Franklin Resources, Inc. · NYSE:BEN

Franklin Resources — Q2 2017 Earnings Presentation

25 slides from Franklin Resources's earnings presentation, Apr 28, 2017

  1. Slide 1: Franklin Resources, Inc. Second Quarter Results

    Franklin Resources, Inc. Greg Johnson Chairman and Chief Executive Officer Second Quarter Results Ken Lewis Chief Financial Officer April 28, 2017

  2. 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

  3. Slide 3: Commentary and Conference Call Details

    Commentary and Conference Call Details A written commentary on the results by Chairman and CEO Greg Johnson and CFO and Executive Vice President Ken Lewis will be available today at approximately 8:30 a.m. Eastern Time. Access to the written commentary and accompanying slides will be available via i

  4. Slide 4: Highlights

    Highlights Relative investment performance continues to rebound for many key strategies, particularly equity and hybrid funds which reported its highest asset-weighted 1-year INVESTMENT ranking since 2013, with 84% of assets in the top two quartiles for the period, while PERFORMANCE long-term relati

  5. Slide 5: Investment Performance and Flows

    Investment Performance and Flows

  6. Slide 6: Investment Performance: U.S.-Registered and Cross-Border Mutual Funds

    Investment Performance U.S.-Registered and Cross-Border Mutual Funds Percentage of Total Long-Term Assets ($484 billion) in the Top Two Peer Group Quartiles 3-Year 5-Year 10-Year 49% 71% 81% Equity & Hybrid - $285 billion 34% 72% 77% Fixed Income - $199 billion 70% 69% 86% The peer group rankings ar

  7. Slide 7: Assets Under Management Overview

    Assets Under Management Overview (in US$ billions, for the three months ended) Simple Monthly Average vs. End of Period As of March 31, 2017 1% 42% 737 743 740 732 736 733 732 740 3% 723 720 4% 67% 12% 38% 14% 19% 3/16 6/16 9/16 12/16 3/17 Mar-17 United States $ 499.3  Average AUM  Ending AUM Mar-

  8. Slide 8: 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 Net Market Change and Other 31.0 30.5 23.2 22.7 22.7 24.5 18.9 (15.0) (14.4) (11.0) (20.8) (17.7) 4.5 1.1 (41.8) (44.6) (44.5) (47.2) (46.7) (0.5) 3/16 6/16 9/16 12/16 3/17 3/16 6/16 9/16 12/16 3/

  9. Slide 9: 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 11.5 11.3 12.4 12.0 10.3 10.9 7.7 8.5 5.5 6.5 2.5 2.1 2.9 3.4 2.6 2.5 2.1 2.9 2.0 2.0 (4.2) (5.2) (4.8) (3.3) (5.7) (5.6) (5.8) (6.2) (6.0) (7.5) (12.2) (11.5) (1

  10. Slide 10: 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 9.0 6.9 6.7 5.4 5.9 6.2 6.3 6.1 5.0 4.9 (2.9) (2.0) (6.4) (7.4) (6.7) (5.7) (7.7) (7.5) (7.5) (10.7) (9.1) (11

  11. Slide 11: 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 4.3 3.9 4.0 4.2 3.6 3.5 3.7 3.6 3.1 2.8 (0.5) (0.6) (0.5) (0.9) (1.7) (1.1) (1.2) (2.2) (2.1) (1.9) (5.2) (5.0) (5.5) (5.8) (6.4) (6.4) (6.0) (6.8) (6.7) (7.5) 3/16 6/16 9/16 12/16

  12. Slide 12: 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 4.2 2.4 2.6 2.6 2.6 2.2 2.2 1.9 1.9 1.9 0.9 1.1 0.6 0.5 (0.4) (0.4) (0.8) (1.5) (1.3) (2.2) (2.1) (2.0) (2.3) (2.8) (3.4) (3.7) (3.7) (3

  13. Slide 13: Financial Results

    @. FRANKLIN TEMPLETON INVESTMENTS. Financial Results

  14. Slide 14: 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 $0.82 $0.77 $0.77 595 579 587 $0.74 537 556 $0.61 472 446 440 421 360 3/16 6/16 9/16 12/16 3/17 3/16 6/16 9/16 12/16 3/17  Operating Inc

  15. Slide 15: Operating Revenues

    Unaudited Operating Revenues (in US$ millions, for the three months ended) Mar-17 vs. Mar-17 vs. Mar-17 Dec-16 Sep-16 Jun-16 Mar-16 Dec-16 Mar-16 Investment management fees $ 1,089.2 $ 1,063.2 2% $ 1,096.3 $ 1,093.5 $ 1,095.2 (1%) Sales and distribution fees 431.2 419.3 3% 440.8 450.2 437.0 (1%) Sha

  16. Slide 16: Operating Expenses

    Unaudited Operating Expenses (in US$ millions, for the three months ended) Mar-17 vs. Mar-17 vs. Mar-17 Dec-16 Sep-16 Jun-16 Mar-16 Dec-16 Mar-16 Sales, distribution and marketing $ 534.8 $ 520.0 3% $ 536.2 $ 553.4 $ 531.7 1% Compensation and benefits 343.4 311.5 10% 317.2 326.9 374.3 (8%) Informati

  17. Slide 17: Operating Leverage

    Unaudited Operating Leverage Operating Margin (%) vs. Average AUM (in US$ billions for the fiscal year ended) 37.9% 38.1% 37.3% 36.6% 36.1% 35.4% 35.7% 34.8% 33.3% 33.5% 888 870 808 28.7% 749 Average AUM: 706 728 694 2.3% CAGR 582 605 571 442 09/07 09/08 09/09 09/10 09/11 09/12 09/13 09/14 09/15 09/

  18. Slide 18: Other Income – U.S. GAAP

    Unaudited Other Income – U.S. GAAP (in US$ millions, for the three months ended March 31, 2017) (8.8) 1.8 8.4 22.7 (12.6) (3.3) 36.3 72.0 63.2 18.7 Dividend and Equity method Available-for- Trading Interest Foreign Consolidated Total other Noncontrolling Other income, interest income investments sal

  19. Slide 19: Capital Management

    @. FRANKLIN TEMPLETON INVESTMENTS. Capital Management

  20. Slide 20: Share Repurchases Accretive to Earnings per Share

    Unaudited Share Repurchases Accretive to Earnings per Share Change in Ending Shares Outstanding 20% 15% U.S. Asset Managers (ex- 10% BEN)1: 2.2% Compound Annual Dilution 5% 0% -5% -10% BEN: 2.7% Compound -15% Annual Accretion -20% 3/12 9/12 3/13 9/13 3/14 9/14 3/15 9/15 3/16 9/16 3/17  BEN  U.S. A

  21. Slide 21: 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) $1,977 $1,856 $1,745 $1,608 $1,444 97% 87% 77% 69% 57% 24% 25% 24% 25% 24% 3/16 6/16 9/16 12/16 3/17  Dividends  Share Repurchases 1. The cha

  22. Slide 22: Appendix

    @. FRANKLIN TEMPLETON INVESTMENTS. Appendix

  23. Slide 23: Strong Balance Sheet

    Unaudited Strong Balance Sheet Net Cash and Investments1 (US$ billions) 9.6 9.7 9.9 9.2 7.3 7.4 7.9 8.5 9.9 6.5 1.8 1.7 0.8 1.2 FYE-9/13 FYE-9/14 FYE-9/15 FYE-9/16 3/17  U.S. Net Cash and Investments  Non-U.S. Net Cash and Investments 1. Net cash and investments consists of Franklin Resources, Inc

  24. Slide 24: Sales and Distribution Summary

    Unaudited Sales and Distribution Summary (in US$ millions, for the three months ended) Mar-17 Dec-16 Change % Change Asset-based fees $ 332.2 $ 338.3 (6.1) (2%) Asset-based expenses (429.6) (431.8) 2.2 (1%) Asset-based fees, net $ (97.4) $ (93.5) $ (3.9) 4% Sales-based fees 96.6 78.8 17.8 23% Contin

  25. Slide 25: Consolidated SIPs Related Adjustments

    Unaudited Consolidated SIPs Related Adjustments (in US$ millions, for the three and six months ended) FY This table summarizes the impact of Mar-17 Mar-17 consolidating SIPs on the Company’s reported Operating Revenues $ 12.9 $ 25.8 U.S. GAAP financial results. Operating Expenses 3.7 9.2 Operating I

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