NEW YORK, Oct. 22 /PRNewswire-FirstCall/ -- Cohen & Steers, Inc. (NYSE: CNS) reported a net loss of $1.6 million, or $0.04 per share (diluted and basic), for the quarter ended September 30, 2008, compared with net income of $15.9 million, or $0.37 per diluted share and $0.38 per basic share, for the quarter ended September 30, 2007. Total revenue for the third quarter of 2008 was $49.1 million, a decrease of 29.4% from $69.5 million for the third quarter of 2007.
The third quarter 2008 results include an after-tax expense of approximately $0.20 per share associated with losses recorded on available-for-sale securities, primarily from investments in Federal National Mortgage Association preferred securities and a $0.04 per share increase to tax expense associated primarily with available-for-sale securities. After adjusting for these items, earnings per diluted share would have been $0.20. The third quarter 2007 results included the previously disclosed after-tax expense of approximately $0.09 per share associated with the payment of an additional compensation agreement entered into in connection with the offering of a closed-end mutual fund. After adjusting for this expense, earnings per diluted share would have been $0.46.
For the nine months ended September 30, 2008, the company recorded net income of $25.0 million, or $0.59 per diluted share and $0.60 per basic share, compared with net income of $56.8 million, or $1.33 per diluted share and $1.36 per basic share, for the 2007 period. After adjusting for the above-mentioned items, earnings per diluted share would have been $0.83 and $1.42 for the nine months ended September 30, 2008 and 2007, respectively. Total revenue was $157.9 million for the nine months ended September 30, 2008, a decrease of 26.7% from $215.5 million for the 2007 period. The decline in revenue and net income was primarily attributable to lower average assets under management and lower investment banking fees.
Assets Under Management
Assets under management were $24.6 billion at September 30, 2008, a decrease of 8.7% from $27.0 billion at June 30, 2008 and a decrease of 29.1% from $34.7 billion at September 30, 2007. The decrease from June 30, 2008 was due to market depreciation of $1.9 billion and net outflows of $465 million. The decrease from September 30, 2007 was due to market depreciation of $8.4 billion and net outflows of $1.7 billion.
"While the current economic and financial environment is extremely challenging, we have been successful in maintaining our industry leading investment performance while substantially expanding our global distribution network," said Robert Steers, co-chairman and co-chief executive officer.
Asset Management Segment
Total revenue for the asset management segment was $48.9 million for the three months ended September 30, 2008, a decrease of 24.3% from $64.6 million for the three months ended September 30, 2007. Pretax income was $4.0 million for the three months ended September 30, 2008, a decrease of 83.2% from $23.7 million for the three months ended September 30, 2007. The 2008 and 2007 periods include the aforementioned loss on available-for-sale securities of approximately $10.5 million and distribution expense of approximately $5.8 million, respectively. After adjusting for these items, asset management's pretax income would have been approximately $14.5 million and $29.5 million in the 2008 and 2007 periods, respectively.
Assets under management were $24.6 billion at September 30, 2008, a decrease of 29.1% from $34.7 billion at September 30, 2007. The decrease was a result of market depreciation of $8.4 billion and net outflows of $1.7 billion.
The company recorded net outflows of $321 million from open-end mutual funds during the quarter ended September 30, 2008. Outflows of $943 million were partially offset by inflows of $622 million.
Institutional separate accounts had net outflows of $144 million during the quarter ended September 30, 2008. Outflows of $458 million were partially offset by inflows of $314 million.
Investment Banking Segment
Total revenue for the investment banking segment was $116,000 for the quarter ended September 30, 2008, compared with $4.8 million for the quarter ended September 30, 2007. Pretax loss was $1.3 million for the three months ended September 30, 2008, compared with pretax income of $1.9 million for the third quarter of 2007. Revenue from investment banking activity is dependent on the completion of transactions, the timing of which cannot be predicted.
Balance Sheet Information
As of September 30, 2008, cash, cash equivalents and marketable securities (excluding cash and marketable securities attributable to the consolidation of the company's investment in its long-short global real estate fund) were $164 million. As of September 30, 2008, stockholders' equity was $254 million and the company had no long-term or short-term debt.
Conference Call Information
Cohen & Steers will hold a conference call tomorrow, October 23, 2008 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 (866) 672-2663 (U.S.) and (973) 582-2772 (international); passcode: 69126056. 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 2:00 p.m. (ET) on October 23, 2008 and can be accessed at (800) 642-1687 (U.S.) and (706) 645-9291 (international); passcode: 69126056. Internet access to the Web cast, which includes audio (listen-only), will be available on the company's Web site at www.cohenandsteers.com under "Corporate Info." The Web cast 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, utilities and listed infrastructure, and preferred securities. The company also offers alternative investment strategies such as hedged real estate securities portfolios and private real estate multimanager strategies. 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, 2007, 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
-------------------------- ----------------
Sept. June Sept. June Sept.
30, 30, 30, 30, 30,
2008 2008 2007 2008 2007
------- ------- ------- ------- -------
Revenue
Investment
advisory and
administration
fees $43,558 $47,901 $54,913
Distribution and
service fees 4,201 5,202 7,335
Portfolio
consulting and
other 1,178 1,307 2,383
Investment banking
fees 116 840 4,820
--- --- -----
Total revenue 49,053 55,250 69,451 (11.2%) (29.4%)
------ ------ ------
Expenses
Employee
compensation and
benefits 19,100 17,957 20,140
Distribution and
service fees 7,017 6,744 14,330
General and
administrative 8,721 8,283 8,590
Depreciation and
amortization 1,020 839 1,767
Amortization,
deferred
commissions 624 1,017 3,123
--- ----- -----
Total expenses 36,482 34,840 47,950 4.7% (23.9%)
------ ------ ------
Operating income 12,571 20,410 21,501 (38.4%) (41.5%)
------ ------ ------
Non-operating
income
Interest and
dividend income 1,704 1,709 2,882
(Loss) gain from
marketable
securities - net (11,548) (364) 773
Foreign currency
(loss) gain - net (90) 145 432
--- --- ---
Total non-operating
(loss) income (9,934) 1,490 4,087 * *
------ ----- -----
Income before
provision for
income taxes 2,637 21,900 25,588 (88.0%) (89.7%)
Provision for
income taxes 4,197 8,319 9,727
----- ----- -----
Net (loss) income $(1,560) $13,581 $15,861 * *
======= ======= =======
(Loss) earnings per
share
Basic $(0.04) $0.32 $0.38 * *
====== ===== =====
Diluted $(0.04) $0.32 $0.37 * *
====== ===== =====
Weighted
average
shares
outstanding
Basic 41,889 41,850 41,823
====== ====== ======
Diluted 41,889 42,037 42,564
====== ====== ======
* Not meaningful
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, September 30, September 30,
2008 2007 2007
-------------- -------------- --------------
Revenue
Investment advisory
and administration
fees $138,102 $163,255
Distribution and
service fees 14,777 21,461
Portfolio
consulting and
other 4,055 7,293
Investment banking
fees 1,007 23,496
----- ------
Total revenue 157,941 215,505 (26.7%)
------- -------
Expenses
Employee
compensation and
benefits 54,489 62,496
Distribution and
service fees 20,383 32,894
General and
administrative 25,035 24,007
Depreciation and
amortization 2,965 5,169
Amortization,
deferred
commissions 3,637 7,948
----- -----
Total expenses 106,509 132,514 (19.6%)
------- -------
Operating income 51,432 82,991 (38.0%)
------ ------
Non-operating income
Interest and
dividend income 5,200 6,582
(Loss) gain from
marketable
securities - net (11,856) 1,684
Loss from sale of
property and
equipment - (2)
Foreign currency
gain - net 410 357
--- ---
Total non-operating
(loss) income (6,246) 8,621 *
------ -----
Income before
provision for income
taxes 45,186 91,612 (50.7%)
Provision for income
taxes 20,165 34,813
------ ------
Net income $25,021 $56,799 (55.9%)
======= =======
Earnings per share
Basic $0.60 $1.36 (56.0%)
===== =====
Diluted $0.59 $1.33 (55.4%)
===== =====
Weighted average
shares outstanding
Basic 41,881 41,871
====== ======
Diluted 42,136 42,685
====== ======
* Not meaningful
Cohen & Steers, Inc. and Subsidiaries
Selected Segment Financial Data (Unaudited)
For the Periods Ended
(in thousands)
Three Months Ended % Change From
-------------------------- ----------------
Sept. June Sept. June Sept.
30, 30, 30, 30, 30,
2008 2008 2007 2008 2007
------- ------- ------- ------- -------
Asset
Management
-----------
Total revenue $48,937 $54,410 $64,631 (10.1%) (24.3%)
Total expenses (34,933) (33,118) (44,600) 5.5% (21.7%)
Net non-operating
(loss) income (10,030) 1,391 3,694 * *
------- ----- -----
Income before
provision for
income taxes $3,974 $22,683 $23,725 (82.5%) (83.2%)
====== ======= =======
Investment
Banking
----------
Total revenue $116 $840 $4,820 (86.2%) (97.6%)
Total expenses (1,549) (1,722) (3,350) (10.0%) (53.8%)
Net
non-operating
income 96 99 393 (3.0%) (75.6%)
-- -- ---
(Loss) income
before
provision for
income taxes $(1,337) $(783) $1,863 70.8% *
======= ===== ======
Total
-----
Total revenue $49,053 $55,250 $69,451 (11.2%) (29.4%)
Total expenses (36,482) (34,840) (47,950) 4.7% (23.9%)
Net non-operating
(loss) income (9,934) 1,490 4,087 * *
------ ----- -----
Income before
provision for
income taxes $2,637 $21,900 $25,588 (88.0%) (89.7%)
====== ======= =======
Nine Months Ended % Change From
----------------- -------------
September 30, September 30, September 30,
2008 2007 2007
------------- ------------- -------------
Asset
Management
-----------
Total revenue $156,934 $192,009 (18.3%)
Total expenses (101,501) (119,409) (15.0%)
Net non-operating
(loss) income (6,630) 7,571 *
------ -----
Income before
provision for
income taxes $48,803 $80,171 (39.1%)
======= =======
Investment
Banking
----------
Total revenue $1,007 $23,496 (95.7%)
Total expenses (5,008) (13,105) (61.8%)
Net
non-operating
income 384 1,050 (63.4%)
--- -----
(Loss) income
before
provision for
income taxes $(3,617) $11,441 *
======= =======
Total
-----
Total revenue $157,941 $215,505 (26.7%)
Total expenses (106,509) (132,514) (19.6%)
Net non-operating
(loss) income (6,246) 8,621 *
------ -----
Income before
provision for
income taxes $45,186 $91,612 (50.7%)
======= =======
* Not meaningful
Cohen & Steers, Inc. and Subsidiaries
Assets Under Management (Unaudited)
For the Periods Ended
(in millions)
Three Months Ended % Change From
-------------------------- ----------------
Sept. June Sept. June Sept.
30, 30, 30, 30, 30,
2008 2008 2007 2008 2007
------- ------- ------- ------- -------
Closed-End Mutual Funds
-----------------------
Assets under management,
beginning of period $9,531 $9,724 $11,191
------ ------ -------
Inflows - - 445
Market depreciation (961) (193) (265)
---- ---- ----
Total (decrease)
increase (961) (193) 180
---- ---- ---
Assets under
management, end of
period $8,570 $9,531 $11,371 (10.1%) (24.6%)
====== ====== =======
Open-End Mutual Funds
---------------------
Assets under management,
beginning of period $7,644 $8,432 $11,119
------ ------ -------
Inflows 622 660 951
Outflows (943) (818) (1,419)
---- ---- ------
Net outflows (321) (158) (468)
Market (depreciation)
appreciation (374) (630) 191
---- ---- ---
Total decrease (695) (788) (277)
---- ---- ----
Assets under management,
end of period $6,949 $7,644 $10,842 (9.1%) (35.9%)
====== ====== =======
Institutional Separate Accounts
-------------------------------
Assets under management,
beginning of period $9,785 $10,414 $12,250
------ ------- -------
Inflows 314 776 626
Outflows (458) (618) (474)
---- ---- ----
Net (outflows) inflows (144) 158 152
Market (depreciation)
appreciation (536) (787) 108
---- ---- ---
Total (decrease)
increase (680) (629) 260
---- ---- ---
Assets under management,
end of period $9,105 $9,785 $12,510 (6.9%) (27.2%)
====== ====== =======
Total
------
Assets under management,
beginning of period $26,960 $28,570 $34,560
------- ------- -------
Inflows 936 1,436 2,022
Outflows (1,401) (1,436) (1,893)
------ ------ ------
Net (outflows)
inflows (465) - 129
Market (depreciation)
appreciation (1,871) (1,610) 34
------ ------ --
Total (decrease)
increase (2,336) (1,610) 163
------ ------ ---
Assets under management,
end of period $24,624 $26,960 $34,723 (8.7%) (29.1%)
======= ======= =======
Cohen & Steers, Inc. and Subsidiaries
Assets Under Management (Unaudited)
For the Periods Ended
(in millions)
Nine Months Ended % Change From
----------------- -------------
September 30, September 30, September 30,
2008 2007 2007
-------------- -------------- --------------
Closed-End Mutual Funds
-----------------------
Assets under management,
beginning of period $10,274 $11,391
------- -------
Inflows - 647
Market depreciation (1,704) (667)
------ ----
Total decrease (1,704) (20)
------ ---
Assets under management,
end of period $8,570 $11,371 (24.6%)
====== =======
Open-End Mutual Funds
---------------------
Assets under management,
beginning of period $8,900 $9,575
------ ------
Inflows 2,170 4,918
Outflows (2,892) (3,343)
------ ------
Net (outflows) inflows (722) 1,575
Market depreciation (1,229) (308)
------ ----
Total (decrease) increase (1,951) 1,267
------ -----
Assets under management,
end of period $6,949 $10,842 (35.9%)
====== =======
Institutional Separate
Accounts
----------------------
Assets under management,
beginning of period $10,612 $8,930
------- ------
Inflows 1,407 5,314
Outflows (1,676) (1,422)
------ ------
Net (outflows) inflows (269) 3,892
Market depreciation (1,238) (312)
------ ----
Total (decrease) increase (1,507) 3,580
------ -----
Assets under management,
end of period $9,105 $12,510 (27.2%)
====== =======
Total
------
Assets under management,
beginning of period $29,786 $29,896
------- -------
Inflows 3,577 10,879
Outflows (4,568) (4,765)
------ ------
Net (outflows) inflows (991) 6,114
Market depreciation (4,171) (1,287)
------ ------
Total (decrease) increase (5,162) 4,827
------ -----
Assets under management,
end of period $24,624 $34,723 (29.1%)
======= =======
SOURCE Cohen & Steers, Inc.
