BEN - Earnings call transcript Q4 2020 | Franklin Resources, Inc.

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Operator

Welcome to Franklin Resources' Earnings Conference Call for the Quarter and Fiscal Year Ended September 30, 2020. My name is Holly and I'll be your call operator today. Please note the information presented on this conference call is preliminary. Statements made on this conference call regarding Franklin Resources, Inc, which are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from any future results expressed or implied by such forward-looking statements. risks, and in important the most Franklin's Exchange including risks in are Securities recent other and Commission, detail factors XX-Q more recent the Form and XX-K uncertainties of filings. factors and described and MD&A and These section risk Franklin's the filings with this [Operator reminder, is recorded. conference Instructions] As being call a Jenny At Franklin Resources' to this call Johnson. the over time, I turn would and like CEO, to President Ms. you Johnson, begin. may

Jenny Johnson

We've bring especially the announced in works on acquisition these full Franklin way position challenges rationale fourth today Hello, In a under made short since in Johnson, fiscal to areas and by announced support only Templeton are quarter the this significant combined in this and ones initially that that closing Matthew reflect has maximize staying loved Templeton's on you M&A all presented of organization. multiyear platforms of forward, February. powerful strengthened balanced only and we've We including expected. newly discuss ahead schedule. And made include thank we change. conditions, progress and on I'm but for growth, home strategic complimentary moving amount our execute time Greg been key that extraordinary and plan the together quarter organization. strategic that becoming Templeton, efforts Legg that CFO. our business hope investments the Mason and and more morning us XXXX earlier by to remarkable capitalize a safe progress company Today, Franklin the joining Chairman COVID-XX, in results. results The Nicholls, We and directly to year one year, we our we acquisitions your and This creates than call everyone opportunities, firm's organic Franklin two able back combination fiscal of our of despite for this the a industry from joined year to Executive healthy. focused two months

presence now different our our sell to investment has of global reinforce We've each our investment able created world. toward exceptional global realized with retail we is that by talented global of and been team already report acceptance our integration, to XX% We're to ability but We with in high-quality and and offering integral made from acquisition or globally. part be specialist to an An to strong reactions of our range shareholders fully to has so many specialized the professionals And had Legg it SIM appointed capabilities, growth productive not important focus rate of a and to shared with the to the across on around client the Our holding not outcomes. meet years and pleased could we've channels this joined regional markets of employment from employees. Mason Mason leaders roles areas leadership cross eye place also the leaders both client for institutional commitment leaders pleased or have other. with company been all we efforts that were conversations certain in Together, have frequent a in managers all-weather the alignment, the of distribution delivering We're note an to significantly products impressive is will the organizations each have of It's excited company planning Legg bring SIM. investment the We've the and expanded to greater alone. about enhanced just strategic advisors product people become key company positive. board. group consistently been of come. needs for benefits, clients, many to have also offers

structure Our more growth and for end-to-end increase most to ensure regional us. utilized clients their accountability distribution is out designed client with of centric relationships new get the

also capabilities. managers their retain investment specialized institutional distribution strong each Our

focused with billion overseeing customize skills professionals more investment together of asset investors to multi the combination opportunity with multi franchises of from solutions. solutions, capabilities and the autonomy than business with This Sims, infrastructure largest in the Franklin preserving than Franklin Templeton the platform team The Templeton to exception, strategies, investments technology. the best independent combined form and adding have strong quantitative while a to full-service We investment has single class sizable providers. investment XXX QS already them compete asset benefits Templeton in capabilities. with We're the one fundamental class solutions $XXX on an In of world in more clients. investment scale powerful global now Franklin benefit seeing multi providing Franklin brings asset of active, to QS portfolios Templeton have creating for set to

We play And continue to an portfolios. capitalize this. important well to role client active in believe will increasingly on that positioned management we're

front, fund performance over including standard assets outperforming On stars are approximately periods, their of XXX raised funds by mutual time Morningstar. the the four or half peers over five

X assets, X, and the fixed the most respectively, have for institutional and XX also XX%, performance, X, income periods XX%, of applicable We strong with and XX% year in beating alternatives. notably XX% benchmarks

in net On both net quarter. income Western Assets, $XXX the decade. billion fixed of reached to level in in billion long-term over attracted total long strong, in which pleased and record its We're a outflows $X.X billion flows assets, front, $XXX assets, US from see on term front the sales highest

year. Additionally, $XX at fixed time, strong, that investment under been will has strategies pipeline. acquisition We common significant We for and introduced was the rebounded the ahead Western opportunity of portfolio performance year On this assets billion positive management period, team the the with assets structure a new for peers income this AUM to tax-free to outstanding, strong our of firm, quarter. to portfolio strong flows performance, management contributing as income announced. is in basis at essentially of recently funds more has strategies. a Martin unfunded than team management billion. platform. for end, year, were a doubling with XX% over for performance funds, the investment bond municipal and billion across at has across billion the our $X.X almost combined managers than across believe Western least firm also DynaTech for Franklin inflows. performance total the net and $X one-year wins the Franklin higher investment assets $XXX strong $XX enhance with Franklin pipeline above align to under of flows strategy quarter with Franklin near performance its with inflows generated Franklin attract in Royce $XX all-time funds fixed combined has standing investment Currie achieve or and flat of group equity continues Franklin increased to with under its several now high ClearBridge to three equity and $XX billion the dividend flows AUM billion billion, assets management. close further group the rising net the growth

Templeton challenging and Western macro global positioned and some truly outflows, unique favor continue Franklin Franklin mutual equity Similarly, challenges continue to Brandywine, our well an be strategies for extensive capabilities to experience value are a market Franklin we Templeton, It's undeniable and but periods global that across strategies. with position and global security that for investing. set benchmark have of peers up more global in conditions. Brandywine ground made and Templeton from macro, also strategy These These strategies macro quarter. on In the performance persist. attrition positioned terms the

in class the strong recorded With with of Partners, Street addition KX firm of an net fifth approximately Benefit price alternative its Street queue consecutive in CLOs quarter quarter experiencing additional in and billion. $X assets of commitments investor Clarion received now to over million. inflows $XXX partner $XXX Partners, build. to and the $XXX totaling is our alternative along of inbound continues Clarion interest asset represents new business million Benefit and the wide. Momentum Advisors, billion with

in cognostic, to billion now to more of $XX market, compared And AUM with in become $X investors retail leading this SMA our are franchise $XXX offering year. billion we're and in well year segment just ago. a ETF doubled positioned the assets a expanded where the billion we As over more

We are capabilities. fund closed expand to end our also planning

financial increased quarter, from to addition XX% of months two million, Legg increase X% versus prior $XXX adjusted highlights, or last a to of reflecting the operating Mason. Turning largely income the year,

increase cost We $XXX the to from than which in rate tax less we million initial is anticipated. are realized The $XXX benefits attributes to forward run these estimate. achieve $XXX related approximately million originally fiscal of $XXX deductions, be tax XX% on realize track of synergies is approximately of a million realize the transaction, savings be to gross million, XX% to expect expected savings carried XXXX. And end to year of to various with the cash and our by expected which

provide continues higher million principal our with junior and us tremendous of sheet our to to pre a strong senior Our $XXX balance flexibility we Earlier coupon due X.X% month, coupon funding offering notes business. issuing subordinated in to employees all significant I'd of like laser thank this aggregate public completed at XXXX intention and to for call our evolve extraordinary par notes, XXXX. our times their during for to on these clients which March and keep are their smoothly business efforts callable operating needs. focus our at maintaining September finally, And

your to to like open I'd questions. Now, up it

Operator

line the Ken first [Operator with is of J.P. to from Worthington come Instructions] question Morgan. Our going

KenWorthington

Thank good Hi, my question. taking for you morning.

about of distribution far? the you With distribution talked underway, networks the well about agile two organization. in building you the talk regional integration on I integration last more of can the call, think Legg thus

cross over how to And ramp kind last anecdote any hoping maybe wanted I hear commentary. integration, in a then expect products And be the of months. cross couple might most could of and updates the was to Thanks. what out you you'd flesh the successful, what So learned you've gave there. given given selling I selling you

JennyJohnson

thanks for the so Ken. question, Yes,

was thing to first decision a regionalized. more So

out does mean? to that marketing wanted push what and analytics region. product out So data more the and to We

more centrally. historically, So was that done

Europe. you so the talked Julian head Head portion And of is Global and who the And about completely controlled was he Head that of SIM there's Distribution. of of some Currie of know, of it Ide, And Adam on Head we of a Spector head region. leadership taking that now is by Martin now, roles. now as is Brandywine the probably CEO

that's distribution. in with how just both we of the distribution the SIM so handles helpful really how ensuring to each integrate that understand And global their

it's that perspective. having come people from helpful so And who

US of the $XXX retail, independent billion As stronger at in channel. and in we as Mason a footprint stronger provider. Legg much came in were channel SME the with three a much look SMEs, warehouse trillion have very top dollars they broker now far dealer which you is assets, We in our were

the between just the how organizations, capabilities so the penetration than in have some people has and great figuring and two but cases, out one And channel really covering that. you was it looking at to, greater on same

team were. historic And to in penetration is mix those distribution really They Templeton the recognize people, so a trying and Franklin we strong Mason Legg were and it insurance of where of was, kind had our types channel.

Mason So in great they're Legg folks. the

number, teach like and ensure We XX in to remember products. have people of each like spent have sales we've like the webinars that people there's, participated the something to something that all have trying knowledge other's X,XXX done

So spend with time that. a we lot of

anecdotes You comments. the saw the in

example, that up getting were in one for where and a institutions mandate - had another ended an the any we Israel, of had also Israeli SIM. had distribution We never

tell bit little a overlap when now, it's can felt we that covers. about less operating find really thought takes good the we under really you than we and this are, time, of found how with but I distribution got we that So you they

MatthewNicholls

add in and clients, for to distribution staying institutional it's rationale big stability which level, recognizing of I say just Legg business. that, that largely continuity that of creates today manager confidence exactly our specialized business, think organized Mason area the and of to is, that grow the was a is with and on given at fact institutional important portion the investment that transaction thing degree the I institutional as high the the one side, to how a the

JennyJohnson

other me asked of, add positive you one get we thing question And how more flows. actually, let the

retail positive selling of some in acquisition in As think you it really amount we channel. RA BSP and they the things small the there a to have saw, channels doing BSP acquiring had had been and is opportunity Clarion and who was just and did alternatives we like of were REIT what alternatives the were for flow; huge wholesalers actually expertise

industrials, think as in with that had its opportunity who surprises diversify sell feel that income of tensions. overweight surprises, the may they as inflation that's an these and say able say - SMA think heavy escalation funds. investors off relationships of have we real in insurance tremendous up they and things China invested and out Brandywine. we've be the for than perform September. right coming around So And and were And a them And as Templeton have as may risk set they or clear opportunity capabilities. a kind just is Clarion sort big tremendous of I both estate BSP, the there have. bond, of the environment concentration have do any like I SMA, Fund catalyst very continuing like nervousness we feedback advisors policy for well underweight well in and for that, to some as US warehouses we've as is to whether with much they'd retail. whether What penetrating as seen great has is we've performances an more the global Income obviously Mason now think increasingly they're that cross-sell to of very them Western, to and like And of side managers

story think insurance. at message story job in we're can kind of to redemptions. the a better And I we that as their the of think reduction positioning it's begin out some so see doing is I again, And least getting there,

Operator

And will the Research. Patrick line come Autonomous Davitt our next from question of of

PatrickDavitt

the we Could better long-term in comp? reinvested compare amount to you good can distributions the it so Hey, morning, numbers public us flow your all. give of

MatthewNicholls

quarter. $X.X last year a quarter, we distributions had compares $X to know Those and billion Yes, the of $X.X for reinvested billion you as billion ago.

of have seem to confusion here plan flows some a of around out We to decided of view flows. in Our that's it. have anything there, to was simplified presentation to way, we the get terms the those by caused unusual call

and we at planning And our is $X year know not trying So We it. we had avoid activity as quarter, but that's billion often a to for thought you elevated. breadth most it, plan you client end, around out anything last And were business, have number our we call reinvested the time, quarter $X.X the - as discuss unusual know out. client year so billion we're given distributions that's driven and that to we client $X.X the made for but example, of activity that size to with sense, the it billion, ago. discussing

PatrickDavitt

kind on And much that it's the thanks. built money maybe headwind of on you quarter? quarter? and any view hit rate how And the fee December through how recent that? Perfect, that into the to guide, is funds And lens, into any most kind started of there ever tracking do have

MatthewNicholls

projection. the Yes, it's in fully included

PatrickDavitt

last Great. quarter? And was in it the impactful

MatthewNicholls

Not structure the relative that rate to the market of our business. the has and also with Western size business largest of given our money of portion our

margin. some protection the on We have there

material not overall absolutely big, company not it's it's to So operation.

Operator

from line with of Craig will Our come Credit Suisse. next Siegenthaler question the

CraigSiegenthaler

Matthew, I doing to wanted well. Good M&A. start hope you're with morning, Jenny,

so organization. just another months, in in acquisition see the Mason, probably speculation US knowing the in management, we to consider a given Legg M&A you're which Franklin want process the easy over digesting And the on of still asset doing large XX next would that isn't pickup

MatthewNicholls

the in felt going Yes, absolutely flow we are we that I that the think that on. is way what's of

the doubled the to we more it's I internally, our in sure to efficient opportunities some the You're company time opportunity to broadly are, Legg right, we got revenue. maximize meetings realize the transaction. getting started. ways, focused from Mason of of there's when an we every are of I of think in industry, more size interesting or we, terms that mean, output the making from ideas industry under tremendous together very to be the out speaking, perspective, consider, the we either literally assets back, another and just But onion work very, management peel we've internally produce evolution we're have we amount the activity more a we on with dramatic there, many of some

our helps distribution it was have, at a if that. tremendously looking we're going that not any these distribution So primary M&A to further think but flow very for what stretch, side, shut there not I that's was there compelling. something sheet. we us already particular, In by with we in on We're something the have still on balance strong things. are compromise we the if carefully, focus, very We're to

we earnings and internally. going fascinating the elsewhere the use are strong of we're in one we've have making pursuing industry We potential; we it's of flow to opportunities up given ideas to cash times sure companies are change. that, But that the actively not compromise our with keep and got quite the

JennyJohnson

takes dramatically. else looking Yes, to we've tends Matt this more Matt, lot very in industry it the the higher never industry, something our to business. that one. distribution it which continue But add grow for that. at a if little and then related, want we for was we before keeping, case just with know. take high with deal. probably changing be technology in big about digest worth on side also intentional to because that to is having said sort powder And to something that there's bars those came pretty the as the of want Exact - said, we on us were you're and any net always mean, I stay I something a the on just dry But bit else you we up

CraigSiegenthaler

you. Thank

to much US. the of the And Brandywine with very But to as a working do start think into you together? we've start the yields migration the though bond you bit income then really negative in global Western. Franklin flow; you seen follow continue quarter Do do were one flows up and due as this little to industry it'll migration you addition now think all a your for low? company in business have pieces bond. my stronger And bond fixed the the Just continue, the expect if can a are then participate, even just as strong

GregJohnson

have as mean, doing out going seen would Western of think possibly fixed Yes, between rates in US [Indiscernible] I go and on side. We've income that's Greg, to really lot a like that to strength say rates I our federal up. continue is what you is we this areas Fed REIT separate

think positive. mostly rates very that's period. I declined, So the Obviously, over

straight So spike any we bit, the the And of bit. when gets from inflows help it look that especially that buyer. doesn't contraction global that duration that's the bond traditional rates, continuing just very earlier, And really that out. bond September, be saw for and the global fixed end credit well. so else. in equities, think of At at US even little categories just returns a happening And in see look US just will category you income, compare global bond. And it'd everything with and we very any as asset strong Western the for very may I US at the I a looked like fixed, said a the worked why what's attractive. credit, it very and is and flows, day, competes any any if Jenny quarter, we really a in saw or by spreads category that which stood $X.X billion on quarter different our fixed is masked And side, income you

move to we balance up really quickly, pretty if overall is kind any why I nice of this in portfolio. looks the have attractive, think that's think it And rates. you fairly a

Operator

the from next KBW. with Our Robert Lee come line of question will

RobertLee

and everyone. morning, Thanks good

it. to of do adjusted advance filing to around compared should know initially, or of basis - think of maybe use kind you that, --could XX% XX% I maybe like, in I still about we're mean kind tax or we which, just you're as XX% range, just standing find I was question, it mentioned we so how you from you - comment expecting expect First in as baseline, on understand the want GAAP kind the there. was should we XX

MatthewNicholls

baseline, of And business greater business little I'd tax has we've at use gone in the got the up couple rate. of, in have business, as where XX%, and a of rates portion are there our our higher mean, tax a bit. the with jurisdictions I the a the terms US internationally, changed

impacts overall that view. our tax So

spike a model use So the I XX%. in just put was quarter but I maybe view now. the because that mentioned we the was good be is could it unusual of with had The rate would prepared XX% to to in think it a very a confusing, or fourth we XX%, that only for number that XX% remarks, spiked in reasons up it

RobertLee

XX do down that XX. is going and of Great be way. kind just fiscal to run over, quarter XXXX, XX kind or long think got two and of rate? XXXX at of basis, kind the exit consolidated run of maybe term. guessed back in to kind Is And you to rate just fee And fully Speakers] basis, just you change the and rate kind months of --[Multiple unlike in of

MatthewNicholls

very full a on, significant change. Yes. full the The assuming based think year, months mix is you obviously, XX so the that's good business will, of we XX XX guide if that's combination, to a

site a much the Franklin rates versus some So which Templeton, the opportunities the that institutional we where brings down. interesting higher. bigger bigger opportunity there fee fixed business there and And in growth with But growth lowers are the rates a income that time, bit there. quite alternative same business, at is legacy much see

And then higher lower plus the So the you of offset brings alternative business. will, rate it you upwards, federal bond being, have pressure if rate, growth being that's business by income, global broader is fixed what institutional, down. core bond

think it, that's on So of we're hope the for but we range the natural the end year. higher we

Operator

Dan is going question of next from come line Our with Jefferies. the to Fannon

DanFannon

Hi, thanks.

gave performance level in terms so of fees? the think kind or theories is your expense So you you it just looks guidance some rate of are follow baseline what was just that the any assumption the you're about question fee the of also, market up flat And for more assume guidance. guidance and one using, Do the growth? on if as your assumptions modest

MatthewNicholls

we one. projections, not does projection the assume any market average flat, include fees the include assume Two, not So our fees. we growth rate performance do that don't performance, in fee

go performance we next our quarter to fees expect for at from performance a actually percentage up. were April of enjoy from million quarter They We $XX this last Clarion start to fee, after year. standalone larger zero fees

that whereas XX% opportunity XX% So ownership our we we an share get Clarion. It's today, provides XX:XXX performance on in today, don't fees with them any.

get So fee this to and that opportunity quarter we that's in fees Street. to no had was previous in unusual, the an performance more for side. expect wouldn't pick see But from up Benefits so went times last to And up performance million we bit Mason quarter from go Legg million, us to quite $X example, got we XXXX. it a that zero $X surprise in

DanFannon

in highlighted redemption, billion then was out known prepared in not the the the called it $X you of transaction. we Great, comments to that and terms then, that also related

I what either of you business about normal confidence then heard And just the about acquisition. that that. other we might might curious disruptions or just coming gives or from potential around So guess course see have -

JennyJohnson

they So flows standpoint, in from the was on Legg much Legg September, business. as bigger in institutional you the, say a positive just Mason have Mason

because but you're what's going one Franklin historically, lumpier be related redemption not redeeming the that's of called sub out for to Templeton, bigger of transaction, fee, wealth - as low think redemptions, a right in I we on seeing that in to was have relationship. seen going just basically There investment be larger seen tended redemption is for you numbers now. not sovereign haven't we've some Middle than we for funds advisor this more any sort East said, performance, market So where to that transaction it's the the characteristics

couple X,XXX we like in optimistic things going performance and the value you're are the areas with on So the issues have, standpoint how points we global indexes going still year-to-date. macro, it and from are as to obviously always integration clients. performs a have But value, basis of

So switch. there's it's are throw could others people value, that towel on in ready to just maybe to some that the time

always to more on a bit are be, those going So institutional lumpy. the extent little to the side there

MatthewNicholls

billion obviously, as pleased $XX.X $XX.X when with you we'd quarter outflows. that. is very outflows quarter, and outflows about about $XX.X billion But of billion, and it, the no general Franklin it's have a last standalone think Templeton matter, like rather from consistent not previous we're quarter the But both before the

one you the about again. the out that firm times well, of is driven that wins - attrition unfunded billion if so important were market $XX.X positioning really we we to sort come the under is $X do same December would things of have that say some of like across get billion expect we exactly do percentage lot. So the are or And market because difficult those also will point more something Jenny and starts I'd very that important strategies driven, that the quarter. by a is in hood it's the that have, here our come a that the down all-weather if an this think the in of made regard strategies, few

Operator

Our Stanley. from Morgan Cyprys will of Michael next come question with the line

MichaelCyprys

Thanks morning. for question. Good the taking

Just you asset create on to multi the guys front, the asset multi combined asset multi Group Franklin the Solutions solution platform. standalone have with QS Templeton

to sense and similar bit a look would more How to then the you're opportunity there team. and industry like else up little it entirely, the most bringing set? Just just thinking create as strategy sort could across together investment over hoping make where just from think there. of the you And excited Franklin follow time about organization be talk about? you're about could Templeton you maybe about some the combined businesses teams of the What

JennyJohnson

much it So kind could we about that and a the and got SMA, talked thought on QS together about and together. stronger much said, be of really very it teams

really this of assets. $XXX kind So investment from those is organically in has that billion organization professionals coming combined XXX teams. and Today,

on models was a strong think QS active type them risk, managed being them of institutional as makes And they like world's together, And more risk active trying quant quant, risk this think conversation, going, of position in they much of how way diligence, around the overlay bringing and bringing So mitigation a sense an to that. tremendous you're and clients due had hybrid outside Franklin active intrigued almost for when come side, about capability driven it's outcome while things there we their are right future what for this so capability way retail allocations. I or and - accounts, does. just portfolio. record is manager quants, looking separately get of retail, if able of was have liabilities active, in quants, managers your an really the an they to through, whether conversation, us oriented investments, that's was them to have track their on the think And really sort the models their kind to of to own that like they're the think build how portfolios, to gives OCIO and channel,

GregJohnson

and the value-added and mean, up I think institutional new just channels also insurance. I that accounts, LDIs a having at would side just from it of like looking add, risk capability, overlays, I and client opening service

into clients For one also bringing one. that we with that's exciting. have I large that us, think a offer example very deepen expertise scale, then that the And in clients, where you the it's toolbox to increases And we leveraging examples, of all can it organization, just hopefully, hopefully and relationships. bring

JennyJohnson

that merging of the about on rise answer that's together, do or ability see healthy. talked certain And and part rate just have other our to is income views product whether And all-weather we'll that's inflation that deal. and products the products it you curve, different CIO And they of outcomes. see the not to for and very not we're just have opportunities different fixed the what Western. timing we global at other is And think or on different an lineup, to to bring on end the not question that interest long in focused is part CIO groups this on of together, we

same that we arguably that to side, the where and have you decide clients different in one for, deliver the to competing what say options be equities, that they comfortable distribution option, Our the on fixed distribution best income capability either to to in the able category, answer managers very or have with the going can have two equity RFP side. the category. two on been that I added now, selling the different same you're team up was discern data, with They has - looking just

Operator

line Katz with Our from next Bill question come of will the Citigroup.

BillKatz

for very taking thanks question. Okay, much the

or what back Jenny your XXXX coming of sure So of by billion. of to I about I'm guess you a depressed you kind to guidance probably of of plugging that fiscal into sort Matthew, COVID-XX assumptions just entertainment, think sense are things just that number, sort around given $X.X expense terms What the of playing in trying get not normal travel, are G&A backdrop?

MatthewNicholls

Bill. your son hope I Hey, well. doing is

optimistic in advertising, for maybe is a So normalization this building I these franchise. say that sort next more as terms as a in would been But working of beginning you'd client But of, as of we've that built built March we're in my things of distribution, distractive. also sorts say us sense expect the sense do of on promotion, again, we've we that we're, year. breathe, in to we in

we the to and number of normality and some healthy for number next $XXX million for a after to year, continue allow So form which our to travel, to a have G&A, allows of important in year things back does forecasted quarter annualized first is invest about us go the for

BillKatz

as a repurchase you that's helpful. up, just started stock to in I the noticed some follow quarter. And Great,

business stages investors your you of the the return versus was it cash evolution? commentary into of the how just to So versus counterbalance that beginning of do back reinvesting sort M&A an

MatthewNicholls

to on give Yes, we, so still have to confidence last us or quarter, you use can our so It's and see, look when now underpinning balance investments, at $X.X investments. our in quite fact, $X.X billion ended cash cash we sheet the healthy income. at back, you billion we billion

with months there significantly Legg Now of just enhanced. income Mason pretty already is two in

grants. December, have the some repurchases, you in there. a expect history we our already investments, we opportunities, seek what pressure a we co at some and dividend obviously, capital on you what of the terms our of ups the plan our in other breath even, additional that can we're And focused I feel to new making, board minimum share year requests don't offset that or respect may management make multiple know share repurchases, subject top share think I consider with new and we do as a that, elsewhere. of end very our reach internally, policy. And sure given to approving firm So we growth if continue opportunities, to we all to then and internal to say the would is of quarter capital And do either then then

just and forward, as if profile debt stay if current stay aren't a current more that they markets some mentioned, assuming maybe we earlier maybe to the use where expensive now, they refinance attractive, that our million notes, debt load, to on debt where keep the refinance you delever stays as and we're stay our cash. also the want notes more month, to We about are, credit higher same as having rates and this intend we EBITDA as going about that, said successfully going the we expensive $XX the have are, But market access Jenny proceeds much to intact. actually load without rates rates know, But save we if we we that. at get for because well out

of that our more combination do things. the to have a current we'll valuation, capacity really And it. given of it's shares, the buy if those So end day, we

Operator

from Sachs. will line question the next with Alex come Our Blostein of Goldman

AlexBlostein

Hey, thanks, guys.

expense point. Matthew help at you with guidance, a know to So this couple assumption? sensitivity on flat can I clarification generally the markets guys some expense revenue you assuming the that returns? market if a help were But be billion markets normalized to of for higher, with kind kind the can of us XXXX. sensitivity to in $X.X you what's Just us of said guide are you understand your

MatthewNicholls

that it and it. the if down, an course, That's includes as we don't adjusted that in adjusted number billion Yes, of If $X.X because go billion. up, how disciplined GAAP I markets that's a it'll But be still I could billion. number, fact that's number, $X.X comfort the that given could or have I'd I say the see markets SMA. sort that But of beyond be higher lower, come some down. us an think number, come would describe $X.X going up the

AlexBlostein

making another small in cash given acquisition, out in a the devaluation stock find stock or in level? I another around free flow versus management continuously channel around back then Franklin And the channel generation buying business, the building can something IRA framework out whether early side, the to distribution question, of us on it's kind Yes. guess, the help capital what you of this understand

MatthewNicholls

great for back high, Yes, bar look, dollar be every stock I think fact like we're buying because yield. question the it's dividend is obviously us in has a probably quite given our the to that like X%

on and we're quite be from based We doing deals dilute. that. current on won't multiple focused stock our at So large

Okay, were fixed sorry. I've talking we? so about. I we it. okay. hear I'm Alex, I'm sorry what no, you Okay, just that. track can lost of were about Where me?

JennyJohnson

the we about You on --. buy back whether were answering question decision

MatthewNicholls

yes. Oh, yes, high the bar,

the I of multiple. do we not we're same stock it's stock. to So using just going reasons mentioned for large unless bar a our And transaction the kind have high a on our for

savings, management, both small good to bit said think of terms the it all cash, that out growth, our us that is in up we transactions, execution well. a wealth the they around accretive works I two being the use of cost ended we So little way quite of because revenue very in did it's

It's asset some so the I how we transactions continue would there'd use to to that we we think. would alternative to use cash our that there. So have are where describe be stocks out trust. our side interesting in and wealth, opportunities much There that And smaller on grow that. be fiduciary that's

Operator

Our Wells line Chris next question Fargo. of will come with Harris the from

ChrisHarris

Thanks.

seeing the class, So there an as real But asset quickly, momentum estate you are been you've generally, highlighted in estate. commercial some concerns real about alternatives.

in Clarion area? is with downturn position to deal that So the how seeing we're particular

JennyJohnson

e-commerce If very Amazon So very, up, done more Clarion is is industrial overweight well. goes that demand area storage. so needs

And And so that it's and real on that's on. estate. commercial more underweight had focused they an really on area the And demand were things. they cloud

- their are right they So performance performance. very now is with positioned well actually

ChrisHarris

more noise profit quick traditional here, the model. one one some the was, got on of just then revenue and because expenses. Legg Okay, we've I Franklin's its and know, and share,

probably being I if the base, we're base considering at at looking the look net cost we we addressable what Because is what expense if are In shouldn't synergies you aggregate these words, will? of? other expense be So the when know entire that. base,

MatthewNicholls

think No, should. you I

it's to as billion I you early guidance. I should it addressable. But against being as for at think the I that correct look we've $X.X that XXXX. think know, guided think very of it's

Operator

Our next Carrier question Mike America. with will come from of Bank the line of

MikeCarrier

taking the Good Thanks for question. Hi. morning.

up. follow two Just

synergies color with full the just then if XQ any given the like of we Legg the of when on the level expense [Indiscernible] XX% and impacted timing a starting adjusted of point year. during the of, expect and realized a Given parts for September, have fiscal then expenses, should by you lot moving the end XX%

MatthewNicholls

XX%, progress we've Yes, good say so so made I'd on the far. only

already that XX% we think achieved X/XX. we mentioned it by I of

by we that side sure expect the stability yes, around the left. group then end, XX% sure rest hope it June. make upon would spend that that's and to to it the that's executing we we but say to we make And have expense continuity XX% But be by, some of office said achieve front or end more be to like I get January. managed going reductions We of of most there'll year We probably and time we've more the carefully discussed. particular that wanted to on the

get again, maybe the year. to we say got I of get the by XX%, we, of the XX% we and XX% it's then end of June, up January, that the we've rest fair fiscal the to the end end done think So XX% by

we associated Mason. In terms one, in Legg a through to I normalize, on revenue of of it's the what maybe think, with term walk and - bought from useful expenses

of revenue. was $XXX two million months Mason Legg So about

$XXX excluding distribution it's you non-recurring exclude as and a of It's the $XXX an if But so you or quarter quarterized, level acquisition about it's related the $XXX million of million revenue. it related items, $XXX to sales exclude sales million. annual was we fees, of will, fees. that terms distribution least into $XXX expense that million on all and sales about about annualized was you million, just inclusive the noisy with acquisition months said, distribution, two sort bit in if a about billion include about say $X.XX of expenses, Mason you And expenses. the to the Legg If

minus you distribution, it's to think of way I looking one So it. That's XXX six and include sale it XXX times XXX. being, equals XXX, at if as about

sales six XXX distribution, execute and you it's If times XXX XXX. XXX, minus is

helps think in you but I So you expect cost additional don't know those it overlay, the adding to achieve to included remember, could business. haven't because that that included Maybe aids, including we're look that the numbers, the on that our an as we top about are that we the in run at of addition, as years. if during if rate being

MikeCarrier

on and fee rate. clarification Yes, the one then just that's helpful

to quarter, even was it seems XX about that XX. not like than with little the the then month includes like forma. impact, pro around XX. another XX, XX. seems a even the the lower Franklin of it of I from an relative And And if delay, the Just expected when then If stand I look much alphabet to at that's that think

impacting So - I wasn't else sure the if there run quarter, either was or rate something we're this just like impacting

MatthewNicholls

No, it they're think and nothing good in particular, we guide. we've out modeled

Operator

Brian will Our from next Bedell. line of come the question

BrianBedell

Great, $X.X if billion cash cash cash, thanks the be deals in the what available in if capacity morning, answered. has think and much. additional Matt, just type about follow questions actually you for as what my you're asked been do and doing of and said, Most then them view on that, to level one for debt of you Good within you cash up investments, able acquisitions do? But capacity you'd very like guys. also

MatthewNicholls

to you the make X intend to that cash, call sure in place. as because see that we like we SUP, it's we're keep it's $ you we again, Yes, conservative, we billion liquidity. a out And supplemental probably, we're, know probably of quite it have the

we're disciplined So that. around

be that's excess could so - if to number looking we that's you cash excess, And that be we that. probably it consider for how are what would

maybe of we would that double but people terms and define it In wouldn't. that other number as

of that capacity, current debt the and absolute maintain is an access sure is AX our just terms as intention we transaction, that way we In and our in profile, debt know, capital focus very credit structure our and with which to that's a we in company make that and rating we're markets operate and to writing pleased intend profile consistent retain with the that. you

to described investors, So our have some given debt we our at don't debt push to capacity with what or capacity, that level, probably them. out limits agencies intend we with rating our we've whatsoever the

terms on very in of but substantial capacity grade very, we investment technical focused don't debt, that. is to to use quite we're So that. intend The

BrianBedell

and And about could a other capabilities that totality the How then ESG. traction, are the or ClearBridge platforms little ESG about Legg's the you Jenny and few also also Franklin if a affiliates. leveraging are bit process just ESG certainly some managers had across Okay. about through of that talk that you managers. Obviously, at and you leaving good thinking thinking or That's integrating within centralizing helpful. Western individual

JennyJohnson

ESG apply centralized a team. get the So the of and is that more framework a to created with you the But investment database. member lot standardization think actually to respect trying a the around we we're which data, data, [savvy] we've to ESG, in specific

hard global their goes really teams it are any ESG team, of are data feeds framework, database, But into to think then different data welcome as to built centralized framework ESG model. XX this I they build get that use we So and the own they their working investment macro that your standardize But build savvy in the answer think part IPI that people of Greg it on at with question, trying of fundamental investment process. framework. of their the the just ESG. participates And part information the, look to to is to in we the industry lot and

BrianBedell

makes one? more sense. one quick ask Yes. I May real That

JennyJohnson

the is demand it's bond area, like demand, is I'll pretty and got this fund municipal little our and Franklin great our ESG and grand. green make year-to-date, this pitch, nice main X% she

BrianBedell

employment That's any thinking, great. that On either XX% guess. acceptance, were was And from that there or key non what were with PM acceptances in that in line X%. I significant leaders you

JennyJohnson

was that think up we on holding that and a and felt you So no, we lot both think of combination company more investment making distribution we the - you no a company talking And I specific like we I about set holding and makes and employees what what out, focused should And see sure we're groups. that there again, it's plays. like distribution. on both ended was weren't really people. of that And one really we you on percentage not I think Mason miss,

Operator

for Research. question come last with from Davitt of today Our the Autonomous will line Patrick

Patrick Davitt

yes. has my Brian Hey, asked question.

So thanks.

Jenny Johnson

our just sheet to to evolve, our organizations for to stay been great. at the strong shared only knew further delivering crystallized Okay, as results aligned incredibly are investment you culture we guys with for Well, terms participating of but investment providing in listen, and clients. what that really continuing fit, thought, and want and want is again, choice flexibility focus our in things two thank really that strategic we our our of think, as clients. I I forward everybody from balance for unparalleled And leave call. that one today's service beginning look and just forefront to industry keeping And the on is

everybody, So thank be for out safe and participating there. you,

Operator

do participation Thank conference we participating Once now your today's may appreciate disconnect. call. and on you again, for you

Greg Johnson	Executive Chairman and Chairman of the Board
Jenny Johnson	President and Chief Executive Officer
Matthew Nicholls	Executive Vice President and Chief Financial Officer
Ken Worthington	J.P. Morgan
Patrick Davitt	Autonomous Research
Craig Siegenthaler	Credit Suisse
Robert Lee	Keefe, Bruyette & Woods
Dan Fannon	Jefferies & Company Inc
Michael Cyprys	Morgan Stanley
Bill Katz	Citigroup Inc
Alex Blostein	Goldman Sachs
Chris Harris	Wells Fargo Securities
Mike Carrier	Bank of America Merrill Lynch
Brian Bedell	Deutsche Bank

Franklin Resources (BEN) 27 Oct 202020 Q4 Earnings call transcript