Q1 2025 Cohen & Company Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to the Cohen <unk> company's first quarter 2025 earnings call.
Rob: My name is Rob and I'll be your operator for today.
Rob: Before we begin Cohen <unk> company would like to remind everyone that some of the statements. The company makes during this call may contain forward looking statements under applicable securities laws.
Rob: These statements may involve risks and uncertainties that could cause the company's actual results to differ materially from the results discussed in such forward looking statements.
Rob: The forward looking statements made during this call are made only as of the date of this call and the company undertakes no obligation to update such statements to reflect subsequent events or circumstances.
Rob: Cowen and company advises you to read the cautionary note regarding forward looking statements in its earnings release and its most recent.
Rob: Annual report on Form 10-K filed with the SEC.
Earlier today Cowen and company issued a press release announcing first quarter 2025 financial results.
Rob: Today's discussion is complementary to that press release, which is available on the company's website at Cowen and company Dot com.
Rob: This conference call is being recorded and a replay of it will be available for three days beginning shortly after the conclusion of this call.
Rob: The company's remarks May also also include certain non-GAAP financial measures that management believes are meaningful when evaluating the company's performance.
Rob: A reconciliation of these non-GAAP financial measures to the comparable GAAP measures is provided in the company's earnings release.
Rob: After the prepared remarks, the call will be opened up for questions.
Speaker Change: I would now like to turn the call over to Mr. Lesser Rosman, Chief Executive Officer of Cowen and company.
Speaker Change: Thank you and thank everyone for joining us for our first quarter 2025 earnings call with me on the call is Joe Pooler, our CFO.
Speaker Change: Yes.
Speaker Change: We are incurred.
Speaker Change: But our first quarter results, reflecting strong performance from our full service boutique investment banking operation Cohen, <unk> company capital markets, or CCM, which generated $20 1 million of net revenue.
Speaker Change: Also in April of this year after the end of the first quarter, we expanded our platform with the launch of those new spec focused equity trading desk, creating synergy synergistic opportunity to build on ccm's momentum and further insights and capabilities. Despite ongoing mark to market headwinds in our principal investing portfolio. We remain focused on disciplined execution and are well positioned for continued.
Speaker Change: No.
Speaker Change: We remain confident in our future earnings potential and committed to enhancing long term sustained value for our stockholders. The Canadian continued return of capital, including our quarterly dividend now.
Joe Pooler: Now I will turn the call over to Joe to walk through this quarters financial highlights in more detail.
Joe Pooler: Thank you Lester I will begin with a discussion of our operating results for the quarter. Our net income attributable to Cowen and company shareholders was 300000 for the quarter of 19 cents per fully diluted share compared to net loss of $2 million for the prior quarter.
Joe Pooler: <unk>.
Joe Pooler: Or $1 21 per fully diluted share and net income up $2 million for the prior year quarter or $1.28 per fully diluted share.
Joe Pooler: Our adjusted pre tax income was $1 3 million for the quarter compared to adjusted pretax loss of $7 7 million for the prior quarter and adjusted pre tax income of $7 7 million for the prior year quarter.
Speaker Change: As a reminder, adjusted pre tax income or loss is a key earnings measurement for us as it incorporates the enterprise earnings attributable to our convertible Noncontrolling interest, which is substantially held by our founder and Chairman Daniel Cohen.
Speaker Change: Daniel holds whose interest in the enterprise through the primary operating subsidiary coloring company LLC, which is a consolidated subsidiary of Cohen <unk> Company, Inc.
Speaker Change: New issue and advisory revenue was $33 2 million in the first quarter, an increase of $23 2 million from the prior quarter and an increase of $8 9 million from the year ago quarter.
Speaker Change: All of our new issue and advisory revenue came from our Ccs business.
Speaker Change: A substantial portion of Ccm's, new issue and advisory revenue came from spec M&A and spec IPO transactions.
Speaker Change: CCM new issue revenue was offset by $13 1 million of negative principal transactions revenue during the quarter. As a reminder, we have received financial instruments as consideration for advisory services provided by CCM instead of cash at times.
Speaker Change: These financial instruments are included in other investments at fair value on our consolidated balance sheets.
Speaker Change: During the quarter. These financial instruments have been marked down resulting in $13 1 million of negative principal transactions.
Speaker Change: Net trading revenue came in at $9 2 million in the quarter up 300000 from the prior quarter and down 600000 from the first quarter of 'twenty four.
Speaker Change: Our asset management revenue totaled $2 million in the quarter, which was down slightly from the prior quarter and down 700000 from the prior year quarter.
Speaker Change: Total first quarter principal transactions and other revenue was negative $15 7 million, primarily due to the $13 1 million of losses.
Speaker Change: Related to previously received consideration by CCM, but also from principal losses related to our ongoing involvement in this back market outside of six again, that's an asset manager or investor.
Speaker Change: Our involvement in the spec market inside of CCM and outside of CCM has led to increased holdings of public equity positions and post business combination companies.
Speaker Change: Equity value post business combination specs in many cases has continued to decline leading the shares we received to the decrease in value negatively impacting both the principal transactions and the income from equity method affiliates line items in our statement of operations.
Speaker Change: Compensation and benefits expense for the first quarter was $21 7 million, which was up from both prior quarters.
Speaker Change: Primarily due to fluctuations in revenue income from equity method affiliates.
Speaker Change: And the related variable incentive compensation impacts the number of company employees was 117 as at the end of the quarter compared to 113 at the end of the year.
Speaker Change: Net interest expense for the first quarter of 'twenty, five was $1 4 million, including $1. One 4 million on our two trust preferred debt instruments.
285000 on our senior promissory notes and 18000 on our credit lines.
Speaker Change: Income from equity method affiliates during the first quarter totaled $2 4 million.
Speaker Change: In terms of our balance sheet at the end of the quarter total equity was $85 7 million compared to $93 million as of the end of the year.
Speaker Change: The non convertible non controlling interest component of total equity was $8 4 million at the end of the quarter and $11 5 million at the end of the year. Thus the total enterprise equity excluding the non convertible non controlling interest component was $77 3 million.
Speaker Change: The end of the quarter of $1 5 million decrease from $78 8 million at the end of the year.
Speaker Change: At the end of the quarter consolidated corporate indebtedness was carried at $35 million.
Speaker Change: As Lester mentioned, we declared a quarterly dividend of 25 cents per share payable on June 2nd to stockholders of record as of May 16.
Speaker Change: 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 Companys capital needs.
Lester: With that I'll turn it back over to Lester.
Speaker Change: Thanks, Joe before we open the call for questions I want to take a moment to thank all of our employees for their continued hard work and dedication of Cowen and company. We remain confident in our ability to navigate the current environment execute on our strategic priorities and continue driving progress as we enhance long term value for our stockholders. Please direct any offline investor question to Joe Pooler.
Speaker Change: And 215, 701, $895, two or via E mail to Investor Relations at Cowen and company Dot Com.
Speaker Change: Contact information can also be found at the bottom of our earnings release, operator, you can now open the call lines for questions and thank you for joining us today.
Speaker Change: Thank you well now be conducting a question and answer session.
Speaker Change: I feel like I ask a question at this time. Please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue.
Speaker Change: You May press star two if you'd like to withdraw your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment, please we poll for questions.
Speaker Change: Okay.
Speaker Change: Once again the star one if you'd like to ask a question at this time.
Speaker Change: Okay.
Speaker Change: And there are no questions at this time I'd like to turn floor back to management for further remarks, okay, well, thanks, everyone for joining us today, and we look forward to.
Speaker Change: Reconvening at our next quarterly call you guys have a good weekend. Thank you.
Speaker Change: This will conclude today's conference. Thank you for your participation you may now disconnect your lines at this time.
Speaker Change: Yeah.
Speaker Change: [music].