for 3rd consecutive quarter, increased market share.
  • Institutional Channel: Net inflows $200 million, improved from prior quarter, aided by over 10 distinct mandate fundings.
  • Self-Directed Channel: Net outflows $900 million, flat to prior quarter.
• Flows by Capability:
  • Equity: Negative $1.4 billion but took market share.
  • Fixed Income: Net inflows $3.3 billion, led by fixed income ETFs.
  • Multi-Asset: Net outflows $800 million.
  • Alternatives: Net inflows $600 million, driven by institutional fundings.

Guidance

• AUM increased 3% to $361.4 billion, the highest in over two years.
• Net flows were positive $1.7 billion, showing improvement in intermediary and institutional channels.
• Adjusted EPS expected to continue growth driven by strong investment performance and expense management.
• Continued investment in the business and return of capital to shareholders through dividends and share buybacks.

Risks

• Persistent unsettled macro backdrop.
• Fee pressures in the asset management industry.
• Execution risk of strategic initiatives not being linear.
• Potential lumpy inflows/outflows in the institutional channel.

Question and Answer

Q: Bill Katz on brand improvement and M&A/Privacore update A: Ali Dibadj discusses brand correlation with business success, stating brand progress is correlated with business success though not one-to-one; mentions M&A is client-led and focuses on protecting and growing businesses, with Privacore showing progress in private placements and product launches.

Q: Ken Worthington on ETF business, Tabula, fixed income A: Ali Dibadj talks about ETF growth, noting over $19B ETF AUM with four funds over $1B; discusses Tabula acquisition as a platform to expand into European ETF market and offer active products in fixed income and equities; highlights strong fixed income performance and product offerings.

Q: Dan Fannon on distribution, institutional maturation A: Ali Dibadj and Roger Thompson discuss distribution momentum, with U.S. intermediary showing positive flows and broader global intermediary flows improving; on institutional channel, mentions rebuilding the pipeline with over 10 distinct mandate fundings and progress in consultant relationships.

Q: Craig Siegenthaler on institutional pipeline, talent A: Roger Thompson talks about institutional pipeline development with 10 distinct fundings and ongoing rebuilding; Ali Dibadj mentions continuing to look for talent to attract more flows into the institutional channel.

Q: Michael Cyprys on capital allocation, buybacks A: Roger Thompson states capital profile allows investment in business and return of capital to shareholders, with buyback expected to complete and capital philosophy unchanged.

Q: John Dunn on balance fund, EMEA/LatAm intermediary products A: Ali Dibadj and Roger Thompson discuss balance fund performance improving due to strong investment performance and client interest; in EMEA/LatAm, mention progress in product strength across regions like European equity and absolute return.

Q: Adam Beatty on institutional redemptions, solutions A: Ali Dibadj talks about institutional performance and protection from investment performance; mentions solutions business as a high priority under the Amplify strategy, focusing on client-led outcome orientation.