Principal Financial Q4 Earnings Miss, Revenues Up Y/Y, Dividend Raised

Core Insights - Principal Financial Group, Inc. (PFG) reported a fourth-quarter 2024 operating net income of $1.94 per share, which missed the Zacks Consensus Estimate by 0.5%, but increased by 6% year over year [1][15] - Total revenues surged 76.6% year over year to $4.7 billion, exceeding the Zacks Consensus Estimate by 17.9% [2] Financial Performance - Total expenses decreased by 4.2% year over year to $3.6 billion, lower than the estimate of $4.4 billion [3] - As of December 31, 2024, assets under management (AUM) were $712 billion, part of total assets under administration (AUA) of $1.7 trillion [3] Segment Analysis - Retirement and Income Solution: Revenues fell 6.3% year over year to $2.1 billion, missing the estimate of $2.2 billion; pre-tax operating earnings increased 6% to $280.1 million, but missed the estimate of $828.5 million [4] - Investment Management: Revenues rose 9.6% year over year to $474.6 million; pre-tax operating earnings increased 27% to $163.9 million, with an operating margin expansion of 570 basis points to 38.3% [5] - International Pension: Revenues decreased 21.6% year over year to $239.8 million; pre-tax operating earnings dropped 40% to $52.1 million, with an operating margin contraction of 1,100 basis points to 38.1% [6] - Benefits and Protection: Revenues increased 2.7% year over year to $1.2 billion, beating the estimate of $1 billion; pre-tax operating earnings rose 7.1% to $154.7 million, exceeding the estimate of $40.7 million [7] - Specialty Benefits: Revenues grew 4.2% year over year to $873.3 million, surpassing the estimate of $801.8 million; pre-tax operating earnings increased 23% to $147.2 million, beating the estimate of $111.1 million [8] - Life Insurance: Revenues decreased 1.4% year over year to $329.3 million, beating the estimate of $280 million; pre-tax operating earnings declined 70% to $7.5 million, attributed to higher mortality [9][10] - Corporate: Pre-tax operating losses widened to $103.9 million from a loss of $88.5 million a year ago, exceeding the estimate of $92.4 million [11] Capital Management - Principal Financial returned $1.7 billion to shareholders in 2024, including $1 billion in share repurchases and $0.7 billion in dividends; the board raised the first-quarter dividend by 9% to 75 cents per share [13] - A new authorization for the repurchase of $1.5 billion of outstanding shares was approved, with approximately $0.8 billion remaining under the prior authorization as of December 31, 2024 [14] Full-Year Highlights - For 2024, operating net income was $6.97 per share, missing the Zacks Consensus Estimate by 0.2%, but increased 6% year over year; total operating revenues reached $15.63 billion, beating the consensus mark by 0.3% and increasing 6.6% year over year [15] 2025 Guidance - Principal Financial expects 9-12% annual non-GAAP operating earnings per diluted share growth, with an estimated 75-85% free capital flow conversion and a projected 14-16% non-GAAP return on equity [16]