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Cohen & Company Inc. (COHN) reported a notable financial turnaround in the first quarter of 2025, achieving a net income of $300,000, or $0.19 per fully diluted share. This marks a significant improvement from the net loss of $2 million in the previous quarter. Despite the positive earnings, the company’s stock remained unchanged at $8.50, reflecting a neutral investor sentiment. The firm continues to navigate challenges in the SPAC market while maintaining its focus on investment banking and capital markets.
Key Takeaways
- Cohen & Co achieved a net income of $300,000, reversing a prior quarter loss.
- The company launched a new SPAC-focused equity trading desk.
- Total equity decreased to $85.7 million, down from $90.3 million at year-end.
- No change in stock price following the earnings report.
Company Performance
Cohen & Co’s first-quarter results highlight a significant recovery from the previous quarter’s losses. The company’s strategic focus on SPAC-related activities and investment banking has begun to show positive results. However, challenges persist, particularly with mark-to-market issues in its principal investing portfolio. The firm’s expansion in capital markets and the launch of a new equity trading desk signal a strategic pivot aimed at capturing more opportunities in the SPAC sector.
Financial Highlights
- Net Income: $300,000 (compared to a $2 million loss in the prior quarter)
- Adjusted Pretax Income: $1.3 million
- Total Equity: $85.7 million (down from $90.3 million at year-end)
- Corporate Indebtedness: $35 million
- New Issue and Advisory Revenue: $33.2 million (up by $23.2 million from the prior quarter)
- Net Trading Revenue: $9.2 million
- Principal Transactions Revenue: -$15.7 million
Outlook & Guidance
Cohen & Co remains optimistic about its future earnings potential, with a continued commitment to enhancing long-term stockholder value. The company plans to evaluate its dividend policy quarterly, maintaining a disciplined execution strategy to navigate the challenging SPAC market environment.
Executive Commentary
CEO Lester Rothman expressed confidence in the company’s trajectory, stating, "We are encouraged by our first-quarter results and remain focused on disciplined execution." His remarks underline the firm’s strategic initiatives to strengthen its position in the investment banking sector.
Risks and Challenges
- Continued volatility in the SPAC market could impact future earnings.
- Mark-to-market challenges in the principal investing portfolio pose financial risks.
- Decline in equity value of post-business combination SPACs may affect investor confidence.
- Corporate indebtedness remains a concern with potential interest rate implications.
Cohen & Co’s first quarter demonstrates a promising recovery, yet the company must remain vigilant in addressing ongoing market challenges and financial risks.
Full transcript - Cohen & Company Inc (COHN) Q1 2025:
Rob, Operator/Conference Moderator: Good morning, ladies and gentlemen, and welcome to the Cohen Companies First Quarter twenty twenty five Earnings Call. My name is Rob, and I’ll be your operator for today. Before we begin, Cohen and 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. 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. 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.
Cohen and Company advises you to read the note regarding forward looking statements in its earnings release and in its most recent annual report on Form 10 ks filed with the SEC. Earlier today, Cohen and Company issued a press release announcing first quarter twenty twenty five financial results. Today’s discussion is complementary to that press release, which is available on the company’s website at cohenandcompany.com. 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. The company’s remarks may also include certain non GAAP financial measures that management believes are meaningful when evaluating the company’s performance.
A reconciliation of these non GAAP financial measures to the comparable GAAP measures is provided in the company’s earnings release. After the prepared remarks, the call will be opened up for questions. I would now like to turn the call over to Mr. Lester Rothman, Chief Executive Officer of Cowen and Company.
Lester Rothman, Chief Executive Officer, Cohen and Company: Thank you, and thank you, everyone, for joining us for our first quarter twenty twenty five earnings call. With me on the call is Joe Pooler, our CFO. We are encouraged by our first quarter results, reflecting strong performance from our full service boutique investment banking operation, Cohen and Company Capital Markets, or CCM, which generated $20,100,000 of net revenue. Also in April of this year, after the end of the first quarter, we expanded our platform with the launch of a new SPAC focused equity trading desk, creating synergistic opportunity to build on CCM’s momentum and further its 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 growth.
We remain confident in our future earnings potential and committed to enhancing long term sustained value for our stockholders through continued return of capital, including our quarterly dividend. Now I will turn the call over to Joe to walk through this quarter’s financial highlights in more detail.
Joe Pooler, Chief Financial Officer, Cohen and Company: Thank you, Lester. I will begin with a discussion of our operating results for the quarter. Our net income attributable to Cohen and Company Inc. Shareholders was $300,000 for the quarter or zero one nine dollars per fully diluted share compared to net loss of $2,000,000 for the prior quarter or $1.21 per fully diluted share and net income of $2,000,000 for the prior year quarter or $1.28 per fully diluted share. Our adjusted pretax income was $1,300,000 for the quarter compared to adjusted pretax loss of $7,700,000 for the prior quarter and adjusted pretax income of $7,700,000 for the prior year quarter.
As a reminder, adjusted pretax income or loss is a key earnings measurement for us as it incorporates the enterprise earnings attributable to our convertible non controlling interest, which is substantially held by our Founder and Chairman, Daniel Cohen. Daniel holds his interest in the enterprise through the primary operating subsidiary, Cowen and Company LLC, which is a consolidated subsidiary of Cowen and Company Inc. New Issue and Advisory revenue was $33,200,000 in the first quarter, an increase of $23,200,000 from the prior quarter and an increase of $8,900,000 from the year ago quarter. All of our new issue and advisory revenue came from our CCM business. A substantial portion of CCM’s new issue and advisory revenue came from SPAC M and A and SPAC IPO transactions.
CCM’s new issue revenue was offset by $13,100,000 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. These financial instruments are included in other investments at fair value balance sheets. During the quarter, these financial instruments have been marked down resulting in CPM’s thirteen point one million dollars of negative principal transactions. Net trading revenue came in at $9,200,000 in the quarter, up $300,000 from the prior quarter and down $600,000 from the first quarter of twenty twenty four.
Our asset management revenue totaled $2,000,000 in the quarter, which was down slightly from the prior quarter and down $700,000 from the prior year quarter. Total first quarter principal transactions and other revenue was negative $15,700,000 primarily due to the $13,100,000 of losses related to previously received consideration by CCM, but also from principal losses related to our ongoing involvement in the SPAC market outside of CCM as an asset manager or investor. Our involvement in the SPAC market inside of CCM and outside of CCM has led to increased holdings of public equity positions in post business combination companies. Equity value of post business combination SPACs in many cases has continued to decline leading the shares we received to decrease in value negatively impacting both the principal transactions and the income from equity method affiliates line items in our statement of operations. Compensation and benefits expense for the first quarter was $21,700,000 which was up from both prior quarters, primarily due to fluctuations in revenue, income from equity method affiliates and the related variable incentive compensation impacts.
The number of company employees was 117 as of the end of the quarter compared to 113 at the end of the year. Net interest expense for the first quarter of twenty twenty five was $1,400,000 including $1,140,000 on our two trust preferred debt instruments, dollars 285,000 on our senior promissory notes and $18,000 on our credit lines. Income from equity method affiliates during the first quarter totaled $2,400,000 In terms of our balance sheet, at the end of the quarter total equity was $85,700,000 compared to $90,300,000 as of the end of the year. The non convertible non controlling interest component of total equity was $8,400,000 at the end of the quarter and $11,500,000 at the end of the year. Thus, the total enterprise equity excluding the non convertible non controlling interest component was $77,300,000 at the end of the quarter, a $1,500,000 decrease from $78,800,000 at the end of the year.
At the end of the quarter, corporate indebtedness was carried at $35,000,000 As Lester mentioned, we declared a quarterly dividend of $0.25 per share payable on June 2 to stockholders of record as of May 16. The Board of Directors will continue to evaluate dividend policy each quarter and future decisions regarding dividends may be impacted by quarterly operating results and the company’s capital needs. With that, I’ll turn it back over to Lester.
Lester Rothman, Chief Executive Officer, Cohen and Company: 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 to Cohen 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 off line investor question to Joe Pooler at (215) 701-8952 or via e mail to investorrelationscohencompany dot com. The 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.
Rob, Operator/Conference Moderator: Thank you. We’ll now be conducting a question and answer session. Session. Thank you. There are no questions at this time.
I’d like to turn the floor back to management for further remarks.
Lester Rothman, Chief Executive Officer, Cohen and Company: Okay. Well, thanks everyone for joining us today and we look forward to reconvening at our on our next quarterly call. You guys have a good weekend. Thank you.
Rob, Operator/Conference Moderator: This will conclude today’s conference. Thank you for your participation. You may now disconnect your lines at this time.
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