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Janus Capital Group Inc. Announces Third Quarter 2012 Results

Stocks in this article: JNS

Janus Capital Group Inc. (“JCG”) (NYSE: 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 Rating TM. 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.

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