Principal Financial Group, Inc. (PFG) Q2 2023 Earnings Call Transcript

Principal Financial Group, Inc. (NASDAQ:PFG) Q2 2023 Results Conference Call July 28, 2023 10:00 AM ET

Company Participants

Humphrey Lee - Vice President of Investor Relations

Dan Houston - CEO

Deanna Strable - CFO

Chris Littlefield - Retirement and Income Solutions

Pat Halter - Asset Management

Amy Friedrich - Benefits and Protection

Conference Call Participants

Suneet Kamath - Jefferies

Ryan Krueger - KBW

Tom Gallagher - Evercore ISI

Erik Bass - Autonomous Research

John Barnidge - Piper Sandler

Wes Carmichael - Wells Fargo

Jimmy Bhullar - JPMorgan

Alex Scott - Goldman Sachs

Tracy Benguigui - Barclays

Mike Ward - Citi

Operator

Good morning. And welcome to the Principal Financial Group Second Quarter 2023 Financial Results Conference Call. There will be a question-and-answer session after the speakers have completed their prepared remarks [Operator Instructions].

I will now turn the conference over to Humphrey Lee, Vice President of Investor Relations.

Humphrey Lee

Thank you, and good morning. Welcome to Principal Financial Group's Second Quarter 2023 Conference Call. As always, materials related to today's call are available on our Web site at investors.principal.com. Following a reading of the safe harbor provision, CEO, Dan Houston and CFO, Deanna Strable, will deliver some prepared remarks. We will then open up the call for questions. Others available for Q&A include Chris Littlefield, Retirement and Income Solutions; Pat Halter, Asset Management; and Amy Friedrich, Benefits and Protection.

Some of the comments made during this conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. The company does not revise or update them to reflect new information, subsequent events or changes in strategy. Risks and uncertainties that could cause actual results to differ materially from those expressed or implied are discussed in the company's most recent annual report on Form 10-K filed by the company with the U.S. Securities and Exchange Commission. Additionally, some of the comments made during this conference call may refer to non-GAAP financial measures. Reconciliations of the non-GAAP financial measures to the most directly comparable US GAAP financial measures may be found in our earnings release, financial supplement and slide presentation.

Dan?

Dan Houston

Thanks, Humphrey, and welcome to everyone on the call. This morning, I will share key aspects of our second quarter financial results and some notable performance highlights. Deanna will follow with additional details and an update on our current financial and capital position. Our leading position in the US small to midsize business market contributed to healthy growth across our benefits and protection and retirement businesses. Across the enterprise, we continue to balance investing for growth in our business with disciplined expense management and favorable 2023 equity market performance is starting to benefit revenue in our fee based businesses. Starting on Slide 3, we reported $376 million of non-GAAP operating earnings or $1.53 per diluted share in the second quarter, excluding significant variances, earnings per share increased 4% over the second quarter of 2022. Our second quarter results highlight our focus on our growth drivers, the power of our integrated offerings and the value of our differentiated distribution and joint venture partnerships and our deep customer relationships. During the quarter, we delivered on our capital deployment strategy, investing for growth in our business and returning $255 million of excess capital to shareholders through share repurchases and common stock dividends. Our business has generated strong free capital flow in the quarter and we are on track to deliver on our targeted 75% to 85% for the full year. We ended the quarter with nearly $675 billion of total company managed AUM, a 2% increase from the first quarter. Improved market performance and positive impacts from foreign currency more than offset a negative $3.9 billion of net cash flow.