Cohen & Steers (CNS) 21 Jul 222022 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Cohen & Steers' Second Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Thursday, July 21, 2022. I would now like to turn the conference over to Brian Heller, Senior Vice President and Corporate Counsel of Cohen & Steers. Please go ahead.

to Call. & welcome XXXX Second and Conference Earnings you, the Steers' Cohen Quarter Thank

outcomes are us, Chief Chief statements believe Further, quarter offer fund those me that release annual your Officer, vehicle. an constitute of information Cheigh. in Joining questions our on want to any and are We some Matt but or Chief Harvey; any I an due available factors, to could including forward-looking sell none and described currently to Form Stadler; reasonable investment offer of Financial statements. duty of on our presentation, number may our our differ our the based buy recent and of answers accompanying remind most include our no materially these solicitation second our SEC to securities other of Investment filings. update assume earnings actual comments John statements Executive Officer, our to you Officer, to other the Joe or We XX-K statements. and to report a forward-looking

the presentation as the links call turn of presentation release in in Our meaningful non-GAAP and www.cohenandsteers.com. website section financial GAAP With evaluating believe contains we as measures performance. to as are reconciliation the release extent of well conjunction A presentation results. Matt. measures earnings to be adjusted included to that our that, non-GAAP financial financial measures These read and The our should the are is Relations available. financial also our measures our in SEC in reasonably to over referred Investor available filings with I'll at non-GAAP earnings these

XX of good share morning, and we to through $X.XX reported release earnings Yesterday, $X.XX morning My the on GAAP prior of presentation. earnings results. you, per as-adjusted reconciliation and compared A will earnings focus in Brian, the Pages XX with year's this can XX results on of and the of found on $X.XX our quarter Slides XX as-adjusted be Thank remarks and everyone. sequentially.

prior Second rate. the quarter that benefits tax the $XXX.X and The included partially to year's decrease average increased assets revenue attributable day sequentially. lower lowered Revenue million quarter quarter the effective cumulative in adjustments was in compensation income compared revenue first offset and million $XXX.X was taxes ratio with additional the our $XXX.X for by to our quarter. and management, in under X from quarter primarily and million compensation to

basis first million compared XX.X the points with with income in in quarter quarter compared sequentially. quarter year's million million was and basis $XX.X in was rate in points fee the second $XX.X effective prior XX.X the Our quarter. the Operating $XX

operating from quarter. Our XX.X% to margin last decreased XX.X%

And in fees. was due XX was to X.X% the fee to to benefits lower in reduction service distribution second increase and compensation plan, Notwithstanding and which The to cumulative in basis roles. open-end compensation higher under included increase assets when primarily information resulting than to G&A recruitment The driven and we as from quarter target previous are a and adjustment primarily funds. cumulative increase technology second with expense with ended, X ratio ratio. now XX.XX% in were quarter fees the and an travel XX.XX% decreased compensation increased positions, at for by hiring investments, to certain and U.S. incentive senior distribution to revenue in average support due the points the the guidance. adjustment The offset revenue key just-mentioned G&A. infrastructure accrual compared lower market is by depreciation, our a business compensation first to and partially months continue for primarily entertainment the service management higher higher and in our quarter our Expenses revenue lower decrease

a effective effective to rate, and securities tax is the second for first quarter rate XX.XX% lower primarily increase X from local was now taxes, quarter the also XX.XX% was The the included cumulative months state adjustment, by which due income in an partially ended. Our in and reduction tax nondeductible seed offset the earnings for cash trailing the impact X previously for of presentation Page quarters. commensurate cash the investments and executive forth U.S. current with was pretax the of in equivalents, portion investments compensation of in decrease sets the base. forecasted our the and that treasury liquid and a corporate XX

$XXX.X compared we quarter. $XXX.X debt-free. totaled to with liquidity million quarter firm And be at continue last Our million end

outflows outflows due Assets was $XX million net assets rebalanced than offset outflows a inflows from number billion, than of Distributions under Joe with totaled as $XXX during time who $XXX XX, on million, update distributions estate million million $XX.X billion March with net our the global offset million was had the portfolios. inflows Japan quarter, last of million second well million more of during The quarter $XX.X during estate XX% reinvested. of inflows of excluding the $XXX color more a will preferred management than compared billion $XXX million of estate outflows more quarter, U.S. $X $XXX totaled Open-end with East $XXX Harvey totaled quarter to some June million net net net which quarter. accounts Japan, net provide their was XX. of unfunded our an mandates. these had $XXX market were outflows on compared of securities. the mandate as net during billion. decrease $XXX of multi-strategy by from from clients with $X.X the million portfolios of and funds flows last compared into quarter. inflows Sub-advisory, a in $XXX the outflows sub-advisory $XX.X of outflows as institutional decrease the $XXX real of as million $XX first outflows. million $XX pipeline by awarded had Middle by million Distributions real first net advisory of real outflows Advisory had we billion being depreciation offset XXXX. of and quarter during of or The new of recorded from at was second

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recorded million We the to XXXX. expect G&A we from of to the half XX% first increase XX% $XX.X in

to in the framework. upgrades cloud continue investments incremental of new and will and technology, implementation cybersecurity We our infrastructure migration including systems, make to

we effective tax travel XX.XX%. sponsored our rate and that both entertainment increase. remain at conference will also expect We and And costs will expect

over Now John it our I'd to discuss Investment our turn Officer, investment performance. like Chief will to Cheigh, who

our areas: will to perspective X and to Matt, you, for and morning. why Thank I I'd provide and combined investment current environment private as present we offering like real performance are to such listed the alpha-generating briefly our second, a scorecard; Today, unique our think and how investors. last, major our wanted asset good cover first, platform performing; classes estate

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So the Harvey. Joe with that, me let call turn over to

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of securities. XX% real real and market size, as global in XX% light in Our in in likewise estate, by notable open-end investment our share in of illustrated preferred funds agility U.S. estate XX% is our

XX% the X by mutual metric. performance X our stars averages industry or compared fund is range. compelling rated AUM Morningstar Another with of in XX%

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had case, due institutional We its outflows to Realty large and case, sibling, totaling million to another from allocator and X & X clients' a Steers in $XXX U.S. funds, Shares our also redemptions. core Cohen due institutional in REIT

million portion of U.S. reconfiguring are REIT The these Cohen allocation. in model Real a from demonstrates history, investors funds Our Steers fund, in its $XXX was in other in difference portfolios Estate second different highest in which & that Fund Securities flows inflows, saw ways. a

underlying but point, conflicting to the the it protection, liquidity unusual reacting see not plans to during were trends. In is logical to redeemed changes, care allocation health market cases, for regime The were adding and Specifically, sellers the business other cycle. buyers create operations. inflation

surprising, assets $XXX quarter, catalyzed the fund, in had $XXX advisory multi-strategy our from real new saw million that We accounts. and modest had estate infrastructure $XXX inflows more strongest of Unfortunately, flows clients, while million withdrawals X had contributed pandemic outflows were had stay withdrawal using with and in client and calls, that We Of capital inflows X the invested considering from $XXX real to withdrawals real estate in a into Institutional totaling funds. outflows. real allocations opportunistic corrected, were estate much million value added our business Our discovery from somewhat is listed temporarily by private inflation. which which million. into market, believe are than private our that the have net net listed a by global meaningfully price by during of better was all inflows REITs mandates existing waiting to trends, for that existing and represent these we process. been together

growing in in While market volatility the estate activity see could is demand and slow listed is infrastructure. East U.S. in emerging advisory, we for real Activity Asia. and robust somewhat worldwide Middle and

and strong Our This ratings win relationships XX%, are average consultant broadening. compares a with our which year, finals and percentage X-year institutional XX%. is of

risk fixed income us recession our unfunded [indiscernible] to for was more million still the performance, million positive together our average need estate, prolonged XX% of new alternative we with listed unfunded quarter's billion. X-year portfolios and plan and strategies the that return, pipeline positions This, quarter pipeline and our period Even measured $XXX above to business and the respect income, and With last yields backdrop approach mandates. of $XXX with real the Measured strategy, by we we total real pipeline in was with diversification XX% a see billion, last global won attributes. funded allocations of take well. have estate protection Our investment for of volatility. and AUM, our again the is of U.S. outstanding a band balances as $X.X long-term XX% same market that infrastructure. our $X.X very inflation rising,

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Cohen Steers. culture Finally, We've entered strong our we strategies this to with execute continue momentum. to enhance and at downturn invest talent in our cyclical &

stronger. on you have Thank the lines markets Operator, & interest you the slowed for to organic Cohen could growth, please our for questions? While even other in we the side emerge your expect Steers. open

[Operator Instructions] Dunn And Evercore line with question first John of our ISI. from comes

private should we And demand about that effort? now years? How talk -- the public for looking we are assets? you could of on is private public tracking next of what a little real couple then versus real how the the some the estate over Maybe do for be more estate option? milestones Maybe think

going backward-looking. was Blackstone invite record and a for because latest is closing those maybe in some fund, in the be takes articulated so That's announced real have based to its corrected. John it reflected strategies. the Well, be private investment I valuations market, the yesterday while the are private estate tend appraisals John to I'll smooth, have that uncertainty REIT it's private private share changes of estate. that to in interest today, to real think start X really economic demand And fact demonstrates outlook, John, valuations next the rates that it and a months. over prices for add valuations a Joe. to that are color. and equity be that's will the transparency not there's around with XX also on going to for in and and where But evolve the process market,

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and of reporting quarters duration raising on a the process. institutions. to in is toward over capital coming look forward targeted we that's year that that so And vehicle because the That

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non-traded raising the with been successful familiar are all with You that's capital REITs.

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then are years? Makes you maybe business might couple shifting the And could your of what prospects [indiscernible], how next like over look talk in maybe sense. and things across European the SICAV about

flows business. in on we're -- opportunity. But to optimistic SICAVs, create on shape the our more to in SICAV, fact very I in to my that's They're than in SICAVs. outlook in Europe. of And is seen a which light an to into We're in He's has process mentioned positive the U.S., quarter, X.X report business in that funds best plan, the interesting demand not designed we're and also that I attribute our offshore new funds relatively quarter UCITS our in the investment it flows has that inflation and place been up positive great for for Sure. fund environment, We've the designed the a years Europe. leader positive the groundwork Asian the I our some would these the about starting investors, been real laying of like are strategy Asia. small for portfolio, beginning and assets are and which in surprising modestly multi-strategy row. in had the quarter. comments, our sales in in we on the that But very preferreds our business, overall didn't I eighth business open-end influential, we relative think ago. put

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the comes question our Marla And with line Backer next Instructions] Sidoti. [Operator of from

consider you at do efforts? So feel capital support terms the raise teams of there that mean, trying your some extensions these other of as moment investment out you that for in private to you've strategy equity sales and you're bandwidth you sufficient these fund, have and contemplating, and current to as also both I the

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in the And follow-up was the about you’ve expansion channel. X then talked wealth

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question the next is ISI. with And Dunn from John Evercore

state seeing of the also [indiscernible] little talk you're a regions, and to Maybe U.S. advisory demand about Yes. back business Can the the too? other U.S. bit across maybe what coming you the

Sure.

U.S. advisory is the business So strong.

down, what's really of particularly on opportunistic But top than because real U.S. from just real the been going side the right demand on, strong for in because is estate. and also it's And characterize It's more quarter infrastructure. advisory now, this demand flows the redemptions don't for listed estate. to allocations. the strongest for estate rebalancings the of global represent Our and real

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we very team -- good our what is like a doing. So shape. We've everybody in is

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business. that gives some hopefully, So the color on you advisory

Yes, me. it one does. And maybe just one for last

like a and institutional on pieces. touched give sketch of having us You thumbnail the growth the wealth could lens conversations a of But inflation? kind and flavor through you the client-level the kind side you're valuation of on maybe of and management secular

John the he's in of ask those take Yes, going middle right that Cheigh to to because conversations. I'm

in I going X institutional some that estate." say have I real their have my need thing. cases, thought, other of That's Or look, people I'd is, they step thing crypto. you portfolio they happen to feel course, a of would across that So say X there's I'd and diversity assets like that conversations is wealth. is, real more "I real have in [indiscernible] asset. investors have gold. the say

our that protection but way, assets be estate, say that right resource is So view need this, I together on deliver commodities natural think equities, of inflation of all portfolio to we there's inflation sensitivity. the in real put wouldn't a that think real that I infrastructure,

was education commodities my anything, And was only only "Well, so my is, answer. saying, gold answer. thought you I'd real reality thought was have estate exposure. like need diversified my say people I the asset I on some to only thought there's I real answer." And

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turn Officer, the Harvey, now Thank Please would go ahead. to over you. call remarks. to back closing Executive Joe Chief for I like

thank look reporting quarter our forward in listening We Well, results participating. to October. you, next everyone, for and

So day. a Thank have great you.

today. Thank your a for you. you participation. great That Have does conclude day. the call We thank for