Principal Announces Second Quarter 2018 Results
July 26, 2018 at 16:15 PM EDT
Principal Financial Group® (Nasdaq: PFG) today announced results for second quarter 2018.
“I’m pleased with our results for the quarter and first six months of the year,” said Dan Houston, chairman, president and CEO of Principal. “We delivered $391 million of non-GAAP operating earnings in the second quarter. At $800 million year-to-date, non-GAAP operating earnings are up 6 percent compared to the first half of 2017, despite some unfavorable macroeconomic conditions and our accelerated investment in digital business solutions.”
“We continue to create long-term shareholder value through our balanced approach to capital deployment,” added Houston. “In the first half of the year, we’ve returned over $670 million to shareholders through common stock dividends and share repurchases. Additionally, we’ve committed $130 million to strategic acquisitions to increase scale and capabilities in our global businesses. Our recent acquisition of financial technology company RobustWealth is an important step forward for Principal as we look to make investment advice more accessible to customers. RobustWealth provides us a suite of solutions for investment advisors, including a digital advice platform, goal-based investment tools, and efficient client onboarding.”
Other second quarter highlights
Forward looking and cautionary statements
Use of Non-GAAP financial measures
Earnings conference call
The company’s financial supplement and slide presentation is currently available at principal.com/investor, and may be referred to during the call.
*U.S. GAAP (GAAP) net income attributable to PFG versus non-GAAP operating earnings
Management uses non-GAAP operating earnings, which is a financial measure that excludes the effect of net realized capital gains and losses, as adjusted, and other after-tax adjustments the company believes are not indicative of overall operating trends, for goal setting, as a basis for determining employee and senior management awards and compensation, and evaluating performance on a basis comparable to that used by investors and securities analysts. Note: it is possible these adjusting items have occurred in the past and could recur in future reporting periods. While these items may be significant components in understanding and assessing our consolidated financial performance, management believes the presentation of non-GAAP operating earnings enhances the understanding of results of operations by highlighting earnings attributable to the normal, ongoing operations of the company’s businesses.
1 Use of non-GAAP financial measures is discussed in this release after segment results. Non-GAAP operating earnings for total company is after tax.
2 Represents the percentage of Principal actively managed mutual funds, exchange traded funds (ETFs), insurance separate accounts, and collective investment trusts (CITs) in the top two Morningstar quartiles. Excludes Money Market, Stable Value, Liability Driven Investment, Hedge Fund Separate Account & US Property Separate Account.
3 The company has provided reconciliations of the non-GAAP measures to the most directly comparable U.S. GAAP measures at the end of the release. The company has determined this measure is more representative of underlying operating revenues growth for PGI as it removes commissions that are collected through fee revenue and passed through expenses with no impact to pre-tax operating earnings.
4 Premium and fees = premiums and other considerations plus fees and other revenues.
5 Pre-tax operating earnings = operating earnings before income taxes and after noncontrolling interest.
6 Net revenue = operating revenues less benefits, claims and settlement expenses less dividends to policyholders.
7 Pre-tax return on net revenue = pre-tax operating earnings divided by net revenue.
8 Variable investment income includes certain types of investment returns such as prepayment fees and income (loss) from certain elements of our alternative asset classes, including results of value-add real estate sales activity.
9 Pre-tax return on operating revenues less pass-through commissions = pre-tax operating earnings, adjusted for noncontrolling interest divided by operating revenues less pass-through commissions.
10 Combined net revenue: net revenue for all Principal International companies at 100% less pass-through commissions. Prior to 1Q 2018, pass-through commissions were not excluded from this definition. The company has determined combined net revenue (at PFG share) is more representative of underlying net revenue growth for Principal International as it reflects our proportionate share of consolidated and equity method subsidiaries. In addition, using this net revenue metric provides a more meaningful representation of our profit margins. net revenue (at PFG share)
11 Pre-tax return on premium and fees = pre-tax operating earnings divided by premium and fees.
12 Principal, Principal and symbol design and Principal Financial Group are trademarks and service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.