BlackRock, Inc has reported full year diluted EPS of USD12.37, up 17% from 2010. Fourth quarter 2011 net income of USD555 million was down 7% from third quarter 2011 and 16% from a year ago.
Operating income for the fourth quarter and full year 2011 was USD808 million and USD3.2 billion, respectively. The full year 2011 operating margin was 35.8%. In the fourth quarter, BlackRock repurchased approximately 618,000 shares.
As adjusted results: Full year 2011 operating income of USD3.4 billion improved USD225 million, or 7%, and diluted EPS of USD11.85 improved 8% compared with 2010. Fourth quarter diluted EPS was USD3.06, including operating income of USD3.14 per diluted share and net non-operating expense of USD0.08 per diluted share. Operating margin was 39.7% for full year 2011, an improvement compared with 2010. Fourth quarter 2011 results include restructuring charges (not included in as adjusted results) of USD32 million related to a 3.4% reduction in the fourth quarter work force. For the full year, BlackRock continued to make investments in focus areas, which is reflected in the net addition of over 900 employees during the year.
“We finished 2011 with solid annual revenue and earnings growth despite challenging market conditions, particularly in the second half of the year,” says Laurence D Fink (pictured), Chairman and CEO of BlackRock. “Our results reinforce the underlying strength and momentum of our diversified client-focused model. Our mix of businesses, together with unparalleled risk management capabilities and a sharp focus on execution, have allowed us to deliver strong results through highly challenging market cycles. This momentum was reflected in the fourth quarter as we generated net inflows of USD23.8 billion in long term net new business. In addition, with the investments made over the course of 2011, we remain well positioned to execute against key themes driving our industry in the coming years.”
Assets under management (“AUM”) closed the quarter at USD3.513 trillion, up 5% since third quarter-end and down 1% since year-end 2010. Results reflected strong inflows of USD23.8 billion in long-term products (equity, fixed income, multi-asset class and alternative investments) and a USD143.3 billion improvement in market and investment performance. Total net inflows of USD24.6 billion included USD10.9 billion of inflows in cash management largely offset by USD10.1 billion of planned distributions in our advisory business. For the year, we recorded USD67.3 billion of long-term net new business, before giving effect to the final BGI merger-related outflows of USD28.3 billion recorded in the first half of the year.
The net new business pipeline totalled USD54.3 billion at 12 January, 2012, before giving effect to the previously announced USD40 billion institutional fixed income index redemption notice from a single client that intends to insource their business over time. The pipeline included USD7.9 billion of mandates that funded since quarter end, including strong flows from iShares® and domestic retail and high net worth clients as well as USD46.4 billion of awards to be funded. Of this total, the pipeline reflected 97% in long-term products and 3% in cash management and advisory assignments. BlackRock Solutions® (“BRS”) pipeline of contracts and proposals remains robust and reflects 14 net new assignments added during the quarter.
“Our strategic focus on ETFs, retirement, income, multi-asset solutions, and alternatives is bearing fruit across our platform. In this volatile and rapidly changing environment, clients are increasingly seeking investment partners who can offer a full array of cost-effective products, customized solutions, world-class advice and risk management products, which we are uniquely positioned to provide.
“With volatile markets and low interest rates, investors also continue to seek more efficient investment alternatives – particularly in fixed income strategies. This was especially evident in the fourth quarter, with passive strategies gaining USD45.3 billion in net inflows, including USD20.1 billion across our global iShares platform. For the year, iShares maintained its global leadership position and delivered net inflows of USD53 billion highlighted by organic growth of 18% in EMEA and 7% in the Americas.
“Sovereign uncertainty across Europe and an increasing focus on risk management also led to unique opportunities for BlackRock Solutions where momentum continued to build throughout 2011 across an increasingly global client base. BlackRock Solutions achieved record revenues of USD510 million for full year 2011, including our first two Aladdin assignments in Japan and an increase in our advisory mandates in Europe taking our installed client base to over 165 institutions. Assets on our Aladdin platform ended the year at USD10.2 trillion.
“While our teams continue to execute on our strategic focus areas and drive momentum across the business, we are not immune to the volatility of the markets, which weighed on the industry-wide performance of active managers. We saw reduced performance fees in the fourth quarter, and market uncertainty also affected both retail and institutional investor behavior and in many instances investors delayed or postponed near term investment decisions. Still, we anticipate more active dialogues in the year ahead and BlackRock is ideally positioned to assist clients as they look to allocate assets in this challenging market.
“We are also well-positioned to continue to deliver for our shareholders while investing for future growth with strong cash flow estimated to be USD2.7 billion in 2011. During the year we consistently demonstrated our commitment to strong capital management and driving enhanced shareholder value. We delivered a dividend payout ratio of 43% during the year and repurchased nearly 14.2 million shares including 618,000 in the fourth quarter.
“For us, 2011 was also a year of investment to align ourselves for the new opportunities we see and to drive global integration. Consistent with our commitment to continually expand and enhance our talent base to support our clients, we added over 900 employees during the year, including strategic focus areas such as iShares, alternatives, institutional sales and Asia. Just last week, we announced our planned purchase of Claymore Investments which will further diversify our iShares’ product offerings in key strategic focus areas in the attractive, high-growth Canadian marketplace. At the same time, we are leveraging opportunities across our platform to drive further global integration and efficiencies through activities such as realigning organisational structures, leveraging best-in-class practices, relocating operations into lower-cost centers of excellence and developing differentiated operational and trading efficiencies that enable us to deliver enhanced alpha. We also remain committed to serving as a strong advocate for our clients in this increasingly complex regulatory and political environment and to ensuring that their interests are represented as the changing landscape unfolds.
“As we enter 2012, improved economic indicators have served to provide greater market stability and the environment feels more constructive overall, but it is likely that political and regulatory dynamics, persistent low-rates, continued divergence between developing and developed economies and protracted periods of heightened volatility will remain key factors. Still, the continued investments we have made in people, technology and products give us greater confidence in BlackRock’s ability to continue to perform through a wide range of environments and ultimately deliver exceptional value for clients and shareholders. BlackRock’s employees have remained intensely focused on serving our clients, and I want to once again express my gratitude and admiration for their commitment to our clients and the Firm.”
