Franklin Resources Inc Q1 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

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

Question: Daniel Fannon - Jefferies - Analyst : So a lot there in the first response. So just to follow up just to make sure I understand the $200 million to $250 million of additional savings, that is going to be beyond the flat including Putnam for fiscal 2025. So as we think about 2026, you'll have natural growth plus that savings that should be for the full year?

Question: Daniel Fannon - Jefferies - Analyst : And then just in the similar kind of vein, is there any other affiliate like Western that is not on a profit share? As you go through this integration and/or are there other integrations of smaller affiliates or recent deals that could be part of that improvement in efficiencies?

Question: Michael Cyprys - Morgan Stanley - Analyst : I just wanted to ask about Putnam. I think it's been about a year since you guys have closed the transaction there. I was hoping maybe you could just update us on the progress, the synergies there. The flow picture seems to be perhaps a lot better than people may have thought, perhaps the accretion as well. So just curious if you could update us on that as well as the strategic partnership that you have with Great-West and the scope for additional growth and flows there.

Question: Michael Cyprys - Morgan Stanley - Analyst : Congrats on the success with Putnam.

Question: Bill Katz - TD Cowen - Analyst : I just want to clarify the guidance on expenses. Just Matt, if you could just reiterate the '26, what I think I heard was you'd be flat to '25 if you strip out market action, performance fees and pre synergies. And so that would be an incremental to $250 million down. A, is that correct? And then against that, what is the revenue contribution you're assuming for Wamco? You mentioned I think about 6% residual exposure on the on the website. Just are you assuming zero contribution or some component of that?

Question: Brennan Hawken - UBS Equities - Analyst : Matthew, I'd just like to ask about that last point you just made, the $200 million to $250 million. Is that coming out of the full year and will that ramp through the year?

Question: Brennan Hawken - UBS Equities - Analyst : Yes? Okay. And --

Question: Brennan Hawken - UBS Equities - Analyst : So the $200 million to $250 million is the exit rate of the fiscal year '26 and we'll see the progress of that through the year of 2026?

Question: Brennan Hawken - UBS Equities - Analyst : On a run rate basis?

Question: Brennan Hawken - UBS Equities - Analyst : So then just two more related sort of to clarify. If you could, please, maybe -- I know you said flat for the full year, but if you could maybe clarify starting point and what number we should be thinking about. And then the -- is my sense that this is rather large especially vis-a-vis Western? So is this -- these efficiency efforts, do they transcend the whole organization or are they focused in any particular areas?

Question: Benjamin Budish - Barclays - Analyst : Maybe moving over to the alternative side. During the prepared remarks, Jenny, you talked about wealth fundraising growing to 20% to 30% of total capital raises. Just curious, how do you see that unfolding? What's the sort of cadence? It sounds like you've obviously talked about investing a lot in distribution. There are new products in the market. Is this predicated on more sort of semi liquid democratized vehicles or retail participation in drawdown funds? So just curious if you could provide some more color on those expectations.

Question: Patrick Davitt - Autonomous - Analyst : If I remember correctly, I don't think you include VA wins insurance, VA wins in your unfunded balance. And there were a few very large, reported VA wins that I think funded in the quarter. Could you give us an idea of how much of that added to the quarterly flows? And secondly, if there's still more to come from those wins? And then higher level, it seems that most of the large active managers in our coverage have been losing large VA mandates. So maybe give some high-level thoughts on why you think Franklin is bucking that trend.