Franklin Resources, Inc. (the “Company”) [NYSE: BEN] today
announced preliminary net income1 of $295.5 million or $0.58 per
diluted share for the quarter ended September 30, 2023, as compared
to $227.5 million or $0.44 per diluted share for the previous
quarter, and $232.7 million or $0.46 per diluted share for the
quarter ended September 30, 2022. Preliminary net income1 for the
year ended September 30, 2023 was $882.8 million or $1.72 per
diluted share, as compared to $1,291.9 million or $2.53 per diluted
share for the prior year. Preliminary operating income was $338.3
million for the quarter ended September 30, 2023, as compared to
$314.9 million for the previous quarter and $348.5 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. Preliminary
adjusted net income2 was $427.0 million and adjusted diluted
earnings per share2 was $0.84 for the quarter ended September 30,
2023, as compared to $326.1 million and $0.63 for the previous
quarter, and $394.4 million and $0.78 for the quarter ended
September 30, 2022. Preliminary adjusted net income2 was $1,332.2
million and adjusted diluted earnings per share2 was $2.60 for the
year ended September 30, 2023, as compared to $1,855.6 million and
$3.63 for the prior year. Preliminary adjusted operating income2
was $511.7 million for the quarter ended September 30, 2023, as
compared to $476.8 million for the previous quarter and $494.1
million for the prior year.
“As we look back over our fiscal year, challenging global
financial markets and geopolitical uncertainty weighed on investor
sentiment,” said Jenny Johnson, President and CEO of Franklin
Resources, Inc. “Against this backdrop and amidst ongoing
industry-wide change, we continued to make progress executing on
our long-term plan focused on further diversifying our business
across asset classes, vehicles, and geographies.
“For the fiscal year, long-term net flows were positive in key
areas, including alternatives, multi-asset, ETFs, Canvas®, and the
high-net-worth channel. While long-term inflows were impacted by
the risk-off environment, long-term outflows improved by over 20%
from the prior year. Our largest alternative managers, Benefit
Street Partners, Clarion Partners, and Lexington Partners,
generated $11 billion in net flows for the year. Fixed income net
outflows improved from the prior year, and starting in the second
quarter, we saw investor interest accelerate. In addition, the
successful execution of our regionally focused distribution
strategy resulted in positive net flows for the fourth quarter for
our non-US regions and a significant improvement in long-term net
outflows for the fiscal year. Our Asia-Pacific region generated
positive long-term net flows for the fiscal year, and our EMEA
region turned positive in the second half of fiscal 2023.
“One of our strategic priorities has been to increase our scale
in key segments of the industry reflecting long-term client demand.
In this pursuit to offer more choice to more clients, we closed the
acquisition of Alcentra, a leading European credit manager,
doubling our alternative credit assets under management (“AUM’).
Firmwide alternative AUM increased by over 13% to $255 billion from
the prior year, making Franklin Templeton one of the largest
managers of alternative assets. Furthermore, we were pleased to
announce the pending acquisition of Putnam Investments with $136
billion of AUM and our relationship with Power Corporation and
Great-West Lifeco, strengthening our presence in the retirement and
insurance segments. The transaction will enable us to further
increase our investment in these key sectors to better serve all
our clients and remains on track to close in the fourth quarter of
calendar 2023.
“While continuing to invest in long-term growth initiatives, we
also continued to strengthen the foundation of our business through
disciplined expense management and operational efficiencies. Our
balance sheet gives us the financial flexibility to continue to
grow our business. We ended the fiscal year with $6.9 billion of
cash and investments, after funding acquisitions and returning $870
million to shareholders through dividends and share
repurchases.
“Finally, I would like to thank our dedicated employees around
the world for all their efforts this past year to grow our business
by always putting our clients first in a continuously evolving
industry. It is their hard work and innovative spirit that
positions Franklin Templeton well for future success.”
Quarter Ended
% Change Qtr. vs.
Qtr.
Quarter Ended
% Change Year vs.
Year
Fiscal Year Ended September
30,
% Change
30-Sep-23
30-Jun-23
30-Sep-22
2023
2022
Financial Results
(in millions, except per share data)
Operating revenues
$
1,986.1
$
1,969.0
1
%
$
1,939.0
2
%
$
7,849.4
$
8,275.3
(5
%)
Operating income
338.3
314.9
7
%
348.5
(3
%)
1,102.3
1,773.9
(38
%)
Operating margin
17.0
%
16.0
%
18.0
%
14.0
%
21.4
%
Net income1
$
295.5
$
227.5
30
%
$
232.7
27
%
$
882.8
$
1,291.9
(32
%)
Diluted earnings per share
0.58
0.44
32
%
0.46
26
%
1.72
2.53
(32
%)
As adjusted
(non-GAAP):2
Adjusted operating income
$
511.7
$
476.8
7
%
$
494.1
4
%
$
1,823.8
$
2,323.5
(22
%)
Adjusted operating margin
32.4
%
30.5
%
32.2
%
29.9
%
35.9
%
Adjusted net income
$
427.0
$
326.1
31
%
$
394.4
8
%
$
1,332.2
$
1,855.6
(28
%)
Adjusted diluted earnings per share
0.84
0.63
33
%
0.78
8
%
2.60
3.63
(28
%)
Assets Under Management
(in billions)
Ending
$
1,374.2
$
1,431.5
(4
%)
$
1,297.4
6
%
$
1,374.2
$
1,297.4
6
%
Average3
1,419.1
1,419.6
0
%
1,373.6
3
%
1,400.4
1,469.2
(5
%)
Long-term net flows
(6.9
)
0.2
(20.4
)
(21.3
)
(27.8
)
Total AUM were $1,374.2 billion at September 30, 2023, down
$57.3 billion or 4% during the quarter due to the negative impact
of $48.8 billion of net market change, distributions, and other,
$6.9 billion of long-term net outflows, and $1.6 billion of cash
management net outflows. AUM increased $76.8 billion or 6% during
the fiscal year due to the positive impact of $58.9 billion of net
market change, distributions and other, $34.9 billion from an
acquisition, and $4.3 billion of cash management net inflows,
partially offset by $21.3 billion of long-term net outflows.
Cash and cash equivalents and investments were $5.9 billion and,
including the Company’s direct investments in consolidated
investment products, were $6.9 billion4 at September 30, 2023.
Total stockholders’ equity was $12.5 billion and the Company had
495.9 million shares of common stock outstanding at September 30,
2023. The Company repurchased 7.0 million shares of its common
stock for a total cost of $187.6 million during the quarter ended
September 30, 2023.
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 10:00 a.m. Eastern Time to answer
questions. Access to the teleconference will be available via
investors.franklinresources.com or by dialing (+1) (888) 396-8049
in North America or (+1) (416) 764-8646 in other locations using
access code 23594627. 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 594627# after
2:00 p.m. Eastern Time on October 31, 2023 through November 7,
2023, 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 written commentary.
FRANKLIN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF
INCOME
Unaudited
Three Months Ended September
30,
%
Twelve Months Ended
September 30,
%
(in millions, except per share data)
2023
2022
Change
2023
2022
Change
Operating Revenues
Investment management fees
$
1,634.4
$
1,571.0
4
%
$
6,452.9
$
6,616.8
(2
%)
Sales and distribution fees
306.4
311.0
(1
%)
1,203.7
1,415.0
(15
%)
Shareholder servicing fees
37.2
46.2
(19
%)
152.7
193.0
(21
%)
Other
8.1
10.8
(25
%)
40.1
50.5
(21
%)
Total operating revenues
1,986.1
1,939.0
2
%
7,849.4
8,275.3
(5
%)
Operating Expenses
Compensation and benefits
826.3
768.0
8
%
3,494.0
3,089.8
13
%
Sales, distribution and marketing
411.1
412.8
0
%
1,613.1
1,845.6
(13
%)
Information systems and technology
128.3
123.6
4
%
505.0
500.2
1
%
Occupancy
57.8
55.8
4
%
228.9
218.9
5
%
Amortization of intangible assets
86.5
81.5
6
%
341.1
282.0
21
%
General, administrative and other
137.8
148.8
(7
%)
565.0
564.9
0
%
Total operating expenses
1,647.8
1,590.5
4
%
6,747.1
6,501.4
4
%
Operating Income
338.3
348.5
(3
%)
1,102.3
1,773.9
(38
%)
Other Income (Expenses)
Investment and other income (losses),
net
72.1
(6.6
)
NM
340.0
91.1
273
%
Interest expense
(24.4
)
(27.1
)
(10
%)
(123.7
)
(98.2
)
26
%
Investment and other income (losses) of
consolidated investment products, net
40.5
(51.0
)
NM
115.8
(17.7
)
NM
Expenses of consolidated investment
products
(3.0
)
(9.6
)
(69
%)
(18.7
)
(19.7
)
(5
%)
Other income (expenses), net
85.2
(94.3
)
NM
313.4
(44.5
)
NM
Income before taxes
423.5
254.2
67
%
1,415.7
1,729.4
(18
%)
Taxes on income
75.0
48.5
55
%
312.3
396.2
(21
%)
Net income
348.5
205.7
69
%
1,103.4
1,333.2
(17
%)
Less: net income (loss) attributable
to
Redeemable noncontrolling interests
27.0
3.3
718
%
135.5
(46.9
)
NM
Nonredeemable noncontrolling interests
26.0
(30.3
)
NM
85.1
88.2
(4
%)
Net Income Attributable to Franklin
Resources, Inc.
$
295.5
$
232.7
27
%
$
882.8
$
1,291.9
(32
%)
Earnings per Share
Basic
$
0.58
$
0.46
26
%
$
1.72
$
2.53
(32
%)
Diluted
0.58
0.46
26
%
1.72
2.53
(32
%)
Dividends Declared per Share
$
0.30
$
0.29
3
%
$
1.20
$
1.16
3
%
Average Shares Outstanding
Basic
489.2
487.7
0
%
490.0
488.7
0
%
Diluted
490.0
488.2
0
%
490.8
489.3
0
%
Operating Margin
17.0
%
18.0
%
14.0
%
21.4
%
FRANKLIN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF
INCOME
Unaudited
Three Months Ended
%
Three Months Ended
(in millions, except per share data)
30-Sep-23
30-Jun-23
Change
31-Mar-23
31-Dec-22
30-Sep-22
Operating Revenues
Investment management fees
$
1,634.4
$
1,613.4
1
%
$
1,573.3
$
1,631.8
$
1,571.0
Sales and distribution fees
306.4
304.0
1
%
301.4
291.9
311.0
Shareholder servicing fees
37.2
38.8
(4
%)
43.3
33.4
46.2
Other
8.1
12.8
(37
%)
9.2
10.0
10.8
Total operating revenues
1,986.1
1,969.0
1
%
1,927.2
1,967.1
1,939.0
Operating Expenses
Compensation and benefits
826.3
841.2
(2
%)
847.3
979.2
768.0
Sales, distribution and marketing
411.1
406.8
1
%
406.6
388.6
412.8
Information systems and technology
128.3
127.3
1
%
128.0
121.4
123.6
Occupancy
57.8
56.9
2
%
59.7
54.5
55.8
Amortization of intangible assets
86.5
85.4
1
%
86.0
83.2
81.5
General, administrative and other
137.8
136.5
1
%
144.5
146.2
148.8
Total operating expenses
1,647.8
1,654.1
0
%
1,672.1
1,773.1
1,590.5
Operating Income
338.3
314.9
7
%
255.1
194.0
348.5
Other Income (Expenses)
Investment and other income (losses),
net
72.1
51.2
41
%
125.6
91.1
(6.6
)
Interest expense
(24.4
)
(34.9
)
(30
%)
(33.5
)
(30.9
)
(27.1
)
Investment and other income (losses) of
consolidated investment products, net
40.5
1.7
NM
87.2
(13.6
)
(51.0
)
Expenses of consolidated investment
products
(3.0
)
(0.8
)
275
%
(3.4
)
(11.5
)
(9.6
)
Other income (expenses), net
85.2
17.2
395
%
175.9
35.1
(94.3
)
Income before taxes
423.5
332.1
28
%
431.0
229.1
254.2
Taxes on income
75.0
84.1
(11
%)
92.9
60.3
48.5
Net income
348.5
248.0
41
%
338.1
168.8
205.7
Less: net income (loss) attributable
to
Redeemable noncontrolling interests
27.0
26.8
1
%
83.2
(1.5
)
3.3
Nonredeemable noncontrolling interests
26.0
(6.3
)
NM
60.7
4.7
(30.3
)
Net Income Attributable to Franklin
Resources, Inc.
$
295.5
$
227.5
30
%
$
194.2
$
165.6
$
232.7
Earnings per Share
Basic
$
0.58
$
0.44
32
%
$
0.38
$
0.32
$
0.46
Diluted
0.58
0.44
32
%
0.38
0.32
0.46
Dividends Declared per Share
$
0.30
$
0.30
0
%
$
0.30
$
0.30
$
0.29
Average Shares Outstanding
Basic
489.2
490.7
0
%
490.7
489.6
487.7
Diluted
490.0
491.4
0
%
491.4
490.2
488.2
Operating Margin
17.0
%
16.0
%
13.2
%
9.9
%
18.0
%
AUM AND FLOWS
Three Months Ended
September 30,
%
Twelve Months Ended
September 30,
%
(in billions)
2023
2022
Change
2023
2022
Change
Beginning AUM
$
1,431.5
$
1,379.8
4
%
$
1,297.4
$
1,530.1
(15
%)
Long-term inflows
55.2
59.9
(8
%)
254.9
320.4
(20
%)
Long-term outflows
(62.1
)
(80.3
)
(23
%)
(276.2
)
(348.2
)
(21
%)
Long-term net flows
(6.9
)
(20.4
)
(66
%)
(21.3
)
(27.8
)
(23
%)
Cash management net flows
(1.6
)
0.1
NM
4.3
(0.8
)
NM
Total net flows
(8.5
)
(20.3
)
(58
%)
(17.0
)
(28.6
)
(41
%)
Acquisitions
—
—
NM
34.9
64.9
(46
%)
Net market change, distributions and
other5
(48.8
)
(62.1
)
(21
%)
58.9
(269.0
)
NM
Ending AUM
$
1,374.2
$
1,297.4
6
%
$
1,374.2
$
1,297.4
6
%
Average AUM
$
1,419.1
$
1,373.6
3
%
$
1,400.4
$
1,469.2
(5
%)
AUM BY ASSET CLASS
(in billions)
30-Sep-23
30-Jun-23
% Change
31-Mar-23
31-Dec-22
30-Sep-22
Fixed Income
$
483.1
$
505.1
(4
%)
$
510.1
$
494.8
$
490.9
Equity
430.4
458.0
(6
%)
437.1
419.1
392.3
Alternative
254.9
257.2
(1
%)
258.2
257.4
225.1
Multi-Asset
145.0
148.3
(2
%)
146.1
141.4
131.5
Cash Management
60.8
62.9
(3
%)
70.6
75.0
57.6
Total AUM
$
1,374.2
$
1,431.5
(4
%)
$
1,422.1
$
1,387.7
$
1,297.4
Average AUM for the Three-Month
Period
$
1,419.1
$
1,419.6
0
%
$
1,419.5
$
1,353.5
$
1,373.6
AUM BY SALES REGION
(in billions)
30-Sep-23
30-Jun-23
% Change
31-Mar-23
31-Dec-22
30-Sep-22
United States
$
979.9
$
1,026.0
(4
%)
$
1,017.1
$
993.1
$
971.3
International
Europe, Middle East and Africa
156.0
162.0
(4
%)
159.9
156.4
126.6
Asia-Pacific
126.7
129.6
(2
%)
127.7
123.4
118.4
Americas, excl. U.S.
111.6
113.9
(2
%)
117.4
114.8
81.1
Total international
394.3
405.5
(3
%)
405.0
394.6
326.1
Total
$
1,374.2
$
1,431.5
(4
%)
$
1,422.1
$
1,387.7
$
1,297.4
AUM AND FLOWS BY ASSET CLASS
(in billions)
for the three months ended
September 30, 2023
Fixed Income
Equity
Alternative
Multi-Asset
Cash Management
Total
AUM at July 1, 2023
$
505.1
$
458.0
$
257.2
$
148.3
$
62.9
$
1,431.5
Long-term inflows
26.2
17.1
3.9
8.0
—
55.2
Long-term outflows
(27.8
)
(24.8
)
(3.1
)
(6.4
)
—
(62.1
)
Long-term net flows
(1.6
)
(7.7
)
0.8
1.6
—
(6.9
)
Cash management net flows
—
—
—
—
(1.6
)
(1.6
)
Total net flows
(1.6
)
(7.7
)
0.8
1.6
(1.6
)
(8.5
)
Net market change, distributions and
other5
(20.4
)
(19.9
)
(3.1
)
(4.9
)
(0.5
)
(48.8
)
AUM at September 30, 2023
$
483.1
$
430.4
$
254.9
$
145.0
$
60.8
$
1,374.2
(in billions)
for the three months ended June
30, 2023
Fixed Income
Equity
Alternative
Multi-Asset
Cash Management
Total
AUM at April 1, 2023
$
510.1
$
437.1
$
258.2
$
146.1
$
70.6
$
1,422.1
Long-term inflows
26.5
23.0
7.3
10.6
—
67.4
Long-term outflows
(29.6
)
(26.0
)
(3.3
)
(8.3
)
—
(67.2
)
Long-term net flows
(3.1
)
(3.0
)
4.0
2.3
—
0.2
Cash management net flows
—
—
—
—
(7.3
)
(7.3
)
Total net flows
(3.1
)
(3.0
)
4.0
2.3
(7.3
)
(7.1
)
Net market change, distributions and
other5
(1.9
)
23.9
(5.0
)
(0.1
)
(0.4
)
16.5
AUM at June 30, 2023
$
505.1
$
458.0
$
257.2
$
148.3
$
62.9
$
1,431.5
(in billions)
for the three months ended
September 30, 2022
Fixed
Income
Equity
Alternative
Multi-Asset
Cash
Management
Total
AUM at July 1, 2022
$
536.3
$
424.9
$
224.8
$
136.2
$
57.6
$
1,379.8
Long-term inflows
26.2
22.6
5.8
5.3
—
59.9
Long-term outflows
(42.3
)
(28.6
)
(4.6
)
(4.8
)
—
(80.3
)
Long-term net flows
(16.1
)
(6.0
)
1.2
0.5
—
(20.4
)
Cash management net flows
—
—
—
—
0.1
0.1
Total net flows
(16.1
)
(6.0
)
1.2
0.5
0.1
(20.3
)
Net market change, distributions and
other5
(29.3
)
(26.6
)
(0.9
)
(5.2
)
(0.1
)
(62.1
)
AUM at September 30, 2022
$
490.9
$
392.3
$
225.1
$
131.5
$
57.6
$
1,297.4
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.
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:
Three Months Ended
Twelve Months Ended
(in millions)
30-Sep-23
30-Jun-23
30-Sep-22
30-Sep-23
30-Sep-22
Operating income
$
338.3
$
314.9
$
348.5
$
1,102.3
$
1,773.9
Add (subtract):
Elimination of operating revenues upon
consolidation of investment products*
11.2
12.1
9.7
37.5
48.2
Acquisition-related retention
56.8
21.3
48.8
164.9
167.2
Compensation and benefits expense from
gains (losses) on deferred compensation, net
(6.0
)
10.1
(6.3
)
20.3
(36.7
)
Other acquisition-related expenses
4.9
8.7
1.8
50.2
60.7
Amortization of intangible assets
86.5
85.4
81.5
341.1
282.0
Special termination benefits
8.3
12.2
0.4
63.2
8.2
Compensation and benefits expense related
to minority interests in certain subsidiaries
11.7
12.1
9.7
44.3
20.0
Adjusted operating income
$
511.7
$
476.8
$
494.1
$
1,823.8
$
2,323.5
Total operating revenues
$
1,986.1
$
1,969.0
$
1,939.0
$
7,849.4
$
8,275.3
Add (subtract):
Acquisition-related pass through
performance fees
(5.6
)
(11.6
)
(3.8
)
(169.7
)
(4.2
)
Sales and distribution fees
(306.4
)
(304.0
)
(311.0
)
(1,203.7
)
(1,415.0
)
Allocation of investment management fees
for sales, distribution and marketing expenses
(104.7
)
(102.8
)
(101.8
)
(409.4
)
(430.6
)
Elimination of operating revenues upon
consolidation of investment products*
11.2
12.1
9.7
37.5
48.2
Adjusted operating revenues
$
1,580.6
$
1,562.7
$
1,532.1
$
6,104.1
$
6,473.7
Operating margin
17.0
%
16.0
%
18.0
%
14.0
%
21.4
%
Adjusted operating margin
32.4
%
30.5
%
32.2
%
29.9
%
35.9
%
Three Months Ended
Twelve Months Ended
(in millions, except per share data)
30-Sep-23
30-Jun-23
30-Sep-22
30-Sep-23
30-Sep-22
Net income attributable to Franklin
Resources, Inc.
$
295.5
$
227.5
$
232.7
$
882.8
$
1,291.9
Add (subtract):
Net (income) loss of consolidated
investment products*
1.6
1.5
(3.5
)
8.0
(0.2
)
Acquisition-related retention
56.8
21.3
48.8
164.9
167.2
Other acquisition-related expenses
8.9
12.7
7.9
70.4
73.3
Amortization of intangible assets
86.5
85.4
81.5
341.1
282.0
Special termination benefits
8.3
12.2
0.4
63.2
8.2
Net (gains) losses on deferred
compensation plan investments not offset by compensation and
benefits expense
(1.4
)
(0.5
)
0.4
(15.5
)
9.0
Unrealized investment (gains) losses
20.6
9.4
74.1
(2.6
)
191.9
Interest expense for amortization of debt
premium
(6.4
)
(6.3
)
(6.3
)
(25.4
)
(25.2
)
Net compensation and benefits expense
related to minority interests in certain subsidiaries not offset by
net income (loss) attributable to redeemable noncontrolling
interests
1.0
(1.0
)
0.9
0.1
1.4
Net income tax expense of adjustments
(44.4
)
(36.1
)
(42.5
)
(154.8
)
(143.9
)
Adjusted net income
$
427.0
$
326.1
$
394.4
$
1,332.2
$
1,855.6
Diluted earnings per share
$
0.58
$
0.44
$
0.46
$
1.72
$
2.53
Adjusted diluted earnings per
share
0.84
0.63
0.78
2.60
3.63
__________________
*
The impact of CIPs is summarized as
follows:
Three Months Ended
Twelve Months Ended
(in millions)
30-Sep-23
30-Jun-23
30-Sep-22
30-Sep-23
30-Sep-22
Elimination of operating revenues upon
consolidation
$
(11.2
)
$
(12.1
)
$
(9.7
)
$
(37.5
)
$
(48.2
)
Other income (expenses), net
21.4
7.3
(24.6
)
88.8
24.2
Less: income (loss) attributable to
noncontrolling interests
11.8
(3.3
)
(37.8
)
59.3
(24.2
)
Net income (loss)
$
(1.6
)
$
(1.5
)
$
3.5
$
(8.0
)
$
0.2
Notes
- Net income represents net income 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 $1.0 billion,
approximately $300 million of employee-owned and other third-party
investments made through partnerships, and approximately $380
million of investments that are subject to long-term repurchase
agreements and other financing arrangements. Excludes $800 million
undrawn revolving credit facility.
- 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 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 1,300 investment
professionals, and offices in major financial markets around the
world, the California-based company has over 75 years of investment
experience and approximately $1.4 trillion in AUM as of September
30, 2023. 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,” “preliminary,” “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, 2022 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/20231030913728/en/
Franklin Resources, Inc. Investor Relations: Selene Oh (650)
312-4091, selene.oh@franklintempleton.com Media Relations: Matt
Walsh (650) 312-2245, matthew.walsh@franklintempleton.com
investors.franklinresources.com
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