Franklin Resources, Inc. · NYSE:BEN
Franklin Resources — Q3 2014 Earnings Presentation
27 slides from Franklin Resources's earnings presentation, Jul 30, 2014
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 30, 2014
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, 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 • Franklin Income Fund upgraded to 5 stars by Morningstar • Ended the quarter at $920.5 billion, an all-time high, and 13% increase from
Slide 5: Investment Performance
@ Ss + FRANKLIN TEMPLETON INVESTMENTS. Investment Performance
Slide 6: Investment Performance
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 June 30, 2014) Total Equity & Hybrid Fixed-Income ($619 billion) ($333 billion) ($286 billion) 88% 84% 93% 88% 93% 84% 80% 80% 72% 75% 71% 59%
Slide 7: Assets Under Management and Flows
Assets Under Management and Flows
Slide 8: Assets Under Management Growth
Assets Under Management Growth (in US$ billions, for the three months ended) End of Period vs. Simple Monthly Average 920.5 902.8 879.1 886.9 876.4 865.9 833.2 844.7 815.0 827.8 6/13 9/13 12/13 3/14 6/14 Ending AUM Average AUM 8
Slide 9: Assets Under Management Diversification
Assets Under Management Diversification Investment Objective Sales Region As of June 30, 2014 As of June 30, 2014 Latin Cash Mgmt Equity America 1% 42% Canada 3% 5% United States Asia-Pacific 65% 10% Fixed- Europe, the Income Hybrid Middle East 39% 18% and Africa 17% (in billions) Jun-14 Mar-14 % Ch
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 62.1 33.1 31.9 48.0 49.8 49.8 47.6 15.9 7.4 2.5 0.0 (2.9) (6.8) (16.3) (49.7) (45.1) (53.9) (50.5) (56.7) 6/13 9/13 12/13 3/14 6/14 6/13 9/13 12/13 3/14 6/
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 23.6 25.0 20.9 19.7 19.8 19.6 17.3 18.8 16.7 16.0 8.5 7.1 6.9 4.2 4.5 5.2 5.4 4.6 5.4 5.5 (4.3) (3.8) (4.7) (5.8) (4.6) (5.1) (4.8) (5.4) (6.8) (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 30.2 15.1 16.1 15.9 14.3 15.6 11.4 12.5 13.2 11.8 10.2 1.2 3.1 1.4 (2.2) (1.2) (1.2) (3.1) (3.6) (11.5) (8.8)
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 8.2 8.8 7.9 8.1 6.8 6.5 5.5 6.1 5.6 4.5 2.6 2.7 3.2 3.2 3.1 1.2 1.4 0.4 (1.2) (0.6) (4.1) (5.2) (5.6) (5.1) (6.1) (6.1) (6.2) (6.0) (6.0) (7.2) 6/13 9/13 12/13 3/14 6/14 6/13 9/13 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 5.2 4.6 4.3 3.7 3.8 2.9 2.5 1.9 2.3 2.0 0.4 0.5 0.7 0.2 (0.4) (0.2) (3.4) (1.5) (2.5) (2.4) (5.4) (3.6) (3.3) (3.6) (3.9) (4.3) (4.5) (4
Slide 15: Financial Results
@ Ss + 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 813 $0.96 772 786 787 735 $0.92 $0.89 $0.86 604 561 579 $0.80 552 509 6/13 9/13 12/13 3/14 6/14 6/13 9/13 12/13 3/14 6/14 Operating Inc
Slide 17: Operating Revenues
Unaudited Operating Revenues (in US$ millions, for the three months ended) Jun-14 vs. Jun-14 vs. Jun-14 Mar-14 Mar-14 Dec-13 Sep-13 Jun-13 Jun-13 Investment management fees $ 1,393.2 $ 1,368.0 2% $ 1,373.8 $ 1,285.7 $ 1,318.3 6% Sales and distribution fees 643.7 638.6 1% 636.7 604.7 664.5 (3%) Share
Slide 18: Operating Expenses
Unaudited Operating Expenses (in US$ millions, for the three months ended) Jun-14 vs. Jun-14 vs. Jun-14 Mar-14 Mar-14 Dec-13 Sep-13 Jun-13 Jun-13 Sales, distribution and marketing $ 789.3 $ 766.3 3% $ 776.7 $ 717.6 $ 812.8 (3%) Compensation and benefits 380.7 372.3 2% 349.0 348.8 345.5 10% Informati
Slide 19: Operating Leverage
Unaudited Operating Leverage Growing Operating Income Faster than AUM Operating Margin (%) vs. Average AUM (in US$ billions) 37.3% 37.7% 36.6% 34.8% 35.4% 33.5% 33.3% 881 32.3% 808 29.9% 28.7% 694 706 Average 605 AUM: 10% 27.1% 582 571 CAGR 482 442 411 340 9/04 9/05 9/06 9/07 9/08 9/09 9/10 9/11 9/1
Slide 20: Other Income – U.S. GAAP
Unaudited Other Income – U.S. GAAP (in US$ millions, for the three months ended June 30, 2014) (0.5) (44.3) 59.4 2.6 0.1 96.7 7.8 (10.9) 52.4 33.6 4.6 Dividend and Equity method Available-for- Trading Interest Other Consolidated Consolidated Total other Noncontrolling Other income, interest income i
Slide 21: Capital Management
@ Ss + FRANKLIN TEMPLETON INVESTMENTS. Capital Management
Slide 22: Share Repurchases
Unaudited Share Repurchases Accretive to Earnings per Share Change in Ending Shares Outstanding 15% U.S. Asset Managers (ex-BEN)1: 2.3% 10% Compound Annual 5% Dilution 0% -5% BEN: 2.0% -10% Compound Annual Accretion -15% 6/09 12/09 6/10 12/10 6/11 12/11 6/12 12/12 6/13 12/13 6/14 BEN U.S. Asset
Slide 23: Return of Capital
Unaudited Return of Capital Distributing U.S. Free Cash Flow Trailing 12 Months Share Repurchases and Dividends1 (US$ millions) $1,378 $1,207 23% $999 15% $962 $792 31% 31% 24% 41% 41% 12% 12% 13% 6/13 9/13 12/13 3/14 6/14 Dividends Share Repurchases 1. The chart above illustrates the amount of
Slide 24: Strong Balance Sheet
Unaudited Strong Balance Sheet Net Cash and Investments1 (US$ billions) 8.8 7.3 6.5 5.9 5.2 6.5 4.8 5.6 4.1 1.1 1.1 0.9 0.8 FYE-9/10 FYE-9/11 FYE-9/12 FYE-9/13 QE-6/14 U.S. Net Cash and Investments Non-U.S. Net Cash and Investments 1. Net cash and investments consists of Franklin Resources, Inc.
Slide 25: Appendix
@ 25 FRANKLIN TEMPLETON INVESTMENTS. Appendix
Slide 26: Sales and Distribution Summary
Unaudited Sales and Distribution Summary (in US$ millions, for the three months ended) This table summarizes the asset- and sales- Jun-14 Mar-14 Change % Change based distribution fees, net of expense. Asset-based fees, net $ (130.2) $ (115.8) $ (14.4) 12% • Asset-based expenses are generally not Sa
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) FYTD This table summarizes the impact of Jun-14 Jun-14 consolidating SIPs and VIEs on the Company’s Operating Revenues $ 14.0 $ 34.4 reported U.S. GAAP operating results. Operating Expense