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Share Name | Share Symbol | Market | Type |
---|---|---|---|
BlackRock Inc | NYSE:BLK | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 780.92 | 90 | 12:01:18 |
Fourth Quarter 2016 Diluted EPS of $5.13, or $5.14 as adjusted
BlackRock, Inc. (NYSE:BLK)
FINANCIAL RESULTS
(in millions, except per share data) Q42016
Q42015
Change Q32016
Change Full Year 2016 2015 Change AUM $ 5,147,852 $ 4,645,412 11 % $ 5,117,421 1 % $ 5,147,852 $ 4,645,412 11 % Total net flows $ 98,050 $ 67,885 $ 69,809 $ 202,191 $ 149,895GAAP basis:
Revenue $ 2,890 $ 2,863 1 % $ 2,837 2 % $ 11,155 $ 11,401 (2 )% Operating income $ 1,225 $ 1,137 8 % $ 1,209 1 % $ 4,570 $ 4,664 (2 )% Operating margin 42.4 % 39.7 % 270 bps 42.6 % (20) bps 41.0 % 40.9 % 10 bps Net income(1) $ 851 $ 861 (1 )% $ 875 (3 )% $ 3,172 $ 3,345 (5 )% Diluted EPS $ 5.13 $ 5.11 - % $ 5.26 (2 )% $ 19.04 $ 19.79 (4 )% Weighted average diluted shares 165.9 168.6 (2 )% 166.3 - % 166.6 169.0 (1 )%As adjusted:
Operating income(2) $ 1,232 $ 1,143 8 % $ 1,216 1 % $ 4,674 $ 4,695 - % Operating margin(2) 44.4 % 41.6 % 280 bps 44.8 % (40) bps 43.7 % 42.9 % 80 bps Net income(1) (2) $ 852 $ 801 6 % $ 854 - % $ 3,214 $ 3,313 (3 )% Diluted EPS(2) $ 5.14 $ 4.75 8 % $ 5.14-
% $ 19.29 $ 19.60 (2 )% (1) Net income represents net income attributable to BlackRock, Inc. (2)See notes (1) through (4) to the Condensed Consolidated Statements of Income and Supplemental Information for more information on as adjusted items and the reconciliation to GAAP.
BlackRock, Inc. (NYSE:BLK) today reported financial results for the three months and year ended December 31, 2016.
“In a year of dramatic change and uncertainty around the world, clients continued to put their trust in BlackRock, allowing us to deliver the strongest annual net inflows in our firm’s history,” commented Laurence D. Fink, Chairman and CEO of BlackRock. “2016 total net inflows of $202 billion were positive across product types and included $181 billion of long-term net inflows. Our full year results reflect our continued commitment to optimize the growth of our diverse investment, technology and risk management capabilities in the most efficient way possible.
“While domestic equities rallied following the US election, the combination of a strengthening dollar, underperforming international equities and negative fixed income markets produced challenging outcomes for global investors. Investors are rethinking their approach to active management, asset allocation and portfolio construction, and we’re seeing more clients use active and index strategies together to deliver returns. We have purposefully invested in our platform to provide clients with a full spectrum of offerings including cash, market cap-weighted indexes, smart beta and factor-based investment strategies, and high-conviction active products, whether fundamental, quantitative or illiquid.
“Increasingly diversified groups of institutional and retail clients are using ETFs in their portfolios. This broadening of the ETF ecosystem is creating a deeper secondary market for ETF trading – enhancing liquidity for all investors. iShares generated a record $140 billion of net inflows for the year, including $60 billion into iShares fixed income ETFs, capturing the #1 share of flows globally, in the US and in Europe, and in equity and fixed income.
“Institutions looked to BlackRock to help them close funding gaps and meet future liability objectives, and we saw record institutional net inflows of $51 billion, driven by fixed income and multi-asset solutions.
“Technology is increasingly important in the evolving regulatory and investment landscape, and clients increasingly value BlackRock’s technology solutions to help them understand and manage risk, and build portfolios. Aladdin revenue increased 13% in 2016, and is well positioned for continued momentum with a broader set of clients than ever before. Additionally, we launched Aladdin Risk for Wealth Management and continued to deepen our relationships with our distribution partners through FutureAdvisor’s digital advice capabilities.
“BlackRock has always focused on repositioning its investment platform and technology capabilities in anticipation of change, and BlackRock employees embrace their responsibility to help clients navigate this evolving, complex landscape. As we head into 2017, we remain committed to investing for the future and developing our talent in order to fulfill our responsibility to both clients and shareholders.”
CAPITAL MANAGEMENT
The BlackRock Board of Directors approved a 9% increase in the quarterly cash dividend to $2.50 per share, payable March 23, 2017, to shareholders of record at the close of business on March 6, 2017. In addition, the Board authorized the repurchase of an additional 6 million shares under the Company’s existing share repurchase program for a total up to 9 million shares of BlackRock common stock.
RESULTS BY CLIENT TYPE
December 31, 2016
Q4 2016
Q4 2016
December 31, 2016
Q4 2016
AUM
Base fees(1)
(in millions), (unaudited)Net flows
AUM
Base fees(1)
% of Total
% of Total
Retail $ (2,444 )$
541,952
$ 789 10 % 31 % iShares 49,300 1,287,879 885 25 % 36 % Institutional: Active 6,306 1,009,974 453 20 % 18 % Index 34,601 1,901,681 241 37 % 10 % Total institutional 40,907 2,911,655 694 57 %28
% Long-term 87,763 4,741,486 2,368 92 % 95 % Cash management 17,671 403,584 118 8 % 5 % Advisory (7,384 ) 2,782 - - - Total $ 98,050 $ 5,147,852 $ 2,486 100 % 100 %RESULTS BY PRODUCT TYPE
December 31, 2016
Q4 2016
Q4 2016
December 31, 2016
Q4 2016
AUM
Base fees(1)
(in millions), (unaudited)Net flows
AUM
Base fees(1)
% of Total
% of Total
Equity $ 57,965 $ 2,657,176 $ 1,237 52 % 50 % Fixed income 25,306 1,572,365 685 30 % 27 % Multi-asset 4,856 395,007 278 8 % 11 % Alternatives (364 ) 116,938 168 2 % 7 % Long-term 87,763 4,741,486 2,368 92 % 95 % Cash management 17,671 403,584 118 8 % 5 % Advisory (7,384 ) 2,782 - - - Total $ 98,050 $ 5,147,852 $ 2,486 100 % 100 %RESULTS BY INVESTMENT STYLE
December 31, 2016
Q4 2016
Q4 2016
December 31, 2016
Q4 2016
AUM
Base fees(1)
(in millions), (unaudited)Net flows
AUM
Base fees(1)
% of Total
% of Total
Active $ (546 ) $ 1,501,052 $ 1,232 29 % 49 % Index and iShares 88,309 3,240,434 1,136 63 % 46 % Long-term 87,763 4,741,486 2,368 92 % 95 % Cash management 17,671 403,584 118 8 % 5 % Advisory (7,384 ) 2,782 - - - Total $ 98,050 $ 5,147,852 $ 2,486 100 % 100 %(1) Base fees include investment advisory, administration fees and securities lending revenue.
BUSINESS HIGHLIGHTS
Long-term net inflows were positive across all major regions, with net inflows of $46.0 billion, $38.2 billion and $3.6 billion from clients in the Americas, EMEA and Asia-Pacific, respectively. At December 31, 2016, BlackRock managed 63% of its long-term AUM for investors in the Americas and 37% for clients in EMEA and Asia-Pacific.
A discussion of the Company’s net flows by client type for the fourth quarter of 2016 is presented below.
Cash management AUM increased 4% to $403.6 billion, driven by $17.7 billion of net inflows, primarily into government funds.
INVESTMENT PERFORMANCE AT DECEMBER 31, 2016(1)
One-year period Three-year period Five-year period Fixed Income:
Actively managed AUM above benchmark or peer median
Taxable
60%
78%
88%
Tax-exempt64%
63%
73%
Index AUM within or above applicable tolerance90%
99%
99%
Equity:Actively managed AUM above benchmark or peer median
Fundamental48%
62%
65%
Scientific43%
80%
91%
Index AUM within or above applicable tolerance95%
97%
97%
(1)Past performance is not indicative of future results. The performance information shown is based on preliminary available data. Please refer to performance disclosure detail.
TELECONFERENCE, WEBCAST AND PRESENTATION INFORMATION
Chairman and Chief Executive Officer, Laurence D. Fink, and Chief Financial Officer, Gary S. Shedlin, will host a teleconference call for investors and analysts on Friday, January 13, 2017 at 8:30 a.m. (Eastern Time). Members of the public who are interested in participating in the teleconference should dial, from the United States, (800) 374-0176, or from outside the United States, (706) 679-8281, shortly before 8:30 a.m. and reference the BlackRock Conference Call (ID Number 39041891). A live, listen-only webcast will also be available via the investor relations section of www.blackrock.com.
Both the teleconference and webcast will be available for replay by 12:30 p.m. (Eastern Time) on Friday, January 13, 2017 and ending at midnight on Friday, January 27, 2017. To access the replay of the teleconference, callers from the United States should dial (855) 859-2056 and callers from outside the United States should dial (404) 537-3406 and enter the Conference ID Number 39041891. To access the webcast, please visit the investor relations section of www.blackrock.com.
About BlackRock
BlackRock is a global leader in investment management, risk management and advisory services for institutional and retail clients. At December 31, 2016, BlackRock’s AUM was $5.1 trillion. BlackRock helps clients around the world meet their goals and overcome challenges with a range of products that include separate accounts, mutual funds, iShares® (exchange-traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions®. As of December 31, 2016, the firm had approximately 13,000 employees in more than 30 countries and a major presence in global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa. For additional information, please visit the Company’s website at www.blackrock.com | Twitter: @blackrock_news | Blog: www.blackrockblog.com | LinkedIn: www.linkedin.com/company/blackrock
CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION
(in millions, except shares and per share data), (unaudited)
Three Months Three Months Ended Ended December 31,September 30,
2016 2015 Change 2016 Change Revenue Investment advisory, administration fees and securities lending revenue $2,486 $2,460 $26 $2,546 $(60 ) Investment advisory performance fees 129 169 (40 ) 58 71 BlackRock Solutions and advisory 197 171 26 174 23 Distribution fees 9 11 (2 ) 10 (1 ) Other revenue 69 52 17 49 20 Total revenue 2,890 2,863 27 2,837 53 Expense Employee compensation and benefits 987 989 (2 ) 969 18 Distribution and servicing costs 109 103 6 114 (5 ) Amortization of deferred sales commissions 7 11 (4 ) 8 (1 ) Direct fund expense 183 189 (6 ) 200 (17 ) General and administration 355 410 (55 ) 312 43 Amortization of intangible assets 24 24 - 25 (1 ) Total expense 1,665 1,726 (61 ) 1,628 37 Operating income 1,225 1,137 88 1,209 16 Nonoperating income (expense) Net gain (loss) on investments 6 57 (51 ) 31 (25 ) Interest and dividend income 7 5 2 22 (15 ) Interest expense (51 ) (51 ) - (52 ) 1 Total nonoperating income (expense) (38 ) 11 (49 ) 1 (39 ) Income before income taxes 1,187 1,148 39 1,210 (23 ) Income tax expense 336 279 57 333 3 Net income 851 869 (18 ) 877 (26 ) Less: Net income (loss) attributable to noncontrolling interests - 8 (8 ) 2 (2 ) Net income attributable to BlackRock, Inc. $851 $861 $(10 ) $875 $(24 ) Weighted-average common shares outstanding Basic 163,441,552 165,826,808 (2,385,256 ) 164,129,214 (687,662 ) Diluted 165,854,167 168,632,558 (2,778,391 ) 166,256,598 (402,431 ) Earnings per share attributable to BlackRock, Inc. common stockholders (4) Basic $5.21 $5.19 $0.02 $5.33 $(0.12 ) Diluted $5.13 $5.11 $0.02 $5.26 $(0.13 ) Cash dividends declared and paid per share $2.29 $2.18 $0.11 $2.29 $-Supplemental information:
AUM (end of period) $5,147,852 $4,645,412 $502,440 $5,117,421 $30,431 Shares outstanding (end of period) 163,121,291 165,596,139 (2,474,848 ) 163,858,070 (736,779 ) GAAP: Operating margin 42.4 % 39.7 %270
bps
42.6 %(20
) bps
Effective tax rate 28.3 % 24.5 %380
bps
27.6 %70
bps
As adjusted: Operating income (1) $1,232 $1,143 $89 $1,216 $16 Operating margin (1) 44.4 % 41.6 %280
bps
44.8 %(40
) bps
Nonoperating income (expense), less net income (loss) attributable to noncontrolling interests (2) $(38 ) $1 $(39 ) $(1 ) $(37 ) Net income attributable to BlackRock, Inc. (3) $852 $801 $51 $854 $(2 ) Diluted earnings attributable to BlackRock, Inc. common stockholders per share (3) (4) $5.14 $4.75 $0.39 $5.14 $- Effective tax rate 28.6 % 30.0 %(140
) bps
29.7 %(110
) bps
See the reconciliation to GAAP and notes (1) through (4) for more information on as adjusted items.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION
(in millions, except shares and per share data), (unaudited)
Year Ended December 31, 2016 2015 Change Revenue Investment advisory, administration fees and securities lending revenue $9,880 $9,840 $40 Investment advisory performance fees 295 621 (326 ) BlackRock Solutions and advisory 714 646 68 Distribution fees 41 55 (14 ) Other revenue 225 239 (14 ) Total revenue 11,155 11,401 (246 ) Expense Employee compensation and benefits 3,880 4,005 (125 ) Distribution and servicing costs 429 409 20 Amortization of deferred sales commissions 34 48 (14 ) Direct fund expense 766 767 (1 ) General and administration 1,301 1,380 (79 ) Restructuring charge 76 - 76 Amortization of intangible assets 99 128 (29 ) Total expense 6,585 6,737 (152 ) Operating income 4,570 4,664 (94 ) Nonoperating income (expense) Net gain (loss) on investments 55 116 (61 ) Interest and dividend income 40 26 14 Interest expense (205 ) (204 ) (1 ) Total nonoperating income (expense) (110 ) (62 ) (48 ) Income before income taxes 4,460 4,602 (142 ) Income tax expense 1,290 1,250 40 Net income 3,170 3,352 (182 ) Less: Net income (loss) attributable to noncontrolling interests (2 ) 7 (9 ) Net income attributable to BlackRock, Inc. $3,172 $3,345 $(173 ) Weighted-average common shares outstanding Basic 164,425,858 166,390,009 (1,964,151 ) Diluted 166,579,752 169,038,571 (2,458,819 ) Earnings per share attributable to BlackRock, Inc. common stockholders (4) Basic $19.29 $20.10 $(0.81 ) Diluted $19.04 $19.79 $(0.75 ) Cash dividends declared and paid per share $9.16 $8.72 $0.44Supplemental information:
AUM (end of period) $5,147,852 $4,645,412 $502,440 Shares outstanding (end of period) 163,121,291 165,596,139 (2,474,848 ) GAAP: Operating margin 41.0 % 40.9 % 10 bps Effective tax rate 28.9 % 27.2 % 170 bps As adjusted: Operating income (1) $4,674 $4,695 $(21 ) Operating margin (1) 43.7 % 42.9 % 80 bps Nonoperating income (expense), less net income (loss) attributable to noncontrolling interests (2) $(108 ) $(70 ) $(38 ) Net income attributable to BlackRock, Inc. (3) $3,214 $3,313 $(99 ) Diluted earnings attributable to BlackRock, Inc. common stockholders per share(3) (4) $19.29 $19.60 $(0.31 ) Effective tax rate 29.6 % 28.4 % 120 bpsSee the reconciliation to GAAP and notes (1) through (4) for more information on as adjusted items.
ASSETS UNDER MANAGEMENT(in millions), (unaudited)
Current Quarter Component Changes by Client Type and Product Net September 30, inflows December 31, 2016 (outflows) Market change FX impact (1) 2016 Average AUM (2) Retail: Equity $196,131 $1,742 $1,525 $(3,177 ) $196,221 $193,865 Fixed income 230,842 (1,832 ) (4,798 ) (1,956 ) 222,256 226,160 Multi-asset 111,369 (1,699 ) (1,115 ) (558 ) 107,997 108,785 Alternatives 16,436 (655 ) (33 ) (270 ) 15,478 15,977 Retail subtotal 554,778 (2,444 ) (4,421 ) (5,961 ) 541,952 544,787 iShares: Equity 891,010 50,650 15,721 (6,129 ) 951,252 909,727 Fixed income 329,462 (326 ) (10,344 ) (4,085 ) 314,707 320,334 Multi-asset 2,506 695 (49 ) (3 ) 3,149 2,730 Alternatives 23,188 (1,719 ) (2,586 ) (112 ) 18,771 20,869 iShares subtotal 1,246,166 49,300 2,742 (10,329 ) 1,287,879 1,253,660 Institutional: Active: Equity 123,770 (2,804 ) 2,652 (2,919 ) 120,699 120,590 Fixed income 560,799 1,267 (14,537 ) (10,802 ) 536,727 546,842 Multi-asset 280,406 5,657 (2,403 ) (6,727 ) 276,933 275,203 Alternatives 74,678 2,186 71 (1,320 ) 75,615 75,069 Active subtotal 1,039,653 6,306 (14,217 ) (21,768 ) 1,009,974 1,017,704 Index: Equity 1,355,128 8,377 52,752 (27,253 ) 1,389,004 1,360,085 Fixed income 507,165 26,197 (15,902 ) (18,785 ) 498,675 492,827 Multi-asset 7,980 203 (727 ) (528 ) 6,928 7,645 Alternatives 7,228 (176 ) 214 (192 ) 7,074 7,102 Index subtotal 1,877,501 34,601 36,337 (46,758 ) 1,901,681 1,867,659 Institutional subtotal 2,917,154 40,907 22,120 (68,526 ) 2,911,655 2,885,363 Long-term 4,718,098 87,763 20,441 (84,816 ) 4,741,486 4,683,810 Cash management 388,982 17,671 225 (3,294 ) 403,584 397,661 Advisory (3) 10,341 (7,384 ) 51 (226 ) 2,782 8,018 Total $5,117,421 $98,050 $20,717 $(88,336 ) $5,147,852 $5,089,489 Current Quarter Component Changes by Product Type (Long-term) Net September 30, inflows December 31, 2016 (outflows) Market change FX impact (1) 2016 Average AUM (2) Equity: Active $281,726 $(4,549 ) $3,063 $(5,207 ) $275,033 $275,078 iShares 891,010 50,650 15,721 (6,129 ) 951,252 909,727 Non-ETF index 1,393,303 11,864 53,866 (28,142 ) 1,430,891 1,399,462 Equity subtotal 2,566,039 57,965 72,650 (39,478 ) 2,657,176 2,584,267 Fixed income: Active 782,858 (1,485 ) (18,984 ) (12,393 ) 749,996 764,415 iShares 329,462 (326 ) (10,344 ) (4,085 ) 314,707 320,334 Non-ETF index 515,948 27,117 (16,253 ) (19,150 ) 507,662 501,414 Fixed income subtotal 1,628,268 25,306 (45,581 ) (35,628 ) 1,572,365 1,586,163 Multi-asset 402,261 4,856 (4,294 ) (7,816 ) 395,007 394,363 Alternatives: Core 88,731 1,217 19 (1,337 ) 88,630 88,715 Currency andcommodities (4)
32,799 (1,581 ) (2,353 ) (557 ) 28,308 30,302 Alternatives subtotal 121,530 (364 ) (2,334 ) (1,894 ) 116,938 119,017 Long-term $4,718,098 $87,763 $20,441 $(84,816 ) $4,741,486 $4,683,810 Current Quarter Component Changes by Investment Style (Long-term) Net September 30, inflows December 31, 2016 (outflows) Market change FX impact (1) 2016 Average AUM (2) Active $1,547,473 $(546 ) $(19,402 ) $(26,473 ) $1,501,052 $1,514,526 Index and iShares 3,170,625 88,309 39,843 (58,343 ) 3,240,434 3,169,284 Long-term $4,718,098 $87,763 $20,441 $(84,816 ) $4,741,486 $4,683,810(1)
Foreign exchange reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.
(2) Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing four months. (3) Advisory AUM represents long-term portfolio liquidation assignments. (4)Amounts include commodity iShares.
ASSETS UNDER MANAGEMENT
(in millions), (unaudited)
Year-over-Year Component Changes by Client Type and Product Net December 31, inflows December 31, 2015 (outflows) Acquisition (1) Market changeFX impact(2)
2016 Average AUM (3) Retail: Equity $193,755 $(7,429 ) $ - $15,456 $(5,561 ) $196,221 $192,311 Fixed income 212,653 8,407 - 3,130 (1,934 ) 222,256 221,797 Multi-asset 115,307 (9,367 ) - 3,100 (1,043 ) 107,997 111,416 Alternatives 19,410 (2,935 ) - (835 ) (162 ) 15,478 17,424 Retail subtotal 541,125 (11,324 ) - 20,851 (8,700 ) 541,952 542,948 iShares: Equity 823,156 74,914 - 56,469 (3,287 ) 951,252 849,017 Fixed income 254,190 59,913 - 3,782 (3,178 ) 314,707 301,061 Multi-asset 2,730 354 - 61 4 3,149 2,448 Alternatives 12,485 5,298 - 1,055 (67 ) 18,771 18,561 iShares subtotal 1,092,561 140,479 - 61,367 (6,528 ) 1,287,879 1,171,087 Institutional: Active: Equity 121,442 (7,449 ) - 11,112 (4,406 ) 120,699 119,604 Fixed income 514,428 10,234 - 20,242 (8,177 ) 536,727 542,332 Multi-asset 252,041 13,322 - 18,516 (6,946 ) 276,933 265,652 Alternatives 74,941 1,811 - 619 (1,756 ) 75,615 74,919 Active subtotal 962,852 17,918 - 50,489 (21,285 ) 1,009,974 1,002,507 Index: Equity 1,285,419 (8,612 ) - 135,997 (23,800 ) 1,389,004 1,307,812 Fixed income 441,097 41,401 - 55,665 (39,488 ) 498,675 478,444 Multi-asset 6,258 (82 ) - 843 (91 ) 6,928 7,464 Alternatives 6,003 784 - 790 (503 ) 7,074 6,642 Index subtotal 1,738,777 33,491 - 193,295 (63,882 ) 1,901,681 1,800,362 Institutional subtotal 2,701,629 51,409 - 243,784 (85,167 ) 2,911,655 2,802,869 Long-term 4,335,315 180,564 - 326,002 (100,395 ) 4,741,486 4,516,904 Cash management 299,884 29,228 80,635 430 (6,593 ) 403,584 358,498 Advisory (4) 10,213 (7,601 ) - (68 ) 238 2,782 9,687 Total $4,645,412 $202,191 $80,635 $326,364 $(106,750 ) $5,147,852 $4,885,089 Year-over-Year Component Changes by Product Type (Long-term) Net December 31, inflows December 31, 2015 (outflows) Acquisition Market changeFX impact(2)
2016 Average AUM (3) Equity: Active $281,319 $(20,230 ) $ - $21,045 $(7,101 ) $275,033 $275,656 iShares 823,156 74,914 - 56,469 (3,287 ) 951,252 849,017 Non-ETF index 1,319,297 (3,260 ) - 141,520 (26,666 ) 1,430,891 1,344,071 Equity subtotal 2,423,772 51,424 - 219,034 (37,054 ) 2,657,176 2,468,744 Fixed income: Active 719,653 16,625 - 22,742 (9,024 ) 749,996 756,110 iShares 254,190 59,913 - 3,782 (3,178 ) 314,707 301,061 Non-ETF index 448,525 43,417 - 56,295 (40,575 ) 507,662 486,463 Fixed income subtotal 1,422,368 119,955 - 82,819 (52,777 ) 1,572,365 1,543,634 Multi-asset 376,336 4,227 - 22,520 (8,076 ) 395,007 386,980 Alternatives: Core 92,085 (1,165 ) - (291 ) (1,999 ) 88,630 90,028 Currency andcommodities (5)
20,754 6,123 - 1,920 (489 ) 28,308 27,518 Alternatives subtotal 112,839 4,958 - 1,629 (2,488 ) 116,938 117,546 Long-term $4,335,315 $180,564 $ - $326,002 $(100,395 ) $4,741,486 $4,516,904 Year-over-Year Component Changes by Investment Style (Long-term) Net December 31, inflows December 31, 2015 (outflows) Acquisition Market change FX impact (2) 2016 Average AUM (3) Active $1,462,672 $(774 ) $ - $65,187 $(26,033 ) $1,501,052 $1,501,176 Index and iShares 2,872,643 181,338 - 260,815 (74,362 ) 3,240,434 3,015,728 Long-term $4,335,315 $180,564 $ - $326,002 $(100,395 ) $4,741,486 $4,516,904(1)
Amount represents AUM acquired in the BofA® Global Capital Management transaction in April 2016. (2) Foreign exchange reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes. (3) Average AUM is calculated as the average of the month-end spot AUM amounts for the trailing thirteen months. (4) Advisory AUM represents long-term portfolio liquidation assignments. (5)Amounts include commodity iShares.
SUMMARY OF REVENUE
Three Months Ended
December 31,
Three Months
Ended
September 30,
Year Ended
December 31,
(in millions), (unaudited)
2016
2015
Change
2016
Change
2016
2015
Change
Investment advisory, administration fees and securities lending revenue: Equity: Active $390 $413 $(23 ) $409 $(19 ) $1,591 $1,709 $(118 ) iShares 681 666 15 691 (10 ) 2,651 2,751 (100 ) Non-ETF Index 166 169 (3 ) 170 (4 ) 674 680 (6 ) Equity subtotal 1,237 1,248 (11 ) 1,270 (33 ) 4,916 5,140 (224 ) Fixed income: Active 421 404 17 427 (6 ) 1,658 1,566 92 iShares 184 147 37 188 (4 ) 696 554 142 Non-ETF Index 80 72 8 78 2 297 282 15 Fixed income subtotal 685 623 62 693 (8 ) 2,651 2,402 249 Multi-asset 278 311 (33 ) 285 (7 ) 1,138 1,253 (115 ) Alternatives: Core 146 172 (26 ) 156 (10 ) 634 653 (19 ) Currency and commodities 22 17 5 24 (2 ) 83 73 10 Alternatives subtotal 168 189 (21 ) 180 (12 ) 717 726 (9 ) Long-term 2,368 2,371 (3 ) 2,428 (60 ) 9,422 9,521 (99 ) Cash management 118 89 29 118 - 458 319 139 Total base fees 2,486 2,460 26 2,546 (60 ) 9,880 9,840 40 Investment advisory performance fees: Equity 35 84 (49 ) 14 21 102 205 (103 ) Fixed income 4 16 (12 ) 2 2 13 26 (13 ) Multi-asset 13 15 (2 ) 1 12 19 34 (15 ) Alternatives 77 54 23 41 36 161 356 (195 ) Total performance fees 129 169 (40 ) 58 71 295 621 (326 ) BlackRock Solutions and advisory 197 171 26 174 23 714 646 68 Distribution fees 9 11 (2 ) 10 (1 ) 41 55 (14 ) Other revenue 69 52 17 49 20 225 239 (14 ) Total revenue $2,890 $2,863 $27 $2,837 $53 $11,155 $11,401 $(246 )Highlights
SUMMARY OF OPERATING EXPENSE
Three
Months EndedDecember 31,
Three
Months EndedSeptember 30,
Year EndedDecember 31,
(in millions), (unaudited) 2016 2015 Change 2016 Change 2016 2015 Change Operating expense Employee compensation and benefits $987 $989$(2
)
$969 $18 $3,880 $4,005 $(125 ) Distribution and servicing costs 109 103 6 114 (5 ) 429 409 20 Amortization of deferred sales commissions 7 11 (4 )8
(1 ) 34 48 (14 ) Direct fund expense 183 189 (6 ) 200 (17)
766 767 (1 ) General and administration 355 410 (55 ) 312 43 1,301 1,380 (79 ) Restructuring charge - - - - - 76 - 76 Amortization of intangible assets 24 24 - 25 (1 ) 99 128 (29 ) Total operating expense $1,665 $1,726 $(61 ) $1,628 $37 $6,585 $6,737 $(152 )Highlights
INCOME TAX EXPENSE
Three
Months EndedDecember 31,
Three
Months EndedSeptember 30,
Year EndedDecember 31,
(in millions), (unaudited) 2016 2015 Change 2016 Change 2016 2015 Change Income tax expense $336 $279 $57 $333 $3 $1,290 $1,250 $40Highlights
SUMMARY OF NONOPERATING INCOME (EXPENSE)
Three MonthsEndedDecember 31,
Three MonthsEndedSeptember 30,
Year EndedDecember 31,
(in millions), (unaudited) 2016 2015 Change 2016 Change 2016 2015 Change Nonoperating income (expense), GAAP basis $(38 ) $11 $(49 ) $1 $(39 ) $(110 ) $(62 ) $(48 ) Less: Net income (loss) attributable to NCI - 8 (8 ) 2 (2 ) (2 ) 7 (9 ) Nonoperating income (expense)(1) $(38 ) $3 $(41 ) $(1 ) $(37 ) $(108 ) $(69 ) $(39 ) Estimatedeconomicinvestments atDecember 31, 2016(2) Three MonthsEndedDecember 31, Three MonthsEndedSeptember 30,2016Year EndedDecember 31,
(in millions), (unaudited) 2016 2015 Change Change 2016 2015 Change Net gain (loss) on investments(1) Private equity20-25
% $(5 ) $36 $(41 ) $2 $(7 ) $6 $71 $(65 ) Real assets5-10
% 3 3 - 2 1 8 12 (4 ) Other alternatives(3)15-20
% 8 4 4 9 (1 ) 21 (2 ) 23 Other investments(4)55-60
% - 5 (5 ) 16 (16 ) 22 (18 ) 40 Subtotal 6 48 (42 ) 29 (23 ) 57 63 (6 ) Other gains(5) - 1 (1 ) - - - 46 (46 ) Total net gain (loss) on investments(1) 6 49 (43 ) 29 (23 ) 57 109 (52 ) Interest and dividend income 7 5 2 22 (15 ) 40 26 14 Interest expense (51 ) (51 ) - (52 ) 1 (205 ) (204 ) (1 ) Net interest expense (44 ) (46 ) 2 (30 ) (14 ) (165 ) (178 ) 13 Total nonoperating income (expense)(1) (38 ) 3 (41 ) (1 ) (37 ) (108 ) (69 ) (39 ) Compensation expense related to (appreciation) depreciation on deferred compensation plans - (2 ) 2 - - - (1 ) 1 Nonoperating income (expense), as adjusted(1) $(38 ) $1 $(39 ) $(1 ) $(37 ) $(108 ) $(70 ) $(38 ) (1) Net of net income (loss) attributable to noncontrolling interests (“NCI”). (2) Percentages represent estimated percentages of BlackRock’s corporate economic investment portfolio at December 31, 2016. Economic investment amounts at September 30, 2016 for private equity, real assets, other alternatives and other investments were $348 million, $109 million, $238 million and $1,156 million, respectively. (3) Amounts primarily include net gains (losses) related to direct hedge fund strategies and hedge fund solutions. (4) Amounts include net gains (losses) related to equity and fixed income investments, and BlackRock’s seed capital hedging program. (5) Amount for the year ended December 31, 2015 primarily includes a gain related to the acquisition of certain assets of BlackRock Kelso Capital Advisors LLC.Highlights
ECONOMIC TANGIBLE ASSETS
The Company presents economic tangible assets as additional information to enable investors to exclude certain assets that have equal and offsetting liabilities or noncontrolling interests that ultimately do not have an impact on stockholders’ equity or cash flows. In addition, goodwill and intangible assets are excluded from economic tangible assets.
Economic tangible assets include cash, receivables, seed and co-investments, regulatory investments and other assets.
December 31, December 31, (in billions), (unaudited) 2016 (Est.) 2015 Total balance sheet assets $220 $225Separate account assets and separate account collateral held under securities lending agreements
(177 ) (182 ) Consolidated sponsored investment funds (1 ) (1 ) Goodwill and intangible assets, net (30 ) (30 ) Economic tangible assets $12 $12RECONCILIATION OF U.S. GAAP OPERATING INCOME AND OPERATING MARGIN TO OPERATING INCOME AND OPERATING MARGIN, AS ADJUSTED
Three Months Ended Year Ended December 31,September 30,
December 31, (in millions), (unaudited) 2016 20152016
20162015
Operating income, GAAP basis $ 1,225 $ 1,137$
1,209
$ 4,570 $ 4,664 Non-GAAP expense adjustments: Restructuring charge - --
76 - PNC LTIP funding obligation 7 47
28 30 Compensation expense related to appreciation (depreciation) on deferred compensation plans - 2-
- 1 Operating income, as adjusted 1,232 1,1431,216
4,674 4,695 Product launch costs and commissions - --
- 5 Operating income used for operating margin measurement $ 1,232 $ 1,143$
1,216
$ 4,674 $ 4,700 Revenue, GAAP basis $ 2,890 $ 2,863$
2,837
$ 11,155 $ 11,401 Non-GAAP adjustments: Distribution and servicing costs (109 ) (103 )(114
)
(429 ) (409 ) Amortization of deferred sales commissions (7 ) (11 )(8
)
(34 ) (48 ) Revenue used for operating margin measurement $ 2,774 $ 2,749$
2,715
$ 10,692 $ 10,944 Operating margin, GAAP basis 42.4 % 39.7 %42.6
%
41.0 % 40.9 % Operating margin, as adjusted 44.4 % 41.6 %44.8
%
43.7 % 42.9 %See note (1) to the Condensed Consolidated Statements of Income and Supplemental Information for more information on as adjusted items and the reconciliation to GAAP.
RECONCILIATION OF U.S. GAAP NONOPERATING INCOME NET OF NCI TO NONOPERATING INCOME NET OF NCI, AS ADJUSTED
Three Months Ended Year Ended December 31,September 30,
December 31, (in millions), (unaudited) 2016 20152016
2016 2015 Nonoperating income (expense), GAAP basis $ (38 ) $ 11$
1
$ (110 ) $ (62 ) Less: Net income (loss) attributable to NCI - 82
(2 ) 7 Nonoperating income (expense), net of NCI (38 ) 3(1
)
(108 ) (69 ) Compensation expense related to (appreciation) depreciation on deferred compensation plans - (2 )-
- (1 ) Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted $ (38 ) $ 1$
(1
)
$ (108 ) $ (70 )See note (2) to the Condensed Consolidated Statements of Income and Supplemental Information for more information on as adjusted items and the reconciliation to GAAP.
RECONCILIATION OF U.S. GAAP NET INCOME ATTRIBUTABLE TO BLACKROCK TO NET INCOME ATTRIBUTABLE TO BLACKROCK, AS ADJUSTED
Three Months Ended Year EndedDecember 31,
December 31,September 30,
(in millions, except per share data), (unaudited) 2016 20152016
2016 2015 Net income attributable to BlackRock, Inc., GAAP basis $ 851 $ 861$
875
$ 3,172 $ 3,345 Non-GAAP adjustments: Restructuring charge (including $23 tax benefit) - --
53 - PNC LTIP funding obligation, net of tax 5 45
19 22 Income tax matters (4 ) (64 )(26
)
(30 ) (54 ) Net income attributable to BlackRock, Inc., as adjusted $ 852 $ 801$
854
$ 3,214 $ 3,313 Diluted weighted-average common shares outstanding(4) 165.9 168.6166.3
166.6 169.0 Diluted earnings per common share, GAAP basis(4) $ 5.13 $ 5.11$
5.26
$ 19.04 $ 19.79 Diluted earnings per common share, as adjusted(4) $ 5.14 $ 4.75$
5.14
$ 19.29 $ 19.60See notes (3) and (4) to the Condensed Consolidated Statements of Income and Supplemental Information for more information on as adjusted items and the reconciliation to GAAP.
NOTES TO CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION (unaudited)
BlackRock reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”); however, management believes evaluating the Company’s ongoing operating results may be enhanced if investors have additional non-GAAP financial measures. Management reviews non-GAAP financial measures to assess ongoing operations and, for the reasons described below, considers them to be effective indicators, for both management and investors, of BlackRock’s financial performance over time. Management also uses non-GAAP financial measures as a benchmark to compare its performance with other companies and to enhance the comparability of this information for the reporting periods presented. Non-GAAP measures may pose limitations because they do not include all of BlackRock’s revenue and expense. BlackRock’s management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
Management uses both GAAP and non-GAAP financial measures in evaluating BlackRock’s financial performance. Adjustments to GAAP financial measures (“non-GAAP adjustments”) include certain items management deems nonrecurring or that occur infrequently, transactions that ultimately will not impact BlackRock’s book value or certain tax items that do not impact cash flow.
Computations for all periods are derived from the condensed consolidated statements of income as follows:
(1) Operating income, as adjusted, and operating margin, as adjusted: Management believes operating income, as adjusted, and operating margin, as adjusted, are effective indicators of BlackRock’s financial performance over time and, therefore, provide useful disclosure to investors.
(2) Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted: Nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, equals nonoperating income (expense), GAAP basis, less net income (loss) attributable to NCI, adjusted for compensation expense associated with (appreciation) depreciation on investments related to certain BlackRock deferred compensation plans. The compensation expense offset is recorded in operating income. This compensation expense has been included in nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, to offset returns on investments set aside for these plans, which are reported in nonoperating income (expense), GAAP basis.
Management believes nonoperating income (expense), less net income (loss) attributable to NCI, as adjusted, provides comparability of information among reporting periods and is an effective measure for reviewing BlackRock’s nonoperating contribution to results.
(3) Net income attributable to BlackRock, Inc., as adjusted: Management believes net income attributable to BlackRock, Inc., as adjusted, and diluted earnings per common share, as adjusted, are useful measures of BlackRock’s profitability and financial performance. Net income attributable to BlackRock, Inc., as adjusted, equals net income attributable to BlackRock, Inc., GAAP basis, adjusted for significant nonrecurring items, charges that ultimately will not impact BlackRock’s book value or certain tax items that do not impact cash flow.
See aforementioned discussion regarding operating income, as adjusted, and operating margin, as adjusted, for information on the PNC LTIP funding obligation and the restructuring charge.
For each period presented, the non-GAAP adjustment related to the restructuring charge and PNC LTIP funding obligation was tax effected at the respective blended rates applicable to the adjustments. Amounts for income tax matters represent net noncash (benefits) expense primarily associated with the revaluation of certain deferred tax liabilities related to intangible assets and goodwill. Amounts have been excluded from the as adjusted results as these items will not have a cash flow impact and to ensure comparability among periods presented.
Per share amounts reflect net income attributable to BlackRock, as adjusted divided by diluted weighted average common shares outstanding.
(4) Nonvoting participating preferred stock is considered to be a common stock equivalent for purposes of determining basic and diluted earnings per share calculations.
Forward-looking Statements
This earnings release, and other statements that BlackRock may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to BlackRock’s future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” and similar expressions.
BlackRock cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and BlackRock assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.
In addition to risk factors previously disclosed in BlackRock’s Securities and Exchange Commission (“SEC”) reports and those identified elsewhere in this earnings release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (1) the introduction, withdrawal, success and timing of business initiatives and strategies; (2) changes and volatility in political, economic or industry conditions, the interest rate environment, foreign exchange rates or financial and capital markets, which could result in changes in demand for products or services or in the value of assets under management; (3) the relative and absolute investment performance of BlackRock’s investment products; (4) the impact of increased competition; (5) the impact of future acquisitions or divestitures; (6) the unfavorable resolution of legal proceedings; (7) the extent and timing of any share repurchases; (8) the impact, extent and timing of technological changes and the adequacy of intellectual property, information and cyber security protection; (9) the potential for human error in connection with BlackRock’s operational systems; (10) the impact of legislative and regulatory actions and reforms, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, and regulatory, supervisory or enforcement actions of government agencies relating to BlackRock or PNC; (11) terrorist activities, international hostilities and natural disasters, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or BlackRock; (12) the ability to attract and retain highly talented professionals; (13) fluctuations in the carrying value of BlackRock’s economic investments; (14) the impact of changes to tax legislation, including income, payroll and transaction taxes, and taxation on products or transactions, which could affect the value proposition to clients and, generally, the tax position of the Company; (15) BlackRock’s success in negotiating distribution arrangements and maintaining distribution channels for its products; (16) the failure by a key vendor of BlackRock to fulfill its obligations to the Company; (17) any disruption to the operations of third parties whose functions are integral to BlackRock’s ETF platform; (18) the impact of BlackRock electing to provide support to its products from time to time and any potential liabilities related to securities lending or other indemnification obligations; and (19) the impact of problems at other financial institutions or the failure or negative performance of products at other financial institutions.
BlackRock’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and BlackRock’s subsequent filings with the SEC, accessible on the SEC’s website at www.sec.gov and on BlackRock’s website at www.blackrock.com, discuss these factors in more detail and identify additional factors that can affect forward-looking statements. The information contained on the Company’s website is not a part of this earnings release.
Performance Notes
Past performance is not indicative of future results. Except as specified, the performance information shown is as of December 31, 2016 and is based on preliminary data available at that time. The performance data shown reflects information for all actively and passively managed equity and fixed income accounts, including U.S. registered investment companies, European-domiciled retail funds and separate accounts for which performance data is available, including performance data for high net worth accounts available as of November 30, 2016. The performance data does not include accounts terminated prior to December 31, 2016 and accounts for which data has not yet been verified. If such accounts had been included, the performance data provided may have substantially differed from that shown.
Performance comparisons shown are gross-of-fees for institutional and high net worth separate accounts, and net-of-fees for retail funds. The performance tracking shown for index accounts is based on gross-of-fees performance and includes all institutional accounts and all iShares funds globally using an index strategy. AUM information is based on AUM available as of December 31, 2016 for each account or fund in the asset class shown without adjustment for overlapping management of the same account or fund. Fund performance reflects the reinvestment of dividends and distributions.
Performance shown is derived from applicable benchmarks or peer median information, as selected by BlackRock, Inc. Peer medians are based in part on data either from Lipper Inc. or Morningstar, Inc. for each included product.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170113005084/en/
BlackRock, Inc.Tom Wojcik, 212-810-8127Investor RelationsorBrian Beades, 212-810-5596Media Relations
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