Janus Henderson Group plc reports second quarter 2018 diluted EPS of US$0.70, or US$0.74 on an adjusted basis
LONDON--(BUSINESS WIRE)--Jul 31, 2018--Janus Henderson Group plc (NYSE:JHG, ASX:JHG; “JHG”, “the Group” or “the Company”) published its second quarter and interim results for the three month and six month periods ended 30 June 2018. Additionally, the JHG Board of Directors (the “Board”) announced the appointment of Dick Weil as the sole CEO of JHG.
A conference call and webcast to discuss the second quarter results and the CEO appointment will be held today, 31 July 2018, at 6pm EDT, 11pm BST, 8am AEST (1 August 2018). Call details are provided under “Second Quarter 2018 Earnings Call Information” below and on the investor relations section of JHG’s website (www.janushenderson.com/IR).
Second Quarter 2018 Earnings Results
Second quarter 2018 net income attributable to JHG was US$140.6 million compared to US$165.2 million in the first quarter 2018 and US$41.7 million in the second quarter 2017. Adjusted net income attributable to JHG, adjusted for one-off non-cash and acquisition and transaction related costs, of US$149.9 million increased 4% compared to US$143.6 million in the first quarter 2018 and improved 7% compared to US$139.8 million on a pro forma adjusted basis in the second quarter 2017.
Second quarter 2018 diluted earnings per share was US$0.70 compared to US$0.82 in the first quarter 2018 and US$0.28 in the second quarter 2017. Adjusted diluted earnings per share of US$0.74 increased 4% compared to US$0.71 in the first quarter 2018 and improved 9% versus US$0.68 on a pro forma adjusted basis in the second quarter 2017.
As at 30 June 2018, the Group had achieved US$107 million of annualised run rate pre-tax net cost synergies. The Group continues to expect it will be able to realise recurring annual run rate pre-tax net cost synergies of at least US$125 million within three years post merger close.
Appointment of Dick Weil as CEO of Janus Henderson Group
While not an easy decision, due to having two highly qualified candidates, the CEO decision was based on a very rigorous process over several months, supported by expert advice from external consultants. This decision was made with the full support of the Board, and the Board believes Dick is most appropriate to take Janus Henderson to the next level.
“Now that our integration plans are significantly progressed, our Board has determined that the co-CEO structure has achieved its goals, and now is the appropriate time for Janus Henderson to be led once again by a sole CEO. Dick brings a breadth of skills and experience from prior roles in his career where he successfully led organizations through challenge and change”, said Richard Gillingwater, Chairman of the Janus Henderson Group plc Board.
The Board wishes to thank Andrew Formica for his tremendous leadership over the past 10 years, and especially for the dedication and collaboration he has demonstrated since announcement of our merger. While Andrew will resign his co-CEO role and Board seat effective immediately, he has agreed to continue on as an advisor to assist with final integration efforts through the end of the year”.
Commenting on his appointment as sole CEO, Dick Weil said:
“I am honored and excited to have the opportunity to lead Janus Henderson. We have established a strong platform from which Janus Henderson can continue to drive deeper client relationships”.
Commenting on Dick Weil’s appointment as sole CEO, Andrew Formica said:
“It has been a pleasure to work with Dick in the creation and formation of Janus Henderson this past year. I am also proud of what we achieved at Henderson over the 10 years I was CEO. Janus Henderson is an outstanding business with a fantastic and talented workforce. I wish Dick and the team the very best going forward”.
In connection with the Board’s decision, the firm will take a severance charge of approximately US$12 million, including the acceleration of long-term incentive compensation, that will be reflected in the third quarter results.
In connection with today’s announcement, Phil Wagstaff, Global Head of Distribution, has decided that now is the right time to take a career break, given that the integration work is significantly progressed and the distribution team is well in place. Phil will work closely with Dick Weil over the next 6 months to ensure a full and smooth transition.
Commenting on Phil Wagstaff’s Departure, Richard Gillingwater said:
“Phil has been instrumental in the development of our global distribution team, first at Henderson following the acquisition of Gartmore and then with the merger of Janus and Henderson, where he has played a key role in welding the two distribution teams together, creating a world-class distribution organization. We are grateful for all Phil’s efforts”.
About Dick Weil
Dick Weil is Chief Executive Officer of Janus Henderson Investors and also serves as a member of the Board of Directors. In this role, Mr. Weil is responsible for the strategic direction and overall day-to-day management of the firm. He also leads the firm’s Executive Committee. Prior to this, Mr. Weil was Chief Executive Officer of Janus, a position he had held since joining the firm in 2010. Prior to this, Mr. Weil spent 15 years with PIMCO where most recently he served as the global head of PIMCO Advisory, a member of PIMCO’s executive committee, and a member of the Board of Trustees of the PIMCO Funds. Previous to his appointment as Global Head of PIMCO Advisory, he served as Chief Operating Officer of PIMCO, a position he held for 10 years, in which time he successfully led the development of PIMCO’s global business and founded their German operations. Mr. Weil also previously served as PIMCO Advisors L.P.’s General Counsel. Prior to joining PIMCO in 1996, Mr. Weil was with Bankers Trust Global Asset Management and Simpson Thacher & Bartlett LLP in New York. Mr. Weil earned his bachelor of arts degree in economics from Duke University and his juris doctorate from the University of Chicago Law School. He has 23 years of financial industry experience.
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”) which includes the results of Janus Capital Group from the Merger closing date. However, in the opinion of Management, the profitability of the Group and its ongoing operations is best evaluated using additional non-GAAP financial measures on a pro forma adjusted basis. See adjusted statements of income reconciliation for additional information.
RESULTS FOR ANNOUNCEMENT TO THE MARKET
These results for announcement to the market include the interim information required to be provided to the Australian Securities Exchange (ASX) under Listing Rule 4.2A and Appendix 4D.
As a result of revenue recognition accounting guidance that came into effect in 2018, the Group’s presentation of distribution expenses under US GAAP is now reported on a gross basis. As a consequence, the Group reclassified prior year amounts to conform to the 2018 presentation. The change in presentation does not affect the Group’s reporting on an adjusted basis as distribution expenses are netted against revenue.
First half 2018 adjusted revenue of US$948.1 million increased from the first half 2017 pro forma result of US$888.2 million. Higher management fees offset the decline in performance fees, reduced from the strong levels seen in the first half 2017. Management fees grew 12% as a result of the increase in average assets under management. First half 2018 adjusted operating income of US$380.2 million increased from US$343.1 million in the first half 2017 on a pro forma basis, driven by higher management fees coupled with lower expenses as a result of merger-related cost synergies.
Second quarter 2018 adjusted revenue of US$477.7 million increased from the first quarter 2018 result of US$470.4 million with an increase in performance fees offsetting the 2% decline in management fees. The reduction in management fees was a result of lower average assets under management through the period. Performance fees grew from first quarter 2018 levels, driven by seasonality. Second quarter 2018 adjusted operating income of US$191.4 million increased from US$188.8 million in the first quarter 2018, with higher adjusted revenue offsetting increased adjusted operating expenses.
DIVIDEND AND SHARE BUYBACK
On 31 July 2018, the Board declared a second quarter dividend in respect of the three months ended 30 June 2018 of US$0.36 per share. Shareholders on the register on the record date of 13 August 2018 will be paid the dividend on 24 August 2018. Janus Henderson does not offer a dividend reinvestment plan.
Subject to formally appointing a corporate broker, the Board has approved the Company commencing an on-market buyback programme this quarter, on a date to be determined and announced by the Company. The Company intends to spend up to US$100 million to buy its ordinary shares on the New York Stock Exchange and its CHESS Depositary Interests (CDIs) on the ASX over 12 months. Further information regarding the proposed on-market buyback programme will be announced immediately prior to its finalisation and formal launch.
Net tangible assets/(liabilities) per share
Net tangible assets/(liabilities) 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.
1 See adjusted statements of income reconciliation for additional information.
AUM AND FLOWS
AUM and flows for periods prior to and including second quarter 2017 present pro forma flows of Janus Henderson as if the merger had occurred at the beginning of the period shown.
Total Group comparative AUM and flows
Second quarter 2018 AUM and flows by capability
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