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 28, 2016
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 and CEO 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 live teleconfe
Slide 4: Highlights
Highlights Relative investment performance improved across all major categories over the trailing INVESTMENT 1-year period PERFORMANCE Equity and hybrid product performance improved across the 1-, 3-, 5-, and 10-year & FLOWS periods Redemptions continued to slow and long-term net outflows broadly im
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 Total Long-Term Assets ($484 billion) in the Top Two Peer Group Quartiles 3-Year 5-Year 10-Year 26% 67% 77% Equity & Hybrid - $269 billion 36% 71% 76% Fixed Income - $215 billion 13% 61% 78% The peer group rankings ar
Slide 7: Assets Under Management and Flows
Assets Under Management and Flows
Slide 8: Assets Under Management Growth
Assets Under Management Growth (in US$ billions, for the three months ended) Simple Monthly Average vs. End of Period 882.6 866.5 824.5 770.9 781.5 763.9 737.1 742.6 739.8 732.1 6/15 9/15 12/15 3/16 6/16 Average AUM Ending AUM 8
Slide 9: Assets Under Management Diversification
Assets Under Management Diversification As of June 30, 2016 Investment Objective (in US$ billions, for the three months ended) Jun-16 Mar-16 % Change Equity $ 296.8 $ 304.2 (2%) Hybrid 135.0 132.6 2% 41% Fixed Income 294.2 299.6 (2%) 1% Cash Management 6.1 6.2 (2%) 3% Total $ 732.1 $ 742.6 (1%) 4% 6
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 37.7 15.0 30.5 33.1 9.8 23.2 22.7 4.2 (2.1) (11.4) (20.4) (19.2) (28.4) (24.1) (41.8) (47.2) (49.0) (53.3) (65.8) (58.1) 6/15 9/15 12/15 3/16 6/16 6/15 9/15 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 14.6 12.5 11.9 11.5 11.3 12.3 9.8 10.2 6.4 7.2 6.5 3.9 4.3 5.5 3.5 3.4 2.5 3.4 2.6 2.0 (4.2) (4.2) (5.6) (5.4) (5.7) (5.3) (4.8) (7.9) (8.2) (7.5) (12.8) (12.2) (
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 15.0 12.9 9.8 9.7 8.1 6.6 5.4 6.7 6.2 5.0 (4.6) (2.9) (3.6) (5.1) (5.4) (6.6) (6.6) (7.6) (11.9) (11.5) (10.2)
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 5.6 4.6 4.3 3.9 3.5 3.6 4.0 3.9 3.6 3.1 (1.0) (1.6) (2.2) (1.7) (2.2) (3.1) (2.9) (3.5) (5.2) (4.4) (5.6) (5.5) (5.6) (5.8) (7.0) (7.3) (6.8) (7.6) (8.2) (9.2) 6/15 9/15 12/15 3/16
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 2.7 2.8 2.1 2.2 2.4 2.3 1.7 1.7 1.9 1.9 0.1 0.4 (0.2) (0.5) (0.7) (1.4) (1.6) (1.8) (2.2) (2.2) (2.3) (2.5) (2.3) (2.5) (3.5) (3.4) (3.7
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 770 718 654 595 $0.82 537 $0.74 $0.77 504 $0.59 $0.61 448 446 358 360 6/15 9/15 12/15 3/16 6/16 6/15 9/15 12/15 3/16 6/16 Operating Inc
Slide 17: Operating Revenues
Unaudited Operating Revenues (in US$ millions, for the three months ended) Jun-16 vs. Jun-16 vs. Jun-16 Mar-16 Dec-15 Sep-15 Jun-15 Mar-16 Jun-15 Investment management fees $ 1,093.5 $ 1,095.2 0% $ 1,186.7 $ 1,256.9 $ 1,340.9 (18%) Sales and distribution fees 450.2 437.0 3% 478.4 510.6 566.8 (21%) S
Slide 18: Operating Expenses
Unaudited Operating Expenses (in US$ millions, for the three months ended) Jun-16 vs. Jun-16 vs. Jun-16 Mar-16 Dec-15 Sep-15 Jun-15 Mar-16 Jun-15 Sales, distribution and marketing $ 553.4 $ 531.7 4% $ 588.6 $ 626.3 $ 694.0 (20%) Compensation and benefits 326.9 374.3 (13%) 342.5 336.8 363.5 (10%) Inf
Slide 19: Operating Leverage
Unaudited Operating Leverage Operating Margin (%) vs. Average AUM (in US$ billions for the fiscal year ended) 37.3% 37.9% 38.1% 36.6% 35.7% 35.4% 33.3% 34.8% 33.5% 32.3% 888 870 808 28.7% 753 Average 694 706 AUM: 4.6% 582 605 571 CAGR 482 442 09/06 09/07 09/08 09/09 09/10 09/11 09/12 09/13 09/14 09/
Slide 20: Other Income – U.S. GAAP
Unaudited Other Income – U.S. GAAP (in US$ millions, for the three months ended June 30, 2016) (12.3) 2.2 14.1 0.0 (0.6) 35.4 (0.9) 67.6 11.4 53.5 18.3 Dividend and Equity method Available-for- Trading Interest Foreign Consolidated Consolidated Total other Noncontrolling Other income, interest incom
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 20% U.S. Asset Managers (ex-BEN)1: 2.7% 10% Compound Annual Dilution 0% -10% BEN: 2.4% Compound Annual -20% Accretion 6/11 12/11 6/12 12/12 6/13 12/13 6/14 12/14 6/15 12/15 6/16 BEN U.S. Asset Manager
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) 1,977 1,856 1,741 1,696 1,403 52% 97% 87% 32% 68% 29% 34% 20% 24% 25% 6/15 9/15 12/15 3/16 6/16 Dividends Share Repurchases 1. The chart ab
Slide 24: Appendix
@. FRANKLIN TEMPLETON INVESTMENTS. Appendix
Slide 25: Strong Balance Sheet
Unaudited Strong Balance Sheet Net Cash and Investments1 (US$ billions) 9.2 9.6 9.6 7.3 6.5 7.4 7.9 9.6 5.6 6.5 1.8 1.7 0.9 0.8 FYE-9/12 FYE-9/13 FYE-9/14 FYE-9/15 6/16 U.S. Net Cash and Investments Non-U.S. Net Cash and Investments 1. Net cash and investments consists of Franklin Resources, Inc
Slide 26: Sales and Distribution Summary
Unaudited Sales and Distribution Summary (in US$ millions, for the three months ended) Jun-16 Mar-16 Change % Change This table summarizes the asset- and sales- Asset-based fees $ 345.7 $ 339.9 5.8 2% based distribution fees, net of expense. Asset-based expenses (442.1) (433.8) (8.3) 2% • Asset-base
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) FY This table summarizes the impact of Jun-16 Jun-16 consolidating SIPs and VIEs on the Company’s Operating Revenues $ 21.1 $ 56.1 reported U.S. GAAP financial results. Operating Expenses