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BlackRock Reports Third Quarter Diluted EPS Of $3.65, Or $3.47 As Adjusted

BlackRock, Inc. (NYSE:BLK) today reported third quarter 2012 diluted EPS of $3.65, up 19% from second quarter 2012 and 13% from third quarter 2011. Revenue grew 4% from third quarter 2011 reflecting positive market factors, positive net new business, and strength in performance fees and BlackRock Solutions ®. Operating income of $875 million and operating margin of 37.7% for third quarter 2012 included $25 million of launch costs for the Municipal Target Term Trust.

As adjusted (2) results . Third quarter 2012 operating income rose 3% and 5% to $876 million from third quarter 2011 and second quarter 2012, respectively. Diluted EPS totaled $3.47 and included operating income of $3.42 per diluted share and net non-operating income of $0.05 per diluted share. Adjusted operating margin of 40.7% in third quarter 2012 rose 60 bps from third quarter 2011 and 150 bps from second quarter 2012.

“We’ve built a broad and diverse platform at BlackRock focused on delivering strong investment performance and the solutions our clients need regardless of market environment. In the third quarter, we delivered record earnings per share up 23% from the prior year and margins over 40%,” said Laurence D. Fink, Chairman and CEO of BlackRock. "We achieved these results through robust new business generation across each of our channels with particular strength in key growth areas on which we’ve focused, including Retail and iShares and our DC business, strong non-operating results and due to the benefits of share repurchases.”

 

The table below presents AUM and a comparison of GAAP and as adjusted results for certain financial measures.

 
        Q3

2012

    Q3

2011

    %

Change

    Q2

2012

    %

Change

    YTD

2012

    YTD

2011

    %

Change

AUM $3,673,274     $3,345,067     10%     $3,559,934     3%     $3,673,274     $3,345,067     10%
 

GAAP basis:

Revenue $2,320 $2,225 4% $2,229 4% $6,798 $6,854 (1%)
Operating income $875 $777 13% $829 6% $2,519 $2,441 3%
Net income (1) $642 $595 8% $554 16% $1,768 $1,782 (1%)
Diluted EPS $3.65 $3.23 13% $3.08 19% $9.87 $9.33 6%
Diluted shares 175,450,532 181,825,329 (4%) 179,590,702 (2%) 178,956,699 188,792,952 (5%)
 

As Adjusted:

Operating income (2) $876 $849 3% $832 5% $2,533 $2,551 (1%)
Net income (1)(2) $610 $521 17% $558 9% $1,743 $1,681 4%
Diluted EPS (2)         $3.47     $2.83     23%     $3.10     12%     $9.73     $8.80     11%
 

(1) Net income represents net income attributable to BlackRock, Inc.

(2) See notes (a) through (f) to the Condensed Consolidated Statements of Income and Supplemental Information in Attachment I on pages 10 through 13 for more information on as adjusted items and the reconciliation to GAAP.

“High performing fixed income products combined with continued demand for yield-oriented strategies drove strong results in our retail business, specifically in retail fixed income where we generated $6.2 billion in net new business, our highest retail fixed income flows in over 10 years. As retirement trends accelerate and assets continue to shift from defined benefit to defined contribution plans, the appetite for broader investment solutions continues to increase. I’m proud to say that BlackRock attracted net inflows of $10.4 billion in defined contribution AUM, with particular strength in outcome-oriented solutions such as our LifePath® portfolios. BlackRock Solutions, another key growth priority, continued its record of consistent year-over-year growth, with a 9% increase in revenue for the business overall and 18% in our industry leading trading and operating system, Aladdin.

“We achieved a milestone in our iShares business, with the highest net new business production since our merger with Barclays Global Investors in December 2009. iShares generated $25.2 billion in net flows, including $20.5 billion into our equity offerings. We hold the number one market share of year-to-date industry flows. This week, we introduced our new iShares Core series for buy-and-hold investors, launched a revitalized iShares brand campaign and began to integrate our U.S. iShares and BlackRock retail sales forces. These initiatives are the first phase of a broader, global strategy to drive enhanced growth in the iShares platform.

“During the year, we consistently demonstrated our commitment to strong capital management and driving enhanced shareholder value. We have returned over $2 billion of cash to shareholders in a combination of dividends and share repurchases supported by strong cash flow. We remain committed to actively returning cash to our shareholders while investing for future growth.

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