Franklin Resources, Inc. (NYSE:BEN) Q1 2024 Earnings Conference Call January 29, 2024 11:00 AM ET Company Participants Selene Oh - Chief Communications Officer and Head of Investor Relations Jennifer Johnson - President and Chief Executive Officer Matthew Nicholls - Chief Financial Officer and Chief Operating Officer Adam Spector - Head of Global Distribution Conference Call Participants Alexander Blostein - Goldman Sachs Craig Siegenthaler - Bank of America William Katz - TD Cowen Daniel Fannon - Jefferies ...

Franklin Resources (BEN) reported $1.99 billion in revenue for the quarter ended December 2023, representing a year-over-year increase of 1.2%. EPS of $0.65 for the same period compares to $0.51 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $1.91 billion, representing a surprise of +4.11%. The company delivered an EPS surprise of +14.04%, with the consensus EPS estimate being $0.57.While investors scrutinize revenue and earnings changes year-over-year and how they compare with ...

Franklin Resources (BEN) came out with quarterly earnings of $0.65 per share, beating the Zacks Consensus Estimate of $0.57 per share. This compares to earnings of $0.51 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 14.04%. A quarter ago, it was expected that this investment manager would post earnings of $0.60 per share when it actually produced earnings of $0.84, delivering a surprise of 40%.Over the last four quarters, th ...

SAN MATEO, Calif.--(BUSINESS WIRE)--Franklin Resources, Inc. (the “Company”) [NYSE: BEN] today announced net income1 of $251.3 million or $0.50 per diluted share for the quarter ended December 31, 2023, as compared to $295.5 million or $0.58 per diluted share for the previous quarter, and $165.6 million or $0.32 per diluted share for the quarter ended December 31, 2022. Operating income was $206.5 million for the quarter ended December 31, 2023, as compared to $338.3 million for the previous quarter and $19 ...

[PART I Financial Information](index=4&type=section&id=PART%20I%20Financial%20Information) This section presents the company's unaudited consolidated financial statements and management's discussion and analysis for the period ended December 31, 2023 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for the three months ended December 31, 2023, including income, balance sheets, equity, and cash flows, showing increased net income and diluted EPS [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) This table presents the company's unaudited consolidated statements of income, highlighting key revenue, income, and EPS figures for the period Consolidated Statements of Income Highlights (Unaudited) | Metric | Three Months Ended Dec 31, 2023 (in millions) | Three Months Ended Dec 31, 2022 (in millions) | | :--- | :--- | :--- | | **Total operating revenues** | $1,991.1 | $1,967.1 | | **Operating Income** | $206.5 | $194.0 | | **Net Income Attributable to Franklin Resources, Inc.** | $251.3 | $165.6 | | **Diluted Earnings per Share** | $0.50 | $0.32 | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) This table presents the company's unaudited consolidated balance sheets, detailing assets, liabilities, and equity at period end Consolidated Balance Sheet Highlights (Unaudited) | Metric | December 31, 2023 (in millions) | September 30, 2023 (in millions) | | :--- | :--- | :--- | | **Total Assets** | $29,865.8 | $30,121.2 | | **Total Liabilities** | $16,149.7 | $16,547.3 | | **Total Stockholders' Equity** | $12,637.6 | $12,547.8 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This table presents the company's unaudited consolidated statements of cash flows, summarizing cash movements from operating, investing, and financing activities Consolidated Cash Flow Highlights (Unaudited) | Cash Flow Activity | Three Months Ended Dec 31, 2023 (in millions) | Three Months Ended Dec 31, 2022 (in millions) | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(251.9) | $(256.3) | | **Net cash used in investing activities** | $(137.6) | $(1,042.6) | | **Net cash (used in) provided by financing activities** | $(159.0) | $958.9 | | **Decrease in cash and cash equivalents** | $(522.8) | $(280.3) | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed notes to the consolidated financial statements, including revenue breakdown, lease commitments, and subsequent events - Revenues from sponsored funds constituted **83% of total operating revenues** for the three months ended December 31, 2023 and 2022[26](index=26&type=chunk) - On November 1, 2023, the Company took possession of new office space in New York City, recognizing an operating lease right-of-use asset and liability of **$396.6 million** for a lease over sixteen years with an aggregate commitment of **$707.3 million**[49](index=49&type=chunk) - Subsequent to the quarter end, on January 1, 2024, the Company acquired Putnam Investments from Great-West Lifeco Inc. for **31.6 million shares** of its common stock, approximately **$220 million in cash** at closing, and **$100.0 million in deferred cash consideration**[52](index=52&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting a 6% quarter-over-quarter increase in Assets Under Management (AUM) to $1.456 trillion, driven by positive market performance, and a 6% YoY rise in operating income to $206.5 million [Overview](index=20&type=section&id=Overview) This section provides an overview of the company's financial performance, including AUM growth and the acquisition of Putnam Investments - Total Assets Under Management (AUM) reached **$1,455.5 billion** at December 31, 2023, a **6% increase** from September 30, 2023, and a **5% increase** from December 31, 2022[63](index=63&type=chunk) - The increase in AUM was supported by positive returns in global equity and bond markets during the quarter, with the S&P 500 Index and MSCI World Index increasing by **11.7%** and **11.5%**, respectively[62](index=62&type=chunk) - On January 1, 2024, the company completed the acquisition of Putnam Investments, a global asset management firm, from Great-West Lifeco Inc[63](index=63&type=chunk) [Assets Under Management](index=22&type=section&id=Assets%20Under%20Management) This section details the company's Assets Under Management (AUM) by asset class and analyzes the changes in AUM components AUM by Asset Class | Asset Class | Dec 31, 2023 (in billions) | Dec 31, 2022 (in billions) | % Change | | :--- | :--- | :--- | :--- | | Fixed Income | $511.7 | $494.8 | 3% | | Equity | $467.5 | $419.1 | 12% | | Alternative | $256.2 | $257.4 | 0% | | Multi-Asset | $154.6 | $141.4 | 9% | | Cash Management | $65.5 | $75.0 | (13%) | | **Total** | **$1,455.5** | **$1,387.7** | **5%** | Change in AUM (Three Months Ended Dec 31, 2023) | Component | Amount (in billions) | | :--- | :--- | | Beginning AUM (Oct 1, 2023) | $1,374.2 | | Long-term net flows | $(5.0) | | Cash management net flows | $4.7 | | **Total net flows** | **$(0.3)** | | Net market change, distributions and other | $81.6 | | **Ending AUM (Dec 31, 2023)** | **$1,455.5** | - For the quarter, the company experienced long-term net outflows of **$5.0 billion**, which included **$10.8 billion of reinvested distributions** This was more than offset by **$81.6 billion** from positive net market change, distributions, and other factors[70](index=70&type=chunk) [Operating Revenues](index=25&type=section&id=Operating%20Revenues) This section analyzes the company's operating revenues, highlighting changes in investment management fees and performance fees - Total operating revenues increased **1% year-over-year** to **$1,991.1 million**, driven by a **1% rise** in investment management fees and a **2% increase** in sales and distribution fees[81](index=81&type=chunk) - Investment management fees rose by **$20.4 million**, primarily due to a **3% increase** in average AUM and higher catch-up fees from a secondary private fund, which offset lower performance fees[82](index=82&type=chunk) - Performance fees decreased to **$166.4 million** from **$209.0 million** in the prior-year period, mainly due to a **$72.0 million decrease** in fees from Lexington Partners L.P., which are passed through as compensation expense[84](index=84&type=chunk) [Operating Expenses](index=26&type=section&id=Operating%20Expenses) This section details the company's operating expenses, focusing on compensation and benefits, occupancy, and general and administrative costs - Total operating expenses increased **1% year-over-year** to **$1,784.6 million**[89](index=89&type=chunk) - Compensation and benefits, the largest expense category, decreased by **1%** to **$968.3 million** This was primarily due to a **$71.9 million decrease** in acquisition-related performance fee pass-through expenses, which offset increases in incentive compensation and salaries[91](index=91&type=chunk)[93](index=93&type=chunk) - Occupancy expenses increased **22%** to **$66.7 million**, mainly due to the new office lease at One Madison Avenue in New York City[99](index=99&type=chunk) - General, administrative and other expenses decreased **10%** to **$132.0 million**, primarily due to a **$14.9 million decrease** in acquisition-related costs compared to the prior year quarter[102](index=102&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquid assets, debt, share repurchase activities, and future cash commitments Liquid Assets and Debt | Metric (in millions) | Dec 31, 2023 | Sep 30, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $3,284.6 | $3,592.8 | | Receivables | $1,175.6 | $1,181.7 | | Investments | $1,130.9 | $1,098.8 | | **Total Liquid Assets** | **$5,591.1** | **$5,873.3** | | **Debt** | **$3,046.9** | **$3,052.8** | - During the quarter, the company repurchased **2.4 million shares** of common stock for **$58.8 million** In December 2023, the Board authorized an additional **27.2 million shares** for repurchase[139](index=139&type=chunk) - The company expects to use cash for deferred consideration payments related to acquisitions, including **$100.0 million** for Putnam in Q3 FY2024, and **$400 million** for Lexington in Q3 FY2024[140](index=140&type=chunk)[141](index=141&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports that there were no material changes from the market risk disclosures presented in its Annual Report on Form 10-K for the fiscal year ended September 30, 2023 - There were no material changes from the market risk disclosures in the Form 10-K for the fiscal year ended September 30, 2023[150](index=150&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the principal executive and financial officers, evaluated the company's disclosure controls and procedures and concluded they were effective as of December 31, 2023, with no material changes in internal control over financial reporting - The Company's principal executive and financial officers concluded that disclosure controls and procedures were **effective** as of December 31, 2023[151](index=151&type=chunk) - No changes occurred during the fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[152](index=152&type=chunk) [PART II Other Information](index=38&type=section&id=PART%20II%20Other%20Information) This section provides updates on legal proceedings, risk factors, equity sales, and a list of exhibits [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company refers to Note 10 in the financial statements for details on legal proceedings, indicating no significant changes from the previous fiscal year-end disclosure - For a description of legal proceedings, the report refers to Note 10 – Commitments and Contingencies in Part I, Item 1 of the Form 10-Q[154](index=154&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) The company states that there have been no material changes from the Risk Factors previously disclosed in its Annual Report on Form 10-K for the fiscal year 2023 - There were no material changes from the Risk Factors previously disclosed in the last Annual Report on Form 10-K for fiscal year 2023[155](index=155&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's common stock repurchases during the three months ended December 31, 2023, totaling 2,423,273 shares, and notes the Board's authorization for an additional 27.2 million shares for repurchase Common Stock Repurchases (Q1 FY2024) | Month | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | October 2023 | 1,240,037 | $23.83 | | November 2023 | 725,713 | $24.16 | | December 2023 | 457,523 | $25.63 | | **Total** | **2,423,273** | **N/A** | - In December 2023, the Board of Directors authorized the repurchase of up to an additional **27.2 million shares**, bringing the total available for repurchase under the program to **40.0 million shares**[157](index=157&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, which are incorporated by reference - The exhibits listed on the Exhibit Index are incorporated by reference into the Form 10-Q[158](index=158&type=chunk)

One stock that might be an intriguing choice for investors right now is Franklin Resources, Inc (BEN) . This is because this security in the Financial - Investment Management space is seeing solid earnings estimate revision activity, and is in great company from a Zacks Industry Rank perspective.This is important because, often times, a rising tide will lift all boats in an industry, as there can be broad trends taking place in a segment that are boosting securities across the board. This is arguably taking ...

Analysts on Wall Street project that Franklin Resources (BEN) will announce quarterly earnings of $0.57 per share in its forthcoming report, representing an increase of 11.8% year over year. Revenues are projected to reach $1.91 billion, declining 2.8% from the same quarter last year.Over the past 30 days, the consensus EPS estimate for the quarter has been adjusted upward by 5.9% to its current level. This demonstrates the covering analysts' collective reassessment of their initial projections during this ...

We are in the initial stage of the fourth-quarter 2023 earnings season. The results so far have shown stability, mostly in line with expectations. The earnings results and management guidance will be crucial for market participants to gauge the health of the U.S. economy.Q4 Earnings So FarAs of Jan 19, 52 companies on the S&P 500 Index have reported their financial numbers. Total earnings for these 52 index members are up 1.4% from the same period last year on 4.8% higher revenues, with 80.8% beating EPS es ...

Wall Street expects a year-over-year increase in earnings on lower revenues when Franklin Resources (BEN) reports results for the quarter ended December 2023. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on Janua ...

A downtrend has been apparent in Franklin Resources (BEN) lately. While the stock has lost 7.1% over the past four weeks, it could witness a trend reversal as a hammer chart pattern was formed in its last trading session. This could mean that the bulls have been able to counteract the bears to help the stock find support.While the formation of a hammer pattern is a technical indication of nearing a bottom with potential exhaustion of selling pressure, rising optimism among Wall Street analysts about the fut ...