Invesco Ltd.
's (
IVZ
) fourth-quarter adjusted earnings came in at 45 cents per share,
marginally missing the Zacks Consensus Estimate of 47 cents. Yet,
this compares favorably with adjusted earnings of 42 cents
recorded in the previous quarter.
Lower-than-expected quarterly results came on the back of a rise
in operating costs, partly offset by higher net revenue. Further,
improved assets under management (AUM) and stable balance sheet
position were the tailwinds.
On a GAAP basis, net income in the fourth quarter stood at $158.7
million or 35 cents per share, down from $170.6 million or 38
cents in the prior quarter. For 2012, it was $677.1 million or
$1.49 per share, down from $729.7 million or $1.57 per share in
2011.
For 2012, adjusted earnings per share were $1.71, slightly below
the Zacks Consensus Estimate of $1.74. Yet, this was up 1.8% from
$1.68 in 2011.
Behind the Headlines
Adjusted net revenue grew 5.6% sequentially to $775.9 million in
the reported quarter. Increases in investment management fees and
performance fee revenues were the primary reasons behind the
rise. However, net revenue was nowhere near the Zacks Consensus
Estimate of $1.11 billion.
For 2012, adjusted net revenue was recorded at $3.0 billion, up
2.1% year over year. Yet, it was substantially below the Zacks
Consensus Estimate of $4.25 billion.
Adjusted operating expenses hiked 3.1% from the prior quarter to
$499.4 million. The increase was primarily attributable to higher
employee compensation expenses and general and administrative
expenses, partially offset by lower marketing expenses.
Adjusted operating margin for the quarter was 35.6%, rising from
34.1% in the prior quarter.
Assets Under Management
As of Dec 31, 2012, AUM inched up 0.7% sequentially to $687.7
billion, reflecting net market gains, partially offset by
unfavorable foreign exchange rate changes. Average AUM for the
reported quarter was $680.2 billion, up 1.8% from $667.9 billion
in the prior quarter.
Long-term net inflows during the quarter were $0.9 billion
compared with $9.4 billion in the preceding quarter.
Balance Sheet
As of Dec 31, 2012, cash and cash equivalents were $835.5 million
compared with $727.4 million as of Dec 31, 2011. Total debt was
$1,186.0 million as of Dec 31, 2012, against $1,284.7 million as
of Dec 31, 2011.
Additionally, credit facility balance reached $586.5 million as
of Dec 31, 2012, compared with $754.5 million as of Sep 30, 2012.
Share Repurchase Update
During the reported quarter, Invesco repurchased $75 million
worth of shares, representing 3.0 million shares. For 2012, the
company repurchased shares worth $265.0 million.
Dividend Update
Concurrent with the earnings release, the company declared
third-quarter dividend of 17.25 cents per share. The dividend
will be paid on Mar 8 to shareholders of record as of Feb 21.
Peer Performances
Fourth-quarter earnings of
BlackRock Inc.
(
BLK
) and
Ameriprise Financial Inc.
(
AMP
) substantially exceeded the Zacks Consensus Estimate, while
SEI Investments Co.
(
SEIC
) reported in line. For all these 3 companies, the year-over-year
improvement was primarily attributable to increased top line,
partly offset by higher operating expenses.
Our Viewpoint
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 Invesco's cost-control initiatives.
Invesco is well positioned to benefit from improved global
investment flows owing to its broad diversification. Also,
meaningful capital deployment activities will enhance
shareholders confidence in the stock. However, volatile U.S.
dollar and increasing competition remain the major areas of
concern.
Invesco currently retains a Zacks Rank #3 (Hold).
AMERIPRISE FINL (AMP): Free Stock Analysis
Report
BLACKROCK INC (BLK): Free Stock Analysis
Report
INVESCO LTD (IVZ): Free Stock Analysis Report
SEI INVESTMENTS (SEIC): Free Stock Analysis
Report
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