Cohen & Steers Inc

Ladies and gentlemen, thank you for standing by. Welcome to the Cohen and Steers first quarter 2023 earnings conference call. During the presentation, all participants will be in any listen only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press star followed by the number one on your telephone keypad. If at any time during the conference, you need to reach an operator, please press star zero. As a reminder, this conference is being recorded Thursday, April 20, 2023. I would now like to turn the conference over to Brian Heller, Senior Vice President and Corporate Counsel of Cohen & Steers. Please go ahead.

Thank you, and welcome to the Cohen & Steers First Quarter 2023 Earnings Conference Call. Joining me are our Chief Executive Officer, Joe Harvey, our Chief Financial Officer, Matt Stadler, and our Chief Investment Officer, John Che. 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 first quarter 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 or other investment vehicle. 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, and good morning. Consistent with previous quarters, my remarks this morning will focus on our as-adjusted results. Note that effective January 1st, such results included interest and dividends earned on our corporate seed investments. A reconciliation of GAAP to as-adjusted results can be found on pages 13 through 15 of the earnings release and on slides 16 through 20 of the earnings presentation. Yesterday, we reported earnings of 76 cents per share compared with the $1.04 in the prior year's quarter and 79 cents sequentially. Revenue was 126.3 million in the quarter compared with 154.3 million in the prior year's quarter and 125.5 million sequentially. The increase in revenue from the fourth quarter was primarily due to higher average assets under management across all three types of investment vehicles, partially offset by two fewer days in the quarter. Our effective fee rate was 57.6 basis points in the first quarter, compared with 57.8 basis points in the fourth quarter. Operating income was 48 million in the quarter, compared with 68.9 million in the prior year's quarter, and 50.9 million sequentially. and our operating margins decreased to 38 percent from 40.5 percent last quarter. Expenses increased 4.8 percent from the fourth quarter, primarily due to higher compensation and benefits and higher G&A. The compensation to revenue ratio for the first quarter was 38.5 percent, consistent with the guidance provided on our last call. And the increase in G&A was primarily due to a full quarter of rent expense for our new corporate headquarters, where the lease commenced on December 1st. We expect to occupy our new space by year end. Our effective tax rate was 25.25% for the quarter, slightly lower than the guidance provided on our last call. 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 $247.6 million a quarter end compared with $316 million last quarter. Firm liquidity as of March 31st reflected the payment of employee bonuses as well as the firm's customary repurchase of common stock to satisfy withholding tax obligations arising from vesting and delivery of restricted stock units to participating employees. At quarter end, we had no borrowings on the $100 million three-year revolving credit facility that we entered into on January 20th. Assets under management were $79.9 billion at March 31st, down slightly from $80.4 billion at December 31st. The decrease was due to net outflows of $497 million and distributions of 694 million, partially offset by market appreciation of 671 million. Joe Harvey will provide an update on our flows and institutional pipeline of awarded unfunded mandates. Let me briefly discuss a few items to consider for the second quarter and remainder of the year. First, with respect to compensation and benefits, we are taking a deliberate and measured approach to both new and replacement hires, which is intended to balance talent growth, our opportunities, and the environment, so that all things being equal, we would expect to maintain a compensation to revenue ratio of 38.5%. Next, we expect G&A to increase 12% to 14% from the $52.6 million we recorded in 2022, the majority of which relates to costs associated with our new corporate headquarters and to a lesser extent, certain other strategic infrastructure initiatives, such as establishing a new data center, opening a Singapore office, relocating our London office, and upgrading our trading and order management system. Excluding these costs, we would expect G&A to increase four to six percent. That said, in light of the environment, we have undertaken a comprehensive review of all of our non-client related expenses. And finally, we expect that our effective tax rate will remain at 25.25%. Now I'd like to turn it over to our Chief Investment Officer, John Che, who will discuss our investment performance. Thank you, Matt, and good morning.