Janus Capital Group Inc (JNS)’s Fourth Quarter And Full Year 2014 Earnings Conference Call Transcript

Turning to slide 10, which is our operating expense break down. Operating expenses increased 9 million so we are roughly 5 percent compared to last quarter and the primary drivers there were long term incentive compensation and discretionary expensed, which are the marketing and G&A lines. The increase in LTI was a result of a lower credit for the Perkins SPI in the fourth quarter and an increase in LTI relating to INTECH. And looking to our LTI expense for 2015, we currently estimate the amount to be about 70 to 75 million for the year. This assumes the flat market in 2015 and also an assumption on our February 2015 grants of new LTI which is yet to happen. We will provide updates on our expected expense on future quarterly earning calls as we started doing it last year. As I mentioned the discretion spending was up by 17% this quarter compared to the third quarter. This expectation is consistent with what we talked about in the third quarter call and the guidance we gave you.

You will see an increase in marketing and advertising as well as the portion of G&A and that was partially due to some investments we made around the hiring bill gross and the building out of that global macro franchise. Additionally, in the fourth quarter we also had about a million and half dollars of deal related expenses with Velocity Shares. Normally, this is where I would discuss our quarterly total compensation to revenue ratio. However, we have received many calls and questions this quarter regarding the ratio, because I gave some guidance on its last call. So, we have decided to include it in the special topics of interest section.

Now, let’s look at slide 11, a year over year review of our balance sheet and capital management activities. Just walking through the bullet points, our net debt position is improved by approximately 60 million dollars over the course of 2014, as strong cash flow generation more than offset for our repayment of debt and acquisitions and return of capital to shareholders. Cash and cash equivalents increased 108 million dollars, driven by strong cash flows and investment security redemptions. The total debt decline is 94 million dollars as our 2014 senior and convertible senior notes matured and we retired those with cash on hand. Also in the fourth quarter we closed on our acquisition of Velocity Shares, and we paid an upfront cash consideration of approximately 28 million dollars. In addition, we return 55% of our 2014 cash flow from operations to shareholders through 84 million dollars throughout the year in share repurchase and 58 million dollars in dividends. So, now let’s turn to some of these special topics.