Core Viewpoint - Franklin Resources, Inc. (BEN) reported preliminary assets under management (AUM) of $1.58 trillion as of February 28, 2025, reflecting a marginal decrease from the prior month due to long-term net outflows of $10 billion, including previously disclosed outflows at Western Asset Management [1] AUM Breakdown by Asset Class - Equity assets amounted to $623.4 billion, down 2% from the previous month [2] - Fixed income AUM was $455.6 billion, showing a marginal decline from the prior month [2] - Alternative AUM decreased marginally to $249.3 billion [2] - Multi-asset AUM rose to $179.9 billion, an increase of 1.8% from January 2025 [2] - Cash management balance increased to $68.8 billion, up 11.1% from the previous month [2] Company Performance and Market Context - February was challenging for Franklin due to fewer days and long-term net outflows; however, increased cash management and multi-asset AUM, along with efforts for inorganic growth, supported its financials [3] - Over the past six months, BEN shares gained 3.1%, compared to the industry's 9% rise [3] Performance of Other Asset Managers - AllianceBernstein Holding L.P. (AB) and Victory Capital Holdings, Inc. (VCTR) are set to release their February AUM results soon, both carrying a Zacks Rank 3 (Hold) [5] - The consensus estimate for VCTR's 2025 earnings has been revised downward by 1.3% over the past week, with shares rising 15.4% in the past six months [5] - The consensus estimate for AB's 2025 earnings has been revised marginally upward, with the stock witnessing a 14.6% rise in the past six months [6]

Franklin Resources, Inc. First Quarter 2025 Results January 31, 2025 | Investor Presentation Jenny Johnson President Chief Executive Officer Matthew Nicholls Executive Vice President Chief Financial Officer Chief Operating Officer Adam Spector Executive Vice President Head of Global Distribution Forward-looking statements and non-GAAP financial information This commentary contains forward-looking statements that involve a number of known and unknown risks, uncertainties and other important factors. This com ...

Core Viewpoint - Franklin Resources Inc. reported first-quarter fiscal 2025 adjusted earnings of 59 cents per share, exceeding the Zacks Consensus Estimate of 53 cents, but down from 65 cents in the prior year [1][2] Financial Performance - Total operating revenues increased by 13% year over year to $2.25 billion, surpassing the Zacks Consensus Estimate of $2.1 billion, driven by higher investment management fees, sales and distribution fees, and shareholder servicing fees [3][4] - Investment management fees rose by 9% year over year to $1.79 billion, while sales and distribution fees increased by 27% to $376 million, and shareholder servicing fees jumped by 95% to $64 million [4] - Total operating expenses rose by 14% year over year to $2.03 billion, exceeding the estimate of $1.96 billion, resulting in an operating margin of 9.7%, down from 10.4% in the previous year [5] Assets Under Management (AUM) - As of December 31, 2024, total AUM was $1.58 trillion, a decline of 6% sequentially, with long-term net outflows of $50 billion during the quarter [6] - The average AUM decreased by 2% sequentially to $1.63 trillion [6] Capital Position and Distribution - As of December 31, 2024, cash and cash equivalents, and investments totaled $5.2 billion, while total stockholders' equity was $13.2 billion [7] - In the reported quarter, the company repurchased 0.3 million shares for $5.8 million [8] Strategic Outlook - The company's efforts to diversify its business through acquisitions and a strong distribution platform are expected to support revenue growth, although rising expenses from technological upgrades may hinder bottom-line growth [9]

Financial Performance - Operating revenues for the three months ended December 31, 2024, were $2,251.6 million, a 13% increase from $1,991.1 million in the same period of 2023[68]. - Net income attributable to Franklin Resources, Inc. for the same period was $163.6 million, a 35% decrease from $251.3 million in 2023[68]. - Adjusted operating income for the three months ended December 31, 2024, was $412.8 million, a slight decrease of 1% from $417.0 million in 2023[68]. - The operating margin for the three months ended December 31, 2024, was 9.7%, down from 10.4% in the same period of 2023[68]. - Adjusted operating margin decreased to 24.5% for the three months ended December 31, 2024, down from 27.3% in the prior year[124]. - Net income attributable to Franklin Resources, Inc. for the three months ended December 31, 2024, was $163.6 million, a decrease of 34.9% from $251.3 million in the same period of 2023[125]. - Adjusted net income for the same period was $320.5 million, slightly down from $328.5 million year-over-year[125]. Assets Under Management (AUM) - Total assets under management (AUM) as of December 31, 2024, were $1,575.7 billion, an 8% increase from $1,455.5 billion on December 31, 2023[64]. - The average AUM for the three months ended December 31, 2024, was $1,634.5 billion, a 17% increase from $1,394.2 billion in 2023[70]. - The equity asset class AUM increased by 33% to $620.0 billion from $467.5 billion in 2023[69]. - Total AUM at December 31, 2023, reached $1,455.5 billion, an 8% increase from $1,374.2 billion at October 1, 2023[75]. Inflows and Outflows - Long-term inflows for the three months ended December 31, 2024, were $97.8 billion, a 42% increase from $68.9 billion in 2023[72]. - Long-term net outflows totaled $50.0 billion, a significant increase of 900% compared to $5.0 billion in the previous year[72]. - Long-term inflows increased 42% to $97.8 billion compared to the prior year, driven by higher inflows in equity and multi-asset open-end funds[74]. - Long-term outflows increased 100% to $147.8 billion, primarily due to higher outflows from fixed income vehicles and equity open-end funds[74]. Revenue and Fees - Investment management fees rose 9% to $1,799.3 million for the three months ended December 31, 2024, due to a 17% increase in average AUM[81][82]. - Sales and distribution fees increased 27% to $375.5 million, driven by revenue from Putnam products post-acquisition[81][86]. - Total operating revenues for the three months ended December 31, 2024, were $2,251.6 million, a 13% increase from $1,991.1 million in the prior year[81]. - Performance fees decreased to $141.6 million for the three months ended December 31, 2024, down from $166.4 million in the prior year[84]. Expenses - Total operating expenses increased 14% to $2,032.6 million, influenced by the integration of the Putnam acquisition[90]. - General, administrative, and other operating expenses increased by $53.2 million, largely due to the acquisition of Putnam and higher legal and professional fees[104]. - Amortization of intangible assets increased by $26.8 million, attributed to a reduction in the remaining useful life of definite-lived intangible assets related to WAM[103]. - Occupancy expenses increased by $8.4 million for the three months ended December 31, 2024, primarily due to expenses incurred by Putnam following the acquisition[101]. Cash Flow and Liquid Assets - Operating cash flows for the three months ended December 31, 2024, were $(145.2) million, an improvement from $(251.9) million in the prior year[126]. - Total liquid assets decreased to $5,151.5 million as of December 31, 2024, from $5,664.4 million at September 30, 2024[128]. - Cash and cash equivalents at December 31, 2024, were $2,765.4 million, down from $3,261.1 million[128]. Shareholder Actions - The company declared regular dividends of $0.32 per share during the three months ended December 31, 2024, compared to $0.31 per share in the same period of 2023[138]. - During the three months ended December 31, 2024, the company repurchased 0.3 million shares at a cost of $5.8 million, compared to 2.4 million shares at a cost of $58.8 million in the prior year[139]. Workforce and Acquisitions - The global workforce increased to approximately 10,100 employees from 9,100 at December 31, 2023, mainly due to the acquisition of Putnam[97]. - The company expects to make a deferred cash payment of $100.0 million related to the acquisition of Lexington during the third quarter of fiscal year 2025[140]. - The company maintains an $800.0 million 5-year revolving credit facility, which remains undrawn as of the filing date[134]. - As of December 31, 2024, the company had $500.0 million of short-term commercial paper available for issuance under an uncommitted private placement program[135].

Financial Performance - Franklin Resources, Inc. reported net income of $163.6 million or $0.29 per diluted share for Q1 2025, compared to a net loss of $84.7 million in the previous quarter and net income of $251.3 million in Q1 2024[3]. - Adjusted net income was $320.5 million for the quarter, a slight increase from $315.2 million in the previous quarter, but down from $328.5 million in the prior year[7]. - Operating income was $219.0 million, compared to an operating loss of $150.7 million in the previous quarter and an operating income of $206.5 million in the prior year[7]. - The company reported a net income attributable to Franklin Resources, Inc. of $163.6 million for the three months ended December 31, 2024, recovering from a loss of $84.7 million in the previous quarter[26]. - Adjusted diluted earnings per share for the three months ended December 31, 2024, was $0.59, consistent with the previous quarter[26]. Revenue and Assets Under Management - Operating revenues for the quarter were $2,251.6 million, reflecting a 2% increase from the previous quarter and a 13% increase year-over-year[7]. - Total assets under management (AUM) were $1,575.7 billion at December 31, 2024, down $102.9 billion during the quarter due to $52.9 billion in net market changes and $50 billion in long-term net outflows[7]. - Average AUM for the quarter was $1,634.5 billion, a 17% increase from $1,394.2 billion year-over-year[14]. - The AUM as of December 31, 2024, was approximately $1.6 trillion, indicating a strong market presence and investment capability[29]. - Total AUM by asset class showed a decline in equity and fixed income, with equity at $620.0 billion (down 2%) and fixed income at $469.5 billion (down 16%) compared to the previous quarter[15]. Inflows and Outflows - Long-term inflows improved by 34% year-over-year, generating positive net flows of $17 billion across equity, multi-asset, and alternatives, despite long-term net outflows of $50 billion[3]. - Long-term inflows for the quarter were $97.8 billion, a 42% increase from $68.9 billion year-over-year[14]. - Long-term outflows doubled to $147.8 billion from $73.9 billion in the same period last year, resulting in long-term net flows of $(50.0) billion, a 900% decline[14]. - Long-term net flows for the three months ended September 30, 2024, were negative at $31.3 billion, driven by outflows in Fixed Income and Alternative assets[18]. Strategic Investments and Shareholder Value - The company remains committed to strategically investing in its business while managing expenses to enhance shareholder value[6]. - The company repurchased 0.3 million shares of common stock for a total cost of $5.8 million during the quarter[8]. - Fundraising in alternatives reached $6 billion, with $4.3 billion in private market assets, and the launch of a new evergreen secondaries private equity fund achieved $900 million in assets under management[4]. Market Presence and Operations - The company operates in over 150 countries, leveraging its extensive investment management expertise and technology solutions[29]. - Total reinvested distributions amount to $20.1 billion[11]. - Direct investments in CIPs total $1.1 billion, with additional third-party investments of approximately $356 million[11]. - Cash and investments related to deferred compensation plans amount to approximately $437 million[11].

Core Insights - Franklin Resources, Inc. is positioned for growth through acquisitions, solid AUM growth, and an organic growth strategy, despite facing challenges from rising expenses and concentrated revenues from investment management fees [8]. Group 1: AUM Growth and Financial Performance - Franklin has experienced solid growth in AUM, with a compound annual growth rate (CAGR) of 18.7% over the last five fiscal years, despite a decline in fiscal 2022 [2]. - The company declared a 3.2% increase in its common stock dividend in December 2024, raising it to 32 cents per share [3]. - Investment management fees, which account for 79.9% of revenues as of September 30, 2024, have shown volatility, influenced by AUM levels and service types [4]. Group 2: Strategic Initiatives and Partnerships - Franklin has pursued growth through acquisitions and partnerships, including a collaboration with Japan's SBI Holdings to focus on ETFs and emerging asset classes [9]. - The acquisition of Putnam Investments in January 2024 is expected to enhance Franklin's growth in the retirement space, increasing defined contribution AUM to over $100 billion [16]. - The company announced a share repurchase authorization of 27.2 million shares in December 2023, reflecting its commitment to capital distribution [18]. Group 3: Financial Stability and Expense Management - As of September 30, 2024, Franklin's debt stood at $2.6 billion, with a liquidity position of $6.7 billion, indicating a stable financial position [11]. - Although expenses declined in 2022, they have shown a CAGR of 12.5% over the last four years, with ongoing investments in technology and talent likely to keep expenses high [13]. - The company’s AUM is subject to market fluctuations and regulatory changes, which could impact financial performance [19].

Core Insights - Franklin Resources Inc. (NYSE: BEN) has experienced a share price decline of approximately 3.7% over the past seven months, contrasting with a 14.25% gain in the S&P 500 during the same period [1]. Company Analysis - The company is being analyzed through a combination of fundamental analysis and momentum research, utilizing software developed to track market sentiment [1]. - The investment strategy focuses on identifying companies with a higher likelihood of delivering positive surprises in the near future, based on the disconnect between market perceptions and potential outcomes [1].

Company Overview - Franklin Resources reported fourth-quarter fiscal 2024 adjusted earnings of 59 cents per share, missing the Zacks Consensus Estimate of 60 cents, and reflecting a 29.7% decrease from the prior-year quarter [2] - The company experienced a net loss of $84.7 million compared to a net income of $295.5 million in the prior-year quarter [3] - For fiscal 2024, adjusted earnings per share were $2.39, down from $2.60 in the prior year [4] Revenue and Expenses - Total operating revenues for fiscal 2024 increased by 8% year over year to $8.48 billion, surpassing the Zacks Consensus Estimate of $8.39 billion [5] - In the fiscal fourth quarter, total operating revenues rose 11.3% year over year to $2.21 billion, driven by increases in investment management fees, sales and distribution fees, and shareholder servicing fees, also exceeding the Zacks Consensus Estimate of $2.12 billion [5] - Investment management fees increased by 8.1% year over year to $1.77 billion, while sales and distribution fees rose by 20.1% to $368 million, and shareholder servicing fees surged by 80.1% to $67 million [6] - Total operating expenses rose by 43.3% year over year to $2.36 billion, attributed to increases across all components of operating expenses [6] - The operating margin was reported at negative 6.8%, a significant decline from the 17% margin in the year-ago quarter [7] Assets Under Management (AUM) - As of September 30, 2024, total AUM was $1.69 trillion, reflecting a sequential increase of 1.9% [8] - Average AUM increased by 2.1% sequentially to $1.67 trillion [10] - The company reported long-term net outflows of $31.3 billion during the reported quarter [9] Capital Position - As of September 30, 2024, cash and cash equivalents, along with investments, totaled $5.6 billion, while total stockholders' equity was $13.3 billion [11] - In the reported quarter, Franklin repurchased 4.9 million shares for $102.4 million [12] Market Performance and Outlook - The consensus estimate for Franklin Resources has trended downward, with a shift of -10.57% noted [13][14] - The company currently holds a Zacks Rank 4 (Sell), indicating expectations of below-average returns in the coming months [15] - Franklin Resources is part of the Zacks Financial - Investment Management industry, which has seen competitors like Principal Financial report a revenue increase of 5.6% year over year [16]

Group 1 - Bassett Furniture Industries, Incorporated (BSET) has been added to the Zacks Rank 5 (Strong Sell) List due to a 40% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Franklin Resources, Inc. (BEN) is also on the Zacks Rank 5 (Strong Sell) List, with a 9.8% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Hitachi Construction Machinery Co., Ltd. (HTCMY) has seen a 30.9% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days, leading to its inclusion in the Zacks Rank 5 (Strong Sell) List [2]

Core Insights - The Q3 2024 Advisor Pulse Survey indicates a significant increase in the number of financial advisors recommending digital assets, with 19% reporting that over half of their clients own such assets, up from 15% in Q2 2024 [1][2] - The survey, which included 619 financial professionals, shows a growing trend in crypto investment recommendations and allocations, with only 3% of advisors reporting no crypto ownership among clients, down from 8% in the previous quarter [2] Group 1: Advisor Recommendations - 70% of advisors have recommended crypto to at least 10% of their clients, with the most common recommendation being a 2% allocation by 26% of advisors, followed by a 5% allocation by 22% [3] - Among advisors not currently recommending crypto, 56% plan to do so, with 28% intending to start within the next six months [3] - 30% of advisors planning future allocations to crypto anticipate recommending 5% allocations, while 22% plan for 2% allocations [3] Group 2: Industry Trends - The data reflects a clear shift in the perception of digital assets among financial advisors, indicating increased confidence in this asset class [3] - The partnership between DACFP and Franklin Templeton aims to provide educational resources to help advisors stay informed about the evolving digital asset market [3] Group 3: Survey Methodology - The survey was conducted between July and September 2024, with 83% of respondents having over 10 years of experience in the financial services industry [4] - A significant portion of the advisors surveyed primarily serve clients with assets ranging from $500,000 to $3.5 million, with 11% serving clients with assets exceeding $3.5 million [4]