Invesco Ltd. — 2021 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a standalone fourth-quarter report; the supplied filing does not provide a clear set of Q4-only results. Invesco is a global investment manager with approximately $1.61 trillion in AUM at year-end.
Financial and operating performance
| Metric | 2021 | 2020 | Change or context |
|---|---|---|---|
| Operating revenue (GAAP) | $6,894.5 million | $6,145.6 million | Up 12.2% |
| Net revenue (non-GAAP) | $5,261.1 million | $4,501.0 million | Up 16.9% |
| Operating income (GAAP) | $1,788.2 million | $920.4 million | Up 94.3% |
| Operating margin (GAAP) | 25.9% | 15.0% | Includes unusual and consolidation-related items |
| Adjusted operating income (non-GAAP) | $2,182.6 million | $1,664.5 million | Up 31.1% |
| Adjusted operating margin (non-GAAP) | 41.5% | 37.0% | Based on net revenue |
| Net income attributable to Invesco | $1,393.0 million | $524.8 million | Up from prior year |
| Diluted EPS | $2.99 | $1.13 | Adjusted diluted EPS was $3.09, versus $1.93 |
| Ending AUM | $1,610.9 billion | $1,349.9 billion | Up 19.3%; average AUM rose to $1,499.9 billion from $1,194.9 billion |
| Net long-term flows | $81.4 billion | $(15.7) billion | 2021 total net flows were $141.7 billion, including money-market and non-management-fee AUM |
| Operating cash flow (GAAP) | $1,078.1 million | $1,230.3 million | Excluding CIP cash flows, operating cash flow was $1,514.2 million, versus $1,303.0 million |
- Revenue growth reflected higher average AUM and growth in Invesco Great Wall, partly offset by lower fee yields. Investment management fees rose 12.2%; performance fees declined 14.5% to $56.1 million.
- Net revenue yield fell to 35.1 basis points from 37.7 basis points, as AUM shifted toward lower-fee passive products and money-market fee waivers increased. Passive AUM rose to $528.4 billion, or 32.8% of total AUM, from 27.5%.
- Expenses declined 2.3% to $5,106.3 million. General and administrative expense fell, while compensation and third-party distribution costs rose with performance and higher AUM.
- GAAP results included $509.0 million of net other income from consolidated investment products (CIP), largely market gains. CIP assets and debt are generally not available to, or obligations of, Invesco; the filing says CIP had no net impact on 2021 net income attributable to Invesco.
Balance sheet, debt and liquidity
- Cash and cash equivalents were $1,896.4 million at year-end, up from $1,408.4 million. Corporate debt was $2,085.1 million, broadly unchanged from 2020; the $1.5 billion revolving credit facility had no borrowings and was extended to April 2026.
- Debt consisted of senior notes due in 2022, 2024, 2026 and 2043. The weighted-average cost of debt was 3.95%. The company reported covenant compliance, a 0.79:1.00 leverage ratio and 25.21:1.00 interest coverage.
- Cash flow excluding CIP showed $1,030.7 million used in financing activities, including the $309.4 million settlement of share-repurchase forward contracts and common and preferred dividends. Capital expenditures were $108.8 million.
- Invesco reported $4.0 billion of perpetual preferred shares paying a 5.9% annual rate. It also reported a $724.9 million minimum regulatory capital requirement; some subsidiary cash may be restricted from transfer to the parent.
- Undrawn co-investment commitments were $488.8 million. Additional commitments and guarantees to managed products were disclosed; management considered the likelihood of funding them remote.
Material changes, outlook and unusual items
- Management reported six consecutive quarters of net long-term inflows and emphasized investment in ETFs, fixed income, China, solutions, alternatives and global equities.
- A strategic expense review targets $200 million of permanent annual net operating expense improvements. Invesco reported $167 million of annualized savings achieved by year-end 2021, with the remainder expected by the end of 2022. It estimated $30 million to $55 million of remaining restructuring costs through 2022.
- Invesco began migrating investment operations to State Street’s Alpha platform in 2021, with completion scheduled for 2024.
- The OppenheimerFunds-related fund accounting matter was remediated with $254.3 million of shareholder payments in Q4 2021. Invesco received a $100.0 million insurance recovery and reduced its estimated liability by $131.1 million; possible further insurance or MassMutual recovery remained subject to policy and indemnification terms.
- The board increased the common dividend 10% in 2021 to $0.17 per share quarterly. In January 2022, Invesco announced up to $200 million of first-quarter share repurchases; by the filing date, it reported repurchasing 6.4 million shares for $147.3 million. Future dividends remain subject to board approval and financial conditions.
- The filing provides no specific company-wide revenue or earnings forecast. Management said lower revenue yields were expected to continue pressuring revenue in the near term. Key risks include market declines and outflows, investment underperformance, fee pressure, competition, foreign exchange, regulation, cyber and operational disruption, and COVID-19 uncertainty.
- Auditors issued an unqualified opinion on the financial statements and internal control over financial reporting. Accounting for income taxes was identified as a critical audit matter; tax estimates and uncertain tax positions involve significant judgment.
Important facts for investors to verify
- Reconcile GAAP earnings and margins with non-GAAP measures, including the effects of the OppenheimerFunds liability adjustment, insurance recovery, CIP and other gains.
- Assess whether strong AUM growth and net inflows can persist, and whether the shift to passive and lower-fee products continues to reduce revenue yield.
- Track delivery of the remaining expense savings, restructuring costs and the cost, execution and benefits of the Alpha platform migration.
- Review debt maturities, preferred dividend obligations, capital requirements and the availability of subsidiary cash; distinguish corporate debt from non-recourse CIP debt.
- Monitor the OppenheimerFunds matter for any additional insurance or indemnification recoveries, and review disclosed legal contingencies and commitments.
- Check subsequent filings for actual share repurchases, dividend decisions, AUM flows, fee waivers and updated outlook or risk disclosures.