BlackRock Inc. - FORM 8-K - EX-99.2 - THIRD QUARTER 2014 EARNINGS - EARNINGS RELEASE SUPPLEMENT

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8-K - FORM 8-K - BlackRock Inc.	d803136d8k.htm
EX-99.1 - EARNINGS RELEASE DATED OCTOBER 15, 2014 ISSUED BY THE COMPANY - BlackRock Inc.	d803136dex991.htm

Q3 2014 Earnings

Earnings Release Supplement:

Results

presented

“as

adjusted”

basis,

unless

otherwise

noted

October 15, 2014

Exhibit 99.2

A broadly diversified business across clients, products and geographies

Q3 2014 Long-term Base Fees of $2.396 billion

Long-term Assets Under Management of $4.220 trillion at September 30,

2014

Product Type

Client Type

Style

Region

Alternatives 3%

Alternatives 8%

Multi-asset

13%

Fixed Income

32%

Fixed Income

23%

Equity

56%

Equity

56%

iShares

23%

iShares

35%

Retail

12%

Retail

35%

Institutional

65%

Institutional

30%

AUM

Base Fees

AUM

Base Fees

Index

43%

Index

10%

iShares

23%

iShares

35%

Asia-Pacific 8%

EMEA

31%

EMEA

29%

Americas

61%

Americas

63%

Active

34%

Active

55%

AUM

Base Fees

AUM

Base Fees

Note: Revenue and AUM by region data is based on client domicile.

Long-term net flows ($ in billions)

Total Long-Term

Retail

iShares

Institutional

10%

13%

10%

14%

13%

11%

(5%)

(3%)

(2%)

(1%)

14%

13%

(1)

Includes the effect of a single-client institutional fixed income index redemption that totaled $74.2 billion in Q3 2012.

Note:

LTM

organic

asset

growth

rate

measures

rolling

last

twelve

months

net

new

flows

over

beginning

period

assets.

LTM organic asset growth rate (%)

11%

($43)

$47

$39

$12

$25

$41

$27

$38

$29

2012

2013

2014

$17

$14

$13

2012

2013

2014

$25

$36

$26

($1)

$20

$19

$30

$18

2012

2013

2014

($73)

($3)

($6)

2012

2013

2014

Profitability ($ in millions, except per share data)

Net Income and EPS, as adjusted

Operating Income and Margin, as adjusted

For further information and reconciliation between GAAP and as adjusted, see page 9 of this earnings release supplement, notes (1) through (4) in the current earnings release as well as previously filed Form 10-Ks,

10-Qs and 8-Ks.

Operating Income

Operating Margin

•

Operating

income,

adjusted

$1,214

million,

24%

year-over-year

•

Operating

margin,

adjusted

44.2%

expanded

300

bps

year-over-year

•

Net

income,

adjusted

$890

million,

32%

year-over-year

•

EPS,

adjusted

$5.21,

34%

year-over-year

Net Income

EPS

$610

$695

$637

$722

$672

$851

$762

$837

$890

$3.47

$3.96

$3.65

$4.15

$3.88

$4.92

$4.43

$4.89

$5.21

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$400

$500

$600

$700

$800

$900

$1,000

$1,100

$1,200

2012

2013

2014

$876

$1,041

$921

$982

$978

$1,143

$1,062

$1,133

$1,214

40.7%

42.6%

40.0%

41.3%

41.2%

42.7%

41.4%

42.4%

44.2%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

$400

$500

$600

$700

$800

$900

$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

2012

2013

2014

Capital management (amounts in millions, except per share data)

Amounts above exclude repurchases of employee tax withholdings related to employee stock transactions.

GAAP dividend payout ratio = Dividends declared / GAAP net income.

Total GAAP payout ratio = (Dividends declared + share repurchases) / GAAP net income.

Share repurchases and weighted average diluted shares

Dividends and Payout Ratios

$1.50

$1.68

$1.93

40%

37%

49%

39%

34%

48%

40%

35%

66%

61%

88%

74%

64%

81%

71%

63%

2012

2013

2014

Dividends

GAAP Dividend Payout Ratio

Total GAAP Payout Ratio

$250

$166

$167

170.8

171.2

171.9

173.0

173.4

173.9

174.6

175.2

175.5

2014

2013

2012

Share Repurchases

Weighted average diluted shares

Major market indices and exchange rates

Spot

Average Level

% Change

Q3 2014 vs.

June 30,

2014

September 30,

2014

% Change

Q3 2013

Q3 2014

Q2 2014

Q3 2013

Q2 2014

Equity Indices:

Domestic

S&P 500

1,960

1,972

1,673

1,976

1,900

18%

Global

MSCI Barra World Index

1,743

1,698

(3%)

1,511

1,733

1,698

15%

MSCI Europe Index

117

104

116

12%

MSCI AC Asia Pacific Index

146

140

(4%)

135

147

141

MSCI Emerging Markets Index

1,051

1,005

(4%)

956

1,067

1,024

12%

S&P Global Natural Resources

3,733

3,438

(8%)

3,262

3,675

3,612

13%

Fixed Income Index:

Barclays U.S. Aggregate Bond Index

1,878

1,881

1,795

1,880

1,862

Foreign Exchange Rates:

GBP to USD

1.71

1.62

(5%)

1.55

1.67

1.68

(1%)

EUR to USD

1.37

1.26

(8%)

1.32

1.33

1.37

(3%)

Source: Bloomberg

Revenue

Q3 2014 Compared to Q3 2013

$377 million

Total Revenue

Q3 2014

$2,849 million

Q3 2014 Compared to Q2 2014

$71 million

Percentage Change

Year-over-Year

Sequential

Base Fees ex. SL

15%

Securities Lending

(18)

Performance Fees

Aladdin

Other BRS

Distribution Fees

(11)

(6)

Other Revenue

Total

$2,778

$2,849

$59

$18

$10

($1)

($25)

$2,472

$2,849

$299

$37

$18

$16

($2)

82%

Base Fees ex. Securities Lending

Securities Lending

Performance Fees

Aladdin

Other BRS

Q3 2013

Base Fees ex

Sec Lending

Performance

Fees

Other

Revenue

Securities

Lending

Aladdin

Other BRS

Distribution

fees

Q3 2014

Q2 2014

Base Fees ex

Sec Lending

Performance

Fees

Other

Revenue

Securities

Lending

Aladdin

Other BRS

Distribution

fees

Q3 2014

Distribution Fees

Other Revenue

Investment advisory, administration fees and securities lending revenue

Q3 2014: $2,468 million

Q3 2014 Compared to Q3 2013

Investment advisory, administration fees and securities lending revenue

$315 million

Q3 2014 Compared to Q2 2014

$34 million

Q3 2013: $2,153 million

Q2 2014: $2,434 million

20%

27%

15%

12%

Active Equity

iShares Equity

Active Fixed Income

iShares Fixed Income

Multi

Asset

Alternatives

Non-ETF Index Equity

Non-ETF Index Fixed Income

Cash

18%

29%

15%

13%

$2,434

$2,468

$31

$15

$13

($1)

($2)

($3)

($5)

($15)

$2,153

$2,468

$119

$53

$50

$45

$23

$13

$10

($3)

Q3 2013

iShares

Multi-

Asset

Active

Active FI

Non-ETF

Index

Alts

iShares

Non-ETF

Index FI

Cash

Q3 2014

19%

28%

14%

12%

Q2 2014

iShares

Multi

Asset

Active

Active FI

Non-

ETF

Index

Alts

iShares

Non-ETF

Index

Cash

Q3 2014

Expense

Q3 2014

$1,635 million

Expense, as adjusted, by Category

Q3 2014 Compared to Q3 2013, as adjusted

For further information and reconciliation between GAAP and as adjusted, see page 9 of this earnings release supplement and notes (1) through (4) in the current earnings release.

$141 million

Q3 2014 Compared to Q2 2014, as adjusted

($10) million

Percentage Change

Year-over-Year

Sequential

Employee Comp. & Benefits

13%

Distribution & Servicing Costs

Amort. of Deferred Sales Commissions

Direct Fund Expense

General & Administrative

(2)

(14)

Amortization of Intangibles

(2)

Total

(1)

59%

12%

20%

Employee Comp. & Benefits

Distribution & Servicing Costs

Amort. of Deferred Sales

Commissions

Direct Fund Expense

General & Administration

Amortization of Intangibles

$1,494

$1,635

$32

$112

($8)

Q3 2013

G&A

Servicing

Direct Fund

Benefits

Q3 2014

$1,645

$1,635

$12

$29

($51)

($1)

Q2 2014

G&A

Intangibles

Distribution &

Servicing

Direct Fund

Expense

Comp &

Benefits

Q3 2014

Distribution &

Comp &

Amort of

Reconciliation between GAAP and as adjusted ($ in millions)

Non-GAAP adjustments include amounts related to the reduction of an indemnification asset, the PennyMac Charitable Contribution, U.K. lease exit costs, a contribution to short-term investment funds (“STIFs”),

PNC LTIP funding obligation, compensation related to appreciation (depreciation) on certain deferred compensation plans and noncash income tax matters, as applicable.

For further information and reconciliation between GAAP and as adjusted, see notes (1) through (4) in the current earnings release as well as previously filed Form 10-Ks, 10-Qs and 8-Ks.

2012

2013

2014

Operating Income

GAAP

$875

$1,005

$909

$849

$966

$1,133

$1,051

$1,122

$1,157

Non-GAAP adjustments

133

As Adjusted

$876

$1,041

$921

$982

$978

$1,143

$1,062

$1,133

$1,214

Nonoperating Income (Expense)

GAAP

$30

($67)

$41

$69

($18)

$24

$17

$16

($52)

Non-GAAP adjustments

(17)

(38)

(57)

(3)

(11)

(36)

As Adjusted

$13

($27)

$12

($21)

$13

$26

($20)

($8)

Net Income

GAAP

$642

$690

$632

$729

$730

$841

$756

$808

$917

Non-GAAP adjustments

(32)

(7)

(58)

(27)

As Adjusted

$610

$695

$637

$722

$672

$851

$762

$837

$890

Important Notes

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 on page 9 of this earnings release supplement, our current earnings release

dated October 15, 2014, and BlackRock’s other periodic reports, which are available on BlackRock’s web site at

www.blackrock.com.

This presentation, and other statements that BlackRock, Inc. (“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” and 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 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, information and cyber 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.; (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 BlackRock; (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 potential 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.

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