Cohen & Steers(CNS) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported earnings of $0.75 per share, a decrease from$0.78 sequentially [6] - Revenue for Q1 decreased to $133.8 million from the prior quarter, primarily due to lower average AUM and a lower day count [6][7] - The effective fee rate improved slightly to 59 basis points, up from the prior quarter [8] - Operating margin was 34.7$87.6 billion from $85.8 billion at the prior quarter end, driven by net inflows and market appreciation [9][10] - Total expenses decreased, mainly due to a reduction in compensation and benefits, resulting in a compensation ratio of 40.5$295 million, a decrease from the prior period [11] Business Line Data and Key Metrics Changes - The company experienced net inflows of $222 million firm-wide, with open-end funds leading at$585 million [35][36] - Institutional advisory saw net outflows of $108 million, attributed to new mandates and account terminations [39] - The unfunded pipeline ended at$61 million, significantly lower than the previous quarter [39] Market Data and Key Metrics Changes - U.S. equities declined 4.3% in Q1, while developed market ex-U.S. equities rose 5.4% [16] - U.S. REITs gained 2.8%, and global listed infrastructure rose 4.8%, outperforming corresponding broad equity indices [16] - The company noted a rotation into defensive assets, including utilities and gold, amid macroeconomic concerns [17] Company Strategy and Development Direction - The company remains focused on growth despite market volatility and potential recession risks [32] - There is a growing case for real assets due to persistent inflation, with a focus on enhancing market position through strategic initiatives [35][48] - The company plans to launch additional active ETFs and explore partnerships for new investment vehicles [41][90] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about a potential recession due to recent tariff announcements and their impact on economic growth [21][32] - The company anticipates a slowdown in economic growth and higher inflation, which may affect investment strategies [21][65] - Management emphasized the importance of liquidity and the opportunity costs associated with illiquidity in the current market environment [27][30] Other Important Information - The company launched its first three active ETFs in February, targeting real estate, preferreds, and natural resource equities [41] - The company is seeing increased interest in real assets from retirement segments and model builders [50] - The company is committed to investing in distribution capabilities, particularly in the wealth channel [52] Q&A Session Summary Question: What is the current state of the Wealth Manager channel? - Management noted that the market has been volatile, leading to uncertainty and a less robust flow environment, but there is interest in U.S. REITs and listed infrastructure [57][58] Question: What are the second-order impacts from tariffs? - Management indicated that the indirect effects would include slower economic growth and higher inflation, with infrastructure being a stagflationary strategy [65][66] Question: How is the company responding to potential recession risks? - Management stated that they are not making rash short-term changes but are focused on strategic hires and maintaining strong client interactions [68][70] Question: What is the outlook for the unfunded pipeline? - Management expressed confidence in the future, noting that while the current pipeline is low, there are good levels of activity and new allocations expected [84][86] Question: What are the company's acquisition strategies? - Management is open to exploring acquisitions or partnerships, particularly in light of changing dynamics in the wealth channel [90][92]