Cohen & Steers, Inc. ((CNS)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Cohen & Steers’ recent earnings call painted a picture of both optimism and caution. The company reported strong revenue and earnings growth, along with positive net inflows and impressive investment performance. However, challenges such as a decline in assets under management (AUM), increased operating expenses, and anticipated redemptions tempered the overall positive sentiment, suggesting a balanced yet forward-looking perspective.
Revenue and Earnings Growth
Cohen & Steers reported a notable increase in revenue for the fourth quarter, with a sequential rise of 4.9% to $139.9 million. For the full year 2024, revenue grew by 5.9%, reaching $518 million. The company’s earnings per share also showed improvement, climbing to $2.93 from $2.84 the previous year, indicating robust financial health.
Positive Investment Performance
The investment performance was a standout, with 95% of AUM outperforming benchmarks over one year. The company achieved strong excess returns of 288, 162, and 224 basis points over 1-, 3-, and 5-year periods respectively. This performance underscores Cohen & Steers’ effective investment strategies and positions them well in competitive markets.
Successful Net Inflows
Cohen & Steers recorded firm-wide net inflows of $860 million in the fourth quarter, driven by significant contributions from open-end funds. This marks the second consecutive quarter of positive flows, highlighting strong investor confidence and demand for their offerings.
Launch of New ETFs
In a strategic move, Cohen & Steers announced plans to launch three new ETFs in the first quarter of 2025. These will be the company’s first ETFs, aiming to capitalize on opportunities in the wealth channel, reflecting their commitment to innovation and market expansion.
Strong Non-Traded REIT Performance
The performance of Cohen & Steers’ non-traded REITs was particularly strong, with a total return of 11.6% for 2024, ranking second among peers. This success is a testament to their expertise in real estate investments and adds to their competitive edge.
AUM Decline
Despite positive inflows, Cohen & Steers experienced a decline in AUM from $91.8 billion to $85.8 billion by year-end, primarily attributed to market depreciation. This decline presents a challenge, although the firm remains focused on recovery and growth initiatives.
Increased Operating Expenses
The company faced increased operating expenses compared to previous quarters, with notable rises in compensation, distribution, service fees, and general administrative expenses. These costs are crucial to manage as the company navigates growth and operational efficiency.
Challenges in Preferred Securities
Cohen & Steers encountered slower-than-expected activity in preferred securities, attributed to competition from private credit and normalization of the yield curve. This area remains a challenge, requiring strategic adjustments.
Expected Redemptions
The company anticipates redemptions of $800 million in the first half of 2025 due to reallocations to private investments and client rebalancing. This expectation necessitates careful planning to mitigate potential impacts.
Forward-Looking Guidance
Looking ahead, Cohen & Steers provided guidance for 2025, emphasizing strategic initiatives and financial expectations. The launch of three new ETFs is a key focus, along with growth in active ETFs, private real estate, and international markets. They plan to maintain an effective tax rate at 25.3% and aim for enhanced distribution and investment performance across asset classes, despite anticipating a rise in G&A expenses by 6% to 7%.
In conclusion, Cohen & Steers’ earnings call reflected a balanced viewpoint, celebrating substantial achievements in revenue, investment performance, and net inflows while acknowledging the challenges of increased expenses and AUM decline. The company’s strategic initiatives, particularly in ETFs and international markets, position them for continued success, though with a cautious outlook.
