Baltimore money manager T. Rowe Price said Thursday that net income rose nearly 26 percent in the first three months of the year, compared with a year earlier, and customers added money to portfolios rather than taking cash out — reversing an unusual trend in 2013.
The company reported $304.3 million in net income during the first quarter, up from $241.9 million during the year-ago quarter. Total revenue rose 17 percent, to $954.6 million.
That performance was fueled by rising investment advisory revenue, thanks to market gains and more money flowing in from clients. Customers invested $8.8 billion in net cash into Price funds and other portfolios during the first quarter, compared with $12 billion pulled out through all of last year.
"It was definitely a better quarter for them," said Greggory Warren, a senior stock analyst at Morningstar who covers asset managers. "A lot of investors had sort of been wringing their hands. Over the last decade, they've only had six quarters where they've seen outflows, and three of them happened last year."
Price executives talked with shareholders about performance during the company's annual meeting, held in one of its new buildings in Owings Mills. James A.C. Kennedy, the company's chief executive officer, said the net outflows came as several large institutional investors pulled money from funds. He said the company added to its sales team to broaden its base of institutional clients.
Despite the outflows, Price's net income rose nearly 19 percent in 2013, a year marked by strong U.S. stock performance and difficulties for bond investors.
"We have navigated what has been a choppy series of financial markets ... but all in all, 2013 was a fine year for financial markets and for your company," said Brian Rogers, Price's chairman.
Kennedy said U.S. economic growth is stable — if subdued. Market performance this year will depend in part on how both consumer and corporate confidence and interest rates fare, he said. He expects that rates will rise, but not fast enough to "choke off the recovery."
"That's what our best guess is," he said.
So far, 2014 has been good to Price. Average assets under management increased $100.2 billion during the first quarter, a jump of 17 percent from a year earlier. Earnings were $1.12 per diluted share, up from 91 cents a share during the year-ago period.
The company's stock closed at $81.82 Thursday, up 64 cents.
During the meeting, investors — retired Price employees among them — asked executives questions that ranged from the company's plans for property it owns in Florida to its strategy of investing in some firms that aren't yet public.
Kennedy said the land gives Price the ability to build a campus for its approximately 400 Tampa employees, who work in rented offices. But the company is negotiating to extend its lease and doesn't need more space now.
As for investing in "pre-public" companies — as it did with the now publicly traded Facebook — Rogers said that's a small piece of what Price does. But Kennedy thinks it makes sense as private companies wait longer to go public.
"If we want to find growth, we have to tiptoe into the private markets," Kennedy said.
Joe Molyneaux, a retired IBM worker from Timonium, came out specifically to thank executives for keeping their headquarters in Baltimore. The company, which had considered moving farther east in the city or consolidating in Owings Mills, said in December that it had signed a letter of intent to stay on Pratt Street through 2027.
"It's hard to estimate what that means to the city of Baltimore and to its well-being," Molyneaux said. "If a company like T. Rowe Price had moved out, it would have been devastating."