# Cohen & Steers, Inc.: Form 10-Q for the period ended Mar 31, 2023

- Company: [Cohen & Steers, Inc.](/companies/cns.md) (CIK 1284812)
- Form: 10-Q
- Filed: 2023-05-05
- Accepted by EDGAR: May 5, 2023, 09:43 ET
- Period: 2023-03-31
- Accession: 0001284812-23-000159
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1284812/000128481223000159/cns-20230331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1284812/000128481223000159/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-01-01 to 2023-03-31 | $126.1m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Operating income | 3 months, 2023-01-01 to 2023-03-31 | $44.9m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-01-01 to 2023-03-31 | $10.2m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-01-01 to 2023-03-31 | $35.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-01-01 to 2023-03-31 | $0.71 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-01-01 to 2023-03-31 | $0.72 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-01-01 to 2023-03-31 | 49,402,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2023-01-01 to 2023-03-31 | −$15.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2023-01-01 to 2023-03-31 | $4.6m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2023-01-01 to 2023-03-31 | $28.1m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 3 months, 2023-01-01 to 2023-03-31 | $20.4m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-03-31 | $149.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2023-03-31 | $623.4m | us-gaap:Assets |
| Total liabilities | at 2023-03-31 | $193.8m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-03-31 | $337.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 43,690 characters.

Set forth on the following pages is management's discussion and analysis of our financial condition and results of operations for the three months ended March 31, 2023 and 2022. Such information should be read in conjunction with our condensed consolidated financial statements and the related notes included herein. The condensed consolidated financial statements of the Company are unaudited. When we use the terms "Cohen & Steers," the "Company," "we," "us," and "our," we mean Cohen & Steers, Inc., a Delaware corporation, and its consolidated subsidiaries.

### Executive Overview

#### General

We are a global investment manager specializing in real assets and alternative income, including real estate, preferred securities, infrastructure, resource equities, commodities, as well as multi-strategy solutions. Founded in 1986, we are headquartered in New York City, with offices in London, Dublin, Hong Kong, Tokyo and Singapore.

Our primary investment strategies include U.S. real estate, preferred securities and low duration preferred securities, global/international real estate, global listed infrastructure, real assets multi-strategy, as well as global natural resource equities. Our strategies seek to achieve a variety of investment objectives for different risk profiles and are actively managed by specialist teams of investment professionals who employ fundamental-driven research and portfolio management processes. We offer our strategies through a variety of investment vehicles, including U.S. and non-U.S. registered funds and other commingled vehicles, separate accounts and subadvised portfolios.

Our distribution network encompasses two major channels, wealth and institutional. Our wealth channel includes registered investment advisers, wirehouses, independent and regional broker dealers and bank trusts. Our institutional channel includes sovereign wealth funds, corporate plans, insurance companies and public funds, including defined benefit and defined contribution plans, as well as other financial institutions that access our investment management services directly or through consultants and other intermediaries.

Our revenue from the wealth channel is primarily derived from investment advisory, administration, distribution and service fees from open-end and closed-end funds as well as other commingled vehicles. Our revenue from the institutional channel is derived from fees received from our clients for managing advised and subadvised accounts. Our fees are based on contractually specified rates applied to the value of the assets we manage and, in certain cases, may include a performance-based fee. Our revenue fluctuates with changes in the total value of our assets under management, which may occur as a result of market appreciation and depreciation, contributions or withdrawals from investor accounts and distributions. This revenue is recognized over the period that the assets are managed.

#### Market Environment

There was elevated financial market volatility in the first quarter of 2023, which has continued into the second quarter of 2023, resulting primarily from several bank failures both in the U.S. and abroad. Although these events did not have a material effect on our business, the outcome remains uncertain and could impact our future assets under management and financial results.

### Assets Under Management

#### By Investment Vehicle

#### (in millions)

| Open-end Funds | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| **Assets under management, beginning of period** | $36,903 | $50,911 |
| Inflows | 3,474 | 4,886 |
| Outflows | (3,779) | (4,678) |
| Net inflows (outflows) | (305) | 208 |
| Market appreciation (depreciation) | 110 | (2,735) |
| Distributions | (281) | (279) |
| Total increase (decrease) | (476) | (2,806) |
| **Assets under management, end of period** | $36,427 | $48,105 |
| **Percentage of total assets under management** | 45.6% | 47.1% |
| **Average assets under management** | $38,440 | $48,055 |
| **Institutional Accounts** |  |  |
| **Assets under management, beginning of period** | $32,373 | $42,727 |
| Inflows | 715 | 2,060 |
| Outflows | (833) | (2,066) |
| Net inflows (outflows) | (118) | (6) |
| Market appreciation (depreciation) | 608 | (1,494) |
| Distributions | (259) | (271) |
| Total increase (decrease) | 231 | (1,771) |
| **Assets under management, end of period** | $32,604 | $40,956 |
| **Percentage of total assets under management** | 40.8% | 40.1% |
| **Average assets under management** | $33,409 | $40,631 |
| **Closed-end Funds** |  |  |
| **Assets under management, beginning of period** | $11,149 | $12,991 |
| Inflows | 11 | 554 |
| Outflows | (85) | — |
| Net inflows (outflows) | (74) | 554 |
| Market appreciation (depreciation) | (47) | (337) |
| Distributions | (154) | (147) |
| Total increase (decrease) | (275) | 70 |
| **Assets under management, end of period** | $10,874 | $13,061 |
| **Percentage of total assets under management** | 13.6% | 12.8% |
| **Average assets under management** | $11,353 | $12,550 |
| **Total** |  |  |
| **Assets under management, beginning of period** | $80,425 | $106,629 |
| Inflows | 4,200 | 7,500 |
| Outflows | (4,697) | (6,744) |
| Net inflows (outflows) | (497) | 756 |
| Market appreciation (depreciation) | 671 | (4,566) |
| Distributions | (694) | (697) |
| Total increase (decrease) | (520) | (4,507) |
| **Assets under management, end of period** | $79,905 | $102,122 |
| **Average assets under management** | $83,202 | $101,236 |

21

### Assets Under Management - Institutional Accounts

#### By Account Type

#### (in millions)

| Advisory | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| **Assets under management, beginning of period** | $18,631 | $24,599 |
| Inflows | 222 | 1,573 |
| Outflows | (621) | (1,615) |
| Net inflows (outflows) | (399) | (42) |
| Market appreciation (depreciation) | 258 | (831) |
| Total increase (decrease) | (141) | (873) |
| **Assets under management, end of period** | $18,490 | $23,726 |
| **Percentage of institutional assets under management** | 56.7% | 57.9% |
| **Average assets under management** | $19,123 | $23,861 |
| **Japan Subadvisory** |  |  |
| **Assets under management, beginning of period** | $8,376 | $11,329 |
| Inflows | 385 | 219 |
| Outflows | (59) | (103) |
| Net inflows (outflows) | 326 | 116 |
| Market appreciation (depreciation) | 270 | (482) |
| Distributions | (259) | (271) |
| Total increase (decrease) | 337 | (637) |
| **Assets under management, end of period** | $8,713 | $10,692 |
| **Percentage of institutional assets under management** | 26.7% | 26.1% |
| **Average assets under management** | $8,739 | $10,351 |
| **Subadvisory Excluding Japan** |  |  |
| **Assets under management, beginning of period** | $5,366 | $6,799 |
| Inflows | 108 | 268 |
| Outflows | (153) | (348) |
| Net inflows (outflows) | (45) | (80) |
| Market appreciation (depreciation) | 80 | (181) |
| Total increase (decrease) | 35 | (261) |
| **Assets under management, end of period** | $5,401 | $6,538 |
| **Percentage of institutional assets under management** | 16.6% | 16.0% |
| **Average assets under management** | $5,547 | $6,419 |
| **Total Institutional Accounts** |  |  |
| **Assets under management, beginning of period** | $32,373 | $42,727 |
| Inflows | 715 | 2,060 |
| Outflows | (833) | (2,066) |
| Net inflows (outflows) | (118) | (6) |
| Market appreciation (depreciation) | 608 | (1,494) |
| Distributions | (259) | (271) |
| Total increase (decrease) | 231 | (1,771) |
| **Assets under management, end of period** | $32,604 | $40,956 |
| **Average assets under management** | $33,409 | $40,631 |

22

### Assets Under Management

#### By Investment Strategy

#### (in millions)

| U.S. Real Estate | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| **Assets under management, beginning of period** | $35,108 | $49,915 |
| Inflows | 2,033 | 3,293 |
| Outflows | (1,599) | (2,736) |
| Net inflows (outflows) | 434 | 557 |
| Market appreciation (depreciation) | 907 | (2,792) |
| Distributions | (437) | (412) |
| Transfers | 68 | — |
| Total increase (decrease) | 972 | (2,647) |
| **Assets under management, end of period** | $36,080 | $47,268 |
| **Percentage of total assets under management** | 45.2% | 46.3% |
| **Average assets under management** | $36,772 | $46,462 |
| **Preferred Securities** |  |  |
| **Assets under management, beginning of period** | $19,767 | $26,987 |
| Inflows | 1,454 | 1,964 |
| Outflows | (2,326) | (2,872) |
| Net inflows (outflows) | (872) | (908) |
| Market appreciation (depreciation) | (492) | (1,400) |
| Distributions | (195) | (213) |
| Transfers | 2 | — |
| Total increase (decrease) | (1,557) | (2,521) |
| **Assets under management, end of period** | $18,210 | $24,466 |
| **Percentage of total assets under management** | 22.8% | 24.0% |
| **Average assets under management** | $20,227 | $25,649 |
| **Global/International Real Estate** |  |  |
| **Assets under management, beginning of period** | $14,782 | $19,380 |
| Inflows | 273 | 1,556 |
| Outflows | (417) | (780) |
| Net inflows (outflows) | (144) | 776 |
| Market appreciation (depreciation) | 202 | (775) |
| Distributions | (8) | (19) |
| Transfers | (70) | — |
| Total increase (decrease) | (20) | (18) |
| **Assets under management, end of period** | $14,762 | $19,362 |
| **Percentage of total assets under management** | 18.5% | 19.0% |
| **Average assets under management** | $15,321 | $18,867 |

23

### Assets Under Management

#### By Investment Strategy - continued

#### (in millions)

| Global Listed Infrastructure | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| **Assets under management, beginning of period** | $8,596 | $8,763 |
| Inflows | 135 | 464 |
| Outflows | (124) | (299) |
| Net inflows (outflows) | 11 | 165 |
| Market appreciation (depreciation) | 35 | 314 |
| Distributions | (46) | (45) |
| Total increase (decrease) | — | 434 |
| **Assets under management, end of period** | $8,596 | $9,197 |
| **Percentage of total assets under management** | 10.8% | 9.0% |
| **Average assets under management** | $8,682 | $8,609 |
| **Other** |  |  |
| **Assets under management, beginning of period** | $2,172 | $1,584 |
| Inflows | 305 | 223 |
| Outflows | (231) | (57) |
| Net inflows (outflows) | 74 | 166 |
| Market appreciation (depreciation) | 19 | 87 |
| Distributions | (8) | (8) |
| Total increase (decrease) | 85 | 245 |
| **Assets under management, end of period** | $2,257 | $1,829 |
| **Percentage of total assets under management** | 2.8% | 1.8% |
| **Average assets under management** | $2,200 | $1,649 |
| **Total** |  |  |
| **Assets under management, beginning of period** | $80,425 | $106,629 |
| Inflows | 4,200 | 7,500 |
| Outflows | (4,697) | (6,744) |
| Net inflows (outflows) | (497) | 756 |
| Market appreciation (depreciation) | 671 | (4,566) |
| Distributions | (694) | (697) |
| Total increase (decrease) | (520) | (4,507) |
| **Assets under management, end of period** | $79,905 | $102,122 |
| **Average assets under management** | $83,202 | $101,236 |

24

### Investment Performance at March 31, 2023

(1) Past performance is no guarantee of future results. Outperformance is determined by comparing the annualized investment performance of each investment strategy to the performance of specified reference benchmarks. Investment performance in excess of the performance of the benchmark is considered outperformance. The investment performance calculation of each investment strategy is based on all active accounts and investment models pursuing similar investment objectives. For accounts, actual investment performance is measured gross of fees and net of withholding taxes. For investment models, for which actual investment performance does not exist, the investment performance of a composite of accounts pursuing comparable investment objectives is used as a proxy for actual investment performance. The performance of the specified reference benchmark for each account and investment model is 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.

(2) © 2023 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Morningstar calculates its ratings based on a risk-adjusted return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each 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. Past 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 at March 31, 2023. 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.

#### Overview

Assets under management at March 31, 2023 decreased 21.8% to $79.9 billion from $102.1 billion at March 31, 2022. The decrease was due to net outflows of $2.9 billion, market depreciation of $15.7 billion and distributions of $3.6 billion. Net outflows included $3.1 billion from preferred securities, partially offset by net inflows of $729 million into real assets multi-strategy (included in "Other" in the table on pages 23 and 24). Market depreciation included $8.4 billion from U.S. real estate and $4.1 billion from global/international real estate. Distributions included $2.4 billion from U.S. real estate and $816 million from preferred securities. Our organic decay rate for the twelve months ended March 31, 2023 was (2.8%). The organic growth/decay rate represents the ratio of net flows for the period to the beginning assets under management.

Average assets under management for the three months ended March 31, 2023 decreased 17.8% to $83.2 billion from $101.2 billion for the three months ended March 31, 2022.

#### Open-end funds

Assets under management in open-end funds at March 31, 2023, which represented 45.6% of total assets under management, decreased 24.3% to $36.4 billion from $48.1 billion at March 31, 2022. The decrease was due to net outflows of $2.3 billion, market depreciation of $7.4 billion and distributions of $2.0 billion. Net outflows included $2.7 billion from preferred securities, partially offset by net inflows of $706 million into real assets multi-strategy (included in "Other" in the table on pages 23 and 24). Market depreciation included $5.0 billion from U.S. real estate and $1.6 billion from preferred securities. Distributions included $1.2 billion from U.S. real estate and $591 million from preferred securities. Of these distributions, $1.6 billion was reinvested and included in net flows. Our organic decay rate for open-end funds for the twelve months ended March 31, 2023 was (4.8%).

Average assets under management for open-end funds for the three months ended March 31, 2023 decreased 20.0% to $38.4 billion from $48.1 billion for the three months ended March 31, 2022.

#### Institutional accounts

Assets under management in institutional accounts at March 31, 2023, which represented 40.8% of total assets under management, decreased 20.4% to $32.6 billion from $41.0 billion at March 31, 2022. The decrease was due to net outflows of $555 million, market depreciation of $6.8 billion and distributions of $974 million. Net outflows included $378 million from global/international real estate and $293 million from preferred securities, partially offset by net inflows of $168 million into global listed infrastructure. Market depreciation included $3.4 billion from global/international real estate and $2.8 billion from U.S. real estate. Distributions included $933 million from U.S. real estate. Our organic decay rate for institutional accounts for the twelve months ended March 31, 2023 was (1.4%).

Average assets under management for institutional accounts for the three months ended March 31, 2023 decreased 17.8% to $33.4 billion from $40.6 billion for the three months ended March 31, 2022.

Assets under management in advisory accounts at March 31, 2023, which represented 56.7% of institutional assets under management, decreased 22.1% to $18.5 billion from $23.7 billion at March 31, 2022. The decrease was due to net outflows of $1.4 billion and market depreciation of $3.8 billion. Net outflows included $940 million from U.S. real estate and $356 million from global/international real estate. Market depreciation included $2.0 billion from global/international real estate and $1.3 billion from U.S. real estate. Our organic decay rate for advisory accounts for the twelve months ended March 31, 2023 was (6.0%).

Average assets under management for advisory accounts for the three months ended March 31, 2023 decreased 19.9% to $19.1 billion from $23.9 billion for the three months ended March 31, 2022.

Assets under management in Japan subadvisory accounts at March 31, 2023, which represented 26.7% of institutional assets under management, decreased 18.5% to $8.7 billion from $10.7 billion at March 31, 2022. The decrease was due to market depreciation of $1.8 billion and distributions of $974 million, partially offset by net inflows of $761 million. Net inflows included $788 million into U.S. real estate, partially offset by net outflows of $21 million from preferred securities. Market depreciation included $1.3 billion from U.S. real estate and $497 million from global/international real estate. Distributions included $933 million from U.S. real estate. Our organic growth rate for Japan subadvisory accounts for the twelve months ended March 31, 2023 was 7.1%.

Average assets under management for Japan subadvisory accounts for the three months ended March 31, 2023 decreased 15.6% to $8.7 billion from $10.4 billion for the three months ended March 31, 2022.

Assets under management in subadvisory accounts excluding Japan at March 31, 2023, which represented 16.6% of institutional assets under management, decreased 17.4% to $5.4 billion from $6.5 billion at March 31, 2022. The decrease was due to market depreciation of $1.2 billion, partially offset by net inflows of $103 million. Net inflows included $95 million into U.S. real estate. Market depreciation included $888 million from global/international real estate and $220 million from U.S. real estate. Our organic growth rate for subadvisory accounts excluding Japan for the twelve months ended March 31, 2023 was 1.6%.

Average assets under management for subadvisory accounts excluding Japan for the three months ended March 31, 2023 decreased 13.6% to $5.5 billion from $6.4 billion for the three months ended March 31, 2022.

#### Closed-end funds

Assets under management in closed-end funds at March 31, 2023, which represented 13.6% of total assets under management, decreased 16.7% to $10.9 billion from $13.1 billion at March 31, 2022. The decrease was primarily due to market depreciation of $1.4 billion and distributions of $703 million. Our organic decay rate for closed-end funds for the twelve months ended March 31, 2023 was (0.4%).

Average assets under management for closed-end funds for the three months ended March 31, 2023 decreased 9.5% to $11.4 billion from $12.6 billion for the three months ended March 31, 2022.

### Summary of Operating Results

*(in thousands, except percentages and per share data)*

| U.S. GAAP | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| Revenue | $126,082 | $154,189 |
| Expenses | $81,183 | $103,198 |
| Operating income | $44,899 | $50,991 |
| Non-operating income (loss) (1) | $1,632 | $5,110 |
| Net income attributable to common stockholders | $35,314 | $42,018 |
| Diluted earnings per share | $0.71 | $0.85 |
| Operating margin | 35.6% | 33.1% |
| As Adjusted (2) |  |  |
| Net income attributable to common stockholders | $37,594 | $51,152 |
| Diluted earnings per share | $0.76 | $1.04 |
| Operating margin | 38.0% | 44.7% |

(1) Included amounts attributable to third-party interests in consolidated investment vehicles. Refer to non-operating income (loss) tables on pages 29-30 for additional detail.

(2) Refer to pages 31-33 for reconciliations of U.S. GAAP to as adjusted results.

### Three Months Ended March 31, 2023 Compared with Three Months Ended March 31, 2022

#### Revenue

*(in thousands)*

| Investment advisory and administration fees | Three Months Ended March 31, 2023 | 2022 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Open-end funds | $62,520 | $79,665 | $(17,145) | (21.5)% |
| Institutional accounts | 30,629 | 36,683 | $(6,054) | (16.5)% |
| Closed-end funds | 24,885 | 27,321 | $(2,436) | (8.9)% |
| Total | 118,034 | 143,669 | $(25,635) | (17.8)% |
| Distribution and service fees | 7,562 | 9,869 | $(2,307) | (23.4)% |
| Other | 486 | 651 | $(165) | (25.3)% |
| Total revenue | $126,082 | $154,189 | $(28,107) | (18.2)% |

Investment advisory and administration fees decreased from the three months ended March 31, 2022, primarily due to lower average assets under management across all three types of investment vehicles.

- Total investment advisory and administration revenue from open-end funds compared with average assets under management implied an annualized effective fee rate of 66.0 bps and 67.2 bps for the three months ended March 31, 2023 and 2022, respectively. The decrease in the implied annualized effective fee rate was primarily due to a shift in the composition of assets under management.
- Total investment advisory revenue from institutional accounts compared with average assets under management implied an annualized effective fee rate of 37.2 bps and 36.6 bps for the three months ended March 31, 2023 and 2022, respectively.
- Total investment advisory and administration revenue from closed-end funds compared with average assets under management implied an annualized effective fee rate of 88.9 bps and 88.3 bps for the three months ended March 31, 2023 and 2022, respectively.

Distribution and service fees decreased from the three months ended March 31, 2022, primarily due to lower average assets under management in U.S. open-end funds.

#### Expenses

*(in thousands)*

|  | Three Months Ended March 31, 2023 | 2022 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Employee compensation and benefits | $48,857 | $54,743 | $(5,886) | (10.8)% |
| Distribution and service fees | 14,216 | 33,951 | $(19,735) | (58.1)% |
| General and administrative | 17,122 | 13,510 | $3,612 | 26.7% |
| Depreciation and amortization | 988 | 994 | $(6) | (0.6)% |
| Total expenses | $81,183 | $103,198 | $(22,015) | (21.3)% |

Employee compensation and benefits decreased from the three months ended March 31, 2022, primarily due to lower incentive compensation of $7.3 million and a decrease in amortization of restricted stock units of $1.0 million, partially offset by higher salaries of $2.1 million.

Distribution and service fee expenses decreased from the three months ended March 31, 2022, primarily due to lower average assets under management in U.S. open-end funds and costs of $14.2 million associated with the initial public offering of the Cohen & Steers Real Estate Opportunities and Income Fund (RLTY) included in the three months ended March 31, 2022 .

General and administrative expenses increased from the three months ended March 31, 2022, primarily due to incremental lease costs of $3.2 million related to the Company's future headquarters at 1166 Avenue of the Americas.

#### Operating Margin

Operating margin for the three months ended March 31, 2023 increased to 35.6% from 33.1% for the three months ended March 31, 2022. Operating margin represents the ratio of operating income to revenue.

#### Non-operating Income (Loss)

*(in thousands)*

|  | Three Months Ended March 31, 2023 Consolidated Investment Vehicles | Corporate Seed Investments | Corporate Other |  | Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| Interest and dividend income—net | $884 | $843 | $1,489 |  | $3,216 |
| Gain (loss) from investments—net | (7) | 45 | (346) | (1) | (308) |
| Foreign currency gain (loss)—net | 41 | 24 | (1,341) |  | (1,276) |
| **Total non-operating income (loss)** | 918 | 912 | (198) |  | 1,632 |
| Net (income) loss attributable to noncontrolling interests | (984) | — | — |  | (984) |
| Non-operating income (loss) attributable to the company | $(66) | $912 | $(198) |  | $648 |

(1) Comprised primarily of gain (loss) on derivative contracts, which are utilized to economically hedge a portion of the market risk of the Company's seed investments included in both Consolidated Investment Vehicles and Corporate Seed Investments.

*(in thousands)*

|  | Three Months Ended March 31, 2022 Consolidated Investment Vehicles | Corporate Seed Investments | Corporate Other |  | Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| Interest and dividend income—net | $734 | $167 | $(4) |  | $897 |
| Gain (loss) from investments—net | 3,513 | 752 | (698) | (1) | 3,567 |
| Foreign currency gain (loss)—net | (294) | (1) | 941 |  | 646 |
| **Total non-operating income (loss)** | 3,953 | 918 | 239 |  | 5,110 |
| Net (income) loss attributable to noncontrolling interests | (4,823) | — | — |  | (4,823) |
| Non-operating income (loss) attributable to the company | $(870) | $918 | $239 |  | $287 |

(1) Comprised primarily of gain (loss) on derivative contracts, which are utilized to economically hedge a portion of the market risk of the Company's seed investments included in both Consolidated Investment Vehicles and Corporate Seed Investments.

#### Income Taxes

A reconciliation of the Company’s statutory federal income tax rate and the effective income tax rate is summarized in the following table:

|  | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| U.S. statutory tax rate | 21.0% | 21.0% |
| State and local income taxes, net of federal benefit | 3.1 | 3.5 |
| Non-deductible executive compensation | 3.0 | 5.2 |
| Unrecognized tax benefit adjustments | 0.2 | — |
| Excess tax benefits related to the vesting and delivery of restricted stock units | (4.6) | (11.5) |
| Other | (0.2) | (0.1) |
| Effective income tax rate | 22.5% | 18.1% |

30

### Reconciliations of U.S. GAAP to As Adjusted Financial Results

Management believes that use of the following as adjusted (non-GAAP) financial results provides greater transparency into the Company’s operating performance. In addition, these as adjusted financial results are used to prepare the Company's internal management reports which are used in evaluating its business.

While management believes that these as adjusted financial results are useful in evaluating operating performance, this information should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with U.S. GAAP.

Effective January 1, 2023, the Company revised its methodology for as adjusted results to include interest and dividends from seed investments. Prior period amounts have not been recast to conform with the current period results as the impact was not significant.

### Reconciliation of U.S. GAAP to As Adjusted Financial Results

### Net Income Attributable to Common Stockholders and Diluted Earnings per Share

*(in thousands, except per share data)*

|  | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| **Net income attributable to common stockholders, U.S. GAAP** | $35,314 | $42,018 |
| Seed investments—net (1) | 968 | 1,051 |
| Accelerated vesting of restricted stock units | 245 | 2,305 |
| Lease transition and other costs - 280 Park Avenue (2) | 2,443 | — |
| Initial public offering costs (3) | — | 15,239 |
| Foreign currency exchange (gains) losses—net (4) | 1,090 | (1,212) |
| Tax adjustments—net (5) | (2,466) | (8,249) |
| Net income attributable to common stockholders, as adjusted | $37,594 | $51,152 |
| **Diluted weighted average shares outstanding** | 49,402 | 49,337 |
| **Diluted earnings per share, U.S. GAAP** | $0.71 | $0.85 |
| Seed investments—net | 0.02 | 0.02 |
| Accelerated vesting of restricted stock units | 0.01 | 0.05 |
| Lease transition and other costs - 280 Park Avenue | 0.05 | — |
| Initial public offering costs | — | 0.31 |
| Foreign currency exchange (gains) losses—net | 0.02 | (0.02) |
| Tax adjustments—net | (0.05) | (0.17) |
| Diluted earnings per share, as adjusted | $0.76 | $1.04 |

(1) Represents amounts related to the deconsolidation of seed investments in consolidated investment vehicles as well as non-operating (income) loss from seed investments that were not consolidated. In accordance with the Company’s revised methodology, interest and dividends from seed investments were not included in the adjustment for the three months ended March 31, 2023.

(2) Represents lease and other expenses related to the Company's current headquarters at 280 Park Avenue, which it expects to vacate in the fourth quarter of 2023. In connection with the transition to its future headquarters, the Company will recognize additional GAAP expense as a result of the overlapping terms for both its current and future headquarters until its current headquarters lease expires in January 2024.

(3) Represents costs associated with the initial public offering of RLTY. Costs are summarized in the following table:

*(in thousands)*

|  | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| Employee compensation and benefits | $— | $357 |
| Distribution and service fees | — | 14,224 |
| General and administrative | — | 658 |
| Initial public offering costs | $— | $15,239 |

(4) Represents net foreign currency exchange (gains) losses associated with U.S. dollar-denominated assets held by certain foreign subsidiaries.

(5) Tax adjustments are summarized in the following table:

*(in thousands)*

|  | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| Exclusion of tax effects associated with items noted above | $(1,285) | $(4,281) |
| Exclusion of discrete tax items | (1,181) | (3,968) |
| Total tax adjustments | $(2,466) | $(8,249) |

### Reconciliation of U.S. GAAP to As Adjusted Financial Results

### Revenue, Expenses, Operating Income and Operating Margin

*(in thousands, except percentages)*

|  | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| **Revenue, U.S. GAAP** | $126,082 | $154,189 |
| Seed investments (1) | 183 | 123 |
| Revenue, as adjusted | $126,265 | $154,312 |
| **Expenses, U.S. GAAP** | $81,183 | $103,198 |
| Seed investments (1) | (267) | (276) |
| Accelerated vesting of restricted stock units | (245) | (2,305) |
| Lease transition and other costs - 280 Park Avenue (2) | (2,443) | — |
| Initial public offering costs (3) | — | (15,239) |
| Expenses, as adjusted | $78,228 | $85,378 |
| **Operating income, U.S. GAAP** | $44,899 | $50,991 |
| Seed investments (1) | 450 | 399 |
| Accelerated vesting of restricted stock units | 245 | 2,305 |
| Lease transition and other costs - 280 Park Avenue (2) | 2,443 | — |
| Initial public offering costs (3) | — | 15,239 |
| Operating income, as adjusted | $48,037 | $68,934 |
| **Operating margin, U.S. GAAP** | 35.6% | 33.1% |
| Operating margin, as adjusted | 38.0% | 44.7% |

(1) Represents amounts related to the deconsolidation of seed investments in consolidated investment vehicles.

(2) Represents lease and other expenses related to the Company's current headquarters at 280 Park Avenue, which it expects to vacate in the fourth quarter of 2023. In connection with the transition to its future headquarters, the Company will recognize additional GAAP expense as a result of the overlapping terms for both its current and future headquarters until its current headquarters lease expires in January 2024.

(3) Represents costs associated with the initial public offering of RLTY. Costs are summarized in the following table:

*(in thousands)*

|  | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| Employee compensation and benefits | $— | $357 |
| Distribution and service fees | — | 14,224 |
| General and administrative | — | 658 |
| Initial public offering costs | $— | $15,239 |

32

### Reconciliation of U.S. GAAP to As Adjusted Financial Results

### Non-operating Income (Loss)

*(in thousands)*

|  | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| **Non-operating income (loss), U.S. GAAP** | $1,632 | $5,110 |
| Seed investments—net (1) | (466) | (4,171) |
| Foreign currency exchange (gains) losses—net (2) | 1,090 | (1,212) |
| Non-operating income (loss), as adjusted | $2,256 | $(273) |

(1) Represents amounts related to the deconsolidation of seed investments in consolidated investment vehicles as well as non-operating (income) loss from seed investments that were not consolidated. In accordance with the Company’s revised methodology, interest and dividends from seed investments were not included in the adjustment for the three months ended March 31, 2023.

(2) Represents net foreign currency exchange (gains) losses associated with U.S. dollar-denominated assets held by certain foreign subsidiaries.

### Changes in Financial Condition, Liquidity and Capital Resources

We seek to maintain a balance sheet that supports our business strategies and provides the appropriate amount of liquidity at all times.

#### Net Liquid Assets

Our current financial condition is highly liquid and is primarily comprised of cash and cash equivalents, liquid seed investments and other current assets. Liquid assets are reduced by current liabilities, which are generally defined as obligations due within one year (together, net liquid assets).

The table below summarizes net liquid assets:

*(in thousands)*

|  | March 31, 2022 | December 31, 2022 |
| --- | ---: | ---: |
| Cash and cash equivalents | $149,518 | $247,418 |
| U.S. Treasury securities | 29,673 | — |
| Liquid seed investments—net | 68,685 | 67,987 |
| Other current assets | 72,568 | 70,716 |
| Current liabilities | (58,830) | (114,522) |
| Net liquid assets | $261,614 | $271,599 |

#### Cash and cash equivalents

Cash and cash equivalents are on deposit with several major national financial institutions and include short-term, highly liquid investments, which are readily convertible into cash and have original maturities of three months or less.

#### U.S. Treasury securities

U.S. Treasury securities are directly issued by the U.S. government and were classified as trading investments.

#### Liquid seed investments—net

Liquid seed investments are generally traded in active markets on major exchanges and can typically be liquidated within a normal settlement cycle. Liquid seed investments include corporate securities held directly for the purpose of establishing performance track records and the Company's economic interest in consolidated investment vehicles which are presented net of noncontrolling interests.

#### Other current assets

Other current assets primarily represent investment advisory and administration fees receivable. At March 31, 2023, institutional accounts comprised 48.3% of total accounts receivable, while open-end and closed-end funds, together, comprised 43.5% of total accounts receivable. We perform a review of our receivables on an ongoing basis in order to assess collectability and, based on our analysis at March 31, 2023, there was no allowance for uncollectible accounts required.

#### Current liabilities

Current liabilities included accrued compensation and benefits, distribution and service fees payable, operating lease obligations due within 12 months, certain income taxes payable and other liabilities and accrued expenses.

#### Future liquidity needs

Our business has become more capital intensive. Potential uses of capital range from funding the upfront costs associated with closed-end fund launches and rights offerings, seeding new strategies and vehicles, co-investing in private real estate vehicles, and making various one-time investments to grow our firm infrastructure as our business scales. In order to provide us with the financial flexibility to pursue these opportunities, on January 20, 2023, we entered into a Credit Agreement providing for a $100.0 million senior unsecured revolving credit facility maturing on January 20, 2026. Borrowings under the Credit Agreement will be used for working capital and other general corporate purposes. To date, we have not drawn on the credit agreement.

In connection with the build-out of our future office space located at 1166 Avenue of the Americas, we expect to incur costs of approximately $35.0 million to $45.0 million, net of lease incentives by the end of fiscal year 2023. The lease for our current corporate headquarters, also in New York City, is scheduled to expire in January 2024.

We have committed to invest up to $50.0 million in Cohen & Steers Real Estate Opportunities Fund, L.P. (REOF) of which $27.3 million remains unfunded. In addition, we have committed to invest up to $125.0 million in Cohen & Steers Income Opportunities REIT, Inc. (CNSREIT) of which $124.8 million remains unfunded. The timing for funding the remaining portion of our commitments is determined by the investment vehicles.

#### Cash flows

Our cash flows generally result from the operating activities of our business, with investment advisory and administration fees being the most significant contributor.

The table below summarizes our cash flows:

*(in thousands)*

| Cash Flow Data: | Three Months Ended March 31, 2023 | 2022 |
| --- | ---: | ---: |
| Net cash provided by (used in) operating activities | $(14,966) | $(106,449) |
| Net cash provided by (used in) investing activities | (35,007) | (30,372) |
| Net cash provided by (used in) financing activities | (46,519) | 38,648 |
| Net increase (decrease) in cash and cash equivalents | (96,492) | (98,173) |
| Effect of foreign exchange rate changes on cash and cash equivalents | 1,409 | (1,383) |
| Cash and cash equivalents, beginning of the period | 248,714 | 184,373 |
| Cash and cash equivalents, end of the period | 153,631 | 84,817 |

Cash and cash equivalents decreased by $96.5 million, excluding the effect of foreign exchange rate changes, for the three months ended March 31, 2023. Cash flows from operating activities primarily consisted of net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash used in operating activities was $15.0 million for the three months ended March 31, 2023. Net cash used in investing activities was $35.0 million, which included purchases of U.S. Treasury securities held for corporate purposes of $30.0 million. Net cash used in financing activities was $46.5 million, including dividends paid to stockholders of $28.1 million and repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $20.4 million, partially offset by net contributions from noncontrolling interests of $2.2 million.

Cash and cash equivalents decreased by $98.2 million, excluding the effect of foreign exchange rate changes, for the three months ended March 31, 2022. Cash flows from operating activities primarily consisted of net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash used in operating activities was $106.4 million for the three months ended March 31, 2022, which included net investment purchases of $100.8 million resulting from the consolidation of certain investment vehicles. Net cash used in investing activities was $30.4 million, which included purchases of U.S. Treasury securities held for corporate purposes of $29.9 million. Net cash provided by financing activities was $38.6 million, including net contributions from noncontrolling interests of $90.7 million, partially offset by dividends paid to stockholders of $26.8 million and repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $25.6 million.

### Contractual Obligations, Commitments and Contingencies

The following table summarizes our contractual obligations at March 31, 2023:

*(in thousands)*

|  | Reminder of 2023 | 2024 | 2025 | 2026 | 2027 | Thereafter | Total |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Operating leases | $8,760 | $10,881 | $13,038 | $13,038 | $13,038 | $161,161 | $219,916 |
| Purchase obligations (1) | 5,064 | 5,256 | 3,913 | 2,427 | 315 | — | 16,975 |
| Other liability (2) | — | 1,662 | 2,077 | — | — | — | 3,739 |
| Total | $13,824 | $17,799 | $19,028 | $15,465 | $13,353 | $161,161 | $240,630 |

(1) Represents contracts that are either noncancellable or cancellable with a penalty. Our obligations primarily reflected information technology equipment, software licenses and standard service contracts for market data.

(2) Consists of the transition tax liability based on the cumulative undistributed earnings and profits of our foreign subsidiaries in connection with the enactment of the Tax Cuts and Jobs Act in 2017.

#### Investment Commitments

We have committed to invest up to $50.0 million in REOF. As of March 31, 2023, we had funded $22.7 million of this commitment. In addition, we have committed to invest up to $125.0 million in CNSREIT. As of March 31, 2023, we had funded $0.2 million of this commitment to enable CNSREIT to capitalize a share class in preparation for an offering. The timing for funding the remaining portion of our commitments is determined by the investment vehicles.

#### Dividends

Subject to the approval of our Board of Directors, we anticipate paying dividends. When determining whether to pay a dividend, we take into account general economic and business conditions, our strategic plans, our results of operations and financial condition, contractual, legal and regulatory restrictions on the payment of dividends, if any, by us and our subsidiaries and such other factors deemed relevant.

On May 4, 2023, we declared a quarterly dividend on our common stock in the amount of $0.57 per share. This dividend will be payable on May 25, 2023 to stockholders of record at the close of business on May 15, 2023.

### Critical Accounting Estimates

A complete discussion of our critical accounting estimates is included in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022. There were no changes to the Company’s accounting estimates for the three months ended March 31, 2023.

### Recently Issued Accounting Pronouncements

See discussion of Recently Issued Accounting Pronouncements in Note 2 of the condensed consolidated financial statements.

## Market risk

As filed, 2,248 characters.

In the normal course of our business, we are exposed to risk as a result of changes in interest and currency rates,

securities markets and other general economic conditions which may have an adverse impact on the value of our assets under management and our seed investments. The majority of our revenue is derived from investment advisory and administration fees which are based on average assets under management. Accordingly, where there are changes in the value of the assets we manage as a result of market fluctuations, our revenue and the value of our seed investments may change.

The economic environment may also preclude us from increasing the assets we manage in closed-end funds. The

market conditions for these offerings may not be as favorable in the future, which could adversely impact our ability to grow

the assets we manage. Depending on market conditions, the closed-end funds we manage may increase or decrease their leverage in order to maintain the funds’ target leverage ratios, thereby increasing or decreasing the assets we manage.

### Corporate Seed investments—net

Our seed investments are comprised of both liquid and illiquid holdings. Liquid seed investments are generally traded in active markets on major exchanges and can typically be liquidated within a normal settlement cycle. Illiquid seed investments are generally comprised of limited partnership interests in private real estate vehicles for which there may be contractual restrictions on redemption.

Our seed investments are subject to market risk. We may mitigate this risk by entering into derivative contracts designed to hedge certain portions of our risk. The following table summarizes the effect of a ten percent increase or decrease on the carrying value of our seed investments, which are presented net of noncontrolling interests, if any, as of March 31, 2023 (in thousands):

|  | Carrying Value | Notional Value - Hedges | Net Carrying Value | Net Carrying Value Assuming a 10% increase | Net Carrying Value Assuming a 10% decrease |
| --- | ---: | ---: | ---: | ---: | ---: |
| Liquid seed investments—net | $68,685 | $(40,520) | $28,165 | $30,982 | $25,349 |
| Illiquid seed investments—net | $19,572 | $— | $19,572 | $21,529 | $17,615 |

## Controls and procedures

As filed, 861 characters.

### Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during the three months ended March 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

### Disclosure Controls and Procedures

Under the direction of our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective.

## Risk factors

As filed, 305 characters.

For a discussion of the potential risks and uncertainties associated with our business, please see Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 (the Form 10-K). There have been no material changes to the risk factors disclosed in Part 1, Item 1A of the Form 10-K.

Filed May 5, 2023.
Source: SEC EDGAR, the filing index for accession 0001284812-23-000159. Last ingested by Listed: Nov 6, 2026, 12:11 ET. No prices; not investment advice.