Cowen Inc. (NASDAQ: COWN) (“Cowen” or “the Company”) today
announced its operating results for the fourth quarter and full
year ended December 31, 2020.
Jeffrey M. Solomon, Chair and Chief Executive Officer of Cowen,
said, "I am proud of the dedication and hard work the Cowen team
exhibited to achieve the strongest results in the firm's history.
Because 2020 was a year of tremendous challenge, uncertainty and
hardship for many, I am equally proud of our efforts to help our
clients, our communities, and each other. We are grateful every day
to be in a position to help our clients help others by solving
their problems and enabling them to realize their visions. We are
thankful that they put their trust in us. As we look ahead to 2021,
we strive to live by our core values of vision, empathy,
sustainability and tenacious teamwork."
Fourth Quarter 2020 Financial
Summary
|
US GAAP |
|
Economic Operating Income (Non-GAAP) |
|
Three Months Ended December
31, |
|
Three Months Ended December
31, |
($ in millions, except per
share information) |
2020 |
|
2019 |
|
Δ % |
|
2020 |
|
2019 |
|
Δ % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue/Economic Proceeds (Non-GAAP) |
$ |
502.9 |
|
$ |
281.1 |
|
79 |
% |
|
$ |
512.7 |
|
$ |
248.3 |
|
106 |
% |
Net income (loss) attributable
to common stockholders/Economic Operating Income (Non-GAAP) |
$ |
90.5 |
|
$ |
3.5 |
|
2,486 |
% |
|
$ |
138.7 |
|
$ |
16.3 |
|
751 |
% |
Earnings (loss) per common
share (diluted) |
$ |
2.98 |
|
$ |
0.11 |
|
2,609 |
% |
|
$ |
4.58 |
|
$ |
0.53 |
|
764 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Note: Throughout
this press release the Company presents non-GAAP financial measures
that are not prepared in accordance with accounting principles
generally accepted in the United States of America ("US GAAP"). A
reconciliation of these non-GAAP measures appears under the
section, "Reconciliation of US GAAP (Unaudited) to Non-GAAP
Measures." |
Fourth Quarter and Full Year 2020
Operating Financial Highlights
• |
Record Investment Banking
performance: |
|
— |
Record quarter and year for overall revenues, capital markets
issuance and advisory and M&A revenues |
|
— |
Broad strength across products.
Biotech, tools & diagnostics and sustainability all key
earnings drivers |
|
— |
Record M&A proceeds driven by
several high-fee engagements. Deal pipeline now at record high
level |
|
|
|
• |
Record Brokerage performance with continuing share
gains: |
|
— |
Markets Economic Proceeds
(Non-GAAP) of $657.3 million ($2.60 million/trading day) in FY20,
with a 4Q20 record high of $188.3 million ($2.94 million/day)
(Non-GAAP).1 |
|
— |
Strong growth in electronic
trading, non-US execution, prime services, outsourced trading,
securities finance, and special situations |
|
|
|
• |
Strong momentum in investment
management: |
|
— |
Management fees at highest annual
level since 2016, four investment strategies grew AUM
year-over-year |
|
|
|
• |
Invested
capital: |
|
— |
Full-year 2020 investment income
economic proceeds (Non-GAAP) of $29.2 million from gains in balance
sheet investments including Cowen Healthcare Investments and the
Merchant Banking portfolio, including the sale of the Company's
common shares of Nikola Corporation. |
|
— |
As of December 31, 2020, the
Company had invested capital in Op Co totaling $722.8 million, down
from $784.2 million as of September 30, 2020. |
|
— |
As of December 31, 2020, the
Company had invested capital in Asset Co totaling $131.0 million,
an increase of $2.3 million from the invested capital invested as
of September 30, 2020. |
|
— |
The largest Asset Co investments
were the investment in Italian wireless broadband provider Linkem
S.p.A ($82.7 million), private equity funds Formation8/Eclipse
($39.2 million) and other private investments ($9.1 million). |
|
|
|
• |
Assets under
Management |
|
— |
As of December 31, 2020, the
Company had assets under management of $12.5 billion, up $0.7
billion from September 30, 2020 and an increase of $1.1 billion
from December 31, 2019, respectively. |
Capital Optimization Update
As of December 31, 2020, Cowen had book value of $32.34 per
common share and tangible book value per common share of $25.95, up
from book value of $30.48 and tangible book value of $24.32 at
September 30, 2020, and up from book value of $24.77 and tangible
book value of $18.72 at December 31, 2019.
In the fourth quarter of 2020, the Company repurchased $3.9
million of its common stock, or 165,040 shares, at an average price
of $23.46 under the Company's existing share repurchase program.
Outside the share repurchase program, in the fourth quarter of 2020
the Company acquired approximately $8.9 million of stock as a
result of net share settlements relating to the vesting of equity
awards, or 361,082 shares, at an average price of $24.51.
For full-year 2020, the Company repurchased 3,139,751 shares for
$47.3 million, or an average price of $15.07 under the Company's
existing share repurchase program. Outside the share repurchase
program, in 2020 the Company acquired approximately $15.1 million
of shares as a result of net share settlements relating to the
vesting of equity awards, or 866,784 shares at an average price of
$17.48.
Maintained Quarterly Cash Dividend
The Company maintained its quarterly cash dividend payable on
its common stock. On February 10, 2021, the Board of Directors
declared a cash dividend of $0.08 per common share. The dividend
will be payable on March 15, 2021, to stockholders of record on
March 1, 2021.
Select Balance Sheet Data
(Amounts in millions, except per share information) |
|
|
|
|
December 31, 2020 |
|
December 31, 2019 |
Cowen Inc. stockholders' equity |
$ |
969.5 |
|
$ |
809.9 |
Common
equity (CE) |
$ |
868.2 |
|
$ |
708.5 |
Tangible
common equity (TCE) |
$ |
696.7 |
|
$ |
535.6 |
|
|
|
|
Book
value per share (CE/CSO) |
$ |
32.34 |
|
$ |
24.77 |
Tangible
book value per share (TCE/CSO) |
$ |
25.95 |
|
$ |
18.72 |
|
|
|
|
Common
shares outstanding (CSO) |
|
26.8 |
|
|
28.6 |
|
|
|
|
Note: Common Equity (CE) is calculated as Cowen Inc,
stockholders’ equity less our preferred stock issuance.Tangible
common equity (TCE) is calculated as common equity (CE) less
goodwill and net intangible assets.
Cowen Inc. |
US GAAP Preliminary Unaudited Condensed Consolidated
Statements of Operations |
(Dollar and share amounts in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31 |
|
December 31 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenue |
|
|
|
|
|
|
|
Investment banking |
$ |
266,135 |
|
|
$ |
102,922 |
|
|
$ |
769,486 |
|
|
$ |
375,025 |
|
Brokerage |
147,479 |
|
|
99,907 |
|
|
572,548 |
|
|
402,747 |
|
Management fees |
12,304 |
|
|
11,128 |
|
|
47,515 |
|
|
32,608 |
|
Incentive income |
465 |
|
|
823 |
|
|
592 |
|
|
1,547 |
|
Interest and dividends |
59,912 |
|
|
45,067 |
|
|
187,459 |
|
|
174,913 |
|
Reimbursement from affiliates |
271 |
|
|
246 |
|
|
1,048 |
|
|
1,026 |
|
Reinsurance premiums |
11,204 |
|
|
17,267 |
|
|
30,147 |
|
|
46,335 |
|
Other |
3,912 |
|
|
2,205 |
|
|
8,621 |
|
|
5,433 |
|
Consolidated Funds revenues |
1,238 |
|
|
1,570 |
|
|
5,888 |
|
|
9,809 |
|
Total revenue |
502,920 |
|
|
281,135 |
|
|
1,623,304 |
|
|
1,049,443 |
|
Interest and dividends expense |
61,875 |
|
|
43,539 |
|
|
187,725 |
|
|
168,628 |
|
Total net revenue |
441,045 |
|
|
237,596 |
|
|
1,435,579 |
|
|
880,815 |
|
Expenses |
|
|
|
|
|
|
|
Employee compensation and benefits |
277,394 |
|
|
147,161 |
|
|
860,531 |
|
|
535,772 |
|
Reinsurance claims, commissions and amortization of deferred
acquisition costs |
12,189 |
|
|
18,931 |
|
|
33,905 |
|
|
44,070 |
|
Operating, general, administrative and other expenses |
104,890 |
|
|
84,584 |
|
|
369,840 |
|
|
335,499 |
|
Depreciation and amortization expense |
5,353 |
|
|
5,470 |
|
|
22,677 |
|
|
20,460 |
|
Goodwill impairment |
— |
|
|
— |
|
|
— |
|
|
4,100 |
|
Consolidated Funds expenses |
616 |
|
|
2,734 |
|
|
5,409 |
|
|
8,963 |
|
Total expenses |
400,442 |
|
|
258,880 |
|
|
1,292,362 |
|
|
948,864 |
|
Other income
(loss) |
|
|
|
|
|
|
|
Net (losses) gains on securities, derivatives and other
investments |
92,139 |
|
|
18,969 |
|
|
175,877 |
|
|
80,409 |
|
Gain/(loss) on debt extinguishment |
2,719 |
|
|
— |
|
|
2,719 |
|
|
— |
|
Consolidated Funds net (losses) gains |
5,034 |
|
|
36,827 |
|
|
(24,376 |
) |
|
58,363 |
|
Total other income (loss) |
99,892 |
|
|
55,796 |
|
|
154,220 |
|
|
138,772 |
|
Income (loss) before income taxes |
140,495 |
|
|
34,512 |
|
|
297,437 |
|
|
70,723 |
|
Income tax
expense/(benefit) |
37,784 |
|
|
5,238 |
|
|
90,373 |
|
|
14,853 |
|
Net income (loss) |
102,711 |
|
|
29,274 |
|
|
207,064 |
|
|
55,870 |
|
Net income (loss) attributable
to non-controlling interests in consolidated subsidiaries and
funds |
10,544 |
|
|
24,051 |
|
|
(9,299 |
) |
|
31,239 |
|
Net income (loss)
attributable to Cowen Inc. |
92,167 |
|
|
5,223 |
|
|
216,363 |
|
|
24,631 |
|
Less: Preferred stock dividends |
1,698 |
|
|
1,698 |
|
|
6,792 |
|
|
6,792 |
|
Net income (loss)
attributable to Cowen Inc. common stockholders |
$ |
90,469 |
|
|
$ |
3,525 |
|
|
$ |
209,571 |
|
|
$ |
17,839 |
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share: |
|
|
|
|
|
|
|
Basic |
$ |
3.36 |
|
|
$ |
0.12 |
|
|
$ |
7.54 |
|
|
$ |
0.60 |
|
Diluted |
$ |
2.98 |
|
|
$ |
0.11 |
|
|
$ |
7.10 |
|
|
$ |
0.57 |
|
|
|
|
|
|
|
|
|
Weighted average
shares used in per share data: |
|
|
|
|
|
|
|
Basic |
26,934 |
|
|
29,046 |
|
|
27,790 |
|
|
29,525 |
|
Diluted |
30,316 |
|
|
30,722 |
|
|
29,519 |
|
|
31,286 |
|
U.S. GAAP Financial Measures
Fourth quarter 2020 revenue was $502.9 million versus $281.1
million in the fourth quarter of 2019. Full year 2020 revenue was
$1.6 billion compared to $1.0 billion in the prior year. The
year-over-year increase was due primarily to increased investment
banking and brokerage activity.
Fourth quarter 2020 investment banking revenues increased $163.2
million to $266.1 million. Full year 2020 investment banking
revenue increased $394.5 million to $769.5 million. During
full-year 2020 the Company completed 165 underwriting transactions,
74 strategic advisory transactions and 12 debt capital markets
transactions.
Fourth quarter 2020 brokerage revenues increased $47.6 million
to $147.5 million. Full year 2020 brokerage revenues increased
$169.8 million to $572.5 million. The revenue growth was
attributable to an increase in institutional brokerage, including
special situations trading and electronic trading commissions, as
well as an increase in institutional services, primarily prime
brokerage.
Fourth quarter 2020 employee compensation and benefits expenses
was $277.4 million, an increase of $130.2 million from the
prior-year period. Full year 2020 employee compensation and
benefits expenses was $860.5 million compared to $535.8 million in
the prior year. The year-over-year increase was due primarily to
higher total revenues resulting in a higher compensation and
benefits accrual.
Fourth quarter 2020 income tax expense was $37.8 million
compared to $5.2 million in the prior-year quarter. Full year 2020
income tax expense was $90.4 million compared to $14.9 million in
the prior year. The year-over-year change was primarily
attributable to the increase in the Company's income before income
taxes.
Fourth quarter 2020 total expenses totaled $400.4 million, an
increase of $141.6 million from the prior-year period. Full year
2020 total expenses totaled $1.3 billion, compared to $948.9
million in the prior year. The year-over-year increase was due to
higher compensation expenses and higher non-compensation expenses
associated with increased investment banking and brokerage
activity, partially offset by a reduction in marketing and business
development expenses.
Fourth quarter 2020 net income attributable to common
stockholders was $90.5 million compared to $3.5 million in the
fourth quarter of 2019. Full-year 2020 net income attributable to
common stockholders was $209.6 million compared to net income of
$17.8 million in the prior year.
Non-GAAP Financial
Measures
Throughout this press release, the Company presents supplemental
financial measures that are not prepared in accordance with U.S.
GAAP. These non-GAAP financial measures include (i) Economic Income
(Loss), (ii) Economic Operating Income (Loss), (iii) Economic
Proceeds and related components, (iv) Net Economic Proceeds and
related components (v) Economic Expenses and related components and
(vi) related per share measures. The Company believes that these
non-GAAP financial measures, viewed in addition to, and not in lieu
of, the Company’s reported US GAAP results, provide useful
information to investors and analysts regarding its performance and
overall results of operations as it presents investors and analysts
with a supplemental operating view of the Company’s financials to
help better inform their analysis of the Company’s performance.
These Non-GAAP financial measures are an integral part of the
Company’s internal reporting to measure the performance of its
business segments, allocate capital and other strategic decisions
as well as assess the overall effectiveness of senior management.
The Company believes that presenting these non-GAAP measures may
provide expanded transparency into the Company’s business
operations, growth opportunities and expense allocation
decisions.
The Company’s primary non-GAAP financial measures of profit or
loss are Economic Income (Loss) and Economic Operating Income
(Loss). Economic Income (Loss) is a pre-tax measure that (i)
includes management reclassifications which the Company believes
provides additional insight on the performance of the Company’s
core businesses and divisions (ii) eliminates the impact of
consolidation for Consolidated Funds and excludes (iii) goodwill
and intangible impairment (iv) certain other transaction-related
adjustments and/or reorganization expenses and (v) certain costs
associated with debt. Economic Operating Income (Loss) is a similar
measure but before depreciation and amortization expenses. The
Company believes that these non-GAAP financial measures provide
analysts and investors transparency into the measures of profit and
loss management uses to evaluate the financial performance of and
make operating decisions for the segments including determining
appropriate compensation levels. Additionally, the measures provide
investors and analysts with additional insight into the activities
of the Company’s core businesses, taking into account, among other
things, the impact of minority investment stakes, securities
borrowing and lending activities and expenses from investment
banking activities on US GAAP reported results.
In addition to Economic Income (Loss) and Economic Operating
Income (Loss), the Company also presents Economic Proceeds, Net
Economic Proceeds, Economic Expenses, as well as their related
components. These measures include management reclassifications and
the elimination of the impact of the consolidation for Consolidated
funds as described for Economic Income (Loss) and Economic
Operating Income (Loss) described above. These adjustments are
meant to provide comparability to our peers as well as to provide
investors and analysts with transparency into how the Company
manages its operating businesses and how analysts and investors
review and analyze the Company’s and its peers’ similar lines of
businesses. For example, among others, within the Company’s Op Co
business segment, investors and analysts typically review and
analyze the performance of investment banking revenues net of
underwriting expenses and excluding the impact of reimbursable
expenses. Additionally, the performance of the Company’s Markets
business is typically analyzed as a unit incorporating commissions,
interest from securities financing transactions and gains and
losses from proprietary and facilitation trading. The Company’s
investment management business performance is analyzed and reviewed
by investors and analysts through investment income, incentive
income and management fees. The presentation of Economic Proceeds,
Net Economic Proceeds, Economic Expenses as well as their related
components align with these and other examples of how the Company’s
business activities and performance are reviewed by analysts and
investors in addition to providing simplification related to legacy
businesses and investments for which the Company maintains
long-term monetization strategies . Additionally, the Company
manages its operating businesses to an Economic
Compensation-to-Proceeds ratio. Presentation of Economic
Compensation Expense and Economic Proceeds provides transparency in
addition to the Company’s US GAAP Compensation Expense.
Reconciliations to comparable US GAAP measures are presented
along with the Company’s Non-GAAP financial measures. The non-GAAP
measures presented herein may not be comparable to similarly titled
measures presented by other public companies and are not identical
to corresponding measures used in our various agreements or public
filings.
These Non-GAAP measures should not be considered in isolation or
as a substitute for revenue, expenses, net income, operating cash
flows, investing and financing activities, or other income or cash
flow statement data prepared in accordance with US GAAP. As a
result of the adjustments made to arrive at Economic Income (Loss)
described below, Economic Income (Loss) has limitations in that it
does not take into account certain items included or excluded under
US GAAP, including its consolidated funds.
Economic Proceeds
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, 2020 |
|
December 31, 2019 |
|
December 31, 2020 |
|
December 31, 2019 |
(Dollar amounts in
thousands) |
Op Co |
|
Asset Co |
|
Total |
|
Op Co |
|
Asset Co |
|
Total |
|
Op Co |
|
Asset Co |
|
Total |
|
Op Co |
|
Asset Co |
|
Total |
Economic
Proceeds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment banking |
$ |
254,402 |
|
|
$ |
— |
|
|
$ |
254,402 |
|
|
$ |
96,711 |
|
|
$ |
— |
|
|
$ |
96,711 |
|
|
$ |
729,180 |
|
|
$ |
— |
|
|
$ |
729,180 |
|
|
$ |
351,085 |
|
|
$ |
— |
|
|
$ |
351,085 |
|
Brokerage |
185,824 |
|
|
— |
|
|
185,824 |
|
|
113,047 |
|
|
— |
|
|
113,047 |
|
|
652,647 |
|
|
— |
|
|
652,647 |
|
|
459,143 |
|
|
— |
|
|
459,143 |
|
Management fees |
16,430 |
|
|
312 |
|
|
16,742 |
|
|
10,305 |
|
|
187 |
|
|
10,492 |
|
|
58,154 |
|
|
946 |
|
|
59,100 |
|
|
40,321 |
|
|
1,976 |
|
|
42,297 |
|
Incentive income |
42,606 |
|
|
1,769 |
|
|
44,375 |
|
|
10,603 |
|
|
370 |
|
|
10,973 |
|
|
83,435 |
|
|
1,927 |
|
|
85,362 |
|
|
44,600 |
|
|
1,132 |
|
|
45,732 |
|
Investment income (loss) |
5,220 |
|
|
5,108 |
|
|
10,328 |
|
|
18,788 |
|
|
(2,178 |
) |
|
16,610 |
|
|
37,786 |
|
|
(8,564 |
) |
|
29,222 |
|
|
32,614 |
|
|
3,111 |
|
|
35,725 |
|
Other economic proceeds |
1,073 |
|
|
1 |
|
|
1,074 |
|
|
490 |
|
|
1 |
|
|
491 |
|
|
775 |
|
|
5 |
|
|
780 |
|
|
5,785 |
|
|
58 |
|
|
5,843 |
|
Total: Economic
Proceeds |
505,555 |
|
|
7,190 |
|
|
512,745 |
|
|
249,944 |
|
|
(1,620 |
) |
|
248,324 |
|
|
1,561,977 |
|
|
(5,686 |
) |
|
1,556,291 |
|
|
933,548 |
|
|
6,277 |
|
|
939,825 |
|
Economic Interest Expense |
6,048 |
|
|
1,109 |
|
|
7,157 |
|
|
6,205 |
|
|
1,402 |
|
|
7,607 |
|
|
24,519 |
|
|
5,123 |
|
|
29,642 |
|
|
22,576 |
|
|
5,449 |
|
|
28,025 |
|
Net Economic
Proceeds |
$ |
499,507 |
|
|
$ |
6,081 |
|
|
$ |
505,588 |
|
|
$ |
243,739 |
|
|
$ |
(3,022 |
) |
|
$ |
240,717 |
|
|
$ |
1,537,458 |
|
|
$ |
(10,809 |
) |
|
$ |
1,526,649 |
|
|
$ |
910,972 |
|
|
$ |
828 |
|
|
$ |
911,800 |
|
Economic Proceeds were $512.7 million versus $248.3 million in
the fourth quarter of 2019, an increase of 106%. Full-year 2020
economic proceeds rose 67%.
Investment Banking Economic Proceeds were $254.4 million, up
163% versus the prior-year period, driven by stronger equity
capital markets activity as well as higher-fee M&A
transactions. Full-year 2020 banking proceeds rose 108%.
Brokerage Economic Proceeds of $185.8 million were up 64% versus
the prior-year period, driven by strength in non-US trading,
electronic trading, prime services and securities finance.
Full-year 2020 brokerage proceeds rose 42%.
Management Fees Economic Proceeds rose 60% year-over-year to
$16.7 million in the fourth quarter, driven by higher AUM in the
sustainability strategy, private healthcare strategy and the
healthcare royalties strategy. Full-year 2020 management fees rose
40%.
Incentive Income Economic Proceeds were $44.4 million in the
fourth quarter of 2020, up from income of $11.0 million in the
prior-year period. Fourth quarter 2020 incentive income reflects
higher performance fees in the private healthcare strategy and the
activist strategy. Full-year 2020 incentive income rose 87%.
Investment Income Economic Proceeds posted income of $10.3
million, versus income of $16.6 million in the prior-year period.
Fourth quarter 2020 proceeds include increases in the value of
investments in the private healthcare strategy, activist strategy
and merchant banking portfolio, partially offset by a
negative-mark-to market adjustment on Cowen's Nikola holdings,
which were substantially reduced during the quarter. Full-year 2020
investment income economic proceeds declined 18%.
Economic Expenses
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, 2020 |
|
December 31, 2019 |
|
December 31, 2020 |
|
December 31, 2019 |
(Dollar amounts in
thousands) |
Op Co |
|
Asset Co |
|
Total |
|
Op Co |
|
Asset Co |
|
Total |
|
Op Co |
|
Asset Co |
|
Total |
|
Op Co |
|
Asset Co |
|
Total |
Economic
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation & Benefits |
$ |
278,273 |
|
|
$ |
1,674 |
|
|
$ |
279,947 |
|
|
$ |
145,875 |
|
|
$ |
687 |
|
|
$ |
146,562 |
|
|
$ |
860,753 |
|
|
$ |
3,767 |
|
|
$ |
864,520 |
|
|
$ |
532,468 |
|
|
$ |
5,070 |
|
|
$ |
537,538 |
|
Non-Compensation Expenses |
83,976 |
|
|
(46 |
) |
|
83,930 |
|
|
72,997 |
|
|
1,311 |
|
|
74,308 |
|
|
312,173 |
|
|
350 |
|
|
312,523 |
|
|
294,614 |
|
|
3,924 |
|
|
298,538 |
|
Depreciation & Amortization |
5,900 |
|
|
5 |
|
|
5,905 |
|
|
5,447 |
|
|
6 |
|
|
5,453 |
|
|
22,655 |
|
|
22 |
|
|
22,677 |
|
|
20,403 |
|
|
36 |
|
|
20,439 |
|
Non-Controlling Interest |
1,308 |
|
|
— |
|
|
1,308 |
|
|
1,852 |
|
|
— |
|
|
1,852 |
|
|
6,892 |
|
|
— |
|
|
6,892 |
|
|
4,796 |
|
|
— |
|
|
4,796 |
|
Total: Economic
Expenses |
$ |
369,457 |
|
|
$ |
1,633 |
|
|
$ |
371,090 |
|
|
$ |
226,171 |
|
|
$ |
2,004 |
|
|
$ |
228,175 |
|
|
$ |
1,202,473 |
|
|
$ |
4,139 |
|
|
$ |
1,206,612 |
|
|
$ |
852,281 |
|
|
$ |
9,030 |
|
|
$ |
861,311 |
|
Economic Compensation Expenses expense was $279.9 million
compared to $146.6 million in the fourth quarter of 2019. The
increase was due to higher revenues offset only partially by a
lower economic compensation-to-proceeds ratio. The fourth quarter
2020 economic compensation-to-proceeds ratio was 54.6%, down from
56.1% in 3Q20 and down from 59.0% in 4Q19. Full-year 2020
compensation-to-proceeds ratio was 55.6%, down from 57.2% in
full-year 2019.
Economic Non-compensation Expenses Fourth quarter 2020
fixed non-compensation expenses increased $3.5 million from the
prior-year period to $39.8 million. The increase was due in part to
higher service fees offset only partially by reduced office service
expenses. Variable non-compensation expenses were $44.1 million, up
from $38.0 million in the fourth quarter of 2019. The increase is
related in part to higher brokerage and trade execution costs due
to increased volumes, partially offset by lower travel,
entertainment and business development expenses. Full-year 2020
non-compensation-to-proceeds ratio was 20.1%, down from 31.8% in
full-year 2019.
Economic Income and Economic Operating
Income
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, 2020 |
|
December 31, 2019 |
|
December 31, 2020 |
|
December 31, 2019 |
(Dollar amounts in
thousands) |
Op Co |
|
Asset Co |
|
Total |
|
Op Co |
|
Asset Co |
|
Total |
|
Op Co |
|
Asset Co |
|
Total |
|
Op Co |
|
Asset Co |
|
Total |
Economic Income (loss) * |
$ |
128,607 |
|
|
$ |
4,193 |
|
|
$ |
132,800 |
|
|
$ |
16,193 |
|
|
$ |
(5,349 |
) |
|
$ |
10,844 |
|
|
$ |
329,381 |
|
|
$ |
(16,136 |
) |
|
$ |
313,245 |
|
|
$ |
53,257 |
|
|
$ |
(9,560 |
) |
|
$ |
43,697 |
|
Add: Depreciation &
amortization |
5,900 |
|
|
5 |
|
|
5,905 |
|
|
5,447 |
|
|
6 |
|
|
5,453 |
|
|
22,655 |
|
|
22 |
|
|
22,677 |
|
|
20,403 |
|
|
36 |
|
|
20,439 |
|
Economic Operating
Income (Loss) |
$ |
134,507 |
|
|
$ |
4,198 |
|
|
$ |
138,705 |
|
|
$ |
21,640 |
|
|
$ |
(5,343 |
) |
|
$ |
16,297 |
|
|
$ |
352,036 |
|
|
$ |
(16,114 |
) |
|
$ |
335,922 |
|
|
$ |
73,660 |
|
|
$ |
(9,524 |
) |
|
$ |
64,136 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Economic Income per common
share |
$ |
4.24 |
|
|
$ |
0.14 |
|
|
$ |
4.38 |
|
|
$ |
0.53 |
|
|
$ |
(0.17 |
) |
|
$ |
0.35 |
|
|
$ |
11.16 |
|
|
$ |
(0.55 |
) |
|
$ |
10.60 |
|
|
$ |
1.69 |
|
|
$ |
(0.31 |
) |
|
$ |
1.40 |
|
Economic Operating Income per
common share |
$ |
4.44 |
|
|
$ |
0.14 |
|
|
$ |
4.58 |
|
|
$ |
0.70 |
|
|
$ |
(0.17 |
) |
|
$ |
0.53 |
|
|
$ |
11.93 |
|
|
$ |
(0.55 |
) |
|
$ |
11.38 |
|
|
$ |
2.35 |
|
|
$ |
(0.30 |
) |
|
$ |
2.06 |
|
* Economic Income (loss) is net of preferred dividends
The following tables reconciles total US GAAP Revenues and Other
Income (Loss) to total Economic Proceeds for the three and twelve
months ended December 31, 2020 and 2019:
For the three months
ended December 31, 2020(Dollar amounts in thousands) |
|
Investment Banking |
|
Brokerage |
|
Management Fees |
|
Incentive Income |
|
Investment Income |
|
Interest and Dividends |
|
Reimbursement from Affiliates |
|
Reinsurance premiums |
|
Other revenues |
|
Consolidated Funds Revenues |
|
Other Income (Loss) |
|
Total |
Total US GAAP Revenues and Other Income
(Loss) |
|
$ |
266,135 |
|
|
$ |
147,479 |
|
|
$ |
12,304 |
|
|
$ |
465 |
|
|
$ |
— |
|
|
$ |
59,912 |
|
|
$ |
271 |
|
|
$ |
11,204 |
|
|
$ |
3,912 |
|
|
$ |
1,238 |
|
|
$ |
99,892 |
|
|
$ |
602,812 |
|
Management
Presentation Reclassifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenses |
a |
(6,041 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(6,041 |
) |
Reimbursable client expenses |
b |
(5,692 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(271 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(5,963 |
) |
Securities financing interest expense |
c |
— |
|
|
958 |
|
|
— |
|
|
— |
|
|
— |
|
|
(46,911 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(45,953 |
) |
Fund start-up costs and distribution fees |
d |
— |
|
|
(293 |
) |
|
(540 |
) |
|
(467 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,773 |
) |
|
— |
|
|
— |
|
|
(3,073 |
) |
Certain equity method investments |
e |
— |
|
|
— |
|
|
3,439 |
|
|
6,879 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(7,362 |
) |
|
2,956 |
|
Carried interest |
f |
— |
|
|
— |
|
|
— |
|
|
37,498 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(37,498 |
) |
|
— |
|
Proprietary trading gains and losses |
g |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
29,944 |
|
|
(4,786 |
) |
|
— |
|
|
— |
|
|
(64 |
) |
|
— |
|
|
(39,125 |
) |
|
(14,031 |
) |
Insurance related activities expenses |
h |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(11,204 |
) |
|
(987 |
) |
|
— |
|
|
— |
|
|
(12,191 |
) |
Facilitation trading gains and losses |
i |
— |
|
|
37,680 |
|
|
— |
|
|
— |
|
|
(19,616 |
) |
|
(8,215 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(11,809 |
) |
|
(1,960 |
) |
Total Management Presentation Reclassifications: |
|
(11,733 |
) |
|
38,345 |
|
|
2,899 |
|
|
43,910 |
|
|
10,328 |
|
|
(59,912 |
) |
|
(271 |
) |
|
(11,204 |
) |
|
(2,824 |
) |
|
— |
|
|
(95,794 |
) |
|
(86,256 |
) |
Fund Consolidated
Reclassifications |
l |
— |
|
|
— |
|
|
1,539 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(14 |
) |
|
(1,238 |
) |
|
(1,379 |
) |
|
(1,092 |
) |
Income Statement
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt extinguishment |
q |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2,719 |
) |
|
(2,719 |
) |
Total Economic
Proceeds |
|
$ |
254,402 |
|
|
$ |
185,824 |
|
|
$ |
16,742 |
|
|
$ |
44,375 |
|
|
$ |
10,328 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,074 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
512,745 |
|
For the three months
ended December 31, 2019(Dollar amounts in thousands) |
|
Investment Banking |
|
Brokerage |
|
Management Fees |
|
Incentive Income |
|
Investment Income |
|
Interest and Dividends |
|
Reimbursement from Affiliates |
|
Reinsurance premiums |
|
Other revenues |
|
Consolidated Funds Revenues |
|
Other Income (Loss) |
|
Total |
Total US GAAP Revenues and Other Income
(Loss) |
|
$ |
102,922 |
|
|
$ |
99,907 |
|
|
$ |
11,128 |
|
|
$ |
823 |
|
|
$ |
— |
|
|
$ |
45,067 |
|
|
$ |
246 |
|
|
$ |
17,267 |
|
|
$ |
2,205 |
|
|
$ |
1,570 |
|
|
$ |
55,796 |
|
|
$ |
336,931 |
|
Management
Presentation Reclassifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenses |
a |
(2,684 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2,684 |
) |
Reimbursable client expenses |
b |
(10,139 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(274 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(10,413 |
) |
Securities financing interest expense |
c |
— |
|
|
6,791 |
|
|
— |
|
|
— |
|
|
— |
|
|
(34,984 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(28,193 |
) |
Fund start-up costs and distribution fees |
d |
— |
|
|
— |
|
|
(4,314 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,120 |
) |
|
— |
|
|
— |
|
|
(5,434 |
) |
Certain equity method investments |
e |
— |
|
|
— |
|
|
3,049 |
|
|
4,240 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(5,169 |
) |
|
2,120 |
|
Carried interest |
f |
— |
|
|
— |
|
|
— |
|
|
5,867 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(5,867 |
) |
|
— |
|
Proprietary trading gains and losses |
g |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
20,934 |
|
|
(4,667 |
) |
|
— |
|
|
— |
|
|
(728 |
) |
|
— |
|
|
(12,076 |
) |
|
3,463 |
|
Insurance related activities expenses |
h |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(17,267 |
) |
|
134 |
|
|
— |
|
|
— |
|
|
(17,133 |
) |
Facilitation trading gains and losses |
i |
6,612 |
|
|
6,349 |
|
|
— |
|
|
— |
|
|
(4,324 |
) |
|
(5,416 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(5,090 |
) |
|
(1,869 |
) |
Total Management Presentation Reclassifications: |
|
(6,211 |
) |
|
13,140 |
|
|
(1,265 |
) |
|
10,107 |
|
|
16,610 |
|
|
(45,067 |
) |
|
(274 |
) |
|
(17,267 |
) |
|
(1,714 |
) |
|
— |
|
|
(28,202 |
) |
|
(60,143 |
) |
Fund Consolidated
Reclassifications |
l |
— |
|
|
— |
|
|
629 |
|
|
43 |
|
|
— |
|
|
— |
|
|
28 |
|
|
— |
|
|
— |
|
|
(1,570 |
) |
|
(27,594 |
) |
|
(28,464 |
) |
Total Economic
Proceeds |
|
$ |
96,711 |
|
|
$ |
113,047 |
|
|
$ |
10,492 |
|
|
$ |
10,973 |
|
|
$ |
16,610 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
491 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
248,324 |
|
For the twelve months
ended December 31, 2020(Dollar amounts in thousands) |
|
Investment Banking |
|
Brokerage |
|
Management Fees |
|
Incentive Income |
|
Investment Income |
|
Interest and Dividends |
|
Reimbursement from Affiliates |
|
Reinsurance premiums |
|
Other revenues |
|
Consolidated Funds Revenues |
|
Other Income (Loss) |
|
Total |
Total US GAAP Revenues and Other Income
(Loss) |
|
$ |
769,486 |
|
|
$ |
572,548 |
|
|
$ |
47,515 |
|
|
$ |
592 |
|
|
$ |
— |
|
|
$ |
187,459 |
|
|
$ |
1,048 |
|
|
$ |
30,147 |
|
|
$ |
8,621 |
|
|
$ |
5,888 |
|
|
$ |
154,220 |
|
|
$ |
1,777,524 |
|
Management
Presentation Reclassifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenses |
a |
(22,565 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(22,565 |
) |
Reimbursable client expenses |
b |
(17,741 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,098 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(18,839 |
) |
Securities financing interest expense |
c |
— |
|
|
14,499 |
|
|
— |
|
|
— |
|
|
— |
|
|
(142,998 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(128,499 |
) |
Fund start-up costs and distribution fees |
d |
— |
|
|
(293 |
) |
|
(3,970 |
) |
|
(719 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2,529 |
) |
|
— |
|
|
— |
|
|
(7,511 |
) |
Certain equity method investments |
e |
— |
|
|
— |
|
|
12,540 |
|
|
24,121 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(28,346 |
) |
|
8,315 |
|
Carried interest |
f |
— |
|
|
— |
|
|
— |
|
|
61,335 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(61,335 |
) |
|
— |
|
Proprietary trading gains and losses |
g |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
42,564 |
|
|
(17,442 |
) |
|
— |
|
|
— |
|
|
(1,518 |
) |
|
— |
|
|
(56,351 |
) |
|
(32,747 |
) |
Insurance related activities expenses |
h |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(30,147 |
) |
|
(3,759 |
) |
|
— |
|
|
— |
|
|
(33,906 |
) |
Facilitation trading gains and losses |
i |
— |
|
|
65,893 |
|
|
— |
|
|
— |
|
|
(13,342 |
) |
|
(27,019 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(31,768 |
) |
|
(6,236 |
) |
Total Management Presentation Reclassifications: |
|
(40,306 |
) |
|
80,099 |
|
|
8,570 |
|
|
84,737 |
|
|
29,222 |
|
|
(187,459 |
) |
|
(1,098 |
) |
|
(30,147 |
) |
|
(7,806 |
) |
|
— |
|
|
(177,800 |
) |
|
(241,988 |
) |
Fund Consolidated
Reclassifications |
l |
— |
|
|
— |
|
|
3,015 |
|
|
33 |
|
|
— |
|
|
— |
|
|
50 |
|
|
— |
|
|
(35 |
) |
|
(5,888 |
) |
|
26,299 |
|
|
23,474 |
|
Income Statement
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt extinguishment |
q |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2,719 |
) |
|
(2,719 |
) |
Total Economic
Proceeds |
|
$ |
729,180 |
|
|
$ |
652,647 |
|
|
$ |
59,100 |
|
|
$ |
85,362 |
|
|
$ |
29,222 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
780 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,556,291 |
|
For the twelve months
ended December 31, 2019(Dollar amounts in thousands) |
|
Investment Banking |
|
Brokerage |
|
Management Fees |
|
Incentive Income |
|
Investment Income |
|
Interest and Dividends |
|
Reimbursement from Affiliates |
|
Reinsurance premiums |
|
Other revenues |
|
Consolidated Funds Revenues |
|
Other Income (Loss) |
|
Total |
Total US GAAP Revenues and Other Income
(Loss) |
|
$ |
375,025 |
|
|
$ |
402,747 |
|
|
$ |
32,608 |
|
|
$ |
1,547 |
|
|
$ |
— |
|
|
$ |
174,913 |
|
|
$ |
1,026 |
|
|
$ |
46,335 |
|
|
$ |
5,433 |
|
|
$ |
9,809 |
|
|
$ |
138,772 |
|
|
$ |
1,188,215 |
|
Management
Presentation Reclassifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenses |
a |
(15,067 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(15,067 |
) |
Reimbursable client expenses |
b |
(15,485 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,148 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(16,633 |
) |
Securities financing interest expense |
c |
— |
|
|
22,198 |
|
|
— |
|
|
— |
|
|
— |
|
|
(132,000 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(109,802 |
) |
Fund start-up costs and distribution fees |
d |
— |
|
|
— |
|
|
(5,500 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,123 |
) |
|
— |
|
|
— |
|
|
(6,623 |
) |
Certain equity method investments |
e |
— |
|
|
— |
|
|
12,919 |
|
|
19,975 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(25,204 |
) |
|
7,690 |
|
Carried interest |
f |
— |
|
|
— |
|
|
— |
|
|
23,610 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(23,610 |
) |
|
— |
|
Proprietary trading gains and losses |
g |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
54,455 |
|
|
(24,067 |
) |
|
— |
|
|
— |
|
|
(725 |
) |
|
— |
|
|
(44,631 |
) |
|
(14,968 |
) |
Insurance related activities expenses |
h |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(46,335 |
) |
|
2,243 |
|
|
— |
|
|
— |
|
|
(44,092 |
) |
Facilitation trading gains and losses |
i |
6,612 |
|
|
34,198 |
|
|
— |
|
|
— |
|
|
(18,730 |
) |
|
(18,846 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(8,662 |
) |
|
(5,428 |
) |
Total Management Presentation Reclassifications: |
|
(23,940 |
) |
|
56,396 |
|
|
7,419 |
|
|
43,585 |
|
|
35,725 |
|
|
(174,913 |
) |
|
(1,148 |
) |
|
(46,335 |
) |
|
395 |
|
|
— |
|
|
(102,107 |
) |
|
(204,923 |
) |
Fund Consolidated
Reclassifications |
l |
— |
|
|
— |
|
|
2,270 |
|
|
600 |
|
|
— |
|
|
— |
|
|
122 |
|
|
— |
|
|
15 |
|
|
(9,809 |
) |
|
(36,665 |
) |
|
(43,467 |
) |
Total Economic
Proceeds |
|
$ |
351,085 |
|
|
$ |
459,143 |
|
|
$ |
42,297 |
|
|
$ |
45,732 |
|
|
$ |
35,725 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5,843 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
939,825 |
|
The following table reconciles total US GAAP interest and
dividends expense to total Economic Interest Expense for the three
and twelve months ended December 31, 2020 and 2019:
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
(Dollar amounts in
thousands) |
2020 |
|
2019 |
|
2020 |
|
2019 |
Total US GAAP Interest & Dividend Expense |
|
$ |
61,875 |
|
|
$ |
43,539 |
|
|
$ |
187,725 |
|
|
$ |
168,628 |
|
Management
Presentation Reclassifications: |
|
|
|
|
|
|
|
|
Securities financing interest expense |
c |
(45,953 |
) |
|
(28,193 |
) |
|
(128,499 |
) |
|
(109,802 |
) |
Proprietary trading gains and losses |
g |
(5,700 |
) |
|
(4,781 |
) |
|
(18,849 |
) |
|
(21,076 |
) |
Facilitation trading gains and losses |
i |
(1,960 |
) |
|
(1,869 |
) |
|
(6,236 |
) |
|
(5,428 |
) |
Total Management Presentation Reclassifications: |
|
(53,613 |
) |
|
(34,843 |
) |
|
(153,584 |
) |
|
(136,306 |
) |
Income
Statement Adjustments: |
|
|
|
|
|
|
|
Amortization of discount/(premium) on debt |
m |
(1,105 |
) |
|
(1,089 |
) |
|
(4,499 |
) |
|
(4,297 |
) |
Total
Economic Interest Expense |
$ |
7,157 |
|
|
$ |
7,607 |
|
|
$ |
29,642 |
|
|
$ |
28,025 |
|
The following tables reconcile total US GAAP Expenses and
non-controlling interests to total Economic Expenses for the three
and twelve months ended December 31, 2020 and 2019:
|
|
Three Months Ended December 31, 2020 |
|
Three Months Ended December 31, 2019 |
(Dollar amounts in
thousands) |
|
Employee Compensation and Benefits |
|
Non-compensation US GAAP Expenses (including Depreciation
and Amortization) |
|
Net income (loss) attributable to non-controlling interests
in consolidated subsidiaries and investment funds |
|
Total |
|
Employee Compensation and Benefits |
|
Non-compensation US GAAP Expenses (including Depreciation
and Amortization) |
|
Net income (loss) attributable to non-controlling interests
in consolidated subsidiaries and investment funds |
|
Total |
Total US GAAP |
|
$ |
277,394 |
|
|
$ |
123,048 |
|
|
$ |
10,544 |
|
|
$ |
410,986 |
|
|
$ |
147,161 |
|
|
$ |
111,719 |
|
|
$ |
24,051 |
|
|
$ |
282,931 |
|
Management
Presentation Reclassifications: |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
Underwriting expenses |
a |
— |
|
|
(6,041 |
) |
|
— |
|
|
(6,041 |
) |
|
— |
|
|
(2,684 |
) |
|
— |
|
|
(2,684 |
) |
Reimbursable client expenses |
b |
— |
|
|
(5,963 |
) |
|
— |
|
|
(5,963 |
) |
|
— |
|
|
(10,413 |
) |
|
— |
|
|
(10,413 |
) |
Fund start-up costs and distribution fees |
d |
— |
|
|
(3,073 |
) |
|
— |
|
|
(3,073 |
) |
|
— |
|
|
(5,434 |
) |
|
— |
|
|
(5,434 |
) |
Certain equity method investments |
e |
— |
|
|
2,956 |
|
|
— |
|
|
2,956 |
|
|
— |
|
|
2,120 |
|
|
— |
|
|
2,120 |
|
Proprietary trading gains and losses |
g |
— |
|
|
1,737 |
|
|
(10,068 |
) |
|
(8,331 |
) |
|
— |
|
|
6,565 |
|
|
1,679 |
|
|
8,244 |
|
Insurance related activities expenses |
h |
— |
|
|
(12,191 |
) |
|
— |
|
|
(12,191 |
) |
|
— |
|
|
(17,133 |
) |
|
— |
|
|
(17,133 |
) |
Associated partner/banker compensation |
j |
2,908 |
|
|
(2,908 |
) |
|
— |
|
|
— |
|
|
1,054 |
|
|
(1,054 |
) |
|
— |
|
|
— |
|
Management company non-Controlling interest |
k |
(355 |
) |
|
(953 |
) |
|
1,308 |
|
|
— |
|
|
(1,653 |
) |
|
(199 |
) |
|
1,852 |
|
|
— |
|
Total Management Presentation Reclassifications: |
|
2,553 |
|
|
(26,436 |
) |
|
(8,760 |
) |
|
(32,643 |
) |
|
(599 |
) |
|
(28,232 |
) |
|
3,531 |
|
|
(25,300 |
) |
Fund Consolidated
Reclassifications |
l |
— |
|
|
(616 |
) |
|
(476 |
) |
|
(1,092 |
) |
|
— |
|
|
(2,734 |
) |
|
(25,730 |
) |
|
(28,464 |
) |
Income Statement
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition adjustments |
n |
— |
|
|
(4,282 |
) |
|
— |
|
|
(4,282 |
) |
|
— |
|
|
(992 |
) |
|
— |
|
|
(992 |
) |
Goodwill and/or other impairment |
o |
— |
|
|
(1,879 |
) |
|
— |
|
|
(1,879 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total Income Statement Adjustments: |
|
— |
|
|
(6,161 |
) |
|
— |
|
|
(6,161 |
) |
|
— |
|
|
(992 |
) |
|
— |
|
|
(992 |
) |
Total Economic
Expenses |
|
$ |
279,947 |
|
|
$ |
89,835 |
|
|
$ |
1,308 |
|
|
$ |
371,090 |
|
|
$ |
146,562 |
|
|
$ |
79,761 |
|
|
$ |
1,852 |
|
|
$ |
228,175 |
|
|
|
Twelve Months Ended December 31, 2020 |
|
Twelve Months Ended December 31, 2019 |
(Dollar amounts in
thousands) |
|
Employee Compensation and Benefits |
|
Non-compensation US GAAP Expenses (including Depreciation
and Amortization) |
|
Net income (loss) attributable to non-controlling interests
in consolidated subsidiaries and investment funds |
|
Total |
|
Employee Compensation and Benefits |
|
Non-compensation US GAAP Expenses (including Depreciation
and Amortization) |
|
Net income (loss) attributable to non-controlling interests
in consolidated subsidiaries and investment funds |
|
Total |
Total US GAAP |
|
$ |
860,531 |
|
|
$ |
431,831 |
|
|
$ |
(9,299 |
) |
|
$ |
1,283,063 |
|
|
$ |
535,772 |
|
|
$ |
413,092 |
|
|
$ |
31,239 |
|
|
$ |
980,103 |
|
Management
Presentation Reclassifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenses |
a |
— |
|
|
(22,565 |
) |
|
— |
|
|
(22,565 |
) |
|
— |
|
|
(15,067 |
) |
|
— |
|
|
(15,067 |
) |
Reimbursable client expenses |
b |
— |
|
|
(18,839 |
) |
|
— |
|
|
(18,839 |
) |
|
— |
|
|
(16,633 |
) |
|
— |
|
|
(16,633 |
) |
Fund start-up costs and distribution fees |
d |
— |
|
|
(7,511 |
) |
|
— |
|
|
(7,511 |
) |
|
— |
|
|
(6,623 |
) |
|
— |
|
|
(6,623 |
) |
Certain equity method investments |
e |
— |
|
|
8,315 |
|
|
— |
|
|
8,315 |
|
|
— |
|
|
7,690 |
|
|
— |
|
|
7,690 |
|
Proprietary trading gains and losses |
g |
— |
|
|
5,686 |
|
|
(19,584 |
) |
|
(13,898 |
) |
|
— |
|
|
2,843 |
|
|
3,265 |
|
|
6,108 |
|
Insurance related activities expenses |
h |
— |
|
|
(33,906 |
) |
|
— |
|
|
(33,906 |
) |
|
— |
|
|
(44,092 |
) |
|
— |
|
|
(44,092 |
) |
Associated partner/banker compensation |
j |
5,377 |
|
|
(5,377 |
) |
|
— |
|
|
— |
|
|
3,419 |
|
|
(3,419 |
) |
|
— |
|
|
— |
|
Management company non-Controlling interest |
k |
(1,388 |
) |
|
(5,504 |
) |
|
6,892 |
|
|
— |
|
|
(1,653 |
) |
|
(3,143 |
) |
|
4,796 |
|
|
— |
|
Total Management Presentation Reclassifications: |
|
3,989 |
|
|
(79,701 |
) |
|
(12,692 |
) |
|
(88,404 |
) |
|
1,766 |
|
|
(78,444 |
) |
|
8,061 |
|
|
(68,617 |
) |
Fund Consolidated
Reclassifications |
l |
— |
|
|
(5,409 |
) |
|
28,883 |
|
|
23,474 |
|
|
— |
|
|
(8,963 |
) |
|
(34,504 |
) |
|
(43,467 |
) |
Income Statement
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition adjustments |
n |
— |
|
|
(9,098 |
) |
|
— |
|
|
(9,098 |
) |
|
— |
|
|
(2,608 |
) |
|
— |
|
|
(2,608 |
) |
Goodwill and/or other impairment |
o |
— |
|
|
(2,423 |
) |
|
— |
|
|
(2,423 |
) |
|
— |
|
|
(4,100 |
) |
|
— |
|
|
(4,100 |
) |
Total Income Statement Adjustments: |
|
— |
|
|
(11,521 |
) |
|
— |
|
|
(11,521 |
) |
|
— |
|
|
(6,708 |
) |
|
— |
|
|
(6,708 |
) |
Total Economic
Expenses |
|
$ |
864,520 |
|
|
$ |
335,200 |
|
|
$ |
6,892 |
|
|
$ |
1,206,612 |
|
|
$ |
537,538 |
|
|
$ |
318,977 |
|
|
$ |
4,796 |
|
|
$ |
861,311 |
|
The following table reconciles US GAAP Net Income (loss)
Attributable to Cowen Inc. Common Stockholders to Economic Income
(loss) and Economic Operating Income (loss):
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
December 31 |
|
December 31 |
(Dollar amounts in
thousands) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
US GAAP
Net income (loss) attributable to Cowen Inc. common
stockholders |
|
$ |
90,469 |
|
|
$ |
3,525 |
|
|
$ |
209,571 |
|
|
$ |
17,839 |
|
|
Income Statement
Adjustments: |
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
p |
37,784 |
|
|
5,238 |
|
|
90,373 |
|
|
14,853 |
|
|
Amortization of discount (premium) on debt |
m |
1,105 |
|
|
1,089 |
|
|
4,499 |
|
|
4,297 |
|
|
Debt extinguishment |
q |
(2,719 |
) |
|
— |
|
|
(2,719 |
) |
|
— |
|
|
Goodwill and other impairment |
o |
1,879 |
|
|
— |
|
|
2,423 |
|
|
4,100 |
|
|
Transaction-related and other costs |
n |
4,282 |
|
|
992 |
|
|
9,098 |
|
|
2,608 |
|
|
Economic Income (Loss) |
|
$ |
132,800 |
|
|
$ |
10,844 |
|
|
$ |
313,245 |
|
|
$ |
43,697 |
|
|
Add back: Depreciation and amortization expense |
|
5,905 |
|
|
5,453 |
|
|
22,677 |
|
|
20,439 |
|
|
Economic Operating
Income (Loss) |
|
$ |
138,705 |
|
|
$ |
16,297 |
|
|
$ |
335,922 |
|
|
$ |
64,136 |
|
The following table reconciles US GAAP Net Income (loss)
Attributable to Cowen Inc. Common Stockholders Earnings Per Common
Share (Diluted) to Economic Income (loss) Per Common Share
(Diluted) and Economic Operating Income (loss) Per Common Share
(Diluted):
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
December 31 |
|
December 31 |
(Dollars per
share) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
US GAAP
Net income (loss) attributable to Cowen Inc. common
stockholders |
|
$ |
2.98 |
|
|
$ |
0.11 |
|
|
$ |
7.10 |
|
|
$ |
0.57 |
|
|
Income Statement
Adjustments: |
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
p |
1.25 |
|
|
0.17 |
|
|
3.06 |
|
|
0.47 |
|
|
Amortization of discount (premium) on debt |
m |
0.04 |
|
|
0.04 |
|
|
0.15 |
|
|
0.14 |
|
|
Debt extinguishment |
q |
(0.09 |
) |
|
— |
|
|
(0.09 |
) |
|
— |
|
|
Goodwill and other impairment |
o |
0.06 |
|
|
— |
|
|
0.08 |
|
|
0.13 |
|
|
Transaction-related and other costs |
n |
0.15 |
|
|
0.03 |
|
|
0.30 |
|
|
0.08 |
|
|
Economic income (Loss) per common share
(diluted) |
|
$ |
4.39 |
|
|
$ |
0.35 |
|
|
$ |
10.60 |
|
|
$ |
1.39 |
|
|
Add back: Depreciation and amortization expense |
|
0.19 |
|
|
0.18 |
|
|
0.77 |
|
|
0.66 |
|
|
Economic Operating
Income (Loss) per common share (diluted) |
|
$ |
4.58 |
|
|
$ |
0.53 |
|
|
$ |
11.37 |
|
|
$ |
2.05 |
|
Adjustments made to US GAAP Net Income (Loss) to arrive
at Economic Operating Income (Loss)
Management
Reclassifications |
|
Management reclassification adjustments and fund consolidation
reclassification adjustments have no effect on economic income.
These adjustments are reclassifications to change the location of
certain line items. |
a |
Underwriting expenses: Economic
Income (Loss) presents investment banking revenues net of
underwriting expenses. |
b |
Reimbursable client expenses:
Economic Income (Loss) presents expenses reimbursed from clients
and affiliates within their respective expense category but is
included as a part of revenues under US GAAP. |
c |
Securities financing interest
expense: Economic Income (Loss) brokerage revenues included net
securities borrowed and securities loaned activities which are
shown gross in interest income and interest expense for US
GAAP. |
d |
Fund start-up costs and
distribution fees: Economic Income (Loss) presents revenues net of
fund start-up costs and distribution fees paid to agents. |
e |
Certain equity method
investments: Economic Income (Loss) recognizes the Company's
proportionate share of management and incentive fees and associated
share of expenses on a gross basis for equity method investments
within the activist business, real estate operating entities and
the healthcare royalty business. The Company applies the equity
method of accounting to these entities and accordingly the results
from these businesses are recorded within Other Income (Loss) for
US GAAP. |
f |
Carried interest: The Company
applies an equity ownership model to carried interest which is
recorded in Other Income (Loss) for US GAAP. The Company presents
carried interest as incentive income for Economic Income
(Loss). |
g |
Proprietary trading gains and
losses: Economic Income (Loss) recognizes Company income from
proprietary trading (including interest and dividends) for which
the majority of this activity is shown in other income (loss) for
US GAAP reporting. |
h |
Insurance related activities
expenses: Economic Income (Loss) recognizes underwriting income
from the Company's insurance related activities, net of expenses,
within other revenue. The costs are recorded within expenses for US
GAAP reporting. |
i |
Facilitation trading gains and
losses: Economic Income (Loss) recognizes gains and losses on
investments held as part of the Company's facilitation and trading
business within brokerage revenues as these investments are
directly related to the markets business activities. |
j |
Associated partner/banker
compensation reclassification: Economic Income (Loss) presents
certain payments to associated banking partners as compensation
rather than non-compensation expenses. |
k |
Management company
non-controlling interest: Economic income (Loss) non-controlling
interest represents only operating entities that are not wholly
owned by the Company. The Company also presents non-controlling
interests within total expenses for Economic Income (Loss). |
Fund
Consolidation Reclassifications |
l |
The impacts of consolidation and
the related elimination entries of the Consolidated Funds are not
included in Economic Income (Loss). Adjustments to reconcile to US
GAAP Net Income (Loss) included elimination of incentive income and
management fees earned from the Consolidated Funds and addition of
investment fund expenses excluding management fees paid, investment
fund revenues and investment income (loss). |
Income
Statement Adjustments |
m |
Economic Income (Loss) excludes
the amortization of discount (premium) on debt. |
n |
Economic Income (Loss) excludes
acquisition related adjustments. |
o |
Economic Income (Loss) excludes
goodwill and other impairments. |
p |
Economic Income (Loss) excludes
income taxes. |
q |
Economic Income (Loss) excludes
gain/(loss) on debt extinguishment. |
Earnings Conference Call
Management will hold a conference call today, February 11, 2021
at 9:00 am ET to discuss these results and provide an update on
business conditions.
Chair and Chief Executive Officer Jeffrey M. Solomon and Chief
Financial Officer Stephen A. Lasota will host the presentation,
followed by a question and answer period.
U.S. dial in: (855)
760-0961International dial-in: (631)
485-4850Passcode: 9894979
Please call the conference telephone number at least 15 minutes
prior to the start time.
The call can also be accessed through live audio webcast via
this direct
link:https://edge.media-server.com/mmc/p/qyu9qc6t
A replay of the call will be available for one week beginning at
12:00 pm ET on February 11, 2021 on the Company’s website at
investor.cowen.com/investor-calls or via the
following numbers:
U.S. replay dial-in: (855)
859-2056International replay dial-in: (404)
537-3406Replay ID: 9894979
About Cowen Inc. Cowen Inc. (“Cowen” or
the “Company”) is a diversified financial services firm offering
investment banking services, research, sales and trading, prime
brokerage, global clearing, commission management services and
investment management. Cowen focuses on delivering value-added
capabilities to our clients in order to help them outperform.
Founded in 1918, the Company is headquartered in New
York and has offices worldwide. Learn more at Cowen.com
Investor Relations Contact:JT Farley(646)
562-1056james.farley@cowen.comSource: Cowen Inc.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains forward-looking statements.
Forward-looking statements provide the Company’s current
expectations or forecasts of future events. Forward-looking
statements include statements about the Company’s expectations,
beliefs, plans, objectives, intentions, assumptions and other
statements that are not historical facts. Forward-looking
statements are subject to known and unknown risks and uncertainties
and are based on potentially inaccurate assumptions that could
cause actual results to differ materially from those expected or
implied by the forward-looking statements. As a result of the
spread of COVID-19, economic uncertainties have arisen that have
the potential in future periods to negatively impact the Company’s
business, financial condition, results of operation, cash flows,
strategies and prospects. The extent of the impact of COVID-19 on
the Company’s operational and financial performance will depend on
certain developments, including the duration and spread of the
outbreak and impact on our clients, employees, vendors and the
markets in which we operate our businesses, all of which are
uncertain and cannot be reasonably estimated at this time. The
Company’s actual results could differ materially from those
anticipated in forward-looking statements for many reasons,
including the factors described in the sections entitled “Risk
Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in the Company’s Annual Report
on Form 10-K and Quarterly Reports on Form 10-Q as filed with the
Securities and Exchange Commission. The Annual Report on Form 10-K
and Quarterly Reports on Form 10-Q are available at our website at
www.cowen.com and at the Securities and Exchange Commission website
at www.sec.gov. Unless required by law, the Company undertakes no
obligation to publicly update or revise any forward-looking
statement to reflect circumstances or events after the date of this
press release.
1 Markets Economic Proceeds is comprised of Brokerage Economic
Proceeds (Non-GAAP) of $652.6 million as well as $3.1 million of
management fees for Prime Services and $1.7 million of
miscellaneous fees presented in Management Fees Economic Proceeds
(Non-GAAP) and Other Economic Proceeds (Non-GAAP) respectively.
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