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 27, 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 Performance of some of our larger strategies continued to weigh on aggregate asset- INVESTMENT weighted performance and net new flows; however, we did start to see some PERFORMANCE encouraging signs in the form of improved performance as well as improved redemption & FLOWS trends, particu
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 ($490 billion) in the Top Two Peer Group Quartiles 3-Year 5-Year 10-Year 38% 56% 78% Equity & Hybrid - $270 billion 30% 44% 73% Fixed Income - $220 billion 47% 71% 84% The peer group rankings ar
Slide 7: Assets Under Management and Flows
Assets Under Management and Flows
Slide 8: Assets Under Management Growth
Assets Under Management Growth (in US$ billions, for the three months ended) Simple Monthly Average vs. End of Period 881.6 880.6 882.6 866.5 824.5 770.9 781.5 763.9 737.1 742.6 3/15 6/15 9/15 12/15 3/16 Average AUM Ending AUM 8
Slide 9: Assets Under Management Diversification
Assets Under Management Diversification As of March 31, 2016 Investment Objective (in US$ billions, for the three months ended) Mar-16 Dec-15 % Change Equity $ 304.2 $ 313.7 (3%) Hybrid 132.6 134.4 (1%) 41% Fixed-Income 299.6 309.2 (3%) 1% Cash Management 6.2 6.6 (6%) Total $ 742.6 $ 763.9 (3%) 3% 4
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 46.5 37.7 15.0 30.5 33.1 23.2 7.0 4.2 (2.1) (5.3) (11.4) (20.4) (24.1) (28.4) (47.2) (51.9) (49.0) (53.3) (65.8) (58.1) 3/15 6/15 9/15 12/15 3/16 3/15 6/15 9/15
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 17.5 14.6 13.7 12.5 11.9 11.5 12.3 9.2 9.8 10.2 6.4 7.2 5.0 3.9 4.3 5.5 3.5 3.4 2.5 3.4 (4.7) (5.6) (4.2) (5.4) (5.7) (5.3) (7.6) (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 15.9 15.0 11.6 12.9 9.8 9.7 8.1 6.7 6.6 5.4 (1.6) (4.6) (5.1) (5.4) (4.0) (2.9) (3.6) (6.6) (11.9) (11.5) (10.
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 6.7 5.5 5.6 4.6 4.3 3.9 3.9 3.5 3.1 4.0 0.3 (0.6) (1.0) (2.2) (1.7) (3.5) (3.1) (2.9) (4.4) (5.6) (5.5) (5.6) (6.6) (6.4) (6.8) (7.0) (7.3) (7.6) (8.2) (9.2) 3/15 6/15 9/15 12/15 3/
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 4.4 2.7 2.8 2.4 2.1 2.2 2.3 1.7 1.7 1.9 0.2 0.1 0.4 (0.5) (0.2) (0.7) (1.4) (1.8) (2.2) (2.5) (2.2) (2.3) (2.5) (2.3) (3.5) (3.4) (3.9)
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 758 770 718 $0.98 654 $0.82 537 $0.74 607 504 $0.59 $0.61 448 358 360 3/15 6/15 9/15 12/15 3/16 3/15 6/15 9/15 12/15 3/16 Operating Inc
Slide 17: Operating Revenues
Unaudited Operating Revenues (in US$ millions, for the three months ended) Mar-16 vs. Mar-16 vs. Mar-16 Dec-15 Sep-15 Jun-15 Mar-15 Dec-15 Mar-15 Investment management fees $ 1,095.2 $ 1,186.7 (8%) $ 1,256.9 $ 1,340.9 $ 1,347.6 (19%) Sales and distribution fees 437.0 478.4 (9%) 510.6 566.8 580.0 (25
Slide 18: Operating Expenses
Unaudited Operating Expenses (in US$ millions, for the three months ended) Mar-16 vs. Mar-16 vs. Mar-16 Dec-15 Sep-15 Jun-15 Mar-15 Dec-15 Mar-15 Sales, distribution and marketing $ 531.7 $ 588.6 (10%) $ 626.3 $ 694.0 $ 710.5 (25%) Compensation and benefits 374.3 342.5 9% 336.8 363.5 377.5 (1%) Info
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% 35.4% 36.6% 35.3% 33.3% 34.8% 33.5% 32.3% 888 870 808 28.7% 759 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 March 31, 2016) (12.2) 21.7 (9.6) (6.4) 0.7 7.3 13.5 (16.6) 14.1 12.5 5.2 Dividend and Equity method Available-for- Trading Interest Foreign Consolidated Consolidated Total other Noncontrolling Other income, interest inc
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: 3.0% 10% Compound Annual Dilution 0% -10% BEN: 2.5% Compound Annual -20% Accretion 3/11 9/11 3/12 9/12 3/13 9/13 3/14 9/14 3/15 9/15 3/16 BEN U.S. Asset Managers Ave
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) 1,856 1,741 1,696 1,403 1,296 52% 87% 27% 32% 68% 27% 29% 34% 20% 24% 3/15 6/15 9/15 12/15 3/16 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 9.4 7.3 6.5 7.4 7.9 9.4 5.6 6.5 1.8 1.7 0.9 0.8 FYE-9/12 FYE-9/13 FYE-9/14 FYE-9/15 03/16 U.S. Net Cash and Investments Non-U.S. Net Cash and Investments 1. Net cash and investments consists of Franklin Resources, In
Slide 26: Sales and Distribution Summary
Unaudited Sales and Distribution Summary (in US$ millions, for the three months ended) Mar-16 Dec-15 Change % Change This table summarizes the asset- and sales- Asset-based fees $ 339.9 $ 377.2 based distribution fees, net of expense. Asset-based expenses (433.8) (478.6) • 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 six months ended) FY This table summarizes the impact of Mar-16 Mar-16 consolidating SIPs and VIEs on the Company’s Operating Revenues $ 12.6 $ 35.0 reported U.S. GAAP financial results. Operating Expenses 6