Blackrock Beats on the Top and Bottom Line as AUM Hits Record

Investment management giant Blackrock BLK reported first quarter 2013 results early Tuesday morning that beat analyst estimates. Blackrock beat both on the top and bottom lines as assets under management at the firm grew 7 percent year-over-year to a new record level.

For the first quarter of 2013, Blackrock reported adjusted earnings per share of $3.65 compared to analyst estimates of $3.58. Revenue was also strong in the quarter at $2.45 billion vs. $2.43 expected by analysts.

Blackrock noted that assets under management grew to a record $3.936 trillion in the first quarter of 2013, representing 7 percent growth from the same period a year ago. To put the figure into perspective, that is about 25 percent of the GDP of the U.S. Along with this growth in AUM, Blackrock announced that it saw $39.4 billion in net long-term inflows.

Also in the quarter, Blackrock returned more capital to shareholders reflecting the company's commitment sound capital management. In the first quarter, the company increased its dividend by 12 percent to $1.68 per share and also repurchased $250 million in stock.

“Our strong first quarter financial results, with revenue up 9% and EPS up 16% year-over-year, once again demonstrate the strength of our diversified business model,” commented Laurence D. Fink, Chairman and CEO of BlackRock. “Our $39.4 billion in long-dated net new business for the quarter is indicative of positive momentum across all client channels and was driven by the strategic themes we continue to focus on: ETFs, retirement, income, multi-asset class products, and alternatives.”

“Aging populations are living longer worldwide at the same time that global monetary policies have reduced interest rates to historic lows. Now, long-dated fixed income instruments traditionally used to fund retirement obligations carry asymmetric risk for investors looking to match retirement assets and liabilities. This is having a significant impact on where we're seeing asset flows as investors seek other sources of yield, including from equities, where we witnessed a record $34 billion in net new flows.”

“iShares maintained its leadership position in the global ETF market, capturing $26 billion in net new business, as we continued to see adoption of ETFs across both institutional and retail investors globally. We signed a critical new strategic alliance with Fidelity Investments to deliver Fidelity's more than 10 million clients increased access to iShares products, tools and support, and create a powerhouse ETF offering for the self-directed investor in the U.S. market. iShares has increasingly become a leading indicator of investor sentiment and, during the quarter, investors turned to iShares as a way to quickly and efficiently increase their exposure to equity markets."

“Our institutional clients also displayed an expanded appetite for risk and holistic portfolio solutions, generating strong net inflows in multi-asset products, including our LifePath® target-date funds where we now manage $62 billion, a 38% increase year-over-year. BlackRock Solutions posted another strong quarter and continues to expand globally."

"Our Aladdin assignments generated year-over-year revenue growth of 11% driven by several successful implementations and a growing global client base. Clients are increasingly using Aladdin across multiple asset classes as they consolidate investment systems. Including two substantial new client wins in April, we have added seven Aladdin assignments in 2013 and we are implementing programs totaling close to $1.3 trillion in new assets."

“During the quarter, we continued our efforts to reshape the organization and invest in developing top-tier talent. We have made a number of internal moves to create opportunities for high performing employees and to add talent in key areas to enhance the experience for our clients. Since our acquisition of Barclays Global Investors, the Company has added more than 1,500 employees globally and expects incremental net additions by the end of this year."

“Our first quarter results give us confidence that we have positioned BlackRock to continue to deliver for our clients and shareholders across all market environments,” said Mr. Fink.

Blackrock shares traded modestly higher in the pre-market following the news. Shares gained 0.45 percent to $255.00 per share as of 6:49 am eastern.