Franklin Resources, Inc. Announces Preliminary Fourth Quarter and Fiscal Year Results
As supplemental information, the Company is providing certain adjusted performance measures which are based on methodologies other than generally accepted accounting principles. Preliminary adjusted net income2 was
“Franklin Templeton is one of the most comprehensive global asset managers with investment management capabilities across public and private markets and a distribution reach with clients in over 150 countries,” said
“As we reflect on our fiscal year, global markets rallied significantly, despite ongoing geopolitical complexity and uncertainty. Against this backdrop, we reached record AUM of
“During the fiscal year, we continued to increase our presence in our key focus areas which reflect areas of long-term client demand. Client interest in alternative and multi-asset investment strategies generated positive flows for the year. Private markets fundraising totaled
“Our acquisition of Putnam Investments has exceeded our expectations. Since closing on
“We remain committed to our vision of building innovative and collaborative relationships with our clients and look forward to unlocking new opportunities that reflect the high standards that have defined
|
Quarter Ended |
% Change |
Quarter Ended |
% Change |
Fiscal Year Ended |
|
|||||||||||||||||||||||
|
|
|
Qtr. vs. Qtr. |
|
Year vs. Year |
2024 |
2023 |
% Change |
|||||||||||||||||||||
Financial Results |
|
|
|
|
|
|
|
|
|||||||||||||||||||||
(in millions, except per share data) |
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Operating revenues |
$ |
2,211.2 |
|
$ |
2,122.9 |
|
4 |
% |
$ |
1,986.1 |
|
11 |
% |
$ |
8,478.0 |
|
$ |
7,849.4 |
|
8 |
% |
||||||||
Operating income (loss) |
|
(150.7 |
) |
|
222.5 |
|
NM |
|
|
338.3 |
|
NM |
|
|
407.6 |
|
|
1,102.3 |
|
(63 |
%) |
||||||||
Operating margin |
|
(6.8 |
%) |
|
10.5 |
% |
|
|
17.0 |
% |
|
|
4.8 |
% |
|
14.0 |
% |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net income (loss)¹ |
$ |
(84.7 |
) |
$ |
174.0 |
|
NM |
|
$ |
295.5 |
|
NM |
|
$ |
464.8 |
|
$ |
882.8 |
|
(47 |
%) |
||||||||
Diluted earnings (loss) per share |
|
(0.19 |
) |
|
0.32 |
|
NM |
|
|
0.58 |
|
NM |
|
|
0.85 |
|
|
1.72 |
|
(51 |
%) |
||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
As adjusted (non-GAAP): 2 |
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Adjusted operating income |
$ |
451.6 |
|
$ |
424.9 |
|
6 |
% |
$ |
511.7 |
|
(12 |
%) |
$ |
1,713.1 |
|
$ |
1,823.8 |
|
(6 |
%) |
||||||||
Adjusted operating margin |
|
26.3 |
% |
|
25.7 |
% |
|
|
32.4 |
% |
|
|
26.1 |
% |
|
29.9 |
% |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Adjusted net income |
$ |
315.2 |
|
$ |
326.4 |
|
(3 |
%) |
$ |
427.0 |
|
(26 |
%) |
$ |
1,276.7 |
|
$ |
1,332.2 |
|
(4 |
%) |
||||||||
Adjusted diluted earnings per share |
|
0.59 |
|
|
0.60 |
|
(2 |
%) |
|
0.84 |
|
(30 |
%) |
|
2.39 |
|
|
2.60 |
|
(8 |
%) |
||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Assets Under Management |
|
|
|
|
|
|
|
|
|||||||||||||||||||||
(in billions) |
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Ending |
$ |
1,678.6 |
|
$ |
1,646.6 |
|
2 |
% |
$ |
1,374.2 |
|
22 |
% |
$ |
1,678.6 |
|
$ |
1,374.2 |
|
22 |
% |
||||||||
Average3 |
|
1,667.5 |
|
|
1,632.6 |
|
2 |
% |
|
1,419.1 |
|
18 |
% |
|
1,565.8 |
|
|
1,400.4 |
|
12 |
% |
||||||||
Long-term net flows |
|
(31.3 |
) |
|
(3.2 |
) |
|
|
(6.9 |
) |
|
|
(32.6 |
) |
|
(21.3 |
) |
|
Total assets under management (“AUM”) were
Cash and cash equivalents and investments were
Conference Call Information
A written commentary on the results by
Analysts and investors are encouraged to review the Company’s recent filings with the
CONSOLIDATED STATEMENTS OF INCOME Unaudited |
||||||||||||||||||||||
(in millions, except per share data) |
Three Months Ended
|
% Change |
Twelve Months Ended
|
% Change |
||||||||||||||||||
2024 |
2023 5 |
2024 |
2023 5 |
|||||||||||||||||||
Operating Revenues |
|
|
|
|
|
|
||||||||||||||||
Investment management fees |
$ |
1,766.2 |
|
$ |
1,634.4 |
|
8 |
% |
$ |
6,822.2 |
|
$ |
6,452.9 |
|
6 |
% |
||||||
Sales and distribution fees |
|
368.0 |
|
|
306.4 |
|
20 |
% |
|
1,381.0 |
|
|
1,203.7 |
|
15 |
% |
||||||
Shareholder servicing fees |
|
67.0 |
|
|
37.2 |
|
80 |
% |
|
229.3 |
|
|
152.7 |
|
50 |
% |
||||||
Other |
|
10.0 |
|
|
8.1 |
|
23 |
% |
|
45.5 |
|
|
40.1 |
|
13 |
% |
||||||
Total operating revenues |
|
2,211.2 |
|
|
1,986.1 |
|
11 |
% |
|
8,478.0 |
|
|
7,849.4 |
|
8 |
% |
||||||
Operating Expenses |
|
|
|
|
|
|
||||||||||||||||
Compensation and benefits |
|
940.8 |
|
|
826.3 |
|
14 |
% |
|
3,831.1 |
|
|
3,494.0 |
|
10 |
% |
||||||
Sales, distribution and marketing |
|
496.9 |
|
|
411.1 |
|
21 |
% |
|
1,863.1 |
|
|
1,613.1 |
|
15 |
% |
||||||
Information systems and technology |
|
177.4 |
|
|
128.3 |
|
38 |
% |
|
620.1 |
|
|
505.0 |
|
23 |
% |
||||||
Occupancy |
|
77.7 |
|
|
57.8 |
|
34 |
% |
|
325.4 |
|
|
228.9 |
|
42 |
% |
||||||
Amortization of intangible assets |
|
83.8 |
|
|
86.5 |
|
(3 |
%) |
|
338.2 |
|
|
341.1 |
|
(1 |
%) |
||||||
Impairment of intangible assets |
|
389.2 |
|
|
— |
|
NM |
|
|
389.2 |
|
|
— |
|
NM |
|
||||||
General, administrative and other |
|
196.1 |
|
|
137.8 |
|
42 |
% |
|
703.3 |
|
|
565.0 |
|
24 |
% |
||||||
Total operating expenses |
|
2,361.9 |
|
|
1,647.8 |
|
43 |
% |
|
8,070.4 |
|
|
6,747.1 |
|
20 |
% |
||||||
Operating Income (Loss) |
|
(150.7 |
) |
|
338.3 |
|
NM |
|
|
407.6 |
|
|
1,102.3 |
|
(63 |
%) |
||||||
Other Income (Expenses) |
|
|
|
|
|
|
||||||||||||||||
Investment and other income, net |
|
95.3 |
|
|
62.0 |
|
54 |
% |
|
395.5 |
|
|
262.3 |
|
51 |
% |
||||||
Interest expense |
|
(25.0 |
) |
|
(24.4 |
) |
2 |
% |
|
(97.2 |
) |
|
(123.7 |
) |
(21 |
%) |
||||||
Investment and other income of consolidated investment products, net |
|
46.2 |
|
|
40.5 |
|
14 |
% |
|
149.9 |
|
|
115.8 |
|
29 |
% |
||||||
Expenses of consolidated investment products |
|
(12.0 |
) |
|
(3.0 |
) |
300 |
% |
|
(32.6 |
) |
|
(18.7 |
) |
74 |
% |
||||||
Other income, net |
|
104.5 |
|
|
75.1 |
|
39 |
% |
|
415.6 |
|
|
235.7 |
|
76 |
% |
||||||
Income (loss) before taxes |
|
(46.2 |
) |
|
413.4 |
|
NM |
|
|
823.2 |
|
|
1,338.0 |
|
(38 |
%) |
||||||
Taxes on income |
|
9.5 |
|
|
75.0 |
|
(87 |
%) |
|
215.3 |
|
|
312.3 |
|
(31 |
%) |
||||||
Net income (loss) |
|
(55.7 |
) |
|
338.4 |
|
NM |
|
|
607.9 |
|
|
1,025.7 |
|
(41 |
%) |
||||||
Less: net income (loss) attributable to |
|
|
|
|
|
|
||||||||||||||||
Redeemable noncontrolling interests |
|
32.6 |
|
|
27.0 |
|
21 |
% |
|
127.9 |
|
|
135.5 |
|
(6 |
%) |
||||||
Nonredeemable noncontrolling interests |
|
(3.6 |
) |
|
15.9 |
|
NM |
|
|
15.2 |
|
|
7.4 |
|
105 |
% |
||||||
Net Income (Loss) Attributable to |
$ |
(84.7 |
) |
$ |
295.5 |
|
NM |
|
$ |
464.8 |
|
$ |
882.8 |
|
(47 |
%) |
||||||
|
|
|
|
|
|
|
||||||||||||||||
Earnings (Loss) per Share |
|
|
|
|
|
|
||||||||||||||||
Basic |
$ |
(0.19 |
) |
$ |
0.58 |
|
NM |
|
$ |
0.85 |
|
$ |
1.72 |
|
(51 |
%) |
||||||
Diluted |
|
(0.19 |
) |
|
0.58 |
|
NM |
|
|
0.85 |
|
|
1.72 |
|
(51 |
%) |
||||||
Dividends Declared per Share |
$ |
0.31 |
|
$ |
0.30 |
|
3 |
% |
$ |
1.24 |
|
$ |
1.20 |
|
3 |
% |
||||||
|
|
|
|
|
|
|
||||||||||||||||
Average Shares Outstanding |
|
|
|
|
|
|
||||||||||||||||
Basic |
|
516.2 |
|
|
489.2 |
|
6 |
% |
|
509.5 |
|
|
490.0 |
|
4 |
% |
||||||
Diluted |
|
516.2 |
|
|
490.0 |
|
5 |
% |
|
510.3 |
|
|
490.8 |
|
4 |
% |
||||||
|
|
|
|
|
|
|
||||||||||||||||
Operating Margin |
|
(6.8 |
%) |
|
17.0 |
% |
|
|
4.8 |
% |
|
14.0 |
% |
|
CONSOLIDATED STATEMENTS OF INCOME Unaudited |
|||||||||||||||||||||||
|
|||||||||||||||||||||||
(in millions, except per share data) |
Three Months Ended |
% Change |
Three Months Ended 5 |
||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||
Operating Revenues |
|
|
|
|
|
|
|||||||||||||||||
Investment management fees |
$ |
1,766.2 |
|
$ |
1,689.9 |
|
5 |
% |
$ |
1,713.9 |
|
$ |
1,652.2 |
|
$ |
1,634.4 |
|
||||||
Sales and distribution fees |
|
368.0 |
|
|
358.3 |
|
3 |
% |
|
358.3 |
|
|
296.4 |
|
|
306.4 |
|
||||||
Shareholder servicing fees |
|
67.0 |
|
|
61.8 |
|
8 |
% |
|
68.0 |
|
|
32.5 |
|
|
37.2 |
|
||||||
Other |
|
10.0 |
|
|
12.9 |
|
(22 |
%) |
|
12.6 |
|
|
10.0 |
|
|
8.1 |
|
||||||
Total operating revenues |
|
2,211.2 |
|
|
2,122.9 |
|
4 |
% |
|
2,152.8 |
|
|
1,991.1 |
|
|
1,986.1 |
|
||||||
Operating Expenses |
|
|
|
|
|
|
|||||||||||||||||
Compensation and benefits |
|
940.8 |
|
|
893.8 |
|
5 |
% |
|
1,028.2 |
|
|
968.3 |
|
|
826.3 |
|
||||||
Sales, distribution and marketing |
|
496.9 |
|
|
481.1 |
|
3 |
% |
|
484.3 |
|
|
400.8 |
|
|
411.1 |
|
||||||
Information systems and technology |
|
177.4 |
|
|
156.6 |
|
13 |
% |
|
155.1 |
|
|
131.0 |
|
|
128.3 |
|
||||||
Occupancy |
|
77.7 |
|
|
104.8 |
|
(26 |
%) |
|
76.2 |
|
|
66.7 |
|
|
57.8 |
|
||||||
Amortization of intangible assets |
|
83.8 |
|
|
84.0 |
|
0 |
% |
|
84.6 |
|
|
85.8 |
|
|
86.5 |
|
||||||
Impairment of intangible assets |
|
389.2 |
|
|
— |
|
NM |
|
|
— |
|
|
— |
|
|
— |
|
||||||
General, administrative and other |
|
196.1 |
|
|
180.1 |
|
9 |
% |
|
195.1 |
|
|
132.0 |
|
|
137.8 |
|
||||||
Total operating expenses |
|
2,361.9 |
|
|
1,900.4 |
|
24 |
% |
|
2,023.5 |
|
|
1,784.6 |
|
|
1,647.8 |
|
||||||
Operating Income (Loss) |
|
(150.7 |
) |
|
222.5 |
|
NM |
|
|
129.3 |
|
|
206.5 |
|
|
338.3 |
|
||||||
Other Income (Expenses) |
|
|
|
|
|
|
|||||||||||||||||
Investment and other income, net |
|
95.3 |
|
|
74.5 |
|
28 |
% |
|
52.5 |
|
|
173.2 |
|
|
62.0 |
|
||||||
Interest expense |
|
(25.0 |
) |
|
(25.7 |
) |
(3 |
%) |
|
(27.7 |
) |
|
(18.8 |
) |
|
(24.4 |
) |
||||||
Investment and other income (losses) of consolidated investment products, net |
|
46.2 |
|
|
37.6 |
|
23 |
% |
|
89.9 |
|
|
(23.8 |
) |
|
40.5 |
|
||||||
Expenses of consolidated investment products |
|
(12.0 |
) |
|
(8.8 |
) |
36 |
% |
|
(5.9 |
) |
|
(5.9 |
) |
|
(3.0 |
) |
||||||
Other income, net |
|
104.5 |
|
|
77.6 |
|
35 |
% |
|
108.8 |
|
|
124.7 |
|
|
75.1 |
|
||||||
Income (loss) before taxes |
|
(46.2 |
) |
|
300.1 |
|
NM |
|
|
238.1 |
|
|
331.2 |
|
|
413.4 |
|
||||||
Taxes on income |
|
9.5 |
|
|
68.1 |
|
(86 |
%) |
|
62.8 |
|
|
74.9 |
|
|
75.0 |
|
||||||
Net income (loss) |
|
(55.7 |
) |
|
232.0 |
|
NM |
|
|
175.3 |
|
|
256.3 |
|
|
338.4 |
|
||||||
Less: net income (loss) attributable to |
|
|
|
|
|
|
|||||||||||||||||
Redeemable noncontrolling interests |
|
32.6 |
|
|
43.0 |
|
(24 |
%) |
|
42.8 |
|
|
9.5 |
|
|
27.0 |
|
||||||
Nonredeemable noncontrolling interests |
|
(3.6 |
) |
|
15.0 |
|
NM |
|
|
8.3 |
|
|
(4.5 |
) |
|
15.9 |
|
||||||
Net Income (Loss) Attributable to |
$ |
(84.7 |
) |
$ |
174.0 |
|
NM |
|
$ |
124.2 |
|
$ |
251.3 |
|
$ |
295.5 |
|
||||||
|
|
|
|
|
|
|
|||||||||||||||||
Earnings (Loss) per Share |
|
|
|
|
|
|
|||||||||||||||||
Basic |
$ |
(0.19 |
) |
$ |
0.32 |
|
NM |
|
$ |
0.23 |
|
$ |
0.50 |
|
$ |
0.58 |
|
||||||
Diluted |
|
(0.19 |
) |
|
0.32 |
|
NM |
|
|
0.23 |
|
|
0.50 |
|
|
0.58 |
|
||||||
Dividends Declared per Share |
$ |
0.31 |
|
$ |
0.31 |
|
0 |
% |
$ |
0.31 |
|
$ |
0.31 |
|
$ |
0.30 |
|
||||||
|
|
|
|
|
|
|
|||||||||||||||||
Average Shares Outstanding |
|
|
|
|
|
|
|||||||||||||||||
Basic |
|
516.2 |
|
|
516.5 |
|
0 |
% |
|
518.4 |
|
|
487.0 |
|
|
489.2 |
|
||||||
Diluted |
|
516.2 |
|
|
517.2 |
|
0 |
% |
|
519.2 |
|
|
487.9 |
|
|
490.0 |
|
||||||
|
|
|
|
|
|
|
|||||||||||||||||
Operating Margin |
|
(6.8 |
)% |
|
10.5 |
% |
|
6.0 |
% |
|
10.4 |
% |
|
17.0 |
% |
AUM AND FLOWS |
||||||||||||||||||||||
|
||||||||||||||||||||||
(in billions) |
Three Months Ended
|
% Change |
Twelve Months Ended
|
% Change |
||||||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||||||||
Beginning AUM |
$ |
1,646.6 |
|
$ |
1,431.5 |
|
15 |
% |
$ |
1,374.2 |
|
$ |
1,297.4 |
|
6 |
% |
||||||
Long-term inflows |
|
82.5 |
|
|
55.2 |
|
49 |
% |
|
319.0 |
|
|
254.9 |
|
25 |
% |
||||||
Long-term outflows |
|
(113.8 |
) |
|
(62.1 |
) |
83 |
% |
|
(351.6 |
) |
|
(276.2 |
) |
27 |
% |
||||||
Long-term net flows |
|
(31.3 |
) |
|
(6.9 |
) |
354 |
% |
|
(32.6 |
) |
|
(21.3 |
) |
53 |
% |
||||||
Cash management net flows |
|
(0.2 |
) |
|
(1.6 |
) |
(88 |
%) |
|
2.7 |
|
|
4.3 |
|
(37 |
%) |
||||||
Total net flows |
|
(31.5 |
) |
|
(8.5 |
) |
271 |
% |
|
(29.9 |
) |
|
(17.0 |
) |
76 |
% |
||||||
Acquisition |
|
— |
|
|
— |
|
NM |
|
|
148.3 |
|
|
34.9 |
|
NM |
|
||||||
Net market change, distributions and other6 |
|
63.5 |
|
|
(48.8 |
) |
NM |
|
|
186.0 |
|
|
58.9 |
|
216 |
% |
||||||
Ending AUM |
$ |
1,678.6 |
|
$ |
1,374.2 |
|
22 |
% |
$ |
1,678.6 |
|
$ |
1,374.2 |
|
22 |
% |
||||||
Average AUM |
$ |
1,667.5 |
|
$ |
1,419.1 |
|
18 |
% |
$ |
1,565.8 |
|
$ |
1,400.4 |
|
12 |
% |
AUM BY ASSET CLASS |
||||||||||||||||||
|
||||||||||||||||||
(in billions) |
|
|
% Change |
|
|
|
||||||||||||
Equity |
$ |
632.1 |
$ |
595.0 |
6 |
% |
$ |
592.7 |
$ |
467.5 |
$ |
430.4 |
||||||
Fixed Income |
|
556.4 |
|
564.5 |
(1 |
%) |
|
571.4 |
|
511.7 |
|
483.1 |
||||||
Alternative |
|
249.9 |
|
254.5 |
(2 |
%) |
|
255.5 |
|
256.2 |
|
254.9 |
||||||
Multi-Asset |
|
176.2 |
|
168.1 |
5 |
% |
|
163.4 |
|
154.6 |
|
145.0 |
||||||
Cash Management |
|
64.0 |
|
64.5 |
(1 |
%) |
|
61.7 |
|
65.5 |
|
60.8 |
||||||
Total AUM |
$ |
1,678.6 |
$ |
1,646.6 |
2 |
% |
$ |
1,644.7 |
$ |
1,455.5 |
$ |
1,374.2 |
||||||
Average AUM for the Three-Month Period |
$ |
1,667.5 |
$ |
1,632.6 |
2 |
% |
$ |
1,581.1 |
$ |
1,394.2 |
$ |
1,419.1 |
AUM BY SALES REGION |
||||||||||||||||||
|
||||||||||||||||||
(in billions) |
|
|
% Change |
|
|
|
||||||||||||
|
$ |
1,177.1 |
$ |
1,155.0 |
2 |
% |
$ |
1,155.9 |
$ |
1,019.4 |
$ |
979.9 |
||||||
International |
|
|
|
|
|
|
||||||||||||
|
|
209.1 |
|
205.8 |
2 |
% |
|
206.3 |
|
180.6 |
|
165.1 |
||||||
|
|
178.0 |
|
174.1 |
2 |
% |
|
170.4 |
|
150.5 |
|
117.6 |
||||||
|
|
114.4 |
|
111.7 |
2 |
% |
|
112.1 |
|
105.0 |
|
111.6 |
||||||
Total international |
|
501.5 |
|
491.6 |
2 |
% |
|
488.8 |
|
436.1 |
|
394.3 |
||||||
Total |
$ |
1,678.6 |
$ |
1,646.6 |
2 |
% |
$ |
1,644.7 |
$ |
1,455.5 |
$ |
1,374.2 |
AUM AND FLOWS BY ASSET CLASS |
||||||||||||||||||||||||
|
||||||||||||||||||||||||
(in billions) |
|
|
|
|
|
|
||||||||||||||||||
for the three months ended
|
Equity |
Fixed Income |
Alternative |
Multi-Asset |
Cash Management |
Total |
||||||||||||||||||
AUM at |
$ |
595.0 |
|
$ |
564.5 |
|
$ |
254.5 |
|
$ |
168.1 |
|
$ |
64.5 |
|
$ |
1,646.6 |
|
||||||
Long-term inflows |
|
36.8 |
|
|
33.0 |
|
|
4.0 |
|
|
8.7 |
|
|
— |
|
|
82.5 |
|
||||||
Long-term outflows |
|
(36.0 |
) |
|
(66.9 |
) |
|
(5.0 |
) |
|
(5.9 |
) |
|
— |
|
|
(113.8 |
) |
||||||
Long-term net flows |
|
0.8 |
|
|
(33.9 |
) |
|
(1.0 |
) |
|
2.8 |
|
|
— |
|
|
(31.3 |
) |
||||||
Cash management net flows |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.2 |
) |
|
(0.2 |
) |
||||||
Total net flows |
|
0.8 |
|
|
(33.9 |
) |
|
(1.0 |
) |
|
2.8 |
|
|
(0.2 |
) |
|
(31.5 |
) |
||||||
Net market change, distributions and other6 |
|
36.3 |
|
|
25.8 |
|
|
(3.6 |
) |
|
5.3 |
|
|
(0.3 |
) |
|
63.5 |
|
||||||
AUM at |
$ |
632.1 |
|
$ |
556.4 |
|
$ |
249.9 |
|
$ |
176.2 |
|
$ |
64.0 |
|
$ |
1,678.6 |
|
(in billions) |
|
|
|
|
|
|
||||||||||||||||||
for the three months ended
|
Equity |
Fixed Income |
Alternative |
Multi-Asset |
Cash Management |
Total |
||||||||||||||||||
AUM at |
$ |
592.7 |
|
$ |
571.4 |
|
$ |
255.5 |
|
$ |
163.4 |
|
$ |
61.7 |
|
$ |
1,644.7 |
|
||||||
Long-term inflows |
|
32.0 |
|
|
37.4 |
|
|
3.4 |
|
|
9.9 |
|
|
— |
|
|
82.7 |
|
||||||
Long-term outflows |
|
(33.6 |
) |
|
(42.2 |
) |
|
(2.0 |
) |
|
(8.1 |
) |
|
— |
|
|
(85.9 |
) |
||||||
Long-term net flows |
|
(1.6 |
) |
|
(4.8 |
) |
|
1.4 |
|
|
1.8 |
|
|
— |
|
|
(3.2 |
) |
||||||
Cash management net flows |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.0 |
|
|
3.0 |
|
||||||
Total net flows |
|
(1.6 |
) |
|
(4.8 |
) |
|
1.4 |
|
|
1.8 |
|
|
3.0 |
|
|
(0.2 |
) |
||||||
Net market change, distributions and other6 |
|
3.9 |
|
|
(2.1 |
) |
|
(2.4 |
) |
|
2.9 |
|
|
(0.2 |
) |
|
2.1 |
|
||||||
AUM at |
$ |
595.0 |
|
$ |
564.5 |
|
$ |
254.5 |
|
$ |
168.1 |
|
$ |
64.5 |
|
$ |
1,646.6 |
|
(in billions) |
|
|
|
|
|
|
||||||||||||||||||
for the three months ended
|
Equity |
Fixed Income |
Alternative |
Multi-Asset |
Cash Management |
Total |
||||||||||||||||||
AUM at |
$ |
458.0 |
|
$ |
505.1 |
|
$ |
257.2 |
|
$ |
148.3 |
|
$ |
62.9 |
|
$ |
1,431.5 |
|
||||||
Long-term inflows |
|
17.1 |
|
|
26.2 |
|
|
3.9 |
|
|
8.0 |
|
|
— |
|
|
55.2 |
|
||||||
Long-term outflows |
|
(24.8 |
) |
|
(27.8 |
) |
|
(3.1 |
) |
|
(6.4 |
) |
|
— |
|
|
(62.1 |
) |
||||||
Long-term net flows |
|
(7.7 |
) |
|
(1.6 |
) |
|
0.8 |
|
|
1.6 |
|
|
— |
|
|
(6.9 |
) |
||||||
Cash management net flows |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1.6 |
) |
|
(1.6 |
) |
||||||
Total net flows |
|
(7.7 |
) |
|
(1.6 |
) |
|
0.8 |
|
|
1.6 |
|
|
(1.6 |
) |
|
(8.5 |
) |
||||||
Net market change, distributions and other6 |
|
(19.9 |
) |
|
(20.4 |
) |
|
(3.1 |
) |
|
(4.9 |
) |
|
(0.5 |
) |
|
(48.8 |
) |
||||||
AUM at |
$ |
430.4 |
|
$ |
483.1 |
|
$ |
254.9 |
|
$ |
145.0 |
|
$ |
60.8 |
|
$ |
1,374.2 |
|
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.
“Adjusted operating income,” “adjusted operating margin,” “adjusted net income” and “adjusted diluted earnings per share” are defined below, followed by reconciliations of operating income (loss), operating margin, net income attributable to
Adjusted Operating Income
We define adjusted operating income as operating income (loss) adjusted to exclude the following:
- Elimination of operating revenues upon consolidation of investment products.
-
Acquisition-related items:
- Acquisition-related retention compensation.
- Other acquisition-related expenses including professional fees, technology costs and fair value adjustments related to contingent consideration assets and liabilities.
- Amortization of intangible assets.
- Impairment of intangible assets and goodwill, if any.
- Special termination benefits related to workforce optimization initiatives related to past acquisitions and certain initiatives undertaken by the Company.
- Impact on compensation and benefits expense from gains and losses on investments related to deferred compensation plans, which is offset in investment and other income (losses), net.
- Impact on compensation and benefits expense related to minority interests in certain subsidiaries, which is offset in net income (loss) attributable to redeemable noncontrolling interests.
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:
- Elimination of operating revenues upon consolidation of investment products.
- 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.
Adjusted Net Income and Adjusted Diluted Earnings Per Share
We define adjusted net income as net income attributable to
- Activities of CIPs.
-
Acquisition-related items:
- Acquisition-related retention compensation.
- Other acquisition-related expenses including professional fees, technology costs and fair value adjustments related to contingent consideration assets and liabilities.
- Amortization of intangible assets.
- Impairment of intangible assets and goodwill, if any.
- Write off of noncontrolling interests related to the wind down of an acquired business.
-
Interest expense for amortization of
Legg Mason debt premium from acquisition-date fair value adjustment.
- Special termination benefits related to workforce optimization initiatives related to past acquisitions and certain initiatives undertaken by the Company.
- Net gains or losses on investments related to deferred compensation plans which are not offset by compensation and benefits expense.
- Net compensation and benefits expense related to minority interests in certain subsidiaries not offset by net income (loss) attributable to redeemable noncontrolling interests.
- Unrealized investment gains and losses.
- Net income tax expense of the above adjustments based on the respective blended rates applicable to the adjustments.
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 our non-GAAP measures, we adjust for the impact of CIPs because it is not considered reflective of our underlying results of operations. Acquisition-related items and special termination benefits are excluded to facilitate comparability to other asset management firms. We adjust for compensation and benefits expense related to funded deferred compensation plans because it is partially offset in other income (expense), net. We adjust for compensation and benefits expense and net income (loss) attributable to redeemable noncontrolling interests to reflect the economics of certain profits interest arrangements. Sales and distribution fees and a portion of investment management fees generally cover sales, distribution and marketing expenses and, therefore, are excluded from adjusted operating revenues. In addition, when calculating adjusted net income and adjusted diluted earnings per share we exclude unrealized investment gains and losses included in investment and other income (losses) because the related investments 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 |
Twelve Months Ended |
||||||||||||||||||
|
|
|
|
|
||||||||||||||||
Operating income (loss) |
$ |
(150.7 |
) |
$ |
222.5 |
|
$ |
338.3 |
|
$ |
407.6 |
|
$ |
1,102.3 |
|
|||||
Add (subtract): |
|
|
|
|
|
|||||||||||||||
Elimination of operating revenues upon consolidation of investment products* |
|
12.7 |
|
|
12.3 |
|
|
11.2 |
|
|
47.4 |
|
|
37.5 |
|
|||||
Acquisition-related retention |
|
46.3 |
|
|
43.7 |
|
|
56.8 |
|
|
263.6 |
|
|
164.9 |
|
|||||
Compensation and benefits expense from gains (losses) on deferred compensation, net |
|
15.7 |
|
|
1.8 |
|
|
(6.0 |
) |
|
50.5 |
|
|
20.3 |
|
|||||
Other acquisition-related expenses |
|
31.8 |
|
|
33.6 |
|
|
4.9 |
|
|
97.4 |
|
|
50.2 |
|
|||||
Amortization of intangible assets |
|
83.8 |
|
|
84.0 |
|
|
86.5 |
|
|
338.2 |
|
|
341.1 |
|
|||||
Impairment of intangible assets |
|
389.2 |
|
|
— |
|
|
— |
|
|
389.2 |
|
|
— |
|
|||||
Special termination benefits |
|
12.0 |
|
|
16.7 |
|
|
8.3 |
|
|
75.8 |
|
|
63.2 |
|
|||||
Compensation and benefits expense related to minority interests in certain subsidiaries |
|
10.8 |
|
|
10.3 |
|
|
11.7 |
|
|
43.4 |
|
|
44.3 |
|
|||||
Adjusted operating income |
$ |
451.6 |
|
$ |
424.9 |
|
$ |
511.7 |
|
$ |
1,713.1 |
|
$ |
1,823.8 |
|
|||||
|
|
|
|
|
|
|||||||||||||||
Total operating revenues |
$ |
2,211.2 |
|
$ |
2,122.9 |
|
$ |
1,986.1 |
|
$ |
8,478.0 |
|
$ |
7,849.4 |
|
|||||
Add (subtract): |
|
|
|
|
|
|||||||||||||||
Acquisition-related pass through performance fees |
|
(10.5 |
) |
|
— |
|
|
(5.6 |
) |
|
(97.5 |
) |
|
(169.7 |
) |
|||||
Sales and distribution fees |
|
(368.0 |
) |
|
(358.3 |
) |
|
(306.4 |
) |
|
(1,381.2 |
) |
|
(1,203.7 |
) |
|||||
Allocation of investment management fees for sales, distribution and marketing expenses |
|
(128.9 |
) |
|
(122.8 |
) |
|
(104.7 |
) |
|
(481.9 |
) |
|
(409.4 |
) |
|||||
Elimination of operating revenues upon consolidation of investment products* |
|
12.7 |
|
|
12.3 |
|
|
11.2 |
|
|
47.4 |
|
|
37.5 |
|
|||||
Adjusted operating revenues |
$ |
1,716.5 |
|
$ |
1,654.1 |
|
$ |
1,580.6 |
|
$ |
6,564.8 |
|
$ |
6,104.1 |
|
|||||
|
|
|
|
|
|
|||||||||||||||
Operating margin |
|
(6.8 |
%) |
|
10.5 |
% |
|
17.0 |
% |
|
4.8 |
% |
|
14.0 |
% |
|||||
Adjusted operating margin |
|
26.3 |
% |
|
25.7 |
% |
|
32.4 |
% |
|
26.1 |
% |
|
29.9 |
% |
(in millions, except per share data) |
Three Months Ended |
Twelve Months Ended |
|||||||||||||||||
|
|
|
|
|
|||||||||||||||
Net income (loss) attributable to |
$ |
(84.7 |
) |
$ |
174.0 |
|
$ |
295.5 |
|
$ |
464.8 |
|
$ |
882.8 |
|
||||
Add (subtract): |
|
|
|
|
|
||||||||||||||
Net (income) loss of consolidated investment products* |
|
(2.8 |
) |
|
(2.4 |
) |
|
1.6 |
|
|
(3.9 |
) |
|
8.0 |
|
||||
Acquisition-related retention |
|
46.3 |
|
|
43.7 |
|
|
56.8 |
|
|
263.6 |
|
|
164.9 |
|
||||
Other acquisition-related expenses |
|
32.0 |
|
|
34.9 |
|
|
8.9 |
|
|
107.0 |
|
|
70.4 |
|
||||
Amortization of intangible assets |
|
83.8 |
|
|
84.0 |
|
|
86.5 |
|
|
338.2 |
|
|
341.1 |
|
||||
Impairment of intangible assets |
|
389.2 |
|
|
— |
|
|
— |
|
|
389.2 |
|
|
— |
|
||||
Special termination benefits |
|
12.0 |
|
|
16.7 |
|
|
8.3 |
|
|
75.8 |
|
|
63.2 |
|
||||
Net gains on deferred compensation plan investments not offset by compensation and benefits expense |
|
(2.9 |
) |
|
(1.1 |
) |
|
(1.4 |
) |
|
(13.9 |
) |
|
(15.5 |
) |
||||
Unrealized investment (gains) losses |
|
(23.9 |
) |
|
31.0 |
|
|
20.6 |
|
|
(51.5 |
) |
|
(2.6 |
) |
||||
Interest expense for amortization of debt premium |
|
(5.2 |
) |
|
(6.4 |
) |
|
(6.4 |
) |
|
(24.4 |
) |
|
(25.4 |
) |
||||
Net compensation and benefits expense related to minority interests in certain subsidiaries not offset by net income attributable to redeemable noncontrolling interests |
|
2.3 |
|
|
2.8 |
|
|
1.0 |
|
|
3.5 |
|
|
0.1 |
|
||||
Net income tax expense of adjustments |
|
(130.9 |
) |
|
(50.8 |
) |
|
(44.4 |
) |
|
(271.7 |
) |
|
(154.8 |
) |
||||
Adjusted net income |
$ |
315.2 |
|
$ |
326.4 |
|
$ |
427.0 |
|
$ |
1,276.7 |
|
$ |
1,332.2 |
|
||||
|
|
|
|
|
|
||||||||||||||
Diluted earnings (loss) per share |
$ |
(0.19 |
) |
$ |
0.32 |
|
$ |
0.58 |
|
$ |
0.85 |
|
$ |
1.72 |
|
||||
Adjusted diluted earnings per share |
|
0.59 |
|
|
0.60 |
|
|
0.84 |
|
|
2.39 |
|
|
2.60 |
|
* The impact of CIPs is summarized as follows: |
||||||||||||||||||||
|
||||||||||||||||||||
(in millions) |
Three Months Ended |
Twelve Months Ended |
||||||||||||||||||
|
|
|
|
|
||||||||||||||||
Elimination of operating revenues upon consolidation |
$ |
(12.7 |
) |
$ |
(12.3 |
) |
$ |
(11.2 |
) |
$ |
(47.4 |
) |
$ |
(37.5 |
) |
|||||
Other income, net |
|
32.5 |
|
|
42.0 |
|
|
21.4 |
|
|
104.5 |
|
|
88.8 |
|
|||||
Less: income attributable to noncontrolling interests |
|
17.0 |
|
|
27.3 |
|
|
11.8 |
|
|
53.2 |
|
|
59.3 |
|
|||||
Net income (loss) |
$ |
2.8 |
|
$ |
2.4 |
|
$ |
(1.6 |
) |
$ |
3.9 |
|
$ |
(8.0 |
) |
Notes
-
Net income (loss) represents net income (loss) attributable to
Franklin Resources, Inc. - “Adjusted net income,” “adjusted diluted earnings per share,” “adjusted operating income” and “adjusted operating margin” 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 monthly average AUM.
-
Includes our direct investments in CIPs of
$1.1 billion , approximately$355 million of employee-owned and other third-party investments made through partnerships, approximately$289 million of investments that are subject to long-term repurchase agreements and other net financing arrangements, and approximately$441 million of cash and investments related to deferred compensation plans. -
During the quarter ended
March 31, 2024 , the Company identified that it did not eliminate the investment income from certain consolidated limited partnerships for the fiscal year endedSeptember 30, 2023 , resulting in offsetting adjustments to investment and other income, net and net income attributable to nonredeemable noncontrolling interest. For comparability, the Company has revised the comparative prior period amounts in the Consolidated Statements of Income. There was no impact to operating income, net income attributable toFranklin Resources, Inc. or earnings per share. - 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.
-
India region is included inEurope ,Middle East andAfrica .
Forward-Looking Statements
Some of the statements herein may include forward-looking statements that reflect our current views with respect to future events, financial performance and market conditions. 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 that may cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements, including market and volatility risks, investment performance and reputational risks, global operational risks, competition and distribution risks, third-party risks, technology and security risks, human capital risks, cash management risks, and legal and regulatory risks. 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
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