BlackRock, Inc. (NYSE:BLK) Q1 2019 Earnings Conference Call - Final Transcript

Apr 16, 2019 • 08:30 am ET


BlackRock, Inc. (NYSE:BLK) Q1 2019 Earnings Conference Call - Final Transcript


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Good morning. My name is Gigi and I will be your conference facilitator today. At this time, I would like to welcome everyone to the BlackRock Incorporated First quarter 2019 Earnings Teleconference. Our host for today's call will be Chairman and Chief Executive Officer, Laurence D. Fink; Chief Financial Officer, Gary S. Shedlin; President, Robert S. Kapito, and General Counsel, Christopher J. Meade. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer period. (Operator Instructions)

Thank you. Mr. Meade, you may begin your conference.

Christopher J. Meade

Good morning, everyone. I'm Chris Meade, the General Counsel of BlackRock. Before we begin, I'd like to remind you that during the course of this call, we may make a number of forward-looking statements. We call your attention to the fact that BlackRock's actual results may, of course, differ from these statements. As you know, BlackRock has filed reports with the SEC, which lists some of the factors that may cause the results of BlackRock to differ materially from what we see today. BlackRock assumes no duty and does not undertake to update any forward-looking statements.

So with that, I'll turn it over to Gary.

Gary S. Shedlin

Thanks, Chris, and good morning everyone. It's my pleasure to present results for the first quarter of 2019. Before I turn it over to Larry to offer his comments, I'll review our financial performance and business results. While our earnings release discloses both GAAP and as adjusted financial results, I will be focusing primarily on our as adjusted results.

BlackRock generated $65 billion of total net inflows in the first quarter or 4% annualized organic asset growth, reflecting our differentiated solutions-based approach to addressing client needs.

Our first quarter results reflect the benefits of our integrated business model and the investments we've made to diversify our investment platform, enhance our risk management and technology capabilities and build local expertise at global scale.

First quarter revenue of $3.3 billion was 7% lower than a year ago, reflecting the impact of fourth quarter equity market declines on our 2019 base fee entry rate. Operating income of $1.2 billion was down 11% compared to a year ago, while earnings per share of $6.61 was down 1% as lower operating income and a higher effective tax rate were partially offset by higher non-operating income and a lower share count in the current quarter.

Non-operating results for the quarter reflected $135 million of net investment income driven by higher marks on our unhedged seed capital investments and the revaluation of certain strategic minority investments.

Our as adjusted tax rate for the first quarter was approximately 22% and included a $22 million discrete tax benefit related to stock-based compensation awards that vested during the quarter. We continue to estimate that 24% is a reasonable projected tax run rate for the remainder of 2019, though the actual effective tax rate may differ as a consequence of non-recurring or discrete items and issuance of additional guidance