Net Income Attributable to
Adjusted Pre-Tax income of
Board Declares Quarterly Dividend of
Summary Operating Results | |||||||||||
Three Months Ended | |||||||||||
($ in thousands) | |||||||||||
Net trading | $ | 9,848 | $ | 7,809 | $ | 8,210 | |||||
Asset management | 2,717 | 1,919 | 2,025 | ||||||||
New issue and advisory | 24,388 | 18,722 | 900 | ||||||||
Principal transactions and other revenue | (18,389 | ) | 6,014 | (2,311 | ) | ||||||
Total revenues | 18,564 | 34,464 | 8,824 | ||||||||
Compensation and benefits | 14,839 | 16,335 | 10,537 | ||||||||
Non-compensation operating expenses | 7,100 | 6,680 | 5,770 | ||||||||
- | - | - | |||||||||
Operating income (loss) | (3,375 | ) | 11,449 | (7,483 | ) | ||||||
Interest expense, net | (1,666 | ) | (1,619 | ) | (1,592 | ) | |||||
Other non-operating income | - | - | - | ||||||||
Income (loss) from equity method affiliates | 29,045 | 17,217 | (395 | ) | |||||||
Income (loss) before income tax expense (benefit) | 24,004 | 27,047 | (9,470 | ) | |||||||
Income tax expense (benefit) | 498 | 166 | 584 | ||||||||
Net income (loss) | 23,506 | 26,881 | (10,054 | ) | |||||||
Less: Net income (loss) attributable to the non-convertible non-controlling interest | 16,270 | 11,054 | 97 | ||||||||
Enterprise net income (loss) | 7,236 | 15,827 | (10,151 | ) | |||||||
Less: Net income (loss) attributable to the convertible non-controlling interest | 5,213 | 11,279 | (7,514 | ) | |||||||
Net income (loss) attributable to | $ | 2,023 | $ | 4,548 | $ | (2,637 | ) | ||||
Fully diluted net income (loss) per share | $ | 1.28 | $ | 2.97 | $ | (1.77 | ) | ||||
Adjusted pre-tax income (loss) (1) | $ | 7,734 | $ | 15,993 | $ | (9,567 | ) | ||||
Fully diluted adjusted pre-tax income (loss) per share | $ | 1.37 | $ | 2.88 | $ | (1.74 | ) | ||||
(1) Adjusted pre-tax income (loss) is not a measure recognized under | |||||||||||
“Despite the on-going challenging market environment, we continue to invest in our full-service boutique investment banking operation,
“Our net trading operations are also off to a strong start. In the first quarter, net trading revenue increased 26% from the prior quarter. In January, we announced the hiring of
“We are excited about the momentum we have built as we look to capitalize on the tremendous opportunity to grow our topline revenue and profitability. We will continue to invest prudently in revenue generating talent and additional diversification of our offerings. Moving forward, we remain focused on enhancing stockholder value, including through continued payment of our quarterly dividend.”
Financial Highlights
- Net income attributable to
Cohen & Company Inc. was$2.0 million , or$1.28 per diluted share, for the three months endedMarch 31, 2024 , compared to net income of$4.5 million , or$2.97 per diluted share, for the three months endedDecember 31, 2023 , and net loss of$2.6 million , or$1.77 per diluted share, for the three months endedMarch 31, 2023 . Adjusted pre-tax income was$7.7 million , or$1.37 per diluted share, for the three months endedMarch 31, 2024 , compared to adjusted pre-tax income of$16.0 million , or$2.88 per diluted share, for the three months endedDecember 31, 2023 , and adjusted pre-tax loss of$9.6 million , or$1.74 per diluted share, for the three months endedMarch 31, 2023 . Adjusted pre-tax income (loss) and adjusted pre-tax income (loss) per diluted share are not measures recognized under GAAP. See Note 1 below. - Revenues were
$18.6 million for the three months endedMarch 31, 2024 , compared to$34.5 million for the prior quarter and$8.8 million for the prior year quarter.- Net trading revenue was
$9.8 million for the three months endedMarch 31, 2024 , up$2.0 million from the prior quarter and up$1.6 million from the prior year quarter. The increase from both prior quarters was due primarily to higher trading revenue from our corporate and mortgage groups. - Asset management revenue was
$2.7 million for the three months endedMarch 31, 2024 , up$0.8 million from the prior quarter and up$0.7 million from the prior year quarter. The increase from both prior quarters was related primarily to a deferred performance fee in one of our European funds that was recorded in the first quarter. - New issue and advisory revenue was
$24.4 million for the three months endedMarch 31, 2024 , up$5.7 million from the prior quarter and up$23.5 million from the prior year quarter. - Principal transactions and other revenue was negative
$18.4 million for the three months endedMarch 31, 2024 , compared to positive$6.0 million in the prior quarter and negative$2.3 million in the prior year quarter. In all quarters presented, the principal transactions and other revenue was primarily due to mark-to-market adjustments on the Company’s principal investment portfolio.
- Net trading revenue was
- Compensation and benefits expense during the three months ended
March 31, 2024 decreased$1.5 million from the prior quarter and increased$4.3 million from the prior year quarter. The number of Company employees was 116 as ofMarch 31, 2024 , compared to 118 as ofDecember 31, 2023 , and 121 as ofMarch 31, 2023 . - Interest expense during the three months ended
March 31, 2024 was up slightly from the prior periods. The increase from both prior periods was primarily due to higher interest on our redeemable financial instrument, partially offset by lower interest on our trust preferred securities debt and our bank credit facility. - Income from equity method affiliates for the three months ended
March 31, 2024 was$29.0 million , compared to income from equity method affiliates of$17.2 million for the prior quarter and loss from equity method affiliates of$0.4 million for the prior year quarter. The increase in the current quarter was primarily driven by$32.7 million of income from our equity method investments in the sponsors of six special purpose acquisition companies (SPACs) that closed their business combinations during the first quarter of 2024, which resulted in an increase in value of the founder shares to which we are entitled to an allocation from the sponsors. For the three months endedMarch 31, 2024 , there was an offsetting credit recorded in the net income (loss) attributable to the non-convertible non-controlling interest line item of$16.7 million related to the six SPACs that closed their business combinations during the first quarter of 2024. - Income tax expense for the three months ended
March 31, 2024 was$0.5 million , compared to income tax expense of$0.2 million in the prior quarter, and income tax expense of$0.6 million in the prior year quarter. The Company will continue to evaluate its operations on a quarterly basis and may adjust the valuation allowance applied against the Company's net operating loss and net capital loss tax assets. Future adjustments could be material and may result in additional tax benefit or tax expense.
Total Equity and Dividend Declaration
- As of
March 31, 2024 , total equity was$113.3 million , compared to$91.8 million as ofDecember 31, 2023 ; the non-convertible non-controlling interest component of total equity was$25.9 million as ofMarch 31, 2024 and$9.6 million as ofDecember 31, 2023 . Thus, the total equity excluding the non-convertible non-controlling interest component was$87.4 million as ofMarch 31, 2024 , a$5.2 million increase from$82.2 million as ofDecember 31, 2023 . - The Company’s Board of Directors has declared a quarterly dividend of
$0.25 per share, payable onJune 5, 2024 , to stockholders of record as ofMay 20, 2024 . The Board of Directors will continue to evaluate the dividend policy each quarter, and future decisions regarding dividends may be impacted by quarterly operating results and the Company’s capital needs.
Conference Call
The Company will host a conference call at
About
Note 1: Adjusted pre-tax income (loss) and adjusted pre-tax income (loss) per share are non-GAAP measures of performance. Please see the discussion under “Non-GAAP Measures” below. Also see the tables below for the reconciliations of non-GAAP measures of performance to their corresponding GAAP measures of performance.
Forward-looking Statements
This communication contains certain statements, estimates, and forecasts with respect to future performance and events. These statements, estimates, and forecasts are “forward-looking statements.” In some cases, forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “seek,” or “continue” or the negatives thereof or variations thereon or similar terminology. All statements other than statements of historical fact included in this communication are forward-looking statements and are based on various underlying assumptions and expectations and are subject to known and unknown risks, uncertainties, and assumptions, and may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance, or achievements to differ materially from the results, level of activity, performance, or achievements expressed or implied in the forward-looking statements including, but not limited to, those discussed under the heading “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition” in our filings with the
Cautionary Note Regarding Quarterly Financial Results
Due to the nature of our business, our revenue and operating results may fluctuate materially from quarter to quarter. Accordingly, revenue and net income in any particular quarter may not be indicative of future results. Further, our employee compensation arrangements are in large part incentive-based and, therefore, will fluctuate with revenue. The amount of compensation expense recognized in any one quarter may not be indicative of such expense in future periods. As a result, we suggest that annual results may be the most meaningful gauge for investors in evaluating our business performance.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | |||||||||||||
(in thousands, except per share data) | |||||||||||||
Three Months Ended | |||||||||||||
Revenues | |||||||||||||
Net trading | $ | 9,848 | $ | 7,809 | $ | 8,210 | |||||||
Asset management | 2,717 | 1,919 | 2,025 | ||||||||||
New issue and advisory | 24,388 | 18,722 | 900 | ||||||||||
Principal transactions and other revenue | (18,389 | ) | 6,014 | (2,311 | ) | ||||||||
Total revenues | 18,564 | 34,464 | 8,824 | ||||||||||
Operating expenses | |||||||||||||
Compensation and benefits | 14,839 | 16,335 | 10,537 | ||||||||||
Business development, occupancy, equipment | 1,441 | 1,317 | 1,301 | ||||||||||
Subscriptions, clearing, and execution | 2,086 | 2,088 | 2,125 | ||||||||||
Professional services and other operating | 3,449 | 3,145 | 2,200 | ||||||||||
Depreciation and amortization | 124 | 130 | 144 | ||||||||||
Total operating expenses | 21,939 | 23,015 | 16,307 | ||||||||||
Operating income (loss) | (3,375 | ) | 11,449 | (7,483 | ) | ||||||||
Non-operating income (expense) | |||||||||||||
Interest expense, net | (1,666 | ) | (1,619 | ) | (1,592 | ) | |||||||
Income (loss) from equity method affiliates | 29,045 | 17,217 | (395 | ) | |||||||||
Income (loss) before income tax expense (benefit) | 24,004 | 27,047 | (9,470 | ) | |||||||||
Income tax expense (benefit) | 498 | 166 | 584 | ||||||||||
Net income (loss) | 23,506 | 26,881 | (10,054 | ) | |||||||||
Less: Net income (loss) attributable to the non-convertible non-controlling interest | 16,270 | 11,054 | 97 | ||||||||||
Enterprise net income (loss) | 7,236 | 15,827 | (10,151 | ) | |||||||||
Less: Net income (loss) attributable to the convertible non-controlling interest | 5,213 | 11,279 | (7,514 | ) | |||||||||
Net income (loss) attributable to | $ | 2,023 | $ | 4,548 | $ | (2,637 | ) | ||||||
Earnings per share | |||||||||||||
Basic | |||||||||||||
Net income (loss) attributable to | $ | 2,023 | $ | 4,548 | $ | (2,637 | ) | ||||||
Basic shares outstanding | 1,581 | 1,522 | 1,489 | ||||||||||
Net income (loss) attributable to | $ | 1.28 | $ | 2.99 | $ | (1.77 | ) | ||||||
Fully Diluted | |||||||||||||
Net income (loss) attributable to | $ | 2,023 | $ | 4,548 | $ | (2,637 | ) | ||||||
Net income (loss) attributable to the convertible non-controlling interest | 5,213 | - | (7,514 | ) | |||||||||
Income tax and conversion adjustment | (31 | ) | - | 435 | |||||||||
Net income (loss) attributable to | $ | 7,205 | $ | 4,548 | $ | (9,716 | ) | ||||||
Basic shares outstanding | 1,581 | 1,522 | 1,489 | ||||||||||
4,052 | - | 3,998 | |||||||||||
Additional dilutive shares | 12 | 9 | - | ||||||||||
Fully diluted shares outstanding (1) | 5,645 | 1,531 | 5,487 | ||||||||||
Fully diluted net income (loss) per share | $ | 1.28 | $ | 2.97 | $ | (1.77 | ) | ||||||
Reconciliation of adjusted pre-tax income (loss) to net income (loss) attributable to | |||||||||||||
Net income (loss) attributable to | $ | 2,023 | $ | 4,548 | $ | (2,637 | ) | ||||||
Addback (deduct): Income tax expense (benefit) | 498 | 166 | 584 | ||||||||||
Addback (deduct): Net income (loss) attributable to the convertible non-controlling interest | 5,213 | 11,279 | (7,514 | ) | |||||||||
Adjusted pre-tax income (loss) | $ | 7,734 | $ | 15,993 | $ | (9,567 | ) | ||||||
Adjusted fully diluted shares outstanding (2) | 5,645 | 5,546 | 5,505 | ||||||||||
Fully diluted adjusted pre-tax income (loss) per share | $ | 1.37 | $ | 2.88 | $ | (1.74 | ) | ||||||
(1) When the fully diluted net income (loss) per share is anti-dilutive, the basic shares outstanding are presented on this line item. | |||||||||||||
(2) Adjusted fully diluted shares outstanding includes (a) weighted average unrestricted and restricted | |||||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
(in thousands) | |||||||||
(unaudited) | |||||||||
Assets | |||||||||
Cash and cash equivalents | $ | 11,829 | $ | 10,650 | |||||
Receivables from brokers, dealers, and clearing agencies | 68,105 | 66,801 | |||||||
Due from related parties | 998 | 772 | |||||||
Other receivables | 6,784 | 5,373 | |||||||
Investments - trading | 165,903 | 181,328 | |||||||
Other investments, at fair value | 59,533 | 72,217 | |||||||
Receivables under resale agreements | 692,438 | 408,408 | |||||||
Investment in equity method affiliates | 43,281 | 14,241 | |||||||
Deferred income taxes | 1,639 | 1,580 | |||||||
109 | 109 | ||||||||
Right-of-use asset - operating leases | 7,000 | 7,541 | |||||||
Other assets | 3,706 | 3,741 | |||||||
Total assets | $ | 1,061,325 | $ | 772,761 | |||||
Liabilities | |||||||||
Payables to brokers, dealers, and clearing agencies | $ | 110,856 | $ | 111,085 | |||||
Accounts payable and other liabilities | 10,104 | 8,115 | |||||||
Accrued compensation | 13,176 | 17,268 | |||||||
Trading securities sold, not yet purchased | 57,115 | 65,751 | |||||||
Other investments sold, not yet purchased, at fair value | 20,217 | 24,742 | |||||||
Securities sold under agreements to repurchase | 690,900 | 408,203 | |||||||
Due to related parties | 437 | - | |||||||
Operating lease liability | 7,632 | 8,216 | |||||||
Redeemable financial instruments | 7,868 | 7,868 | |||||||
Debt | 29,697 | 29,716 | |||||||
Total liabilities | 948,002 | 680,964 | |||||||
Equity | |||||||||
Voting non-convertible preferred stock | 27 | 27 | |||||||
Common stock | 19 | 19 | |||||||
Additional paid-in capital | 75,314 | 74,594 | |||||||
Accumulated other comprehensive loss | (969 | ) | (944 | ) | |||||
Accumulated deficit | (30,638 | ) | (32,014 | ) | |||||
Total stockholders' equity | 43,753 | 41,682 | |||||||
Non-controlling interest | 69,570 | 50,115 | |||||||
Total equity | 113,323 | 91,797 | |||||||
Total liabilities and equity | $ | 1,061,325 | $ | 772,761 | |||||
Non-GAAP Measures
Adjusted pre-tax income (loss) and adjusted pre-tax income (loss) per diluted share
Adjusted pre-tax income (loss) is not a financial measure recognized by GAAP. Adjusted pre-tax income (loss) represents net income (loss) attributable to
We present adjusted pre-tax income (loss) and related per diluted share amounts in this release because we consider them to be useful and appropriate supplemental measures of our performance. Adjusted pre-tax income (loss) and related per diluted share amounts help us to evaluate our performance without the effects of certain GAAP calculations that may not have a direct cash or recurring impact on our current operating performance. In addition, our management uses adjusted pre-tax income (loss) and related per diluted share amounts to evaluate the performance of our enterprise operations. Adjusted pre-tax income (loss) and related per diluted share amounts, as we define them, are not necessarily comparable to similarly named measures of other companies and may not be appropriate measures for performance relative to other companies. Adjusted pre-tax income (loss) should not be assessed in isolation from or construed as a substitute for net income (loss) attributable to
Contact: | ||
Investors - | Media - | |
Executive Vice President and | 212-355-4449 | |
Chief Financial Officer | ||
215-701-8952 | ||
investorrelations@cohenandcompany.com | ||
Source:
2024 GlobeNewswire, Inc., source