) first-quarter 2013 adjusted earnings were 52 cents per share,
surpassing the Zacks Consensus Estimate by a nickel. This also
compares favorably with adjusted earnings of 45 cents recorded in
the prior quarter.
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Better-than-expected results came on the back of a rise in
revenues, partly offset by a slight increase in operating
expenses. Further, improved assets under management (AUM) and
stable balance sheet position were the tailwinds.
On a GAAP basis, net income in the first quarter was $222.2
million or 49 cents per share, up from $158.7 million or 35 cents
in the prior quarter.
Adjusted net revenue grew 5.2% sequentially to $816.5 million in
the reported quarter. Increases in investment management fees and
performance fee revenues were the driving forces behind the rise.
However, net revenue was significantly below the Zacks Consensus
Estimate of $1.13 billion.
Adjusted operating expenses nudged up 0.7% from the prior quarter
to $502.9 million. The marginal rise was primarily due to higher
employee compensation expenses, partially offset by decreases in
general and administrative expenses and marketing costs.
Adjusted operating margin for the quarter was 38.4%, rising from
35.6% in the prior quarter.
As of Mar 31, 2013, AUM grew 6.0% sequentially to $729.3 billion,
reflecting net market gains, partially offset by unfavorable
foreign exchange rate changes. Average AUM for the reported
quarter was $712.7 billion, up 4.8% from $680.2 billion in the
Long-term net inflows in the quarter were $14.8 billion compared
with $3.3 billion in the preceding quarter.
As of Mar 31, 2013, cash and cash equivalents were $884.7 million
compared with $835.5 million as of Dec 31, 2012. Total debt was
$1,514.5 million as of Mar 31, 2013, against $1,186.0 million as
of Dec 31, 2012.
Additionally, credit facility balance reached $915.0 million as
of Mar 31, 2013, compared with $586.5 million as of Dec 31, 2012.
Share Repurchase Update
In the reported quarter, Invesco repurchased $45 million worth of
shares, representing 1.6 million shares.
Concurrent with the earnings release, the company declared
first-quarter dividend of 22.5 cents per share. The dividend will
be paid on Jun 7 to shareholders of record as of May 17. This
dividend represents a hike of nearly 30% from the prior dividend.
On Apr 11, Invesco announced that it has entered into a
definitive agreement to divest Atlantic Trust Private Wealth
Canadian Imperial Bank of Commerce
) for $210 million. The deal, expected to close in the second
half of 2013, is still subject to regulatory approval.
Performance of Other Investment Management
First-quarter earnings per share of
The Blackstone Group L.P.
) surpassed the Zacks Consensus Estimate. The improved results
were primarily attributable to increased top line, partially
offset by higher operating expenses.
Invesco's long-term investment performance was boosted by an
uptrend in the global equity markets, which is envisioned to
uplift the company's operating results. Moreover, the operating
leverage is expected to improve significantly over the long term
due to the company's cost-control initiatives.
Invesco is well positioned to benefit from improved global
investment flows owing to its broad diversification.
Additionally, meaningful capital deployment activities will
enhance shareholders' confidence in the stock. However, the
volatile U.S. dollar and increasing competition remain matters of
Invesco currently retains a Zacks Rank #2 (Buy).