How did T. Rowe Price's assets under management and client flows perform in 2023?

Ending AUM was $1.445 trillion at December 31, 2023, up from $1.274.7 billion... more precisely $1,274.7 billion at year-end 2022. The company recorded net client outflows of $28.3 billion in Q4 2023 and $81.8 billion for the full year, with the largest outflows concentrated in equity assets, which had net outflows of $85.4 billion for 2023.

Why did GAAP and adjusted earnings per share differ in 2023?

GAAP diluted EPS was $7.76 for 2023, while adjusted diluted EPS was $7.59. The reconciliation adjusts for items including acquisition-related amortization and impairments, contingent consideration fair value changes, supplemental savings plan liability market valuation effects, and consolidated investment product impacts. The GAAP figure was higher primarily due to larger non-operating income from investment gains.

What drove the change in operating results in the fourth quarter?

Q4 2023 net revenues rose 7.7% year over year, mainly from higher investment advisory fees on higher average AUM and $25.3 million in performance-based fees on certain alternative products. GAAP operating expenses fell 1.3% from Q4 2022, but adjusted operating expenses rose 7.2%, driven by higher compensation, technology, advertising, and general and administrative costs.

What is the status of the audited 2023 financial statements?

The results are unaudited. The filing states that KPMG LLP is completing its audits of the 2023 consolidated financial statements and internal control over financial reporting, and that the company expects KPMG to finish in mid-February, after which it will file its 2023 Form 10-K.

How much did T. Rowe Price return to stockholders and what is its tax outlook?

The company returned $384 million to stockholders in Q4 2023 and $1,376 million for 2023 through the recurring quarterly dividend and stock repurchases. For 2024, it estimates a full-year effective tax rate of 23% to 27% on a U.S. GAAP basis, reflecting lower expected valuation allowances on UK-based deferred tax assets and a lower state tax rate.

TROW 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed February 8, 2024. Cited figures are marked; the original filing is the authoritative source.

Rowe Price Group, Inc. (NASDAQ-GS: TROW) reported results for the fourth quarter and full year 2023 in an earnings release furnished under Item 2.02 of this Form 8-K, dated February 8, 2024. Year-end assets under management were $1.445 trillion^a, with net client outflows of $28.3 billion in Q4 2023 and $81.8 billion for the full year. U.S. GAAP diluted EPS was $1.90 for Q4 2023 and $7.76 for 2023, while adjusted diluted EPS was $1.72 for Q4 2023 and $7.59 for 2023.

Net revenues were $1,642.0 million^b in Q4 2023, up 7.7% from Q4 2022 but down 1.7% from Q3 2023, and $6,460.5 million for the full year, down 0.4% from 2022. CEO Rob Sharps said 2023 was a challenging year with substantial net outflows but noted progress, including strong performance in large cap growth funds and work to position the firm for future growth. The company returned $384 million to stockholders in Q4 2023 and $1,376 million for the year through dividends and stock repurchases.

Full-year GAAP operating expenses rose 8.7% to $4,474.3 million^c, while net operating income fell 16.3% to $1,986.2 million. The company estimates its 2024 effective tax rate will be in the range of 23% to 27% on a U.S. GAAP basis. The financial results are unaudited.

The filing states that KPMG LLP is completing its audits and that the company expects to file its 2023 Form 10-K in mid-February. A Regulation FD supplement (Exhibit 99.2) accompanied an investor webcast held the same day, and the release and supplement are furnished rather than filed.

02—Key points

Key Highlights

Year-end AUM of $1.445 trillion, with Q4 2023 net outflows of $28.3 billion and full-year 2023 net outflows of $81.8 billion
Q4 2023 diluted GAAP EPS of $1.90 versus $1.16 in Q4 2022; full-year 2023 diluted GAAP EPS of $7.76 versus $6.70 in 2022
Full-year 2023 adjusted diluted EPS of $7.59, down 5.4% from $8.02 in 2022
Q4 2023 net revenues of $1,642.0 million, up 7.7% year over year, driven by higher investment advisory fees and $25.3 million in performance-based fees on alternative products
Full-year 2023 GAAP net operating income fell 16.3% to $1,986.2 million, while GAAP operating expenses rose 8.7% to $4,474.3 million
Capital returned to stockholders totaled $384 million in Q4 2023 and $1,376 million for 2023 through dividends and share repurchases
2024 effective tax rate guidance of 23% to 27% on a U.S. GAAP basis and 23% to 26% on a non-GAAP basis

03—Questions

Frequently Asked Questions

How did T. Rowe Price's assets under management and client flows perform in 2023?
Ending AUM was $1.445 trillion at December 31, 2023, up from $1.274.7 billion... more precisely $1,274.7 billion at year-end 2022. The company recorded net client outflows of $28.3 billion in Q4 2023 and $81.8 billion for the full year, with the largest outflows concentrated in equity assets, which had net outflows of $85.4 billion for 2023.
Why did GAAP and adjusted earnings per share differ in 2023?
GAAP diluted EPS was $7.76 for 2023, while adjusted diluted EPS was $7.59. The reconciliation adjusts for items including acquisition-related amortization and impairments, contingent consideration fair value changes, supplemental savings plan liability market valuation effects, and consolidated investment product impacts. The GAAP figure was higher primarily due to larger non-operating income from investment gains.
What drove the change in operating results in the fourth quarter?
Q4 2023 net revenues rose 7.7% year over year, mainly from higher investment advisory fees on higher average AUM and $25.3 million in performance-based fees on certain alternative products. GAAP operating expenses fell 1.3% from Q4 2022, but adjusted operating expenses rose 7.2%, driven by higher compensation, technology, advertising, and general and administrative costs.
What is the status of the audited 2023 financial statements?
The results are unaudited. The filing states that KPMG LLP is completing its audits of the 2023 consolidated financial statements and internal control over financial reporting, and that the company expects KPMG to finish in mid-February, after which it will file its 2023 Form 10-K.
How much did T. Rowe Price return to stockholders and what is its tax outlook?
The company returned $384 million to stockholders in Q4 2023 and $1,376 million for 2023 through the recurring quarterly dividend and stock repurchases. For 2024, it estimates a full-year effective tax rate of 23% to 27% on a U.S. GAAP basis, reflecting lower expected valuation allowances on UK-based deferred tax assets and a lower state tax rate.

04—Continue

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