T. Rowe Price earnings and assets plunge in volatile market

T. Rowe Price Chief Financial Officer Jen Dardis. (Photo submitted)

The Baltimore-based T. Rowe Price Group saw revenue and profit plummet in the third quarter of 2022, but its overall performance was better than most analysts had expected in volatile business conditions.

In a filing with federal regulators and an earnings press release, the company said it had quarterly revenue of $1.59 billion and profit of $384 million. For the 3rd a quarter of a year ago, those numbers were $2 billion and $778 million, respectively.

Average assets under management fell 4% and quarterly investment advisory revenue of $1.4 billion was down 4% from the prior quarter and 20% from the third quarter of 2021, the CEO said and President of T. Rowe Price, Rob Sharps.

The decline in assets under management and advisory fees could be directly attributable to a sharp decline in stock and bond markets, both domestically and internationally.

Earnings, adjusted for one-time costs and M&A-related costs, were $1.86 per share, beating Wall Street expectations. The average estimate from five analysts polled by Zacks Investment Research was for earnings of $1.83 per share.

T. Rowe also recorded net investor outflows of $24.6 billion, which Sharps said was “largely driven by a handful of growth-oriented equity strategies amplified this quarter. with the takeovers of a few large institutional clients”.

The company has taken steps to reduce expense growth, including slowing hiring and reducing planned third-party expenses. Still, T. Rowe said, he expects operating expenses to rise between 4% and 7% for the year, due to its acquisition of Oak Hill Advisors for $4.2 billion and higher compensation costs.

The company said it employed 7,990 people as of September 30, 2022, an increase of 6.1% from the end of 2021 when it acquired Oak Hill.

The impact of soaring inflation has affected all asset managers, not just T. Rowe. Jen Dardis, the company’s chief financial officer, said Thursday that while it’s difficult to predict with certainty when inflation will decline, T. Rowe remains committed to providing its investors with actively managed, research-driven products that will help them at all times. market condition.

“It’s the hallmark of what we do,” she says.

The company has been encouraged by investor reception of its new exchange-traded funds, Dardis said. Earlier this week, T. Rowe launched its ninth ETF, an actively managed high yield bond product.

Sharps said the company was in a good position to fund any initiative, ending the quarter with $2.8 billion in cash and discretionary investments on its balance sheet. During the quarter, T. Rowe paid a regular dividend of $1.20 and repurchased 1.9 million shares, returning approximately $500 million to shareholders.

The company is also thrilled to have been named to several Forbes Best Employers lists, including “World’s Best Employers 2022,” Sharps said.