T. Rowe Price Group Inc., the Baltimore money management company, reported that second-quarter profit climbed 32 percent, propelling its stock 5.3 percent higher - the fourth-biggest gain yesterday among stocks in the Standard & Poor's 500 Index.
The company posted net income of $136 million, or 49 cents per share, beating Wall Street estimates by three cents, according to a consensus of analysts polled by Thomson Financial. Price, which doesn't give guidance to analysts on its earnings outlook and doesn't host conference calls, had net income of $103 million, or 38 cents per share, a year ago.
The company was able to attract enough new client cash to its funds that the pot of money it invests on behalf of investors grew even though the stock market declined during the quarter.
That enabled the company to avoid a fate suffered by some of its peers, including Legg Mason Inc., Baltimore's other investment powerhouse, which has seen its shares decline 11 percent this week after reporting its assets fell during the quarter.
Assets under management at Price grew $800 million in the quarter to $294 billion, as investors parked $7.7 billion in the company's funds and market depreciation took away $6.9 billion.
"We view this as a solid quarter in a tough environment," said Wachovia Securities analyst Douglas Sipkin.
Shares rose $1.98 to close at $39.03 yesterday on the Nasdaq stock market.
Price spent $21 million on advertising during the quarter, including broadcast and print media, and led the pack in terms of ad expenditures among mutual fund firms last year, said Nielsen Monitor-Plus. Price said it expects 2006 ad spending to be 10 percent higher than last year.
"We have good performance and the outlook is good, so there's no reason why we wouldn't advertise that," Chairman George A. Roche said.
To accommodate its growing client base, Price announced last month that it would double the size of its customer-service call center in Colorado Springs, Colo. It plans to begin construction on a second $55 million building there this fall, bringing capacity at the entire facility to about 1,400 workers.
Investors poured $2.6 billion into Price's mutual funds in the second quarter, including $840 million into the Growth Stock Fund, which invests in blue-chip stocks. Such stocks are expected to come into favor over small-cap stocks as the economy slows. Investors plowed another $5.1 billion into separate accounts and other kinds of funds.
Price acquired a small group of mutual funds and separate accounts during the quarter, and Roche said the company is looking to make more acquisitions, especially of bond assets. He said a number of banks and insurance companies are contemplating getting out of the asset management business and may be looking to sell.
Price, which has no debt and $1.2 million in cash and liquid investments on hand, repurchased 4 million shares during the quarter and another 500,000 shares in July. The company also bought $75 million worth of shares in its own mutual funds.
Northrop Grumman Corp. said yesterday that second-quarter earnings rose 17 percent, as operating profit growth at its electronics and systems units overcame a decline at the company's ships division. Net income climbed to $430 million, or $1.23 per share, in the April-June period from $367 million, or $1 per share, in the year-ago period. Excluding a loss related to the shutdown of the company's former reseller business, earnings were $1.26 per share in the latest quarter. Revenue slid to $7.6 billion from $7.81 billion last year.
W.R. Grace & Co.
The Columbia-based company recorded a net loss for the second quarter because of asbestos claims related to a vermiculite mine it once operated in Libby, Mont. The chemical maker's loss amounted to $5.2 million, or 8 cents per diluted share, compared with a $32.7 million profit during the second quarter last year. The decline occurred despite improved sales, which rose 7.8 percent to $729.1 million, compared with $676.5 million for the period a year ago. The company paid $30 million toward environmental remediation and $24.3 million for litigation, bankruptcy and other noncore operations. Excluding those charges, the company would have earned a $34.1 million profit.
XM Satellite Radio Holdings Inc. reported yesterday a wider loss for its second quarter. The company lost $231.7 million, or 87 cents per share, in the three months that ended June 30, versus a loss of $148.8 million, or 70 cents per share, in the comparable period a year ago. The losses included $105 million in charges for restructuring debt and other nonoperating items. Revenue nearly doubled to $227.9 million from $125.4 million a year ago.
Comcast said yesterday that its second-quarter net income rose 7 percent from a year ago, highlighted by an increase in subscribers for its Internet telephone service. The company earned $460 million, or 22 cents per share, in the quarter, compared with $430 million, or 19 cents, in the corresponding period a year ago. Revenue came in at $6.23 billion, up 11 percent from last year's $5.6 billion.
The Baltimore-based operator of Sylvan tutoring centers reported a 57 percent decrease in second-quarter profit from the year-ago period, to $4.3 million from $10 million, because of higher expenses and lower margins in corporate-owned centers. The company said diluted earnings per share from continuing operations were 13 cents, compared with 27 cents in the second quarter last year. Revenue increased 11 percent to $102.5 million for the three months that ended June 30, but operating expenses increased 26 percent to $84 million.
The Baltimore developer of remote monitoring systems for intensive care units reported yesterday net income of $1.2 million, or 4 cents a share, for the quarter that ended June 30. That compares with a loss of $504,000, or 15 cents a share, in the second quarter of last year. Revenue was $7.5 million, up 80 percent from $4.2 million in the year-earlier period, reflecting more hospitals adopting Visicu's system last year. The report was Visicu's second as a public company; it had its initial stock offering in April.
St. Paul Travelers
St. Paul Travelers Cos. Inc. said yesterday that its profit fell 9 percent in the second quarter. The insurer said it earned $970 million, or $1.36 a share, down from almost $1.07 billion, or $1.52 a share, from last year's quarter, which included a $138 million gain on the sale of Nuveen Investments Inc. The company also disclosed a $42 million charge "for an additional legal provision related to investigations of various business practices by certain governmental agencies." Revenue increased 3.6 percent to $6.25 billion, up from about $6.04 billion during the corresponding period last year.
Aetna, one of the nation's largest health insurers, reported second-quarter earnings that dipped 1 percent because of growing costs from large claims and competitive pressures. Net income slipped to $389.5 million, or 67 cents per share, from $394.9 million, or 65 cents per share, in the year-ago period, which was based on about 23 million more average shares outstanding. Excluding reserve development, operating earnings rose 23 percent to 64 cents per share in the quarter.
The movie rental chain earned $65.6 million, or 31 cents per share, after paying preferred dividends in the quarter that ended June 30. The profit compared with a net loss of $57.2 million, or 31 cents per common share, a year ago, but the profit included $91.2 million from the settlement of a long-running tax audit. Without that gain and other one-time gains and expenses, Blockbuster had an adjusted net loss of $21.4 million, or 13 cents per share, on revenue of $1.32 billion, down from $1.39 billion a year ago.
European Aeronautic Defence & Space Co. NV said yesterday that its second-quarter profit fell 9 percent, and the company cut its full-year earnings guidance, reflecting delays in the Airbus A380 superjumbo program.
EADS, which owns 80 percent of Airbus, earned 527 million euros ($663.3 million) in the three months that ended June 30, down from 582 million euros a year earlier. Revenue rose to 9.9 billion euros ($12.47 billion) from 9.02 billion euros a year earlier.
Allegheny Energy Inc., which owns utilities that serve four states, including Maryland, reported a second-quarter profit of $31.1 million, compared with a loss of $18.4 million a year earlier. Per-share earnings were 18 cents, compared with a loss of 12 cents a year earlier, the company said yesterday.
Sun reporters Allison Connolly, Hanah Cho and William Salganik and the Associated Press and Bloomberg News contributed to this article.