Principal Financial Group (NasdaqGS:PFG) Q3 2025 Earnings Call October 28, 2025 10:00 AM ET Company ParticipantsDeanna Strable - CEOAmy Friedrich - President, Benefits and ProtectionChris Littlefield - President, Retirement, and Income SolutionsKamal Bhatia - President, Asset ManagementJoel Pitz - CFOHumphrey Lee - VP of Investor RelationsConference Call ParticipantsTom Gallagher - Senior Managing Director and Senior Equity AnalystSuneet Kamath - Research AnalystRyan Kruger - Life Insurance AnalystJimmy Bhu ...

Core Insights - Apollo Global Management Inc. (APO) is acquiring Eagle Creek Renewable Energy, a significant independent hydroelectric power platform in the U.S., which operates 85 facilities across 18 states with a total capacity of nearly 700 MW, enough to power over 260,000 homes [2] - The acquisition aligns with Apollo's strategy to scale energy transition assets in response to rising power demand from data centers and industrial infrastructure, with the company having invested approximately $59 billion in energy transition since 2022 [3] - BMO Capital initiated coverage of Apollo with a "Market Perform" rating and a price target of $132, highlighting the company's strong private credit capabilities but cautioning about potential pressure on earnings expectations as rate cuts approach [4] Company Overview - Apollo Global Management Inc. is a global alternative asset manager providing investment, credit, and retirement solutions across institutional and retail markets [5] - The company holds a significant position in the portfolio of billionaire investor Dan Loeb, with $180,884,250 worth of shares, representing 2.37% of his portfolio [1]

Financial Data and Key Metrics Changes - Total revenue increased by 17% year-over-year to $1.5 billion [14] - Adjusted diluted EPS grew by 5% to $1.22, while diluted EPS decreased by 10% to $1.06 [15] - Total expenses rose by 29% to $998 million, primarily due to the Paycor acquisition [15] - Cash flow from operations was $718 million for the first quarter [15] - The company returned $549 million to shareholders through dividends and share repurchases [15] Business Line Data and Key Metrics Changes - Management Solutions revenue increased by 21% to $1.2 billion, driven by the addition of Paycor and higher revenue per client [14] - PEO and Insurance Solutions revenue grew by 3% to $329 million, supported by an increase in average PEO worksite employees [14] - Interest on funds held for clients rose by 27% to $48 million due to the inclusion of Paycor balances [14] Market Data and Key Metrics Changes - The PEO business experienced mid-single-digit worksite employee growth, with strong demand and retention performance [11] - The small business employment environment remains stable, with no signs of recession and moderating wage inflation [11][12] Company Strategy and Development Direction - The integration of Paycor is on track, with targeted revenue synergies and cost synergies expected to exceed initial estimates [4][5] - The company is focusing on cross-selling opportunities, particularly in retirement, ASO, and PEO solutions to Paycor's client base [5][6] - The Partner Plus program for brokers has seen nearly double enrollment, indicating strong momentum in referral channels [7][8] - New product offerings, such as Bill Pay Powered by BILL, aim to enhance service delivery for small and mid-sized businesses [8][9] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the resilience of small businesses and expects renewed business confidence due to clarity on tariffs, taxes, and inflation [11][12] - The company anticipates total revenue growth for fiscal 2026 to be between 16.5% and 18.5%, with Management Solutions expected to grow by 20%-22% [16][17] - Adjusted operating income margin is projected to be approximately 43% [16] Other Important Information - The company has launched AI-driven tools to enhance client experiences and operational efficiency [9][10] - The integration of Paycor is expected to provide additional growth opportunities and improve overall service offerings [4][5] Q&A Session Summary Question: Update on demand environment and employer size segments - Demand remains consistent with historical trends, with increased activity and solid RPO bookings [20][21] Question: Paycor recurring revenue growth - Recurring revenue growth for Paycor is expected to be double digits for the full year, with Q1 performance in line with expectations [22][23] Question: PEO environment characterization - PEO continues to perform well with mid-single-digit worksite employee growth and record retention [25][26] Question: Direct expenses and SG&A comparison - Direct expenses showed strong leverage, while SG&A expenses were impacted by integration costs [31][32] Question: Paycor integration and recurring revenue - Integration is progressing well, with high retention rates and strong sales performance [38][39] Question: EPS increase drivers - EPS guidance was raised due to strong retention and confidence in achieving cost and revenue synergies [47][48] Question: PEO market competitiveness - The competitive environment remains stable, with a focus on value proposition rather than aggressive pricing [59][60] Question: Bill.com partnership and customer profile - The partnership aims to enhance payment capabilities for small businesses, integrating with existing platforms [65][66] Question: Regulatory environment impact - The company does not expect significant impacts from regulatory changes, with small businesses remaining resilient [82][83]

Financial Data and Key Metrics Changes - Total revenue increased by 17% year-over-year to $1.5 billion [13] - Management Solutions revenue rose by 21% to $1.2 billion, driven by the addition of Paycor and higher revenue per client [13] - PEO and Insurance Solutions revenue grew by 3% to $329 million, supported by an increase in average PEO worksite employees [13] - Total expenses increased by 29% to $998 million, primarily due to the Paycor acquisition [14] - Adjusted diluted EPS increased by 5% to $1.22, while diluted EPS decreased by 10% to $1.06 [14][15] Business Line Data and Key Metrics Changes - Management Solutions revenue growth was significantly influenced by Paycor, contributing approximately 17% to the overall growth [13] - PEO business showed mid-single-digit worksite employee growth, with strong demand and record retention [11][25] - Interest on funds held for clients increased by 27% to $48 million due to the inclusion of Paycor balances [14] Market Data and Key Metrics Changes - The small business employment environment remains stable, with no signs of recession and moderate wage inflation [11][12] - The demand environment is consistent, with increased activity and solid RPO bookings, particularly in the micro segment [19] Company Strategy and Development Direction - The integration of Paycor is on track, with targeted revenue synergies and cost synergies expected to reach approximately $90 million [4][14] - The company is focusing on cross-selling opportunities, particularly in retirement, ASO, and PEO solutions to Paycor's client base [5] - New marketing campaigns and partnerships, such as the CPA Partner Pro portal and BillPay powered by Bill.com, are aimed at expanding service offerings [8][9] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the macro environment, citing renewed business confidence due to clarity on tariffs, taxes, and inflation [12] - The company expects total revenue growth for fiscal 2026 to be between 16.5% and 18.5%, with adjusted diluted EPS growth now expected to be between 9% and 11% [15][16] - The PEO model is seen as a key growth driver, allowing small businesses to offer competitive benefits [11] Other Important Information - The company has launched AI-driven tools to enhance client experiences and operational efficiency, including generative AI solutions for HR guidance [10][92] - Paychex was recognized by Newsweek as one of America's greatest companies and most admired workplaces, highlighting the importance of company culture [12] Q&A Session Summary Question: Update on demand environment and employer size segments - Demand remains consistent with historical trends, with increased activity and solid RPO bookings across segments [19] Question: Paycor recurring revenue growth expectations - Recurring revenue for Paycor is expected to grow in double digits for the full year, aligning with expectations [21] Question: PEO environment characterization - The PEO business continues to perform well, with mid-single-digit worksite employee growth and record retention [25][26] Question: Direct expenses and operating expenses outlook - Direct expenses showed strong leverage, with ongoing operating expenses expected to remain consistent with current trends [32] Question: Impact of regulatory environment on business - The small business market remains resilient, with stability in employment and wage inflation below 3% [104]

Company Overview - T. Rowe Price Group, Inc. (TROW) is a leading global investment management firm with a market cap of $20.5 billion, headquartered in Baltimore, Maryland, offering a variety of products and services including mutual funds, retirement solutions, and advanced planning tools for individuals and institutions [1][2] Performance Analysis - TROW shares have decreased by 17.2% from their 52-week high of $125.81, reached on December 6, 2024, but have gained 13.8% over the past three months, outperforming the S&P 500 Index, which returned 10.7% in the same period [3] - Over the past 52 weeks, TROW has marginally declined, significantly lagging behind the S&P 500's 17.6% increase, and on a year-to-date basis, TROW shares are down 7.9%, compared to the S&P 500's 12.5% return [4] Market Position - TROW's stock jumped over 5% on September 4 after Goldman Sachs announced plans to invest up to $1 billion in the firm to expand private-market offerings for retail investors [5] - TROW's underperformance is notable when compared to its rival BlackRock, which has seen a 25.9% gain over the past 52 weeks and an 8.8% rise year-to-date [5] Analyst Sentiment - The stock has a consensus rating of "Moderate Sell" from 14 analysts, and it currently trades above the mean price target of $93.21 [6]

Financial Performance - Horace Mann's second-quarter core earnings per share (EPS) was $1.06[6] - The company's core return on equity (ROE) reached 12.6%, a 6.1 percentage point increase compared to the previous year[6, 7] - Horace Mann repurchased $13 million of shares year-to-date at an average multiple of 1.05x book value[7] - The company's adjusted book value per share has shown a 7.0% compound annual growth since 2010[8] Segment Results - The Property & Casualty (P&C) combined ratio improved to 97.0%, a 14.5 percentage point improvement year-over-year[6, 7] - Life & Retirement (L&R) core earnings doubled compared to the prior year, reaching $24.6 million[7, 16] - Individual Supplemental sales increased by 43%[7] and Auto sales were up by 6%[7, 15] Investment Portfolio - The investment portfolio has a fair value of $6.9 billion[32] - The company's annualized limited partnership returns were 10%[7] - The company's annualized commercial mortgage loan fund returns were 7%[7] Guidance and Outlook - Horace Mann revised its full-year 2025 core EPS guidance to a range of $4.15 to $4.45[41] - The company anticipates total net investment income of $470 million to $480 million[43]