Invesco Ltd · NYSE:IVZ
Invesco — Q1 2018 Earnings Presentation
55 slides from Invesco's earnings presentation, Apr 26, 2018
Slide 1: Invesco first quarter 2018 results
Invesco first quarter 2018 results Martin L. Flanagan President and Chief Executive Officer Loren M. Starr Chief Financial Officer April 26, 2018
Slide 2: Forward-looking statements
Forward-looking statements This presentation, 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 expendit
Slide 3: Presentation of first quarter 2018 results
Presentation of first quarter 2018 results This presentation includes the following non-GAAP performance measures: net revenue (and by calculation, net revenue yield on AUM), adjusted operating income, adjusted operating margin, adjusted net income attributable to Invesco Ltd., and adjusted diluted
Slide 4: Discussion topics
Discussion topics First quarter overview Financial results Strengthening competitive advantage for growth Appendix 3
Slide 5: First quarter overview – highlights
First quarter overview – highlights Maintained strong investment performance and achieved solid operating results during the quarter Investment 68% and 70% of actively managed assets in top half of peer Performance group on a 3- and 5-year basis Assets under March 31, 2018 AUM of $934.2 billion,
Slide 6: Investment performance – overview
Investment performance – overview Aggregate performance analysis – asset weighted Percent of actively managed assets in top half of peer group* 1-Year 3-Year 5-Year 58% 68% 70% 32% 30% 42% Assets top half of peer group Assets bottom half of peer group * Excludes passive products, closed-end funds, p
Slide 7: Quarterly long-term flows
Quarterly long-term flows Strong demand for institutional and passive capabilities Quarterly long-term flows ($ billions) Total(a) Active(a) Passive 39.9 40.1 16.5 16.5 33.5 35.6 37.3 33.7 35.1 34.3 9.3 9.2 9.5 9.1 9.9 7.4 56.6 8.3 50.8 3.8 3.8 49.1 2.8 2.0 2.1 1.8 42.8 45.1 46.4 45.0 0.0 0.5 1.3 0.
Slide 8: Discussion topics
Discussion topics First quarter overview Financial results Strengthening competitive advantage for growth Appendix 7
Slide 9: Total assets under management – 1Q18 vs. 4Q17
Total assets under management – 1Q18 vs. 4Q17 ($ billions) 1Q-18 4Q-17 % Change Beginning Assets $937.6 $917.5 2.2% Long-Term Inflows* 56.6 50.8 11.4% Long-Term Outflows (56.3) (52.3) 7.6% Long-Term Net Flows 0.3 (1.5) N/A Net flows in non-management fee earning AUM** (0.4) 1.6 N/A Net flows in Inst
Slide 10: US GAAP operating results – 1Q18 vs. 4Q17
US GAAP operating results – 1Q18 vs. 4Q17 ($ millions) 1Q-18 4Q-17 % Change Operating Revenues Investment Management Fees 1,043.7 1,098.7 (5.0)% Service and Distribution Fees 246.1 217.5 13.1% Performance Fees 9.1 43.0 (78.8)% Other 56.9 16.4 247.0% Total Operating Revenues 1,355.8 1,375.6 (1.4)% Op
Slide 11: Non-GAAP operating results – 1Q18 vs. 4Q17
Non-GAAP operating results – 1Q18 vs. 4Q17 ($ millions) 1Q-18 4Q-17 % Change Adjusted Revenues Investment Management Fees 1,066.8 1,119.2 (4.7)% Service and Distribution Fees 246.1 217.5 13.1% Performance Fees 9.1 43.3 (79.0)% Other 58.1 18.4 215.8% Third-Party Distribution, Service and Advisory Exp
Slide 12: The advantages of diversification
The advantages of diversification Invesco’s global diversification has helped us achieve nine years of consistent growth across regions $30 4.4% 4.5% $25 3.8% $20 3.2% 3.5% 2.6% 2.6% $15 2.5% Organic growth $10 Flows ($bn) 1.0% 1.5% $5 0.7% 1.2% 1.0% $0 0.5% -$5 -0.5% -$10 -1.5% -$15 -$20 -2.5% Regi
Slide 13: The advantages of diversification
The advantages of diversification Invesco’s global diversification has led to consistent growth and lower volatility compared to industry average Organic Average Standard Growth Deviation = 2.2% 8.0% A 6.0% D 4.0% K L IVZ 2.0% C E Average Organic B Growth = 1.3% I G H 0.0% Standard 0.0% 1.0% 2.0% 3.
Slide 14: Discussion topics
Discussion topics First quarter overview Financial results Strengthening competitive advantage for growth Appendix 13
Slide 15: Building on nine years of positive net long-term flows, we are focused on key growth drivers
Building on nine years of positive net long-term flows, we are focused on key growth drivers to meet client needs and strengthen our business Foundational elements Key Invesco strengths Growth driver Global centers of Long-established local presence investment excellence and deep client connecti
Slide 16: Invesco is one of the world’s leading ETF providers
ETFs Invesco is one of the world’s leading ETF providers, with a track record of innovation and growth With $211 billion in global assets, Invesco ranks as the fourth-largest ETF provider* $2.6 AUM based on fund domicile $36.9 US Invesco’s ETF leadership profile Smart beta pioneer since 2003, now
Slide 17: Invesco’s smart beta market share ranks #2
ETFs Invesco’s smart beta market share ranks #2 Less than 3 percentage points behind the market leader* $90 21.1% market share Top 5 Providers Smart Beta AUM ($B) $80 18.6% market share $70 $60 $50 $85 $40 $76 $30 $49 $44 $41 $20 $10 $- iShares Invesco ETFs Vanguard State Street WisdomTree *All data
Slide 18: Factor investing requires unique skills and expertise to deliver results
Factors Factor investing requires unique skills and expertise to deliver results Risk Research Customization management Ongoing research Implementation of Integrated risk is essential to gain factors into management new insights to portfolios can be aligns factor evolving markets customized to expos
Slide 19: Invesco is an innovative leader in factor investing
Invesco is an innovative leader in factor investing 40 years’ experience across multiple investment teams Factor-based investment strategies Active fixed Active Factor-based Custom factor Active equity income/FX commodity ETFs indices factors factors factors Invesco ETFs Invesco Indexing Invesco Inv
Slide 20: Our solutions capability is both a growth driver and enabler for the firm
Solutions Our solutions capability is both a growth driver and enabler for the firm Growth driver Growth enabler ▪ Design, implement and manage ▪ Support distribution teams with customized investment solutions investment and analytics expertise for clients as needed – Target Date/Target Risk ▪ Partn
Slide 21: We’ve built one of the strongest, most experienced solutions teams in the industry
Solutions We’ve built one of the strongest, most experienced solutions teams in the industry Dedicated to understanding and meeting retail/institutional client needs Portfolio Management Client Solutions Research and Analytics Multi-asset portfolio Lead advisory Multi-dimensional management team rel
Slide 22: We are in the process of developing the full potential of Jemstep
Digital advice/Jemstep We are in the process of developing the full potential of Jemstep, our digital advice platform Differentiating attributes Current One of the first digital solutions on Live with one major US bank and the market designed for advisors testing with two other banks for Q2 roll
Slide 23: Integrated model allows Invesco to provide holistic solutions for advisors and investors
Digital advice/Jemstep Integrated model allows Invesco to provide holistic solutions for advisors and investors Our ability to bring our capabilities ETFs Digital Advice together to meet client needs in key markets/channels is a US Wealth powerful differentiator that will Solutions Management Interm
Slide 24: Bringing our capabilities together to meet client needs is a key differentiator
Bringing our capabilities together to meet client needs is a key differentiator and source of potential growth Increasing penetration in global markets Competitive advantage Americas EMEA Institutional Provides greater access to the Institutional $30+ trillion of institutional assets globally on a t
Slide 25: Building on nine years of positive net long-term flows, we are focused on key growth drivers
Building on nine years of positive net long-term flows, we are focused on key growth drivers to meet client needs and strengthen our business Foundational elements Key Invesco strengths Growth driver Global centers of Long-established local presence investment excellence and deep client connecti
Slide 26: Discussion topics
Discussion topics First quarter overview Financial results Strengthening competitive advantage for growth Appendix 25
Slide 27: We are diversified as a firm
We are diversified as a firm Delivering a diverse set of solutions to meet client needs By client domicile By channel By asset class 3% 16% 12% 64% 45% 62% 36% 14% 24% 9% 9% 6% 1-Yr 1-Yr 1-Yr ($ billions) Change ($ billions) Change ($ billions) Change U.S. $580.7 5.6% Retail $599.4 8.6% Equity $420.
Slide 28: Investment performance by investment objective (actively managed assets)
Investment performance By investment objective (actively managed assets)* Equities AUM above benchmark 1st quartile 2nd quartile U.S. Core U.S. Growth U.S. Value Sector 100% 100% 100% 100% 83% 27% 57% 4% 52% 47% 17% 45% 40% 56% 7% 38% 47% 3% 29% 36% 27% 36% 19% 20% 18% 30% 22% 13% 7% 19% 19% 10% 6%
Slide 29: Investment performance by investment objective (continued)
Investment performance By investment objective (actively managed assets)* (CONTINUED) Equities Other AUM above benchmark 1st quartile 2nd quartile Global Global ex-U.S. and Em. Mkts. Alternatives Balanced 100% 100% 100% 100% 5% 83% 86% 34% 37% 77% 74% 23% 63% 65% 63% 65% 20% 9% 5% 81% 51% 48% 48% 58
Slide 30: Investment performance (5-year) by investment objective
Investment performance (5-year) By investment objective (actively managed assets)* Percentages in parentheses represent % AUM of each investment objective as a ratio of all objectives (Total ranked AUM of $483.7 billion) % of assets top % of assets bottom Equities half of peer group half of peer gro
Slide 31: Investment performance (5-year) by investment objective (continued)
Investment performance (5-year) By investment objective (actively managed assets)* (CONTINUED) Percentages in parentheses represent % AUM of each investment objective as a ratio of all objectives (Total ranked AUM of $483.7 billion) % of assets top % of assets bottom Equities Other half of peer grou
Slide 32: US GAAP operating results – quarterly
US GAAP operating results – quarterly ($ millions) 1Q-18 4Q-17 % Change* 3Q-17 2Q-17 1Q-17 4Q-16 3Q-16 2Q-16 Investment Management Fees 1,044 1,099 (5.0)% 1,062 1,010 955 947 966 947 Service and Distribution Fees 246 218 13.1% 218 211 206 209 213 203 Performance Fees 9 43 (78.8)% 42 17 11 18 3 9 Oth
Slide 33: Non-GAAP operating results – quarterly
Non-GAAP operating results– quarterly ($ millions) 1Q-18 4Q-17 % Change* 3Q-17 2Q-17 1Q-17 4Q-16 3Q-16 2Q-16 Investment Management Fees 1,067 1,119 (4.7)% 1,082 1,028 974 965 983 963 Service and Distribution Fees 246 218 13.1% 218 211 206 209 213 203 Performance Fees 9 43 (79.0)% 43 18 18 18 4 9 Oth
Slide 34: Impact of revenue recognition changes on 1Q18 results
Impact of revenue recognition changes on 1Q18 results US GAAP operating results ($ millions) Three months ended March 31, 2018 Three months ended December 31, 2017 Variance Increase/(decrease) related to Revenue Variance (excluding impact of revenue Recognition Changes recognition changes) Operating
Slide 35: Total assets under management – quarterly
Total assets under management – quarterly ($ billions) 1Q-18 4Q-17 % Change 3Q-17 2Q-17 1Q-17 4Q-16 3Q-16 2Q-16 Beginning Assets $937.6 $917.5 2.2% $858.3 $834.8 $812.9 $820.2 $779.6 $771.5 Long-Term Inflows* 56.6 50.8 11.4% 45.0 41.1 46.4 45.1 49.1 42.8 Long-Term Outflows (56.3) (52.3) 7.6% (40.9)
Slide 36: Total assets under management – by asset class
Total assets under management – by asset class Fixed Money ($ billions) Total Equity Balanced Alternatives Income Market September 30, 2017 $917.5 $416.2 $224.5 $54.2 $81.9 $140.7 Long-Term Inflows* 50.8 24.4 12.8 3.6 1.0 9.0 Long-Term Outflows (52.3) (29.2) (12.4) (2.5) (1.0) (7.2) Long-Term Net fl
Slide 37: Total assets under management – by asset class
Total assets under management – by asset class Fixed Money ($ billions) Total Equity Balanced Alternatives Income Market March 31, 2017 $834.8 $381.8 $203.8 $48.9 $73.1 $127.2 Long-Term Inflows 41.1 18.0 10.7 3.6 1.0 7.8 Long-Term Outflows (40.8) (22.9) (8.4) (2.1) (0.9) (6.5) Long-Term Net flows 0.
Slide 38: Total assets under management – by channel
Total assets under management – by channel ($ billions) Total Retail Institutional September 30, 2017 $917.5 $621.5 $296.0 Long-Term Inflows* 50.8 42.4 8.4 Long-Term Outflows (52.3) (44.7) (7.6) Long-Term Net flows (1.5) (2.3) 0.8 Net flows in non-management fee earning AUM** 1.6 1.6 - Net flows in
Slide 39: Total assets under management – by channel
Total assets under management – by channel ($ billions) Total Retail Institutional March 31, 2017 $834.8 $552.1 $282.7 Long-Term Inflows 41.1 33.3 7.8 Long-Term Outflows (40.8) (31.0) (9.8) Long-Term Net flows 0.3 2.3 (2.0) Net flows in non-management fee earning AUM** (0.7) (0.7) - Net flows in Ins
Slide 40: Total assets under management – by client domicile
Total assets under management – by client domicile Continental ($ billions) Total U.S. Canada U.K. Asia Europe September 30, 2017 $917.5 $578.0 $25.8 $108.0 $120.7 $85.0 Long-Term Inflows* 50.8 21.4 1.1 3.9 19.2 5.2 Long-Term Outflows (52.3) (27.9) (1.2) (3.4) (15.4) (4.4) Long-Term Net flows (1.5)
Slide 41: Total assets under management – by client domicile
Total assets under management – by client domicile Continental ($ billions) Total U.S. Canada U.K. Asia Europe March 31, 2017 $834.8 $550.0 $23.9 $101.0 $77.6 $82.3 Long-Term Inflows 41.1 21.3 1.1 4.0 9.8 4.9 Long-Term Outflows (40.8) (23.2) (1.0) (5.1) (5.8) (5.7) Long-Term Net flows 0.3 (1.9) 0.1
Slide 42: Passive assets under management – by asset class
Passive assets under management – by asset class Fixed Money ($ billions) Total Equity Balanced Alternative Income Market September 30, 2017 $190.5 $119.8 $57.4 - - $13.3 Long-Term Inflows 16.5 10.1 4.7 - - 1.7 Long-Term Outflows (15.7) (9.5) (4.3) - - (1.9) Long-Term Net flows 0.8 0.6 0.4 - - (0.2)
Slide 43: Passive assets under management – by asset class
Passive assets under management – by asset class Fixed Money ($ billions) Total Equity Balanced Income Market Alternative March 31, 2017 $154.3 $101.2 $45.1 - - $8.0 Long-Term Inflows 7.4 4.7 2.3 - - 0.4 Long-Term Outflows (6.9) (4.7) (0.7) - - (1.5) Long-Term Net flows 0.5 - 1.6 - - (1.1) Net flows
Slide 44: Passive assets under management – by channel
Passive assets under management – by channel ($ billions) Total Retail Institutional September 30, 2017 $190.5 $173.4 $17.1 Long-Term Inflows 16.5 16.5 - Long-Term Outflows (15.7) (15.7) - Long-Term Net flows 0.8 0.8 - Net flows in non-management fee earning AUM* 1.6 1.6 - Net flows in Inst. Money M
Slide 45: Passive assets under management – by channel
Passive assets under management – by channel ($ billions) Total Retail Institutional March 31, 2017 $154.3 $138.5 $15.8 Long-Term Inflows 7.4 7.4 - Long-Term Outflows (6.9) (6.4) (0.5) Long-Term Net flows 0.5 1.0 (0.5) Net flows in non-management fee earning AUM (0.7) (0.7) - Net flows in Inst. Mone
Slide 46: Passive assets under management – by client domicile
Passive assets under management – by client domicile Continental ($ billions) Total U.S. Canada U.K. Asia Europe September 30, 2017 $190.5 $159.8 $0.6 - $29.0 $1.1 Long-Term Inflows 16.5 8.1 0.1 - 8.3 - Long-Term Outflows (15.7) (7.6) - - (8.1) - Long-Term Net flows 0.8 0.5 0.1 - 0.2 - Net flows in
Slide 47: Passive assets under management – by client domicile
Passive assets under management – by client domicile Continental ($ billions) Total U.S. Canada U.K. Asia Europe March 31, 2017 $154.3 $150.2 $0.5 - $2.0 $1.6 Long-Term Inflows 7.4 7.0 0.1 - 0.3 - Long-Term Outflows (6.9) (6.1) - - (0.3) (0.5) Long-Term Net flows 0.5 0.9 0.1 - - (0.5) Net flows in n
Slide 48: Reconciliation of US GAAP results to non-GAAP results – three months ended March 31, 2018
Reconciliation of US GAAP results to non-GAAP results – three months ended March 31, 2018 Please refer to pages 8-10 in the 1Q 2018 earnings press release for a description of the adjustments ($ millions) US GAAP Proportional 3rd party Business Market appreciation / Consolidated Other Non-GAAP Conso
Slide 49: Reconciliation of US GAAP results to non-GAAP results – three months ended December 31, 2017
Reconciliation of US GAAP results to non-GAAP results – three months ended December 31, 2017 Please refer to pages 9-12 in the 4Q 2017 earnings press release for a description of the adjustments ($ millions) US GAAP Proportional 3rd party Business Market appreciation / Consolidated Other Non-GAAP Co
Slide 50: Reconciliation of US GAAP results to non-GAAP results – three months ended September 30, 2017
Reconciliation of US GAAP results to non-GAAP results – three months ended September 30, 2017 Please refer to pages 8-10 in the 3Q 2017 earnings press release for a description of the adjustments ($ millions) US GAAP Proportional 3rd party Business Market appreciation / Consolidated Other Non-GAAP C
Slide 51: Reconciliation of US GAAP results to non-GAAP results – three months ended June 30, 2017
Reconciliation of US GAAP results to non-GAAP results – three months ended June 30, 2017 Please refer to pages 8-10 in the 2Q 2017 earnings press release for a description of the adjustments ($ millions) US GAAP Proportional 3rd party Business Market appreciation / Consolidated Other Non-GAAP Consol
Slide 52: Reconciliation of US GAAP results to non-GAAP results – three months ended March 31, 2017
Reconciliation of US GAAP results to non-GAAP results – three months ended March 31, 2017 Please refer to pages 7-9 in the 1Q 2017 earnings press release for a description of the adjustments ($ millions) US GAAP Proportional 3rd party Business Market appreciation / Consolidated Other Non-GAAP Consol
Slide 53: Reconciliation of US GAAP results to non-GAAP results – three months ended December 31, 2016
Reconciliation of US GAAP results to non-GAAP results – three months ended December 31, 2016 Please refer to pages 9-11 in the 4Q 2016 earnings press release for a description of the adjustments ($ millions) US GAAP Proportional 3rd party Business Market appreciation / Consolidated Other Non-GAAP Co
Slide 54: Reconciliation of US GAAP results to non-GAAP results – three months ended September 30, 2016
Reconciliation of US GAAP results to non-GAAP results – three months ended September 30, 2016 Please refer to pages 8-10 in the 3Q 2016 earnings press release for a description of the adjustments ($ millions) US GAAP Proportional 3rd party Business Market appreciation / Consolidated Other Non-GAAP C
Slide 55: Reconciliation of US GAAP results to non-GAAP results – three months ended June 30, 2016
Reconciliation of US GAAP results to non-GAAP results – three months ended June 30, 2016 Please refer to pages 8-10 in the 2Q 2016 earnings press release for a description of the adjustments ($ millions) US GAAP Proportional 3rd party Business Market appreciation / Consolidated Other Non-GAAP Consol