Franklin Resources Q4 Profit Up 26%, Beats View

(RTTNews) - Franklin Resources Inc. (BEN) on Monday reported a 26 percent increase in profit for the fourth quarter from last year, reflecting higher revenues, including investment management fees, that were partly offset by increases in operating expenses and taxes.

Earnings per share for the quarter beat analysts' expectations, while the company's assets under management increased 6 percent from last year.

San Mateo, California-based Franklin Resources is an asset management holding company that offers investment vehicles for clients, including individuals, institutions, pension plans, trusts and partnerships.

Preliminary net income attributable to the company for the fourth quarter was $640.6 million or $1.02 per share, up from $509 million or $0.80 per share in the year-ago period.

On average, 18 analysts polled by Thomson Reuters expected the company to report earnings per share of $0.93 for the quarter. Analysts' estimates typically exclude one-time items.

Operating revenues for the quarter grew 9 percent to $2.16 billion from $1.98 billion in the year-ago period. Analysts' consensus revenue estimate for the quarter was $2.17 billion.

The company's investment management fees for the fourth quarter grew 11 percent from the year-ago period to $1.43 billion, while sales and distribution fees increased 4 percent to $627.4 million. Meanwhile, shareholder servicing fees declined 9 percent to $68.3 million, while other revenues surged 52 percent from last year to $29.1 million.

Total operating expenses rose 6 percent from the prior-year period to $1.32 billion. Operating margin rose 180 basis points from the same period last year to 38.8 percent.

Investment and other income for the quarter was $63 million, compared to investment and other losses of $0.1 million in the prior-year period. Interest expenses increased 9 percent to $12.5 million, while taxes on income rose 20 percent to $255 million.

For fiscal 2014, Franklin Resources' preliminary net income rose to $2.38 billion or $3.79 per share from $2.15 billion or $3.37 per share in the prior year. Operating revenues for the year increased 6 percent to $8.49 billion from $7.99 billion last year.

Street expected the company to earn $3.70 per share for the year on revenues of $8.52 billion.

As at year-end, the company's total assets under management or AUM were $898 billion. AUM increased $53.3 billion, or 6 percent year-on-year, chiefly due to $62.4 billion of market appreciation, which is net of a $6.8 billion decrease due to the impact of foreign exchange revaluation. This was partly offset by $4.6 billion of net new outflows.

BEN closed Friday's trading at $53.41, up $0.52 on a volume of 1.81 million shares.