COHEN & STEERS, INC. (CNS) FY 2024 MD&A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Annual Report on Form 10-K and other documents filed by us contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), which reflect management’s current views with respect to, among other things, our 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 forward-looking statements. We believe that these factors include, but are not limited to, the risks described in Item 1A. Risk Factors of this Annual Report on Form 10-K. These factors are not exhaustive and should be read in conjunction with the other cautionary statements that are included in this Annual Report on Form 10-K. We undertake 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. (CNS), a Delaware corporation formed in 2004, and its subsidiaries are collectively referred to as

the Company, we, us or our.

The following discussion includes a comparison of our results for 2024 and 2023. For a comparison of our results for 2023 and 2022, see Item 7. 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, 2023, which was filed with the SEC on February 23, 2024, and is incorporated herein by reference.

Executive Overview

General

We are a global investment manager specializing in real assets and alternative income, including listed and private 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.

Refer to Part I. Item 1 Business Overview for an overview of our business.

Macroeconomic Environment

During 2024, global economic conditions remained complex, marked by varying levels of growth across regions and recalibrations to new political administrations. Global equity and fixed income markets reflected these dynamics, with investor sentiment fluctuating in response to monetary policy developments, inflation trends and geopolitical uncertainties. Despite these challenges, we continue to see investment opportunities across our asset classes. As a global asset manager, we navigated these macroeconomic conditions by leveraging our extensive portfolio management expertise, disciplined risk management framework and prudent cost control.

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Investment Performance as of December 31, 2024

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(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)    © 2025 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 December 31, 2024. 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.

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Assets Under Management

Below is a discussion of our assets under management at December 31, 2024. For additional details, please refer to the tables on pages 24 - 27.

Assets under management at December 31, 2024 increased 3.2% to $85.8 billion from $83.1 billion at December 31, 2023. The increase was due to market appreciation of $5.4 billion, partially offset by net outflows of $171 million and distributions of $2.6 billion.

Open-end funds

Assets under management in open-end funds at December 31, 2024 increased 10.6% to $41.0 billion from $37.0 billion at December 31, 2023. The change was primarily due to:

•Net inflows of $2.8 billion including $2.7 billion into U.S. real estate

•Market appreciation of $2.4 billion including $1.2 billion from U.S. real estate and $995 million from preferred securities

•Distributions of $1.3 billion including $598 million from U.S. real estate and $520 million from preferred securities, of which $962 million was reinvested and included in net flows

Institutional accounts

Assets under management in institutional accounts at December 31, 2024 decreased 4.2% to $33.6 billion from $35.0 billion at December 31, 2023. The change was primarily due to:

Advisory:

•Net outflows of $2.2 billion including $1.9 billion from global/international real estate

•Market appreciation of $1.2 billion including $576 million from U.S. real estate and $412 million from global listed infrastructure

Japan subadvisory accounts:

•Net outflows of $563 million including $292 million from global/international real estate and $233 million from U.S. real estate

•Market appreciation of $752 million including $661 million from U.S. real estate

•Distributions of $693 million including $647 million from U.S. real estate

Subadvisory accounts excluding Japan:

•Net outflows of $211 million including $297 million from global/international real estate, partially offset by net inflows of $134 million into U.S. real estate

•Market appreciation of $242 million including $110 million from global listed infrastructure and $108 million from U.S. real estate

Closed-end funds

Assets under management in closed-end funds at December 31, 2024 increased 1.9% to $11.3 billion from $11.1 billion at December 31, 2023. The change was primarily due to:

•Net inflows of $13 million

•Market appreciation of $816 million

•Distributions of $616 million

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Assets Under Management

By Investment Vehicle

(in millions)

24

Assets Under Management - Institutional Accounts

By Account Type

(in millions)

25

Assets Under Management

By Investment Strategy

(in millions)

26

Assets Under Management

By Investment Strategy - continued

(in millions)

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Summary of Operating Results

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(1)Refer to pages 30-31 for reconciliations of U.S. GAAP to as adjusted results.

Year Ended December 31, 2024 Compared with Year Ended December 31, 2023

Revenue

Investment advisory and administration revenue increased from the year ended December 31, 2023 primarily due to higher average assets under management.

Total investment advisory and administration revenue from open-end funds compared with average assets under management implied an annual effective fee rate of 66.0 bps and 66.2 bps for the years ended December 31, 2024 and 2023, respectively.

Total investment advisory revenue from institutional accounts compared with average assets under management implied an annual effective fee rate of 38.5 bps and 37.6 bps for the years ended December 31, 2024 and 2023, respectively. Excluding performance fees of $1.4 million and $2.5 million, the implied annual effective fee rate would have been 38.1 bps and 36.8 bps for the years ended December 31, 2024 and 2023, respectively. The increase in the implied annual effective fee rate is primarily due to the shift in the mix of assets under management.

Total investment advisory and administration revenue from closed-end funds compared with average assets under management implied an annual effective fee rate of 88.7 bps and 88.8 bps for the years ended December 31, 2024 and 2023, respectively.

Expenses

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Employee compensation and benefits increased from the year ended December 31, 2023 primarily due to higher amortization of restricted stock units of $7.7 million, including $5.8 million of accelerated vesting of certain restricted

stock units. Additionally, there were increases in incentive compensation of $4.3 million and salaries of $2.7 million.

Distribution and service fee expenses increased by $3.0 million from the year ended December 31, 2023 primarily due to higher average assets under management in U.S. open-end funds.

General and administrative expenses decreased from the year ended December 31, 2023 primarily due to lower rent expense of $8.5 million related to the expiration of the lease for the Company’s prior headquarters in January 2024, partially offset by higher technology expenses of $911,000 and travel and entertainment of $748,000.

Depreciation and amortization increased from the year ended December 31, 2023 primarily due to depreciation

and amortization of fixed assets and leasehold improvements associated with the Company's current headquarters that were

placed in service in December 2023.

Operating margin for the year ended December 31, 2024 decreased to 33.4% from 33.6% for the year ended December 31, 2023.

Non-operating Income (Loss)

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(1)Represents seed investments in funds that we are required to consolidate under U.S. GAAP.

Income Taxes

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

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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 corporate seed investments. Amounts for the year ended December 31, 2022 have not been recast to conform with the current methodology as the impact was not significant.

Net Income Attributable to Common Stockholders and Diluted Earnings per Share

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(1)Represents the impact of consolidated funds and the net effect of corporate seed investment performance.

(2)Represents the impact of incremental expenses associated with the separation of certain employees.

(3)Represents the impact of lease and other expenses related to the Company's prior headquarters, for which the lease expired in January 2024. From a GAAP perspective, the Company recognized lease expense on both its prior and current headquarters as a result of overlapping lease terms.

(4)Represents costs associated with the offering of the Cohen & Steers Real Estate Opportunities and Income Fund (RLTY).

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

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

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Revenue, Expenses, Operating Income and Operating Margin

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(1)Represents the impact of incremental expenses associated with the separation of certain employees.

(2)Represents the impact of lease and other expenses related to the Company's prior headquarters, for which the lease expired in January 2024. From a GAAP perspective, the Company recognized lease expense on both its prior and current headquarters as a result of overlapping lease terms.

(3)Represents costs associated with the offering of RLTY.

Non-operating Income (Loss)

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(1)Represents the impact of consolidated funds and the net effect of corporate seed investment performance.

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

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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, U.S. Treasury securities, liquid seed investments and other current assets. Liquid assets are reduced by current liabilities (together, net liquid assets).

The table below summarizes net liquid assets:

Cash and cash equivalents

Cash and cash equivalents are on deposit with major national financial institutions and include short-term, highly liquid investments, which are readily convertible into cash.

U.S. Treasury securities

U.S. Treasury securities, recorded at fair value, are directly issued by the U.S. government and were classified as trading investments.

Liquid seed investments—net

Liquid seed investments, recorded at fair value, are generally traded in active markets on major exchanges and can typically be liquidated within a normal settlement cycle. Liquid seed investments are primarily securities held directly for the purpose of establishing performance records and the Company's economic interest in certain consolidated funds which are presented net of noncontrolling interests.

Other current assets

Other current assets primarily represent investment advisory and administration fees receivable. We perform a review of our receivables on an ongoing basis to assess collectability and, based on our analysis at December 31, 2024, no allowance for uncollectible accounts was 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 certain other liabilities and accrued expenses.

Future liquidity needs

Our business may become capital intensive over time to support growth initiatives. Potential uses of capital range from, among other things, seeding new strategies and investment vehicles, co-investing in private real estate vehicles, funding the upfront costs associated with product offerings, and making various investments to grow our firm infrastructure as our business scales. In order to provide us with the financial flexibility to pursue these opportunities, we have a $100.0 million senior unsecured revolving credit facility maturing on January 20, 2026.

In early 2025, we launched our first ETFs and made seed investments of approximately $49.8 million to support this initiative.

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On April 22, 2024, we issued 1,007,057 shares of common stock through an offering. The net proceeds, after deducting commissions and offering expenses, were approximately $68.5 million. We intend to use the net proceeds for general corporate purposes, including seeding track record strategies and investment vehicles. The offering was completed on April 22, 2024 after the issuance of the shares.

We have committed to invest up to a total of $175.0 million in certain of our investment vehicles, of which $80.0 million remained unfunded as of December 31, 2024. The timing for funding the remaining portion of our commitments is uncertain.

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 2024, cash and cash equivalents, excluding the effect of foreign exchange rate changes, decreased by $4.9 million when compared with 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 provided by operating activities was $96.7 million. Net cash used in investing activities was $119.7 million, which included the funding of $67.0 million of our $125.0 million commitment to CNSREIT and net purchases of U.S. Treasury securities held for corporate purposes of $48.1 million. Net cash provided by financing activities was $18.2 million, including net contributions from noncontrolling interests of $88.9 million and proceeds of $68.5 million from the issuance of common stock in a registered public offering, partially offset by dividends paid to stockholders of $119.2 million and repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $21.1 million.

Contractual Obligations, Commitments and Contingencies

The following table summarizes our contractual obligations at December 31, 2024:

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(1)Represents contracts that are either noncancellable or cancellable with a penalty. Our obligations primarily reflect 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. See Note 15, Income Taxes, in the notes to the consolidated financial statements included in Part IV, Item 15 of this filing.

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Investment Commitments

We have committed to invest up to a total of $175.0 million in certain of our investment vehicles. Refer to Note 14, Commitments and Contingencies, in the notes to the consolidated financial statements included in Part IV, Item 15 of this filing for further discussion.

Dividends

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

On February 20, 2025, we declared a quarterly dividend on our common stock in the amount of $0.62 per share. This dividend will be payable on March 13, 2025 to stockholders of record at the close of business on March 3, 2025.

Contingencies

Due to the uncertainty with respect to the timing of future cash flows associated with unrecognized tax benefits at December 31, 2024, the Company is unable to reasonably estimate when cash settlement with the respective taxing authorities will occur. Therefore, $1.3 million of gross unrecognized tax benefits have been excluded from the contractual obligations table above. See Note 15, Income Taxes, in the notes to the consolidated financial statements included in Part IV, Item 15 of this filing.

Net Capital Requirements

Several of our subsidiaries are subject to minimum net capital requirements by the local laws and regulations to which they are subject. As of December 31, 2024, each of our subsidiaries subject to a minimum net capital requirement satisfied the applicable requirement. See Note 12, Regulatory Requirements, in the notes to the consolidated financial statements included in Part IV, Item 15 of this filing.

Critical Accounting Estimates

The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes the estimates used in preparing the consolidated financial statements are reasonable and prudent. Actual results could differ from those estimates.

Our significant accounting policies are disclosed in Note 2, Summary of Significant Accounting Policies, in the notes to the consolidated financial statements included in Part IV, Item 15 of this filing and should be read in conjunction with the summarized information below. Management considers the following accounting estimates critical to an informed review of our consolidated financial statements as they require management to make certain judgments about matters that may be uncertain at the time the estimates were determined.

Valuation of Investments

There is no established market for private real estate investments, and there may not be any comparable public market valuations. As a result, the valuation of a private real estate investment may be based on subjective information and is subject to inherent uncertainties, and the resulting values may differ from values that would have been determined had a ready market existed for such investments, from values placed on such investments by other investors and from prices at which such investments may ultimately be sold.

We have retained an independent valuation services firm to assist in the determination of the fair value of certain of our private real estate investments. Each real property investment is valued no less than quarterly in accordance with the applicable governing documents. Limited partnerships that hold real property investments are valued using the valuation methodology we deem most appropriate and consistent with industry best practices and market conditions. We expect the primary methodology used to value real property investments will be the income approach, whereby value is derived by determining the present value of an asset’s expected stream of future cash flows (for example, discounted cash flow analysis). Consistent with industry practices, the income approach incorporates actual contractual lease income, professional judgments

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regarding comparable rental and operating expense data, the capitalization or discount rate and projections of future rent and expenses based on appropriate market evidence, and other subjective factors. Other methodologies that may also be used to value a real property investment include, among other approaches, sales comparisons and cost approaches. We monitor the real property investments for events that we believe could have a material impact on the most recent estimated fair values of such real property investments.

Income Taxes

We operate globally through our subsidiaries and therefore must allocate our income, expenses, and earnings considering various laws and regulations. Our tax provision represents an estimate of the total liability that we have incurred as a result of our global operations. The determination of our annual provision is subject to judgments and estimates and the actual results included in our annual tax returns may vary from the amounts reported in our consolidated financial statements. Accordingly, we recognize additions to, or reductions from, income tax expense as our estimated liabilities are revised, actual tax returns are filed and audits, if any, are settled. Such adjustments are recognized in the quarterly period in which they are determined.

In addition, we record current and deferred tax consequences of all transactions that have been recognized in the consolidated financial statements in accordance with the provisions of the enacted tax laws. Deferred tax assets are recognized for temporary differences that will result in deductible amounts in future years at tax rates that are expected to apply in those years. We record a valuation allowance, when necessary, to reduce deferred tax assets to an amount that more likely than not will be realized. Deferred tax liabilities are recognized for temporary differences that will result in taxable income in future years at tax rates that are expected to apply in those years.

The calculation of our tax liabilities involves uncertainties in the application of complex tax laws and regulations in several jurisdictions across our global operations. In accordance with Accounting Standards Codification Topic 740, Income Taxes (ASC 740), a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits.

We record unrecognized tax benefits as liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of these uncertainties, the ultimate resolution may differ from our current estimate of the unrecognized tax benefit liabilities. These differences are reflected as increases or decreases in income tax expense in the period in which new information becomes available.

Recently Issued Accounting Pronouncements

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

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