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01/11 03:09
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Despite strong investment performance and a record high AUM, there are concerns about decreased net inflows, a volatile wealth management channel, and uncertainties in future allocations. The Q&A revealed management's unclear responses and concerns about the low pipeline. However, the launch of new ETFs and strong REIT performance are positive signs. Given the mixed signals and the company's market cap, the stock price is likely to remain neutral within the next two weeks.
Earnings per Share (EPS) $0.75 per share, down from $0.78 sequentially.
Revenue $133,800,000, down from the prior quarter, driven by lower average AUM and lower day count, partially offset by improvement in effective fee rate.
Effective Fee Rate 59 basis points, slightly higher than the prior quarter due to a mix change in average AUM.
Operating Margin 34.7%, down from 35.5% in the prior quarter, impacted by lower average AUM.
Ending AUM $87,600,000,000, up from $85,800,000,000 at prior quarter end, driven by net inflows and market appreciation.
Total Expenses Lower than the prior quarter, primarily due to a decrease in compensation and benefits, consistent with the sequential decrease in revenue.
Compensation Ratio 40.5%, consistent with planning.
Effective Tax Rate 25.3% for the quarter.
Liquidity $295,000,000 at quarter end, a decrease versus the prior period, driven by annual incentive compensation cycle.
Net Inflows $222,000,000, down from $860,000,000 in the preceding quarter.
Unfunded Pipeline $61,000,000, down from $531,000,000 last quarter.
Gross Sales for Open End Funds Annualized at $12,800,000,000, in line with average over the past several years.
CCAV Vehicles AUM $1,200,000,000, with inflows in 19 of the past 21 quarters.
CNS REIT Return 13.4% compared to 4.4% for the average non-traded REIT over the same period.
Active ETFs Launch: Launched first three active ETFs in real estate, preferreds, and natural resource equities, which are core strategies designed for asset allocators.
New CCAP Sub Fund: Launched a short duration preferred stock strategy with attractive attributes, including a size of $1.3 billion and yields of 7.7%.
Net Inflows: Achieved firm-wide net inflows of $222 million, marking the third consecutive quarter of net inflows.
Global Listed Infrastructure: Generated $586 million in net inflows, indicating strong demand for this strategy.
Wealth Channel Performance: Wealth channel led net inflows for the past three quarters, reflecting strong client relationships and brand recognition.
Compensation Ratio: Maintained a compensation ratio of 40.5%, consistent with planning.
G&A Expense Increase: Expected G&A expenses to increase by 6% to 7% compared to the prior year due to infrastructure investments and ETF rollout.
Strategic Priorities: Focus on enhancing market position through innovation and strategic hires, while being cautious about non-essential investments.
Partnership for Core Real Estate: Planning to launch a strategy for institutional investors combining listed and private core real estate.
Economic Factors: The company anticipates a potential U.S. recession due to recent tariff announcements and business uncertainty, which could slow decision-making and impact revenue.
Regulatory Issues: The recent tariff policy announced by the administration is more severe than expected, leading to increased economic volatility and uncertainty.
Supply Chain Challenges: The impact of tariffs may lead to stagflationary effects on the U.S. economy, affecting economic growth and inflation.
Competitive Pressures: The firm is facing challenges in maintaining its unfunded pipeline, which has significantly decreased, reflecting a competitive environment and the need to translate activity into mandates.
Market Volatility: Post-quarter market volatility has created uncertainty, affecting decision-making and potentially leading to reduced inflows.
Investment Performance: Despite strong investment performance, the firm acknowledges that U.S. equities appear expensive and may face earnings and multiple contraction.
Liquidity Concerns: The cost of illiquidity is becoming a priority for clients, with potential impacts on investment strategies and asset allocations.
Active ETFs Launch: In February, Cohen and Steers launched its first three active ETFs in real estate, preferreds, and natural resource equities, which are expected to expand their addressable market.
Private Real Estate Initiative: Cohen and Steers is making progress on its private real estate initiative, with CNS REIT being the top-performing non-traded REIT for the twelve months ended February.
New Real Estate Strategy: A new strategy combining listed and private core real estate is expected to launch in late Q2, aimed at providing better risk-adjusted returns and liquidity.
Infrastructure Investment: Cohen and Steers sees increasing demand for global listed infrastructure, driven by macroeconomic trends and the need for infrastructure investment.
Compensation Ratio: The compensation ratio is expected to remain at 40.5% for the rest of the year.
G&A Expense Increase: General and administrative expenses are expected to increase by 6% to 7% compared to the prior year.
Effective Tax Rate: The effective tax rate is expected to remain at 25.3% on an as-adjusted basis for 2025.
Revenue Expectations: Revenue for Q1 was reported at $133.8 million, with expectations of continued focus on real assets and infrastructure amid economic uncertainty.
Net inflows: $222,000,000 in net inflows for the quarter.
Open end funds inflows: $585,000,000 in net inflows for open end funds.
Previous quarter inflows: $860,000,000 in the preceding quarter.
Third quarter inflows: $1,300,000,000 in the third quarter of last year.
Institutional Advisory outflows: $108,000,000 in net outflows.
Sub advisory outflows: $258,000,000 in net outflows.
Unfunded pipeline: $61,000,000 at quarter end.
Pending redemptions: $290,000,000 in known redemptions.
Active ETFs: Launched three active ETFs in real estate, preferreds, and natural resource equities.
CCAV vehicles: Six CCAV vehicles with $1,200,000,000 in AUM.
CNS REIT performance: CNS REIT returned 13.4% compared to 4.4% for the average non-traded REIT.
The earnings call reveals strong financial performance with increased EPS, revenue, operating margin, and AUM, alongside stable expenses and improved liquidity. The Q&A section highlights positive sentiment towards U.S. REITs and real asset strategies, with expectations of strong future performance. The market cap suggests moderate sensitivity to these positive developments. Despite some management ambiguity on long-term comp ratio guidance, the overall outlook is optimistic, leading to a positive stock price prediction of 2% to 8% over the next two weeks.
The earnings call revealed several concerning factors: a slight EPS decline, net outflows, and a drop in operating margin. While there are positive aspects like revenue growth and liquidity increase, the Q&A highlighted uncertainties in wealth management and strategic execution risks. The net outflows and competition pressures further indicate challenges. Given the market cap of $3.57 billion, these factors suggest a negative sentiment, likely resulting in a stock price decrease of -2% to -8% over the next two weeks.
The earnings call presents mixed signals: while the company reports strong performance in certain segments like CNS REIT and AUM growth, EPS and operating margins have declined. The Q&A reveals concerns about market volatility and vague responses on key issues, which could worry investors. The launch of new ETFs and a focus on innovation are positives, but the decrease in net inflows and unfunded pipeline are negatives. Given the mid-cap status of the company, the stock price is likely to remain stable, resulting in a neutral sentiment.
Despite strong investment performance and a record high AUM, there are concerns about decreased net inflows, a volatile wealth management channel, and uncertainties in future allocations. The Q&A revealed management's unclear responses and concerns about the low pipeline. However, the launch of new ETFs and strong REIT performance are positive signs. Given the mixed signals and the company's market cap, the stock price is likely to remain neutral within the next two weeks.
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