Franklin Resources, Inc. (the “Company”) [NYSE: BEN] today
announced preliminary net loss of $84.7 million or $0.19 per
diluted share for the quarter ended September 30, 2024, as compared
to net income of $174.0 million or $0.32 per diluted share for the
previous quarter, and $295.5 million or $0.58 per diluted share for
the quarter ended September 30, 2023. Preliminary net income1 for
the fiscal year ended September 30, 2024 was $464.8 million or
$0.85 per diluted share, as compared to $882.8 million or $1.72 per
diluted share for the prior fiscal year. Preliminary operating loss
was $150.7 million for the quarter ended September 30, 2024, as
compared to operating income of $222.5 million for the previous
quarter and $338.3 million for the prior year. During the quarter
ended September 30, 2024, the Company impaired its indefinite-lived
intangible asset related to certain mutual fund contracts managed
by Western Asset Management by $389.2 million.
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 $315.2 million and adjusted diluted
earnings per share2 was $0.59 for the quarter ended September 30,
2024, as compared to $326.4 million and $0.60 for the previous
quarter, and $427.0 million and $0.84 for the quarter ended
September 30, 2023. Preliminary adjusted net income2 was $1,276.7
million and adjusted diluted earnings per share2 was $2.39 for the
fiscal year ended September 30, 2024, as compared to $1,332.2
million and $2.60 for the prior fiscal year. Preliminary adjusted
operating income2 was $451.6 million for the quarter ended
September 30, 2024, as compared to $424.9 million for the previous
quarter and $511.7 million for the prior year.
“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 Jenny Johnson, President and CEO of
Franklin Resources, Inc. “Over the past several years, we have
successfully grown and further diversified our business by
investment team, asset class, investment vehicle and geography.
“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 $1.68
trillion and saw a 25% increase from the prior year in long-term
inflows to $319 billion. Long-term net outflows were $32.6 billion,
including $20.7 billion of reinvested distributions. Excluding
Western Asset Management, our long-term net inflows were $16.0
billion.
“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 $14.8 billion with flagship funds in secondary
private equity and alternative credit exceeding fund targets. We
saw strong growth across a broad range of investment vehicles with
retail SMA, ETF and Canvas® AUM increasing by 29%, 89% and 94%
year-over-year, respectively – all to record highs. From a regional
perspective, our international business continued to be a strength
of the firm and experienced positive long-term net flows for the
year, culminating in over $500 billion in AUM.
“Our acquisition of Putnam Investments has exceeded our
expectations. Since closing on January 1, Putnam’s AUM has grown
21% to $180 billion and Franklin Templeton has generated positive
net flows of approximately $11 billion in Putnam strategies,
benefiting from our global distribution platform. The transaction
has also exceeded our annual run-rate cost savings target of $150
million. We have returned $946 million to shareholders through
dividends and share repurchases.
“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 Franklin Templeton as a trusted partner over 75 years.
I would like to thank our employees around the world for their
dedication and commitment to always putting our clients first.”
Quarter Ended
% Change
Quarter Ended
% Change
Fiscal Year Ended September
30,
30-Sep-24
30-Jun-24
Qtr. vs. Qtr.
30-Sep-23
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 $1,678.6 billion at
September 30, 2024, up $32.0 billion or 2% during the quarter due
to the positive impact of $63.5 billion of net market change,
distributions, and other, partially offset by $31.3 billion of
long-term net outflows, inclusive of $37.0 billion of long-term net
outflows at Western Asset Management, and $0.2 billion of cash
management net outflows. AUM increased $304.4 billion or 22% during
the fiscal year due to the positive impact of $186.0 billion of net
market change, distributions and other, $148.3 billion from the
acquisition of Putnam, and $2.7 billion of cash management net
inflows, partially offset by $32.6 billion of long-term net
outflows, inclusive of $48.6 billion of long-term net outflows at
Western Asset Management.
Cash and cash equivalents and investments were $5.6 billion and,
including the Company’s direct investments in consolidated
investment products (“CIPs”), were $6.7 billion4 at September 30,
2024. Total stockholders’ equity was $13.3 billion and the Company
had 523.6 million shares of common stock outstanding at September
30, 2024. The Company repurchased 4.9 million shares of its common
stock for a total cost of $102.4 million during the quarter ended
September 30, 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) (877) 407-0989
in North America or (+1) (201) 389-0921 in other locations. A
replay of the teleconference can also be accessed by calling (+1)
(877) 660-6853 in North America or (+1) (201) 612-7415 in other
locations using access code 13749455 after 2:00 p.m. Eastern Time
on November 4, 2024 through November 10, 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
investorrelations@franklintempleton.com before the live
teleconference for any clarifications or questions related to the
earnings release or written commentary.
FRANKLIN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF
INCOME
Unaudited
(in millions, except per share data)
Three Months Ended
September 30,
%
Change
Twelve Months Ended
September 30,
%
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
Franklin Resources, Inc.
$
(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
%
FRANKLIN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF
INCOME
Unaudited
(in millions, except per share data)
Three Months Ended
%
Change
Three Months Ended 5
30-Sep-24
30-Jun-24
31-Mar-24
31-Dec-23
30-Sep-23
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
Franklin Resources, Inc.
$
(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
September 30,
%
Change
Twelve Months Ended
September 30,
%
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)
30-Sep-24
30-Jun-24
% Change
31-Mar-24
31-Dec-23
30-Sep-23
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)
30-Sep-24
30-Jun-24
% Change
31-Mar-24
31-Dec-23
30-Sep-23
United States
$
1,177.1
$
1,155.0
2
%
$
1,155.9
$
1,019.4
$
979.9
International
Europe, Middle East and Africa7
209.1
205.8
2
%
206.3
180.6
165.1
Asia-Pacific
178.0
174.1
2
%
170.4
150.5
117.6
Americas, excl. U.S.
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
September 30, 2024
Equity
Fixed
Income
Alternative
Multi-Asset
Cash
Management
Total
AUM at July 1, 2024
$
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 September 30, 2024
$
632.1
$
556.4
$
249.9
$
176.2
$
64.0
$
1,678.6
(in billions)
for the three months ended
June 30, 2024
Equity
Fixed
Income
Alternative
Multi-Asset
Cash
Management
Total
AUM at April 1, 2024
$
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 June 30, 2024
$
595.0
$
564.5
$
254.5
$
168.1
$
64.5
$
1,646.6
(in billions)
for the three months ended
September 30, 2023
Equity
Fixed
Income
Alternative
Multi-Asset
Cash
Management
Total
AUM at July 1, 2023
$
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 September 30, 2023
$
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 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 (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
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.
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
30-Sep-24
30-Jun-24
30-Sep-23
30-Sep-24
30-Sep-23
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
30-Sep-24
30-Jun-24
30-Sep-23
30-Sep-24
30-Sep-23
Net income (loss) attributable to
Franklin Resources, Inc.
$
(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
30-Sep-24
30-Jun-24
30-Sep-23
30-Sep-24
30-Sep-23
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 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.
- 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 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 equity, fixed income, 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 September 30, 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.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241103233835/en/
Franklin Resources, Inc. Investor Relations: Selene Oh (650)
312-4091, selene.oh@franklintempleton.com Media Relations: Jeaneen
Terrio (212) 632-4005, jeaneen.terrio@franklintempleton.com
investors.franklinresources.com
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