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    COWN   US2236226062

COWEN INC.

(COWN)
  Report
Delayed Nasdaq  -  04:00 2022-09-26 pm EDT
38.38 USD   -0.18%
08/31COWEN INC. : Ex-dividend day for
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08/23Cowen Continues To Build Leading Cross-Asset Team With Four Significant Hires
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08/23Cowen Inc. Announces Four Key Additions to the Firm’s Global Cross-Asset Division
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Cowen Announces Financial Results For Second Quarter 2022

08/03/2022 | 04:16pm EDT
  • Reports 2Q22 GAAP Net Income to common stockholders for diluted earnings per share of $12.4 million, or $0.41 per diluted share
  • Economic Operating Income of $3.7 million, or $0.12 per diluted share (Non-GAAP)
  • Declared quarterly cash dividend of $0.12 per share

NEW YORK, Aug. 03, 2022 (GLOBE NEWSWIRE) -- Cowen Inc. (NASDAQ: COWN) (“Cowen” or “the Company”) today announced its operating results for the second quarter ended June 30, 2022.

Jeffrey M. Solomon, Chair and Chief Executive Officer of Cowen, said, "Cowen delivered profitability in the second quarter in the face of challenging market conditions, which is a testament to the broad, resilient business we have built over the last several years. We are focused on outperforming for our clients, providing strategic advice, innovative financing solutions, world-class investment research, advanced execution capabilities and differentiated investment products."

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 is expected to close in the first calendar quarter of 2023, and is subject to customary closing conditions, including approvals from the Company's shareholders and various U.S., Canadian and foreign regulatory authorities. Post-closing, parts of the combined business will be known as TD Cowen, a division of TD Securities.

Second Quarter 2022 Financial Summary

 Operating Results (GAAP) Economic Operating Income (Non-GAAP)
 Three Months Ended June 30, Three Months Ended June 30,
($ in millions, except per share information) 2022  2021 Δ %  2022  2021 Δ %
            
            
Revenue/Economic Proceeds (Non-GAAP)$302.4 $458.8 (34)% $268.6 $390.1 (31)%
Net income (loss) attributable to common stockholders for diluted earnings per share/Economic Operating Income (Non-GAAP)$12.4 $43.6 (72)% $3.7 $50.8 (93)%
Earnings (loss) per common share (diluted)$0.41 $1.29 (68)% $0.12 $1.50 (92)%
            
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."

Second Quarter 2022 Operating Financial Highlights

  • Sustained Performance in Markets :
    • Brokerage Economic Proceeds of $2.95 million/trading day in 2Q'22, up 5% year-over-year and above FY'21 average
    • Strong growth in cash trading, non-US execution, derivatives and swaps trading
    • Prime Services revenues steady, as outsourced trading momentum offsets challenging market conditions
  • Solid Investment Banking performance:
    • Strong Capital Markets Advisory revenues helped offset weaker equity issuance and M&A completions
    • Demonstrated industry coverage strength in healthcare, industrials and TMT
  • Year-over-Year Growth in Assets Under Management
    • As of June 30, 2022, the Company had AUM of $14.7 billion, up 2%, or $0.3 billion, from June 30, 2021
    • Management fees economic proceeds were $20.4 million, up 13% from 2Q'21
  • Invested Capital:
    • As of June 30, 2022, the Company had invested capital in Op Co totaling $745.7 million, up from $723.2 million as of March 31, 2022
    • As of June 30, 2022, the Company had invested capital in Asset Co totaling $115.5 million, down from $119.6 million as of March 31, 2022
    • The largest Asset Co investments are the investment in Italian wireless broadband provider Linkem S.p.A ($77.7 million excluding carried interest) and private equity funds Formation8/Eclipse ($27.3 million)

Capital Optimization Update

In the second quarter of 2022, the Company repurchased $3.3 million of its common stock, or 120,700 shares, at an average price of $27.24 per share under the Company's existing share repurchase program. Outside the share repurchase program, the Company acquired approximately $4.3 million of stock as a result of net share settlements relating to the vesting of equity awards, or 177,050 shares, at an average price of $24.17 per share. Share repurchases were limited by compliance-related blackout restrictions during the second quarter of 2022. Approximately $28.7 million is currently available for repurchase under the program.

Quarterly Cash Dividend

On July 20, 2022, the Board of Directors declared a cash dividend of $0.12 per common share. The dividend will be payable on September 15, 2022, to stockholders of record on September 1, 2022.

Select Balance Sheet Data

(Amounts in millions, except per share information)   
 June 30, 2022 December 31, 2021
Common equity (CE)$1,047.2 $1,015.9
    
Book value per share (CE/CSO)$37.67 $36.57
    
Common shares outstanding (CSO) 27.8  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 Six Months Ended
 June 30 June 30
  2022   2021   2022   2021 
Revenue       
Investment banking$100,169  $224,981  $201,711  $529,815 
Brokerage 154,656   139,060   323,394   312,797 
Investment income (loss)       
Securities principal transactions, net 31,542   40,572   122,794   104,537 
Portfolio fund principal transactions, net (9,462)  (1,882)  (15,560)  13,521 
Carried interest allocations (32,083)  (35,530)  (49,150)  61,239 
Total investment income (loss) (10,003)  3,160   58,084   179,297 
Management fees 16,717   14,995   33,486   40,737 
Incentive income    169   633   2,427 
Interest and dividends 48,545   62,173   94,880   121,561 
Insurance and reinsurance premiums 14,278   11,493   25,599   18,610 
Other revenues, net (6,625)  2,031   (7,574)  3,690 
Consolidated Funds revenues (15,324)  695   (17,208)  (2,652)
Total revenue 302,413   458,757   713,005   1,206,282 
Interest and dividends expense 53,925   63,073   100,449   120,714 
Total net revenue 248,488   395,684   612,556   1,085,568 
Expenses       
Employee compensation and benefits 151,322   219,186   338,500   607,382 
Insurance and reinsurance claims, commissions and amortization of deferred acquisition costs 3,171   5,216   10,514   11,671 
Operating, general, administrative and other expenses 85,381   104,001   186,182   200,077 
Depreciation and amortization expense 6,997   4,565   14,182   8,919 
Consolidated Funds expenses 54   124   159   395 
Total expenses 246,925   333,092   549,537   828,444 
Other income (loss)       
Net (losses) gains on other investments 3,527   6,730   9,107   19,375 
Bargain purchase gain, net of tax          3,855 
Gain/(loss) on debt extinguishment          (4,538)
Total other income (loss) 3,527   6,730   9,107   18,692 
Income (loss) before income taxes 5,090   69,322   72,126   275,816 
Income tax expense/(benefit) 5,908   10,244   17,797   64,672 
Net income (loss) (818)  59,078   54,329   211,144 
Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and funds (14,981)  13,755   5,150   18,317 
Net income (loss) attributable to Cowen Inc. 14,163   45,323   49,179   192,827 
Less: Preferred stock dividends 1,698   1,698   3,396   3,396 
Net income (loss) attributable to Cowen Inc. common stockholders$12,465  $43,625  $45,783  $189,431 
        
Earnings (loss) per share:       
Basic$0.45  $1.62  $1.63  $6.98 
Diluted$0.41  $1.29  $1.48  $5.62 
        
Weighted average shares used in per share data:       
Basic 27,897   26,903   28,138   27,130 
Diluted 30,153   33,858   30,899   33,703 

U.S. GAAP Financial Measures

Second quarter 2022 revenue was $302.4 million versus $458.8 million in the second quarter of 2021. The year-over-year decrease was due primarily to reduced investment banking activity, partially offset by higher brokerage revenues.

Second quarter 2022 investment banking revenues decreased $124.8 million to $100.2 million. During the quarter, the Company completed five underwriting transactions and 39 strategic advisory transactions, including five debt capital markets transactions.

Second quarter 2022 brokerage revenues increased $15.6 million to $154.7 million. The increase was attributable to a modest increase in institutional brokerage activity.

Second quarter 2022 investment income decreased $13.2 million to a loss of $10.0 million. The year-over-year decrease was primarily due to portfolio fund investment losses and negative carried interest allocations related to public positions in the healthcare and sustainability strategies.

Second quarter 2022 employee compensation and benefits expenses were $151.3 million, a decrease of $67.9 million from the prior-year period. The decrease is primarily due to $156.3 million lower total revenues, resulting in reduced compensation and benefits accrual.

Second quarter 2022 total expenses were $246.9 million, a decrease of $86.2 million from the prior-year period. The decrease was primarily due to the reduced compensation and benefits accrual.

Second quarter 2022 income tax expense was $5.9 million compared to $10.2 million income tax expense in the prior-year quarter. The decrease was primarily due to the year-over-year decrease in the Company’s income before income taxes.

Second quarter 2022 net income attributable to common stockholders was $12.5 million, down from $43.6 million in the second quarter of 2021.

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.

Second Quarter 2022 Non-GAAP Financial Review

Economic Proceeds

 Three Months Ended Six Months Ended
 June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
(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$97,757  $  $97,757  $214,427  $  $214,427  $196,453  $  $196,453  $507,914 $  $507,914
Brokerage 181,935   62   181,997   175,845      175,845   379,791      379,791   397,692     397,692
Management fees 20,173   242   20,415   17,825   299   18,124   40,613   508   41,121   44,709  616   45,325
Incentive income (29,014)  (990)  (30,004)  (31,566)  514   (31,052)  (41,811)  (1,205)  (43,016)  78,359  (701)  77,658
Investment income (loss) (10,135)  203   (9,932)  5,595   (117)  5,478   12,091   1,610   13,701   37,514  2,973   40,487
Other economic proceeds 8,404      8,404   7,307      7,307   12,223   1   12,224   8,471  (1)  8,470
Total: Economic Proceeds 269,120   (483)  268,637   389,433   696   390,129   599,360   914   600,274   1,074,659  2,887   1,077,546
Economic Interest Expense / (Income) 4,339   618   4,957   7,423   1,174   8,597   (4,170)  (800)  (4,970)  13,366  2,261   15,627
Net Economic Proceeds$264,781  $(1,101) $263,680  $382,010  $(478) $381,532  $603,530  $1,714  $605,244  $1,061,293 $626  $1,061,919

Economic Proceeds were $268.6 million versus $390.1 million in the second quarter of 2021, a decrease of 31%.

Investment Banking Economic Proceeds were $97.8 million, down 54% from the prior-year period. The decrease was due primarily to reduced equity underwriting activity and fewer M&A completions.

Brokerage Economic Proceeds of $182.0 million were 3% higher versus the prior-year period, as overall market-wide trading volumes rose in the same period. The increase was due in part to higher cash trading, non-US execution and derivatives trading, partially offset by reduced special situations and securities finance revenues.

Management Fees Economic Proceeds rose 13% year-over-year to $20.4 million, due largely to an increase in assets under management.

Incentive Income Economic Proceeds were a loss of $30.0 million in the second quarter of 2022 versus a loss of $31.1 million in the prior-year period. The loss in both periods was primarily due to a decrease in performance fees in our healthcare investments and sustainability strategies.

Investment Income Economic Proceeds were a loss of $9.9 million versus proceeds of $5.5 million in the prior-year period, a decrease of $15.4 million. The decrease is due largely to a decrease in value of investments in the activist strategy, the event-driven strategy and the merchant banking portfolio.

Economic Interest Expense (Income). In the second quarter of 2022 Cowen had interest expense of $5.0 million, down from $8.6 million in the prior-year period.

Second Quarter 2022 Non-GAAP Financial Review (continued)

Economic Expenses

 Three Months Ended Six Months Ended
 June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
(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$151,235  $545 $151,780  $216,280 $4,133 $220,413 $337,660 $1,495 $339,155 $601,858 $6,951  $608,809
Non-Compensation Expenses 103,766   30  103,796   87,811  53  87,864  197,558  36  197,594  177,226  (24)  177,202
Depreciation & Amortization 6,990   7  6,997   4,561  4  4,565  14,169  13  14,182  8,910  9   8,919
Non-Controlling Interest (27)    (27)  1,488    1,488  986    986  2,955     2,955
Total: Economic Expenses$261,964  $582 $262,546  $310,140 $4,190 $314,330 $550,373 $1,544 $551,917 $790,949 $6,936  $797,885

Economic Compensation Expenses were $151.8 million compared to $220.4 million in the second quarter of 2021. The economic compensation-to-proceeds ratio was 56.5%, unchanged year-over-year.

Economic Fixed Non-Compensation Expenses Second quarter 2022 fixed non-compensation expenses were up $2.5 million from the prior-year period at $42.9 million. The year-over-year increase is due in part to an increase in technology-related service fees.

Economic Variable Non-Compensation Expenses were $60.9 million, up from $47.5 million in the second quarter of 2021, due in part to higher trade execution costs from increased markets activity as well as increased client event and entertainment costs. The fixed non-compensation-to-economic-proceeds ratio rose from 10.3% in 2Q'21 to 16.0% in 2Q'22 and the variable non-compensation-to-proceeds ratio rose from 12.2% in 2Q'21 to 22.7% in 2Q'22.

Economic Depreciation and Amortization Expenses were $7.0 million compared to $4.6 million in the second quarter of 2021. The year-over-year increase is due primarily to expenses associated with the Portico acquisition in late 2021.

Second Quarter 2022 Non-GAAP Financial Review (continued)

Economic Income and Economic Operating Income

 Three Months Ended Six Months Ended
 June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
(Dollar amounts in thousands)Op Co Asset Co Total Op Co Asset Co Total Op Co Asset Co Total Op Co Asset Co Total
Pre-tax Economic Income (Loss)$2,817 $(1,683) $1,134  $71,870 $(4,668) $67,202 $53,157 $170  $53,327 $270,344 $(6,310) $264,034
Economic income tax expense 1,236  (419)  817   19,261  (1,251)  18,010  13,821  44   13,865  72,451  (1,691)  70,760
Preferred stock dividends 1,477  221   1,698   1,460  238   1,698  2,938  458   3,396  2,887  509   3,396
Economic Income (Loss)$104 $(1,485) $(1,381) $51,149 $(3,655) $47,494  36,398  (332)  36,066  195,006  (5,128)  189,878
Add back: Depreciation and amortization expense, net of taxes 5,101  4   5,105   3,339  3   3,342  10,485  9   10,494  6,522  6   6,528
Economic Operating Income (Loss)$5,205 $(1,481) $3,724  $54,488 $(3,652) $50,836 $46,883 $(323) $46,560 $201,528 $(5,122) $196,406
                        
Economic Income per diluted share$ $(0.05) $(0.05) $1.51 $(0.11) $1.40 $1.18 $(0.01) $1.17 $5.79 $(0.15) $5.63
Economic Operating Income per diluted share$0.17 $(0.05) $0.12  $1.61 $(0.11) $1.50 $1.52 $(0.01) $1.51 $5.98 $(0.15) $5.83
                                         

Reconciliation of US GAAP (Unaudited) to Non-GAAP Measures

The following tables reconciles total US GAAP Revenues and Other Income (Loss) to total Economic Proceeds for the three and six months ended June 30, 2022 and 2021:

For the three months ended June 30, 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) $100,169  $154,656  $(10,003) $16,717  $  $48,545  $14,278  $(6,625) $(15,324) $3,527  $305,940 
Management Presentation Reclassifications:                      
Underwriting expensesa (889)                             (889)
Reimbursable client expensesb (1,523)                    (296)        (1,819)
Securities financing interest expensec    (79)           (28,161)              (28,240)
Fund start-up costs, distribution and other feesd          (368)           (613)        (981)
Certain equity method investmentse          4,019   2,770               (4,681)  2,108 
Carried interestf       32,083      (31,397)                 686 
Proprietary trading, interest and dividendsg    3,777   (25,295)     (1,377)  (11,147)     4,831      23,141   (6,070)
Insurance related activities expensesh                   (14,278)  11,107         (3,171)
Facilitation trading gains and lossesi    23,643   3,369         (9,237)           (21,987)  (4,212)
Total Management Presentation Reclassifications:  (2,412)  27,341   10,157   3,651   (30,004)  (48,545)  (14,278)  15,029      (3,527)  (42,588)
Fund Consolidated Reclassificationsl       (10,086)  47               15,324      5,285 
Total Economic Proceeds $97,757  $181,997  $(9,932) $20,415  $(30,004) $  $  $8,404  $  $  $268,637 


For the three months ended June 30, 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) $224,981  $139,060  $3,160  $14,995  $169  $62,173  $11,493  $2,031  $695  $6,730  $465,487 
Management Presentation Reclassifications:                      
Underwriting expensesa (6,152)                             (6,152)
Reimbursable client expensesb (4,402)                    (295)        (4,697)
Securities financing interest expensec    6,132            (48,854)              (42,722)
Fund start-up costs, distribution and other feesd    (107)     (449)           (666)        (1,222)
Certain equity method investmentse          3,523   4,358               (5,894)  1,987 
Carried interestf       35,530      (35,686)                 (156)
Proprietary trading, interest and dividendsg    10,245   (32,710)     275   (2,262)     (34)     10,616   (13,870)
Insurance related activities expensesh                   (11,493)  6,271      1   (5,221)
Facilitation trading gains and lossesi    20,515   (1,554)        (11,057)           (11,453)  (3,549)
Total Management Presentation Reclassifications:  (10,554)  36,785   1,266   3,074   (31,053)  (62,173)  (11,493)  5,276      (6,730)  (75,602)
Fund Consolidated Reclassificationsl       1,052   55   (168)           (695)     244 
Total Economic Proceeds $214,427  $175,845  $5,478  $18,124  $(31,052) $  $  $7,307  $  $  $390,129 


Reconciliation of US GAAP (Unaudited) to Non-GAAP Measures (continued)

For the six months ended June 30, 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) $201,711  $323,394  $58,084  $33,486  $633  $94,880  $25,599  $(7,574) $(17,208) $9,107  $722,112 
Management Presentation Reclassifications:                      
Underwriting expensesa (1,148)                             (1,148)
Reimbursable client expensesb (4,110)                    (606)        (4,716)
Securities financing interest expensec    (1,326)           (57,966)              (59,292)
Fund start-up costs, distribution and other feesd          (739)           (1,292)        (2,031)
Certain equity method investmentse          8,275   6,362               (10,437)  4,200 
Carried interestf       49,150      (48,297)                 853 
Proprietary trading gains and lossesg    12,595   (87,380)     (1,714)  (17,029)     6,611      39,299   (47,618)
Insurance related activities expensesh                   (25,599)  15,085         (10,514)
Facilitation trading gains and lossesi    45,128   5,248         (19,885)           (37,969)  (7,478)
Total Management Presentation Reclassifications:  (5,258)  56,397   (32,982)  7,536   (43,649)  (94,880)  (25,599)  19,798      (9,107)  (127,744)
Fund Consolidated Reclassificationsl       (11,401)  99               17,208      5,906 
Total Economic Proceeds $196,453  $379,791  $13,701  $41,121  $(43,016) $  $  $12,224  $  $  $600,274 


Reconciliation of US GAAP (Unaudited) to Non-GAAP Measures (continued)

For the six months ended June 30, 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) $529,815  $312,797  $179,297  $40,737  $2,427  $121,561  $18,610  $3,690  $(2,652) $18,692  $1,224,974 
Management Presentation Reclassifications:                      
Underwriting expensesa (13,067)                             (13,067)
Reimbursable client expensesb (8,834)                    (583)        (9,417)
Securities financing interest expensec    7,566            (90,655)              (83,089)
Fund start-up costs, distribution and other feesd    (266)     (4,523)           (1,305)        (6,094)
Certain equity method investmentse          7,003   13,999               (16,723)  4,279 
Carried interestf       (61,239)     61,353                  114 
Proprietary trading gains and lossesg    26,347   (65,436)     (51)  (6,358)     (271)     21,766   (24,003)
Insurance related activities expensesh          1         (18,610)  6,939         (11,670)
Facilitation trading gains and lossesi    51,248   (10,522)        (24,548)           (24,418)  (8,240)
Total Management Presentation Reclassifications:  (21,901)  84,895   (137,197)  2,481   75,301   (121,561)  (18,610)  4,780      (19,375)  (151,187)
Fund Consolidated Reclassificationsl       (1,613)  2,107   (70)           2,652      3,076 
Income Statement Adjustments                      
Acquisition related amountsn                            (3,855)  (3,855)
Debt extinguishmentp                            4,538   4,538 
Total Income Statement Adjustments:                             683   683 
Total Economic Proceeds $507,914  $397,692  $40,487  $45,325  $77,658  $  $  $8,470  $  $  $1,077,546 

The following table reconciles total US GAAP interest and dividends expense to total Economic Interest Expense for the three and six months ended June 30, 2022 and 2021:

Reconciliation of US GAAP (Unaudited) to Non-GAAP Measures (continued)

  Three Months Ended June 30, Six Months Ended June 30,
(Dollar amounts in thousands) 2022   2021   2022   2021 
Total US GAAP Interest & Dividend Expense $53,925  $63,073  $100,449  $120,714 
Management Presentation Reclassifications:        
Securities financing interest expensec (28,240)  (42,722)  (59,292)  (83,089)
Fund start-up costs, distribution and other feesd (1,313)  (628)  (2,209)  (1,171)
Proprietary trading gains and lossesg (15,125)  (1,248)  (36,286)  (5,486)
Facilitation trading gains and lossesi (4,212)  (3,549)  (7,478)  (8,240)
Total Management Presentation Reclassifications:  (48,890)  (48,147)  (105,265)  (97,986)
Income Statement Adjustments:       
Accelerated debt costsp    (5,557)     (5,557)
Amortization of discount/(premium) on debtm (78)  (772)  (154)  (1,544)
Total Income Statement Adjustments:  (78)  (6,329)  (154)  (7,101)
Total Economic Interest Expense / (Income)$4,957  $8,597  $(4,970) $15,627 


Reconciliation of US GAAP (Unaudited) to Non-GAAP Measures (continued)

The following tables reconcile total US GAAP Expenses and non-controlling interests to total Economic Expenses for the three and six months ended June 30, 2022 and 2021:

  Three Months Ended June 30, 2022 Three Months Ended June 30, 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 $151,322  $95,603  $(14,981) $231,944  $219,186  $113,906  $13,755  $346,847 
Management Presentation Reclassifications:                 
Underwriting expensesa    (889)     (889)     (6,152)     (6,152)
Reimbursable client expensesb    (1,819)     (1,819)     (4,697)     (4,697)
Fund start-up costs, distribution and other feesd    332      332      (594)     (594)
Certain equity method investmentse    2,108      2,108      1,987      1,987 
Carried interestf    686      686      (156)     (156)
Proprietary trading gains and lossesg    (587)  9,642   9,055      1,501   (14,123)  (12,622)
Insurance related activities expensesh    (3,171)     (3,171)     (5,221)     (5,221)
Associated partner/banker compensationj 806   (806)        1,574   (1,574)      
Management company non-Controlling interestk (348)  375   (27)     (347)  (1,141)  1,488    
Total Management Presentation Reclassifications:  458   (3,771)  9,615   6,302   1,227   (16,047)  (12,635)  (27,455)
Fund Consolidated Reclassificationsl    (54)  5,339   5,285      (124)  368   244 
Income Statement Adjustments:                
Acquisition related adjustmentsn    (78)     (78)     (76)     (76)
Contingent liability adjustmentsn    19,093      19,093      (5,230)     (5,230)
Total Income Statement Adjustments:     19,015      19,015      (5,306)     (5,306)
Total Economic Expenses $151,780  $110,793  $(27) $262,546  $220,413  $92,429  $1,488  $314,330 


Reconciliation of US GAAP (Unaudited) to Non-GAAP Measures (continued)

  Six Months Ended June 30, 2022 Six Months Ended June 30, 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 $338,500  $211,037  $5,150  $554,687  $607,382  $221,062  $18,317  $846,761 
Management Presentation Reclassifications:                
Underwriting expensesa    (1,148)     (1,148)     (13,067)     (13,067)
Reimbursable client expensesb    (4,716)     (4,716)     (9,417)     (9,417)
Fund start-up costs, distribution and other feesd    178      178      (4,923)     (4,923)
Certain equity method investmentse    4,200      4,200      4,279      4,279 
Carried interestf    853      853      114      114 
Proprietary trading gains and lossesg    (117)  (11,215)  (11,332)     3,271   (21,788)  (18,517)
Insurance related activities expensesh    (10,514)     (10,514)     (11,670)     (11,670)
Associated partner/banker compensationj 1,352   (1,352)        2,122   (2,122)      
Management company non-Controlling interestk (697)  (289)  986      (695)  (2,260)  2,955    
Total Management Presentation Reclassifications:  655   (12,905)  (10,229)  (22,479)  1,427   (35,795)  (18,833)  (53,201)
Fund Consolidated Reclassificationsl    (159)  6,065   5,906      (395)  3,471   3,076 
Income Statement Adjustments:                
Acquisition related amountsn    (158)     (158)     (317)     (317)
Contingent liability adjustmentsn    13,961      13,961      1,566      1,566 
Total Income Statement Adjustments:     13,803      13,803      1,249      1,249 
Total Economic Expenses $339,155  $211,776  $986  $551,917  $608,809  $186,121  $2,955  $797,885 

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):

Reconciliation of US GAAP (Unaudited) to Non-GAAP Measures (continued)

   Three Months Ended June 30,Six Months Ended June 30,
(Dollar amounts in thousands)  2022   2021   2022   2021 
          
US GAAP Net income (loss) attributable to Cowen Inc. common stockholders $12,465  $43,625  $45,783  $189,431 
 Income Statement Adjustments:        
 US GAAP Income tax expense (benefit)o 5,908   10,244   17,797   64,672 
 Amortization of discount (premium) on debtm 78   772   154   1,544 
 Debt extinguishment gain (loss) and/or accelerated debt costsp    5,557      10,095 
 Bargain purchase gainn          (3,855)
 Contingent liability adjustmentsn (19,093)  5,230   (13,961)  (1,566)
 Acquisition related amountsn 78   76   158   317 
 Preferred stock dividendsq 1,698   1,698   3,396   3,396 
 Pre-tax Economic Income (Loss)  1,134   67,202   53,327   264,034 
 Economic income tax expense  (817)  (18,010)  (13,865)  (70,760)
 Preferred stock dividends  (1,698)  (1,698)  (3,396)  (3,396)
 Economic Income (Loss)  (1,381)  47,494   36,066   189,878 
 Add back: Depreciation and amortization expense, net of taxes  5,105   3,342   10,494   6,528 
 Economic Operating Income (Loss) $3,724  $50,836  $46,560  $196,406 

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 June 30, Six Months Ended June 30,
(Dollars per share)  2022   2021   2022   2021 
          
US GAAP Net income (loss) attributable to Cowen Inc. common stockholders $0.41  $1.29  $1.48  $5.62 
 Income Statement Adjustments:        
 US GAAP Income tax expense (benefit)o 0.20   0.30   0.58   1.92 
 Amortization of discount (premium) on debtm    0.02      0.05 
 Debt extinguishment gain (loss) and accelerated debt costsp    0.16      0.30 
 Bargain purchase gainn          (0.11)
 Contingent liability adjustmentsn (0.63)  0.15   (0.45)  (0.05)
 Acquisition related amountsn       0.01   0.01 
 Preferred stock dividendsq 0.06   0.05   0.11   0.10 
 Pre-tax Economic Income (Loss) per common share (diluted)  0.04   1.98   1.73   7.83 
 Economic income tax expense  (0.03)  (0.53)  (0.45)  (2.10)
 Preferred stock dividends  (0.06)  (0.05)  (0.11)  (0.10)
 Economic income (Loss) per common share (diluted)  (0.05)  1.40   1.17   5.63 
 Add back: Depreciation and amortization expense, net of taxes  0.17   0.10   0.34   0.20 
 Economic Operating Income (Loss) per common share (diluted) $0.12  $1.50  $1.51  $5.83 

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.
aUnderwriting expenses: Economic Proceeds presents investment banking revenues net of underwriting expenses.
bReimbursable 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.
cSecurities 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.
dFund 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.
eCertain 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.
fCarried 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.
gProprietary trading, interest and dividends: Economic Proceeds presents interest and dividends from the Company's proprietary trading in investment income.
hInsurance 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.
iFacilitation 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.
jAssociated partner/banker compensation reclassification: Economic Compensation Expense presents certain payments to associated banking partners as compensation rather than non-compensation expenses.
kManagement 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
lThe 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
mPre-tax Economic Income (Loss) excludes the amortization of discount (premium) on debt.
nPre-tax Economic Income (Loss) excludes acquisition related adjustments (including bargain purchase gain and contingent liability adjustments).
oPre-tax Economic Income (Loss) excludes US GAAP income taxes.
pPre-tax Economic Income (Loss) excludes gain/(loss) on debt extinguishment and accelerated debt costs.
qPre-tax Economic income (Loss) excludes preferred stock dividends.

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:
JT Farley, Managing Director
(646) 562-1056
james.farley@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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Financials (USD)
Sales 2022 1 307 M - -
Net income 2022 111 M - -
Net cash 2022 85,0 M - -
P/E ratio 2022 10,5x
Yield 2022 1,27%
Capitalization 1 026 M 1 026 M -
EV / Sales 2022 0,72x
EV / Sales 2023 0,54x
Nbr of Employees 1 534
Free-Float 45,5%
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Number of Analysts 4
Last Close Price 38,45 $
Average target price 39,00 $
Spread / Average Target 1,43%
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Managers and Directors
Jeffrey Solomon Chairman & Chief Executive Officer
Stephen A. Lasota Chief Financial Officer
Robert Fagin Managing Director & Head-Research
John Holmes Head-Technology & Operations
Elizabeth Flisser Rosman Head-Investment Management
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