BlackRock, Inc. (NYSE: BLK) today reported record net income of $25.5 million for the first quarter ended March 31, 2001, a 33% increase compared with $19.2 million earned in the first quarter of 2000 and a 4% increase compared with $24.5 million earned in the fourth quarter of 2000. Diluted earnings per share for the first quarter were $0.39 compared with $0.30 and $0.38 for the first and fourth quarters of 2000, respectively. Operating income of $41.9 million increased 31% and 6% compared with $32.1 million and $39.7 million earned in the first and fourth quarters of 2000, respectively (See Table 1).
Assets under management at March 31, 2001 were $201.6 billion, a 17% increase compared to $172.6 billion at March 31, 2000 and a 1% decline from the $203.8 billion reported at year-end 2000. New business and strong fixed income performance largely offset the adverse effect of the equity markets, which caused a $3.5 billion decline in equity asset values and a $4 billion decline in security lending assets, which are a low fee (2.5 basis point) product. Quarter-end assets under management were also affected by the timing of new business fundings, as nine new institutional separate accounts totaling $5.3 billion funded on the first business day of the second quarter.
"Despite treacherous financial markets, BlackRock generated earnings growth for the first quarter that we expect will compare favorably with our industry," commented Laurence D. Fink, Chairman and CEO. "More importantly, the ongoing strength of our fixed income investment performance should enable us to continue to increase market share over the remainder of the year. As a result, I currently remain comfortable with 2001 consensus estimates for BlackRock's earnings for the second quarter and full year."
First Quarter Highlights * Total revenue rose to $133.7 million, an increase of 24% from the $108.1 million reported for the first quarter 2000 and an increase of 4% compared with the fourth quarter 2000 total of $128.5 million. * Our pipeline of potential new business remained strong, with 178 fixed income searches totaling $25 billion and 110 equity searches totaling $8 billion. * Diluted cash earnings per share for the first quarter of 2001 were $0.43, a 26% increase versus $0.34 for the comparable period in 2000.
BlackRock's operating margin for the first quarter 2001 was 35.8% compared with 35.9% for the fourth quarter of 2000.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter of 2001 was $49.5 million, a 31% increase versus $37.8 million for the comparable period in 2000.
Total investment advisory and administration fees for the quarter ended March 31, 2001 increased $23.4 million or 23% to $125.3 million compared with the first quarter of 2000 primarily due to a 65% increase in separate account revenue. The increase in separate account revenue was driven by an increase in separate account assets of $27.4 billion or 26% and continued strong investment performance for alternative products which generated $16.5 million in performance fees for the first quarter. The increases in separate account fees were partially offset by a decline in mutual fund revenue of $4.2 million or 7.1% due to market depreciation in equity mutual fund assets. Other income increased $2.2 million or 36% largely due to increased sales of BlackRock Solutions' products. Operating expenses for the first quarter 2001 rose $15.8 million or 21% to $91.8 million. The increase was primarily attributable to a $14.8 million rise in compensation and benefits over half of which represented direct incentives on alternative product performance fees.
Compared with the fourth quarter of 2000, revenue increased $5.2 million or 4% in the first quarter of 2001. Separate account fees increased $4.4 million or 7% as a result of higher fixed income assets under management and included $2.0 million of performance fees on European equity institutional accounts. Other income increased $2.1 million, or 33%, as a result of a discretionary performance fee associated with, and increased sales of, BlackRock Solutions' products. Mutual fund fees decreased $1.3 million or 2% due to market depreciation in equity mutual fund assets.
About BlackRock. BlackRock is one of the largest publicly traded investment management firms in the United States with $201.6 billion of assets under management as of March 31, 2001. BlackRock manages assets on behalf of more than 3,300 institutions and 200,000 individuals worldwide through a variety of equity, fixed income, liquidity and alternative investment separate accounts and mutual funds, including BlackRock's flagship fund families, BlackRock Funds and BlackRock Provident Institutional Funds. In addition, BlackRock provides risk management and investment system services to a growing number of institutional investors under the BlackRock Solutions name. Clients are served from the Company's headquarters in New York City, as well as offices in Philadelphia, PA, Wilmington, DE, Edinburgh, Scotland and Tokyo, Japan. BlackRock is a member of The PNC Financial Services Group, Inc. (NYSE: PNC), one of the largest diversified financial services organizations in the United States, and is majority-owned by PNC and by BlackRock employees.
Forward Looking Statements. The third paragraph of this press release is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements with respect to the Company's future financial or business performance, conditions, strategies, expectations and goals may also be included in other portions of this press release and in other statements the Company makes. Forward-looking statements are typically identified by words or phrases such as "remain," "currently," "believe," "expect" "anticipate," "intend," "assume," "target," "estimate," "continue," "position," "prospects," "strategy," "outlook," "trend," and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "may" or similar expressions. BlackRock cautions that these 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 update forward-looking statements. Actual results could differ materially from those anticipated in these forward-looking statements and future results could differ materially from historical performance.
The following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the introduction, withdrawal, success and timing of business initiatives and strategies; economic conditions; changes in interest rates and financial and capital markets; the investment performance of BlackRock's advised or sponsored investment products and separately managed accounts; competitive conditions; capital improvement projects; future acquisitions; and the impact, extent and timing of technological changes and legislative and regulatory actions and reforms.
Please refer to BlackRock's Annual Report on Form 10-K for the year ended December 31, 2000 and subsequent reports filed with the Securities and Exchange Commission for a more detailed discussion of these and other factors.
BlackRock, Inc. Financial Highlights ($ in thousands, except share data) (unaudited) Three months ended March 31, December 31, 2001 2000 2000 Total revenue $133,709 $108,060 $128,540 Total expense $91,789 $75,942 $88,868 Operating income $41,920 $32,118 $39,672 Net income $25,496 $19,197 $24,546 Diluted earnings per share $0.39 $0.30 $0.38 Diluted cash earnings per share (a) $0.43 $0.34 $0.42 Average diluted shares outstanding 64,897,486 64,342,592 64,727,763 EBITDA (b) $49,531 $37,801 $47,745 Operating margin (c) 35.8% 36.4% 35.9% Assets under management ($ in millions) $201,636 $172,573 $203,769 (a) Net income plus amortization expense for the period divided by average diluted shares outstanding. (b) Earnings before interest, taxes, depreciation and amortization. (c) Operating income divided by total revenue less fund administration and servicing costs - affiliates. BlackRock, Inc. Financial Highlights ($ in thousands, except share data) (unaudited) Variance vs. March 31, 2000 December 31, 2000 Amount % Amount % Total revenue $25,649 24% $5,169 4% Total expense $15,847 21% $2,921 3% Operating income $9,802 31% $2,248 6% Net income $6,299 33% $950 4% Diluted earnings per share $0.09 30% $0.01 3% Diluted cash earnings per share (a) $0.09 26% $0.01 2% Average diluted shares outstanding 554,894 1% 169,723 0% EBITDA (b) $11,730 31% $1,786 4% Operating margin (c) Assets under management ($ in millions) $29,063 17% ($2,133) -1% (a) Net income plus amortization expense for the period divided by average diluted shares outstanding. (b) Earnings before interest, taxes, depreciation and amortization. (c) Operating income divided by total revenue less fund administration and servicing costs - affiliates. BlackRock, Inc. Condensed Consolidated Statements of Income (Dollar amounts in thousands, except share data) (unaudited) Three months ended March 31, March 31, December 31, 2001 2000 2000 Revenue Investment advisory and administration fees: Mutual funds $54,916 $59,100 $56,186 Separate accounts 70,385 42,770 66,008 Total investment advisory and administration fees 125,301 101,870 122,194 Other income 8,408 6,190 6,346 Total revenue 133,709 108,060 128,540 Expense Employee compensation and benefits 55,430 40,670 53,062 Fund administration and servicing costs - affiliates 16,690 19,759 18,164 General and administration 17,055 13,100 15,029 Amortization of intangible assets 2,614 2,413 2,613 Total expense 91,789 75,942 88,868 Operating income 41,920 32,118 39,672 Non-operating income (expense) Investment income 1,862 1,050 3,070 Interest expense (201) (353) (201) 1,661 697 2,869 Income before income taxes 43,581 32,815 42,541 Income taxes 18,085 13,618 17,995 Net income $25,496 $19,197 $24,546 Weighted-average shares outstanding Basic 64,159,248 63,864,382 63,930,387 Diluted 64,897,486 64,342,592 64,727,763 Earnings per share Basic $0.40 $0.30 $0.38 Diluted $0.39 $0.30 $0.38 NM - Not meaningful BlackRock, Inc. Condensed Consolidated Statements of Income (Dollar amounts in thousands, except share data) (unaudited) Variance vs. March 31, December 31, 2000 2000 Amount Percent Amount Percent Revenue Investment advisory and administration fees: Mutual funds ($4,184) (7.1%) ($1,270) (2.3%) Separate accounts 27,615 64.6 4,377 6.6 Total investment advisory and administration fees 23,431 23.0 3,107 2.5 Other income 2,218 35.8 2,062 32.5 Total revenue 25,649 23.7 5,169 4.0 Expense Employee compensation and benefits 14,760 36.3 2,368 4.5 Fund administration and servicing costs - affiliates (3,069) (15.5) (1,474) (8.1) General and administration 3,955 30.2 2,026 13.5 Amortization of intangible assets 201 8.3 1 0.0 Total expense 15,847 20.9 2,921 3.3 Operating income 9,802 30.5 2,248 5.7 Non-operating income (expense) Investment income 812 77.3 (1,208) (39.3) Interest expense (152) (43.1) -- NM 964 NM (1,208) (42.1) Income before income taxes 10,766 32.8 1,040 2.4 Income taxes 4,467 32.8 90 0.5 Net income $6,299 32.8 $950 3.9 Weighted-average shares outstanding Basic 294,866 0.5% 228,861 0.4% Diluted 554,894 0.9% 169,723 0.3% Earnings per share Basic $0.10 33.3% $0.02 5.3% Diluted $0.09 30.0% $0.01 2.6% NM - Not meaningful BlackRock, Inc. Condensed Consolidated Statements of Financial Condition (Dollar amounts in thousands) (unaudited) March 31, December 31, 2001 2000 Assets Cash and cash equivalents $145,377 $192,590 Accounts receivable 86,430 83,284 Investments 20,703 13,316 Property and equipment, net 50,658 45,598 Intangible assets, net 189,528 192,142 Other assets 7,747 10,073 Total assets $500,443 $537,003 Liabilities and stockholders' equity Accrued compensation $52,556 $130,101 Accounts payable and accrued liabilities 36,544 27,014 Acquired management contract obligation 8,040 8,040 Other liabilities 1,489 3,607 Total liabilities 98,629 168,762 Stockholders' equity 401,814 368,241 Total liabilities and stockholders' equity $500,443 $537,003 BlackRock, Inc. Condensed Consolidated Statements of Cash Flows (Dollar amounts in thousands) (unaudited) Period ended March 31, 2001 2000 Cash flows from operating activities Net income $25,496 $19,197 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 5,749 4,633 Stock-based compensation 2,098 149 Tax benefit from stock-based compensation 5,127 -- Changes in operating assets and liabilities: Increase in accounts receivable (3,599) (7,796) Decrease in receivable from affiliate 453 1,165 Decrease (increase) in other assets 2,326 (1,738) Decrease in accrued compensation (71,521) (51,550) Increase in accounts payable and accrued liabilities 9,530 4,138 Decrease in accrued interest payable to affiliates -- (705) Decrease in other liabilities (2,118) (2,315) Cash used in operating activities (26,459) (34,822) Cash flows from investing activities Purchase of property and equipment (8,195) (5,630) (Purchase)/sale of investments (5,961) 41 Cash used in investing activities (14,156) (5,589) Cash flows from financing activities Repayment of note and loan payable to affiliates -- (28,200) Issuance of class A common stock 203 162 Purchase of treasury stock (6,472) -- Reissuance of treasury stock 194 -- Cash used in financing activities (6,075) (28,038) Effect of exchange rate changes on cash and cash equivalents (523) (10) Net decrease in cash and cash equivalents (47,213) (68,459) Cash and cash equivalents, beginning of period 192,590 157,129 Cash and cash equivalents, end of period $145,377 $88,670 BlackRock, Inc. Assets Under Management (Dollar amounts in millions) (unaudited) March 31, December 31, 2001 2000 2000 Separate Accounts Fixed income $107,371 $77,595 $103,561 Liquidity 5,713 7,811 6,495 Liquidity-Securities lending 7,514 11,299 11,501 Equity 7,796 6,414 8,716 Alternative investment products 4,317 2,230 3,470 Subtotal 132,711 105,349 133,743 Mutual Funds Fixed income 13,600 13,923 13,317 Liquidity 44,252 36,862 43,190 Equity 11,073 16,439 13,519 Subtotal 68,925 67,224 70,026 Total $201,636 $172,573 $203,769 Component Changes in Assets Under Management Period ended March 31, 2001 2000 Separate Accounts Beginning assets under management $133,743 $99,220 Net subscriptions (redemptions) (2,974) 3,807 Market appreciation 1,942 2,322 Ending assets under management 132,711 105,349 Mutual Funds Beginning assets under management 70,026 65,297 Net subscriptions 876 760 Market appreciation (depreciation) (1,977) 1,167 Ending assets under management 68,925 67,224 Total $201,636 $172,573 Net subscriptions (redemptions) ($2,098) $4,567 % of Change in AUM from net subscriptions (redemptions) 98.4% 56.7% BlackRock, Inc. Assets Under Management Quarterly Trend (Dollar amounts in millions) (unaudited) Quarter Ended 2000 2001 March 31 June 30 Sept. 30 Dec. 31 March 31 Separate Accounts Fixed Income Beginning assets under management $73,120 $77,595 $83,950 $96,791 $103,561 Net subscriptions 2,430 5,756 10,606 2,776 699 Market appreciation 2,045 599 2,235 3,994 3,111 Ending assets under management 77,595 83,950 96,791 103,561 107,371 Liquidity Beginning assets under management 7,902 7,811 7,052 5,147 6,495 Net subscriptions (redemptions) (114) (779) (1,925) 1,321 (813) Market appreciation 23 20 20 27 31 Ending assets under management 7,811 7,052 5,147 6,495 5,713 Liquidity-Securities lending Beginning assets under management 13,032 11,299 10,655 10,843 11,501 Net subscriptions (redemptions) (1,733) (644) 188 658 (3,987) Market appreciation -- -- -- -- -- Ending assets under management 11,299 10,655 10,843 11,501 7,514 Equity Beginning assets under management 3,080 6,414 7,621 7,500 8,716 Net subscriptions 3,113 1,387 442 1,282 445 Market appreciation (depreciation) 221 (180) (563) (66) (1,365) Ending assets under management 6,414 7,621 7,500 8,716 7,796 Alternative investment products Beginning assets under management 2,086 2,230 2,394 2,818 3,470 Net subscriptions 111 95 336 584 682 Market appreciation 33 69 88 68 165 Ending assets under management 2,230 2,394 2,818 3,470 4,317 Total Separate Accounts Beginning assets under management 99,220 105,349 111,672 123,099 133,743 Net subscriptions (redemptions) 3,807 5,815 9,647 6,621 (2,974) Market appreciation 2,322 508 1,780 4,023 1,942 Ending assets under management $105,349 $111,672 $123,099 $133,743 $132,711 Mutual Funds BlackRock Funds Beginning assets under management $27,339 $29,280 $28,262 $27,819 $26,359 Net subscriptions (redemptions) 994 (168) (455) 1,463 65 Market appreciation (depreciation) 947 (850) 12 (2,923) (2,041) Ending assets under management 29,280 28,262 27,819 26,359 24,383 BlackRock Global Series Beginning assets under management -- -- -- 54 75 Net subscriptions -- -- 54 18 43 Market appreciation (depreciation) -- -- -- 3 (13) Ending assets under management -- -- 54 75 105 BPIF* Beginning assets under management 25,554 25,755 25,615 27,580 36,338 Net subscriptions (redemptions) 201 (140) 1,965 4,662 709 Exchanges -- -- -- 4,096 -- Ending assets under management 25,755 25,615 27,580 36,338 37,047 Closed End Beginning assets under management 7,340 7,560 7,583 7,634 6,764 Net redemptions -- (30) -- (954) -- Market appreciation 220 53 51 84 77 Ending assets under management 7,560 7,583 7,634 6,764 6,841 Short Term Investment Funds (STIF)* Beginning assets under management 5,064 4,629 4,205 4,622 490 Net subscriptions (redemptions) (435) (424) 417 (36) 59 Exchanges -- -- -- (4,096) -- Ending assets under management 4,629 4,205 4,622 490 549 Total Mutual Funds Beginning assets under management 65,297 67,224 65,665 67,709 70,026 Net subscriptions (redemptions) 760 (762) 1,981 5,153 876 Market appreciation (depreciation) 1,167 (797) 63 (2,836) (1,977) Ending assets under management $67,224 $65,665 $67,709 $70,026 $68,925 * During the fourth quarter of 2000, $4.1 billion of STIF assets under management were exchanged into the BPIF product.
SOURCE: BlackRock, Inc.
Contact: Paul L. Audet of BlackRock, Inc., 212-409-3555, or
invrel@blackrock.com
Website: http://www.blackrock.com/