Franklin Resources, Inc. · NYSE:BEN
Franklin Resources — Q1 FY2016 Earnings Presentation
28 slides from Franklin Resources's earnings presentation, Feb 3, 2016
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 February 3, 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 A majority of U.S. and cross-border mutual fund assets ranked in the top-half of their INVESTMENT respective peer groups for the 3-, 5- and 10-year periods PERFORMANCE & FLOWS Institutional flows rebounded with a $5.5 billion global macro mandate Cost savings initiatives so far have decre
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 ($507 billion) in the Top Two Peer Group Quartiles 3-Year 5-Year 10-Year 51% 56% 79% Equity & Hybrid - $278 billion 35% 42% 75% Fixed Income - $229 billion 69% 73% 84% The peer group rankings ar
Slide 7: Assets Under Management and Flows
Assets Under Management and Flows
Slide 8: Assets Under Management Growth
Assets Under Management Growth (in US$ billions, for the three months ended) Simple Monthly Average vs. End of Period 894.1 880.1 881.6 880.6 882.6 866.5 824.5 770.9 781.5 763.9 12/14 3/15 6/15 9/15 12/15 Average AUM Ending AUM 8
Slide 9: Assets Under Management Diversification
Assets Under Management Diversification As of December 31, 2015 Investment Objective (in US$ billions, for the three months ended) Dec-15 Sep-15 % Change Equity $ 313.7 $ 312.9 0% Hybrid 134.4 138.3 (3%) 41% Fixed Income 309.2 312.9 (1%) 1% Cash Management 6.6 6.8 (3%) Total $ 763.9 $ 770.9 (1%) 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 46.7 46.5 37.7 33.1 15.0 30.5 7.0 (2.1) (12.1) (3.4) (5.3) (11.4) (20.4) (28.4) (50.0) (51.9) (49.0) (53.3) (65.8) (58.1) 12/14 3/15 6/15 9/15 12/15 12/14 3/15
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 17.2 17.5 14.6 14.4 13.7 12.5 11.9 12.3 10.1 9.2 9.8 10.2 6.4 7.2 4.0 5.0 3.9 3.5 4.3 3.4 (4.0) (4.7) (4.2) (5.6) (5.4) (6.2) (5.3) (7.6) (7.9) (8.2) (12.8) (17.0
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 15.9 15.0 11.6 12.9 10.8 9.8 9.7 8.1 6.6 0.8 (1.6) (3.5) (4.0) (2.9) (3.6) (4.6) (5.1) (5.4) (13.3) (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 7.5 6.7 5.2 5.5 5.6 4.6 4.3 4.0 3.9 3.5 1.0 0.3 (0.9) (0.6) (1.0) (1.7) (3.1) (3.5) (4.4) (5.6) (5.6) (6.5) (6.6) (6.5) (6.4) (7.0) (7.3) (7.6) (8.2) (9.2) 12/14 3/15 6/15 9/15 12/1
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 4.4 3.6 2.7 2.8 2.4 2.1 2.3 2.0 1.7 1.7 0.2 0.4 0.0 (0.2) (0.5) (0.8) (0.7) (1.4) (1.8) (2.1) (2.2) (2.2) (2.5) (2.5) (3.5) (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 782 758 770 718 $0.98 654 $0.91 $0.82 607 $0.74 566 504 $0.59 448 358 12/14 3/15 6/15 9/15 12/15 12/14 3/15 6/15 9/15 12/15 Operating I
Slide 17: Operating Revenues
Unaudited Operating Revenues (in US$ millions, for the three months ended) Dec-15 vs. Dec-15 vs. Dec-15 Sep-15 Jun-15 Mar-15 Dec-14 Sep-15 Dec-14 Investment management fees $ 1,186.7 $ 1,256.9 (6%) $ 1,340.9 $ 1,347.6 $ 1,382.4 (14%) Sales and distribution fees 478.4 510.6 (6%) 566.8 580.0 595.0 (20
Slide 18: Operating Expenses
Unaudited Operating Expenses (in US$ millions, for the three months ended) Dec-15 vs. Dec-15 vs. Dec-15 Sep-15 Jun-15 Mar-15 Dec-14 Sep-15 Dec-14 Sales, distribution and marketing $ 588.6 $ 626.3 (6%) $ 694.0 $ 710.5 $ 731.5 (20%) Compensation and benefits 342.5 336.8 2% 363.5 377.5 375.5 (9%) Infor
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% 37.2% 35.4% 33.3% 34.8% 33.5% 32.3% 888 870 808 782 28.7% Average 694 706 AUM: 4.9% 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 December 31, 2015) 6.6 (7.3) (12.0) 8.5 5.6 (5.7) 0.1 24.8 27.0 18.5 6.4 Dividend and Equity method Available-for- Trading Interest Foreign Consolidated Consolidated Total other Noncontrolling Other income, interest inco
Slide 21: Capital Management
FRANKLIN TEMPLETON INVESTMENTS Capital Management
Slide 22: Strong Dividend Growth Increased Every Year Since 1981
Unaudited Strong Dividend Growth Increased Every Year Since 1981 Compound Annual Growth of Regular Dividends as of December 31, 2015 23% 20% 17% 16% 15% 15% 8% 5% 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, ARES, BLK,
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 (ex-BEN)1: 2.8% 10% Compound Annual Dilution 0% -10% BEN: 2.3% Compound Annual -20% Accretion 12/10 6/11 12/11 6/12 12/12 6/13 12/13 6/14 12/14 6/15 12/15 BEN U.S. Asset Manage
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 and percentage of net income) 1,741 1,696 1,403 1,267 1,296 52% 32% 68% 27% 27% 27% 27% 29% 34% 20% 12/14 3/15 6/15 9/15 12/15 Dividends Share Repurchases 1. The chart a
Slide 25: Appendix
L PLETON INVESTMENTS Appendix
Slide 26: Strong Balance Sheet
Unaudited Strong Balance Sheet Net Cash and Investments1 (US$ billions) 9.6 9.5 9.2 7.3 6.5 7.4 7.9 5.6 6.5 1.8 1.7 0.9 0.8 FYE-9/12 FYE-9/13 FYE-9/14 FYE-9/15 12/15 U.S. Net Cash and Investments Non-U.S. Net Cash and Investments 1. Net cash and investments consists of Franklin Resources, Inc. c
Slide 27: Sales and Distribution Summary
Unaudited Sales and Distribution Summary (in US$ millions, for the three months ended) This table summarizes the asset- and sales- Dec-15 Sep-15 Change % Change based distribution fees, net of expense. Asset-based fees $ 377.2 $ 396.9 • Asset-based expenses are generally not Asset-based expenses (47
Slide 28: Consolidated SIPs and VIEs Related Adjustments
Unaudited Consolidated SIPs and VIEs Related Adjustments (in US$ millions, for the three months ended) Dec-15 This table summarizes the impact of Operating Revenues $ 22.4 consolidating SIPs and VIEs on the Company’s Operating Expenses 2.4 reported U.S. GAAP operating results. Operating Income 20.0