Franklin Resources, Inc. (the “Company”) [NYSE: BEN] today
announced net income1 of $381.8 million or $0.74 per diluted share
for the quarter ended March 31, 2021, as compared to $345.3 million
or $0.67 per diluted share for the previous quarter, and $79.1
million or $0.16 per diluted share for the quarter ended March 31,
2020. Operating income2 was $456.3 million for the quarter ended
March 31, 2021, as compared to $409.1 million for the previous
quarter and $339.9 million in the prior year.
As supplemental information, the Company is providing certain
adjusted performance measures which are based on methodologies
other than generally accepted accounting principles.3 Adjusted net
income3 was $403.5 million and adjusted diluted earnings per share3
was $0.79 for the quarter ended March 31, 2021, as compared to
$373.4 million and $0.73 for the previous quarter, and $332.8
million and $0.66 for the quarter ended March 31, 2020. Adjusted
operating income3 was $581.1 million for the quarter ended March
31, 2021, as compared to $549.9 million for the previous quarter
and $385.9 million in the prior year.
“We are pleased with our continued progress during our second
fiscal quarter,” said Jenny Johnson, President and CEO of Franklin
Resources, Inc. “After only two quarters as a combined firm, we are
experiencing organic growth in a number of key areas, and we are
encouraged and excited by our collective potential. Notably, we’re
seeing strong performance and momentum across a broad base of
investment strategies. Our expanded distribution effort drove an
increase in gross sales of 32% from the prior quarter from an array
of funds, vehicles and asset classes, led by U.S. retail.
“This quarter, we saw positive net flows into Benefit Street
Partners, Clarion Partners, ClearBridge, Fiduciary Trust
International, Franklin Equity Group, Franklin Templeton Fixed
Income, Martin Currie, Royce and Western Asset. Alternative asset
inflows of $6.2 billion nearly doubled from the prior quarter, with
record net inflows of $2.9 billion, driven primarily by our real
estate, alternative credit, hedge fund and infrastructure
strategies. We now have $131 billion in alternative assets under
management. Fixed income inflows increased by 27% from the prior
quarter to $53.5 billion, driven by a diverse group of fixed income
strategies, including core bond, core plus and corporates.
“We’ve created a differentiated global investment management
firm which balances scale and specialization and offers expanded
opportunities for our shareholders, clients and employees, as well
as the financial professionals with whom we partner. Our financial
results reflect meaningful progress, and our balance sheet
continues to provide strong financial flexibility. I could not be
prouder of our employees who demonstrate on a daily basis their
professionalism, work ethic and resilience, and are squarely
focused on helping our clients around the world achieve the most
important milestones of their lives.”
Quarter Ended
% Change
Quarter Ended
% Change
31-Mar-21
31-Dec-20
Qtr. vs. Qtr.
31-Mar-20
Year vs. Year
Financial Results2
(in millions, except per share data)
Operating revenues
$
2,076.5
$
1,995.1
4
%
$
1,311.2
58
%
Operating income
456.3
409.1
12
%
339.9
34
%
Operating margin
22.0
%
20.5
%
25.9
%
Net income1
$
381.8
$
345.3
11
%
$
79.1
383
%
Diluted earnings per share
0.74
0.67
10
%
0.16
363
%
As adjusted
(non-GAAP):3
Adjusted operating income
$
581.1
$
549.9
6
%
$
385.9
51
%
Adjusted operating margin
38.0
%
37.2
%
43.2
%
Adjusted net income
$
403.5
$
373.4
8
%
$
332.8
21
%
Adjusted diluted earnings per share
0.79
0.73
8
%
0.66
20
%
Assets Under Management
(in billions)
Ending
$
1,498.9
$
1,498.0
0
%
$
580.3
158
%
Average4
1,497.9
1,443.8
4
%
655.8
128
%
Long-term net flows
(4.2
)
(4.5
)
(25.4
)
Total assets under management (“AUM”) were $1,498.9 billion at
March 31, 2021, up $0.9 billion during the quarter due to $3.9
billion of net market change, distributions and other and $1.2
billion of cash management net inflows, partially offset by $4.2
billion of long-term net outflows.
Cash and cash equivalents and investments were $5.2 billion at
March 31, 2021, as compared to $4.3 billion at September 30, 2020.
Including the Company’s direct investments in consolidated
investment products, cash and cash equivalents and investments were
$6.2 billion at March 31, 2021, as compared to $5.1 billion at
September 30, 2020. Total stockholders’ equity was $11.7 billion at
March 31, 2021, as compared to $11.0 billion at September 30, 2020.
The Company had 504.3 million shares of common stock outstanding at
March 31, 2021, as compared to 495.1 million shares outstanding at
September 30, 2020. The Company repurchased 1.7 million shares of
its common stock for a total cost of $45.8 million during the
quarter ended March 31, 2021.
Conference Call Information
A written commentary on the results by Jenny Johnson, President
and CEO; Greg Johnson, Executive Chairman; Matthew Nicholls,
Executive Vice President and CFO; and Adam Spector, Executive Vice
President – Global Advisory Services, Head of Global Distribution
will be available via investors.franklinresources.com today at
approximately 8:30 a.m. Eastern Time.
Ms. Johnson and Messrs. Johnson, Nicholls and Spector will also
lead a live teleconference today at 10:00 a.m. Eastern Time to
answer questions of a material nature. Access to the teleconference
will be available via investors.franklinresources.com or by dialing
(833) 350-1245 in the U.S. and Canada or (236) 712-2205
internationally. A replay of the teleconference can also be
accessed by calling (800) 585-8367 in the U.S. and Canada or (416)
621-4642 internationally using access code 3991013, after 1:00 p.m.
Eastern Time on May 4, 2021 through May 11, 2021, or via
investors.franklinresources.com.
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 at (650) 312-4091 before the live
teleconference for any clarifications or questions related to the
earnings release or commentary.
FRANKLIN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF
INCOME2
Unaudited
(in millions, except per share data)
Three Months Ended
March 31,
%
Change
Six Months Ended
March 31,
%
Change
2021
2020
2021
2020
Operating Revenues
Investment management fees
$
1,598.4
$
908.2
76
%
$
3,138.8
$
1,887.9
66
%
Sales and distribution fees
413.6
341.7
21
%
810.5
693.2
17
%
Shareholder servicing fees
55.7
54.8
2
%
105.1
104.8
0
%
Other
8.8
6.5
35
%
17.2
14.5
19
%
Total operating revenues
2,076.5
1,311.2
58
%
4,071.6
2,700.4
51
%
Operating Expenses
Compensation and benefits
732.3
365.7
100
%
1,457.8
755.1
93
%
Sales, distribution and marketing
541.8
423.9
28
%
1,048.3
867.8
21
%
Information systems and technology
117.5
61.8
90
%
234.0
124.3
88
%
Occupancy
53.8
34.4
56
%
109.5
68.9
59
%
Amortization of intangible assets
57.9
4.4
NM
116.1
9.2
NM
General, administrative and other
116.9
81.1
44
%
240.5
162.3
48
%
Total operating expenses
1,620.2
971.3
67
%
3,206.2
1,987.6
61
%
Operating Income
456.3
339.9
34
%
865.4
712.8
21
%
Other Income (Expenses)
Investment and other income (losses),
net
67.1
(181.0)
NM
144.3
(113.1
)
NM
Interest expense
(15.9
)
(3.7
)
330
%
(45.6
)
(9.8
)
365
%
Investment and other income (losses) of
consolidated investment products, net
111.2
(40.9
)
NM
202.3
(25.7
)
NM
Expenses of consolidated investment
products
(5.2
)
(11.4
)
(54
%)
(15.6
)
(15.7
)
(1
%)
Other income (expenses), net
157.2
(237.0
)
NM
285.4
(164.3
)
NM
Income before taxes
613.5
102.9
496
%
1,150.8
548.5
110
%
Taxes on income
128.1
44.1
190
%
270.6
141.6
91
%
Net income
485.4
58.8
726
%
880.2
406.9
116
%
Less: net income (loss) attributable
to
Redeemable noncontrolling interests
12.0
(28.5
)
NM
30.7
(19.5
)
NM
Nonredeemable noncontrolling interests
91.6
8.2
NM
122.4
(3.2
)
NM
Net Income Attributable to Franklin
Resources, Inc.
$
381.8
$
79.1
383
%
$
727.1
$
429.6
69
%
Earnings per Share
Basic
$
0.74
$
0.16
363
%
$
1.42
$
0.86
65
%
Diluted
0.74
0.16
363
%
1.42
0.86
65
%
Dividends Declared per Share
$
0.28
$
0.27
4
%
$
0.56
$
0.54
4
%
Average Shares Outstanding
Basic
490.5
491.5
0
%
490.8
493.1
0
%
Diluted
490.9
491.8
0
%
491.3
493.6
0
%
Operating Margin
22.0
%
25.9
%
21.3
%
26.4
%
FRANKLIN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF
INCOME2
Unaudited
(in millions, except per share data)
Three Months Ended
%
Change
Three Months Ended
31-Mar-21
31-Dec-20
30-Sep-20
30-Jun-20
31-Mar-20
Operating Revenues
Investment management fees
$
1,598.4
$
1,540.4
4
%
$
1,284.6
$
809.2
$
908.2
Sales and distribution fees
413.6
396.9
4
%
366.7
302.1
341.7
Shareholder servicing fees
55.7
49.4
13
%
45.7
44.6
54.8
Other
8.8
8.4
5
%
8.0
5.2
6.5
Total operating revenues
2,076.5
1,995.1
4
%
1,705.0
1,161.1
1,311.2
Operating Expenses
Compensation and benefits
732.3
725.5
1
%
732.3
386.5
365.7
Sales, distribution and marketing
541.8
506.5
7
%
466.7
368.6
423.9
Information systems and technology
117.5
116.5
1
%
102.0
62.1
61.8
Occupancy
53.8
55.7
(3
%)
47.5
31.5
34.4
Amortization of intangible assets
57.9
58.2
(1
%)
40.1
4.7
4.4
General, administrative and other
116.9
123.6
(5
%)
212.8
75.2
81.1
Total operating expenses
1,620.2
1,586.0
2
%
1,601.4
928.6
971.3
Operating Income
456.3
409.1
12
%
103.6
232.5
339.9
Other Income (Expenses)
Investment and other income (losses),
net
67.1
77.2
(13
%)
25.1
49.6
(181.0
)
Interest expense
(15.9
)
(29.7
)
(46
%)
(18.4
)
(5.2
)
(3.7
)
Investment and other income (losses) of
consolidated investment products, net
111.2
91.1
22
%
95.6
0.3
(40.9
)
Expenses of consolidated investment
products
(5.2
)
(10.4
)
(50
%)
(6.3
)
(7.4
)
(11.4
)
Other income (expenses), net
157.2
128.2
23
%
96.0
37.3
(237.0
)
Income before taxes
613.5
537.3
14
%
199.6
269.8
102.9
Taxes on income5
128.1
142.5
(10
%)
73.1
16.1
44.1
Net income
485.4
394.8
23
%
126.5
253.7
58.8
Less: net income (loss) attributable
to
Redeemable noncontrolling interests
12.0
18.7
(36
%)
36.8
31.3
(28.5
)
Nonredeemable noncontrolling interests
91.6
30.8
197
%
10.8
(68.0
)
8.2
Net Income Attributable to Franklin
Resources, Inc.
$
381.8
$
345.3
11
%
$
78.9
$
290.4
$
79.1
Earnings per Share
Basic
$
0.74
$
0.67
10
%
$
0.15
$
0.58
$
0.16
Diluted
0.74
0.67
10
%
0.15
0.58
0.16
Dividends Declared per Share
$
0.28
$
0.28
0
%
$
0.27
$
0.27
$
0.27
Average Shares Outstanding
Basic
490.5
491.1
0
%
491.1
490.4
491.5
Diluted
490.9
491.7
0
%
491.7
490.7
491.8
Operating Margin
22.0
%
20.5
%
6.1
%
20.0
%
25.9
%
AUM AND FLOWS
(in billions)
Three Months Ended
March 31,
%
Change
Six Months Ended
March 31,
%
Change
2021
2020
2021
2020
Beginning AUM
$
1,498.0
$
698.3
115
%
$
1,418.9
$
692.6
105
%
Long-term inflows
101.7
38.9
161
%
197.8
81.9
142
%
Long-term outflows
(105.9
)
(64.3
)
65
%
(206.5
)
(119.6
)
73
%
Long-term net flows
(4.2
)
(25.4
)
(83
%)
(8.7
)
(37.7
)
(77
%)
Cash management net flows
1.2
0.5
140
%
(9.0
)
1.5
NM
Total net flows
(3.0
)
(24.9
)
(88
%)
(17.7
)
(36.2
)
(51
%)
Acquisitions
—
5.6
(100
%)
—
5.6
(100
%)
Net market change, distributions and
other6
3.9
(98.7
)
NM
97.7
(81.7
)
NM
Ending AUM
$
1,498.9
$
580.3
158
%
$
1,498.9
$
580.3
158
%
Average AUM
$
1,497.9
$
655.8
128
%
$
1,467.0
$
671.4
118
%
AUM BY ASSET CLASS
(in billions)
31-Mar-21
31-Dec-20
% Change
30-Sep-20
30-Jun-20
31-Mar-20
Fixed Income
$
642.3
$
669.9
(4
%)
$
656.9
$
211.3
$
214.9
Equity
511.9
495.7
3
%
438.1
235.8
200.9
Multi-Asset
148.2
141.1
5
%
129.4
118.5
107.4
Alternative
131.1
127.1
3
%
122.1
46.8
46.4
Cash Management
65.4
64.2
2
%
72.4
10.4
10.7
Total AUM
$
1,498.9
$
1,498.0
0
%
$
1,418.9
$
622.8
$
580.3
Average AUM for the Three-Month
Period
$
1,497.9
$
1,443.8
4
%
$
1,227.8
$
605.0
$
655.8
AUM AND FLOWS - UNITED STATES AND INTERNATIONAL7
As of and for the Three Months
Ended
(in billions)
31-Mar-21
% of Total
31-Dec-20
% of Total
31-Mar-20
% of Total
Long-Term Inflows
United States
$
70.0
69
%
$
69.9
73
%
$
23.9
61
%
International
31.7
31
%
26.2
27
%
15.0
39
%
Total long-term inflows
$
101.7
100
%
$
96.1
100
%
$
38.9
100
%
Long-Term Outflows
United States
$
(65.8
)
62
%
$
(65.6
)
65
%
$
(39.0
)
61
%
International
(40.1
)
38
%
(35.0
)
35
%
(25.3
)
39
%
Total long-term outflows
$
(105.9
)
100
%
$
(100.6
)
100
%
$
(64.3
)
100
%
AUM
United States
$
1,100.5
73
%
$
1,088.5
73
%
$
408.3
70
%
International
398.4
27
%
409.5
27
%
172.0
30
%
Total AUM
$
1,498.9
100
%
$
1,498.0
100
%
$
580.3
100
%
AUM AND FLOWS BY ASSET CLASS
(in billions)
for the three months ended
March 31, 2021
Fixed
Income
Equity
Multi-Asset
Alternative
Cash
Management
Total
AUM at January 1, 2021
$
669.9
$
495.7
$
141.1
$
127.1
$
64.2
$
1,498.0
Long-term inflows
53.5
32.4
9.6
6.2
—
101.7
Long-term outflows
(56.1
)
(38.0
)
(8.5
)
(3.3
)
—
(105.9
)
Long-term net flows
(2.6
)
(5.6
)
1.1
2.9
—
(4.2
)
Cash management net flows
—
—
—
—
1.2
1.2
Total net flows
(2.6
)
(5.6
)
1.1
2.9
1.2
(3.0
)
Net market change, distributions and
other6
(25.0
)
21.8
6.0
1.1
—
3.9
AUM at March 31, 2021
$
642.3
$
511.9
$
148.2
$
131.1
$
65.4
$
1,498.9
(in billions)
for the three months ended
December 31, 2020
Fixed
Income
Equity
Multi-Asset
Alternative
Cash
Management
Total
AUM at October 1, 2020
$
656.9
$
438.1
$
129.4
$
122.1
$
72.4
$
1,418.9
Long-term inflows
42.0
41.5
9.3
3.3
—
96.1
Long-term outflows
(47.9
)
(40.2
)
(9.6
)
(2.9
)
—
(100.6
)
Long-term net flows
(5.9
)
1.3
(0.3
)
0.4
—
(4.5
)
Cash management net flows
—
—
—
—
(10.2
)
(10.2
)
Total net flows
(5.9
)
1.3
(0.3
)
0.4
(10.2
)
(14.7
)
Net market change, distributions and
other6
18.9
56.3
12.0
4.6
2.0
93.8
AUM at December 31, 2020
$
669.9
$
495.7
$
141.1
$
127.1
$
64.2
$
1,498.0
(in billions)
for the three months ended
March 31, 2020
Fixed
Income
Equity
Multi-Asset
Alternative
Cash
Management
Total
AUM at January 1, 2020
$
243.0
$
273.2
$
125.6
$
46.1
$
10.4
$
698.3
Long-term inflows
15.6
13.4
6.7
3.2
—
38.9
Long-term outflows
(29.3
)
(23.2
)
(9.4
)
(2.4
)
—
(64.3
)
Long-term net flows
(13.7
)
(9.8
)
(2.7
)
0.8
—
(25.4
)
Cash management net flows
—
—
—
—
0.5
0.5
Total net flows
(13.7
)
(9.8
)
(2.7
)
0.8
0.5
(24.9
)
Acquisition
—
—
5.6
—
—
5.6
Net market change, distributions and
other6
(14.4
)
(62.5
)
(21.1
)
(0.5
)
(0.2
)
(98.7
)
AUM at March 31, 2020
$
214.9
$
200.9
$
107.4
$
46.4
$
10.7
$
580.3
Supplemental Non-GAAP Financial Measures
As supplemental information, we are providing performance
measures for “adjusted operating income,” “adjusted operating
margin,” “adjusted net income” and “adjusted diluted earnings per
share,” each of which is based on methodologies other than
generally accepted accounting principles (“non-GAAP measures”).
Management believes these non-GAAP measures are useful indicators
of our financial performance and may be helpful to investors in
evaluating our relative performance against industry peers as these
measures exclude the impact of consolidated investment products
(“CIPs”) and mitigate the margin variability related to sales and
distribution revenues and expenses across multiple distribution
channels globally. These measures also exclude performance-based
investment management fees which are fully passed through as
compensation and benefits expense per the terms of a previous
acquisition by Legg Mason, Inc. (“Legg Mason”) and have no impact
on net income. These non-GAAP measures also exclude
acquisition-related expenses, certain items which management
considers to be nonrecurring, unrealized investment gains and
losses included in investment and other income (losses), net, and
the related income tax effect of these adjustments, as applicable.
These non-GAAP measures also exclude the impact on compensation and
benefits expense which is offset by gains and losses in investment
and other income (losses), net on investments made to fund deferred
compensation plans and on seed investments under certain historical
revenue sharing arrangements.
“Adjusted operating income,” “adjusted operating margin,”
“adjusted net income” and “adjusted diluted earnings per share” are
defined below, followed by reconciliations of operating income,
operating margin, net income attributable to Franklin Resources,
Inc. and diluted earnings per share on a U.S. GAAP basis to these
non-GAAP measures. Non-GAAP measures should not be considered in
isolation from, or as substitutes for, any financial information
prepared in accordance with U.S. GAAP, and may not be comparable to
other similarly titled measures of other companies. Additional
reconciling items may be added in the future to these non-GAAP
measures if deemed appropriate.
Adjusted Operating Income
We define adjusted operating income as operating income adjusted
to exclude the following:
- Elimination of operating revenues upon consolidation of
investment products.
- Acquisition-related retention compensation.
- Impact on compensation and benefits expense from gains and
losses on investments related to Legg Mason deferred compensation
plans and seed investments, which is offset in investment and other
income (expense), net.
- Other acquisition-related expenses including professional fees
and technology costs.
- Amortization and impairment of intangible assets.
- Special termination benefits related to workforce optimization
initiatives related to the acquisition of Legg Mason on July 31,
2020.
Adjusted Operating Margin
We calculate adjusted operating margin as adjusted operating
income divided by adjusted operating revenues. We define adjusted
operating revenues as operating revenues adjusted to exclude the
following:
- Acquisition-related performance-based investment management
fees which are passed through as compensation and benefits
expense.
- Sales and distribution fees and a portion of investment
management fees allocated to cover sales, distribution and
marketing expenses paid to the financial advisers and other
intermediaries who sell our funds on our behalf.
- Elimination of operating revenues upon consolidation of
investment products.
Adjusted Net Income
We define adjusted net income as net income attributable to
Franklin Resources, Inc. adjusted to exclude the following:
- Activities of CIPs, including investment and other income
(losses), net, and income (loss) attributable to noncontrolling
interests, net of revenues eliminated upon consolidation of
investment products.
- Acquisition-related retention compensation.
- Other acquisition-related expenses including professional fees
and technology costs.
- Amortization and impairment of intangible assets.
- Special termination benefits related to workforce optimization
initiatives related to the acquisition of Legg Mason on July 31,
2020.
- Net gains or losses on investments related to Legg Mason
deferred compensation plans which are not offset by compensation
and benefits expense.
- Unrealized investment gains and losses other than those that
are offset by compensation and benefits expense.
- Interest expense for amortization of Legg Mason debt premium
from acquisition-date fair value adjustment.
- Net income tax expense of the above adjustments based on the
respective blended rates applicable to the adjustments.
Adjusted Diluted Earnings Per Share
We define adjusted diluted earnings per share as diluted
earnings per share adjusted to exclude the per share impacts of the
adjustments applied to net income in calculating adjusted net
income.
In calculating adjusted operating income, adjusted operating
margin, adjusted net income and adjusted diluted earnings per
share, we adjust for activities of CIPs because the impact of
consolidated products is not considered reflective of the
underlying results of our operations. We adjust for
acquisition-related retention compensation, other
acquisition-related expenses, amortization and impairment of
intangible assets and interest expense for amortization of the Legg
Mason debt premium to facilitate comparability of our operating
results with the results of other asset management firms. We adjust
for special termination benefits related to workforce optimization
initiatives related to the acquisition of Legg Mason because these
items are deemed nonrecurring. In calculating adjusted net income
and adjusted diluted earnings per share, we adjust for unrealized
investment gains and losses included in investment and other income
(losses), net and net gains or losses on investments related to
Legg Mason deferred compensation plans which are not offset by
compensation and benefits expense because these items primarily
relate to seed and strategic investments which have been and are
generally expected to be held long term.
The calculations of adjusted operating income, adjusted
operating margin, adjusted net income and adjusted diluted earnings
per share are as follows:
(in millions)
Three Months Ended
Six Months Ended
31-Mar-21
31-Dec-20
31-Mar-20
31-Mar-21
31-Mar-20
Operating income
$
456.3
$
409.1
$
339.9
$
865.4
$
712.8
Add (subtract):
Elimination of operating revenues upon
consolidation of investment products*
5.8
5.7
6.2
11.5
12.9
Acquisition-related retention
46.6
43.5
27.2
90.1
48.5
Compensation and benefits expense from
gains on deferred compensation and seed investments, net
0.2
14.1
—
14.3
—
Other acquisition-related expenses
3.8
11.9
5.4
15.7
5.2
Amortization of intangible assets
57.9
58.2
4.4
116.1
9.2
Impairment of intangible assets
—
—
2.8
—
2.8
Special termination benefits
10.5
7.4
—
17.9
—
Adjusted operating income
$
581.1
$
549.9
$
385.9
$
1,131.0
$
791.4
Total operating revenues
$
2,076.5
$
1,995.1
$
1,311.2
$
4,071.6
$
2,700.4
Add (subtract):
Acquisition-related pass through
performance fees
(9.3
)
(16.0
)
—
(25.3
)
—
Sales and distribution fees
(413.6
)
(396.9
)
(341.7
)
(810.5
)
(693.2
)
Allocation of investment management fees
for sales, distribution and marketing expenses
(128.2
)
(109.6
)
(82.2
)
(237.8
)
(174.6
)
Elimination of operating revenues upon
consolidation of investment products*
5.8
5.7
6.2
11.5
12.9
Adjusted operating revenues
$
1,531.2
$
1,478.3
$
893.5
$
3,009.5
$
1,845.5
Operating margin
22.0
%
20.5
%
25.9
%
21.3
%
26.4
%
Adjusted operating margin
38.0
%
37.2
%
43.2
%
37.6
%
42.9
%
(in millions, except per share data)
Three Months Ended
Six Months Ended
31-Mar-21
31-Dec-20
31-Mar-20
31-Mar-21
31-Mar-20
Net income attributable to Franklin
Resources, Inc.
$
381.8
$
345.3
$
79.1
$
727.1
$
429.6
Add (subtract):
Net (income) loss of consolidated
investment products*
(6.3
)
21.2
(16.4
)
14.9
(11.8
)
Acquisition-related retention
46.6
43.5
27.2
90.1
48.5
Other acquisition-related expenses
3.7
10.1
5.4
13.8
5.2
Amortization of intangible assets
57.9
58.2
4.4
116.1
9.2
Impairment of intangible assets
—
—
2.8
—
2.8
Special termination benefits
10.5
7.4
—
17.9
—
Net gains on deferred compensation plan
investments not offset by compensation and benefits expense
(0.2
)
(1.2
)
—
(1.4
)
—
Unrealized investment (gains) losses
(60.6
)
(95.9
)
257.6
(156.5
)
221.2
Interest expense for amortization of debt
premium
(16.9
)
(6.0
)
—
(22.9
)
—
Net income tax expense of adjustments
(13.0
)
(9.2
)
(27.3
)
(22.2
)
(33.6
)
Adjusted net income
$
403.5
$
373.4
$
332.8
$
776.9
$
671.1
Diluted earnings per share
$
0.74
$
0.67
$
0.16
$
1.42
$
0.86
Adjusted diluted earnings per
share
0.79
0.73
0.66
1.51
1.34
__________________
* The impact of consolidated investment products is summarized
as follows:
(in millions)
Three Months Ended
Six Months Ended
31-Mar-21
31-Dec-20
31-Mar-20
31-Mar-21
31-Mar-20
Elimination of operating revenues upon
consolidation
$
(5.8
)
$
(5.7
)
$
(6.2
)
$
(11.5
)
$
(12.9
)
Other income (expenses), net
95.6
20.3
(0.7
)
115.9
(0.9
)
Less: income (loss) attributable to
noncontrolling interests
83.5
35.8
(23.3
)
119.3
(25.6
)
Net income (loss)
$
6.3
$
(21.2
)
$
16.4
$
(14.9
)
$
11.8
Notes
- Net income represents net income attributable to Franklin
Resources, Inc.
- Effective with the quarter ended September 30, 2020, the
Company changed the presentation of its consolidated statements of
income to include dividend and interest income and other expenses
from consolidated investment products in non-operating income.
Amounts for the comparative prior fiscal periods were reclassified
to conform to the current presentation, including the
reclassification of investment income and interest expense of
consolidated investment products. These reclassifications had no
impact on previously reported net income or financial
position.
- “Adjusted operating income,” “adjusted operating margin,”
“adjusted net income” and “adjusted diluted earnings per share” are
based on methodologies other than generally accepted accounting
principles. See “Supplemental Non-GAAP Financial Measures” for
definitions and reconciliations of these measures.
- Average AUM represents simple monthly average AUM.
- Taxes on income for the quarter ended June 30, 2020 includes a
$38.6 million tax benefit from capital losses subsequent to the
change in corporate tax structure of a foreign holding company to a
U.S. branch.
- Net market change, distributions and other includes
appreciation (depreciation), distributions to investors that
represent return on investments and return of capital, and foreign
exchange revaluation.
- International includes North America-based advisers serving
non-resident clients.
Franklin Resources, Inc. (NYSE: BEN) is a global investment
management organization with subsidiaries operating as Franklin
Templeton and serving clients in over 165 countries. Franklin
Templeton’s mission is to help clients achieve better outcomes
through investment management expertise, wealth management and
technology solutions. Through its specialist investment managers,
the Company brings extensive capabilities in equity, fixed income,
multi-asset solutions and alternatives. With offices in more than
30 countries and approximately 1,300 investment professionals, the
California-based company has over 70 years of investment experience
and approximately $1.5 trillion in AUM as of March 31, 2021. The
Company posts information that may be significant for investors in
the Investor Relations and News Center sections of its website, and
encourages investors to consult those sections regularly. For more
information, please visit investors.franklinresources.com.
Forward-Looking Statements
Some of the statements herein may include forward-looking
statements that reflect our current views with respect to future
events and financial performance. Such statements are provided
under the “safe harbor” protection of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include
all statements that do not relate solely to historical or current
facts and generally can be identified by words or phrases written
in the future tense and/or preceded by words such as “anticipate,”
“believe,” “could,” “depends,” “estimate,” “expect,” “intend,”
“likely,” “may,” “plan,” “potential,” “seek,” “should,” “will,”
“would,” or other similar words or variations thereof, or the
negative thereof, but these terms are not the exclusive means of
identifying such statements.
Forward-looking statements involve a number of known and unknown
risks, uncertainties and other important factors, some of which are
listed below, that may cause actual results and outcomes to differ
materially from any future results or outcomes expressed or implied
by such forward-looking statements. While forward-looking
statements are our best prediction at the time that they are made,
you should not rely on them and are cautioned against doing so.
Forward-looking statements are based on our current expectations
and assumptions regarding our business, the economy and other
possible future conditions. Because forward-looking statements
relate to the future, they are subject to inherent uncertainties,
risks and changes in circumstances that are difficult to predict.
They are neither statements of historical fact nor guarantees or
assurances of future performance. Factors or events that could
cause our actual results to differ may emerge from time to time,
and it is not possible for us to predict all of them.
These and other risks, uncertainties and other important factors
are described in more detail in our recent filings with the U.S.
Securities and Exchange Commission, including, without limitation,
in Risk Factors and Management’s Discussion and Analysis of
Financial Condition and Results of Operations in our Annual Report
on Form 10-K for the fiscal year ended September 30, 2020 and our
subsequent Quarterly Reports on Form 10-Q:
- Our business and operations are subject to adverse effects from
the outbreak and spread of contagious diseases such as COVID-19,
which adverse effects may continue.
- Volatility and disruption of our business and the capital and
credit markets and adverse changes in the global economy may
significantly affect our results of operations and may put pressure
on our financial results.
- The amount and mix of our AUM are subject to significant
fluctuations.
- We are subject to significant risk of asset volatility from
changes in the global financial, equity, debt and commodity
markets.
- Our funds may be subject to liquidity risks or an unanticipated
large number of redemptions and fund closures.
- A shift in our asset mix toward lower fee products may
negatively impact our revenues.
- We may not effectively manage risks associated with the
replacement of benchmark indices.
- Poor investment performance of our products could reduce the
level of our AUM or affect our sales, and negatively impact our
revenues and income.
- Harm to our reputation may negatively impact our revenues and
income.
- Our completed acquisition of Legg Mason, Inc. remains subject
to integration risks.
- Our business operations are complex and a failure to perform
operational tasks properly or comply with applicable regulatory
requirements could have an adverse effect on our revenues and
income.
- Failure to establish adequate controls and risk management
policies, or the circumvention of controls and policies, could have
an adverse effect on our global operations, reputation and
financial position.
- We face risks, and corresponding potential costs and expenses,
associated with conducting operations and growing our business in
numerous countries.
- Our focus on international markets as a source of investments
and sales of our products subjects us to increased exchange rate
and market-specific political, economic or other risks that may
adversely impact our revenues and income generated overseas.
- We may review and pursue strategic transactions that could pose
risks to our business.
- Failure to properly address the increased transformative
pressures affecting the asset management industry could negatively
impact our business.
- Strong competition from numerous and sometimes larger companies
with competing offerings and products could limit or reduce sales
of our products, potentially resulting in a decline in our market
share, revenues and income.
- Increasing competition and other changes in the third-party
distribution and sales channels on which we depend could reduce our
income and hinder our growth.
- Any failure of our third-party providers to fulfill their
obligations, or our failure to maintain good relationships with our
providers, could adversely impact our business.
- We may be adversely affected if any of our third-party
providers is subject to a successful cyber or security attack.
- Our ability to manage and grow our business successfully can be
impeded by systems and other technological limitations.
- Any significant limitation, failure or security breach of our
information and cyber security infrastructure, software
applications, technology or other systems that are critical to our
operations could disrupt our business and harm our operations and
reputation.
- Our inability to recover successfully, should we experience a
disaster or other business continuity problem, could cause material
financial loss, regulatory actions, legal liability, and/or
reputational harm.
- We depend on key personnel and our financial performance could
be negatively affected by the loss of their services.
- Our ability to meet cash needs depends upon certain factors,
including the market value of our assets, our operating cash flows
and our perceived creditworthiness.
- We are dependent on the earnings of our subsidiaries.
- We are subject to extensive, complex, overlapping and
frequently changing rules, regulations, policies, and legal
interpretations.
- We may be adversely affected as a result of new or revised
legislation or regulations or by changes in the interpretation of
existing laws and regulations, in the U.S. and other
jurisdictions.
- Global regulatory and legislative actions and reforms have made
compliance in the regulatory environment in which we operate more
costly and future actions and reforms could adversely impact our
financial condition and results of operations.
- Failure to comply with the laws, rules or regulations in any of
the jurisdictions in which we operate could result in substantial
harm to our reputation and results of operations.
- Changes in tax laws or exposure to additional income tax
liabilities could have a material impact on our financial
condition, results of operations and liquidity.
- Regulatory and governmental examinations and/or investigations,
litigation and the legal risks associated with our business, could
adversely impact our AUM, increase costs and negatively impact our
profitability and/or our future financial results.
- Our contractual obligations may subject us to indemnification
costs and liability to third parties.
- Failure to protect our intellectual property may negatively
impact our business.
If a circumstance occurs after the date of this press release
that causes any of our forward-looking statements to be inaccurate,
whether as a result of new information, future developments or
otherwise, we undertake no obligation to announce publicly the
change to our expectations, or to make any revision to our
forward-looking statements, to reflect any change in assumptions,
beliefs or expectations, or any change in events, conditions or
circumstances upon which any forward-looking statement is based,
unless required by law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210504005734/en/
Franklin Resources, Inc. Investor Relations: Selene Oh (650)
312-4091, selene.oh@franklintempleton.com Media Relations: Matt
Walsh (650) 312-2245, matthew.walsh@franklintempleton.com
investors.franklinresources.com
Franklin Resources (NYSE:BEN)
Historical Stock Chart
From Aug 2024 to Sep 2024
Franklin Resources (NYSE:BEN)
Historical Stock Chart
From Sep 2023 to Sep 2024