03.02.2016, 18:44
Franklin Resources, Inc. Announces First Quarter Results
OREANDA-NEWS. Franklin Resources, Inc. (the “Company”) [NYSE: BEN] today announced net income of $447.8 million or $0.74 per diluted share for the quarter ended December 31, 2015, as compared to $358.2 million or $0.59 per diluted share for the previous quarter and $566.4 million or $0.91 per diluted share for the quarter ended December 31, 2014.
“Market volatility continued this quarter, but we are confident that we have the talent, discipline and foresight to continue driving our long-term success,” said Greg Johnson, Chairman and CEO. “We have a long history of weathering periods like this, and emerging stronger as a firm – well positioned to benefit from long-term trends driving global markets.”
“Market volatility continued this quarter, but we are confident that we have the talent, discipline and foresight to continue driving our long-term success,” said Greg Johnson, Chairman and CEO. “We have a long history of weathering periods like this, and emerging stronger as a firm – well positioned to benefit from long-term trends driving global markets.”
Quarter
Quarter Ended % Change Ended % Change
-------------------- ---------
Qtr. vs. Year vs.
31-Dec-15 30-Sep-15 Qtr. 31-Dec-14 Year
--------- --------- -------- --------- --------
Financial Results
(in millions, except
per share data)
Operating revenues $ 1,758.0 $ 1,873.8 (6)% $ 2,064.3 (15)%
Operating income 653.6 718.1 (9)% 782.0 (16)%
Operating margin 37.2% 38.3% 37.9%
Net income(1) $ 447.8 $ 358.2 25% $ 566.4 (21)%
Diluted earnings per
share 0.74 0.59 25% 0.91 (19)%
Assets Under
Management
(in billions)
Ending $ 763.9 $ 770.9 (1)% $ 880.1 (13)%
Average(2) 781.5 824.5 (5)% 894.1 (13)%
Net new flows (20.6) (28.6) (28)% (3.5) 489%
Total assets under management ("AUM") were $763.9 billion at December 31, 2015, down $7.0 billion or 1% during the quarter primarily due to $20.6 billion of net new outflows, partially offset by $15.0 billion of market appreciation and other, which is net of a $1.6 billion decrease from foreign exchange revaluation.
Cash and cash equivalents and investments were $10.5 billion at December 31, 2015, as compared to $10.6 billion at September 30, 2015. Total stockholders' equity was $12.4 billion at December 31, 2015, as compared to $12.5 billion at September 30, 2015. The Company had 595.2 million shares of common stock outstanding at December 31, 2015, as compared to 603.5 million shares outstanding at September 30, 2015. During the quarter ended December 31, 2015, the Company repurchased 10.5 million shares of its common stock for a total cost of $404.1 million.
Conference Call Information
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 teleconference today at 11:00 a.m. Eastern Time to answer questions of a material nature. Analysts and investors are encouraged to review the Company's recent filings with the U.S. Securities and Exchange Commission and to contact Investor Relations before the live teleconference for any clarifications or questions related to the earnings release or pre-recorded audio commentary.
Access to the pre-recorded audio commentary and accompanying slides are available at investors.franklinresources.com. The pre-recorded audio commentary can also be accessed by dialing (877) 523-5612 in the U.S. and Canada or (201) 689-8483 internationally using access code 7055790, any time through March 3, 2016.
Access to the live teleconference will be available at investors.franklinresources.com or by dialing (877) 407-8293 in the U.S. and Canada or (201) 689-8349 internationally. A replay of the teleconference can also be accessed by calling (877) 660-6853 in the U.S. and Canada or (201) 612-7415 internationally using access code 13627935, after 2:00 p.m. Eastern Time on February 3, 2016 through March 3, 2016.
Questions regarding the pre-recorded audio commentary or live teleconference should be directed to Franklin Resources, Inc., Investor Relations at (650) 312-4091 or Media Relations at (650) 312-2245.
Performance Rankings of Franklin Templeton's U.S.-Registered and Cross-Border Long-Term Mutual Funds(3,4,5):
Percentage of Assets in Top Two
Peer Group Quartiles
----------------------------------
Period ended December 31, 2015 1-Year 3-Year 5-Year 10-Year
------- ------- ------- -------
Equity and Hybrid (AUM: $278 billion) 28% 35% 42% 75%
Fixed Income (AUM: $229 billion) 38% 69% 73% 84%
Total (AUM: $507 billion) 32% 51% 56% 79%
Performance quoted above represents past performance, which cannot predict or guarantee future results. All investments involve risks, including loss of principal.
FRANKLIN RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited
Three Months Ended
December 31,
--------------------
(in millions, except per share data and AUM) 2015 2014 % Change
--------- --------- --------
Operating Revenues
Investment management fees $ 1,186.7 $ 1,382.4 (14)%
Sales and distribution fees 478.4 595.0 (20)%
Shareholder servicing fees 61.9 65.8 (6)%
Other 31.0 21.1 47%
--------- --------- --------
Total operating revenues 1,758.0 2,064.3 (15)%
--------- --------- --------
Operating Expenses
Sales, distribution and marketing 588.6 731.5 (20)%
Compensation and benefits 342.5 375.5 (9)%
Information systems and technology 51.2 51.2 0%
Occupancy 30.7 34.3 (10)%
General, administrative and other 91.4 89.8 2%
--------- --------- --------
Total operating expenses 1,104.4 1,282.3 (14)%
--------- --------- --------
Operating Income 653.6 782.0 (16)%
--------- --------- --------
Other Income (Expenses)
Investment and other income, net 30.5 51.7 (41)%
Interest expense (12.0) (11.3) 6%
--------- --------- --------
Other income, net 18.5 40.4 (54)%
--------- --------- --------
Income before taxes 672.1 822.4 (18)%
Taxes on income 209.7 256.1 (18)%
--------- --------- --------
Net income 462.4 566.3 (18)%
Less: net income (loss) attributable to
Nonredeemable noncontrolling interests 13.6 6.7 103%
Redeemable noncontrolling interests 1.0 (6.8) NM
Net Income Attributable to Franklin
Resources, Inc. $ 447.8 $ 566.4 (21)%
========= ========= ========
Earnings per Share
Basic $ 0.74 $ 0.91 (19)%
Diluted 0.74 0.91 (19)%
Dividends per Share $ 0.18 $ 0.65 (72)%
Average Shares Outstanding
Basic 597.6 620.1 (4)%
Diluted 597.7 620.2 (4)%
Operating Margin 37.2% 37.9%
AUM (in billions)
Ending $ 763.9 $ 880.1 (13)%
Average 781.5 894.1 (13)%
Net new flows (20.6) (3.5) 489%
FRANKLIN RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited
Three Months
Ended Three Months Ended
----------------- --------------------------
(in millions, except
per share data and 31-Dec- 30-Sep- % 30-Jun- 31-Mar- 31-Dec-
employees) 15 15 Change 15 15 14
-------- -------- ------ -------- -------- --------
Operating Revenues
Investment
management fees $1,186.7 $1,256.9 (6)% $1,340.9 $1,347.6 $1,382.4
Sales and
distribution fees 478.4 510.6 (6)% 566.8 580.0 595.0
Shareholder
servicing fees 61.9 64.4 (4)% 66.5 66.1 65.8
Other 31.0 41.9 (26)% 26.6 16.1 21.1
-------- -------- ------ -------- -------- --------
Total operating
revenues 1,758.0 1,873.8 (6)% 2,000.8 2,009.8 2,064.3
-------- -------- ------ -------- -------- --------
Operating Expenses
Sales, distribution
and marketing 588.6 626.3 (6)% 694.0 710.5 731.5
Compensation and
benefits 342.5 336.8 2% 363.5 377.5 375.5
Information systems
and technology 51.2 64.9 (21)% 58.3 49.9 51.2
Occupancy 30.7 35.6 (14)% 30.7 32.1 34.3
General,
administrative and
other 91.4 92.1 (1)% 84.5 82.1 89.8
-------- -------- ------ -------- -------- --------
Total operating
expenses 1,104.4 1,155.7 (4)% 1,231.0 1,252.1 1,282.3
-------- -------- ------ -------- -------- --------
Operating Income 653.6 718.1 (9)% 769.8 757.7 782.0
-------- -------- ------ -------- -------- --------
Other Income
(Expenses)
Investment and other
income (losses),
net 30.5 (109.5) NM (4.7) 102.9 51.7
Interest expense (12.0) (12.9) (7)% (13.7) (1.7) (11.3)
-------- -------- ------ -------- -------- --------
Other income
(expenses), net 18.5 (122.4) NM (18.4) 101.2 40.4
-------- -------- ------ -------- -------- --------
Income before taxes 672.1 595.7 13% 751.4 858.9 822.4
Taxes on income 209.7 214.2 (2)% 217.4 236.0 256.1
-------- -------- ------ -------- -------- --------
Net income 462.4 381.5 21% 534.0 622.9 566.3
Less: net income
(loss) attributable
to
Nonredeemable
noncontrolling
interests 13.6 26.1 (48)% 28.6 14.1 6.7
Redeemable
noncontrolling
interests 1.0 (2.8) NM 1.2 2.3 (6.8)
-------- -------- ------ -------- -------- --------
Net Income
Attributable to
Franklin Resources,
Inc. $ 447.8 $ 358.2 25% $ 504.2 $ 606.5 $ 566.4
======== ======== ====== ======== ======== ========
Earnings per Share
Basic $ 0.74 $ 0.59 25% $ 0.82 $ 0.98 $ 0.91
Diluted 0.74 0.59 25% 0.82 0.98 0.91
Dividends per Share $ 0.18 $ 0.15 20% $ 0.15 $ 0.15 $ 0.65
Average Shares
Outstanding
Basic 597.6 607.4 (2)% 614.1 617.6 620.1
Diluted 597.7 607.4 (2)% 614.2 617.7 620.2
Operating Margin 37.2% 38.3% 38.5% 37.7% 37.9%
Employees 9,412 9,489 (1)% 9,576 9,362 9,368
Billable Shareholder
Accounts 25.1 24.8 1% 25.3 24.8 24.3
AUM AND FLOWS
Three Months Ended
December 31,
--------------------
(in billions) 2015 2014 % Change
--------- --------- --------
Beginning AUM $ 770.9 $ 898.0 (14)%
Long-term sales 33.1 46.7 (29)%
Long-term redemptions (53.3) (50.0) 7%
Net cash management (0.4) (0.2) 100%
--------- --------- --------
Net new flows (20.6) (3.5) 489%
Reinvested distributions 11.5 15.1 (24)%
--------- --------- --------
Net flows (9.1) 11.6 NM
Distributions (12.9) (17.4) (26)%
Appreciation (depreciation) and other(6) 15.0 (12.1) NM
--------- --------- --------
Ending AUM $ 763.9 $ 880.1 (13)%
========= ========= ========
AUM BY INVESTMENT OBJECTIVE
31-Dec- 30-Sep- % 30-Jun- 31-Mar- 31-Dec-
(in billions) 15 15 Change 15 15 14
------- ------- ------ ------- ------- -------
Equity
Global/international $ 211.7 $ 212.1 0% $ 247.3 $ 251.8 $ 248.5
United States 102.0 100.8 1% 114.4 115.6 113.1
------- ------- ------ ------- ------- -------
Total equity 313.7 312.9 0% 361.7 367.4 361.6
Hybrid 134.4 138.3 (3)% 154.8 158.2 157.1
Fixed Income
Tax-free 72.4 71.7 1% 72.7 74.2 73.2
Taxable
Global/international 182.0 182.7 0% 208.5 211.1 219.1
United States 54.8 58.5 (6)% 61.8 63.1 62.2
------- ------- ------ ------- ------- -------
Total fixed income 309.2 312.9 (1)% 343.0 348.4 354.5
Cash Management 6.6 6.8 (3)% 7.0 6.6 6.9
------- ------- ------ ------- ------- -------
Total AUM $ 763.9 $ 770.9 (1)% $ 866.5 $ 880.6 $ 880.1
======= ======= ====== ======= ======= =======
Average AUM for the Three-
Month Period $ 781.5 $ 824.5 (5)% $ 882.6 $ 881.6 $ 894.1
AUM AND FLOWS - UNITED STATES AND INTERNATIONAL(7)
As of and for the Three Months Ended
-------------------------------------------------
31-Dec- % of 30-Sep- % of 31-Dec- % of
(in billions) 15 Total 15 Total 14 Total
------- ------ ------- ------ ------- ------
Long-Term Sales
United States $ 15.7 47% $ 16.3 53% $ 22.2 48%
International 17.4 53% 14.2 47% 24.5 52%
------- ------ ------- ------ ------- ------
Total long-term sales $ 33.1 100% $ 30.5 100% $ 46.7 100%
======= ====== ======= ====== ======= ======
Long-Term Redemptions
United States $ (35.2) 66% $ (33.1) 57% $ (26.7) 53%
International (18.1) 34% (25.0) 43% (23.3) 47%
------- ------ ------- ------ ------- ------
Total long-term
redemptions $ (53.3) 100% $ (58.1) 100% $ (50.0) 100%
======= ====== ======= ====== ======= ======
AUM
United States $ 513.2 67% $ 522.4 68% $ 580.6 66%
International 250.7 33% 248.5 32% 299.5 34%
------- ------ ------- ------ ------- ------
Total AUM $ 763.9 100% $ 770.9 100% $ 880.1 100%
======= ====== ======= ====== ======= ======
AUM AND FLOWS BY INVESTMENT OBJECTIVE
(in billions) Equity
------------------------
for the three
months ended Global/ United
December 31, 2015 International States Hybrid
-------------- -------- -------
AUM at October 1,
2015 $ 212.1 $ 100.8 $ 138.3
Long-term sales 6.6 3.5 4.0
Long-term
redemptions (11.9) (7.0) (9.2)
Net exchanges (0.1) 0.4 (0.4)
Net cash management -- -- --
-------------- -------- -------
Net new flows (5.4) (3.1) (5.6)
Reinvested
distributions 3.1 4.3 1.9
-------------- -------- -------
Net flows (2.3) 1.2 (3.7)
Distributions (3.4) (4.7) (2.1)
Appreciation
(depreciation) and
other(6) 5.3 4.7 1.9
-------------- -------- -------
AUM at December 31,
2015 $ 211.7 $ 102.0 $ 134.4
============== ======== =======
(in billions) Fixed Income
---------------------------------
for the three Taxable Taxable
months ended Tax- Global/ United Cash
December 31, 2015 Free International States Management Total
------ -------------- --------- ----------- -------
AUM at October 1,
2015 $ 71.7 $ 182.7 $ 58.5 $ 6.8 $ 770.9
Long-term sales 1.7 15.0 2.3 -- 33.1
Long-term
redemptions (2.2) (18.4) (4.6) -- (53.3)
Net exchanges 0.3 (0.2) (0.2) 0.2 --
Net cash management -- -- -- (0.4) (0.4)
------ -------------- --------- ----------- -------
Net new flows (0.2) (3.6) (2.5) (0.2) (20.6)
Reinvested
distributions 0.5 1.3 0.4 -- 11.5
------ -------------- --------- ----------- -------
Net flows 0.3 (2.3) (2.1) (0.2) (9.1)
Distributions (0.6) (1.6) (0.5) -- (12.9)
Appreciation
(depreciation) and
other(6) 1.0 3.2 (1.1) -- 15.0
------ -------------- --------- ----------- -------
AUM at December 31,
2015 $ 72.4 $ 182.0 $ 54.8 $ 6.6 $ 763.9
====== ============== ========= =========== =======
(in billions) Equity
------------------------
for the three
months ended Global/ United
September 30, 2015 International States Hybrid
-------------- -------- -------
AUM at July 1, 2015 $ 247.3 $ 114.4 $ 154.8
Long-term sales 8.1 3.9 4.3
Long-term
redemptions (13.1) (7.6) (8.2)
Net exchanges (0.1) 0.2 (0.5)
Net cash management -- -- --
-------------- -------- -------
Net new flows (5.1) (3.5) (4.4)
Reinvested
distributions 0.8 0.8 1.2
-------------- -------- -------
Net flows (4.3) (2.7) (3.2)
Distributions (1.0) (0.8) (1.4)
Appreciation
(depreciation) and
other(6) (29.9) (10.1) (11.9)
-------------- -------- -------
AUM at September
30, 2015 $ 212.1 $ 100.8 $ 138.3
============== ======== =======
(in billions) Fixed Income
---------------------------------
for the three Taxable Taxable
months ended Tax- Global/ United Cash
September 30, 2015 Free International States Management Total
------ -------------- --------- ----------- -------
AUM at July 1, 2015 $ 72.7 $ 208.5 $ 61.8 $ 7.0 $ 866.5
Long-term sales 1.7 9.7 2.8 -- 30.5
Long-term
redemptions (3.5) (21.3) (4.4) -- (58.1)
Net exchanges -- (0.6) 0.2 0.8 --
Net cash management -- -- -- (1.0) (1.0)
------ -------------- --------- ----------- -------
Net new flows (1.8) (12.2) (1.4) (0.2) (28.6)
Reinvested
distributions 0.5 1.2 0.3 -- 4.8
------ -------------- --------- ----------- -------
Net flows (1.3) (11.0) (1.1) (0.2) (23.8)
Distributions (0.6) (1.7) (0.5) -- (6.0)
Appreciation
(depreciation) and
other(6) 0.9 (13.1) (1.7) -- (65.8)
------ -------------- --------- ----------- -------
AUM at September
30, 2015 $ 71.7 $ 182.7 $ 58.5 $ 6.8 $ 770.9
====== ============== ========= =========== =======
(in billions) Equity
------------------------
for the three
months ended Global/ United
December 31, 2014 International States Hybrid
-------------- -------- -------
AUM at October 1,
2014 $ 261.5 $ 109.5 $ 159.0
Long-term sales 10.8 5.2 7.5
Long-term
redemptions (14.2) (6.5) (6.5)
Net exchanges (0.1) 0.4 --
Net cash management -- -- --
-------------- -------- -------
Net new flows (3.5) (0.9) 1.0
Reinvested
distributions 4.3 3.9 1.9
-------------- -------- -------
Net flows 0.8 3.0 2.9
Distributions (4.9) (4.2) (2.1)
Appreciation
(depreciation) and
other(6) (8.9) 4.8 (2.7)
-------------- -------- -------
AUM at December 31,
2014 $ 248.5 $ 113.1 $ 157.1
============== ======== =======
(in billions) Fixed Income
---------------------------------
for the three Taxable Taxable
months ended Tax- Global/ United Cash
December 31, 2014 Free International States Management Total
------ -------------- --------- ----------- -------
AUM at October 1,
2014 $ 72.1 $ 225.1 $ 63.8 $ 7.0 $ 898.0
Long-term sales 2.0 17.6 3.6 -- 46.7
Long-term
redemptions (2.1) (16.5) (4.2) -- (50.0)
Net exchanges 0.1 (0.3) (0.2) 0.1 --
Net cash management -- -- -- (0.2) (0.2)
------ -------------- --------- ----------- -------
Net new flows -- 0.8 (0.8) (0.1) (3.5)
Reinvested
distributions 0.5 3.9 0.6 -- 15.1
------ -------------- --------- ----------- -------
Net flows 0.5 4.7 (0.2) (0.1) 11.6
Distributions (0.7) (4.8) (0.7) -- (17.4)
Appreciation
(depreciation) and
other(6) 1.3 (5.9) (0.7) -- (12.1)
------ -------------- --------- ----------- -------
AUM at December 31,
2014 $ 73.2 $ 219.1 $ 62.2 $ 6.9 $ 880.1
====== ============== ========= =========== =======
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