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Section 1: 8-K (8-K)

blk-8k_20180716.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): July 16, 2018

 

 

BLACKROCK, INC.

(Exact name of registrant as specified in its charter)

 

DELAWARE

(State or other jurisdiction

of incorporation)

001-33099

(Commission

File Number)

32-0174431

(IRS Employer

Identification No.)

 

 

55 East 52nd Street, New York, New York

 

10055

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (212) 810-5300

 

_________________________________________________________________________________________________

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 


Item 2.02. Results of Operations and Financial Condition

 

On July 16, 2018, BlackRock, Inc. (the “Company”) reported results of operations for the three and six months ended June 30, 2018. A copy of the earnings release issued by the Company is attached as Exhibit 99.1. In addition, a copy of the Company’s Earnings Release Supplement for the quarter ended June 30, 2018 is being furnished as Exhibit 99.2 to this Form 8-K.

Item 9.01. Financial Statements and Exhibits

 

(d)  Exhibits

 

99.1

Earnings release dated July 16, 2018 issued by the Company

99.2

Second Quarter 2018 Earnings – Earnings Release Supplement

 

 

 

 



EXHIBIT INDEX

 

99.1

Earnings release dated July 16, 2018 issued by the Company

99.2

Second Quarter 2018 Earnings – Earnings Release Supplement

 

 



SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

BlackRock, Inc.

 

(Registrant)

 

 

 

 

 

By: /s/ Gary S. Shedlin          

Date: July 16, 2018

Senior Managing Director and

 

Chief Financial Officer

 

Gary S. Shedlin

 

 

 

(Back To Top)

Section 2: EX-99.1 (EARNINGS RELEASE DATED JULY 16, 2018)

blk-ex991_54.htm

Exhibit 99.1

 

 

 

 

 

 

 

 

INVESTOR RELATIONS:

Tom Wojcik      212.810.8127

 

MEDIA RELATIONS:

Brian Beades    212.810.5596

 

 

New York, July 16, 2018 – BlackRock, Inc. (NYSE: BLK) today reported financial results for the three months and six months ended June 30, 2018.

 

BlackRock Reports Second Quarter 2018 Diluted EPS of $6.62, or $6.66 as adjusted

 

 

 

$20 billion of total net inflows, positive across active, index and cash management

 

11% revenue growth year-over-year driven by base fees, performance fees and technology services revenue

 

16% operating income growth year-over-year reflects

operating margin expansion

 

27% diluted EPS growth (28% as adjusted) driven in part by lower tax rate

 

$300 million of quarterly share repurchases

 

Laurence D. Fink, Chairman and CEO:

 

“BlackRock delivered strong financial results in the second quarter, as revenue increased 11%, operating income increased 16% and EPS increased 28% year-over-year.

 

“Our diverse global platform generated $20 billion of total net inflows in the quarter and $276 billion over the last twelve months. Secular trends supportive of BlackRock’s future growth continue, especially in technology, including Aladdin and digital wealth, alternatives and iShares.

 

“Despite an industry-wide slowdown in flows associated with investor uncertainty in the current market environment, our dialogue with clients and opportunities to provide long-term solutions are more robust than ever before.

 

“We have seen markets like these before, and BlackRock’s product breadth, unparalleled portfolio construction capabilities, digital tools and technology uniquely position us to deliver long-term value to clients and shareholders.”

 

 

 

 

 

FINANCIAL RESULTS

 

 

Q2

 

Q2

 

 

 

 

 

(in millions, except per share data)

2018

 

2017*

 

Change

 

 

AUM

$

6,299,706

 

$

5,689,273

 

 

11

%

 

Total net flows

$

20,015

 

$

103,616

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP basis:

 

 

 

 

 

 

 

 

 

 

Revenue

$

3,605

 

$

3,236

 

 

11

%

 

Operating income

$

1,440

 

$

1,237

 

 

16

%

 

Operating margin

 

39.9

%

 

38.2

%

 

170

bps

 

Net income(1)

$

1,073

 

$

854

 

 

26

%

 

Diluted EPS

$

6.62

 

$

5.20

 

 

27

%

 

Weighted average diluted

   shares

 

162.2

 

 

164.1

 

 

(1

)%

 

 

 

 

 

 

 

 

 

 

 

 

As Adjusted:

 

 

 

 

 

 

 

 

 

 

Operating income(2)

$

1,443

 

$

1,241

 

 

16

%

 

Operating margin(2)

 

45.2

%

 

43.9

%

 

130

bps

 

Net income(1) (2)

$

1,080

 

$

857

 

 

26

%

 

Diluted EPS(2)

$

6.66

 

$

5.22

 

 

28

%

 

 

 

*

Results for 2017 were recast to reflect the adoption of the new revenue recognition standard. For further information, refer to the Current Report on Form 8-K furnished on March 22, 2018.

(1)

Net income represents net income attributable to BlackRock, Inc.  

(2)

See notes (1) through (3) to the condensed consolidated statements of income and supplemental information on pages 11 and 12 for more information on as adjusted items and the reconciliation to GAAP.

NET FLOW HIGHLIGHTS

 

Long-term net inflows of $14.5 billion by region:

 

 

Americas:

$

21.0

 billion

 

EMEA:

$

(7.4)

 billion

 

APAC:

$

0.9

 billion

 

Long-term net inflows of $14.5 billion by client type:

 

 

Retail:

$

5.5

 billion

 

U.S.:

$

8.2

 billion

 

International:

$

(2.7)

 billion

 

 

iShares®:

$

17.8

 billion

 

Core:

$

20.4

 billion

 

Non-Core:

$

(2.6)

 billion

 

 

Institutional:

$

(8.8)

 billion

 

Index:

$

(13.5)

 billion

 

Active:

$

4.7

 billion

 

Cash management net inflows of $5.7 billion

 

1


 

BUSINESS RESULTS

 

 

 

 

 

 

 

 

 

 

June 30, 2018

 

 

Q2 2018

 

 

 

Q2 2018

 

June 30, 2018

 

Q2 2018

 

AUM

 

 

Base fees(1)

 

 

(in millions), (unaudited)

Net flows

 

AUM

 

Base fees(1)

 

% of Total

 

 

% of Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RESULTS BY CLIENT TYPE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

$

5,496

 

$

636,825

 

$

858

 

 

10

%

 

 

29

%

 

iShares ETFs

 

17,811

 

 

1,776,765

 

 

1,143

 

 

28

%

 

 

39

%

 

Institutional:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active

 

4,657

 

 

1,123,388

 

 

511

 

 

18

%

 

 

18

%

 

Index

 

(13,466

)

 

2,304,764

 

 

275

 

 

37

%

 

 

9

%

 

Total institutional

 

(8,809

)

 

3,428,152

 

 

786

 

 

55

%

 

 

27

%

 

Long-term

 

14,498

 

 

5,841,742

 

 

2,787

 

 

93

%

 

 

95

%

 

Cash management

 

5,728

 

 

457,054

 

 

157

 

 

7

%

 

 

5

%

 

Advisory

 

(211

)

 

910

 

 

-

 

 

-

 

 

 

-

 

 

Total

$

20,015

 

$

6,299,706

 

$

2,944

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RESULTS BY INVESTMENT STYLE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active

$

7,889

 

$

1,682,794

 

$

1,352

 

 

27

%

 

 

46

%

 

Index and iShares ETFs

 

6,609

 

 

4,158,948

 

 

1,435

 

 

66

%

 

 

49

%

 

Long-term

 

14,498

 

 

5,841,742

 

 

2,787

 

 

93

%

 

 

95

%

 

Cash management

 

5,728

 

 

457,054

 

 

157

 

 

7

%

 

 

5

%

 

Advisory

 

(211

)

 

910

 

 

-

 

 

-

 

 

 

-

 

 

Total

$

20,015

 

$

6,299,706

 

$

2,944

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RESULTS BY PRODUCT TYPE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

$

(22,377

)

$

3,366,480

 

$

1,524

 

 

53

%

 

 

52

%

 

Fixed income

 

26,420

 

 

1,858,609

 

 

766

 

 

30

%

 

 

26

%

 

Multi-asset

 

8,376

 

 

481,666

 

 

295

 

 

8

%

 

 

10

%

 

Alternatives

 

2,079

 

 

134,987

 

 

202

 

 

2

%

 

 

7

%

 

Long-term

 

14,498

 

 

5,841,742

 

 

2,787

 

 

93

%

 

 

95

%

 

Cash management

 

5,728

 

 

457,054

 

 

157

 

 

7

%

 

 

5

%

 

Advisory

 

(211

)

 

910

 

 

-

 

 

-

 

 

 

-

 

 

Total

$

20,015

 

$

6,299,706

 

$

2,944

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Base fees include investment advisory, administration fees and securities lending revenue.

 

INVESTMENT PERFORMANCE AT JUNE 30, 2018(1)

One-year period

 

Three-year period

 

Five-year period

 

  Fixed income:

 

 

 

 

 

 

 

 

 

  Actively managed AUM above benchmark or peer median

 

 

 

 

 

 

 

 

 

Taxable

78%

 

71%

 

85%

 

Tax-exempt

78%

 

77%

 

76%

 

  Index AUM within or above applicable tolerance

96%

 

99%

 

100%

 

  Equity:

 

 

 

 

 

 

 

 

 

  Actively managed AUM above benchmark or peer median

 

 

 

 

 

 

 

 

 

Fundamental

59%

 

78%

 

80%

 

Systematic

86%

 

82%

 

91%

 

  Index AUM within or above applicable tolerance

98%

 

98%

 

99%

 

(1)

Past performance is not indicative of future results. The performance information shown is based on preliminary available data. Please refer to page 13 for performance disclosure detail.

 

TELECONFERENCE, WEBCAST AND PRESENTATION INFORMATION

Chairman and Chief Executive Officer, Laurence D. Fink, President, Robert S. Kapito, and Chief Financial Officer, Gary S. Shedlin, will host a teleconference call for investors and analysts on Monday, July 16, 2018 at 8:30 a.m. (Eastern Time). Members of the public who are interested in participating in the teleconference should dial, from the United States, (800) 374-0176, or from outside the United States, (706) 679-8281, shortly before 8:30 a.m. and reference the BlackRock Conference Call (ID Number 5768688). A live, listen-only webcast will also be available via the investor relations section of www.blackrock.com.

Both the teleconference and webcast will be available for replay by 12:30 p.m. (Eastern Time) on Monday, July 16, 2018 and ending at midnight on Monday, July 30, 2018. To access the replay of the teleconference, callers from the United States should dial (855) 859-2056 and callers from outside the United States should dial (404) 537-3406 and enter the Conference ID Number 5768688. To access the webcast, please visit the investor relations section of www.blackrock.com.

ABOUT BLACKROCK

BlackRock helps investors build better financial futures. As a fiduciary to our clients, we provide the investment and technology solutions they need when planning for their most important goals. As of June 30, 2018, the firm managed approximately $6.3 trillion in assets on behalf of investors worldwide. For additional information on BlackRock, please visit www.blackrock.com | Twitter: @blackrock | Blog: www.blackrockblog.com | LinkedIn: www.linkedin.com/company/blackrock.

2


 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION

(in millions, except shares and per share data), (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

Ended

 

 

 

 

 

 

June 30,

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

2018

 

 

2017*

 

 

Change

 

 

2018

 

 

Change

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment advisory, administration fees and

  securities lending revenue

$

2,944

 

 

$

2,667

 

 

$

277

 

 

$

2,947

 

 

$

(3

)

Investment advisory performance fees

 

91

 

 

 

48

 

 

 

43

 

 

 

70

 

 

 

21

 

Technology services revenue

 

198

 

 

 

158

 

 

 

40

 

 

 

184

 

 

 

14

 

Distribution fees

 

294

 

 

 

292

 

 

 

2

 

 

 

311

 

 

 

(17

)

Advisory and other revenue

 

78

 

 

 

71

 

 

 

7

 

 

 

71

 

 

 

7

 

Total revenue

 

3,605

 

 

 

3,236

 

 

 

369

 

 

 

3,583

 

 

 

22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

1,082

 

 

 

998

 

 

 

84

 

 

 

1,121

 

 

 

(39

)

Distribution and servicing costs

 

415

 

 

 

410

 

 

 

5

 

 

 

432

 

 

 

(17

)

Direct fund expense

 

264

 

 

 

221

 

 

 

43

 

 

 

261

 

 

 

3

 

General and administration

 

393

 

 

 

345

 

 

 

48

 

 

 

383

 

 

 

10

 

Amortization of intangible assets

 

11

 

 

 

25

 

 

 

(14

)

 

 

11

 

 

 

-

 

Total expense

 

2,165

 

 

 

1,999

 

 

 

166

 

 

 

2,208

 

 

 

(43

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

1,440

 

 

 

1,237

 

 

 

203

 

 

 

1,375

 

 

 

65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonoperating income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) on investments

 

3

 

 

 

36

 

 

 

(33

)

 

 

15

 

 

 

(12

)

Interest and dividend income

 

19

 

 

 

13

 

 

 

6

 

 

 

15

 

 

 

4

 

Interest expense

 

(46

)

 

 

(48

)

 

 

2

 

 

 

(46

)

 

 

-

 

Total nonoperating income (expense)

 

(24

)

 

 

1

 

 

 

(25

)

 

 

(16

)

 

 

(8

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

1,416

 

 

 

1,238

 

 

 

178

 

 

 

1,359

 

 

 

57

 

Income tax expense (benefit)

 

338

 

 

 

374

 

 

 

(36

)

 

 

265

 

 

 

73

 

Net income

 

1,078

 

 

 

864

 

 

 

214

 

 

 

1,094

 

 

 

(16

)

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling

  interests

 

5

 

 

 

10

 

 

 

(5

)

 

 

5

 

 

 

-

 

Net income attributable to BlackRock, Inc.

$

1,073

 

 

$

854

 

 

$

219

 

 

$

1,089

 

 

$

(16

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

160,980,960

 

 

 

162,502,465

 

 

 

(1,521,505

)

 

 

161,250,018

 

 

 

(269,058

)

Diluted

 

162,161,937

 

 

 

164,149,861

 

 

 

(1,987,924

)

 

 

162,918,961

 

 

 

(757,024

)

Earnings per share attributable to BlackRock, Inc.

   common stockholders (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

6.67

 

 

$

5.26

 

 

$

1.41

 

 

$

6.75

 

 

$

(0.08

)

Diluted

$

6.62

 

 

$

5.20

 

 

$

1.42

 

 

$

6.68

 

 

$

(0.06

)

Cash dividends declared and paid per share

$

2.88

 

 

$

2.50

 

 

$

0.38

 

 

$

2.88

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AUM (end of period)

$

6,299,706

 

 

$

5,689,273

 

 

$

610,433

 

 

$

6,316,984

 

 

$

(17,278

)

Shares outstanding (end of period)

 

160,779,596

 

 

 

162,207,216

 

 

 

(1,427,620

)

 

 

161,275,008

 

 

 

(495,412

)

GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

39.9

%

 

 

38.2

%

 

 

170

  bps

 

 

38.4

%

 

 

150

bps

Effective tax rate

 

24.0

%

 

 

30.5

%

 

 

(650

) bps

 

 

19.6

%

 

 

440

bps

As adjusted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (1)

$

1,443

 

 

$

1,241

 

 

$

202

 

 

$

1,378

 

 

$

65

 

Operating margin (1)

 

45.2

%

 

 

43.9

%

 

 

130

  bps

 

 

44.1

%

 

 

110

bps

Nonoperating income (expense), less net income

     (loss) attributable to noncontrolling interests

$

(29

)

 

$

(9

)

 

$

(20

)

 

$

(21

)

 

$

(8

)

Net income attributable to BlackRock, Inc. (2)

$

1,080

 

 

$

857

 

 

$

223

 

 

$

1,092

 

 

$

(12

)

Diluted earnings attributable to BlackRock, Inc.

     common stockholders per share (2) (3)

$

6.66

 

 

$

5.22

 

 

$

1.44

 

 

$

6.70

 

 

$

(0.04

)

Effective tax rate

 

23.7

%

 

 

30.4

%

 

 

(670

) bps

 

 

19.6

%

 

 

410

bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See pages 11-12 for the reconciliation to GAAP and notes (1) through (3) for more information on as adjusted items.

 

 

*

Results for 2017 were recast to reflect the adoption of the new revenue recognition standard. For further information, refer to the Current Report on Form 8-K furnished on March 22, 2018.  


3


 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION

(in millions, except shares and per share data), (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

June 30,

 

 

 

 

 

 

2018

 

 

2017*

 

 

Change

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

Investment advisory, administration fees and securities

      lending revenue

$

5,891

 

 

$

5,190

 

 

$

701

 

Investment advisory performance fees

 

161

 

 

 

118

 

 

 

43

 

Technology services revenue

 

382

 

 

 

312

 

 

 

70

 

Distribution fees

 

605

 

 

 

579

 

 

 

26

 

Advisory and other revenue

 

149

 

 

 

129

 

 

 

20

 

Total revenue

 

7,188

 

 

 

6,328

 

 

 

860

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

2,203

 

 

 

2,019

 

 

 

184

 

Distribution and servicing costs

 

847

 

 

 

811

 

 

 

36

 

Direct fund expense

 

525

 

 

 

427

 

 

 

98

 

General and administration

 

776

 

 

 

641

 

 

 

135

 

Amortization of intangible assets

 

22

 

 

 

50

 

 

 

(28

)

Total expense

 

4,373

 

 

 

3,948

 

 

 

425

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

2,815

 

 

 

2,380

 

 

 

435

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonoperating income (expense)

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) on investments

 

18

 

 

 

87

 

 

 

(69

)

Interest and dividend income

 

34

 

 

 

20

 

 

 

14

 

Interest expense

 

(92

)

 

 

(113

)

 

 

21

 

Total nonoperating income (expense)

 

(40

)

 

 

(6

)

 

 

(34

)

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

2,775

 

 

 

2,374

 

 

 

401

 

Income tax expense

 

603

 

 

 

642

 

 

 

(39

)

Net income

 

2,172

 

 

 

1,732

 

 

 

440

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

10

 

 

 

19

 

 

 

(9

)

Net income attributable to BlackRock, Inc.

$

2,162

 

 

$

1,713

 

 

$

449

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

Basic

 

161,114,746

 

 

 

162,758,112

 

 

 

(1,643,366

)

Diluted