Janus Capital Group Inc.
) reported fourth quarter 2012 earnings per share attributable to
common shareholders of 19 cents, beating the Zacks Consensus
Estimate by 5 cents. Moreover, results compared favorably with
prior-quarter earnings of 15 cents. Including an intangible asset
impairment charge of 2 cents per share related to the redemption
of a sub-advised account, earnings stood at 17 cents.
Higher top-line growth and decreased operating expenses,
reflecting better expense management were the positives for the
quarter. Yet, long-term net outflows remain a matter of concern.
Net income attributable to common shareholders stood at $31.2
million compared with $25.1 million in the prior quarter.
For full year 2012, net income totaled $102.3 million or 55 cents
per share, down from $142.9 million or 78 cents per share in the
prior year. However, earnings outpaced the Zacks Consensus
Estimate by 2 cents.
Performance in Detail
Total revenue surged 3.6% sequentially to $216.6 million in the
reported quarter. The upsurge reflects higher shareowner
servicing fees and other revenues coupled with reduced negative
performance fees compared with the prior quarter. Moreover, the
revenue figure surpassed the Zacks Consensus Estimate of $213.0
For full year 2012, total revenue declined 13.4% year over year
to $850 million. However, the revenue figure beat the Zacks
Consensus Estimate of $845.0 million.
Total operating expenses decreased 1.6% sequentially to $158.6
million. The decline was mainly driven by lower distribution
expenses and reduced employee compensation and benefits expenses.
Operating margin was 26.8% compared with 22.9% in the prior
As of Dec 31, 2012, Janus Capital reported assets under
management (AUM) of $156.8 billion, down from $158.2 billion as
of Sep 30, 2012. Yet, average AUM increased slightly on a
sequential basis to $155.6 billion.
The decrease in overall assets mainly reflects long-term net
outflows of $3.6 billion, partly offset by net market
appreciation of $2.1 billion. Long-term net outflows at
fundamental equity and mathematical equity totaled $2.7 billion
and $1.6 billion, respectively, partially offset by fixed income
long-term net inflows of $0.7 billion.
As of Dec 31, 2012, Janus Capital had stockholders' equity of
$1.4 billion, cash and investments of $725.6 million and
outstanding debt of $545.1 million compared with stockholders'
equity of $1.4 billion, cash and investments of $683.6 million
and outstanding debt of $542.8 million, respectively, in the
Cash flows from operations during the reported quarter were $67.4
million compared with $75.3 million in the prior quarter.
Capital Deployment Activity
During the fourth quarter, Janus Capital repurchased 293,100
shares of its common stock at an average price of $8.84 per share
and at a total cost of $2.6 million.
Janus Capital has the best-in-class investment boutique with the
potential for AUM and revenue along with competitive leverage
growth. However, weakness in flows remains a matter of concern.
Though fixed income segment and global operations are showing
signs of improvement, the company's equity-heavy portfolio make
it vulnerable to the volatilities of the equity market. Further,
a low interest rate environment will likely affect the money
market business. Nevertheless, given its healthy balance sheet,
we believe Janus Capital has the potential to perform well in the
Shares of Janus Capital currently carry a Zacks Rank #3 (Hold).
The Blackstone Group LP
) are expected to release fourth quarter earnings on Jan 31,
Franklin Resources Inc.
) will report fiscal first quarter 2013 results on Feb 1.
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