Cohen & Steers Q4 2024: Unraveling Contradictions in Market Strategy, International Growth, and Wealth Management Performance
Generated by AI AgentAinvest Earnings Call Digest
Thursday, Jan 23, 2025 6:06 pm ET1min read
CNS--
Strong Financial Performance and Revenue Growth:
- Cohen & Steers reported earnings of $0.78 per share for Q4 2024, a sequential increase from the previous quarter's $0.77, and full-year earnings of $2.93 per share compared to $2.84 in 2023.
- Revenue for Q4 increased 4.9% sequentially to $139.9 million and 5.9% for the full year to $518 million.
- The growth was primarily driven by higher average AUM and recognition of $1.4 million in performance fees.
Investment and Business Strategy:
- Cohen & Steers plan to launch three new ETFs in Q1 of 2025, focusing on opportunities in the wealth channel, with expectations for these ETFs to complement their existing offerings in U.S. REITs, global preferred securities, and natural resources.
- The company anticipates a continued focus on the compensation ratio at 40.5%, and an increase in G&A expenses by 6-7%.
- The strategic focus is on expanding international offices and increasing business development activities to meet the needs of clients across various markets.
Flow Dynamics and Asset Classes:
- The firm experienced firm-wide net inflows of $860 million in Q4, primarily due to $1.2 billion in net inflows in open-end funds, partially offset by advisory and sub-advisory outflows.
- There was a significant interest in U.S. REITs and global-listed infrastructure funds, while there were outflows from global real estate and limited duration preferred funds.
- The strong interest in U.S. REITs and infrastructure is attributed to their attractive valuations and expected performance, while competition with private credit affected preferred securities.
Operating Leverage and Expense Management:
- Cohen & Steers reported an operating margin of 35.5% in Q4, consistent with the previous quarter, despite higher expenses due to increased compensation and benefits.
- The company is expecting to maintain its compensation ratio at about 40.5% and to grow operating margins over the long term as new investments in private real estate, ETFs, and international CCAFs contribute to revenue.
- Operating leverage is expected to improve based on market conditions and the realization of revenue from these strategic investments.
- Cohen & Steers reported earnings of $0.78 per share for Q4 2024, a sequential increase from the previous quarter's $0.77, and full-year earnings of $2.93 per share compared to $2.84 in 2023.
- Revenue for Q4 increased 4.9% sequentially to $139.9 million and 5.9% for the full year to $518 million.
- The growth was primarily driven by higher average AUM and recognition of $1.4 million in performance fees.
Investment and Business Strategy:
- Cohen & Steers plan to launch three new ETFs in Q1 of 2025, focusing on opportunities in the wealth channel, with expectations for these ETFs to complement their existing offerings in U.S. REITs, global preferred securities, and natural resources.
- The company anticipates a continued focus on the compensation ratio at 40.5%, and an increase in G&A expenses by 6-7%.
- The strategic focus is on expanding international offices and increasing business development activities to meet the needs of clients across various markets.
Flow Dynamics and Asset Classes:
- The firm experienced firm-wide net inflows of $860 million in Q4, primarily due to $1.2 billion in net inflows in open-end funds, partially offset by advisory and sub-advisory outflows.
- There was a significant interest in U.S. REITs and global-listed infrastructure funds, while there were outflows from global real estate and limited duration preferred funds.
- The strong interest in U.S. REITs and infrastructure is attributed to their attractive valuations and expected performance, while competition with private credit affected preferred securities.
Operating Leverage and Expense Management:
- Cohen & Steers reported an operating margin of 35.5% in Q4, consistent with the previous quarter, despite higher expenses due to increased compensation and benefits.
- The company is expecting to maintain its compensation ratio at about 40.5% and to grow operating margins over the long term as new investments in private real estate, ETFs, and international CCAFs contribute to revenue.
- Operating leverage is expected to improve based on market conditions and the realization of revenue from these strategic investments.
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