Cohen & Steers Reports Third Quarter 2010 Results

Oct 20, 2010, 16:30 ET from Cohen & Steers, Inc.

NEW YORK, Oct. 20 /PRNewswire-FirstCall/ -- Cohen & Steers, Inc. (NYSE: CNS) reported net income attributable to common shareholders of $13.2 million, or $0.30 per diluted share and $0.31 per basic share, for the quarter ended September 30, 2010, compared with net income attributable to common shareholders of $7.5 million, or $0.18 per share (diluted and basic), for the quarter ended September 30, 2009.

The third quarter 2010 results included an after-tax gain of approximately $0.06 per share primarily due to recoveries on the sale of securities. After adjusting for these items, earnings per share attributable to common shareholders would have been $0.25 for the quarter ended September 30, 2010.

For the nine months ended September 30, 2010, the company recorded net income attributable to common shareholders of $33.6 million, or $0.78 per diluted share and $0.79 per basic share, compared with a loss attributable to common shareholders of $13.4 million, or $0.32 per share (diluted and basic), for the nine months ended September 30, 2009. The 2010 results included after-tax gains of approximately $0.14 per share primarily due to recoveries on the sale of securities. After adjusting for these items, earnings per share attributable to common shareholders would have been $0.64 for the nine months ended September 30, 2010. The 2009 results included after-tax expenses of approximately $0.69 per share due to impairment charges. After adjusting for these items, earnings per share attributable to common shareholders would have been $0.38 for the nine months ended September 30, 2009.

Assets Under Management

Assets under management were $31.2 billion as of September 30, 2010, an increase of 19.0% from $26.2 billion at June 30, 2010 and an increase of 38.9% from $22.5 billion at September 30, 2009. The increase from June 30, 2010 was due to market appreciation of $3.9 billion and net inflows of $1.1 billion. The increase from September 30, 2009 was due to market appreciation of $4.4 billion and net inflows of $4.4 billion. Average assets under management were $29.0 billion for the quarter ended September 30, 2010, an increase of 7.1% from $27.0 billion for the quarter ended June 30, 2010 and an increase of 48.8% from $19.5 billion for the quarter ended September 30, 2009.

Assets under management for open-end mutual funds were $7.6 billion as of September 30, 2010, an increase of 15.8% from $6.6 billion at June 30, 2010 and an increase of 29.4% from $5.9 billion at September 30, 2009. The increase from June 30, 2010 was due to market appreciation of $1.0 billion and net inflows of $33 million. The increase from September 30, 2009 was due to market appreciation of $1.2 billion and net inflows of $511 million. Average assets under management for open-end mutual funds were $7.0 billion for the quarter ended September 30, 2010, an increase of 5.5% from $6.7 billion for the quarter ended June 30, 2010 and an increase of 37.4% from $5.1 billion for the quarter ended September 30, 2009.

Assets under management for closed-end mutual funds were $5.9 billion as of September 30, 2010, an increase of 11.1% from $5.3 billion at June 30, 2010 and an increase of 13.7% from $5.2 billion at September 30, 2009. The increase from June 30, 2010 was primarily due to market appreciation of $559 million. The increase from September 30, 2009 was primarily due to market appreciation of $689 million. Average assets under management for closed-end mutual funds were $5.7 billion for the quarter ended September 30, 2010, an increase of 1.2% from $5.6 billion for the quarter ended June 30, 2010 and an increase of 19.8% from $4.8 billion for the quarter ended September 30, 2009.

Assets under management for institutional separate accounts were $17.7 billion as of September 30, 2010, an increase of 23.5% from $14.3 billion at June 30, 2010 and an increase of 55.3% from $11.4 billion at September 30, 2009. The increase from June 30, 2010 was due to market appreciation of $2.3 billion and net inflows of $1.0 billion. The increase from September 30, 2009 was due to net inflows of $3.8 billion and market appreciation of $2.5 billion. Average assets under management for institutional separate accounts were $16.2 billion for the quarter ended September 30, 2010, an increase of 10.1% from $14.7 billion for the quarter ended June 30, 2010 and an increase of 69.2% from $9.6 billion for the quarter ended September 30, 2009.

Financial Highlights

Three Months Ended (In thousands, except per share data or as noted)

September 30, 2010

June 30, 2010

Revenue

$      46,372

$      44,232

Expenses

$      32,400

$      30,900

Operating income

$      13,972

$      13,332

Operating margin  

30.1%

30.1%

Total non-operating income

$        4,489

$        2,050

Net income attributable to common shareholders

$      13,163

$      11,603

Diluted earnings per share attributable to common shareholders

$          0.30

$          0.27

Assets under management, end of period (in millions)

$      31,239

$      26,242

Average assets under management for period (in millions)

$      28,961

$      27,031

Total revenue was $46.4 million for the three months ended September 30, 2010, an increase of 4.8% from $44.2 million for the three months ended June 30, 2010, primarily due to higher average assets under management. Operating expenses were $32.4 million for the three months ended September 30, 2010, an increase of 4.9% from $30.9 million for the three months ended June 30, 2010, primarily due to increases in employee compensation and benefits, general and administrative and distribution and service fees. Operating income was $14.0 million for the three months ended September 30, 2010, compared with $13.3 million for the three months ended June 30, 2010. The company's operating margin remained unchanged at 30.1% for the third quarter of 2010 compared with the second quarter of 2010 primarily due to the compensation to revenue ratio remaining at 39%. Non-operating income was $4.5 million for the three months ended September 30, 2010, an increase of 119.0% from $2.1 million for the three months ended June 30, 2010, primarily due to an increase in equity in earnings from the company's seed investments, partially offset by a decline in the amount of recoveries on the sale of securities.

Balance Sheet Information

As of September 30, 2010, cash, cash equivalents and investments were $172 million. As of September 30, 2010, stockholders' equity was $222 million and the company had no long-term or short-term debt.

Conference Call Information

Cohen & Steers will hold a conference call tomorrow, October 21, 2010 at 11:00 a.m. (ET) to discuss the company's third-quarter results. Investors and analysts can access the live conference call by dialing (800) 769-9015 (U.S.) or (212) 231-2913 (international); passcode: 21484874. Participants should plan to register at least 10 minutes before the conference call begins.

A replay of the call will be available for two weeks starting at approximately 1:00 p.m. (ET) on October 21, 2010 and can be accessed at (800) 633-8284 (U.S.) or (402) 977-9140 (international); passcode: 21484874. Internet access to the webcast, which includes audio (listen-only), will be available on the company's Web site at www.cohenandsteers.com under "Corporate Info."  The webcast will be archived on the Web site for two weeks.

About Cohen & Steers, Inc.

Cohen & Steers is a manager of income-oriented equity portfolios specializing in U.S. and international real estate securities, large cap value stocks, listed infrastructure and utilities, and preferred securities. The company also manages alternative investment strategies such as hedged real estate securities portfolios and private real estate multimanager strategies for qualified investors. Headquartered in New York City, with offices in London, Brussels, Hong Kong and Seattle, Cohen & Steers serves individual and institutional investors through a broad range of investment vehicles.

Forward-Looking Statements

This press release and other statements that Cohen & Steers may make may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect the company's current views with respect to, among other things, its operations and financial performance. You can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates" or the negative versions of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties.

Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. The company believes that these factors include, but are not limited to, those described in the "Risk Factors" section of the company's Annual Report on Form 10-K for the year ended December 31, 2009, which is accessible on the Securities and Exchange Commission's Web site at www.sec.gov and on the company's Web site at www.cohenandsteers.com. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release. The company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Cohen & Steers, Inc. and Subsidiaries  

Condensed Consolidated Statements of Operations (Unaudited)

For the Periods Ended

(in thousands, except per share data)

Three Months Ended

% Change From

September 30, 2010

June 30, 2010

September 30, 2009

June 30, 2010

September 30, 2009

Revenue

Investment advisory and administration fees

$ 42,909

$ 40,835

$ 30,929

Distribution and service fees

2,259

2,236

2,019

Portfolio consulting and other

1,204

1,161

879

Total revenue

46,372

44,232

33,827

4.8%

37.1%

Expenses

Employee compensation and benefits

18,085

17,251

15,956

Distribution and service fees

5,065

4,831

3,837

General and administrative

7,880

7,473

6,990

Depreciation and amortization

1,126

1,113

1,072

Amortization, deferred commissions

244

232

157

Total expenses

32,400

30,900

28,012

4.9%

15.7%

Operating income  

13,972

13,332

5,815

4.8%

140.3%

Non-operating income  

Interest and dividend income - net

710

366

100

(Loss) gain from trading securities - net

-

(371)

3,071

Gain from available-for-sale securities - net

2,124

3,281

455

Equity in earnings (losses) of affiliates

1,005

(1,361)

-

Other

650

135

586

        Total non-operating income

4,489

2,050

4,212

119.0%

6.6%

Income before provision for income taxes

18,461

15,382

10,027

20.0%

84.1%

Provision for income taxes

5,298

3,781

2,065

Net income

13,163

11,601

7,962

13.5%

65.3%

   Less: Net loss (income) attributable to     redeemable noncontrolling interest

-

2

(417)

Net income attributable to common shareholders

$ 13,163

$ 11,603

$   7,545

13.4%

74.5%

Earnings per share attributable to common shareholders

Basic

$     0.31

$     0.27

$     0.18

13.4%

73.0%

Diluted

$     0.30

$     0.27

$     0.18

13.3%

72.1%

Weighted average shares outstanding

     Basic

42,756

42,730

42,396

     Diluted

43,217

43,143

42,633

Cohen & Steers, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)

For the Periods Ended

(in thousands, except per share data)

Nine Months Ended

% Change From

September 30, 2010

September 30, 2009

September 30, 2009

Revenue

Investment advisory and administration fees

$             121,836

$               75,999

Distribution and service fees

6,659

5,321

Portfolio consulting and other

3,453

2,362

Total revenue

131,948

83,682

57.7%

Expenses

Employee compensation and benefits

51,460

43,047

Distribution and service fees

14,206

10,039

General and administrative

22,490

20,490

Depreciation and amortization

3,393

3,120

Amortization, deferred commissions

666

611

Total expenses

92,215

77,307

19.3%

Operating income  

39,733

6,375

*

Non-operating income  

Interest and dividend income - net

1,271

1,426

(Loss) gain from trading securities - net

(182)

11,642

Gain (loss) from available-for-sale securities - net

5,603

(31,241)

Equity in earnings of affiliates

185

-

Other

697

677

        Total non-operating income (loss)

7,574

(17,496)

*

Income (loss) before provision for income taxes

47,307

(11,121)

*

Provision for income taxes

13,653

1,227

Net income (loss)

33,654

(12,348)

*

   Less: Net income attributable to redeemable noncontrolling interest

(8)

(1,007)

Net income (loss) attributable to common shareholders

$               33,646

$             (13,355)

*

Earnings (loss) per share attributable to common shareholders

Basic

$                   0.79

$                 (0.32)

*

Diluted

$                   0.78

$                 (0.32)

*

Weighted average shares outstanding

     Basic

42,696

42,319

     Diluted

43,099

42,319

* Not meaningful

Cohen & Steers, Inc. and Subsidiaries

Assets Under Management (Unaudited)

For the Periods Ended

(in millions)

Three Months Ended

% Change From

September 30, 2010

June 30, 2010

September 30, 2009

June 30, 2010

September 30, 2009

Open-End Mutual Funds

Assets under management, beginning of period

$                6,595

$            6,958

$               4,238

   Inflows

641

684

747

   Outflows  

(608)

(509)

(361)

   Net inflows

33

175

386

   Market appreciation (depreciation)

1,010

(538)

1,279

   Total increase (decrease)

1,043

(363)

1,665

Assets under management, end of period

$                7,638

$            6,595

$               5,903

15.8%

29.4%

Average assets under management for period

$                7,039

$            6,672

$               5,122

5.5%

37.4%

Closed-End Mutual Funds

Assets under management, beginning of period

$                5,315

$            5,736

$               4,213

   Inflows

41

-

180

   Outflows  

(12)

(7)

-

   Net inflows (outflows)

29

(7)

180

   Market appreciation (depreciation)

559

(414)

799

   Total increase (decrease)

588

(421)

979

Assets under management, end of period

$                5,903

$            5,315

$               5,192

11.1%

13.7%

Average assets under management for period

$                5,703

$            5,633

$               4,759

1.2%

19.8%

Institutional Separate Accounts

Assets under management, beginning of period

$              14,332

$          14,503

$               7,869

   Inflows

1,840

1,471

1,634

   Outflows  

(798)

(417)

(449)

   Net inflows

1,042

1,054

1,185

   Market appreciation (depreciation)

2,324

(1,225)

2,344

   Total increase (decrease)

3,366

(171)

3,529

Assets under management, end of period (1)

$              17,698

$          14,332

$             11,398

23.5%

55.3%

Average assets under management for period

$              16,219

$          14,726

$               9,583

10.1%

69.2%

Total

Assets under management, beginning of period

$              26,242

$          27,197

$             16,320

   Inflows

2,522

2,155

2,561

   Outflows  

(1,418)

(933)

(810)

   Net inflows

1,104

1,222

1,751

   Market appreciation (depreciation)

3,893

(2,177)

4,422

   Total increase (decrease)

4,997

(955)

6,173

Assets under management, end of period

$              31,239

$          26,242

$             22,493

19.0%

38.9%

Average assets under management for period

$              28,961

$          27,031

$             19,464

7.1%

48.8%

(1) As of September 30, 2010 and June 30, 2010, assets under management from institutional separate accounts included $217 million of assets invested in the company's alternative strategy.

Cohen & Steers, Inc. and Subsidiaries

Assets Under Management (Unaudited)

For the Periods Ended

(in millions)

Nine Months Ended

% Change From

September 30, 2010

September 30, 2009

September 30, 2009

Open-End Mutual Funds

Assets under management, beginning of period

$                 6,285

$                4,280

   Inflows

2,035

1,502

   Outflows  

(1,570)

(1,031)

   Net inflows

465

471

   Market appreciation

888

1,152

   Total increase

1,353

1,623

Assets under management, end of period

$                 7,638

$                5,903

29.4%

Average assets under management for period

$                 6,647

$                4,094

62.4%

Closed-End Mutual Funds

Assets under management, beginning of period

$                 5,546

$                4,278

   Inflows

41

628

   Outflows  

(19)

(395)

   Net inflows

22

233

   Market appreciation

335

681

   Total increase

357

914

Assets under management, end of period

$                 5,903

$                5,192

13.7%

Average assets under management for period

$                 5,625

$                4,112

36.8%

Institutional Separate Accounts

Assets under management, beginning of period

$               12,954

$                6,544

   Inflows

4,705

3,110

   Outflows  

(1,735)

(748)

   Net inflows

2,970

2,362

   Market appreciation

1,774

2,492

   Total increase

4,744

4,854

Assets under management, end of period (1)

$               17,698

$              11,398

55.3%

Average assets under management for period

$               14,696

$                7,386

99.0%

Total

Assets under management, beginning of period

$               24,785

$              15,102

   Inflows

6,781

5,240

   Outflows  

(3,324)

(2,174)

   Net inflows

3,457

3,066

   Market appreciation

2,997

4,325

   Total increase

6,454

7,391

Assets under management, end of period

$               31,239

$              22,493

38.9%

Average assets under management for period

$               26,968

$              15,592

73.0%

(1) As of September 30, 2010, assets under management from institutional separate accounts included $217 million of assets invested in the company's alternative strategy.

Cohen & Steers, Inc. and Subsidiaries

Assets Under Management (Unaudited)

By Investment Category

(in millions)

As of September 30, 2010

As of June 30, 2010

As of September 30, 2009

Open-End Mutual Funds

  U.S. Real Estate

$                           4,824

$                    4,573

$                           3,512

  International Real Estate

2,184

1,612

1,960

  Large Cap Value

193

187

163

  Preferreds

35

12

15

  Listed Infrastructure and Utilities

106

88

86

  Other

296

123

167

Assets under management, end of period

$                           7,638

$                    6,595

$                           5,903

Closed-End Mutual Funds

  U.S. Real Estate

$                           1,735

$                    1,666

$                           1,730

  International Real Estate

195

82

134

  Large Cap Value

203

182

241

  Preferreds

1,481

1,242

1,253

  Listed Infrastructure and Utilities

2,025

1,788

1,275

  Other

264

355

559

Assets under management, end of period

$                           5,903

$                    5,315

$                           5,192

Institutional Separate Accounts

  U.S. Real Estate

$                           6,906

$                    5,504

$                           4,571

  International Real Estate

6,134

4,918

4,143

  Large Cap Value

2,834

2,434

1,831

  Preferreds

1,068

889

724

  Listed Infrastructure and Utilities

162

146

38

  Other

594

441

91

Assets under management, end of period (1)

$                         17,698

$                  14,332

$                         11,398

Total

  U.S. Real Estate

$                         13,465

$                  11,743

$                           9,813

  International Real Estate

8,513

6,612

6,237

  Large Cap Value

3,230

2,803

2,235

  Preferreds

2,584

2,143

1,992

  Listed Infrastructure and Utilities

2,293

2,022

1,399

  Other

1,154

919

817

Assets under management, end of period

$                         31,239

$                  26,242

$                         22,493

(1) As of September 30, 2010 and June 30, 2010, assets under management from institutional separate accounts included $217 million of assets invested in the company's alternative strategy.

Cohen & Steers, Inc. and Subsidiaries

Other Fee Earning Assets (Unaudited)

(in millions)

As of September 30, 2010

As of June 30, 2010

As of September 30, 2009

Unified Managed Accounts, end of period

$                              536

$                        468

$                             414

Exchange Traded Funds, end of period

$                           2,332

$                     2,012

$                          1,676

Unit Investment Trusts, end of period

$                           1,389

$                     1,256

$                          1,298

Total, end of period

$                           4,257

$                     3,736

$                          3,388

Note: Other fee earning assets are defined as assets for which the company provides investment advice but for which the company has no discretion to execute trades, and therefore are not included in the company's reported assets under management.

SOURCE Cohen & Steers, Inc.



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