BEN
$25.80
Franklin Resources
$.69
2.75%
Earnings Details
2nd Quarter March 2022
Tuesday, May 3, 2022 8:30:00 AM
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Summary

Franklin Resources (BEN) Recent Earnings

Franklin Resources (BEN) reported 2nd Quarter March 2022 earnings of $0.96 per share on revenue of $2.1 billion. The consensus earnings estimate was $0.79 per share on revenue of $2.1 billion. Revenue grew 0.2% on a year-over-year basis.

Franklin Resources Inc is an investment management company. The Company' services include fund administration, sales, distribution, marketing, shareholder servicing, trustee, custody and other fiduciary services.

Results
Reported Earnings
$0.96
Earnings Whisper
-
Consensus Estimate
$0.79
Reported Revenue
$2.08 Bil
Revenue Estimate
$2.08 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Franklin Resources, Inc. Announces Second Quarter Results

SAN MATEO, Calif.--(BUSINESS WIRE)--Franklin Resources, Inc. (the “Company”) [NYSE: BEN] today announced net income1 of $349.6 million or $0.68 per diluted share for the quarter ended March 31, 2022, as compared to $453.2 million or $0.88 per diluted share for the previous quarter, and $381.8 million or $0.74 per diluted share for the quarter ended March 31, 2021. Operating income was $463.0 million for the quarter ended March 31, 2022, as compared to $557.7 million for the previous quarter and $456.3 million for 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. Adjusted net income2 was $491.6 million and adjusted diluted earnings per share2 was $0.96 for the quarter ended March 31, 2022, as compared to $553.6 million and $1.08 for the previous quarter, and $403.5 million and $0.79 for the quarter ended March 31, 2021. Adjusted operating income2 was $576.6 million for the quarter ended March 31, 2022, as compared to $685.9 million for the previous quarter and $581.1 million for the prior year.

“This quarter’s market volatility highlighted the benefits of diversification and global scale in our business,” said Jenny Johnson, President and CEO of Franklin Resources, Inc. “While industry-wide pressures, particularly in taxable fixed income, contributed to long-term net outflows, we experienced long-term net inflows, primarily into higher fee products, in the multi-asset category and at our alternative specialist investment managers, Benefit Street Partners and Clarion Partners, each of which reported record assets under management.

“This quarter, we continued to make significant progress on our corporate priorities – especially as they relate to diversifying our client offerings in alternatives, customization in SMAs, wealth management and ETFs. Most notably, we continue to place an emphasis on thoughtfully building out our alternative asset business, as illustrated by last month’s close of the Lexington Partners’ acquisition, which added key complementary capabilities in secondary private equity and co-investments. With the addition of Lexington, Franklin Templeton increased its presence in alternatives by 39% to become a $215 billion manager of alternative assets, an area of increasing importance for both individual and institutional investors. Our strong financial flexibility continues to allow us to make investments in our business that further diversify our firm and position us to address evolving client demand.”

 

 

Quarter Ended

 

% Change

 

Quarter Ended

 

% Change

 

 

31-Mar-22

 

31-Dec-21

 

Qtr. vs. Qtr.

31-Mar-21

 

Year vs. Year

Financial Results

 

 

 

 

 

 

 

 

 

(in millions, except per share data)

 

 

 

 

 

 

 

 

 

Operating revenues

 

$

2,081.0

 

 

$

2,224.0

 

 

(6

%)

$

2,076.5

 

 

0

%

Operating income

 

 

463.0

 

 

 

557.7

 

 

(17

%)

 

456.3

 

 

1

%

Operating margin

 

 

22.2

%

 

 

25.1

%

 

 

 

22.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Net income¹

 

$

349.6

 

 

$

453.2

 

 

(23

%)

$

381.8

 

 

(8

%)

Diluted earnings per share

 

 

0.68

 

 

 

0.88

 

 

(23

%)

 

0.74

 

 

(8

%)

 

 

 

 

 

 

 

 

 

 

As adjusted (non-GAAP):2

 

 

 

 

 

 

 

 

 

Adjusted operating income

 

$

576.6

 

 

$

685.9

 

 

(16

%)

$

581.1

 

 

(1

%)

Adjusted operating margin

 

 

35.7

%

 

 

39.8

%

 

 

 

38.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income

 

$

491.6

 

 

$

553.6

 

 

(11

%)

$

403.5

 

 

22

%

Adjusted diluted earnings per share

 

 

0.96

 

 

 

1.08

 

 

(11

%)

 

0.79

 

 

22

%

 

 

 

 

 

 

 

 

 

 

Assets Under Management

 

 

 

 

 

 

 

 

 

(in billions)

 

 

 

 

 

 

 

 

 

Ending

 

$

1,477.5

 

 

$

1,578.1

 

 

(6

%)

$

1,498.9

 

 

(1

%)

Average3

 

 

1,516.1

 

 

 

1,554.2

 

 

(2

%)

 

1,497.9

 

 

1

%

Long-term net flows

 

 

(11.7

)

 

 

24.1

 

 

 

 

(4.2

)

 

 

Total assets under management (“AUM”) were $1,477.5 billion at March 31, 2022, down $100.6 billion or 6% during the quarter due to $81.8 billion of net market change, distributions and other, $11.7 billion of long-term net outflows and $7.1 billion of cash management net outflows.

Cash and cash equivalents and investments were $5.8 billion at March 31, 2022, as compared to $5.9 billion at September 30, 2021. Including the Company’s direct investments in consolidated investment products, cash and cash equivalents and investments were $6.8 billion at March 31, 2022, as compared to $6.9 billion at September 30, 2021. Total stockholders’ equity was $12.2 billion at March 31, 2022, as compared to $11.8 billion at September 30, 2021. The Company had 500.4 million shares of common stock outstanding at March 31, 2022, as compared to 501.8 million shares outstanding at September 30, 2021. The Company repurchased 2.7 million shares of its common stock for a total cost of $80.8 million during the quarter ended March 31, 2022.

Conference Call Information

A written commentary on the results by Jenny Johnson, President and CEO; Matthew Nicholls, Executive Vice President, CFO and COO; and Adam Spector, Executive Vice President, Head of Global Distribution will be available via investors.franklinresources.com today at approximately 8:30 a.m. Eastern Time.

Ms. Johnson and Messrs. Nicholls and Spector will also lead a live teleconference today at 11:00 a.m. Eastern Time to answer questions. 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 7452235, after 2:00 p.m. Eastern Time on May 3, 2022 through May 10, 2022, 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 INCOME

Unaudited

(in millions, except per share data)

 

Three Months Ended
March 31,

 

%
Change

 

Six Months Ended
March 31,

 

%
Change

 

2022

 

2021

 

 

2022

 

2021

 

Operating Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Investment management fees

 

$

1,649.2

 

 

$

1,598.4

 

 

3

 

$

    3,409.7

 

 

$

    3,138.8

 

 

9

Sales and distribution fees

 

 

      370.2

 

 

 

      413.6

 

 

(10

%)

 

 

         768.4

 

 

 

         810.5

 

 

(5

%)

Shareholder servicing fees

 

 

        52.2

 

 

 

        55.7

 

 

(6

%)

 

 

            99.9

 

 

 

         105.1

 

 

(5

%)

Other

 

 

          9.4

 

 

 

          8.8

 

 

7

 

 

            27.0

 

 

 

            17.2

 

 

57

Total operating revenues

 

 

  2,081.0

 

 

 

  2,076.5

 

 

0

 

 

      4,305.0

 

 

 

      4,071.6

 

 

6

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

      752.5

 

 

 

      732.3

 

 

3

 

 

      1,555.1

 

 

 

      1,457.8

 

 

7

Sales, distribution and marketing

 

 

      482.4

 

 

 

      541.8

 

 

(11

%)

 

 

         992.5

 

 

 

      1,048.3

 

 

(5

%)

Information systems and technology

 

 

      126.9

 

 

 

      117.5

 

 

8

 

 

         250.7

 

 

 

         234.0

 

 

7

Occupancy

 

 

        53.0

 

 

 

        53.8

 

 

(1

%)

 

 

         109.3

 

 

 

         109.5

 

 

0

Amortization of intangible assets

 

 

        60.4

 

 

 

        57.9

 

 

4

 

 

         118.7

 

 

 

         116.1

 

 

2

General, administrative and other

 

 

      142.8

 

 

 

      116.9

 

 

22

 

 

         258.0

 

 

 

         240.5

 

 

7

Total operating expenses

 

 

  1,618.0

 

 

 

  1,620.2

 

 

0

 

 

      3,284.3

 

 

 

      3,206.2

 

 

2

Operating Income

 

 

      463.0

 

 

 

      456.3

 

 

1

 

 

      1,020.7

 

 

 

         865.4

 

 

18

Other Income (Expenses)

 

 

 

 

 

 

 

 

 

 

 

 

Investment and other income, net

 

 

        27.7

 

 

 

        67.1

 

 

(59

%)

 

 

            84.7

 

 

 

         144.3

 

 

(41

%)

Interest expense

 

 

      (22.9

)   

 

 

      (15.9

)   

 

44

 

 

          (42.2

)

 

 

          (45.6

)

 

(7

%)

Investment and other income of consolidated investment products,net

 

 

          3.0

 

 

 

      111.2

 

 

(97

%)

 

 

         107.7

 

 

 

         202.3

 

 

(47

%)

Expenses of consolidated investment products

 

 

         (4.6

)   

 

 

         (5.2

)   

 

(12

%)

 

 

            (8.8

)

 

 

          (15.6

)

 

(44

%)

Other income, net

 

 

          3.2

 

 

 

      157.2

 

 

(98

%)

 

 

         141.4

 

 

 

         285.4

 

 

(50

%)

Income before taxes

 

 

      466.2

 

 

 

      613.5

 

 

(24

%)

 

 

      1,162.1

 

 

 

      1,150.8

 

 

1

Taxes on income

 

 

      107.1

 

 

 

      128.1

 

 

(16

%)

 

 

         258.2

 

 

 

         270.6

 

 

(5

%)

Net income

 

 

      359.1

 

 

 

      485.4

 

 

(26

%)

 

 

         903.9

 

 

 

         880.2

 

 

3

Less: net income (loss) attributable to

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

 

      (57.2

)   

 

 

        12.0

 

 

NM

 

 

 

          (49.7

)

 

 

            30.7

 

 

NM

 

Nonredeemable noncontrolling interests

 

 

        66.7

 

 

 

        91.6

 

 

(27

%)

 

 

         150.8

 

 

 

         122.4

 

 

23

Net Income Attributable to Franklin Resources, Inc.

 

$

   349.6

 

 

$

   381.8

 

 

(8

%)

 

$

       802.8

 

 

$

       727.1

 

 

10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per Share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

      0.68

 

 

$

      0.74

 

 

(8

%)

 

$

         1.57

 

 

$

         1.42

 

 

11

Diluted

 

 

        0.68

 

 

 

        0.74

 

 

(8

%)

 

 

            1.57

 

 

 

            1.42

 

 

11

Dividends Declared per Share

 

$

      0.29

 

 

$

      0.28

 

 

4

 

$

         0.58

 

 

$

         0.56

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Shares Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

      490.0

 

 

 

      490.5

 

 

0

 

 

         489.9

 

 

 

         490.8

 

 

0

Diluted

 

 

      490.5

 

 

 

      490.9

 

 

0

 

 

         490.5

 

 

 

         491.3

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

 

22.2

%

 

 

22.0

%

 

 

 

 

23.7

%

 

 

21.3

%

 

 

 

FRANKLIN RESOURCES, INC.

CONSOLIDATED STATEMENTS OF INCOME

Unaudited

(in millions, except per share data)

 

Three Months Ended

 

%
Change

 

Three Months Ended

 

31-Mar-22

 

31-Dec-21

 

 

30-Sep-21

 

30-Jun-21

 

31-Mar-21

Operating Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Investment management fees

 

$

    1,649.2

 

 

$

    1,760.5

 

 

(6

%)

 

$

    1,705.5

 

 

$

    1,697.3

 

 

$

    1,598.4

 

Sales and distribution fees

 

 

         370.2

 

 

 

         398.2

 

 

(7

%)

 

 

         408.1

 

 

 

         416.9

 

 

 

         413.6

 

Shareholder servicing fees

 

 

            52.2

 

 

 

            47.7

 

 

9

 

 

            55.6

 

 

 

            50.5

 

 

 

            55.7

 

Other

 

 

              9.4

 

 

 

            17.6

 

 

(47

%)

 

 

            11.8

 

 

 

              8.2

 

 

 

              8.8

 

Total operating revenues

 

 

      2,081.0

 

 

 

      2,224.0

 

 

(6

%)

 

 

      2,181.0

 

 

 

      2,172.9

 

 

 

      2,076.5

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

         752.5

 

 

 

         802.6

 

 

(6

%)

 

 

         742.1

 

 

 

         771.4

 

 

 

         732.3

 

Sales, distribution and marketing

 

 

         482.4

 

 

 

         510.1

 

 

(5

%)

 

 

         526.5

 

 

 

         531.0

 

 

 

         541.8

 

Information systems and technology

 

 

         126.9

 

 

 

         123.8

 

 

3

 

 

         130.3

 

 

 

         121.8

 

 

 

         117.5

 

Occupancy

 

 

            53.0

 

 

 

            56.3

 

 

(6

%)

 

 

            54.0

 

 

 

            54.6

 

 

 

            53.8

 

Amortization of intangible assets

 

 

            60.4

 

 

 

            58.3

 

 

4

 

 

            57.9

 

 

 

            58.0

 

 

 

            57.9

 

General, administrative and other

 

 

         142.8

 

 

 

         115.2

 

 

24

 

 

         138.7

 

 

 

         158.0

 

 

 

         116.9

 

Total operating expenses

 

 

      1,618.0

 

 

 

      1,666.3

 

 

(3

%)

 

 

      1,649.5

 

 

 

      1,694.8

 

 

 

      1,620.2

 

Operating Income

 

 

         463.0

 

 

 

         557.7

 

 

(17

%)

 

 

         531.5

 

 

 

         478.1

 

 

 

         456.3

 

Other Income (Expenses)

 

 

 

 

 

 

 

 

 

 

 

 

Investment and other income, net

 

 

            27.7

 

 

 

            57.0

 

 

(51

%)

 

 

            67.5

 

 

 

            52.9

 

 

 

            67.1

 

Interest expense

 

 

          (22.9

)

 

 

          (19.3

)

 

19

 

 

          (14.1

)

 

 

          (25.7

)

 

 

          (15.9

)

Investment and other income of consolidated investment products, net

 

 

              3.0

 

 

 

         104.7

 

 

(97

%)

 

 

         157.8

 

 

 

            61.0

 

 

 

         111.2

 

Expenses of consolidated investment products

 

 

            (4.6

)

 

 

            (4.2

)

 

10

 

 

            (4.7

)

 

 

          (10.9

)

 

 

            (5.2

)

Other income, net

 

 

              3.2

 

 

 

         138.2

 

 

(98

%)

 

 

         206.5

 

 

 

            77.3

 

 

 

         157.2

 

Income before taxes

 

 

         466.2

 

 

 

         695.9

 

 

(33

%)

 

 

         738.0

 

 

 

         555.4

 

 

 

         613.5

 

Taxes on income4

 

 

         107.1

 

 

 

         151.1

 

 

(29

%)

 

 

            (4.8

)

 

 

            83.8

 

 

 

         128.1

 

Net income

 

 

         359.1

 

 

 

         544.8

 

 

(34

%)

 

 

         742.8

 

 

 

         471.6

 

 

 

         485.4

 

Less: net income (loss) attributable to

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

 

          (57.2

)

 

 

              7.5

 

 

NM

 

 

 

            29.7

 

 

 

            33.7

 

 

 

            12.0

 

Nonredeemable noncontrolling interests

 

 

            66.7

 

 

 

            84.1

 

 

(21

%)

 

 

            47.4

 

 

 

            (0.5

)

 

 

            91.6

 

Net Income Attributable to Franklin Resources, Inc.

 

$

       349.6

 

 

$

       453.2

 

 

(23

%)

 

$

       665.7

 

 

$

       438.4

 

 

$

       381.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per Share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

         0.68

 

 

$

         0.89

 

 

(24

%)

 

$

         1.31

 

 

$

         0.86

 

 

$

         0.74

 

Diluted

 

 

            0.68

 

 

 

            0.88

 

 

(23

%)

 

 

            1.30

 

 

 

            0.86

 

 

 

            0.74

 

Dividends Declared per Share

 

$

         0.29

 

 

$

         0.29

 

 

0

%

 

$

         0.28

 

 

$

         0.28

 

 

$

         0.28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Shares Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

         490.0

 

 

 

         489.8

 

 

0

 

 

         488.9

 

 

 

         489.2

 

 

 

         490.5

 

Diluted

 

 

         490.5

 

 

 

         490.6

 

 

0

 

 

         489.7

 

 

 

         489.9

 

 

 

         490.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

 

22.2

%

 

 

25.1

%

 

 

 

 

24.4

%

 

 

22.0

%

 

 

22.0

%

 

AUM AND FLOWS

(in billions)

 

Three Months Ended

March 31,

 

%
Change

 

Six Months Ended

March 31,

 

%
Change

 

 

2022

 

 

 

2021

 

 

 

 

2022

 

 

 

2021

 

 

Beginning AUM

 

$

1,578.1

 

 

$

1,498.0

 

 

5

%

 

$

1,530.1

 

 

$

1,418.9

 

 

8

%

Long-term inflows

 

 

76.1

 

 

 

101.7

 

 

(25

%)

 

 

183.1

 

 

 

197.8

 

 

(7

%)

Long-term outflows

 

 

(87.8

)

 

 

(105.9

)

 

(17

%)

 

 

(170.7

)

 

 

(206.5

)

 

(17

%)

Long-term net flows

 

 

(11.7

)

 

 

(4.2

)

 

179

%

 

 

12.4

 

 

 

(8.7

)

 

NM

 

Cash management net flows

 

 

(7.1

)

 

 

1.2

 

 

NM

 

 

 

(1.3

)

 

 

(9.0

)

 

(86

%)

Total net flows

 

 

(18.8

)

 

 

(3.0

)

 

527

%

 

 

11.1

 

 

 

(17.7

)

 

NM

 

Acquisitions

 

 

 

 

 

 

 

NM

 

 

 

7.7

 

 

 

 

 

NM

 

Net market change, distributions and other5

 

 

(81.8

)

 

 

3.9

 

 

NM

 

 

 

(71.4

)

 

 

97.7

 

 

NM

 

Ending AUM

 

$

1,477.5

 

 

$

1,498.9

 

 

(1

%)

 

$

1,477.5

 

 

$

1,498.9

 

 

(1

%)

Average AUM

 

$

1,516.1

 

 

$

1,497.9

 

 

1

%

 

$

1,529.0

 

 

$

1,467.0

 

 

4

%

AUM BY ASSET CLASS

(in billions)

 

31-Mar-22

 

31-Dec-21

 

%
Change

 

30-Sep-21

 

30-Jun-21

 

31-Mar-21

Fixed Income

 

$

595.0

 

$

642.1

 

(7

%)

 

$

650.3

 

$

658.1

 

$

642.3

Equity

 

 

515.4

 

 

563.4

 

(9

%)

 

 

523.6

 

 

536.9

 

 

511.9

Alternative

 

 

157.9

 

 

154.3

 

2

%

 

 

145.2

 

 

140.8

 

 

131.1

Multi-Asset

 

 

151.9

 

 

154.0

 

(1

%)

 

 

152.4

 

 

153.0

 

 

148.2

Cash Management

 

 

57.3

 

 

64.3

 

(11

%)

 

 

58.6

 

 

63.3

 

 

65.4

Total AUM

 

$

1,477.5

 

$

1,578.1

 

(6

%)

 

$

1,530.1

 

$

1,552.1

 

$

1,498.9

Average AUM for the Three-Month Period

 

$

1,516.1

 

$

1,554.2

 

(2

%)

 

$

1,552.9

 

$

1,531.0

 

$

1,497.9

AUM BY SALES REGION

(in billions)

 

31-Mar-22

 

31-Dec-21

 

%
Change

 

30-Sep-21

 

30-Jun-21

 

31-Mar-21

United States

 

$

1,107.2

 

$

1,186.5

 

(7

%)

 

$

1,140.2

 

$

1,151.2

 

$

1,100.5

International

 

 

 

 

 

 

 

 

 

 

 

 

Asia-Pacific

 

 

148.3

 

 

155.0

 

(4

%)

 

 

155.6

 

 

161.1

 

 

164.5

Europe, Middle East and Africa

 

 

143.4

 

 

156.2

 

(8

%)

 

 

153.9

 

 

156.2

 

 

150.1

Americas, excl. U.S.

 

 

78.6

 

 

80.4

 

(2

%)

 

 

80.4

 

 

83.6

 

 

83.8

Total international

 

 

370.3

 

 

391.6

 

(5

%)

 

 

389.9

 

 

400.9

 

 

398.4

Total

 

$

1,477.5

 

$

1,578.1

 

(6

%)

 

$

1,530.1

 

$

1,552.1

 

$

1,498.9

AUM AND FLOWS BY ASSET CLASS

(in billions)

 

 

 

 

 

 

 

 

 

 

 

 

for the three months ended

March 31, 2022

 

Fixed
Income

 

Equity

 

Alternative

 

Multi-Asset

 

Cash
Management

 

Total

AUM at January 1, 2022

 

$

642.1

 

 

$

563.4

 

 

$

154.3

 

 

$

154.0

 

 

$

64.3

 

 

$

1,578.1

 

Long-term inflows

 

 

33.3

 

 

 

29.8

 

 

 

4.6

 

 

 

8.4

 

 

 

 

 

 

76.1

 

Long-term outflows

 

 

(41.2

)

 

 

(35.9

)

 

 

(4.6

)

 

 

(6.1

)

 

 

 

 

 

(87.8

)

Long-term net flows

 

 

(7.9

)

 

 

(6.1

)

 

 

 

 

 

2.3

 

 

 

 

 

 

(11.7

)

Cash management net flows

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7.1

)

 

 

(7.1

)

Total net flows

 

 

(7.9

)

 

 

(6.1

)

 

 

 

 

 

2.3

 

 

 

(7.1

)

 

 

(18.8

)

Net market change, distributions and other5

 

 

(39.2

)

 

 

(41.9

)

 

 

3.6

 

 

 

(4.4

)

 

 

0.1

 

 

 

(81.8

)

AUM at March 31, 2022

 

$

595.0

 

 

$

515.4

 

 

$

157.9

 

 

$

151.9

 

 

$

57.3

 

 

$

1,477.5

 

(in billions)

 

 

 

 

 

 

 

 

 

 

 

 

for the three months ended

December 31, 2021

 

Fixed
Income

 

Equity

 

Alternative

 

Multi-Asset

 

Cash
Management

 

Total

AUM at October 1, 2021

 

$

650.3

 

 

$

523.6

 

 

$

145.2

 

 

$

152.4

 

 

$

58.6

 

 

$

1,530.1

 

Long-term inflows

 

 

43.7

 

 

 

46.1

 

 

 

6.1

 

 

 

11.1

 

 

 

 

 

 

107.0

 

Long-term outflows

 

 

(35.6

)

 

 

(33.4

)

 

 

(3.1

)

 

 

(10.8

)

 

 

 

 

 

(82.9

)

Long-term net flows

 

 

8.1

 

 

 

12.7

 

 

 

3.0

 

 

 

0.3

 

 

 

 

 

 

24.1

 

Cash management net flows

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5.8

 

 

 

5.8

 

Total net flows

 

 

8.1

 

 

 

12.7

 

 

 

3.0

 

 

 

0.3

 

 

 

5.8

 

 

 

29.9

 

Acquisition

 

 

 

 

 

4.6

 

 

 

0.8

 

 

 

2.3

 

 

 

 

 

 

7.7

 

Net market change, distributions and other5

 

 

(16.3

)

 

 

22.5

 

 

 

5.3

 

 

 

(1.0

)

 

 

(0.1

)

 

 

10.4

 

AUM at December 31, 2021

 

$

642.1

 

 

$

563.4

 

 

$

154.3

 

 

$

154.0

 

 

$

64.3

 

 

$

1,578.1

 

(in billions)

 

 

 

 

 

 

 

 

 

 

 

 

for the three months ended

March 31, 2021

 

Fixed
Income

 

Equity

 

Alternative

 

Multi-Asset

 

Cash
Management

 

Total

AUM at January 1, 2021

 

$

669.9

 

 

$

495.7

 

 

$

127.1

 

 

$

141.1

 

 

$

64.2

 

$

1,498.0

 

Long-term inflows

 

 

53.5

 

 

 

32.4

 

 

 

6.2

 

 

 

9.6

 

 

 

 

 

101.7

 

Long-term outflows

 

 

(56.1

)

 

 

(38.0

)

 

 

(3.3

)

 

 

(8.5

)

 

 

 

 

(105.9

)

Long-term net flows

 

 

(2.6

)

 

 

(5.6

)

 

 

2.9

 

 

 

1.1

 

 

 

 

 

(4.2

)

Cash management net flows

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.2

 

 

1.2

 

Total net flows

 

 

(2.6

)

 

 

(5.6

)

 

 

2.9

 

 

 

1.1

 

 

 

1.2

 

 

(3.0

)

Net market change, distributions and other5

 

 

(25.0

)

 

 

21.8

 

 

 

1.1

 

 

 

6.0

 

 

 

 

 

3.9

 

AUM at March 31, 2021

 

$

642.3

 

 

$

511.9

 

 

$

131.1

 

 

$

148.2

 

 

$

65.4

 

$

1,498.9

 

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 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 from gains and losses on investments made to fund deferred compensation plans and on seed investments under certain historical revenue sharing arrangements, which is offset in investment and other income (losses), net.

“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 deferred compensation plans and seed investments, which is offset in investment and other income (losses), net.
  • Other acquisition-related expenses including professional fees, technology costs and fair value adjustments related to contingent consideration assets and liabilities.
  • Amortization and impairment of intangible assets, if any.
  • Special termination benefits related to workforce optimization initiatives related to past acquisitions and specific initiatives announced by the Company.

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, technology costs and fair value adjustments related to contingent consideration assets and liabilities.
  • Amortization and impairment of intangible assets, if any.
  • Special termination benefits related to workforce optimization initiatives related to past acquisitions and specific initiatives announced by the Company.
  • Net gains or losses on investments related to 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, if any, 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 past acquisitions and specific initiatives announced by the Company 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 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-22

 

31-Dec-21

 

31-Mar-21

 

31-Mar-22

 

31-Mar-21

Operating income

 

$

463.0

 

 

$

557.7

 

 

$

456.3

 

 

$

1,020.7

 

 

$

865.4

 

Add (subtract):

 

 

 

 

 

 

 

 

 

 

Elimination of operating revenues upon consolidation of investment products*

 

 

17.2

 

 

 

8.3

 

 

 

5.8

 

 

 

25.5

 

 

 

11.5

 

Acquisition-related retention

 

 

34.2

 

 

 

40.0

 

 

 

46.6

 

 

 

74.2

 

 

 

90.1

 

Compensation and benefits expense from gains (losses) on deferred compensation and seed investments, net

 

 

(15.3

)

 

 

4.2

 

 

 

0.2

 

 

 

(11.1

)

 

 

14.3

 

Other acquisition-related expenses

 

 

12.7

 

 

 

14.7

 

 

 

3.8

 

 

 

27.4

 

 

 

15.7

 

Amortization of intangible assets

 

 

60.4

 

 

 

58.3

 

 

 

57.9

 

 

 

118.7

 

 

 

116.1

 

Special termination benefits

 

 

4.4

 

 

 

2.7

 

 

 

10.5

 

 

 

7.1

 

 

 

17.9

 

Adjusted operating income

 

$

576.6

 

 

$

685.9

 

 

$

581.1

 

 

$

1,262.5

 

 

$

1,131.0

 

 

 

 

 

 

 

 

 

 

 

 

Total operating revenues

 

$

2,081.0

 

 

$

2,224.0

 

 

$

2,076.5

 

 

$

4,305.0

 

 

$

4,071.6

 

Add (subtract):

 

 

 

 

 

 

 

 

 

 

Acquisition-related pass through performance fees

 

 

 

 

 

(0.4

)

 

 

(9.3

)

 

 

(0.4

)

 

 

(25.3

)

Sales and distribution fees

 

 

(370.2

)

 

 

(398.2

)

 

 

(413.6

)

 

 

(768.4

)

 

 

(810.5

)

Allocation of investment management fees for sales, distribution and marketing expenses

 

 

(112.2

)

 

 

(111.9

)

 

 

(128.2

)

 

 

(224.1

)

 

 

(237.8

)

Elimination of operating revenues upon consolidation of investment products*

 

 

17.2

 

 

 

8.3

 

 

 

5.8

 

 

 

25.5

 

 

 

11.5

 

Adjusted operating revenues

 

$

1,615.8

 

 

$

1,721.8

 

 

$

1,531.2

 

 

$

3,337.6

 

 

$

3,009.5

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

 

22.2

%

 

 

25.1

%

 

 

22.0

%

 

 

23.7

%

 

 

21.3

%

Adjusted operating margin

 

 

35.7

%

 

 

39.8

%

 

 

38.0

%

 

 

37.8

%

 

 

37.6

%

(in millions, except per share data)

 

Three Months Ended

 

Six Months Ended

31-Mar-22

 

31-Dec-21

 

31-Mar-21

 

31-Mar-22

 

31-Mar-21

Net income attributable to Franklin Resources, Inc.

 

$

349.6

 

 

$

453.2

 

 

$

381.8

 

 

$

802.8

 

 

$

727.1

 

Add (subtract):

 

 

 

 

 

 

 

 

 

 

Net (income) loss of consolidated investment products*

 

 

0.1

 

 

 

10.0

 

 

 

(6.3

)

 

 

10.1

 

 

 

14.9

 

Acquisition-related retention

 

 

34.2

 

 

 

40.0

 

 

 

46.6

 

 

 

74.2

 

 

 

90.1

 

Other acquisition-related expenses

 

 

12.7

 

 

 

15.1

 

 

 

3.7

 

 

 

27.8

 

 

 

13.8

 

Amortization of intangible assets

 

 

60.4

 

 

 

58.3

 

 

 

57.9

 

 

 

118.7

 

 

 

116.1

 

Special termination benefits

 

 

4.4

 

 

 

2.7

 

 

 

10.5

 

 

 

7.1

 

 

 

17.9

 

Net (gains) losses on deferred compensation plan investments not offset by compensation and benefits expense

 

 

2.8

 

 

 

(0.3

)

 

 

(0.2

)

 

 

2.5

 

 

 

(1.4

)

Unrealized investment losses (gains)

 

 

70.3

 

 

 

1.8

 

 

 

(60.6

)

 

 

72.1

 

 

 

(156.5

)

Interest expense for amortization of debt premium

 

 

(6.3

)

 

 

(6.3

)

 

 

(16.9

)

 

 

(12.6

)

 

 

(22.9

)

Net income tax expense of adjustments

 

 

(36.6

)

 

 

(20.9

)

 

 

(13.0

)

 

 

(57.5

)

 

 

(22.2

)

Adjusted net income

 

$

491.6

 

 

$

553.6

 

 

$

403.5

 

 

$

1,045.2

 

 

$

776.9

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.68

 

 

$

0.88

 

 

$

0.74

 

 

$

1.57

 

 

$

1.42

 

Adjusted diluted earnings per share

 

 

0.96

 

 

 

1.08

 

 

 

0.79

 

 

 

2.04

 

 

 

1.51

 

__________________

* The impact of CIPs is summarized as follows:

(in millions)

 

Three Months Ended

 

Six Months Ended

31-Mar-22

 

31-Dec-21

 

31-Mar-21

 

31-Mar-22

 

31-Mar-21

Elimination of operating revenues upon consolidation

 

$

(17.2

)

 

$

(8.3

)

 

$

(5.8

)

 

$

(25.5

)

 

$

(11.5

)

Other income, net

 

 

9.9

 

 

 

72.5

 

 

 

95.6

 

 

 

82.4

 

 

 

115.9

 

Less: income (loss) attributable to noncontrolling interests

 

 

(7.2

)

 

 

74.2

 

 

 

83.5

 

 

 

67.0

 

 

 

119.3

 

Net income (loss)

 

$

(0.1

)

 

$

(10.0

)

 

$

6.3

 

 

$

(10.1

)

 

$

(14.9

)

Notes

  1. Net income represents net income attributable to Franklin Resources, Inc.
  2. “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.
  3. Average AUM represents monthly average AUM.
  4. Taxes on income for the quarter ended September 30, 2021 includes a tax benefit of $155.1 million due to the release of certain tax reserves primarily related to the closure of Internal Revenue Service audits and increases in our ability to utilize certain tax attributes resulting from the integration of our business. For the quarter ended June 30, 2021, taxes on income includes a $23.1 million tax benefit from a valuation allowance release for interest expense carryforwards in the U.K.
  5. 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.

Franklin Resources, Inc. (NYSE: BEN) is a global investment management organization with subsidiaries operating as Franklin Templeton and serving clients in over 155 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 fixed income, equity, alternatives and multi-asset solutions. With offices in more than 30 countries and approximately 1,300 investment professionals, the California-based company has 75 years of investment experience and approximately $1.5 trillion in AUM as of March 31, 2022. 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, 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 pandemic-related risks, 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 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, 2021 and our subsequent Quarterly Reports on Form 10-Q. 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.

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

Source: Franklin Resources, Inc.