Franklin Resources, Inc. · NYSE:BEN
Franklin Resources — Q1 2017 Earnings Presentation
26 slides from Franklin Resources's earnings presentation, Jan 27, 2017
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 27, 2017
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: 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
Slide 4: Highlights
Highlights Relative investment performance significantly improved this quarter, with the majority of assets returning to the top two quartiles for all time periods, and the improvement in performance against benchmarks was even more pronounced INVESTMENT Many of our key funds, including Franklin Inc
Slide 5: Investment Performance and Flows
Investment Performance and Flows
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 ($472 billion) in the Top Two Peer Group Quartiles 3-Year 5-Year 10-Year 67% 68% 82% Equity & Hybrid - $275 billion 63% 66% 77% Fixed Income - $197 billion 73% 69% 89% The peer group rankings ar
Slide 7: Assets Under Management Overview
Assets Under Management Overview (in US$ billions, for the three months ended) Simple Monthly Average vs. End of Period As of December 31, 2016 41% 1% 782 764 2% 737 743 740 732 736 733 723 720 4% 68% 12% 14% 39% 19% 12/15 3/16 6/16 9/16 12/16 Sales Region Dec-16 United States $ 491.0 Average AUM
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 18.9 33.1 23.2 24.5 22.7 22.7 (8.9) 4.5 (15.0) (17.7) (14.4) (20.8) 1.9 1.1 (41.8) (44.6) (47.2) (46.7) (53.3) (0.5) 12/15 3/16 6/16 9/16 12/16 12/15 3/16 6/16 9/16 12/
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 11.9 11.5 11.3 10.9 10.3 10.2 7.2 7.7 8.5 5.5 6.5 3.4 2.5 3.4 2.6 2.5 2.1 2.0 2.0 2.1 (5.4) (5.7) (4.2) (3.3) (5.6) (5.2) (5.3) (4.8) (7.5) (6.2) (12.8) (12.2) (1
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 15.0 6.6 6.7 6.2 6.1 5.4 4.9 5.9 6.3 5.0 (2.9) (2.3) (2.3) (6.4) (5.7) (7.4) (7.7) (7.5) (7.5) (9.1) (11.9) (1
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 3.6 3.5 3.7 4.0 3.9 4.0 3.5 3.6 3.1 2.8 1.2 (0.9) (0.5) (0.6) (1.1) (1.2) (2.2) (2.1) (1.7) (3.7) (5.2) (5.0) (5.5) (5.8) (6.4) (6.7) (7.0) (6.8) (7.5) (9.2) 12/15 3/16 6/16 9/16 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 2.4 2.6 2.6 2.6 2.2 2.2 2.3 1.7 1.9 1.9 0.9 1.1 0.6 0.3 (0.4) (0.8) (1.5) (1.3) (2.2) (2.3) (2.2) (2.1) (2.1) (2.0) (3.4) (3.7) (3.7) (3
Slide 13: Financial Results
@. FRANKLIN TEMPLETON INVESTMENTS. Financial Results
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 654 $0.82 $0.77 $0.77 595 579 587 $0.74 537 $0.61 472 448 446 440 360 12/15 3/16 6/16 9/16 12/16 12/15 3/16 6/16 9/16 12/16 Operating I
Slide 15: Operating Revenues
Unaudited Operating Revenues (in US$ millions, for the three months ended) Dec-16 vs. Dec-16 vs. Dec-16 Sep-16 Jun-16 Mar-16 Dec-15 Sep-16 Dec-15 Investment management fees $ 1,063.2 $ 1,096.3 (3%) $ 1,093.5 $ 1,095.2 $ 1,186.7 (10%) Sales and distribution fees 419.3 440.8 (5%) 450.2 437.0 478.4 (12
Slide 16: Operating Expenses
Unaudited Operating Expenses (in US$ millions, for the three months ended) Dec-16 vs. Dec-16 vs. Dec-16 Sep-16 Jun-16 Mar-16 Dec-15 Sep-16 Dec-15 Sales, distribution and marketing $ 520.0 $ 536.2 (3%) $ 553.4 $ 531.7 $ 588.6 (12%) Compensation and benefits 311.5 317.2 (2%) 326.9 374.3 342.5 (9%) Inf
Slide 17: 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% 37.6% 35.4% 35.7% 34.8% 33.5% 33.3% 888 870 808 28.7% 749 Average AUM: 694 706 723 2.2% CAGR 582 605 571 442 09/07 09/08 09/09 09/10 09/11 09/12 09/13 09/14 09/15 09/
Slide 18: Other Income – U.S. GAAP
Unaudited Other Income – U.S. GAAP (in US$ millions, for the three months ended December 31, 2016) 2.0 23.9 (29.9) 28.6 (0.1) (13.3) 34.2 61.4 32.8 16.0 Dividend and Equity method Available-for- Trading Interest Foreign Consolidated Total other Noncontrolling Other income, interest income investment
Slide 19: Capital Management
@. FRANKLIN TEMPLETON INVESTMENTS. Capital Management
Slide 20: Strong Dividend Growth Increased Every Year Since 1981
Unaudited Strong Dividend Growth Increased Every Year Since 1981 Compound Annual Growth of Regular Dividends Declared as of December 31, 2016 19% 17% 15% 11% 6% 6% 5% -2% 1-year 3-year 5-year 10-year BEN U.S. Asset Managers Average (ex-BEN)1 1. U.S. asset managers include AB, AMG, APAM, APO, ARE
Slide 21: 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: 2.5% Compound Annual Dilution 5% 0% -5% -10% BEN: 2.7% Compound -15% Annual Accretion -20% 12/11 6/12 12/12 6/13 12/13 6/14 12/14 6/15 12/15 6/16 12/16 BEN
Slide 22: 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 $1,696 $1,745 $1,608 97% 87% 77% 68% 69% 20% 24% 25% 24% 25% 12/15 3/16 6/16 9/16 12/16 Dividends Share Repurchases 1. The ch
Slide 23: Appendix
@. FRANKLIN TEMPLETON INVESTMENTS. Appendix
Slide 24: Strong Balance Sheet
Unaudited Strong Balance Sheet Net Cash and Investments1 (US$ billions) 9.6 9.7 9.7 9.2 7.3 7.4 7.9 8.5 9.7 6.5 1.8 1.7 0.8 1.2 FYE-9/13 FYE-9/14 FYE-9/15 FYE-9/16 12/16 U.S. Net Cash and Investments Non-U.S. Net Cash and Investments 1. Net cash and investments consists of Franklin Resources, In
Slide 25: Sales and Distribution Summary
Unaudited Sales and Distribution Summary (in US$ millions, for the three months ended) Dec-16 Sep-16 Change % Change This table summarizes the asset- and sales- Asset-based fees $ 338.3 $ 347.8 (9.5) (3%) based distribution fees, net of expense. Asset-based expenses (431.8) (438.2) 6.4 (1%) • Asset-
Slide 26: Consolidated SIPs Related Adjustments
Unaudited Consolidated SIPs Related Adjustments (in US$ millions, for the three months ended) Dec-16 This table summarizes the impact of Operating Revenues $ 12.9 consolidating SIPs on the Company’s reported Operating Expenses 5.5 U.S. GAAP financial results. Operating Income 7.4 Investment Income (