0001113169falsePRICE T ROWE GROUP INC00011131692024-11-012024-11-01
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 1, 2024
T. Rowe Price Group, Inc.
(Exact name of registrant as specified in its charter)
| | | | | | | | |
| Maryland | 000-32191 | 52-2264646 |
(State of
incorporation) | (Commission
File Number) | (IRS Employer
Identification No.) |
100 East Pratt Street, Baltimore, Maryland 21202
| | | | | |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (410) 345-2000
N/A
(Former Name of Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
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| | | | |
| Title of each class | | Trading Symbol | | Name of each exchange on which registered |
| Common Stock, par value $0.20 | | TROW | | The NASDAQ Stock Market LLC (Nasdaq Global Select Market) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Section 2 - Financial Information.
Item 2.02. Results of Operations and Financial Condition.
On November 1, 2024 we issued an earnings release reporting our results of operations for the three and nine months ended September 30, 2024. A copy of this earnings release is attached hereto as Exhibit 99.1 and is incorporated by reference.
The information in this Current Report on Form 8-K and the Exhibits attached hereto shall not be deemed to be “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Section 7 Regulation FD
Item 7.01. Regulation FD Disclosure
On November 1, 2024, the Company will hold an investor conference call and webcast to discuss the Company’s earnings results for the three and nine months ended September 30, 2024. A copy of supplemental materials used during the earnings call is furnished as Exhibit 99.2 to this Form 8-K. All information in Exhibits 99.2 is presented as of the particular date or dates referenced therein, and the Company does not undertake any obligation to, and disclaims any duty to, update any of the information provided.
Section 9 - Financial Statements and Exhibits.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
T. Rowe Price Group, Inc.
By: /s/ Jennifer B. Dardis
Jennifer B. Dardis
Vice President, Chief Financial Officer and Treasurer
Date: November 1, 2024
NEWS RELEASE
T. ROWE PRICE GROUP REPORTS THIRD QUARTER 2024 RESULTS
BALTIMORE (November 1, 2024) - T. Rowe Price Group, Inc. (NASDAQ-GS: TROW) today reported its results for the third quarter of 2024.
▪Quarter-end assets under management of $1.63 trillion
▪Net client outflows of $12.2 billion
▪Diluted earnings per common share (EPS) of $2.64
▪Adjusted diluted EPS of $2.57
▪Returned $354 million to stockholders from the recurring quarterly dividend and stock repurchases
Rob Sharps, chair, CEO, and president, commented, “We are seeing encouraging signs that we are on the right path. Our active ETF franchise is expanding, we are deepening our retirement leadership position with the launch of innovative retirement solutions, and our associates are advancing our strategic initiatives. Our long-term performance is solid and we remain on track to reduce net outflows this year.”
Financial Highlights | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended | | | | |
| (in millions, except per-share data) | 9/30/2024 | | 9/30/2023 | | Change(1) | | | 6/30/2024 | | Change(1) | | | | | | | | |
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| U.S. GAAP basis | | | | | | | | | | | | | | | | | | |
| Investment advisory fees | $ | 1,632.9 | | | $ | 1,463.9 | | | 11.5 | % | | | $ | 1,585.6 | | | 3.0 | % | | | | | | | | |
Capital allocation-based income(2) | $ | 4.6 | | | $ | 66.1 | | | n/m | | | $ | 0.1 | | | n/m | | | | | | | | |
| Net revenues | $ | 1,785.6 | | | $ | 1,670.7 | | | 6.9 | % | | | $ | 1,733.3 | | | 3.0 | % | | | | | | | | |
| Operating expenses | $ | 1,172.0 | | | $ | 1,089.4 | | | 7.6 | % | | | $ | 1,168.6 | | | 0.3 | % | | | | | | | | |
| Net operating income | $ | 613.6 | | | $ | 581.3 | | | 5.6 | % | | | $ | 564.7 | | | 8.7 | % | | | | | | | | |
| Non-operating income (loss) | $ | 212.5 | | | $ | 2.8 | | | n/m | | | $ | 80.3 | | | n/m | | | | | | | | |
| Net income attributable to T. Rowe Price | $ | 603.0 | | | $ | 453.2 | | | 33.1 | % | | | $ | 483.4 | | | 24.7 | % | | | | | | | | |
| Diluted earnings per common share | $ | 2.64 | | | $ | 1.97 | | | 34.0 | % | | | $ | 2.11 | | | 25.1 | % | | | | | | | | |
| Weighted average common shares outstanding assuming dilution | 222.8 | | | 224.8 | | | (0.9) | % | | | 223.5 | | | (0.3) | % | | | | | | | | |
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Adjusted basis(3) | | | | | | | | | | | | | | | | | | |
| Operating expenses | $ | 1,099.0 | | | $ | 1,061.3 | | | 3.6 | % | | | $ | 1,105.8 | | | (0.6) | % | | | | | | | | |
| Operating expenses, excluding accrued carried interest related compensation | $ | 1,087.4 | | | $ | 1,030.8 | | | 5.5 | % | | | $ | 1,097.3 | | | (0.9) | % | | | | | | | | |
| Net operating income | $ | 718.4 | | | $ | 635.9 | | | 13.0 | % | | | $ | 654.9 | | | 9.7 | % | | | | | | | | |
| Non-operating income (loss) | $ | 51.2 | | | $ | 28.7 | | | 78.4 | % | | | $ | 34.7 | | | n/m | | | | | | | | |
| Net income attributable to T. Rowe Price | $ | 586.5 | | | $ | 499.5 | | | 17.4 | % | | | $ | 519.7 | | | 12.9 | % | | | | | | | | |
| Diluted earnings per common share | $ | 2.57 | | | $ | 2.17 | | | 18.4 | % | | | $ | 2.26 | | | 13.7 | % | | | | | | | | |
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Assets under management (in billions) | | | | | | | | | | | | | | | | | |
| Average assets under management | $ | 1,589.5 | | | $ | 1,393.6 | | | 14.1 | % | | | $ | 1,534.0 | | | 3.6 | % | | | | | | | | |
| Ending assets under management | $ | 1,630.9 | | | $ | 1,346.5 | | | 21.1 | % | | | $ | 1,569.1 | | | 3.9 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Investment advisory annualized effective fee rate in basis points (bps) | 40.9 | | | 41.7 | | | (0.8) | | | | 41.6 | | | (0.7) | | | | | | | | | |
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| Investment advisory annualized effective fee rate excluding performance-based fees (bps) | 40.7 | | | 41.6 | | | (0.9) | | | | 41.1 | | | (0.4) | | | | | | | | | |
(1) n/m - the percentage change is not meaningful. (2) Capital allocation-based income represents the change in accrued carried interest. (3) See the reconciliation to the comparable U.S. GAAP measures at the end of this earnings release.
Assets Under Management
During Q3 2024, assets under management (AUM) increased $61.8 billion to $1.63 trillion. The components of the change in AUM, by asset class, are shown in the table below.
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| Three months ended 9/30/2024 |
| (in billions) | Equity | | Fixed income, including money market | | Multi-asset(1) | | Alternatives(2) | | Total |
| Assets under management at beginning of period | $ | 810.3 | | | $ | 179.9 | | | $ | 529.1 | | | $ | 49.8 | | | $ | 1,569.1 | |
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| Net cash flows prior to manager-driven distributions | (16.1) | | | 1.1 | | | 1.9 | | | 1.7 | | | (11.4) | |
| Manager-driven distributions | — | | | — | | | — | | | (0.8) | | | (0.8) | |
| Net cash flows | (16.1) | | | 1.1 | | | 1.9 | | | 0.9 | | | (12.2) | |
Net market appreciation (depreciation) and income(3) | 37.8 | | | 5.3 | | | 29.9 | | | 1.0 | | | 74.0 | |
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| Change during the period | 21.7 | | | 6.4 | | | 31.8 | | | 1.9 | | | 61.8 | |
Assets under management at September 30, 2024 | $ | 832.0 | | | $ | 186.3 | | | $ | 560.9 | | | $ | 51.7 | | | $ | 1,630.9 | |
(1) The underlying AUM of the multi-asset portfolios have been aggregated and presented in this category and not reported in the equity and fixed income columns.
(2) The alternatives asset class includes strategies authorized to invest more than 50% of its holdings in private credit, leveraged loans, mezzanine, real assets/CRE, structured products, stressed/distressed, non-investment grade CLOs, special situations, business development companies, or that have absolute return as its investment objective. Generally, only those strategies with longer than daily liquidity are included. Unfunded capital commitments as of September 30, 2024 were $14.5 billion and $11.3 billion as of June 30, 2024, and are not reflected in fee basis AUM above.
(3) Includes net distributions not reinvested of $0.2 billion.
Investors domiciled outside the United States accounted for 8.6% of the firm's AUM at September 30, 2024, June 30, 2024 and December 31, 2023.
The firm provides participant accounting and plan administration for retirement plans that primarily invest in the firm's U.S. mutual funds, collective investment trusts, and funds managed outside of the firm's complex. As of September 30, 2024, the firm's assets under administration were $286 billion, of which $163 billion were assets we manage.
The firm offers non-discretionary advisory services through model delivery and multi-asset solutions for providers to implement. The firm records the revenue earned on these services in administrative fees. The assets under advisement in these portfolios, predominantly in the United States, were $16.8 billion at September 30, 2024.
Financial Results Highlights
Net Revenues
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| Three months ended | | | | | | | | |
| (in millions) | 9/30/2024 | | 9/30/2023 | | Change | | | 6/30/2024 | | Change | | | | | | | | | | | | |
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| | | | | | | | | | | | | | | | | | | | | | |
| Investment advisory fees | | | | | | | | | | | | | | | | | | | | | | |
| Equity | $ | 978.5 | | | $ | 885.0 | | | 10.6 | % | | | $ | 948.9 | | | 3.1 | % | | | | | | | | | | | | |
| Fixed income, including money market | 104.1 | | | 100.9 | | | 3.2 | % | | | 100.2 | | | 3.9 | % | | | | | | | | | | | | |
| Multi-asset | 465.8 | | | 405.5 | | | 14.9 | % | | | 444.8 | | | 4.7 | % | | | | | | | | | | | | |
| Alternatives | 84.5 | | | 72.5 | | | 16.6 | % | | | 91.7 | | | (7.9) | % | | | | | | | | | | | | |
| Total investment advisory fees | 1,632.9 | | | 1,463.9 | | | 11.5 | % | | | 1,585.6 | | | 3.0 | % | | | | | | | | | | | | |
Capital allocation-based income(1) | 4.6 | | | 66.1 | | | n/m | | | 0.1 | | | n/m | | | | | | | | | | | | |
| Administrative, distribution, and servicing fees | 148.1 | | | 140.7 | | | 5.3 | % | | | 147.6 | | | 0.3 | % | | | | | | | | | | | | |
| Net revenues | $ | 1,785.6 | | | $ | 1,670.7 | | | 6.9 | % | | | $ | 1,733.3 | | | 3.0 | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| Average AUM (in billions): | | | | | | | | | | | | | | | | | | | | | | |
| Equity | $ | 813.1 | | | $ | 725.0 | | | 12.2 | % | | | $ | 790.4 | | | 2.9 | % | | | | | | | | | | | | |
| Fixed income, including money market | 183.3 | | | 169.0 | | | 8.5 | % | | | 174.8 | | | 4.9 | % | | | | | | | | | | | | |
| Multi-asset | 542.3 | | | 453.8 | | | 19.5 | % | | | 520.1 | | | 4.3 | % | | | | | | | | | | | | |
| Alternatives | 50.8 | | | 45.8 | | | 10.9 | % | | | 48.7 | | | 4.3 | % | | | | | | | | | | | | |
| Average AUM | $ | 1,589.5 | | | $ | 1,393.6 | | | 14.1 | % | | | $ | 1,534.0 | | | 3.6 | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| Investment advisory annualized effective fee rate (bps) | 40.9 | | | 41.7 | | | (0.8) | | | | 41.6 | | | (0.7) | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| Investment advisory annualized effective fee rate excluding performance-based fees (bps) | 40.7 | | | 41.6 | | | (0.9) | | | | 41.1 | | | (0.4) | | | | | | | | | | | | | |
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(1)The Capital allocation-based income represents the change in accrued carried interest. The percentage change is not meaningful (n/m).
Net revenues in Q3 2024 were $1.8 billion, an increase of 6.9% from Q3 2023 and 3.0% from Q2 2024. Performance-based fees earned were $5.6 million in Q3 2024, $2.1 million in Q3 2023, and $16.8 million in Q2 2024.
▪The investment advisory annualized effective fee rate, excluding performance-based fees, of 40.7 basis points in Q3 2024 decreased from 41.6 basis points earned in Q3 2023 and 41.1 basis points earned in Q2 2024. In comparison to prior periods, client flows and transfers drove a mix shift in assets under management toward lower fee products and asset classes.
▪Capital allocation-based income in Q3 2024 of $4.6 million includes $35.1 million in additional accrued carried interest, offset by $30.5 million in acquisition-related, non-cash amortization and impairments. Comparatively, the Q3 2023 amount of $66.1 million includes $91.9 million in additional accrued carried interest, partially offset by $25.8 million in acquisition-related, non-cash amortization and impairments.The decreases from prior periods were primarily the result of overall lower relative returns.
A portion of the capital allocation-based income is passed through as compensation and recognized in compensation and related costs, with the unpaid amount reported as non-controlling interest on the consolidated balance sheet. For detail on the quarterly change in accrued carried interest, which is reported as part of investments on the consolidated balance sheet, and related non-controlling interest, see the applicable tables at the end of this release.
Operating Expenses
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| Three months ended | | | | | | | | |
| (in millions) | 9/30/2024 | | 9/30/2023 | | Change (1) | | | 6/30/2024 | | Change (1) | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| Compensation, benefits, and related costs | $ | 632.9 | | | $ | 617.0 | | | 2.6 | % | | | $ | 635.8 | | | (0.5) | % | | | | | | | | | | | | |
| Acquisition-related retention agreements | 4.0 | | | 13.7 | | | (70.8) | % | | | 13.1 | | | (69.5) | % | | | | | | | | | | | | |
Capital allocation-based income compensation(2) | (2.0) | | | 19.9 | | | n/m | | | (2.4) | | | n/m | | | | | | | | | | | | |
| Supplemental savings plan | 43.4 | | | (14.2) | | | n/m | | | 14.6 | | | n/m | | | | | | | | | | | | |
| Total compensation and related costs | 678.3 | | | 636.4 | | | 6.6 | % | | | 661.1 | | | 2.6 | % | | | | | | | | | | | | |
| Distribution and servicing | 91.6 | | | 74.9 | | | 22.3 | % | | | 87.7 | | | 4.4 | % | | | | | | | | | | | | |
| Advertising and promotion | 20.8 | | | 21.1 | | | (1.4) | % | | | 33.3 | | | (37.5) | % | | | | | | | | | | | | |
| Product and recordkeeping related costs | 75.0 | | | 73.1 | | | 2.6 | % | | | 73.0 | | | 2.7 | % | | | | | | | | | | | | |
| Technology, occupancy, and facility costs | 164.0 | | | 159.7 | | | 2.7 | % | | | 160.9 | | | 1.9 | % | | | | | | | | | | | | |
| General, administrative, and other | 104.2 | | | 85.7 | | | 21.6 | % | | | 108.7 | | | (4.1) | % | | | | | | | | | | | | |
| Change in fair value of contingent consideration | (13.4) | | | — | | | n/m | | | — | | | n/m | | | | | | | | | | | | |
| Acquisition-related amortization and impairment costs | 51.5 | | | 38.5 | | | 33.8 | % | | | 43.9 | | | 17.3 | % | | | | | | | | | | | | |
| Total operating expenses | $ | 1,172.0 | | | $ | 1,089.4 | | | 7.6 | % | | | $ | 1,168.6 | | | 0.3 | % | | | | | | | | | | | | |
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Total adjusted operating expenses(3) | $ | 1,099.0 | | | $ | 1,061.3 | | | 3.6 | % | | | $ | 1,105.8 | | | (0.6) | % | | | | | | | | | | | | |
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(1) n/m - the percentage change is not meaningful.
(2) Capital allocation-based income compensation represents the change in accrued carried interest compensation along with acquisition-related, non-cash amortization and impairments.
(3) See the reconciliation to the comparable U.S. GAAP measures at the end of this earnings release.
Operating expenses were $1,172.0 million, an increase of 7.6% from Q3 2023 and 0.3% from Q2 2024. On a non-GAAP basis, adjusted operating expenses in Q3 2024 were $1,099.0 million, a 3.6% increase from Q3 2023 and a 0.6% decrease from Q2 2024.
▪Compensation, benefits, and related costs in Q3 2024 of $632.9 million increased $15.9 million from Q3 2023 and were $2.9 million lower than Q2 2024. The increase from Q3 2023 was primarily due to higher salaries and related benefits and interim bonus accrual. These increases were partially offset by lower stock-based compensation. The Q3 2023 period included severance costs related to the July 2023 workforce action. Compared to Q2 2024, higher salaries and related benefits were more than offset by lower other employee-related costs. The firm employed 8,104 associates at September 30, 2024, an increase of 3.3% from 7,842 associates at September 30, 2023, and 2.2% from 7,929 associates at June 30, 2024.
▪Distribution and servicing costs in Q3 2024 of $91.6 million increased $16.7 million from Q3 2023 and $3.9 million from Q2 2024. The increase from prior periods was primarily driven by higher average assets under management distributed through intermediaries.
▪Advertising and promotion expenses in Q3 2024 of $20.8 million decreased $0.3 million from Q3 2023 and $12.5 million from Q2 2024. The decrease from Q2 2024 was primarily due to the timing of advertising and promotion spend.
▪Technology, occupancy, and facility costs in Q3 2024 of $164.0 million increased $4.3 million from Q3 2023 and $3.1 million from Q2 2024. The increase from Q3 2023 was due to higher costs from the firm's ongoing investment in its technology capabilities, primarily hosted solutions. Compared to Q2 2024, the increase was due to higher costs related to our existing facilities.
▪General, administrative, and other costs in Q3 2024 of $104.2 million increased $18.5 million from Q3 2023 and decreased $4.5 million from Q2 2024. The increase over the prior year was primarily driven by a cost recovery recognized in Q3 2023 that didn't recur in Q3 2024. Additionally, higher professional fees recognized in Q3 2024 were partially offset by lower research fee expense as the firm changed its approach to paying for research beginning in Q1 2024, consistent with regulations and general industry practice. Compared to Q2 2024, the decrease was primarily driven by lower travel, entertainment, and research fee expenses. These lower costs were partially offset by higher professional fees.
Non-operating income (loss)
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| (in millions) | Three months ended | | | |
| 9/30/2024 | | 9/30/2023 | | 6/30/2024 | | | | | |
| Net gains (losses) from non-consolidated T. Rowe Price investment products | | | | | | | | | | |
| Cash and discretionary investments | | | | | | | | | | |
| Dividend income | $ | 37.4 | | | $ | 30.3 | | | $ | 33.6 | | | | | | |
| Market-related gains (losses) and equity in earnings (losses) | 5.9 | | | 2.2 | | | 0.1 | | | | | | |
| Total net gains (losses) from cash and discretionary investments | 43.3 | | | 32.5 | | | 33.7 | | | | | | |
| Seed capital investments | | | | | | | | | | |
| Dividend income | 0.5 | | | 0.3 | | | 0.3 | | | | | | |
| Market-related gains (losses) and equity in earnings (losses) | 21.3 | | | (4.5) | | | 15.3 | | | | | | |
| Net gains (losses) recognized upon deconsolidation | (0.6) | | | 0.7 | | | — | | | | | | |
| Investments used to hedge the supplemental savings plan liability | 41.1 | | | (19.7) | | | 14.8 | | | | | | |
| Total net gains (losses) from non-consolidated T. Rowe Price investment products | 105.6 | | | 9.3 | | | 64.1 | | | | | | |
| Other investment income (loss) | 13.4 | | | 21.4 | | | 13.9 | | | | | | |
| Net gains (losses) on investments | 119.0 | | | 30.7 | | | 78.0 | | | | | | |
| Net gains (losses) on consolidated sponsored investment products | 85.9 | | | (24.4) | | | 8.5 | | | | | | |
| Other gains (losses), including foreign currency gains (losses) | 7.6 | | | (3.5) | | | (6.2) | | | | | | |
| Non-operating income (loss) | $ | 212.5 | | | $ | 2.8 | | | $ | 80.3 | | | | | | |
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On a non-GAAP basis, non-operating income (loss) consists of investment gains/losses generated from the firm's cash and discretionary investment portfolio.
Income taxes
The firm's GAAP effective tax rate for Q3 2024 was 22.5%, compared with 24.8% in Q3 2023. These quarterly rates were the result of an overall year-to-date rate of 23.5% for 2024 and 26.1% for 2023. The following reconciles the statutory federal income tax rate to the firm's effective tax rate for the nine months ended September 30, 2024 and 2023:
| | | | | | | | | | | | | | | | |
| | | | Nine months ended |
| | | | | | 9/30/2024 | | 9/30/2023 |
| Statutory U.S. federal income tax rate | | | | | | 21.0 | % | | 21.0 | % |
| | | | | | | | |
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State income taxes for current year, net of federal income tax benefits(1) | | | | | | 2.7 | | | 3.0 | |
Net (income) losses attributable to redeemable non-controlling interests(2) | | | | | | (0.6) | | | (0.2) | |
| Net excess tax losses (benefits) from stock-based compensation plans activity | | | | | | (0.2) | | | (0.3) | |
| Valuation allowances | | | | | | 0.3 | | | 2.7 | |
| Other items | | | | | | 0.3 | | | (0.1) | |
| Effective income tax rate | | | | | | 23.5 | % | | 26.1 | % |
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(1) State income tax benefits are reflected in the total benefits for net income attributable to redeemable non-controlling interests and stock-based compensation plans activity.
(2) Net income attributable to redeemable non-controlling interest represents the portion of earnings held in the firm's consolidated investment products, which are not taxable to the firm despite being included in pre-tax income.
The firm's non-GAAP effective tax rate for Q3 2024 was 23.8%, compared with 24.8% for Q3 2023. The quarterly rates were the result of an overall year-to-date rate of 24.1% for 2024 and 26.8% for 2023. The decrease in the firm's effective tax rate is primarily due to lower valuation allowances recognized in 2024 compared with the 2023 period. In 2023, valuation allowances were recognized against cumulative UK-based deferred tax assets.
The firm estimates that its effective tax rate for the full year 2024 will be in the range of 23.5% to 26.5% on a U.S. GAAP basis, and 23.5% to 25.5% on a non-GAAP basis.
Other Matters
The financial results presented in this release are unaudited. The firm expects that it will file its Form 10-Q Quarterly Report for the third quarter of 2024 with the U.S. Securities and Exchange Commission later today. The Form 10-Q will include additional information on the firm's unaudited financial results at September 30, 2024.
Certain statements in this earnings release may represent “forward-looking information,” including information relating to anticipated changes in revenues, our operations, expenses, earnings, liquidity, cash flows and capital expenditures, industry or market conditions, amount or composition of assets under management, regulatory developments, changes in our effective fee rate, demand for and pricing of our products, new products and services, effective tax rates, net income and earnings per common share, future transactions, our strategic initiatives, general economic conditions, dividends, stock repurchases, and other market conditions. For a discussion concerning risks and other factors that could affect future results, see the firm's 2023 Annual Report on Form 10-K.
Founded in 1937, T. Rowe Price (NASDAQ – GS: TROW) helps individuals and institutions around the world achieve their long-term investment goals. As a large global asset management company known for investment excellence, retirement leadership, and independent proprietary research, the firm is built on a culture of integrity that puts client interests first. Clients rely on the award-winning firm for its retirement expertise and active management of equity, fixed income, alternatives, and multi-asset investment capabilities. T. Rowe Price serves millions of clients globally and manages $1.63 trillion in assets under management as of September 30, 2024. About two-thirds of the assets under management are retirement-related. News and other updates can be found on Facebook, Instagram, LinkedIn, X, YouTube, and troweprice.com/newsroom.
Webcast Information
Chair, CEO, and President Rob Sharps and Chief Financial Officer Jen Dardis will provide an update on business performance, review financial results, and answer questions on a webcast to be held on Friday, November 1, 2024 from 8:00 - 8:45 AM (Eastern Time). To access the webcast or to obtain dial in instructions to ask a question, please visit: investors.troweprice.com.
Supplemental materials will be available on the company's investor relations website shortly before the start of the call. A replay of the webcast will be available on the company's investor relations website shortly after the event.
CONTACTS: | | | | | | | | | | | |
| Public Relations | | Investor Relations | |
| Jamaal Mobley | | Linsley Carruth | |
| 410-345-3403 | | 410-345-3717 | |
| jamaal.mobley@troweprice.com | | linsley.carruth@troweprice.com | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Unaudited Consolidated Statements of Income | | | | | |
| (in millions, except per-share amounts) | | | | | |
| | Three months ended | | | Nine months ended |
| Revenues | 9/30/2024 | | 9/30/2023 | | 6/30/2024 | | | 9/30/2024 | | 9/30/2023 |
| Investment advisory fees | $ | 1,632.9 | | | $ | 1,463.9 | | | $ | 1,585.6 | | | | $ | 4,772.5 | | | $ | 4,286.5 | |
| Capital allocation-based income | 4.6 | | | 66.1 | | | 0.1 | | | | 51.8 | | | 121.7 | |
| Administrative, distribution, and servicing fees | 148.1 | | | 140.7 | | | 147.6 | | | | 444.8 | | | 410.3 | |
| Net revenues | 1,785.6 | | | 1,670.7 | | | 1,733.3 | | | | 5,269.1 | | | 4,818.5 | |
| | | | | | | | | | | |
| Operating expenses | | | | | | | | | | |
| Compensation, benefits, and related costs | 632.9 | | | 617.0 | | | 635.8 | | | | 1,898.0 | | | 1,801.3 | |
| Acquisition-related retention agreements | 4.0 | | | 13.7 | | | 13.1 | | | | 30.6 | | | 41.5 | |
| Capital allocation-based income compensation | (2.0) | | | 19.9 | | | (2.4) | | | | 8.8 | | | 34.0 | |
| Supplemental savings plan | 43.4 | | | (14.2) | | | 14.6 | | | | 111.0 | | | 61.3 | |
| Total compensation and related costs | 678.3 | | | 636.4 | | | 661.1 | | | | 2,048.4 | | | 1,938.1 | |
| Distribution and servicing | 91.6 | | | 74.9 | | | 87.7 | | | | 261.2 | | | 214.2 | |
| Advertising and promotion | 20.8 | | | 21.1 | | | 33.3 | | | | 79.4 | | | 69.8 | |
| Product and recordkeeping related costs | 75.0 | | | 73.1 | | | 73.0 | | | | 223.0 | | | 222.9 | |
| Technology, occupancy, and facility costs | 164.0 | | | 159.7 | | | 160.9 | | | | 474.8 | | | 461.0 | |
| General, administrative, and other | 104.2 | | | 85.7 | | | 108.7 | | | | 305.5 | | | 293.2 | |
| Change in fair value of contingent consideration | (13.4) | | | — | | | — | | | | (13.4) | | | (72.8) | |
| Acquisition-related amortization and impairment costs | 51.5 | | | 38.5 | | | 43.9 | | | | 125.3 | | | 93.1 | |
| | | | | | | | | | | |
| Total operating expenses | 1,172.0 | | | 1,089.4 | | | 1,168.6 | | | | 3,504.2 | | | 3,219.5 | |
| | | | | | | | | | | |
| Net operating income | 613.6 | | | 581.3 | | | 564.7 | | | | 1,764.9 | | | 1,599.0 | |
| | | | | | | | | | |
| Non-operating income (loss) | | | | | | | | | | |
| Net gains (losses) on investments | 119.0 | | | 30.7 | | | 78.0 | | | | 318.5 | | | 213.7 | |
| Net gains (losses) on consolidated sponsored investment products | 85.9 | | | (24.4) | | | 8.5 | | | | 166.7 | | | 45.4 | |
| Other gains (losses), including foreign currency gains (losses) | 7.6 | | | (3.5) | | | (6.2) | | | | (3.5) | | | (14.7) | |
| Total non-operating income (loss) | 212.5 | | | 2.8 | | | 80.3 | | | | 481.7 | | | 244.4 | |
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| Income before income taxes | 826.1 | | | 584.1 | | | 645.0 | | | | 2,246.6 | | | 1,843.4 | |
| Provision for income taxes | 185.7 | | | 144.9 | | | 159.7 | | | | 527.5 | | | 481.3 | |
| Net income | 640.4 | | | 439.2 | | | 485.3 | | | | 1,719.1 | | | 1,362.1 | |
| Less: net income (loss) attributable to redeemable non-controlling interests | 37.4 | | | (14.0) | | | 1.9 | | | | 58.9 | | | 11.0 | |
| Net income attributable to T. Rowe Price Group, Inc. | 603.0 | | | 453.2 | | | 483.4 | | | | 1,660.2 | | | 1,351.1 | |
| Less: net income allocated to outstanding restricted stock and stock unit holders | 15.5 | | | 10.6 | | | 12.9 | | | | 44.2 | | | 32.7 | |
| Net income allocated to T. Rowe Price common stockholders | $ | 587.5 | | | $ | 442.6 | | | $ | 470.5 | | | | $ | 1,616.0 | | | $ | 1,318.4 | |
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| Earnings per share | | | | | | | | | | |
| Basic | $ | 2.64 | | | $ | 1.98 | | | $ | 2.11 | | | | $ | 7.25 | | | $ | 5.88 | |
| Diluted | $ | 2.64 | | | $ | 1.97 | | | $ | 2.11 | | | | $ | 7.23 | | | $ | 5.86 | |
| | | | | | | | | | | |
| Weighted-average common shares | | | | | | | | | | |
| Outstanding | 222.3 | | | 224.1 | | | 223.0 | | | | 223.0 | | | 224.3 | |
| Outstanding assuming dilution | 222.8 | | | 224.8 | | | 223.5 | | | | 223.5 | | | 225.1 | |
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| Summary of Adjusted Basis(1) | Three months ended | | | Nine months ended |
| (in millions, except per-share data) | 9/30/2024 | | 9/30/2023 | | 6/30/2024 | | | 9/30/2024 | | 9/30/2023 |
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| Operating expenses | $ | 1,099.0 | | | $ | 1,061.3 | | | $ | 1,105.8 | | | | $ | 3,276.2 | | | $ | 3,110.0 | |
| Operating expenses, excluding accrued carried interest related compensation | $ | 1,087.4 | | | $ | 1,030.8 | | | $ | 1,097.3 | | | | $ | 3,237.6 | | | $ | 3,055.2 | |
| Net operating income | $ | 718.4 | | | $ | 635.9 | | | $ | 654.9 | | | | $ | 2,065.7 | | | $ | 1,760.5 | |
| Non-operating income (loss) | $ | 51.2 | | | $ | 28.7 | | | $ | 34.7 | | | | $ | 114.4 | | | $ | 91.3 | |
| Net income attributable to T. Rowe Price | $ | 586.5 | | | $ | 499.5 | | | $ | 519.7 | | | | $ | 1,654.7 | | | $ | 1,355.4 | |
| Diluted earnings per common share | $ | 2.57 | | | $ | 2.17 | | | $ | 2.26 | | | | $ | 7.21 | | | $ | 5.88 | |
| (1) See the reconciliation to the comparable U.S. GAAP measures at the end of this earnings release. | | | | | |
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| Assets Under Management | Nine months ended 9/30/2024 |
| (in billions) | Equity | | Fixed income, including money market | | Multi-asset(1) | | Alternatives(2) | | Total |
| Assets under management at beginning of period | $ | 743.6 | | | $ | 170.0 | | | $ | 483.0 | | | $ | 47.9 | | | $ | 1,444.5 | |
| | | | | | | | | |
| Net cash flows prior to manager-driven distributions | (43.8) | | | 9.1 | | | 9.0 | | | 4.7 | | | (21.0) | |
| Manager-driven distributions | — | | | — | | | — | | | (2.9) | | | (2.9) | |
Net cash flows(3) | (43.8) | | | 9.1 | | | 9.0 | | | 1.8 | | | (23.9) | |
Net market appreciation and gains(4) | 132.2 | | | 7.2 | | | 68.9 | | | 2.0 | | | 210.3 | |
| | | | | | | | | |
| Change during the period | 88.4 | | | 16.3 | | | 77.9 | | | 3.8 | | | 186.4 | |
Assets under management at September 30, 2024 | $ | 832.0 | | | $ | 186.3 | | | $ | 560.9 | | | $ | 51.7 | | | $ | 1,630.9 | |
(1) The underlying AUM of the multi-asset portfolios have been aggregated and presented in this category and not reported in the equity and fixed income columns.
(2) The alternatives asset class includes strategies authorized to invest more than 50% of its holdings in private credit, leveraged loans, mezzanine, real assets/CRE, structured products, stressed/distressed, non-investment grade CLOs, special situations, business development companies, or that have absolute return as its investment objective. Generally, only those strategies with longer than daily liquidity are included. Unfunded capital commitments as of September 30, 2024 were $14.5 billion and $11.6 billion as of December 31, 2023 and are not reflected in fee basis AUM above.
(3) Alternatives net cash flows include $2.9 billion in outflows that represent investment manager-driven distributions.
(4) Includes net distributions not reinvested of $1.1 billion.
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| Net Revenues | Nine months ended |
| (in millions) | 9/30/2024 | | 9/30/2023 | | % Change |
| | | | | |
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| | | | | |
| | | | | |
| Investment advisory fees | | | | | |
| Equity | $ | 2,877.0 | | | $ | 2,581.2 | | | 11.5 | % |
| Fixed income, including money market | 304.9 | | | 303.3 | | | 0.5 | % |
| Multi-asset | 1,340.3 | | | 1,182.8 | | | 13.3 | % |
| Alternatives | 250.3 | | | 219.2 | | | 14.2 | % |
| Total investment advisory fees | $ | 4,772.5 | | | $ | 4,286.5 | | | 11.3 | % |
| | | | | |
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| | | | | |
| Average AUM (in billions): | | | | | |
| Equity | $ | 791.4 | | | $ | 705.3 | | | 12.2 | % |
| Fixed income, including money market | 175.9 | | | 169.6 | | | 3.7 | % |
| Multi-asset | 519.9 | | | 438.5 | | | 18.6 | % |
| Alternatives | 49.0 | | | 44.8 | | | 9.4 | % |
| Average AUM | $ | 1,536.2 | | | $ | 1,358.2 | | | 13.1 | % |
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| Non-Operating Income (Loss) | | | |
| (in millions) | Nine months ended |
| 9/30/2024 | | 9/30/2023 |
| Net gains (losses) from non-consolidated T. Rowe Price investment products | | | |
| Cash and discretionary investments | | | |
| Dividend income | $ | 98.8 | | | $ | 76.0 | |
| Market-related gains (losses) and equity in earnings (losses) | 6.2 | | | 19.1 | |
| Total net gains (losses) from cash and discretionary investments | 105.0 | | | 95.1 | |
| Seed capital investments | | | |
| Dividend income | 0.8 | | | 1.2 | |
| Market-related gains (losses) and equity in earnings (losses) | 60.1 | | | 25.0 | |
| Net gains (losses) recognized upon deconsolidation | (0.6) | | | 0.7 | |
| Investments used to hedge the supplemental savings plan liability | 105.6 | | | 58.6 | |
| Total net gains (losses) from non-consolidated T. Rowe Price investment products | 270.9 | | | 180.6 | |
| Other investment income (loss) | 47.6 | | | 33.1 | |
| Net gains (losses) on investments | 318.5 | | | 213.7 | |
| Net gains (losses) on consolidated sponsored investment portfolios | 166.7 | | | 45.4 | |
| Other gains (losses), including foreign currency gains (losses) | (3.5) | | | (14.7) | |
| Non-operating income (loss) | $ | 481.7 | | | $ | 244.4 | |
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The following table summarizes the cash flows for the nine months ended 2024 that are attributable to T. Rowe Price Group, our consolidated sponsored investment products, and the related eliminations required.
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| Nine months ended | | | | | | | | |
| 9/30/2024 | | |
(in millions) | Cash flow attributable to T. Rowe Price | | Cash flow attributable to consolidated T. Rowe Price investment products | | Elims | | As reported | | | | | | | | |
| Cash flows from operating activities | | | | | | | | | | | | | | | |
| Net income (loss) | $ | 1,660.2 | | | $ | 159.4 | | | $ | (100.5) | | | $ | 1,719.1 | | | | | | | | | |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities | | | | | | | | | | | | | | | |
| Depreciation, amortization and impairments of property, equipment and software | 188.4 | | | — | | | — | | | 188.4 | | | | | | | | | |
| Amortization and impairment of acquisition-related assets and retention agreements | 196.5 | | | — | | | — | | | 196.5 | | | | | | | | | |
| Fair value remeasurement of contingent liability | (13.4) | | | — | | | — | | | (13.4) | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Stock-based compensation expense | 162.2 | | | — | | | — | | | 162.2 | | | | | | | | | |
| Net (gains) losses recognized on investments | (432.6) | | | — | | | 100.5 | | | (332.1) | | | | | | | | | |
| Net redemptions in sponsored investment products used to economically hedge supplemental savings plan liability | 29.8 | | | — | | | — | | | 29.8 | | | | | | | | | |
| Net change in trading securities held by consolidated sponsored investment products | — | | | (517.9) | | | — | | | (517.9) | | | | | | | | | |
| Other changes | 548.3 | | | 5.7 | | | (19.1) | | | 534.9 | | | | | | | | | |
| Net cash provided by (used in) operating activities | 2,339.4 | | | (352.8) | | | (19.1) | | | 1,967.5 | | | | | | | | | |
| Net cash provided by (used in) investing activities | (143.1) | | | (15.7) | | | 3.8 | | | (155.0) | | | | | | | | | |
| Net cash provided by (used in) financing activities | (1,089.4) | | | 345.9 | | | 15.3 | | | (728.2) | | | | | | | | | |
| Effect of exchange rate changes on cash and cash equivalents of consolidated sponsored investment products | — | | | 0.5 | | | — | | | 0.5 | | | | | | | | | |
| Net change in cash and cash equivalents during period | 1,106.9 | | | (22.1) | | | — | | | 1,084.8 | | | | | | | | | |
| Cash and cash equivalents at beginning of year | 2,066.6 | | | 77.2 | | | — | | | 2,143.8 | | | | | | | | | |
| Cash and cash equivalents at end of period | $ | 3,173.5 | | | $ | 55.1 | | | $ | — | | | $ | 3,228.6 | | | | | | | | | |
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| Unaudited Condensed Consolidated Balance Sheet Information (in millions) | As of |
| 9/30/2024 | | 12/31/2023 |
| Cash and cash equivalents | $ | 3,173.5 | | | $ | 2,066.6 | |
| Accounts receivable and accrued revenue | 890.0 | | | 807.9 | |
| Investments | 2,966.0 | | | 2,554.7 | |
| Assets of consolidated sponsored investment products | 1,857.2 | | | 1,959.3 | |
| Operating lease assets | 228.5 | | | 241.1 | |
| Property, equipment and software, net | 930.1 | | | 806.6 | |
| Goodwill and intangible assets | 3,038.0 | | | 3,150.1 | |
| Other assets | 622.6 | | | 692.5 | |
| Total assets | 13,705.9 | | | 12,278.8 | |
| Supplemental savings plan liability | 969.6 | | | 895.0 | |
| Contingent consideration | — | | | 13.4 | |
Total other liabilities, includes $57.8 at September 30, 2024, and $54.2 at December 31, 2023, from consolidated sponsored investment products | 1,520.2 | | | 1,974.2 | |
| Non-controlling interests* | 966.8 | | | 786.1 | |
Stockholders' equity attributable to T. Rowe Price Group, Inc., 222.1 common shares outstanding at September 30, 2024 and 223.9 common shares outstanding at December 31, 2023 | $ | 10,249.3 | | | $ | 9,505.1 | |
* This includes both redeemable and non-redeemable non-controlling interest in consolidated entities.
The following tables detail changes in our investments in affiliated private investment funds - carried interest and non-controlling interest in consolidated entities.
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| Three months ended | | Nine months ended |
| Investments in affiliated private investment funds - carried interest | 9/30/2024 | | 9/30/2023 | | 6/30/2024 | | 9/30/2024 | | 9/30/2023 |
| Balance at beginning of period | $ | 497.3 | | | $ | 514.2 | | | $ | 514.3 | | | $ | 519.9 | | | $ | 467.8 | |
| Capital allocation-based income: | | | | | | | | | |
| Change in accrued carried interest | 35.1 | | | 91.9 | | | 27.0 | | | 121.6 | | | 172.1 | |
| Acquisition-related amortization and impairments | (30.5) | | | (25.8) | | | (26.9) | | | (69.8) | | | (50.4) | |
| Net distributions | (2.2) | | | (2.1) | | | (17.1) | | | (72.0) | | | (11.3) | |
Balance at end of period | $ | 499.7 | | | $ | 578.2 | | | $ | 497.3 | | | $ | 499.7 | | | $ | 578.2 | |
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| Three months ended | | Nine months ended |
| Non-controlling interests (NCI) in consolidated entities | 9/30/2024 | | 9/30/2023 | | 6/30/2024 | | 9/30/2024 | | 9/30/2023 |
| Balance at beginning of period | $ | 205.3 | | | $ | 202.1 | | | $ | 205.4 | | | $ | 192.0 | | | $ | 190.7 | |
| Capital allocation-based income compensation: | | | | | | | | | |
| Change in accrued carried interest compensation | 11.6 | | | 30.5 | | | 8.5 | | | 38.6 | | | 54.8 | |
| Acquisition-related amortization and impairments | (13.6) | | | (10.6) | | | (10.9) | | | (29.8) | | | (20.8) | |
| Net contributions (distributions) | 0.1 | | | (0.5) | | | 2.3 | | | 2.6 | | | (3.2) | |
Balance at end of period | $ | 203.4 | | | $ | 221.5 | | | $ | 205.3 | | | $ | 203.4 | | | $ | 221.5 | |
Non-GAAP Information and Reconciliation
The firm believes the non-GAAP financial measures below provide relevant and meaningful information to investors about its core operating results. These measures have been established in order to increase transparency for the purpose of evaluating the firm's core business, for comparing current results with prior period results, and to enable more appropriate comparison with industry peers. However, non-GAAP financial measures should not be considered as a substitute for financial measures calculated in accordance with U.S. GAAP and may be calculated differently by other companies.
The following schedules reconcile U.S. GAAP financial measures to non-GAAP financial measures for the three months ended September 30, 2024 and 2023 and June 30, 2024.
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| Three months ended 9/30/2024 |
| Operating expenses | | Net operating income | | Non-operating income (loss) | | Provision (benefit) for income taxes(5) | | Net income attributable to T. Rowe Price Group, Inc. | | Diluted earnings per share(6) |
| U.S. GAAP Basis (FS line item) | $ | 1,172.0 | | | $ | 613.6 | | | $ | 212.5 | | | $ | 185.7 | | | $ | 603.0 | | | $ | 2.64 | |
| Non-GAAP adjustments: | | | | | | | | | | | |
| Acquisition-related: | | | | | | | | | | | |
Investment and NCI amortization and impairments(1) (Capital allocation-based income and Compensation and related costs) | 13.6 | | | 16.9 | | | — | | | 2.3 | | | 14.6 | | | 0.06 | |
Acquisition-related retention arrangements(1) (Compensation and related costs) | (4.0) | | | 4.0 | | | — | | | 0.5 | | | 3.5 | | | 0.02 | |
Contingent consideration(1) | 13.4 | | | (13.4) | | | — | | | (1.8) | | | (11.6) | | | (0.05) | |
Intangible assets amortization and impairments(1) | (51.5) | | | 51.5 | | | — | | | 7.0 | | | 44.5 | | | 0.19 | |
| | | | | | | | | | | |
| Total acquisition-related | (28.5) | | | 59.0 | | | — | | | 8.0 | | | 51.0 | | | 0.22 | |
Supplemental savings plan liability(2) (Compensation and related costs) | (43.4) | | | 43.4 | | | (41.1) | | | 0.3 | | | 2.0 | | | 0.01 | |
Consolidated T. Rowe Price investment products(3) | (1.1) | | | 2.4 | | | (85.9) | | | (6.3) | | | (39.8) | | | (0.17) | |
Other non-operating income(4) | — | | | — | | | (34.3) | | | (4.6) | | | (29.7) | | | (0.13) | |
| Adjusted Non-GAAP Basis | $ | 1,099.0 | | | $ | 718.4 | | | $ | 51.2 | | | $ | 183.1 | | | $ | 586.5 | | | $ | 2.57 | |
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| Three months ended 9/30/2023 |
| Operating expenses | | Net operating income | | Non-operating income (loss) | | Provision (benefit) for income taxes(5) | | Net income attributable to T. Rowe Price Group, Inc. | | Diluted earnings per share(6) |
| U.S. GAAP Basis (FS line item) | $ | 1,089.4 | | | $ | 581.3 | | | $ | 2.8 | | | $ | 144.9 | | | $ | 453.2 | | | $ | 1.97 | |
| Non-GAAP adjustments: | | | | | | | | | | | |
| Acquisition-related: | | | | | | | | | | | |
Investment and NCI amortization and impairments(1) (Capital allocation-based income and Compensation and related costs) | 10.6 | | | 15.2 | | | — | | | 4.6 | | | 10.6 | | | 0.04 | |
Acquisition-related retention arrangements(1) (Compensation and related costs) | (13.7) | | | 13.7 | | | — | | | 4.2 | | | 9.5 | | | 0.04 | |
| | | | | | | | | | | |
Intangible assets amortization and impairments(1) | (38.5) | | | 38.5 | | | — | | | 11.7 | | | 26.8 | | | 0.12 | |
| | | | | | | | | | | |
| Total acquisition-related | (41.6) | | | 67.4 | | | — | | | 20.5 | | | 46.9 | | | 0.20 | |
Supplemental savings plan liability(2) (Compensation and related costs) | 14.2 | | | (14.2) | | | 19.7 | | | 1.7 | | | 3.8 | | | 0.02 | |
Consolidated T. Rowe Price investment products(3) | (0.7) | | | 1.4 | | | 24.4 | | | 3.6 | | | 8.2 | | | 0.03 | |
Other non-operating income(4) | — | | | — | | | (18.2) | | | (5.6) | | | (12.6) | | | (0.05) | |
| Adjusted Non-GAAP Basis | $ | 1,061.3 | | | $ | 635.9 | | | $ | 28.7 | | | $ | 165.1 | | | $ | 499.5 | | | $ | 2.17 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended 6/30/2024 |
| Operating expenses | | Net operating income | | Non-operating income (loss) | | Provision (benefit) for income taxes(5) | | Net income attributable to T. Rowe Price Group, Inc. | | Diluted earnings per share(6) |
| U.S. GAAP Basis (FS line item) | $ | 1,168.6 | | | $ | 564.7 | | | $ | 80.3 | | | $ | 159.7 | | | $ | 483.4 | | | $ | 2.11 | |
| Non-GAAP adjustments: | | | | | | | | | | | |
| Acquisition-related: | | | | | | | | | | | |
Investment and NCI amortization and impairments(1) (Capital allocation-based income and Compensation and related costs) | 10.9 | | | 16.0 | | | — | | | 3.5 | | | 12.5 | | | 0.05 | |
Acquisition-related retention arrangements(1) (Compensation and related costs) | (13.1) | | | 13.1 | | | — | | | 2.9 | | | 10.2 | | | 0.04 | |
| | | | | | | | | | | |
Intangible assets amortization and impairments(1) | (43.9) | | | 43.9 | | | — | | | 9.6 | | | 34.3 | | | 0.15 | |
| | | | | | | | | | | |
| Total acquisition-related | (46.1) | | | 73.0 | | | — | | | 16.0 | | | 57.0 | | | 0.24 | |
Supplemental savings plan liability(2) (Compensation and related costs) | (14.6) | | | 14.6 | | | (14.8) | | | — | | | (0.2) | | | — | |
Consolidated T. Rowe Price investment products(3) | (2.1) | | | 2.6 | | | (8.5) | | | (0.9) | | | (3.1) | | | (0.01) | |
Other non-operating income(4) | — | | | — | | | (22.3) | | | (4.9) | | | (17.4) | | | (0.08) | |
| Adjusted Non-GAAP Basis | $ | 1,105.8 | | | $ | 654.9 | | | $ | 34.7 | | | $ | 169.9 | | | $ | 519.7 | | | $ | 2.26 | |
The following schedules reconcile certain U.S. GAAP financial measures for the nine months ended September 30, 2024 and 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine months ended 9/30/2024 |
| Operating expenses | | Net operating income | | Non-operating income (loss) | | Provision (benefit) for income taxes(5) | | Net income attributable to T. Rowe Price Group, Inc. | | Diluted earnings per share(6) |
| U.S. GAAP Basis (FS line item) | $ | 3,504.2 | | | $ | 1,764.9 | | | $ | 481.7 | | | $ | 527.5 | | | $ | 1,660.2 | | | $ | 7.23 | |
| Non-GAAP adjustments: | | | | | | | | | | | |
| Acquisition-related: | | | | | | | | | | | |
Investment and NCI amortization and impairments(1) (Capital allocation-based income and Compensation and related costs) | 29.8 | | | 40.0 | | | — | | | 7.8 | | | 32.2 | | | 0.14 | |
Acquisition-related retention arrangements(1) (Compensation and related costs) | (30.6) | | | 30.6 | | | — | | | 7.2 | | | 23.4 | | | 0.10 | |
Contingent consideration(1) | 13.4 | | | (13.4) | | | — | | | (1.8) | | | (11.6) | | | (0.05) | |
Intangible assets amortization and impairments(1) | (125.3) | | | 125.3 | | | — | | | 24.9 | | | 100.4 | | | 0.44 | |
| | | | | | | | | | | |
| Total acquisition-related | (112.7) | | | 182.5 | | | — | | | 38.1 | | | 144.4 | | | 0.63 | |
Supplemental savings plan liability(2) (Compensation and related costs) | (111.0) | | | 111.0 | | | (105.6) | | | 1.2 | | | 4.2 | | | 0.02 | |
Consolidated T. Rowe Price investment products(3) | (4.3) | | | 7.3 | | | (166.7) | | | (21.2) | | | (79.3) | | | (0.35) | |
Other non-operating income(4) | — | | | — | | | (95.0) | | | (20.2) | | | (74.8) | | | (0.32) | |
| Adjusted Non-GAAP Basis | $ | 3,276.2 | | | $ | 2,065.7 | | | $ | 114.4 | | | $ | 525.4 | | | $ | 1,654.7 | | | $ | 7.21 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine months ended 9/30/2023 |
| Operating expenses | | Net operating income | | Non-operating income (loss) | | Provision (benefit) for income taxes(5) | | Net income attributable to T. Rowe Price Group, Inc. | | Diluted earnings per share(6) |
| U.S. GAAP Basis (FS line item) | $ | 3,219.5 | | | $ | 1,599.0 | | | $ | 244.4 | | | $ | 481.3 | | | $ | 1,351.1 | | | $ | 5.86 | |
| Non-GAAP adjustments: | | | | | | | | | | | |
| Acquisition-related: | | | | | | | | | | | |
Investment and NCI amortization and impairments(1) (Capital allocation-based income and Compensation and related costs) | 20.8 | | | 29.6 | | | — | | | 6.2 | | | 23.4 | | | 0.10 | |
Acquisition-related retention arrangements(1) (Compensation and related costs) | (41.5) | | | 41.5 | | | — | | | 7.2 | | | 34.3 | | | 0.15 | |
Contingent consideration(1) | 72.8 | | | (72.8) | | | — | | | (8.0) | | | (64.8) | | | (0.28) | |
Intangible assets amortization and impairments(1) | (93.1) | | | 93.1 | | | — | | | 17.7 | | | 75.4 | | | 0.33 | |
| | | | | | | | | | | |
| Total acquisition-related | (41.0) | | | 91.4 | | | — | | | 23.1 | | | 68.3 | | | 0.30 | |
Supplemental savings plan liability(2) (Compensation and related costs) | (61.3) | | | 61.3 | | | (58.6) | | | 1.4 | | | 1.3 | | | 0.01 | |
Consolidated T. Rowe Price investment products(3) | (7.2) | | | 8.8 | | | (45.4) | | | (0.5) | | | (25.1) | | | (0.11) | |
Other non-operating income(4) | — | | | — | | | (49.1) | | | (8.9) | | | (40.2) | | | (0.18) | |
| Adjusted Non-GAAP Basis | $ | 3,110.0 | | | $ | 1,760.5 | | | $ | 91.3 | | | $ | 496.4 | | | $ | 1,355.4 | | | $ | 5.88 | |
(1) These non-GAAP adjustments remove the impact of acquisition-related amortization and costs including intangible assets and acquired assets amortization and impairments, contingent consideration liability fair value remeasurements, amortization and impairments of acquired investments and non-controlling interest basis differences, and amortization of compensation-related arrangements. Management believes adjusting for these charges helps the reader's ability to understand the firm's core operating results and to increase comparability period to period.
(2) This non-GAAP adjustment removes the compensation expense impact from market valuation changes in the supplemental savings plan liability and the related net gains (losses) on investments designated as economic hedges against the related liability. Amounts deferred under the supplemental savings plan are adjusted for appreciation (depreciation) of hypothetical investments chosen by participants. The firm uses T. Rowe Price investment products to economically hedge the exposure to these market movements. Management believes it is useful to offset the non-operating investment income (loss) recognized on the economic hedges against the related compensation expense and remove the net impact to help the reader's ability to understand the firm's core operating results and to increase comparability period to period.
(3) These non-GAAP adjustments remove the impact the consolidated sponsored investment products have on the firm's U.S. GAAP consolidated statements of income. Specifically, the firm adds back the operating expenses and subtracts the investment income of the consolidated sponsored investment products. The adjustment to operating expenses represents the operating expenses of the consolidated products, net of the elimination of related management and administrative fees. The adjustment to net income attributable to T. Rowe Price represents the net income of the consolidated products, net of redeemable non-controlling interests. Management believes the consolidated sponsored investment products may impact the reader’s ability to understand the firm's core operating results.
(4) This non-GAAP adjustment represents the other non-operating income (loss) and the net gains (losses) earned on the firm's investment portfolio that are not designated as economic hedges of the supplemental savings plan liability and that are not part of the cash and discretionary investment portfolio. Management retains in its non-GAAP measures the investment gains recognized on the cash and discretionary investments as these assets and related income (loss) are considered part of the firm's core operations. Management believes adjusting for the remaining non-operating income (loss) helps the reader’s ability to understand the firm's core operating results and increases comparability to prior years. Additionally, management does not emphasize the impact of this portion of non-operating income (loss) when managing and evaluating the firm's performance.
(5) The income tax impacts were calculated in order to achieve an overall year-to-date non-GAAP effective tax rate of 24.1% in 2024 and 26.8% in 2023. As such, the non-GAAP effective tax rate for the three months ended September 30, 2024 and 2023 was 23.8% and 24.8%, respectively.
(6) This non-GAAP measure was calculated by applying the two-class method to adjusted net income attributable to T. Rowe Price Group and dividing by the weighted-average common shares outstanding assuming dilution. The calculation of adjusted net income allocated to common stockholders is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended | | | Nine months ended |
| 9/30/2024 | | 9/30/2023 | | 6/30/2024 | | | 9/30/2024 | | 9/30/2023 |
| Adjusted net income attributable to T. Rowe Price | $ | 586.5 | | | $ | 499.5 | | | $ | 519.7 | | | | $ | 1,654.7 | | | $ | 1,355.4 | |
| Less: adjusted net income allocated to outstanding restricted stock and stock unit holders | 15.0 | | | 11.7 | | | 13.9 | | | | 44.1 | | | 32.8 | |
| Adjusted net income allocated to common stockholders | $ | 571.5 | | | $ | 487.8 | | | $ | 505.8 | | | | $ | 1,610.6 | | | $ | 1,322.6 | |
T. Rowe Price Group, Inc. November 1, 2024 Earnings Release Supplement Q3 2024 A copy of this presentation, which includes additional information, is available at investors.troweprice.com. Data as of September 30, 2024, unless otherwise noted. All figures are USD, unless otherwise noted.
2T. R O W E P R I C E This presentation, and other statements that T. Rowe Price may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to T. Rowe Price’s future financial or business performance, strategies, or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may,” and similar expressions. Forward-looking statements in this presentation may include, without limitation, information concerning future results of our operations, revenues, expenses, earnings, liquidity, cash flows and capital expenditures, industry or market conditions, amount or composition of assets under management, flows into our investment funds, regulatory developments, changes in our effective fee rate, demand for and pricing of our products, new products and services, effective tax rates, net income and earnings per common share, future transactions, our strategic initiatives, general economic conditions, dividends, stock repurchases, and other aspects of our business. T. Rowe Price cautions that forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. Actual results could differ materially from those anticipated in forward-looking statements, and future results could differ materially from historical performance. Forward- looking statements speak only as of the date they are made, and T. Rowe Price assumes no duty to and does not undertake to update forward-looking statements. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in our most recent Form 10-K filed with the Securities and Exchange Commission. Forward-Looking Statement
3T. R O W E P R I C E Key Metric Q3 2023 Q2 2024 Q3 2024 AUM and Flows Net Flows ($17.4B) ($3.7B) ($12.2B) Assets Under Management (AUM)1 $1.35T $1.57T $1.63T Average AUM $1.39T $1.53T $1.59T Investment Advisory Annualized Effective Fee Rate 41.7bps 41.6bps 40.9bps Investment Advisory Annualized Effective Fee Rate excluding Performance-Based Fees 41.6bps 41.1bps 40.7bps GAAP Basis Net Revenues $1,670.7M $1,733.3M $1,785.6M Operating Expenses $1,089.4M $1,168.6M $1,172.0M Diluted GAAP Earnings per Share (EPS) $1.97 $2.11 $2.64 Non-GAAP Basis Adjusted Operating Expenses2 $1,061.3M $1,105.8M $1,099.0M Adjusted EPS2 $2.17 $2.26 $2.57 Dividends Dividend per share $1.22 $1.24 $1.24 The financial results presented in this earnings release supplement are unaudited. 1 Firmwide AUM includes assets managed by T. Rowe Price Associates, Inc., and its investment advisory affiliates. 2 For the reconciliation between GAAP and adjusted (non-GAAP) expenses and EPS, see the current earnings release. Financial Highlights
4T. R O W E P R I C E % of Funds/ Composites U.S. Funds Outperforming Morningstar Median1,2 U.S. Funds Outperforming Morningstar Passive Peer Median1,3 Composites Outperforming Benchmarks4 1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years Equity 59% 45% 51% 71% 50% 42% 47% 53% 49% 26% 43% 63% Fixed Income 43% 50% 53% 66% 36% 45% 58% 58% 53% 31% 55% 66% Multi-Asset 54% 47% 67% 68% 45% 44% 68% 54% NA NA NA NA All 53% 47% 56% 68% 45% 44% 56% 54% 51% 28% 48% 64% Past performance is not a reliable indicator of future performance. The investment performance reflects that of the T. Rowe Price-sponsored mutual funds, ETFs and composites. 1 Source: © 2024 Morningstar, Inc. All rights reserved. Please see page 16 for more information. 2 Primary share class only. Excludes T. Rowe Price passive funds, funds that are a clones of other funds, and fund categories not ranked by Morningstar. 3 Primary share class only. Excludes T. Rowe Price passive funds, and funds that are clones of other funds. Funds are measured against the most appropriate strategy benchmark used for portfolio manager evaluation, which may not always be the regulatory benchmark. 4 Net returns for composites are calculated using the highest applicable separate account fee schedule and compared to official GIPS composite primary benchmark. Excludes money market composites. % of AUM U.S. Funds Outperforming Morningstar Median1,2 U.S. Funds Outperforming Morningstar Passive Peer Median1,3 Composites Outperforming Benchmarks4 1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years Equity 50% 39% 52% 85% 45% 33% 42% 50% 60% 28% 38% 57% Fixed Income 55% 65% 60% 82% 41% 60% 84% 72% 57% 22% 47% 48% Multi-Asset 77% 55% 90% 93% 67% 56% 95% 94% NA NA NA NA All 57% 44% 61% 86% 50% 40% 58% 62% 60% 27% 40% 55% Investment Performance Overview
5T. R O W E P R I C E Firmwide AUM includes assets managed by T. Rowe Price Associates, Inc., and its investment advisory affiliates. OHA’s fee-basis AUM of $46.9B acquired on December 29, 2021, is reflected in 2021 ending AUM. All periods after 2021 reflect the related activity. Other acquisition of AUM is detailed in our quarterly releases and 10Qs. Distributions, net of reinvestments, are included in the market change figure. Manager-driven distributions related to our alternative products by year: 2022: $2.6B, 2023: $2.6B, YTD: $2.9B U.S. $ billions Assets Under Management Market Change ($B) +92.3 +60.4 -6.6 +70.1 +127.6 +50.7 +14.7 +50.5 +166.3 -42.0 +231.3 +256.9 +198.9 -351.4 +251.7 +210.3 Net Flows ($B) +22.7 +30.3 +14.1 +17.2 -12.0 +3.7 +1.6 -2.8 +14.0 +13.2 +13.2 +5.6 -28.5 -61.7 -81.8 -23.9 En di ng A U M $391 $482 $489 $577 $692 $747 $763 $811 $991 $962 $1,207 $1,471 $1,688 $1,275 $1,445 $1,631 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 September 2024
6T. R O W E P R I C E Firmwide AUM includes assets managed by T. Rowe Price Associates, Inc., and its investment advisory affiliates. Institutional includes defined contribution assets, including those through intermediaries and our full-service recordkeeping business. Retail includes our direct-marketed business and financial intermediaries. Assets Under Management and Net Flows U.S. $ billions ▪ Retirement assets are 67% of AUM ▪ U.S. defined contribution AUM of $722B ▪ Target date AUM of $482B ▪ Alternative AUM includes private markets ($20B), CLOs ($19B), and liquid strategies ($13B) ▪ $14.5B in unfunded capital commitments compared to $11.6B at December 31, 2023. ▪ Outflows largely concentrated in US equity strategies ▪ Alternative flows are net of $0.8B in manager-driven distributions ▪ Target date inflows of $3.6B in Q3 2024. Firmwide flows by quarter ($B) Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 (17.4) (28.3) (8.0) (3.7) (12.2) Net Flows Q3 2024 Assets Under Management As of September 30, 2024Asset Class Client Type Geography Equity $ (19.7) $ (22.7) $ (12.8) $ (14.9) $ (16.1) FI 1.0 (6.0) 0.2 7.8 1.1 MA 0.4 — 5.5 1.6 1.9 Alts 0.9 0.4 (0.9) 1.8 0.9 Inst. $ (4.0) $ (14.4) $ (0.5) $ 7.6 $ (2.2) Retail (13.4) (13.9) (7.5) (11.3) (10.0) U.S. $ (19.6) $ (17.8) $ (5.9) $ (5.2) $ (13.1) APAC, EMEA, Canada 2.2 (10.5) (2.1) 1.5 0.9 Retail Inst. U.S. APAC, EMEA, Canada $690 $744 $803 $810 $832 $169 $170 $171 $180 $186 $441 $483 $521 $529 $561 $47 $48 $48 $50 $52 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Fixed Income Multi-Asset Alts Equity $595 $635 $676 $675 $695 $752 $810 $866 $894 $936 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 $1,223 $1,321 $1,412 $1,434 $1,490 $124 $124 $131 $135 $141 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Assets Under Management Assets Under Management Assets Under Management Net Flows Net Flows Net Flows Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24
7T. R O W E P R I C E $169.0 ($56.8) ($4.7) $7.4 Q3 2023 Investment Advisory Fees CABI CABI (Amortization/Impairment) Admin & Distribution Q3 2024 Quarterly Net Revenues U.S. $ millions ▪ Investment advisory fees represent more than 90% of net revenue in the periods presented ▪ Q3 2024 investment advisory revenue was $1,632.9M ▪ CABI was $35M in Q3 2024 compared to $92M in Q3 2023 Q3 2024 compared to Q2 2024 Q3 2024 compared to Q3 2023 $47.3 $8.1 ($3.6) $0.5 Q2 2024 Investment Advisory Fees CABI CABI (Amortization/Impairment) Admin & Distribution Q3 2024 Capital allocation-based income (CABI) $114.9 / 6.9% $52.3 / 3.0% $1,670.7 $1,785.6 $1,785.6 $1,733.3
8T. R O W E P R I C E ($2.9) $3.1 $3.9 ($12.5) $2.0 $3.1 ($3.5) Q2 2024 Compensation & Related CABI Compensation Distribution & Servicing Ad/Promo Product & Recordkeeping Tech, Occ, & Facility G&A&Other Q3 2024 Quarterly Adjusted Operating Expenses U.S. $ millions Q3 2024 compared to Q3 2023 $15.9 ($18.9) $16.7 ($0.3) $1.9 $4.3 $18.1 Q3 2023 Compensation & Related CABI Compensation Distribution & Servicing Ad/Promo Product & Recordkeeping Tech, Occ, & Facility G&A&Other Q3 2024 Q3 2024 compared to Q2 2024 For the reconciliation between GAAP and adjusted (non-GAAP) expenses, see the current earnings release. Capital allocation-based income (CABI) compensation represents the portion of CABI (carried interest) that is passed through to certain associates as compensation. $37.7 / 3.6% $1,061.3 ($6.8) / (0.6)% $1,105.8 $1,099.0 $1,099.0 Nine months ended 9/30/2024 9/30/2023 Change (%) Adjusted Operating Expenses $3,276.2 $3,110.0 5.3% Adjusted CABI Compensation (38.6) (54.8) n/m Adjusted Operating Expenses, ex CABI Compensation $3,237.6 $3,055.2 6.0% Basis for Operating Expense Guidance U.S. $ millions
9T. R O W E P R I C E 1 Operating margin is equal to operating income divided by net revenues; adjusted operating margin is equal to adjusted operating income divided by adjusted net revenues. See the GAAP to adjusted (non-GAAP) operating income and operating margin reconciliation on page 13. For the reconciliation between GAAP and adjusted (non-GAAP) net income and EPS, see the current earnings release. Net Income U.S. $ millions, (except EPS) Quarterly Operating Income and Net Income U.S. GAAP Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Net Income $453.2 $437.6 $573.8 $483.4 $603.0 Diluted EPS $1.97 $1.90 $2.49 $2.11 $2.64 Operating Income U.S. GAAP Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Operating Income $581.3 $387.2 $586.6 $564.7 $613.6 Operating Margin1 34.8% 23.6% 33.5% 32.6% 34.4% Adjusted Operating Income Adjusted Operating Margin1 $635.9 $502.7 $692.4 $654.9 $718.4 37.5% 30.4% 37.2% 39.5% Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Adjusted Net Income Adjusted EPS $499.5 $394.7 $548.5 $519.7 $586.5 $2.17 $1.72 $2.26 $2.57 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 $2.38 39.3%
10T. R O W E P R I C E Capital Returned to Stockholders Cash and Investments1 1 Cash and investments includes our cash and investments in T. Rowe Price products. This display does not include the non-controllable interest of our seed investments, which we normally consolidate due to our ownership. U.S. $ millions Capital Management Data through 9/30/2024 Q3 2023 Q4 2023 Q3 2024 Cash and Cash Equivalents $2,578.7 $2,066.6 $3,173.5 Discretionary Investments 486.3 463.7 471.8 Cash and Discretionary Investments $3,065.0 $2,530.3 $3,645.3 Redeemable Seed Capital $1,167.4 $1,370.9 $1,379.9 Investments Used to Hedge the Supplemental Savings Plan Liability $783.9 $894.6 $969.1 282 1,132 3,329 71 367 1,983 — — — Q3 2024 Last 12 months Last 36 months $5,312 $1,498 $354 Dividends Share Repurchases
11T. R O W E P R I C E $205.3 $11.6 ($13.6) $0.1 $203.4 Q2 2024 Change in accrued carried compensation Acquisition-related amortization and impairments Net Contributions Q3 2024 At the end of each reporting period, accrued carried interest reflects what would be due from each investment fund as if the fair value of the underlying investments were realized as of such date, regardless of whether the amounts have been realized. The change in accrued carried interest reflects amounts that are (1) realized and distributed by the fund, (2) market-related adjustments that are recognized as capital allocation-based income in the income statement, and (3) acquisition-related amortization. The change in accrued carried interest will fluctuate quarter to quarter. Approximately $3.7M of the 40%-50% of accrued carried interest recognized in compensation expense was not allocated to non-controlling interest holders, therefore, not categorized as CABI-related compensation. Quarterly Capital Allocation-Based Income (carried interest) U.S. $ millions, unless otherwise noted ▪ As of 9/30/2024, $19B of alternative fee-basis assets under management are eligible to earn carried interest. ▪ In general, 50%-60% of accrued carried interest is expected to be retained in operating income with the remainder recognized as compensation expense. ▪ Absolute performance of the following indices are an indicator of changes in accrued carried interest. Non-controlling interests (NCI) in consolidated entities CABI Comp ($2.0) Q3 2024 returns ICE Bank of America U.S. High Yield Index: 5.3 % Credit Suisse Leveraged Loan Index: 2.1 % CABI $4.6 Past performance is not a reliable indicator of future performance. Sources: ICE Data Indices, LLC, and CREDIT SUISSE GROUP AG and/or its affiliates Investments in affiliated private investment funds—carried interest $497.3 $35.1 ($30.5) ($2.2) $499.7 Q2 2024 Change in accrued carried interest Acquisition-related amortization and impairments Net Distributions Q3 2024
Non-GAAP Reconciliation
13T. R O W E P R I C E Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Net Revenues, GAAP Basis $1,670.7 $1,642.0 $1,750.2 $1,733.3 $1,785.6 Non-GAAP Adjustments1: Consolidated Investment Products 0.7 0.5 1.2 0.5 1.3 Investment Amortization and Impairments 25.8 10.9 12.4 26.9 30.5 Net Revenues, Non-GAAP Basis $1,697.2 $1,653.4 $1,763.8 $1,760.7 $1,817.4 Operating Income, GAAP Basis $581.3 $387.2 $586.6 $564.7 $613.6 Non-GAAP Adjustments1: Acquisition-Related Adjustments 67.4 51.3 50.5 73.0 59.0 Consolidated Investment Products 1.4 2.3 2.3 2.6 2.4 Supplemental Savings Plan Liability (14.2) 61.9 53.0 14.6 43.4 Operating Income, Non-GAAP Basis $635.9 $502.7 $692.4 $654.9 $718.4 Operating Margin, GAAP Basis2 34.8 % 23.6 % 33.5 % 32.6 % 34.4 % Operating Margin, as Adjusted2 37.5 % 30.4 % 39.3 % 37.2 % 39.5 % 1 For a description of the non-GAAP adjustments, see the related earnings releases and/or prior 10Q or 10Ks filed with the SEC. 2 Operating margin is equal to operating income divided by net revenues. U.S. $ millions Non-GAAP Net Revenues and Operating Income Reconciliation
Appendix
15T. R O W E P R I C E $(28.5) $(61.7) $(81.8) $(23.9) $13.2 $5.6 $(0.3) $(6.5) $(7.5) $(12.2) $(12.2) $(13.8) $13.5 $12.1 $(21.0) $(49.5) $(69.6) $(10.1) 2019 2020 2021 2022 2023 Sep 2024 $(100.0) $(80.0) $(60.0) $(40.0) $(20.0) $— $20.0 Firmwide AUM includes assets managed by T. Rowe Price Associates, Inc., and its investment advisory affiliates. Subadvisory Variable Annuity (VA) Business U.S. $ billions ▪ VA portion of total AUM has dropped from 9% in 2019 to more than 6% in 2024. ▪ Organic growth of VA business has been lower than overall business for more than 5 years. ▪ Average effective fee rate on VA accounts is <30 bps, though this varies by asset class and account size. As of September 2024, the Other category includes about $85 billion of subadvised assets that are not VA. $1,207 $1,471 $1,688 $1,275 $1,445 $1,631 $1,099 $1,350 $1,555 $1,180 $1,342 $1,526 $108 $121 $133 $95 $103 $104 2019 2020 2021 2022 2023 Sep 2024 $— $500 $1,000 $1,500 $2,000 Firm-Wide Flows Firm-Wide AUM Subadvised VA Other YTD Subadvised VA Other
16T. R O W E P R I C E Figures may not total due to rounding. Investment performance overview (slide 4) 1 Source: © 2024 Morningstar, Inc. All rights reserved. The information contained herein: 1) is proprietary to Morningstar and/or its content providers; 2) may not be copied or distributed; and 3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. 2 Source: Morningstar. Primary share class only. Excludes money market mutual funds, funds with an operating history of less than one year, T. Rowe Price passive funds, and T. Rowe Price funds that are clones of other funds. The top chart reflects the percentage of T. Rowe Price funds with 1 year, 3 year, 5 year, and 10 year track record that outperformed the Morningstar category median. The bottom chart reflects the percentage of T. Rowe Price funds AUM that has outperformed for the time periods indicated. Total AUM included for this analysis includes $332B for 1 year, $329B for 3 years, $328B for 5 years, and $327B for 10 years. 3 Passive Peer Median was created by T. Rowe Price using data from Morningstar. Primary share class only. Excludes money market mutual funds, funds with an operating history of less than one year, funds with fewer than three peers, T. Rowe Price passive funds, and T. Rowe Price funds that are clones of a retail fund. This analysis compares T. Rowe Price active funds with the applicable universe of passive/index open-end funds and ETFs of peer firms. The top chart reflects the percentage of T. Rowe Price funds with 1 year, 3 year, 5 year, and 10 year track record that outperformed the passive peer universe. The bottom chart reflects the percentage of T. Rowe Price funds AUM that has outperformed for the time periods indicated. Total AUM included for this analysis includes $315B for 1 year, $312B for 3 years, $272B for 5 years, and $267B for 10 years. 4 Composite net returns are calculated using the highest applicable separate account fee schedule. Excludes money market composites. All composites compared to official GIPS composite primary benchmark. The top chart reflects the percentage of T. Rowe Price composites with 1 year, 3 year, 5 year, and 10 year track record that outperformed their benchmarks. The bottom chart reflects the percentage of T. Rowe Price composite AUM that has outperformed for the time periods indicated. Total AUM included for this analysis includes $1,457B for 1 year, $1,452B for 3 years, $1,444B for 5 years, and $1,392B for 10 years. Capital Allocation Based Income (slide 11) © 2024 CREDIT SUISSE GROUP AG and/or its affiliates. All rights reserved. ICE Data Indices, LLC (“ICE DATA”), is used with permission. ICE DATA, ITS AFFILIATES AND THEIR RESPECTIVE THIRD-PARTY SUPPLIERS DISCLAIM ANY AND ALL WARRANTIES AND REPRESENTATIONS, EXPRESS AND/OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, INCLUDING THE INDICES, INDEX DATA AND ANY DATA INCLUDED IN, RELATED TO, OR DERIVED THEREFROM. NEITHER ICE DATA, ITS AFFILIATES NOR THEIR RESPECTIVE THIRD-PARTY SUPPLIERS SHALL BE SUBJECT TO ANY DAMAGES OR LIABILITY WITH RESPECT TO THE ADEQUACY, ACCURACY, TIMELINESS OR COMPLETENESS OF THE INDICES OR THE INDEX DATA OR ANY COMPONENT THEREOF, AND THE INDICES AND INDEX DATA AND ALL COMPONENTS THEREOF ARE PROVIDED ON AN “AS IS” BASIS AND YOUR USE IS AT YOUR OWN RISK. ICE DATA, ITS AFFILIATES AND THEIR RESPECTIVE THIRD-PARTY SUPPLIERS DO NOT SPONSOR, ENDORSE, OR RECOMMEND T. ROWE PRICE OR ANY OF ITS PRODUCTS OR SERVICES. Additional Information
17T. R O W E P R I C E Important Information Referenced in the earnings call: Pacific Life provides a variety of products and services designed to help individuals and businesses in the retail, institutional, workforce benefits, and reinsurance markets achieve financial security. All guarantees are subject to the claims-paying ability and financial strength of the issuing insurance company. See https://investors.troweprice.com/news-releases/news-release-details/t-rowe- price-launches-lifetime-income-solution-retirees-pacific The following entities may be referenced in the earnings supplement or the earnings call: ▪ TRPA – T. Rowe Price Associates, Inc. ▪ TRPIM – T. Rowe Price Investment Management, Inc. This material, including any statements, information, data and content contained within it and any materials, information, images, links, graphics or recordings provided in conjunction with this material are being furnished by T. Rowe Price for general informational purposes only. Under no circumstances should the material, in whole or part, be copied or distributed without consent from T. Rowe Price. The views contained herein are as of the date of the presentation. The information and data obtained from third-party sources which is contained in the report were obtained from the sources deemed reliable; however, its accuracy and completeness is not guaranteed. The products and services discussed in this presentation are available via subsidiaries of T. Rowe Price Group as authorized in countries throughout the world. The products and services are not available to all investors or in all countries. Visit troweprice.com to learn more about the products and services available in your country and the T. Rowe Price Group subsidiary which is authorized to provide them. The material is not intended for use by persons in jurisdictions that prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request. © 2024 T. Rowe Price. All Rights Reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the Bighorn Sheep design are, collectively and/or apart, trademarks of T. Rowe Price Group, Inc.
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Grafico Azioni T Rowe Price (NASDAQ:TROW)
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