PHILADELPHIA and NEW YORK, Aug. 02, 2023 (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 second quarter ended June 30, 2023.
Summary Operating Results
| Three Months Ended | Six Months Ended | ||||||||||||||||||
| ($ in thousands) | 6/30/23 | 3/31/23 | 6/30/22 | 6/30/23 | 6/30/22 | ||||||||||||||
| Net trading | $ | 7,416 | $ | 8,210 | $ | 10,377 | $ | 15,626 | $ | 22,399 | |||||||||
| Asset management | 1,605 | 2,025 | 1,898 | 3,630 | 3,787 | ||||||||||||||
| New issue and advisory | 1,395 | 900 | 3,481 | 2,295 | 7,251 | ||||||||||||||
| Principal transactions and other revenue | 12,156 | (2,311 | ) | (6,602 | ) | 9,845 | (24,965 | ) | |||||||||||
| Total revenues | 22,572 | 8,824 | 9,154 | 31,396 | 8,472 | ||||||||||||||
| Compensation and benefits | 10,001 | 10,537 | 12,214 | 20,538 | 26,093 | ||||||||||||||
| Non-compensation operating expenses | 5,572 | 5,770 | 5,102 | 11,342 | 10,419 | ||||||||||||||
| Operating income | 6,999 | (7,483 | ) | (8,162 | ) | (484 | ) | (28,040 | ) | ||||||||||
| Interest expense, net | (1,630 | ) | (1,592 | ) | (1,106 | ) | (3,222 | ) | (2,457 | ) | |||||||||
| Income (loss) from equity method affiliates | (511 | ) | (395 | ) | (3,044 | ) | (906 | ) | (15,148 | ) | |||||||||
| Income (loss) before income tax expense (benefit) | 4,858 | (9,470 | ) | (12,312 | ) | (4,612 | ) | (45,645 | ) | ||||||||||
| Income tax expense (benefit) | 5,550 | 584 | (60 | ) | 6,134 | 1,773 | |||||||||||||
| Net income (loss) | (692 | ) | (10,054 | ) | (12,252 | ) | (10,746 | ) | (47,418 | ) | |||||||||
| Less: Net income (loss) attributable to the non-convertible non-controlling interest | 6,503 | 97 | (4,167 | ) | 6,600 | (18,871 | ) | ||||||||||||
| Enterprise net income (loss) | (7,195 | ) | (10,151 | ) | (8,085 | ) | (17,346 | ) | (28,547 | ) | |||||||||
| Less: Net income (loss) attributable to the convertible non-controlling interest | (594 | ) | (7,514 | ) | (6,228 | ) | (8,108 | ) | (19,078 | ) | |||||||||
| Net income (loss) attributable to Cohen & Company Inc. | $ | (6,601 | ) | $ | (2,637 | ) | $ | (1,857 | ) | $ | (9,238 | ) | $ | (9,469 | ) | ||||
| Fully diluted net income (loss) per share | $ | (4.34 | ) | $ | (1.77 | ) | $ | (1.53 | ) | $ | (6.14 | ) | $ | (6.71 | ) | ||||
| Adjusted pre-tax income (loss) | $ | (1,645 | ) | $ | (9,567 | ) | $ | (8,145 | ) | $ | (11,212 | ) | $ | (26,774 | ) | ||||
| Fully diluted adjusted pre-tax income (loss) per share | $ | (0.30 | ) | $ | (1.74 | ) | $ | (1.51 | ) | $ | (2.03 | ) | $ | (4.91 | ) | ||||
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, “Our principal investing segment recovered, while net trading and new issue and advisory revenue remained relatively stagnant during the second quarter. Our team of bankers and originators continue to build our pipeline, which we expect will drive higher revenue in the near term. As we continue to make progress on our pipeline, we are pleased to have already closed approximately $5 million of new issue and advisory revenue to-date in the third quarter. As always, we remain focused on enhancing stockholder value, and are optimistic about the future as evidenced by our continued payment of our quarterly dividend.”
Financial Highlights
- Net loss attributable to Cohen & Company Inc. was $6.6 million, or $4.34 per diluted share, for the three months ended June 30, 2023, compared to net loss of $2.6 million, or $1.77 per diluted share, for the three months ended March 31, 2023, and net loss of $1.9 million, or $1.53 per diluted share, for the three months ended June 30, 2022. Adjusted pre-tax loss was $1.6 million, or $0.30 per diluted share, for the three months ended June 30, 2023, compared to adjusted pre-tax loss of $9.6 million, or $1.74 per diluted share, for the three months ended March 31, 2023, and adjusted pre-tax loss of $8.1 million, or $1.51 per diluted share, for the three months ended June 30, 2022. 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 $22.6 million for the three months ended June 30, 2023, compared to $8.8 million for the prior quarter and $9.2 million for the prior year quarter.
- Net trading revenue was $7.4 million for the three months ended June 30, 2023, down $0.8 million from the prior quarter and $3.0 million from the prior year quarter. The decrease from the prior quarter was due primarily to lower trading revenue by our corporate, agency, municipal, and treasury groups, and the decrease from the prior year quarter was due primarily to lower trading revenue by our mortgage group.
- Asset management revenue was $1.6 million for the three months ended June 30, 2023, down $0.4 million from the prior quarter and $0.3 million from the prior year quarter. The decrease from both prior quarters was due primarily to no revenue being earned by the manager of the Company’s SPAC fund in the current quarter, as a result of SPAC fund investors redeeming all of their interests in the SPAC fund at the end of the first quarter of 2023.
- New issue and advisory revenue was $1.4 million for the three months ended June 30, 2023, up $0.5 million from the prior quarter and down $2.1 million from the prior year quarter. In the current quarter, the Cohen & Company Capital Markets investment banking team generated $0.9 million and the U.S. insurance origination team generated $0.5 million of the new issue and advisory revenue.
- Principal transactions and other revenue was $12.2 million for the three months ended June 30, 2023, compared to negative $2.3 million in the prior quarter and negative $6.6 million in the prior year quarter.
- Compensation and benefits expense during the three months ended June 30, 2023 decreased $0.5 million from the prior quarter and $2.2 million from the prior year quarter. The number of Company employees was 117 as of June 30, 2023, compared to 121 as of March 31, 2023, and 121 as of June 30, 2022.
- Interest expense during the three months ended June 30, 2023 was comparable to the prior quarter and increased $0.5 million from the prior year quarter. The increase from the prior year quarter was primarily due to higher interest on our trust preferred securities.
- Loss from equity method affiliates for the three months ended June 30, 2023 was $0.5 million, compared to loss from equity method affiliates of $0.4 million for the prior quarter and loss from equity method affiliates of $3.0 million for the prior year quarter.
- Income tax expense for the three months ended June 30, 2023 was $5.6 million, compared to $0.6 million in the prior quarter, and income tax benefit of $0.1 million in the prior year quarter. The current quarter expense was the result of an increase to the valuation allowance applied against the Company’s net operating loss and net capital loss tax assets. 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 June 30, 2023, total equity was $81.3 million, compared to $94.0 million as of December 31, 2022; the non-convertible non-controlling interest component of total equity was $6.7 million as of June 30, 2023 and $17 thousand as of December 31, 2022. Thus, the total equity excluding the non-convertible non-controlling interest component was $74.7 million as of June 30, 2023, a $19.4 million decrease from $94.0 million as of December 31, 2022.
- The Company’s Board of Directors has declared a quarterly dividend of $0.25 per share, payable on September 1, 2023, to stockholders of record as of August 18, 2023. 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.
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 full-service boutique investment bank with a focus on mergers and acquisitions, capital markets, and SPAC advisory services. The Asset Management segment manages assets through collateralized debt obligations, managed accounts, and investment funds. As of June 30, 2023, the Company managed approximately $2.1 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.
