Invesco Ltd.
's (
IVZ
) first quarter adjusted earnings came in at 44 cents per share, in
line with the Zacks Consensus Estimate. This compares favorably
with the adjusted earnings of 42 cents in the previous quarter and
41 cents in the prior-year quarter.
On a GAAP basis, earnings came in at 43 cents per share,
compared with 44 cents in the prior quarter and 38 cents in the
year-ago quarter.
Higher net revenue was mainly responsible for the improvement in
the results. However, higher operating expenses were the primary
dampeners. Moreover, the company's assets under management and
balance sheet position remained healthy during the quarter.
Invesco's adjusted net income grew 5.5% sequentially and 4.9%
year over year to $201.0 million.
Performance in Detail
Adjusted net revenue improved 2.7% sequentially and 1.7% year
over year to $736.3 million. Higher investment management fees was
one of the primary reasons for the sequential rise. On a
year-over-year basis, revenues climbed primarily due to a
substantial increase in performance fees. Also, foreign exchange
rate changes had a positive impact on net revenue during the
quarter. However, net revenue was nowhere near the Zacks Consensus
Estimate of $1.05 billion.
Adjusted investment management fees increased 5.4% sequentially
but decreased 0.5% marginally year over year to $812.1 million.
Likewise, service and distribution fees grew 4.4% sequentially but
fell 4.9% year over year to $189.0 million.
Adjusted operating expenses hiked 1.4% sequentially and 3.3%
year over year to $467.1 million. The increase was primarily
attributable to higher employee compensation expenses as well as
increased marketing expenses.
Adjusted operating margin for the quarter was 36.6% compared
with 35.8% in the prior quarter and 37.6% in the prior-year
quarter.
Assets under Management
Assets under management (AUM) escalated 7.6% sequentially and
4.8% year over year to $672.8 billion, as of March 31, 2012.
Average AUM for the reported quarter was $658.2 billion compared
with $621.7 billion in the prior quarter and $630.2 billion in the
prior-year quarter.
Long-term net inflows during the quarter were $7.0 billion
compared with $5.6 billion in the prior quarter and $6.6 billion in
the year-ago quarter.
Balance Sheet
As of March 31, 2012, cash and cash equivalents were $592.3
million compared with $727.4 million as of December 31, 2011. Total
debt was $1,325.7 million as of March 31, 2012, compared with
$1,284.7 million as of December 31, 2011.
Additionally, credit facility balance was $580.0 million as of
March 31, 2012, as against $539.0 million as of December 31,
2011.
Dividend Update
Concurrent with the earnings release, the company declared a
first-quarter dividend of 17.25 cents per share, up 41% from the
prior quarter. The dividend will be paid on June 8, 2012, to
shareholders of record as of May 18, 2012.
Share Repurchase Update
During the reported quarter, Invesco repurchased $75.0 million
worth of shares, representing 3.13 million shares at an average
price of $24.35.
Peer Performances
Unlike Invesco,
The Blackstone Group
's (
BX
) first quarter 2012 economic net income missed the Zacks Consensus
Estimate. Results declined due to the shrinking top line, which
were, to some extent, softened by lower expenses. Despite the
disappointing results, sturdy improvement in AUM was a huge
respite.
Likewise,
T. Rowe Price Group Inc.
's (
TROW
) first quarter 2012 earnings marginally lagged the Zacks Consensus
Estimate. Better-than-expected top-line growth was more-than-offset
by higher non-interest expenses. However, increased AUM was the
positive for the quarter.
Our Take
An uptrend in the global equity markets helped the long-term
investment performance of Invesco to improve. It is further
expected 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, resulting from its broad diversification.
However, volatile U.S. dollar and increasing competition remain the
major areas of concern.
Invesco currently retains a Zacks #1 Rank, which translates into
a short-term 'Strong Buy' rating.
BLACKSTONE GRP (
BX
): Free Stock Analysis Report
INVESCO LTD (
IVZ
): Free Stock Analysis Report
T ROWE PRICE (
TROW
): Free Stock Analysis Report
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