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Franklin Resources, Inc. Announces Second Quarter Results

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Franklin Resources, Inc. (the “Company”) [NYSE: BEN] today announced net income1 of $381.8 million or $0.74 per diluted share for the quarter ended March 31, 2021, as compared to $345.3 million or $0.67 per diluted share for the previous quarter, and $79.1 million or $0.16 per diluted share for the quarter ended March 31, 2020. Operating income2 was $456.3 million for the quarter ended March 31, 2021, as compared to $409.1 million for the previous quarter and $339.9 million in 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.3 Adjusted net income3 was $403.5 million and adjusted diluted earnings per share3 was $0.79 for the quarter ended March 31, 2021, as compared to $373.4 million and $0.73 for the previous quarter, and $332.8 million and $0.66 for the quarter ended March 31, 2020. Adjusted operating income3 was $581.1 million for the quarter ended March 31, 2021, as compared to $549.9 million for the previous quarter and $385.9 million in the prior year.

“We are pleased with our continued progress during our second fiscal quarter,” said Jenny Johnson, President and CEO of Franklin Resources, Inc. “After only two quarters as a combined firm, we are experiencing organic growth in a number of key areas, and we are encouraged and excited by our collective potential. Notably, we’re seeing strong performance and momentum across a broad base of investment strategies. Our expanded distribution effort drove an increase in gross sales of 32% from the prior quarter from an array of funds, vehicles and asset classes, led by U.S. retail.

“This quarter, we saw positive net flows into Benefit Street Partners, Clarion Partners, ClearBridge, Fiduciary Trust International, Franklin Equity Group, Franklin Templeton Fixed Income, Martin Currie, Royce and Western Asset. Alternative asset inflows of $6.2 billion nearly doubled from the prior quarter, with record net inflows of $2.9 billion, driven primarily by our real estate, alternative credit, hedge fund and infrastructure strategies. We now have $131 billion in alternative assets under management. Fixed income inflows increased by 27% from the prior quarter to $53.5 billion, driven by a diverse group of fixed income strategies, including core bond, core plus and corporates.

“We’ve created a differentiated global investment management firm which balances scale and specialization and offers expanded opportunities for our shareholders, clients and employees, as well as the financial professionals with whom we partner. Our financial results reflect meaningful progress, and our balance sheet continues to provide strong financial flexibility. I could not be prouder of our employees who demonstrate on a daily basis their professionalism, work ethic and resilience, and are squarely focused on helping our clients around the world achieve the most important milestones of their lives.”

 

 

Quarter Ended

 

% Change

 

Quarter Ended

 

% Change

 

 

31-Mar-21

 

31-Dec-20

 

Qtr. vs. Qtr.

31-Mar-20

 

Year vs. Year

Financial Results2

 

 

 

 

 

 

 

 

 

(in millions, except per share data)

 

 

 

 

 

 

 

 

 

Operating revenues

 

$

2,076.5

 

 

$

1,995.1

 

 

4

%

$

1,311.2

 

 

58

%

Operating income

 

456.3

 

 

409.1

 

 

12

%

339.9

 

 

34

%

Operating margin

 

22.0

%

 

20.5

%

 

 

25.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Net income1

 

$

381.8

 

 

$

345.3

 

 

11

%

$

79.1

 

 

383

%

Diluted earnings per share

 

0.74

 

 

0.67

 

 

10

%

0.16

 

 

363

%

 

 

 

 

 

 

 

 

 

 

As adjusted (non-GAAP):3

 

 

 

 

 

 

 

 

 

Adjusted operating income

 

$

581.1

 

 

$

549.9

 

 

6

%

$

385.9

 

 

51

%

Adjusted operating margin

 

38.0

%

 

37.2

%

 

 

43.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income

 

$

403.5

 

 

$

373.4

 

 

8

%

$

332.8

 

 

21

%

Adjusted diluted earnings per share

 

0.79

 

 

0.73

 

 

8

%

0.66

 

 

20

%

 

 

 

 

 

 

 

 

 

 

Assets Under Management

 

 

 

 

 

 

 

 

 

(in billions)

 

 

 

 

 

 

 

 

 

Ending

 

$

1,498.9

 

 

$

1,498.0

 

 

0

%

$

580.3

 

 

158

%

Average4

 

1,497.9

 

 

1,443.8

 

 

4

%

655.8

 

 

128

%

Long-term net flows

 

(4.2

)

 

(4.5

)

 

 

(25.4

)

 

 

Total assets under management (“AUM”) were $1,498.9 billion at March 31, 2021, up $0.9 billion during the quarter due to $3.9 billion of net market change, distributions and other and $1.2 billion of cash management net inflows, partially offset by $4.2 billion of long-term net outflows.

Cash and cash equivalents and investments were $5.2 billion at March 31, 2021, as compared to $4.3 billion at September 30, 2020. Including the Company’s direct investments in consolidated investment products, cash and cash equivalents and investments were $6.2 billion at March 31, 2021, as compared to $5.1 billion at September 30, 2020. Total stockholders’ equity was $11.7 billion at March 31, 2021, as compared to $11.0 billion at September 30, 2020. The Company had 504.3 million shares of common stock outstanding at March 31, 2021, as compared to 495.1 million shares outstanding at September 30, 2020. The Company repurchased 1.7 million shares of its common stock for a total cost of $45.8 million during the quarter ended March 31, 2021.

Conference Call Information

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

Ms. Johnson and Messrs. Johnson, Nicholls and Spector will also lead a live teleconference today at 10:00 a.m. Eastern Time to answer questions of a material nature. Access to the teleconference will be available via investors.franklinresources.com or by dialing (833) 350-1245 in the U.S. and Canada or (236) 712-2205 internationally. A replay of the teleconference can also be accessed by calling (800) 585-8367 in the U.S. and Canada or (416) 621-4642 internationally using access code 3991013, after 1:00 p.m. Eastern Time on May 4, 2021 through May 11, 2021, or via investors.franklinresources.com.

Analysts and investors are encouraged to review the Company’s recent filings with the U.S. Securities and Exchange Commission and to contact Investor Relations at (650) 312-4091 before the live teleconference for any clarifications or questions related to the earnings release or commentary.

FRANKLIN RESOURCES, INC.

CONSOLIDATED STATEMENTS OF INCOME2

Unaudited

(in millions, except per share data)

 

Three Months Ended

March 31,

 

%

Change

 

Six Months Ended

March 31,

 

%

Change

 

2021

 

2020

 

 

2021

 

2020

 

Operating Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Investment management fees

 

$

1,598.4

 

 

$

908.2

 

 

76

%

 

$

3,138.8

 

 

$

1,887.9

 

 

66

%

Sales and distribution fees

 

413.6

 

 

341.7

 

 

21

%

 

810.5

 

 

693.2

 

 

17

%

Shareholder servicing fees

 

55.7

 

 

54.8

 

 

2

%

 

105.1

 

 

104.8

 

 

0

%

Other

 

8.8

 

 

6.5

 

 

35

%

 

17.2

 

 

14.5

 

 

19

%

Total operating revenues

 

2,076.5

 

 

1,311.2

 

 

58

%

 

4,071.6

 

 

2,700.4

 

 

51

%

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

732.3

 

 

365.7

 

 

100

%

 

1,457.8

 

 

755.1

 

 

93

%

Sales, distribution and marketing

 

541.8

 

 

423.9

 

 

28

%

 

1,048.3

 

 

867.8

 

 

21

%

Information systems and technology

 

117.5

 

 

61.8

 

 

90

%

 

234.0

 

 

124.3

 

 

88

%

Occupancy

 

53.8

 

 

34.4

 

 

56

%

 

109.5

 

 

68.9

 

 

59

%

Amortization of intangible assets

 

57.9

 

 

4.4

 

 

NM

 

 

116.1

 

 

9.2

 

 

NM

 

General, administrative and other

 

116.9

 

 

81.1

 

 

44

%

 

240.5

 

 

162.3

 

 

48

%

Total operating expenses

 

1,620.2

 

 

971.3

 

 

67

%

 

3,206.2

 

 

1,987.6

 

 

61

%

Operating Income

 

456.3

 

 

339.9

 

 

34

%

 

865.4

 

 

712.8

 

 

21

%

Other Income (Expenses)

 

 

 

 

 

 

 

 

 

 

 

 

Investment and other income (losses), net

 

67.1

 

 

(181.0)

 

 

NM

 

 

144.3

 

 

(113.1

)

 

NM

 

Interest expense

 

(15.9

)

 

(3.7

)

 

330

%

 

(45.6

)

 

(9.8

)

 

365

%

Investment and other income (losses) of consolidated investment products, net

 

111.2

 

 

(40.9

)

 

NM

 

 

202.3

 

 

(25.7

)

 

NM

 

Expenses of consolidated investment products

 

(5.2

)

 

(11.4

)

 

(54

%)

 

(15.6

)

 

(15.7

)

 

(1

%)

Other income (expenses), net

 

157.2

 

 

(237.0

)

 

NM

 

 

285.4

 

 

(164.3

)

 

NM

 

Income before taxes

 

613.5

 

 

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Franklin Resources, Inc.

NYSE:BEN

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franklin resources, inc. [nyse:ben] is a global investment management organization with subsidiaries operating as franklin templeton (www.franklinresources.com). the products, services, information and materials referenced in this site may not be available to residents in certain jurisdictions. consult with an investment professional or contact your local franklin templeton office for more information. this site and the information contained herein is not intended to constitute an offer to sell or an invitation or solicitation of an offer to buy any product or service by franklin templeton. nothing in this website should be construed as investment, tax, legal or other advice. all investments involve risks, including potential loss of principal.linkedin is owned by a third party unaffiliated with us. we are not responsible for linkedin’s privacy, security, or terms of use policies that control this service, nor their content, software, or tools (or those of any third party’s) that are