Franklin Resources, Inc. · NYSE:BEN
Franklin Resources — Q1 2015 Earnings Presentation
28 slides from Franklin Resources's earnings presentation, Jan 30, 2015
Slide 1: Franklin Resources, Inc. First Quarter Results
Franklin Resources, Inc. Greg Johnson Chairman and Chief Executive Officer First Quarter Results Ken Lewis Chief Financial Officer January 30, 2015
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements in this presentation regarding Franklin Resources, Inc. (“Franklin”) and its subsidiaries, which are not historical facts, are "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. When used in this present
Slide 3: Audio Commentary and Conference Call Details
Audio Commentary and Conference Call Details Pre-recorded audio commentary on the results from Franklin Resources, Inc.’s Chairman, CEO and President Greg Johnson and CFO and Executive Vice President Ken Lewis will be available today at approximately 8:30 a.m. Eastern Time. They will also lead a liv
Slide 4: Highlights
Highlights Investment • The majority of assets under management continue to outperform their respective peer Performance medians across the 3-, 5- and 10-year periods • One of the strongest quarters ever for institutional flows Flows • Franklin Income Fund continues to attract inflows, posting its 1
Slide 5: Investment Performance
@ 25 FRANKLIN TEMPLETON INVESTMENTS. Investment Performance
Slide 6: Investment Performance U.S.-Registered and Cross-Border Mutual Funds
Investment Performance U.S.-Registered and Cross-Border Mutual Funds Percentage of Long-Term Assets in the Top Two Peer Group Quartiles (10-Year Period ended Dec. 31, 2014) Total Equity & Hybrid Fixed-Income ($595 billion) ($318 billion) ($277 billion) 81% 71% 92% 92% 81% 80% 83% 74% 78% 73% 71% 68%
Slide 7: Assets Under Management and Flows
Assets Under Management and Flows
Slide 8: Assets Under Management Growth
Assets Under Management Growth (in US$ billions, for the three months ended) Simple Monthly Average vs. End of Period 920.5 912.1 902.8 898.0 894.1 865.9 879.1 876.4 886.9 880.1 12/13 3/14 6/14 9/14 12/14 Average AUM Ending AUM 8
Slide 9: Assets Under Management Diversification
Assets Under Management Diversification As of December 31, 2014 Investment Objective (in US$ billions, for the three months ended) Dec-14 Sep-14 % Change Equity $ 361.6 $ 371.0 (3%) Hybrid 157.1 159.0 (1%) 41% Fixed-Income 354.5 361.0 (2%) 1% Cash Management 6.9 7.0 (1%) Total $ 880.1 $ 898.0 (2%) 3
Slide 10: Long-Term Flows and Market Return Summary
Long-Term Flows and Market Return Summary (in US$ billions, for the three months ended) Long-Term Flows Appreciation (Depreciation) & Other 36.0 31.9 49.8 49.8 47.6 46.7 45.4 15.9 0.0 2.5 (0.8) (3.4) (6.8) (12.1) (45.1) (21.4) (49.7) (46.0) (50.0) (56.7) 12/13 3/14 6/14 9/14 12/14 12/13 3/14 6/14 9/
Slide 11: United States and International, Retail and Institutional Flows
United States and International, Retail and Institutional Flows (in US$ billions, for the three months ended) United States International 19.7 19.8 19.6 18.8 17.3 17.2 17.3 16.0 15.3 14.4 10.1 7.1 8.4 5.5 6.9 5.2 5.4 4.6 4.0 4.0 (4.7) (4.6) (4.8) (4.0) (4.8) (5.4) (5.8) (6.9) (5.8) (6.2) (17.6) (17.
Slide 12: Flows by Investment Objective: Global / International Equity and Fixed-Income
Flows by Investment Objective: Global / International Equity and Fixed-Income (in US$ billions, for the three months ended) Global / International Equity Global / International Fixed-Income 17.6 15.1 15.9 15.6 15.0 13.2 14.3 11.8 11.4 10.8 3.1 2.5 1.4 0.8 (1.2) (1.2) (2.8) (3.5) (3.1) (8.8) (12.3) (
Slide 13: Flows by Investment Objective: U.S. Equity and Hybrid
Flows by Investment Objective: U.S. Equity and Hybrid (in US$ billions, for the three months ended) U.S. Equity Hybrid 8.2 8.8 8.1 8.1 7.5 6.1 6.5 5.6 5.2 4.4 3.2 3.1 2.6 2.2 1.4 1.0 0.4 (0.6) (0.9) (2.2) (4.1) (6.1) (6.2) (6.0) (6.4) (6.5) (6.0) (6.1) (6.5) (7.2) 12/13 3/14 6/14 9/14 12/14 12/13 3/
Slide 14: Flows by Investment Objective: Tax-Free and Taxable U.S. Fixed-Income
Flows by Investment Objective: Tax-Free and Taxable U.S. Fixed-Income (in US$ billions, for the three months ended) Tax-Free Fixed-Income Taxable U.S. Fixed-Income 4.3 4.5 3.7 3.8 3.6 2.3 2.0 2.0 2.0 1.9 0.7 0.2 0.2 0.0 (0.2) (0.4) (0.7) (0.8) (3.4) (1.5) (2.4) (2.1) (2.7) (3.6) (3.3) (3.6) (4.5) (4
Slide 15: Financial Results
@ 25 FRANKLIN TEMPLETON INVESTMENTS. Financial Results
Slide 16: Quarterly Financial Highlights
Unaudited Quarterly Financial Highlights (in US$ millions, except per share data, for the three months ended) Operating and Net Income1 Diluted Earnings Per Share 835 $1.02 813 786 787 782 $0.96 $0.92 $0.91 641 $0.89 604 579 566 561 12/13 3/14 6/14 9/14 12/14 12/13 3/14 6/14 9/14 12/14 Operating I
Slide 17: Operating Revenues
Unaudited Operating Revenues (in US$ millions, for the three months ended) Dec-14 vs. Dec-14 vs. Dec-14 Sep-14 Sep-14 Jun-14 Mar-14 Dec-13 Dec-13 Investment management fees $ 1,382.4 $ 1,430.7 (3%) $ 1,393.2 $ 1,368.0 $ 1,373.8 1% Sales and distribution fees 595.0 627.4 (5%) 643.7 638.6 636.7 (7%) S
Slide 18: Operating Expenses
Unaudited Operating Expenses (in US$ millions, for the three months ended) Dec-14 vs. Dec-14 vs. Dec-14 Sep-14 Jun-14 Mar-14 Dec-13 Sep-14 Dec-13 Sales, distribution and marketing $ 731.5 $ 755.9 (3%) $ 789.3 $ 766.3 $ 776.7 (6%) Compensation and benefits 375.5 365.9 3% 380.7 372.3 349.0 8% Informat
Slide 19: Operating Leverage Growing Operating Income Faster than AUM
Unaudited Operating Leverage Growing Operating Income Faster than AUM Operating Margin (%) vs. Average AUM (in US$ billions) 37.3% 37.9% 37.9% 33.5% 36.6% 34.8% 35.4% 32.3% 33.3% 888 894 808 29.9% 28.7% 706 Average 694 AUM: 8.1% 582 605 571 CAGR 482 442 411 9/05 9/06 9/07 9/08 9/09 9/10 9/11 9/12 9/
Slide 20: Other Income – U.S. GAAP
Unaudited Other Income – U.S. GAAP (in US$ millions, for the three months ended December 31, 2014) (0.9) 2.9 5.3 40.4 39.5 3.5 (3.0) 32.1 4.2 6.7 (11.3) Dividend and Equity method Available-for- Trading Interest Foreign Consolidated Consolidated Total other Noncontrolling Other income, interest inco
Slide 21: Capital Management
@ 25 FRANKLIN TEMPLETON INVESTMENTS. Capital Management
Slide 22: Strong Dividend Growth Increased Every Year Since 1981
Unaudited Strong Dividend Growth Increased Every Year Since 1981 Compound Annual Growth of Regular Dividends as of December 31, 2014 25.0% 21.3% 18.6% 18.6% 16.8% 16.2% 15.4% 9.6% 1-year 3-year 5-year 10-year BEN U.S. Asset Managers Average (ex-BEN)1 1. U.S. asset managers include AMG, AB, APAM,
Slide 23: Share Repurchases Accretive to Earnings per Share
Unaudited Share Repurchases Accretive to Earnings per Share Change in Ending Shares Outstanding 15% U.S. Asset Managers (ex-BEN)1: 2.3% 10% Compound Annual 5% Dilution 0% -5% BEN: 1.9% -10% Compound Annual Accretion -15% 12/09 6/10 12/10 6/11 12/11 6/12 12/12 6/13 12/13 6/14 12/14 BEN U.S. Asset
Slide 24: Return of Capital Distributing U.S. Free Cash Flow
Unaudited Return of Capital Distributing U.S. Free Cash Flow Trailing 12 Months Share Repurchases and Dividends1 (US$ millions and percentage of net income) 1,267 962 999 923 27% 792 31% 31% 26% 24% 27% 12% 12% 13% 13% 12/13 3/14 6/14 9/14 12/14 Dividends Share Repurchases 1. The chart above ill
Slide 25: Appendix
PLETON EM. INVESTMENTS. Appendix
Slide 26: Strong Balance Sheet
Unaudited Strong Balance Sheet Net Cash and Investments1 (US$ billions) 9.5 9.2 7.3 6.5 5.9 7.4 9.5 5.6 6.5 4.8 1.1 1.8 0.9 0.8 FYE-9/11 FYE-9/12 FYE-9/13 FYE-9/14 12/14 U.S. Net Cash and Investments Non-U.S. Net Cash and Investments 1. Net cash and investments consists of Franklin Resources, In
Slide 27: Sales and Distribution Summary
Unaudited Sales and Distribution Summary (in US$ millions, for the three months ended) Dec-14 Sep-14 Change % Change This table summarizes the asset- and sales- Asset-based fees $ 447.8 $ 462.6 based distribution fees, net of expense. Asset-based expenses (567.6) (575.5) • Asset-based expenses are g
Slide 28: Consolidated SIPs and VIEs Related Adjustments
Unaudited Consolidated SIPs and VIEs Related Adjustments (in US$ millions, for the three months ended) Dec-14 This table summarizes the impact of Operating Revenues $ (2.5) consolidating SIPs and VIEs on the Company’s Operating Expenses 3.0 reported U.S. GAAP operating results. Operating Income (5.5