T. Rowe Price Group, Inc.

Good morning, my name is Gigi, and I'll be your conference facilitator today. Welcome to T. Rowe Price's second quarter 2023 earnings conference call. All participants will be in a listen-only mode until the question and answer period. I will give you instructions on how to ask questions at that time. As a reminder, this call is being recorded and will be available for replay on T. Rowe Price's website shortly after the call concludes. I will now turn the call over to Lindsley Caruth, T. Rowe Price's Director of Investor Relations.

Hello, and thank you for joining us today for our second quarter earnings call. The press release and a supplemental materials document can be found on our IR website at investors.troweprice.com. Today's call will last approximately 45 minutes. Our CEO and President Rob Sharps and CFO Jen Dardis will discuss the company's results for about 15 minutes, and then we'll open it up to your questions. We ask that you limit it to one question per participant. I'd like to remind you that during the course of this call, we may make a number of forward-looking statements and reference certain non-GAAP financial measures. Please refer to the forward-looking statement language and the reconciliations to GAAP in the supplemental materials as well as in our press release and 10-Q. Now I'll turn it over to Rob.

Thank you, Lindsley. And thank you all for joining us today. While equity outflows continued in the second quarter, we saw improved performance in a number of important investment strategies. Stronger equity markets helped lift revenue from first quarter levels, and we identified substantial cost savings that will allow us to meaningfully slow expense growth while continuing to pursue our strategic initiatives. On today's call, I'll give an overview of our investment performance followed by a brief update on the key milestones we reached in advancing our strategic initiatives. Jen will then provide a detailed view of our financial results before we take your questions. Overall, second quarter investment performance was encouraging with reasonably solid results across asset classes and the percentage of funds outperforming their peers increasing from the prior quarter. The U.S. large cap growth franchise outperformed this quarter with blue-chip growth, growth stock, and large-cap growth posting top quartile results versus peers and beating their benchmarks. Our U.S. equity research and mid-cap value strategies continued to deliver strong performance. In contrast, the large-cap value franchise, a bright spot in 2022, gave back some of its relative outperformance in the first half of 2023. However, the long-term results remain favorable. Our target day franchise delivered another strong quarter of performance, with all of our flagship retirement funds ranking in the top quartile. Performance in fixed income and international equity was solid as well, with the majority of funds in both segments outperforming peer groups in a number of products, including global multi-sector bond and U.S. high yield in the top decile for the quarter. Our global stock, overseas stock, and several of our municipal bond strategies were top quartile performers in the second quarter, and all have strong 3-, 5-, and 10-year performance track records. Despite these gains, organic growth remains under pressure. As we reported, net outflows for the second quarter were $20 billion. The sales and redemption patterns that we saw in the first quarter largely continued in the second. U.S. equity outflows were primarily driven by U.S. large-cap growth strategies, as market demand remained muted and we saw the lagging impact of past investment performance on sales and redemptions. International and global outflows slowed with improved market demand and better performance. Fixed income net flows declined from the prior quarter as rates rose and demand softened. Target date products had net inflows of $2.4 billion for the quarter. To protect our ability to invest in our corporate strategy and deliver for our clients, we're proactively managing expense growth. We are pursuing a number of efforts to manage expenses, drive efficiency, and create a cost structure that's appropriate for the size and scale of our firm today. Jim will discuss these efforts in greater detail, but since the fourth quarter of 2022, we have taken steps to remove or reallocate over $200 million in run rate costs for 2024. This work partly reflects ongoing company and industry challenges, but also reflects a broader commitment to efficiency, process improvement, and durability, driving a culture of continuous improvement and innovation with an agile mindset. Institutionalizing this work will allow us to better invest in our corporate strategy and continue to deliver for our clients, even in challenging times. Our corporate strategy is focused on areas where we believe we have the greatest opportunity for growth and long-term success. In the second quarter, We advanced efforts to deepen our client partnerships, expand our investment and operational capabilities, and continue to broaden our global reach. We've made important hires and met some key milestones. We are making steady progress in bolstering our USI wealth channel by fortifying partnerships with the largest intermediary firms in the industry. Clients expect compelling investment strategies offered in a variety of vehicles to meet their needs, and we made progress delivering on both this quarter. On June 15th, we launched five fully transparent active equity ETFs, which are already generating client interest and inflows. Our existing lineup of 15 ETFs, now at $1.5 billion in AUM, is steadily building momentum. We continue to fill out our roster of SMA strategies with the addition of four muni and two equity SMA strategies this quarter. We finalized the seed commitment for our first joint co-branded product with OHA, Hero Price OHA Select Private Credit Fund, or Ocredit, and closed for our business development company, or BDC, election filing on June 30th. The filing is a key legal milestone for the launch, which is planned for later this year. We also hired a head of U.S. intermediary, alternative sales, and will continue to invest in resources and expertise to support this effort. We closed on our acquisition of Retiree, Inc., which will enhance our ability to expand and retain relationships with pre-retiree and retiree clients by providing tax-aware retirement income and Social Security claiming strategies. With this acquisition, we demonstrate our commitment to expanding and evolving our already strong retirement capabilities. So, while our flows continue to reflect lingering challenges, we are making clear progress. Our work on driving efficiencies and managing expenses will allow us to continue to invest to deliver for our clients and support future growth. I'm impressed by the resiliency and commitment of our associates, and I remain confident in the long-term fundamental value that a global active investment management firm like T. Rowe Price can deliver, no matter the environment. I'll now turn to Jen to cover our financial results for the second quarter.