Franklin Resources (BEN) 1 Nov 212021 Q4 Earnings call transcript

Welcome to Franklin Resources Earnings Conference Call for the quarter ended fiscal year ended September 30, 2021. Hello. My name is April, and I will be your call operator today.

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

You may begin.

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

be welcome provides cycles in available I'll of who Lexington’s Franklin build by be a fiscal the announced we for We're reviewing Lexington after that diversified a acquisition everyone. such spend this our Matt on prepared am important truly you for discuss of created financial and And Lexington Templeton represent serving the Then with resilient client to transaction business a of Distribution fiscal team. greater closed joining our by growth Mason full Will for classes, Hello, a to fourth and quarter invested Templeton's a go Selene. well us and with have that year's across critical transaction talented and Franklin a mix milestones. Legg and Templeton year our the alternative business to Nicholls performs the thank partners year with excited me fiscal in and transformational today. extend partnership. to and questions business I and of since our announce also first through minutes. exposure our will start transaction Deane, acquisition, today the more results that remarks. cover year. today balanced detail. joined The across shareholders. results Global we organization some market this our asset you, are history, to this employees and We're warmest delighted will for the us more results President Throughout as few Head a discussing time to Thank Alternatives business, clients, in today's commitment geographies. our we Partners, CFO Head Franklin very quarter Adam happier new the to Spector, in We'll in also we cannot Matthew Warren, area the asset our call Tom

added We are our exceeded pleased to Legg and and acquisition goals, report opportunities. from Mason important that of growth the financial have benefits strategic our we

have we Legg key of the of year, created Templeton, specialists management investment managers. from consisting course team a Franklin and the our Over Mason representation

ways we're successfully to attributes yet specialization. with across potential, strong collaboration successfully the many invigorating We combines the made boutique one getting strength collective maximize two of and work and the dedication innovation our culture just firm. while and started. that progress hard brought Through we've together of We've our maintained have employees, in firms global so our

strategy Turning been their XX%, XX%, investment strategies. XX% improvement to across Through broad respective of of performance in benchmarks time base and September, XX%, investment outperform performance, the key composites four periods. there's an a across

of or compared fund to we five AUM funds mutual by had year with Morningstar ratings four in star This XX% ago. XX% quarter, a

During we institutions. efforts global the with specialist client global region, focused general in by Fiscal and model, enhancing the our year, our particularly reshaping on with updating coverage sales relationships deepening largest distribution each financial Notably, term inflows AUM net trillion in prior billion U.S., year. for largest to sales long year is year. the the the positive was $XXX flow region, from our over which doubled $X.X

growth executed In important specific diversify core areas, positive in further net acquisitions including of distribution terms strategies. growth, Wealth flows investment notable alternative saw and assets, our SMEs, grow and customization, to business we alternatives, our Management, ESG and of organic We strategies. and

infrastructure, us Lexington categories have of tier of leader on for a year AUM, Partners, This brought and grew managers XXXX, the terms with equity co-investments. And capabilities. generated all Partners, investment manager to including now with today's group added asset Partners, focus other us debt, top Benefit Several Venture of strategies, in announcement very led deliberate estate, secondary alternative in the Clarion specialist In key to and acquisition Partners, in to years from XXXX, a In Lexington our an important been class accomplishments, we Franklin in suite a each alternatives Benefit Street private full we've building private funds. contributions alternative the the leading We with of of estate and real prior of now hedge the $XXX In in Partners. us, diverse world KX Street of acquisition area alternative a billion we manager. strategies. alternative real from year, of Partners. flows a net ago, Clarion Partners positive credit quarter strategies, during focus XX% by intention announced and create our

we team capabilities There attractive will experienced growing no bringing Lexington be outstanding partnering an by Franklin talented the immediately global firm will team scale such investment the led close billion the of revenue, the changes I'm market. in and independent with billion operate and over management this transaction, be fees. they Partners. shortly. alternative and excited will with Specifically $X is $XXX and that transaction Lexington excluding Partners the Upon Templeton to an continue review to or details additional a as Matt transaction, expect of approximately that its an AUM performance process our approach and will to in autonomously

managed Another is core separately business. growth our area account

assets three a in under SMEs are billion retail. top of which We with fastest management, growing provider the XXX one is in in segments

flows generated SMA Our business by net positive in quarter during the grew AUM year-over-year year. and each in XX% fiscal

XXXX, considerations There's returns, is in factors as overall there consider; of she clients serve and to of ever investors take focused will custom strengths ESG society to the to portfolio, our next are ESG tax indexing will platform multiple how a that to Management, level, XX. and that the late strong and represents seen benefits are The its capabilities. customization X.X risks and channels. the based and companies both Canvas question no ESG its that bring billion more has now our investors growth as in acquisition factor billion of three contributes transaction overall Our the before. and of recently impact announced was compelling the than X.X across inception, Increasingly, of in Canvas dimensions since environment. ESG AUM September to firm's management existing O'Shaughnessy SMA Asset on launched understood goals ESG enhancing total

accomplishments are investment billion employees. consider As extremely AUM the being representing investors this ESG relationships, approximately fostering quarter year. past service our focused it were active strategies, broad an on achieving around as dedicated that be our the range specific our excellence, investment fiscal in and for All fortunate of represents none during and AUM weren't $XXX part who would over manager, We're XX% strategies have delivering positive ESG of of each possible netflow of in to said factors such colleagues process, this and year globe. superior if to our this

CFO through like quarter of the the transaction. financial I'd as our turn results Lexington review specifics year, well fiscal it as the to will Nicholls, Now, who our Matt you take from to fourth and Matt? over

offset corporate funds, yield you, Hill’s in enclosed Jenny. net long Fourth were $X.X mutual outflows billion Diamond quarter which the added AUM $X.X U.S. of high July. billion, partially by which in Thank focused credit term were acquisition

disclosed net excluding million $X billion are billion dividends a $X.XX management revenue quarter $X.XX term of XXX process compared the $XXX redemption management quarter. compared performance with plus to billion next redemption, million in outflows $X.X $X.XX or to assets $X.XX fourth in average to prior per quarter, for higher fees quarters, X% discrete India operating liquidation. for a plan due or adjusted adjusted front and up per previously quarter, funds under This which adjusted quarter of of quarter. share that Reinvested the closed have $XXX were items of of diluted compensation income credit assets, X% $X.X quarter. Fourth G&A Investment share prior long the higher favorable income included minimal of income and of fund an lower billion institutional fees end from that revenue included for This performance the non-management-fee-earning tax million, billion fees X% this lower were million, the and $X.X $XXX result the margin trillion, generated in the results to an $XX fixed and $XXX adjusted on impact billion X% of last quarter lower per of These expenses as and expenses. led Adjusted operating increase income XX% million earnings adjusted XX%. increased operating to include $X.XX share. the

results, versus last and to market from year a Mason two Turning financial of favorable XXXX full year. year months fiscal benefited conditions which Legg

expenses fiscal was $X.XX of higher XX% year. an prior For led $X.XX respectively. billion, adjusted billion, adjusted This XX% XX% compared billion year to and revenues were which and adjusted full the year, to operating the $X.XX increase operating of were income

share increased XX.X%. the fiscal Compared year discrete $X.XX adjusted for per adjusted items net the year, per to $X.XX prior operating income share, margin XX% which share million to $XXX included XX% per diluted Our was impact or $X.XX of to full earnings the billion year. and tax favorable increased of adjusted

we have anticipate XX% year end XXX% run synergies of of XXXX. synergies $XXX be of the year. achieved million We achieved cost that fiscal this merger of a rate targeted planned, of As our will by these related

our investment teams. involved efficiencies cost these specialist of none managers, reminder, investment or a As

Capital continues evolve flexibility to on our our strong and financial believe to Management, business. Moving with sheet provide balance us strategic to we

shareholders the For $XXX we September through returned year to share repurchases. XX, and dividends ended million fiscal

with we credit a year, profile. debt cost large debt lower the legacy of During of Mason Legg also portion pre reflecting financed our

of million XXXX X.X% On of with Legg redeemed million Legg and we X.XX% $X.XX Jr. Mason Notes due due XX on Senior quarter million subordinated XXXX, XX, and billion $XXX March $XXX and XXX due XXXX XXXX. We $XXX of September million due X.X% the Jr. We X.XX% of cash XXXX. investments. Specifically, Notes issued notes Mason notes subordinated XXXX. ended

shares investments prioritize at and acquisitions increase share acquisition the and specifics our our drops. firm on of to in new to opportunities sources to Consistent positioning continue The to intend that morning. this our will to We continues repurchase growth we're Partners industry evolve. and the on business our employee our dividend least while the equity flow, further Lexington capacity of to focus with the of will this, enough we cash announced as remainder our offset continued diversify excited

It this of million $XXX of founding document, $XX raised outlined XXX employees in its approximately $XXX of strong and co-investments revenue global offices. currently across a With secondary As and to $XX acquisition, in expected transaction capabilities commitments, real and hedge is in million private Partners with X in AUM equity summary related and fund and a EBITDA Lexington activities. team capital leader is PE has over billion we in aggregate credit, alternative global XXXX, fee estate, current have has billion. now of solutions, in Since Lexington based XXXX. approximately generate complementary the

a in to our will capabilities. growth diversification and importance tied multi savings important assets investments expansion, a versions and logical continued sector to size clients. Furthermore, our likelihood a in manager continue our having development goals retirement private business This both of increase alternative equity private meet further of overall the this returning be access of solutions diversified and step could of our the broad of providing customization investment business. asset of higher group is markets specialist of Given to also in and the

will annual one management producing in $XXX us and XX%. adding billion, management, performance for managers Jenny a in allocating As in billion mentioned wealth alternative a further organic more this and takes business asset asset expansion. margin This management intend investment transaction capital both and creating acquisitions. diversified earlier, existing both fee via asset continue $X approximately important in at We geographic of performance class our year and into business approximately XXXX including asset fees, will step specialist revenue, fiscal approximately alternative through larger to complimentary investments AUM result be excluding and

Given and for we're of on model our management industry. a teams a and and support scale large combination attract new highly asset local experience business and independence, global reach, and financial able collaboration flexibility, the a execution, to and segment what expanding partnerships, growth opportunities in looking is talented to create global of very

$X million cash closing, Turning Partners to in Lexington financial the a three over transaction, next terms billion in for cash the we're of acquiring $XXX further XXX% at plus years.

clients, and performance long Lexington’s partners with for approvals. we to grants retention to our a quarter based over this, customary equal ensure establishing we to fiscal transaction Lexington to like have next now the will up strong be the to Operator? end And to the The with Consistent alignment term. would cash to of transaction employees to of expected the structured to five open We employees of second is Lexington interest simultaneously five-year $XXX by subject the of issuing XX% and be close years. paid and subject questions. vesting this over also your call million continuity

Instructions]. you.[Operator Thank

question Glenn with first Schorr Evercore. Our ahead. Please from go is

you. thank Hi,

to businesses. I using So buy that good like the you into cash

on I think cash. you're when earning nothing everything's accretive

me If and kind high to the right, about price all times purchase that. ROI I to EBITDA. teens that just the all of that see curious out can't to? So took big of comes it we looks Thanks. pieces, fan in I'm range it what kind if I'm a that's of of XX

or $X.XX million on the deferred billion $XXX plus whether $X.XX the of the billion whether additional As compensation. take take you XX you

maybe And the of the also, company XX% right?

Well, we assume Yes. Oh, mean all numbers to got, I EBITDA the I yes, just multiples we yes, the XX% Yes. of course. of referred just that announced.

And…

times by take XXX Pretty the just mean, XX% simple. pay. we I divided amount

Okay. piecing pieces curious of a you’re together alternative Got on it? as went the and are I'm bunch through; of piecing you interesting you pie. And,

historical their boutique what’s really on KX, of distribution noticed on Mason you never between So process approaching I do thought all pieces. you’re your funding Thank integrate? specialist’s beneficiary you're team. or Lexington, alternative But, integration and Clarion and the do that not how the how curious you. Legg forming the integrated so

So have I’ll start and then Tommy add to it.

there’s one traditional that is when alternative lot differences the across that the So, obviously can of you isn't acquire teams, that managers case. things managers shared investment asset of a be

they're alternatives For manager deals legal expertise, and doing their example, want since own things. may and

is with investment the more And And that Mason changes investment sits within Legg independent, world. institutional of having more one in alternatives lot within so the in we've team the that made a the specialized groups. people acquisition there's sales of the

And in manager. to more anything as you And the opportunity build, to distribution the we to assets we that believe channel, an democratize part are already global of alternatives. is Tommy, to of alternatives want alternative add So what that? hard retail that's working

AUM, And I it’s you? to the the platform mean, I grow of I at really hey, think and these afford to strong focusing are power be, in how types the more it's of that No, everybody. opportunities joint think given on think on we then expect we I which now, bringing bear And exactly things $XXX distribution in defined, in, to it. that alternatives, expand billion that’s, really services, see think we’ll it. and invest good continue retail. alternatives can we’ve I first the both Glenn I rate. think can broadly as mean, to and in venture products created going of that’s is look institutional effectively to the I sort retail, to But be that's, for

Glenn, one And other point. just

really requires believe look together, at to risk gets our out that's you're a that's breaths, products knitted communicating, be as additional asset to opportunity to the that. And products multi tried around teams kind as you're it well. factors of going where fill building we we As solutions, the across of

Appreciate you Thank both. it.

Blostein is Alex question next with Your from Sachs. Goldman

thanks question. taking Hi, the for good morning,

And for a in building XXXX business on? XXXX. the what looks impressive and funds outs like. of that Lexington be over the just I pretty kind little going more what are maybe of vintages. a their Lexington guess first So assuming based you bit on of earn couple us and growth give last terms growth sense to what Maybe in into are

that let answer. take Well, Will

both our areas able focus our been capital secondaries, then our we've funds, co-investment Yes, to of raise and or significant flagship our in market in funds business. middle Thanks.

So the drivers we each in there's market expand businesses opportunities, structural that some forward. think of look we those

it. with to excited go we're partners. new And our that's after it So really

Yes, of around of we built get to history given if think of the the talk to needs future, look a we terms past for on growth at various, I wouldn't core. on But the do the had about company, some hurdles but contingent be things we some in we say together. and particularly you and potential cannot timing this the aggressive Future think I do, have in, these we Alex, that growth Fundraising consideration, the the what achieved to

they're very One things of successful own. Lexington is about the very attractive on Partners frankly, their

then our high other was the the resources, of that apply looking add So additional today. the, numbers we've actually the adding and to worth, client to more potential, you we to net broader us. could very base forward growth And across it think growth attractive globally, Lexington when through standalone distribution highlighted

The proforma you when the balance and resources have the whatnot, would other kind what capital, Ben's look And sense of of sheet Can expect wanted give much about take dynamics balance do is cash fundraisers? us sheet? that deal. in? billion how words, the are think of something on going six says cash? sort based tomorrow, future So you the around participate or much you my So be sheet they a going you. is basis balance paid then on in if Franklin's future Great, you how follow the just of performer much deal. to guys Thank that's you $X investments thanks. can you to of do of unrestricted And deck a out up like? after on co-investment to, ultimately And seed funds it how XXX%, to like do for

Yes.

Okay. Thanks, Alex.

couple a there. of things So

the of probably to terms And In the we at be other time we're close $X assuming like can that this number sort March, unrestricted at do the will it's available that of close this transaction cash, of that transaction. billion. end something that things we

also. question Lexington. GP commitment. and executives question that's partners know is strong very the on for looking two at part from And are employees, capital GP GP the senior level. to So being will There to you're the committing Templeton, Franklin the Templeton folks that fact and the right both also I balance other Franklin from one, forward support that perspective, be to sheet of highlight a commitment But demand that

on a We commitment can't have amount because it depends what we the obviously Future So say is, to Fundraising. that.

for the you thank very much questions. Great,

Cyprys Stanley. Our with next from question is Morgan Michael

didn't. was then just equity morning. good you And could missed heard Lexington. employees on announcement. I I think taking economics. the that. I around the granted Apologies. carry question in elaborate I Thanks the Matt, on for hoping maybe And that. congratulations you that's don't just Hey, just to on just for it. I question. the deal

not in curious Templeton? parent of around equity thought why Just the Franklin grant shares in the process

Yes.

first the was question what So again?

carried. It

of in we going this in stream us, So something carry The going The at We producers than XX% was funds. is very for company believe, on and of fee from growth and carry think, that. so acquired like I very focus we're the either carry, carry alignment forward. then haven't investors and average previous our allocating of the interest past think and a potential share any majority the focus yes, to transaction attractive management important. us rate much in partners, higher the to rate the fee certainly the through collection of

we what second structuring of terms that's question? So on transaction. focused in was the the What

around engineers? just ownership? the The second equity not part Why was the

good Good, question.

that So firstly, ventures are hear not you to we it quite us that believe say may undervalued. surprise

sure like alignment question the the that to operating So but, we Lexington revenue we tie of We’ve collaborate more of more loot We that across will to whole value. happens, the actual important need the to don’t Franklin and this coordinate The more the more got providing and create really the of equity we are and shares. incentives the that be get parts than that firm, plenty you that think worth our the a people to in that is make interests EBITDA, more create better lot in, through be business that. can’t worth. and more folks don’t in case will

So better we and well, for probably very think is that the in two frankly investors. things regard, this in Franklin shareholder this aligned value

just it? more if I could, up And question picture. Got bigger follow a a

I there the credit estate. extend business opportunity reference opportunities hoping there, deck about a was Lexington the the bit into be that private I might elaborate just set more to could and you in and And opportunity putting on was strong that how do into of real distribution. about through the be extension accomplished, retail with on a there little talk growth. bit has retail what Franklin just because clearly, sort of hurdles set think might that, sort to broadly more

that that you…? question. Well, Tommy why take you don’t

credit, that respect as think look Will. of to to back sort as well estate, at each we'll inorganically. push to I secondary I'd for tremendous of have verticals. growth With that opportunities opportunities to or fundraising products, And expand in private of the activity Well, potential we targeted each real continue organically

estate. in but markets I are areas we growth in exist developing mentioned see secondary they our in also as today, in in products that real structural certainly earlier, said you so, Yes core credit, private the and

transaction raising So the dedicated capital to things consider grows, alternatives interesting those as this ability in universe about areas. the of the is one

that over the So look I’d term, be that medium at something say. will we’ll

Great, thank you.

of Worthington line question is the next from Your with JPMorgan. Ken

Good morning, taking thanks question. for the

multi Franklin So models multi you brand increasingly discount. commanded highlighted intent more, publicly arguably as continue acquire your model. to multi brand to boutique the other and And I guess, manager operates asset a asset manager traded

on So questions some this.

multi you not So like if alt discount, product how about thinking together trapped insurance acquire out at you are get more solution the about color, and side? buying break Glenn's And bigger knitting into so particularly are you to your does based brand their flesh or brands? roadmap. then offerings more Franklin perpetually of the products as being trading creative conglomerate various more It and question, a could the alternatives companies differentiation, on how services set, products? the on leverage point the solutions more you offerings example, Can looks for in diverse to solutions response base and solutions

a think first at of should we’d not selling of have, the so with we be we it parts all, a then than sum broad the that, the at the Yes, that look parts, discount. of isn’t the greater capability and frankly asset parts, sum managers the we discrete Because say premium, large failed. if

You are to manager, good management you’re hard science you’re I’ll with data talked if to time a of have really about, and So firms consolidating our think and start with, what’s just the to and competing active out they to business partners going active lists. capability starting have clients, able leveraging at data do why be with happening is that? large data not you breadth today, number we an expensive. broad two, have a and make Number and you those analytics, disruption, of they just is technology just about at look and if ultimately, technology as with

we’ve the our is center, scientists teams an in and individual there. of created lake data Our for example, approach at investment data

their leverage versus to So and choice. to of access vendor well of there their a when they point of cross-sells negotiate back large partner types opportunity. have if advantages, Those in a that a can data. contracts breadth can at then assets. are depth But independent opt we gain the things unique core, you massive at at kind broad And executed that become

like and do Franklin of of do capability we in their access want markets Thought find markets that Templeton things training can which You Academy, kind to partners for teams. have the emerging we to the built Leadership with by that of just and that ever institute after Franklin support Institute. that distribution of the our footprint massive the could partners course, no institution, Templeton global individual It’s a something or the capability. large manager that’s kind sought then developed

And opportunity But we mean, That’s team happening your business, a insurance continue, have point premium. opportunity, Matt's with solutions, a more can Yes. an a deals, And customize. to so, what's see that model probably, bring that you'll that strong partners. it existing if limited that. our those as know there's of we think grow you here. something and in look it's, we it and that brings I will number. see On on the you together although I good solutions an also add we at on dying see of Yes, where can to continue kind

both asset really to I I of level you’re with affiliate affiliate autonomy perspective. is multi investment company The the And channels. and force And management managers. like will the some via and we companies. And is number increased any to exactly And model big that management wouldn’t opinion, as dilute for a specialist, and way. number any for our versions the highest mentioned, really being a increasingly management because doesn’t our opportunities In competitive not a mean a one number of and other of compete, want asset collaboration strategy distribution independence other our for specialist seeing referred And across Jenny known the And do want good marketplace, independence things work It seems across we really institutional dilute We common insurance are the the and we’re that a almost an our specialized we in through ourselves firm. in all investment would while ourselves, study environment, we company is at we’ve want the thing two, this models we multi to. tremendous firm, of don’t don’t and collaboration. respect colleagues the terms we it’s way don’t slightly That’s in -- do. things to that the one. collaboration, the resonate the we good. seeing the well see of we’re we company. brand it’s Also, that It it’s, really grow, of that what of just least. from want that in have teams us very they of that collaboration There’s is And definitely we we these our is strategy our opt-in firm. confuse model. investment have energizing win. piece, different autonomy it to is coordination think carefully. in kind across for say of have our managers industry, pretty And finding that that don’t in model the it the an across hybrid a to well.

that ourselves. a it’s have pretty also. But area very in interested We insurance, meaningful an that angle we’re

for So, it’s continue a new time, we obviously, opportunities at to company. build as thing one the

Great, thank you.

next Jefferies. question with Fannon Dan Our comes from

Thanks. Good morning.

think But or core terms them about the a So as want think would be to a that on we expense about expenses we could maybe transactions, there’s next you XXXX to if for Matt, give framework basis, parts about of fiscal maybe, a x, if talk think of growth, or about year. helpful. you moving either us can lot together, in

Sure. there. Yes,

date, the or April just provided assuming around in X XX, the close including, would sorry, be won’t it the So divided two, March and that assume two, that to that would take what say, margin in. two, numbers provided by we we including divided just the we add by revenue I margin just in divided Lexington, EBITDA be

standalone So on basis. putting that it aside, a

flat to the from the first digits, synergies. performance for through give say expect run for expenses single we you let’s down fees, quarter, quarter first for from because be be the early to rolling know, approximately rate expenses we would as the merger do For and first guidance were year excluding last revenue low our the we quarter have in the But year. related quarter, to very some

So got we’ve that that got we’ve happening.

remain stable. think, all I that Markets say equal. would remain So else I

revenue expect fees. single and adjusted to to the operating to be all low, quarter. This expenses at current performance levels our excluding down is adjusted operating We remain compared digits fourth

know, you the and $XXX million had with have fourth quarter we the quarters in two fees in third performance last As elevated quarter. $XX for

in obviously vary. that I would terms Now modeling does on one. that of

of to bit of I how the helpful. little I being other half think been there’s that’s coming not that think If just think half parent. that. and confusion half around to of the would of the a being other

that. That for to just clarify say expenses quarter-over-quarter is When you or... percentage down that’s

yes. Yes, Yes.

percentages. digit single low sorry, So

partners. just onboarding And core Great. of sales business then the range your offerings about talked wide largest the terms in in of you and and financial a prepared global momentum gross remarks, with product

one-off talked maybe maybe you also, think some out maybe seeing if then should had fourth quarter, that that tangible called expand what your Edward note if fiscal And about that. channels there’s of aware the or other examples be some you’ve quarter upon first we I Jones before, but for anything last you’ve you products quarter, are as well. they’re, can redemptions I’m of sorry, So to

take that? want to you Adam,

Sure.

the let’s so of the like channel presence to the about Each the in year back ago, And about go we much better banking said if of private a talk you I’ll U.S., were. Germany, on-boarding. regional merger, and And operate independent in the think a how Legacy, over Italy, firms Franklin, what separate the complimentary segments two stronger, about U.S. Mason the and really an platforms. business in stronger those Legg retail with outside wires banking. Franklin markets much legs having stronger, So

position Since one we the its little negative strategy Franklin Franklin participate we on had Legg it product several because Legg a the do able we the agreements, for to That on and effort year of That took takes available of work we far we’re we’re significantly the in to process to sale. year platforms. So formal And the outside Often, more where platforms, able funds bit means U.S. were on a execute that over think we other. sell quarters of on Mason U.S. next in more on to and be now sometimes a where those able platforms, and now had this that. execute. versa. vice and platforms, brought we have can product set to

could we’re acquisition, O'Shaughnessy since increases. we And announced close of acquisition management. of a add are couple acquisition quarter. a excited our bring few the team. a publicly, it that potential could of lumpiness, a that’s of customization going first fairly $X talked terms second is that a large what in Because haven’t income fixed numbers you obviously, us fourth team, space announcement one that publicly things almost there the a the And And And quickly. we be And lumpy the very is of Management will, in of I be guess, Adam, within into about billion capabilities. for also we the terms that the that in LDI will could in under quarter, which new quarter, expected quarter may team if tremendous dollars. was Again, that about the but important billion then race to Asset first really

We out will call time. that specifically

and a the top XX of kind Today, past I concentrated our put our largest funds. XX%, only funds very top XX XX our it. an on to we few products. the just And mark times of think represent not I by are AUM where of of flows mean, on funds, are were exclamation out there

Sam, of diversifying But Oh, capabilities road, well, our, very down diversifying excited also SMA enhancing indexing. being active direct referred excited of we’re product of the only that. the portion the our the just we’re base. base, We in really our really much but something our not client that core as strategies also about like And about case deliver are to

I were pipeline our there at where of true pipeline, side, on we look would kind of asset this And point. our first XX% is than is more classes the our at say institutional diversification Jenny, the equally that no strategy, think, I

on institutional So as really side diversified well. the

you. Thank

Thanks.

Hawken question UBS. with Brennan is the of next Our line from

Thanks A EBITDA. of $XXX the good couple taking questions. Hi my million on up for morning. follow

XXX. said so means that months, the there’s you just no it divide six Matthew, that by to for carry that in So I’m two guessing

Correct.

will team of then percentage Okay. that that the Great. move interest And annum. that of sort does points per schedule, going so interest mean XX% with five the vesting to

No immediate. that that be will

– transaction to So look on XX% best going through numbers will a be for the of But way can obviously basis, adjusted process you the running that through running through, our to the see that. a that would on basically. we’re, to it sort of the account work those we’ve highlighted will doing in going at our run through we’re throughout of expect P&L, the an of XX impact I

Okay.

basis. just a we to And then of immediately to I our terms to tax single level net income, annualized a to on rate apply, average be get the expect digits, accretion better EBITDA bit would little rough it an contribution mid to in probably

components What else is are performance there the there’s the about other we this, term? them. then we In XX%? performance, it. know tied over Are I the linked to other any Franklin Got metrics retention when that any connected? is with words, But performance there transferable? in or to performance think of And long pieces bad XXX

a focused non-solicitation, equity company. in that and we that as would incentivize the well a employees us XX%, And period, over all things expect that’s from you there are five as question, year really are something holders that’s, that around -- the non-compete obviously, And that important how on Yes. very senior you that that retain, the well that, was team.

that five ratably, can year years, around are options equity. the of lot, basically there So could end obviously, demand one we for and who acquire to at pool. there’s it, a Lexington, things. those acquire, that five their all period, equity That’s be have a including but at going through the internally is lot it the there’s vests over bonus Franklin of own that

contingent that, the that also something back on COVID the So piece a that’s in the go in and we well, then had minute. I’ll dialogue Will? to maybe terms what’s of

something our that I mean, Matt. thanks, opportunity, own in for is ownership structure understand. portion through considerably The employees. that grown really was formed opportunity business own is And partnership and it broaden to XXXX. with Franklin we business of Yes, has our exciting to the this a the significant since

really our a LPs. our perform for at really ourselves this on and think is, have a exceptional to bet to this So, is partner, powerful for to continue and I chance us time, new same ability the and the

anticipate number on on And to over talked, revenue tied time. that Thank to the don’t you second terms you, the in performance they a of base AUM they end Brennan, that awards, the of this the way work pleased you about, that until the the based period over all period to through with and were team. and Will. that, very And of metrics cash of asked payments begin we time that then fifth base year. run then they’re year, we there’s year, of also, And second

So that’s the end at is million the And end years. even. year year then split fifth to numbers first $XXX we have little $XXX the a a and much million, of the billion $XXX of XXX $XXX in different million is year. between through three dollars and at million year evenly very the second over closing and It's the $XXX the we million then the fifth to reference but right third year. split second And through pretty the the the bit way $XXX

So it’s through five between throughout quite balanced years. well through

Thank you details. for the That’s all helpful. pretty

difficulty] clarifying one thoughts Just [Technical

it Yes, we you. That’s again. can't hear Try better.

Franklin, participate a I bit. you have more therefore to now. The in election want after said? chance little I that is increase make a to that diluting actually five understood that. Better walk what years, does XX% employees just and sure then Yes,

No, no, I meant within the XX%.

either of Lexington, it'll will Franklin outside within go Lexington, within the circulate other Lexington, So never it either Franklin, to be more. within so XX%, than acquire it or will will

clarifying you that. for Thank

within to period. for expect stay extended it we the But Lexington

Understood.

just that if guess complete decide a takes And they're it Partners I of down be number if, years in Partners is equity employed And there then the Lexington by theory, that why a the when at Franklin, that’s to circulation even point. picture, of of actively we’re to the even minimum their needs company. amount to the equity to And at equity. confident to the sell held sell the some complete

that. for answer. you Thank thoroughness the the Appreciate of

you. Thank

Lee is with question next from Your KBW. Robert

Great. my for taking Good morning. Thanks questions.

an payments sure one First, is Is, delayed is performance that start paying that I’ll the earn and you earn pay-out three, XXX ones some faced. of maybe Or with make of understand is outs? and it is or out year performance? kind just in the to or through that this you really, like guess sticking subject the I call not

They’re based payments. time just

is So, this okay, time based.

whatnot, over struggled a back mean, partners, a great. the that of you in value And own any philosophically, having their to know, employees, revenue equity maybe they or versus employees with there’s it’s Benefit of meaning how this internal structure, Legacy reshape, how piece share? of And towards the stepping having and their certainly just and their time. is move them much how Legg more, other of have away, business someone second, huge a get still believe from revamp, I share piece equity Lexington, specialist Clarion, revenue more business. create maybe kind then sales, they’re, own own a Street was and something Okay, affiliates I Western other whether pressure to kind or

individual itself which carry is beauty the often alternatives And so there’s because in retention often historical the investment is Well, tool. some structure business of nature the, first related there great the of acquisition. is of all, to the team is a

you, we’ve into our we core seen teams had I like heads do conversations there to did appreciated mean, a teams were leveraging And aligned the a as think we business. got were of Mason businesses. And able part about engagement what an the we very built good. same where outstanding. And things the together that direction. the there environment real incentives the We really to created boat by were our the in Everybody rowing where when with we tell the investment the got everybody’s so of earlier, of of all And and very, are And alternatives, acquisition, acquisition, different in the it. recently to that’s talked that are the that I really forum upsides all opt-in some to then, company, was ensure desire. good is parent a CIO we’ve

of benefit a think part so of And recognize organization. great I people being the

add just Jenny’s But Rob to also to point.

It’s If like all Lexington, Clarins, the not sort partnership think asset, the about basically we you with alternative investment either Partners equity, of we Benefit example, accretive for units. owns to XX% close have have growth structures they managers, have that’s but same specialist Clarins, and equity. it’s Street very

same for always each businesses, basically of business in that thing aligning to in growth doesn’t certain growth It have the with for equity, business. have relates that to many it we terms other we’re targets can where specific cash So combination particular as be how a and you’re equity, be interests. it Jenny mentioned, objectives of and in

them that for works of growth, to teams, for the really going. things right we So sure combination a we make well that works company the parent get and it’s with on work what growth what specific

guess the of I mean up. last paying yet are Great. powder odd if funds of very and certain And I there of quick was Maybe good, But fundraising amount is fee that’s I maybe one drawdown fees. those cycle. in AUM structures. billion follow could not earning squeeze a some XX dry that’s

just already committed. already from So, kind some they’re kind Seagrove, have of built of as we look they’ve forward is in what

Will, we take So why don’t that? why have you we don’t

are it. fee these no. existing take commitment on products, pain products. is The to On Happy answer

thank taking my Appreciate you Great, for questions. it.

Rob. Thanks,

comes Bank question next Deutsche Bedell from with Brian Our

like we on morning, should and couple that year. second of $XXX asked for $XXX pro the of The from Lexington, you question. $XXX $X longer the just said Matt, then AUM the to fee it clarify I on first, and most term and the of and them thanks a contribution, million just fees questions. the paying billion deal on clarifications billion, on AUM, starts good more the taking Great, asked includes be But but in a that, the XX forma billion then on think, thinking of answered my so thanks

you're what then would So XXXX going fiscal And is impact rates tax that not whatsoever. forward that year adjusted using? the

couple a things. so Yes,

fully could Firstly, just question? what said. first I repeat follow didn't the you you -- your

$XXX. The Right? $XXX billion Yes. is AUM

Oh, yes. Yes.

Okay.

So actually, in raised $XX systems. that’s assumption But inception, across that an include been $XX some is XX% firstly, billion been growing, Since $XX it other the only of of billion amount alternative Lexington, growth. capital. the that with actually doesn’t asset we’ve terms includes organically billion. modest

in those growth some includes it So also.

feel billion, $XX of the XXX, growth, question? second was $XXX $XX how that. to good add the and billion. then assumption doesn’t just So the get adds about it the that’s billion the We What you it the

the end that basically. And at March, $XXX of billion

Right. Yes.

that on starts on fiscal a the the second Just the I after of is the rate think using. million $XXX And you're XXXX. go-forward that couple the tax question part year

the So XXXX, in four that contingent payment starts actually… first

yes. Okay,

So the And that. then other in question, that’s asked. you

to said, because example, for fraction billion margin Sorry, that. or so that’s asked already or you and us many probably, carry, to that’s you. only management tied well, to you to, a the quite management And to XXXX, XX% XXX. questions to something think the anything asked, fees. I’ll anything then conservative, for probably that to standalone, billion revenue. that’s mentioned I $XXX plus, is fees yes, about fairly I had at fee, dollars a got that second, get taxing that’s, conservative, the got the at like frankly, million It’s we’re of close it I of management like And fees already We performance quite that’s not

In of all of XX% to would tax effective guidance continue XX% tax this. on terms use rate, to rate the I the

was reserve unusual the terms Now we in we’re that realized of that this release. quarter to able

not So reserves additional happen. to any large we do that expect like

to benefit taxes, the we’ve that favorable over, next probably years. point from we then And Legg $XXX rest of point the from about benefits be seven and another or will the million I been Although tax tax the And that out $XXX attributes at to should two able of years over six in acquisition of be probably benefit then years. obtained seven on through million Mason. approximately about $XXX able should

to the opposed as rate tax cash the that’s XX. And

Yes. right. that’s Yes,

up for Jenny, products. mentioned now $XXX just one and obviously Thank investments classifying on pure between like that you versus about maybe what great. to you billion. would you’re sustainable that That’s just Maybe you exclusionary consider, ESG.

in I think you classification. modeled of nine said, terms eight after before sort and it of you’ve articles

billion X is, just strategies want U.K. of your to in even that linked is you the And and verify if So Europe. billion? and is what reclassifying maybe changing will that $XXX Article of $XXX potentially just that to, maybe raising terms to X perspectives view

Well. I, Article so yes, X, it’s X.

X. So there’s $X.X up And going some we but that you, in trillion selling, that’s is the XXXX, tell I $XX X, look there’s trillion I X I by Article demand you XXXX. first AUM says to and the there’s, part. to mean, the saw in that’s at if get to flows something mean, Article in Europe, got

the growth So that’s We’ve got where is. good products there. very

them declare were disciplined rigorous compliance we claiming that I were very a disciplined. reviewing any think before way. Nobody’s we we have our products on very greenwashing and part, group

that the queue happen want and And, think well. the you reviewed as in more have in are what’s internally. being happening in to that? going Asia to We we add U.S. Adam, Europe that to is

going was that. just I add to to

it’s it’s and Europe. eight pipeline. our of are pretty If coming incredible. you XX% XX% our pipeline, at flows products from of look nine And About in our about

did. growing got business there, So we while a else growing it’s anything and decent quickly than we’ve just more

That possible. able that’s if super if It apart you that. break know to it just for between I sustainable Thank you’re don’t helpful. that exclusionary, and is

Adam, do. them know fingertips. have I you my don’t don't if I at

we I back those exact can tell you don’t that. to get Why numbers.

Yes.

Okay. helpful. Yes. Super All right. Thank you so much.

Brian. you, Thank

want just thank for say participating I call you today’s well, today. Great, to in

as tell, the so made progress getting many ways, in hopefully time, a you at months. XX we’re exciting And are lot just over We past can of yet, we’ve started.

focused to our to quarter. next work for we speaking again thank look our other. like forward their clients And on we’d employees hard again, each once and remaining So and to you

and healthy. everybody, thanks, So stay

conference This concludes call. today’s

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