Release Date: August 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cohen & Co Inc (COHN, Financial) generated $6.4 million in advisory revenues and acted as lead book runner for two SPAC IPOs, showcasing strong performance in its investment banking operations.
- The company has grown its Cohen & Co Inc Capital Markets (CCM) team to 24 professionals and plans to continue expanding, indicating a commitment to growth and talent acquisition.
- Cohen & Co Inc (COHN) improved its adjusted pretax loss by $10.4 million year-to-date compared to 2023, reflecting better financial management.
- The company remains confident in its future earnings potential and is focused on enhancing long-term value for stockholders, including maintaining its quarterly dividend.
- Net trading revenue increased by $1.4 million compared to the second quarter of 2023, indicating positive momentum in trading activities.
Negative Points
- Cohen & Co Inc (COHN) reported a net loss of $2.3 million for the quarter, a significant decline from the net income of $2 million in the prior quarter.
- The company's adjusted pretax loss was $8.6 million for the quarter, a reversal from the adjusted pretax income of $7.7 million in the previous quarter.
- New issue and advisory revenue decreased by $17.9 million from the first quarter, highlighting volatility and dependency on a limited number of engagements.
- Principal transactions and other revenue were negative $6.6 million, primarily due to unfavorable mark-to-market adjustments on principal investments related to SPACs.
- Equity value post-business combination SPACs continued to decline, negatively impacting the value of founder shares and investment banking considerations received.
Q & A Highlights
Q: Can you provide an overview of Cohen & Company Capital Markets' (CCM) performance and future outlook?
A: Lester Brafman, CEO, stated that CCM generated $6.4 million in advisory revenues and acted as lead book runner for two SPAC IPOs. The team has grown to 24 professionals, and there are plans to continue adding talent. The pipeline looks promising, and consistent production is expected through the end of the year.
Q: How did the unfavorable mark-to-market adjustments impact the company's financial results?
A: Joseph Pooler, CFO, explained that the second quarter results were negatively impacted by ongoing unfavorable mark-to-market adjustments on the principal investment portfolio, particularly related to SPAC market involvement. This led to a negative $6.6 million in principal transactions and other revenue.
Q: What were the key financial metrics for the second quarter?
A: The net loss attributable to Cohen & Company Inc. was $2.3 million, or $1.47 per fully diluted share. The adjusted pretax loss was $8.6 million. New issue and advisory revenue was $6.5 million, and net trading revenue was $8.8 million. Asset management revenue totaled $2.1 million.
Q: How has the company's equity and debt position changed over the quarter?
A: Total equity at the end of the quarter was $95.6 million, with non-convertible non-controlling interest at $17.1 million. Total enterprise equity excluding non-convertible non-controlling interest was $78.5 million. Consolidated indebtedness was $29.7 million, and the redeemable financial instrument was $7.9 million.
Q: What is the company's dividend policy moving forward?
A: A quarterly dividend of $0.25 per share has been declared, payable on September 5, 2024. The Board will continue to evaluate the dividend policy each quarter, considering quarterly operating results and the company's capital needs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
