Franklin Resources, Inc. · NYSE:BEN
Franklin Resources — Q2 2015 Earnings Presentation
28 slides from Franklin Resources's earnings presentation, Apr 29, 2015
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 29, 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 • The majority of U.S.-registered and cross-border assets continue to outperform their Investment respective peer group medians with 72%, 72% and 78% of assets in the top two quartiles Performance on a 3-, 5-, and 10-year basis • Net new flows to U.S. and global equity as well as U.S. tax
Slide 5: Investment Performance
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 March. 31, 2015) Total Equity & Hybrid Fixed-Income ($592 billion) ($323 billion) ($269 billion) 78% 68% 89% 89% 78% 77% 75% 79% 72% 72% 70% 6
Slide 7: Assets Under Management and Flows
Assets Under Management and Flows
Slide 8: Assets Under Management Growth
Assets Under Management Growth (in US$ billions, for the three months ended) Simple Monthly Average vs. End of Period 920.5 912.1 902.8 898.0 894.1 876.4 886.9 880.1 881.6 880.6 3/14 6/14 9/14 12/14 3/15 Average AUM Ending AUM 8
Slide 9: Assets Under Management Diversification
Assets Under Management Diversification As of March 31, 2015 Investment Objective (in US$ billions, for the three months ended) Mar-15 Dec-14 % Change Equity $ 367.4 $ 361.6 2% Hybrid 158.2 157.1 1% 41% Fixed-Income 348.4 354.5 (2%) 1% Cash Management 6.6 6.9 (4%) Total $ 880.6 $ 880.1 0% 3% 4% Sale
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 31.9 49.8 47.6 46.7 46.5 45.4 15.9 7.0 2.5 (6.8) (0.8) (3.4) (5.3) (12.1) (45.1) (21.4) (46.0) (50.0) (51.9) (56.7) 3/14 6/14 9/14 12/14 3/15 3/14 6/14 9/14 12/
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 19.8 19.6 18.8 17.3 17.2 17.5 16.0 15.3 14.4 13.7 10.1 9.2 8.4 5.5 6.9 5.4 4.6 4.0 4.0 5.0 (4.6) (4.8) (4.0) (4.7) (5.4) (5.8) (5.8) (6.2) (6.9) (7.6) (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 15.6 15.0 15.9 13.2 14.3 11.8 11.4 10.8 11.6 1.4 2.5 0.8 (1.2) (1.2) (1.6) (2.8) (3.5) (4.0) (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 8.8 8.2 8.1 8.1 7.5 6.7 5.6 5.5 5.2 4.4 2.6 3.1 2.2 1.4 1.0 0.3 (0.6) (0.6) (0.9) (2.2) (6.2) (6.0) (6.4) (6.5) (6.0) (6.1) (6.5) (6.4) (6.6) (7.2) 3/14 6/14 9/14 12/14 3/15 3/14 6/
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 4.5 4.4 3.7 3.8 3.6 2.3 2.4 2.0 2.0 2.0 0.7 0.2 0.2 0.4 0.0 0.2 (0.4) (0.7) (0.8) (1.5) (2.4) (2.1) (2.2) (2.7) (3.6) (3.3) (3.6) (4.2)
Slide 15: High Level View of Selected 2015 Strategic Initiatives
High Level View of Selected 2015 Strategic Initiatives • Maintain or enhance investment performance such that the majority of assets are in the top half of their respective peer group. • Further enhanced strong collaborative relationships across investment teams via the Global Sector Collaboration I
Slide 16: Financial Results
FRANKLIN TEMPLETON INVESTMENTS Financial Results
Slide 17: 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 $1.02 786 787 782 758 $0.98 $0.92 $0.91 641 $0.89 607 579 566 561 3/14 6/14 9/14 12/14 3/15 3/14 6/14 9/14 12/14 3/15 Operating Inc
Slide 18: Operating Revenues
Unaudited Operating Revenues (in US$ millions, for the three months ended) Mar-15 vs. Mar-15 vs. Mar-15 Dec-14 Dec-14 Sep-14 Jun-14 Mar-14 Mar-14 Investment management fees $ 1,347.6 $ 1,382.4 (3%) $ 1,430.7 $ 1,393.2 $ 1,368.0 (1%) Sales and distribution fees 580.0 595.0 (3%) 627.4 643.7 638.6 (9%)
Slide 19: Operating Expenses
Unaudited Operating Expenses (in US$ millions, for the three months ended) Mar-15 vs. Mar-15 vs. Mar-15 Dec-14 Dec-14 Sep-14 Jun-14 Mar-14 Mar-14 Sales, distribution and marketing $ 710.5 $ 731.5 (3%) $ 755.9 $ 789.3 $ 766.3 (7%) Compensation and benefits 377.5 375.5 1% 365.9 380.7 372.3 1% Informat
Slide 20: 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% 37.8% 33.5% 36.6% 34.8% 35.4% 32.3% 33.3% 888 889 808 29.9% 28.7% 706 Average 694 AUM: 8.0% 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 21: Other Income – U.S. GAAP
Unaudited Other Income – U.S. GAAP (in US$ millions, for the three months ended March 31, 2015) (0.2) 20.7 (14.5) 68.8 101.2 86.7 6.0 (1.7) 5.3 1.2 1.1 Dividend and Equity method Available-for- Trading Interest Foreign Consolidated Consolidated Total other Noncontrolling Other income, interest incom
Slide 22: Capital Management
FRANKLIN TEMPLETON INVESTMENTS Capital Management
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: 2.2% 10% Compound Annual 5% Dilution 0% -5% BEN: 1.9% -10% Compound Annual Accretion -15% 3/10 9/10 3/11 9/11 3/12 9/12 3/13 9/13 3/14 9/14 3/15 BEN U.S. Asset Manag
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 1,296 962 999 923 27% 27% 31% 31% 26% 27% 27% 12% 13% 13% 3/14 6/14 9/14 12/14 3/15 Dividends Share Repurchases 1. The chart above il
Slide 25: Appendix
L PLETON INVESTMENTS Appendix
Slide 26: Strong Balance Sheet
Unaudited Strong Balance Sheet Net Cash and Investments1 (US$ billions) 9.2 9.4 7.3 6.5 5.9 7.4 9.4 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 3/15 U.S. Net Cash and Investments Non-U.S. Net Cash and Investments 1. Net cash and investments consists of Franklin Resources, Inc
Slide 27: Sales and Distribution Summary
Unaudited Sales and Distribution Summary (in US$ millions, for the three months ended) Mar-15 Dec-14 Change % Change This table summarizes the asset- and sales- Asset-based fees $ 428.3 $ 447.8 based distribution fees, net of expense. Asset-based expenses (541.6) (567.6) • 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) FYTD This table summarizes the impact of Mar-15 Mar-15 consolidating SIPs and VIEs on the Company’s Operating Revenues $ 3.4 $ 0.9 reported U.S. GAAP operating results. Operating Expenses 4.1 7.1 O