T. Rowe Price 10-Q 2024-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended March 31, 2024

OR

For the transition period from to

Commission File Number: 000-32191

T. ROWE PRICE GROUP, INC.

(Exact name of registrant as specified in its charter)

100 East Pratt Street, Baltimore, Maryland 21202

(Address, including Zip Code, of principal executive offices)

(410) 345-2000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of shares outstanding of the issuer’s common stock ($.20 par value), as of the latest practicable date, April 23, 2024, is 223,299,903.

The exhibit index is at Item 6 on page 38.

PART I – FINANCIAL INFORMATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

The accompanying notes are an integral part of these statements.

Page 2

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per-share amounts)

Showing the first 8K of 75K characters. Open the full section

OVERVIEW.

Our revenues and net income are derived primarily from investment advisory services provided to individual and institutional investors in a broad range of investment solutions across equity, fixed income, multi-asset, and alternative capabilities. We also provide certain investment advisory clients with related administrative services, including distribution, mutual fund transfer agent, accounting, and shareholder services; participant recordkeeping and transfer agent services for defined contribution retirement plans; brokerage; trust services; and non-discretionary advisory services through model delivery.

Investment advisory revenues depend largely on the total value and composition of assets under our management. Accordingly, fluctuations in financial markets and in the composition of assets under management affect our revenues and results of operations.

We incur significant expenditures to develop new products and services and improve and expand our capabilities and distribution channels in order to attract new investment advisory clients and additional investments from our existing clients. These efforts often involve costs that precede any future revenues that we may recognize from an increase to our assets under management.

The investment management industry has been evolving and industry participants are facing several challenging trends including passive investments taking market share from traditional active strategies; continued downward fee pressure; demand for new investment vehicles to meet client needs; and an ever-changing regulatory landscape. In this regard, we have ample liquidity and resources that allow us to take advantage of attractive growth opportunities. We are investing in key capabilities, including investment professionals, distribution professionals, technologies, and new product offerings in order to provide our clients with strong investment management expertise and service.

MARKET TRENDS.

U.S. stocks produced strong first-quarter gains that lifted several broad indexes to all-time highs. The market was driven by investors’ optimism about the corporate profit potential stemming from advances in artificial intelligence (AI). Investors were also encouraged by the outcome of the Federal Reserve’s most recent monetary policy meeting. Although the central bank kept short-term interest rates steady throughout the quarter, policymakers in March maintained their December 2023 projections for three quarter-point interest rate cuts by the end of 2024 despite recent upticks in inflation readings.

Developed non-U.S. equity markets appreciated in U.S. dollar terms, but total returns to U.S. investors were hurt by a stronger dollar versus other major currencies. In Europe, equity markets were mostly positive, as investors hoped that easing inflation pressures would enable major central banks to begin reducing short-term interest rates later this year. Asian markets were widely mixed: Japanese shares led the region with a gain exceeding 11%, while Hong Kong stocks dropped almost 12%.

Emerging equity markets generally rose but trailed stocks in developed markets in dollar terms. In Europe, Turkish shares advanced as investors were encouraged that the central bank continued to raise interest rates to fight elevated inflation. In Asia, several markets produced gains, but Chinese stocks fell slightly, as the property market remained in distress. In Latin America, a few markets rose sharply, but stocks in regional heavyweight Brazil fell 7%.

Page 19

Returns of several major equity market indexes were as follows for the three months ended:

(1) Returns exclude dividends

Global bond returns were mixed in U.S. dollar terms in the first quarter of 2024. In the U.S., Treasury bill yields increased, even though the fed funds target rate remained in the 5.25% to 5.50% range. Yields of Treasuries with intermediate- and long-term maturities rose to a greater degree due in part to some recent upticks in inflation readings. The 10-year U.S. Treasury note yield increased from 3.88% to 4.20% during the quarter.

In the U.S. investment-grade bond universe, sector performance was mixed. Mortgage-backed and Treasury securities performed worst. Corporate bonds held up somewhat better but still posted mild losses. Asset-backed securities rose slightly, while non-agency commercial mortgage-backed securities produced a solid gain. Tax-free municipal bonds held up slightly better than the broad taxable bond market. High yield corporate bonds produced gains and outperformed the broad investment-grade market.

Bonds in developed non-U.S. markets declined in dollar terms. In Europe, longer-term bond yields generally increased while major European currencies weakened versus the dollar. While the European Central Bank and the Bank of England held short-term interest rates steady, Switzerland’s central bank surprised investors in March with a quarter-point rate cut. In Japan, long-term government bond yields increased and the yen fell to 34-year lows versus the dollar, even though the Bank of Japan decided in March to lift its benchmark interest rate out of negative territory. Emerging markets bonds were mixed: Dollar-denominated issues produced gains, but bonds denominated in local currencies declined, as many developing markets currencies depreciated versus the U.S. dollar.

Returns for several major bond market indexes were as follows for the three months ended:

Page 20

ASSETS UNDER MANAGEMENT.****(1)

Assets under management ended the first quarter of 2024 at $1,542.2 billion, an increase of $97.7 billion from December 31, 2023. The increase in assets under management during the first quarter of 2024 was driven by market appreciation and income, net of distributions not reinvested, of $105.7 billion, offset by net cash outflows of $8.0 billion.

The following tables detail changes in our assets under management, by asset class, during the first quarter of 2024:

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

Showing the first 8K of 90K characters. Open the full section

There has been no material change in our market risks from those provided in Item 7A of the Form 10-K Annual Report for 2023.

Our management, including our principal executive and principal financial officers, has evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2024. Based on that evaluation, our principal executive and principal financial officers have concluded that our disclosure controls and procedures as of March 31, 2024, are effective at the reasonable assurance level to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, including this Form 10-Q quarterly report, is recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our principal executive and principal financial officers, has evaluated any change in our internal control over financial reporting that occurred during the first quarter of 2024, and has concluded that there was no change during the first quarter of 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

For information about our legal proceedings, please see our Commitments and Contingencies footnote to our unaudited condensed consolidated financial statements in Part 1 of this Form 10-Q.

There have been no material changes in the information provided in Item 1A of our Form 10-K Annual Report for 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(c) Repurchase activity during the first quarter of 2024 is as follows:

Shares repurchased by us in a quarter may include repurchases conducted pursuant to publicly announced board authorization, outstanding shares surrendered to us to pay the exercise price in connection with swap exercises of employee stock options, and shares withheld to cover the minimum tax withholding obligation associated with the vesting of restricted stock awards. Of the total number of shares purchased during the first quarter of 2024, 92,328 were related to shares surrendered in connection with employee stock option exercises and no shares were withheld to cover tax withholdings associated with the vesting of restricted stock awards.

Page 37

The following table details the changes in and status of the Board of Directors’ outstanding publicly announced board authorizations.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Not applicable.

The following exhibits required by Item 601 of Regulation S-K are furnished herewith.

Page 38

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on April 26, 2024.

T. Rowe Price Group, Inc.

By: /s/ Jennifer B. Dardis

Vice President, Chief Financial Officer and Treasurer

Page 39