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Franklin Resources (BEN) Gregory Eugene Johnson on Q2 2016 Results - Earnings Call Transcript

Q2 2016 Earnings Call

April 27, 2016 11:00 am ET


Gregory Eugene Johnson - Chairman & Chief Executive Officer

Kenneth A. Lewis - Chief Financial Officer & Executive Vice President


Daniel Thomas Fannon - Jefferies LLC

Robert Lee - Keefe, Bruyette & Woods, Inc.

Craig Siegenthaler - Credit Suisse Securities (NYSE:USA) LLC (Broker)

William Raymond Katz - Citigroup Global Markets, Inc. (Broker)

Patrick Davitt - Autonomous Research US LP

Michael S. Kim - Sandler O'Neill & Partners LP

Kenneth B. Worthington - JPMorgan Securities LLC

Kenneth Hill - Barclays Capital, Inc.

Michael Roger Carrier - Bank of America Merrill Lynch

Chris M. Harris - Wells Fargo Securities LLC

Brian Bedell - Deutsche Bank Securities, Inc.

Alexander Blostein - Goldman Sachs & Co.

Michael J. Cyprys - Morgan Stanley & Co. LLC

Eric Berg - RBC Capital Markets LLC


Good morning and welcome to Franklin Resources Earnings Conference Call for the Quarter Ended March 31, 2016. Statements made in this commentary 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.

These and other risks, uncertainties and other important factors are described in more detail in Franklin's recent filings with the Securities and Exchange Commission, including in the Risk Factors and MD&A sections of Franklin's most recent Form 10-K and 10-Q filings.


Good morning. My name is Melissa and I will be your call operator today. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded.

At this time, I would like to turn the call over to Franklin Resources' Chairman and CEO, Mr. Greg Johnson. Mr. Johnson, you may begin.

Gregory Eugene Johnson - Chairman & Chief Executive Officer

Well, good morning and thank you for joining Ken Lewis and me to discuss the company's second quarter. Although we continue to experience net outflows in the March quarter, the nature of the mid-quarter market rebound marked an encouraging transition for us. As many of the weakest performing sectors of 2015, we're among the strongest performers in the quarter. As the quarter progressed, investment performance of many of our key strategies improved as did redemption trends.

Overall, our financial results were solid as we continued to exercise expense discipline, notwithstanding some notable onetime items that are discussed in more detail on our 10-Q which was also filed this morning. Now, Ken and I are happy to take your questions.

Question-and-Answer Session


Thank you. Our first question comes from the line of Dan Fannon with Jefferies. Please proceed with your question.

Daniel Thomas Fannon - Jefferies LLC

Thanks. Good morning. I guess, Ken, if you could clarify some of the one-time items in the quarter, I know you called out some of the $40 million or so in severance but I believe there were some other things in the G&A line and others.

Kenneth A. Lewis - Chief Financial Officer & Executive Vice President

Sure. We did have an impairment charge in G&A that was about $30 million. That was offset a little bit by contingent liability. So those were the two major large lumpiness in the G&A account.

Daniel Thomas Fannon - Jefferies LLC

I guess in the context of last quarter, we had 3% to 4% expense decline for the year and now you're seeing 3%. What are the variables in terms of that change?

Kenneth A. Lewis - Chief Financial Officer & Executive Vice President