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): July 28, 2023
T. Rowe Price Group, Inc.
(Exact name of registrant as specified in its charter)
| (State of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
| (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:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
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 July 28, 2023 we issued an earnings release reporting our results of operations for the three and six months ended June 30, 2023. 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 July 28, 2023, the Company will hold an investor conference call and webcast to discuss the Company’s earnings results for the three and six months ended June 30, 2023. A copy of supplemental materials used during the earnings call is furnished as Exhibit 99.2 to this Form 8-K.
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: July 28, 2023
NEWS RELEASE
T. ROWE PRICE GROUP REPORTS SECOND QUARTER 2023 RESULTS
BALTIMORE (July 28, 2023) - T. Rowe Price Group, Inc. (NASDAQ-GS: TROW) today reported its results for the second quarter of 2023.
▪Quarter end assets under management of $1.40 trillion
▪Net client outflows of $20.0 billion
▪Diluted earnings per common share (EPS) of $2.06; Adjusted diluted EPS of $2.02
▪Returned $323 million to stockholders mostly from the recurring quarterly dividend
Rob Sharps, chief executive officer and president, commented, "While equity outflows continued in the second quarter, we saw improved performance in a number of important investment strategies. Stronger equity markets helped lift revenue from first quarter levels, and we identified substantial cost savings that will allow us to meaningfully slow expense growth while continuing to pursue our strategic initiatives."
Financial Highlights
| Three months ended | ||||||||||||||||||||||||||||||||
| (in millions, except per-share data) | 6/30/2023 | 6/30/2022 | Change | 3/31/2023 | Change | |||||||||||||||||||||||||||
| U.S. GAAP basis | ||||||||||||||||||||||||||||||||
| Investment advisory fees | $ | 1,430.8 | $ | 1,496.7 | (4.4) | % | $ | 1,391.8 | 2.8 | % | ||||||||||||||||||||||
Capital allocation-based income(1) (2) | $ | 38.7 | $ | (126.3) | n/m | $ | 16.9 | n/m | ||||||||||||||||||||||||
| Net revenues | $ | 1,610.2 | $ | 1,513.0 | 6.4 | % | $ | 1,537.6 | 4.7 | % | ||||||||||||||||||||||
| Operating expenses | $ | 1,076.7 | $ | 844.4 | 27.5 | % | $ | 1,053.4 | 2.2 | % | ||||||||||||||||||||||
| Net operating income | $ | 533.5 | $ | 668.6 | (20.2) | % | $ | 484.2 | 10.2 | % | ||||||||||||||||||||||
Non-operating income (loss)(2) | $ | 106.2 | $ | (279.9) | n/m | $ | 135.4 | n/m | ||||||||||||||||||||||||
| Net income attributable to T. Rowe Price | $ | 476.4 | $ | 339.6 | 40.3 | % | $ | 421.5 | 13.0 | % | ||||||||||||||||||||||
| Diluted earnings per common share | $ | 2.06 | $ | 1.46 | 41.1 | % | $ | 1.83 | 12.6 | % | ||||||||||||||||||||||
| Weighted average common shares outstanding assuming dilution | 225.2 | 227.9 | (1.2) | % | 225.2 | — | % | |||||||||||||||||||||||||
Adjusted basis(3) | ||||||||||||||||||||||||||||||||
| Operating expenses | $ | 1,026.2 | $ | 947.3 | 8.3 | % | $ | 1,022.5 | 0.4 | % | ||||||||||||||||||||||
| Operating expenses, excluding accrued carried interest compensation | $ | 1,010.5 | $ | 992.5 | 1.8 | % | $ | 1,013.9 | (0.3) | % | ||||||||||||||||||||||
| Net operating income | $ | 596.6 | $ | 579.7 | 2.9 | % | $ | 528.0 | 13.0 | % | ||||||||||||||||||||||
Non-operating income (loss)(2) | $ | 31.8 | $ | (30.6) | n/m | $ | 30.8 | n/m | ||||||||||||||||||||||||
| Net income attributable to T. Rowe Price | $ | 466.5 | $ | 417.7 | 11.7 | % | $ | 389.4 | 19.8 | % | ||||||||||||||||||||||
| Diluted earnings per common share | $ | 2.02 | $ | 1.79 | 12.8 | % | $ | 1.69 | 19.5 | % | ||||||||||||||||||||||
Assets under management (in billions) | ||||||||||||||||||||||||||||||||
| Average assets under management | $ | 1,357.4 | $ | 1,407.1 | (3.5) | % | $ | 1,322.9 | 2.6 | % | ||||||||||||||||||||||
| Ending assets under management | $ | 1,399.4 | $ | 1,309.7 | 6.8 | % | $ | 1,341.7 | 4.3 | % | ||||||||||||||||||||||
| Investment advisory effective fee rate (bps) | 42.3 | 42.7 | (0.9) | % | 42.7 | (0.9) | % | |||||||||||||||||||||||||
(1) Capital allocation-based income represents the change in accrued carried interest.
(2) The percentage change is not meaningful (n/m).
(3) See the reconciliation to the comparable U.S. GAAP measures at the end of this earnings release.
1
Assets Under Management
During Q2 2023, assets under management (AUM) increased $57.7 billion to $1.40 trillion. The components of the change in AUM, by asset class, are shown in the table below.
| Three months ended 6/30/2023 | |||||||||||||||||||||||||||||
| (in billions) | Equity | Fixed income, including money market | Multi-asset(1) | Alternatives(2) | Total | ||||||||||||||||||||||||
| Assets under management at beginning of period | $ | 695.1 | $ | 170.4 | $ | 431.9 | $ | 44.3 | $ | 1,341.7 | |||||||||||||||||||
Net cash flows(3) | (19.5) | (1.9) | 1.6 | (0.2) | (20.0) | ||||||||||||||||||||||||
Net market appreciation and gains(4) | 56.6 | 0.8 | 19.7 | 0.6 | 77.7 | ||||||||||||||||||||||||
| Change during the period | 37.1 | (1.1) | 21.3 | 0.4 | 57.7 | ||||||||||||||||||||||||
| Assets under management at June 30, 2023 | $ | 732.2 | $ | 169.3 | $ | 453.2 | $ | 44.7 | $ | 1,399.4 | |||||||||||||||||||
(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 June 30, 2023 were
$12.2 billion and are not reflected in fee basis AUM above.
(3) Alternatives net cash flows include $0.4 billion in outflows that represent investment manager-driven distributions.
(4) Includes net distributions not reinvested of $0.2 billion.
Investors domiciled outside the United States accounted for 8.9% of the firm's AUM at June 30, 2023, 8.9% at March 31, 2023 and 9.1% at December 31, 2022.
The firm provides participant accounting and plan administration for retirement plans that invest in the firm's U.S. mutual funds and collective investment trusts, as well as funds managed outside of the firm's complex. As of June 30, 2023, the firm's assets under administration were $243 billion, of which $147 billion were assets we manage.
In recent years, the firm began offering 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 $9 billion at
June 30, 2023.
2
Financial Results Highlights
Net Revenues
| Three months ended | ||||||||||||||||||||||||||||||||
| (in millions) | 6/30/2023 | 6/30/2022 | % Change | 3/31/2023 | % Change | |||||||||||||||||||||||||||
| Investment advisory fees | ||||||||||||||||||||||||||||||||
| Equity | $ | 862.3 | $ | 941.0 | (8.4) | % | $ | 833.9 | 3.4 | % | ||||||||||||||||||||||
| Fixed income, including money market | 100.0 | 109.9 | (9.0) | % | 102.4 | (2.3) | % | |||||||||||||||||||||||||
| Multi-asset | 391.3 | 377.5 | 3.7 | % | 386.0 | 1.4 | % | |||||||||||||||||||||||||
| Alternatives | 77.2 | 68.3 | 13.0 | % | 69.5 | 11.1 | % | |||||||||||||||||||||||||
| Total investment advisory fees | $ | 1,430.8 | $ | 1,496.7 | (4.4) | % | $ | 1,391.8 | 2.8 | % | ||||||||||||||||||||||
Capital allocation-based income(1) | $ | 38.7 | $ | (126.3) | n/m | $ | 16.9 | n/m | ||||||||||||||||||||||||
| Administrative, distribution, and servicing fees | 140.7 | 142.6 | (1.3) | % | 128.9 | 9.2 | % | |||||||||||||||||||||||||
| Net revenues | $ | 1,610.2 | $ | 1,513.0 | 6.4 | % | $ | 1,537.6 | 4.7 | % | ||||||||||||||||||||||
| Average AUM (in billions): | ||||||||||||||||||||||||||||||||
| Equity | $ | 703.4 | $ | 769.6 | (8.6) | % | $ | 687.0 | 2.4 | % | ||||||||||||||||||||||
| Fixed income, including money market | 170.4 | 174.8 | (2.5) | % | 169.6 | 0.5 | % | |||||||||||||||||||||||||
| Multi-asset | 439.0 | 420.2 | 4.5 | % | 422.2 | 4.0 | % | |||||||||||||||||||||||||
| Alternatives | 44.6 | 42.5 | 4.9 | % | 44.1 | 1.1 | % | |||||||||||||||||||||||||
| Average AUM | $ | 1,357.4 | $ | 1,407.1 | (3.5) | % | $ | 1,322.9 | 2.6 | % | ||||||||||||||||||||||
(1)The Capital allocation-based income represents the change in accrued carried interest. The percentage change is not meaningful (n/m).
Net revenues earned in Q2 2023 were $1.6 billion, an increase of 6.4% from Q2 2022 primarily driven by an increase in accrued carried interest in Q2 2023. The change in accrued carried interest in Q2 2022 reduced net revenues. The increase in accrued carried interest in 2023 was partially offset by lower investment advisory fee revenue as lower overall markets and net outflows reduced average assets under management. In comparison to Q1 2023, net revenues increased 4.7% driven primarily by higher investment advisory fees on higher average assets under management and higher capital allocation-based income.
▪The investment advisory fee annualized effective fee rate of 42.3 basis points in Q2 2023 decreased from 42.7 basis points earned in Q2 2022 and in Q1 2023. In comparison with Q2 2022, the annualized effective fee rate was primarily driven by a mix shift toward lower fee asset classes and vehicles as a result of overall market declines and net outflows over the last twelve months.
▪Capital allocation-based income in Q2 2023 of $38.7 million includes $51.0 million in additional accrued carried interest, partially offset by $12.3 million in acquisition-related non-cash amortization. Comparatively, the Q2 2022 amount reduced net revenues by $126.3 million. The Q2 2022 amount includes $113.0 million in market-related reductions of accrued carried interest and $13.3 million in non-cash amortization.
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 of 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.
3
Operating Expenses
| Three months ended | ||||||||||||||||||||||||||||||||
| (in millions) | 6/30/2023 | 6/30/2022 | % Change | 3/31/2023 | % Change | |||||||||||||||||||||||||||
| Compensation, benefits, and related costs | $ | 591.0 | $ | 589.8 | 0.2 | % | $ | 593.3 | (0.4) | % | ||||||||||||||||||||||
| Acquisition-related retention agreements | 13.6 | 18.0 | (24.4) | % | 14.2 | (4.2) | % | |||||||||||||||||||||||||
Capital allocation-based income compensation(1) | 10.6 | (50.9) | n/m | 3.5 | n/m | |||||||||||||||||||||||||||
Supplemental savings plan(1) | 33.0 | (93.5) | n/m | 42.5 | n/m | |||||||||||||||||||||||||||
| Total compensation and related costs | 648.2 | 463.4 | 39.9 | % | 653.5 | (0.8) | % | |||||||||||||||||||||||||
| Distribution and servicing | 67.8 | 75.7 | (10.4) | % | 71.5 | (5.2) | % | |||||||||||||||||||||||||
| Advertising and promotion | 22.9 | 21.4 | 7.0 | % | 25.8 | (11.2) | % | |||||||||||||||||||||||||
| Product and recordkeeping related costs | 77.7 | 76.3 | 1.8 | % | 72.1 | 7.8 | % | |||||||||||||||||||||||||
| Technology, occupancy, and facility costs | 154.7 | 134.3 | 15.2 | % | 146.6 | 5.5 | % | |||||||||||||||||||||||||
| General, administrative, and other | 100.0 | 96.4 | 3.7 | % | 107.5 | (7.0) | % | |||||||||||||||||||||||||
| Change in fair value of contingent consideration | (23.2) | (50.3) | (53.9) | % | (49.6) | (53.2) | % | |||||||||||||||||||||||||
| Acquisition-related amortization and impairment costs | 28.6 | 27.2 | 5.1 | % | 26.0 | 10.0 | % | |||||||||||||||||||||||||
| Total operating expenses | $ | 1,076.7 | $ | 844.4 | 27.5 | % | $ | 1,053.4 | 2.2 | % | ||||||||||||||||||||||
Total adjusted operating expenses(2) | $ | 1,026.2 | $ | 947.3 | 8.3 | % | $ | 1,022.5 | 0.4 | % | ||||||||||||||||||||||
(1) The percentage change is not meaningful (n/m).
(2) See the reconciliation to the comparable U.S. GAAP measures at the end of this earnings release.
Operating expenses were $1,076.7 million, an increase of 27.5% compared with Q2 2022 and an increase of 2.2% compared with Q1 2022. On a non-GAAP basis, adjusted operating expenses in Q2 2023 were $1,026.2 million, a 8.3% increase over Q2 2022 and a 0.4% increase compared with Q1 2023. The increase in adjusted operating expenses in Q2 2023 was largely driven by higher accrued carried interest-related compensation as the amount in Q2 2022 reduced operating expenses.
▪Compensation, benefits, and related costs in Q2 2023 of $591.0 million increased slightly from Q2 2022 as higher salaries and related benefits were almost completely offset by a lower interim bonus accrual and other employee-related costs. Compensation, benefits, and related costs in Q2 2023 declined $2.3 million from Q1 2023, primarily reflecting lower employee-related benefits. The firm employed 7,903 associates at June 30, 2023, an increase of 0.4% from the end of 2022 and an increase of 1.7% from June 30, 2022.
▪Distribution and servicing costs in Q2 2023 of $67.8 million declined $7.9 million from Q2 2022, primarily driven by lower average AUM in certain SICAV share classes.
▪Technology, occupancy, and facility costs in Q2 2023 of $154.7 million increased $20.4 million from Q2 2022, primarily due to increased office facility costs, mainly related to rent expense associated with a new UK facility we expect to occupy later this year, and higher costs from the firm's ongoing investment in its technology capabilities, including hosted solution licenses and depreciation.
4
Non-operating income (loss)
| (in millions) | Three months ended | ||||||||||||||||
| 6/30/2023 | 6/30/2022 | 3/31/2023 | |||||||||||||||
| Net gains (losses) from non-consolidated T. Rowe Price investment products | |||||||||||||||||
| Cash and discretionary investments | |||||||||||||||||
| Dividend income | $ | 25.5 | $ | 2.8 | $ | 20.2 | |||||||||||
| Market-related gains (losses) and equity in earnings (losses) | 6.3 | (33.4) | 10.6 | ||||||||||||||
| Total net gains (losses) from cash and discretionary investments | 31.8 | (30.6) | 30.8 | ||||||||||||||
| Seed capital investments | |||||||||||||||||
| Dividend income | 0.4 | 0.2 | 0.5 | ||||||||||||||
| Market-related gains (losses) and equity in earnings (losses) | 14.4 | (40.6) | 15.1 | ||||||||||||||
| Net gains recognized upon deconsolidation | — | 5.2 | — | ||||||||||||||
| Investments used to hedge the supplemental savings plan liability | 33.6 | (96.4) | 44.7 | ||||||||||||||
| Total net gains (losses) from non-consolidated T. Rowe Price investment products | 80.2 | (162.2) | 91.1 | ||||||||||||||
| Other investment income (loss) | 8.9 | (7.7) | 2.8 | ||||||||||||||
| Net gains (losses) on investments | 89.1 | (169.9) | 93.9 | ||||||||||||||
| Net gains (losses) on consolidated sponsored investment portfolios | 24.4 | (104.6) | 45.4 | ||||||||||||||
| Other losses, including foreign currency losses | (7.3) | (5.4) | (3.9) | ||||||||||||||
| Non-operating income (loss) | $ | 106.2 | $ | (279.9) | $ | 135.4 | |||||||||||
▪On a non-GAAP basis, non-operating income (loss) comprises the investment gains/losses generated from the firm's cash and discretionary investment portfolio. The net investment gains on this portfolio totaled $31.8 million in Q2 2023, compared with net investment losses of $30.6 million in the 2022 period, and net investment gains of $30.8 million in Q1 2023.
Income taxes
The following reconciles the statutory federal income tax rate to the firm's effective tax rate for the second quarter and six months ended 2023 and 2022:
| Three months ended | Six months ended | |||||||||||||||||||||||||
| 6/30/2023 | 6/30/2022 | 6/30/2023 | 6/30/2022 | |||||||||||||||||||||||
Statutory U.S. federal income tax rate | 21.0 | % | 21.0 | % | 21.0 | % | 21.0 | % | ||||||||||||||||||
State income taxes for current year, net of federal income tax benefits(1) | 2.8 | 3.9 | 2.9 | 3.5 | ||||||||||||||||||||||
Net (income) losses attributable to redeemable non-controlling interests(2) | (0.3) | 2.7 | (0.3) | 1.1 | ||||||||||||||||||||||
Net excess tax benefits from stock-based compensation plans activity | (0.2) | (0.5) | (0.3) | (0.5) | ||||||||||||||||||||||
| Other items, including valuation allowances | 1.5 | (1.1) | 3.4 | (0.2) | ||||||||||||||||||||||
Effective income tax rate | 24.8 | % | 26.0 | % | 26.7 | % | 24.9 | % | ||||||||||||||||||
(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.
5
▪The firm's non-GAAP effective tax rate was 25.8% for Q2 2023, compared with 23.9% for Q2 2022. The Q2 2023 pre-tax income includes losses in certain foreign jurisdictions in which no associated tax benefit was recognized in the income tax provision.
▪The firm estimates that its effective tax rate for the full year 2023 will be in the range of 26% to 30%, on a U.S. GAAP basis, and 26.5% to 29.5%, on a non-GAAP basis.
Other Matters
The financial results presented in this release are unaudited. The firm expects to file its Form 10-Q Quarterly Report for the second quarter of 2023 with the U.S. Securities and Exchange Commission later today. The Form 10-Q will include additional information on the firm's unaudited consolidated financial statements at June 30, 2023.
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, net income and earnings per common share, tax rates, general economic conditions, 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 2022 Annual Report on Form 10-K.
Founded in 1937, Baltimore-based T. Rowe Price (troweprice.com) is a global investment management organization that provides a broad array of mutual funds, subadvisory services, and separate account management for individual and institutional investors, retirement plans, and financial intermediaries. The organization also offers a variety of sophisticated investment planning and guidance tools. T. Rowe Price's disciplined, risk-aware investment approach focuses on diversification, style consistency, and fundamental research.
Webcast Information
Chief Executive Officer 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, July 28, 2023 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.
6
CONTACTS:
| Public Relations | Investor Relations | ||||||||||
| Jeanne Moore | Linsley Carruth | ||||||||||
| 443-938-0463 | 410-345-3717 | ||||||||||
| jeanne.moore@troweprice.com | linsley.carruth@troweprice.com | ||||||||||
7
| Unaudited Consolidated Statements of Income | |||||||||||||||||||||||||||||||||||
(in millions, except per-share amounts) | |||||||||||||||||||||||||||||||||||
| Three months ended | Six months ended | ||||||||||||||||||||||||||||||||||
Revenues | 6/30/2023 | 6/30/2022 | 3/31/2023 | 6/30/2023 | 6/30/2022 | ||||||||||||||||||||||||||||||
| Investment advisory fees | $ | 1,430.8 | $ | 1,496.7 | $ | 1,391.8 | $ | 2,822.6 | $ | 3,158.8 | |||||||||||||||||||||||||
| Capital allocation-based income | 38.7 | (126.3) | 16.9 | 55.6 | (81.9) | ||||||||||||||||||||||||||||||
| Administrative, distribution, and servicing fees | 140.7 | 142.6 | 128.9 | 269.6 | 299.1 | ||||||||||||||||||||||||||||||
| Net revenues | 1,610.2 | 1,513.0 | 1,537.6 | 3,147.8 | 3,376.0 | ||||||||||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||||||
| Compensation, benefits, and related costs | 591.0 | 589.8 | 593.3 | 1,184.3 | 1,185.7 | ||||||||||||||||||||||||||||||
| Acquisition-related retention agreements | 13.6 | 18.0 | 14.2 | 27.8 | 37.2 | ||||||||||||||||||||||||||||||
| Capital allocation-based income compensation | 10.6 | (50.9) | 3.5 | 14.1 | (33.4) | ||||||||||||||||||||||||||||||
| Supplemental savings plan | 33.0 | (93.5) | 42.5 | 75.5 | (144.5) | ||||||||||||||||||||||||||||||
| Total compensation and related costs | 648.2 | 463.4 | 653.5 | 1,301.7 | 1,045.0 | ||||||||||||||||||||||||||||||
| Distribution and servicing | 67.8 | 75.7 | 71.5 | 139.3 | 161.6 | ||||||||||||||||||||||||||||||
| Advertising and promotion | 22.9 | 21.4 | 25.8 | 48.7 | 44.8 | ||||||||||||||||||||||||||||||
| Product and recordkeeping related costs | 77.7 | 76.3 | 72.1 | 149.8 | 156.7 | ||||||||||||||||||||||||||||||
| Technology, occupancy, and facility costs | 154.7 | 134.3 | 146.6 | 301.3 | 268.2 | ||||||||||||||||||||||||||||||
| General, administrative, and other | 100.0 | 96.4 | 107.5 | 207.5 | 195.2 | ||||||||||||||||||||||||||||||
| Contingent consideration fair value adjustments | (23.2) | (50.3) | (49.6) | (72.8) | (95.8) | ||||||||||||||||||||||||||||||
| Acquisition-related amortization and impairment costs | 28.6 | 27.2 | 26.0 | 54.6 | 54.3 | ||||||||||||||||||||||||||||||
Total operating expenses | 1,076.7 | 844.4 | 1,053.4 | 2,130.1 | 1,830.0 | ||||||||||||||||||||||||||||||
Net operating income | 533.5 | 668.6 | 484.2 | 1,017.7 | 1,546.0 | ||||||||||||||||||||||||||||||
| Non-operating income (loss) | |||||||||||||||||||||||||||||||||||
| Net gains (losses) on investments | 89.1 | (169.9) | 93.9 | 183.0 | (259.8) | ||||||||||||||||||||||||||||||
| Net gains (losses) on consolidated investment products | 24.4 | (104.6) | 45.4 | 69.8 | (206.0) | ||||||||||||||||||||||||||||||
| Other losses | (7.3) | (5.4) | (3.9) | (11.2) | (12.6) | ||||||||||||||||||||||||||||||
| Total non-operating income (loss) | 106.2 | (279.9) | 135.4 | 241.6 | (478.4) | ||||||||||||||||||||||||||||||
| Income before income taxes | 639.7 | 388.7 | 619.6 | 1,259.3 | 1,067.6 | ||||||||||||||||||||||||||||||
| Provision for income taxes | 158.5 | 100.9 | 177.9 | 336.4 | 265.4 | ||||||||||||||||||||||||||||||
| Net income | 481.2 | 287.8 | 441.7 | 922.9 | 802.2 | ||||||||||||||||||||||||||||||
| Less: net income (loss) attributable to redeemable non-controlling interests | 4.8 | (51.8) | 20.2 | 25.0 | (105.3) | ||||||||||||||||||||||||||||||
| Net income attributable to T. Rowe Price | 476.4 | 339.6 | 421.5 | 897.9 | 907.5 | ||||||||||||||||||||||||||||||
Less: net income allocated to outstanding restricted stock and stock unit holders | 11.6 | 7.4 | 10.5 | 22.1 | 20.4 | ||||||||||||||||||||||||||||||
| Net income allocated to T. Rowe Price common stockholders | $ | 464.8 | $ | 332.2 | $ | 411.0 | $ | 875.8 | $ | 887.1 | |||||||||||||||||||||||||
Earnings per share | |||||||||||||||||||||||||||||||||||
Basic | $ | 2.07 | $ | 1.47 | $ | 1.83 | $ | 3.90 | $ | 3.90 | |||||||||||||||||||||||||
Diluted | $ | 2.06 | $ | 1.46 | $ | 1.83 | $ | 3.89 | $ | 3.88 | |||||||||||||||||||||||||
Weighted-average common shares | |||||||||||||||||||||||||||||||||||
Outstanding | 224.4 | 226.7 | 224.4 | 224.4 | 227.5 | ||||||||||||||||||||||||||||||
Outstanding assuming dilution | 225.2 | 227.9 | 225.2 | 225.2 | 228.8 | ||||||||||||||||||||||||||||||
Summary of Adjusted Basis(1) | Three months ended | Six months ended | |||||||||||||||||||||||||||||||||
| (in millions, except per-share data) | 6/30/2023 | 6/30/2022 | 3/31/2023 | 6/30/2023 | 6/30/2022 | ||||||||||||||||||||||||||||||
| Operating expenses | $ | 1,026.2 | $ | 947.3 | $ | 1,022.5 | $ | 2,048.7 | $ | 1,986.4 | |||||||||||||||||||||||||
| Operating expenses, excluding accrued carried interest compensation | $ | 1,010.5 | $ | 992.5 | $ | 1,013.9 | $ | 2,024.4 | $ | 2,008.5 | |||||||||||||||||||||||||
| Net operating income | $ | 596.6 | $ | 579.7 | $ | 528.0 | $ | 1,124.6 | $ | 1,417.7 | |||||||||||||||||||||||||
| Non-operating income (loss) | $ | 31.8 | $ | (30.6) | $ | 30.8 | $ | 62.6 | $ | (54.4) | |||||||||||||||||||||||||
| Net income attributable to T. Rowe Price | $ | 466.5 | $ | 417.7 | $ | 389.4 | $ | 855.9 | $ | 1,034.6 | |||||||||||||||||||||||||
| Diluted earnings per common share | $ | 2.02 | $ | 1.79 | $ | 1.69 | $ | 3.71 | $ | 4.42 | |||||||||||||||||||||||||
(1) See the reconciliation to the comparable U.S. GAAP measures at the end of this earnings release. | |||||||||||||||||||||||||||||||||||
8
| Assets Under Management | Six months ended 6/30/2023 | ||||||||||||||||||||||||||||
| (in billions) | Equity | Fixed income, including money market | Multi-asset(1) | Alternatives(2) | Total | ||||||||||||||||||||||||
| Assets under management at beginning of period | $ | 664.2 | $ | 167.0 | $ | 400.1 | $ | 43.4 | $ | 1,274.7 | |||||||||||||||||||
Net cash flows(3) | (43.0) | (1.8) | 8.7 | — | (36.1) | ||||||||||||||||||||||||
Net market appreciation and gains(4) | 111.0 | 4.1 | 44.4 | 1.3 | 160.8 | ||||||||||||||||||||||||
| Change during the period | 68.0 | 2.3 | 53.1 | 1.3 | 124.7 | ||||||||||||||||||||||||
Assets under management at June 30, 2023 | $ | 732.2 | $ | 169.3 | $ | 453.2 | $ | 44.7 | $ | 1,399.4 | |||||||||||||||||||
(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.
(3) Alternatives net cash flows include $0.8 billion in outflows that represent investment manager-driven distributions.
(4) Includes net distributions not reinvested of $0.4 billion.
| Net Revenues | Six months ended | ||||||||||||||||
| (in millions) | 6/30/2023 | 6/30/2022 | % Change | ||||||||||||||
| Investment advisory fees | |||||||||||||||||
| Equity | $ | 1,696.2 | $ | 2,027.0 | (16.3) | % | |||||||||||
| Fixed income, including money market | 202.4 | 216.5 | (6.5) | % | |||||||||||||
| Multi-asset | 777.3 | 782.1 | (0.6) | % | |||||||||||||
| Alternatives | 146.7 | 133.2 | 10.1 | % | |||||||||||||
| Total investment advisory fees | $ | 2,822.6 | $ | 3,158.8 | (10.6) | % | |||||||||||
| Capital allocation-based income | 55.6 | (81.9) | 167.9 | % | |||||||||||||
| Administrative, distribution, and servicing fees | 269.6 | 299.1 | (9.9) | % | |||||||||||||
| Net revenues | $ | 3,147.8 | $ | 3,376.0 | (6.8) | % | |||||||||||
| Average AUM (in billions): | |||||||||||||||||
| Equity | $ | 695.2 | $ | 827.7 | (16.0) | % | |||||||||||
| Fixed income, including money market | 170.0 | 176.3 | (3.6) | % | |||||||||||||
| Multi-asset | 430.7 | 436.9 | (1.4) | % | |||||||||||||
| Alternatives | 44.3 | 42.1 | 5.2 | % | |||||||||||||
| Average AUM | $ | 1,340.2 | $ | 1,483.0 | (9.6) | % | |||||||||||
| Non-Operating Income (Loss) | |||||||||||
| (in millions) | Six months ended | ||||||||||
| 6/30/2023 | 6/30/2022 | ||||||||||
| Net gains (losses) from non-consolidated T. Rowe Price investment products | |||||||||||
| Cash and discretionary investments | |||||||||||
| Dividend income | $ | 45.7 | $ | 3.6 | |||||||
| Market-related gains (losses) and equity in earnings (losses) | 16.9 | (58.0) | |||||||||
| Total net gains (losses) from cash and discretionary investments | 62.6 | (54.4) | |||||||||
| Seed capital investments | |||||||||||
| Dividend income | 0.9 | 0.4 | |||||||||
| Market-related gains (losses) and equity in earnings (losses) | 29.5 | (63.4) | |||||||||
| Net gains recognized upon deconsolidation | — | 6.8 | |||||||||
| Investments used to hedge the supplemental savings plan liability | 78.3 | (151.7) | |||||||||
| Total net gains (losses) from non-consolidated T. Rowe Price investment products | 171.3 | (262.3) | |||||||||
| Other investment income | 11.7 | 2.5 | |||||||||
| Net gains (losses) on investments | 183.0 | (259.8) | |||||||||
| Net gains (losses) on consolidated sponsored investment portfolios | 69.8 | (206.0) | |||||||||
| Other losses, including foreign currency losses | (11.2) | (12.6) | |||||||||
| Non-operating income (loss) | $ | 241.6 | $ | (478.4) | |||||||
9
The following table summarizes the cash flows for the six months ended 2023 that are attributable to T. Rowe Price Group, our consolidated sponsored investment products, and the related eliminations required.
| Six months ended | |||||||||||||||||||||||
| 6/30/2023 | |||||||||||||||||||||||
(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) | $ | 897.9 | $ | 62.4 | $ | (37.4) | $ | 922.9 | |||||||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities | |||||||||||||||||||||||
| Depreciation, amortization and impairments of property, equipment and software | 117.9 | — | — | 117.9 | |||||||||||||||||||
| Amortization and impairment of acquisition-related assets and retention agreements | 97.9 | — | — | 97.9 | |||||||||||||||||||
| Fair value remeasurement of contingent liability | (72.8) | — | — | (72.8) | |||||||||||||||||||
| Stock-based compensation expense | 115.4 | — | — | 115.4 | |||||||||||||||||||
| Net (gains) losses recognized on investments | (253.0) | — | 37.4 | (215.6) | |||||||||||||||||||
| Net redemptions in sponsored investment products used to economically hedge supplemental savings plan liability | 18.4 | — | — | 18.4 | |||||||||||||||||||
| Net change in trading securities held by consolidated sponsored investment products | — | (414.5) | — | (414.5) | |||||||||||||||||||
| Other changes | 339.3 | 1.4 | (3.8) | 336.9 | |||||||||||||||||||
| Net cash provided by (used in) operating activities | 1,261.0 | (350.7) | (3.8) | 906.5 | |||||||||||||||||||
| Net cash provided by (used in) investing activities | (163.5) | (17.8) | 45.4 | (135.9) | |||||||||||||||||||
| Net cash provided by (used in) financing activities | (603.4) | 325.0 | (41.6) | (320.0) | |||||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents of consolidated sponsored investment products | — | 0.9 | — | 0.9 | |||||||||||||||||||
| Net change in cash and cash equivalents during period | 494.1 | (42.6) | — | 451.5 | |||||||||||||||||||
| Cash and cash equivalents at beginning of year | 1,755.6 | 119.1 | — | 1,874.7 | |||||||||||||||||||
| Cash and cash equivalents at end of period | $ | 2,249.7 | $ | 76.5 | $ | — | $ | 2,326.2 | |||||||||||||||
| Unaudited Condensed Consolidated Balance Sheet Information (in millions) | As of | ||||||||||
| 6/30/2023 | 12/31/2022 | ||||||||||
| Cash and cash equivalents | $ | 2,249.7 | $ | 1,755.6 | |||||||
| Accounts receivable and accrued revenue | 761.4 | 748.7 | |||||||||
| Investments | 2,718.4 | 2,539.2 | |||||||||
| Assets of consolidated sponsored investment products | 1,946.1 | 1,603.4 | |||||||||
| Operating lease assets | 261.6 | 279.4 | |||||||||
| Property, equipment and software, net | 771.2 | 755.7 | |||||||||
| Goodwill and intangible assets | 3,220.2 | 3,272.6 | |||||||||
| Other assets | 692.8 | 688.7 | |||||||||
| Total assets | 12,621.4 | 11,643.3 | |||||||||
| Supplemental savings plan liability | 817.3 | 761.2 | |||||||||
| Contingent consideration | 23.0 | 95.8 | |||||||||
| Total other liabilities, includes $71.7 at June 30, 2023, and $89.1 at December 31, 2022, from consolidated sponsored investment products | 1,330.0 | 1,099.4 | |||||||||
| Non-controlling interests* | 1,187.3 | 847.4 | |||||||||
Stockholders' equity attributable to T. Rowe Price Group, Inc., 224.3 common shares outstanding at June 30, 2023 and 224.3 common shares outstanding at December 31, 2022 | $ | 9,263.8 | $ | 8,839.5 | |||||||
* This includes both redeemable and non-redeemable non-controlling interest in consolidated entities.
10
The following tables detail changes in our investments in affiliated private investment funds - carried interest and non-controlling interest in consolidated entities.
| Three months ended | Six months ended | ||||||||||||||||||||||
| Investments in affiliated private investment funds - carried interest | 6/30/2023 | 6/30/2022 | 6/30/2023 | 6/30/2022 | |||||||||||||||||||
| Balance at beginning of period | $ | 483.8 | $ | 642.1 | $ | 467.8 | $ | 609.8 | |||||||||||||||
| Capital allocation-based income: | |||||||||||||||||||||||
| Change in accrued carried interest | 51.0 | (113.0) | 80.2 | (55.4) | |||||||||||||||||||
| Acquisition-related amortization | (12.3) | (13.3) | (24.6) | (26.5) | |||||||||||||||||||
| Net realized distributions | (8.3) | (8.6) | (9.2) | (20.7) | |||||||||||||||||||
Balance at end of period | $ | 514.2 | $ | 507.2 | $ | 514.2 | $ | 507.2 | |||||||||||||||
| Three months ended | Six months ended | ||||||||||||||||||||||
| Non-controlling interests (NCI) in consolidated entities | 6/30/2023 | 6/30/2022 | 6/30/2023 | 6/30/2022 | |||||||||||||||||||
| Balance at beginning of period | $ | 194.4 | $ | 272.2 | $ | 190.7 | $ | 248.7 | |||||||||||||||
| Capital allocation-based income compensation: | |||||||||||||||||||||||
| Change in accrued carried interest compensation | 15.7 | (45.2) | 24.3 | (22.1) | |||||||||||||||||||
| Acquisition-related amortization | (5.1) | (5.7) | (10.2) | (11.3) | |||||||||||||||||||
| Net distributions | (2.9) | (12.5) | (2.7) | (6.5) | |||||||||||||||||||
Balance at end of period | $ | 202.1 | $ | 208.8 | $ | 202.1 | $ | 208.8 | |||||||||||||||
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.
11
The following schedules reconcile U.S. GAAP financial measures to non-GAAP financial measures for the three months ended June 30, 2023 and 2022 and March 31, 2023.
| Three months ended 6/30/2023 | |||||||||||||||||||||||||||||||||||
| Operating expenses | Net operating income | Non-operating income (loss) | Provision (benefit) for income taxes(6) | Net income attributable to T. Rowe Price | Diluted earnings per share(7) | ||||||||||||||||||||||||||||||
| U.S. GAAP Basis (FS line item) | $ | 1,076.7 | $ | 533.5 | $ | 106.2 | $ | 158.5 | $ | 476.4 | $ | 2.06 | |||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
| Acquisition-related non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
Investment and NCI amortization and impairments(1) (Capital allocation-based income and Compensation and related costs) | 5.1 | 7.2 | — | 0.1 | 7.1 | 0.03 | |||||||||||||||||||||||||||||
Acquisition-related retention arrangements(1) (Compensation and related costs) | (13.6) | 13.6 | — | (0.1) | 13.7 | 0.06 | |||||||||||||||||||||||||||||
Contingent consideration(1) | 23.2 | (23.2) | — | 2.5 | (25.7) | (0.11) | |||||||||||||||||||||||||||||
Intangible assets amortization and impairments(1) | (28.6) | 28.6 | — | 0.4 | 28.2 | 0.12 | |||||||||||||||||||||||||||||
| Total acquisition-related non-GAAP adjustments | (13.9) | 26.2 | — | 2.9 | 23.3 | 0.10 | |||||||||||||||||||||||||||||
Supplemental savings plan liability(3) (Compensation and related costs) | (33.0) | 33.0 | (33.6) | 0.2 | (0.8) | — | |||||||||||||||||||||||||||||
Consolidated T. Rowe Price investment products(4) | (3.6) | 3.9 | (24.4) | 0.5 | (16.2) | (0.07) | |||||||||||||||||||||||||||||
Other non-operating income(5) | — | — | (16.4) | (0.2) | (16.2) | (0.07) | |||||||||||||||||||||||||||||
| Adjusted Non-GAAP Basis | $ | 1,026.2 | $ | 596.6 | $ | 31.8 | $ | 161.9 | $ | 466.5 | $ | 2.02 | |||||||||||||||||||||||
| Three months ended 6/30/2022 | |||||||||||||||||||||||||||||||||||
| Operating expenses | Net operating income | Non-operating income (loss) | Provision (benefit) for income taxes(6) | Net income attributable to T. Rowe Price | Diluted earnings per share(7) | ||||||||||||||||||||||||||||||
| U.S. GAAP Basis (FS line item) | $ | 844.4 | $ | 668.6 | $ | (279.9) | $ | 100.9 | $ | 339.6 | $ | 1.46 | |||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
| Acquisition-related non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
Investment and NCI amortization and impairments(1) (Capital allocation-based income and Compensation and related costs) | 5.7 | 7.6 | — | 2.0 | 5.6 | 0.03 | |||||||||||||||||||||||||||||
Acquisition-related retention arrangements(1) (Compensation and related costs) | (18.0) | 18.0 | — | 4.6 | 13.4 | 0.06 | |||||||||||||||||||||||||||||
Contingent consideration(1) | 50.3 | (50.3) | — | (13.5) | (36.8) | (0.16) | |||||||||||||||||||||||||||||
Intangible assets amortization and impairments(1) | (27.2) | 27.2 | — | 7.2 | 20.0 | 0.09 | |||||||||||||||||||||||||||||
Transaction costs(2) (General, admin and other) | (0.1) | 0.1 | — | — | 0.1 | — | |||||||||||||||||||||||||||||
| Total acquisition-related non-GAAP adjustments | 10.7 | 2.6 | — | 0.3 | 2.3 | 0.02 | |||||||||||||||||||||||||||||
Supplemental savings plan liability(3) (Compensation and related costs) | 93.5 | (93.5) | 96.4 | 0.6 | 2.3 | — | |||||||||||||||||||||||||||||
Consolidated T. Rowe Price investment products(4) | (1.3) | 2.0 | 104.6 | 14.7 | 40.1 | 0.17 | |||||||||||||||||||||||||||||
Other non-operating income(5) | — | — | 48.3 | 14.9 | 33.4 | 0.14 | |||||||||||||||||||||||||||||
| Adjusted Non-GAAP Basis | $ | 947.3 | $ | 579.7 | $ | (30.6) | $ | 131.4 | $ | 417.7 | $ | 1.79 | |||||||||||||||||||||||
12
| Three months ended 3/31/2023 | |||||||||||||||||||||||||||||||||||
| Operating expenses | Net operating income | Non-operating income (loss) | Provision (benefit) for income taxes(6) | Net income attributable to T. Rowe Price | Diluted earnings per share(7) | ||||||||||||||||||||||||||||||
| U.S. GAAP Basis (FS line item) | $ | 1,053.4 | $ | 484.2 | $ | 135.4 | $ | 177.9 | $ | 421.5 | $ | 1.83 | |||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
| Acquisition-related non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
Investment and NCI amortization and impairments(1) (Capital allocation-based income and Compensation and related costs) | 5.1 | 7.2 | — | 1.5 | 5.7 | 0.02 | |||||||||||||||||||||||||||||
Acquisition-related retention arrangements(1) (Compensation and related costs) | (14.2) | 14.2 | — | 3.1 | 11.1 | 0.05 | |||||||||||||||||||||||||||||
Contingent consideration(1) | 49.6 | (49.6) | — | (10.5) | (39.1) | (0.17) | |||||||||||||||||||||||||||||
Intangible assets amortization and impairments(1) | (26.0) | 26.0 | — | 5.6 | 20.4 | 0.09 | |||||||||||||||||||||||||||||
| Total acquisition-related non-GAAP adjustments | 14.5 | (2.2) | — | (0.3) | (1.9) | (0.01) | |||||||||||||||||||||||||||||
Supplemental savings plan liability(3) (Compensation and related costs) | (42.5) | 42.5 | (44.7) | (0.5) | (1.7) | (0.01) | |||||||||||||||||||||||||||||
Consolidated T. Rowe Price investment products(4) | (2.9) | 3.5 | (45.4) | (4.6) | (17.1) | (0.07) | |||||||||||||||||||||||||||||
Other non-operating income(5) | — | — | (14.5) | (3.1) | (11.4) | (0.05) | |||||||||||||||||||||||||||||
| Adjusted Non-GAAP Basis | $ | 1,022.5 | $ | 528.0 | $ | 30.8 | $ | 169.4 | $ | 389.4 | $ | 1.69 | |||||||||||||||||||||||
The following schedules reconcile certain U.S. GAAP financial measures for the six months ended June 30, 2023 and 2022.
| Six months ended 6/30/2023 | |||||||||||||||||||||||||||||||||||
| Operating expenses | Net operating income | Non-operating income (loss) | Provision (benefit) for income taxes(6) | Net income attributable to T. Rowe Price | Diluted earnings per share(7) | ||||||||||||||||||||||||||||||
| U.S. GAAP Basis (FS line item) | $ | 2,130.1 | $ | 1,017.7 | $ | 241.6 | $ | 336.4 | $ | 897.9 | $ | 3.89 | |||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
| Acquisition-related non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
Investment and NCI amortization and impairments(1) (Capital allocation-based income and Compensation and related costs) | 10.2 | 14.4 | — | 1.6 | 12.8 | 0.06 | |||||||||||||||||||||||||||||
Acquisition-related retention arrangements(1) (Compensation and related costs) | (27.8) | 27.8 | — | 3.0 | 24.8 | 0.11 | |||||||||||||||||||||||||||||
Contingent consideration(1) | 72.8 | (72.8) | — | (8.0) | (64.8) | (0.28) | |||||||||||||||||||||||||||||
Intangible assets amortization and impairments(1) | (54.6) | 54.6 | — | 6.0 | 48.6 | 0.21 | |||||||||||||||||||||||||||||
| Total acquisition-related non-GAAP adjustments | 0.6 | 24.0 | — | 2.6 | 21.4 | 0.10 | |||||||||||||||||||||||||||||
Supplemental savings plan liability(3) (Compensation and related costs) | (75.5) | 75.5 | (78.3) | (0.3) | (2.5) | (0.01) | |||||||||||||||||||||||||||||
Consolidated T. Rowe Price investment products(4) | (6.5) | 7.4 | (69.8) | (4.1) | (33.3) | (0.14) | |||||||||||||||||||||||||||||
Other non-operating income(5) | — | — | (30.9) | (3.3) | (27.6) | (0.13) | |||||||||||||||||||||||||||||
| Adjusted Non-GAAP Basis | $ | 2,048.7 | $ | 1,124.6 | $ | 62.6 | $ | 331.3 | $ | 855.9 | $ | 3.71 | |||||||||||||||||||||||
13
| Six months ended 6/30/2022 | |||||||||||||||||||||||||||||||||||
| Operating expenses | Net operating income | Non-operating income (loss) | Provision (benefit) for income taxes(6) | Net income attributable to T. Rowe Price | Diluted earnings per share(7) | ||||||||||||||||||||||||||||||
| U.S. GAAP Basis (FS line item) | $ | 1,830.0 | $ | 1,546.0 | $ | (478.4) | $ | 265.4 | $ | 907.5 | $ | 3.88 | |||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
| Acquisition-related non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||
Investment and NCI amortization and impairments(1) (Capital allocation-based income and Compensation and related costs) | 11.3 | 15.2 | — | 7.3 | 7.9 | 0.04 | |||||||||||||||||||||||||||||
Acquisition-related retention arrangements(1) (Compensation and related costs) | (37.2) | 37.2 | — | 10.0 | 27.2 | 0.11 | |||||||||||||||||||||||||||||
Contingent consideration(1) | 95.8 | (95.8) | — | (31.7) | (64.1) | (0.28) | |||||||||||||||||||||||||||||
Intangible assets amortization and impairments(1) | (54.3) | 54.3 | — | 18.0 | 36.3 | 0.16 | |||||||||||||||||||||||||||||
Transaction costs(2) (General, admin and other) | (0.8) | 0.8 | — | 0.3 | 0.5 | — | |||||||||||||||||||||||||||||
| Total acquisition-related non-GAAP adjustments | 14.8 | 11.7 | — | 3.9 | 7.8 | 0.03 | |||||||||||||||||||||||||||||
Supplemental savings plan liability(3) (Compensation and related costs) | 144.5 | (144.5) | 151.7 | 2.3 | 4.9 | 0.02 | |||||||||||||||||||||||||||||
Consolidated T. Rowe Price investment products(4) | (2.9) | 4.5 | 206.0 | 35.0 | 70.2 | 0.30 | |||||||||||||||||||||||||||||
Other non-operating income(5) | — | — | 66.3 | 22.1 | 44.2 | 0.19 | |||||||||||||||||||||||||||||
| Adjusted Non-GAAP Basis | $ | 1,986.4 | $ | 1,417.7 | $ | (54.4) | $ | 328.7 | $ | 1,034.6 | $ | 4.42 | |||||||||||||||||||||||
(1) These non-GAAP adjustments remove the impact of acquisition-related amortization and costs including amortization of intangible assets, the recurring fair value remeasurements of the contingent consideration liability, amortization 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 acquisition-related transaction costs. 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.
(3) 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.
(4) These non-GAAP adjustments remove the impact that 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.
(5) This non-GAAP adjustment represents the other non-operating income (loss) and the net gains (losses) earned on the firm's non-consolidated 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 the investment gains recognized on the non-consolidated cash and discretionary investments as these assets and related income (loss) are considered part of the firm's core operations. Management believes adjusting for these non-operating income (loss) items 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 the portion of non-operating income (loss) removed when managing and evaluating the firm's performance.
14
(6) The income tax impacts were calculated in order to achieve an overall year-to-date non-GAAP effective tax rate of 27.9% and 24.1%, respectively. As such, the non-GAAP effective tax rate for the three months ended June 30, 2023 and 2022 was 25.8% and 23.9%, respectively. The firm estimates that its effective tax rate for the full-year 2023 on a non-GAAP basis will be in the range of 26.5% to 29.5%.
(7) This non-GAAP measure was calculated by applying the two-class method to adjusted net income attributable to T. Rowe Price Group divided 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 | Six months ended | ||||||||||||||||||||||||||||
| 6/30/2023 | 6/30/2022 | 3/31/2023 | 6/30/2023 | 6/30/2022 | |||||||||||||||||||||||||
| Adjusted net income attributable to T. Rowe Price | $ | 466.5 | $ | 417.7 | $ | 389.4 | $ | 855.9 | $ | 1,034.6 | |||||||||||||||||||
| Less: adjusted net income allocated to outstanding restricted stock and stock unit holders | 11.4 | 9.3 | 9.6 | 21.0 | 23.3 | ||||||||||||||||||||||||
| Adjusted net income allocated to common stockholders | $ | 455.1 | $ | 408.4 | $ | 379.8 | $ | 834.9 | $ | 1,011.3 | |||||||||||||||||||
15
T. Rowe Price Group, Inc. July 28, 2023 Q2 2023 Earnings Release Supplement A copy of this presentation, which includes additional information, is available at investors.troweprice.com. Data as of June 30, 2023, unless otherwise noted. All figures are USD, unless otherwise noted.
2T. R OW E P R IC E GR OU P, IN C . Forward-Looking Statement 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, 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, 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.
3T. R OW E P R IC E GR OU P, IN C . 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 and/or 10Q filed with the SEC. Financial Highlights Key Metric Q2 2022 Q1 2023 Q2 2023 AUM AND FLOWS Net Flows ($14.7B) ($16.1B) ($20.0B) Assets Under Management (AUM)1 $1.31T $1.34T $1.40T Average AUM $1.41T $1.32T $1.36T Effective Fee Rate 42.7bps 42.7bps 42.3bps GAAP BASIS Net Revenues $1,513.0M $1,537.6M $1,610.2M Operating Expenses $844.4M $1,053.4M $1,076.7M Diluted GAAP Earnings per Share (EPS) $1.46 $1.83 $2.06 NON-GAAP BASIS Adjusted Operating Expenses2 $947.3M $1,022.5M $1,026.2M Adjusted EPS2 $1.79 $1.69 $2.02 DIVIDENDS Dividend per share $1.20 $1.22 $1.22 Launched 5 active ETFs and 6 SMA strategies Closed on acquisition of Retiree, Inc.
4T. R OW E P R IC E GR OU P, IN C . % of Funds/ Composites U.S. Mutual Funds Outperforming Morningstar Median1,2 U.S. Mutual 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 57% 52% 62% 78% 51% 41% 58% 61% 42% 32% 49% 71% Fixed Income 49% 59% 68% 65% 38% 59% 59% 52% 32% 61% 51% 76% Multi-Asset 61% 56% 75% 86% 67% 59% 61% 75% NA NA NA NA All Funds 56% 55% 67% 75% 54% 52% 59% 61% 38% 44% 50% 73% Past performance is not a reliable indicator of future performance. The investment performance reflects that of the T. Rowe Price-sponsored mutual funds and composites. 1Source: © 2023 Morningstar, Inc. All rights reserved. Please see page 15 for more information. 2Primary share class only. Excludes T. Rowe Price passive funds and fund categories not ranked by Morningstar. Net = NAV. 3Primary share class only. Excludes T. Rowe Price passive funds and institutional funds that are a clone of a retail fund. Mutual funds are measured against the most appropriate style benchmark used for portfolio manager evaluation, which may not always be the prospectus benchmark. Net=NAV. 4Net 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. Investment Performance Overview % of AUM U.S. Mutual Funds Outperforming Morningstar Median1,2 U.S. Mutual 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 60% 48% 57% 85% 62% 29% 51% 52% 40% 36% 34% 63% Fixed Income 58% 67% 87% 76% 34% 67% 65% 61% 31% 62% 46% 66% Multi-Asset 90% 87% 94% 97% 95% 88% 95% 96% NA NA NA NA All Funds 68% 61% 69% 88% 70% 50% 65% 65% 38% 41% 36% 64%
5T. R OW E P R IC E GR OU P, IN C . Firmwide AUM includes assets managed by T. Rowe Price Associates, Inc., and its investment advisory affiliates. Market change and net flows in June 2023 column reflect YTD activity. AUM for the period 2008–2020 does not include the acquired fee-based AUM related to the OHA acquisition ($46.9B) that closed in December 2021. Other acquisition of AUM is detailed in our quarterly releases and 10Qs. Net flows include OHA for 2022 and after. Distribution (net of reinvestments) is included in the market change figure. YTD 2023 net outflows reflect $0.8B in manager-driven distributions related to our alternative products. Assets Under Management $276 $391 $482 $489 $577 $692 $747 $763 $811 $991 $962 $1,207 $1,471 $1,688 $1,275 $1,399 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 June 2023 En di ng A U M -140.8 +92.3 +60.4 -6.6 +70.1 +127.6 +50.7 +14.7 +50.5 +166.3 -42.0 +231.3 +256.9 +198.9 -351.4 +160.8 +17.1 +22.7 +30.3 +14.1 +17.2 -12.0 +3.7 +1.6 -2.8 +14.0 +13.2 +13.2 +5.6 -28.5 -61.7 -36.1 Market Change ($B) Net Flows ($B) U.S. $ billions
6T. R OW E P R IC E GR OU P, IN C . Assets Under Management and Net Flows Target date retirement AUM of $380B U.S. defined contribution AUM of $599B Alternative AUM includes private markets ($17B), CLOs ($17B), and liquid strategies ($11B) U.S. $ billions Asset Class Client Type $700 $648 $664 $695 $732 $171 $165 $167 $170 $169 $396 $374 $400 $432 $453 $43 $43 $43 $44 $45 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 $594 $554 $569 $596 $627 $715 $676 $706 $746 $772 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Geography $1,187 $1,120 $1,159 $1,223 $1,275 $123 $111 $116 $119 $125 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Outflows largely concentrated in equity strategies and U.S. intermediary channels Target date retirement inflows of $2.4B Alternative flows include $0.4B in manager-driven distributions ASSETS UNDER MANAGEMENT ASSETS UNDER MANAGEMENT ASSETS UNDER MANAGEMENT NET FLOWS NET FLOWS NET FLOWS Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Fixed Income Multi-Asset Alts Retail Inst. Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 U.S. Firmwide flows by quarter ($B) Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 (14.7) (24.6) (17.1) (16.1) (20.0) NET FLOWS Q2 2023 ASSETS UNDER MANAGEMENT As of June 30, 2023 APAC, EMEA, Canada Firmwide AUM includes assets managed by T. Rowe Price Associates, Inc., and its investment advisory affiliates. Numbers may not add up due to rounding. Institutional includes defined contribution assets, including those through intermediaries and our full-service recordkeeping business. Retail includes our direct-marketed business and financial intermediaries. Equity ($17.5) ($22.8) ($14.3) ($23.5) ($19.5) FI 3.2 (2.4) (2.0) 0.1 (1.9) MA (2.1) 0.8 (0.5) 7.1 1.6 Alts 1.7 (0.2) (0.3) 0.2 (0.2) Inst. ($0.9) ($8.1) ($5.2) ($5.4) ($12.2) Retail (13.8) (16.5) (11.9) (10.7) (7.8) U.S. ($13.3) ($17.1) ($17.3) ($10.7) ($18.9) APAC, EMEA, Canada (1.4) (7.5) 0.2 (5.4) (1.1) Equity Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Fixed Income Multi-Asset Alts Retail Inst. U.S. APAC, EMEA, Canada Equity
7T. R OW E P R IC E GR OU P, IN C . Net Revenues Investment advisory fees represent about 90% of net revenue in the periods presented Q2 2023 investment advisory revenue was $1,430.8M CABI was $51M in Q2 2023 compared to ($113M) in Q2 2022 $97.2 / 6.4% Q2 2023 compared to Q2 2022 $72.6 / 4.7% U.S. $ millions Q2 2023 compared to Q1 2023 CABI = capital allocation-based income. Q2 2022 Investment Advisory Fees CABI CABI (Amortization/Impairment) Admin & Distribution Q2 2023 Q1 2023 Investment Advisory Fees CABI CABI (Amortization/Impairment) Admin & Distribution Q2 2023 $1610.2 $1537.6 $1513.0 $1610.2
8T. R OW E P R IC E GR OU P, IN C . Adjusted Operating Expenses U.S. $ millions Q2 2022 Comp & Related CABI Compensation Distribution & Servicing Ad/Promo Product & Recordkeeping Tech, Occ, & Facility G&A & Other Q2 2023 Q1 2023 Comp & Related CABI Compensation Distribution & Servicing Ad/Promo Product & Recordkeeping Tech, Occ, & Facility G&A & Other Q2 2023 YTD 2023 YTD 2022 Change (%) Adjusted Operating Expenses $2,048.7 $1,986.4 3.1% Adjusted CABI Compensation (24.3) 22.1 n/m Adjusted Operating Expenses, ex CABI Compensation $2,024.4 $2,008.5 0.8% Basis for Operating Expense Guidance For the reconciliation between GAAP and adjusted (non-GAAP) expenses and EPS, see the current earnings release and/or 10Q filed with the SEC. Capital allocation-based income (CABI) compensation represents the portion of CABI that is passed through to certain associates as compensation. Q2 2023 compared to Q1 2023 $3.7 / 0.4% $78.9 / 8.3% U.S. $ millions Q2 2023 compared to Q2 2022 $947.3 $1,026.2 $1,026.2$1,022.5
9T. R OW E P R IC E GR OU P, IN C . $417.7 $430.6 $399.6 $389.4 $466.5 $1.79 $1.86 $1.74 $1.69 $2.02 $0 $1 $1 $2 $2 $3 $3 $4 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Operating Income and Net Income $579.7 $573.7 $509.1 $528.0 $596.6 38.0% 35.8% 32.2% 34.1% 36.8% 0% 10% 20% 30% 40% 50% 60% $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Operating Income Net Income Adjusted Operating Income Adjusted Operating Margin1 Adjusted Net Income Adjusted EPS U.S. GAAP Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Net Income $339.6 $384.4 $266.0 $421.5 $476.4 Diluted EPS $1.46 $1.66 $1.16 $1.83 $2.06 U.S. GAAP Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Operating Income $668.6 $574.6 $253.1 $484.2 $533.5 Operating Margin1 44.2% 36.2% 16.6% 31.5% 33.1% U.S. $ millions, (except EPS) 1Operating 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 and/or 10Q filed with the SEC.
10T. R OW E P R IC E GR OU P, IN C . Capital Returned to Stockholders 281 1,114 3,094 42 381 2,200 700 Current Quarter Last 12 months Last 36 months Capital Management Q2 2022 Q4 2022 Q2 2023 Cash and Cash Equivalents $2,116.0 $1,755.6 $2,249.7 Discretionary Investments 491.3 449.7 484.8 Cash and Discretionary Investments $2,607.3 $2,205.3 $2,734.5 Redeemable Seed Capital $998.0 $1,120.3 $1,182.2 Investments Used to Hedge the Supplemental Savings Plan Liability $725.7 $760.7 $820.3 Dividends Share Repurchases Special Dividend $323 $1,494 $5,994 Data through 6/30/23 *Cash and investments includes 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 Cash and Investments*
11T. R OW E P R IC E GR OU P, IN C . Past performance is not a reliable indicator of future performance. 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. Capital Allocation-Based Income (carried interest) As of 6/30/2023, about $17B 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 Investments in affiliated private investment funds—carried interest Non-controlling interests (NCI) in consolidated entities Q1 2023 Change in accrued carried compensation Acquisition-related amortization Net realized contributions Q2 2023 Q1 2023 Change in accrued carried interest Acquisition-related amortization Net realized distributions Q2 2023 U.S. $ millions, unless otherwise noted CABI Comp $10.6 Q2 2023 returns ICE Bank of America U.S. High Yield Index: 1.6% Credit Suisse Leveraged Loan Index: 3.1% CABI $38.7 Sources: ICE Data Indices, LLC, and CREDIT SUISSE GROUP AG and/or its affiliates. See Additional Information for more information on the sources.
Non-GAAP Reconciliation
13T. R OW E P R IC E GR OU P, IN C . Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Net Revenues, GAAP Basis $1,513.0 $1,588.2 $1,524.2 $1,537.6 $1,610.2 Non-GAAP Adjustments: Consolidated Investment Products 0.7 0.5 (0.2) 0.6 0.3 Investment and NCI Amortization and Impairments 13.3 13.2 58.3 12.3 12.3 Net Revenues, Non-GAAP Basis $1,527.0 $1,601.9 $1,582.3 $1,550.5 $1,622.8 Operating Income, GAAP Basis $668.6 $574.6 $253.1 $484.2 $533.5 Non-GAAP Adjustments: Acquisition-Related Adjustments 2.5 22.0 217.2 (2.2) 26.2 Consolidated Investment Products 2.0 1.8 1.9 3.5 3.9 Supplemental Savings Plan Liability (93.5) (24.7) 36.9 42.5 33.0 Operating Income, Non-GAAP Basis $579.7 $573.7 $509.1 $528.0 $596.6 Operating Margin, GAAP Basis1 44.2% 36.2% 16.6% 31.5% 33.1% Operating Margin, as Adjusted1 38.0% 35.8% 32.2% 34.1% 36.8% 1Operating margin is equal to operating income divided by net revenues. Non-GAAP Net Revenues and Operating Income Reconciliation U.S. $ millions
Appendix
15T. R OW E P R IC E GR OU P, IN C . Additional Information Investment performance overview (slide 4) 1 Source: © 2023 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 $321B for 1 year, $321B for 3 years, $320B for 5 years, and $316B 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 other funds. 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 $306B for 1 year, $273B for 3 years, $271B for 5 years, and $255B 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 $1,243B for 1 year, $1,238B for 3 years, $1,230B for 5 years, and $1,190B for 10 years. Capital Allocation Based Income (slide 11) © 2023 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.
16T. R OW E P R IC E GR OU P, IN C . Important Information 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. © 2023 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.