Franklin Resources, Inc. Announces Second Quarter Results
SAN MATEO, Calif.--(BUSINESS WIRE)--April 29, 2024--
Franklin Resources, Inc. (the “Company”) (NYSE: BEN) today announced net income(1) 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 income(2) was $306.6 million and adjusted diluted earnings per share(2) 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 income(2) 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(R) 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.”
Quarter
Quarter Ended % Change Ended % Change
-------------------------- ------------
Qtr. vs. Year vs.
31-Mar-24 31-Dec-23 Qtr. 31-Mar-23 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 income(1) $ 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%
Average(4) 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 billion(5) 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 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
Three Months Ended Six Months Ended
March 31, March 31,
------------------ -------------------------- ---- -------------------------- ----
(in millions,
except per share % %
data) 2024 2023(6) Change 2024 2023(6) Change
------------------ ------- ------- -------- ------- ------- --------
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%)