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TheStreet Open House

BlackRock Reports Quarterly Diluted EPS Of $4.21, Or $3.88 As Adjusted

BlackRock, Inc. (NYSE:BLK) today reported third quarter 2013 diluted EPS of $4.21, up 15% from a year ago. Revenue increased 7% from the third quarter 2012, reflecting growth in markets, long-term net inflows and strength in BlackRock Solutions. Operating income for the third quarter 2013 was $966 million with an operating margin of 39.1%.

As adjusted results (1) : Third quarter 2013 diluted EPS of $3.88 and operating income of $978 million both rose 12% compared with the third quarter 2012. Third quarter 2012 included $25 million of closed-end fund launch costs. Diluted EPS included operating income of $3.96 per diluted share and net nonoperating expense of $0.08 per diluted share. Operating margin of 41.2% in the third quarter 2013 rose 50 bps from the third quarter 2012. Compared with the second quarter 2013, operating margin and diluted EPS declined 10 bps and $0.27, respectively, reflecting seasonally lower securities lending fees, partially offset by strength in base fees and BlackRock Solutions revenue. The decline in diluted EPS compared with second quarter 2013 also reflected the $39 million noncash, pre-tax nonoperating gain related to the PennyMac IPO recorded in the second quarter 2013.

“Our solid third quarter 2013 results are continued evidence of the benefits of our broad, diversified investment platform and strong investment performance,” commented Laurence D. Fink, Chairman and CEO of BlackRock. “Long-term net inflows of more than $25 billion reflected positive flows across all major asset classes and geographies, driven by demand for outcome-oriented solutions, unconstrained fixed income and retail alternative strategies. We are seeing the steps we have taken to further enhance performance and invest in our brand drive accelerating growth in retail flows. Our Global Retail business added $8.3 billion of long-term net inflows in the quarter and more than $22 billion thus far in 2013, driving 7% year-to-date annualized organic growth, up from 3% growth for full year 2012. Our iShares ETFs also saw strong net inflows as liquidity-oriented investors turned to iShares once again to increase exposure during the quarter, and as buy-and-hold investors continued to access our Core Series product suite, which has attracted $9 billion of inflows year to date.”

 
AUM, GAAP and as adjusted results
            Nine Months Ended

September 30,

 
(Amounts in millions, except per share data) Q3

2013

  Q3

2012

  Change   Q2

2013

  Change     2013       2012     Change
AUM $ 4,096,356 $ 3,673,274 12 % $ 3,857,007 6 % $ 4,096,356   $ 3,673,274 12 %
 

GAAP basis:

Revenue $ 2,472 $ 2,320 7 % $ 2,482 - % $ 7,403 $ 6,798 9 %
 
Operating income $ 966 $ 875 10 % $ 849 14 % $ 2,724 $ 2,519 8 %
 
Operating margin 39.1 % 37.7 % 140 bps 34.2 % 490 bps 36.8 % 37.1 % (30 bps)
 
Net income (2) $ 730 $ 642 14 % $ 729 - % $ 2,091 $ 1,768 18 %
 
Diluted EPS $ 4.21 $ 3.65 15 % $ 4.19 - % $ 12.02 $ 9.87 22 %
 
Weighted average diluted shares 173.4 175.5 (1 %) 173.9 - % 174.0 179.0 (3 %)
 

As Adjusted:

Operating income (1) $ 978 $ 876 12 % $ 982 - % $ 2,881 $ 2,533 14 %
 
Operating margin (1) 41.2 % 40.7 % 50 bps 41.3 % (10 bps) 40.8 % 39.5 % 130 bps
 
Net income (1) (2) $ 672 $ 610 10 % $ 722 (7 %) $ 2,031 $ 1,743 17 %
 
Diluted EPS (1)   $ 3.88     $ 3.47     12 %   $ 4.15     (7 %)   $ 11.67     $ 9.73     20 %
(1)   See notes (a) through (f) to the Condensed Consolidated Statements of Income and Supplemental Information on pages 13 through 16 for more information on as adjusted items and the reconciliation to GAAP.
(2) Net income represents net income attributable to BlackRock, Inc.
 

“The current investment environment presents a wide range of challenges for our clients. Fundamentals continue to be outweighed by policy decisions and global growth is dictated more by central bankers and elected officials than business leaders. This uncertainty is keeping many investors on the sidelines, at exactly the time they need to be investing to plan for their futures, and in the face of these unknowns, clients are turning to BlackRock to provide solutions.

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