Janus Henderson (JHG) 1 Aug 242024 Q2 Earnings call transcript

Good morning. My name is Megan, and I'll be your conference facilitator today. Thank you for standing by, and welcome to the Janus Henderson Group Second Quarter 2024 Results Briefing. [Operator Instructions] In today's conference call, certain matters discussed may constitute forward-looking statements. Actual results could differ materially from those predicted in the forward-looking statements due to a number of factors, including, but not limited to, those described in the forward-looking statements in the Risks Factors section in the company's most recent Form 10-K and other more recent filings made in the SEC. obligation any no during statements assumes call. the Henderson to forward-looking update made Janus you. Thank

conference. my is Executive Mr. begin Janus it to Officer Henderson. your may you Now Dibadj, pleasure of Chief introduce Ali Dibadj,

Henderson's Welcome, everyone, comments, run and CFO, and positioning XXXX prepared through the you some time. an for Roger more Dibadj before Thompson. Call. Ali it by towards over call, I'll quarter to Roger's initiatives, and provide on remarks. on Second I'll After strength delivering thoughts Roger on and strategic our those I'm provide to [indiscernible] joining Earnings joined quesitons Quarter over today thank Janus update details. our In handing press today's consistent on brand results our

persistent teams backdrop, exceptional Despite and the gains, world-class risk with Turning market alpha by client X. the X-, finance, execution basis. We enabled investment our marketing in generation set and and teams, to good a Investment our human and and a Slide on unsettled by macro support provided teams our operations technologies, productivity operations, of provided a assets quarterly services capital, XX-year again results. deliver to of beating XX% is of consistently Janus-Henderson believe performance X- other solid. and benchmarks X-, functions compliance, continued legal,

to XX% compared is quarterly AUM highest higher billion, year figure the management X under which to over years X% Assets and $XXX.X increased ago. in a

to our grow funds range ranging client and our Net XX mandate from institutional $XXX sizes benefited net broad came million channel, over business. flows flows from our were positive the a $XXX intermediary efforts channel billion, institutional $X.X of in illustrating improvement distinct for to million, from which

strategic the the delivering out that quarters towards term. our with are net consistent organic last the that flows, is positive previously flows, Net inflows second quarter neutral aspiration we in improvement quarter starting of demonstrating said our growth recall marked of over indication improve. of to intermittent that long net plan tangible to inflows encouraged the positive [indiscernible] by We X our

Our diluted compared financial our inflows, adjusted $X.XX, year results expense investment productivity EPS XX% in remain solid markets, delivered the management outperformance ago. of by and same resulted period increase teams net to increased a plus positive

Our balance financial and a to path performance both us delivering second organically consistent are in results strong inorganically work long business, do, the the continue we sheet to always the and return provide In shareholders. the to cash the quarter term. flexibility to demonstrates while for on there's and to squarely summary, invest

performance momentum Net Investment business. and our reflect of inflows financial results strong. are areas in

We to strong and financial run stable have each detailed Janus to collectively Henderson sheet execute call results. to over person Roger individually on and balance the turn and now the a our at through you I'll strategy. continues

thank call Starting Ali, Slide joining performance. Thanks, on and everyone, you, X today. for us on investment the and

over investment As of remained Ali AUM XX% versus mentioned, performance time beating solid than periods. with benchmarks their respective more benchmark all aggregate

the Slide flows capabilities. all periods X almost time of performance capabilities at reflecting X/X AUM investment top of periods. peers of over [indiscernible] time periods, by time across is further least detail, at with in each competitive ahead and Overall, Morningstar Looking to consistent benchmark quarter. is company X-, and half shows X performance compared AUM X- XX-year over investment X-, total

to $X.X net net quarter billion billion for compared $X last outflows mentioned, Ali of inflows the As of quarter.

delivering our the by goal we're making pleased results of client progress and Slide towards over shows type. We're it time. On growth flows organic believe X, consistent that with a

and channel organic to by growth were X% quarterly a increase year-over-year intermediary ETFs, gross were U.S. annual $X.X channel equating and The the a quarter years. X positive Second in credit, supported XX% best most Mid-Cap multisector over flow sales the net for U.S. including quarter in international was next in for the The strategies, of the fourth quarterly with rate. intermediary growth. active billion, results several consecutive positive figure alpha inflows sales gross was

about our pillar. protect and service about under and means, pillar, intermediary market including our spoken that which various U.S. growth using is talked Amplify by the in a quarter previously, pleased client results key we've vehicles to We're we're the deliver Under products. strengths As share. initiative strategic we've for amplifying gaining the and investment strategic

into [indiscernible] positive goes hedge this to were our addition second funds CITs, in In and quarter in the SMAs channel.

to the American Moving EMEA and intermediary segment. Latin

[indiscernible], and flows we expanding strategic consecutive positive In share. increased third the quarter, our for efforts. finishing net slightly market Here, about improved spoken quarter, the previously this

million, were flows, Similar net outflows in outflows. first the positive to the delivered billion positive net net remained $XXX Europe which compared U.K. $X.X improved while America and in Continental net to quarter. meaningfully XX between different of institutional Notably, in base flows Latin that fruit. beginning Institutional these our million, Ali's to $XXX inflows the all spanning million the commentary, quarter, into middle, Reiterating of it, client were both of previous $XXX missing to went call demonstrating the each we strategy over distinct by capabilities. institutional bear as fundings and aided are fill a our efforts fundings

Equity negative the $X.X the billion the direct $XXX first to Slide flows the the at in take quarter. supermarket Net in opportunities maturation sustainable and number outflows But team the still regions. all flat channel, to billion by encouraged includes self-directed of were with distribution X will were work development negative doing, by the create across is time. We're of We we're $X.X to flows our our for investors million. of is prior compared continue pipeline a quarter which work quarter pipeline. and continued increasing capability. the to pleased and

of income but of is fee net inflows and we enhanced million. multi-strategy. $XXX in capability the mid- in to the share. ETFs, including fixed the flows in to into explain to both fee by quarter Australian invested lower channel. and to million fundings Net in to million, contributed Pleasingly, net quarter, credit, and also the to positive Onto lower and generating the billion Adjusted across institutional and $XXX positive performance, high in $XXX income positive capability results. in Slide average to LTI operating securitized flows XXs. intermediary channel good investment fixed billion. we improvement were had the equities $X.X million on inflows were JBBB which a X were fees flows Several market in year. driven leverage active strong results challenging U.S. improved JAAA, GAAP inflows environment financials. for all credits at the X, ETF, prior financial were was regions, for income. by for were equity the take the higher compared performance AUM, due net higher alternatives strategies flows the And The global income JSI index led income finally, outflows tactical multi-asset fixed expense. rate continue net operating strategies the commodity contributing primarily Other outflows into income And Biomaintain statement $XXX institutional and multi-sector Global led the prior into return, absolute offsetting by and CLO our Total Slide a $X.X

XX% improvements a EPS, improved XX% XX% and ago respectively. EPS stronger, quarter-over-quarter, operating income even were operating year XX%, with Adjusted income over up and improved and

the XX.X compared prior from compared revenue management Looking to the was at fees seasonal Adjusted margin increased the declined management prior to and CCaaS but more primarily higher AUM due basis fee and prior X% the at slightly and performance quarter and XX% and Net year-on-year U.K. year, higher importantly, OCA improved detail. to fees. points. unchanged quarter,

Our be compared management pressures asset net a roughly fee peers continues industry. margin fee stable to considering to management the in experienced differentiator many

investment million. we've payroll to success vestings with our model. provided table by fee competitively these quarter, differentiator $XXX largely quarter. seasonal a to expected the taxes the quarter where the see operating use do grants pressures, we're usual you prior immune existing channels And to the in expenses compared the expenses. in the amortization to we due prior our resilient nearly of Adjusted rate Adjusted of declined and LTI appendix, the mix future driven performance. declined annual X% in on Continuing XX% your seeing not to we're in as on to second capabilities and given strong While

The second from declined revenue demonstrating XX.X% XX.X% from our declined leverage XX.X% and adjusted quarter first ratio business. to comp year-over-year in quarter higher in to the the seasonally

the primarily to expenses due flat, still we to an increased the Our while to XX% reinvesting advertising Similar in operating XXXX our quarter, expenses G&A expectation mid- range to expenses. of half an to operating last noncomp adjusted the XX% compensation and and high to ratio noncomp business. of management higher the quarter, digits remains Adjusted costs marketing anticipate growth comments to reflecting commitment expense prior to to year, resulted in the disciplined Compared year prior adjusted adjusted in were more X% and our second of prior increased single efficiently and compared year. of accelerate unchanged. my expenses compared the non-compensation operate annual

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to the earlier, XX% $XXX the XX% year prior a quarter I compared same and increased to adjusted over As operating income ago increased million. said period

million $XX $XX the million to on Compared increased of income incremental year, prior revenue. operating

was second XX up $XXX reflects demonstrating EPS Slide and from position Our million the in June, a XXth X% quarter from strong diluted an of operations second Skipping basis our in X EPS margin XX% leverage over $XXX ago, operating and and generated as increase income. as adjusted up Adjusted XX%, equivalents moving prior million year adjusted nearly was to our of profile. look Capital points Cash remained from in we an of prior quarter. quarter operating diluted over $X.XX, the quarter [indiscernible]. from of and prior X% to Slide The a the quarter the were the at $X.XX cash cash operating second and and year from liquidity primarily flows higher the XXXX. business. XXX increase increase in

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Let operator over your to the me the turn to call take back questions. now

[Operator Instructions]

the Our Bill Katz goes Securities. first of line from question with TD

Thank of the the to which bit by of function on talk about platform, you is little you as it a and and/or nice brand detail. for net whether intrigued improvement maybe Can for relative your ranks of intermediary sort your the all step across you I'm see. you just globally? compare terms that might how side, the of side retail U.S. any relevance versus institutional in statistical opportunities, on discussion see sale the gross improvement be

Bill, thanks the question. for

pleased are We that with making. the progress we're very brand

an You'd imagine and your consultant of trusted that also there their very view it's considered. you That's sure, directly. our if the be correlation in want from for have But what brands, if known, folks time. door. you're getting do for perspective up consultant it's lot the brand be not between and a for clear we a up partners deliver are on over something not of both of terms in flows sure clients consideration from rankings we right? is and the as a set. with client advisers, that that here A institutional isn't building X brand to perspective And to intermediary in That's won't side from to the rankings, that's

all -- this Now as stuff. we have are, our around -- be clear, ROI maniacal of analytics well just to about very we

news the we surgical is a brand. we say. in the And have [indiscernible] that lot way We are to good very our

no special experience have. have about that is client Janus lot terms service, of we really work Henderson. We And lines to do our that. people investors one a that while say We else. Janus experienced now in

operations, reliable else IT Our and trustworthy. infrastructure is everything

to say to success our seeing So there. formula, so brand -- we the a correlated our out It and X not get to have lot it X, not is we correlated, working, want business. but you're a of with

bit the of the the you I'm Maybe just on then a this about Privacore? how And comments, just about you're late. you're only signings a bit talked platform there's looking which Okay. of seasoning, been on pipeline, there. it's lot alive into little maybe that, thinking economics things then the where of loop as end strategically half Could M&A is about you an Ali, at? follow-up, of your well. buying beginning at with little a update and toward talk year? work that maybe I paraphrasing active and kind you that a what And the part in second And in could maybe Because of the think how second of

that for question. Sure. Thanks again

strategy. our support So to going going at changed be partner all. build continue businesses we not itself. amplify actively everything M&A to do to our and grow, hasn't strategy want It's M&A diversify and to and our buy, is to our clear and a or strategy. We're I clients. though execute to want support our client-led. not can protect view to to look to We're be on strategy that unto We our

hear from ours. may It's not I others. think you that

For us, it's a tool to deliver on our strategy.

and is to that I one aware timing say probably M&A that marketplace in say everything that some almost and Okay. transactions everything transacted. the has everything for actually will go. difficult we really of come theres predict, are

of skill research to partner to we our are come processes We and in. our through. businesses. It's way we so that We our at go potential make I'll culture. teams And with about it. I we're and at culture, We grow We look triage that that the obviously, at to We terms client-focused, at look would extraordinarily distribution XX% tie is important into leverage to who want the financials footprint, in around back the to fundamentally global a go the we careful as, focused growth understanding people, say infrastructure of investing the price well and the look set the strong culture in and very they what the actually grow, as people want that is performance want the in teams. second. the of people look of our I to sure the M&A. where which

at. Obviously, is have as for what forth areas lot areas in we at. right overlapping the deliver our way sure talked that pull as continue years We'll businesses things that looking we're those -- Capital types [indiscernible] we credit, that clients the to we're are differentiated like we've clients to things with we Privacore? trying with of about looking to areas solutions, bring areas [indiscernible], and So areas of teams to we're much private with of of for quality some the a the product bringing Privacore the to are that go [indiscernible] NBK some the of not make our look in you the to ago have disciplined and want with just back with with couple a been as top all team. Roger, do through like

guess, private before with significant They to a Yes. I at the for accounting second billion date Yes, a excited almost premier completed [indiscernible] I progress it, the It's in Capital. $XXX to placement placement. Privacore by mean, into we're a we quarter. the partnered really They get start manager.

is. in to capital unable specifics terms talk raised about partner who of we're So or that

tender about includes products market say, to to They're funds. products. excited that new talked have we've And Again, and pretty investment currently new alternative the XX%. with statements ones, And previously and firm, interval have placing them partnering also tech registration [indiscernible] managers. plus and alt firm, also with they're for billion sizable a X about filed other We conversations. working team and a second in like continue They high-quality assembled. they've I failed the funds own launch

Those do fundraise with So the the as option -- the first starting primarily have cost that that's the the at come or moment. away. so months through costs, XX other revenues purchase to NCI. XX%, other -- are We but they still X through

course. We'll that assess So a about ops to our talk early in little due now.

remind why of Privacore of add so the to sits exciting. is this to nexus Just at in It little industry. a needs folks bit clear

that access make We of to others. big clients, get as also the and differentiate Apollo have want -- clients, folks are Blackstone, best to the reporting who the set they want clients performance. They very wirehouse some beyond the today, that sure us beyond just the wealth a

these of firms large those best they're great some So have but categories. the performance not of performance, always

So those list few just that's even Roger channel. what alternatives. of have fantastic have Privacore for within long Privacore are print others And really at a architecture as are then [ ] folks there mentioned pipeline -- that billion between there's but open strong [ wealth driver investors. the the scale the that in And $XX a where want. ] to don't a to wealth get of even best-in-class of billion, $XXX that's those democratization at that sits and

Our with of next question comes from Ken the Worthington JPMorgan. line

Want to that, into ETF closed. Tabula, just business that's in given dig the

ETF you into So how dig see growing. first, maybe non-U.S. the business

mentioned new Can there? You passive, launching thinking you plan active, you of color on us some Are equity more products. you factor-based. give going

think very side creative. U.S. been your I has

Can success about you success leverage you've learning the to success Europe? that what drive scaling had extent thinking to -- fixed U.S. you ETFs. are how amazing U.S. income you've in had with the fixed the So the U.S. you the or outside Tabula creativity just taking income the can And then maybe second side on part funds is

Thanks, Ken, for the questions.

off the start with ETF me franchise. Let

team we've proud of is AUM. business. in the there. crossing, are have we there now job. making phenomenal about are AUM has say, ETFs The is I'd done It each $X been what's $XX progress We are ETFs billion a And very for really the above X that exciting billion that

reach doing a addressable few capabilities and a we're been we're that more beyond broader of and our moving strategy. were been broad. just great of we're to clients. is Remember, a set has momentum momentum by what and democratizing with aligned it's very institutional ETFs the clients only has So becoming that really The bringing

ETFs ETF think there's to we grow continued first enormous the the U.S. that a So in of We've as late. potential franchises. launched

QX, we filed example, may couple an there. ETF as emerging an launched we filed, also you is then JSI. ETF see that a So back called about We've one there debt market ETFs, in

so think the our room from in U.S. active is And grow answer word -- we to as earlier in a the continued brand use ETFs there we build to

extraordinarily the of and presence in in perspective ETFs see They and as same add question, and and Europe to own $X we you have very in already realm. to be your partnered be to Europe the should million the in Tabula. want on broad those where grow with AUM will have we is the that going be client-led they great saw as do puck and an We over fantastic are and they We have that's shifting go fixed a continue XX the venues plots funds and with specific in patterns U.S. the well then need And in-house. to U.S. XX the expect To analytical agnostic to to active be exact they their team and trading income different as equities an Now to funds. countries, platform from be why new vehicles. our and we -- all different

investment clients want And so acumen we in the that to our that contact have or differentiator form with. put a

Now allows last well. that is regions, I'd America, it's USIP is is the what point ETFs absolutely, are places It yes, London, European all have to other East, right on also [indiscernible], based in us Tabula. as presence But Middle Ken, for Latin do Tabula form. that now. And say, we're franchise in we a seeing looking

so that that us bucket of think think Tabula, July far in closing strategy. grow ETF We So can amplify X-pronged about very further. our progress the even just X business our right, pleased We're with squarely in help it you're franchise.

Fannon Jefferies. with from Our of the next line question Dan comes

Great.

I to comments. expand of wanted some just So the upon

gross talk and in seeing can Just know the how quarter the improvement prospectively business, being year? flow coming the second in not the that I half where you in certainly you've in think strong. most about past back translates just momentum about the trend talked but you about sales think the you're into of the linear, in as you

a to to Sure. many Thank, That Ken. because so It's to be performance focused of but difficult, out obviously, our we'll on things control service, [indiscernible] means projections and be give are control, what client executing strategy. investment continue on we infrastructure continue on to on robust can control and continue client-led. anyone's

us up several the we're and other strategy are times right. I protecting to and moved. where quarter points seems hasn't our from diversifying think, And you've this core be as think run that amplifying like proof give ranks, proof bearing fruit. we points, quarter heard strategy, to businesses. now, we're our certainly We're to seeing quarters clients that this Our We're

to good intermediary discussions, side the positive from at this parts about clearly meetings, seeing how flows is well, look expanding number an it start number quarter that's a the think of organic perhaps indicators see the of looking of fruit as in perspective. And well institutional some of U.S. strategy world look we institutional. bearing a We're an You indicators look on our number to can other intermediaries that consultant and at can an that you perspective, to intermediary, RFPs, on perspective. think from institutional leading from as a

a Privacore as the of we be path to a the and that seen That's And example And think share we quarters grow. it just have lead it that's some to real think for eventually on shown NBK we and JV, and in consistently time. growth not a an debt got continue over market the of but been We organically Tabula right team direction. market over time. whether quarter capabilities that something brought this many many, We on hope it whether will is that, be that we corner. be in board inorganic hopefully as emerging certainly progress being row, anything to before else have grow quarter, this we organic as with around whether viewed a

Just business. to side net really gross progress the and about intermediary leveraging there both on bit. seen we adding we've talked the some last of Again, years little over the business. the And great U.S. couple of on that from obviously, a

is positive bear and really positive we're LatAm to just in coming we're Europe, Latin in in positive every We're in Asia, country that Australia. in Europe, But in positive -- America. about Continental now

be across still is So really of to that a to we And time. say, the the -- starting it's path. obviously, second going and is to like what I broadening but we're of seeing path, Again, a hope it's that got we've we've the beginnings linear the of breadth flow a continue But world. come do. the over through. to of of quarter work linear demonstration This that got -- isn't lot

kind context the in legacy the side. guess where I maturation but Understood. about That's that focus of of a team a I just I are strength. right where in obviously, the you helpful. around be And talk it's distribution consultants. the that been opportunity? U.S. an can channel you in put on an And you there and of have you area of for are area Janus just evolution helpful. mentioned you would little know place, that you if not more you, of follow-up meetings guess institutions, has been Can

rebuild from we in million probably Sure. XXXX this That's over had XX to very to pop. XX now. said months globally. the $XXX a pipeline. $XXX we quarter, million XX distinct ago positive said Remember, institutional And had as we we we were And going flows or fundings, earlier, in

their our is demonstrating I base working. institutional client efforts think broadening that's of

performance. that is Some of obviously that -- investment of some

client institutional that to different is So service. And it's those capabilities bringing importantly, clients.

that, investment were completely mentioned enhanced We're and as those drive consultant to that indicators, completely mentioned different the well different leading quite you be capabilities, continue growth, so think good, this, before believe speak. fundings that and we're chickens time, we those well. we that growing The strategies. relationships going but over So we We -- again, seeing our have not really for hatch, are seeing perhaps mentioned, to this, relationships also to count you they growth drive not as we're will are linearly, but us.

question comes from of next America. line Our of the with Siegenthaler Craig Bank

positive flows. Congrats to pronounce. a the its one Siegenthaler, on tough

of to flow JAAA, the AAA extension, Janus' reallocations big the much fixed business. of in ETF accelerating you've is momentum. been would specifically We're what ramp? that the And with trajectory duration that seeing attribute How strong then to you and hit a income positive that we've with which continue CLO industry? more part part big the was of seeing So especially had lineup

the for question. Thanks

a bit. get I little just can me that Let

income a fixed perspective, clients from broader income. First, from looking we Fixed clearly are at interest seeing

and think term greater the well. I short the even perhaps in curve be down its when interest will rates changes come as the complexion

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follow-up, which more flows for talent, Just new could the adding into Gap] institutional on channel, does focus too? attract [Audio the institutional how my

Yes.

people? time Let developing. Ali, massive as we've first the And replete to on the we either outside. that's it we nothing But to -- that we you've needed need now That's come rebuild XX told we said. pipeline tell again. is -- starting need you We and and part seeing repeat but over would do. the and about We to on do in me time give you to sort take the of that's to seen the $XXX pick develop pipeline. through -- said fundings run, seen what wanted time short you we're the doing million. to as $XXX on there's million want time, pipeline going or up told this of to We've take we you the you it. It's to quarter,

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Our Morgan next Stanley. Cyprys from of with line Michael question comes the

be Just X might X that to And earnings wanted does at over Privacore. to on Janus be? successful that the look can looking If ask another like? line years, out to just what this bottom question here what time? is contribution meaningful How

Michael. Thanks,

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Evercore. from Our the Dunn next of comes line John with

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could in more Got the you us a it. in And LatAm what little specific on EMEA color then give and intermediary? products are improvement

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to and to start, Roger me over it. go then I'll Let hand through

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quite this Tabula, income Roger, platform looks that even grow fixed [indiscernible] Our give bring to And comments. more good. you business. can online before we all

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Beatty last will the question Our Adam UBS. of go with line to

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There are other no questions registered.

So I'll back conference the Ali pass closing for to over remarks.

clients, Janus here. everybody compliance be at our could and I Thanks, hope trajectory our at our risk or want other have living Okay. The importantly, certainly our and hard our results right all thank, to operations, NBK not they shareholders, employees without values IT Capital, and to whom, legal and have or to service clients teammates their an every and whether client and deliver continues all investments of work delivering Megan. our the not on Henderson, finance, for that these and Janus We and are delivered is Henderson strategy. executing continued and [indiscernible]. most employee each we

thanks listening bye and this So for for call, to now.

hope your for you participation. rest wonderful call. conference have today's your I a day. of concludes That Thank you