Q1 2013 Earnings Press Release Supplement April 16, 2013 Exhibit 99.2 |
1 Important Notes This presentation, and other statements that BlackRock may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to BlackRock’s future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” and similar expressions. BlackRock cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward- looking statements speak only as of the date they are made, and BlackRock assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance. In addition to risk factors previously disclosed in BlackRock’s Securities and Exchange Commission (“SEC”) reports and those identified elsewhere in this presentation the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (1) the introduction, withdrawal, success and timing of business initiatives and strategies; (2) changes and volatility in political, economic or industry conditions, the interest rate environment, foreign exchange rates or financial and capital markets, which could result in changes in demand for products or services or in the value of assets under management; (3) the relative and absolute investment performance of BlackRock’s investment products; (4) the impact of increased competition; (5) the impact of future acquisitions or divestitures; (6) the unfavorable resolution of legal proceedings; (7) the extent and timing of any share repurchases; (8) the impact, extent and timing of technological changes and the adequacy of intellectual property, information and cyber security protection; (9) the impact of legislative and regulatory actions and reforms, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, and regulatory, supervisory or enforcement actions of government agencies relating to BlackRock or The PNC Financial Services Group, Inc. (“PNC”); (10) terrorist activities, international hostilities and natural disasters, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or BlackRock; (11) the ability to attract and retain highly talented professionals; (12) fluctuations in the carrying value of BlackRock’s economic investments; (13) the impact of changes to tax legislation, including income, payroll and transaction taxes, and taxation on products or transactions, which could affect the value proposition to clients and, generally, the tax position of BlackRock; (14) BlackRock’s success in maintaining the distribution of its products; (15) the impact of BlackRock electing to provide support to its products from time to time and any potential liabilities related to securities lending or other indemnification obligations; and (16) the impact of problems at other financial institutions or the failure or negative performance of products at other financial institutions. This presentation also includes non-GAAP financial measures. You can find our presentations on the most directly comparable GAAP financial measures calculated in accordance with GAAP and our reconciliations in the appendix to this earnings release supplement, our current earnings release dated April 16, 2013, and BlackRock’s other periodic reports, which are available on BlackRock’s web site at www.blackrock.com. |
2 Table of Contents Operating and Net Income/Diluted EPS, as adjusted Page 3 Operating Margin, as adjusted Page 4 Q1 2013 Mix by Product, Client Type, Style and Region Page 5 Global Equity Market Indices Page 6 Year-over-Year: Q1 2013 vs. Q1 2012 Pages 7-12 Sequential Quarters: Q1 2013 vs. Q4 2012 Pages 13-18 Non-operating and Capital Management Pages 19-21 Appendix Pages 22-28 |
3 Q1 2013 EPS up 16% year-over-year reflecting strong revenues and operating leverage Operating and Net Income, as adjusted ($ in millions) Diluted Earnings Per Share, as adjusted For further information and reconciliation between GAAP and as adjusted, see the appendix, notes (a) through (f) in the current earnings release as well as previously filed Form 10-Ks, 10-Qs and 8-Ks. Operating Income Net Income • Q1 2013 includes $33 million of organizational alignment costs and $18 million of fund launch costs • Sequential results reflect seasonal factors primarily related to performance fees and payroll taxes 12% increase year-over-year 16% increase year-over-year |
4 40.7% 42.6% 39.7% 39.3% 36.8% 38.2% 38.7% 37.4% 38.6% 39.2% 40.0% 2007 2008 2009 2009 2010 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Full Year 2012 = 40.4% Continued year-over-year margin improvement Operating Margin, as adjusted For further information and reconciliation between GAAP and as adjusted, see the appendix, notes (a) through (f) in the current earnings release as well as previously filed Form 10-Ks, 10-Qs and 8-Ks. BGI/BLK Pro Forma • Q1 2013 includes $33 million of organizational alignment costs • Sequential results reflect seasonal factors primarily related to performance fees and payroll taxes |
5 Alternatives 3% Alternatives 8% Multi-asset 8% Multi-asset 12% Fixed Income 34% Fixed Income 24% Equity 55% Equity 56% iShares 22% iShares 35% Retail 11% Retail 33% Institutional 67% Institutional 32% AUM Base Fees AUM Base Fees Index 42% Index 10% iShares 22% iShares 35% Asia-Pacific 8% Asia-Pacific 5% EMEA 31% EMEA 30% Americas 61% Americas 65% Active 36% Active 55% AUM Base Fees AUM Base Fees Q1 2013 Long-term Base Fees of $2.043 billion Long-term Assets Under Management of $3.629 trillion at March 31, 2013 Q1 2013 mix by product, client type, style and region Product Type Client Type Style Region |
6 Major global equity markets indices Index Spot March 31, 2013 Average Index Level Average Q1 2013 vs. Q1 2013 Q1 2012 Q4 2012 Q1 2012 Q4 2012 Domestic S&P 500 1,569 1,513 1,347 1,418 12.3% 6.7% Global MSCI Barra World Index 1,435 1,405 1,268 1,312 10.8% 7.1% MSCI Europe Index 101 100 90 94 11.1% 6.4% MSCI AC Asia Pacific Index 136 133 124 124 7.3% 7.3% MSCI Emerging Markets Index 1,035 1,059 1,026 1,009 3.2% 5.0% S&P Global Natural Resources 3,415 3,524 3,533 3,391 (0.3%) 3.9% |
Year-over-year Q1 2013 vs. Q1 2012 ** * * * * * * * * Exhibit 99.2 |
8 EPS up 16% year-over-year driven by strong operating results Q1 2013 Compared to Q1 2012, as adjusted Total EPS: $3.65 Total EPS: $3.16 Non-Operating: $0.06 Operating EPS: Operating EPS: For further information and reconciliation between GAAP and as adjusted, see the appendix and notes (a) through (f) in the current earnings release. $0.49 Increasing EPS Decreasing EPS Non-Operating: $0.01 • Q1 2013 includes $33 million of organizational alignment costs and $18 million of fund launch costs $3.10 $3.64 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 Q1 2012 Operating EPS Non-Operating EPS Q1 2013 ($0.05) $0.54 |
9 Year-over-year operating income reflected revenue growth and expense discipline Q1 2013 Compared to Q1 2012, as adjusted For further information and reconciliation between GAAP and as adjusted, see the appendix and notes (a) through (f) in the current earnings release. Increasing Revenue Increasing Expense |
10 Year-over-year revenue reflected base fee growth and strong performance fees Q1 2013 Compared to Q1 2012 Total Revenue Q1 2012 $2.25 billion Decreasing Revenue Increasing Revenue |
11 Q1 2013 $2.13 billion Year-over-year base fees reflected growth across most asset classes Q1 2013 Compared to Q1 2012 Base fees Q1 2012 $1.98 billion Decreasing Base Fees Increasing Base Fees |
12 Q1 2013 $1.53 billion Year-over-year expense discipline was impacted by reorganization and fund launch costs Expenses, as adjusted, by Category Q1 2013 Compared to Q1 2012, as adjusted (1) G&A and compensation & benefits expenses exclude organizational alignment costs and fund launch costs incurred in first quarter 2013, which are presented separately above. For further information and reconciliation between GAAP and as adjusted, see the appendix and notes (a) through (f) in the current earnings release. Q1 2012 $1.42 billion |
Sequential Quarters Q1 2013 vs. Q4 2012 * * * * * ** ** * * |
14 $4.07 $0.12 ($0.43) $3.64 ($0.50) $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 Q4 2012 Operating EPS Non-Operating EPS Q1 2013 Sequential results reflected base fee growth offset by seasonal factors Increasing EPS For further information and reconciliation between GAAP and as adjusted, see the appendix and notes (a) through (f) in the current earnings release. Q1 2013 Compared to Q4 2012, as adjusted Operating EPS: Total EPS: $3.96 Total EPS: $3.65 Operating EPS: Non-Operating: ($0.11) ($0.31) Decreasing EPS • Q1 2013 includes $33 million of organizational alignment costs and $18 million of fund launch costs • Sequential results reflect seasonal factors primarily related to performance fees and payroll taxes Non-Operating: $0.01 |
15 Q1 2013 operating income reflected base fee growth offset by seasonal factors Q1 2013 Compared to Q4 2012, as adjusted ($69) million For further information and reconciliation between GAAP and as adjusted, see the appendix and notes (a) through (f) in the current earnings release. Decreasing Expense • Q1 2013 includes $33 million of organizational alignment costs and $18 million of fund launch costs • Sequential results reflect seasonal factors primarily related to performance fees and payroll taxes $700 $800 $900 $1,000 $1,100 Q4 2012 Revenue Expenses Fund Launch Costs Organizational Alignment Costs Q1 2013 $921 $1,041 ($90) $21 ($18) ($33) $0 Decreasing Revenue/Increasing Expense |
16 Sequential revenue driven by base fee growth offset by seasonally lower performance fees Q1 2013 Compared to Q4 2012 Increasing Revenue Total Revenue Q4 2012 $2.54 billion Decreasing Revenue Q1 2013 $2.45 billion |
17 Q1 2013 $2.13 billion Sequential base fees reflected growth in markets and long-term flows Base Fees Q1 2013 Compared to Q4 2012 Q4 2012 $2.08 billion Increasing Base Fees Decreasing Base Fees |
18 (1) G&A and compensation & benefits expenses exclude organizational alignment costs and fund launch costs incurred in first quarter 2013, which are presented separately above. For further information and reconciliation between GAAP and as adjusted, see the appendix and notes (a) through (f) in the current earnings release. Q1 2013 $1.53 billion Sequential expenses reflected reorganization and fund launch costs and lower marketing costs Increasing Expenses Decreasing Expenses Expenses, as adjusted, by Category Q1 2013 Compared to Q4 2012, as adjusted Q4 2012 $1.50 billion • Sequential results reflect seasonal factors primarily related to performance fees and payroll taxes |
Non-operating and Capital Management * * * * * * * * * * * |
20 Q1 2013 non-operating income $19 $19 $3 $3 $7 ($48) ($60) ($50) ($40) ($30) ($20) ($10) $0 $10 $20 $30 Private Equity Real Estate Distressed Credit/ Mortgage Funds Hedge Funds/ Funds of Hedge Funds Other Investments Net Interest Expense For further information and reconciliation between GAAP and as adjusted, see the appendix and notes (a) through (f) in the current earnings release. Q1 2013 $3 million Non-Operating Income by Category, as adjusted Net Interest Expense Investment Gains $51 million Net Investment Gain |
21 Continued commitment to sound capital management Operating cash flow Share repurchases Amounts above exclude repurchases of employee tax withholdings related to employee stock transactions. Total payout ratio Dividends and Dividend Payout Ratio Payout ratio = (Dividends declared + shares repurchases) / GAAP Net income. Annual incentive compensation payout in Q1 For further information and reconciliation between GAAP and as adjusted, see the previously filed Form 10-Ks Form 10-Qs and 8-Ks and the appendix to this earnings release supplement. |
Appendix * * * * * * * * * |
23 Q1 2013 long-term AUM up 9% from Q1 2012 Q1 2013 Compared to Q1 2012 Long-term AUM Q1 2012 $3.345 trillion Q1 2013 $3.629 trillion (1) Net new business excludes the effect of a single low-fee non-ETP index fixed income outflow of $74.2 billion in the third quarter 2012, which is shown separately above. Non-ETF EQ iShares EQ Active EQ Non-ETF FI iShares FI Active FI Multi Asset Alternatives |
24 Q4 2012 $3.482 trillion Q1 2013 long-term AUM up 4% from Q4 2012 Q1 2013 Compared to Q4 2012 Long-term AUM Decreasing AUM Increasing AUM Q1 2013 $3.629 trillion Non-ETF EQ iShares EQ Active EQ Non-ETF FI iShares FI Active FI Multi Asset Alternatives |
25 Quarterly operating income – GAAP and as adjusted GAAP as adjusted Operating Income ($ in millions) Non-GAAP Adjustments ($ in millions) Non-GAAP adjustments include a contribution to short-term investment funds (“STIFs”), PNC LTIP funding obligation and compensation related to appreciation (depreciation) on certain deferred compensation plans. For further information and reconciliation between GAAP and as adjusted, see notes (a) through (f) in the current earnings release as well as previously filed Form 10-Ks, 10-Qs and 8-Ks. |
26 Net Income ($ in millions) Non-GAAP Adjustments ($ in millions) GAAP as adjusted Quarterly net income – GAAP and as adjusted Non-GAAP adjustments include a contribution to STIFs, PNC LTIP funding obligation and income tax changes. For further information and reconciliation between GAAP and as adjusted, see notes (a) through (f) in the current earnings release as well as previously filed Form 10-Ks, 10-Qs and 8-Ks. |
27 Quarterly non-operating income (expense) – GAAP and as adjusted GAAP as adjusted Non-Operating Income (Expense) ($ in millions) Non-GAAP Adjustments ($ in millions) Non-GAAP adjustments include net income (loss) attributable to non-controlling interests and compensation expense related to (appreciation) depreciation on certain deferred compensation plans. For further information and reconciliation between GAAP and as adjusted, see notes (a) through (f) in the current earnings release as well as previously filed Form 10-Ks, 10-Qs and 8-Ks. |
28 Cash Flow GAAP and As Adjusted (in millions) 2010 2011 2012 Q1 2012 EST Q1 2013 Operating Cash Flows Operating Cash flows, GAAP basis $2,488 $2,826 $2,240 ($102) $200 Less: Non-GAAP adjustments (1) (77) 178 (483) (23) - Operating Cash flows, as Adjusted $2,565 $2,648 $2,723 ($79) $200 Investing Cash Flows Investing Cash flows, GAAP basis ($627) ($204) ($266) ($487) $100 Less: Non-GAAP adjustments (1) (52) 24 (211) (125) - Investing Cash flows, as Adjusted ($575) ($228) ($55) ($362) $100 Financing Cash Flows Financing Cash flows, GAAP basis ($3,170) ($2,485) ($944) ($393) ($800) Less: Non-GAAP adjustments (1) 110 (71) 631 51 - Financing Cash flows, as Adjusted ($3,280) ($2,414) ($1,575) ($444) ($800) (1) Non-GAAP adjustments include the impact on cash flows of consolidated sponsored investment funds and consolidated VIEs. |
* * * ** * * * * * * |