T. Rowe Price Fourth Quarter Results: Balance Sheet Remains Strong

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The T. Rowe Price Group reported strong revenue growth of 13.2% for the fourth quarter of 2021 and 23.6% for the year, driven by market appreciation which boosted average assets under management.

The asset manager continued to invest in strategic initiatives, but expenses lagged revenue growth, resulting in record profitability and diluted GAAP EPS of $13.12 and unused EPS. Adjusted GAAP of $12.75 for the year.

In the fourth quarter, T. Rowe Price repurchased over 3 million shares, which, combined with repurchases from previous quarters, the regular dividend and a special dividend earlier in the year, brought in $2.8 billion. dollars to shareholders in 2021.

Rob Sharp

In addition to the return on capital, T. Rowe Price used $2.5 billion in cash to fund part of the acquisition of OHA, a $57 billion alternative lending company.

“Nevertheless, our balance sheet remains strong with over $2 billion in cash and discretionary investments at year-end,” commented Rob Sharps, CEO and Chairman.

Net revenue realized in the fourth quarter of 2021 was nearly $2 billion, an increase of 13.2% compared to the fourth quarter of 2020.

Average assets under management in Q4 2021 were $1.65 billion, an increase of 18.6% compared to Q4 2020.

The company voluntarily waived a Q4 2021 money market advisory fee of $14.9 million to continue to maintain positive returns for investors.

The company expects waivers in the first quarter of 2022 to be at a slightly lower level than in the fourth quarter of 2021, and the company expects to continue waiving fees for at least the first half of 2022.

Source: T. Rowe Price

Operating expenses in the fourth quarter of 2021 were $1.1 billion, an increase of 12.5% ​​compared to the fourth quarter of 2020.

On a non-GAAP basis, the company’s operating expenses in the fourth quarter of 2021 were $1.0 billion, an increase of 14.7% from the fourth quarter of 2020. Non-GAAP operations of the business exclude the impact of the additional savings plan, consolidated sponsored products and transaction costs incurred. related to the acquisition of OHA. The increase in the company’s non-GAAP operating expenses compared to the fourth quarter of 2020 was primarily due to higher compensation costs; higher distribution and service costs, as average assets under management increased compared to the prior year; and higher costs for technology development, associate transition, and core operations provided by FIS since August 2021 for the company’s full-service recordkeeping offering.

Costs incurred under the FIS agreement were partially offset by a reduction in compensation expense due to the transition of approximately 800 associates to FIS in August 2021.

The company currently estimates that its non-GAAP operating expenses for 2022, including a full year of OHA operating expenses, will increase between 12% and 16%.

Non-operating income was $50.1 million in the fourth quarter of 2021, compared to non-operating income of $390.1 million in the fourth quarter of 2020.

At the end of 2021, Bill Stromberg retired as CEO after a distinguished 35-year career with the company.

“Bill has successfully guided us through a difficult time for our industry. His legacy positions us well to take advantage of the significant opportunities that lie ahead of us,” said Sharps.

“As we enter 2022, our focus on investment performance and exceptional customer service remains our top priority. To meet these imperatives, we will continue to build on our rich history and culture, while adapting to changing times. changing landscape of our industry,” he added.

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