Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - BlackRock Inc. | d381137d8k.htm |
| EX-99.1 - PRESS RELEASE - BlackRock Inc. | d381137dex991.htm |
 Q2
2012 Earnings Press Release Supplement
July 18, 2012
Exhibit 99.2 |
 1
Important Notes
This presentation, 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” or 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 presentation 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 and information security protection; (9) 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
The PNC Financial Services Group, Inc. (“PNC”); (10) 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; (11) the ability to attract
and retain highly talented professionals; (12) fluctuations in the carrying value of BlackRock’s
economic investments; (13) 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; (14) BlackRock’s success in
maintaining the distribution of its products; (15) the impact of BlackRock electing to provide support
to its products from time to time and any liabilities related to securities lending or other
indemnification obligations; and (16) the impact of problems at other financial institutions or the
failure or negative performance of products at other financial institutions.
This presentation also includes non-GAAP financial measures. You can find our presentations
on the most directly comparable GAAP financial measures calculated in accordance with GAAP and
our reconciliations in the appendix to this earnings release supplement, our current earnings
release dated July 18, 2012, and BlackRock’s other periodic reports, which are available on
BlackRock’s web site at www.blackrock.com. |
 Table
of Contents 2
Operating and Net Income/Diluted EPS, as adjusted
Pg. 3
Operating Margin, as adjusted
Pg. 4
Q2 2012 Mix by product, client type, style and region
Pg. 5
Market Indices
Pg. 6
Year-over-Year: Q2 2012 vs. Q2 2011
Pg. 7-12
Sequential Quarters: Q2 2012 vs. Q1 2012
Pg. 13-18
Non-operating and Cash Flow
Pg. 19-21
Appendix
Pg. 22-28 |
 3
Operating income remained strong despite market environment
Operating and Net Income, as adjusted ($ in millions)
Diluted Earnings Per Share, as adjusted
For further information and reconciliation between GAAP and as adjusted, see the
appendix, notes (a) through (f) in the current earnings release as well as previously filed Form 10-Ks, 10-Qs and 8-Ks.
Operating Income
Net Income
Second quarter EPS reflected market conditions |
 4
40.0%
38.6%
39.2%
40.1%
39.7%
37.4%
38.7%
38.2%
36.8%
39.3%
39.1%
2007
2008
2009
2009
2010
Q1
2011
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Sequential operating margin improvement
Operating Margin, as adjusted
For further information and reconciliation between GAAP and as adjusted, see the
appendix, notes (a) through (f) in the current earnings release as well as previously filed Form 10-Ks, 10-Qs and 8-Ks.
Full Year 2011 = 39.7%
BGI/BLK
Pro Forma
Year-over-year operating margin largely reflected market effects
YTD 2012 = 38.9% |
 Q2
2012 mix by product, client type, style and region 5
Q2 2012 Long-term Base Fees of $1.902 billion generated from
Long-term Assets Under Management of $3.255 trillion at June 30, 2012
Product Type
Client Type
Style
Region
Alternatives
9%
Alternatives 3%
Institutional
Index
12%
Institutional
Index
43%
Multi-Asset
12%
7%
Fixed Income
24%
Fixed Income
39%
Equity
55%
Equity
51%
iShares
31%
iShares
20%
Asia-Pacific
8%
Asia
-Pacific
11%
iShares
31%
iShares
20%
EMEA
28%
EMEA
29%
Americas
64%
Americas
60%
Retail
34%
Retail
11%
Active
57%
Active
37%
Institutional
35%
Institutional
69%
Revenue
AUM
Revenue
AUM
Revenue
AUM
Revenue
AUM
Multi-Asset |
 Major
non-US equity markets trended lower in Q2 2012 6
Index
Average Index Level
Q2 12 vs.
Q2 11
Q1 12
Q2 12
Q2 11
Q1 12
S&P 500
1,319
1,347
1,350
2.3%
MSCI Barra World Index
1,332
1,268
1,233
(7.4%)
MSCI Europe Index
95
90
86
(9.4%)
MSCI AC Asia Pacific Index
135
124
118
(12.4%)
MSCI Emerging Markets Index
1,158
1,026
963
(16.9%)
S&P Global Natural Resources
3,941
3,533
3,209
(18.6%)
(2.7%)
(4.4%)
(4.6%)
(6.2%)
(9.2%)
0.2% |
 Year-over-year
Q2 2012 vs. Q2 2011
7 |
 8
Year-over-year EPS growth
Q2-12 Compared to Q2-11, as adjusted
$3.27
$0.18
($0.08)
$3.09
($0.50)
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
Q2-11 EPS
Operating EPS
Non-Operating EPS
Q2-12 EPS
Total EPS:
$3.10
Total EPS:
$3.00
Non-Operating:
($0.09)
Operating
EPS:
Operating
EPS:
For further information and reconciliation between GAAP and as adjusted, see the
appendix and notes (a) through (f) in the current earnings release.
Non-Operating:
($0.17)
Decreasing EPS
$0.10
Increasing EPS |
 9
Year-over-year operating income reflected market effects and expense
discipline Q2-12 Compared to Q2-11, as adjusted
For further information and reconciliation between GAAP and as adjusted, see the
appendix and notes (a) through (f) in the current earnings release.
Decreasing Expenses
Decreasing Revenue
$0
($51) million
$832
$883
$67
($118)
$600
$700
$800
$900
Q2-11
Revenue
Expenses
Q2-12 |
 10
Year-over-year revenue reflected market effects and strong demand for BRS
services Q2-12 Compared to Q2-11
($118) million
Total Revenue
Q2-11
$2.35 billion
Q2-12
$2.23 billion
Decreasing Revenue
Increasing Revenue
90%
2%
5%
3%
Base Fees
Performance Fees
BRS and Advisory
Other Revenue/
Distribution Fees
89%
2%
6%
3%
$0
$2,347
$2,229
($14)
($9)
$2,000
$2,200
$2,400
Q2-11
BRS & Advisory
Performance Fees
Other Revenue /
Distribution Fees
Base Fees
Q2-12 |
 ($110) million
11
Year-over-year base fees reflected a shift towards fixed income
iShares Decreasing Base Fees
Increasing Base Fees
Q2-12 Compared to Q2-11
Q2-12
$1.99 billion
Base fees
Q2-11
$2.10 billion
$0
$1,990
$2,100
($107)
($33)
($20)
($8)
$8
$9
$30
$1,900
$2,000
$2,100
$2,200
Q2-11
iShares
Fixed
Income
Active Fixed
Income
Institutional
Index Equity
Multi-Asset
Institutional
Index Fixed
Income
Cash
Alternatives
iShares
Equity
Active Equity
Q2-12
$6
$5 |
 12
Year-over-year expenses declined across all major expense categories
Increasing Expenses
Decreasing Expenses
Q2-12
$1.40 billion
Expenses, as adjusted, by Category
Q2-12 Compared to Q2-11, as adjusted
For further information and reconciliation between GAAP and as adjusted, see the
appendix and notes (a) through (f) in the current earnings release. $0
($67) million
Q2-11
$1.46 billion
Employee Comp. & Benefits
Distribution & Servicing Costs
Amort. of Deferred Sales Commissions
Direct Fund Expenses
General & Administration
Amortization of Intangibles
55%
7%
10%
24%
3%
1%
56%
7%
10%
23%
3%
1%
$1,464
$1,397
($24)
($21)
($9)
($7)
($7)
$1
$1,300
$1,400
$1,500
Q2-11
Compensation
& Benefits
G&A
Direct Fund
Expenses
Distribution &
Servicing
Amort.-
Deferred
Commissions
Amort.-
Intangible
Assets
Q2-12 |
 Sequential Quarters
Q2 2012 vs. Q1 2012
13 |
 ($0.23)
$0.17
$3.27
$3.10
($0.50)
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
Q1-12 EPS
Operating EPS
Non-Operating EPS
Q2-12 EPS
14
Sequential EPS reflected market conditions
Increasing EPS
For further information and reconciliation between GAAP and as adjusted, see the
appendix and notes (a) through (f) in the current earnings release. Q2-12
Compared to Q1-12, as adjusted Total EPS:
$3.16
Total EPS:
$3.10
Operating
EPS:
Non-Operating:
$0.06
Non-Operating:
($0.17)
Operating
EPS:
Decreasing EPS
($0.06) |
 15
Q2 2012 operating income improvement reflected seasonal factors and market
effects Q2-12 Compared to Q1-12, as adjusted
$7 million
$0
For further information and reconciliation between GAAP and as adjusted, see the
appendix and notes (a) through (f) in the current earnings release.
Decreasing Expense
Decreasing Revenue
$832
$825
($20)
$27
$600
$700
$800
$900
Q1-12
Revenue
Expenses
Q2-12 |
 16
Sequential revenue stable
($20) million
Decreasing Revenue
Q2-12 Compared to Q1-12
Increasing Revenue
Total Revenue
Q2-12
$2.23 billion
Q1-12
$2.25 billion
$0
$2,229
$2,249
$8
($2)
$13
($39)
$2,000
$2,200
$2,400
Q1-12
Base Fees
BRS & Advisory
Other Revenue /
Distribution Fees
Performance Fees
Q2-12
89%
2%
6%
3%
4%
5%
3%
88%
Base Fees
Performance Fees
BRS & Advisory
Other Revenue /
Distribution Fees |
 17
Sequential base fees reflected seasonal factors, fixed income demand and market
effects Base Fees
Q2-12 Compared to Q1-12
$1,990
$1,977
($24)
($7)
($7)
($6)
($1)
$6
$9
$10
$33
$1,800
$1,900
$2,000
Q1-12
Institutional
Index Equity
Institutional
Index Fixed
Income
iShares
Fixed
Income
Active
Fixed
Income
Cash
iShares
Equity
Alternatives
Multi-Asset
Active
Equity
Q2-12
Increasing Base Fees
Decreasing Base Fees
Q2-12
$1.99 billion
Q1-12
$1.98 billion
$0
$13 million |
 18
Sequential expenses declined overall despite higher brand campaign costs
Increasing Expenses
Decreasing Expenses
Expense, as adjusted, by Category
Q2-12 Compared to Q1-12, as adjusted
For further information and reconciliation between GAAP and as adjusted, see the
appendix and notes (a) through (f) in the current earnings release.
Q2-12
$1.40 billion
Q1-12
$1.42 billion
$0
($27) million
$1,397
$1,424
$17
($2)
($2)
($8)
($32)
$1,300
$1,400
$1,500
Q1-12
Compensation &
Benefits
Direct Fund
Expenses
Distribution &
Servicing
Amort.-
Deferred
Commissions
G&A
Q2-12
56%
3%
23%
10%
1%
7%
57%
3%
21%
11%
1%
7%
Employee Comp. & Benefits
Distribution & Servicing Costs
Amort. Of Deferred Sales Commissions
Direct Fund Expenses
General & Administration
Amort.. of Intangible Assets |
 Non-operating and cash flow
19 |
 20
For further information and reconciliation between GAAP and as adjusted, see the
appendix and notes (a) through (f) in the current earnings release. Q2 2012
non-operating expense ($4)
$4
$3
($2)
($44)
($50)
($40)
($30)
($20)
($10)
$0
$10
Private Equity
Real Estate
Hedge Funds/ Funds of
Hedge Funds
Other Investments
Net Interest Expense
Q2-12 $43 million Non-Operating Expense by Category, as adjusted
Investment Losses/ Net Interest Expense
Investment Gains
$1 million Net Investment Gain |
 $2.8
$2.5
$1.4
$1.9
$0.7
$0.9
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
2006
2007
2008
2009
2010
2011
YTD Q2
2011
Est.
YTD Q2
2012
21
Operating cash flow and payout ratio
2/17/06 2/27/07
2/15/08 N/A Dividend Change
Declared:
Excludes $2.5 bn June 2011
buyback of 13.6 million shares
Payout Ratio
Operating cash flow
GAAP
as adjusted
Excludes $1.0 bn May 2012
buyback of 6.4 million shares
$0.6
$0.7
$0.7
$0.8
2/25/10
2/24/11
2/23/12
For further information and reconciliation between GAAP and as adjusted, see the
Company’s previously filed Form 10-Ks, Form 10-Qs and 8-Ks
and the appendix to this earnings release supplement.
Notes:
(A)Payout ratio = (dividends + share repurchases) / GAAP net income.
$2.6
$2.6
$1.2
$1.5
$0.9
$0.7
` |
 Appendix
22 |
 23
Q2 2012 long-term AUM reflected modest long-term inflows and market
declines Q2-11 Compared to Q2-12
$0
($24) billion
Long-term AUM
Q2-11
$3.279 trillion
Q2-12
$3.255 trillion
$3,279
$8
$8
$7
($47)
$3,255
$3,100
$3,200
$3,300
$3,400
Q2-11
Net New Business
Acquisition
Market
FX
Q2-12
Decreasing AUM
Increasing AUM
7%
3%
10%
13%
4%
15%
29%
19%
Index
EQ
iShares EQ
Active EQ
Index FI
iShares FI
Active FI
Multi Asset
Alternatives |
 24
Q2 2012 long-term AUM reflected decline in global markets
Q1-12 Compared to Q2-12
Long-term AUM
Q2-12
$3.255 trillion
Decreasing AUM
Increasing AUM
Q1-12
$3.345 trillion
7%
3%
9%
13%
5%
14%
30%
19%
Index EQ
iShares EQ
Active EQ
Index FI
iShares FI
Active FI
Multi Asset
Alternatives
8%
3%
8%
14%
6%
14%
28%
19%
$3,345
$3,255
($78)
$4
($16)
$0
$3,100
$3,200
$3,300
$3,400
Q1-12
Net New Business
Market
FX
Q2-12
($90) billion |
 25
Quarterly
operating
income
–
GAAP
and
as
adjusted
GAAP
as adjusted
Operating Income ($ in millions)
Non-GAAP Adjustments ($ in millions)
Non-GAAP adjustments include PNC LTIP funding obligation, Merrill Lynch
compensation contribution, UK lease exit costs, restructuring charges, and
compensation related to appreciation (depreciation) on certain deferred compensation
plans
For further information and reconciliation between GAAP and as adjusted, see notes
(a) through (f) in the current earnings release as well as previously filed Form 10-Ks, 10-Qs and 8-Ks. |
 26
Quarterly
net
income
–
GAAP
and
as
adjusted
Net Income ($ in millions)
Non-GAAP Adjustments ($ in millions)
Non-GAAP adjustments include PNC LTIP funding obligation, Merrill Lynch
compensation contribution, UK lease exit costs,
restructuring
charges,
income
tax
law
changes
and
a
state
tax
election
GAAP
as adjusted
For further information and reconciliation between GAAP and as adjusted, see notes
(a) through (f) in the current earnings release as well as previously filed Form 10-Ks, 10-Qs and 8-Ks. |
 27
GAAP
as adjusted
Quarterly
non-operating
income
–
GAAP
and
as
adjusted
Non-Operating Income (Expense) ($ in millions)
Non-GAAP Adjustments ($ in millions)
Non-GAAP adjustments include net income (loss) attributable to
non-controlling interests and compensation expense related to
(appreciation) depreciation on certain deferred compensation plans Q1
2011
Q2
2011
Q3
2011
Q4
2011
Q1
2012
For
further
information
and
reconciliation
between
GAAP
and
as
adjusted,
see
notes
(a)
through
(f)
in
the
current
earnings
release
as
well
as
previously
filed
Form
10-Ks,
10-Qs
and
8-Ks.
Q2
2012 |
 28
Cash Flow GAAP and As Adjusted
Cash Flow GAAP and As Adjusted
(in millions)
2006
2007
2008
2009
2010
2011
YTD
Q2 2011
EST YTD
Q2 2012
Operating Cash Flows
Operating Cash flows, GAAP
basis
$721
$587
$1,916
$1,399
$2,488
$2,826
$717
$900
Less: Non-GAAP adjustments (1)
21
(337)
413
168
(77)
178
16
100
Operating Cash flows, as
Adjusted
$700
$924
$1,503
$1,231
$2,565
$2,648
$701
$800
Investing Cash Flows
Investing Cash flows, GAAP
basis
$3
($1,068)
($394)
($5,519)
($627)
($204)
($104)
($600)
Less: Non-GAAP adjustments (1)
2
(201)
(9)
31
(52)
24
(2)
(200)
Investing Cash flows, as
Adjusted
$1
($867)
($385)
($5,550)
($575)
($228)
($102)
($400)
Financing Cash Flows
Financing Cash flows, GAAP
basis
($85)
$959
($887)
$6,749
($3,170)
($2,485)
($1,236)
($200)
Less: Non-GAAP adjustments (1)
68
514
(410)
(185)
110
(71)
(29)
-
Financing Cash flows, as
Adjusted
($153)
$445
($477)
$6,934
($3,280)
($2,414)
($1,207)
($200)
(1) Non-GAAP adjustments include the impact on cash flows of consolidated
sponsored investment funds and consolidated VIEs. |
 |