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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Cohen & Company Inc | AMEX:COHN | AMEX | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 7.61 | 28 | 13:17:19 |
Summary Operating Results
Three Months Ended | ||||||||||||
($ in thousands) | 3/31/21 | 12/31/20 | 3/31/20 | |||||||||
Total revenues | $ | 102,676 | $ | 66,365 | $ | 17,770 | ||||||
Compensation and benefits | 26,647 | 23,479 | 14,134 | |||||||||
Non-compensation operating expenses | 5,584 | 5,111 | 5,198 | |||||||||
Goodwill impairment | - | - | 7,883 | |||||||||
Operating income | 70,445 | 37,775 | (9,445 | ) | ||||||||
Interest expense, net | (2,014 | ) | (1,951 | ) | (2,605 | ) | ||||||
Income (loss) from equity method affiliates | (835 | ) | (244 | ) | (107 | ) | ||||||
Income (loss) before income tax expense (benefit) | 67,596 | 35,580 | (12,157 | ) | ||||||||
Income tax expense (benefit) | 868 | (8,046 | ) | (372 | ) | |||||||
Net income (loss) | 66,728 | 43,626 | (11,785 | ) | ||||||||
Less: Net income (loss) attributable to the noncontrolling interest | 57,373 | 28,875 | (8,683 | ) | ||||||||
Net income (loss) attributable to Cohen & Company Inc. | $ | 9,355 | $ | 14,751 | $ | (3,102 | ) | |||||
Fully diluted net income (loss) per share | $ | 6.98 | $ | 7.64 | $ | (2.70 | ) | |||||
Adjusted pre-tax income (loss) | $ | 37,626 | $ | 23,779 | $ | (4,114 | ) | |||||
Fully diluted adjusted pre-tax income (loss) per share | $ | 7.52 | $ | 4.64 | $ | (1.04 | ) | |||||
Lester Brafman, Chief Executive Officer of Cohen & Company, said, “We are pleased with our first quarter results as our strategic initiatives continue to generate strong returns. In the first quarter, our net trading revenue was $19.2 million thanks to strong performance from our Mortgage, Repo, and Corporate trading groups, and our Gestation Repo book grew to $4.1 billion, up from $3.3 billion at the end of 2020. Also in the quarter, our second company-sponsored SPAC, INSU Acquisition Corp. II, completed its merger with Metromile, a digital insurance platform and pay-by-mile auto insurer, contributing $33.4 million to our adjusted pre-tax income.”
Brafman continued, “We were excited to announce the hiring of several top investment bankers with broad experience in M&A advisory, private capital markets, equity capital markets and PIPE transactions. We expect that this added expertise will create another source of revenue, complement the continued growth of our SPAC franchise, and contribute to our overall operating leverage. Looking ahead, we are excited to build on our momentum as we grow our business while remaining committed to executing on our strategic priorities, with a continued focus on proactively managing our risk and capital structure, and on enhancing stockholder value.”
Conference Call
The Company will host a conference call at 11:00 a.m. Eastern Time (ET), today, May 6, 2021, to discuss these results. The conference call will be available via webcast. Interested parties can access the webcast by clicking the webcast link on the Company’s homepage at www.cohenandcompany.com. Those wishing to listen to the conference call with operator assistance can dial (877) 686-9573 (domestic) or (706) 643-6983 (international), with participant pass code 3559203, or request the Cohen & Company earnings call. A replay of the call will be available for one week following the call by dialing (800) 585-8367 or (404) 537-3406, participant pass code 3559203.
About Cohen & Company
Cohen & Company is a financial services company specializing in fixed income markets and, more recently, in SPAC markets. It was founded in 1999 as an investment firm focused on small-cap banking institutions but has grown to provide an expanding range of capital markets and asset management services. Cohen & Company’s operating segments are Capital Markets, Asset Management, and Principal Investing. The Capital Markets segment consists of fixed income sales, trading, and matched book repo financing as well as new issue placements in corporate and securitized products, and advisory services, operating primarily through Cohen & Company’s subsidiaries, J.V.B. Financial Group, LLC in the United States and Cohen & Company Financial (Europe) Limited in Europe. The Asset Management segment manages assets through collateralized debt obligations, managed accounts, and investment funds. As of March 31, 2021, the Company managed approximately $2.4 billion in primarily fixed income assets in a variety of asset classes including US and European trust preferred securities, subordinated debt, and corporate loans. As of March 31, 2021, 67.7% of the Company’s assets under management were in collateralized debt obligations that Cohen & Company manages, which were all securitized prior to 2008. The Principal Investing segment is comprised primarily of investments the Company holds related to its SPAC franchise and other investments the Company has made for the purpose of earning an investment return rather than investments made to support its trading, matched book repo, or other capital markets business activity. For more information, please visit www.cohenandcompany.com.
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 Securities and Exchange Commission (“SEC”), which are available at the SEC’s website at www.sec.gov and our website at www.cohenandcompany.com/investor-relations/sec-filings. Such risk factors include the following: (a) a decline in general economic conditions or the global financial markets, (b) losses caused by financial or other problems experienced by third parties, (c) losses due to unidentified or unanticipated risks, (d) a lack of liquidity, i.e., ready access to funds for use in our businesses, (e) the ability to attract and retain personnel, (f) litigation and regulatory issues, (g) competitive pressure, (h) an inability to generate incremental income from new or expanded businesses, (i) unanticipated market closures or effects due to inclement weather or other disasters, (j) losses (whether realized or unrealized) on our principal investments, including on our CLO investments, (k) the possibility that payments to the Company of subordinated management fees from its CDOs will continue to be deferred or will be discontinued, (l) the possibility that the stockholder rights plan may fail to preserve the value of the Company’s deferred tax assets, whether as a result of the acquisition by a person of 5% of the Company’s common stock or otherwise, (m) the possibility that Insurance SPAC III does not successfully consummate an Insurance SPAC III Business Combination, (n) a reduction in the volume of investments into SPACs; (o) the value of our holdings of founders shares in Shift and Metromile may decline and the possibility that significant portions of the founder shares may remain restricted for a long period of time; and (p) the impacts of the COVID-19 pandemic. As a result, there can be no assurance that the forward-looking statements included in this communication will prove to be accurate or correct. In light of these risks, uncertainties, and assumptions, the future performance or events described in the forward-looking statements in this communication might not occur. Accordingly, you should not rely upon forward-looking statements as a prediction of actual results and we do not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.
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.
COHEN & COMPANY INC. | ||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||||||||||||
(in thousands, except per share data) | ||||||||||||||
Three Months Ended | ||||||||||||||
3/31/21 | 12/31/20 | 3/31/20 | ||||||||||||
Revenues | ||||||||||||||
Net trading | $ | 19,183 | $ | 18,087 | $ | 18,561 | ||||||||
Asset management | 2,093 | 3,821 | 1,615 | |||||||||||
New issue and advisory | 1,839 | 1,734 | - | |||||||||||
Principal transactions and other revenue | 79,561 | 42,723 | (2,406 | ) | ||||||||||
Total revenues | 102,676 | 66,365 | 17,770 | |||||||||||
Operating expenses | ||||||||||||||
Compensation and benefits | 26,647 | 23,479 | 14,134 | |||||||||||
Business development, occupancy, equipment | 719 | 671 | 756 | |||||||||||
Subscriptions, clearing, and execution | 2,790 | 2,517 | 2,580 | |||||||||||
Professional services and other operating | 1,994 | 1,838 | 1,782 | |||||||||||
Depreciation and amortization | 81 | 85 | 80 | |||||||||||
Impairment of goodwill | - | - | 7,883 | |||||||||||
Total operating expenses | 32,231 | 28,590 | 27,215 | |||||||||||
Operating income (loss) | 70,445 | 37,775 | (9,445 | ) | ||||||||||
Non-operating income (expense) | ||||||||||||||
Interest expense, net | (2,014 | ) | (1,951 | ) | (2,605 | ) | ||||||||
Income (loss) from equity method affiliates | (835 | ) | (244 | ) | (107 | ) | ||||||||
Income (loss) before income tax expense (benefit) | 67,596 | 35,580 | (12,157 | ) | ||||||||||
Income tax expense (benefit) | 868 | (8,046 | ) | (372 | ) | |||||||||
Net income (loss) | 66,728 | 43,626 | (11,785 | ) | ||||||||||
Less: Net income (loss) attributable to the noncontrolling interest | 57,373 | 28,875 | (8,683 | ) | ||||||||||
Net income (loss) attributable to Cohen & Company Inc. | $ | 9,355 | $ | 14,751 | $ | (3,102 | ) | |||||||
Earnings per share | ||||||||||||||
Basic | ||||||||||||||
Net income (loss) attributable to Cohen & Company Inc. | $ | 9,355 | $ | 14,751 | $ | (3,102 | ) | |||||||
Basic shares outstanding | 1,034 | 1,070 | 1,147 | |||||||||||
Net income (loss) attributable to Cohen & Company Inc. per share | $ | 9.04 | $ | 13.79 | $ | (2.70 | ) | |||||||
Fully Diluted | ||||||||||||||
Net income (loss) attributable to Cohen & Company Inc. | $ | 9,355 | $ | 14,751 | $ | (3,102 | ) | |||||||
Net income (loss) attributable to the convertible non-controlling interest | 27,403 | 17,074 | (8,523 | ) | ||||||||||
Net interest attributable to convertible debt, net of taxes | 289 | 39 | - | |||||||||||
Income tax and conversion adjustment | (1,751 | ) | 7,924 | 966 | ||||||||||
Enterprise net income (loss) | $ | 35,296 | $ | 39,788 | $ | (10,659 | ) | |||||||
Basic shares outstanding | 1,034 | 1,070 | 1,147 | |||||||||||
Unrestricted Operating LLC membership units exchangeable into COHN shares | 2,838 | 2,803 | 2,794 | |||||||||||
Additional dilutive shares | 1,181 | 1,334 | - | |||||||||||
Fully diluted shares outstanding | 5,053 | 5,207 | 3,941 | |||||||||||
Fully diluted net income (loss) per share | $ | 6.98 | $ | 7.64 | $ | (2.70 | ) | |||||||
Reconciliation of adjusted pre-tax income (loss) to net income (loss) attributable to Cohen & Company Inc. and calculations of per share amounts | ||||||||||||||
Net income (loss) attributable to Cohen & Company Inc. | $ | 9,355 | $ | 14,751 | $ | (3,102 | ) | |||||||
Addback: Impairment of goodwill | - | - | 7,883 | |||||||||||
Addback (deduct): Income tax expense (benefit) | 868 | (8,046 | ) | (372 | ) | |||||||||
Addback (deduct): Net income (loss) attributable to the convertible non-controlling interest | 27,403 | 17,074 | (8,523 | ) | ||||||||||
Adjusted pre-tax income (loss) | 37,626 | 23,779 | (4,114 | ) | ||||||||||
Net interest attributable to convertible debt | 375 | 381 | - | |||||||||||
Enterprise pre-tax income (loss) for fully diluted adjusted pre-tax income (loss) per share calculation | $ | 38,001 | $ | 24,160 | $ | (4,114 | ) | |||||||
Fully diluted shares outstanding | 5,053 | 5,207 | 3,941 | |||||||||||
Fully diluted adjusted pre-tax income (loss) per share | $ | 7.52 | $ | 4.64 | $ | (1.04 | ) | |||||||
COHEN & COMPANY INC. | ||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||
(in thousands) | ||||||||||
March 31, 2021 | ||||||||||
(unaudited) | December 31, 2020 | |||||||||
Assets | ||||||||||
Cash and cash equivalents | $ | 19,471 | $ | 41,996 | ||||||
Receivables from brokers, dealers, and clearing agencies | 92,688 | 52,917 | ||||||||
Due from related parties | 603 | 2,812 | ||||||||
Other receivables | 5,736 | 3,929 | ||||||||
Investments - trading | 284,314 | 242,961 | ||||||||
Other investments, at fair value | 107,573 | 58,540 | ||||||||
Receivables under resale agreements | 7,299,538 | 5,716,343 | ||||||||
Investment in equity method affiliates | 9,136 | 13,482 | ||||||||
Deferred income taxes | 6,778 | 7,397 | ||||||||
Goodwill | 109 | 109 | ||||||||
Right-of-use asset - operating leases | 5,807 | 6,063 | ||||||||
Other assets | 3,242 | 2,830 | ||||||||
Total assets | $ | 7,834,995 | $ | 6,149,379 | ||||||
Liabilities | ||||||||||
Payables to brokers, dealers, and clearing agencies | $ | 219,946 | $ | 156,678 | ||||||
Accounts payable and other liabilities | 34,167 | 46,251 | ||||||||
Accrued compensation | 11,179 | 14,359 | ||||||||
Trading securities sold, not yet purchased | 58,727 | 44,439 | ||||||||
Other investments sold, not yet purchased | 5,490 | 7,415 | ||||||||
Securities sold under agreements to repurchase | 7,289,275 | 5,713,212 | ||||||||
Operating lease liability | 6,276 | 6,531 | ||||||||
Redeemable Financial Instruments | 7,957 | 11,957 | ||||||||
Debt | 47,306 | 47,100 | ||||||||
Total liabilities | 7,680,323 | 6,047,942 | ||||||||
Equity | ||||||||||
Voting nonconvertible preferred stock | 27 | 27 | ||||||||
Common stock | 13 | 13 | ||||||||
Additional paid-in capital | 65,351 | 65,031 | ||||||||
Accumulated other comprehensive loss | (887 | ) | (821 | ) | ||||||
Accumulated deficit | (10,993 | ) | (20,341 | ) | ||||||
Total stockholders' equity | 53,511 | 43,909 | ||||||||
Noncontrolling interest | 101,161 | 57,528 | ||||||||
Total equity | 154,672 | 101,437 | ||||||||
Total liabilities and equity | $ | 7,834,995 | $ | 6,149,379 | ||||||
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 Cohen & Company Inc., computed in accordance with GAAP, excluding impairment of goodwill and income tax expense (benefit), plus the net income (loss) attributable to the convertible non-controlling interest. Impairment of goodwill has been excluded from adjusted pre-tax income (loss) because it is a non-recurring, non-cash item. Income tax expense (benefit) has been excluded because a pre-tax measurement of enterprise earnings that includes net income (loss) attributable to the convertible non-controlling interest is a useful and appropriate measure of performance. Furthermore, our income tax expense (benefit) has been, and we expect it will continue to be, a substantially non-cash item for the foreseeable future, generated from adjustments in our valuation allowance applied to the Company’s gross deferred tax assets. Convertible non-controlling interest is added back to adjusted pre-tax income because the underlying Cohen & Company, LLC equity units are convertible into Cohen & Company Inc. shares. Adjusted pre-tax income (loss) per diluted share is calculated, by dividing adjusted pre-tax income (loss) by diluted shares outstanding, both of which include adjustments used in the corresponding calculation in accordance with GAAP.
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) prepared in accordance with GAAP. Adjusted pre-tax income (loss) is not intended to represent and should not be considered to be a more meaningful measure than, or an alternative to, measures of operating performance as determined in accordance with GAAP.
Contact: | ||
Investors - | Media - | |
Cohen & Company Inc. | Joele Frank, Wilkinson Brimmer Katcher | |
Joseph W. Pooler, Jr. | James Golden or Andrew Squire | |
Executive Vice President and | 212-355-4449 | |
Chief Financial Officer | jgolden@joelefrank.com or asquire@joelefrank.com | |
215-701-8952 | ||
investorrelations@cohenandcompany.com |
1 Year Cohen & Chart |
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