Cowen Inc. (NASDAQ: COWN) (“Cowen” or “the Company”) today
announced its operating results for the fourth quarter and full
year ended December 31, 2022.
Announced Transaction
On August 2, 2022, TD Bank Group ("TD”) and Cowen announced a
definitive agreement for TD to acquire Cowen in an all-cash
transaction valued at approximately $1.3 billion, or $39 for each
Class A common share of Cowen. The transaction remains on
track to close in the first calendar quarter of 2023 and is subject
to customary closing conditions, including receipt of certain
regulatory approvals.
Fourth Quarter 2022 Financial
Summary
|
Operating Results(GAAP) |
|
Economic OperatingIncome (Non-GAAP) |
|
Three Months EndedDecember 31, |
|
Three Months EndedDecember 31, |
($ in millions, except per share information) |
|
2022 |
|
|
2021 |
|
Δ % |
|
|
2022 |
|
|
2021 |
|
Δ % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue/Economic Proceeds
(Non-GAAP) |
$ |
413.9 |
|
$ |
494.3 |
|
(16)% |
|
$ |
371.7 |
|
$ |
454.0 |
|
(18)% |
Net income (loss) attributable
to common stockholders for diluted earnings per share/Economic
Operating Income (Non-GAAP) |
$ |
11.2 |
|
$ |
63.3 |
|
(82)% |
|
$ |
9.6 |
|
$ |
86.7 |
|
(89)% |
Earnings (loss) per common
share (diluted) |
$ |
0.34 |
|
$ |
2.02 |
|
(83)% |
|
$ |
0.29 |
|
$ |
2.77 |
|
(90)% |
|
|
|
|
|
|
|
|
|
|
|
|
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." |
Capital Optimization UpdateDuring 2022, the
Company repurchased $31.1 million of its common stock, or 1,069,002
shares, at an average price of $29.07 per share under the Company's
existing share repurchase program. Outside the share repurchase
program, the Company acquired approximately $36.1 million of stock
as a result of net share settlements relating to the vesting of
equity awards, or 1,058,933 shares, at an average price of $34.07
per share.
Quarterly Cash DividendOn February 14, 2023,
the Board of Directors declared a cash dividend of $0.12 per common
share. The dividend will be payable on March 15, 2023, to
stockholders of record as of the close of trading on March 1, 2023.
If the merger with TD is consummated prior to the close of trading
on March 1, 2023, no dividend will be paid to stockholders of Cowen
who hold common shares prior to the closing of the merger with
TD.
Select Balance Sheet Data
(Amounts in millions, except per share information) |
|
|
|
|
December 31, 2022 |
|
December 31, 2021 |
Common equity (CE) |
$ |
1,064.2 |
|
|
$ |
1,015.9 |
|
|
|
|
|
Book value per share (CE/CSO) |
$ |
37.69 |
|
|
$ |
36.57 |
|
|
|
|
|
Common shares outstanding (CSO) |
|
28.2 |
|
|
|
27.8 |
|
|
|
|
|
Note: Common
Equity (CE) is equivalent to Cowen Inc. stockholders’ equity. |
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 |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue |
|
|
|
|
|
|
|
Investment banking |
$ |
138,651 |
|
|
$ |
263,815 |
|
|
$ |
494,842 |
|
|
$ |
1,067,162 |
|
Brokerage |
|
133,382 |
|
|
|
140,994 |
|
|
|
592,292 |
|
|
|
585,162 |
|
Investment income (loss) |
|
|
|
|
|
|
|
Securities principal transactions, net |
|
31,205 |
|
|
|
10,282 |
|
|
|
112,829 |
|
|
|
122,110 |
|
Portfolio fund principal transactions, net |
|
11,365 |
|
|
|
(2,062 |
) |
|
|
(4,442 |
) |
|
|
338 |
|
Carried interest allocations |
|
8,152 |
|
|
|
4,291 |
|
|
|
(31,555 |
) |
|
|
5,059 |
|
Total investment income (loss) |
|
50,722 |
|
|
|
12,511 |
|
|
|
76,832 |
|
|
|
127,507 |
|
Management fees |
|
16,529 |
|
|
|
16,216 |
|
|
|
66,670 |
|
|
|
72,287 |
|
Incentive income |
|
13 |
|
|
|
299 |
|
|
|
646 |
|
|
|
2,732 |
|
Interest and dividends |
|
69,370 |
|
|
|
51,753 |
|
|
|
312,134 |
|
|
|
219,292 |
|
Insurance and reinsurance premiums |
|
186 |
|
|
|
8,435 |
|
|
|
36,522 |
|
|
|
39,631 |
|
Other revenues, net |
|
14,208 |
|
|
|
2,599 |
|
|
|
7,010 |
|
|
|
5,211 |
|
Consolidated Funds revenues |
|
(9,134 |
) |
|
|
(2,342 |
) |
|
|
(49,225 |
) |
|
|
(6,185 |
) |
Total revenue |
|
413,927 |
|
|
|
494,280 |
|
|
|
1,537,723 |
|
|
|
2,112,799 |
|
Interest and dividends expense |
|
82,407 |
|
|
|
47,638 |
|
|
|
259,126 |
|
|
|
211,387 |
|
Total net revenue |
|
331,520 |
|
|
|
446,642 |
|
|
|
1,278,597 |
|
|
|
1,901,412 |
|
Expenses |
|
|
|
|
|
|
|
Employee compensation and benefits |
|
229,008 |
|
|
|
237,303 |
|
|
|
771,386 |
|
|
|
1,046,371 |
|
Insurance and reinsurance claims, commissions and amortization of
deferred acquisition costs |
|
(35,890 |
) |
|
|
9,095 |
|
|
|
(12,260 |
) |
|
|
33,938 |
|
Operating, general, administrative and other expenses |
|
126,243 |
|
|
|
121,540 |
|
|
|
424,470 |
|
|
|
430,250 |
|
Depreciation and amortization expense |
|
6,549 |
|
|
|
5,289 |
|
|
|
27,725 |
|
|
|
19,004 |
|
Consolidated Funds expenses |
|
19 |
|
|
|
111 |
|
|
|
248 |
|
|
|
630 |
|
Total expenses |
|
325,929 |
|
|
|
373,338 |
|
|
|
1,211,569 |
|
|
|
1,530,193 |
|
Other income
(loss) |
|
|
|
|
|
|
|
Net (losses) gains on other investments |
|
2,143 |
|
|
|
11,853 |
|
|
|
9,613 |
|
|
|
35,494 |
|
Bargain purchase gain, net of tax |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,855 |
|
Gain/(loss) on debt extinguishment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,538 |
) |
Total other income (loss) |
|
2,143 |
|
|
|
11,853 |
|
|
|
9,613 |
|
|
|
34,811 |
|
Income (loss) before income taxes |
|
7,734 |
|
|
|
85,157 |
|
|
|
76,641 |
|
|
|
406,030 |
|
Income tax
expense/(benefit) |
|
(11,487 |
) |
|
|
25,175 |
|
|
|
10,786 |
|
|
|
102,039 |
|
Net income (loss) |
|
19,221 |
|
|
|
59,982 |
|
|
|
65,855 |
|
|
|
303,991 |
|
Net income (loss) attributable
to non-controlling interests in consolidated subsidiaries and
funds |
|
6,293 |
|
|
|
(4,999 |
) |
|
|
(10,603 |
) |
|
|
8,380 |
|
Net income (loss)
attributable to Cowen Inc. |
|
12,928 |
|
|
|
64,981 |
|
|
|
76,458 |
|
|
|
295,611 |
|
Less: Preferred stock dividends |
|
1,698 |
|
|
|
1,698 |
|
|
|
6,792 |
|
|
|
6,792 |
|
Net income (loss)
attributable to Cowen Inc. common stockholders |
$ |
11,230 |
|
|
$ |
63,283 |
|
|
$ |
69,666 |
|
|
$ |
288,819 |
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share: |
|
|
|
|
|
|
|
Basic |
$ |
0.40 |
|
|
$ |
2.28 |
|
|
$ |
2.47 |
|
|
$ |
10.42 |
|
Diluted |
$ |
0.34 |
|
|
$ |
2.02 |
|
|
$ |
2.21 |
|
|
$ |
8.85 |
|
|
|
|
|
|
|
|
|
Weighted average
shares used in per share data: |
|
|
|
|
|
|
|
Basic |
|
28,411 |
|
|
|
27,731 |
|
|
|
28,183 |
|
|
|
27,721 |
|
Diluted |
|
32,744 |
|
|
|
31,355 |
|
|
|
31,544 |
|
|
|
32,628 |
|
U.S. GAAP Financial Measures
Fourth quarter 2022 revenue was $413.9 million versus $494.3
million in the fourth quarter of 2021. Full-year 2022 revenue was
$1.54 billion, down from $2.1 billion for full-year 2021. The
year-over-year decrease was primarily due to reduced investment
banking activity.
Fourth quarter 2022 investment banking revenues decreased $125.2
million to $138.7 million. Full-year 2022 investment banking
revenues decreased $572.3 million to $494.8 million. During
full-year 2022, the Company completed 49 underwriting transactions
and 137 strategic advisory transactions.
Fourth quarter 2022 brokerage revenues decreased $7.6 million to
$133.4 million. Full-year 2022 brokerage revenues increased $7.1
million to $592 million. The year-over-year increase was
attributable to an increase in institutional services activity.
Fourth quarter 2022 investment income increased $38.2 million to
$50.7 million. Full-year 2022 investment income decreased $50.6
million to $76.8 million. The year-over-year decrease is primarily
due to negative carried interest allocations.
Fourth quarter 2022 interest and dividends increased $17.6
million to $69.4 million. Full-year 2022 interest and dividends
income increased $92.8 million to $312.1 million. The increase in
interest and dividends is primarily attributable to dividends
receivable.
Fourth quarter 2022 employee compensation and benefits expenses
were $229.0 million, a decrease of $8.3 million from the prior-year
period. Full-year 2022 employee compensation and benefits expenses
decreased $275 million to $771.4 million. The year-over-year
decrease was primarily due to lower revenue.
Fourth quarter 2022 total expenses were $325.9 million, a
decrease of $47.4 million from the prior-year period. Full-year
2022 total expenses decreased $318.6 million to $1.21 billion. The
year-over-year decrease was primarily driven by lower compensation
expenses associated with lower revenues.
Fourth quarter 2022 income tax benefit was $11.5 million
compared to $25.2 million income tax expense in the prior-year
quarter. Full-year 2022 income tax expense decreased $91.2 million
to $10.8 million. The decrease was primarily due to the
year-over-year decrease in the Company's income before income
taxes.
Fourth quarter 2022 net income attributable to common
stockholders was $11.2 million, down from $63.3 million in the
fourth quarter of 2021. Full-year 2022 net income decreased $219.1
million to $69.7 million.
Non-GAAP Financial
Measures
Throughout this press release, the Company presents supplemental
financial measures that are not prepared in accordance with US
GAAP. These Non-GAAP financial measures include (i) Pre-tax
Economic Income (Loss) (ii) Economic Income (Loss), (iii) Economic
Operating Income (Loss), (iv) Economic Proceeds and related
components, (v) Net Economic Proceeds and related components, (vi)
Economic Expenses and related components and (vii) 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 Pre-tax Economic Income (Loss), Economic Income (Loss) and
Economic Operating Income (Loss). Pre-tax Economic Income
(Loss) is a pre-tax measure which (i) includes management
reclassifications which the Company believes provide 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, as well as (v) certain costs
associated with debt. Economic Income (Loss) is a similar
measure, but after tax, which includes the Company’s income tax
expense or benefit calculated on Pre-tax Economic Income (Loss)
once all currently available net operating losses have been
utilized (this occurred during tax year 2020) and is presented
after preferred stock dividends. Economic Operating Income (Loss)
is a similar measure to Economic Income (Loss), 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. The Company
presents Pre-tax Economic Income (Loss) in addition to Economic
Income (Loss) and Economic Operating Income (Loss) to provide
insight to investors and analysts on how the Company manages its
tax position over time.
In addition to Pre-tax Economic Income (Loss), 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
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, income (loss) before income
taxes, 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 these Non-GAAP measures described below, these
Non-GAAP measures have limitations in that they do not take into
account certain items included or excluded under US GAAP, including
its consolidated funds.
Fourth Quarter and Full Year 2022
Non-GAAP Financial Review
Economic Proceeds
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, 2022 |
|
December 31, 2021 |
|
December 31, 2022 |
|
December 31, 2021 |
(Dollar amounts in
thousands) |
Op Co |
|
AssetCo |
|
Total |
|
Op Co |
|
AssetCo |
|
Total |
|
Op Co |
|
AssetCo |
|
Total |
|
Op Co |
|
AssetCo |
|
Total |
Economic
Proceeds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment banking |
$ |
132,371 |
|
$ |
— |
|
|
$ |
132,371 |
|
$ |
255,155 |
|
|
$ |
— |
|
|
$ |
255,155 |
|
|
$ |
478,184 |
|
|
$ |
— |
|
|
$ |
478,184 |
|
|
$ |
1,025,688 |
|
$ |
— |
|
|
$ |
1,025,688 |
Brokerage |
|
167,320 |
|
|
— |
|
|
|
167,320 |
|
|
170,347 |
|
|
|
— |
|
|
|
170,347 |
|
|
|
719,208 |
|
|
|
— |
|
|
|
719,208 |
|
|
|
728,525 |
|
|
— |
|
|
|
728,525 |
Management fees |
|
19,942 |
|
|
150 |
|
|
|
20,092 |
|
|
19,807 |
|
|
|
289 |
|
|
|
20,096 |
|
|
|
82,681 |
|
|
|
850 |
|
|
|
83,531 |
|
|
|
79,255 |
|
|
1,200 |
|
|
|
80,455 |
Incentive income |
|
13,542 |
|
|
(1,511 |
) |
|
|
12,031 |
|
|
13,508 |
|
|
|
(6 |
) |
|
|
13,502 |
|
|
|
(12,678 |
) |
|
|
(13,143 |
) |
|
|
(25,821 |
) |
|
|
34,579 |
|
|
(1,153 |
) |
|
|
33,426 |
Investment income (loss) |
|
9,925 |
|
|
(9,292 |
) |
|
|
633 |
|
|
(8,553 |
) |
|
|
2,650 |
|
|
|
(5,903 |
) |
|
|
21,226 |
|
|
|
(20,837 |
) |
|
|
389 |
|
|
|
8,542 |
|
|
6,014 |
|
|
|
14,556 |
Other economic proceeds |
|
39,239 |
|
|
5 |
|
|
|
39,244 |
|
|
792 |
|
|
|
(1 |
) |
|
|
791 |
|
|
|
57,299 |
|
|
|
7 |
|
|
|
57,306 |
|
|
|
7,942 |
|
|
(2 |
) |
|
|
7,940 |
Total: Economic
Proceeds |
|
382,339 |
|
|
(10,648 |
) |
|
|
371,691 |
|
|
451,056 |
|
|
|
2,932 |
|
|
|
453,988 |
|
|
|
1,345,920 |
|
|
|
(33,123 |
) |
|
|
1,312,797 |
|
|
|
1,884,531 |
|
|
6,059 |
|
|
|
1,890,590 |
Economic Interest Expense / (Income) |
|
10,563 |
|
|
1,274 |
|
|
|
11,837 |
|
|
4,879 |
|
|
|
698 |
|
|
|
5,577 |
|
|
|
5,233 |
|
|
|
283 |
|
|
|
5,516 |
|
|
|
23,914 |
|
|
3,779 |
|
|
|
27,693 |
Net Economic
Proceeds |
$ |
371,776 |
|
$ |
(11,922 |
) |
|
$ |
359,854 |
|
$ |
446,177 |
|
|
$ |
2,234 |
|
|
$ |
448,411 |
|
|
$ |
1,340,687 |
|
|
$ |
(33,406 |
) |
|
$ |
1,307,281 |
|
|
$ |
1,860,617 |
|
$ |
2,280 |
|
|
$ |
1,862,897 |
Economic Proceeds were $371.7 million, down 18% from the
prior-year period. Full-year 2022 economic proceeds were $1,312.8
million, down 31% year-over-year.
Investment Banking Economic Proceeds
were $132.4 million, down 48% from the prior-year period. Full-year
2022 banking proceeds were $478.2 million, down 53% year-over-year.
The decrease was primarily due to reduced capital markets
activity.
Brokerage Economic Proceeds were
$167.3 million, down 2% from the prior-year period. Full-year 2022
brokerage proceeds were $719.2 million, down 1% year-over-year.
Management Fees Economic Proceeds
were $20.1 million, flat from the prior-year period. Full-year 2022
management fees were $83.5 million, up 4% year-over-year.
Incentive Income Economic Proceeds
were a gain of $12.0 million in the fourth quarter of 2022 versus a
gain of $13.5 million in the prior-year period. Full-year 2022
incentive income proceeds were a loss of $25.8 million. The decline
was primarily due to a decrease in performance fees.
Investment Income Economic Proceeds
were a gain of $0.6 million in the fourth quarter of 2022 versus a
loss of $5.9 million in the prior-year period. Full-year 2022
investment income proceeds were $0.4 million, a decrease of $14.2
million year-over-year.
Economic Interest Expense (Income)
was an expense of $11.8 million, versus an expense of
$5.6 million in the prior-year period. Full-year 2022 interest
expense decreased $22.2 million year-over-year. The decrease in
expense was primarily due to gains from mark-to-market adjustments
on interest rate swaps.
Economic Expenses
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, 2022 |
|
December 31, 2021 |
|
December 31, 2022 |
|
December 31, 2021 |
(Dollar amounts in
thousands) |
Op Co |
|
AssetCo |
|
Total |
|
Op Co |
|
AssetCo |
|
Total |
|
Op Co |
|
AssetCo |
|
Total |
|
Op Co |
|
AssetCo |
|
Total |
Economic
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation & Benefits |
$ |
230,245 |
|
$ |
326 |
|
$ |
230,571 |
|
$ |
246,170 |
|
$ |
(7,266 |
) |
|
$ |
238,904 |
|
$ |
772,202 |
|
$ |
2,330 |
|
$ |
774,532 |
|
$ |
1,046,730 |
|
$ |
3,871 |
|
$ |
1,050,601 |
Non-Compensation Expenses |
|
113,429 |
|
|
123 |
|
|
113,552 |
|
|
93,994 |
|
|
174 |
|
|
|
94,168 |
|
|
412,192 |
|
|
232 |
|
|
412,424 |
|
|
359,577 |
|
|
187 |
|
|
359,764 |
Depreciation & Amortization |
|
6,544 |
|
|
5 |
|
|
6,549 |
|
|
5,282 |
|
|
7 |
|
|
|
5,289 |
|
|
27,702 |
|
|
23 |
|
|
27,725 |
|
|
18,982 |
|
|
22 |
|
|
19,004 |
Non-Controlling Interest |
|
502 |
|
|
— |
|
|
502 |
|
|
1,142 |
|
|
— |
|
|
|
1,142 |
|
|
2,314 |
|
|
— |
|
|
2,314 |
|
|
5,314 |
|
|
— |
|
|
5,314 |
Total: Economic
Expenses |
$ |
350,720 |
|
$ |
454 |
|
$ |
351,174 |
|
$ |
346,588 |
|
$ |
(7,085 |
) |
|
$ |
339,503 |
|
$ |
1,214,410 |
|
$ |
2,585 |
|
$ |
1,216,995 |
|
$ |
1,430,603 |
|
$ |
4,080 |
|
$ |
1,434,683 |
Economic Compensation Expenses were $230.6 million, down 3% from
prior year period. Full-year 2022 economic compensation expenses
were $774.5 million, down 26% year-over-year. Full-year 2022
economic compensation-to-proceeds ratio was 59%.
Economic Fixed Non-Compensation Expenses in the fourth quarter
of 2022 were up $1.1 million from the prior-year period at $45.0
million. Full-year 2022 economic fixed non-compensation expenses
were $172.0 million, up 7% year-over-year due in part to an
increase in headcount as well as investments in infrastructure. The
fixed non-compensation-to-economic-proceeds ratio rose from 8.5% in
FY'21 to 13.1% in FY'22.
Economic Variable Non-Compensation Expenses were $68.6 million
in the fourth quarter of 2022, up from $50.3 million in the fourth
quarter of 2021. Full-year 2022 economic variable non-compensation
expenses were $240.5 million, an increase of 20% year-over-year due
in part to increased client event and entertainment costs and a
change in business mix. The variable non-compensation-to-proceeds
ratio rose from 10.6% in FY'21 to 18.3% in FY'22.
Economic Depreciation and Amortization Expenses were $6.5
million in the fourth quarter of 2022 compared to $5.3 million in
the fourth quarter of 2021. Full-year 2022 economic depreciation
and amortization expenses were $27.7 million, an increase of 46%
due primarily to expenses associated with the Portico acquisition
in late 2021.
Economic Income and Economic Operating
Income
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, 2022 |
|
December 31, 2021 |
|
December 31, 2022 |
|
December 31, 2021 |
(Dollar amounts in
thousands) |
Op Co |
|
AssetCo |
|
Total |
|
Op Co |
|
AssetCo |
|
Total |
|
Op Co |
|
AssetCo |
|
Total |
|
Op Co |
|
AssetCo |
|
Total |
Pre-tax Economic Income (Loss) |
$ |
21,056 |
|
$ |
(12,376 |
) |
|
$ |
8,680 |
|
$ |
99,589 |
|
$ |
9,319 |
|
$ |
108,908 |
|
$ |
126,277 |
|
$ |
(35,991 |
) |
|
$ |
90,286 |
|
$ |
430,014 |
|
$ |
(1,800 |
) |
|
$ |
428,214 |
Economic income tax
expense |
|
5,474 |
|
|
(3,218 |
) |
|
|
2,256 |
|
|
22,090 |
|
|
2,489 |
|
|
24,579 |
|
|
32,832 |
|
|
(9,358 |
) |
|
|
23,474 |
|
|
109,654 |
|
|
(460 |
) |
|
|
109,194 |
Preferred stock dividends |
|
1,511 |
|
|
187 |
|
|
|
1,698 |
|
|
1,477 |
|
|
221 |
|
|
1,698 |
|
|
5,943 |
|
|
849 |
|
|
|
6,792 |
|
|
5,841 |
|
|
951 |
|
|
|
6,792 |
Economic Income
(Loss) |
$ |
14,071 |
|
$ |
(9,345 |
) |
|
$ |
4,726 |
|
$ |
76,022 |
|
$ |
6,609 |
|
$ |
82,631 |
|
|
87,502 |
|
|
(27,482 |
) |
|
|
60,020 |
|
|
314,519 |
|
|
(2,291 |
) |
|
|
312,228 |
Add back: Depreciation and
amortization expense, net of taxes |
|
4,843 |
|
|
3 |
|
|
|
4,846 |
|
|
4,072 |
|
|
5 |
|
|
4,077 |
|
|
20,500 |
|
|
17 |
|
|
|
20,517 |
|
|
14,142 |
|
|
16 |
|
|
|
14,158 |
Economic Operating
Income (Loss) |
$ |
18,914 |
|
$ |
(9,342 |
) |
|
$ |
9,572 |
|
$ |
80,094 |
|
$ |
6,614 |
|
$ |
86,708 |
|
$ |
108,002 |
|
$ |
(27,465 |
) |
|
$ |
80,537 |
|
$ |
328,661 |
|
$ |
(2,275 |
) |
|
$ |
326,386 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Economic Income per diluted
share |
$ |
0.43 |
|
$ |
(0.29 |
) |
|
$ |
0.14 |
|
$ |
2.42 |
|
$ |
0.21 |
|
$ |
2.64 |
|
$ |
2.77 |
|
$ |
(0.87 |
) |
|
$ |
1.90 |
|
$ |
9.64 |
|
$ |
(0.07 |
) |
|
$ |
9.57 |
Economic Operating Income per
diluted share |
$ |
0.58 |
|
$ |
(0.29 |
) |
|
$ |
0.29 |
|
$ |
2.55 |
|
$ |
0.21 |
|
$ |
2.77 |
|
$ |
3.42 |
|
$ |
(0.87 |
) |
|
$ |
2.55 |
|
$ |
10.07 |
|
$ |
(0.07 |
) |
|
$ |
10.00 |
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, 2022 and 2021:
For the three months
ended December 31, 2022(Dollar amounts in thousands) |
|
Investment Banking |
|
Brokerage |
|
Investment Income |
|
Management Fees |
|
Incentive Income |
|
Interest and Dividends |
|
Reinsurance Premiums |
|
Other Revenues, net |
|
Consolidated Funds Revenues |
|
Other Income (Loss) |
|
Total |
Total US GAAP Revenues and Other Income
(Loss) |
|
$ |
138,651 |
|
|
$ |
133,382 |
|
|
$ |
50,722 |
|
|
$ |
16,529 |
|
|
$ |
13 |
|
$ |
69,370 |
|
|
$ |
186 |
|
|
$ |
14,208 |
|
|
$ |
(9,134 |
) |
|
$ |
2,143 |
|
|
$ |
416,070 |
|
Management
Presentation Reclassifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenses |
a |
|
(1,867 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,867 |
) |
Reimbursable client expenses |
b |
|
(4,413 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
(234 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4,647 |
) |
Securities financing interest expense |
c |
|
— |
|
|
|
(6,783 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(19,690 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(26,473 |
) |
Fund start-up costs, distribution and other fees |
d |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(395 |
) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
(549 |
) |
|
|
— |
|
|
|
— |
|
|
|
(944 |
) |
Certain equity method investments |
e |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,928 |
|
|
|
3,866 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,763 |
) |
|
|
2,031 |
|
Carried interest |
f |
|
— |
|
|
|
— |
|
|
|
(8,152 |
) |
|
|
— |
|
|
|
8,152 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Proprietary trading, interest and dividends |
g |
|
— |
|
|
|
4,981 |
|
|
|
(29,216 |
) |
|
|
— |
|
|
|
— |
|
|
(44,480 |
) |
|
|
— |
|
|
|
(10,258 |
) |
|
|
— |
|
|
|
29,204 |
|
|
|
(49,769 |
) |
Insurance related activities expenses |
h |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
(186 |
) |
|
|
36,077 |
|
|
|
— |
|
|
|
— |
|
|
|
35,891 |
|
Facilitation trading gains and losses |
i |
|
— |
|
|
|
35,740 |
|
|
|
(6,705 |
) |
|
|
— |
|
|
|
— |
|
|
(5,200 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(25,584 |
) |
|
|
(1,749 |
) |
Total Management Presentation Reclassifications: |
|
|
(6,280 |
) |
|
|
33,938 |
|
|
|
(44,073 |
) |
|
|
3,533 |
|
|
|
12,018 |
|
|
(69,370 |
) |
|
|
(186 |
) |
|
|
25,036 |
|
|
|
— |
|
|
|
(2,143 |
) |
|
|
(47,527 |
) |
Fund Consolidated
Reclassifications |
l |
|
— |
|
|
|
— |
|
|
|
(6,016 |
) |
|
|
30 |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,134 |
|
|
|
— |
|
|
|
3,148 |
|
Total Economic
Proceeds |
|
$ |
132,371 |
|
|
$ |
167,320 |
|
|
$ |
633 |
|
|
$ |
20,092 |
|
|
$ |
12,031 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
39,244 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
371,691 |
|
For the three months
ended December 31, 2021(Dollar amounts in thousands) |
|
Investment Banking |
|
Brokerage |
|
Investment Income |
|
Management Fees |
|
Incentive Income |
|
Interest and Dividends |
|
Reinsurance Premiums |
|
Other Revenues, net |
|
Consolidated Funds Revenues |
|
Other Income (Loss) |
|
Total |
Total US GAAP Revenues and Other Income
(Loss) |
|
$ |
263,815 |
|
|
$ |
140,994 |
|
|
$ |
12,511 |
|
|
$ |
16,216 |
|
|
$ |
299 |
|
|
$ |
51,753 |
|
|
$ |
8,435 |
|
|
$ |
2,599 |
|
|
$ |
(2,342 |
) |
|
$ |
11,853 |
|
|
$ |
506,133 |
|
Management
Presentation Reclassifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenses |
a |
|
(4,703 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,703 |
) |
Reimbursable client expenses |
b |
|
(3,957 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(234 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4,191 |
) |
Securities financing interest expense |
c |
|
— |
|
|
|
(1,126 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(32,855 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(33,981 |
) |
Fund start-up costs, distribution and other fees |
d |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(341 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(719 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,060 |
) |
Certain equity method investments |
e |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,168 |
|
|
|
9,212 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(10,962 |
) |
|
|
2,418 |
|
Carried interest |
f |
|
— |
|
|
|
— |
|
|
|
(4,291 |
) |
|
|
— |
|
|
|
4,396 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
105 |
|
Proprietary trading, interest and dividends |
g |
|
— |
|
|
|
9,371 |
|
|
|
(13,028 |
) |
|
|
— |
|
|
|
(285 |
) |
|
|
(7,217 |
) |
|
|
— |
|
|
|
(195 |
) |
|
|
— |
|
|
|
12,767 |
|
|
|
1,413 |
|
Insurance related activities expenses |
h |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(8,435 |
) |
|
|
(660 |
) |
|
|
— |
|
|
|
— |
|
|
|
(9,095 |
) |
Facilitation trading gains and losses |
i |
|
— |
|
|
|
21,108 |
|
|
|
20 |
|
|
|
— |
|
|
|
— |
|
|
|
(11,681 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(13,658 |
) |
|
|
(4,211 |
) |
Total Management Presentation Reclassifications: |
|
|
(8,660 |
) |
|
|
29,353 |
|
|
|
(17,299 |
) |
|
|
3,827 |
|
|
|
13,323 |
|
|
|
(51,753 |
) |
|
|
(8,435 |
) |
|
|
(1,808 |
) |
|
|
— |
|
|
|
(11,853 |
) |
|
|
(53,305 |
) |
Fund Consolidated
Reclassifications |
l |
|
— |
|
|
|
— |
|
|
|
(1,115 |
) |
|
|
53 |
|
|
|
(120 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,342 |
|
|
|
— |
|
|
|
1,160 |
|
Total Economic
Proceeds |
|
$ |
255,155 |
|
|
$ |
170,347 |
|
|
$ |
(5,903 |
) |
|
$ |
20,096 |
|
|
$ |
13,502 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
791 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
453,988 |
|
For the twelve months
ended December 31, 2022(Dollar amounts in thousands) |
|
Investment Banking |
|
Brokerage |
|
Investment Income |
|
Management Fees |
|
Incentive Income |
|
Interest and Dividends |
|
Reinsurance Premiums |
|
Other Revenues, net |
|
Consolidated Funds Revenues |
|
Other Income (Loss) |
|
Total |
Total US GAAP Revenues and Other Income
(Loss) |
|
$ |
494,842 |
|
|
$ |
592,292 |
|
|
$ |
76,832 |
|
|
$ |
66,670 |
|
|
$ |
646 |
|
|
$ |
312,134 |
|
|
$ |
36,522 |
|
|
$ |
7,010 |
|
|
$ |
(49,225 |
) |
|
$ |
9,613 |
|
|
$ |
1,547,336 |
|
Management
Presentation Reclassifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenses |
a |
|
(4,914 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,914 |
) |
Reimbursable client expenses |
b |
|
(11,744 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,101 |
) |
|
|
— |
|
|
|
— |
|
|
|
(12,845 |
) |
Securities financing interest expense |
c |
|
— |
|
|
|
(10,363 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(103,924 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(114,287 |
) |
Fund start-up costs, distribution and other fees |
d |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,513 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,445 |
) |
|
|
— |
|
|
|
— |
|
|
|
(3,958 |
) |
Certain equity method investments |
e |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
18,208 |
|
|
|
7,135 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(16,040 |
) |
|
|
9,303 |
|
Carried interest |
f |
|
— |
|
|
|
— |
|
|
|
31,555 |
|
|
|
— |
|
|
|
(28,781 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,774 |
|
Proprietary trading gains and losses |
g |
|
— |
|
|
|
(55,407 |
) |
|
|
(67,956 |
) |
|
|
— |
|
|
|
(4,821 |
) |
|
|
(98,139 |
) |
|
|
— |
|
|
|
5,060 |
|
|
|
— |
|
|
|
92,981 |
|
|
|
(128,282 |
) |
Insurance related activities expenses |
h |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(36,522 |
) |
|
|
48,782 |
|
|
|
— |
|
|
|
— |
|
|
|
12,260 |
|
Facilitation trading gains and losses |
i |
|
— |
|
|
|
192,686 |
|
|
|
(7,547 |
) |
|
|
— |
|
|
|
— |
|
|
|
(110,071 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(86,554 |
) |
|
|
(11,486 |
) |
Total Management Presentation Reclassifications: |
|
|
(16,658 |
) |
|
|
126,916 |
|
|
|
(43,948 |
) |
|
|
16,695 |
|
|
|
(26,467 |
) |
|
|
(312,134 |
) |
|
|
(36,522 |
) |
|
|
50,296 |
|
|
|
— |
|
|
|
(9,613 |
) |
|
|
(251,435 |
) |
Fund Consolidated
Reclassifications |
l |
|
— |
|
|
|
— |
|
|
|
(32,495 |
) |
|
|
166 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
49,225 |
|
|
|
— |
|
|
|
16,896 |
|
Total Economic
Proceeds |
|
$ |
478,184 |
|
|
$ |
719,208 |
|
|
$ |
389 |
|
|
$ |
83,531 |
|
|
$ |
(25,821 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
57,306 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,312,797 |
|
For the twelve months
ended December 31, 2021(Dollar amounts in thousands) |
|
Investment Banking |
|
Brokerage |
|
Investment Income |
|
Management Fees |
|
Incentive Income |
|
Interest and Dividends |
|
Reinsurance Premiums |
|
Other Revenues, net |
|
Consolidated Funds Revenues |
|
Other Income (Loss) |
|
Total |
Total US GAAP Revenues and Other Income
(Loss) |
|
$ |
1,067,162 |
|
|
$ |
585,162 |
|
|
$ |
127,507 |
|
|
$ |
72,287 |
|
|
$ |
2,732 |
|
|
$ |
219,292 |
|
|
$ |
39,631 |
|
|
$ |
5,211 |
|
|
$ |
(6,185 |
) |
|
$ |
34,811 |
|
|
$ |
2,147,610 |
|
Management
Presentation Reclassifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenses |
a |
|
(24,978 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(24,978 |
) |
Reimbursable client expenses |
b |
|
(16,496 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,206 |
) |
|
|
— |
|
|
|
— |
|
|
|
(17,702 |
) |
Securities financing interest expense |
c |
|
— |
|
|
|
8,006 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(153,928 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(145,922 |
) |
Fund start-up costs, distribution and other fees |
d |
|
— |
|
|
|
(361 |
) |
|
|
— |
|
|
|
(9,190 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,633 |
) |
|
|
— |
|
|
|
— |
|
|
|
(12,184 |
) |
Certain equity method investments |
e |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15,142 |
|
|
|
25,802 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(32,261 |
) |
|
|
8,683 |
|
Carried interest |
f |
|
— |
|
|
|
— |
|
|
|
(5,059 |
) |
|
|
— |
|
|
|
5,486 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
427 |
|
Proprietary trading gains and losses |
g |
|
— |
|
|
|
44,241 |
|
|
|
(92,900 |
) |
|
|
— |
|
|
|
(494 |
) |
|
|
(19,233 |
) |
|
|
— |
|
|
|
875 |
|
|
|
— |
|
|
|
46,918 |
|
|
|
(20,593 |
) |
Insurance related activities expenses |
h |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(39,631 |
) |
|
|
5,693 |
|
|
|
— |
|
|
|
— |
|
|
|
(33,938 |
) |
Facilitation trading gains and losses |
i |
|
— |
|
|
|
91,477 |
|
|
|
(11,034 |
) |
|
|
— |
|
|
|
— |
|
|
|
(46,131 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(50,151 |
) |
|
|
(15,839 |
) |
Total Management Presentation Reclassifications: |
|
|
(41,474 |
) |
|
|
143,363 |
|
|
|
(108,993 |
) |
|
|
5,952 |
|
|
|
30,794 |
|
|
|
(219,292 |
) |
|
|
(39,631 |
) |
|
|
2,729 |
|
|
|
— |
|
|
|
(35,494 |
) |
|
|
(262,046 |
) |
Fund Consolidated
Reclassifications |
l |
|
— |
|
|
|
— |
|
|
|
(3,958 |
) |
|
|
2,216 |
|
|
|
(100 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,185 |
|
|
|
— |
|
|
|
4,343 |
|
Income Statement
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bargain purchase gain |
n |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,855 |
) |
|
|
(3,855 |
) |
Debt extinguishment |
p |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,538 |
|
|
|
4,538 |
|
Total Income Statement Adjustments: |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
683 |
|
|
|
683 |
|
Total Economic
Proceeds |
|
$ |
1,025,688 |
|
|
$ |
728,525 |
|
|
$ |
14,556 |
|
|
$ |
80,455 |
|
|
$ |
33,426 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
7,940 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,890,590 |
|
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, 2022 and 2021:
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
(Dollar amounts in
thousands) |
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Total US GAAP Interest & Dividend Expense |
|
$ |
82,407 |
|
|
$ |
47,638 |
|
|
$ |
259,126 |
|
|
$ |
211,387 |
|
Management
Presentation Reclassifications: |
|
|
|
|
|
|
|
|
Securities financing interest expense |
c |
|
(26,473 |
) |
|
|
(33,981 |
) |
|
|
(114,287 |
) |
|
|
(145,922 |
) |
Fund start-up costs, distribution and other fees |
d |
|
(867 |
) |
|
|
— |
|
|
|
(3,204 |
) |
|
|
(2,257 |
) |
Proprietary trading gains and losses |
g |
|
(41,402 |
) |
|
|
(3,837 |
) |
|
|
(124,324 |
) |
|
|
(12,515 |
) |
Facilitation trading gains and losses |
i |
|
(1,749 |
) |
|
|
(4,211 |
) |
|
|
(11,486 |
) |
|
|
(15,839 |
) |
Total Management Presentation Reclassifications: |
|
|
(70,491 |
) |
|
|
(42,029 |
) |
|
|
(253,301 |
) |
|
|
(176,533 |
) |
Income
Statement Adjustments: |
|
|
|
|
|
|
|
Accelerated debt costs |
p |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,557 |
) |
Amortization of discount/(premium) on debt |
m |
|
(79 |
) |
|
|
(32 |
) |
|
|
(309 |
) |
|
|
(1,604 |
) |
Total Income Statement Adjustments: |
|
|
(79 |
) |
|
|
(32 |
) |
|
|
(309 |
) |
|
|
(7,161 |
) |
Total
Economic Interest Expense / (Income) |
$ |
11,837 |
|
|
$ |
5,577 |
|
|
$ |
5,516 |
|
|
$ |
27,693 |
|
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, 2022 and 2021:
|
|
Three Months Ended December 31, 2022 |
|
Three Months Ended December 31, 2021 |
(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 |
|
$ |
229,008 |
|
|
$ |
96,921 |
|
|
$ |
6,293 |
|
|
$ |
332,222 |
|
|
$ |
237,303 |
|
|
$ |
136,035 |
|
|
$ |
(4,999 |
) |
|
$ |
368,339 |
|
Management
Presentation Reclassifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenses |
a |
|
— |
|
|
|
(1,867 |
) |
|
|
— |
|
|
|
(1,867 |
) |
|
|
— |
|
|
|
(4,703 |
) |
|
|
— |
|
|
|
(4,703 |
) |
Reimbursable client expenses |
b |
|
— |
|
|
|
(4,647 |
) |
|
|
— |
|
|
|
(4,647 |
) |
|
|
— |
|
|
|
(4,191 |
) |
|
|
— |
|
|
|
(4,191 |
) |
Fund start-up costs, distribution and other fees |
d |
|
— |
|
|
|
(77 |
) |
|
|
— |
|
|
|
(77 |
) |
|
|
— |
|
|
|
(1,060 |
) |
|
|
— |
|
|
|
(1,060 |
) |
Certain equity method investments |
e |
|
— |
|
|
|
2,031 |
|
|
|
— |
|
|
|
2,031 |
|
|
|
— |
|
|
|
2,418 |
|
|
|
— |
|
|
|
2,418 |
|
Carried interest |
f |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
105 |
|
|
|
— |
|
|
|
105 |
|
Proprietary trading gains and losses |
g |
|
— |
|
|
|
1,093 |
|
|
|
(9,460 |
) |
|
|
(8,367 |
) |
|
|
— |
|
|
|
1,522 |
|
|
|
3,728 |
|
|
|
5,250 |
|
Insurance related activities expenses |
h |
|
— |
|
|
|
35,891 |
|
|
|
— |
|
|
|
35,891 |
|
|
|
— |
|
|
|
(9,095 |
) |
|
|
— |
|
|
|
(9,095 |
) |
Associated partner/banker compensation |
j |
|
1,884 |
|
|
|
(1,884 |
) |
|
|
— |
|
|
|
— |
|
|
|
1,949 |
|
|
|
(1,949 |
) |
|
|
— |
|
|
|
— |
|
Management company non-controlling interest |
k |
|
(321 |
) |
|
|
(181 |
) |
|
|
502 |
|
|
|
— |
|
|
|
(348 |
) |
|
|
(794 |
) |
|
|
1,142 |
|
|
|
— |
|
Total Management Presentation Reclassifications: |
|
|
1,563 |
|
|
|
30,359 |
|
|
|
(8,958 |
) |
|
|
22,964 |
|
|
|
1,601 |
|
|
|
(17,747 |
) |
|
|
4,870 |
|
|
|
(11,276 |
) |
Fund Consolidated
Reclassifications |
l |
|
— |
|
|
|
(19 |
) |
|
|
3,167 |
|
|
|
3,148 |
|
|
|
— |
|
|
|
(111 |
) |
|
|
1,271 |
|
|
|
1,160 |
|
Income Statement
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition related adjustments |
n |
|
— |
|
|
|
(8,442 |
) |
|
|
— |
|
|
|
(8,442 |
) |
|
|
— |
|
|
|
(5,271 |
) |
|
|
— |
|
|
|
(5,271 |
) |
Contingent liability adjustments |
n |
|
— |
|
|
|
1,282 |
|
|
|
— |
|
|
|
1,282 |
|
|
|
— |
|
|
|
(12,440 |
) |
|
|
— |
|
|
|
(12,440 |
) |
Goodwill and/or other impairment |
r |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,009 |
) |
|
|
— |
|
|
|
(1,009 |
) |
Total Income Statement Adjustments: |
|
|
— |
|
|
|
(7,160 |
) |
|
|
— |
|
|
|
(7,160 |
) |
|
|
— |
|
|
|
(18,720 |
) |
|
|
— |
|
|
|
(18,720 |
) |
Total Economic
Expenses |
|
$ |
230,571 |
|
|
$ |
120,101 |
|
|
$ |
502 |
|
|
$ |
351,174 |
|
|
$ |
238,904 |
|
|
$ |
99,457 |
|
|
$ |
1,142 |
|
|
$ |
339,503 |
|
|
|
Twelve months Ended December 31, 2022 |
|
Twelve months Ended December 31, 2021 |
(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 |
|
$ |
771,386 |
|
|
$ |
440,183 |
|
|
$ |
(10,603 |
) |
|
$ |
1,200,966 |
|
|
$ |
1,046,371 |
|
|
$ |
483,822 |
|
|
$ |
8,380 |
|
|
$ |
1,538,573 |
|
Management
Presentation Reclassifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenses |
a |
|
— |
|
|
|
(4,914 |
) |
|
|
— |
|
|
|
(4,914 |
) |
|
|
— |
|
|
|
(24,978 |
) |
|
|
— |
|
|
|
(24,978 |
) |
Reimbursable client expenses |
b |
|
— |
|
|
|
(12,845 |
) |
|
|
— |
|
|
|
(12,845 |
) |
|
|
— |
|
|
|
(17,702 |
) |
|
|
— |
|
|
|
(17,702 |
) |
Fund start-up costs, distribution and other fees |
d |
|
— |
|
|
|
(754 |
) |
|
|
— |
|
|
|
(754 |
) |
|
|
— |
|
|
|
(9,927 |
) |
|
|
— |
|
|
|
(9,927 |
) |
Certain equity method investments |
e |
|
— |
|
|
|
9,303 |
|
|
|
— |
|
|
|
9,303 |
|
|
|
— |
|
|
|
8,683 |
|
|
|
— |
|
|
|
8,683 |
|
Carried interest |
f |
|
— |
|
|
|
2,774 |
|
|
|
— |
|
|
|
2,774 |
|
|
|
— |
|
|
|
427 |
|
|
|
— |
|
|
|
427 |
|
Proprietary trading gains and losses |
g |
|
— |
|
|
|
2,583 |
|
|
|
(6,541 |
) |
|
|
(3,958 |
) |
|
|
— |
|
|
|
5,275 |
|
|
|
(13,353 |
) |
|
|
(8,078 |
) |
Insurance related activities expenses |
h |
|
— |
|
|
|
12,260 |
|
|
|
— |
|
|
|
12,260 |
|
|
|
— |
|
|
|
(33,938 |
) |
|
|
— |
|
|
|
(33,938 |
) |
Associated partner/banker compensation |
j |
|
4,509 |
|
|
|
(4,509 |
) |
|
|
— |
|
|
|
— |
|
|
|
5,621 |
|
|
|
(5,621 |
) |
|
|
— |
|
|
|
— |
|
Management company non-controlling interest |
k |
|
(1,363 |
) |
|
|
(951 |
) |
|
|
2,314 |
|
|
|
— |
|
|
|
(1,391 |
) |
|
|
(3,923 |
) |
|
|
5,314 |
|
|
|
— |
|
Total Management Presentation Reclassifications: |
|
|
3,146 |
|
|
|
2,947 |
|
|
|
(4,227 |
) |
|
|
1,866 |
|
|
|
4,230 |
|
|
|
(81,704 |
) |
|
|
(8,039 |
) |
|
|
(85,513 |
) |
Fund Consolidated
Reclassifications |
l |
|
— |
|
|
|
(248 |
) |
|
|
17,144 |
|
|
|
16,896 |
|
|
|
— |
|
|
|
(630 |
) |
|
|
4,973 |
|
|
|
4,343 |
|
Income Statement
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition related amounts |
n |
|
— |
|
|
|
(16,293 |
) |
|
|
— |
|
|
|
(16,293 |
) |
|
|
— |
|
|
|
(6,593 |
) |
|
|
— |
|
|
|
(6,593 |
) |
Contingent liability adjustments |
n |
|
— |
|
|
|
13,560 |
|
|
|
— |
|
|
|
13,560 |
|
|
|
— |
|
|
|
(15,118 |
) |
|
|
— |
|
|
|
(15,118 |
) |
Goodwill and/or other impairment |
r |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,009 |
) |
|
|
— |
|
|
|
(1,009 |
) |
Total Income Statement Adjustments: |
|
|
— |
|
|
|
(2,733 |
) |
|
|
— |
|
|
|
(2,733 |
) |
|
|
— |
|
|
|
(22,720 |
) |
|
|
— |
|
|
|
(22,720 |
) |
Total Economic
Expenses |
|
$ |
774,532 |
|
|
$ |
440,149 |
|
|
$ |
2,314 |
|
|
$ |
1,216,995 |
|
|
$ |
1,050,601 |
|
|
$ |
378,768 |
|
|
$ |
5,314 |
|
|
$ |
1,434,683 |
|
The following table reconciles US GAAP Net Income (loss)
Attributable to Cowen Inc. Common Stockholders to Pre-tax Economic
Income (Loss), Economic Income (loss) and Economic Operating Income
(loss):
|
|
Three Months Ended December
31, |
|
Twelve Months Ended December
31, |
(Dollar amounts in thousands) |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
US GAAP Net income
(loss) attributable to Cowen Inc. common stockholders |
|
$ |
11,230 |
|
|
$ |
63,283 |
|
|
$ |
69,666 |
|
|
$ |
288,819 |
|
Income Statement Adjustments: |
|
|
|
|
|
|
|
|
US GAAP Income tax expense (benefit) |
o |
|
(11,487 |
) |
|
|
25,175 |
|
|
|
10,786 |
|
|
|
102,039 |
|
Amortization of discount (premium) on debt |
m |
|
79 |
|
|
|
32 |
|
|
|
309 |
|
|
|
1,604 |
|
Goodwill and/or other impairment |
r |
|
— |
|
|
|
1,009 |
|
|
|
— |
|
|
|
1,009 |
|
Debt extinguishment gain (loss) and/or accelerated debt costs |
p |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,095 |
|
Bargain purchase gain |
n |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,855 |
) |
Contingent liability adjustments |
n |
|
(1,282 |
) |
|
|
12,440 |
|
|
|
(13,560 |
) |
|
|
15,118 |
|
Acquisition related amounts |
n |
|
8,442 |
|
|
|
5,271 |
|
|
|
16,293 |
|
|
|
6,593 |
|
Preferred stock dividends |
q |
|
1,698 |
|
|
|
1,698 |
|
|
|
6,792 |
|
|
|
6,792 |
|
Pre-tax Economic Income (Loss) |
|
|
8,680 |
|
|
|
108,908 |
|
|
|
90,286 |
|
|
|
428,214 |
|
Economic income tax expense |
|
|
(2,256 |
) |
|
|
(24,579 |
) |
|
|
(23,474 |
) |
|
|
(109,194 |
) |
Preferred stock dividends |
|
|
(1,698 |
) |
|
|
(1,698 |
) |
|
|
(6,792 |
) |
|
|
(6,792 |
) |
Economic Income (Loss) |
|
|
4,726 |
|
|
|
82,631 |
|
|
|
60,020 |
|
|
|
312,228 |
|
Add back: Depreciation and amortization expense, net of taxes |
|
|
4,846 |
|
|
|
4,077 |
|
|
|
20,517 |
|
|
|
14,158 |
|
Economic Operating Income (Loss) |
|
$ |
9,572 |
|
|
$ |
86,708 |
|
|
$ |
80,537 |
|
|
$ |
326,386 |
|
The following table reconciles US GAAP Net Income (loss)
Attributable to Cowen Inc. Common Stockholders Earnings Per Common
Share (Diluted) to Pre-tax Economic Income (loss) Per Common Share
(Diluted), Economic Income (loss) Per Common Share (Diluted) and
Economic Operating Income (loss) Per Common Share (Diluted):
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
(Dollars per share) |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
US GAAP Net income
(loss) attributable to Cowen Inc. common stockholders |
|
$ |
0.34 |
|
|
$ |
2.02 |
|
|
$ |
2.21 |
|
|
$ |
8.85 |
|
Income Statement Adjustments: |
|
|
|
|
|
|
|
|
US GAAP Income tax expense (benefit) |
o |
|
(0.35 |
) |
|
|
0.80 |
|
|
|
0.34 |
|
|
|
3.13 |
|
Amortization of discount (premium) on debt |
m |
|
— |
|
|
|
— |
|
|
|
0.01 |
|
|
|
0.05 |
|
Goodwill and/or other impairment |
r |
|
— |
|
|
|
0.03 |
|
|
|
— |
|
|
|
0.03 |
|
Debt extinguishment gain (loss) and accelerated debt costs |
p |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.31 |
|
Bargain purchase gain |
n |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.12 |
) |
Contingent liability adjustments |
n |
|
(0.04 |
) |
|
|
0.40 |
|
|
|
(0.43 |
) |
|
|
0.46 |
|
Acquisition related amounts |
n |
|
0.26 |
|
|
|
0.17 |
|
|
|
0.52 |
|
|
|
0.20 |
|
Preferred stock dividends |
q |
|
0.05 |
|
|
|
0.05 |
|
|
|
0.22 |
|
|
|
0.21 |
|
Pre-tax Economic Income (Loss) per common share
(diluted) |
|
|
0.27 |
|
|
|
3.47 |
|
|
|
2.86 |
|
|
|
13.12 |
|
Economic income tax expense |
|
|
(0.07 |
) |
|
|
(0.78 |
) |
|
|
(0.74 |
) |
|
|
(3.35 |
) |
Preferred stock dividends |
|
|
(0.05 |
) |
|
|
(0.05 |
) |
|
|
(0.22 |
) |
|
|
(0.21 |
) |
Economic income (Loss) per common share
(diluted) |
|
|
0.14 |
|
|
|
2.64 |
|
|
|
1.90 |
|
|
|
9.57 |
|
Add back: Depreciation and amortization expense, net of taxes |
|
|
0.15 |
|
|
|
0.13 |
|
|
|
0.65 |
|
|
|
0.44 |
|
Economic Operating Income (Loss) per common share
(diluted) |
|
$ |
0.29 |
|
|
$ |
2.77 |
|
|
$ |
2.55 |
|
|
$ |
10.01 |
|
Note: Amounts may not
add due to rounding.
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 Operating
Income (Loss). These adjustments are reclassifications to change
the location of certain line items. |
a |
Underwriting expenses: Economic Proceeds presents investment
banking revenues net of underwriting expenses. |
b |
Reimbursable client expenses: Economic Proceeds 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: Brokerage within Economic
Proceeds 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, distribution and other fees: Economic Proceeds
and Economic Interest Expense are net of fund start-up costs and
distribution fees paid to agents and other debt service costs. |
e |
Certain equity method investments: Economic Proceeds and Economic
Expenses recognize 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 Investment income - Carried
interest allocation for US GAAP. The Company presents carried
interest as Incentive Income Economic Proceeds. |
g |
Proprietary trading, interest and dividends: Economic Proceeds
presents interest and dividends from the Company's proprietary
trading in investment income. |
h |
Insurance related activities expenses: Economic Proceeds presents
underwriting income from the Company's insurance and reinsurance
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 Brokerage Proceeds
presents 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 while these are presented in Investment income
- Securities principal transactions, net for US GAAP
reporting. |
j |
Associated partner/banker compensation reclassification: Economic
Compensation Expense presents certain payments to associated
banking partners as compensation rather than non-compensation
expenses. |
k |
Management company non-controlling interest: Economic Expenses
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 |
Pre-tax Economic Income (Loss) excludes the amortization of
discount (premium) on debt. |
n |
Pre-tax Economic Income (Loss) excludes acquisition related
adjustments (including bargain purchase gain and contingent
liability adjustments). |
o |
Pre-tax Economic Income (Loss) excludes US GAAP income taxes. |
p |
Pre-tax Economic Income (Loss) excludes gain/(loss) on debt
extinguishment and accelerated debt costs. |
q |
Pre-tax Economic income (Loss) excludes preferred stock
dividends. |
r |
Economic Income (Loss) excludes goodwill and other
impairments. |
About Cowen Inc.Cowen Inc. (“Cowen” or the
“Company”) is a diversified financial services firm that provides
investment banking, research, sales and trading, prime brokerage,
outsourced trading and commission management services. Cowen also
has an investment management division which offers actively managed
alternative investment products. Founded in 1918, the Company is
headquartered in New York and has offices worldwide. Learn more at
Cowen.com
Investor Relations Contact:Steve Lasota, Chief
Financial Officer (646) 662-2778stephen.lasota@cowen.com
Source: 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.
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