Franklin Resources, Inc. · NYSE:BEN
Franklin Resources — Q4 2015 Earnings Presentation
29 slides from Franklin Resources's earnings presentation, Oct 22, 2015
Slide 1: Preliminary Fourth Quarter and Fiscal Year Results
Franklin Resources, Inc. Greg Johnson Chairman and Chief Executive Officer Preliminary Fourth Quarter Ken Lewis and Fiscal Year Results Chief Financial Officer October 22, 2015
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 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 • Long-term fixed income performance remains strong with the majority of assets ranked in Investment the top half of the peer groups for the 3-, 5-, and 10-yr periods Performance • Excluding the Franklin Income Fund, the majority of our equity and hybrid assets still rank in the top half
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 Long-Term Assets in the Top Two Peer Group Quartiles (10-Year Period ended September 30, 2015) Total Equity & Hybrid Fixed-Income ($515 billion) ($278 billion) ($237 billion) 80% 77% 84% 80% 84% 77% 72% 74% 55% 57% 40
Slide 7: Assets Under Management and Flows
Assets Under Management and Flows
Slide 8: Assets Under Management Growth
Assets Under Management Growth (in US$ billions, for the three months ended) Simple Monthly Average vs. End of Period 912.1 898.0 894.1 880.1 881.6 880.6 882.6 866.5 824.5 770.9 9/14 12/14 3/15 6/15 9/15 Average AUM Ending AUM 8
Slide 9: Assets Under Management Diversification
Assets Under Management Diversification As of September 30, 2015 Investment Objective (in US$ billions, for the three months ended) Sep-15 Jun-15 % Change Equity $ 312.9 $ 361.7 (13%) Hybrid 138.3 154.8 (11%) 41% Fixed-Income 312.9 343.0 (9%) 1% Cash Management 6.8 7.0 (3%) Total $ 770.9 $ 866.5 (11
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 45.4 46.7 46.5 37.7 30.5 7.0 (2.1) (12.1) (0.8) (3.4) (21.4) (5.3) (11.4) (28.4) (46.0) (49.0) (65.8) (50.0) (51.9) (58.1) 9/14 12/14 3/15 6/15 9/15 9/14 12/14
Slide 11: FY 2015 in Historical Perspective: Pre-Market Organic Growth
FY 2015 in Historical Perspective: Pre-Market Organic Growth vs. S&P 500 Value / S&P 500 Growth 1997 2002 - 2005 Mid 2000’s 2009-2014 ► Global Equity / Emerging ► Global Equity AUM grows ► Global Fixed Income ► Global Fixed Income and Emerging Markets comprise almost 30% per year, becomes grows 10x
Slide 12: 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 17.3 17.2 17.5 14.6 15.3 14.4 13.7 12.5 12.3 10.1 9.2 9.8 8.4 5.0 6.4 4.0 4.0 3.9 3.5 4.3 (4.8) (4.0) (4.7) (4.2) (5.6) (5.8) (6.2) (7.6) (7.9) (8.2) (17.4) (16.8
Slide 13: 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 15.0 15.9 11.6 12.9 11.4 10.8 9.8 9.7 8.1 2.5 0.8 (2.8) (1.6) (2.9) (3.5) (4.6) (5.1) (4.0) (13.3) (13.1)
Slide 14: 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 8.1 7.5 6.7 5.2 5.5 5.6 4.4 4.6 3.9 4.3 2.2 1.0 0.3 (0.6) (0.9) (1.0) (2.2) (1.7) (3.5) (4.4) (5.6) (6.1) (6.4) (6.5) (6.6) (6.5) (6.4) (7.6) (7.3) (8.2) 9/14 12/14 3/15 6/15 9/15 9
Slide 15: 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 4.5 4.4 3.6 2.7 2.8 2.4 2.1 2.0 2.0 1.7 0.0 0.2 0.2 0.4 (0.7) (0.5) (0.8) (0.7) (1.4) (2.1) (2.2) (1.8) (2.7) (2.5) (3.5) (3.4) (4.2) (4
Slide 16: Financial Results
FRANKLIN TEMPLETON INVESTMENTS Financial Results
Slide 17: Fiscal Year Financial Highlights
Unaudited Fiscal Year Financial Highlights (in US$ millions, except per share data, for the fiscal years ended) Operating and Net Income1 Diluted Earnings Per Share 3,221 $3.79 3,028 2,921 2,660 2,515 $3.37 $3.29 2,384 2,150 $2.98 1,931 2,035 $2.87 1,924 9/11 9/12 9/13 9/14 9/15 9/11 9/12 9/13 9/14
Slide 18: Quarterly Financial Highlights
Unaudited Quarterly Financial Highlights (in US$ millions, except per share data, for the three months ended) Operating and Net Income1 Diluted Earnings Per Share 835 782 758 770 718 $1.02 $0.98 $0.91 641 $0.82 607 566 504 $0.59 358 9/14 12/14 3/15 6/15 9/15 9/14 12/14 3/15 6/15 9/15 Operating Inc
Slide 19: Operating Revenues
Unaudited Operating Revenues (in US$ millions, for the three months ended) Sep-15 vs. Sep-15 vs. Sep-15 Jun-15 Mar-15 Dec-14 Sep-14 Jun-15 Sep-14 Investment management fees $ 1,256.9 $ 1,340.9 (6%) $ 1,347.6 $ 1,382.4 $ 1,430.7 (12%) Sales and distribution fees 510.6 566.8 (10%) 580.0 595.0 627.4 (1
Slide 20: Operating Expenses
Unaudited Operating Expenses (in US$ millions, for the three months ended) Sep-15 vs. Sep-15 vs. Sep-15 Jun-15 Mar-15 Dec-14 Sep-14 Jun-15 Sep-14 Sales, distribution and marketing $ 626.3 $ 694.0 (10%) $ 710.5 $ 731.5 $ 755.9 (17%) Compensation and benefits 336.8 363.5 (7%) 377.5 375.5 365.9 (8%) In
Slide 21: 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% 38.1% 33.5% 36.6% 34.8% 35.4% 32.3% 33.3% 888 870 808 29.9% 28.7% 706 Average 694 AUM: 7.8% 582 605 571 CAGR 482 442 411 9/05 9/06 9/07 9/08 9/09 9/10 9/11 9/12 9/
Slide 22: Other Income – U.S. GAAP
Unaudited Other Income – U.S. GAAP (in US$ millions, for the three months ended September 30, 2015) 6.7 (72.5) 0.8 (16.7) (122.4) (115.6) (12.9) (11.1) (17.5) 0.8 6.8 Dividend and Equity method Available-for- Trading Interest Foreign Consolidated Consolidated Total other Noncontrolling Other income,
Slide 23: Capital Management
FRANKLIN TEMPLETON INVESTMENTS Capital Management
Slide 24: Share Repurchases Accretive to Earnings per Share
Unaudited Share Repurchases Accretive to Earnings per Share Change in Ending Shares Outstanding 15% U.S. Asset Managers (ex-BEN)1: 2.5% 10% Compound Annual 5% Dilution 0% -5% BEN: 2.1% -10% Compound Annual Accretion -15% 9/10 3/11 9/11 3/12 9/12 3/13 9/13 3/14 9/14 3/15 9/15 BEN U.S. Asset Manag
Slide 25: 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 1,403 1,267 1,296 52% 923 32% 27% 27% 26% 27% 27% 29% 34% 13% 9/14 12/14 3/15 6/15 9/15 Dividends Share Repurchases 1. The chart abov
Slide 26: Appendix
L PLETON INVESTMENTS Appendix
Slide 27: Strong Balance Sheet
Unaudited Strong Balance Sheet Net Cash and Investments1 (US$ billions) 9.2 9.6 7.3 6.5 5.9 7.4 7.9 5.6 6.5 4.8 1.1 1.8 1.7 0.9 0.8 FYE-9/11 FYE-9/12 FYE-9/13 FYE-9/14 FYE-9/15 U.S. Net Cash and Investments Non-U.S. Net Cash and Investments 1. Net cash and investments consists of Franklin Resour
Slide 28: Sales and Distribution Summary
Unaudited Sales and Distribution Summary (in US$ millions, for the three months ended) Sep-15 Jun-15 Change % Change This table summarizes the asset- and sales- Asset-based fees $ 396.9 $ 425.9 based distribution fees, net of expense. Asset-based expenses (504.1) (547.7) • Asset-based expenses are g
Slide 29: Consolidated SIPs and VIEs Related Adjustments
Unaudited Consolidated SIPs and VIEs Related Adjustments (in US$ millions, for the three and twelve months ended) FY This table summarizes the impact of Sep-15 Sep-15 consolidating SIPs and VIEs on the Company’s Operating Revenues $ 32.4 $ 52.8 reported U.S. GAAP operating results. Operating Expense