T. Rowe Price(TROW) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company closed 2024 with $1.6 trillion in assets under management (AUM) and$43.2 billion in net outflows, which is a significant improvement from previous years [7][19] - Adjusted diluted earnings per share (EPS) for Q4 2024 was $2.12, bringing full-year adjusted diluted EPS to$9.33, up 23% from 2023 [18] - Full-year adjusted revenue reached nearly $7.2 billion, a 10.1$8 billion in AUM, with net inflows of $4.7 billion for the year, more than tripling from 2023 [10][22] - The target date franchise had net inflows of$16.3 billion for the year, with 2.2 billion in net flows for Q4, marking its strongest Q4 since 2019 [10][20] - Fixed income and alternatives also saw positive net flows for both the fourth quarter and the full year [21] Market Data and Key Metrics Changes - The EMEA and APAC regions, along with the Americas Institutional channel, experienced positive net flows during the year [21] - The company noted a significant increase in gross sales, with a strong net pipeline ending the year better than the previous year [14] Company Strategy and Development Direction - The company is focused on expanding its ETF business and enhancing its insurance asset management offerings through partnerships, particularly with Aspida [12][60] - There is a commitment to delivering innovative retirement offerings and exploring the integration of alternatives into target date products [40][41] - The company aims to leverage its strong balance sheet for potential M&A and strategic investments to enhance capabilities and client access [63] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about reducing outflows in 2025 and building on the momentum from 2024, despite acknowledging the challenges in the current market environment [16][110] - The company is focused on improving investment performance and strategic initiatives to regain positive net flows [110] Other Important Information - The company returned over 1.4 billion to stockholders in 2024 and maintained a strong balance sheet with $3.1 billion in cash and discretionary investments [16][28] - Adjusted operating expenses for the full year were$4.46 billion, up 6.3% from 2023, with expectations for a 4-6% increase in 2025 [26][27] Q&A Session Summary Question: Insights on the Aspida partnership and insurance opportunities - Management highlighted excitement about the partnership with Aspida, focusing on refining insurance asset management offerings and potential co-development of investment products [58][60] Question: Fee rate dynamics and outlook - Management noted higher fee compression this year, with an average of about 2%, influenced by sales in lower fee strategies and elevated redemptions in higher fee products [72][73] Question: Client demand for hybrid products - Management acknowledged the growing interest in hybrid products across public and private markets, with ongoing discussions about potential offerings [88][90] Question: Future private equity allocations in retirement products - Management indicated a commitment to offering best-in-class solutions, open to partnerships or M&A to enhance capabilities in private equity and credit [96][97] Question: Gross sales trends and pipeline context - Management reported improved gross sales across channels, with a strong pipeline for retirement date funds and a positive outlook for 2025 [104][108]