T. Rowe Price(US:TROW)2024-02-08 15:33Financial Data and Key Metrics Changes - Adjusted earnings per share for Q4 2023 was $1.72, bringing the full year total to $7.59, down from $8.02 in 2022 due to lower average AUM and investment advisory revenue, along with higher expenses [30] - Q4 adjusted net revenues were $1.7 billion, leading to a full year adjusted total revenue of $6.5 billion, with Q4 investment advisory revenue of about $1.5 billion being higher than the previous year [39] - The effective fee rate for Q4 was 42.2 basis points, up due to over $25 million in performance-based fees, predominantly from Alternatives products [32] Business Line Data and Key Metrics Changes - The Target Date suite ended the year with $13.1 billion of positive net flows, while Alternatives also posted positive flows for the year [31] - Capital Appreciation, All-Cap Opportunities, International Core, and Global Multi-Sector Bond funds all delivered over $1 billion in positive net flows in 2023 [31] Market Data and Key Metrics Changes - The company experienced $28.3 billion in net outflows for Q4, bringing full-year outflows to $81.8 billion [30] - Despite challenges, there were signs of strength in individual equity and fixed-income products, with improved performance in large-cap growth funds expected to reduce redemptions in 2024 [13][30] Company Strategy and Development Direction - The active ETF business is gaining traction, with assets under management over $2.7 billion at the end of January [9] - The acquisition of Retiree, Inc. aims to enhance relationships with pre-retiree and retiree clients by providing tax-aware retirement income strategies [10] - The company is focused on evolving its investment platform to meet market demands and is ready to compete with new capabilities and experiences [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a better year ahead, citing improved investment performance and early indicators of reduced net outflows [8][13] - The company anticipates that some sidelined money will flow into fixed income due to higher rates and better potential for absolute returns [56] Other Important Information - The company announced a quarterly dividend of $1.24, marking the 38th consecutive year of dividend increases [15] - Full-year adjusted operating expenses were $4.19 billion, up 3% from 2022, with expectations for a similar increase in 2024 [33] Q&A Session Summary Question: Insights on 2024 improvements - Management expects outflows but anticipates improvement from 2023, with better performance translating into lower client redemptions and improved sales [44] Question: OHA investment strategy and flows - OCredit has raised over $100 million since September, with expectations for similar amounts in Q1 and building momentum throughout the year [49] Question: Fixed income flows and future trajectory - Management noted that Q4 flows were impacted by seasonal factors and anticipated that higher rates would attract investments into fixed income [56] Question: Growth expectations for non-U.S. business - Management expects relative growth outside the U.S. to be greater than in the U.S., focusing on markets in Asia Pacific and EMEA [63] Question: Buyback opportunities for 2024 - The company plans to be opportunistic with share repurchases, with 2023 levels serving as a base case for future buybacks [70] Question: Strategic rationale for Retiree, Inc. acquisition - The acquisition aims to enhance capabilities in retirement advisory services, focusing on optimizing social security elections and withdrawal strategies [75]