Piper Jaffray Companies Announces 2015 First Quarter Results
Financial Highlights
-
Adjusted net income(1) was
$18.8 million , or$1.14 per diluted common share(1), in the first quarter of 2015, compared to$20.0 million , or$1.24 per diluted common share, in the first quarter of 2014, and$14.7 million , or$0.90 per diluted common share, in the fourth quarter of 2014. -
Adjusted net revenues(1) were
$155.7 million in the first quarter of 2015, compared to$161.5 million and$148.4 million in the first and fourth quarters of 2014, respectively. - Adjusted pre-tax operating margin(1) was 18.9% in the first quarter of 2015, compared to 19.3% and 15.9% in the first and fourth quarters of 2014, respectively.
-
Assets under management were
$11.4 billion at March 31, 2015, compared to$11.5 billion in the year-ago period and$11.5 billion at the end of the fourth quarter of 2014. - Rolling 12 month return on average common shareholders' equity increased to 7.8% at March 31, 2015, compared to 7.2% at March 31, 2014. Our rolling 12 month return on average tangible common shareholders' equity(2) increased to 11.2% at March 31, 2015, compared to 10.9% at March 31, 2014.
-
Book value per share increased 8% from March 31, 2014 to
$55.40 a share at March 31, 2015.
|
(1) |
A non-U.S. GAAP ("non-GAAP") measure. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see "Reconciliation of U.S. GAAP to Selected Summary Financial Information." We believe that presenting our results and measures on an adjusted basis in conjunction with U.S. GAAP measures provides the most meaningful basis for comparison of our operating results across periods. |
|
|
(2) |
A non-GAAP measure. See the "Additional Shareholder Information" section for a detailed explanation of the adjustment made to the corresponding U.S. GAAP measure. We believe that the rolling 12 month return on average tangible common shareholders' equity is a meaningful measure of our return on tangible assets deployed in the business. |
|
| Three Months Ended | Percent Inc/(Dec) | |||||||||||||||||
| Mar. 31, | Dec. 31, | Mar. 31, | 1Q '15 | 1Q '15 | ||||||||||||||
| (Amounts in thousands, except per share data) | 2015 | 2014 | 2014 | vs. 4Q '14 | vs. 1Q '14 | |||||||||||||
| As Adjusted(1) | ||||||||||||||||||
| Net revenues | $ | 155,739 | $ | 148,394 | $ | 161,497 | 4.9 | % | (3.6 | )% | ||||||||
| Net income | $ | 18,819 | $ | 14,700 | $ | 20,035 | 28.0 | % | (6.1 | )% | ||||||||
| Earnings per diluted common share | $ | 1.14 | $ | 0.90 | $ | 1.24 | 26.7 | % | (8.1 | )% | ||||||||
| Pre-tax operating margin | 18.9 | % | 15.9 | % | 19.3 | % | ||||||||||||
| U.S. GAAP | ||||||||||||||||||
| Net revenues | $ | 161,871 | $ | 150,548 | $ | 168,133 | 7.5 | % | (3.7 | )% | ||||||||
| Net income | $ | 16,972 | $ | 12,543 | $ | 17,748 | 35.3 | % | (4.4 | )% | ||||||||
| Earnings per diluted common share | $ | 1.03 | $ | 0.77 | $ | 1.10 | 33.8 | % | (6.4 | )% | ||||||||
| Pre-tax operating margin | 19.3 | % | 14.3 | % | 19.5 | % | ||||||||||||
|
(1) |
A non-U.S. GAAP ("non-GAAP") measure. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see "Reconciliation of U.S. GAAP to Selected Summary Financial Information." We believe that presenting our results and measures on an adjusted basis in conjunction with U.S. GAAP measures provides the most meaningful basis for comparison of our operating results across periods. |
|
|
(2) |
A non-GAAP measure. See the "Additional Shareholder Information" section for a detailed explanation of the adjustment made to the corresponding U.S. GAAP measure. We believe that the rolling 12 month return on average tangible common shareholders' equity is a meaningful measure of our return on tangible assets deployed in the business. |
|
For the first quarter of 2015, on a U.S. GAAP basis, net revenues were
“Our portfolio of businesses combined to produce steady results to begin
the year,” said
First Quarter Results – Non-GAAP Basis
Throughout the
Adjusted Consolidated Results and Business Segment Results sections of
this press release we present financial measures that are not prepared
in accordance with U.S. generally accepted accounting principles ("U.S.
GAAP"). The non-GAAP financial measures include adjustments to exclude
(1) revenues and expenses related to noncontrolling interests, (2)
amortization of intangible assets related to acquisitions and (3)
compensation for acquisition-related agreements. Management believes
that presenting results and measures on an adjusted basis in conjunction
with U.S. GAAP measures provides the most meaningful basis for
comparison of its operating results across periods. For a detailed
explanation of the adjustments made to the corresponding U.S. GAAP
measures, see "Reconciliation of U.S. GAAP to Selected Summary Financial
Information."
Adjusted Consolidated Results
For the first quarter of 2015,
adjusted net revenues were
For the first quarter of 2015, adjusted compensation and benefits
expenses were
For the first quarter of 2015, adjusted compensation and benefits expenses were 60.7% of adjusted net revenues, compared to 61.4% and 62.4% for the first and fourth quarters of 2014, respectively. The adjusted compensation ratio decreased compared to the year-ago period due to a change in our mix of business, and decreased compared to the sequential quarter due to a higher revenue base. Also, our compensation ratio was higher in the fourth quarter of 2014 as we made adjustments to reflect our business activity for the full year.
Adjusted non-compensation expenses were
Business Segment Results
The firm has two reportable
business segments: Capital Markets and Asset Management. Consolidated
net revenues and expenses are fully allocated to these two segments.
Capital Markets
For the quarter, Capital Markets
generated adjusted pre-tax operating income of
Adjusted net revenues were
-
Equity financing revenues of
$36.5 million increased 3% and 58% compared to the first and fourth quarters of 2014, respectively. Revenues were favorable compared to both periods due to more completed transactions. -
Debt financing revenues were
$21.7 million , up 61% and 11% compared to the year-ago period and the fourth quarter of 2014, respectively, due to more completed transactions. -
Advisory services revenues were
$29.3 million , down 26% and 28% compared to the first and fourth quarters of 2014, respectively, due to fewer completed transactions. Also, revenues were unfavorable compared to the year-ago period due to lower revenue per transaction. -
Equity institutional brokerage revenues of
$18.9 million decreased 22% and 17% compared to the year-ago period and the fourth quarter of 2014, respectively, due to lower client trading volumes. The decrease compared to the first quarter of 2014 was also attributable to lower revenues from block trades, which are more episodic in occurrence. -
Fixed income institutional brokerage revenues were
$21.2 million , down 16% and 8% compared to the first and fourth quarters of 2014, respectively, due to lower trading gains. -
Management and performance fees earned from managing our alternative
asset management funds were
$1.4 million , compared to$1.7 million and$0.9 million in the year-ago period and the sequential quarter, respectively. -
Adjusted investment income, which includes realized and unrealized
gains and losses on our investments in the merchant banking fund and
the municipal bond fund that we manage for third party investors, and
other firm investments, was
$8.6 million , compared to$3.7 million in the year-ago period and$1.3 million in the fourth quarter of 2014. In the first quarter of 2015, we recorded higher gains on these investments. -
Long-term financing expenses, which primarily represents interest paid
on the firm's variable rate senior notes, were
$1.6 million , down 10% and 2% compared to the first and fourth quarters of 2014, respectively. -
Adjusted operating expenses for the first quarter of 2015 were
$113.6 million , down 4% compared to the first quarter of 2014 and up 2% compared to the fourth quarter of 2014. The decrease compared to the year-ago period was due to lower compensation expenses. - Adjusted segment pre-tax operating margin was 16.5% compared to 17.0% in the year-ago period and 13.9% in the fourth quarter of 2014. Adjusted pre-tax operating margin improved compared to the sequential quarter due to higher net revenues.
Asset Management
For the quarter ended March 31,
2015, Asset Management generated adjusted pre-tax operating income of
Net revenues were
-
Adjusted operating expenses for the current quarter were
$12.7 million , essentially flat compared to the year-ago period and down 4% compared to the fourth quarter of 2014. - Adjusted segment pre-tax operating margin was 35.8%, compared to 36.0% in the first quarter of 2014 and 29.9% in the fourth quarter of 2014. Adjusted segment pre-tax operating margin improved relative to the sequential quarter due to higher net revenues from investment income and lower non-compensation expenses.
-
Assets under management (AUM) were
$11.4 billion at the end of the first quarter of 2015, compared to$11.5 billion in the year-ago period and$11.5 billion at the end of the fourth quarter of 2014.
Other Matters
In the first quarter of 2015, we granted
In the first quarter of 2015, we repurchased
In addition, we acquired
Additional Shareholder Information
| For the Quarter Ended | ||||||
| Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | ||||
| Full time employees | 1,030 | 1,026 | 1,015 | |||
| Equity financings | ||||||
| # of transactions | 35 | 18 | 31 | |||
| Capital raised | $6.5 billion | $2.7 billion | $5.3 billion | |||
| Negotiated tax-exempt issuances | ||||||
| # of transactions | 99 | 92 | 57 | |||
| Par value | $2.9 billion | $1.9 billion | $1.6 billion | |||
| Mergers & acquisitions | ||||||
| # of transactions | 15 | 22 | 17 | |||
| Aggregate deal value | $1.6 billion | $2.5 billion | $2.8 billion | |||
| Asset Management | ||||||
| AUM | $11.4 billion | $11.5 billion | $11.5 billion | |||
| Common shareholders’ equity | $831.0 million | $819.9 million | $767.5 million | |||
| Number of common shares outstanding (in thousands) | 15,000 | 15,265 | 14,916 | |||
| Rolling 12 month return on average common shareholders’ equity * | 7.8% | 8.1% | 7.2% | |||
| Rolling 12 month return on average tangible common shareholders’ equity † | 11.2% | 11.8% | 10.9% | |||
| Book value per share | $55.40 | $53.71 | $51.45 | |||
| Tangible book value per share ‡ | $39.35 | $37.82 | $34.81 | |||
| * | Rolling 12 month return on average common shareholders' equity is computed by dividing net income applicable to Piper Jaffray Companies' for the last 12 months by average monthly common shareholders' equity. | |
| † | Rolling 12 month return on average tangible common shareholders' equity is computed by dividing net income applicable to Piper Jaffray Companies' for the last 12 months by average monthly common shareholders' equity less average goodwill and identifiable intangible assets. Management believes that the rolling 12 month return on average tangible common shareholders' equity is a meaningful measure of our return on tangible assets deployed in the business. Average common shareholders’ equity is the most directly comparable GAAP financial measure to average tangible shareholders’ equity. The following is a reconciliation of average common shareholders’ equity to average tangible common shareholders’ equity: | |
| As of | As of | As of | |||||||||
| (Amounts in thousands) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | ||||||||
| Average common shareholders’ equity | $ | 803,670 | $ | 783,425 | $ | 732,386 | |||||
| Deduct: average goodwill and identifiable intangible assets | 244,646 | 246,598 | 246,867 | ||||||||
| Average tangible common shareholders’ equity | $ | 559,024 | $ | 536,827 | $ | 485,519 | |||||
| ‡ | Tangible book value per share is computed by dividing tangible common shareholders’ equity by common shares outstanding. Tangible common shareholders’ equity equals total common shareholders’ equity less goodwill and identifiable intangible assets. Management believes that tangible book value per share is a meaningful measure of the tangible assets deployed in our business. Shareholders’ equity is the most directly comparable GAAP financial measure to tangible shareholders’ equity. The following is a reconciliation of shareholders’ equity to tangible shareholders’ equity: | |
| As of | As of | As of | |||||||||
| (Amounts in thousands) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | ||||||||
| Common shareholders’ equity | $ | 830,951 | $ | 819,912 | $ | 767,454 | |||||
| Deduct: goodwill and identifiable intangible assets | 240,763 | 242,536 | 248,246 | ||||||||
| Tangible common shareholders’ equity | $ | 590,188 | $ | 577,376 | $ | 519,208 | |||||
Conference Call
About
Cautionary Note Regarding Forward-Looking Statements
This press release and the conference call to discuss the contents of this press release contain forward-looking statements. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements and are subject to significant risks and uncertainties that are difficult to predict. These forward-looking statements cover, among other things, statements made about general economic and market conditions (including the outlook for equity markets and the interest rate environment), the environment and prospects for corporate advisory transactions and capital markets (including our performance in specific sectors), anticipated financial results generally (including expectations regarding our non-compensation expenses, compensation and benefits expense, compensation ratio, revenue levels, operating margins, earnings per share, effective tax rate, and return on equity), current deal pipelines (or backlogs), the liquidity of fixed income markets and impact on our related inventory, our strategic priorities (including growth in public finance, asset management, and corporate advisory), potential acquisitions or strategic hires, or other similar matters.
Forward-looking statements involve inherent risks and uncertainties, both known and unknown, and important factors could cause actual results to differ materially from those anticipated or discussed in the forward-looking statements. These risks, uncertainties and important factors include, but are not limited to, the following:
- market and economic conditions or developments may be unfavorable, including in specific sectors in which we operate, and these conditions or developments, such as market fluctuations or volatility, may adversely affect our business, revenue levels and profitability;
- net revenues from capital markets and corporate advisory engagements may vary materially depending on the number, size, and timing of completed transactions, and completed transactions do not generally provide for subsequent engagements;
- the volume of anticipated investment banking transactions as reflected in our deal pipelines (and the net revenues we earn from such transactions) may differ from expected results if there is a decline in macroeconomic conditions or the financial markets, or if the terms of any transactions are modified;
- interest rate volatility, especially if the changes are rapid or severe, could negatively impact our fixed income institutional business and the negative impact could be exaggerated by reduced liquidity in the fixed income markets;
- strategic trading activities comprise a meaningful portion of our fixed income institutional brokerage revenue, and results from these activities may be volatile and vary significantly, including the possibility of incurring losses, on a quarterly and annual basis;
- potential acquisitions targets or strategic hires may not be available on reasonable terms or at all, and we may not be able to effectively integrate any business or groups of employees we acquire or hire; and
- our stock price may fluctuate as a result of several factors, including but not limited to, changes in our revenues and operating results.
A further listing and description of these and other risks,
uncertainties and important factors can be found in the sections titled
“Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for
the year ended December 31, 2014 and “Management's Discussion and
Analysis of Financial Condition and Results of Operations” in Part II,
Item 7 of our Annual Report on Form 10-K for the year ended December 31,
2014, and updated in our subsequent reports filed with the
Forward-looking statements speak only as of the date they are made, and readers are cautioned not to place undue reliance on them. We undertake no obligation to update them in light of new information or future events.
© 2015
Preliminary Results of Operations (U.S. GAAP – Unaudited)
| Three Months Ended | Percent Inc/(Dec) | |||||||||||||||||
| Mar. 31, | Dec. 31, | Mar. 31, | 1Q '15 | 1Q '15 | ||||||||||||||
| (Amounts in thousands, except per share data) | 2015 | 2014 | 2014 | vs. 4Q '14 | vs. 1Q '14 | |||||||||||||
| Revenues: | ||||||||||||||||||
| Investment banking | $ | 87,077 | $ | 82,613 | $ | 88,474 | 5.4 | % | (1.6 | )% | ||||||||
| Institutional brokerage | 36,036 | 42,324 | 44,034 | (14.9 | ) | (18.2 | ) | |||||||||||
| Asset management | 20,522 | 20,242 | 20,959 | 1.4 | (2.1 | ) | ||||||||||||
| Interest | 12,205 | 11,781 | 13,659 | 3.6 | (10.6 | ) | ||||||||||||
| Investment income | 12,591 | 434 | 6,768 | N/M | 86.0 | |||||||||||||
| Total revenues | 168,431 | 157,394 | 173,894 | 7.0 | (3.1 | ) | ||||||||||||
| Interest expense | 6,560 | 6,846 | 5,761 | (4.2 | ) | 13.9 | ||||||||||||
| Net revenues | 161,871 | 150,548 | 168,133 | 7.5 | (3.7 | ) | ||||||||||||
| Non-interest expenses: | ||||||||||||||||||
| Compensation and benefits | 95,857 | 93,765 | 100,489 | 2.2 | (4.6 | ) | ||||||||||||
| Occupancy and equipment | 6,783 | 6,080 | 6,778 | 11.6 | 0.1 | |||||||||||||
| Communications | 6,328 | 5,684 | 5,955 | 11.3 | 6.3 | |||||||||||||
| Trade execution and clearance | 1,997 | 2,094 | 1,834 | (4.6 | ) | 8.9 | ||||||||||||
| Marketing and business development | 6,982 | 7,473 | 6,251 | (6.6 | ) | 11.7 | ||||||||||||
| Outside services | 8,184 | 9,218 | 8,768 | (11.2 | ) | (6.7 | ) | |||||||||||
| Intangible asset amortization expense | 1,773 | 2,318 | 2,318 | (23.5 | ) | (23.5 | ) | |||||||||||
| Other operating expenses | 2,675 | 2,427 | 3,027 | 10.2 | (11.6 | ) | ||||||||||||
| Total non-interest expenses | 130,579 | 129,059 | 135,420 | 1.2 | (3.6 | ) | ||||||||||||
| Income before income tax expense | 31,292 | 21,489 | 32,713 | 45.6 | (4.3 | ) | ||||||||||||
| Income tax expense | 9,490 | 7,514 | 9,827 | 26.3 | (3.4 | ) | ||||||||||||
| Net income | 21,802 | 13,975 | 22,886 | 56.0 | (4.7 | ) | ||||||||||||
| Net income applicable to noncontrolling interests | 4,830 | 1,432 | 5,138 | 237.3 | (6.0 | ) | ||||||||||||
| Net income applicable to Piper Jaffray Companies (a) | $ | 16,972 | $ | 12,543 | $ | 17,748 | 35.3 | % | (4.4 | )% | ||||||||
| Net income applicable to Piper Jaffray Companies’ common shareholders (a) | $ | 15,810 | $ | 11,700 | $ | 16,089 | 35.1 | % | (1.7 | )% | ||||||||
| Earnings per common share | ||||||||||||||||||
| Basic | $ | 1.03 | $ | 0.77 | $ | 1.10 | 33.8 | % | (6.4 | )% | ||||||||
| Diluted | $ | 1.03 | $ | 0.77 | $ | 1.10 | 33.8 | % | (6.4 | )% | ||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||||
| Basic | 15,294 | 15,241 | 14,612 | 0.3 | % | 4.7 | % | |||||||||||
| Diluted | 15,332 | 15,293 | 14,657 | 0.3 | % | 4.6 | % | |||||||||||
|
(a) |
Net income applicable to Piper Jaffray Companies is the total net income earned by the Company. Piper Jaffray Companies calculates earnings per common share using the two-class method, which requires the allocation of consolidated net income between common shareholders and participating security holders, which in the case of Piper Jaffray Companies, represents unvested restricted stock with dividend rights. |
|
|
N/M — Not meaningful |
||
Preliminary Segment Data (U.S. GAAP – Unaudited)
| Three Months Ended | Percent Inc/(Dec) | |||||||||||||||||
| Mar. 31, | Dec. 31, | Mar. 31, | 1Q '15 | 1Q '15 | ||||||||||||||
| (Dollars in thousands) | 2015 | 2014 | 2014 | vs. 4Q '14 | vs. 1Q '14 | |||||||||||||
| Capital Markets | ||||||||||||||||||
| Investment banking | ||||||||||||||||||
| Financing | ||||||||||||||||||
| Equities | $ | 36,489 | $ | 23,056 |
$ |
35,301 | 58.3 | % | 3.4 | % | ||||||||
| Debt | 21,738 | 19,583 | 13,539 | 11.0 | 60.6 | |||||||||||||
| Advisory services | 29,266 | 40,433 | 39,728 | (27.6 | ) | (26.3 | ) | |||||||||||
| Total investment banking | 87,493 | 83,072 | 88,568 | 5.3 | (1.2 | ) | ||||||||||||
| Institutional sales and trading | ||||||||||||||||||
| Equities | 18,905 | 22,874 | 24,260 | (17.4 | ) | (22.1 | ) | |||||||||||
| Fixed income | 21,217 | 23,140 | 25,238 | (8.3 | ) | (15.9 | ) | |||||||||||
| Total institutional sales and trading | 40,122 | 46,014 | 49,498 | (12.8 | ) | (18.9 | ) | |||||||||||
| Management and performance fees | 1,407 | 886 | 1,737 | 58.8 | (19.0 | ) | ||||||||||||
| Investment income | 14,705 | 3,446 | 10,378 | 326.7 | 41.7 | |||||||||||||
| Long-term financing expenses | (1,560 | ) | (1,597 | ) | (1,740 | ) | (2.3 | ) | (10.3 | ) | ||||||||
| Net revenues | 142,167 | 131,821 | 148,441 | 7.8 | (4.2 | ) | ||||||||||||
| Operating expenses | 116,203 | 114,039 | 120,930 | 1.9 | (3.9 | ) | ||||||||||||
| Segment pre-tax operating income | $ | 25,964 | $ | 17,782 | $ | 27,511 | 46.0 | % | (5.6 | )% | ||||||||
| Segment pre-tax operating margin | 18.3 | % | 13.5 | % | 18.5 | % | ||||||||||||
| Asset Management | ||||||||||||||||||
| Management and performance fees | ||||||||||||||||||
| Management fees | $ | 19,107 | $ | 19,298 | $ | 19,136 | (1.0 | )% | (0.2 | )% | ||||||||
| Performance fees | 8 | 58 | 86 | (86.2 | ) | (90.7 | ) | |||||||||||
| Total management and performance fees | 19,115 | 19,356 | 19,222 | (1.2 | ) | (0.6 | ) | |||||||||||
| Investment income/(loss) | 589 | (629 | ) | 470 | (193.6 | ) | 25.3 | |||||||||||
| Net revenues | 19,704 | 18,727 | 19,692 | 5.2 | 0.1 | |||||||||||||
| Operating expenses | 14,376 | 15,020 | 14,490 | (4.3 | ) | (0.8 | ) | |||||||||||
| Segment pre-tax operating income | $ | 5,328 | $ | 3,707 | $ | 5,202 | 43.7 | % | 2.4 | % | ||||||||
| Segment pre-tax operating margin | 27.0 | % | 19.8 | % | 26.4 | % | ||||||||||||
| Total | ||||||||||||||||||
| Net revenues | $ | 161,871 | $ | 150,548 | $ | 168,133 | 7.5 | % | (3.7 | )% | ||||||||
| Operating expenses | 130,579 | 129,059 | 135,420 | 1.2 | (3.6 | ) | ||||||||||||
| Pre-tax operating income | $ | 31,292 | $ | 21,489 | $ | 32,713 | 45.6 | % | (4.3 | )% | ||||||||
| Pre-tax operating margin | 19.3 | % | 14.3 | % | 19.5 | % | ||||||||||||
Preliminary Selected Summary Financial Information (Non-GAAP – Unaudited) (1)
| Three Months Ended | Percent Inc/(Dec) | |||||||||||||||||
| Mar. 31, | Dec. 31, | Mar. 31, | 1Q '15 | 1Q '15 | ||||||||||||||
| (Amounts in thousands, except per share data) | 2015 | 2014 | 2014 | vs. 4Q '14 | vs. 1Q '14 | |||||||||||||
| Revenues: | ||||||||||||||||||
| Investment banking | $ | 87,077 | $ | 82,613 | $ | 88,474 | 5.4 | % | (1.6 | )% | ||||||||
| Institutional brokerage | 36,036 | 42,324 | 44,034 | (14.9 | ) | (18.2 | ) | |||||||||||
| Asset management | 20,522 | 20,242 | 20,959 | 1.4 | (2.1 | ) | ||||||||||||
| Interest | 9,245 | 8,853 | 10,356 | 4.4 | (10.7 | ) | ||||||||||||
| Investment income | 8,452 | 125 | 2,581 | N/M | 227.5 | |||||||||||||
| Total revenues | 161,332 | 154,157 | 166,404 | 4.7 | (3.0 | ) | ||||||||||||
| Interest expense | 5,593 | 5,763 | 4,907 | (2.9 | ) | 14.0 | ||||||||||||
| Adjusted net revenues (2) | $ | 155,739 | $ | 148,394 | $ | 161,497 | 4.9 | % | (3.6 | )% | ||||||||
| Non-interest expenses: | ||||||||||||||||||
| Adjusted compensation and benefits (3) | $ | 94,606 | $ | 92,552 | $ | 99,200 | 2.2 | % | (4.6 | )% | ||||||||
| Ratio of adjusted compensation and benefits to adjusted net revenues | 60.7 | % | 62.4 | % | 61.4 | % | ||||||||||||
| Adjusted non-compensation expenses (4) | $ | 31,647 | $ | 32,254 | $ | 31,115 | (1.9 | )% | 1.7 | % | ||||||||
| Ratio of adjusted non-compensation expenses to adjusted net revenues | 20.3 | % | 21.7 | % | 19.3 | % | ||||||||||||
| Adjusted income: | ||||||||||||||||||
| Adjusted income before adjusted income tax expense (5) | $ | 29,486 | $ | 23,588 | $ | 31,182 | 25.0 | % | (5.4 | )% | ||||||||
| Adjusted operating margin (6) | 18.9 | % | 15.9 | % | 19.3 | % | ||||||||||||
| Adjusted income tax expense (7) | 10,667 | 8,888 | 11,147 | 20.0 | (4.3 | ) | ||||||||||||
| Adjusted net income (8) | $ | 18,819 | $ | 14,700 | $ | 20,035 | 28.0 | % | (6.1 | )% | ||||||||
| Effective tax rate (9) | 36.2 | % | 37.7 | % | 35.7 | % | ||||||||||||
| Adjusted net income applicable to Piper Jaffray Companies’ common shareholders (10) | $ | 17,531 | $ | 13,712 | $ | 18,162 | 27.9 | % | (3.5 | )% | ||||||||
| Adjusted earnings per diluted common share | $ | 1.14 | $ | 0.90 | $ | 1.24 | 26.7 | % | (8.1 | )% | ||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||||
| Diluted | 15,332 | 15,293 | 14,657 | 0.3 | % | 4.6 | % | |||||||||||
This presentation includes non-GAAP measures. The non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see "Reconciliation of U.S. GAAP to Selected Summary Financial Information."
N/M — Not meaningful
Preliminary Adjusted Segment Data (Non-GAAP – Unaudited)
| Three Months Ended | Percent Inc/(Dec) | |||||||||||||||||
| Mar. 31, | Dec. 31, | Mar. 31, | 1Q '15 | 1Q '15 | ||||||||||||||
| (Dollars in thousands) | 2015 | 2014 | 2014 | vs. 4Q '14 | vs. 1Q '14 | |||||||||||||
| Capital Markets | ||||||||||||||||||
| Investment banking | ||||||||||||||||||
| Financing | ||||||||||||||||||
| Equities | $ | 36,489 | $ | 23,056 | $ | 35,301 | 58.3 | % | 3.4 | % | ||||||||
| Debt | 21,738 | 19,583 | 13,539 | 11.0 | 60.6 | |||||||||||||
| Advisory services | 29,266 | 40,433 | 39,728 | (27.6 | ) | (26.3 | ) | |||||||||||
| Total investment banking | 87,493 | 83,072 | 88,568 | 5.3 | (1.2 | ) | ||||||||||||
| Institutional sales and trading | ||||||||||||||||||
| Equities | 18,905 | 22,874 | 24,260 | (17.4 | ) | (22.1 | ) | |||||||||||
| Fixed income | 21,217 | 23,140 | 25,238 | (8.3 | ) | (15.9 | ) | |||||||||||
| Total institutional sales and trading | 40,122 | 46,014 | 49,498 | (12.8 | ) | (18.9 | ) | |||||||||||
| Management and performance fees | 1,407 | 886 | 1,737 | 58.8 | (19.0 | ) | ||||||||||||
| Investment income | 8,573 | 1,292 | 3,742 | 563.5 | 129.1 | |||||||||||||
| Long-term financing expenses | (1,560 | ) | (1,597 | ) | (1,740 | ) | (2.3 | ) | (10.3 | ) | ||||||||
| Adjusted net revenues (2) | 136,035 | 129,667 | 141,805 | 4.9 | (4.1 | ) | ||||||||||||
| Adjusted operating expenses (12) | 113,601 | 111,682 | 117,721 | 1.7 | (3.5 | ) | ||||||||||||
| Adjusted segment pre-tax operating income (5) | $ | 22,434 | $ | 17,985 | $ | 24,084 | 24.7 | % | (6.9 | )% | ||||||||
| Adjusted segment pre-tax operating margin (6) | 16.5 | % | 13.9 | % | 17.0 | % | ||||||||||||
| Asset Management | ||||||||||||||||||
| Management and performance fees | ||||||||||||||||||
| Management fees | $ | 19,107 | $ | 19,298 | $ | 19,136 | (1.0 | )% | (0.2 | )% | ||||||||
| Performance fees | 8 | 58 | 86 | (86.2 | ) | (90.7 | ) | |||||||||||
| Total management and performance fees | 19,115 | 19,356 | 19,222 | (1.2 | ) | (0.6 | ) | |||||||||||
| Investment income/(loss) | 589 | (629 | ) | 470 | (193.6 | ) | 25.3 | |||||||||||
| Net revenues | 19,704 | 18,727 | 19,692 | 5.2 | 0.1 | |||||||||||||
| Adjusted operating expenses (13) | 12,652 | 13,124 | 12,594 | (3.6 | ) | 0.5 | ||||||||||||
| Adjusted segment pre-tax operating income (13) | $ | 7,052 | $ | 5,603 | $ | 7,098 | 25.9 | % | (0.6 | )% | ||||||||
| Adjusted segment pre-tax operating margin (6) | 35.8 | % | 29.9 | % | 36.0 | % | ||||||||||||
| Total | ||||||||||||||||||
| Adjusted net revenues (2) | $ | 155,739 | $ | 148,394 | $ | 161,497 | 4.9 | % | (3.6 | )% | ||||||||
| Adjusted operating expenses (12) | 126,253 | 124,806 | 130,315 | 1.2 | (3.1 | ) | ||||||||||||
| Adjusted pre-tax operating income (5) | $ | 29,486 | $ | 23,588 | $ | 31,182 | 25.0 | % | (5.4 | )% | ||||||||
| Adjusted pre-tax operating margin (6) | 18.9 | % | 15.9 | % | 19.3 | % | ||||||||||||
This presentation includes non-GAAP measures. The non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see "Reconciliation of U.S. GAAP to Selected Summary Financial Information."
Reconciliation of U.S. GAAP to Selected Summary Financial Information (1) (Unaudited)
| Three Months Ended | ||||||||||||
| Mar. 31, | Dec. 31, | Mar. 31, | ||||||||||
| (Amounts in thousands, except per share data) | 2015 | 2014 | 2014 | |||||||||
| Net revenues: | ||||||||||||
| Net revenues – U.S. GAAP basis | $ | 161,871 | $ | 150,548 | $ | 168,133 | ||||||
| Adjustments: | ||||||||||||
| Revenue related to noncontrolling interests (11) | (6,132 | ) | (2,154 | ) | (6,636 | ) | ||||||
| Adjusted net revenues | $ | 155,739 | $ | 148,394 | $ | 161,497 | ||||||
| Compensation and benefits: | ||||||||||||
| Compensation and benefits – U.S. GAAP basis | $ | 95,857 | $ | 93,765 | $ | 100,489 | ||||||
| Adjustments: | ||||||||||||
| Compensation from acquisition-related agreements | (1,251 | ) | (1,213 | ) | (1,289 | ) | ||||||
| Adjusted compensation and benefits | $ | 94,606 | $ | 92,552 | $ | 99,200 | ||||||
| Non-compensation expenses: | ||||||||||||
| Non-compensation expenses – U.S. GAAP basis | $ | 34,722 | $ | 35,294 | $ | 34,931 | ||||||
| Adjustments: | ||||||||||||
| Non-compensation expenses related to noncontrolling interests (11) | (1,302 | ) | (722 | ) | (1,498 | ) | ||||||
| Amortization of intangible assets related to acquisitions | (1,773 | ) | (2,318 | ) | (2,318 | ) | ||||||
| Adjusted non-compensation expenses | $ | 31,647 | $ | 32,254 | $ | 31,115 | ||||||
| Income before income tax expense: | ||||||||||||
| Income before income tax expense – U.S. GAAP basis | $ | 31,292 | $ | 21,489 | $ | 32,713 | ||||||
| Adjustments: | ||||||||||||
| Revenue related to noncontrolling interests (11) | (6,132 | ) | (2,154 | ) | (6,636 | ) | ||||||
| Expenses related to noncontrolling interests (11) | 1,302 | 722 | 1,498 | |||||||||
| Compensation from acquisition-related agreements | 1,251 | 1,213 | 1,289 | |||||||||
| Amortization of intangible assets related to acquisitions | 1,773 | 2,318 | 2,318 | |||||||||
| Adjusted income before adjusted income tax expense | $ | 29,486 | $ | 23,588 | $ | 31,182 | ||||||
| Income tax expense: | ||||||||||||
| Income tax expense – U.S. GAAP basis | $ | 9,490 | $ | 7,514 | $ | 9,827 | ||||||
| Tax effect of adjustments: | ||||||||||||
| Compensation from acquisition-related agreements | 487 | 472 | 501 | |||||||||
| Amortization of intangible assets related to acquisitions | 690 | 902 | 819 | |||||||||
| Adjusted income tax expense | $ | 10,667 | $ | 8,888 | $ | 11,147 | ||||||
| Net income applicable to Piper Jaffray Companies: | ||||||||||||
| Net income applicable to Piper Jaffray Companies – U.S. GAAP basis | $ | 16,972 | $ | 12,543 | $ | 17,748 | ||||||
| Adjustments: | ||||||||||||
| Compensation from acquisition-related agreements | 764 | 741 | 788 | |||||||||
| Amortization of intangible assets related to acquisitions | 1,083 | 1,416 | 1,499 | |||||||||
| Adjusted net income | $ | 18,819 | $ | 14,700 | $ | 20,035 | ||||||
| Net income applicable to Piper Jaffray Companies' common shareholders: | ||||||||||||
| Net income applicable to Piper Jaffray Companies' common stockholders – U.S. GAAP basis | $ | 15,810 | $ | 11,700 | $ | 16,089 | ||||||
| Adjustments: | ||||||||||||
| Compensation from acquisition-related agreements | 712 | 691 | 714 | |||||||||
| Amortization of intangible assets related to acquisitions | 1,009 | 1,321 | 1,359 | |||||||||
| Adjusted net income applicable to Piper Jaffray Companies' common stockholders | $ | 17,531 | $ | 13,712 | $ | 18,162 | ||||||
| Earnings per diluted common share: | ||||||||||||
| Earnings per diluted common share – U.S. GAAP basis | $ | 1.03 | $ | 0.77 | $ | 1.10 | ||||||
| Adjustments: | ||||||||||||
| Compensation from acquisition-related agreements | 0.05 | 0.05 | 0.05 | |||||||||
| Amortization of intangible assets related to acquisitions | 0.07 | 0.09 | 0.09 | |||||||||
| Adjusted earnings per diluted common share | $ | 1.14 | $ | 0.90 | $ | 1.24 | ||||||
This presentation includes non-GAAP measures. The non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP.
Notes to Non-GAAP Financial Schedules
| (1) | Selected Summary Financial Information are non-GAAP measures. Management believes that presenting results and measures on an adjusted basis in conjunction with U.S. GAAP measures provides the most meaningful basis for comparison of its operating results across periods. | |
| (2) | A non-GAAP measure which excludes revenues related to noncontrolling interests (see (11) below). | |
| (3) | A non-GAAP measure which excludes compensation expense from acquisition-related agreements. | |
| (4) | A non-GAAP measure which excludes (a) non-compensation expenses related to noncontrolling interests (see (11) below) and (b) amortization of intangible assets related to acquisitions. | |
| (5) | A non-GAAP measure which excludes (a) revenues and expenses related to noncontrolling interests (see (11) below), (b) compensation from acquisition-related agreements and (c) amortization of intangible assets related to acquisitions. | |
| (6) | A non-GAAP measure which represents adjusted income before adjusted income tax expense as a percentage of adjusted net revenues. | |
| (7) | A non-GAAP measure which excludes the income tax benefit from (a) compensation from acquisition-related agreements and (b) amortization of intangible assets related to acquisitions. | |
| (8) | A non-GAAP measure which represents net income earned by the Company excluding (a) compensation expense from acquisition-related agreements, (b) amortization of intangible assets related to acquisitions and (c) the income tax expense/(benefit) allocated to the adjustments. | |
| (9) | Effective tax rate is a non-GAAP measure which is computed based on a quotient, the numerator of which is adjusted income tax expense and the denominator of which is adjusted income before adjusted income tax expense. | |
| (10) | Piper Jaffray Companies calculates earnings per common share using the two-class method, which requires the allocation of consolidated adjusted net income between common shareholders and participating security holders, which in the case of Piper Jaffray Companies, represents unvested stock with dividend rights. | |
| (11) | Noncontrolling interests include revenue and expenses from consolidated alternative asset management entities that are not attributable, either directly or indirectly, to Piper Jaffray Companies. | |
| (12) | A non-GAAP measure which excludes (a) expenses related to noncontrolling interests (see (11) above), (b) compensation from acquisition-related agreements and (c) amortization of intangible assets related to acquisitions. | |
| (13) | A non-GAAP measure which excludes (a) compensation from acquisition-related agreements and (b) amortization of intangible assets related to acquisitions. |
Source:
Piper Jaffray Companies
Investor Relations Contact
Tom
Smith, 612-303-6336