Franklin Resources, Inc. · NYSE:BEN
Franklin Resources — Q4 2014 Earnings Presentation
28 slides from Franklin Resources's earnings presentation, Oct 27, 2014
Slide 1: Preliminary Fourth Quarter and Fiscal Year Results
Franklin Resources, Inc. Greg Johnson Chairman and Chief Executive Officer Preliminary Fourth Quarter and Ken Lewis Fiscal Year Results Chief Financial Officer October 27, 2014
Slide 2: Forward-Looking Statements
Forward-Looking Statements The financial results in this presentation are preliminary. 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 Securit
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 • Long-term relative performance of U.S. and cross-border funds remains strong across Investment equity, hybrid and fixed-income strategies Performance • Templeton Global Bond Fund and Templeton Global Total Return Fund upgraded to 5 stars by Morningstar • Stronger net new flows into fixe
Slide 5: Investment Performance
@ 25 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 Sep. 30, 2014) Total Equity & Hybrid Fixed-Income ($608 billion) ($324 billion) ($284 billion) 84% 77% 91% 84% 86% 91% 80% 84% 77% 80% 70% 75%
Slide 7: Assets Under Management and Flows
Assets Under Management and Flows
Slide 8: Assets Under Management Growth
Assets Under Management Growth (in US$ billions, for the three months ended) End of Period vs. Simple Monthly Average 920.5 912.1 902.8 898.0 879.1 886.9 876.4 865.9 844.7 827.8 9/13 12/13 3/14 6/14 9/14 Ending AUM Average AUM 8
Slide 9: Assets Under Management Diversification
Assets Under Management Diversification As of September 30, 2014 Investment Objective (in US$ billions, for the three months ended) Sep-14 Jun-14 % Change Equity $ 371.0 $ 388.3 (4%) Hybrid 159.0 162.5 (2%) 41% Fixed-Income 361.0 363.3 (1%) 1% Cash Management 7.0 6.4 9% Total $ 898.0 $ 920.5 (2%) 3%
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 36.0 33.1 31.9 48.0 49.8 49.8 47.6 45.4 15.9 0.0 2.5 (2.9) (0.8) (6.8) (21.4) (45.1) (46.0) (50.5) (49.7) (56.7) 9/13 12/13 3/14 6/14 9/14 9/13 12/13 3/14 6/14
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 20.9 19.7 19.8 19.6 17.3 17.3 18.8 16.7 16.0 15.3 7.1 8.4 5.5 6.9 4.5 5.2 5.4 4.6 4.0 5.4 (3.8) (4.7) (4.6) (4.8) (5.1) (4.8) (5.8) (5.4) (5.8) (6.9) (17.6) (17.4
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 15.1 16.1 15.9 15.6 15.0 13.2 14.3 12.5 11.8 11.4 3.1 1.4 2.5 1.2 (1.2) (1.2) (2.8) (3.6) (3.1) (8.8) (11.5) (
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 8.2 8.1 6.8 6.5 6.1 5.6 5.5 4.4 3.2 3.2 3.1 2.6 2.2 1.2 1.4 0.4 (0.6) (2.2) (4.1) (5.2) (5.1) (6.1) (6.2) (6.0) (6.4) (6.0) (6.1) (7.2) 9/13 12/13 3/14 6/14 9/14 9/13 12/13
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 4.6 4.3 4.5 3.7 3.8 2.5 2.3 2.0 1.9 2.0 0.5 0.7 0.2 0.2 (0.4) (0.7) (0.2) (3.4) (1.5) (2.4) (2.7) (5.4) (3.6) (3.3) (3.6) (3.9) (4.3) (4
Slide 15: Financial Results
@ 25 FRANKLIN TEMPLETON INVESTMENTS. Financial Results
Slide 16: Fiscal Year Financial Highlights
Unaudited Fiscal Year Financial Highlights (in US$ millions, except per share data, for the fiscal year ended September 30) Operating and Net Income1 Diluted Earnings Per Share 3,221 $3.79 2,921 $3.37 2,660 $2.98 2,515 $2.87 1,959 2,384 2,150 $2.11 1,924 1,931 1,446 2010 2011 2012 2013 2014 2010 201
Slide 17: Quarterly Financial Highlights
Unaudited Quarterly Financial Highlights (in US$ millions, except per share data, for the three months ended) Operating and Net Income1 Diluted Earnings Per Share 835 $1.02 813 786 787 735 $0.96 $0.92 641 $0.89 604 579 561 509 $0.80 9/13 12/13 3/14 6/14 9/14 9/13 12/13 3/14 6/14 9/14 Operating Inc
Slide 18: Operating Revenues
Unaudited Operating Revenues (in US$ millions, for the three months ended) Sep-14 vs. Sep-14 vs. Sep-14 Jun-14 Jun-14 Mar-14 Dec-13 Sep-13 Sep-13 Investment management fees $ 1,430.7 $ 1,393.2 3% $ 1,368.0 $ 1,373.8 $ 1,285.7 11% Sales and distribution fees 627.4 643.7 (3%) 638.6 636.7 604.7 4% Shar
Slide 19: Operating Expenses
Unaudited Operating Expenses (in US$ millions, for the three months ended) Sep-14 vs. Sep-14 vs. Sep-14 Jun-14 Jun-14 Mar-14 Dec-13 Sep-13 Sep-13 Sales, distribution and marketing $ 755.9 $ 789.3 (4%) $ 766.3 $ 776.7 $ 717.6 5% Compensation and benefits 365.9 380.7 (4%) 372.3 349.0 348.8 5% 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% 36.6% 34.8% 35.4% 33.5% 888 33.3% 32.3% 808 29.9% 28.7% 694 706 Average AUM: 27.1% 582 605 571 10% CAGR 482 442 411 340 9/04 9/05 9/06 9/07 9/08 9/09 9/10 9/11 9/1
Slide 21: Other Income – U.S. GAAP
Unaudited Other Income – U.S. GAAP (in US$ millions, for the three months ended September 30, 2014) 7.2 (4.8) (0.3) 43.7 0.7 57.7 50.5 (12.5) (0.1) 19.2 4.6 Dividend and Equity method Available-for- Trading Interest Foreign Consolidated Consolidated Total other Noncontrolling Other income, interest
Slide 22: Capital Management
@ 25 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 20% U.S. Asset Managers 15% (ex-BEN)1: 2.8% 10% Compound Annual 5% Dilution 0% -5% BEN: 2.0% -10% Compound Annual -15% Accretion 9/09 3/10 9/10 3/11 9/11 3/12 9/12 3/13 9/13 3/14 9/14 BEN U.S. Asset M
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) 1,378 23% 999 962 923 792 31% 31% 26% 24% 41% 12% 12% 13% 13% 9/13 12/13 3/14 6/14 9/14 Dividends Share Repurchases 1. The chart above illustrates the amount of share r
Slide 25: Strong Balance Sheet
Unaudited Strong Balance Sheet Net Cash and Investments1 (US$ billions) 9.2 7.3 6.5 5.9 5.1 7.4 6.5 4.8 5.6 4.1 1.8 1.0 1.1 0.9 0.8 FYE-9/10 FYE-9/11 FYE-9/12 FYE-9/13 FYE-9/14 U.S. Net Cash and Investments Non-U.S. Net Cash and Investments 1. Net cash and investments consists of Franklin Resour
Slide 26: Appendix
PLETON EM. INVESTMENTS. Appendix
Slide 27: Sales and Distribution Summary
Unaudited Sales and Distribution Summary (in US$ millions, for the three months ended) Sep-14 Jun-14 Change % Change This table summarizes the asset- and sales- Asset-based fees $ 462.6 $ 460.5 based distribution fees, net of expense. Asset-based expenses (575.5) (590.7) • 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 and twelve months ended) Sep-14 FY Sep-14 This table summarizes the impact of Operating Revenues $ (1.9) $ 32.5 consolidating SIPs and VIEs on the Company’s Operating Expenses 4.0 15.5 reported U.S. GAAP operati