Good morning. My name is Nicole, and I will be your conference facilitator today. Thank you for standing by, and welcome to the Janus Henderson Group Fourth Quarter and Full-year 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer period in the interest of time questions will be limited to one initial and one follow-up question. In today's conference call, certain matters discussed may constitute Forward-Looking Statements. Actual results could differ materially from those projected in the forward-looking statements due to a number of factors, including, but not limited to, those described in the forward-looking statements and Risk Factors section of the Company's most recent Form 10-K and other more recent filings made with the SEC. Janus Henderson assumes no obligation to update any forward-looking statements made during the call. Thank you. And now it is my pleasure to introduce Dick Weil, Chief Executive Officer of Janus Henderson. Mr. Weil, you may begin your conference.

Welcome, everyone, to the fourth and full-year 2018 earnings call for Janus Henderson Group. I'm Dick Weil, and I'm joined by our CFO, Roger Thompson. In today's presentation, I'll first touch on what was accomplished during 2018 and then I'll provide an update on our focus for 2019 as we move out of merge integration and into business execution mode. after which I'll turn it over to Roger to review the results in some detail and following our prepared remarks Roger and I will be happy to take your questions. Turning to Slide 2, take a look at some of the key accomplishments from 2018. Despite a challenging market backdrop and disappointing net flows, there were many encouraging achievements in the year. First, looking at investment performance. Despite mixed results across capabilities, the majority of AUM outperformed benchmark over one three and five year period. More specifically, eight of the 10 largest U.S. managed equity and multi asset portfolios beat their benchmarks over one net of fees. So some early strong results were had in those large strategies and most importantly this performance is gaining market attention from our clients. Over 60% of our mutual fund AUM is in the top two MorningStar quartiles over one, three and five years as of 31, December 2018. And finally, 55% of our U.S. mutual funds have a four or five star overall MorningStar ratings. Second, as we continue to seek to expand our distribution efforts to better serve our clients, I want to call out some highlights around client relationships. First, we are gaining market share in U.S. equity category in the U.S. retail market, which is a great result. This is the largest market in which we do business today and our result in 2018 is very encouraging. Second, in institutional…

Thanks Dick and thank you everyone for joining us. 2018 was a year of effective continued transformation for the firm and ongoing challenges across the competitive landscape of market environments and our full-year results reflect these factors. From a market perspective, 2018 saw a reduction of nearly $12 trillion of world market capitalization, 90% of which or $11 trillion occurred in the fourth quarter. Against this backdrop, full-year total adjusted revenues held up well and were 1% higher than the pro forma prior year at stronger management fees offset lower performance fees. Adjusted operating margin for the year continues to be very healthy at 39%, virtually flat year-over-year. AUM did end the year 11% down from prior year driven by the negative impact of markets in the fourth quarter and full-year outflows of $18 billion. That said, given that we have seen a meaningful improvements in the market since the end of December, we thought it would be helpful to provide a sense of where AUM sits today. This isn’t an update we will provide on a regular basis however following the drawdown of assets in December and the rise in January we thought it would be helpful. As we sit here today, AUM is up roughly 5% from the end of the year, which reflects a combination of market appreciation and some notable improvements in net flows particularly in the U.S. retail business. Finally on the capital management front, during the year, we increased the dividend price to shareholders by 17%. We completed $100 million of share buybacks and I'm pleased that today we are announcing that the Board is authorize a $200 million share buybacks which we expect to complete over 12 months. We will go into capital management a bit later in the presentation, but these results…

Thank you, Roger. I just now want to turn for a moment to one last thing the retirement of Bill gross. As was recently announced, Bill approached us and let us know that he has come to the point where he would like to focus on the work of his very substantial family Charitable Foundation, focus more on perhaps giving away money than earning it in the last chapter for him. Bill is [indiscernible]. I don't think anybody has ever made more money for their clients in the fixed income industry. He is the best there has been and it has been an honor for us to work with him and have him on our team here at Janus Henderson and as he goes off to the next chapter in his life, we wish him well and mostly we say thank you for the time he has shared with us. So with that, let me turn it over the operator and take your questions.

Thank you. [Operator Instructions] And we will take our first question from Brian Bedell with Deutsche Bank.

Hi good morning. Maybe to start off with the fixed income strategy, just overall I know the performance weakened a little bit in the one year period, but any overall change to that strategy and just as you also think about the development of the new growth initiatives is there any - are there - you mentioned I think there is more vast and alternative [indiscernible] but anything in the fixed income area that you would focus on as well?

Yes. Thanks Brian. First I guess I would say that we have diversity of performance across our fixed income landscape. We have a number of our strategies which are fairly conservative credit based management and through the really hard period of returns and strong credit markets they struggled to keep up, but have a little bit less than exciting track record right now. And complementing that, we have a few areas that are strong bright spots, one is our multi sector income strategy and another one is our absolute return income strategy. And those are strategies that we think have opportunity to grow in various markets around the world in particular. I mentioned earlier, the absolute return income strategy where we are opening some new vehicles in Europe and elsewhere to make sure that we have the right legal structure to make those properly available to clients who are interested. So there are some really nice bright spots in our fixed income business, but also some challenge in some of the more conservative credit based strategies that have shown modest underperformance for a while now.

Okay, thanks. And then just to follow-up, I would say maybe just - thanks for the commentary. On January with the AUM up, maybe if you can elaborate a little bit more on what you are seeing in flows on the retail side and then the institutional client behavior. Of course there is a lot of delayed fundings industrywide in the fourth quarter given the environment. Are you seeing that reverse in the first quarter so far and in which areas?

Okay. Brian its Roger, thanks for the question. I guess first I would say is that I would normally answer that question, but we don’t talk about short-term flows, but there has been a very dramatic change in markets going - as we went through the fourth quarter and going into Q1. So that’s why we updated a little bit in the script and I'm happy to answer the question now. The turndown in the fourth quarter particular December in the U.S. was pretty dramatic and the comeback in January has been pretty dramatic. So again you will see these flows publicly shortly, but we are in positive flows in the U.S. in January. In Europe, outflows have slowed, but we are still in small outflows. Institutionally as you say, it’s a lumpy environment and two soon to tell, we have got a pipeline of interesting prospects, I guess what I can tell you is we are not sitting on any big losses as we sit here today.

Thank you. And we will move on to Ken Worthington from JP Morgan.

Hi good morning. Thank you Dick for taking my question. You have executed on the promise cost synergies. Can you share the plans for driving revenue synergies from the combination of Janus Henderson in 2019? What I’m really after is, what are you hoping to accomplish from the combination this year from the merger?

Yes. Well, first, I think we are starting to put away the use of the term synergies because it's backwards looking around two legacy companies that no longer exist and as we are through sort of the bulk of the integration process at this point, we are really just focused on managing our company ahead. And so you will probably find us not referencing synergies very much anymore either other costs or revenue. But I do think that the promises we made in the merger around the power of having strong global distribution coupled with well performing products remains true and there is probably no better example of that than our balanced strategy which is gaining significant assets and markets around the world through different sales force. We already mentioned ARIs another example of something that that I think through different sales teams that are legacy one or the other. There is significant interest there. Previously, we have seen significant interest in emerging markets sold by legacy teams from both heritage and I could go on. So, we have said this before, you are always going to be able to point to bright spots and dark spots in our very diversified book of business and that remains true. But I think we see in the data lots of evidence that where we have well performing funds, we can deliver more of them across more markets effectively. And that gives us a reason to be optimistic and its why we believe we will prove out the value of the merger with stronger flows in the future.

Okay. Thank you. Maybe second, we are seeing a step up of managers expensing the cost of research in the U.S., what are your thoughts about extending how you treat your team under research in Europe under method to the U.S.? So I believe you are on bundled in the U.S., but I don't believe you expensed the cost of research. So what are your thoughts there? And are there any lessons learned in Europe about bringing the cost of research on to your P&L here?

Well, to take your last part first, there are certainly lessons we are learning in Europe where all the sellers, the providers of research and the consumers of research are trying to define sort of new market patterns and get together effectively and that as you probably know personally from JP Morgan's experience, this is a complicated restructuring of the markets for research and I would say that's still in flux. We did a good job of estimating what that would cost on our P&L and in Europe and this past year, well done, Roger and team. And I think we have managed it pretty effectively, but the pricing, the structures and all that are in flux, and I think it's too early to talk about big lessons, but there will be lessons that apply in the U.S. if that markets changes structure to match Europe. And I guess, following on that comment, we don't see that happening yet. It may happen in the future, but we don't have any plans currently to change how we are treating the research in the U.S. But we are aware that some other competitors have changed their treatment and we know how this happened in Europe over a reasonably compressed period of time and we see that could happen in the U.S., but so far we are not seeing a lot of strong demand out of the client side yet. So for us its watchful waiting.

Thank you. We will take our next question from Nigel Pittaway with Citi.

Good morning. Just a couple of questions. First of all on the employees comp and benefits, I think Roger as you are going through you said there was some year-end adjustments relating to cash and non-cash payment. Presumably that means more cash. So I mean was that sort of a one-off adjustment or is that something that we need to factor through moving forward, because I think as far as I was aware there was also some one-offs in third quarter relating to that catch up of treatment of interest on pension plans. So it was perhaps a bit surprising to find it flat on third quarter?

Yes. Exactly as you said Nigel, it’s a mix between cash and non-cash, it means that we are paying out a slightly higher proportion of cash in 2018 and lowers to third in 2019. I guess the good news being that means so there it’s going to be amortized in future years. That is a true up in the fourth quarter. So the full-year mix is what you should really look at as you are planning for the future with comp coming down slightly then the mix slightly changes towards cash over stock.

Okay, alright. So that actually impacts the long-term incentive timeline rather than the employee comp line. Does it, is that right?

It will reduced the future amount going throughout the LTI. [Multiple Speakers]

So the reason why the employee comp line flat then given that there was that one-off catch up of interest on pension plans going through that line in third quarter. You should have had synergies coming through, obviously revenue was down, flat employee comp, any sort of reason for that?

Roughly as we said on the call, so comp is down, variable comp is down with profits and that is offset by that the buyback cash drop mix.

Alright, okay. And then obviously you gave guidance for comp ratio, et cetera, but there was also the mention of the op margin, is that sort of still high 30s is what we can expect or?

It obviously depends a lot on where markets sell but - and we have given you guidance of comp ratio in the low 40s basically flat non-stop costs, so I guess if you model out you are in the high 30s.

Thank you. We will take our next question from Patrick Davitt with Autonomous Research.

Good morning. Thank you. I just want to go back to the AUM guidance again versus kind of the vague flow guidance you gave. If markets are up 6%, 7%, 8% globally depending on where you look and AUMs went 5% how do you get to close kind of being flattish to positive per your comments earlier? Is this something I'm missing there?

I guess the non-equity parts of our portfolio, so about half of our book is equity. The rest is pure equity, we have got the contact with e-book as well, but then we got fixed income and LTF. And also it's going to be, we go up slightly less, we have slightly less basis in the pure equity market because of that Patrick.

Okay. Fair enough. And then you mentioned Intech briefly, just curious how the conversations are evolving there as we think about how flows track the last time performance came down this much and I believe this is one of the lowest five year numbers that's ever had. Just curious how those conversations are going and if you have any kind of outlook on AUM risk as that plays out?

Yes. Obviously we have tried to be transparent that that this underperformance is significant and we are concerned about its effect. But we have also been transparent that nobody really knows and in AUM spaces a few decision makers and Intech's book a big institutional business can move a lot of money. And so we have called it a lumpy business for that reason and it remains so. So we are not sitting on any big news at the moment as Roger said earlier, but we are obviously concerned that the underperformance will have destabilize clients and hopefully they will stick it through. Often in the past Intech's best performances as come on the heels of some difficult periods and Intech's actually put up more reasonable numbers more recently. And so, we will hope that the client stick through some challenging performance, but we don't have a good way to predict it. All I can tell you is that, we are on sort of high alert and making every extra effort to touch the clients and service the clients and answer their questions and concerns as best we can so that they have the full information as they make their decisions. But so far, we haven't seen big new trends out of their assets but again it's a lumpy business and it can change quickly.

And we will take our next question from Andrei Stadnik with Morgan Stanley.

Good morning. I just want to ask my first question around investing in further growth. Can you comment maybe on the number of strategies and maybe the formal strategies that are on the incubation now versus one and a half to two years ago when the merger occurred?

You know, we don't track a number, sort of strategies under incubation. We don't actually use the term incubation here. So I don't quite know how to answer your question. We as part of our effort to be focused, we are going to periodically prune the number of strategies. We have been and we will continue to do. And that to us is just as important as adding new ones. We have an awful lot of well performing strategies, our successes is more determined by how we bring those to market and how we carry those forward than it is, bright new ideas. And so that's our first priority. But we have a discipline around sort of trying to constantly prune our lineup and we follow that and I don't think that the overall number of strategies is probably changing in a radical way. But it's probably decreasing modestly as we prune. As we said, we are also adding from time-to-time new ideas. Our ARI strategy is launched a new sort of more concentrated version of that absolute return income on the fixed income side and we have some new ideas coming forward and ETS space and elsewhere. So, it's a balance of new and old and our commitment is we want to do the things we are really good at and that are going to matter to our clients so as we discover that maybe some of the things we have tried and haven’t worked so well, we will be focused on pruning as well as them.

Thank you. And then my second question can you comment on flows in the December quarter, flows outlook momentum in Asia PAC and in Japan particularly around Asia as well?

Well speaking of Japan we didn’t have our biggest year last year in Japan. They have had an awful lot of years of good growth and last year wasn’t one of them. That said, we have a lot on the boil right now in Japan and we are hoping that as this current year progresses that we are able to do a lot more. Our very good partners and owners Dai-ichi Life have committed to bring to market in Japan as part of insurance products. Our adaptive asset allocation run by Myron Scholes and Ashwin Alankar, which is a new product we have been building here in recent years. And Roger I think mentioned that they are starting to see some early wins. And its excited that Dai-ichi Life has decided to make that a core part of some of its insurance products and bring that to market in Japan as they have publicly announced themselves. And so that’s an opportunity and there are more. We had a big success with the Dai-ichi Life affiliate TAL down in Australia last year and we are hopeful that we will find ways to be a good partner for them and serve their needs and continue to grow that relationship. So we have opportunities to work on and lastly, we mentioned that one of our significant growth initiatives has been to retool and focus on Asia ex-Japan and we hired a gentlemen named Scott Steele out of PIMCO to help lead that effort reasonably recently I guess it was at last year or maybe the end of the prior year.

June last year.

June last year, and so he has been putting together a bit of a revised team and making some hires and we are hopeful that in the one, two, three years ahead they can start developing a positive momentum there to match the positive momentum we have seen in Japan and Australia.

I think the other bit to add will be around obviously intermediary sale in Australia as well as the talent mandate which is obviously a substantial piece of lumpy institutional business. We continue to see strong retail flows from the two strong fixed income businesses that we have in Australia two fantastic businesses. And that's more in the model portfolio type of retail account, so small amount of money coming in every day into tactical income, absolute return income. And that will - and with the - obviously a return income class which is hat more leveraged version that they talk about, so it’s a really strong intermediary flows into fixed income in Australia which is really important for us.

Thank you. And we will take our next question from Craig Siegenthaler with Credit Suisse.

Thank you. First just on the multi asset business, we have five star rated balanced fund is really performing [Technical Difficulty] it was actually up in 2018 that it looks like if the big trade is underway international equities and a little over a fixed income. So I'm just wondering are there factors you can attribute the strong performance to? And also as my follow-up, which investors segments are generating highest level inflows to this funds?

The balance strategy the investor segments that are most interested in that historically have been more of the retail sectors come more in the fund space than in institutional separate accounts, if that's what you are asking.

That's now coming from around the world, we are seeing strong sales of that in Europe, some sales in Latin America, in Asia as well as into traditionally strong selling of that in the U.S. So that that really is - I talked about green sheets before and some of those turning to significant trees I guess that's one we are starting to see turn that way. So I think growth, so next flow is balance last year across the world we are around $3 billion. And that’s the sort of thing we are looking for in the future is to more products like that that we can sell around the world through the distribution we have now got at Janus Henderson.

And of course while we are talking about multi asset, our adaptive asset allocation with Mayra International we talked about, perhaps more of an institutional client, I don't know the client base going forward for them. So I think we have opportunities in retail and in institutional to take advantage of that that strong global network.

Also thank you Roger. Roger, pointed out that we have forgotten to mention one of the key factor which is we had hired a new leader for our multi asset and - business that we are very excited about. We welcome recently Michael Ho to the team and Michael's great talent that I hope some of you get to meet here in the not too distant future and he really strengthens our leadership lineup in multi asset and alternatives and we are looking forward to his contributions.

And we will take our next question from Simon Fitzgerald from Evans & Partners.

Good morning and thank you for taking my call. Just the first question relates to your comments in regards to U.S. equities intensive revival there, intensive interest. Just wanting to know a little bit more if you could elaborate that. Is that interest - in general or these mandates that you have been working on in the background that are now signed come together?

I think what we are talking about here Simon is our relative strength in the certain parts, particular parts of the U.S. market where we are taking quite significant market share. So if you look at in the small and mid cap spaces, in a number of other areas that tech both in income, small cap value as well, we are taking between 400 and 900 basis points of market share in those where we are seeing flat to positive growth to try to now - which is our smoke at growth fund grown at 8% that's that the market is up to 2%. So we are taking significant market share in some of these areas.

Okay. That sounds very encouraging. And also just want to get a little bit guidance, just in terms of distribution expenses. Obviously that came back to fair bit in the fourth quarter 2018 from a 112 and 102. But I just wanted to get a bit more of a sense about the market sensitivity in the AUM sensitivity in regards to those distribution expenses going forward?

You should think about them in line with AUM Simon..

So you are right. They came off in the fourth quarter as management fees came up.

They are lot of gross sales not a gross sale.

And we will take our next question from Alex Blostein with Goldman Sachs.

Thanks. Good morning. First question around just capital use. Can you guys give us a sense of the pace of the buyback so as you saw pick up an authorization here. But how should we think about the pace of that being implemented and I guess bigger picture question, it sounded like you don't really see any inorganic opportunities right now, but curious to hear your thoughts on the disharmony down the road whether smaller kind of bolt on or more transformational deals?

Hi Alex, I will take the first part and I will let Dick pick up on M&A. yes, I mean we just executed up over and $100 million. You still have, we did that across both markets, pretty much in-line with the mix of the markets or where are our investor base is. And we obviously won’t buy too much on a particular day. So we are limited in what we buy because of market volume. So you should probably use that as a guide, we will put a programmatic trade in place and execute in that way. So hopefully that answers that part of question.

And I'll talk about M&A Alex. Right now, I think what we are very focused on is delivering on the promises we have already made in the merger that we have already obviously recently completed. And that's the highest priority. Never say never about it, but I think another transaction of really significant size right now would be a real stretch and would be very unlikely. It's not impossible again. So, never rule anything entirely up, but would have to be viewed as pretty far out their tail kind of case. We have a lot that we are focused on to do with what we already have. In the fullness of time, look, we learn, we listen, we watch market developments and we are focused on making sure that we are going to be able to compete and build the right kinds of relationships with our clients going forward. And if we were to determine that we needed to somehow go through a big transformational merger to position ourselves to win, we wouldn't be afraid to do that down the road, but I would say in the near to medium-term it feels pretty darn unlikely.

And we will move on to our next question from Mike Carrier with Bank of America.

Thanks guys. Just a question on the European front. You mentioned some improvement, but still outflows year-to-date. Can you provide some context on what you view as maybe industry trends versus some performance or prior think issues any potential like green shoots to potentially ship that trend?

You are better pretty challenge here last year, I think the total industry had almost EUR130 billion of outflows, which is the first year and - outflows. There are bright spots in that mixed up that sounds positive. Europe actually was slightly positive by the end of the year, global was negative. So we have got offerings in each of those spaces, we will compete, we have got a great ground in Europe, we have got a great Salesforce in Europe, we got some great products. So we will compete in those areas as well as defending the franchise and the products we have got in place now.

And we will move on to our next question from Dan Fannon with Jefferies.

Hi, thanks. So Roger, just want to follow-up on the non-comp guidance. I think you excluded a legal charge. I just want to get the starting point for the flat as we think about 2019?

Yes. Headline numbers will be down $12 million. If we flat that that will look like we are down $12 million because we had a one off $12 million charge in 2018. So I’m saying we will be roughly flat excluding that.

And then just a follow-up on Intech. I’m just wondering if there is anything different about the agreements you have with your clients or to think about the stickiness of those assets. Obviously the performances is documented, and you guys have highlighted has been challenged. And so I'm wondering if there is just a process for redemptions is different than we might see elsewhere because of the contracts that the clients have? Or if there is anything different with how they kind of deal with their clients?

No, I mean, it's a primarily an institutional client base. And so, I think the liquidity the way the clients transact is a little different than they do in mutual funds. But it's the standard institutional fair in liquid investments. And so we don't have private equity kind of advanced notice engagement and that sort of thing. So, no, there is nothing special we would call your attention to.

We will take our next question from Chris Harris with Wells Fargo.

Thanks, guys. A bigger picture question on your alternative business. I know you cited it as a growth area going forward and so flows aren't clearly where you guys want to see them? What is it going to take to turn that business around? Is it a function of just improved investment performance or there some other things that could happen that could accelerate growth?

Yes, so as I mentioned, we hired Michael Ho to help us work through the answers to that. I think some of it is making sure that that we have got the right combination of skills applied for our clients. So some of that is product positioning or effectively capability positioning and how you explain yourself to clients. Some of it is how you use your various capabilities and combination to solve problems. So drawing the skills from various different teams our liquid alt teams are some of the historic Henderson alternative teams here in London, and putting those things together in the right way to serve client needs. So I think there are a number of things to do form always ensuring that you have the highest quality effort going into generating alpha and the risk control to positioning and explaining your products properly and connected them well to the client base. And, frankly, I think we are decent at those things, but we can we can get better. And I think Michael Ho is an important part of getting better, but certainly there is more to do.

And we will take our next question from Robert Lee with KBW.

Great, thanks. Good morning and thanks for taking my questions. Maybe my first question just, as you have talked about and we all know there has been a pressures in the industry, fee pressures and whatnot. When you do your own budgeting and forecasting internally, I mean how do you think of a fee pressures, fee compression, I mean do you kind of have a base assumption that it's I think you may have talked about this before in the past Roger, but maybe it's you know one or two basis points a year, how do you yourselves kind of factor in that industry term?

Yes, I mean, it's obviously different in different areas, but overall, we do assume that there has always been fee pressure in our industry and we expect that to continue. So yes, we model in a mild fee compression, I have been pretty consistent and talked about around a basis point of fee compression a year. I have also said that you haven't really seen that in the past because of the equity market strength over the last decade I guess. But yes, we do build in a expectation of mild fee pressure in our budgeting process as we go through the year.

Great. And maybe as a follow-up. Is it possible to maybe drill down a little bit more into the U.S. retail flows, in addition to kind of the styles that are winning. Is it possible to get a little bit more color on which distribution channels you see. And is part of the improvement in sales there due to get being added to maybe some key distributors model portfolios. Just trying to get a sense of how much kind of the uplift is being driven by distributors and maybe being added to different portfolios and different distributors?

Yes, there is nothing individually that we call to your attention in that zone. We are always being - it's a very competitive situation as you know, and we are constantly facing the opportunities to be added and subtracted from various different platforms or different parts of platforms. But there is nothing in particular as we sit here that we would know about and call your attention to especially this quarter.

And we will take our final question from Alex Blostein with Goldman Sachs.

Hey guys just a quick follow-up. I think you talked about the UK absolute performance fund made up about one percentage point back from there underperform - can you tell us what the -markets or kind of how much more did they need to make up in order to get back into positive performance fee generating mode?

Yes, happy to see you Alex. At the end of the year I think it was about 4% behind its benchmark. And it's again that's cited for the January fundraiser will become fully public. But it's over percent in January.

Got it. Great, thanks.

And ladies and gentlemen, that does conclude today's conference. We appreciate your participation today. You may now disconnect.