TROW - Earnings call 4 2023 | T. Rowe Price Group, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Norma, and I will be your conference facilitator today. Welcome to T. Rowe Price's Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded and will be available for replay on T. after to concludes. I Linsley shortly the now website over call Carruth, Price's the will call turn Rowe T. Rowe Price's Relations. Director of Investor ahead. go Please

Linsley Carruth

Hello, Today's press joining quarter for found on materials and for website be last thank fourth at approximately IR our minutes. investors.troweprice.com. document us can earnings will and release today The our the call supplemental call. you XX

statement XX Investments, of make release. All to company's Sharps; non-GAAP like and Jen during Dardis groups. and reconciliations questions. groups about Global President, measures. results call, materials of language this the GAAP discuss Rob using your forward-looking in CFO, certain course call the may and forward-looking references peer the well performance open reference Eric on CEO to press we'll will and statements Our our a Head today's Veiel as to in that are supplemental then it the Please minutes, number for peer financial to and as investment the refer we of remind to up you Morningstar Instructions]. I'd [Operator

Now I'll Rob. to turn it over

Robert Sharps

Thank you, thanks of all for us. Linsley, to joining you and

to expanded on focus in cover investment I superior Jen Eric XXXX Before turn pursuing strong our as of want organization, I get share him November, will Jen, I his provide role. on investment by experience. of results. With to extensive Head our who for today's outcomes clients, will his results. we that, both on followed was and to will will congratulate financial Eric update leadership he named our and Global that continue recognition started, in well Investments late his as know I

to progress. outflows, our with firm positioned work challenging future was XXXX also and for improved, is advanced we brought performance year a While important growth. substantial Investment ensure us net for it

early a We number are our ahead. are of that better indicators days support seeing that already confidence

pursuing and clients track excellence. and record long first a of solid have We putting

our associates As we on confident our our clients, shareholders. tradition, that near anniversary, value delivering will I am we and our XXth build for this compelling

progress mentioned, As I strategic against XXXX. our we made priorities meaningful in

in Emerging our Bond and the ETF the tax-aware Price pre-retiree Private a Our demonstrates channel. under investors income-oriented strategies. emerging at expanded deepens already Inc. with product broadening management will Blue to pioneering capital partnered private launched the Rowe Fund fund. acquisition as to with over expand We Price assets our is Income the bond a to management OHA Price for early of our and by strategy T. We and T. blue focus Capital the stages markets. We gaining appreciation that investable over the Fund, clients ability bringing create this retirement billion Rowe on of $X.X our companies launch end with or leader. OCREDIT, January. capital Corporation claiming retiree acquired Strategy, the Appreciation security Select Rowe capabilities active are seeking operating and Retiree $X.X retirement of T. This strong Credit with the billion retirement evolving of and wealth We with business an Finance in position our to retain International enhance providing and social income Economy to commitment Markets suite relationships and traction

characterize strong engagement accumulation. as levels. to collaboration investment including inflows continue we The on pre-pandemic billion this I of industry-leading moving performance an last Building and target and healthy add net year. to $XX.X in date our position investment what and have got beyond among We new our teams with franchise, back innovate capabilities strength, would

platform our around delivers and how together corporate opportunities. for This teams, debating risks and on the engaging investment is clients. management thrives with energy culture our Our teams its traveling best

more, demand confidence clients a our with and markets there pace Leading that as support vehicles, experiences. slower are will capabilities and ready net we indicators new additional of our and compete to this evolving year. be new are We outflows

We the in recently strategic redemptions elements seeing any reduce for the in selected platform having wealth our in balance initiatives firm will that billion saw a and with end are flows of multi-asset and solid, sales XXXX. segment of delivering. rebound custom improved large gross growth in And the last U.K. our sheet investor EMEA, we XXXX. Key net are management our U.S. channel expect XXXX in wealth gross management funds over discretionary to performance We by highest seeing years. We're challenging the fund. Despite individual in remains quarter momentum with improving manage positive QX sales QX. in of $X.X large-cap of cash year, a income at a were investments X

highlighted increased prioritize for support and We forward. buybacks the want M&A. opportunistic seed I've dividend continue XXth a associates' while to client the commitment which year. I potential $X.XX, ample liquidity to investment driving is to our corporate progress that of recently the our maintaining of program, underscore strategy to capital to announced and a dividend our to quarterly We consecutive superb excellence, result service

to grateful the are work Eric. will and are we hard for confident together, return firm to their growth. I'll now organic We that, turn

Eric Veiel

which are most or and marked beat Capital fund consecutive by Giroux, the has Fund record X- Fund, also equity Fund done managed Appreciation peer Research X-, in same with periods. XXXX for resulting the Rob. income both average, the medians Strong year Morningstar latter year. in a performance After Equity Mid-Cap David in time portfolio rebounded quarter, our beating fixed quarter, investment XXth top group calendar included indices. equity under year calendar their Fund, and the X-, the XX-year for delivered Capital asset of the multi-asset our XX% and that U.S. group its so the part our tying Appreciation quartile fourth years, of peer markets performers you, manager. for performers retreating classes, funds solid most equity we returns Value strong Across Thank in third the U.S. the

year. the in set peer equity with investment products retirement their recent over XXXX all the quartile their delivered strategies date newer of driven return our X fundamental outflows large-cap XXXX, choices. Strong had medians Blend the our and both X for performance XXXX suite Our a for top of Russell in suite a quartile with strong flagship continued while the top the growth in growth funds X-year just delivered half of have the year. largest names multi-asset benchmark from challenges target in our much large-cap performance of for Growth beating from alpha XXXX, vintages came the that and around over performance all funds turning the the of XX% year Overall, group suite wider

funds Funds performer X- of top XX% of our its private performers performance. Our the adding had our share XX-year strong group performance a its for fixed and a to in and were strategies about investment absolute want medians. notably, performance. Investment with the their our generating income quartile across top and for Bond the including to Fund High benchmarks funds, highlights Duration alternatives peer Global Several beating outperforming year group peer solid year. Multi-Sector all liquid strategies decile Low their year, Most attractive was in I platform. XXXX, franchise few platform Muni Yield, noninvestment-grade with top the International, was

the and research-driven a organization, rigorous investment professionals our process our insights platform. to investment globe research generated around over XXX leverage by adhere investment fundamental As our

in including last past years. very XX OHA. of tenure the Rowe year saw we've Over than for ranks, We doubled T. years, of the investment the XX and turnover little up more TRPIM professional average scale the manager with portfolio the addition at

Importantly, our access as our team these the proprietary engagement year in-house corporate large Rob last capabilities, were in conducted majority levels. meetings due of to is back We XX,XXX to diligence in meetings held part over person. thanks and referenced, pre-pandemic

large Our analysts in research trips field and small. engaged and PMs

for across emerging has generate expertise. over with their to in markets performance peers its Their on to XX digging insights seen earlier, U.S. to can over area delivered our and spend deep less For demonstrated the quartile contributing team analysts our and across alpha top equity China, the with of versus traveling research TRPA example, be time strength our in mentioned I platform XX addition error. portfolio members tracking it consumer industrial of X topics ability technology, clients sectors. The strategy, focus key research week of the

equity We global have this a over research leverages broadened that the XX now insights of strategy offer and approach analysts. global

by Our data and enabling be our the ideas insights investment with data analysts. like to professionals more data capabilities and managers team large to to leveraging collaboration science insights language generating our in of efficient our portfolio delivery is improve team investment and models

investment has Core, equity by U.S. our promising professionals in Small-Cap understanding start help tool our in beta impact informed across Our objectives. related integrated the This established they with a and deliver make core. including and how is our strong large to and recently that us continue be decisions represents builds ESG and a of area. We which demonstrated systematic processes company's to and specific teams of Mid-Cap capability continued our allow variety research.ai is ESG will fundamental clients AI for solutions fundamental and what strategies sure the managers a performance. portfolio equity risks And to to strategies, U.S. XX to team generative this an results wide Value investment equity global versions success their tailored investment strong to combines customized Large Growth, Cap may of the upon test capability opportunities

in to of Strategy now and performance of responding is top Price and Jen so. I'll investment the rooted to Economy depth over culture to pillars process Bond Emerging developing Pursuing our new The tools T. platform, to that be Markets our clients We the it like demand us to Rob mentioned. investment remains cover gives breadth Blue are financials. our our Rowe excellent able X which and client priority. turn people, do for also products our

Jen Dardis

financial then open results, you, will I'll we the questions. Eric. for review and Thank line our

down per earnings outflows and us had in to XXXX higher for lower in $XX.X We from revenue $X.XX outflows $XX.X XXXX $X.XX AUM was billion. adjusted year. the share average year Our from quarter, to net XXXX and expenses. advisory bringing this billion was $X.XX QX for full investment bringing

outflows. In be we XXXX and appetite. elevated outflows. DC net net net asset-class in During higher in that an redemptions main that Value to institutional may From continued a channel, driver equity risk outflows seeking sub-advisory retirement positive the a fourth XXXX, our Stable flows of channels U.S. posted net toward or delivering strong yield perspective, quarter, of in a handful reorienting be large the our sign had investors after sizable

both smaller intermediary and are seeing in We signs ticket encouraging improving with channels. in retail net business direct our our flows

Our target year. posted flows for and alternatives $XX.X billion net date suite positive the of with flows ended the also year positive

annual over the across of on of materials. There equity Bond, detail XX signs products version Additional Core flows on can and of be found in Global some our Opportunities, $X XXXX. strength Multi-Sector International Appreciation, all also our delivering with alternative Capital in individual and net billion positive flows income supplemental Page are All-Cap fixed

Looking revenue at for adjusted year our income full our were bringing billion. $X.X statement. $X.X revenues the adjusted billion net QX quarter, total to

advisory was based lower than higher Our $X.X QX revenue last QX in the $X.X of trend the billion billion earned XXXX but overall than the was year about year, on for average investment assets. of full

in products million our rate have XXXX performance-based in effective on quarter. fee was QX over these fourth with fees, the to more $XX alternatives predominantly would crystallized points fee QX performance-based rate rate. of in fees, fee been in effective a the up XX.X QX Our basis Without little line due that

QX were advertising to and promotion, billion, included $X.X fees. related to higher quarter, compared professional as I stock-based Turning QX mentioned adjusted compensation last QX to expenses seasonal operating expenses, expenses and

lower XXXX, XXXX's carried were benefit excluding XXXX expense, adjusted due provided the in XXXX $X.XX over improved to markets excluding investment $X.XX we of up in tax market-driven be XXXX. to have in XXXX a to X% provided to is to expense capital we've maintaining shares guidance XXXX expected the buybacks on conditions up previously quarter, XXXX the increased non-GAAP expenses, our in this to carried during the G&A X% We on back Full X%. Based bringing and and reflecting range support expenses with business impact a growth. to rate operating to included operating jurisdictions. Despite year to equity X% adjusted billion committed remain to billion, million, the effective equity U.K.-based anticipate buy quarter, last markets be future million of strong returning allowances nonrecurring in XXXX's related As and the and certain XXXX billion. $X.XX challenging balance expenses. to the from of continued our our we the of the within sheet QX previously brand rate and expenses, This We also bought income will start X% XX% lower tax apportionment state XXXX total we guidance worth in expect slightly in is to up interest shares over valuation range stockholders. increase over rules average XX%, a interest $XXX associated XXXX. our market $XXX year, during the fourth back expected

our on and allow opportunities while the buybacks the As financial for size with also Rob strategic firm. open our a fund XXXX arise. We share along remain annual of and $X.XX while positions increase. financial is strategically focused operator cash structure a existing efficiency the ensuring our the and position the last proactively XXXX. growth the allows or questions. investment $X.XX to through million to future in M&A for stockholders This investing $X.XX to the billion continued to week, pursue mentioned, for support seed while scale appropriate flexibility priorities in we us share also to dividend buybacks, of course process from and returned This us that, of cost of end share, strong we've continued opportunistic to to capital expenses managing quarterly and dividend over discipline, line expenses modest announced dividend to Between as position our over our like increases commitment the per $XXX the the ask our expenditures. With improvement increasing reallocation I'd per in of

Operator

question [Operator comes first Dan Our line with Instructions] from of Jefferies. the Fannon

Daniel Fannon

I improvements. your Rob, could was hoping around comments upon XXXX expand you or enhance

highlighted sales performance gross trends investment you has fourth think better. I gotten quarter, we in the know plus some improving,

And as profile a redemptions tracking? about So the the sales more year, outlook. color maybe the start little maybe positive how just curious we are around

Robert Sharps

Dan, thank you for the question.

outflows, for expect but we that is XXXX. have improvement will case Our XXXX base from we do

in First, the with that the 'XX in XXXX client and had most that translate are improve strategies of and over time. should already. XXXX, evidence fact, performance sales seeing And better investment we outflows substantial in into lower redemptions much

risk strategies. feel position think handful better are in XXXX. I'd going go and into a we other gross And we the look there. improvements you look in continued going to How terminations forward. I our from and all notified execution that be is be determined. that strategic some on I confident early-stage think say, combine some better an some -- -- and contingent dependent horizons marketplace of it momentum and the levels more I'm time of investment of and we're out see to when were of our as in to beginning One, we initiatives, build from It's performance You're expect into if reengages OHA sales risk those we To the like this I point vehicles, if with 'XX, contribution some risk from on in a perspective, on things. will sidelines see or at sales you is some money some of year. some lengthening I better, like new at a ETFs extent, momentum time appetites I'd much beginning extends appetite we build it's SMA feel And of volatility. our greater to meaningfully the contingent horizons. as at on than

channels and of our I'm But across as look are across a I our distribution where encouraged. areas number there strategies,

seasonally. nonetheless, an XXXX. But modest, flows year net which in RPS January first had another and we shy flows since we strong were think We beyond were is just target to year First whether unusual billion. where in wealth $X but market core we where XXXX. that, QX are or USI we've are date, pockets trends. better target retirement there see in investment, positive or beginning it's in in XXXX dates flows excellent QX, foremost, had had individual of date I They expect our

throughout of that, think I than we of had have course the that better a the will year in in 'XX build pretty I we're 'XX, momentum year. So confident light we'll in and think we

Operator

Our next the question with Mike comes of KBW. Brown line from

Michael Brown

would in is billion capital. next investment where right? the So $X.X here start business? for a in is Wanted you could OHA. the progress going currently? incremental there, of has investable How the the into of to Where on any And monthly the been XXXX? OCREDIT then chapter where around you investments characterize there dollars give you Can have that the us just into with OHA perhaps how flows flows view have and view story

Robert Sharps

question. Thank for Sure. you the

difficult to end over of throughout credit BDCs home went and made Specifically be Price environment of we wealth platforms. a on in channel, the with $XXX the relationships momentum to SEC, QX channel expect performance. But with throughout raised and OCREDIT credit will to success market as track amount differentiate since long-term Rowe very on adviser the September, that both additional million we lead products. and with issuers and T. regard in OCREDIT launch a and the follow-on benign and OCREDIT, relationships very broker-dealer record and credit and we when field similar wealth the with combination and combined office T. it build of continue support, the I'd Rowe has course to say we effective with the the in competitive to OHA's private OHA's of Price's it's confident non-traded year private for the course

they're alternatives from in point. in in private capital are relationship AUM there. Look, with up fee-basis just under and are for OHA, that to Price regard with at back and commitments have They step alternatives we're billion they uninvested XXXX. Rowe T. this interested alternatives evaluating as us a XX% wealth their that $XX take our and build was if OHA market the hearing platforms products We in follow-on you

$X a pretty in will You But we'll an slightly momentum in for this that that, alternatives in OHA report see January confident year. building when we're in we redemption and expect category. even despite flows we acceleration billion XXXX, monthlies over the see

some capital I think raised the of and in was it's that is XXXX deployment important remember to distressed trigger-based. OHA for for

flows you will the very But performance it's look OHA it's deployed. strategies, So strong. at only of if go that into underlying as

particular, at part the our It's and where as in days which been been the in you market it's closed senior as early has and is been private a I a strong seed that's it's credit look but of healthy is If fund, interest deal and say from OHA demand we there, has dedicated since the launching market investors. lending in OLEND, encouraging pipeline, and anchor strong. very initially, private would

when the over more confident in course will become collectively, and years it of build the So and year OHA 'XX come. to from contribution we that at substantial look beyond, we're this and

Operator

Siegenthaler Craig Our comes Bank the of next America. from of question with line

Craig Siegenthaler

My fixed in question income is on the flows, inflected negatively quarter. the which

that, tax some was I record market and about harvesting, industry extensions but think and money So Fed of how corner the the so especially seasonal rebalancings we the for forward AUM should with not sidelines? potential the given loss think, reoccurring, duration trajectory, cuts also to on around related and rate

Robert Sharps

you Yes, the for Craig, thank question.

sidelines look absolute fixed of do income we for that the better that given to think will higher return. off and as anticipate I comes rates some that it money potential

capabilities. fixed underestimated we're look, think income our terms I in of think -- I

good returns, and deepening fixed a plus vehicles aggressively. number attractive Global and platform team in have sectors and focused more capabilities also and with and we the global a QM on rates, to results sales our with We income. higher We're in very of compete core, go-to-market strategies across including offering income fixed intend new Multi-Sector launching total Bond. strong With a

redemption to a saw what sizable and it short consider relates flows as going in flows, forward. be Specifically, much was of you duration predictive strategy, to of wouldn't I QX a that

value fixed We short we saw people and the franchise, meaningful wanted and as investments, which other bit be also our rates were it's really and growing and XXXX, going about But side an we environment area are of we income, duration benefited on the have rising in stable I where a in potential are XXXX. intent to rate a forward. making little in rate pretty from that floating as think

Eric Veiel

to I put our Rob And emphasize I The income I as add, well. would is team and I simply would who think to some where our folks the strong covered think together the a Rob also I do Husain, view product the in -- think team year leading broadly, Arif really and add to municipal we I just back market extent fixed motivated. that. that is just highly taxes mentioned, on, would is to have the a that, just that capabilities, our into plan winds highly well. it very motivated to interesting come as strong, for have have sectors we team is very performance. area as

Operator

comes of Our line next question Kenneth Worthington with from the JPMorgan.

Kenneth Worthington

U.S. of Investors side X.X% U.S for what versus what new opportunity think, term? the Can I'm the -- of and account changes accomplish? you you sorry, in third, will non-U.S. domiciled flesh the for, expect hope out over of the And outside you do announced first, you I U.S.? Second, focused business the resources the management the outside there intermediate managers your the non-U.S. on you growth do go the to Where business. are that some your expect today. what business portion

Robert Sharps

in was The other relative X? one were U.S. last question versus EMEA and Ken, What APAC more time. the growth

Kenneth Worthington

Yes.

announced focus the new week week. first some is want those earlier I the management managers of are portion focused the business, this you what or The last to changes are on? you business. What on non-U.S. non-U.S. your opportunities And to resources think, late

Robert Sharps

first. Yes last -- from I'll take -- the one

it is that from what not that But the we of to arithmetic off We would greater to expect in that relative relatively is small which growth given we challenging, of. the U.S. be a base that need outside of the U.S. than grow have

to Japan, our Pacific the we're and number in expect of a the several Germany, Australia, those and each EMEA, U.K. markets have We areas the we concentrating both course and resources. would are markets outside Asia next the Canada. really focus Italy, over And where U.S. the U.S. of meaningfully of of outgrow those the years.

look would have I the over to were say, many and go if flow a EMEA couple from but last I think contribution reasonably positive contribution had in consistently fact, had year our several of In XXXX, years positive at XXXX. APAC, years from before back trends you'd I years, before to each we we think you of

In the U.S. of terms of resources the outside

I those global think it's first to some important are decked that strategies. against investment realize of

all the we them are U.S. have So are professionals not that of those U.S. of specific to associates are But outside about multiregional of global of X,XXX AUM and leveraging raised associates X,XXX strategies. for number domiciled Again, of those we are people outside investment the and roundly a

and I not the may right may look domiciled at if look if about associated other that clients you I some -- think and you're we and meaningful to be profitability you at against be the at the So businesses our those of direct from say EMEA account profitable, those. it. What expenses revenue way look is the and you thinking APAC regions there, not our that allocate will deck are expenses

those are I built that ahead. areas. We also profitable in And we've think

we've meaningful investment the made as So get in can we've we some global of well that leverage platform where existing investments off as the those areas very that developed. are distribution

Operator

line next comes Our Hawken Brennan with UBS. from question of the

Brennan Hawken

in right OHA, time? about And fees flat be know performance it think we possible But it I that the fee quarter-over-quarter. fourth said from that should you and that those impact quantify is from performance to rate happening come that in ex is SMAs Jennifer, dollars? fee within would quarter just to the time the

Jen Dardis

the the in in question, the it can the -- you during that's yes, given think specifically kind typically the through for ones of the for yes, accounts be. would are fourth $XX thanks, of quarter, the OHA And most happen of they those And year. as And year. the but that QX. performance-based crystallize number was These million know, has was Brennan, I've I a commentary number So amount fees. happened

Operator

our And with from Alexander line question the Blostein next Goldman comes of Sachs.

Alexander Blostein

a I share you a your think on hoping quarter, you buyback could in seeing first active to repurchases pickup, alluded far was of guess, commentary, so expand on fourth the I quarter. I and remaining in the bit

Given obviously flow us T. of help balance is XXXX? for just generation, cash you and opportunity strong can what robust Rowe's kind frame the sheet buyback

Robert Sharps

Sure.

the regular position Our priorities We to But repurchase. I'd the say present changed of generate regard muted buyback with first themselves. that year second, dividend to we protect given the in foremost, want ourselves with free dividend. as haven't company; to changed. and a appropriate flexibility make put also raise the opportunities regard invest have acquisitions and and in capital allocation to flow been share what margin after our kind the a lot lower have cash flow was historically more the opportunistic to has and last of was the cash

objective XXXX to not the opportunities order we'll opportunistic, of count based in go saw think will the repurchase taking think potential we over it's going that an planning, on back of and in marketplace a year XXXX. over billion of I or to shares. And years before share course $X our take of you about be lower. the levels you for think I the if I have But advantage magnitude the time, the to

flow, think the there that's of of bit potential So strong the And lot but we cash I variability of our think opportunity, a to we do there you case. could as a Alex, a base contingencies quite are that. around could be and about levels XXXX certainly right a would balance outspend given as but you have sheet on base the and have of kind note, case,

Operator

Cyprys Morgan Our with of line next Stanley. from the question Michael comes

Michael Cyprys

Great.

just T. be on could helping of M&A could at to there, was hoping the then it enhance come I you comment the commentary you how on profile maybe this about back bit And this you set thinking to wanted to opportunity Inc. broadly, Just rationale, you point could where how the your Rowe. acquisition. see if on you're the growth additive Rowe. elaborate Retiree more strategic most a T. see

Robert Sharps

Yes.

retirement investments. We help liquidate in retirement your a make the take are Retiree, you about contribution algorithms investor individual Specifically, from social our overall. investors as optimizing elections showed as if which of business, at regard transition when think well have defined that retirement it from as and to in is assets security retirement-related one portion advisory withdrawals well supplement our strategic accumulation with to tax services. relates and slide decumulation set as as a And deferred of plans to our to initiatives to they that of proprietary the look the AUM first

differentiated how your incorporate So efficiently record-keeping tremendous potential a in for add. to participants. for our amount it I we our incorporate flow that's out lifestyle to term, But and in think with we've advisory where really and to to it our that's regard with a able see opportunity differentiate most cash support to the the rolled wealth guidance retirement, meaningful initially. Longer of have sponsors value capabilities channel to And we to also, offering tax needs offerings people plan partners. intermediary instance, for partner into, be with

for early of So potential it's is. I the what us kind exploring very days think

culturally our still make add financial capabilities terms more sense. our the looking clients We're approach and us it's fits In of important for that to same. to strategically and and that M&A, that make things

Operator

the closing I'm conference you. I'd showing questions for to over no Mr. time. at Thank hand to like this further Sharps currently back remarks.

Robert Sharps

and interest Price. Rowe Well, for right. good. All T. joining thank you Thank you. your us in for all Very today

to our to challenging progress, give we for that's better us have and the year we future strategic deliver the As made that associates us, for and with better value great continue but to ahead see of was us a lot outset, potential clients, beginning for a performance, work position to and translate I investment into 'XX regard do that to advancement of days growth, also lot said a results confidence shareholders. some at

thank and again, you, So good day.

Operator

This conference concludes today's call.

You you disconnect. for may day. have now your wonderful participation. a Thank Everyone,

T. Rowe Price (TROW) 8 Feb 242023 Q4 Earnings call transcript