Janus Capital Group, Inc. (JNS) reported third-quarter 2009 revenues of $227.6 million, up 13.7% sequentially but down 17.3% year over year.
The sequential improvement in revenues was driven by higher average assets under management, primarily due to improving global markets.
Operating margin declined significantly to 13.0% in the quarter from 23.5% in the previous quarter and 33.9% in the year-ago quarter. The decline in operating margin was primarily due to a 29% sequential increase in operating expenses as a result of severance charges and higher revenue-based expenses. The company paid $20.5 million of legal settlement charges in the third quarter, mainly related to compensation matters with former employees.
Earnings per share of 5 cents were significantly short of the Zacks Consensus Estimate at 14 cents.
As of Sep 30, 2009, the company’s total assets under management were $151.8 billion, compared with $132.6 billion on Jun 30, 2009 and $160.5 billion on Sep 30, 2008. The increase in firmwide assets during the third quarter primarily reflects $20.0 billion of market appreciation, partially offset by long-term net outflows of $0.6 billion.
During the reported quarter, the company raised approximately $382 million of capital through a public offering of 20.9 million shares and $170 million of convertible senior notes due 2014. The combined proceeds of the offerings were used to repurchase approximately $443 million of senior notes of different maturity. As a result, total long-term debt was reduced by approximately $316 million. At the end of the quarter, the company had cash and equivalents of $337 million and debt of $790 million.
Based in Denver, Colorado, Janus Capital Group, Inc. is a publicly-owned asset management holding company that provides retirement planning, investment planning, tax planning, investment for college, and tax planning services to its clients.
Global markets declined significantly during 2008, causing a significant decline in the company’s total assets under management, revenues, operating margin and net income. In response, management reduced its workforce by approximately 9% during the fourth quarter 2008 and reduced other discretionary administrative, marketing and advertising costs.
All these actions have helped the company retain profitability, but top-line expansion is the key to growth in the long-run. Significant expansion in assets is not expected before mid 2010. Nevertheless, with the improvement of market scenario, we expect the company to post solid performance with an increase in revenues and efficient cost management.
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