DENVER--(BUSINESS WIRE)--Janus Capital Group Inc. (NYSE: JNS) today reported second quarter net income from continuing operations of $65.6 million, or $0.40 per diluted share, compared with net income from continuing operations of $39.0 million, or $0.24 per diluted share, in the first quarter 2008 and $51.6 million, or $0.28 per diluted share, in the second quarter 2007. Second quarter 2008 includes a one-time income tax benefit of approximately $0.06 per share associated with a legislative change in state taxes. The company’s operating margin from continuing operations for the second quarter 2008 was 34.5% compared with 31.8% for the first quarter 2008 and 34.6% for the second quarter 2007.
Flows and Assets Under Management
Average assets under management during the second quarter increased 5.5% to $200.1 billion compared with $189.7 billion during the first quarter 2008. At June 30, 2008, the company’s total assets under management were $191.8 billion compared with $187.6 billion at March 31, 2008.
The increase in firmwide assets during the second quarter reflects long-term net inflows of $5.0 billion, $0.4 billion of net market depreciation / fund performance and money market net outflows of $0.4 billion.
Excluding INTECH, Janus had long-term net inflows during the second quarter this year of $4.8 billion compared with long-term net outflows of $0.4 billion in the previous quarter. INTECH had long-term net inflows of $0.2 billion during the second quarter 2008 compared with long-term net outflows of $1.1 billion in the first quarter 2008.
Investment Management
Despite challenging market conditions during the second quarter, Janus’ relative investment performance remained strong with approximately 78%, 81% and 83% of Janus’ mutual funds in the top half of their Lipper categories on a one-, three- and five-year total-return basis, respectively, as of June 30, 2008.2 In addition, 79% of Janus mutual funds have a 4- or 5-star Overall Morningstar RatingTM at June 30, 2008.3
“In the midst of a turbulent market, we’re pleased that our continued strong performance and investments in distribution led to our best quarterly flows in nearly eight years,” said Janus CEO Gary Black. “It’s especially gratifying to see Janus-managed products gaining traction with institutional clients.”
Financial Discussion
| Financial Highlights | ||||||||||||||
| (dollars in millions, except per share data or as noted) | ||||||||||||||
| Three Months Ended | ||||||||||||||
| June 30, | March 31, | June 30, | ||||||||||||
|
2008* |
2008 | 2007 | ||||||||||||
| Continuing Operations (Investment Management) | ||||||||||||||
| Average Assets (in billions) | $ 200.1 | $ 189.7 | $ 188.2 | |||||||||||
| Ending AUM (in billions) | $ 191.8 | $ 187.6 | $ 190.6 | |||||||||||
| Revenues | $ 304.2 | $ 281.2 | $ 273.0 | |||||||||||
| Operating Expenses | $ 199.1 | $ 191.7 | $ 178.6 | |||||||||||
| Operating Income | $ 105.1 | $ 89.5 | $ 94.4 | |||||||||||
| Operating Margin | 34.5 | % | 31.8 | % | 34.6 | % | ||||||||
| Net Income | $ 65.6 | $ 39.0 | $ 51.6 | |||||||||||
| Diluted Earnings per Share | $ 0.40 | $ 0.24 | $ 0.28 | |||||||||||
| Shares Repurchased (in millions) | 2.6 | 5.2 | 10.4 | |||||||||||
| Cost of Shares Repurchased | $ 75.0 | $ 134.2 | $ 276.5 | |||||||||||
| Average Price | $ 28.93 | $ 25.75 | $ 26.60 | |||||||||||
| Total shares outstanding end of period (in millions) | 160.6 | 162.7 | 176.3 | |||||||||||
|
* |
Net income and diluted earnings per share for second quarter 2008 include a one-time income tax benefit of approximately $10.8 million, or $0.06 per share. |
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Continuing Operations
Second quarter 2008 revenues of $304.2 million increased 8.2% from the previous quarter due to higher average assets under management driven primarily by favorable market conditions through the first two months of the quarter and higher performance fees. Operating expenses increased $7.4 million, or 3.9%, from the previous quarter as a result of higher asset-based distribution expenses and administrative expenses.
Non-operating items for the second quarter 2008 include a one-time $10.8 million, or $0.06 per diluted share, income tax benefit as a result of a legislative change in Colorado state taxes. Beginning in 2009, Janus’ tax rate will decline by approximately 1% from the current rate as a result of the change in state taxes. Also included in non-operating items is a gain of $3.0 million on Janus’ seed capital investments compared with a $9.5 million mark-to-market loss in the first quarter 2008.
Acquisition
On July 7, 2008, Janus agreed to purchase an additional 50% interest in the U.S. value manager Perkins, Wolf, McDonnell and Company, LLC (“Perkins”) for $90.0 million in cash. Pending customary regulatory and fund shareholder approvals, the acquisition is expected to close in the fourth quarter 2008.
“Perkins has been a key strategic partner for Janus and we have great confidence in its ability as a value manager,” Black said. “This acquisition will enable Janus to offer clients a broader range of investment products, including a large-cap value fund later this year.”
Capital and Liquidity
At June 30, 2008, Janus had stockholders’ equity of $1.6 billion, cash and investments of $477 million and $1.1 billion of outstanding debt. As part of its capital and liquidity management, Janus reduced its outstanding shares by 1.3% during the second quarter by repurchasing 2.6 million shares of its common stock at an average price of $28.93 per share and a total cost of $75 million.
Second Quarter 2008 Earnings Call Information
Janus will discuss its results during a conference call on Thursday, July 24 at 10 a.m. Eastern Daylight Time. The call-in number will be 877-301-7574. Anyone outside the U.S. or Canada should call 706-643-3623. The slides used during the presentation will be available in the investor relations section of the Janus Capital Group Web site (www.janus.com/ir) 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.
Founded in 1969, Denver-based Janus Capital Group Inc. (“Janus”) is a recognized leader of growth and risk-managed investment strategies. Our commitment to deliver for investors is rooted in our research-intensive approach and relentless passion to gain a competitive edge.
At the end of June 2008, Janus managed $191.8 billion in assets for more than four million shareholders, clients and institutions around the globe. Outside the U.S., Janus has offices in London, Tokyo, Hong Kong and Singapore. Janus Capital Group consists of Janus Capital Management LLC and Enhanced Investment Technologies, LLC (INTECH). In addition, Janus Capital Group owns 30% of Perkins, Wolf, McDonnell and Company, LLC.
1 Strong relative performance may not be indicative of positive fund returns. Year-to-date absolute performance for some funds is negative. Funds included in the analysis are Janus Retail (JIF), Janus Adviser Series Class S Shares (JAD) and Janus Aspen Series Institutional Shares (JAS). The number of funds in each trust is 26, 22 and 12, respectively. Complete Lipper rankings are based on total returns and are on pages 11 and 12.
2 Strong relative performance may not be indicative of positive fund returns. Year-to-date absolute performance for some funds is negative. Funds included in the analysis are JIF, JAD and JAS. The number of funds in each trust is 26, 22 and 12, respectively. Complete Lipper rankings are based on total returns and are on pages 11 and 12.
3 Funds included in the Morningstar analysis were JIF, JAD and JAS with at least a three-year history. Morningstar rankings are based on risk-adjusted returns. Complete Morningstar ratings are on pages 13-15.
Please consider the charges, risks, expenses and investment objectives carefully before investing. For a prospectus containing this and other information, please call Janus at (800) 525-3713 or download the file from www.janus.com. Read it carefully before you invest or send money.
Data presented reflects past performance, which is no guarantee of future results. Rankings referenced exclude money markets.
Funds distributed by Janus Distributors LLC (7/08).
This press release includes statements concerning potential future events involving Janus Capital Group Inc. that could differ materially from the events that actually occur. The differences could be caused by a number of factors including those factors identified in Janus’ Annual Report on Form 10-K for the year ended December 31, 2007, on file with the Securities and Exchange Commission (Commission file no. 001-15253), including those that appear under headings such as “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Many of these factors are beyond the control of the Company and its management. Any forward-looking statements contained in this release are as of the date on which such statements were made. The Company assumes no duty to update them, even if experience, unexpected events, or future changes make it clear that any projected results expressed or implied therein will not be realized.
| JANUS CAPITAL GROUP INC. | ||||||||||||||
| UNAUDITED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||
| (dollars in millions, except per share data or as noted) | ||||||||||||||
| Three Months Ended | ||||||||||||||
| June 30, | March 31, | June 30, | ||||||||||||
|
2008 |
2008 | 2007 | ||||||||||||
| Investment Management Revenues: | ||||||||||||||
| Investment management fees | $ 239.8 | $ 225.5 | $ 220.6 | |||||||||||
| Performance fees | 11.6 | 5.6 | 3.8 | |||||||||||
| Shareowner servicing fees and other | 52.8 | 50.1 | 48.6 | |||||||||||
| Total | 304.2 | 281.2 | 273.0 | |||||||||||
| Investment Management Operating Expenses: | ||||||||||||||
| Employee compensation and benefits | 91.6 | 91.8 | 86.8 | |||||||||||
| Long-term incentive compensation | 12.5 | 12.1 | 17.0 | |||||||||||
| Marketing and advertising | 8.7 | 7.8 | 5.0 | |||||||||||
| Distribution | 38.2 | 36.3 | 34.5 | |||||||||||
| Depreciation and amortization | 10.7 | 9.9 | 8.7 | |||||||||||
| General, administrative and occupancy | 37.4 | 33.8 | 26.6 | |||||||||||
| Total | 199.1 | 191.7 | 178.6 | |||||||||||
| Investment Management Operating Income | 105.1 | 89.5 | 94.4 | |||||||||||
| Interest expense | (18.8 | ) | (18.9 | ) | (11.5 | ) | ||||||||
| Investment gains (losses), net | 3.0 | (9.5 | ) | 0.4 | ||||||||||
| Other income, net | 1.0 | 4.2 | 4.6 | |||||||||||
| Income tax provision | (23.8 | ) | (24.5 | ) | (32.9 | ) | ||||||||
| Equity in earnings of unconsolidated affiliate | 2.3 | 2.0 | 1.7 | |||||||||||
| Minority interest in consolidated earnings | (3.2 | ) | (3.8 | ) | (5.1 | ) | ||||||||
| Income from Continuing Operations | 65.6 | 39.0 | 51.6 | |||||||||||
| Income (loss) from Discontinued Operations | 0.7 | (1.6 | ) | (2.8 | ) | |||||||||
| Net income | $ 66.3 | $ 37.4 | $ 48.8 | |||||||||||
| Diluted weighted average shares outstanding (in millions) | 162.4 | 164.0 | 182.4 | |||||||||||
| Diluted earnings per share: | ||||||||||||||
| Continuing operations | $ 0.40 | $ 0.24 | $ 0.28 | |||||||||||
| Discontinued operations | 0.00 | (0.01 | ) | (0.02 | ) | |||||||||
| Diluted earnings per share | $ 0.41 | $ 0.23 | $ 0.27 | |||||||||||
| Average Assets Under Management (in billions) | $ 200.1 | $ 189.7 | $ 188.2 | |||||||||||
| JANUS CAPITAL GROUP INC. | |||||||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
| (dollars in millions) | |||||||||||
| June 30, | December 31, | ||||||||||
|
2008 |
2007 | ||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ 275.7 | $ 480.7 | |||||||||
| Marketable securities | 201.1 | 210.7 | |||||||||
| Other assets | 343.4 | 344.9 | |||||||||
| Property and equipment, net | 48.4 | 46.5 | |||||||||
| Intangibles and goodwill, net | 2,511.6 | 2,451.5 | |||||||||
| Assets related to discontinued operations | 12.4 | 29.8 | |||||||||
| Total Assets | $ 3,392.6 | $ 3,564.1 | |||||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Debt | $ 1,127.8 | $ 1,127.7 | |||||||||
| Other liabilities | 215.5 | 297.8 | |||||||||
| Deferred income taxes | 401.8 | 404.3 | |||||||||
| Liabilities related to discontinued operations | 8.8 | 10.8 | |||||||||
| Stockholders' equity | 1,638.7 | 1,723.5 | |||||||||
| Total Liabilities and Stockholders' Equity | $ 3,392.6 | $ 3,564.1 | |||||||||
| UNAUDITED CONDENSED CASH FLOW INFORMATION | ||||||||||||||
| CONTINUING OPERATIONS | ||||||||||||||
| (dollars in millions) | ||||||||||||||
| Three Months Ended | ||||||||||||||
| June 30, | March 31, | June 30, | ||||||||||||
| Cash provided by (used in): |
2008 |
2008 | 2007 | |||||||||||
| Operating activities | $ 78.8 | $ 1.9 | $ 130.2 | |||||||||||
| Investing activities | 6.9 | (76.4 | ) | (13.2 | ) | |||||||||
| Financing activities | (80.3 | ) | (135.9 | ) | 316.4 | |||||||||
| Net change during period | $ 5.4 | $ (210.4 | ) | $ 433.4 | ||||||||||
| JANUS CAPITAL GROUP INC. | ||||||||||
| ASSETS & FLOWS BY INVESTMENT DISCIPLINE | ||||||||||
| (dollars in billions) | ||||||||||
| Three Months Ended | ||||||||||
| June 30, 2008 | March 31, 2008 | June 30, 2007 | ||||||||
| Growth/Blend | ||||||||||
| Beginning of period assets | $ 76.8 | $ 83.5 | $ 65.7 | |||||||
| Sales | 8.9 | 5.9 | 4.7 | |||||||
| Redemptions | 4.7 | 5.6 | 4.0 | |||||||
| Net sales (redemptions) | 4.2 | 0.2 | 0.7 | |||||||
| Market appreciation (depreciation) | 0.9 | (6.9 | ) | 5.1 | ||||||
| End of period assets | $ 81.8 | $ 76.8 | $ 71.6 | |||||||
| Global/International | ||||||||||
| Beginning of period assets | $ 22.1 | $ 24.9 | $ 19.5 | |||||||
| Sales | 1.0 | 1.1 | 1.7 | |||||||
| Redemptions | 0.9 | 1.8 | 1.1 | |||||||
| Net sales (redemptions) | 0.1 | (0.7 | ) | 0.6 | ||||||
| Market appreciation (depreciation) | (1.2 | ) | (2.1 | ) | 2.0 | |||||
| End of period assets | $ 21.0 | $ 22.1 | $ 22.1 | |||||||
| Mathematical/Quantitative | ||||||||||
| Beginning of period assets | $ 61.2 | $ 69.7 | $ 66.3 | |||||||
| Sales | 2.5 | 1.8 | 4.5 | |||||||
| Redemptions | 2.3 | 2.9 | 3.2 | |||||||
| Net sales (redemptions) | 0.2 | (1.1 | ) | 1.3 | ||||||
| Market appreciation (depreciation) | - | (7.5 | ) | 2.6 | ||||||
| End of period assets | $ 61.3 | $ 61.2 | $ 70.1 | |||||||
| Fixed Income | ||||||||||
| Beginning of period assets | $ 3.8 | $ 4.9 | $ 4.8 | |||||||
| Sales | 0.2 | 0.5 | 0.8 | |||||||
| Redemptions | 0.5 | 1.6 | 0.3 | |||||||
| Net sales (redemptions) | (0.2 | ) | (1.1 | ) | 0.5 | |||||
| Market appreciation (depreciation) | - | - | - | |||||||
| End of period assets | $ 3.7 | $ 3.8 | $ 5.2 | |||||||
| Alternatives | ||||||||||
| Beginning of period assets | $ 1.4 | $ 0.8 | $ 0.4 | |||||||
| Sales | 0.1 | 0.7 | 0.1 | |||||||
| Redemptions | 0.2 | 0.1 | - | |||||||
| Net sales (redemptions) | - | 0.6 | 0.1 | |||||||
| Market appreciation (depreciation) | (0.1 | ) | - | - | ||||||
| End of period assets | $ 1.2 | $ 1.4 | $ 0.4 | |||||||
| Value | ||||||||||