BEN 8-K
Franklin Templeton Inc (BEN)
8-K
2024-04-29
For: 2024-04-29
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Added on
April 07, 2026
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 29, 2024
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (650 ) 312-2000
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On April 29, 2024, Franklin Resources, Inc. (the “Company”) issued a press release announcing the financial results for the Company’s second fiscal quarter ended March 31, 2024. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
The Company also posted a second quarter earnings commentary on its internet website, available via investors.franklinresources.com.
The contents of the Company’s website referenced herein and in the exhibit are not incorporated into this Current Report on Form 8-K.
The information in these Items 2.02 and 7.01, including the exhibits hereto, (x) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section and (y) shall not be incorporated by reference into any filing of the Company with the Securities and Exchange Commission, whether made before or after the date hereof, regardless of any general incorporation language in such filings (unless the Company specifically states that the information or exhibits in this particular report with respect to Item 2.02 or Item 7.01, as the case may be, are incorporated by reference).
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The exhibits listed on the Exhibit Index are incorporated herein by reference.
Exhibit Index
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FRANKLIN RESOURCES, INC. | ||||||||
| Date: | April 29, 2024 | /s/ Matthew Nicholls | ||||||
| Matthew Nicholls | ||||||||
Executive Vice President, Chief Financial Officer and Chief Operating Officer (Principal Financial Officer) | ||||||||
| Date: | April 29, 2024 | /s/ Lindsey H. Oshita | ||||||
Lindsey H. Oshita | ||||||||
Chief Accounting Officer (Principal Accounting Officer) | ||||||||
3
EXHIBIT 99.1
 |  | ||||
| Contact: | Franklin Resources, Inc. | ||||
| Investor Relations: Selene Oh (650) 312-4091, [email protected] | |||||
Media Relations: Jeaneen Terrio (212) 632-4005, [email protected] | |||||
| investors.franklinresources.com | |||||
FOR IMMEDIATE RELEASE
Franklin Resources, Inc. Announces Second Quarter Results
San Mateo, CA, April 29, 2024 – Franklin Resources, Inc. (the “Company”) [NYSE: BEN] today announced net income1 of $124.2 million or $0.23 per diluted share for the quarter ended March 31, 2024, as compared to $251.3 million or $0.50 per diluted share for the previous quarter, and $194.2 million or $0.38 per diluted share for the quarter ended March 31, 2023. Operating income was $129.3 million for the quarter ended March 31, 2024, as compared to $206.5 million for the previous quarter and $255.1 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 $306.6 million and adjusted diluted earnings per share2 was $0.56 for the quarter ended March 31, 2024, as compared to $328.5 million and $0.65 for the previous quarter, and $316.7 million and $0.61 for the quarter ended March 31, 2023. Adjusted operating income2 was $419.6 million for the quarter ended March 31, 2024, as compared to $417.0 million for the previous quarter and $440.2 million for the prior year.
“Our efforts to deepen client relationships and further diversify our firm are yielding positive results with contributions across asset classes, investment vehicles and geographies,” said Jenny Johnson, President and CEO of Franklin Resources, Inc. “During our second fiscal quarter, these results included long-term net inflows of $6.9 billion. Fixed income, multi-asset and alternative assets led the way from an asset class perspective, and our three largest alternative managers generated a combined total of $1.4 billion in net inflows in the quarter. Positive net flows continued across our separately managed account, ETF and Canvas® offerings and we once again saw aggregate positive net flows in non-US regions, which have approximately $490 billion in AUM. At quarter end, our institutional pipeline of won-but-unfunded mandates grew to nearly $20 billion.
“The closing of our acquisition of Putnam Investments in January expanded our investment capabilities with strong investment performance. During the quarter, Barron’s ranked Putnam the #1 fund family for one- and five-year performance, and #5 for the 10-year period.3 The transaction also bolsters our relevance in the important insurance and retirement channels, bringing our AUM in this segment to over $650 billion.
“We continue to focus on disciplined expense management while leveraging our net cash and investments position to invest in growth and innovation to stay ahead of client needs to benefit our stakeholders.”
1
| Quarter Ended | % Change | Quarter Ended | % Change | |||||||||||||||||||||||||||||
| 31-Mar-24 | 31-Dec-23 | Qtr. vs. Qtr. | 31-Mar-23 | Year vs. Year | ||||||||||||||||||||||||||||
| Financial Results | ||||||||||||||||||||||||||||||||
| (in millions, except per share data) | ||||||||||||||||||||||||||||||||
| Operating revenues | $ | 2,152.8 | $ | 1,991.1 | 8 | % | $ | 1,927.2 | 12 | % | ||||||||||||||||||||||
| Operating income | 129.3 | 206.5 | (37 | %) | 255.1 | (49 | %) | |||||||||||||||||||||||||
| Operating margin | 6.0 | % | 10.4 | % | 13.2 | % | ||||||||||||||||||||||||||
| Net income¹ | $ | 124.2 | $ | 251.3 | (51 | %) | $ | 194.2 | (36 | %) | ||||||||||||||||||||||
| Diluted earnings per share | 0.23 | 0.50 | (54 | %) | 0.38 | (39 | %) | |||||||||||||||||||||||||
As adjusted (non-GAAP):2 | ||||||||||||||||||||||||||||||||
| Adjusted operating income | $ | 419.6 | $ | 417.0 | 1 | % | $ | 440.2 | (5 | %) | ||||||||||||||||||||||
| Adjusted operating margin | 25.2 | % | 27.3 | % | 28.9 | % | ||||||||||||||||||||||||||
| Adjusted net income | $ | 306.6 | $ | 328.5 | (7 | %) | $ | 316.7 | (3 | %) | ||||||||||||||||||||||
| Adjusted diluted earnings per share | 0.56 | 0.65 | (14 | %) | 0.61 | (8 | %) | |||||||||||||||||||||||||
| Assets Under Management | ||||||||||||||||||||||||||||||||
| (in billions) | ||||||||||||||||||||||||||||||||
| Ending | $ | 1,644.7 | $ | 1,455.5 | 13 | % | $ | 1,422.1 | 16 | % | ||||||||||||||||||||||
Average4 | 1,581.1 | 1,394.2 | 13 | % | 1,419.5 | 11 | % | |||||||||||||||||||||||||
| Long-term net flows | 6.9 | (5.0) | (3.7) | |||||||||||||||||||||||||||||
Total assets under management (“AUM”) were $1,644.7 billion at March 31, 2024, up $189.2 billion or 13% during the quarter due to $148.3 billion from the acquisition of Putnam Investments, the positive impact of $38.8 billion of net market change, distributions, and other, and $6.9 billion of long-term net inflows, partially offset by $4.8 billion of cash management net outflows.
Cash and cash equivalents and investments were $5.7 billion and, including the Company’s direct investments in consolidated investment products (“CIPs”), were $6.9 billion5 at March 31, 2024. Total stockholders’ equity was $13.6 billion and the Company had 526.2 million shares of common stock outstanding at March 31, 2024. The Company repurchased 0.4 million shares of its common stock for a total cost of $11.7 million during the quarter ended March 31, 2024.
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 (+1) (888) 259-6580 in North America or (+1) (416) 764-8624 in other locations using access code 23304402. A replay of the teleconference can also be accessed by calling (+1) (877) 674-7070 in North America or (+1) 416-764-8692 in other locations using access code 304402# after 2:00 p.m. Eastern Time on April 29, 2024 through May 6, 2024, 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 [email protected] before the live teleconference for any clarifications or questions related to the earnings release or written commentary.
2
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 | ||||||||||||||||||||||||||||||||||
| 2024 | 2023 6 | 2024 | 2023 6 | |||||||||||||||||||||||||||||||||||
| Operating Revenues | ||||||||||||||||||||||||||||||||||||||
| Investment management fees | $ | 1,713.9 | $ | 1,573.3 | 9 | % | $ | 3,366.1 | $ | 3,205.1 | 5 | % | ||||||||||||||||||||||||||
| Sales and distribution fees | 358.3 | 301.4 | 19 | % | 654.7 | 593.3 | 10 | % | ||||||||||||||||||||||||||||||
| Shareholder servicing fees | 68.0 | 43.3 | 57 | % | 100.5 | 76.7 | 31 | % | ||||||||||||||||||||||||||||||
| Other | 12.6 | 9.2 | 37 | % | 22.6 | 19.2 | 18 | % | ||||||||||||||||||||||||||||||
| Total operating revenues | 2,152.8 | 1,927.2 | 12 | % | 4,143.9 | 3,894.3 | 6 | % | ||||||||||||||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||||||||||||||
| Compensation and benefits | 1,028.2 | 847.3 | 21 | % | 1,996.5 | 1,826.5 | 9 | % | ||||||||||||||||||||||||||||||
| Sales, distribution and marketing | 484.3 | 406.6 | 19 | % | 885.1 | 795.2 | 11 | % | ||||||||||||||||||||||||||||||
| Information systems and technology | 155.1 | 128.0 | 21 | % | 286.1 | 249.4 | 15 | % | ||||||||||||||||||||||||||||||
| Occupancy | 76.2 | 59.7 | 28 | % | 142.9 | 114.2 | 25 | % | ||||||||||||||||||||||||||||||
| Amortization of intangible assets | 84.6 | 86.0 | (2 | %) | 170.4 | 169.2 | 1 | % | ||||||||||||||||||||||||||||||
| General, administrative and other | 195.1 | 144.5 | 35 | % | 327.1 | 290.7 | 13 | % | ||||||||||||||||||||||||||||||
| Total operating expenses | 2,023.5 | 1,672.1 | 21 | % | 3,808.1 | 3,445.2 | 11 | % | ||||||||||||||||||||||||||||||
| Operating Income | 129.3 | 255.1 | (49 | %) | 335.8 | 449.1 | (25 | %) | ||||||||||||||||||||||||||||||
| Other Income (Expenses) | ||||||||||||||||||||||||||||||||||||||
| Investment and other income, net | 52.5 | 60.6 | (13 | %) | 225.7 | 150.5 | 50 | % | ||||||||||||||||||||||||||||||
Interest expense | (27.7) | (33.5) | (17 | %) | (46.5) | (64.4) | (28 | %) | ||||||||||||||||||||||||||||||
Investment and other losses of consolidated investment products,net | 89.9 | 87.2 | 3 | % | 66.1 | 73.6 | (10 | %) | ||||||||||||||||||||||||||||||
Expenses of consolidated investment products | (5.9) | (3.4) | 74 | % | (11.8) | (14.9) | (21 | %) | ||||||||||||||||||||||||||||||
| Other income, net | 108.8 | 110.9 | (2 | %) | 233.5 | 144.8 | 61 | % | ||||||||||||||||||||||||||||||
| Income before taxes | 238.1 | 366.0 | (35 | %) | 569.3 | 593.9 | (4 | %) | ||||||||||||||||||||||||||||||
| Taxes on income | 62.8 | 92.9 | (32 | %) | 137.7 | 153.2 | (10 | %) | ||||||||||||||||||||||||||||||
| Net income | 175.3 | 273.1 | (36 | %) | 431.6 | 440.7 | (2 | %) | ||||||||||||||||||||||||||||||
| Less: net income (loss) attributable to | ||||||||||||||||||||||||||||||||||||||
| Redeemable noncontrolling interests | 42.8 | 83.2 | (49 | %) | 52.3 | 81.7 | (36 | %) | ||||||||||||||||||||||||||||||
| Nonredeemable noncontrolling interests | 8.3 | (4.3) | NM | 3.8 | (0.8) | NM | ||||||||||||||||||||||||||||||||
| Net Income Attributable to Franklin Resources, Inc. | $ | 124.2 | $ | 194.2 | (36 | %) | $ | 375.5 | $ | 359.8 | 4 | % | ||||||||||||||||||||||||||
| Earnings per Share | ||||||||||||||||||||||||||||||||||||||
| Basic | $ | 0.23 | $ | 0.38 | (39 | %) | $ | 0.71 | $ | 0.70 | 1 | % | ||||||||||||||||||||||||||
| Diluted | 0.23 | 0.38 | (39 | %) | 0.71 | 0.70 | 1 | % | ||||||||||||||||||||||||||||||
| Dividends Declared per Share | $ | 0.31 | $ | 0.30 | 3 | % | $ | 0.62 | $ | 0.60 | 3 | % | ||||||||||||||||||||||||||
| Average Shares Outstanding | ||||||||||||||||||||||||||||||||||||||
| Basic | 518.4 | 490.7 | 6 | % | 502.6 | 490.1 | 3 | % | ||||||||||||||||||||||||||||||
| Diluted | 519.2 | 491.4 | 6 | % | 503.4 | 490.8 | 3 | % | ||||||||||||||||||||||||||||||
| Operating Margin | 6.0 | % | 13.2 | % | 8.1 | % | 11.5 | % | ||||||||||||||||||||||||||||||
3
FRANKLIN RESOURCES, INC. CONSOLIDATED STATEMENTS OF INCOME Unaudited | ||||||||||||||||||||||||||||||||||||||
| (in millions, except per share data) | Three Months Ended | % Change | Three Months Ended 6 | |||||||||||||||||||||||||||||||||||
| 31-Mar-24 | 31-Dec-23 | 30-Sep-23 | 30-Jun-23 | 31-Mar-23 | ||||||||||||||||||||||||||||||||||
| Operating Revenues | ||||||||||||||||||||||||||||||||||||||
| Investment management fees | $ | 1,713.9 | $ | 1,652.2 | ` | 4 | % | $ | 1,634.4 | $ | 1,613.4 | $ | 1,573.3 | |||||||||||||||||||||||||
| Sales and distribution fees | 358.3 | 296.4 | 21 | % | 306.4 | 304.0 | 301.4 | |||||||||||||||||||||||||||||||
| Shareholder servicing fees | 68.0 | 32.5 | 109 | % | 37.2 | 38.8 | 43.3 | |||||||||||||||||||||||||||||||
| Other | 12.6 | 10.0 | 26 | % | 8.1 | 12.8 | 9.2 | |||||||||||||||||||||||||||||||
| Total operating revenues | 2,152.8 | 1,991.1 | 8 | % | 1,986.1 | 1,969.0 | 1,927.2 | |||||||||||||||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||||||||||||||
| Compensation and benefits | 1,028.2 | 968.3 | 6 | % | 826.3 | 841.2 | 847.3 | |||||||||||||||||||||||||||||||
| Sales, distribution and marketing | 484.3 | 400.8 | 21 | % | 411.1 | 406.8 | 406.6 | |||||||||||||||||||||||||||||||
| Information systems and technology | 155.1 | 131.0 | 18 | % | 128.3 | 127.3 | 128.0 | |||||||||||||||||||||||||||||||
| Occupancy | 76.2 | 66.7 | 14 | % | 57.8 | 56.9 | 59.7 | |||||||||||||||||||||||||||||||
| Amortization of intangible assets | 84.6 | 85.8 | (1 | %) | 86.5 | 85.4 | 86.0 | |||||||||||||||||||||||||||||||
| General, administrative and other | 195.1 | 132.0 | 48 | % | 137.8 | 136.5 | 144.5 | |||||||||||||||||||||||||||||||
| Total operating expenses | 2,023.5 | 1,784.6 | 13 | % | 1,647.8 | 1,654.1 | 1,672.1 | |||||||||||||||||||||||||||||||
| Operating Income | 129.3 | 206.5 | (37 | %) | 338.3 | 314.9 | 255.1 | |||||||||||||||||||||||||||||||
| Other Income (Expenses) | ||||||||||||||||||||||||||||||||||||||
| Investment and other income, net | 52.5 | 173.2 | (70 | %) | 62.0 | 49.8 | 60.6 | |||||||||||||||||||||||||||||||
| Interest expense | (27.7) | (18.8) | 47 | % | (24.4) | (34.9) | (33.5) | |||||||||||||||||||||||||||||||
| Investment and other income (losses) of consolidated investment products, net | 89.9 | (23.8) | NM | 40.5 | 1.7 | 87.2 | ||||||||||||||||||||||||||||||||
Expenses of consolidated investment products | (5.9) | (5.9) | 0% | (3.0) | (0.8) | (3.4) | ||||||||||||||||||||||||||||||||
| Other income, net | 108.8 | 124.7 | (13 | %) | 75.1 | 15.8 | 110.9 | |||||||||||||||||||||||||||||||
| Income before taxes | 238.1 | 331.2 | (28 | %) | 413.4 | 330.7 | 366.0 | |||||||||||||||||||||||||||||||
| Taxes on income | 62.8 | 74.9 | (16 | %) | 75.0 | 84.1 | 92.9 | |||||||||||||||||||||||||||||||
| Net income | 175.3 | 256.3 | (32 | %) | 338.4 | 246.6 | 273.1 | |||||||||||||||||||||||||||||||
| Less: net income (loss) attributable to | ||||||||||||||||||||||||||||||||||||||
| Redeemable noncontrolling interests | 42.8 | 9.5 | 351 | % | 27.0 | 26.8 | 83.2 | |||||||||||||||||||||||||||||||
| Nonredeemable noncontrolling interests | 8.3 | (4.5) | NM | 15.9 | (7.7) | (4.3) | ||||||||||||||||||||||||||||||||
| Net Income Attributable to Franklin Resources, Inc. | $ | 124.2 | $ | 251.3 | (51 | %) | $ | 295.5 | $ | 227.5 | $ | 194.2 | ||||||||||||||||||||||||||
| Earnings per Share | ||||||||||||||||||||||||||||||||||||||
| Basic | $ | 0.23 | $ | 0.50 | (54 | %) | $ | 0.58 | $ | 0.44 | $ | 0.38 | ||||||||||||||||||||||||||
| Diluted | 0.23 | 0.50 | (54 | %) | 0.58 | 0.44 | 0.38 | |||||||||||||||||||||||||||||||
| Dividends Declared per Share | $ | 0.31 | $ | 0.31 | 0% | $ | 0.30 | $ | 0.30 | $ | 0.30 | |||||||||||||||||||||||||||
| Average Shares Outstanding | ||||||||||||||||||||||||||||||||||||||
| Basic | 518.4 | 487.0 | 6 | % | 489.2 | 490.7 | 490.7 | |||||||||||||||||||||||||||||||
| Diluted | 519.2 | 487.9 | 6 | % | 490.0 | 491.4 | 491.4 | |||||||||||||||||||||||||||||||
| Operating Margin | 6.0 | % | 10.4 | % | 17.0 | % | 16.0 | % | 13.2 | % | ||||||||||||||||||||||||||||
4
AUM AND FLOWS
| (in billions) | Three Months Ended March 31, | % Change | Six Months Ended March 31, | % Change | ||||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||
| Beginning AUM | $ | 1,455.5 | $ | 1,387.7 | 5 | % | $ | 1,374.2 | $ | 1,297.4 | 6 | % | ||||||||||||||||||||||||||
| Long-term inflows | 84.9 | 61.8 | 37 | % | 153.8 | 132.3 | 16 | % | ||||||||||||||||||||||||||||||
| Long-term outflows | (78.0) | (65.5) | 19 | % | (151.9) | (146.9) | 3 | % | ||||||||||||||||||||||||||||||
| Long-term net flows | 6.9 | (3.7) | NM | 1.9 | (14.6) | NM | ||||||||||||||||||||||||||||||||
| Cash management net flows | (4.8) | (4.3) | 12 | % | (0.1) | 13.2 | NM | |||||||||||||||||||||||||||||||
| Total net flows | 2.1 | (8.0) | NM | 1.8 | (1.4) | NM | ||||||||||||||||||||||||||||||||
Acquisition | 148.3 | — | NM | 148.3 | 34.9 | 325% | ||||||||||||||||||||||||||||||||
Net market change, distributions and other7 | 38.8 | 42.4 | (8 | %) | 120.4 | 91.2 | 32% | |||||||||||||||||||||||||||||||
| Ending AUM | $ | 1,644.7 | $ | 1,422.1 | 16 | % | $ | 1,644.7 | $ | 1,422.1 | 16 | % | ||||||||||||||||||||||||||
| Average AUM | $ | 1,581.1 | $ | 1,419.5 | 11 | % | $ | 1,492.2 | $ | 1,386.4 | 8 | % | ||||||||||||||||||||||||||
AUM BY ASSET CLASS
| (in billions) | 31-Mar-24 | 31-Dec-23 | % Change | 30-Sep-23 | 30-Jun-23 | 31-Mar-23 | ||||||||||||||||||||||||||||||||
Equity | $ | 592.7 | $ | 467.5 | 27 | % | $ | 430.4 | $ | 458.0 | $ | 437.1 | ||||||||||||||||||||||||||
| Fixed Income | 571.4 | 511.7 | 12 | % | 483.1 | 505.1 | 510.1 | |||||||||||||||||||||||||||||||
| Alternative | 255.5 | 256.2 | 0 | % | 254.9 | 257.2 | 258.2 | |||||||||||||||||||||||||||||||
| Multi-Asset | 163.4 | 154.6 | 6 | % | 145.0 | 148.3 | 146.1 | |||||||||||||||||||||||||||||||
| Cash Management | 61.7 | 65.5 | (6 | %) | 60.8 | 62.9 | 70.6 | |||||||||||||||||||||||||||||||
| Total AUM | $ | 1,644.7 | $ | 1,455.5 | 13 | % | $ | 1,374.2 | $ | 1,431.5 | $ | 1,422.1 | ||||||||||||||||||||||||||
| Average AUM for the Three-Month Period | $ | 1,581.1 | $ | 1,394.2 | 13 | % | $ | 1,419.1 | $ | 1,419.6 | $ | 1,419.5 | ||||||||||||||||||||||||||
AUM BY SALES REGION
| (in billions) | 31-Mar-24 | 31-Dec-23 | % Change | 30-Sep-23 | 30-Jun-23 | 31-Mar-23 | ||||||||||||||||||||||||||||||||
| United States | $ | 1,155.9 | $ | 1,019.4 | 13 | % | $ | 979.9 | $ | 1,026.0 | $ | 1,017.1 | ||||||||||||||||||||||||||
| International | ||||||||||||||||||||||||||||||||||||||
Europe, Middle East and Africa8 | 206.3 | 180.6 | 14 | % | 165.1 | 170.6 | 167.6 | |||||||||||||||||||||||||||||||
| Asia-Pacific | 170.4 | 150.5 | 13 | % | 117.6 | 121.0 | 120.0 | |||||||||||||||||||||||||||||||
| Americas, excl. U.S. | 112.1 | 105.0 | 7 | % | 111.6 | 113.9 | 117.4 | |||||||||||||||||||||||||||||||
| Total international | 488.8 | 436.1 | 12 | % | 394.3 | 405.5 | 405.0 | |||||||||||||||||||||||||||||||
| Total | $ | 1,644.7 | $ | 1,455.5 | 13 | % | $ | 1,374.2 | $ | 1,431.5 | $ | 1,422.1 | ||||||||||||||||||||||||||
5
AUM AND FLOWS BY ASSET CLASS
| (in billions) | ||||||||||||||||||||||||||||||||||||||
| for the three months ended March 31, 2024 | Equity | Fixed Income | Alternative | Multi-Asset | Cash Management | Total | ||||||||||||||||||||||||||||||||
| AUM at January 1, 2024 | $ | 467.5 | $ | 511.7 | $ | 256.2 | $ | 154.6 | $ | 65.5 | $ | 1,455.5 | ||||||||||||||||||||||||||
Long-term inflows | 27.5 | 43.8 | 3.4 | 10.2 | — | 84.9 | ||||||||||||||||||||||||||||||||
Long-term outflows | (32.8) | (35.5) | (2.4) | (7.3) | — | (78.0) | ||||||||||||||||||||||||||||||||
| Long-term net flows | (5.3) | 8.3 | 1.0 | 2.9 | — | 6.9 | ||||||||||||||||||||||||||||||||
Cash management net flows | — | — | — | — | (4.8) | (4.8) | ||||||||||||||||||||||||||||||||
Total net flows | (5.3) | 8.3 | 1.0 | 2.9 | (4.8) | 2.1 | ||||||||||||||||||||||||||||||||
Acquisition | 81.3 | 59.3 | 0.7 | 5.8 | 1.2 | 148.3 | ||||||||||||||||||||||||||||||||
Net market change, distributions and other7 | 49.2 | (7.9) | (2.4) | 0.1 | (0.2) | 38.8 | ||||||||||||||||||||||||||||||||
| AUM at March 31, 2024 | $ | 592.7 | $ | 571.4 | $ | 255.5 | $ | 163.4 | $ | 61.7 | $ | 1,644.7 | ||||||||||||||||||||||||||
| (in billions) | ||||||||||||||||||||||||||||||||||||||
| for the three months ended December 31, 2023 | Equity | Fixed Income | Alternative | Multi-Asset | Cash Management | Total | ||||||||||||||||||||||||||||||||
| AUM at October 1, 2023 | $ | 430.4 | $ | 483.1 | $ | 254.9 | $ | 145.0 | $ | 60.8 | $ | 1,374.2 | ||||||||||||||||||||||||||
Long-term inflows | 27.0 | 28.3 | 5.9 | 7.7 | — | 68.9 | ||||||||||||||||||||||||||||||||
Long-term outflows | (26.8) | (36.7) | (3.2) | (7.2) | — | (73.9) | ||||||||||||||||||||||||||||||||
| Long-term net flows | 0.2 | (8.4) | 2.7 | 0.5 | — | (5.0) | ||||||||||||||||||||||||||||||||
Cash management net flows | — | — | — | — | 4.7 | 4.7 | ||||||||||||||||||||||||||||||||
Total net flows | 0.2 | (8.4) | 2.7 | 0.5 | 4.7 | (0.3) | ||||||||||||||||||||||||||||||||
Net market change, distributions and other7 | 36.9 | 37.0 | (1.4) | 9.1 | — | 81.6 | ||||||||||||||||||||||||||||||||
| AUM at December 31, 2023 | $ | 467.5 | $ | 511.7 | $ | 256.2 | $ | 154.6 | $ | 65.5 | $ | 1,455.5 | ||||||||||||||||||||||||||
| (in billions) | ||||||||||||||||||||||||||||||||||||||
| for the three months ended March 31, 2023 | Equity | Fixed Income | Alternative | Multi-Asset | Cash Management | Total | ||||||||||||||||||||||||||||||||
| AUM at January 1, 2023 | $ | 419.1 | $ | 494.8 | $ | 257.4 | $ | 141.4 | $ | 75.0 | $ | 1,387.7 | ||||||||||||||||||||||||||
Long-term inflows | 17.1 | 31.5 | 4.9 | 8.3 | — | 61.8 | ||||||||||||||||||||||||||||||||
Long-term outflows | (25.4) | (29.7) | (3.6) | (6.8) | — | (65.5) | ||||||||||||||||||||||||||||||||
| Long-term net flows | (8.3) | 1.8 | 1.3 | 1.5 | — | (3.7) | ||||||||||||||||||||||||||||||||
Cash management net flows | — | — | — | — | (4.3) | (4.3) | ||||||||||||||||||||||||||||||||
Total net flows | (8.3) | 1.8 | 1.3 | 1.5 | (4.3) | (8.0) | ||||||||||||||||||||||||||||||||
Net market change, distributions and other7 | 26.3 | 13.5 | (0.5) | 3.2 | (0.1) | 42.4 | ||||||||||||||||||||||||||||||||
| AUM at March 31, 2023 | $ | 437.1 | $ | 510.1 | $ | 258.2 | $ | 146.1 | $ | 70.6 | $ | 1,422.1 | ||||||||||||||||||||||||||
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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, 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 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.
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Adjusted Net Income and Adjusted Diluted Earnings Per Share
We define adjusted net income as net income attributable to Franklin Resources, Inc. adjusted to exclude the following:
•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.
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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-24 | 31-Dec-23 | 31-Mar-23 | 31-Mar-24 | 31-Mar-23 | ||||||||||||||||||||||||||||
| Operating income | $ | 129.3 | $ | 206.5 | $ | 255.1 | $ | 335.8 | $ | 449.1 | ||||||||||||||||||||||
Add (subtract): | ||||||||||||||||||||||||||||||||
Elimination of operating revenues upon consolidation of investment products* | 11.0 | 11.4 | 9.1 | 22.4 | 14.2 | |||||||||||||||||||||||||||
Acquisition-related retention | 104.5 | 69.1 | 23.2 | 173.6 | 86.8 | |||||||||||||||||||||||||||
Compensation and benefits expense from gains on deferred compensation, net | 14.0 | 19.0 | 10.6 | 33.0 | 16.2 | |||||||||||||||||||||||||||
| Other acquisition-related expenses | 25.2 | 6.8 | 14.0 | 32.0 | 36.6 | |||||||||||||||||||||||||||
Amortization of intangible assets | 84.6 | 85.8 | 86.0 | 170.4 | 169.2 | |||||||||||||||||||||||||||
Special termination benefits | 40.4 | 6.7 | 31.8 | 47.1 | 42.7 | |||||||||||||||||||||||||||
| Compensation and benefits expense related to minority interests in certain subsidiaries | 10.6 | 11.7 | 10.4 | 22.3 | 20.5 | |||||||||||||||||||||||||||
| Adjusted operating income | $ | 419.6 | $ | 417.0 | $ | 440.2 | $ | 836.6 | $ | 835.3 | ||||||||||||||||||||||
| Total operating revenues | $ | 2,152.8 | $ | 1,991.1 | $ | 1,927.2 | $ | 4,143.9 | $ | 3,894.3 | ||||||||||||||||||||||
Add (subtract): | ||||||||||||||||||||||||||||||||
Acquisition-related pass through performance fees | (14.4) | (72.6) | (8.0) | (87.0) | (152.5) | |||||||||||||||||||||||||||
Sales and distribution fees | (358.5) | (296.4) | (301.4) | (654.9) | (593.3) | |||||||||||||||||||||||||||
Allocation of investment management fees for sales, distribution and marketing expenses | (125.8) | (104.4) | (105.2) | (230.2) | (201.9) | |||||||||||||||||||||||||||
Elimination of operating revenues upon consolidation of investment products* | 11.0 | 11.4 | 9.1 | 22.4 | 14.2 | |||||||||||||||||||||||||||
| Adjusted operating revenues | $ | 1,665.1 | $ | 1,529.1 | $ | 1,521.7 | $ | 3,194.2 | $ | 2,960.8 | ||||||||||||||||||||||
| Operating margin | 6.0 | % | 10.4 | % | 13.2 | % | 8.1 | % | 11.5 | % | ||||||||||||||||||||||
| Adjusted operating margin | 25.2 | % | 27.3 | % | 28.9 | % | 26.2 | % | 28.2 | % | ||||||||||||||||||||||
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| (in millions, except per share data) | Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||
| 31-Mar-24 | 31-Dec-23 | 31-Mar-23 | 31-Mar-24 | 31-Mar-23 | ||||||||||||||||||||||||||||
Net income attributable to Franklin Resources, Inc. | $ | 124.2 | $ | 251.3 | $ | 194.2 | $ | 375.5 | $ | 359.8 | ||||||||||||||||||||||
Add (subtract): | ||||||||||||||||||||||||||||||||
Net (income) loss of consolidated investment products* | 3.5 | (2.2) | 8.5 | 1.3 | 4.9 | |||||||||||||||||||||||||||
Acquisition-related retention | 104.5 | 69.1 | 23.2 | 173.6 | 86.8 | |||||||||||||||||||||||||||
| Other acquisition-related expenses | 29.3 | 10.8 | 20.1 | 40.1 | 48.8 | |||||||||||||||||||||||||||
Amortization of intangible assets | 84.6 | 85.8 | 86.0 | 170.4 | 169.2 | |||||||||||||||||||||||||||
Special termination benefits | 40.4 | 6.7 | 31.8 | 47.1 | 42.7 | |||||||||||||||||||||||||||
Net gains on deferred compensation plan investments not offset by compensation and benefits expense | (3.9) | (6.0) | (6.0) | (9.9) | (13.6) | |||||||||||||||||||||||||||
Unrealized investment gains | (9.6) | (49.0) | (1.9) | (58.6) | (32.6) | |||||||||||||||||||||||||||
Interest expense for amortization of debt premium | (6.4) | (6.4) | (6.4) | (12.8) | (12.7) | |||||||||||||||||||||||||||
| Net compensation and benefits expense related to minority interests in certain subsidiaries not offset by net income (loss) attributable to redeemable noncontrolling interests | 0.4 | (2.0) | (0.3) | (1.6) | 0.1 | |||||||||||||||||||||||||||
| Net income tax expense of adjustments | (60.4) | (29.6) | (32.5) | (90.0) | (74.3) | |||||||||||||||||||||||||||
| Adjusted net income | $ | 306.6 | $ | 328.5 | $ | 316.7 | $ | 635.1 | $ | 579.1 | ||||||||||||||||||||||
| Diluted earnings per share | $ | 0.23 | $ | 0.50 | $ | 0.38 | $ | 0.71 | $ | 0.70 | ||||||||||||||||||||||
Adjusted diluted earnings per share | 0.56 | 0.65 | 0.61 | 1.21 | 1.13 | |||||||||||||||||||||||||||
__________________
* The impact of CIPs is summarized as follows:
| (in millions) | Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||
| 31-Mar-24 | 31-Dec-23 | 31-Mar-23 | 31-Mar-24 | 31-Mar-23 | ||||||||||||||||||||||||||||
Elimination of operating revenues upon consolidation | $ | (11.0) | $ | (11.4) | $ | (9.1) | $ | (22.4) | $ | (14.2) | ||||||||||||||||||||||
| Other income (expenses), net | 38.6 | (8.6) | 62.9 | 30.0 | 60.1 | |||||||||||||||||||||||||||
| Less: income (loss) attributable to noncontrolling interests | 31.1 | (22.2) | 62.3 | 8.9 | 50.8 | |||||||||||||||||||||||||||
| Net income (loss) | $ | (3.5) | $ | 2.2 | $ | (8.5) | $ | (1.3) | $ | (4.9) | ||||||||||||||||||||||
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Notes
1.Net income represents net income attributable to Franklin Resources, Inc.
2.“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.
3.Barron’s, “Barron’s Best Fund Families of 2023,” March 4, 2024. Out of 49 firms (1 year), 47 firms (5 year), 46 firms (10 year).
4.Average AUM represents monthly average AUM.
5.Includes our direct investments in CIPs of $1.3 billion, approximately $350 million of employee-owned and other third-party investments made through partnerships, $353.0 million of investments that are subject to long-term repurchase agreements and other net financing arrangements, and $447.1 million of cash and investments related to deferred compensation plans.
6.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 ended September 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 to Franklin Resources, Inc. or earnings per share.
7.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.
8.India region is included in Europe, Middle East and Africa.
Franklin Resources, Inc. (NYSE: BEN) is a global investment management organization with subsidiaries operating as Franklin Templeton and serving clients in over 150 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 offers specialization on a global scale, bringing extensive capabilities in fixed income, equity, alternatives and multi-asset solutions. With more than 1,500 investment professionals, and offices in major financial markets around the world, the California-based company has over 75 years of investment experience and over $1.6 trillion in AUM as of March 31, 2024. 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 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.
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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, 2023 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.
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