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BlackRock Reports Record Quarterly Diluted EPS Of $3.93, Or $3.96 As Adjusted

BlackRock, Inc. (NYSE:BLK) today reported full year diluted EPS of $13.79, up 11% from 2011. Fourth quarter 2012 diluted EPS of $3.93 was up 29% from fourth quarter 2011. Revenue increased 14% from fourth quarter 2011 and 9% from third quarter 2012, reflecting growth in markets, strength in base fees and higher performance fees. Operating income for fourth quarter and full year 2012 was $1.0 billion and $3.5 billion, respectively. Operating margin of 39.6% for fourth quarter 2012 rose 330 bps from fourth quarter 2011.

As adjusted results (1) . Full year 2012 diluted EPS of $13.68 improved 15% from 2011. Fourth quarter 2012 operating income of $1.0 billion rose 24% and 19% from fourth quarter 2011 and third quarter 2012, respectively. Fourth quarter diluted EPS totaled $3.96 and included operating income of $4.07 per diluted share and net non-operating expense of $0.11 per diluted share. Adjusted operating margin of 42.6% in fourth quarter 2012 rose 260 bps from fourth quarter 2011. For more information on as adjusted items and the reconciliation to GAAP, see notes to the Condensed Consolidated Statements of Income and Supplemental Information beginning on page 10.

“BlackRock’s financial performance in 2012 was strong by any measure,” commented Laurence D. Fink, Chairman and CEO of BlackRock. “We closed the year with record earnings for both the quarter and the year. We improved investment performance in key areas and our work with clients was rewarded with $107.7 billion of long-term net new business. Every client type contributed to these strong flows. Our results demonstrate not only the diversity of our platform and the breadth of our global product offering, but how we have differentiated the firm and continued to evolve in anticipation of our clients’ needs.”

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

(Dollar amounts in millions, except per share data)   Q4

2012

  Q4

2011

  Change   Q3

2012

  Change   Full Year

2012

  Full Year

2011

  Change
AUM $ 3,791,588   $ 3,512,681   8%   $ 3,673,274   3%   $ 3,791,588   $ 3,512,681   8%
 

GAAP basis:

Revenue $ 2,539 $ 2,227 14% $ 2,320 9% $ 9,337 $ 9,081 3%
 
Operating income $ 1,005 $ 808 24% $ 875 15% $ 3,524 $ 3,249 8%
 
Operating margin 39.6% 36.3% 330 bps 37.7% 190 bps 37.7% 35.8% 190 bps
 
Net income (2) $ 690 $ 555 24% $ 642 7% $ 2,458 $ 2,337 5%
 
Diluted EPS $ 3.93 $ 3.05 29% $ 3.65 8% $ 13.79 $ 12.37 11%
 
Diluted shares 175,176,037 181,987,669 (4%) 175,450,532 -% 178,017,679 187,116,410 (5%)
 

As Adjusted:

Operating income (1) $ 1,041 $ 841 24% $ 876 19% $ 3,574 $ 3,392 5%
 

Operating margin (1)

42.6% 40.0% 260 bps 40.7% 190 bps 40.4% 39.7% 70 bps
 
Net income (1)(2) $ 695 $ 558 25% $ 610 14% $ 2,438 $ 2,239 9%
 
Diluted EPS (1)   $ 3.96   $ 3.06   29%   $ 3.47   14%   $ 13.68   $ 11.85   15%

(1) 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.

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

“In 2012, our people delivered focused execution across our key strategic priorities. Retirement trends continue to drive new opportunities across our retail and defined contribution businesses, where we generated long-term net inflows during the year of $11.6 billion and $28.4 billion, respectively. As clients sought efficient tools and creative solutions to manage their investment exposure, they turned to iShares ® . As a result, iShares maintained its #1 global market share position and net new business returned to pre-crisis levels with more than $85 billion in new assets generated this year. Elsewhere in the business, we saw strong sustained demand from clients for high yielding income strategies and multi-asset class solutions, resulting in strong support for our fixed income and equity dividend capabilities as well as multi-asset class products.

BlackRock Solutions ® remains a key differentiator for our firm, both as the foundation for the entire business as well as a key growth contributor on its own. This year we continued to grow our capabilities across geographies and asset classes adding over $3.5 trillion of new positions to our Aladdin platform. Growth for Aladdin is coming from an increasingly global set of clients focused on their entire investment portfolios across multi-asset capabilities.”

“As we enter 2013, the improving global economy provides the potential for greater market stability, but it is likely that political and regulatory dynamics, persistent low-rates and protracted periods of heightened volatility will remain key factors. Still, we are well-positioned to continue delivering for our shareholders while investing for future growth with significant cash flow, which in 2012 totaled $3 billion. Our strong and stable capital position enables BlackRock to take advantage of opportunities to make strategic acquisitions like Claymore, Swiss Re and, most recently, our purchase of the ETF business from Credit Suisse, which represents a major expansion for us in the Swiss market. We are able to make these acquisitions, even as we consistently return cash to shareholders. We delivered a dividend payout ratio of 43% during the year and repurchased nearly 9.1 million shares including 868,500 in the fourth quarter, bringing our payout ratio including share repurchases to 104%. We remain committed to returning cash to our shareholders and are pleased to announce a 12% increase to our quarterly dividend for 2013 and the authority to repurchase an additional 7.5 million shares, bringing our buying capacity to 10.2 million shares.”

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