U.S. Markets open in 6 hrs 13 mins
  • S&P Futures

    4,397.50
    +3.75 (+0.09%)
     
  • Dow Futures

    34,913.00
    +79.00 (+0.23%)
     
  • Nasdaq Futures

    15,003.75
    -7.75 (-0.05%)
     
  • Russell 2000 Futures

    2,233.50
    +12.80 (+0.58%)
     
  • Crude Oil

    72.98
    +0.59 (+0.82%)
     
  • Gold

    1,818.80
    +19.10 (+1.06%)
     
  • Silver

    25.41
    +0.53 (+2.12%)
     
  • EUR/USD

    1.1872
    +0.0025 (+0.2137%)
     
  • 10-Yr Bond

    1.2610
    0.0000 (0.00%)
     
  • Vix

    18.31
    -1.05 (-5.42%)
     
  • GBP/USD

    1.3949
    +0.0040 (+0.2901%)
     
  • USD/JPY

    109.8230
    -0.0870 (-0.0792%)
     
  • BTC-USD

    40,037.04
    +333.42 (+0.84%)
     
  • CMC Crypto 200

    938.08
    +8.15 (+0.88%)
     
  • FTSE 100

    7,044.40
    +27.77 (+0.40%)
     
  • Nikkei 225

    27,782.42
    +200.76 (+0.73%)
     

Cohen & Company Reports Third Quarter 2019 Financial Results

PHILADELPHIA and NEW YORK, Oct. 30, 2019 (GLOBE NEWSWIRE) -- Cohen & Company Inc. (NYSE American: COHN), a financial services firm specializing in fixed income markets, today reported financial results for its third quarter ended September 30, 2019.

Summary Operating Results

Three Months Ended

Nine Months Ended

($ in thousands)

9/30/19

6/30/19

9/30/18

9/30/19

9/30/18

Total revenues

$

11,267

$

11,169

$

12,237

$

33,576

$

33,765

Compensation and benefits

7,017

6,432

7,177

19,813

18,960

Non-compensation operating expenses

4,693

4,219

4,704

13,756

13,434

Operating income

(443

)

518

356

7

1,371

Interest expense, net

(1,536

)

(1,939

)

(2,185

)

(5,329

)

(6,205

)

Income (loss) from equity method affiliates

(109

)

(248

)

-

(365

)

-

Income (loss) before income tax expense (benefit)

(2,088

)

(1,669

)

(1,829

)

(5,687

)

(4,834

)

Income tax expense (benefit)

(170

)

(641

)

(595

)

(917

)

(1,259

)

Net income (loss)

(1,918

)

(1,028

)

(1,234

)

(4,770

)

(3,575

)

Less: Net income (loss) attributable to the noncontrolling interest

(702

)

(618

)

(583

)

(1,942

)

(1,530

)

Net income (loss) attributable to Cohen & Company Inc.

$

(1,216

)

$

(410

)

$

(651

)

$

(2,828

)

$

(2,045

)

Fully diluted net income (loss) per share

$

(1.06

)

$

(0.36

)

$

(0.57

)

$

(2.48

)

$

(1.76

)

  • Revenues during the three months ended September 30, 2019 increased $98 thousand from the prior quarter and decreased $1.0 million from the prior year quarter.

    • The decrease from the prior year quarter was comprised primarily of (i) a decrease of $2.1 million in principal transactions due to less revenue from the Company’s CLO and other equity investments and (ii) a decrease of $800 thousand in asset management revenue due primarily to one-time incentive fees received from our European accounts in the prior-year quarter; partially offset by (iii) an increase of $1.7 million in net trading from higher trading activity primarily in municipals, agencies, and mortgages and (iv) an increase of $250 thousand in new issue and advisory related to an origination fee in our US Insurance business.

  • Compensation and benefits expense as a percentage of revenue was 62% for the three months ended September 30, 2019, compared to 58% for the three months ended June 30, 2019, and 59% for the three months ended September 30, 2018. The number of Cohen & Company employees was 90 as of September 30, 2019, compared to 90 as of June 30, 2019, and 86 as of September 30, 2018.

  • Non-compensation operating expenses during the three months ended September 30, 2019 increased $474 thousand from the prior quarter and were comparable to the prior year quarter. The increase from the prior quarter was primarily due to higher professional fees and revenue-driven clearing and execution cost in the current quarter.

  • Interest expense during the three months ended September 30, 2019 decreased $403 thousand from the prior quarter and $649 thousand from the prior year quarter. The changes in both periods were due to interest on redeemable financial instruments, which is driven by certain groups’ revenue or profit.

  • Income (loss) from equity method investments relates to the Company-sponsored insurance SPAC, which completed its initial public offering in March 2019, and has eighteen months from its initial public offering to consummate a business combination.

  • As of September 30, 2019, total equity was $39.7 million, compared to $42.4 million as of December 31, 2018.

Lester Brafman, Chief Executive Officer of Cohen & Company, said, “Our third quarter performance was impacted by the shock to overnight repo funding rates in September and slower than anticipated growth from new issue revenue opportunities. While we are disappointed with our results from the quarter, we are pleased with the overall growth in our Mortgage business, as our TBA and Gestational Repo businesses have reached all-time highs in terms of volume and revenues. We continue to believe that the initiatives underway will generate long-term value for our shareholders, and we are focused on improving these results going forward.”

Conference Call

Management will hold a conference call this morning at 10:00 a.m. Eastern Time to discuss these results. The conference call will also be available via webcast. Interested parties can access the webcast by clicking the webcast link on the Company’s website 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), participant pass code 6295843, or request the Cohen & Company earnings call. A replay of the call will be available for two weeks following the call by dialing (800) 585-8367 (domestic) or (404) 537-3406 (international), participant pass code 6295843.

About Cohen & Company

Cohen & Company is a financial services company specializing in fixed income 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 Limited in Europe. The Asset Management segment manages assets through collateralized debt obligations, managed accounts, and investment funds. As of September 30, 2019, the Company managed approximately $2.7 billion in fixed income assets in a variety of asset classes including US and European trust preferred securities, subordinated debt, and corporate loans. As of September 30, 2019, 82.4% 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 that we have made for the purpose of earning an investment return rather than investments made to support our trading, matched book repo, or other capital markets business activity. For more information, please visit www.cohenandcompany.com.

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 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 European CLO will continue to be deferred or will be discontinued, and (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. 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

9/30/19

6/30/19

9/30/18

9/30/19

9/30/18

Revenues

Net trading

$

8,479

$

8,670

$

6,816

$

25,873

$

20,193

Asset management

2,018

1,745

2,818

5,765

7,827

New issue and advisory

250

-

-

250

873

Principal transactions

310

585

2,400

1,245

4,292

Other revenue

210

169

203

443

580

Total revenues

11,267

11,169

12,237

33,576

33,765

Operating expenses

Compensation and benefits

7,017

6,432

7,177

19,813

18,960

Business development, occupancy, equipment

770

895

725

2,476

2,236

Subscriptions, clearing, and execution

2,403

2,056

2,433

6,732

6,418

Professional services and other operating

1,440

1,190

1,483

4,309

4,604

Depreciation and amortization

80

78

63

239

176

Total operating expenses

11,710

10,651

11,881

33,569

32,394

Operating income (loss)

(443

)

518

356

7

1,371

Non-operating income (expense)

Interest expense, net

(1,536

)

(1,939

)

(2,185

)

(5,329

)

(6,205

)

Income (loss) from equity method affiliates

(109

)

(248

)

-

(365

)

-

Income (loss) before income tax expense (benefit)

(2,088

)

(1,669

)

(1,829

)

(5,687

)

(4,834

)

Income tax expense (benefit)

(170

)

(641

)

(595

)

(917

)

(1,259

)

Net income (loss)

(1,918

)

(1,028

)

(1,234

)

(4,770

)

(3,575

)

Less: Net income (loss) attributable to the noncontrolling interest

(702

)

(618

)

(583

)

(1,942

)

(1,530

)

Net income (loss) attributable to Cohen & Company Inc.

$

(1,216

)

$

(410

)

$

(651

)

$

(2,828

)

$

(2,045

)

Earnings per share

Basic

Net income (loss) attributable to Cohen & Company Inc.

$

(1,216

)

$

(410

)

$

(651

)

$

(2,828

)

$

(2,045

)

Basic shares outstanding

1,144

1,144

1,145

1,140

1,164

Net income (loss) attributable to Cohen & Company Inc. per share

$

(1.06

)

$

(0.36

)

$

(0.57

)

$

(2.48

)

$

(1.76

)

Fully Diluted

Net income (loss) attributable to Cohen & Company Inc.

$

(1,216

)

$

(410

)

$

(651

)

$

(2,828

)

$

(2,045

)

Net income (loss) attributable to the convertible noncontrolling interest

(645

)

(491

)

(583

)

(1,754

)

(1,530

)

Income tax and conversion adjustment

79

298

283

430

596

Enterprise net income (loss)

$

(1,782

)

$

(603

)

$

(951

)

$

(4,152

)

$

(2,979

)

Basic shares outstanding

1,144

1,144

1,145

1,140

1,164

Unrestricted Operating LLC membership units exchangeable into COHN shares

532

532

532

532

532

Fully diluted shares outstanding

1,676

1,676

1,677

1,672

1,696

Fully diluted net income (loss) per share

$

(1.06

)

$

(0.36

)

$

(0.57

)

$

(2.48

)

$

(1.76

)



COHEN & COMPANY INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

September 30, 2019

(unaudited)

December 31, 2018

Assets

Cash and cash equivalents

$

14,130

$

14,106

Receivables from brokers, dealers, and clearing agencies

99,283

129,812

Due from related parties

317

793

Other receivables

5,949

12,072

Investments - trading

243,928

301,235

Other investments, at fair value

6,892

13,768

Receivables under resale agreements

7,052,919

7,632,230

Investment in equity method affiliate

3,410

-

Goodwill

7,992

7,992

Right-of-use asset - operating leases

7,460

-

Other assets

5,142

3,621

Total assets

$

7,447,422

$

8,115,629

Liabilities

Payables to brokers, dealer, and clearing agencies

$

130,004

$

201,598

Accounts payable and other liabilities

10,682

11,452

Accrued compensation

3,664

5,254

Trading securities sold, not yet purchased

90,016

120,122

Securities sold under agreements to repurchase

7,099,614

7,671,764

Deferred income taxes

1,100

2,017

Lease liability - operating leases

8,011

-

Redeemable financial instruments

18,540

17,448

Debt

46,091

43,536

Total liabilities

7,407,722

8,073,191

Equity

Voting nonconvertible preferred stock

5

5

Common stock

12

12

Additional paid-in capital

68,949

68,591

Accumulated other comprehensive loss

(1,009

)

(908

)

Accumulated deficit

(35,293

)

(31,926

)

Total stockholders' equity

32,664

35,774

Noncontrolling interest

7,036

6,664

Total equity

39,700

42,438

Total liabilities and equity

$

7,447,422

$

8,115,629




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