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Cohen & Company Reports Third Quarter 2024 Financial Results

PHILADELPHIA and NEW YORK, Nov. 04, 2024 (GLOBE NEWSWIRE) — Cohen & Company Inc. (NYSE American: COHN), a financial services firm specializing in an expanding range of capital markets and asset management services, today reported financial results for its third quarter ended September 30, 2024.

Summary Operating Results

    Three Months Ended   Nine Months Ended
($ in thousands) 9/30/24   6/30/24   9/30/23   9/30/24   9/30/23
                   
Net trading $ 8,816     $ 8,798     $ 7,491     $ 27,462     $ 23,117  
Asset management   2,147       2,078       1,788       6,942       5,418  
New issue and advisory   22,459       6,500       7,247       53,347       9,542  
Principal transactions and other revenue   (1,727 )     (6,578 )     595       (26,694 )     10,440  
Total revenues   31,695       10,798       17,121       61,057       48,517  
                                       
Compensation and benefits   17,915       10,699       15,219       43,453       35,757  
Non-compensation operating expenses   6,558       6,466       6,006       20,124       17,348  
Operating income (loss)   7,222       (6,367 )     (4,104 )     (2,520 )     (4,588 )
                                       
Interest expense, net   (1,256 )     (1,425 )     (1,685 )     (4,347 )     (4,907 )
Income (loss) from equity method affiliates   (683 )     (5,996 )     (702 )     22,366       (1,608 )
Income (loss) before income tax expense (benefit)   5,283       (13,788 )     (6,491 )     15,499       (11,103 )
                                       
Income tax expense (benefit)   142       (205 )     (755 )     435       5,379  
Net income (loss)   5,141       (13,583 )     (5,736 )     15,064       (16,482 )
Less: Net income (loss) attributable to the non-convertible non-controlling interest   (2,455 )     (5,206 )     1,936       8,609       8,536  
Enterprise net income (loss)   7,596       (8,377 )     (7,672 )     6,455       (25,018 )
Less: Net income (loss) attributable to the convertible non-controlling interest   5,446       (6,028 )     (7,249 )     4,631       (15,357 )
Net income (loss) attributable to Cohen & Company Inc. $ 2,150     $ (2,349 )   $ (423 )   $ 1,824     $ (9,661 )
Fully diluted net income (loss) per share $ 1.31     $ (1.47 )   $ (0.28 )   $ 1.12     $ (6.40 )
                   

(1)   Adjusted pre-tax income (loss) is not a measure recognized under U.S. generally accepted accounting principles (“GAAP”). See Note 1 below.

Lester Brafman, Chief Executive Officer of Cohen & Company, said, “The positive trends for the first half of the year extended into the third quarter with strong execution and continued momentum from Cohen & Company Capital Markets (“CCM”), our full-service boutique investment banking operation. We are proud to report that CCM generated $21.4 million of advisory revenue and acted as lead bookrunner on one SPAC IPO. CCM’s pipeline remains robust and we expect consistent production from CCM through the end of the year.”

“The Company’s performance at the adjusted pre-tax income (loss) line has improved by $26.5 million year-to-date versus 2023, despite the impact of ongoing unfavorable mark-to-market adjustments on our principal investing portfolio. We remain confident about our future earnings potential and are focused on enhancing long-term, sustained value for our stockholders, including through continued payment of our quarterly dividend.”

Financial Highlights

Total Equity and Dividend Declaration

Conference Call

The Company will host a conference call at 10:00 a.m. Eastern Time (ET), today, November 4, 2024, 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) 524-8416 (domestic) or +1 (412) 902-1028 (international). A replay of the call will be available for three days following the call by dialing (877) 660-6853 or (201) 612-7415, with participant passcode 13749865.

About Cohen & Company

Cohen & Company is a financial services company specializing in 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 gestation 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) S.A. in Europe. A division of JVB, Cohen & Company Capital Markets is the Company’s leading boutique investment bank that provides innovative strategic and financial advice in M&A, capital markets, and SPAC advisory. The Asset Management segment manages assets through collateralized debt obligations, managed accounts, and investment funds. As of September 30, 2024, 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. 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 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, including those caused by inflation, raising interest rates, and the current geopolitical situation, (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, (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 Company’s 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 Company’s reduction in the volume of its investments into SPACs, (n) the difficulty in identifying potential business combinations as a result of increased competition in the SPAC market, (o) the value of the Company’s holdings of founders shares in post-business combination companies is volatile and may decline and the possibility that significant portions of the founder shares may remain restricted for a long period of time, (p) the possibility that the Company will stop paying quarterly dividends to its stockholders, and (q) the impacts of rising interest rates and inflation. 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   Nine Months Ended    
    9/30/24   6/30/24   9/30/23   9/30/24   9/30/23    
  Revenues                      
  Net trading $ 8,816     $ 8,798     $ 7,491     $ 27,462     $ 23,117      
  Asset management   2,147       2,078       1,788       6,942       5,418      
  New issue and advisory   22,459       6,500       7,247       53,347       9,542      
  Principal transactions and other revenue   (1,727 )     (6,578 )     595       (26,694 )     10,440      
  Total revenues   31,695       10,798       17,121       61,057       48,517      
                         
  Operating expenses                      
                         
  Compensation and benefits   17,915       10,699       15,219       43,453       35,757      
  Business development, occupancy, equipment   1,567       1,591       1,268       4,599       3,887      
  Subscriptions, clearing, and execution   2,691       2,217       2,409       6,994       6,877      
  Professional services and other operating   2,156       2,533       2,189       8,138       6,151      
  Depreciation and amortization   144       125       140       393       433      
  Total operating expenses   24,473       17,165       21,225       63,577       53,105      
                                             
  Operating income (loss)   7,222       (6,367 )     (4,104 )     (2,520 )     (4,588 )    
  Non-operating income (expense)                      
  Interest expense, net   (1,256 )     (1,425 )     (1,685 )     (4,347 )     (4,907 )    
  Income (loss) from equity method affiliates   (683 )     (5,996 )     (702 )     22,366       (1,608 )    
  Income (loss) before income tax expense (benefit)   5,283       (13,788 )     (6,491 )     15,499       (11,103 )    
  Income tax expense (benefit)   142       (205 )     (755 )     435       5,379      
  Net income (loss)   5,141       (13,583 )     (5,736 )     15,064       (16,482 )    
  Less: Net income (loss) attributable to the non-convertible non-controlling interest   (2,455 )     (5,206 )     1,936       8,609       8,536      
  Enterprise net income (loss)   7,596       (8,377 )     (7,672 )     6,455       (25,018 )    
  Less: Net income (loss) attributable to the convertible non-controlling interest   5,446       (6,028 )     (7,249 )     4,631       (15,357 )    
  Net income (loss) attributable to Cohen & Company Inc. $ 2,150     $ (2,349 )   $ (423 )   $ 1,824     $ (9,661 )    
                         
Earnings per share  
  Basic                      
  Net income (loss) attributable to Cohen & Company Inc. $ 2,150     $ (2,349 )   $ (423 )   $ 1,824     $ (9,661 )    
  Basic shares outstanding   1,631       1,616       1,522       1,609       1,510      
  Net income (loss) attributable to Cohen & Company Inc. per share $ 1.32     $ (1.45 )   $ (0.28 )   $ 1.13     $ (6.40 )    
                         
  Fully Diluted                      
  Net income (loss) attributable to Cohen & Company Inc. $ 2,150     $ (2,349 )   $ (423 )   $ 1,824     $ (9,661 )    
  Net income (loss) attributable to the convertible non-controlling interest   5,446       (6,028 )     (7,249 )     4,631            
  Income tax and conversion adjustment   (17 )     18       6,114       (30 )          
  Net income (loss) attributable to Cohen & Company Inc. for fully diluted net income (loss) per share calculation $ 7,579     $ (8,359 )   $ (1,558 )   $ 6,425     $ (9,661 )    
                                             
  Basic shares outstanding   1,631       1,616       1,522       1,609       1,510      
  Unrestricted Operating LLC membership units exchangeable into COHN shares   4,062       4,066       4,014       4,060            
  Additional dilutive shares   98                   58            
  Fully diluted shares outstanding (1)   5,791       5,682       5,536       5,727       1,510      
                                             
  Fully diluted net income (loss) per share $ 1.31     $ (1.47 )   $ (0.28 )   $ 1.12     $ (6.40 )    
                         
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. $ 2,150     $ (2,349 )   $ (423 )   $ 1,824     $ (9,661 )    
  Addback (deduct): Income tax expense (benefit)   142       (205 )     (755 )     435       5,379      
  Addback (deduct): Net income (loss) attributable to the convertible non-controlling interest   5,446       (6,028 )     (7,249 )     4,631       (15,357 )    
  Adjusted pre-tax income (loss) $ 7,738     $ (8,582 )   $ (8,427 )   $ 6,890     $ (19,639 )    
                         
  Adjusted fully diluted shares outstanding (2)   5,791       5,682       5,545       5,727       5,528      
  Fully diluted adjusted pre-tax income (loss) per share $ 1.34     $ (1.51 )   $ (1.52 )   $ 1.20     $ (3.55 )    
                         
  (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 Operating LLC units exchangeable into COHN shares and (b) weighted average unrestricted and restricted shares, even during periods when the corresponding GAAP calculation of fully diluted shares outstanding above does not include them. The Operating LLC units are always included because the non-GAAP measure of performance, adjusted pre-tax income (loss), always includes net income (loss) attributable to the corresponding convertible interest.    
                         
COHEN & COMPANY INC.  
CONSOLIDATED BALANCE SHEETS  
(in thousands)  
             
    September 30, 2024        
    (unaudited)   December 31, 2023  
  Assets          
  Cash and cash equivalents $ 14,290     $ 10,650      
  Receivables from brokers, dealers, and clearing agencies   64,965       66,801      
  Due from related parties   932       772      
  Other receivables   11,079       5,373      
  Investments – trading   103,617       181,328      
  Other investments, at fair value   39,761       72,217      
  Receivables under resale agreements   543,783       408,408      
  Investment in equity method affiliates   26,153       14,241      
  Deferred income taxes   1,685       1,580      
  Goodwill   109       109      
  Right-of-use asset – operating leases   7,193       7,541      
  Other assets   4,444       3,741      
  Total assets $ 818,011     $ 772,761      
             
  Liabilities          
  Payables to brokers, dealers, and clearing agencies $ 53,674     $ 111,085      
  Accounts payable and other liabilities   7,474       8,115      
  Accrued compensation   21,453       17,268      
  Trading securities sold, not yet purchased   43,446       65,751      
  Other investments sold, not yet purchased, at fair value   2,719       24,742      
  Securities sold under agreements to repurchase   545,993       408,203      
  Operating lease liability   7,776       8,216      
  Redeemable financial instruments         7,868      
  Debt   34,851       29,716      
  Total liabilities   717,386       680,964      
             
  Equity          
  Voting non-convertible preferred stock   27       27      
  Common stock   19       19      
  Additional paid-in capital   76,323       74,594      
  Accumulated other comprehensive loss   (948 )     (944 )    
  Accumulated deficit   (31,655 )     (32,014 )    
  Total stockholders’ equity   43,766       41,682      
  Non-controlling interest   56,859       50,115      
  Total equity   100,625       91,797      
  Total liabilities and equity $ 818,011     $ 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 Cohen & Company Inc., computed in accordance with GAAP, excluding income tax expense (benefit), plus the net income (loss) attributable to the convertible non-controlling interest. 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 (loss) 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) attributable to Cohen & Company Inc. 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. Joseph Sala or Zach Genirs
Executive Vice President and 212-355-4449
Chief Financial Officer  
215-701-8952  
investorrelations@cohenandcompany.com  


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