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    T Rowe Price Group Inc (TROW)

    Q4 2023 Earnings Summary

    Reported on Jan 10, 2025 (Before Market Open)
    Pre-Earnings Price$109.73Last close (Feb 7, 2024)
    Post-Earnings Price$112.20Open (Feb 8, 2024)
    Price Change
    $2.47(+2.25%)

    What went wrong

    • T. Rowe Price anticipates net outflows in 2024, although they expect improvement from 2023.
    • Fixed income flows have turned negative in the quarter, potentially indicating challenges in that asset class.
    • Share buybacks are expected to remain lower than historical levels due to lower free cash flow after dividends, limiting the company's ability to repurchase shares.

    Q&A Summary

    1. 2024 Sales Outlook
      Q: How will sales and redemptions improve in 2024?
      A: Management expects outflows in 2024 but anticipates improvement from 2023. Strategies with substantial outflows in prior years had better performance in 2023, leading to lower client redemptions and improved sales. Early signs show better gross sales, reduced at-risk assets, and positive momentum, including nearly $3 billion in January retirement date flows.

    2. Share Buyback Plans
      Q: What are your share repurchase plans for 2024?
      A: The company plans to be opportunistic with share repurchases but doesn't expect to return to pre-2023 levels of $1 billion per year. Buybacks may exceed 2023 levels depending on circumstances, aiming to reduce the share count over time.

    3. Fixed Income Flows
      Q: How will fixed income flows trend going forward?
      A: Management anticipates fixed income flows to improve as clients reengage due to higher rates offering attractive returns. Q4 outflows were driven by a sizable redemption in a short duration strategy, not indicative of future trends. The firm is investing in fixed income capabilities and expects growth in this area.

    4. OHA and OCREDIT Growth
      Q: Can you discuss the next chapter for OHA and OCREDIT?
      A: OCREDIT raised over $100 million since September and expects similar amounts in Q1, with momentum building throughout the year. Despite a competitive private credit market, management is confident that T. Rowe Price and OHA's combined strengths will lead to success with OCREDIT and future products. OHA's fee-based AUM in alternatives was up 10% in 2023, and the firm expects an acceleration in flows in 2024.

    5. International Business Growth
      Q: What are your growth expectations for non-U.S. business?
      A: Management expects growth outside the U.S. to outpace domestic growth, targeting focus markets like Japan, Australia, Germany, Italy, the U.K., and Canada. They anticipate meaningful leverage from existing investments in these regions, leading to increased profitability over time.

    6. Retiree Inc. Acquisition
      Q: What is the strategic rationale for acquiring Retiree Inc.?
      A: The acquisition brings proprietary algorithms that help retirement investors transition from accumulation to decumulation, optimizing Social Security elections and withdrawal strategies. This enhances the firm's advisory capabilities, adds value for clients, and offers potential partnerships in the wealth channel. Management sees significant opportunity to differentiate offerings and grow in retirement services.

    7. Performance Fees Impact
      Q: Can you quantify the impact of performance fees in Q4?
      A: Performance fees amounted to $25 million in Q4, primarily from OHA's accounts that crystallize during the year, typically in the fourth quarter but can occur throughout the year.

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