Invesco Plc (IVZ)

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Invesco (IVZ)

Q3 2012 Earnings Call

November 01, 2012 9:00 am ET


Aaron Uhde - Director of Investor Relations and Assistant Treasurer

Martin L. Flanagan - Chief Executive Officer, President and Executive Director

Loren M. Starr - Chief Financial Officer, Senior Vice President and Senior Managing Director


Kenneth B. Worthington - JP Morgan Chase & Co, Research Division

Michael S. Kim - Sandler O'Neill + Partners, L.P., Research Division

Daniel Thomas Fannon - Jefferies & Company, Inc., Research Division

William R. Katz - Citigroup Inc, Research Division

Matthew Kelley - Morgan Stanley, Research Division

Roger A. Freeman - Barclays Capital, Research Division

Glenn Schorr - Nomura Securities Co. Ltd., Research Division

Cynthia Mayer - BofA Merrill Lynch, Research Division

J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc., Research Division

Eric N. Berg - RBC Capital Markets, LLC, Research Division

Robert Lee - Keefe, Bruyette, & Woods, Inc., Research Division

Christopher Shutler - William Blair & Company L.L.C., Research Division

Marc S. Irizarry - Goldman Sachs Group Inc., Research Division

Greggory Warren - Morningstar Inc., Research Division


Aaron Uhde

This presentation and comments made in the associated conference call today may include forward-looking statements. Forward-looking statements include information concerning future results for operations, expenses, earnings, liquidity, cash flow and capital expenditures, industry or market conditions, AUM, acquisitions, debt and our ability to obtain additional financing or make payments, regulatory developments, demand for and pricing of our products and other aspects of our business or general economic conditions.

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 statements and urge you to carefully consider the risks described in our most recent Form 10-K and subsequent Forms 10-Q filed with the SEC. You may obtain these reports from the SEC website at 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 First Quarter Results Conference Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the call over to the speakers for today to Mr. Martin L. Flanagan, President and CEO of Invesco; and Mr. Loren Starr, Chief Financial Officer. Mr. Flanagan, you may now begin.

Martin L. Flanagan

Thank you, and thank you for joining us today. And for those of you in the Northeast, I hope you and your families have made it safely through the storm. I would like to recognize and thank our employees in the Northeast for going above and beyond to deliver for our clients throughout the storm. And as always, our focus is on their safety. And as the case many of them had to work remotely because they couldn't get into the office, and they did work very diligently during the storm for the benefit of our clients, we appreciate that very much. And I'm sure that this appreciation is the same for all of you within your organizations, and I know it's been a difficult time.

So on the call today with me is Loren, as was just mentioned, our CFO. And as is our practice, first of all, the presentation's on the website, if you're so inclined to follow it. I will review the business results for the quarter, Loren will go into greater detail of the financials. And as always the case, Loren and I will answer any questions that people might have.

So I thought it might be helpful before getting into the numbers is to really provide a sense [ph] of the macro environment that we're operating in and that we were operating in within the quarter. And although the markets during the quarter were generally positive, lately, we've seen signs that investor confidence is under pressure again. And it's a variety of factors that are contributing to this. It's the deterioration in the economic environment in Europe, some continued softening in China, although it continues to be a very rapidly growing part of the world. But here, in the United States, uncertainty over the fiscal cliff, negative news that's coming in from abroad is really keeping investors on the sidelines. And again, this week, the weather in the Northeast did not help any of that investor confidence.

In this uncertain market environment, what we've seen is advisors and consultants are focusing on managing risk as a major topic. We recently completed a survey with advisors in the United States, and 65 of them responded saying that managing risk and wealth preservation were the predominant philosophies for managing client assets. So again, people are in a very cautious position still. And as you would expect, the emphasis on risk management for preservation of wealth is driving them into yield-oriented capabilities and multi-asset capabilities, many of which are continuing to see positive flows across the industry. Invesco is well-positioned ahead of this trend, and it's really the broad suite of income capabilities and multi-asset capabilities that we have for our clients that is responding well to these needs.

So moving on, let's take a look at the third quarter and some overview comments. Long-term investment performance was strong again across all time periods for the third quarter. And delivering strong investment performance to our clients contributed very solid operating results. And as we mentioned during the last quarter, we saw early signs of a turnaround in flows in July. And building on that early momentum, net flows grew to $11.7 billion for the quarter. And this was amongst the strongest net flows in the history of the company and most robust net flows since -- we've experienced since the second quarter of 2010. Invesco's quarterly dividend is now $17.25 per share, representing a 41% increase over last year's dividend and reflecting continued confidence in the fundamentals of our business. Return on capital to shareholders during the quarter totaled $118 million.

And during the third quarter, we did take advantage of a number of opportunities in the marketplace to further invest for the future of our business. And let me hit on a couple of those. And as many of you know, we currently have a presence in India through the enterprise support location in Hyderabad and also with WL Ross & Co. having a location there also. We plan to build on that presence, and it was really by acquiring a 49% stake in Religare Asset Management and creating a partnership in India for us. This move will enhance our presence in an important and growing market and will expand again our comprehensive range of investment capabilities with these investment capabilities that Religare Asset Management bring to us.

During the third quarter, we continue to build out our market-leading multi-asset capabilities with the addition of a multi-asset team in the United Kingdom. In the next year, we look to introduce capabilities into the marketplace that again will very much extend and complement the multi-asset capabilities that we have across the organization globally. We continue to invest in the brand in the United States. And where our awareness and brand equity score is now among financial intermediaries has risen to 10. And just 2 years ago, we didn't even show up in the results. And as we said, we do think it is very important for us to generate a level of awareness and brand equity in that marketplace. So good progress is being made there.

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