cown-20210728
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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 Date of Report (Date of earliest event reported): July 28, 2021
 
 
COWEN INC.
(Exact Name of Registrant as Specified in Charter) 
Delaware 001-34516 27-0423711
(State or Other Jurisdiction of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
 599 Lexington Avenue
New York, NY 10022
(Address of Principal Executive Offices and Zip Code) 
Registrant’s telephone number, including area code: (646) 562-1010 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:  
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading SymbolName of Exchange on Which Registered
Class A Common Stock, par value $0.01 per share COWNThe Nasdaq Global Market
7.75% Senior Notes due 2033COWNLThe Nasdaq Global Market





Item 2.02.     Results of Operations and Financial Condition.
 
On July 28, 2021, Cowen Inc., a Delaware corporation (the “Company”) issued a press release announcing its financial results for the three and six months ended June 30, 2021, a copy of which is attached hereto as Exhibit 99.1. 

The information in Exhibit 99.1 is furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.

Item 9.01. Financial Statements and Exhibits.
 
(d) Exhibit
 






SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 COWEN INC.
   
By:/s/ Owen S. Littman
 Name:Owen S. Littman
Date:July 28, 2021Title:General Counsel
 


 


Document







https://cdn.kscope.io/11b7a4917d951d74cbe92e9fd1d4f3a6-cowenlogo1a12a.jpg

COWEN ANNOUNCES FINANCIAL RESULTS FOR SECOND QUARTER 2021

Reports 2Q21 GAAP Net Income to common stockholders of $43.6 million, or $1.29 per diluted share
Economic Operating Income of $50.8 million, or $1.50 per diluted share (Non-GAAP)
Strong Investment Banking, Brokerage and Management fee revenues
Record share repurchases of $49.9 million, maintained quarterly cash dividend of $0.10 per share
Earnings call today at 9am ET. Dial-in: 855-760-0961 or 631-485-4850 Passcode: 3633779

NEW YORK - July 28, 2021 - Cowen Inc. (NASDAQ: COWN) (“Cowen” or “the Company”) today announced its operating results for the second quarter ended June 30, 2021.

Jeffrey M. Solomon, Chair and Chief Executive Officer of Cowen, said, "Our solid performance in the second quarter demonstrates the sustainable earnings power of our core operating business. This is the result of the increased breadth and depth of our capabilities developed through strategic investments over the last several years. We are confident that Cowen is well positioned to continue helping our clients achieve their goals while unlocking significant value for our shareholders."
Second Quarter 2021 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)20212020Δ %20212020Δ %
Revenue/Economic Proceeds (Non-GAAP)$458.8 $646.2(29)%$390.1 $558.7 (30)%
Net income (loss) attributable to common stockholders/Economic Operating Income (Non-GAAP)$43.6 $112.1(61)%$50.8 $166.9 (70)%
Earnings (loss) per common share (diluted)$1.29 $3.83(66)%$1.50 $5.69 (74)%
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." 2Q21 Economic Operating Income (Loss) is calculated net of associated taxes. The Company has utilized all available federal net operating losses not subject to limitation during 2020. 2Q20 Economic Operating Income included $64.9 million from an unrealized gain on the Nikola investment.

Second Quarter 2021 Operating Financial Highlights

Economic Operating Income (Non-GAAP):
$50.8 million, or $1.50 per diluted share, which is after economic income tax expenses of $18.0 million.

Strong Investment Banking performance:
Record advisory: nearly 60% of total IB revenues, including second-highest M&A revenues on record
Strong performance from non-Healthcare sectors including Info Services and Consumer help offset slowdown in HC activity. Overall pipeline remains robust

Solid Markets performance with continuing share gains:
Brokerage Economic Proceeds (Non-GAAP) of $175.8 million ($2.8 million/trading day) in 2Q21, up 5% year-over-year despite a 15% year-over-year decline in U.S. equity trading volumes
Strong growth in cash and non-US trading, prime services, securities finance, and special situations

Invested capital:
As of June 30, 2021, the Company had invested capital in Op Co totaling $831.6 million, up from $800.0 million as of March 31, 2021
1


As of June 30, 2021, the Company had invested capital in Asset Co totaling $126.2 million, down from $128.5 million as of March 31, 2021
The largest Asset Co investments are the investment in Italian wireless broadband provider Linkem S.p.A ($81.3 million), private equity funds Formation8/Eclipse ($41.6 million) and other private investments ($3.3 million)
Assets under Management
As of June 30, 2021, the Company had assets under management of $14.4 billion, an increase of $0.4 billion from March 31, 2021 and an increase of $2.9 billion from June 30, 2020, respectively
Management fee economic proceeds (non-GAAP) were $18.1 million, up 26% year-over-year


Capital Optimization Update
In the second quarter of 2021, the Company repurchased $49.9 million of its common stock, or 1,275,249 shares, at an average price of $39.14 under the Company's existing share repurchase program. Outside the share repurchase program, in the second quarter of 2021 the Company acquired approximately $15.0 million of stock as a result of net share settlements relating to the vesting of equity awards, or 366,310 shares, at an average price of $40.91. Approximately $50 million is currently available for purchase under the share repurchase program.
On June 24, 2021, the Company redeemed all of the outstanding principal of its December 2022 Convertible Notes. The conversion for the December 2022 Convertible Notes was settled in $88.1 million in cash, representing the principal amount and 2,938,841 shares ($128.3 million) of the Company’s Class A common stock, representing the remainder of the conversion obligation in excess of the principal amount.
Quarterly Cash Dividend
On July 21, 2021, the Board of Directors declared a cash dividend of $0.10 per common share. The dividend will be payable on September 15, 2021, to stockholders of record on September 1, 2021.
Select Balance Sheet Data
(Amounts in millions, except per share information)
June 30, 2021December 31, 2020
Cowen Inc. stockholders' equity$1,097.3$969.5
Common equity (CE)$996.0$868.2
Tangible common equity (TCE)$822.0$696.7
Book value per share (CE/CSO)$34.35$32.34
Tangible book value per share (TCE/CSO)$28.35$25.95
Common shares outstanding (CSO)29.026.8
Note: Common Equity (CE) is calculated as Cowen Inc, stockholders’ equity less our preferred stock issuance.
Tangible common equity (TCE) is calculated as common equity (CE) less goodwill and net intangible assets.




2


Cowen Inc.
US GAAP Preliminary Unaudited Condensed Consolidated Statements of Operations
(Dollar and share amounts in thousands, except per share data)
Three Months EndedSix Months Ended
June 30June 30
2021202020212020
Revenue
Investment banking$224,981 $203,982 $529,815 $309,010 
Brokerage139,060 130,209 312,797 271,586 
Investment income (loss)
Securities principal transactions, net40,572157,588104,537126,543
Portfolio fund principal transactions, net (1,882)12,09413,5219,276
Carried interest allocations(35,530)37,75761,23926,213
Total investment income (loss)3,160 207,439 179,297 162,032 
Management fees14,995 11,653 40,737 23,257 
Incentive income169 — 2,427 — 
Interest and dividends62,173 47,918 121,561 89,995 
Insurance and reinsurance premiums11,493 5,967 18,610 16,438 
Other2,031 1,286 3,690 2,868 
Consolidated Funds revenues695 37,730 (2,652)(32,279)
Total revenue458,757 646,184 1,206,282 842,907 
Interest and dividends expense63,073 49,304 120,714 88,096 
Total net revenue395,684 596,880 1,085,568 754,811 
Expenses
Employee compensation and benefits219,186 305,282 607,382 429,710 
Insurance and reinsurance claims, commissions and amortization of deferred acquisition costs5,216 6,434 11,671 16,864 
Operating, general, administrative and other expenses104,001 92,027 200,077 180,166 
Depreciation and amortization expense4,565 6,200 8,919 11,642 
Consolidated Funds expenses124 1,585 395 4,299 
Total expenses333,092 411,528 828,444 642,681 
Other income (loss)
Net (losses) gains on other investments6,730 6,528 19,375 6,466 
Bargain purchase gain, net of tax— — 3,855 — 
Gain/(loss) on debt extinguishment— — (4,538)— 
Total other income (loss)6,730 6,528 18,692 6,466 
Income (loss) before income taxes69,322 191,880 275,816 118,596 
Income tax expense/(benefit)10,244 44,932 64,672 43,759 
Net income (loss)59,078 146,948 211,144 74,837 
Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and funds13,755 33,113 18,317 (29,075)
Net income (loss) attributable to Cowen Inc.45,323 113,835 192,827 103,912 
Less: Preferred stock dividends1,698 1,698 3,396 3,396 
Net income (loss) attributable to Cowen Inc. common stockholders$43,625 $112,137 $189,431 $100,516 
Earnings (loss) per share:
Basic$1.62 $4.01 $6.98 $3.55 
Diluted$1.29 $3.83 $5.62 $3.39 
Weighted average shares used in per share data:
Basic26,903 27,983 27,130 28,289 
Diluted33,858 29,316 33,703 29,644 
3


U.S. GAAP Financial Measures
During the first quarter of 2021, the Company changed the presentation of certain income streams on its U.S. GAAP preliminary Unaudited Condensed Consolidated Statements of Operations by moving the income streams from Other income - net gains (losses) on securities, derivatives and other investments to Revenues. Additionally, the Company moved proprietary trading gains and losses generated by the Company’s broker dealer entities from Brokerage revenue to Investment income (loss) – securities principal transactions, net. The Company believes that these presentation changes provide a better representation of the Company’s operating results as it is used by management to monitor the Company’s financial performance and is consistent with industry practice. The changes in presentation have no impact on net income and prior period amounts have been recast to reflect such changes in presentation.
Second quarter 2021 revenue was $458.8 million versus $646.2 million in the second quarter of 2020. The year-over-year decrease was due primarily to decreased investment income and consolidated funds' principal transactions, net, partly offset by increased investment banking and brokerage activity and higher management fees.
Second quarter 2021 investment banking revenues increased $21.0 million to $225.0 million. During the second quarter of 2021 the Company completed 39 underwriting transactions, 41 strategic advisory transactions and 6 debt capital markets transactions.
Second quarter 2021 brokerage revenues increased $8.9 million to $139.1 million. The revenue growth was attributable to an increase in institutional brokerage, including special situations trading, cash trading and non-U.S. execution, as well as an increase in institutional services, primarily securities finance and prime brokerage.
Second quarter 2021 investment income decreased $204.3 million.The decrease included a $117.0 million decrease in securities principal transactions, including lower performance in the merchant banking portfolio and in public healthcare investments as well as a decrease in carried interest allocations.
Second quarter 2021 employee compensation and benefits expenses were $219.2 million, an decrease of $86.1 from the prior-year period. The year-over-year decrease was due primarily to lower total revenues resulting in a lower compensation and benefits accrual.
Second quarter 2021 income tax expense was $10.2 million compared to a $44.9 million income tax expense in the prior-year quarter. This change is primarily attributable to the change in the Company’s income before income taxes for the respective periods.
Second quarter 2021 total expenses totaled $333.1 million, a decrease of $78.4 million from the prior-year period. The year-over-year decrease was primarily due to lower compensation expenses partially offset by an increase in brokerage and trader execution costs and professional, advisor and other fees associated with increased investment banking and brokerage activity.
Second quarter 2021 net income attributable to common stockholders was $43.6 million compared to $112.1 million in the second quarter of 2020. The decrease was primarily due to decreases in securities principal transactions and carried interest allocations.
4


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 provides additional insight on the performance of the Company’s core businesses and divisions; (ii) eliminates the impact of consolidation for Consolidated Funds; and excludes (iii) goodwill and intangible impairment, (iv) certain other transaction-related adjustments and/or reorganization expenses, 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 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.
5



Second Quarter Non-GAAP Financial Review

Economic Proceeds
Three Months EndedSix Months Ended
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
(Dollar amounts in thousands)Op CoAsset CoTotalOp CoAsset CoTotalOp CoAsset CoTotalOp CoAsset CoTotal
Economic Proceeds
Investment banking$214,427 $— $214,427 $190,429 $— $190,429 $507,914 $— $507,914 $289,627 $— $289,627 
Brokerage175,845 — 175,845 167,067 — 167,067 397,692 — 397,692 299,739 — 299,739 
Management fees17,825 299 18,124 14,234 168 14,402 44,709 616 45,325 27,351 372 27,723 
Incentive income(31,566)514 (31,052)45,392 983 46,375 78,359 (701)77,658 43,449 (1,161)42,288 
Investment income (loss)5,595 (117)5,478 142,379 (1,893)140,486 37,514 2,973 40,487 122,931 (13,548)109,383 
Other economic proceeds7,307 — 7,307 (62)(60)8,471 (1)8,470 498 500 
Total: Economic Proceeds389,433 696 390,129 559,439 (740)558,699 1,074,659 2,887 1,077,546 783,595 (14,335)769,260 
Economic Interest Expense7,423 1,174 8,597 6,102 1,469 7,571 13,366 2,261 15,627 12,445 2,904 15,349 
Net Economic Proceeds$382,010 $(478)$381,532 $553,337 $(2,209)$551,128 $1,061,293 $626 $1,061,919 $771,150 $(17,239)$753,911 

Economic Proceeds were $390.1 million versus $558.7 million in the second quarter of 2020, a decrease of 30%.

Investment Banking Economic Proceeds were $214.4 million, up 13% versus the prior-year period, driven by increased capital markets advisory revenue and higher-fee M&A transactions.

Brokerage Economic Proceeds of $175.8 million were up 5% versus the prior-year period, driven by strength in cash trading, non-US execution, special situations, prime services and securities finance.

Management Fees Economic Proceeds rose 26% year-over-year to $18.1 million in the second quarter, driven primarily by higher AUM in the sustainability and activist strategies.

Incentive Income Economic Proceeds were a loss of $31.1 million in the second quarter of 2021, down from $46.4 million in the prior-year period, primarily due to a quarterly mark-to-market on performance fees in the sustainability and healthcare investment strategies.

Investment Income Economic Proceeds posted income of $5.5 million, down from $140.5 million in the prior-year period. Second quarter 2020 investment income included a $129.8 million unrealized gain on the investment in Nikola.









6


Second Quarter Non-GAAP Financial Review (continued)
Economic Expenses
Three Months EndedSix Months Ended
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
(Dollar amounts in thousands)Op CoAsset CoTotalOp CoAsset CoTotalOp CoAsset CoTotalOp CoAsset CoTotal
Economic Expenses
Compensation & Benefits$216,280 $4,133 $220,413 $304,644 $438 $305,082 $601,858 $6,951 $608,809 $429,650 $1,136 $430,786 
Non-Compensation Expenses87,811 53 87,864 75,572 109 75,681 177,226 (24)177,202 156,203 263 156,466 
Depreciation & Amortization4,561 4,565 5,657 5,663 8,910 8,919 11,085 12 11,097 
Non-Controlling Interest1,488 — 1,488 1,739 — 1,739 2,955 — 2,955 3,479 — 3,479 
Total: Economic Expenses$310,140 $4,190 $314,330 $387,612 $553 $388,165 $790,949 $6,936 $797,885 $600,417 $1,411 $601,828 

Economic Compensation Expenses were $220.4 million compared to $305.1 million in the second quarter of 2020. The decrease was due to lower revenues. The second quarter 2021 economic compensation-to-proceeds ratio was 56.5%, up from 54.6% in 2Q20.

Economic Non-compensation Expenses Second quarter 2021 fixed non-compensation expenses were up $7.0 million from the prior-year period at $41.9 million. Variable non-compensation expenses were $46.0 million, up from $40.8 million in the second quarter of 2020. The increase is related in part to higher brokerage and trade execution costs due to increased volumes as well as higher professional fees and increased travel, entertainment and business development expenses.

Economic Depreciation and Amortization Expenses were $4.6 million compared to $5.7 million in the second quarter of 2020. The decrease was due to certain intangibles which were fully amortized during 2020.

Economic Income and Economic Operating Income
Three Months EndedSix Months Ended
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
(Dollar amounts in thousands)Op CoAsset CoTotalOp CoAsset CoTotalOp CoAsset CoTotalOp CoAsset CoTotal
Pre-tax Economic Income (Loss)$71,870 $(4,668)$67,202 $165,725 $(2,762)$162,963 $270,344 $(6,310)$264,034 $170,733 $(18,650)$152,083 
Economic income tax expense *19,261 (1,251)18,010 — — — 72,451 (1,691)70,760 — — — 
Preferred dividends1,460 238 1,698 1,387 311 1,698 2,887 509 3,396 2,745 651 3,396 
Economic Income (Loss) *$51,149 $(3,655)$47,494 $164,338 $(3,073)$161,265 195,006 (5,128)189,878 167,988 (19,301)148,687 
Add back: Depreciation and amortization expense, net of taxes3,339 3,342 5,657 5,663 6,522 6,528 11,085 12 11,097 
Economic Operating Income (Loss)$54,488 $(3,652)$50,836 $169,995 $(3,067)$166,928 $201,528 $(5,122)$196,406 $179,073 $(19,289)$159,784 
Economic Income per common share$1.51 $(0.11)$1.40 $5.61 $(0.10)$5.50 $5.79 $(0.15)$5.63 $5.67 $(0.65)$5.02 
Economic Operating Income per common share$1.61 $(0.11)$1.50 $5.80 $(0.10)$5.69 $5.98 $(0.15)$5.83 $6.04 $(0.65)$5.40 

* Economic Income (Loss) is presented net of associated taxes starting in the first quarter of 2021. The Company has utilized all available federal net operating losses not subject to limitation during 2020.

7

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, 2021 and 2020:
For the three months ended June 30, 2021
(Dollar amounts in thousands)
Investment BankingBrokerageInvestment Income Management FeesIncentive IncomeInterest and DividendsReinsurance premiums Other revenuesConsolidated Funds RevenuesOther 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 — (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 
For the three months ended June 30, 2020
(Dollar amounts in thousands)
Investment BankingBrokerageInvestment Income Management FeesIncentive IncomeInterest and DividendsReinsurance premiums Other revenuesConsolidated Funds RevenuesOther Income (Loss)Total
Total US GAAP Revenues and Other Income (Loss)$203,982 $130,209 $207,439 $11,653 $— $47,918 $5,967 $1,286 $37,730 $6,528 $652,712 
Management Presentation Reclassifications:
Underwriting expensesa(8,871)— — — — — — — — — (8,871)
Reimbursable client expensesb(4,682)— — — — — — (271)— — (4,953)
Securities financing interest expensec— 4,939 — — — (40,517)— — — — (35,578)
Fund start-up costs, distribution and other feesd— — — (800)— — — (259)— — (1,059)
Certain equity method investmentse— — — 2,914 8,365 — — — — (9,390)1,889 
Carried interestf— — (38,277)— 38,010 — — — — — (267)
Proprietary trading, interest and dividendsg— 22,351 (28,102)— — (2,919)— (364)— 2,862 (6,172)
Insurance related activities expensesh— — — — — — (5,967)(459)— — (6,426)
Facilitation trading gains and lossesi— 9,568 (6,067)— — (4,482)— — — — (981)
Total Management Presentation Reclassifications:(13,553)36,858 (72,446)2,114 46,375 (47,918)(5,967)(1,353)— (6,528)(62,418)
Fund Consolidated Reclassificationsl— — 5,493 635 — — — (37,730)— (31,595)
Total Economic Proceeds$190,429 $167,067 $140,486 $14,402 $46,375 $— $— $(60)$— $— $558,699 


8

Reconciliation of US GAAP (Unaudited) to Non-GAAP Measures (continued)
For the six months ended June 30, 2021
(Dollar amounts in thousands)
Investment BankingBrokerageInvestment Income Management FeesIncentive IncomeInterest and DividendsReinsurance premiums Other revenuesConsolidated Funds RevenuesOther 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— — — — — (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
Bargain purchase gainn— — — — — — — — — (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 











9

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

For the six months ended June 30, 2020
(Dollar amounts in thousands)
Investment BankingBrokerageInvestment Income Management FeesIncentive IncomeInterest and DividendsReinsurance premiums Other revenuesConsolidated Funds RevenuesOther Income (Loss)Total
Total US GAAP Revenues and Other Income (Loss)$309,010 $271,586 $162,032 $23,257 $— $89,995 $16,438 $2,868 $(32,279)$6,466 $849,373 
Management Presentation Reclassifications:
Underwriting expensesa(12,511)— — — — — — — — — (12,511)
Reimbursable client expensesb(6,872)— — — — — — (558)— — (7,430)
Securities financing interest expensec— 10,222 — — — (67,707)— — — — (57,485)
Fund start-up costs, distribution and other feesd— — — (2,810)— — — (520)— — (3,330)
Certain equity method investmentse— — — 5,964 14,965 — — — — (17,303)3,626 
Carried interestf— — (27,192)— 27,323 — — — — — 131 
Proprietary trading gains and lossesg— 25,495 (36,202)— — (10,829)— (897)— 10,837 (11,596)
Insurance related activities expensesh— — — — — — (16,438)(425)— — (16,863)
Facilitation trading gains and lossesi— (7,564)16,361 — — (11,459)— — — — (2,662)
Total Management Presentation Reclassifications:(19,383)28,153 (47,033)3,154 42,288 (89,995)(16,438)(2,400)— (6,466)(108,120)
Fund Consolidated Reclassificationsl— — (5,616)1,312 — — — 32 32,279 — 28,007 
Total Economic Proceeds$289,627 $299,739 $109,383 $27,723 $42,288 $— $— $500 $— $— $769,260 
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, 2021 and 2020:
Three Months Ended June 30,Six Months Ended June 30,
(Dollar amounts in thousands)
2021202020212020
Total US GAAP Interest & Dividend Expense$63,073 $49,304 $120,714 $88,096 
Management Presentation Reclassifications:
Securities financing interest expensec(42,722)(35,578)(83,089)(57,485)
Fund start-up costs, distribution and other feesd(628)— (1,171)— 
Proprietary trading gains and lossesg(1,248)(4,043)(5,486)(10,358)
Facilitation trading gains and lossesi(3,549)(981)(8,240)(2,662)
Total Management Presentation Reclassifications:(48,147)(40,602)(97,986)(70,505)
Income Statement Adjustments:
Accelerated debt costsp(5,557)— (5,557)— 
Amortization of discount/(premium) on debtm(772)(1,131)(1,544)(2,242)
Total Income Statement Adjustments:(6,329)(1,131)(7,101)(2,242)
Total Economic Interest Expense$8,597 $7,571 $15,627 $15,349 


10

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, 2021 and 2020:
Three Months Ended June 30, 2021Three Months Ended June 30, 2020
(Dollar amounts in thousands)
 Employee Compensation and BenefitsNon-compensation US GAAP Expenses (including Depreciation and Amortization)Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment fundsTotalEmployee Compensation and BenefitsNon-compensation US GAAP Expenses (including Depreciation and Amortization)Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment fundsTotal
Total US GAAP$219,186 $113,906 $13,755 $346,847 $305,282 $106,246 $33,113 $444,641 
Management Presentation Reclassifications:— 
Underwriting expensesa— (6,152)— (6,152)— (8,871)— (8,871)
Reimbursable client expensesb— (4,697)— (4,697)— (4,953)— (4,953)
Securities financing interest expensec— — — — — — — — 
Fund start-up costs, distribution and other feesd— (594)— (594)— (1,059)— (1,059)
Certain equity method investmentse— 1,987 — 1,987 — 1,889 — 1,889 
Carried interestf— (156)— (156)— (267)— (267)
Proprietary trading gains and lossesg— 1,501 (14,123)(12,622)— 974 (3,103)(2,129)
Insurance related activities expensesh— (5,221)— (5,221)— (6,426)— (6,426)
Facilitation trading gains and lossesi— — — — — — — — 
Associated partner/banker compensationj1,574 (1,574)— — 140 (140)— — 
Management company non-Controlling interestk(347)(1,141)1,488 — (340)(1,399)1,739 — 
Total Management Presentation Reclassifications:1,227 (16,047)(12,635)(27,455)(200)(20,252)(1,364)(21,816)
Fund Consolidated Reclassificationsl— (124)368 244 — (1,585)(30,010)(31,595)
Income Statement Adjustments:
Acquisition related adjustmentsn— (76)— (76)— 76 — 76 
Contingent liability adjustmentsn— (5,230)— (5,230)— (2,596)— (2,596)
Goodwill and/or other impairmentr— — — — — (545)— (545)
Total Income Statement Adjustments:— (5,306)— (5,306)— (3,065)— (3,065)
Total Economic Expenses$220,413 $92,429 $1,488 $314,330 $305,082 $81,344 $1,739 $388,165 

11

Reconciliation of US GAAP (Unaudited) to Non-GAAP Measures (continued)
Six Months Ended June 30, 2021Six Months Ended June 30, 2020
(Dollar amounts in thousands)
Employee Compensation and BenefitsNon-compensation US GAAP Expenses (including Depreciation and Amortization)Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment fundsTotalEmployee Compensation and BenefitsNon-compensation US GAAP Expenses (including Depreciation and Amortization)Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment fundsTotal
Total US GAAP$607,382 $221,062 $18,317 $846,761 $429,710 $212,971 $(29,075)$613,606 
Management Presentation Reclassifications:
Underwriting expensesa— (13,067)— (13,067)— (12,511)— (12,511)
Reimbursable client expensesb— (9,417)— (9,417)— (7,430)— (7,430)
Fund start-up costs, distribution and other feesd— (4,923)— (4,923)— (3,330)— (3,330)
Certain equity method investmentse— 4,279 — 4,279 — 3,626 — 3,626 
Carried interestf— 114 — 114 — 131 — 131 
Proprietary trading gains and lossesg— 3,271 (21,788)(18,517)— 1,993 (3,231)(1,238)
Insurance related activities expensesh— (11,670)— (11,670)— (16,863)— (16,863)
Associated partner/banker compensationj2,122 (2,122)— — 1,764 (1,764)— — 
Management company non-Controlling interestk(695)(2,260)2,955 — (688)(2,791)3,479 — 
Total Management Presentation Reclassifications:1,427 (35,795)(18,833)(53,201)1,076 (38,939)248 (37,615)
Fund Consolidated Reclassificationsl— (395)3,471 3,076 — (4,299)32,306 28,007 
Income Statement Adjustments:
Acquisition related amountsn— (317)— (317)— 133 — 133 
Contingent liability adjustmentsn— 1,566 — 1,566 — (1,758)— (1,758)
Goodwill and/or other impairmentr— — — — — (545)— (545)
Total Income Statement Adjustments:— 1,249 — 1,249 — (2,170)— (2,170)
Total Economic Expenses$608,809 $186,121 $2,955 $797,885 $430,786 $167,563 $3,479 $601,828 








12

Reconciliation of US GAAP (Unaudited) to Non-GAAP Measures (continued)
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 June 30,Six Months Ended June 30,
(Dollar amounts in thousands)
2021202020212020
US GAAP Net income (loss) attributable to Cowen Inc. common stockholders$43,625 $112,137 $189,431 $100,516 
Income Statement Adjustments:
US GAAP Income tax expense (benefit)o10,244 44,932 64,672 43,759 
Amortization of discount (premium) on debtm772 1,131 1,544 2,242 
Goodwill and/or other impairmentr— 545 — 545 
Debt extinguishment gain (loss) and/or accelerated debt costsp5,557 — 10,095 — 
Bargain purchase gainn— — (3,855)— 
Contingent liability adjustmentsn5,230 2,596 (1,566)1,758 
Acquisition related amountsn76 (76)317 (133)
Preferred dividendsq1,698 1,698 3,396 3,396 
Pre-tax Economic Income (Loss)67,202 162,963 264,034 152,083 
Economic income tax expense (18,010)— (70,760)— 
Preferred dividends(1,698)(1,698)(3,396)(3,396)
Economic Income (Loss) 47,494 161,265 189,878 148,687 
Add back: Depreciation and amortization expense, net of taxes3,342 5,663 6,528 11,097 
Economic Operating Income (Loss)$50,836 $166,928 $196,406 $159,784 
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)2021202020212020
US GAAP Net income (loss) attributable to Cowen Inc. common stockholders$1.29 $3.83 $5.62 $3.39 
Income Statement Adjustments:
US GAAP Income tax expense (benefit)o0.30 1.53 1.92 1.48 
Amortization of discount (premium) on debtm0.02 0.04 0.05 0.08 
Goodwill and/or other impairmentr— 0.02 — 0.02 
Debt extinguishment gain (loss) and accelerated debt costsp0.16 — 0.30 — 
Bargain purchase gainn— — (0.11)— 
Contingent liability adjustmentsn0.15 0.09 (0.05)0.05 
Acquisition related amountsn— — 0.01 — 
Preferred dividendsq0.05 0.06 0.10 0.11 
Pre-tax Economic Income (Loss) per common share (diluted)1.98 5.56 7.83 5.13 
Economic income tax expense (0.53)— (2.10)— 
Preferred dividends(0.05)(0.06)(0.10)(0.11)
Economic income (Loss) per common share (diluted) 1.40 5.50 5.63 5.02 
Add back: Depreciation and amortization expense, net of taxes0.10 0.19 0.20 0.38 
Economic Operating Income (Loss) per common share (diluted)$1.50 $5.69 $5.83 $5.40 
Note: Amounts may not add due to rounding.
13


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 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 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 dividends.
rEconomic Income (Loss) excludes goodwill and other impairments.
14


Earnings Conference Call
 
Management will hold a conference call today, July 28, 2021, at 9:00 am ET to discuss these results and provide an update on business conditions.

Chair and Chief Executive Officer Jeffrey M. Solomon and Chief Financial Officer Stephen A. Lasota will host the presentation, followed by a question and answer period.

U.S. dial in: (855) 760-0961
International dial-in: (631) 485-4850
Passcode: 3633779

Please call the conference telephone number at least 15 minutes prior to the start time.

The call can also be accessed through live audio webcast via this direct link:                     https://edge.media-server.com/mmc/p/r826mdgi

A replay of the call will be available for one week beginning at 12:00 pm ET on July 28, 2021 on the Company’s website at investor.cowen.com/investor-calls or via the following numbers:

U.S. replay dial-in: (855) 859-2056
International replay dial-in: (404) 537-3406
Replay ID: 3633779

About Cowen Inc.
Cowen Inc. (“Cowen” or the “Company”) is a diversified financial services firm offering investment banking services, research, sales and trading, prime brokerage, global clearing, commission management services and investment management. Cowen focuses on delivering value-added capabilities to our clients in order to help them outperform. Founded in 1918, the Company is headquartered in New York and has offices worldwide. Learn more at Cowen.com    

Investor Relations Contact:
JT Farley
(646) 562-1056
james.farley@cowen.com
Source: Cowen Inc.
15


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.


16