Janus Henderson Group plc Reports First Quarter 2020 Diluted EPS of US$(1.35), or US$0.60 on an Adjusted Basis

• Solid long-term investment performance, with 65% and 66% of assets under management (‘AUM’) outperforming relevant benchmarks on a 3 and 5 year basis, respectively, as at 31 March 2020
• First quarter 2020 operating income of US$(332.4) million includes goodwill and intangible asset impairment charges of US$487.3 million. Adjusted operating income of US$164.5 million is up 15% compared to the same period a year ago
• AUM of US$294.4 billion, down 21% compared to the prior quarter, reflecting the impact of COVID-19 and net outflows. Average AUM of US$352.7 billion is down 3% compared to the prior quarter
• Completed US$31 million of share buybacks during the first quarter
• Board declared quarterly dividend of US$0.36 per share

 

LONDON–(BUSINESS WIRE)–Janus Henderson Group plc (NYSE/ASX: JHG; ‘JHG’, ‘the Group’) published its first quarter 2020 results for the period ended 31 March 2020.

First quarter 2020 operating income was US$(332.4) million compared to US$154.3 million in the fourth quarter 2019 and US$124.5 million in the first quarter 2019. Adjusted operating income, adjusted for the goodwill and intangible asset impairments and one-time, acquisition and transaction related costs, of US$164.5 million decreased 4% compared to US$171.0 million in the fourth quarter 2019 and increased 15% compared to US$143.4 million in the first quarter 2019.

First quarter 2020 diluted earnings (loss) per share was US$(1.35) compared to US$0.59 in the fourth quarter 2019 and US$0.48 in the first quarter 2019. Adjusted diluted earnings per share of US$0.60 decreased 8% compared to US$0.65 in the fourth quarter 2019 and increased 7% versus US$0.56 in the first quarter 2019.

First quarter 2020 includes goodwill and intangible asset impairment charges of US$487.3 million.

Dick Weil, Chief Executive Officer of Janus Henderson Group plc, stated:

“At Janus Henderson, our top priority has been looking after the health and safety of our employees and their loved ones. In a short time, we have successfully implemented business continuity plans across all of our offices enabling us to continue to deliver for our clients.

“As an active manager, we have an important role in helping our clients navigate and make sense of volatile markets. We have seen our teams across the firm collaborate more than ever through relevant content, analysis and insights as we collectively work to protect our clients in the near term while maintaining a clear focus on delivering superior outcomes over the long term.

“This is supported by our financial foundation which remains very strong with solid first quarter financial results, US$800 million of cash on the balance sheet and little debt. As you would expect, we are managing our expenses carefully and the focus we have had on cost discipline will also support our positioning through this period. We continue to be a highly cash-generative business, which supports the ongoing needs of the business whilst returning cash to shareholders.

“I am proud of the effort and professionalism displayed by our people during this difficult period, as well as the initiatives we have undertaken to support our local communities and charity partners. Our culture and values are particularly important at times such as these, and I want to thank everyone at Janus Henderson for their commitment and dedication to our clients and each other.”

SUMMARY OF FINANCIAL RESULTS (unaudited) (in US$ millions, except per share data or as noted)

The Group presents its financial results in US$ and in accordance with accounting principles generally accepted in the United States of America (‘US GAAP’ or ‘GAAP’). However, JHG management evaluates the profitability of the Group and its ongoing operations using additional non-GAAP financial measures. Management uses these performance measures to evaluate the business, and adjusted values are consistent with internal management reporting. See ‘Reconciliation of non-GAAP financial information’ below for additional information.

		Three months ended
		31 Mar		31 Dec		31 Mar
		2020		2019		2019
GAAP basis:
Revenue		554.9		601.2		519.3
Operating expenses		887.3		446.9		394.8
Operating income (loss)		(332.4)		154.3		124.5
Operating margin		(59.9)	%	25.7	%	24.0	%
Net income (loss) attributable to JHG		(247.0)		112.0		94.1
Diluted earnings (loss) per share		(1.35)		0.59		0.48
Adjusted basis:
Revenue		442.7		463.1		417.4
Operating expenses		278.2		292.1		274.0
Operating income		164.5		171.0		143.4
Operating margin		37.2	%	36.9	%	34.4	%
Net income attributable to JHG		112.7		123.9		110.0
Diluted earnings per share		0.60		0.65		0.56

First quarter 2020 adjusted revenue of US$442.7 million decreased from the fourth quarter 2019 result of US$463.1 million due to lower average AUM, lower performance fees and partially offset by a higher net management fee margin. First quarter 2020 adjusted operating income of US$164.5 million declined from US$171.0 million in the fourth quarter 2019, primarily driven by the impact of adverse market conditions.

DIVIDEND AND SHARE BUYBACK

On 29 April 2020, the Board declared a first quarter dividend in respect of the three months ended 31 March 2020 of US$0.36 per share. Shareholders on the register on the record date of 11 May 2020 will be paid the dividend on 27 May 2020. Janus Henderson does not offer a dividend reinvestment plan.

As part of the US$200 million on-market buyback programme approved by the Board in February 2020, JHG purchased approximately 2.1 million of its ordinary shares on the NYSE and its CHESS Depositary Interests (CDIs) on the ASX in the first quarter, for a total outlay of US$31.2 million.

Net tangible assets per share

US$		31 Mar 2020		31 Dec 2019
Net tangible assets / (liabilities) per ordinary share		2.35		1.68

Net tangible assets are defined by the ASX as being total assets less intangible assets less total liabilities ranking ahead of, or equally with, claims of ordinary shares.

AUM AND FLOWS (in US$ billions)

FX reflects movement in AUM resulting from changes in foreign currency rates as non-US$ denominated AUM is translated into US$. Redemptions include impact of client switches.

Total Group comparative AUM and flows

		Three months ended
		31 Mar		31 Dec		31 Mar
		2020		2019		2019
Opening AUM		374.8		356.1		328.5
Sales		21.4		18.7		15.6
Redemptions		(33.6)		(25.4)		(23.0)
Net sales / (redemptions)		(12.2)		(6.7)		(7.4)
Market / FX		(64.0)		25.4		36.2
Acquisitions / (disposals)		(4.2)		—		—
Closing AUM		294.4		374.8		357.3

Quarterly AUM and flows by capability

				Fixed		Quantitative
		Equities		Income		Equities		Multi-Asset		Alternatives		Total
AUM 31 Mar 2019		188.8		72.5		49.6		33.4		13.0		357.3
Sales		6.9		5.5		0.2		2.1		0.9		15.6
Redemptions		(12.9)		(5.2)		(4.3)		(1.5)		(1.5)		(25.4)
Net sales / (redemptions)		(6.0)		0.3		(4.1)		0.6		(0.6)		(9.8)
Market / FX		8.5		0.7		2.1		1.1		(0.1)		12.3
AUM 30 Jun 2019		191.3		73.5		47.6		35.1		12.3		359.8
Sales		6.0		6.1		0.3		2.4		0.5		15.3
Redemptions		(8.0)		(4.7)		(2.7)		(2.0)		(1.4)		(18.8)
Net sales / (redemptions)		(2.0)		1.4		(2.4)		0.4		(0.9)		(3.5)
Market / FX		(1.1)		0.1		0.4		0.8		(0.4)		(0.2)
AUM 30 Sep 2019		188.2		75.0		45.6		36.3		11.0		356.1
Sales		9.4		5.6		0.3		2.7		0.7		18.7
Redemptions		(10.7)		(8.4)		(3.6)		(1.3)		(1.4)		(25.4)
Net sales / (redemptions)		(1.3)		(2.8)		(3.3)		1.4		(0.7)		(6.7)
Market / FX		17.1		2.6		2.9		2.1		0.7		25.4
AUM 31 Dec 2019		204.0		74.8		45.2		39.8		11.0		374.8
Sales		8.8		8.0		0.4		3.5		0.7		21.4
Redemptions		(15.7)		(11.4)		(2.4)		(2.5)		(1.6)		(33.6)
Net sales / (redemptions)		(6.9)		(3.4)		(2.0)		1.0		(0.9)		(12.2)
Market / FX		(43.2)		(6.1)		(8.6)		(5.3)		(0.8)		(64.0)
Acquisitions / (disposals)		(4.0)		—		—		(0.2)		—		(4.2)
AUM 31 Mar 2020		149.9		65.3		34.6		35.3		9.3		294.4

Average AUM

		Three months ended
		31 Mar		31 Dec		31 Mar
		2020		2019		2019
Equities		189.3		194.5		182.8
Fixed Income		71.6		74.2		73.3
Quantitative Equities		42.0		44.8		48.3
Multi-Asset		39.4		37.8		32.1
Alternatives		10.4		11.1		13.5
Total		352.7		362.4		350.0

INVESTMENT PERFORMANCE

% of AUM outperforming benchmark (at 31 March 2020)

Capability		1 year		3 years		5 years
Equities		43	%	69	%	70	%
Fixed Income		48	%	55	%	61	%
Quantitative Equities		35	%	28	%	9	%
Multi-Asset		86	%	87	%	93	%
Alternatives		95	%	97	%	97	%
Total		50	%	65	%	66	%

Outperformance is measured based on composite performance gross of fees vs primary benchmark, except where a strategy has no benchmark index or corresponding composite in which case the most relevant metric is used: (1) composite gross of fees vs zero for absolute return strategies, (2) fund net of fees vs primary index or (3) fund net of fees vs Morningstar peer group average or median. Non-discretionary and separately managed account assets are included with a corresponding composite where applicable.

Cash management vehicles, ETFs, Managed CDOs, Private Equity funds and custom non-discretionary accounts with no corresponding composite are excluded from the analysis. Excluded assets represent 6% of AUM as at 31 March 2020. Capabilities defined by Janus Henderson.

% of mutual fund AUM in top 2 Morningstar quartiles (at 31 March 2020)

Capability		1 year		3 years		5 years
Equities		60	%	85	%	78	%
Fixed Income		75	%	82	%	70	%
Quantitative Equities		37	%	57	%	46	%
Multi-Asset		91	%	91	%	92	%
Alternatives		98	%	60	%	98	%
Total		69	%	84	%	79	%

Includes Janus Investment Fund, Janus Aspen Series and Clayton Street Trust (US Trusts), Janus Henderson Capital Funds (Dublin based), Dublin and UK OEIC and Investment Trusts, Luxembourg SICAVs and Australian Managed Investment Schemes. The top two Morningstar quartiles represent funds in the top half of their category based on total return. On an asset-weighted basis, 80%, 74%, 82%, 82% and 86% of total mutual fund AUM were in the top 2 Morningstar quartiles for the 10-year periods ended 31 Mar 2019, 30 Jun 2019, 30 Sep 2019, 31 Dec 2019 and 31 Mar 20 respectively. For the 1-, 3-, 5- and 10-year periods ending 31 Mar 2020, 59%, 63%, 62% and 65% of the 202, 194, 182 and 145 total mutual funds, respectively, were in the top 2 Morningstar quartiles.

Analysis based on ‘primary’ share class (Class I Shares, Institutional Shares or share class with longest history for US Trusts; Class A Shares or share class with longest history for Dublin based; primary share class as defined by Morningstar for other funds). Performance may vary by share class. Rankings may be based, in part, on the performance of a predecessor fund or share class and are calculated by Morningstar using a methodology that differs from that used by Janus Henderson. Methodology differences may have a material effect on the return and therefore the ranking. When an expense waiver is in effect, it may have a material effect on the total return, and therefore the ranking for the period.

ETFs and funds not ranked by Morningstar are excluded from the analysis. Capabilities defined by Janus Henderson. © 2020 Morningstar, Inc. All Rights Reserved.

SECOND QUARTER 2020 RESULTS

Janus Henderson intends to publish its second quarter 2020 results on 29 July 2020.

FIRST QUARTER 2020 RESULTS BRIEFING INFORMATION

Chief Executive Officer Dick Weil and Chief Financial Officer Roger Thompson will present these results on 30 April 2020 on a conference call and webcast to be held at 8am EDT, 1pm BST, 10pm AEST.

Those wishing to participate should call:

	United Kingdom			0800 358 6377 (toll free)
	US & Canada			800 239 9838 (toll free)
	Australia			1 800 573 793 (toll free)
	All other countries			+1 323 794 2551 (this is not a toll free number)
	Conference ID			9138065

Access to the webcast and accompanying slides will be available via the investor relations section of Janus Henderson’s website (www.janushenderson.com/ir).

About Janus Henderson

Janus Henderson Group is a leading global active asset manager dedicated to helping investors achieve long-term financial goals through a broad range of investment solutions, including equities, fixed income, quantitative equities, multi-asset and alternative asset class strategies.

At 31 March 2020, Janus Henderson had approximately US$294 billion in assets under management, more than 2,000 employees, and offices in 28 cities worldwide. Headquartered in London, the company is listed on the New York Stock Exchange (NYSE) and the Australian Securities Exchange (ASX).

FINANCIAL DISCLOSURES

Condensed consolidated statements of comprehensive income (unaudited)

		Three months ended
		31 Mar		31 Dec		31 Mar
(in US$ millions, except per share data or as noted)		2020		2019		2019
Revenue:
Management fees		439.6		457.8		441.9
Performance fees		14.6		18.3		(5.6)
Shareowner servicing fees		50.3		71.9		35.9
Other revenue		50.4		53.2		47.1
Total revenue		554.9		601.2		519.3
Operating expenses:
Employee compensation and benefits		155.6		163.1		145.0
Long-term incentive plans		33.6		44.5		48.4
Distribution expenses		112.2		138.1		101.9
Investment administration		11.7		13.8		11.8
Marketing		6.7		10.0		7.5
General, administrative and occupancy		65.2		60.3		65.2
Impairment of goodwill and intangible assets		487.3		—		—
Depreciation and amortisation		15.0		17.1		15.0
Total operating expenses		887.3		446.9		394.8
Operating income (loss)		(332.4)		154.3		124.5
Interest expense		(3.3)		(3.3)		(4.1)
Investment gains (losses), net		(50.5)		12.1		13.3
Other non-operating income (expenses), net		32.2		(5.8)		(3.9)
Income (loss) before taxes		(354.0)		157.3		129.8
Income tax benefit (provision)		68.8		(36.9)		(29.9)
Net income (loss)		(285.2)		120.4		99.9
Net loss (income) attributable to noncontrolling interests		38.2		(8.4)		(5.8)
Net income (loss) attributable to JHG		(247.0)		112.0		94.1
Less: allocation of earnings to participating stock-based awards		—		(3.1)		(2.4)
Net income (loss) attributable to JHG common shareholders		(247.0)		108.9		91.7
Basic weighted-average shares outstanding (in millions)		182.4		183.6		191.8
Diluted weighted-average shares outstanding (in millions)		182.4		184.1		192.5
Diluted earnings (loss) per share (in US$)		(1.35)		0.59		0.48

Reconciliation of non-GAAP financial information

In addition to financial results reported in accordance with GAAP, we compute certain financial measures using non-GAAP components, as defined by the SEC. These measures are not in accordance with, or a substitute for, GAAP, and our financial measures may be different from non-GAAP financial measures used by other companies. We have provided a reconciliation of our non-GAAP components to the most directly comparable GAAP components. The following are reconciliations of US GAAP revenue, operating expenses, operating income, net income attributable to JHG and diluted earnings per share to adjusted revenue, adjusted operating expenses, adjusted operating income, adjusted net income attributable to JHG and adjusted diluted earnings per share.

		Three months ended
		31 Mar		31 Dec		31 Mar
(in US$ millions, except per share data or as noted)		2020		2019		2019
Reconciliation of revenue to adjusted revenue
Revenue		554.9		601.2		519.3
Management fees1		(44.1)		(48.0)		(49.6)
Shareowner servicing fees1		(41.1)		(62.7)		(27.2)
Other revenue1		(27.0)		(27.4)		(25.1)
Adjusted revenue		442.7		463.1		417.4
Reconciliation of operating expenses to adjusted operating expenses
Operating expenses		887.3		446.9		394.8
Employee compensation and benefits2		(1.4)		(6.3)		(4.3)
Long-term incentive plans2		0.1		0.2		0.2
Distribution expenses1		(112.2)		(138.1)		(101.9)
General, administration and occupancy2		(1.9)		(3.2)		(7.4)
Impairment of goodwill and intangible assets3		(487.3)		—		—
Depreciation and amortisation3		(6.4)		(7.4)		(7.4)
Adjusted operating expenses		278.2		292.1		274.0
Reconciliation of operating income to adjusted operating income
Operating income (loss)		(332.4)		154.3		124.5
Employee compensation and benefits2		1.4		6.3		4.3
Long-term incentive plans2		(0.1)		(0.2)		(0.2)
General, administration and occupancy2		1.9		3.2		7.4
Impairment of goodwill and intangible assets3		487.3		—		—
Depreciation and amortisation3		6.4		7.4		7.4
Adjusted operating income		164.5		171.0		143.4
Operating margin		(59.9)	%	25.7	%	24.0	%
Adjusted operating margin		37.2	%	36.9	%	34.4	%
Reconciliation of net income (loss) attributable to JHG to adjusted net income attributable to JHG
Net income (loss) attributable to JHG		(247.0)		112.0		94.1
Employee compensation and benefits2		1.4		6.3		4.3
Long-term incentive plans2		(0.1)		(0.2)		(0.2)
General, administration and occupancy2		1.9		3.2		7.4
Impairment of goodwill and intangible assets3		487.3		—		—
Depreciation and amortisation3		6.4		7.4		7.4
Interest expense4		0.1		0.2		0.9
Other non-operating income (expenses), net4		(25.9)		(1.9)		0.4
Income tax benefit (provision)5		(111.4)		(3.1)		(4.3)
Adjusted net income attributable to JHG		112.7		123.9		110.0
Less: allocation of earnings to participating stock-based awards		(3.2)		(3.4)		(2.8)
Adjusted net income attributable to JHG common shareholders		109.5		120.5		107.2
Weighted-average diluted common shares outstanding – diluted (two class) (in millions)		182.4		184.1		192.5
Diluted earnings (loss) per share (two class) (in US$)		(1.35)		0.59		0.48
Adjusted diluted earnings per share (two class) (in US$)		0.60		0.65		0.56

1.		JHG contracts with third-party intermediaries to distribute and service certain of its investment products. Fees for distribution and servicing related activities are either provided for separately in an investment product’s prospectus or are part of the management fee. Under both arrangements, the fees are collected by JHG and passed through to third-party intermediaries who are responsible for performing the applicable services. The majority of distribution and servicing fees collected by JHG are passed through to third-party intermediaries. JHG management believes that the deduction of distribution and service fees from revenue in the computation of adjusted revenue reflects the pass-through nature of these revenues. In certain arrangements, JHG performs the distribution and servicing activities and retains the applicable fees. Revenues for distribution and servicing activities performed by JHG are not deducted from GAAP revenue.
2.		Adjustments primarily represent integration costs in relation to the Merger, including severance costs, legal costs and consulting fees. Adjustments for the three months ended 31 March 2019 also include an impairment of sub-leased office space. JHG management believes these costs are not representative of our ongoing operations.
3.		Investment management contracts have been identified as a separately identifiable intangible asset arising on the acquisition of subsidiaries and businesses. Such contracts are recognised at the net present value of the expected future cash flows arising from the contracts at the date of acquisition. For segregated mandate contracts, the intangible asset is amortised on a straight-line basis over the expected life of the contracts. Adjustments for the three months ended 31 March 2020, also include impairment charges of our goodwill and certain mutual fund investment management agreements and client relationships. JHG management believes these non-cash and acquisition-related costs are not representative of the ongoing operations of the Group.
4.		Adjustments for the three months ended 31 March 2020 primarily relate to the gain recognised on the disposal of Geneva during the quarter. Other adjustments include contingent consideration adjustments associated with prior acquisitions and increased debt expense as a consequence of the fair value uplift on debt due to acquisition accounting. JHG management believes these costs are not representative of our ongoing operations.
5.		The tax impact of the adjustments is calculated based on the applicable U.S. or foreign statutory tax rate as it relates to each adjustment. Certain adjustments are either not taxable or not tax-deductible.

Condensed consolidated balance sheets (unaudited)

		31 Mar		31 Dec
(in US$ millions)		2020		2019
Assets:
Cash and cash equivalents		732.5		733.9
Investment securities		250.6		253.5
Property, equipment and software, net		84.0		84.7
Intangible assets and goodwill, net		3,958.8		4,592.9
Assets of consolidated variable interest entities		653.5		1,010.9
Other assets		964.5		945.8
Total assets		6,643.9		7,621.7
Liabilities, redeemable noncontrolling interests and equity:
Long-term debt		315.5		316.2
Deferred tax liabilities, net		602.7		729.1
Liabilities of consolidated variable interest entities		83.1		57.1
Other liabilities		785.2		935.2
Redeemable noncontrolling interests		464.0		677.9
Total equity		4,393.4		4,906.2
Total liabilities, redeemable noncontrolling interests and equity		6,643.9		7,621.7

Condensed consolidated statements of cash flows (unaudited)

		Three months ended
		31 Mar		31 Dec		31 Mar
(in US$ millions)		2020		2019		2019
Cash provided by (used for):
Operating activities		37.9		207.0		(34.7)
Investing activities		41.8		(364.7)		51.3
Financing activities		(46.0)		176.0		(198.3)
Effect of exchange rate changes		(28.0)		4.5		5.0
Net change during period		5.7		22.8		(176.7)

STATUTORY DISCLOSURES

Associates and joint ventures

At 31 March 2020, the Group holds interests in the following associates and joint ventures managed through shareholder agreements with third party investors, accounted for under the equity method:

• LongTail Alpha LLC. Ownership 20%

Basis of preparation

In the opinion of management of Janus Henderson Group plc, the condensed consolidated financial statements contain all normal recurring adjustments necessary to fairly present the financial position, results of operations and cash flows of JHG in accordance with US GAAP. Such financial statements have been prepared in accordance with the instructions to Form 10‑Q pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The financial statements should be read in conjunction with the annual consolidated financial statements and notes presented in Janus Henderson Group’s Annual Report on Form 10‑K for the year ended 31 December 2019, on file with the SEC (Commission file no. 001‑38103). Events subsequent to the balance sheet date have been evaluated for inclusion in the financial statements through the issuance date and are included in the notes to the condensed consolidated financial statements.

Corporate governance principles and recommendations

In the opinion of the Directors, the financial records of the Group have been properly maintained, and the Condensed Consolidated Financial Statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the Group. This opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

FORWARD-LOOKING STATEMENTS DISCLAIMER

Past performance is no guarantee of future results. Investing involves risk, including the possible loss of principal and fluctuation of value.

This document includes statements concerning potential future events involving Janus Henderson Group plc that could differ materially from the events that actually occur.

Contacts

Investor enquiries:
Jim Kurtz
Investor Relations Manager

+1 (303) 336 4529

jim.kurtz@janushenderson.com

Or

Investor Relations

investor.relations@janushenderson.com

Media enquiries:
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Head of Media Relations

+44 (0) 20 7818 2523

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United Kingdom: FTI Consulting
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Asia Pacific: Honner
Craig Morris

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