ATLANTA, Jan. 28, 2016
/PRNewswire/ -- Invesco Ltd. (NYSE: IVZ) today reported
financial results for the year and three months ended
December 31, 2015.
"In spite of volatile markets, our strong, long-term investment
performance and sharp focus on helping clients achieve their
investment objectives contributed to long-term net inflows of
$16.2 billion for the year," said
Martin L. Flanagan, president and
CEO. "Our focused efforts helped us maintain an operating margin of
41.0% and return more than $1.0
billion of capital to shareholders during 2015. For 2016,
given the continued volatility in the markets, we are taking a
disciplined approach to managing operations, balancing our goals of
reinvesting in the business for the benefit of clients with the
need to run our business effectively and efficiently."
|
2015
|
|
2014
|
|
%
Change
|
|
|
Adjusted Financial
Measures(1,2)
|
|
|
|
|
|
|
|
Net
revenues
|
$3,643.2
|
m
|
|
$3,608.3
|
m
|
|
1.0
|
%
|
|
|
Operating
income
|
$1,493.7
|
m
|
|
$1,495.0
|
m
|
|
(0.1)
|
%
|
|
|
Operating
margin
|
41.0
|
%
|
|
41.4
|
%
|
|
|
|
|
Net income
attributable to Invesco Ltd.
|
$1,048.7
|
m
|
|
$1,094.8
|
m
|
|
(4.2)
|
%
|
|
|
Diluted
EPS
|
$2.44
|
|
|
$2.51
|
|
|
(2.8)
|
%
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Financial
Measures
|
|
|
|
|
|
|
|
Operating
revenues
|
$5,122.9
|
m
|
|
$5,147.1
|
m
|
|
(0.5)
|
%
|
|
|
Operating
income
|
$1,358.4
|
m
|
|
$1,276.9
|
m
|
|
6.4
|
%
|
|
|
Operating
margin
|
26.5
|
%
|
|
24.8
|
%
|
|
|
|
|
Net income
attributable to Invesco Ltd.(3)
|
$968.1
|
m
|
|
$988.1
|
m
|
|
(2.0)
|
%
|
|
|
Diluted
EPS(3)
|
$2.26
|
|
|
$2.27
|
|
|
(0.4)
|
%
|
|
|
|
|
|
|
|
|
|
Assets Under
Management
|
|
|
|
|
|
|
|
Ending AUM
|
$775.6
|
bn
|
|
$792.4
|
bn
|
|
(2.1)
|
|
|
|
Average
AUM
|
$794.7
|
bn
|
|
$790.3
|
bn
|
|
0.6
|
%
|
|
|
|
(1) The
adjusted financial measures are all non-GAAP financial measures.
See the information on pages 12 through 16 for a reconciliation to
their most directly comparable U.S. GAAP measures and the notes
beginning on page 23 for other important disclosures.
|
|
(2) The
foreign exchange impact of applying the 2014 annual average foreign
exchange rate to the 2015 annual results would result in an
increase to adjusted operating income of $81.7 million, a 0.3
percentage points increase in adjusted operating margin, and an
increase of $65.1 million to adjusted net income attributable to
Invesco Ltd., or $0.15 on adjusted diluted EPS.
|
|
(3) U.S.
GAAP measures include the results of discontinued operations in
2014.
|
|
Q4-15
|
|
Q3-15
|
|
Q4-15 vs.
Q3-15
|
|
Q4-14
|
|
Q4-15 vs.
Q4-14
|
|
|
Adjusted Financial
Measures(1,2)
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$886.1
|
m
|
|
$903.0
|
m
|
|
(1.9)
|
%
|
|
$905.8
|
m
|
|
(2.2)
|
%
|
|
|
Operating
income
|
$355.7
|
m
|
|
$373.4
|
m
|
|
(4.7)
|
%
|
|
$373.1
|
m
|
|
(4.7)
|
%
|
|
|
Operating
margin
|
40.1
|
%
|
|
41.4
|
%
|
|
|
|
41.2
|
%
|
|
|
|
|
Net income
attributable to Invesco Ltd.
|
$243.8
|
m
|
|
$261.4
|
m
|
|
(6.7)
|
%
|
|
$272.6
|
m
|
|
(10.6)
|
%
|
|
|
Diluted
EPS
|
$0.58
|
|
|
$0.61
|
|
|
(4.9)
|
%
|
|
$0.63
|
|
|
(7.9)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Financial
Measures(3)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
$1,239.7
|
m
|
|
$1,273.5
|
m
|
|
(2.7)
|
%
|
|
$1,276.7
|
m
|
|
(2.9)
|
%
|
|
|
Operating
income
|
$303.6
|
m
|
|
$352.7
|
m
|
|
(13.9)
|
%
|
|
$348.2
|
m
|
|
(12.8)
|
%
|
|
|
Operating
margin
|
24.5
|
%
|
|
27.7
|
%
|
|
|
|
27.3
|
%
|
|
|
|
|
Net income
attributable to Invesco Ltd.
|
$201.9
|
m
|
|
$249.3
|
m
|
|
(19.0)
|
%
|
|
$269.8
|
m
|
|
(25.2)
|
%
|
|
|
Diluted
EPS
|
$0.48
|
|
|
$0.58
|
|
|
(17.2)
|
%
|
|
$0.62
|
|
|
(22.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets Under
Management
|
|
|
|
|
|
|
|
|
|
|
|
Ending AUM
|
$775.6
|
bn
|
|
$755.8
|
bn
|
|
2.6
|
%
|
|
$792.4
|
bn
|
|
(2.1)
|
%
|
|
|
Average
AUM
|
$783.7
|
bn
|
|
$788.9
|
bn
|
|
(0.7)
|
%
|
|
$789.8
|
bn
|
|
(0.8)
|
%
|
|
|
|
(1) The
adjusted financial measures are all non-GAAP financial measures.
See the information on pages 12 through 16 for a reconciliation to
their most directly comparable U.S. GAAP measures and the notes
beginning on page 23 for other important disclosures.
|
|
(2) The
foreign exchange impact of applying the Q3-15 average foreign
exchange rate to the Q4-15 results would result in an increase to
adjusted operating income of $4.2 million, a 0.2 percentage points
on adjusted operating margin, and an increase of $3.5 million to
adjusted net income attributable to Invesco Ltd.
|
|
(3) U.S.
GAAP measures include the results of discontinued
operations.
|
Assets Under Management
Total assets under management (AUM) at December 31, 2015,
were $775.6 billion
(September 30, 2015: $755.8
billion), an increase of $19.8
billion during the fourth quarter. Total net inflows were
$4.1 billion for the fourth quarter,
as detailed below:
|
|
Quarterly
|
|
Year-to-date
|
|
Summary of net
flows (in billions)
|
|
Q4-15
|
|
Q3-15
|
|
Q4-14
|
|
2015
|
|
2014
|
|
Active
|
|
$3.5
|
|
|
($1.6)
|
|
|
$0.9
|
|
|
$14.1
|
|
|
$2.1
|
|
|
Passive
|
|
0.4
|
|
|
(2.3)
|
|
|
1.6
|
|
|
2.1
|
|
|
6.0
|
|
|
Long-term net
flows
|
|
3.9
|
|
|
(3.9)
|
|
|
2.5
|
|
|
16.2
|
|
|
8.1
|
|
|
Invesco PowerShares
QQQ
|
|
2.0
|
|
|
(0.9)
|
|
|
(3.2)
|
|
|
(1.8)
|
|
|
(10.7)
|
|
|
Money
market
|
|
(1.8)
|
|
|
(1.5)
|
|
|
—
|
|
|
(11.9)
|
|
|
(5.8)
|
|
|
Total net
flows
|
|
$4.1
|
|
|
($6.3)
|
|
|
($0.7)
|
|
|
$2.5
|
|
|
($8.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net market gains led to a $21.0
billion increase in AUM during the fourth quarter, compared
to a $35.6 billion decrease in the
third quarter 2015. Foreign exchange rate movements led to a
$5.3 billion decrease in AUM during
the fourth quarter, compared to a $5.9
billion decrease in the third quarter 2015. Average AUM
during the fourth quarter were $783.7
billion, compared to $788.9
billion for the third quarter 2015, a decrease of 0.7%.
Further analysis is included in the supplementary schedules to this
release.
Earnings Summary
The company is presenting both U.S. GAAP earnings information
and non-GAAP earnings information in this release. The company
believes that the additional disclosure of non-GAAP earnings
information provides further transparency into the business on an
ongoing operations basis and allows more appropriate comparisons
with our industry peers. Management uses these non-GAAP performance
measures to evaluate the business, and they are consistent with
internal management reporting. These measures are described more
fully in the company's Form 10-K. Non-GAAP measures should not be
considered as substitutes for any measures derived in accordance
with U.S. GAAP and may not be comparable to other similarly titled
measures of other companies.
U.S. GAAP Earnings
This section comments on the more significant items that have
impacted the company's fourth quarter 2015 results as presented in
accordance with U.S. GAAP, as compared to the third quarter
2015.
Operating revenues decreased 2.7% to $1,239.7 million in the fourth quarter, from
$1,273.5 million in the third quarter
2015. Operating expenses increased by 1.7% to $936.1 million in the fourth quarter, from
$920.8 million in the third quarter
2015.
Business optimization charges of $16.2
million were recorded in the fourth quarter of 2015,
including $12.2 million of staff
severance costs recorded in employee compensation associated with a
business transformation initiative. This is the first part of a
broad program that will continue through 2016 focused on
transforming several key business support functions to become more
effective and efficient. Incremental implementation costs in 2016
are estimated to be up to $85 million
and the initiative is expected to generate ongoing cost savings
that will more than fully offset the implementation expense within
a three year time frame after completion.
Separately, general and administrative expenses for the fourth
quarter of 2015 include a provision of $12.6
million pertaining to regulatory investigations and related
legal fees of $0.5 million.
This includes $7.6 million associated
with our private equity business.
In the first quarter of 2015, the company acquired certain
investment management contracts from a third party for a purchase
price comprised of contingent consideration payable in future
periods. During the fourth quarter of 2015, changes in the
fair value of the contingent consideration liability generated a
gain of $8.7 million, which was
recorded in other gains and losses, net. The third quarter of
2015 included a gain of $18.4 million
associated with the fair value of this liability.
The inclusion of consolidated investment products in the U.S
GAAP earnings resulted in a reduction of $19.4 million in net income attributable to
Invesco Ltd. in the fourth quarter, compared to a $13.2 million reduction in the third quarter
2015.
The effective tax rate on continuing operations increased to
30.8% for the fourth quarter, from 29.4% for the third quarter
2015. See note 10 on page 26 for further details.
Non-GAAP Earnings
This section discusses the company's fourth quarter 2015
non-GAAP financial results, as compared to the third quarter 2015.
The phrase "as adjusted" is used in the following earnings
discussion to identify non-GAAP information, together with the
non-GAAP financial measures of net revenues, adjusted operating
margin, adjusted net income attributable to Invesco Ltd. and
adjusted diluted EPS. The most directly comparable U.S. GAAP items
are reconciled to these non-GAAP items on pages 12 through 16 of
this release.
Net revenues decreased by $16.9
million (1.9%) to $886.1
million in the fourth quarter, from $903.0 million in the third quarter 2015. The
decrease was principally due to reduced investment management fees
partly offset by reduced third-party distribution, service and
advisory expenses. Foreign exchange rate changes decreased fourth
quarter net revenues by $8.1 million
when compared to the third quarter 2015.
Investment management fees, as adjusted, decreased $29.3 million (2.8%) to $1,008.8 million in the fourth quarter, from
$1,038.1 million in the third quarter
2015. The decrease reflects the lower average AUM and changes in
the AUM product and currency mix. Foreign exchange rate changes
decreased fourth quarter management fees by $10.1 million when compared to third quarter
2015.
Service and distribution fees, as adjusted, decreased
$7.2 million (3.4%) to $207.6 million in the fourth quarter, from
$214.8 million in the third quarter
2015, reflecting the lower average AUM associated with products
that charge these fees. Foreign exchange rate changes decreased
fourth quarter service and distribution fees by $0.1 million when compared to third quarter
2015.
Performance fees, as adjusted, increased $1.2 million (6.8%) to $18.8 million in the fourth quarter, from
$17.6 million in the third quarter
2015. The fourth quarter performance fees included $9.8 million generated from real estate,
$3.2 million from U.K. equities and
the remainder from a variety of other investment capabilities.
Foreign exchange rate changes decreased performance fees by
$0.1 million in the fourth quarter
when compared to the third quarter 2015.
Other revenues, as adjusted, increased by $1.4 million (5.1%) to $29.0 million in the fourth quarter, from
$27.6 million in the third quarter
2015 reflecting increased real estate transaction fees. Foreign
exchange rate changes decreased fourth quarter other revenues by
$0.1 million when compared to third
quarter 2015.
Third-party distribution, service and advisory expenses, as
adjusted, decreased by $17.0 million
(4.3%) to $378.1 million in the
fourth quarter from $395.1 million in
the third quarter 2015. The decrease reflects lower retail
management fees and service and distribution fees. Foreign exchange
rate changes decreased the fourth quarter third-party distribution,
services and advisory expenses by $2.3
million.
Total operating expenses, as adjusted, increased by $0.8 million (0.2%) to $530.4 million in the fourth quarter, from
$529.6 million in the third quarter
2015. Foreign exchange rate changes decreased fourth quarter
operating expenses by $3.9 million
when compared to the third quarter 2015.
Employee compensation expenses, as adjusted, decreased by
$8.1 million (2.3%) to $338.8 million in the fourth quarter, from
$346.9 million in the third quarter
2015. The decreased reflected lower incentive compensation combined
with the impact of foreign exchange rate changes. Foreign exchange
rate changes decreased fourth quarter employee compensation
expenses by $2.3 million when
compared to the third quarter 2015.
Marketing expenses, as adjusted, increased by $8.8 million (34.1%) to $34.6 million in the fourth quarter, from
$25.8 million in the third quarter
2015 due to a seasonal increase in advertising and other marketing
costs in support of the business, particularly in EMEA. Foreign
exchange rate changes decreased fourth quarter marketing expenses
by $0.4 million when compared to the
third quarter 2015.
Property, office and technology expenses, as adjusted, increased
$0.5 million (0.6%) to $80.4 million in the fourth quarter, from
$79.9 million in the third quarter
2015. Foreign exchange rate changes decreased fourth quarter
property, office and technology expenses by $0.5 million when compared to the third quarter
2015.
General and administrative expenses, as adjusted, decreased
$0.4 million (0.5%) to $76.6 million in the fourth quarter, from
$77.0 million in the third quarter
2015. Foreign exchange rate changes decreased fourth quarter
general and administrative expenses by $0.7
million when compared to the third quarter 2015.
Non-operating other income and expenses, as adjusted, included
equity in earnings from investments of $0.3
million in the fourth quarter, compared to $4.2 million in the third quarter 2015. Other
gains and losses, net in the fourth quarter were a loss of
$10.3 million compared to a third
quarter 2015 loss of $6.6 million.
Fourth quarter other gains and losses, net included a $7.3 million realized loss on the disposition of
private equity partnership interests and a $2.0 million unrealized loss on the
mark-to-market of other seed money investments. Separately, other
income of consolidated sponsored investment products (CSIP), net
was a gain of $0.8 million in the
fourth quarter compared to a third quarter 2015 loss of
$3.6 million.
The adjusted effective tax rate increased to 26.6% for the
fourth quarter, from 26.5% for the third quarter 2015.
Balance Sheet and Cash Flow Statement Presentation
The company is presenting in this release both a U.S. GAAP
balance sheet and balance sheet information excluding consolidated
investment products (CIP), along with a U.S. GAAP statement of cash
flows and cash flow statement information excluding CIP. The
information presented excluding CIP is a non-GAAP presentation.
Balance sheet and cash flow statement information before and after
the consolidation of investment products is reconciled on pages 19
and 22, respectively.
The company believes that, by excluding the consolidation of
investment products, the non-GAAP balance sheet and cash flow
statement information provides a more representative presentation
of our financial risks and the company's cash and debt positions,
allowing more appropriate comparisons with our industry peers.
Management uses these non-GAAP presentations to evaluate the
business, and the presentations are consistent with internal
management reporting. As demonstrated by the selected balance sheet
data that follows, inclusion of the long-term debt of CIP within
liquidity measures, such as debt-to-equity ratios, causes the
company to appear to be significantly more indebted than is
actually the case.
Balance Sheets and Capital Management
Selected balance sheet information is reflected in the table
below:
|
|
Excluding CIP
(Non-GAAP)(1)
|
|
Including CIP
(U.S. GAAP)
|
|
|
December
31,
2015
|
|
December
31,
2014
|
|
December
31,
2015
|
|
December
31,
2014
|
|
in
millions
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$1,851.4
|
|
$1,514.2
|
|
$1,851.4
|
|
$1,514.2
|
|
Investments of
CIP
|
|
—
|
|
—
|
|
6,016.1
|
|
5,762.8
|
|
Total
assets(1)
|
|
$18,593.7
|
|
$14,220.6
|
|
$25,073.2
|
|
$20,450.0
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
2,072.8
|
|
1,576.8
|
|
2,072.8
|
|
1,576.8
|
|
Debt of
CIP
|
|
—
|
|
—
|
|
5,437.0
|
|
5,149.6
|
|
Long-term debt /
Long-term debt plus CIP debt
|
|
$2,072.8
|
|
$1,576.8
|
|
$7,509.8
|
|
$6,726.4
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities(1)
|
|
$10,499.5
|
|
$5,734.2
|
|
$16,210.2
|
|
$11,164.7
|
|
|
|
|
|
|
|
|
|
|
Total permanent
equity(1)
|
|
$7,926.9
|
|
$8,320.9
|
|
$8,695.7
|
|
$9,119.8
|
|
|
|
|
|
|
|
|
|
|
Debt/Equity %
(1) (2)
|
|
26.1%
|
|
18.9%
|
|
86.4%
|
|
73.8%
|
|
|
(1) The
balance sheet line items excluding CIP are non-GAAP financial
measures. See the reconciliation information on page 19 for balance
sheet information before and after the consolidation of investment
products.
|
|
(2) The
debt/equity ratio excluding CIP is a non-GAAP financial measure.
The debt/equity ratio is calculated as long-term debt divided by
total permanent equity for the balance sheet information excluding
CIP and long-term debt plus debt of CIP divided by total permanent
equity for the balance sheet including CIP.
|
As of December 31, 2015, the company's cash and cash
equivalents were $1,851.4 million,
with long-term debt of $2,072.8
million. The credit facility balance was zero at
December 31, 2015, $99.5 million
at September 30, 2015 and zero at December 31, 2014.
During the fourth quarter the company issued senior notes with
aggregate principal amounts of $500
million at an interest rate of 3.75% due January 15, 2026.
Dividends paid in the fourth quarter were $113.8 million bringing total 2015 full-year cash
dividends to $454.5 million. Today
the company is announcing a fourth-quarter cash dividend of
27.0 cents per share to holders of
common shares. The dividend is payable on March 4, 2016, to
shareholders of record at the close of business on
February 18, 2016, with an ex-dividend date of
February 16, 2016.
During the fourth quarter the company repurchased $214.8 million of its common shares, representing
6.5 million shares at a weighted average share price of
$33.11. This brings year-to-date
repurchases to $548.8 million
representing 15.5 million shares.
Headcount
As of December 31, 2015, the company had 6,490 employees,
compared to 6,430 employees as of September 30, 2015, and
6,264 at December 31, 2014. The
majority of the headcount increase is attributable to growth in our
global shared service centers.
Business Acquisitions
During the fourth quarter of 2015 the company announced that it
is increasing its ownership of Religare Invesco Asset Management
Company, our joint venture in India, from 49% to 100%. The acquisition
of this controlling interest is expected to close in early 2016
pending regulatory approvals.
On January 12, 2016 the company
announced it had acquired Jemstep, a market-leading provider of
advisor-focused digital solutions.
Invesco Ltd. is a leading independent global investment
management firm, dedicated to helping investors worldwide achieve
their financial objectives. By delivering the combined power of our
distinctive investment management capabilities, Invesco provides a
wide range of investment strategies and vehicles to our clients
around the world. Operating in more than 20 countries, the firm is
listed on the New York Stock Exchange under the symbol IVZ.
Additional information is available at www.invesco.com.
Members of the investment community and general public are
invited to listen to the conference call today, January 28,
2016, at 9:00 a.m. ET by dialing one
of the following numbers: 1-866-617-1526 for U.S. and Canadian
callers or 1-210-795-0624 for international callers. An audio
replay of the conference call will be available until February 11, 2016 at 5:00
p.m. ET by calling 1-866-423-4776 for U.S. and Canadian
callers or 1-203-369-0842 for international callers. A presentation
highlighting the company's performance will be available during a
live Webcast and on Invesco's Website at www.invesco.com.
This release, and comments made in the associated conference
call today, may include "forward-looking statements."
Forward-looking statements include information concerning future
results of our operations, expenses, earnings, liquidity, cash flow
and capital expenditures, industry or market conditions, assets
under management, acquisitions and divestitures, 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. Although we make such
statements based on assumptions that we believe to be reasonable,
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 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.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/invesco-reports-results-for-the-year-and-three-months-ended-december-31-2015-300211343.html
SOURCE Invesco Ltd.