T. Rowe Price Group, Inc. · NASDAQ:TROW
T. Rowe Price — Investor Presentation (September 2022)
25 slides from T. Rowe Price's investor presentation, Sep 15, 2022
Slide 1: Business Update
Business Update T. Rowe Price Group, Inc. September 15, 2022 A copy of this presentation, which includes additional information, is available at troweprice.gcs-web.com/investor-relations. Data as of June 30, 2022, unless otherwise noted. All figures are U.S. $, unless otherwise noted.
Slide 2: Forward-looking statement
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 expectati
Slide 3: Opening and T. Rowe Price Overview
Opening and T. Rowe Price Overview Rob Sharps CHIEF EXECUTIVE OFFICER and PRESIDENT T. ROWE PRICE GROUP, INC. BUSINESS UPDATE 2022
Slide 4: We are a global asset management firm focused on client success
We are a global asset management firm focused on client success Founded in 1937 Independent Alignment Financial Investment of Interests Strength Organization We are a publicly We maintain substantial We are focused owned company with cash reserves $1.3 T inmanagement¹ assets under solely on investme
Slide 5: A confluence of secular and transitory factors is impacting our results in 2022
A confluence of secular and transitory factors is impacting our results in 2022 Secular Factors Transitory Factors § “Barbelling” flows to passive, § Market declines in equities alternatives and bonds § Fee pressures and vehicle § Value/growth rotation migration § Performance challenges § More conce
Slide 6: We have been investing in new capabilities to position ourselves for long-term growth
We have been investing in new capabilities to position ourselves for long-term growth with tangible success $39.2 B fixed income 5-year net flows § Investing in our fixed income and multi-asset capabilities $34.7 B multi-asset 5-year net flows § Growing our presence in EMEA and APAC § Building cover
Slide 7: Markets and flows have reduced assets under management
Markets and flows have reduced assets under management—we have managed through this before Goal to Return to $1,688 Positive Net Flows $1,471 $1,339 This will take: Ending AUM (U.S. $b) $1,310 $1,207 $991 $962 More constructive $811 equity markets $747 $763 $692 $577 $482 $489 $400 $391 Traction in
Slide 8: Performance remains solid over the 3-, 5-, and 10-year periods
Performance remains solid over the 3-, 5-, and 10-year periods As of June 30, 2022 U.S. Mutual Funds U.S. Mutual Funds Composites Outperforming Outperforming Outperforming Morningstar Median1 Passive Peer Median2 Benchmark3 1 3 5 10 1 3 5 10 1 3 5 10 Asset Class year years years years year years yea
Slide 9: We continue to focus on delivering for our clients and investing for long-term growth
We continue to focus on delivering for our clients and investing for long-term growth while managing through dynamic markets Pursue Diversify and Globalize and Deliver world- investment expand our grow our class client excellence investment client base service Focus on performance, capabilities Sust
Slide 10: Adding a private markets platform through acquisition of OHA supports long-term growth
Adding a private markets platform through acquisition of OHA supports long-term growth Strategic rationale § Growing demand for alternative credit $57 B § OHA has a 30-year track record of growth and investment performance Capital Under § Opportunity to grow at intersection of the two organizations
Slide 11: Financial Overview
Financial Overview Jen Dardis CHIEF FINANCIAL OFFICER Unless otherwise noted, OHA financial data are included in 2022 results but excluded from previous periods. T. ROWE PRICE GROUP, INC. BUSINESS UPDATE 2022
Slide 12: Long-term financials remain strong, while headwinds have challenged the short term
Long-term financials remain strong, while headwinds have challenged the short term As of June 30, 2022 5 10 20 30 years years years years 1H21 1H22 Change Net revenues 10% 10% 11% 12% Net revenues (m) $3,756 $3,376 -10% Diluted EPS 13% 13% 14% 16% Diluted EPS (GAAP) $6.63 $3.88 -41% (GAAP) Dividends
Slide 13: Fixed income, multi-asset, and alternatives have been offsetting equity outflows
Fixed income, multi-asset, and alternatives have been offsetting equity outflows Net Flows by Asset Class (U.S. $b) $30 $20 Alternatives $10 Multi-Asset We have been Fixed investing in fixed Income $0 income, multi-asset, and more recently ($10) alternatives capabilities Equity as diversifying sourc
Slide 14: We have invested into a rising market environment, building capabilities while expanding operating margin
We have invested into a rising market environment, building capabilities while expanding operating margin Non-GAAP Operating Expense and Income (U.S. $b) Since 2015, average $8 revenue growth of 10.6% per year has outpaced average expense growth $6 of 8.9% per year. Op. Income Market-driven expenses
Slide 15: Our balance sheet remains strong
Our balance sheet remains strong Increased the annual dividend for 36 years Balance Sheet Items December 31, December 31, June 30, (At 12/31 unless noted, U.S. $m) 2016 2021* 2022* Cash and Discretionary Investments $1,906 $2,077 $2,607 Seed Capital Investments $1,264 $1,300 $998 Debt $0 $114 $102 S
Slide 16: Consistently creating value for shareholders
Consistently creating value for shareholders Return of Capital (U.S. $m) $4,000 $3,000 Free Cash Flow* Dividends – Since 2015 Special $2,000 Dividends – Recurring $1,000 Share Buybacks Returned 84% $0 2015 2016 2017 2018 2019 2020 2021 of non-GAAP operating income through dividends Weighted Average
Slide 17: Questions
Questions Please submit your written questions in the box on the left of the screen
Slide 18: We are focused on the long term and positioning for the future
We are focused on the long term and positioning for the future A premier Delivering Committed to Innovating Managing global active performance, retaining and and investing through manager insights, and attracting to reach new near-term service for diverse top clients headwinds our clients talent T.
Slide 19: Appendix
INVEST WITH CONFIDENCE Appendix
Slide 20: Capital allocation-based income (carried interest)
Capital allocation-based income (carried interest) Investments in Affiliated Private Funds Carried Interest § At the end of each reporting period, accrued carried interest (6-Month Change, U.S. $m) reflects what would be due from each investment fund as if the fair value of the underlying investment
Slide 21: Non-GAAP operating income and net revenues reconciliation
Non-GAAP operating income and net revenues reconciliation U.S. $m 2021 2020 2019 2018 2017 2016 2015 Net Revenues, GAAP basis $7,671.9 $6,206.7 $5,617.9 $5,372.6 $4,342.4 $4,284.8 $4,200.6 Non-GAAP adjustments: Consolidated Investment Products 5.5 8.6 6.8 6.2 5.6 6.5 Net Revenues, Non-GAAP basis $7,
Slide 22: Reconciliation between GAAP and adjusted (non-GAAP) EPS
Reconciliation between GAAP and adjusted (non-GAAP) EPS As of June 30, 2022 1H21 1H22 Diluted earnings per common share, GAAP basis $6.63 $3.88 Non-GAAP adjustments: Acquisition-related adjustments - .04 Consolidated T. Rowe Price investment products (.14) .30 Other non-operating income (.17) .18 No
Slide 23: Free cash flow non-GAAP reconciliation
Free cash flow non-GAAP reconciliation U.S. $m 2021 2020 2019 2018 2017 2016 2015 Net cash provided by (used in) operating activities 3,452.0 1,918.9 1,522.7 1,619.9 229.5 170.5 1,530.5 Impact of consolidated products (23.7) 560.1 679.6 558.2 1,322.3 1,173.2 - Adjusted net cash provided by (used in)
Slide 24: Additional information
Additional information ©2022 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 conten
Slide 25: Important information
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 on
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