Cohen & Steers: Q4 and Full Year 2018 Earnings Presentation
2
Summary of Fourth Quarter and Full Year 2018 Results
Financial
Results,
as adjusted
• Net income was $26.7 million in Q4 2018
versus $30.3 million in Q3 2018
• Diluted EPS of $0.56 in Q4 2018 versus
$0.64 in Q3 2018
• Operating margin was 36.8% in Q4 2018
versus 40.2% in Q3 2018
Assets Under
Management
• December 31, 2018 AUM was $54.8 billion
versus $60.1 billion at September 30, 2018
• Average AUM was $57.6 billion for Q4 2018
versus $60.4 billion for Q3 2018
Flows
• Net outflows of $1.2 billion in Q4 2018
versus net outflows of $76 million in Q3 2018
• Net inflows in advisory
• Net outflows in subadvisory ex. Japan,
Japan subadvisory and open-end funds
Please see pages 16-17 of this presentation for a reconciliation of the as adjusted financial measures to their most directly comparable U.S. GAAP financial measures.
• Net income was $113.8 million in FY 2018
versus $97.0 million in FY 2017
• Diluted EPS of $2.40 in FY 2018 versus
$2.07 in FY 2017
• Operating margin was 39.1% in FY 2018
versus 40.9% in FY 2017
• December 31, 2018 AUM was $54.8 billion
versus $62.1 billion at December 31, 2017
• Average AUM was $59.0 billion in FY 2018
versus $60.3 billion in FY 2017
• Net outflows of $1.2 billion in FY 2018
versus net inflows of $3.9 billion in FY 2017
• Overall, 1.9% organic decay rate in FY 2018
versus 6.7% organic growth rate in FY 2017
Full Year 2018 4th Quarter 2018
3
Revenue
Expenses
Financial Results, as adjusted
$99.3 $94.4 $94.2 $98.2 $93.6
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
$58.1 $56.1 $57.8 $58.7 $59.2
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
Diluted
Earnings per
Share
Operating
Margin
41.5% 40.6% 38.7% 40.2% 36.8%
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
$0.55 $0.62 $0.59 $0.64 $0.56
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
$ in millions, except earnings per share and percentages
The presentation of 2017 amounts has been recast to reflect the Company's adoption of the new revenue recognition accounting standard on January 1, 2018.
Please see pages 16-17 of this presentation for a reconciliation of the as adjusted financial measures to their most directly comparable U.S. GAAP financial measures.
$42.1 $40.0 $40.3 $42.3 $40.4
$26.0 $25.2 $24.8
$25.9 $24.5
$20.4 $19.2 $19.1
$19.9 $19.1
$7.9 $7.4 $7.3
$7.5 $7.0
$2.9 $2.6 $2.7
$2.7 $2.7
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
Open-endFund Fees
InstitutionalFees
Closed-endFund Fees
Distribution &Service Fees
Portfolio Consultingand Other
4
$99.3 $94.4 $94.2 $98.2 $93.6
Revenue, as adjusted $ in millions
The presentation of 2017 amounts has been recast to reflect the Company's adoption of the new revenue recognition accounting standard on January 1, 2018.
Please see pages 16-17 of this presentation for a reconciliation of the as adjusted financial measures to their most directly comparable U.S. GAAP financial measures.
Totals may not foot due to rounding.
Expenses, as adjusted $ in millions
5
$32.2 $31.2 $32.5 $33.1 $34.5
$13.6 $12.8 $12.4 $13.2 $11.6
$11.2 $11.1
$11.6 $11.3 $12.0
$1.1 $1.1
$1.2 $1.1 $1.1
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
Employee Compensation and Benefits Distribution and Service Fees
General and Administrative Depreciation and Amortization
$58.1 $56.1 $57.8 $58.7 $59.2
The presentation of 2017 amounts has been recast to reflect the Company's adoption of the new revenue recognition accounting standard on January 1, 2018.
Please see pages 16-17 of this presentation for a reconciliation of the as adjusted financial measures to their most directly comparable U.S. GAAP financial measures.
Totals may not foot due to rounding.
6
$62.1 $58.5 $60.2 $60.1
$54.8
$62.0
$59.2 $58.7
$60.4
$57.6
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
Ending AUM Avg. AUM
Assets Under Management $ in billions
7
Assets Under Management Across Vehicle, Strategy, and Client Domicile
Open-end Funds 37.8%
U.S. Real Estate 42.2%
North America 73.8%
Advisory 22.0%
Preferred Securities 21.6%
Japan 15.4%
Closed-end Funds 15.3%
Global/International Real Estate 19.8%
EMEA 5.6%
Japan Subadvisory 14.8%
Global Listed Infrastructure 11.8%
APAC ex. Japan 5.2% Subadvisory ex. Japan 10.1%
Other 4.5%
ByVehicle
ByStrategy
ByClient Domicile
As of December 31, 2018.
8
($2.8) ($3.4)
($2.7) ($2.5)
($4.4)
$3.1 $3.3 $2.9 $2.4 $3.2
$0.2 ($0.1)
$0.2 ($0.1)
($1.2)
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
Inflows Outflows Net Flows
Total Firm Net Flows $ in billions
1.5% (0.6%) 1.2% (0.5%) (7.9%) Organic Growth/
(Decay)
Totals may not foot due to rounding.
9
$2.7 $2.5 $2.1 $2.0
$2.3
($1.8)
($2.5) ($2.0)
($1.6)
($3.3)
$0.8
($0.0) $0.1 $0.4
($1.0)
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
Open-end Funds
Advisory
Net Flows by Investment Vehicle $ in billions
$0.1
$0.4
$0.5
$0.3
$0.9
($0.3)
($0.1) ($0.1) ($0.2)
($0.6)
($0.2)
$0.3
$0.5
$0.1
$0.3
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
Inflows
Outflows
Net Flows
14.4% (17.0%) (0.1%) 2.3% 7.4%
9.6% 4.8% 16.1% 10.0% (5.6%) Organic Growth/
(Decay)
Organic Growth/
(Decay)
Totals may not foot due to rounding.
10
$0.2 $0.3 $0.2
$0.0 $0.1
($0.2)
($0.3)
($0.4) ($0.4)
($0.3)
$0.1
($0.0)
($0.3)
($0.3)
($0.2)
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
Subadvisory ex. Japan
Japan Subadvisory
Net Flows by Investment Vehicle $ in billions
$0.1 $0.1 $0.0 $0.0 $0.0
($0.6)
($0.4)
($0.2)
($0.3) ($0.3)
($0.5)
($0.3)
($0.2)
($0.3) ($0.3)
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
Inflows
Outflows
Net Flows
4.0% (12.1%) (2.1%) (16.4%) (21.1%)
(13.1%) (12.6%) (6.2%) (11.9%) (16.0%) Organic Growth/
(Decay)
Organic Growth/
(Decay)
Totals may not foot due to rounding.
11
$1.2 $1.3
$1.0 $1.0 $1.1
($1.5) ($1.6)
($1.1) ($1.0)
($1.4)
($0.4) ($0.3) ($0.1) ($0.0)
($0.3)
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
U.S. Real Estate
Preferred Securities
Net Flows by Investment Strategy $ in billions
Inflows
Outflows
Net Flows
(5.4%) (4.5%) (4.2%) (1.2%) (0.2%)
Organic Growth/
(Decay)
Organic Growth/
(Decay)
$1.1 $1.2 $1.0 $1.0
$1.3
($0.8) ($1.0) ($0.9) ($0.8)
($2.0)
$0.3 $0.2 $0.1 $0.2
($0.7)
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
10.3% (20.4%) 6.3% 2.5% 5.3%
Totals may not foot due to rounding.
12
Global/International Real Estate
Global Listed Infrastructure
Net Flows by Investment Strategy $ in billions
$0.2
$0.3
$0.1 $0.1 $0.1
($0.1) ($0.1)
($0.1)
($0.1)
($0.2)
$0.1
$0.2
($0.0)
$0.0
($0.0)
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
Inflows
Outflows
Net Flows
(1.4%) 0.9% (1.0%) 10.4% 4.3%
Organic Growth/
(Decay)
Organic Growth/
(Decay)
$0.6 $0.5
$0.7
$0.2
$0.6
($0.3) ($0.3) ($0.3) ($0.3)
($0.8)
$0.2 $0.2
$0.4
($0.1) ($0.2)
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
(3.4%) (5.8%) 14.5% 6.5% 9.1%
Totals may not foot due to rounding.
13
($0.6)
($0.2) ($0.3)
($0.2) ($0.4)
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
Open-end Funds Japan Subadvisory
($0.1) ($0.1) ($0.1) ($0.1) ($0.1)
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
Closed-end Funds
($1.3)
($0.9) ($1.0) ($0.8) ($0.8)
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
Total
Distributions by Investment Vehicle $ in billions
($0.6) ($0.6) ($0.6) ($0.4)
($0.4)
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
Investment Performance
14
1Past performance is no guarantee of future results. Outperformance is determined by annualized investment performance of all accounts in each investment strategy measured
gross of fees and net of withholding taxes in comparison to performance of each account’s reference benchmark measured net of withholding taxes, where applicable. This is not
investment advice and may not be construed as sales or marketing material for any financial product or service sponsored or provided by Cohen & Steers. 2Past performance is no guarantee of future results. Based on independent rating by Morningstar, Inc. of investment performance of each Cohen & Steers-sponsored open-end U.S.-
registered mutual fund for all share classes for the overall period as of December 31, 2018. Overall Morningstar rating is a weighted average based on the 3-year, 5-year and 10-
year Morningstar rating. Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution
percentages. This is not investment advice and may not be construed as sales or marketing material for any financial product or service sponsored or provided by Cohen & Steers.
See Legal Disclosures on page 18 of this presentation for more information about our investment performance.
1-Y
ea
r 3
-Ye
ar
5-Y
ea
r 1
0-Y
ea
r
96% 94% 97%
12/31/2016 12/31/2017 12/31/2018
76% 100% 98%
12/31/2016 12/31/2017 12/31/2018
95% 100% 98%
12/31/2016 12/31/2017 12/31/2018
% of Total AUM in Outperforming Strategies1 % of U.S. Open-End Fund AUM by Morningstar Rating2
As of 12/31/2018
1% 16%
83%
1 or 2 Star 3 Star 4 or 5 Star
44%
95% 93%
12/31/2016 12/31/2017 12/31/2018
Cash, Cash Equivalents, U.S. Treasuries and Seed Investments $ in millions
15
$193.4
$168.6
$193.7
$164.5
$92.7
$49.6
$49.7
$63.4
$63.0
$69.1
$76.7
$70.8
December 31, 2017 March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018
Cash U.S. Treasuries Seed Investments
$231.6 $262.8 $290.7 $213.2 $256.9
Totals may not foot due to rounding.
1 Classified as held to maturity as of 12/31/18 with maturity dates not exceeding 18 months. 2 Excludes certain illiquid seed investments.
1 2
16
Reconciliation of U.S. GAAP Net Income Attributable to Common Stockholders and U.S. GAAP Earnings per Share to Net Income
Attributable to Common Stockholders, As Adjusted, and Earnings per Share, As Adjusted Three Months Ended Year Ended
December 31,
2017
March 31,
2018
June 30,
2018
September 30,
2018
December 31,
2018
December 31,
2017
December 31,
2018
Net income attributable to common
stockholders, U.S. GAAP $20,398 $27,586 $29,959 $30,790 $25,561 $91,939 $113,896
Deconsolidation (1) (1,216) 481 485 (63) 2,489 (2,350) 3,392
Results from seed investments (2) (471) 1,774 (2,154) (551) 3,091 (1,124) 2,160
Accelerated vesting of restricted stock units (3) 224 — — — — 522 —
General and administrative (4) — 871 — — — (1,018) 871
Foreign currency exchange gain (5) — — (953) (217) (1,100) — (2,270)
Tax adjustments (6) 7,120 (1,703) 528 313 (3,338) 9,068 (4,200)
Net income attributable to common stockholders,
as adjusted $26,055 $29,009 $27,865 $30,272 $26,703 $97,037 $113,849
Diluted weighted average shares outstanding 47,300 47,152 47,311 47,524 47,562 46,979 47,381
Diluted earnings per share, U.S. GAAP $0.43 $0.59 $0.63 $0.65 $0.54 $1.96 $2.40
Deconsolidation (1) (0.03) 0.01 0.01 —* 0.05 (0.05) 0.07
Results from seed investments (2) (0.01) 0.04 (0.04) (0.01) 0.06 (0.02) 0.05
Accelerated vesting of restricted stock units (3) 0.01 — — — — 0.01 —
General and administrative (4) — 0.02 — — — (0.02) 0.02
Foreign currency exchange gain (5) — — (0.02) (0.01) (0.02) — (0.05)
Tax adjustments (6) 0.15 (0.04) 0.01 0.01 (0.07) 0.19 (0.09)
Diluted earnings per share, as adjusted $0.55 $0.62 $0.59 $0.64 $0.56 $2.07 $2.40
Three Months Ended Year Ended
December 31, 2017 March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 December 31, 2017 December 31,2018
Transition tax liability in connection with the Tax Cuts and Jobs Act $8,432 $— ($123) $— $— $8,432 ($123)
Remeasurement of deferred and other tax balances 4,300 — — — — 4,300 —
Reversal of certain liabilities associated with unrecognized tax benefits (4,737) — — — (2,758) (3,772) (2,758)
Delivery of restricted stock units — (1,003) 56 — — 49 (947)
Tax-effect of non-GAAP adjustments (49) (700) 595 313 9 888 217
Other tax related items (826) — — — (589) (829) (589)
Total tax adjustments $7,120 ($1,703) $528 $313 ($3,338) $9,068 ($4,200)
*Totals may not foot due to rounding.
* Amounts round to less than $0.01 per share.
(1) Represents amounts related to the deconsolidation of seed investments in Company-sponsored funds.
(2) Represents (i) dividend income and realized (gains) losses on seed investments in Company-sponsored funds, (ii) the Company's proportionate share of the results of operations of seed investments classified as
equity method investments, including realized and unrealized (gains) losses, and (iii) realized and unrealized (gains) losses on unconsolidated seed investments.
(3) Represents amounts related to the accelerated vesting of certain restricted stock units due to retirements.
(4) Represents expenses associated with the evaluation of a potential business transaction that the Company did not pursue in the first quarter of 2018 and refunds of foreign withholding taxes in 2017.
(5) Represents net foreign currency exchange gains associated with U.S. dollar-denominated assets and liabilities held by certain foreign subsidiaries. Prior year U.S. GAAP amounts have not been recast to conform
with the current period presentation as the impact to results was not material.
(6) Tax adjustments are summarized in the following table:
Non-GAAP Reconciliation $ in thousands, except per share data
17
Non-GAAP Reconciliation $ in thousands, except percentages
(1) Represents amounts related to the deconsolidation of seed investments in Company-sponsored funds.
(2) Represents (i) dividend income and realized (gains) losses on seed investments in Company-sponsored funds, (ii) the Company's proportionate share of the results of operations of seed investments classified as
equity method investments, including realized and unrealized (gains) losses, and (iii) realized and unrealized (gains) losses on unconsolidated seed investments.
(3) Represents net foreign currency exchange gains associated with U.S. dollar-denominated assets and liabilities held by certain foreign subsidiaries. Prior year U.S. GAAP amounts have not been recast to conform
with the current period presentation as the impact to results was not material.
(1) The presentation of 2017 amounts has been recast to reflect the Company's adoption of the new revenue recognition accounting standard on January 1, 2018.
(2) Represents amounts related to the deconsolidation of seed investments in Company-sponsored funds.
(3) Represents amounts related to the accelerated vesting of certain restricted stock units due to retirements.
(4) Represents expenses associated with the evaluation of a potential business transaction that the Company did not pursue in the first quarter of 2018 and refunds of foreign withholding taxes in 2017.
Reconciliation of U.S. GAAP Operating Income and U.S. GAAP Operating Margin to Operating Income, As Adjusted and
Operating Margin, As Adjusted Three Months Ended Year Ended
December 31,
2017
March 31,
2018
June 30,
2018
September 30,
2018
December 31,
2018
December 31,
2017
December 31,
2018
Revenue, U.S. GAAP (1) $99,454 $94,464 $94,410 $98,331 $93,906 $378,696 $381,111
Deconsolidation (2) (148) (51) (194) (180) (269) (403) (694)
Revenue, as adjusted $99,306 $94,413 $94,216 $98,151 $93,637 $378,293 $380,417
Expenses, U.S. GAAP (1) $58,566 $57,245 $58,123 $59,108 $59,597 $223,950 $234,073
Deconsolidation (2) (274) (251) (347) (373) (437) (789) (1,408)
Accelerated vesting of restricted stock units (3) (224) — — — — (522) —
General and administrative (4) — (871) — — — 1,018 (871)
Expenses, as adjusted $58,068 $56,123 $57,776 $58,735 $59,160 $223,657 $231,794
Operating income, U.S. GAAP $40,888 $37,219 $36,287 $39,223 $34,309 $154,746 $147,038
Deconsolidation (2) 126 200 153 193 168 386 714
Accelerated vesting of restricted stock units (3) 224 — — — — 522 —
General and administrative (4) — 871 — — — (1,018) 871
Operating income, as adjusted $41,238 $38,290 $36,440 $39,416 $34,477 $154,636 $148,623
Operating margin, U.S. GAAP (1) 41.1% 39.4% 38.4% 39.9% 36.5% 40.9% 38.6%
Operating margin, as adjusted 41.5% 40.6% 38.7% 40.2% 36.8% 40.9% 39.1%
Reconciliation of U.S. GAAP Non-operating Income (Loss) to Non-operating Income (Loss), As Adjusted
Three Months Ended Year Ended
December 31,
2017
March 31,
2018
June 30,
2018
September 30,
2018
December 31,
2018
December 31,
2017
December 31,
2018
Non-operating income (loss), U.S. GAAP $2,839 ($199) ($778) $1,047 ($3,329) $5,654 ($3,259)
Deconsolidation (1) (1,750) (1,057) 4,722 803 2,584 (3,283) 7,052
Results from seed investments (2) (471) 1,774 (2,154) (551) 3,091 (1,124) 2,160
Foreign currency exchange gain (3) — — (953) (217) (1,100) — (2,270)
Non-operating income (loss), as adjusted $618 $518 $837 $1,082 $1,246 $1,247 $3,683
18
Legal Disclosures
This presentation 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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect
management's current views with respect to, among other things, the Company's 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 forward-looking statements. The Company believes
that these factors include, but are not limited to, the risks described in the Risk Factors section of the Company's Annual Report on Form 10-
K for the year ended December 31, 2017 (Form 10-K), which is accessible on the Securities and Exchange Commission's website at
www.sec.gov and on the Company's website at www.cohenandsteers.com. These factors are not exhaustive and should be read in
conjunction with the other cautionary statements that are included in the Company's Form 10-K and other filings with the Securities and
Exchange Commission. 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.
This presentation contains non-GAAP financial measures that we believe are meaningful in evaluating the Company’s performance. For
disclosures on these non-GAAP financial measures and their U.S. GAAP reconciliations, you should refer to the Non-GAAP Reconciliation
contained on pages 16-17 of this presentation.
Investment Performance:
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category receive five stars, the next 22.5% receive four stars, the next 35% receive three stars, the next 22.5% receive two stars and the
bottom 10% receive one star.
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