OREANDA-NEWS. Janus Capital Group Inc. (“JCG”) (NYSE: JNS) today reported fourth quarter 2015 net income of $46.6 million, or $0.25 per diluted share, compared with third quarter 2015 net income of $19.9 million, or $0.10 per diluted share ($0.22 as adjusted for early retirement of debt). Third quarter 2015 included a $0.12 per diluted share loss from the early retirement of all outstanding $344.5 million aggregate principal amount of the Company’s 6.70% Senior Notes due June 15, 2017. Fourth quarter 2014 net income was $46.7 million, or $0.24 per diluted share.

For the full-year 2015, net income totaled $155.8 million, or $0.80 per diluted share ($0.92 as adjusted for early retirement of debt), compared with net income of $154.4 million, or $0.81 per diluted share, for 2014.

Flows, Assets Under Management, and Exchange-Traded Products

Average assets under management during the fourth quarter 2015 were $191.2 billion compared with $192.1 billion during the third quarter 2015 and $179.2 billion during the fourth quarter 2014.

At December 31, 2015, JCG’s complex-wide assets totaled $192.3 billion compared with $185.0 billion at September 30, 2015, and $185.5 billion at December 31, 2014. The increase in complex-wide assets during the fourth quarter 2015 reflects net market appreciation of $7.2 billion, long-term net outflows of $0.6 billion and exchange-traded product net inflows of $0.7 billion. Fundamental equity (Janus and Perkins equity flows) and mathematical equity long-term net outflows of $1.5 billion each in the fourth quarter were offset by fixed income long-term net inflows of $2.4 billion.

 

Financial Discussion

Financial Highlights                        
(dollars in millions, except per share data or as noted)      
                         
      Three Months Ended     Year Ended
      December 31,     September 30,     December 31,     December 31,
      2015     2015     2015     2014
                         

Average Assets Under Management (in billions)

   $ 191.2     $ 192.1     $ 190.6     $ 175.8  

Ending Complex-Wide Assets (in billions)

   $ 192.3     $ 185.0     $ 192.3     $ 185.5  
Revenues   $ 267.8     $ 273.8     $ 1,076.2     $ 953.2  
Operating Expenses   $ 187.0     $ 190.4     $ 753.9     $ 663.5  
Operating Income   $ 80.8     $ 83.4     $ 322.3     $ 289.7  
Operating Margin     30.2 %     30.5 %     29.9 %     30.4 %
                         
Net Income Attributable to JCG   $ 46.6     $ 19.9     $ 155.8     $ 154.4  
                         
Diluted Earnings per Share   $ 0.25     $ 0.10     $ 0.80     $ 0.81  
                                 

Fourth quarter 2015 revenues of $267.8 million decreased from third quarter 2015 due to lower investment management fees as a result of lower average assets under management. Higher negative performance fees also contributed to the decrease. Fourth quarter 2015 operating expenses of $187.0 million decreased from third quarter operating expenses of $190.4 million, primarily due to lower general, administrative and occupancy expense after third quarter 2015 expenses were higher from a charge related to an operational error.

Capital and Liquidity

At December 31, 2015, JCG had total equity of $1.7 billion, cash and investments of $691.5 million and outstanding debt of $406.1 million.

Cash flows from operations during the fourth quarter 2015 were $124.0 million compared with $122.0 million during the third quarter 2015 and $88.4 million during the fourth quarter 2014.

As part of its capital management, JCG repurchased 2,084,337 shares of its common stock at an average price of $14.90 per share and a total cost of $31.1 million during the fourth quarter 2015.

On January 19, 2016, JCG’s Board of Directors declared a regular quarterly cash dividend of $0.09 per share. The quarterly dividend will be paid on February 25, 2016, to stockholders of record at the close of business on February 12, 2016.

About Janus Capital Group Inc.

Janus Capital Group Inc. (JCG) is a global investment firm dedicated to delivering better outcomes for clients through a broad range of actively managed and smart beta investment solutions, including fixed income, equity, alternative and multi-asset class strategies. It does so through a number of distinct asset management investment platforms, including investment teams within Janus Capital Management LLC (Janus), as well as INTECH Investment Management LLC (INTECH) and Perkins Investment Management LLC (Perkins), in addition to a suite of exchange-traded products under the VelocityShares brand as well as global macro fixed income products under the Kapstream brand. Each team brings distinct asset class expertise, perspective, style-specific experience and a disciplined approach to risk. Investment strategies are offered through open-end funds domiciled in both the U.S. and offshore, as well as through separately managed accounts, collective investment trusts and exchange-traded products.

At the end of December 2015, JCG’s complex-wide assets totaled $192.3 billion for shareholders, clients and institutions around the globe. Based in Denver, JCG also has offices in London, Milan, Singapore, Hong Kong, Tokyo, Melbourne, Sydney, Paris, The Hague, Zurich, Frankfurt, Dubai and Taipei.

JANUS CAPITAL GROUP INC.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share data or as noted)
                               
      Three Months Ended     Year Ended
      December 31,     September 30,     December 31,     December 31,     December 31,
      2015     2015     2014     2015     2014
Revenues:                              
Investment management fees   $ 226.4     $ 231.0     $ 217.1     $ 913.7     $ 849.1  
Performance fees     (1.9 )     (1.2 )     (0.8 )     (9.8 )     (48.0 )
Shareowner servicing fees and other     43.3       44.0       38.5       172.3       152.1  
Total revenues     267.8       273.8       254.8       1,076.2       953.2  
                               
Operating expenses:                              
Employee compensation and benefits     84.0       85.9       82.3       352.5       322.8  
Long-term incentive compensation     19.3       17.6       15.2       76.8       51.3  
Marketing and advertising     5.9       4.9       5.9       22.0       19.5  
Distribution     35.3       36.8       32.5       141.0       131.0  
Depreciation and amortization     9.0       9.0       6.6       33.0       25.6  
General, administrative and occupancy     33.5       36.2       31.8       128.6       113.3  
Total operating expenses     187.0       190.4       174.3       753.9       663.5  
                               
Operating income     80.8       83.4       80.5       322.3       289.7  
                               
Interest expense     (5.2 )     (8.0 )     (7.2 )     (27.7 )     (33.1 )
Investment losses, net     (2.3 )     (7.2 )     (3.0 )     (8.2 )     (1.9 )
Other income, net     4.3       1.2       3.1       3.2       3.0  
Loss on early extinguishment of debt     –       (36.3 )     –       (36.3 )     –  
Income tax provision     (29.3 )     (13.2 )     (26.6 )     (94.0 )     (102.3 )
                               
Net income     48.3       19.9       46.8       159.3       155.4  
                               
Noncontrolling interests     (1.7 )     –       (0.1 )     (3.5 )     (1.0 )
                               
Net income attributable to JCG   $ 46.6     $ 19.9     $ 46.7     $ 155.8     $ 154.4  
                               
Net income attributable to JCG   $ 46.6     $ 19.9     $ 46.7     $ 155.8     $ 154.4  
Less: Allocation of earnings to restricted stock     1.6       0.7       1.5       5.5       5.1  
Net income attributable to JCG common shareholders   $ 45.0     $ 19.2     $ 45.2     $ 150.3     $ 149.3  
                               
Basic weighted-average shares outstanding (in millions)     178.0       179.9       179.7       179.7       182.2  
Diluted weighted-average shares outstanding (in millions)     183.6       186.4       186.0       186.8       184.9  
                               
                               
Diluted earnings per share   $ 0.25     $ 0.10     $ 0.24     $ 0.80     $ 0.81  
                               
Average assets under management (in billions)   $ 191.2     $ 192.1     $ 179.2     $ 190.6     $ 175.8  
 
JANUS CAPITAL GROUP INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
             
      December 31,     December 31,
      2015     2014
Assets            
Cash and cash equivalents   $ 364.4   $ 452.5
Investment securities     327.1     344.0
Other assets     186.0     198.5
Property and equipment, net     38.7     31.1
Intangible assets and goodwill, net     1,955.3     1,768.7
Total assets   $ 2,871.5   $ 2,794.8
             
Liabilities, redeemable noncontrolling interests and equity            
Debt   $ 406.1   $ 450.5
Other liabilities     272.6     270.8
Deferred income taxes     498.9     480.0
Redeemable noncontrolling interests     21.8     5.4
Total equity     1,672.1     1,588.1
Total liabilities, redeemable noncontrolling interests and equity   $ 2,871.5   $ 2,794.8
 
UNAUDITED CONDENSED CONSOLIDATED
CASH FLOW INFORMATION
(dollars in millions)
                               
      Three Months Ended     Year Ended
      December 31,     September 30,     December 31,     December 31,     December 31,
      2015     2015     2014     2015     2014
Cash provided by (used in):                              
Operating activities   $ 124.0     $ 122.0     $ 88.4     $ 274.4     $ 218.4  
Investing activities     5.4       0.9       (36.2 )     (118.5 )     128.4  
Financing activities     (57.5 )     (128.8 )     (34.2 )     (239.4 )     (238.3 )
Effect of foreign exchange rate changes     0.1       (0.9 )     (0.4 )     (4.6 )     (0.5 )
Net change during period   $ 72.0     $ (6.8 )   $ 17.6     $ (88.1 )   $ 108.0  
 
JANUS CAPITAL GROUP INC.
ASSETS & FLOWS BY INVESTMENT DISCIPLINE
(dollars in billions)
  Growth /

Core (1)

   Global /

International

   Mathematical

Equity

   Fixed

Income (1)

   Value   Total

Company

(Excluding

Money

Market

and ETPs)

   Exchange-

Traded

Products

("ETPs")

(2) (3)

   Money

Market

   Total

Company
QUARTERLY                                                    
December 31, 2015 $ 64.9     $ 22.5     $ 47.6     $ 44.4     $ 8.4     $ 187.8     $ 3.2     $ 1.3     $ 192.3  
Sales   3.2       1.3       1.5       5.8       0.3       12.1       2.6       0.1       14.8  
Redemptions   (3.7 )     (1.6 )     (3.0 )     (3.4 )     (1.0 )     (12.7 )     (1.9 )     (0.1 )     (14.7 )
Net Sales (Redemptions)   (0.5 )     (0.3 )     (1.5 )     2.4       (0.7 )     (0.6 )     0.7       –       0.1  
Market/Fund Performance   3.8       1.1       2.5       0.4       0.4       8.2       (1.0 )     –       7.2  
September 30, 2015 $ 61.6     $ 21.7     $ 46.6     $ 41.6     $ 8.7     $ 180.2     $ 3.5     $ 1.3     $ 185.0  
Sales   3.1       2.7       1.5       4.2       0.2       11.7       3.7       0.3       15.7  
Redemptions   (4.0 )     (2.3 )     (3.1 )     (4.4 )     (1.2 )     (15.0 )     (1.9 )     (0.2 )     (17.1 )
Net Sales (Redemptions)   (0.9 )     0.4       (1.6 )     (0.2 )     (1.0 )     (3.3 )     1.8       0.1       (1.4 )
Market/Fund Performance   (4.6 )     (3.0 )     (2.6 )     (1.0 )     (0.7 )     (11.9 )     (1.3 )     –       (13.2 )
Acquisitions (4)   –       –       –       7.1       –       7.1       –       –       7.1  
June 30, 2015 $ 67.1     $ 24.3     $ 50.8     $ 35.7     $ 10.4     $ 188.3     $ 3.0     $ 1.2     $ 192.5  
Sales   3.6       2.6       2.2       2.7       0.5       11.6       2.7       0.2       14.5  
Redemptions   (3.5 )     (1.7 )     (2.2 )     (2.4 )     (1.6 )     (11.4 )     (2.7 )     (0.2 )     (14.3 )
Net Sales (Redemptions)   0.1       0.9       –       0.3       (1.1 )     0.2       –       –       0.2  
Market/Fund Performance   (0.3 )     0.6       (0.3 )     (0.3 )     (0.1 )     (0.4 )     0.3       –       (0.1 )
March 31, 2015 $ 67.3     $ 22.8     $ 51.1     $ 35.7     $ 11.6     $ 188.5     $ 2.7     $ 1.2     $ 192.4  
Sales   3.9       2.7       1.4       3.5       0.8       12.3       3.6       0.1       16.0  
Redemptions   (3.0 )     (1.4 )     (2.7 )     (2.7 )     (1.4 )     (11.2 )     (2.8 )     (0.2 )     (14.2 )
Net Sales (Redemptions)   0.9       1.3       (1.3 )     0.8       (0.6 )     1.1       0.8       (0.1 )     1.8  
Market/Fund Performance   2.5       1.2       1.4       0.5       –       5.6       (0.5 )     –       5.1  
December 31, 2014 $ 63.9     $ 20.3     $ 51.0     $ 34.4     $ 12.2     $ 181.8     $ 2.4     $ 1.3     $ 185.5  
Sales   3.1       1.8       2.0       5.3       0.7       12.9       1.1       0.1       14.1  
Redemptions   (3.1 )     (1.3 )     (2.6 )     (2.5 )     (1.4 )     (10.9 )     (0.4 )     (0.2 )     (11.5 )
Net Sales (Redemptions)   –       0.5       (0.6 )     2.8       (0.7 )     2.0       0.7       (0.1 )     2.6  
Market/Fund Performance   3.7       0.2       2.2       0.1       0.6       6.8       (0.6 )     –       6.2  
Acquisitions (2)   –       –       –       –       –       –       2.3       –       2.3  
September 30, 2014 $ 60.2     $ 19.6     $ 49.4     $ 31.5     $ 12.3     $ 173.0     $ –     $ 1.4     $ 174.4  
                                                     
                                                     
ANNUAL                                                    
December 31, 2015 $ 64.9     $ 22.5     $ 47.6     $ 44.4     $ 8.4     $ 187.8     $ 3.2     $ 1.3     $ 192.3  
Sales   13.8       9.3       6.6       16.2       1.8       47.7       12.6       0.7       61.0  
Redemptions   (14.2 )     (7.0 )     (11.0 )     (12.9 )     (5.2 )     (50.3 )     (9.3 )     (0.7 )     (60.3 )
Net Sales (Redemptions)   (0.4 )     2.3       (4.4 )     3.3       (3.4 )     (2.6 )     3.3       –       0.7  
Market/Fund Performance   1.4       (0.1 )     1.0       (0.4 )     (0.4 )     1.5       (2.5 )     –       (1.0 )
Acquisitions (4)   –       –       –       7.1       –       7.1       –       –       7.1  
December 31, 2014 $ 63.9     $ 20.3     $ 51.0     $ 34.4     $ 12.2     $ 181.8     $ 2.4     $ 1.3     $ 185.5  
Sales   10.6       5.5       6.6       13.7       2.5       38.9       1.1       0.6       40.6  
Redemptions   (13.7 )     (5.2 )     (8.3 )     (9.3 )     (7.3 )     (43.8 )     (0.4 )     (0.7 )     (44.9 )
Net Sales (Redemptions)   (3.1 )     0.3       (1.7 )     4.4       (4.8 )     (4.9 )     0.7       (0.1 )     (4.3 )
Market/Fund Performance   6.2       0.7       5.1       1.1       1.1       14.2       (0.6 )     –       13.6  
Acquisitions (2)   –       –       –       –       –       –       2.3       –       2.3  
December 31, 2013 $ 60.8     $ 19.3     $ 47.6     $ 28.9     $ 15.9     $ 172.5     $ –     $ 1.4     $ 173.9  
                                                     
Notes:                                                    
(1) Growth / Core and Fixed Income assets and flows reflect an even split of the Janus Balanced fund between the two categories.
(2) VS Holdings Inc., the parent company of VelocityShares, LLC, was acquired on December 1, 2014, prior to that the firm did not have exchange-traded products (“ETPs”).
(3) ETP sales (“creates”) and redemptions across all periods were adjusted due to a revised reporting method by the subsidiary; ending and average assets were not impacted.
(4) Kapstream was acquired on July 1, 2015.
 
NON-GAAP FINANCIAL MEASURES
(amounts in millions, except per share data)
       
      Three Months      
      Ended     Year Ended
      September 30,     December 31,
      2015     2015
             
Net income attributable to JCG   $ 19.9     $ 155.8  
Less: Allocation of earnings to restricted stock     0.7       5.5  
Net income attributable to JCG common shareholders     19.2       150.3  
Non-GAAP adjustments:            
Loss on extinguishment of debt     36.3       36.3  
Tax effect of loss on extinguishment of debt     (13.5 )     (13.5 )
Allocation of loss on extinguishment of debt to participating restricted stock awards     (0.8 )     (0.8 )
Net income attributable to JCG common shareholders, adjusted   $ 41.2     $ 172.3  
             
Diluted weighted-average shares outstanding     186.4       186.8  
             
Diluted earnings per share attributable to JCG common shareholders   $ 0.10     $ 0.80  
Diluted earnings per share attributable to JCG common shareholders, adjusted   $ 0.22     $ 0.92