How did T. Rowe Price's assets under management and flows change in the second quarter of 2024?

AUM rose $26.9 billion to $1.57 trillion, driven by $30.6 billion in net market appreciation and income. Net client outflows were $3.7 billion, an improvement from $8.0 billion in net outflows in Q1 2024. Equity assets saw $(14.9) billion in net outflows, while fixed income had $7.8 billion in net inflows.

What drove the difference between GAAP and adjusted earnings per share?

GAAP diluted EPS was $2.11 and adjusted diluted EPS was $2.26. The filing's reconciliation shows adjustments for acquisition-related amortization and impairments, retention arrangements, supplemental savings plan liability, consolidated investment products, and other non-operating income. Acquisition-related adjustments alone contributed $0.24 per share in the quarter.

Why did the effective fee rate decline?

The investment advisory annualized effective fee rate was 41.6 basis points, compared with 42.3 basis points in Q2 2023 and 42.1 basis points in Q1 2024. The company said client flows and transfers shifted the AUM mix toward lower-fee products and asset classes.

What did operating expenses look like compared with the prior year?

GAAP operating expenses were $1,168.6 million, up 8.5% from Q2 2023. Adjusted operating expenses were $1,105.8 million, up 7.8%. Increases were driven by higher compensation, distribution and servicing costs, advertising and promotion, and general and administrative costs, partly offset by lower research fee expense.

What is the company's outlook for tax rates and capital returns?

The company estimates its full-year 2024 effective tax rate at 23.5% to 26.5% on a U.S. GAAP basis and 23.5% to 25.5% on a non-GAAP basis. It returned $396 million to stockholders in Q2 2024 through dividends and share repurchases, and the dividend per share was $1.24.

TROW 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed July 26, 2024. Cited figures are marked; the original filing is the authoritative source.

T.

Rowe Price Group, Inc. (NASDAQ-GS: TROW) furnished an 8-K on July 26, 2024 reporting results for the three and six months ended June 30, 2024. Quarter-end assets under management were $1.57 trillion^a, up $26.9 billion during the quarter, with net client outflows of $3.7 billion. Net revenues were $1,733.3 million, up 7.6% from Q2 2023 and down 1.0% from Q1 2024.

Diluted GAAP EPS was $2.11^b, and adjusted diluted EPS was $2.26. Operating expenses were $1,168.6 million on a GAAP basis, and adjusted operating expenses were $1,105.8 million. The investment advisory annualized effective fee rate declined to 41.6 basis points from 42.3 basis points a year earlier and 42.1 basis points in Q1 2024.

The company attributed this to client flows and transfers shifting mix toward lower-fee products and asset classes. Equity assets under management were $810.3 billion^c at June 30, 2024, while multi-asset assets were $529.1 billion and fixed income assets were $179.9 billion. Alternatives assets were $49.8 billion.

Net outflows were concentrated in equity strategies, with equity net cash flows of $(14.9) billion in the quarter. The company returned $396 million^d to stockholders through its recurring quarterly dividend and share repurchases during the quarter.

Management said the sales pipeline is healthy, redemption pressure is stabilizing, and the company remains on track to substantially reduce net outflows in 2024. The company also estimated its full-year 2024 effective tax rate at 23.5% to 26.5% on a U.S. GAAP basis.

02—Key points

Key Highlights

Quarter-end AUM of $1.57 trillion, with ending AUM up 12.1% from June 30, 2023 ($1,399.4 billion) and up 1.7% from March 31, 2024 ($1,542.2 billion).
Net client outflows of $3.7 billion in Q2 2024, improved from $8.0 billion in net outflows in Q1 2024 and $20.0 billion in Q2 2023.
GAAP diluted EPS of $2.11 (up 2.4% year over year) and adjusted diluted EPS of $2.26 (up 11.9% year over year).
Net revenues of $1,733.3 million, up 7.6% from Q2 2023 but down 1.0% from Q1 2024, with investment advisory fees of $1,585.6 million.
Investment advisory annualized effective fee rate fell to 41.6 basis points from 42.3 basis points in Q2 2023, reflecting a mix shift toward lower-fee products.
Capital allocation-based income was $0.1 million, down from $38.7 million in Q2 2023, as $26.9 million of acquisition-related amortization and impairments offset $27.0 million of additional accrued carried interest.
The company returned $396 million to stockholders in the quarter through dividends and share repurchases, and expects to substantially reduce net outflows in 2024.

03—Questions

Frequently Asked Questions

How did T. Rowe Price's assets under management and flows change in the second quarter of 2024?
AUM rose $26.9 billion to $1.57 trillion, driven by $30.6 billion in net market appreciation and income. Net client outflows were $3.7 billion, an improvement from $8.0 billion in net outflows in Q1 2024. Equity assets saw $(14.9) billion in net outflows, while fixed income had $7.8 billion in net inflows.
What drove the difference between GAAP and adjusted earnings per share?
GAAP diluted EPS was $2.11 and adjusted diluted EPS was $2.26. The filing's reconciliation shows adjustments for acquisition-related amortization and impairments, retention arrangements, supplemental savings plan liability, consolidated investment products, and other non-operating income. Acquisition-related adjustments alone contributed $0.24 per share in the quarter.
Why did the effective fee rate decline?
The investment advisory annualized effective fee rate was 41.6 basis points, compared with 42.3 basis points in Q2 2023 and 42.1 basis points in Q1 2024. The company said client flows and transfers shifted the AUM mix toward lower-fee products and asset classes.
What did operating expenses look like compared with the prior year?
GAAP operating expenses were $1,168.6 million, up 8.5% from Q2 2023. Adjusted operating expenses were $1,105.8 million, up 7.8%. Increases were driven by higher compensation, distribution and servicing costs, advertising and promotion, and general and administrative costs, partly offset by lower research fee expense.
What is the company's outlook for tax rates and capital returns?
The company estimates its full-year 2024 effective tax rate at 23.5% to 26.5% on a U.S. GAAP basis and 23.5% to 25.5% on a non-GAAP basis. It returned $396 million to stockholders in Q2 2024 through dividends and share repurchases, and the dividend per share was $1.24.

04—Continue

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