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Cohen & Steers Reports Second Quarter 2007 ResultsAsset Management Reports Record Quarterly Revenue
NEW YORK, July 25 /PRNewswire-FirstCall/ -- Cohen & Steers, Inc. (NYSE: CNS) reported net income of $18.6 million, or $0.44 per diluted share and $0.45 per basic share for the quarter ended June 30, 2007, compared with a net loss of $37.8 million, or $0.95 per share (diluted and basic), for the quarter ended June 30, 2006. Total revenue in the second quarter of 2007 was $69.3 million, an increase of 64.5% from $42.1 million in the second quarter of 2006. The second quarter 2006 results included the previously disclosed $1.25 per share after-tax expense associated with the termination of certain fund compensation agreements and a $0.02 per share after-tax gain from the sale of property and equipment. After adjusting for these items, earnings per share were $0.28. For the six months ended June 30, 2007, the company recorded net income of $40.9 million, or $0.96 per diluted share and $0.98 per basic share, compared with a net loss of $29.1 million, or $0.73 per share (diluted and basic), for the 2006 period. After adjusting for the above mentioned second quarter 2006 items, earnings per share were $0.50 for the six months ended June 30, 2006. Total revenue was $146.1 million for the six months ended June 30, 2007, an increase of 82.6% from $80.0 million for the 2006 period. Assets Under Management Assets under management reached a record $34.6 billion as of June 30, 2007, an increase of 3.0% from $33.6 billion at March 31, 2007 and an increase of 48.7% from $23.2 billion at June 30, 2006. The increase was driven by record quarterly net inflows of $3.1 billion, including $2.6 billion into institutional separate accounts, primarily from the addition of seven net new accounts and three net new relationships. "We continue to see strong inflows as a result of our expanded retail and institutional sales and client service teams," said Robert H. Steers, co-chairman and co-chief executive officer of Cohen & Steers. Assets under management have become more diverse. As of June 30, 2007, U.S. REIT common stocks comprised 46% of total assets, compared with 66% a year earlier. "Our expansion into international real estate securities, utilities, large cap value and preferred securities has given our clients a number of ways to diversify their holdings," said Martin Cohen, co-chairman and co-chief executive officer of Cohen & Steers. "At the same time, our global diversification has provided stability to assets under management during a period when U.S. REIT share prices declined." Recent Developments The company's commitment to broaden its investment offerings and expand its international distribution capabilities was evident this quarter. -- Cohen & Steers was appointed as subadviser to the Harbor Large Cap
Value Fund in June. The fund had net assets of approximately $540
million at the end of the quarter.
-- The company has developed quantitative strategies and hedging
capabilities. Yigal Jhirad, senior vice president with 21 years of
experience, joined the company from Morgan Stanley where he was an
executive director.
-- Stephen Kenneally was appointed executive director and head of business
development in Asia. Mr. Kenneally, who was formerly chief executive
officer at First State Investments (Hong Kong) Limited, has 26 years of
experience in the region.
-- Cohen & Steers Global Income Builder, a closed-end mutual fund that is
scheduled to price on July 26th, capitalizes on all five of the
company's dividend-oriented strategies and employs a covered-call
option overlay.
Asset Management Segment
Total revenue for the asset management segment was a record $66.4 million for the three months ended June 30, 2007, an increase of 64.4% from $40.4 million for the three months ended June 30, 2006. Pretax income was a record $29.6 million for the three months ended June 30, 2007, compared with a pretax loss of $58.0 million for the second quarter of 2006. (The 2006 period includes the expense associated with the termination of certain fund compensation agreements of $75.7 million and a $1.1 million gain from the sale of property and equipment previously mentioned. After adjusting for these items, asset management's pretax income was $16.6 million.) Assets under management reached $34.6 billion at June 30, 2007, an increase of 48.7% from $23.2 billion at June 30, 2006. The increase was a result of net inflows of $8.1 billion, market appreciation of $2.1 billion and $1.0 billion from the fourth quarter 2006 acquisition of Cohen & Steers Europe S.A. (formerly known as Houlihan Rovers S.A.). The company recorded net inflows of $469 million into open-end mutual funds during the quarter ended June 30, 2007. This marked the eighth consecutive quarter of positive net inflows into open-end mutual funds, and was led by Cohen & Steers International Realty Fund, which had net inflows of $761 million. Institutional separate accounts had net inflows of $2.6 billion during the quarter ended June 30, 2007. Inflows of $3.0 billion, primarily into large cap value, global and international real estate securities portfolios, were partly offset by $389 million in outflows. Investment Banking Segment Total revenue for the investment banking segment was $2.9 million for the quarter ended June 30, 2007, compared with $2.1 million for the quarter ended June 30, 2006. Investment banking revenue was attributable to capital raising and merger advisory assignments. Pretax income was $412,000 for the three months ended June 30, 2007, compared with $239,000 for the second quarter of 2006. Revenue from investment banking activity is dependent on the completion of transactions, the timing of which cannot be predicted. Balance Sheet Information As of June 30, 2007, cash and cash equivalents and marketable securities available for sale were $186 million. Stockholders' equity was $266 million as of June 30, 2007. The company had no long-term or short-term debt. Conference Call Information Cohen & Steers will hold a conference call tomorrow, July 26, 2007 at 11:00 a.m. (ET) to discuss the Company's second quarter results. Investors and analysts can access the live conference call by dialing (888) 243-6208 (domestic) or (973) 582-2869 (international); Passcode: 9036265. A replay of the call will be available for two weeks starting at approximately 2:00 p.m. (ET) on July 26, 2007 and can be accessed at (877) 519-4471 (domestic) or (973) 341-3080 (international); Passcode: 9036265. Internet access to the Web cast, which includes audio (listen-only), will be available on the Company's Web site at cohenandsteers.com under "Corporate Info." The Web cast will be archived on the Web site for two weeks. Participants should plan to register at least 10 minutes before the conference call begins. About Cohen & Steers, Inc. Cohen & Steers is a manager of high-income equity portfolios, specializing in U.S. REITs, international real estate securities, preferred securities, utilities and large cap value stocks. Headquartered in New York City, with offices in Brussels, Hong Kong, London and Seattle, the firm serves individual and institutional investors through a wide range of open-end mutual funds, closed-end mutual funds and institutional separate accounts. 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, 2006, which is accessible on the Securities and Exchange Commission's website at sec.gov and on the Company's Web site at 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. Performance Notes Cohen & Steers Global Income Builder, Inc. For more complete information about the funds, including charges and expenses, please call (800) 330-7348 for a prospectus. There are special risks associated with an investment in the funds. These risks are described in the prospectus for the fund, which you should read carefully before you invest or send money. A registration statement relating to the fund has been filed with the Securities and Exchange Commission, but has not yet become effective. The information in the registration statement is not complete and may be changed. None of the fund's securities may be sold nor may offers to buy be accepted prior to the time the fund's registration statement becomes effective. This communication shall not constitute an offer to sell or the solicitation of any offer to buy, nor shall there be any sale of the fund's securities in any such state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any state. Merrill Lynch, Pierce Fenner & Smith Incorporated is acting as the lead underwriter in connection with the proposed offering. Cohen & Steers, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
For the Periods Ended
(in thousands, except per share data)
Three Months Ended % Change From
June 30, March 31, June 30, March 31, June 30,
2007 2007 2006 2007 2006
Revenue
Investment advisory and
administration fees $56,186 $52,156 $35,298
Distribution and
service fees 7,746 6,380 3,530
Portfolio consulting and
other 2,425 2,485 1,165
Investment banking fees 2,930 15,746 2,128
Total revenue 69,287 76,767 42,121 (9.7%) 64.5%
Expenses
Employee compensation and
benefits 20,094 22,262 11,992
Distribution and service fees 9,297 9,267 81,118
General and administrative 8,146 7,271 6,703
Depreciation and amortization 1,731 1,671 1,623
Amortization, deferred
commissions 2,755 2,070 991
Total expenses 42,023 42,541 102,427 (1.2%) (59.0%)
Operating income (loss) 27,264 34,226 (60,306) (20.3%) *
Non-operating income (expense)
Interest and dividend income 2,043 1,657 645
Gain from sale of marketable
securities 716 195 530
Gain from sale of property
and equipment (2) - 1,056
Foreign currency transaction
loss 1 (76) (29)
Total non-operating
income 2,758 1,776 2,202 55.3% 25.2%
Income (loss) before
provision for income
taxes and equity in
earnings of affiliate 30,022 36,002 (58,104) (16.6%) *
Provision for income taxes 11,400 13,686 (19,925)
Equity in earnings of
affiliate - - 360
Net income (loss) $18,622 $22,316 $(37,819) (16.6%) *
Earnings (loss) per share
Basic $0.45 $0.53 $(0.95) (16.2%) *
Diluted $0.44 $0.52 $(0.95) (16.2%) *
Weighted average shares
outstanding
Basic 41,809 41,983 39,805
Diluted 42,666 42,828 39,805
* Not meaningful
Cohen & Steers, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
For the Periods Ended
(in thousands, except per share data)
Six Months Ended % Change From
June 30, June 30, June 30,
2007 2006 2006
Revenue
Investment advisory and
administration fees $108,342 $68,304
Distribution and service fee revenue 14,126 6,731
Portfolio consulting and other 4,910 2,099
Investment banking fees 18,676 2,833
Total revenue 146,054 79,967 82.6%
Expenses
Employee compensation and benefits 42,356 22,589
Distribution and service fee
expenses 18,564 88,794
General and administrative 15,417 12,398
Depreciation and amortization 3,402 3,174
Amortization, deferred commissions 4,825 1,740
Total expenses 84,564 128,695 (34.3%)
Operating income (loss) 61,490 (48,728) *
Non-operating income (expense)
Interest and dividend income 3,700 1,702
Gain from sale of marketable
securities 911 1,189
Gain from sale of property and
equipment (2) 1,056
Foreign currency transaction loss (75) (45)
Total non-operating income 4,534 3,902 16.2%
Income (loss) before provision for
income taxes and equity in earnings
of affiliate 66,024 (44,826) *
Provision for income taxes 25,086 (15,016)
Equity in earnings of affiliate - 708
Net income (loss) $40,938 $(29,102) *
Earnings (loss) per share
Basic $0.98 $(0.73) *
Diluted $0.96 $(0.73) *
Weighted average shares outstanding
Basic 41,895 39,831
Diluted 42,746 39,831
* Not meaningful
Cohen & Steers, Inc. and Subsidiaries
Selected Segment Financial Data (Unaudited)
For the Periods Ended
(in thousands)
Three Months Ended % Change From
June 30, March 31, June 30, March 31, June 30,
2007 2007 2006 2007 2006
Asset Management
Total revenue, including
equity in earnings of
affiliate $66,357 $61,021 $40,353 8.7% 64.4%
Total expenses (39,135) (35,674) (100,471) 9.7% (61.0%)
Net non-operating income 2,388 1,489 2,135 60.4% 11.9%
Income (loss) before provision
for income taxes $29,610 $26,836 $(57,983) 10.3% *
Investment Banking
Total revenue $2,930 $15,746 $2,128 (81.4%) 37.7%
Total expenses (2,888) (6,867) (1,956) (57.9%) 47.6%
Net non-operating income 370 287 67 28.9% 452.2%
Income before provision for
income taxes $412 $9,166 $239 (95.5%) 72.4%
Total
Total revenue, including
equity in earnings of
affiliate $69,287 $76,767 $42,481 (9.7%) 63.1%
Total expenses (42,023) (42,541) (102,427) (1.2%) (59.0%)
Net non-operating income 2,758 1,776 2,202 55.3% 25.2%
Income (loss) before provision
for income taxes $30,022 $36,002 $(57,744) (16.6%) *
% Change
Six Months Ended From
June 30, June 30, June 30,
2007 2006 2006
Asset Management
Total revenue, including equity in
earnings of affiliate $127,378 $77,842 63.6%
Total expenses (74,809) (124,988) (40.1%)
Net non-operating income 3,877 3,706 4.6%
Income (loss) before provision for
income taxes $56,446 $(43,440) *
Investment Banking
Total revenue $18,676 $2,833 559.2%
Total expenses (9,755) (3,707) 163.2%
Net non-operating income 657 196 235.2%
Income (loss) before provision for
income taxes $9,578 $(678) *
Total
Total revenue, including equity in
earnings of affiliate $146,054 $80,675 81.0%
Total expenses (84,564) (128,695) (34.3%)
Net non-operating income 4,534 3,902 16.2%
Income (loss) before provision for
income taxes $66,024 $(44,118) *
* Not meaningful
Cohen & Steers, Inc. and Subsidiaries
Assets Under Management (Unaudited)
For the Periods Ended
(in millions)
Three Months Ended % Change From
March June
June 30, March 31, June 30, 31, 30,
2007 2007 2006 2007 2006
Closed-End Mutual Funds
Assets under management,
beginning of period $11,742 $11,391 $10,262
Inflows - 202 -
Market appreciation
(depreciation) (551) 149 (164)
Total increase (decrease) (551) 351 (164)
Assets under management, end of
period $11,191 $11,742 $10,098 (4.7%) 10.8%
Open-End Mutual Funds
Assets under management,
beginning of period $11,480 $9,575 $6,577
Inflows 1,601 2,366 702
Outflows (1,132) (792) (481)
Net inflows 469 1,574 221
Market appreciation
(depreciation) (830) 331 (58)
Total increase (decrease) (361) 1,905 163
Assets under management, end of
period $11,119 $11,480 $6,740 (3.1%) 65.0%
Institutional Separate Accounts
Assets under management,
beginning of period $10,330 $8,930 $6,124
Inflows 3,030 1,658 465
Outflows (389) (559) (150)
Net inflows 2,641 1,099 315
Market appreciation
(depreciation) (721) 301 (32)
Total increase 1,920 1,400 283
Assets under management, end of
period $12,250 $10,330 $6,407 18.6% 91.2%
Total
Assets under management,
beginning of period $33,552 $29,896 $22,963
Inflows 4,631 4,226 1,167
Outflows (1,521) (1,351) (631)
Net inflows 3,110 2,875 536
Market appreciation
(depreciation) (2,102) 781 (254)
Total increase 1,008 3,656 282
Assets under management, end of
period (1) $34,560 $33,552 $23,245 3.0% 48.7%
(1) As of June 30, 2006, assets under management included $2.1 billion of
assets managed by Houlihan Rovers through sub-advisory and similar
arrangements.
Cohen & Steers, Inc. and Subsidiaries
Assets Under Management (Unaudited)
For the Periods Ended
(in millions)
Six Months Ended % Change From
June 30, June 30, June 30,
2007 2006 2006
Closed-End Mutual Funds
Assets under management, beginning of
period $11,391 $9,674
Inflows 202 54
Market appreciation
(depreciation) (402) 370
Total increase (decrease) (200) 424
Assets under management, end of
period $11,191 $10,098 10.8%
Open-End Mutual Funds
Assets under management, beginning of
period $9,575 $5,591
Inflows 3,967 1,421
Outflows (1,924) (981)
Net inflows 2,043 440
Market appreciation (depreciation) (499) 709
Total increase 1,544 1,149
Assets under management, end of
period $11,119 $6,740 65.0%
Institutional Separate Accounts
Assets under management, beginning of
period $8,930 $5,226
Inflows 4,688 870
Outflows (948) (376)
Net inflows 3,740 494
Market appreciation (depreciation) (420) 687
Total increase 3,320 1,181
Assets under management, end of
period $12,250 $6,407 91.2%
Total
Assets under management, beginning of
period $29,896 $20,491
Inflows 8,857 2,345
Outflows (2,872) (1,357)
Net inflows 5,985 988
Market appreciation (depreciation) (1,321) 1,766
Total increase 4,664 2,754
Assets under management, end of
period (1) $34,560 $23,245 48.7%
(1) As of June 30, 2006, assets under management included $2.1 billion of
assets managed by Houlihan Rovers through sub-advisory and similar
arrangements.
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