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Invesco Ltd. (IVZ)
Q3 2010 Earnings Call Transcript
October 25, 2010 9:00 am ET
Martin Flanagan – President and CEO
Loren Starr – CFO
Ken Worthington – JPMC
Robert Lee – KBW
Michael Kim – Sandler O'Neill
Craig Siegenthaler – Credit Suisse
Glenn Schorr – Nomura
Cynthia Mayer – Bank of America
Daniel Fannon – Jefferies
William Katz – Citi
Michael Carrier – Deutsche Bank
Marc Irizarry – Goldman Sachs
Brennan Hawken – Collins Stewart
Roger Freeman – Barclays Capital
Jonathan Casteleyn – Susquehanna
Jeffrey Hopson – Stifel
Previous Statements by IVZ
» Invesco Ltd. Q2 2010 Earnings Call Transcript
» Invesco Ltd. Q1 2010 Earnings Call Transcript
» Invesco Ltd. Q4 2009 Earnings Call Transcript
In addition, words such as believes, expects, anticipates, intends, plans, estimates, projects, forecasts, and future or conditional verbs such as will, may, could, should, and would, as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements. Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. There can be no assurance that actual results will not differ materially from our expectations.
We caution investors not to rely unduly on any forward-looking statement and urge you to carefully consider the risks described in our most recent Form 10-K and subsequent forms 10-Q filed with the Securities and Exchange Commission. You may obtain these reports from the SEC’s website at www.sec.gov. We expressly disclaim any obligation to update the information in any public disclosure if any forward-looking statement later turns out to be inaccurate.
Welcome to Invesco’s third quarter results conference call. All participants will be on a listen-only mode until the question-and-answer session. (Operator instructions) Today’s conference is being recorded. If you have any objections, you may disconnect at this time. Now, I would like to turn the call over to the speakers for today, Mr. Martin L. Flanagan, President and CEO of Invesco, and Mr. Loren Starr, Chief Financial Officer. Mr. Flanagan, you may now begin.
Good morning and thank you, everybody, for joining us today. This is Marty Flanagan along with Loren Starr, as was just pointed out. Loren and I will be speaking through the presentation that’s available on our website if you’re still inclined to follow along.
What we’ll do today is, I’ll highlight the business results and we’ll spend a few minutes just on the current update on the combination with Morgan Stanley/Van Kampen – the combination that we just closed in June, and then Loren will go into greater detail on the financials, and then finally we will open up to Q&A.
And so those that are inclined to follow on, I’m going to start on page two of the presentation deck. So if you look at the quarter in spite of the continued volatility that we saw in the markets, Invesco’s commitment to investment excellence really did yield a strong quarter with continued strong investment performance across the enterprise. It remained very strong and with some arrays of the exceptional performance. The strong investment performance contributed to a continued trend of positive long-term inflows into the organization.
And as many of you know, not all of you, on June 1, we completed the combination with Morgan Stanley/Van Kampen retail asset management business. And our goal from the day we announced the transaction was to complete the integration work prior to the close. And thanks to the tremendous amount of effort on everybody’s part, we accomplished that goal and we are able to deliver the value of the combined firm on day one as we referred to it.
And now, since we’ve completed it, we’ve now had a full quarter of the combined organization together and we are seeing strong momentum of that combined business. I’d also like to mention, during this third quarter, we resumed our share repurchase program and purchased 6.4 million shares at the value of about $127 million.
Later in this presentation, Loren is going to give some insight into our capital management approach. And also I’d like to note that Standard & Poor’s increased our enterprise risk management rating from adequate to strong. Invesco is now one of four asset managers with a strong rating.
So if you take a look at slide three, assets under management ended the quarter at $604 billion, and that compares to $557 billion at the end of the second quarter, reflecting the improved markets and also strong momentum in our combined business.
Adjusted operating income for the third quarter was $245 million, an increase of 30% quarter-over-quarter. And long-term net inflows for the quarter were $4.9 billion, continuing the positive trend we’ve demonstrated over the past several quarters. And consistent with the second quarter, we will provide third quarter dividend of $0.11 per share. And again, Loren will go into much greater detail of the financials in just a moment.
If you take a look at the quarter at flows on page four, you will see the strength in the third quarter gross sales led to continued positive momentum in our long-term net inflows. As I mentioned earlier, the long-term net inflows for the quarter were $4.9 billion. This represents the seventh consecutive quarter of positive inflows for Invesco.
And if you take a look on slide five at the gross sales, gross retail and institutional channels, they continued to contribute positive net flows to Invesco overall. And also, if you look at the private wealth management segment of the business, it continued to experience consistent asset growth quarter-over-quarter, and we’ve seen net inflows for the past three years in the private wealth management business.
And if you take a look at investment performance for the group, it’s just, I’d say, one of the key reasons for the enhanced strength and stability of flows that we’ve seen over the past seven quarters. And if you look at the enterprise, 78% of the assets were ahead of peers on a three-year basis, and that compares to 71% one year ago. So, continued improvement in strength and consistent good long-term performance. And again, the detailed charts of performance are in the appendix, if you’re so inclined.
I would like to take a minute just to highlight some of the pockets of exceptional performance. And starting with the long-term investment performance that Invesco Perpetual remains just outstanding with more than 90% of the assets in the top half of peers over one, three and five years. We continue to see improvement in Invesco Trimark with 81% of the Canadian equity assets in the top half of peer groups on a three-year basis and 65% on a one-year basis.