Franklin Resources, Inc. · NYSE:BEN
Franklin Resources — Q3 2015 Earnings Presentation
27 slides from Franklin Resources's earnings presentation, Jul 29, 2015
Slide 1: Franklin Resources, Inc. Third Quarter Results
Franklin Resources, Inc. Greg Johnson Chairman and Chief Executive Officer Third Quarter Results Ken Lewis Chief Financial Officer July 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 • Fixed-income relative investment performance of our U.S. retail and cross-border funds Investment remains strong across the 1-, 3-, 5- and 10-year periods Performance • Majority of U.S. and global equity assets are also beating their peer group medians for the trailing 3-, 5- and 10-yea
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 June 30, 2015) Total Equity & Hybrid Fixed-Income ($580 billion) ($318 billion) ($262 billion) 79% 70% 90% 90% 76% 79% 79% 80% 80% 72% 70% 51%
Slide 7: Assets Under Management and Flows
Assets Under Management and Flows
Slide 8: Assets Under Management Growth
Assets Under Management Growth (in US$ billions, for the three months ended) Simple Monthly Average vs. End of Period 920.5 912.1 902.8 898.0 894.1 880.1 881.6 880.6 882.6 866.5 6/14 9/14 12/14 3/15 6/15 Average AUM Ending AUM 8
Slide 9: Assets Under Management Diversification
Assets Under Management Diversification As of June 30, 2015 Investment Objective (in US$ billions, for the three months ended) Jun-15 Mar-15 % Change Equity $ 361.7 $ 367.4 (2%) Hybrid 154.8 158.2 (2%) 42% Fixed-Income 343.0 348.4 (2%) 1% Cash Management 7.0 6.6 6% Total $ 866.5 $ 880.6 (2%) 3% 4% S
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 47.6 45.4 46.7 46.5 37.7 31.9 2.5 7.0 (0.8) (2.1) (3.4) (5.3) (11.4) (12.1) (21.4) (45.1) (46.0) (50.0) (51.9) (49.0) 6/14 9/14 12/14 3/15 6/15 6/14 9/14 12/14
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 19.6 17.3 17.2 17.5 14.6 16.0 15.3 14.4 13.7 12.3 10.1 9.2 8.4 6.9 6.4 4.6 4.0 4.0 5.0 3.9 (4.6) (4.8) (4.0) (4.7) (5.6) (5.4) (5.8) (6.2) (7.6) (7.9) (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 11.8 12.9 11.4 10.8 11.6 9.8 1.4 2.5 0.8 (1.2) (1.6) (2.8) (3.5) (4.0) (2.9) (4.6) (13.1)
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 8.1 7.5 6.7 5.6 5.5 5.6 5.2 4.6 4.4 3.1 2.2 1.0 0.3 (0.6) (0.9) (0.6) (1.0) (1.7) (2.2) (6.0) (5.6) (6.0) (6.1) (6.4) (6.5) (6.6) (6.5) (6.4) (7.3) 6/14 9/14 12/14 3/15 6/15 6/1
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 3.8 3.6 2.7 2.4 2.1 2.0 2.0 2.0 0.0 0.2 0.2 0.2 0.4 (0.4) (0.7) (0.5) (0.8) (0.7) (2.4) (2.1) (2.2) (2.7) (2.5) (3.6) (3.4) (4.2
Slide 15: Financial Results
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 $1.02 787 782 770 758 $0.98 $0.92 $0.91 641 607 579 566 504 $0.82 6/14 9/14 12/14 3/15 6/15 6/14 9/14 12/14 3/15 6/15 Operating Inc
Slide 17: Operating Revenues
Unaudited Operating Revenues (in US$ millions, for the three months ended) Jun-15 vs. Jun-15 vs. Jun-15 Mar-15 Mar-15 Dec-14 Sep-14 Jun-14 Jun-14 Investment management fees $ 1,340.9 $ 1,347.6 0% $ 1,382.4 $ 1,430.7 $ 1,393.2 (4%) Sales and distribution fees 566.8 580.0 (2%) 595.0 627.4 643.7 (12%)
Slide 18: Operating Expenses
Unaudited Operating Expenses (in US$ millions, for the three months ended) Jun-15 vs. Jun-15 vs. Jun-15 Mar-15 Mar-15 Dec-14 Sep-14 Jun-14 Jun-14 Sales, distribution and marketing $ 694.0 $ 710.5 (2%) $ 731.5 $ 755.9 $ 789.3 (12%) Compensation and benefits 363.5 377.5 (4%) 375.5 365.9 380.7 (5%) Inf
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% 38.0% 33.5% 36.6% 34.8% 35.4% 32.3% 33.3% 888 887 808 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 20: Other Income – U.S. GAAP
Unaudited Other Income – U.S. GAAP (in US$ millions, for the three months ended June 30, 2015) 10.5 (6.6) 1.4 4.9 (13.7) (18.4) 2.4 (28.0) (29.2) (9.6) 11.9 Dividend and Equity method Available-for- Trading Interest Foreign Consolidated Consolidated Total other Noncontrolling Other income, interest
Slide 21: Capital Management
FRANKLIN TEMPLETON INVESTMENTS Capital Management
Slide 22: 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% 6/10 12/10 6/11 12/11 6/12 12/12 6/13 12/13 6/14 12/14 6/15 BEN U.S. Asset
Slide 23: 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) 1,403 1,267 1,296 999 923 32% 27% 27% 31% 26% 27% 27% 29% 13% 13% 6/14 9/14 12/14 3/15 6/15 Dividends Share Repurchases 1. The chart above
Slide 24: Appendix
L PLETON INVESTMENTS Appendix
Slide 25: Strong Balance Sheet
Unaudited Strong Balance Sheet Net Cash and Investments1 (US$ billions) 9.8 9.2 7.3 6.5 5.9 7.4 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 6/15 U.S. Net Cash and Investments Non-U.S. Net Cash and Investments 1. Net cash and investments consists of Franklin Resources, Inc. ca
Slide 26: Sales and Distribution Summary
Unaudited Sales and Distribution Summary (in US$ millions, for the three months ended) Jun-15 Mar-15 Change % Change This table summarizes the asset- and sales- Asset-based fees $ 425.9 $ 428.3 based distribution fees, net of expense. Asset-based expenses (547.7) (541.6) • Asset-based expenses are g
Slide 27: Consolidated SIPs and VIEs Related Adjustments
Unaudited Consolidated SIPs and VIEs Related Adjustments (in US$ millions, for the three and nine months ended) This table summarizes the impact of FYTD consolidating SIPs and VIEs on the Company’s Jun-15 Jun-15 reported U.S. GAAP operating results. Operating Revenues $ 19.5 $ 20.4 Operating Expense