I nvesco third quarter 2016 results Martin L. Flanagan President and Chief Executive Officer Loren M. Starr Chief Financial Officer October 27, 2016
Forw ard-looking statem ents 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 expenditures, industry or market conditions, AUM, geopolitical events and their potential impact on the company, 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. 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. 1
Presentation of Q3 2016 results This presentation includes the following non-GAAP financial 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 earnings per share (EPS). We believe these non-GAAP measures provide greater transparency into our business on an ongoing operations basis and allow more appropriate comparisons with industry peers. Management uses these performance measures to evaluate the business and for internal management reporting. The most directly comparable U.S. GAAP measures are operating revenues (and by calculation, gross revenue yield on AUM), operating income, operating margin, net income attributable to Invesco Ltd., and diluted EPS. The information in this presentation is meant to supplement the information contained in the earnings release and includes a more detailed reconciliation format of the income statement from U.S. GAAP to a non-GAAP presentation. We believe that this presentation is useful, as it aggregates the various non-GAAP adjustments to illustrate adjusted revenue and expense categories and allows more transparency into the calculation of the non-GAAP financial measures. 2
Discussion topics Third quarter overview Investment performance and flows Financial results Questions Appendix 3
Third quarter overview Continued strong investm ent perform ance and our focus on providing m eaningful solutions to clients contributed to robust long-term net inflow s and solid operating results Maintained strong, long-term investment performance – 68% and 79% of actively managed assets in top half of peer group on a 3- and 5-year basis Achieved robust long-term net inflows of $12.2 billion, reflecting solid retail and institutional demand across active and passive capabilities Adjusted operating margin* of 39.7% (up from 38.6% in second quarter) Quarterly dividend of $0.28 per share, up 3.7% over the prior year. Returned $176 million to shareholders during the third quarter through dividends and buybacks Past performance is not a guarantee of future results. Please see page 7 of this presentation for more information on investment performance. * Non-GAAP financial measures - See Appendix to this presentation for a reconciliation to the most directly comparable U.S. GAAP financial measure. 4
Sum m ary of Third quarter 2016 results Assets under September 30, 2016, AUM of $820.2 billion, versus $779.6 billion at June 30, 2016 m anagem ent Average AUM was $814.1 billion, versus $784.5 billion for the second quarter of 2016 Flow s Long-term net inflows of $12.2 billion Total net inflows of $19.2 billion Overall adjusted Adjusted operating income was $339 million versus $330 million in the prior quarter operating Adjusted operating margin was 39.7% in the quarter versus 38.6% in results* the prior quarter Adjusted diluted EPS for the quarter was $0.60 versus $0.56 in the prior quarter Capital Quarterly dividend of $0.28 per share, an increase of 3.7% versus the m anagem ent prior year Repurchased $60 million of shares including $30 million for completion of $150 million ASR * Non-GAAP financial measures - See Appendix to this presentation for a reconciliation to the most directly comparable U.S. GAAP financial measure. 5
Discussion topics Third quarter overview I nvestm ent perform ance and flow s Financial results Questions Appendix 6
I nvestm ent perform ance – overview Aggregate performance analysis – asset weighted Percent of actively m anaged assets in top half of peer group* 1-Year 3-Year 5-Year 6 2 % 6 8 % 7 9 % 2 1 % 3 2 % 3 8 % Assets top half of peer group Assets bottom half of peer group * Excludes passive products, closed-end funds, private equity limited partnerships, non-discretionary funds, unit investment trusts, fund of funds with component funds managed by Invesco, stable value building block funds and CDOs. Certain funds and products were excluded from the analysis because of limited benchmark or peer group data. Had these been available, results may have been different. These results are preliminary and subject to revision. Data as of 9/ 30/ 2016. Includes AUM of $468.5 billion (57% of total IVZ) for 1 year, $451.8 billion (55% of total IVZ) for three year, and $449.6 billion (55% of total IVZ) for 5 year. Peer group rankings are sourced from a widely-used third party ranking agency in each fund’s market (Lipper, Morningstar, IA, Russell, Mercer, eVestment Alliance, SITCA, Value Research) and asset-weighted in USD. Rankings are as of prior quarter-end for most institutional products and prior month-end for Australian retail funds due to their late release by third parties. Rankings for the most representative fund in each GIPS composite are applied to all products within each GIPS composite. Performance assumes the reinvestment of dividends. Past performance is not indicative of future results and may not reflect an investor’s experience. 7
Quarterly long-term flow s Strong active and passive flows during the quarter Quarterly long-term flow s ($ billions) Total Active Passive 5 0 .5 5 2 .1 4 0 .6 4 3 .1 5 1 .7 3 9 .9 3 6 .7 4 3 .5 4 3 .0 4 2 .8 4 5 .8 1 2 .3 1 1 .8 4 6 .0 3 6 .4 3 3 .2 3 2 .9 3 3 .5 9 .8 9 .9 9 .6 9 .9 9 .0 6 .8 4 .5 3 .5 3 .9 1 2 .2 8 .3 1 0 .3 5 .4 6 .8 5 .9 4 .5 1 .6 2 .5 3 .9 0 .5 0 .9 3 .5 0 .5 0 .4 0 .0 -1 .3 -1 .6 -3 .9 -1 .8 -2 .3 -6 .4 -8 .0 -7 .8 -8 .5 -9 .1 -9 .4 -2 9 .7 -7 .9 -3 2 .4 -3 3 .5 -3 1 .6 -3 9 .1 -4 4 .1 -3 5 .5 -3 3 .8 -4 0 .2 -4 1 .3 -3 9 .5 -4 3 .5 -3 7 .7 -3 8 .3 -1 1 .7 -4 6 .2 -4 7 .4 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Gross sales Gross redemptions Net long-term flows 8
Quarterly long-term flow s Strong institutional and retail demand during the quarter Quarterly long-term flow s ($ billions) Retail ( a) I nstitutional ( b) 1 7 .9 4 0 .3 4 0 .3 3 4 .2 3 5 .7 3 2 .0 3 3 .1 3 2 .6 3 4 .8 1 1 .5 1 1 .4 1 0 .4 1 1 .0 1 0 .2 9 .7 1 0 .3 6 .4 5 .0 8 .8 7 .5 3 .9 2 .8 3 .4 0 .8 1 .7 1 .4 0 .3 -0 .5 0 .0 -0 .5 -2 .7 -4 .2 -6 .0 -6 .5 -8 .0 -7 .4 -8 .3 -8 .6 -3 2 .8 -3 4 .7 -3 1 .5 -3 4 .9 -3 5 .8 -3 2 .6 -3 6 .2 -3 5 .3 -1 1 .5 -1 1 .2 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Gross sales Gross redemptions Net long-term flows (a) Retail AUM and flows are distributed by the company’s retail sales team and generally includes retail products in the U.S., Canada, U.K., Continental Europe, Asia and our offshore product line. Retail AUM and flows excludes the PowerShares QQQ product (b) Institutional AUM and flows are distributed by the company’s institutional sales team and generally includes our institutional investment capabilities in the U.S., Canada, U.K., Continental Europe and Asia. Institutional excludes money market 9
Discussion topics Third quarter overview Investment performance and flows Financial results Questions Appendix 10
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