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Section 1: 8-K (8-K)

blk-8k_20190719.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 19, 2019

 

 

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.)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $.01 par value

 

BLK

 

New York Stock Exchange

1.250% Notes due 2025

 

BLK25

 

New York Stock Exchange

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 19, 2019, BlackRock, Inc. (the “Company”) reported results of operations for the three and six months ended June 30, 2019. 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, 2019 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 19, 2019 issued by the Company

99.2

Second Quarter 2019 Earnings – Earnings Release Supplement

 

 

 

 



EXHIBIT INDEX

 

99.1

Earnings release dated July 19, 2019 issued by the Company

99.2

Second Quarter 2019 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 19, 2019

Gary S. Shedlin

 

Senior Managing Director and

 

Chief Financial Officer

 

 

 

(Back To Top)

Section 2: EX-99.1 (EARNINGS RELEASE DATED JULY 19, 2019)

blk-ex991_7.htm

Exhibit 99.1

 

 

 

 

 

INVESTOR RELATIONS:

Samantha Tortora      212.810.5397

MEDIA RELATIONS:

Brian Beades      212.810.5596

 

BlackRock Reports Second Quarter 2019 Diluted EPS of $6.41

New York, July 19, 2019 BlackRock, Inc. (NYSE: BLK) today reported financial results for the three and six months ended June 30, 2019.

 

 

 

 

$151 billion of quarterly total net inflows, or 9% organic asset growth, driven by record fixed income and cash activity

2% decrease in revenue year-over-year reflects lower base fees, driven in part by lower securities lending revenue, and lower performance fees

20% growth in technology services revenue year-over-year reflects momentum in Aladdin® and the impact of the eFront acquisition, which closed in May 2019

11% decrease in operating income year-over-year also reflects $61 million of fund launch costs

3% decrease in diluted EPS (4% as adjusted) year-over-year reflects lower operating income and a higher effective tax rate in the current quarter, partially offset by higher nonoperating income and a lower diluted share count

 

Laurence D. Fink, Chairman and CEO:

“BlackRock generated $151 billion of total net inflows in the second quarter, a record 9% annualized organic asset growth.  While organic base fee growth of 3% and the year-over-year revenue decline reflected certain market headwinds, our second quarter results validate BlackRock’s unique ability to bring together the entire firm to meet clients’ needs in any market environment. We are now working with clients in more ways than ever before and developing deeper relationships with them as a result.

iShares AUM grew to $2 trillion at quarter end, doubling in just five years, with 80% of that growth coming organically. iShares net inflows of $36 billion were once again paced by our industry-leading fixed income ETF franchise.  Active net inflows of $75 billion were also led by fixed income, reflecting two significant strategic institutional wins, and included the successful close of BlackRock Science and Technology Trust II, a $1.4 billion active equity fund that was the industry’s largest closed-end fund raise in the last five years. Cash management strategies saw strong net inflows, driven by client de-risking and a number of significant wins.

“Technology services revenue grew 20% year-over-year as we continued to invest in our leading technology capabilities.  We closed our acquisition of eFront during the quarter further reinforcing Aladdin’s value proposition as the world’s most comprehensive whole-portfolio technology solution.

“BlackRock continues to be disciplined in the way we invest in and evolve our platform.  By approaching client needs comprehensively, bringing together the entirety of our global investment and technology platform, I am more confident than ever that we will continue to deliver exceptional long-term value for both clients and shareholders.”

 

 

FINANCIAL RESULTS

 

 

Q2

 

Q2

 

(in millions, except per share data)

2019

 

2018

 

AUM

$

6,842,482

 

$

6,299,706

 

% change

 

9

%

 

 

 

Total net flows

$

150,985

 

$

20,015

 

 

 

 

 

 

 

 

GAAP basis:

 

 

 

 

 

 

Revenue

$

3,524

 

$

3,605

 

% change

 

(2

)%

 

 

 

Operating income

$

1,278

 

$

1,440

 

% change

 

(11

)%

 

 

 

Operating margin

 

36.3

%

 

39.9

%

Net income(1)

$

1,003

 

$

1,073

 

% change

 

(7

)%

 

 

 

Diluted EPS

$

6.41

 

$

6.62

 

% change

 

(3

)%

 

 

 

Weighted average diluted shares

 

156.4

 

 

162.2

 

% change

 

(4

)%

 

 

 

 

 

 

 

 

 

 

As Adjusted:

 

 

 

 

 

 

Operating income(2)

$

1,278

 

$

1,443

 

% change

 

(11

)%

 

 

 

Operating margin(2)

 

43.1

%

 

45.2

%

Net income(1) (2)

$

1,003

 

$

1,080

 

% change

 

(7

)%

 

 

 

Diluted EPS(2)

$

6.41

 

$

6.66

 

% change

 

(4

)%

 

 

 

 

(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

 

 

 

Q2

YTD

(in billions)

2019

2019

Long-term net flows:

$

125.4

 

 

$

184.4

 

 

 

 

 

 

 

 

 

 

 

 

 

By region:

 

 

 

 

 

 

 

 

 

 

 

 

Americas

$

108.3

 

 

$

148.4

 

 

 

EMEA

 

10.9

 

 

 

32.7

 

 

 

APAC

 

6.2

 

 

 

3.3

 

 

 

 

 

 

 

 

 

 

 

 

 

By client type:

 

 

 

 

 

 

 

 

 

 

 

 

Retail:

$

1.9

 

 

$

1.1

 

 

 

 

US

 

6.6

 

 

 

9.8

 

 

 

 

International

 

(4.7

)

 

 

(8.7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

iShares®:

$

36.1

 

 

$

66.8

 

 

 

 

Core

 

19.7

 

 

 

39.2

 

 

 

 

Non-Core

 

16.4

 

 

 

27.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Institutional:

$

87.4

 

 

$

116.5

 

 

 

 

Active

 

73.2

 

 

 

88.5

 

 

 

 

Index

 

14.2

 

 

 

28.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash management net flows

$

25.6

 

 

$

31.3

 

 

 

 

 

 

 

 

 

 

 

 

 

Total net flows

$

151.0

 

 

$

215.7

 

 

 

 

 

 

 

1

 


 

BUSINESS RESULTS

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2019

 

Q2 2019

 

 

 

Q2 2019

 

June 30, 2019

 

Q2 2019

 

AUM

 

Base fees(1)

 

 

(in millions), (unaudited)

Net flows

 

AUM

 

Base fees(1)

 

% of Total

 

% of Total

 

 

RESULTS BY CLIENT TYPE

Retail

$

1,914

 

$

664,906

 

$

846

 

 

10

%

 

30

%

 

iShares ETFs

 

36,096

 

 

2,008,867

 

 

1,128

 

 

29

%

 

39

%

 

Institutional:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active

 

73,174

 

 

1,272,532

 

 

537

 

 

19

%

 

18

%

 

Index

 

14,181

 

 

2,413,191

 

 

245

 

 

35

%

 

8

%

 

Total institutional

 

87,355

 

 

3,685,723

 

 

782

 

 

54

%

 

26

%

 

Long-term

 

125,365

 

 

6,359,496

 

 

2,756

 

 

93

%

 

95

%

 

Cash management

 

25,621

 

 

481,208

 

 

147

 

 

7

%

 

5

%

 

Advisory

 

(1

)

 

1,778

 

 

-

 

 

-

 

 

-

 

 

Total

$

150,985

 

$

6,842,482

 

$

2,903

 

 

100

%

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RESULTS BY INVESTMENT STYLE

Active

$

74,981

 

$

1,853,393

 

$

1,365

 

 

27

%

 

47

%

 

Index and iShares ETFs

 

50,384

 

 

4,506,103

 

 

1,391

 

 

66

%

 

48

%

 

Long-term

 

125,365

 

 

6,359,496

 

 

2,756

 

 

93

%

 

95

%

 

Cash management

 

25,621

 

 

481,208

 

 

147

 

 

7

%

 

5

%

 

Advisory

 

(1

)

 

1,778

 

 

-

 

 

-

 

 

-

 

 

Total

$

150,985

 

$

6,842,482

 

$

2,903

 

 

100

%

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RESULTS BY PRODUCT TYPE

Equity

$

5,915

 

$

3,485,869

 

$

1,418

 

 

51

%

 

49

%

 

Fixed income

 

110,392

 

 

2,191,130

 

 

806

 

 

32

%

 

28

%

 

Multi-asset

 

6,192

 

 

523,728

 

 

288

 

 

8

%

 

10

%

 

Alternatives

 

2,866

 

 

158,769

 

 

244

 

 

2

%

 

8

%

 

Long-term

 

125,365

 

 

6,359,496

 

 

2,756

 

 

93

%

 

95

%

 

Cash management

 

25,621

 

 

481,208

 

 

147

 

 

7

%

 

5

%

 

Advisory

 

(1

)

 

1,778

 

 

-

 

 

-

 

 

-

 

 

Total

$

150,985

 

$

6,842,482

 

$

2,903

 

 

100

%

 

100

%

 

 

(1)

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

INVESTMENT PERFORMANCE AT JUNE 30, 2019(1)

 

 

One-year period

 

Three-year period

 

Five-year period

 

Fixed income:

 

 

 

 

 

 

 

 

 

Actively managed AUM above benchmark or peer median

 

 

 

 

 

 

 

 

 

Taxable

79%

 

82%

 

86%

 

Tax-exempt

26%

 

75%

 

78%

 

Index AUM within or above applicable tolerance

94%

 

97%

 

98%

 

Equity:

 

 

 

 

 

 

 

 

 

Actively managed AUM above benchmark or peer median

 

 

 

 

 

 

 

 

 

Fundamental

69%

 

74%

 

84%

 

Systematic

39%

 

90%

 

93%

 

Index AUM within or above applicable tolerance

95%

 

99%

 

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 Friday, July 19, 2019 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 5448987). 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 11:30 a.m. (Eastern Time) on Friday, July 19, 2019 and ending at midnight on Friday, August 2, 2019. 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 5448987. 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 investors and a leading provider of financial technology, our clients turn to us for the solutions they need when planning for their most important goals. As of June 30, 2019, the firm managed approximately $6.84 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,

 

 

 

 

 

 

2019

 

 

2018

 

 

Change

 

 

2019

 

 

Change

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment advisory, administration fees and

  securities lending revenue

$

2,903

 

 

$

2,944

 

 

$

(41

)

 

$

2,805

 

 

$

98

 

Investment advisory performance fees

 

64

 

 

 

91

 

 

 

(27

)

 

 

26

 

 

 

38

 

Technology services revenue

 

237

 

 

 

198

 

 

 

39

 

 

 

204

 

 

 

33

 

Distribution fees

 

267

 

 

 

294

 

 

 

(27

)

 

 

262

 

 

 

5

 

Advisory and other revenue

 

53

 

 

 

78

 

 

 

(25

)

 

 

49

 

 

 

4

 

Total revenue

 

3,524

 

 

 

3,605

 

 

 

(81

)

 

 

3,346

 

 

 

178

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

1,083

 

 

 

1,082

 

 

 

1

 

 

 

1,064

 

 

 

19

 

Distribution and servicing costs

 

416

 

 

 

415

 

 

 

1

 

 

 

404

 

 

 

12

 

Direct fund expense

 

252

 

 

 

264

 

 

 

(12

)

 

 

242

 

 

 

10

 

General and administration

 

470

 

 

 

393

 

 

 

77

 

 

 

388

 

 

 

82

 

Amortization of intangible assets

 

25

 

 

 

11

 

 

 

14

 

 

 

15

 

 

 

10

 

Total expense

 

2,246

 

 

 

2,165

 

 

 

81

 

 

 

2,113

 

 

 

133

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

1,278

 

 

 

1,440

 

 

 

(162

)

 

 

1,233

 

 

 

45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonoperating income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) on investments

 

89

 

 

 

3

 

 

 

86

 

 

 

142

 

 

 

(53

)

Interest and dividend income

 

20

 

 

 

19

 

 

 

1

 

 

 

29

 

 

 

(9

)

Interest expense

 

(52

)

 

 

(46

)

 

 

(6

)

 

 

(46

)

 

 

(6

)

Total nonoperating income (expense)

 

57

 

 

 

(24

)

 

 

81

 

 

 

125

 

 

 

(68

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

1,335

 

 

 

1,416

 

 

 

(81

)

 

 

1,358

 

 

 

(23

)

Income tax expense

 

322

 

 

 

338

 

 

 

(16

)

 

 

298

 

 

 

24

 

Net income

 

1,013

 

 

 

1,078

 

 

 

(65

)

 

 

1,060

 

 

 

(47

)

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling

  interests

 

10

 

 

 

5

 

 

 

5

 

 

 

7

 

 

 

3

 

Net income attributable to BlackRock, Inc.

$

1,003

 

 

$

1,073

 

 

$

(70

)

 

$

1,053

 

 

$

(50

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

155,354,552

 

 

 

160,980,960

 

 

 

(5,626,408

)

 

 

158,268,034

 

 

 

(2,913,482

)

Diluted

 

156,360,741

 

 

 

162,161,937

 

 

 

(5,801,196

)

 

 

159,348,431

 

 

 

(2,987,690

)

Earnings per share attributable to BlackRock, Inc.

   common stockholders (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

6.46

 

 

$

6.67

 

 

$

(0.21

)

 

$

6.65

 

 

$

(0.19

)

Diluted

$

6.41

 

 

$

6.62

 

 

$

(0.21

)

 

$

6.61

 

 

$

(0.20

)

Cash dividends declared and paid per share

$

3.30

 

 

$

2.88

 

 

$

0.42

 

 

$

3.30

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AUM (end of period)

$

6,842,482

 

 

$

6,299,706

 

 

$

542,776

 

 

$

6,515,345

 

 

$

327,137

 

Shares outstanding (end of period)

 

155,366,861

 

 

 

160,779,596

 

 

 

(5,412,735

)

 

 

155,323,503

 

 

 

43,358

 

GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

36.3

%

 

 

39.9

%

 

 

(360

) bps

 

 

36.8

%

 

 

(50

) bps

Effective tax rate

 

24.3

%

 

 

24.0

%

 

 

30

  bps

 

 

22.1

%

 

 

220

  bps

As adjusted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (1)

$

1,278

 

 

$

1,443

 

 

$

(165

)

 

$

1,233

 

 

$

45

 

Operating margin (1)

 

43.1

%

 

 

45.2

%

 

 

(210

) bps

 

 

41.9

%

 

 

120

  bps

Nonoperating income (expense), less net income

     (loss) attributable to noncontrolling interests

$

47

 

 

$

(29

)

 

$

76

 

 

$

118

 

 

$

(71

)

Net income attributable to BlackRock, Inc. (2)

$

1,003

 

 

$

1,080

 

 

$

(77

)

 

$

1,053

 

 

$

(50

)

Diluted earnings attributable to BlackRock, Inc.

     common stockholders per share (2) (3)

$

6.41

 

 

$

6.66

 

 

$

(0.25

)

 

$

6.61

 

 

$

(0.20

)

Effective tax rate

 

24.3

%

 

 

23.7

%

 

 

60

  bps

 

 

22.1

%

 

 

220

  bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 


3

 


 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SUPPLEMENTAL INFORMATION

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

June 30,

 

 

 

 

 

 

2019

 

 

2018

 

 

Change

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

Investment advisory, administration fees and securities

      lending revenue

$

5,708

 

 

$

5,891

 

 

$

(183

)

Investment advisory performance fees

 

90

 

 

 

161

 

 

 

(71

)

Technology services revenue

 

441

 

 

 

382

 

 

 

59

 

Distribution fees

 

529

 

 

 

605

 

 

 

(76

)

Advisory and other revenue

 

102

 

 

 

149

 

 

 

(47

)

Total revenue

 

6,870

 

 

 

7,188

 

 

 

(318

)

 

 

 

 

 

 

 

 

 

 

 

 

Expense

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

2,147

 

 

 

2,203

 

 

 

(56

)

Distribution and servicing costs

 

820

 

 

 

847

 

 

 

(27

)

Direct fund expense

 

494

 

 

 

525

 

 

 

(31

)

General and administration

 

858

 

 

 

776

 

 

 

82

 

Amortization of intangible assets

 

40

 

 

 

22

 

 

 

18

 

Total expense

 

4,359

 

 

 

4,373

 

 

 

(14

)

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

2,511

 

 

 

2,815

 

 

 

(304

)

 

 

 

 

 

 

 

 

 

 

 

 

Nonoperating income (expense)

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) on investments

 

231

 

 

 

18

 

 

 

213

 

Interest and dividend income

 

49

 

 

 

34

 

 

 

15

 

Interest expense

 

(98

)

 

 

(92

)

 

 

(6

)

Total nonoperating income (expense)

 

182

 

 

 

(40

)

 

 

222

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

2,693

 

 

 

2,775

 

 

 

(82

)

Income tax expense

 

620

 

 

 

603

 

 

 

17

 

Net income