Janus Capital Group Inc. Announces Third Quarter 2012 Results

Janus Capital Group Inc. Announces Third Quarter 2012 Results

DENVER--(BUSINESS WIRE)-- Janus Capital Group Inc. ("JCG") (NYS: JNS) today reported third quarter net income of $25.1 million, or $0.14 per diluted share, compared with second quarter 2012 net income of $23.4 million, or $0.13 per diluted share and net income of $27.4 million, or $0.15 per diluted share, in the third quarter 2011. Third quarter 2012 net income included an intangible asset impairment charge of $0.01 per share related to the redemption of a sub-advised account. Third quarter 2011 net income included a net charge of $0.06 per share primarily related to mark-to-market losses on investments.

Flows and Assets Under Management


Average assets under management during the third quarter 2012 were $155.5 billion compared with $155.0 billion during the second quarter 2012 and $155.9 billion during the third quarter 2011.

At September 30, 2012, JCG's total assets under management were $158.2 billion compared with $152.4 billion at June 30, 2012 and $141.0 billion at September 30, 2011.

The increase in complex-wide assets during the third quarter 2012 primarily reflects net market appreciation of $7.8 billion offset by long-term net outflows of $2.0 billion. Fixed income and mathematical equity long-term net inflows totaled $1.0 billion and $0.3 billion, respectively, while fundamental equity long-term net outflows totaled $3.3 billion.

Investment Performance

As of September 30, 2012, 42% of complex-wide mutual funds have a 4- or 5-star Overall Morningstar RatingTM.1

As of September 30, 2012, 38%, 26% and 49% of fundamental equity mutual funds ranked in the top half of their Lipper categories on a one-, three- and five-year total return basis, respectively.2

Fixed income mutual funds continue to generate strong long-term relative investment performance with 54%, 75% and 100% of mutual fund assets ranked in the top half of their Lipper categories on a one-, three- and five-year total return basis as of September 30, 2012.3

Mathematical equity relative investment performance has improved, with 82%, 93% and 75% of strategies surpassing their respective benchmarks, net of fees, over the one-, three- and five-year periods, respectively, as of September 30, 2012.4

Financial Discussion

  Financial Highlights            
(dollars in millions, except per share data or as noted)
     
Three Months Ended
September 30, June 30, September 30,
2012 2012 2011
 
 
Average Assets (in billions) $ 155.5 $ 155.0 $ 155.9
Ending AUM (in billions) $ 158.2 $ 152.4 $ 141.0
Revenues $ 209.0 $ 206.0 $ 236.9
Operating Expenses $ 161.1 $ 153.9 $ 162.7
Operating Income $ 47.9 $ 52.1 $ 74.2
Operating Margin 22.9% 25.3% 31.3%
 
Net Income $ 25.1 $ 23.4 $ 27.4
 
Diluted Earnings per Share $ 0.14 $ 0.13 $ 0.15
 

Third quarter 2012 revenues of $209.0 million increased slightly from second quarter 2012, primarily due to higher average assets under management driven by market appreciation. Third quarter 2012 operating expenses of $161.1 million increased $7.2 million, or 4.7% from second quarter 2012, primarily from higher variable compensation expenses and long-term incentive compensation. Additionally, the third quarter 2012 included an intangible asset impairment of $2.5 million related to the redemption of a sub-advised account.

Capital and Liquidity

At September 30, 2012, JCG had stockholders' equity of $1.4 billion, cash and investments of $683.6 million and outstanding debt of $542.8 million.

Cash flows from operations during the third quarter 2012 were $75.3 million compared with $71.1 million during the second quarter 2012 and $47.8 million during the third quarter 2011.

As part of its capital and liquidity management, JCG repurchased 773,300 shares of its common stock at an average price of $8.12 per share and a total cost of $6.3 million during the third quarter 2012.

On October 23, 2012, JCG's Board of Directors declared a regular quarterly cash dividend of $0.06 per share. The quarterly dividend will be paid on November 19, 2012, to stockholders of record at the close of business on November 5, 2012.

Third Quarter 2012 Earnings Call Information

JCG will discuss its results during a conference call on Thursday, October 25, 2012, at 10 a.m. Eastern Daylight Time. The call-in number will be (888) 397-5338. Anyone outside the U.S. or Canada should call (719) 325-2145. The slides used during the presentation will be available in the investor relations section of the Janus Capital Group website (http://ir.janus.com) approximately one hour prior to the call. For those unable to join the conference call at the scheduled time, an audio replay will be available on www.janus.com/ir.

About Janus Capital Group Inc.

Janus Capital Group Inc. ("JCG") is a global investment firm offering strategies from three individual investment boutiques: Janus Capital Management LLC ("Janus"), INTECH Investment Management LLC ("INTECH") and Perkins Investment Management LLC ("Perkins"). Each manager employs a research-intensive approach that is distinct within its respective asset class. This multi-boutique approach enables the firm to provide style-specific expertise across an array of strategies, including growth, value and mathematical equities, fixed income and alternatives through one common distribution platform.

At the end of September 2012, JCG managed $158.2 billion in assets for shareholders, clients and institutions around the globe. Based in Denver, JCG also has offices in Frankfurt, The Hague, Paris, London, Milan, Munich, Zurich, Singapore, Hong Kong, Tokyo, Melbourne, Dubai and Taipei.

1 For the period ending September 30, 2012, 30%, 38% and 50% of complex-wide mutual funds had a 4- or 5-star Morningstar rating for the 3-, 5- and 10-year periods based on risk-adjusted returns for 43, 40 and 28 funds, respectively. 43 funds were included in the analysis for the overall period.

2 References Lipper relative performance on an asset-weighted basis. For the 10-year period ending September 30, 2012, 79% of the 24 fundamental equity mutual funds outperformed the majority of their Lipper peers on an asset-weighted basis. For the 1-, 3-, 5- and 10-year periods ending September 30, 2012, 41%, 40%, 56% and 71% of the 41, 35, 32 and 24 fundamental equity mutual funds outperformed the majority of their Lipper peers based on total returns.

3 References Lipper relative performance on an asset-weighted basis. For the 10-year period ending September 30, 2012, 79% of the 4 fixed income mutual funds outperformed the majority of their Lipper peers on an asset-weighted basis. For the 1-, 3-, 5- and 10-year periods ending September 30, 2012, 60%, 75%, 100% and 75% of the 5, 4, 4 and 4 fixed income mutual funds outperformed the majority of their peers based on total returns.

4 For the period ending September 30, 2012, 25%, 75%, 50% and 40% of the mathematical equity mutual funds were beating their benchmarks on a 1-, 3-, 5-year and since-fund inception basis. Funds included in the analysis and their inception dates are: INTECH U.S. Growth Fund - Class S (1/03); INTECH U.S. Core Fund - Class T (2/03); INTECH U.S. Value Fund - Class I (12/05); INTECH International Fund - Class I (5/07); INTECH Global Dividend Fund - Class I (12/11).

             
JANUS CAPITAL GROUP INC.
UNAUDITED
CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share data or as noted)
   
 
Three Months Ended
September 30, June 30, September 30,
2012 2012 2011
Revenues:
Investment management fees $ 194.1 $ 192.4 $ 202.2
Performance fees (20.9 ) (21.9 ) (3.1 )
Shareowner servicing fees and other   35.8     35.5     37.8  
Total   209.0     206.0     236.9  
 
Operating expenses:
Employee compensation and benefits 70.8 66.6 71.2
Long-term incentive compensation 16.2 15.2 16.4
Marketing and advertising 5.4 6.1 6.2
Distribution 32.3 31.4 35.5
Depreciation and amortization 9.9 8.0 8.1
General, administrative and occupancy   26.5     26.6     25.3  
Total   161.1     153.9     162.7  
 
Operating income 47.9 52.1 74.2
 
Interest expense (11.1 ) (11.0 ) (13.0 )
Investment gains (losses), net 7.6 (7.0 ) (23.4 )
Other income, net 0.3 1.8 1.4
Income tax provision   (17.0 )   (11.2 )   (11.9 )
 
Net income 27.7 24.7 27.3
 
Noncontrolling interests   (2.6 )   (1.3 )   0.1  
 
Net income attributable to JCG $ 25.1   $ 23.4   $ 27.4  
 
 
Diluted weighted-average shares outstanding (in millions) 185.3 185.4 184.0
 
 
Diluted earnings per share
attributable to JCG common shareholders $ 0.14 $ 0.13 $ 0.15
 
Average Assets Under Management (in billions) $ 155.5 $ 155.0 $ 155.9
 
       
JANUS CAPITAL GROUP INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
       
September 30, December 31,
2012 2011
Assets
Cash and cash equivalents $ 352.7 $ 360.0
Investment securities 330.9 312.0
Other assets 169.0 185.1
Property and equipment, net 33.4 36.9
Intangible assets and goodwill, net 1,738.4 1,750.0
Total Assets $ 2,624.4 $ 2,644.0
 
Liabilities and Stockholders' Equity
Debt $ 542.8 $ 595.2
Other liabilities and redeemable noncontrolling interests 235.0 278.0
Deferred income taxes 435.0 421.7
Stockholders' equity 1,411.6 1,349.1
Total Liabilities and Stockholders' Equity $ 2,624.4 $ 2,644.0
 
       
UNAUDITED CONDENSED CASH FLOW INFORMATION
(dollars in millions)
         
Three Months Ended
September 30, June 30, September 30,
2012 2012 2011
Cash provided by (used in):
Operating activities $ 75.3 $ 71.1 $ 47.8
Investing activities (13.9 ) 6.9 116.0
Financing activities   (12.8 )   (26.0 )   (103.9 )
Net change during period $ 48.6   $ 52.0   $ 59.9  
 
       
JANUS CAPITAL GROUP INC.
ASSETS & FLOWS BY INVESTMENT DISCIPLINE
(dollars in billions)
     
Three Months Ended
September 30, 2012 June 30, 2012 September 30, 2011
Growth/Core (1)
Beginning of period assets $ 52.7 $ 56.6 $ 58.5
Sales 2.3 2.2 2.9
Redemptions   (3.9 )   (3.5 )   (4.7 )
Net redemptions (1.6 ) (1.3 ) (1.8 )
Market/fund performance   3.1     (2.6 )   (9.4

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