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Executives

Gregory Frost - Chief Financial Officer, Executive Vice President, Treasurer, Vice President of Janus Capital Management LLC(JCM) and Controller of Janus Capital Management LLC(JCM)

Richard Weil - Chief Executive Officer, Director and Chairman of the Executive Committee

Analysts

William Katz - Citigroup Inc

J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc.

Michael Kim - Sandler O'Neill + Partners, L.P.

Robert Lee - Keefe, Bruyette, & Woods, Inc.

Kenneth Worthington - JP Morgan Chase & Co

Marc Irizarry - Goldman Sachs Group Inc.

Steven Truong - Barclays Capital

Jonathan Casteleyn - Susquehanna Financial Group, LLLP

Cynthia Mayer - BofA Merrill Lynch

Janus Capital Group (JNS) Q1 2011 Earnings Call April 21, 2011 10:00 AM ET

Operator

Good morning, my name is James, and I will be your conference facilitator today. I would like to welcome everyone to the Janus Capital Group First Quarter 2011 Earnings Conference Call. [Operator Instructions]

Before the company begins, I would like to reference their standard legal disclaimer, which also accompanies the full slide presentation located in the Investors Relations area of janus.com. Statements made in the presentation today may contain forward-looking information about management's plans, projections, expectations, strategic objectives, business prospects, anticipated financial results, anticipated results of litigation and regulatory proceedings, and other similar matters. A variety of factors, many of which are beyond the company's control, affect the operations, performance, business strategy and the results of Janus, and could cause actual results and experiences to differ materially from the expectations and objectives expressed in their statements. These factors include, but are not limited to, the factors described in Janus' reports filed with the SEC, which are available on their website, www.janus.com, and on the SEC's website, www.sec.gov.

Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Janus does not undertake to update such statements to reflect the impact of circumstances or events that arise after the date these statements were made. Investors should, however, consult any further disclosures Janus may make in its reports filed with the SEC.

Thank you. Now it is my pleasure to introduce Dick Weil, Chief Executive Officer of Janus Capital Group. Mr. Weil, you may begin your conference.

Richard Weil

Thank you, operator. Hello, everyone, and welcome to our first quarter 2011 earnings presentation. Thanks very much for joining us. You have me, Dick Weil, here with you; and also Greg Frost, our CFO.

In the first quarter of 2011, Janus Capital Group generated an earnings per share of $0.21 compared with $0.17 in the first quarter of last year and $0.36 in the fourth quarter of 2010. We achieved an operating margin above our 30% target at 32.1% compared to a 34.7% operating margin in the fourth quarter of 2010 and 27.3% in the first quarter of 2010. AUM increased a little bit, up 2.4% versus December 31. Long-term flows were negative at $2.7 billion in the first quarter compared to negative $4.7 billion in the prior quarter, that's fourth quarter of 2010.

Importantly, we announced that as a result of the strengthening that we've been able to achieve to our balance sheet, the board of directors declared a regularly -- a regular quarterly cash dividend of $0.05 a share at a $0.20 per annum rate. That's obviously a very significant increase from the prior $0.04 per annum rate. We're pleased to be able to do that after having paid down the debt and strengthened our balance sheet. We took a look at what we needed for safe business operation, what we needed for our investments and for seed capital. And then we focused on the need to return capital to our investors, as we've talked about on prior calls.

In that effort, we take a look at paying down debt. We look at dividends and we look at share repurchase as opportunities to effectively return value to our shareholders. In this case, after looking at the opportunities, the board of directors elected to create the dividend that I discussed.

Turning the page in our presentation and to give you a sense of where I see our business now. I think we continue to develop along the lines of the strategy I've outlined before for our non-U.S. business. Augie Cheh [Augustus Cheh] has been a terrific addition as a new leader. And I think we continue to strengthen our business outside the United States. We continue to strengthen our fixed income. We're focused on supporting our U.S. distribution and relationships inside the U.S.

We have some areas of significant strength that we're building. Our gross equity sales increased 8% quarter-over-quarter. Fixed income flows were positive for the ninth consecutive quarter. INTECH continues to show, in our mathematical strategies, 1-year relative performance that continues to be good and that's very important to us. And we've launched -- or we are in the process of launching right now, as we speak, some significant new products in the U.S. And as you know, we've launched global products last year and we have new Asian products coming on line with our new portfolio manager, Hiroshi Yoh. Those are all exciting new developments for us.

On the challenges side, performance in several of our largest fundamental equity funds continues to be challenged. That's led to an acceleration in net outflows. And if it does not improve, it will increase outflows and it will also affect us through lower performance fees in 2012, and Greg will mention that.

Also a second challenge I'll highlight is, despite the stronger performance in mathematical equities, it hasn't yet translated into significantly better inflows. And the net flow number in our mathematical strategies really reflects a leveling of the outflows but not a dramatic increase in inflows yet. And that's an important challenge for us to resolve going forward. With that, I'll turn it over to Greg to give you some more detail on the results.

Gregory Frost

Thank you, Dick. Good morning, everybody.

Turning to Page 5. Total company outflows, as Dick mentioned, totaled $2.7 billion out. And if you factor out the large mandate loss that we talked about last quarter, the $2.6 billion loss, sales and redemptions in the quarter were effectively flat with the fourth quarter.

On the fundamental equity side, net outflows totaled $0.5 billion. Perkins, in here the Perkins value strategies continued to post positive flows of $0.3 billion. This is a lower number than previous quarter, certainly, but still an annualized organic growth rate ahead of the industry for value strategies.

On the Janus managed side, they had roughly $0.8 billion of outflows. And that story is split, really, between those funds that we see with strong returns which are showing solidly positive flows, more than offset by some of the underperforming larger funds that Dick mentioned, for which we are starting to see an increase in net outflows.

At INTECH, the story continues to be the lack of meaningful activity on the sales side, which unfortunately is very much in line with what the quant [quantitative] industry is experiencing. It is clear to us that investors haven't yet started thinking hard about quantitative managers in their portfolios, even those with good performance like INTECH.

And on the fixed income side, we continue to post positive flows, a little slower than previous quarters as the graph on the lower right shows, but certainly in line, again, with what the industry saw during the same time frame.

On the performance side, although our longer-term performance remains strong and we're proud of that, Dick has already mentioned the short-term challenges for some of our larger U.S. equity funds. These clearly have impacted the 1-year asset weighted Lipper numbers, and in some cases, have started to influence the 3-year numbers as well. Performance will clearly start impacting our revenue yield, as more of our funds move to performance fee schedules, and we've talked about this before. But by the first quarter of 2012, we'll have approximately 43% of our total company assets on a performance fee schedule, which is up from 18% today. Remember that the structure is a base management fee, which has not changed, plus or minus 15 basis points, which adjusts up and down based on each fund's performance relative to a proved benchmark. Although it's obviously difficult to predict future performance, if our recent underperformance doesn't improve, it will have a significant impact in our revenue yields really beginning in 2012.

On a positive side, the fixed income group has a strong quarter, and has delivered a very strong track record over the 1-, 3- and 5-year time periods as the chart shows. And INTECH's performance, as Dick mentioned, continues to markedly improve, with 88% of the strategies beating their relative benchmarks compared to 50% 1 year ago.

Turning to Slide 7 and the numbers. First quarter earnings totaled $0.21 down from $0.36 last quarter, but up significantly from $0.17 a year ago. As we talked about last quarter, the first quarter of '11 included a $0.03 charge related to the early retirement of the 2012 senior notes. That was disclosed. And recall, the fourth quarter included roughly $0.12 benefit from a number of unusual items that we won't go through again today.

On the operating side, the first quarter was a clean quarter, and was marked by higher average assets and investment management fees. And really, our continued focus on managing operating expenses, this all leading to margins of 32%.

You'll notice LTI expense decreased roughly $5 million from the fourth quarter. This reflects some older grants that have moved through the pipe and lower expense from the Perkins senior profits interest plans, which we've talked about before. This plan at Perkins is tied to revenue and investment performance, and given their big run up in '10, we recorded a healthy number of $18 million in 2010. We would expect to see that number come down in 2011, somewhere between the $7 million to $9 million range.

And lastly, below the line, we started to see the impact from the mark-to-market effect of the economic hedging of our mutual fund long-term incentive awards. This is consistent with what we talked about last quarter. With the change in our accounting model for these awards, we will start to see some mark-to-market effect running through below the line. And with that, I will turn it back over to Dick.

Richard Weil

Thanks, Greg. Two last things to cover, and then we'll take some questions. First as you will have seen from our public statement earlier today, Greg informed me very recently that it's his decision to leave the firm sometime around August 1. Greg has put in 14 years at Janus. He's delivered a lot of value and done a fine job. And he leaves with our respect and our friendship. And that's the sad note.

On a positive note, we welcome Bruce Koepfgen to Janus. He's an experienced leader in the asset management and financial services business. He'll be joining us, and very shortly he'll work arm in arm with Greg over the summer to make sure that we have a professional and high-quality transition. And then upon Greg's departure on or about August 1, Bruce will become our new CFO. And we're very excited to welcome somebody with his great experience to the team.

So that was the first thing. I mentioned 2. The second one is I just want to go back and touch on performance briefly. We still have 21 funds on Schwab's Select List, consistent with fourth quarter last year. 46% of the complex has 4 or 5 Morningstars, which I think is a very competitive mark in this business. 78% of our fundamental equity assets have -- are outperforming over 5 years.

We have a strong and deep investment process and we have very good people. Our large-cap U.S. equity funds are undergoing a shorter-term challenge right now, and that's something that we have to endure in this business. Even the best investors go through it. But we have a lot of confidence in our process and our people, and I just wanted to lay that out before taking questions.

Operator, James, at this point, we'll take questions.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from Michael Kim from Sandler O'Neill.

Michael Kim - Sandler O'Neill + Partners, L.P.

First question. Dick, I know you've touched on this briefly, but maybe just in terms of dealing with some of the recent underperformance. Do you feel like maybe making some incremental changes in terms of repositioning some of the portfolios or making changes to some of the investment professional team? Do you feel like that's under consideration at this point? Or is it really just a matter of time in terms of getting a bit more help from the markets?

Richard Weil

Thanks. Good question. First and foremost, our Chief Investment Officer who leads our investment process on the equity side, Jonathan Coleman, is the primary decision maker in all such decisions. And we understand that. We are accountable for poor performance, and none of us have a tenured position. And we have to deliver, otherwise, we have to make changes. And that's the basic framework of our industry. And we're accountable to our investors, both our owners and our fund shareholders, to do that. That said, we think we have a strong process that's still delivering excellent results across a wide variety of funds, and so we have confidence in our process and in our people. But every fund is a specific situation. We watch it carefully and we have to continue to be accountable. And if bad performance doesn't get better, at some point, you have to make a call and Jonathan will make that. At the moment, I think, we still feel good about our people and our process and we're not ready to make such a call. But none of us have an infinite time horizon, certainly not our clients.

Michael Kim - Sandler O'Neill + Partners, L.P.

Okay. And then second question. Can you just maybe go into a bit more detail as it relates to your decision-making process in terms of opting to raise the dividend versus maybe buying back stock, and just kind of any incremental color there? Thanks.

Richard Weil

Sure. When we looked at buying back stock versus a dividend for ways to return capital to our shareholders, we are, of course, aware that a lot of companies have an imperfect track record of picking the right time to buy back their own stock. And so I think the framework under which you buy back stock is a little more challenging than the framework around a dividend. It seemed to our board that at this time the dividend level that they selected, $0.05 a quarter, run rate of $0.20 a year, is one that is very sustainable for us in all reasonable scenarios. And it seemed like that was the most efficient way to deliver a constant flow and predictable flow of income back to our owners. And we think they value that very highly. We wouldn't rule out share repurchases in the future. We'll continue to study that, but given our confidence that we can maintain this on a consistent basis, a dividend seemed to be the right way to proceed to our board.

Operator

And our next question comes from Ken Worthington from JPMorgan.

Kenneth Worthington - JP Morgan Chase & Co

In terms of the performance fees, with the new funds rolling on, are there offsets to mitigate an earnings hit if performance in new funds stays at current levels?

Gregory Frost

Ken, it's Greg. The 1 mitigation you have is obviously that compensation, which is very much in line with revenue and profits of the firm, will also scale. Certainly, fixed expenses don't, but to the extent that we have variable costs tied to that, that will scale down. It will not all offset the impact of a top line revenue hit.

Kenneth Worthington - JP Morgan Chase & Co

And the reason I ask is the funds are already performing. Some of the funds are performing poorly, so I assume that's already in kind of that compensation run rate. So does it mean you can adjust the compensation down further when those performance fees are implemented in the future?

Gregory Frost

Well, as you know, a lot of it is formulaic and tied to the results and the revenue of the business. And so that -- it will automatically adjust down as the revenue comes down. We don't have any plans to ratchet down further from that.

Operator

Our next question comes from Bill Katz from Citigroup.

William Katz - Citigroup Inc

Thank you. Just as you look through, and the think about the businesses, it seems like a lot of cross currents as you pointed out. Over the next 12 or 24 months, where do you guys think the best organic growth is going to come from? That's my first question.

Richard Weil

Organic growth is a result of a combination of factors, some of which we control and a lot of which we don't. The external market demands will have a lot to do with the answer to your question. We are best positioned in our fixed income business and some of our small- and mid-cap strategies. Brent Lynn continues to be, over the medium and long term, one of the absolutely outstanding performers in this industry. You can see, I think, quite plainly where we have exceptional strength. The outcome of where the growth comes from is partly that and it's partly where the demand goes. And we all read 100 articles a day on where we think demand is going. In general, I think we align with a lot of consensus thinking that some of the best values in investing have moved to large-cap U.S. equities. There's some wonderful opportunities in other sectors as well, but broadly speaking, that's an area of great opportunity for investors. And we hope that translates in to some good flows for us in some of our products. But I don't think I can reliably integrate those 2 sides and give you a growth forecast for different segments of our business.

William Katz - Citigroup Inc

Okay. And if I could ask a follow-up, just unrelated. As you think about the PM and analyst level, could you sort of comment where you might be in terms of turnover relative to the industry? Any actions you might be taking to stem any kind of attrition?

Richard Weil

Yes. I don't have the numbers in front of me. We have not had significant attrition. It has to be better, is my guess, than the industry, but I don't have any numbers sitting right in front of me. We have a stable and good team. I think a modest amount of turnover is desired and healthy. Some of it is people making their own choices about maybe they don't want to work quite as hard or they want to work in a different format. And some of it is us making choices around, "Maybe they're not quite in the right fit." So I think a healthy company wants a modest level of turnover. I think our turnover has been very modest, and I think we're a stable shop that will continue to make improvements. But I can't give you industry comparisons on a statistical basis.

Operator

Your next question comes from Roger Freeman from Barclays Capital.

Steven Truong - Barclays Capital

It's Steven Truong here for Roger. Can you talk about the margin this quarter? It seems like there was some pretty good expense management. And as we think about the investment priorities: fixed income, institutional, international -- how might you rank those? And what might be -- the expense trend be going forward, as we think about the margin and these spending initiatives? Thank you.

Gregory Frost

I'll take -- let me start that one and then if Dick wants to add anything, he can. I think -- as I mentioned in the remarks, margins of 32% really reflects higher revenue and a fairly good control on expenses. The LTI line is 1 thing that has come down from previous quarters, and we talked about that. As we've talked about in the past, at these asset levels, we should be able to maintain 30% margins for 2011. And we think that's important. As Dick talked about last time, our spending -- our reinvestment spending in the business in 2011 is at a level that was effectively flat to last year. We are obviously looking at that closely as we move throughout the year and can adjust that, and will adjust that as needed, depending on what happens with the business.

Richard Weil

From a business strategy side, I think we're going to be investing a little more in brand. I think we're going to be investing a little more in international. And we'll be modestly scaling up the fixed income team. I think those things align with what we previously talked about. But in orders of magnitude, whenever I say "investment," I know that some folks imagine very large dollars. We recognize that we have to be very efficient with our use of capital, and we will not be making investments that are sort of in a different order of magnitude from our prior run rate. So I think it's largely consistent with what we did last year, and it will probably stay in that order of magnitude.

Steven Truong - Barclays Capital

Thanks. And my follow-up question has to do with INTECH. Can you discuss the, sort of, pipeline that you're seeing, perhaps discussions with institutions for flows coming back, as performance has been pretty good here? Thank you.

Richard Weil

I think I missed a little bit of that question. It was...

Steven Truong - Barclays Capital

Just the outlook in terms of the flows in terms of INTECH.

Richard Weil

Yes. That's a -- we've talked about this before. That's just a very hard thing to predict. I think INTECH's investment process has proven and continues to prove that it's a very valuable process. We're also aware that, in the industry, there have been very few searches for mathematical and quantitative equity approaches. And that's been challenging. We feel an increase in interest in the marketplace, but I don't think that converted successfully in these numbers into significant inflows. And so the question is, "When does the pendulum start swinging the other way as an industry matter and particularly for INTECH?" And the exact when point is -- it's just very hard to predict. I continue to believe that better investment performance ultimately wins the day, and they have a very strong long-term numbers and short-term numbers. And so that will ultimately be a winning hand. But the moment on when that turns is very hard for me to predict.

Operator

And our next question comes from Jeff Hopson from Stifel, Nicolaus.

J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc.

Okay. Thanks a lot. In terms of the performance issues at Janus, can you perhaps describe kind of where the bets were made that went wrong to help us understand that? It seems like, maybe last year was -- some of your U.S. portfolios had non-U.S. investments that maybe hurt, but anything to help us in that regard. And any feedback from distributors and platforms at this point about performance? Or is it still within a time frame where there's not significant concern being expressed?

Richard Weil

In terms of the sources of performance, it's hard to talk in the aggregate about different portfolios because obviously they're all -- they all have an individual story that their portfolio managers are best positioned to tell. But broadly speaking, we've been overweight large-cap stocks as opposed to smaller-cap stocks because we've seen better growth opportunities and value opportunities in those stocks. The market has not rewarded that. Small-cap and mid-cap stocks have soundly beaten large-cap stocks over the last 12 months. We have also seen more opportunities in some of the more modestly priced in terms of P/E stocks, and that also has not been rewarded. We continue to see a lot of value in some of the less-loved lower-multiple stocks but, again, the trends over the last 12 months have not been in favor of that investment decision. And then on top of that, we've made some specific picks in financial and technology and healthcare sectors that hurt us. And so I think that is, at a high level across multiple portfolios, the best explanation I can give in terms of where the underperformance has come from. The first 2 elements, I think, are investment conviction sorts of ideas that we're not necessarily looking to change. The third one, it's going to happen to you. And you need to look individually at why you made that stock selection and learn from that and do better. And Jonathan and the team are seriously engaged in addressing those issues. In terms of the level of concern in the marketplace, our partners are concerned. We talk to them multiple times a week, and we have an ongoing dialogue about performance in good times and bad. And when they're concerned about performance, we hear about it through the regular channels and often, and clearly, people are expressing some concern. That said, we have delivered a lot of value over a long period of time for these clients. We have good relationships and a strong brand, and they will have to make their decisions as they see fit. But I think we're still in a good position with most of these clients, so long as we do our jobs and improve performance from here.

Steven Truong - Barclays Capital

Thank you.

Operator

Our next question comes from Marc Irizarry from Goldman Sachs.

Marc Irizarry - Goldman Sachs Group Inc.

Great, thanks. Dick, I know some of the investments you're making in the business aren't dramatic, if you will, in terms of raising the fixed cost structure, expense structure. But when you think about the compensation, your comp plans kind of structurally, do you need to move more toward a model of profit -- sort of a profit-based comp versus revenue-based comp, particularly given that it appear that maybe your fees are becoming more variable? Can you maybe just speak to that?

Richard Weil

Yes, thank you. Good question. Yes, we are in fact pursuing that exact path. At Janus, historically, the comp formulas have typically been more focused on revenue than on profits. And working with the investment team, we're evolving the firm towards much more of a profit-based approach than a revenue-based approach. I think that it strongly aligns the employees with our owners, and I think that's a very positive thing. And it ensures that we're accountable in a way that I think our owners should like. And so with the support and cooperation of the investment side, we've been working on moving that direction, and we'll continue to do so.

Marc Irizarry - Goldman Sachs Group Inc.

Okay. Great.

Operator

And our next question comes from Cynthia Mayer from Bank of America.

Cynthia Mayer - BofA Merrill Lynch

Thank you. Can you give us some color on how performance fees for INTECH are structured? Because it looks like, actually, the performance there slipped a bit since last fall with only 36% of the strategies beating benchmarks versus over 1/2 last fall. Is it possible those could go down as well? And it looks like they were maybe $1.8 million this quarter. If the performance is actually very good, what's the uppermost limit for those? Because it would be just interesting to get a better sense of how those could perhaps outweigh some of the negative performance fees from the fund side.

Gregory Frost

Let's see, the -- INTECH does have some accounts, certainly, in the institutional side with a more traditional performance fee structure with a lower fee, and then the opportunity to earn up in performance fees, which obviously is very different than the structure that we have on the Janus mutual funds, which is a base fee that is unchanged from the past than a fulcrum of plus-or-minus 15. I think the INTECH people would tell you that, over time, institutions come out and say, "We want performance fees." And they come out and they work away from performance fees. We're probably somewhere in the middle right now with INTECH's -- some of INTECH's historical performance, they've had us a chunk of assets on fees but it has never been really significant. And so the opportunity -- I guess, to answer your question, the opportunity for INTECH's performance to outweigh some of what we would anticipate on the Janus side should the underperformance not continue -- I'm sorry, should the underperformance not get better, it's probably not. The magnitude isn't there to offset it.

Cynthia Mayer - BofA Merrill Lynch

Got it. Okay. And then just on the expense side, you were saying it's a clean quarter. So should we assume that the G&A that you had is actually a good run rate number?

Gregory Frost

I don't see anything -- I wouldn't see anything in the future that would significantly move the G&A number, no.

Cynthia Mayer - BofA Merrill Lynch

Okay. Thanks a lot.

Operator

And our next question comes from Jonathan Casteleyn from Susquehanna Bank.

Jonathan Casteleyn - Susquehanna Financial Group, LLLP

Thanks. It seems there's a little bit of a short-term trends on underappreciated operating leverage in your business. Can you just remind us of your peak-to-trough operating margins? And although your revenues are going to move around quarter-to-quarter, what normalized percentage of revenues, comp and non-comp, could be at?

Richard Weil

The peak-to-trough question is obviously hard, especially given the last several years of what we've all been through as an industry and as a company. So I think margins were down in the lower 20s and have been as high as the mid-30s, I think, over my career here. Our normalized basis, I think we've talked about these asset levels. In 2011, we should be able to put up plus-30% margins, as we've talked about. The performance fee issue, especially, that would come in '12. With some of our larger funds coming on, it may impact that, but there's so much time between now and then that it's hard to predict toward where that would be.

Jonathan Casteleyn - Susquehanna Financial Group, LLLP

Okay. And then BlackRock this morning spoke about some better quantitative trends in some regional and international products, seeing some improvement. Would there be any correlation to the INTECH product suite there, going forward?

Gregory Frost

We're not expert on BlackRock's products and marketing of them, so I think it's hard for us to answer that question.

Operator

Our next question comes from Robert Lee from KBW [Keefe, Bruyette, & Woods].

Robert Lee - Keefe, Bruyette, & Woods, Inc.

A quick question on distribution. I mean, understanding it's 1 of the performance challenges of fundamental equity, but in those places where you do have a competitive performance, whether it's the overseas products or Perkins products -- understanding they've had some modest inflows, do you feel that you have the right distribution infrastructure to support those flows? Do you feel like you're actually getting your fair share of flows of where you do have performance, so that there's maybe additional investment you need to make there, but maybe it's not the priority right now? It's in a more global. But how should we think of your distribution footprint and your comfort level with it?

Richard Weil

I think our U.S. retail distribution is strong. And it is -- we get more than our fair share, so to speak, where we have strong track records and in an area where there is a lot of consumer demand. I think we're not at that level of exceptional strength where we are able to sell things that have much weaker track records or in areas where there isn't much industry demand. So I would say there are probably 1 or 2 firms out there that are able to sell in the face of pretty mediocre track records or more successfully when there isn't so much pull in the marketplace. We're not at that level. Of course, we'd like to be. We'll continue to work to strengthen our distribution team and footprint. I think some of it is also the work we're doing in branding. That will help. We're working on thought leadership and refocusing on strengthening client relationships and making sure that, in addition to performance, we deliver nonperformance elements in an excellent way to our clients. And I think that will help. But I think we have a very, very good U.S. retail distribution team. We have a very strong footprint in DC space. There are a lot of strengths there, but it can always get better. And we'll continue to work on it because, obviously, that's the heart and core of our franchise.

Robert Lee - Keefe, Bruyette, & Woods, Inc.

That was my only question. Thank you.

Operator

And with that, this does conclude our question-and-answer period for today. I would like to turn the floor back over to Dick Weil for any closing comments.

Richard Weil

I'd like to thank everybody for being with us today. I'll give Greg the opportunity, given his news today, to make the closing comment here.

Gregory Frost

Thanks, Dick. I guess, just a couple thoughts. It's been a wonderful 14 years at Janus. I've been extremely fortunate to have been able to serve in various capacities in, obviously, very different versions of Janus over the years, from the firm that I started with in 1997 to where it is today. This was a very personal decision, as Dick said. It was an exceptionally difficult decision to come to, but I take unbelievably great comfort in Dick. He has been -- he is a good leader for this firm. He has been a good friend to me, and I take great comfort in the management team here. I take great comfort that this firm is financially in a much better place than it has been over the last couple of years and will only get stronger. And I have great good confidence in the team, in the finance and accounting group that I have helped build over the years. And it felt like it was time to broaden my professional career and see something different and -- but I will always root for this firm's success. It has been, obviously, a very big part of my life. So thank you.

Richard Weil

Thanks, everybody. That's it, operator.

Operator

Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time and have a great day.

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