BEN - Earnings call transcript Q1 2025 | Franklin Resources, Inc.

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Operator

Welcome to Franklin Resources Earnings Conference Call for the quarter ended December 31, 2024. Hello. My name is Matt, and I'll be your call operator today.

As a reminder, this conference is being recorded. [Operator Instructions] I'd now like to turn the conference over to your host, Selene Oh, Chief Communications Officer and Head of Investor Relations for Franklin Resources. you. Thank

begin. may You

Selene Oh

are differ to thank implied XXXX. results. joining Franklin's results described factors uncertainties conference Statements XX-K Inc., number Litigation of and historical sections Franklin actual and of Factors from known statements. These any the other discuss Private and or cause recent of forward-looking could the detail most and recent call Franklin's today other statements just our and expressed results that materially the Risk Resources, Securities facts not are quarterly Securities made Act which and factors Exchange by and risks, statements the in you morning, XX-Q future with in important within and us meaning of for Reform Form filings. more to are regarding forward-looking These forward-looking Good unknown Commission, on MD&A a this such filings the other including risks, uncertainties important in involve

I'd call and turn Jenny to the over to Executive Officer. President Chief our Johnson, Now like

Jennifer Johnson

and our Selene. Distribution. We'll your here our thank review will with questions and but highlights. Nicholls, for Adam to discuss joining Welcome Global Franklin results. Templeton's Matt you, Thank CFO and first, I COO; I'm Head us of fiscal Spector, quarter you shortly answer the quarter's

can want to of with from large to clients is the asset and other clients their deeper Asia East What's wealth clear across and and funds Middle more that past key fewer these the me Europe, I've needs. with clients months, relationships conversations owners. managers For ranging traveled few sovereign that meet asset met from to institutions wealth

outside adviser and to public market across intentionally few years, range our classes, our we market in vehicles managers various to conditions countries, managers, we recent presence America specialist and with clients strategic offices approximately cycles. Ever we $XXX benefit and trusted clients have years clients geographies XX since Today, and offices to billion includes positioned XX new advantage, in one global of management. been over broad enabling believe global reach we ago, our be the footprint global has over around our of investment a In through perspective asset serving XXX a asset and of North first As world. us private the are well assets diversified strategies, to investors. a opened extensive in our under company represents

and presidential public notched Global regions during the NASDAQ positive Japan, fiscal markets posted by volatility election XXX U.S. higher Bank X% and Central quarter, actions Europe, results, Starting of presidential trade return a our S&P emerging pressure faced markets XXX election, the X.X% China and During market inflation. equity while ticked like gain. concerns U.S. with the the equity growth uncertainties. saw quarter, while U.S. other and about first part geopolitical economic returns, The in total markets. the U.K., X% the tariff with to uncertainty, a fell equities

lead U.S. earnings believe equity still in with continuing the investment but to equity coming consumer, care way. the lagged. International QX The modest value in year. firms. services and delivered the caps while the more likely valuations quarters, stocks stalled X bit teams the than and remained While The is the and that the Growth markets a markets equity positive the came management U.S. in major support technology and for markets communication largest year, U.S. small global year. In returns for tech were U.S. higher growth trends materials place. by driven returns outperformed our from health quarter the to across both previous caps outperforming large stocks gains

generate to December centered pronounced top of management the the value the policies companies. focus picture issues: out as increase, dispersion of And continue more their also and the to to We inflation reminder and performers more today's just uncertainty markets markets. play also AI. the questions Investor to can market. cap come portfolios. Meanwhile, favors Valuations from should believe the starting signs is diversification this are dynamic dispersion mispriced move meaning quickly this in that seen of than and from securities a tech more managers new administration. turning quarter identify should balance in equity on that investors we've will and to about within skilled and that mega on likely This into ability focus come active race the active rate It's week to DeepSeek to focus alpha. capture raised surrounding two U.S. global

try robust next and economic relatively policy on the over especially Following sustained point to sticky inflation growth, government of reality moves, we Early Fed the the pause in expectations to turn and months, and fiscal solidify a regulations data, markets elevated could several some uncertainty in numbers would U.S. expect U.S. anticipate while regarding prudent overestimated. a proposed tariffs. markets and robust policy may adopt see have rhetoric U.S. We its to between pressures. as inflationary easing tariffs, for which growth remaining distinguish something

The fixed up over from curve. curve does time, income to for what the and going yield continues So benefit investors this will mean steepen markets?

rate to As yield. their cycle for the source end, close regaining an are traditional fixed income a as seems cutting primary Fed's role sectors

to in still attractive continue even tight. at our spread relatively sectors, the managers of robust pace income as spreads remain Given fixed yields find opportunities activity

Turning to the private markets.

the allocating much the levels, ecosystem. across market XXXX reset private As of we valuations attractive that have in from looks believe coming year capital their

secondaries, covenants. tremendous opportunities trillion of today's of believe these XX investors capital We couple are December market returns pricing to exists equity the strategies. A and that features, Morningstar. real larger these can to have group see more over terms estate of more the sidelines in funds increasingly according with flexible years. debt. on been and able sat and deploy valuable significant investments to in favorable global Investors professionals not we at With estate making highs real assets evolution Specifically, negotiate product past environment a capture versatile with market accessible financial opportunity allocating as client $X.X who have money of assets record in and

motion. broad competitive well the expertise of comprehensive managers, extensive and differentiate one asset most capture allow us management and investment global positioned to world's money As asset increasingly continued capabilities, our to distribution us in network an local to in be industry

In fact, Fund of just appointed the and Trustee of were Investment as we Manager week, this National Uzbekistan.

support of We are partner in Uzbekistan of local of development pleased with government their the the capital to markets.

including similar listed Bucharest markets have London mandates, we closed-end and specialized emerging Fondul, managed a years, XX over For Romanian fund. actively

to our now Turning business.

Our our areas, progress across volatility. first meet amid our to needs fiscal of key quarter growth market the heightened clients us results demonstrated enabling

quarter Our decrease well $X.XX be prior from at continues the markets quarter net trillion, asset to AUM Asset. and across class, diversified client to the Western long-term outflows a ended negative and type and due region from

long-term distributions, prior improved net $XX reinvested Long-term billion, from XX% quarter. outflows including distributions. $XX inflows year the billion were by reinvested Excluding of

quantitative, billion. continues as across core smart Excluding classes, positive in $XX.X of were were generated billion inflows asset inflows combined to Western risk strategies. Investment alternatives, infrastructure every listed long-term distributions multi-asset net approximately income asset of equity, and billion in Fixed periods positive $XX.X billion $XX and all were $XX a net net outflows flows investors all performance $XX.X Asset reinvested and to our included and positive into class. strong Equity be saw X We net cap large-cap assets. beta billion. return flows. Management, net our value,

income Western, Excluding positive multi-sector, fixed high-yield net into and core inflows bond were strategies.

from totaling benefit the billion investment broad previous select committed near enhancements them. for Management presented As fixed and Western's range creating philosophies. be Global in combined term, will efficiencies we $X Fixed with past broader for highlighted both in will flows, net These income income Income our positive strategies strategies investment are access of generated while giving supporting a in and the functions, year to we fixed clients. autonomy. our has calls, quarter. This significant challenges FT integrate Brandywine non-correlated we Asset seamless ensuring and to Western team resources corporate In

This generated fund, Markets first million evergreen designed Franklin $X.X cap the equity wealth of billion, we Fund, The realizations launched January, distributions the management. private quarter, $X.X billion. In billion. $XXX of assets Aggregate in Private $X for fundraising secondaries fund initial achieved under private which channel. our totaled and fundraising Lexington alternatives assets and market were an

Franklin alternative are managers. Markets launched Debt funds Templeton of Franklin have to we Partners alternatives equity, Income These all We in our semiliquid Private look Wealth essential subscriptions. our the also for milestone Management BSP a parallel billion Fund. by internationally. reaching Estate AUM an business, this Lexington vehicles further capital are product space. are perpetual win forward secondary Real nearly Clarion of and alternatives in Real examples each and These $X how our Estate private great in elements Fund has of to Today, evergreen important

past focused supporting the we investing few education innovative, advisers. Over suitable years, and products, wealth designing client on in have

Our alternative channel works large approximately that with The our a alternative force. team local model is overall distribution our comprised coverage specialist of of dedicated is wealth sales AUM. XX%

and AUM. stocks, across in flexible example expect be invest Looking of mind and specialist $X.X it ahead, yield to billion by private is and to for as Franklin in global allocation dividend-paying vehicles. Franklin Solutions raises. Multi-asset ended our inflows enables alternative gradually including Canvas and launch of and bonds geographies wealth offer Investment products and custom securities our strategies, network strategy represent Income to Franklin teams Income platform team and in managers grow multiple Templeton the channel, investors. XX% of capital clients The quarter in of a Fund, approach high innovative we net $XX and our XX% indexing the with leverages diversified Fund's to different convertible to we alternatives were a Income in demand great Solutions. to billion, led to Investment investment across continue a strategies top investment increase

in Turning a ETFs, investment interest retail Clients options, diverse Canvas. to including and showed range of SMAs vehicles. investment

XXth financial assets. Retail in positive professionals ETFs billion consecutive and in of largest an our has billion, asset excluding software inflows from platform, funds ETF closely AUM. Nine products efficient record enhanced Western, use net with XX% solutions. the had clients U.S. billion perspective, leadership $XX.X Western. $X.X strategies, have of with to tax-managed end, attracting but was SMAs quarter Through the create Canvas of are and $XX.X billion of grown pipeline. and across billion million pipeline one increase despite web-based in specialist net personalized partner and $XXX including the for flows AUM now mandates AUM a managers, income From portfolio represent over by of allows Canvas, during a are to increased with XX% these institutional had X with $X.X to investment quarter mandates billion it flows, their to prior and challenges Franklin technology, billion. $X.X personalized AUM equity of $X.X of we ETF Our class continue clients, saw $XXX and $X the our in business classes being remains SMA SMAs. the X bond net now develop unfunded diversified QX. of billion of our its core quarter. At asset Fixed

across Before of billion of performance, billion I which the By net in Asset $XX higher Management. wanted brief $XX marketed Asset outflows AUM I occurred update to December $XXX quarter, December. on provide XX, managed Western to it the of in Western month experienced strategies. In investment a significantly Western billion, XX of turn long-term

net we AUM are of approximately to for While as it's billion Western's be January month $XX AUM $XXX of long-term inflows outflows preliminary billion. January and next week, approximately expected report had the

approximately billion. Excluding Western, we expect of inflows $X.X long-term net

our the prior investment decline the X/X period unchanged the our asset fund quarter continue period was Now time-tested disciplines U.S. improved was of strategies. X-year the period, investment stayed X-year in and classes, from prior and over in all their XX-year declined in for and performance investment and X- of peers in beating to the Compared AUM XX-year the quarter, performance, their respective periods XX-year have in produce investment respective the modest in to periods X- composites to benchmarks X-year primarily the than the across their investment returns. and X-year flat improved the performance in in X-year outperformed period period. period. are the AUM periods. true terms approaches competitive distinct remained to teams and fund More X-year the Mutual of relatively XX% mutual half equity and X- the for and composite strategy due

from prior from in of quarter long-term decrease benefits Western initiatives expenses We to prior enhancing in investing be the Turning a be the financial implementing results. of maintaining connection briefly $XXX.X with our cost on will the and which of during operating fiscal additional X% we business was will and the realized while decrease our savings whole, XXXX. managing to million, as remain X% strategically Adjusted our a serve In year income a of XXXX, focus clients to shareholder vision and committed fiscal value. best quarter.

financial showcasing what's rich we I'm the excited month, we're exciting an drive This clear growth legacy With outstanding and partner have to announced the the and innovation. campaign, focused our professionals. already opportunities strong highlights evolving capabilities our trusted client ahead, a of breadth in for This we underway, Franklin new our on of the with experience Looking areas. vision advertising while investment elevating performance our of your clients' critical strategies, most Templeton's for about launch U.S. many of needs ahead. continued growth progress campaign and

the Canvas, SMAs. investments, of public include customized and highlighted capabilities ETFs Some alternative and our solutions,

dedicated Finally, Templeton who recognized the to again clients, talented proud lead investments. I'd in behalf like to on as thank I'm one December, and hard their tirelessly such work organization. employees them and to was and of best and work to our of our dedication by in management Franklin money for pension work places

open questions. your up Operator? call to let's Now the

Operator

here is Alex Goldman question first Sachs. Our Instructions] Blostein [Operator from from

Alexander Blostein

from and help guess, us income I contribution hard obviously with frame going management next it's you Since But obviously, we do to much But where operating stands from on this What down. strategic kind to of will And to the So kind maybe you look in functions. picture. however, that I the just today? one more selected where of update smaller here? Western importantly, for of the of only for ends Appreciate as a fee corporate integrating person quarters Western, of size. now, Western couple help gets could I in about can the pretty terms what And settle that? ultimately and you maybe the January continues up know of us talked is think about savings whole anticipate per things over know from kind ring-fence some challenging start be thing the vision be outflows AUM what it like Western.

Jennifer Johnson

kind rest little the a to has over the strategic model Alex. framing. been side obviously, we lot of and And the then of we Look, the and and can get make like investment is investments know, teams, it do maintain other so financial Western independence that the things bit the and of we AI support investment center. years, the Thanks, was into independent. firm integrate some that integrate always that's data. to our kind basically scale, I'll we're looking the the of technology greater like business independence on it the to address you that. turn areas, done a Matt time But is, in all it on the and takes and initiative of over the of to X that team this things as and broader what we've of at accounting, And acquisitions at even past fund we

so about is you a of do talk natural the impact? and underway. And to that And Matt, evolution want work it's that really

Matthew Nicholls

Alex. morning, Good yes. Yes,

of into things impact then couple and the context Western, financial 'XX. I'll of So impact and of then about through in annual put and 'XX it terms a into talking mention of

probably it. I useful looking most think at of that's the way

adjusted it is the equates billion, Franklin's revenue. The outflows of revenue. impact, about about of Western to equates financial impact year rate you equates this X% the revenue. income That mentioned, revenue with I 'XX greater, in to full operating we're Western X% full of be through to rate a year of if end 'XX adjusted revenue but to up of methodical Franklin's run impact on that of from in August So ensure not approximately of for given January, to Western Western's XX% time, disciplined continued we're supportive, how current mind, tackle though, terms of $XXX run The confused remaining and disciplined, being a Top we of period will that adjusted excellence obviously with about as need Franklin. terms as last And the client revenue of Jenny all shouldn't this. -- mentioned quarter, obviously being, being to super with experience about expenses declines. of being is in be of catch

Jenny with functions mentioned, expires implement is enable that in Resources to autonomy. This will the being significantly the assisting end agreement Western asset in able a of team to July corporate of autonomous as by certain So retaining Jenny while, that operation, mentioned, management which us X-year again, specifically, investment this of scaled result our will accelerating benefits Western, Franklin integration year. larger referenced as the Jenny capture much

say, margin I be, the our sort and think to expect fees, normalize the important the year's performance expect -- it exclude expenses expenses. very last it's you do year in look to We to to full last terms if of year. then a at for let's roughly we year adjusted year be of for Putnam with expenses, even similar impact, of

funding business. saves cost to elsewhere the continue strategic important with investments them in We make and

of certain or say, little let's so short in us again a for October We our the experienced functions expansion bit to quarter reduce X. of starts then fiscal margin margin and support and expect the that term, in of XXXX, the impact in of Western over integration our by next remembering Western

we to important rate XXXX explain to For fiscal now further context, $XXX about the run initiatives working on enter it, expense that -- with 'XX think normally but wouldn't for equivalent XXXX is $XXX our expense -- to million why of talk we of in it's about perspective, position us further which million expect to we're I this perspective in reductions. expense

Asset. effective points. You general, currently fee asked revenue Western don't XX.X of give basis In we the look, about guidance. It's rate obviously,

All time in to within Income, with other pockets Solutions do lower even itself, add Western of this from recovery. areas Fixed and of growth, we markets. fee prepared margin assumes ETFs, Western obviously expect Canvas, Alternatives, Franklin will which the over revenue flat be other remarks, her growth the that replaced referenced and of But to Jenny

a this thing. is two-pronged So sort of

to about reductions margin, expense expansion our margin of I on gave start And obviously, and mentioned. discipline happen begin into that margin, the call, expansion targets XX%, XXXXbut our of And any margin until exactly target or XXXX. the we've any We're on expense obviously, that margin remains then, positive year-end. not have, side the on that effects you same. just at changing margin we the will referenced happen You of we say, is effect finally, won't another in layer the revenue targets, get talked medium-term our let's year-end at of our guidance then and that the -- and --

Jennifer Johnson

of going you Western at with and much to to then that structured. This not you're because other the Alex, at about landscape one time the issues how kind of add do And at over income ask the thing, remiss how acknowledging in kind changed has I'm just strategic. nothing look having may I'd fixed just a trigger be moment.

in that way So traditional used role. Let's it, banks what I lending mean play obviously same the do don't not they by They're same the face that? to.

one sourcing is their talk of as raising opposed number money. to credit deals managers, often private focus to you just If

sourcing can you firms. middle-market of credit, function has like -- and building as lot you're you relationships BSP, obviously relationships those a So think firms, PE imagine, private in important that sponsored IPO about companies becoming more with if

how As the want conversation do if you in can you private, what evolves is becomes, this the that like. structure looks that, build to see you well,

to want groups, and organizational 'XX a income, That of you thinking do looks that fixed are that If is that we maybe it no at not or ultimately kind be. a -- in look what structure all as not are with income manager different these what fixed billion things we impacts is and in 'XX. even is should the something as so is traditional $XXX But somewhere ourselves this is like it there's something right about. -- around we

Operator

Fannon Dan from Jefferies. is question from next Our

Daniel Fannon

response. there first lot a on So the

including million So to to understand. additional XXXX. the of Putnam just sure a fiscal to I follow-up, for going savings, $XXX million $XXX The be just is that make beyond flat

you'll as plus for growth be XXXX, have that that think we about natural the savings should full So year?

Matthew Nicholls

markets our from Right. you -- a to increase -- going little But down if where bit. flat it'd today, flat correct. if we're not for But you if XXXX, expenses we to be have

cost incremental in in expect $XXX the million rate XXXX. In for would that So to expect those And for to that be perspective, is $XXX words, a we other achieve we October full from the to a work XXXX. have earnest. X would to million savings run starting

Daniel Fannon

deals That's like this affiliates And improvement similar is efficiency? not part recent of just other kind that the vein, then Great. there that that are Western smaller share go integration? as be And integrations affiliate in any of you or is or helpful. of other could profit a through on there

Jennifer Johnson

that The of you same sort Act in the talk alts The a team. first manager the only usually -- financial impact, you only alts is deal one by department that is still legal of of the scale could the XX managers, don't a kind all, integration. kind not one the get of team, about -- Matt,

And so pretty those -- there's really are stand-alone. not

operations. a look the But bit different is they the last as they're at been traditional but still Royce All all far integrated various a managers, really and have of either own integration or As one. independent lot their that's runs levels had of happening. the have pretty others, little

Matthew Nicholls

levels of possible way various not because set over consolidate Legg and of Look, is agreed quite Yes. autonomy we we a it's quick that when integrate believe to periods we purposely in methodical and safe acquired time Mason, a to sound. operations

operational over independent and last because so scale list own the scale was we a set timeline themselves with big initiatives one the which the of on day, essentially, autonomous these their the of the were At a they're operation. X it So had Western That's worked. way period various end years, planned. over

forward, you a our company think However, simplistic in of looking way. could much more

going to one of public the scale have series market side, investment teams. supporting operation On a we're

Some investing of of our because have synonymous company specialized from asset is the alternative support operations they're is, their clients and the the of which And part businesses start that own us. demand with them. require then what brands second the very to

so scaled way And the look one it. of business have liquid on other. operation alternative basically the public a global hand, asset the at The on enjoying that's the on to the sort markets level and then you groups

Operator

is next Our Michael from from Morgan question Cyprys Stanley.

Michael Cyprys

about Just to ask wanted Putnam.

been guys the better I the lot there. progress, since accretion year on the than have people flow seems could update you as perhaps think it's about a you closed hoping us The be the synergies was just to a maybe may picture have perhaps I well. there. thought transaction

scope curious growth just for with could the strategic and additional update if that you there. So that us the you Great-West inflows have as partnership on well as

Matthew Nicholls

has been very of into like really stretch. enter in for perfect you the when significant. been has flow will trajectory Why Yes. land, many with home when do and happen it's Adam terms they're management the I transactions flows. human quite very when The partnership best say complicated, definition you you not the But often do first the in do both and Great-West obviously, capital issues you by your run don't Putnam Jenny asset ways, then never it's do one, acquisition and mean, transactions, any strategic I a Life. of us

$XX I I it's number, $XX think flows, since the billion. think closed new that's $XX approximately, excluding not like billion reinvested transaction, the net months billion something XX dividends, is to exact the we the and

flows. The something and outstanding. an billion a together, disciplined a has performance a culturally, with come global -- team well and when example it's meshed got it net fit the that's So those distribution, of rest very very done. team together And sort well culturally, it's month a of The where of And the combined team, pretty where create incredibly team good you've an importantly, Franklin. we've gelled been you've combination things been very, great been of what what new been performs got they're $X they can through has that with really together, much that's powerful two well when fit very with lot Franklin. with a

been months impact of we million pretty ahead $XX X go would obviously, of the probably we're -- that, In we million. million, bit it's way. little operating transaction, of this income margin, a $XXX bit with, had were which certainly to that teams But terms million to much have of the XX% been we margin so announced of financial XX-month going We're $XXX about on XXX a from level. can -- little independent we not $XXX more give ahead that Obviously, reporting or only more XX so can you a context.

how perspective. But and Adam with it's and it. delighted we're very pleased customers from of comment our worked product the I rest think Jenny, and you financially and for with team, both the to on and the delighted So performance want distribution

Adam Spector

is distribution. performance Their that that that's would didn't has what investment the happened. I Yes. together have Thank distribution Putnam say really, really tremendous quite you. team we scaled good. with what's And scale can when happen it about great a shows really bring necessarily remained really thing

I think assets, X XX%, of in they X XX% have XX% XX% with outperforming the XX%, or better. and stars year, their

distribution, with of and if year their is ago, over Xx, over scale take quarter Xx So net gross $XX.X a performance. in really the had look billion and versus up you first flow they But a this strong is quarter. up at

So growing, driving are results. that's of regular much a is sales look just there The strong significantly. take what's the sales how we sales and also really core mutual what's really if important fund things

I Power That's Group. about asked, going the You with quite well. also the think, partnership

some we're deep in products together products. We Empower, plan seeing have interest some embedded relationship new with and generated smaller a building significant where retirement

with build of them beginning outside out are the to U.S. We

the We good a that then where specialized very have significant account general target with team really importantly, with the performance. $XX date relationship. And have scaled with thing us billion in $XX in who a products channel a and stable expertise also now retirement the product stellar about the retirement we brought that's other billion Putnam suite but really that's about right value retirement

Matthew Nicholls

terrific while it's working, we have of styles in -- autonomously, stories want And other the sharing various one teams There's work internally about as on we equities, and certainly, the Mutual get can Life, has our high-profile helped Equity not strategic to thing with is -- I widely I been better the just companies speaking, interfere teams how with comment like such. that work don't around a are of ClearBridge, Series, but Franklin it's key sorry, And the relationship, operate things then added, Great-West also should Jenny broader how firm, and is the a we these meetings are think going know and company with Group, they our all things Franklin access success we other Putnam of in various how themselves. and do tremendous to and benefit investing. across overall in to

to think that's the So company. a I also benefit

Jennifer Johnson

managers look, about it's if just that across the there's Xx a money talk motion we reminder going you into Yes. -- than passive. I'll And active say, always in

they've get a reminds you're top-performing desire size, -- more performing when more have people just talk number it flows and and Number diversification about DeepSeek, the good to moments active back demonstrated you going one. see to why a active a on and into two, you're that, like manager, If more institutional matters you management. seeing you're

points. so two then other that's important. And And just

across then vehicles, quarterly about As just of including the it's great a talked the mutual since not in just emphasize has it open-end gross gross number. benefits diverse scale, funds, sales true sales well. had that the as and XX%, to are their all ETF up acquisition, flows their Putnam's is And Adam

Michael Cyprys

And Putnam. with on the Great. congrats success

Jennifer Johnson

you. Thank

Matthew Nicholls

you. Thank

Operator

is question TD from next from Our Bill Katz Cowen.

William Katz

I on the want to just clarify guidance expenses.

if could Matt, you be you fees pre-synergies. 'XX, to Just, flat heard just and action, the out what think I reiterate was performance 'XX, if I market you'd strip

rep you're exposure that million incremental X% some are of $XXX correct? down. that side? for is so Just revenue million would mentioned, And then about the residual contribution to what And an is assuming I that? be think, or you $XXX the that, component assuming You contribution WAMCO? on against X A,

Matthew Nicholls

and where we're we're which very But with They're No, clients. Western current to multiple income clients its what do we're to update going also making. X% we Obviously, is the make AUM, and with as do Western. can to when see sure progress you going diversified hard of a investors summary on the in and on working we're we've their committed much X. to hard Obviously, strategies. is fixed is going. as with we highlight across transparent their a certainly will we're very Each not as estimate obviously, not community we an we terms business, with working month, include our

you X% to in. is what it calculate you'll So so through month-to-month you'll going we direction be to able be that given on We've a rate, effective as able progress see the fee the basis situation.

fees performance It don't that extra to in is we from $XXX expansion at excluding $XXX from on -- then it. to and You to the XXXX know roughly -- we get to quarter performance normalize that XXXX million about going expect. guidance. to $XXX flat, The where million Putnam think that million -- because obviously get margin to were the performance guide fees the expense minus to right be is for being the and that

Operator

question Hawken is from Brennan Our next from UBS.

Brennan Hawken

about million. And okay. will through million yes, the $XXX the that the you just last that -- Is $XXX to just ask like made, to full year? Matthew, ramp then... year? of point out And that coming I'd Just

Matthew Nicholls

Yes.

by So XXXX. year position fiscal X expect achieving a for rate, where full the we reductions day we to run XXXX, are -- of we in those expense expect is our on be I meant what

to time of will at XXXX, million we $XXX end provide we that. get amount, the XXXX, lower on by that to be expect as expenses to And through updates we the with million. we work you So $XXX obviously,

XXXX. that's we what So expect for

Brennan Hawken

Okay.

year $XXX of the progress see rate year million, the the XXXX. $XXX and exit million the through 'XX, the is fiscal So of we of that will

Matthew Nicholls

by it versus time $XXX the lower get XXXX. to of million you expenses the to XXXX, million But be $XXX will Yes. end

Brennan Hawken

On basis? a run rate

Matthew Nicholls

way should the it, look at you yes. That's

Brennan Hawken

it. Got

Okay.

just related to then clarify. So two more of sort

my for number and be could what should that starting sense you but maybe full know I Western. clarify the please, you maybe are the you If it's sales thinking if especially then point vis-a-vis we could, large, And flat about? year said -- rather

they they organization? areas? efficiency these this particular transcend are whole the is efforts, any do focused So -- Or on

Matthew Nicholls

I that on quarterly So for front, too that give in you're -- asking I'll give you think then guidance, I'll second. a

the taking as announced So overall It as as doing updates the transcends that more I are Western. company. us frankly We review already this the each want were quarter. doing used to to we've you make you have to than an opportunity year. sure that We're and for just

in months, through have because, for people now alternative management wealth example. Franklin heavily invested For we've XX sales in And X,XXX -- coverage, management people to also across. new last asset in almost we've a added the example, XX efforts We major and channel acquisition. obviously,

in We the distribution. ETFs, you're have why This across sales think specialized resources the new We've added dozens organization. is across in I sales salespeople our of increase force. significant seeing

While it control because flat we've a relatively remained in will out can. expenses is manage taking done because continuous that, the as to we margins reason remain expenses under have our effort our why we're best is

we our And right can on industry Now this We're sometimes, look in within years. bit we're strategic that. in a things margin asset business very to dialogue lower see get. to we best as heavily invest which you're and in we're the management years. quarters witnessed when best then higher, because go going while through going to the the haven't but retaining some is we we doing much it where provided of it's forefront X expect think at But the change we that's and X-year why going out where go I

I of is large terms or it's of and with ] of so. in but say across billion lot base the I'd $XXX it So effort a you, million, expense number agree a an $X.X-or-so [

if -- the all and that's such. billion fees and you performance include So $X

firm. but you So got it's it at the look to across overall reduction a meaningful

rate expect In we mid- higher that offset we the expect. be that our guidance, effective into to reason the of strategies for we expect inflows that fee fee in is to terms lower quarterly outflows to The fee high XXs.

XXXX. by a we the about We're to $XXX $XX has we of new and $XX million expect XXs. and that. moved reduction is in time that about. the a firm double $XXX on we a we've Occupancy, mid-high double an it do you Most is rent January catch-up for to off. you which expect we've into that's to our York drop low uptick back to to between New compensation benefits, million, of XXX(k) we but to on in get million the of fully and starting whole the quarter. That the New to talked offices be track. So made most period increases. Information on to see base all million and and in That's $XX salaries be to the we've because rent of we gone time, York at around we technology, the been Compensation project about, XXs end probably performance that and assumes fees million the talked unification that will going million and years in which off City, remain paying within terms that $XX million. expect of the now $XXX to later be expect the starting announcements for Aladdin, It notwithstanding systems in inflationary-driven from drop lower will

million, the for legal with and expenses It will tax year. the XX% we've got between we we're -- that's associated mostly perspective, more the And investing from then be $XXX be bit Western a will and fact matter. advertising, higher. with be higher G&A in due to and around XX% to expect a

Operator

next from is question Our Budish from Ben Barclays.

Benjamin Budish

side. the over Maybe moving alternative to

of growing remarks, to prepared raises. you XX% During to Jenny, XX% fundraising capital the total talked about wealth

of that in more participation like Just What's on market. of new this color you've you distribution. There investing Is unfolding? on drawdown retail some if semi-liquid in funds? sounds a It see vehicles curious the or just products are more sort cadence? provide about curious, how could sort and democratized talked you lot those expectations. obviously the predicated do So

Jennifer Johnson

then Adam I'll to Sure. free feel and add. start

Fund channel. from so XX, it remember, closed of XX% at, wealth which came raised billion, And when the they I $XX.X think, Lexington

of we've So out to in successful And again, vehicles to of -- to even working be channel. ability demonstrated the actually traditional was learning. pretty years the actually on that and the wealth build types

is our the think news wealth the good DNA in channel. is actually I

I in our then distribution that. alternatives recently, to And I call of all And in products. across X like remarks, just bring the people we kind so most opening the mentioned who learning the teams. And actually alternatives how have today, we to to wealth so are to then we perpetual XX support think dedicated -- globe cornerstone

a funds I'm words that have almost equity cover had debt, secondaries products first, perpetual real kind had perpetual secondary we of estate we closed and a so period fundraising of our $X And of partners fund. and time but real with we raised billion. of X couple just the In a but that are not estate sure January, had sort

million. of the we institutional the could respectful $XXX wanted between the So channel, which you we concerned and institutional cash In be were the bigger It it make We channel as cap difference at you people channel. launched had could the it. to in first drag. investments. In capital it. actually because about to wealth have need the wealth the been call deals. pace secondary channel, And do we We can

so fund And to continue raise fund will quarter. this that

So in January, million. it raised $XXX

quarter, accumulation couple that to be And months million. and will actually and open but So up of raised. -- was of $XXX continue a this it

in similar U.S. what we to the Now the It we've side, also on not launched us surprise the raise is that first international side. to able international would the do -- were that on if

is the have around of experts skills kind when the wealth there's shows Academy on tremendous products support two, it Templeton right of Franklin which think there. think So market then the the I portfolios. And our in real a the off how it's a in leadership, just you channel. amount can retirement And but the thought advisers then to their you very to teams, bring distribution one, in educates that alternatives further interest channel, think I much your opportunity about

both has credit Apollo that one products launched real and it. which couple there, we're some estate of We with in have doing a private of

in. to We best CITs. own -- place penetration. you have to the is the have actually flows is get in reality our going of slow channel retirement cash some The It's because natural be the

than a desire ready that manager. And fees, retirement in because then it's deals the poor-performing vehicles. finally, it's the aren't with I in we liquidity of a to say nature the be you'd want channel. Adam, so that nature better of litigious think alts put some the of the to focused to these performing don't with So space, because add retirement see top-performing you through managers deal infrastructure time, on the the open to an I markets and liquid platforms ones to you it fully always alts want will, it's and bring because over a opportunity that? be to But lower do of sale up there's because real aren't incredibly massive But on the this. anything actually able this off to

Adam Spector

private think perpetual, difference your and To large a broker-dealer Sure. drawdowns bank. I both point there's management regional a we in versus a between would things. wealth they play channel, and the add few place about global a

alternatives, around that in We've but also only fund. And with she in world. and also estate secondary roles. a the puts the when off fact we real of That to are. allows selling and vehicles in the XX the the is, in people we effective in different constantly but on are seeing not be different we're scaled the find roughly as Middle talking space, invested come resources. about very better doing us the billion us that partners. in educational significantly, U.S. be perpetual spend see play said, debt in our now have market we our educating products we not focused $X each in we to position that Jenny in to the allows Asia the EMEA, and different as the to That said, we'll that us time benefits in X the But space. just on And success So in team more in that's more do market drawdown private the East, people

as We also to can we make well. that that service grow that think we we sure want in alternatives, business

business We've is team we've where that all expenses things doing in. out it's we working So building to service been better I again, really that we the coming can make an major with can. as sure we would distributors reinvested so services We're, investor one codevelop say, in the of finally, cutting products.

those we're a the So calendar, as our that bringing on partner major and us on a well. at launching instead it their launches -- on of that's tremendously with time own, year planning product scale at we're and in right helped a advance,

Jennifer Johnson

the September. this having XI, first Lexington's thought but year in question billion basically $XX we'd in guidance that And last dependent on quarter we and was $XX to we're I'll you Fund didn't ask raise given close throw just billion had reiterating, its that higher in alternatives we the end

their October XX% a They start close update So fall. just in November, and into an that, a September, Lexington you about in has this sometime if kind next the first it it in year. happens of year. Again, anticipate it and happens it the If to committed when happens, would falls fund. next X Fund thinking trigger of on that's funds, usually give

that that's dependent hit it's And kind on whether we so of where range of billion. higher $XX

billion markets. raised that This private we Of quarter, billion $X was $X.X $X in alternatives. billion,

that that does that counted $XX to because in be $XXX that's part in $XXX perpetual. again, the million quarter, that So Lexington range. raised billion this the is towards $XX will that was million counted And the billion include not

Operator

Our is Research. Autonomous Patrick question next from from Davitt

Patrick Davitt

and of mandates. managers that our VA from to you losing coverage large, and balance. were come of to there's wins your then I wins, it VA VA that you still And Could I wins give correctly, think very if most few us flows? active unfunded much the quarterly how seems have quarter. don't there VA insurance reported think that an added And remember large If a wins the secondly, include funded idea in in I level, been the more large those higher

Franklin bucking give some is you So think why high-level on thoughts maybe that trend.

Jennifer Johnson

refer Well, Adam. ahead, go I think you probably --

ahead. go Sorry,

Adam Spector

to sell. in that to want them. general, going one wins asset managers, say, have but we every the need that they do can multiple in in a might managers very have come players. I true, significantly they had serve, we've X DC, firm was major the is relationships And several I expanded with whether or and who the are them field X, and expertise. that few support DB, with of do segment of right dozen that's who and think a trying the more shrink firms partner important cover become to we're X, of There one all insurance from things to managers can number with X Patrick, that that's fewer of And and the to they have companies classes a to maybe do to insurance. We're

definitely So is when was we strategy in to place win consolidation, the tend in be very that's of now, and It a we quarter. right those of part to on see winning And true that side conversations our this it. consolidation much we've got number of similar deals.

Jennifer Johnson

Venerable, I I'm was remember, did and or this September, was think And it one, I quarter October. the fund big think trying it Adam, to

potentially these firms doing more So details funded. requiring they more to the And and to with Adam haven't that more yes, work have -- about as those partners. firms. number of others said that we because with trying we the conversations reduce couple but that But has there's a are of of continue disclosed they

they to this important want And become some specific expertise, they things expertise on want the education. they They a like breadth So want very space. capability, our in Academy like of insurance.

there'll to think So come there. be we more

Operator

over CEO, for comments. This turn today's Thank session. final call question-and-answer to and you. concludes Franklin's President Jenny Johnson, the now like I'd to

Jennifer Johnson

Well, thank a clients. And our We're to call. people as business. again, I day only Templeton, our we're who work everybody Franklin at folks the good serve just to every as for want attending hard

And want to their And speaking quarter. all hard we you so forward work look of next to thank them with for I just and dedication. all

Operator

This concludes today's teleconference.

disconnect your for may you at participation. this again You Thank lines your time.

Franklin Resources (BEN) 31 Jan 252025 Q1 Earnings call transcript