Cohen & Steers Inc

Ladies and gentlemen, thank you for standing by. Welcome to the Cohen and Sears fourth quarter and full year 2021 earnings conference call. During the presentation, all participants will be in a listen-only mode. Later, we will conduct a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach the operator, please press star 0. As a reminder, this conference is being recorded Thursday, January 27th, 2022. I would now like to turn the conference over to Brian Heller, Senior Vice President and Corporate Counsel of Cohen and Steers. Please go ahead.

Thank you, and welcome to the Cohen and Steers Fourth Quarter and Full Year 2021 Earnings Conference Call. Joining me are our Chief Executive Officer, Bob Steers, our President, Joe Harvey, and our Chief Financial Officer, Matt Stadler. I want to remind you that some of our comments and answers to your questions may include forward-looking statements. We believe these statements are reasonable based on information currently available to us, but actual outcomes could differ materially due to a number of factors, including those described in our accompanying fourth quarter and full-year earnings release and presentation, our most recent annual report on Form 10-K, and our other SEC filings. We assume no duty to update any forward-looking statement. Further, none of our statements constitute an offer to sell or the solicitation of an offer to buy the securities of any fund. Our presentation also contains non-GAAP financial measures, referred to as adjusted financial measures, that we believe are meaningful in evaluating our performance. These non-GAAP financial measures should be read in conjunction with our GAAP results. A reconciliation of these non-GAAP financial measures is included in the earnings release and presentation to the extent reasonably available. The earnings release and presentation, as well as links to our SEC filings, are available in the investor relations section of our website at www.cohenandsteers.com. With that, I'll turn the call over to Matt.

Thank you, Brian. Good morning, everyone. Thanks for joining today. My remarks will focus on our as-adjusted results. A reconciliation of GAAP to as-adjusted results can be found on pages 18 and 19 of the earnings release and on slides 16 through 19 of the earnings presentation. Yesterday, we reported record earnings of $1.24 per share compared with 76 cents in the prior year's quarter. and $1.06 sequentially. The fourth quarter of 2021 included cumulative adjustments to compensation and benefits and income taxes that lowered our compensation to revenue ratio and effective tax rate, respectively. Revenue was a record $159.7 million for the quarter, compared with $116.6 million in the prior year's quarter and $154.3 million sequentially. The increase in revenue from the third quarter was primarily attributable to higher average assets under management and open-end funds and higher performance fees from certain institutional accounts when compared with the third quarter. Our implied effective fee rate was 58.1 basis points in the fourth quarter compared with 57.5 basis points in the third quarter. Excluding performance fees, Our fourth quarter implied effective fee rate would have been 57 basis points. And our third quarter implied effective fee rate would have been 57.3 basis points. Operating income was a record 82.6 million in the quarter, compared with 49.4 million in the prior year's quarter and 70.4 million sequentially. Our operating margin increased to a record 51.7%. from 45.6% last quarter, primarily due to the cumulative adjustment mentioned a moment ago, which reduced compensation and benefits to reflect actual amounts to be paid. Expenses decreased 8.1% when compared with the third quarter, as lower compensation and benefits was partially offset by higher G&A. The compensation to revenue ratio, which included the cumulative adjustment, was 26.16% for the quarter. For the year, the compensation to revenue ratio was 32.22%. The increase in G&A was primarily due to higher travel and entertainment, increased hosted and sponsored conferences, and higher recruitment fees. And the increase in distribution and service fee expense was primarily due to higher average assets under management in U.S. open-end funds. Our effective tax rate, which was 25.36% for the quarter, included a cumulative adjustment to bring the rate to 26.15% for the year. The reduction in the effective tax rate was primarily due to a decrease in the non-deductible portion of executive compensation on a higher than previously forecasted pre-tax base. Page 15 of the earnings presentation sets forth our cash and cash equivalents corporate investments in u.s treasury securities and liquid seed investments for the current and trailing four quarters our firm liquidity totaled 248.2 million a quarter end compared with 241 million last quarter firm liquidity as of december 31st reflected the payment of a special cash dividend in december of 60.3 million or 1.25 per share Over the past 12 years, we've paid a total of $15.25 per share in special dividends, and we continue to be debt-free. Assets under management totaled a record $106.6 billion at December 31st, an increase of $9.4 billion, or 10% from September 30th. The increase was due to net inflows of $1.8 billion and market appreciation of $9.1 billion, partially offset by distributions of 1.6 billion. This marks the 10th consecutive quarter that we have recorded net inflows. Bob Steers will be providing an update on our flows and institutional pipeline of awarded unfunded mandates. And now I'd like to briefly discuss a few items as we begin the new year. First, regarding our expected compensation to revenue ratio, We intend to balance anticipated revenue growth from year-end assets under management that exceeded our full year assets under management by about 13%, with a disciplined approach toward adding human capital. In addition to the full year impact from the new hires we made last year, we plan on making controlled investments in order to broaden our product offerings, expand our public and private distribution efforts, and most importantly, to maintain our industry leading investment performance. As a result, we expect that our compensation to revenue ratio will increase to 33.75% from the 32.22% recorded in 2021. Continuing with the theme of investing in our business, we expect G&A to increase 10 to 15% from the 47.2 million we recorded in 2021. We intend to make incremental investments this year in technology, including the implementation of new systems that will add efficiencies and expand our capabilities, cloud migration, and upgrades to our infrastructure and security. We will also make investments in global marketing, focused on hosting virtual and in-person conferences, as well as expanding our digital footprint. And we expect the travel and entertainment costs will increase as global conditions begin to return to normal. We expect that our effective tax rate will remain at 26.15% in 2022. And finally, you will recall that a year ago, we noted that we were anticipating the redemption of a billion dollar global real estate institutional account in 2021. I am pleased to inform you that not only do we continue to manage this account, but the client has also added assets to it. And therefore, we no longer consider this account to be at risk. And now I'd like to turn it over to Joe Harvey, who will discuss our investment performance.