Financial Performance - Preliminary net loss for Q4 2024 was $84.7 million or $0.19 per diluted share, compared to net income of $174.0 million or $0.32 per diluted share in the previous quarter[1] - Adjusted net income for Q4 2024 was $315.2 million, down 3% from $326.4 million in the previous quarter and down 26% from $427.0 million year-over-year[6] - Operating income for the quarter was a loss of $150.7 million, a decline from an income of $338.3 million in the same quarter last year[12] - Net income attributable to Franklin Resources, Inc. was a loss of $84.7 million, compared to a profit of $295.5 million in the prior year[12] - Basic earnings per share for the quarter were $(0.19), down from $0.58 in the same quarter of 2023[12] - The operating margin for the quarter was 6.8%, a decrease from 17.0% in the same period last year[12] - The company reported an operating loss of $150.7 million, compared to an operating income of $222.5 million for the previous quarter and $338.3 million for the same quarter last year[38] - The adjusted net income for the three months ended September 30, 2024, was $315.2 million, slightly down from $326.4 million in the previous quarter and down from $427.0 million in the same quarter last year[40] - The diluted earnings per share for the three months ended September 30, 2024, was a loss of $0.19, compared to earnings of $0.32 in the previous quarter and $0.58 in the same quarter last year[40] Assets Under Management (AUM) - Total assets under management (AUM) reached $1.68 trillion, a 2% increase from the previous quarter and a 22% increase year-over-year[6] - Ending AUM as of September 30, 2024, was $1,678.6 billion, representing a 22% increase from $1,374.2 billion year-over-year[14] - Average AUM for the three-month period ended September 30, 2024, was $1,667.5 billion, an 18% increase from $1,419.1 billion year-over-year[14] - AUM by asset class as of September 30, 2024: Equity at $632.1 billion, Fixed Income at $556.4 billion, Alternatives at $249.9 billion, Multi-Asset at $176.2 billion, and Cash Management at $64.0 billion[19] - Total international AUM was $501.5 billion, up 2% from $491.6 billion in the previous quarter[17] - AUM in the United States increased to $1,177.1 billion as of September 30, 2024, from $1,155.0 billion on June 30, 2024[17] - AUM in the Asia-Pacific region was $178.0 billion, reflecting a 2% increase from $174.1 billion in the previous quarter[17] Revenue and Expenses - Total operating revenues for the three months ended September 30, 2024, were $2,211.2 million, an increase of 11% compared to $1,986.1 million in the same period of 2023[12] - Investment management fees rose to $1,766.2 million, reflecting an 8% increase from $1,634.4 million year-over-year[12] - Total operating expenses increased significantly by 43% to $2,361.9 million, compared to $1,647.8 million in the same quarter of 2023[12] - The adjusted operating income for the three months ended September 30, 2024, was $451.6 million, up from $424.9 million in the previous quarter but down from $511.7 million in the same quarter last year[38] Shareholder Information - The company repurchased 4.9 million shares of common stock for a total cost of $102.4 million during Q4 2024[7] - Dividends declared per share increased by 3% to $0.31, compared to $0.30 in the previous year[12] - The company declared dividends of $0.31 per share, unchanged from the previous quarter[13] - Average shares outstanding increased by 6% to 516.2 million, compared to 489.2 million in the same quarter of 2023[12] Market Activity - Long-term inflows for the fiscal year were $319 billion, a 25% increase from the prior year, while long-term net outflows were $32.6 billion[2] - Long-term inflows for the three months ended September 30, 2024, were $82.5 billion, a 49% increase from $55.2 billion in the same period last year[14] - Total net flows for the three months ended September 30, 2024, were $(31.5) billion, a 271% increase in outflows compared to $(8.5) billion in the previous quarter[14] - Long-term net flows for the three months ended September 30, 2024, were $0.8 billion, with long-term inflows of $36.8 billion and outflows of $36.0 billion[19] Strategic Initiatives - The acquisition of Putnam Investments resulted in a 21% increase in AUM to $180 billion and generated approximately $11 billion in positive net flows[4] - The company experienced strong growth in international business, culminating in over $500 billion in AUM[3] - The company has a strategic focus on expanding its investment management capabilities and technology solutions to enhance client outcomes[43] - The company incurred acquisition-related retention expenses of $46.3 million for the three months ended September 30, 2024, compared to $43.7 million in the previous quarter[40] - Other acquisition-related expenses for the three months ended September 30, 2024, were $31.8 million, slightly down from $33.6 million in the previous quarter[38] Impairments - The company reported an impairment of intangible assets amounting to $389.2 million for the twelve months ended September 30, 2024[40]

Franklin Resources, Inc. (NYSE:BEN) Q3 2024 Earnings Conference Call July 26, 2024 11:00 AM ET Company Participants Selene Oh - Chief Communications Officer and Head of Investor Relations Jennifer M. Johnson - President and Chief Executive Officer Matthew Nicholls - Executive Vice President, Chief Financial Officer and Chief Operating Officer Adam B. Spector - Executive Vice President, Head of Global Distribution Conference Call Participants Alex Blostein - Goldman Sachs Brennan Hawken - UBS Craig Siegentha ...

PART I Financial Information [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited consolidated financial statements for Q3 and YTD FY2024 and FY2023, including the Putnam Investments acquisition [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Q3 FY2024 saw operating revenues rise to $2.12 billion, but operating income and net income attributable to Franklin Resources declined | Financial Metric | Three Months Ended June 30, 2024 (in millions) | Three Months Ended June 30, 2023 (in millions) | Nine Months Ended June 30, 2024 (in millions) | Nine Months Ended June 30, 2023 (in millions) | | :--- | :--- | :--- | :--- | :--- | | **Total operating revenues** | $2,122.9 | $1,969.0 | $6,266.8 | $5,863.3 | | **Operating Income** | $222.5 | $314.9 | $558.3 | $764.0 | | **Net Income Attributable to Franklin Resources, Inc.** | $174.0 | $227.5 | $549.5 | $587.3 | | **Diluted Earnings per Share** | $0.32 | $0.44 | $1.03 | $1.14 | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to $33.25 billion by June 30, 2024, driven by the Putnam acquisition, with a corresponding rise in liabilities | Balance Sheet Item | June 30, 2024 (in millions) | September 30, 2023 (in millions) | | :--- | :--- | :--- | | **Total Assets** | $33,254.9 | $30,121.2 | | Cash and cash equivalents | $3,378.5 | $3,686.4 | | Goodwill | $6,198.5 | $6,003.8 | | Intangible assets, net | $5,267.8 | $4,902.2 | | **Total Liabilities** | $18,353.5 | $16,547.3 | | Debt | $3,035.0 | $3,052.8 | | **Total Stockholders' Equity** | $13,635.2 | $12,547.8 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations increased to $413.1 million, while investing activities used less cash, and financing activities provided less cash | Cash Flow Activity (Nine Months Ended June 30) | 2024 (in millions) | 2023 (in millions) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $413.1 | $324.7 | | **Net cash used in investing activities** | ($1,222.7) | ($3,278.2) | | **Net cash provided by financing activities** | $506.4 | $2,492.6 | | **Decrease in cash and cash equivalents** | ($290.7) | ($394.9) | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed disclosures cover accounting policies, the Putnam acquisition, revenue, fair value, CIPs, legal proceedings, and a subsidiary's regulatory investigation - On January 1, 2024, the Company acquired Putnam Investments from Great-West Lifeco Inc. for **31.6 million shares** of its common stock, **$221.7 million in cash** at closing, and **$100.0 million in deferred cash consideration**[25](index=25&type=chunk)[26](index=26&type=chunk) - The Putnam acquisition resulted in goodwill of **$190.2 million**, primarily attributed to expected growth opportunities, and is expected to be tax-deductible[28](index=28&type=chunk)[29](index=29&type=chunk) - Western Asset Management (WAM), a subsidiary, is under parallel investigations by the SEC and U.S. Department of Justice regarding certain past trade allocations of treasury derivatives[57](index=57&type=chunk) - On July 15, 2024, subsequent to the quarter end, the company repaid all outstanding **$250.0 million 3.950% senior notes** issued by Legg Mason[65](index=65&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A covers AUM growth to $1.65 trillion, revenue increase, operating income decline due to acquisition costs, and liquidity [Assets Under Management (AUM)](index=27&type=section&id=Assets%20Under%20Management) Total AUM increased 15% year-over-year to $1.65 trillion, primarily due to the Putnam acquisition, with mixed quarterly flows | AUM by Asset Class | June 30, 2024 (in billions) | June 30, 2023 (in billions) | Percent Change | | :--- | :--- | :--- | :--- | | Equity | $595.0 | $458.0 | 30% | | Fixed Income | $564.5 | $505.1 | 12% | | Alternative | $254.5 | $257.2 | (1%) | | Multi-Asset | $168.1 | $148.3 | 13% | | Cash Management | $64.5 | $62.9 | 3% | | **Total** | **$1,646.6** | **$1,431.5** | **15%** | | Change in AUM (Three Months Ended June 30, 2024) | Amount (in billions) | | :--- | :--- | | Beginning AUM | $1,644.7 | | Long-term net flows | ($3.2) | | Cash management net flows | $3.0 | | Net market change, distributions and other | $2.1 | | **Ending AUM** | **$1,646.6** | [Operating Revenues](index=31&type=section&id=Operating%20Revenues) Q3 operating revenues rose 8% to $2.12 billion, driven by increased investment management, sales, and shareholder servicing fees, partly due to Putnam | Revenue Category (Three Months Ended June 30) | 2024 (in millions) | 2023 (in millions) | Percent Change | | :--- | :--- | :--- | :--- | | Investment management fees | $1,689.9 | $1,613.4 | 5% | | Sales and distribution fees | $358.3 | $304.0 | 18% | | Shareholder servicing fees | $61.8 | $38.8 | 59% | | **Total Operating Revenues** | **$2,122.9** | **$1,969.0** | **8%** | - The effective investment management fee rate (excluding performance fees) decreased to **40.2 basis points** for the quarter from **42.0 basis points** in the prior year, mainly due to lower catch-up fees and the addition of lower-fee products from the Putnam acquisition[98](index=98&type=chunk) [Operating Expenses](index=32&type=section&id=Operating%20Expenses) Total operating expenses increased 15% to $1.90 billion in Q3, primarily due to the Putnam acquisition and higher occupancy and administrative costs | Expense Category (Three Months Ended June 30) | 2024 (in millions) | 2023 (in millions) | Percent Change | | :--- | :--- | :--- | :--- | | Compensation and benefits | $893.8 | $841.2 | 6% | | Sales, distribution and marketing | $481.1 | $406.8 | 18% | | Information systems and technology | $156.6 | $127.3 | 23% | | Occupancy | $104.8 | $56.9 | 84% | | General, administrative and other | $180.1 | $136.5 | 32% | | **Total Operating Expenses** | **$1,900.4** | **$1,654.1** | **15%** | - The **84% increase in occupancy expenses** was driven by an impairment of a right-of-use asset for vacated office space and costs for new leased space in New York City as part of an office consolidation initiative[116](index=116&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains $5.68 billion in liquid assets, utilizing capital for share repurchases and deferred acquisition payments | Category | June 30, 2024 (in millions) | September 30, 2023 (in millions) | | :--- | :--- | :--- | | **Total Liquid Assets** | **$5,676.1** | **$5,873.3** | | Cash and cash equivalents | $3,336.1 | $3,592.8 | | **Debt** | **$3,035.0** | **$3,052.8** | - During the nine months ended June 30, 2024, the company repurchased **7.1 million shares** of common stock at a cost of **$172.0 million**[153](index=153&type=chunk) - Significant deferred cash payments were made for prior acquisitions, including **$400.0 million for Lexington** in April 2024 and **$60.8 million for Alcentra** in November 2023[155](index=155&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes occurred in market risk disclosures compared to the fiscal year 2023 Annual Report on Form 10-K - There were no material changes from the market risk disclosures in the Form 10-K for the fiscal year ended September 30, 2023[164](index=164&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting - The Company's principal executive and financial officers concluded that disclosure controls and procedures were effective as of June 30, 2024[165](index=165&type=chunk) - No changes occurred during the fiscal quarter ended June 30, 2024, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[166](index=166&type=chunk) PART II Other Information [Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) Refers to Note 11 for legal proceedings, highlighting ongoing SEC and DOJ investigations into WAM regarding trade allocations - The report refers to Note 11 for a description of legal proceedings, which includes parallel investigations by the SEC and U.S. Department of Justice into Western Asset Management (WAM) regarding past trade allocations[168](index=168&type=chunk)[57](index=57&type=chunk) [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported compared to the fiscal year 2023 Annual Report on Form 10-K - There were no material changes from the Risk Factors disclosed in the Annual Report on Form 10-K for fiscal year 2023[169](index=169&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 4.27 million shares in Q3 FY2024, with 34.8 million shares remaining for repurchase authorization | Month | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2024 | 691,857 | $24.79 | | May 2024 | 3,080,243 | $23.58 | | June 2024 | 502,162 | $23.35 | | **Total** | **4,274,262** | | - As of June 30, 2024, **34,832,896 shares** remained available for repurchase under the company's stock repurchase program[171](index=171&type=chunk) [Exhibits](index=44&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including CEO/CFO certifications and iXBRL financial data files - The exhibits filed with the report include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as iXBRL data files for the financial statements[172](index=172&type=chunk)[176](index=176&type=chunk)

Matthew Nicholls Executive Vice President Chief Financial Officer Chief Operating Officer Jenny Johnson President Chief Executive Officer Highlights........................................2 AUM, revenue, and investment performance……………….…….....4 AUM and flows...............................5 Franklin Resources, Inc. Third Quarter Results July 26, 2024| Executive earnings commentary Adam Spector Executive Vice President Head of Global Distribution Contents Conference call details: Access to the teleconference ...

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) Franklin Resources reported GAAP net income of **$174.0 million** and adjusted net income of **$326.4 million** for Q3 2024, with total AUM reaching **$1,646.6 billion** - The company repurchased **4.3 million** shares of its common stock for a total cost of **$101.5 million** during the quarter[8](index=8&type=chunk) Q3 2024 Key Financial Results (GAAP) | Metric | Q3 2024 (ended Jun 30) | Q2 2024 (ended Mar 31) | Q3 2023 (ended Jun 30) | | :--- | :--- | :--- | :--- | | Net Income | $174.0M | $124.2M | $227.5M | | Diluted EPS | $0.32 | $0.23 | $0.44 | | Operating Income | $222.5M | $129.3M | $314.9M | Q3 2024 Key Financial Results (Adjusted, Non-GAAP) | Metric | Q3 2024 (ended Jun 30) | Q2 2024 (ended Mar 31) | Q3 2023 (ended Jun 30) | | :--- | :--- | :--- | :--- | | Adjusted Net Income | $326.4M | $306.6M | $326.1M | | Adjusted Diluted EPS | $0.60 | $0.56 | $0.63 | | Adjusted Operating Income | $424.9M | $419.6M | $476.8M | [CEO Commentary and Strategic Initiatives](index=1&type=section&id=CEO%20Commentary%20and%20Strategic%20Initiatives) CEO Jenny Johnson highlighted diversification, strong net flows in key areas, and strategic technology investments - The company is executing its long-term diversification plan, leading to positive net flows in multi-asset and alternative strategies[4](index=4&type=chunk) - Strong performance was noted in retail Separately Managed Accounts (SMAs), Canvas®, and Exchange-Traded Funds (ETFs), with ETFs generating over **$3 billion** in net inflows[4](index=4&type=chunk) - The non-U.S. business recorded its fifth consecutive quarter of positive net flows, ending the quarter with approximately **$492 billion** in AUM[4](index=4&type=chunk) - Key technology and strategic investments announced during the quarter include: - Collaboration with Microsoft to build an advanced financial AI platform for sales and marketing[5](index=5&type=chunk) - A planned strategic minority investment in Envestnet[5](index=5&type=chunk) - Selection of a single platform to unify investment management technologies across public market asset classes[5](index=5&type=chunk) [Assets Under Management (AUM) and Flows](index=2&type=section&id=Assets%20Under%20Management%20%28AUM%29%20and%20Flows) Total AUM reached **$1,646.6 billion** as of June 30, 2024, influenced by cash management inflows, market changes, and long-term outflows [AUM and Flows Summary](index=2&type=section&id=AUM%20and%20Flows%20Summary) - Total AUM increased by **15%** year-over-year, from **$1,431.5 billion** at June 30, 2023 to **$1,646.6 billion** at June 30, 2024[7](index=7&type=chunk) AUM and Flows Summary (in billions) | Metric | Three Months Ended Jun 30, 2024 | Three Months Ended Jun 30, 2023 | | :--- | :--- | :--- | | Beginning AUM | $1,644.7 | $1,422.1 | | Long-term net flows | $(3.2) | $0.2 | | Cash management net flows | $3.0 | $(7.3) | | Total net flows | $(0.2) | $(7.1) | | Net market change, distributions and other | $2.1 | $16.5 | | **Ending AUM** | **$1,646.6** | **$1,431.5** | [AUM by Asset Class](index=5&type=section&id=AUM%20by%20Asset%20Class) AUM by Asset Class (in billions) | Asset Class | Jun 30, 2024 | Mar 31, 2024 | Jun 30, 2023 | | :--- | :--- | :--- | :--- | | Equity | $595.0 | $592.7 | $458.0 | | Fixed Income | $564.5 | $571.4 | $505.1 | | Alternative | $254.5 | $255.5 | $257.2 | | Multi-Asset | $168.1 | $163.4 | $148.3 | | Cash Management | $64.5 | $61.7 | $62.9 | | **Total AUM** | **$1,646.6** | **$1,644.7** | **$1,431.5** | [AUM by Sales Region](index=5&type=section&id=AUM%20by%20Sales%20Region) AUM by Sales Region (in billions) | Region | Jun 30, 2024 | Mar 31, 2024 | Jun 30, 2023 | | :--- | :--- | :--- | :--- | | United States | $1,155.0 | $1,155.9 | $1,026.0 | | International | $491.6 | $488.8 | $405.5 | | **Total AUM** | **$1,646.6** | **$1,644.7** | **$1,431.5** | [Detailed AUM Flows by Asset Class](index=6&type=section&id=Detailed%20AUM%20Flows%20by%20Asset%20Class) - For the quarter, Alternative and Multi-Asset strategies experienced positive long-term net inflows of **$1.4 billion** and **$1.8 billion** respectively, while Equity and Fixed Income saw long-term net outflows[17](index=17&type=chunk) Net Flows by Asset Class for Q3 2024 (in billions) | Asset Class | Long-term Net Flows | Cash Management Net Flows | Total Net Flows | | :--- | :--- | :--- | :--- | | Equity | $(1.6) | — | $(1.6) | | Fixed Income | $(4.8) | — | $(4.8) | | Alternative | $1.4 | — | $1.4 | | Multi-Asset | $1.8 | — | $1.8 | | Cash Management | — | $3.0 | $3.0 | | **Total** | **$(3.2)** | **$3.0** | **$(0.2)** | [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) Q3 2024 saw total operating revenues of **$2.12 billion**, operating income of **$222.5 million**, and net income of **$174.0 million** - Quarter-over-quarter, operating income increased **72%** from **$129.3 million** in Q2 2024 to **$222.5 million** in Q3 2024, primarily due to a **13%** decrease in compensation and benefits expense[13](index=13&type=chunk) Consolidated Statement of Income Summary (Three Months Ended June 30) | (in millions, except per share data) | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Total operating revenues | $2,122.9 | $1,969.0 | 8% | | Total operating expenses | $1,900.4 | $1,654.1 | 15% | | **Operating Income** | **$222.5** | **$314.9** | **(29%)** | | **Net Income Attributable to Franklin Resources, Inc.** | **$174.0** | **$227.5** | **(24%)** | | Diluted Earnings per Share | $0.32 | $0.44 | (27%) | | Dividends Declared per Share | $0.31 | $0.30 | 3% | [Supplemental Non-GAAP Financial Measures](index=7&type=section&id=Supplemental%20Non-GAAP%20Financial%20Measures) Non-GAAP measures, including adjusted operating income and net income, are provided to offer useful financial performance indicators and facilitate peer comparison - Management believes non-GAAP measures are useful for evaluating relative performance against industry peers by excluding certain items not considered reflective of underlying operations[19](index=19&type=chunk) - Key adjustments to derive non-GAAP figures include excluding acquisition-related items (retention, amortization), special termination benefits, and the impact of consolidating investment products[21](index=21&type=chunk)[24](index=24&type=chunk) Reconciliation of GAAP to Adjusted Operating Income (in millions) | | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | **Operating income (GAAP)** | **$222.5** | **$129.3** | **$314.9** | | Adjustments (e.g., acquisition-related, amortization) | $202.4 | $290.3 | $161.9 | | **Adjusted operating income (Non-GAAP)** | **$424.9** | **$419.6** | **$476.8** | Reconciliation of GAAP to Adjusted Net Income (in millions) | | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | **Net income attributable to Franklin Resources, Inc. (GAAP)** | **$174.0** | **$124.2** | **$227.5** | | Adjustments (net of tax) | $152.4 | $182.4 | $98.6 | | **Adjusted net income (Non-GAAP)** | **$326.4** | **$306.6** | **$326.1** | [Company Overview and Forward-Looking Statements](index=11&type=section&id=Company%20Overview%20and%20Forward-Looking%20Statements) Franklin Templeton is a global investment management firm with over **$1.6 trillion** in AUM, and this report contains forward-looking statements subject to inherent risks - Franklin Templeton is a global investment management organization with over **1,500** investment professionals and over **$1.6 trillion** in AUM as of June 30, 2024[29](index=29&type=chunk) - The report includes forward-looking statements based on current expectations and assumptions, which are subject to inherent risks and uncertainties that could cause actual results to differ materially[30](index=30&type=chunk)[31](index=31&type=chunk) - The company undertakes no obligation to update forward-looking statements unless required by law[32](index=32&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Delaware 13-2670991 (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-09318 FRANKLIN RESOURCES, INC. (Exact name of registrant as specified in its charter) (St ...

Financial Performance - Net income for Q2 2024 was $124.2 million, a decrease of 51% from the previous quarter and 36% year-over-year[3]. - Adjusted net income was $306.6 million, down 7% from the previous quarter and 3% from the same quarter last year[5]. - Operating income decreased to $129.3 million, down 37% from the previous quarter and 49% year-over-year[5]. - Diluted earnings per share were $0.23, a decline of 54% from the previous quarter and 39% year-over-year[5]. - Net income attributable to Franklin Resources, Inc. decreased by 51% to $124.2 million from $251.3 million in the previous quarter[11]. - Basic earnings per share fell by 54% to $0.23 compared to $0.50 in the prior quarter[11]. - Adjusted diluted earnings per share decreased to $0.56 from $0.61 year-over-year, a decline of 8.2%[23]. Revenue and AUM Growth - Total operating revenues increased to $2,152.8 million, reflecting an 8% quarter-over-quarter growth and a 12% year-over-year increase[5]. - Total operating revenues for the three months ended March 31, 2024, increased by 8% to $2,152.8 million compared to $1,991.1 million in the previous quarter[11]. - Ending Assets Under Management (AUM) reached $1,644.7 billion, a 16% increase from $1,422.1 billion year-over-year[12]. - Assets Under Management (AUM) grew to $1,644.7 billion, a 13% increase during the quarter, driven by the acquisition of Putnam Investments[5]. - The company reported total assets under management (AUM) of over $1.6 trillion as of March 31, 2024[25]. Inflows and Outflows - Long-term net inflows reached $6.9 billion, with significant contributions from fixed income, multi-asset, and alternative assets[3]. - Long-term inflows increased by 37% to $84.9 billion compared to $61.8 billion in the same period last year[12]. - Long-term net flows for the three months ended March 31, 2024, were positive at $6.9 billion, compared to a negative $5.0 billion for the previous quarter[15]. - Cash management net flows for the three months ended March 31, 2024, were negative at $(4.8) billion[15]. Acquisition Impact - The acquisition of Putnam Investments added $148.3 billion to AUM and enhanced investment capabilities[4]. - The company reported acquisition-related items contributing $148.3 billion to AUM during the three months ended March 31, 2024[15]. - Acquisition-related retention expenses increased significantly to $104.5 million for the quarter, compared to $23.2 million in the same period last year[23]. Market Presence and Strategy - The company serves clients in over 150 countries, indicating a strong global presence and market expansion strategy[25]. - Franklin Resources, Inc. emphasizes its commitment to investment management expertise and technology solutions to enhance client outcomes[25]. Other Financial Metrics - The institutional pipeline of won-but-unfunded mandates grew to nearly $20 billion[3]. - Investment management fees rose by 4% to $1,713.9 million from $1,652.2 million quarter-over-quarter[11]. - The average AUM for the three-month period increased by 13% to $1,581.1 billion from $1,394.2 billion year-over-year[13]. - Adjusted operating income for the three months ended March 31, 2024, was $419.6 million, slightly up from $417.0 million in the previous quarter[22]. - Adjusted operating margin for the three months ended March 31, 2024, was 25.2%, compared to 27.3% in the previous quarter[22].

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 ...

[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)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (MARK ONE) FRANKLIN RESOURCES, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Delaware 13-2670991 One Franklin Parkway, San Mateo, CA 94403 (Address of principal executive offices) (Zip code) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ...