Piper Jaffray Companies (NYSE: PJC) today announced pre-tax
income of $3.5 million, but an after-tax loss from continuing
operations of $2.7 million, or $0.17 per diluted share, for the
quarter ended March 31, 2009. In the first quarter of last year,
continuing operations generated a net loss of $1.4 million, or
$0.09 per diluted share. In the fourth quarter of 2008, continuing
operations generated a net loss of $153.0 million, or $9.76 per
diluted share. First quarter 2009 net revenues from continuing
operations were $83.9 million, compared to $95.7 million in the
year-ago period and $59.4 million for the fourth quarter of
2008.
�As a direct result of reducing our costs, we achieved a $3.5
million pre-tax profit on lower revenues than in the year-ago
period,� said Andrew S. Duff, chairman and chief executive officer.
�Revenues rebounded from the fourth quarter. We are seeing a
benefit to our financial results from the senior talent we have
added and from the disruption in the competitive landscape. For
example, we have completed multiple municipal transactions for new
clients and are achieving significant improvement in our fixed
income sales and trading results. However, our global investment
banking businesses remain challenged.�
Results of Continuing Operations
First Quarter
Net Revenues
Investment Banking
For the first quarter of 2009, total investment banking revenues
were $25.3 million, down 59 percent compared to the first quarter
of 2008 and flat with the fourth quarter of 2008.
- Fixed income financing revenues
were $12.4 million, down 36 percent compared to the same period
last year and 16 percent higher compared to the fourth quarter of
2008. Public finance underwriting revenues were stronger compared
to both periods. Compared to the year-ago period, revenues were
lower in taxable underwriting, public finance remarketing and
auction rate securities, and public finance derivatives.
- Advisory services revenues were
$8.8 million, down 65 percent compared to the year-ago period and
down 17 percent compared to the fourth quarter of 2008. Activity
was weaker across all markets. Industry-wide, middle market
(transactions of less than $500 million) U.S. merger and
acquisition activity (in terms of both number and value of
transactions) were well below the average quarterly level of the
last two years. (Source: Thomson)
- Equity financing revenues were
$4.1 million, down 75 percent compared to the first quarter of
2008, and down 4 percent compared to the fourth quarter of 2008. In
the first quarter of 2009, just one IPO was completed industry-wide
in the U.S. (Source: Thomson)
The following is a recap of completed deal information for the
first quarter of 2009:
- 96 tax-exempt issues with a
total par value of $1.9 billion.
- 6 merger and acquisition
transactions with an aggregate enterprise value of $660 million.
(The number of deals and the enterprise value include disclosed and
undisclosed transactions.)
- 4 equity financings raising a
total of $83 million in capital. Of the completed transactions,
none were public offerings.
Institutional Sales and Trading
For the quarter ended March 31, 2009, institutional sales and
trading generated net revenues of $58.5 million, an increase of 74
percent from the same quarter last year and up 105 percent from the
fourth quarter of 2008.
- Equities sales and trading
revenues were $30.7 million, essentially the same as the year-ago
period, and up 9 percent compared to the fourth quarter of 2008.
Compared to both periods, revenues improved in convertibles and
electronic trading, and performance in U.S. high touch equities was
solid but revenues were lower.
- Fixed income sales and trading
revenues were $27.8 million, compared to $2.3 million in the same
period last year, and $0.4 million in the fourth quarter of 2008.
The significant improvement was due to a reduction in the firm�s
high yield business and the discontinuation of its tender option
bond program, and strong performance across municipal and taxable
products.
First Quarter
Non-Interest Expenses
For the first quarter of 2009, compensation and benefits
expenses were $50.3 million, down 15 percent compared to the first
quarter of 2008 driven by lower salaries and benefits expenses.
Total compensation expenses rose 3 percent compared to the fourth
quarter of 2008.
The compensation ratio for the first quarter of 2009 was 60.0
percent, compared to 61.9 percent in the first quarter of 2008, and
81.9 percent in the fourth quarter of 2008.
For the first quarter of 2009, non-compensation expenses were
$30.0 million, down 20 percent compared to the first quarter of
2008. All expense categories reflected a significant decline or
were at the same level compared to the year-ago period, primarily
due to the expense reduction actions the firm implemented in 2008
and additional cost discipline in the first quarter. In the fourth
quarter of 2008, non-compensation expenses were $179.3 million and
included several significant items which increased expenses by
$144.1 million pre-tax:
- A $130.5 million pre-tax,
non-cash charge for impairment of goodwill related to the firm�s
capital markets business.
- $9.7 million for a restructuring
charge.
- $3.9 million of pre-tax expense
for write-offs related to travel and legal expenses for equity
financings that were not completed.
Tax expense for the first quarter of 2009 was $6.3 million
compared to $0.3 million in the first quarter of 2008. The
increased tax expense was due to generating income in the current
period, the distribution of results between U.S. and non-U.S.
entities, and approximately $3 million of one-time items.
Additional Shareholder Information
� � �
As of Mar. 31, 2009 �
As of Dec. 31, 2008 �
As of Mar. 31, 2008 �
Full time employees: �
1,035 �
1,045 �
1,188 �
FAMCO AUM: �
$5.5 billion �
$5.9 billion �
$8.3 billion �
Shareholders� equity: �
$761.6 million �
$748.0
million �
$946.3 million �
Book value per share:
�
$47.31 �
$47.69 �
$59.00 �
Tangible book
value �
$36.49
�
$36.53
�
$40.22
�
per share: �
�
�
�
�
�
�
Conference Call
Andrew S. Duff, chairman and chief executive officer, and Debbra
L. Schoneman, chief financial officer, will host a conference call
to discuss first quarter results on Wednesday, April 15 at 9 a.m.
ET (8 a.m. CT). The call can be accessed via live audio webcast
available through the firm's Web site at www.piperjaffray.com or by
dialing (800) 732-5617. Callers should dial in at least 15 minutes
early to receive instructions. A replay of the conference call will
be available beginning at approximately 11 a.m. ET April 15 at the
same Web address or by calling (800) 633-8284 and referencing
reservation #21421023.
About Piper Jaffray
Piper Jaffray Companies (NYSE: PJC) is a leading, international
middle market investment bank and institutional securities firm,
serving the needs of middle market corporations, private equity
groups, public entities, nonprofit clients and institutional
investors. Founded in 1895, Piper Jaffray provides a comprehensive
set of products and services, including equity and debt capital
markets products; public finance services; mergers and acquisitions
advisory services; high-yield and structured products;
institutional equity and fixed-income sales and trading; and equity
and high-yield research. Piper Jaffray headquarters are located in
Minneapolis, Minnesota, with offices across the U.S. and in London,
Hong Kong and Shanghai. Piper Jaffray & Co. is the firm's
principal operating subsidiary. (www.piperjaffray.com)
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, our current deal pipelines, the environment
and prospects for capital markets transactions and activity,
management expectations, anticipated financial results (including
expectations regarding revenue and expense levels, the compensation
ratio, and break-even performance), liquidity and capital
resources, expectations regarding inventory positions, or other
similar matters. These 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 including (1) market
and economic conditions or developments may be unfavorable,
including in specific sectors in which we operate, and these
conditions or developments (including market fluctuations or
volatility) may adversely affect the environment for capital
markets transactions and activity and our business, revenue levels
and profitability, (2)�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 any transactions are delayed or not completed at all or
if the terms of any transactions are modified, (3) we may not be
able to compete successfully with other companies in the financial
services industry, (4) the disruption in the competitive landscape
and our hiring of additional senior talent may not yield the
benefits we anticipate or yield them within expected timeframes,
(5) our ability to manage expenses to attain break-even performance
at reduced revenue levels may be limited by the fixed nature of
certain expenses as well as the impact from unanticipated expenses
during the year, (6) an inability to access capital readily or on
terms favorable to us could impair our ability to fund operations
and could jeopardize our financial condition, (7)�an inability to
readily divest or transfer inventory positions may result in future
inventory levels that differ from management�s expectations and
potential�financial losses from a decline in value of illiquid
positions, and (8)�the other factors described under �Risk Factors�
in Part�I, Item�1A of our Annual Report on Form 10-K for the year
ended December�31, 2008 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, 2008, and updated in our subsequent reports filed with
the SEC (available at our Web site at www.piperjaffray.com and at
the SEC Web site at www.sec.gov). 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.
� 2009 Piper Jaffray & Co., 800 Nicollet Mall, Suite 800,
Minneapolis, Minnesota 55402-7020
� � � � � � � � � �
Piper Jaffray Companies Preliminary
Unaudited Results of Operations � �
Three Months Ended
Percent Inc/(Dec) Mar. 31 Dec. 31, Mar.
31, 1Q '09 1Q '09
(Amounts in thousands, except per
share data)
2009
2008 2008
vs. 4Q '08
vs. 1Q '08 Revenues: Investment banking $ 24,350 $
23,985 $ 55,265 1.5 % (55.9 ) % Institutional brokerage 55,027
23,359 29,812 135.6 84.6 Interest 7,288 9,714 15,159 (25.0 ) (51.9
) Asset management 3,009 3,985 3,973 (24.5 ) (24.3 ) Other income �
� (3,599 ) � � 1,170 � � � (1,584 ) N/M � 127.2 �
Total revenues
86,075 62,213 102,625 38.4 (16.1 ) � Interest expense � � 2,193 � �
� 2,803 � � � 6,878 � (21.8 ) (68.1 ) � Net revenues � � 83,882 � �
� 59,410 � � � 95,747 � 41.2 � (12.4 ) �
Non-interest expenses:
Compensation and benefits 50,324 48,653 59,277 3.4 (15.1 )
Occupancy and equipment 6,518 8,699 8,110 (25.1 ) (19.6 )
Communications 6,099 5,893 6,739 3.5 (9.5 ) Floor brokerage and
clearance 2,882 2,892 2,654 (0.3 ) 8.6 Marketing and business
development 4,445 5,673 6,096 (21.6 ) (27.1 ) Outside services
7,519 11,992 8,642 (37.3 ) (13.0 ) Restructuring-related expenses -
9,712 2,854 N/M N/M Goodwill impairment - 130,500 - N/M - Other
operating expenses � � 2,551 � � � 3,923 � � � 2,464 � (35.0 ) 3.5
� Total non-interest expenses � � 80,338 � � � 227,937 � � � 96,836
� (64.8 ) (17.0 ) �
�
Income/(loss) from continuing
operations before income tax expense/(benefit)
3,544 (168,527 ) (1,089 ) N/M N/M � Income tax expense/(benefit) �
� 6,269 � � � (15,496 ) � � 305 � N/M � N/M � �
Net loss from
continuing operations � � (2,725 ) � � (153,031 ) � � (1,394 )
(98.2 ) 95.5 � �
Loss from discontinued operations, net of
tax � � - � � � (287 ) � � - � N/M � - � �
Net loss $ �
(2,725 ) $ � (153,318 ) $ � (1,394 ) (98.2 ) % 95.5 � % �
Earnings per basic common share Loss from continuing
operations $ (0.17 ) $ (9.76 ) $ (0.09 ) (98.2 ) % 95.0 % Loss from
discontinued operations � � - � � � (0.02 ) � � - � N/M � - �
Earnings per basic common share $ (0.17 ) $ (9.78 ) $ (0.09 ) (98.2
) % 95.0 % �
Earnings per diluted common share Loss from
continuing operations $ (0.17 ) $ (9.76 ) $ (0.09 ) (98.2 ) % 95.0
% Loss from discontinued operations � � - � � � (0.02 ) �
�
- � N/M � - � Earnings per diluted common share $ (0.17 ) $ (9.78 )
$ (0.09 ) (98.2 ) % 95.0 % �
Weighted average number of common
shares outstanding Basic 15,868 15,676 15,829 1.2 % 0.2 %
Diluted 15,868 15,676 15,829 1.2 % 0.2 % � N/M - Not meaningful � �
� �
Piper Jaffray Companies Preliminary Unaudited
Revenues From Continuing Operations (Detail) � �
Three
Months Ended Percent Inc/(Dec) Mar. 31, Dec.
31, Mar. 31, 1Q '09 1Q '09 (Dollars in
thousands)
2009 2008 2008 vs. 4Q '08
vs. 1Q '08 Investment banking Financing Equities $ � 4,063 $
� 4,225 $ � 16,518 (3.8 ) % (75.4 ) %
Debt
12,388 10,687 19,370 15.9 (36.0 ) Advisory services � � 8,815 � � �
10,584 � � 25,325 � (16.7 ) (65.2 ) Total investment banking 25,266
25,496 61,213 (0.9 ) (58.7 ) � Institutional sales and trading
Equities 30,662 28,040 31,180 9.4 (1.7 ) Fixed income �
�
27,805 � � � 432 � � 2,339 � N/M � N/M � Total institutional sales
and trading 58,467 28,472 33,519 105.3 74.4 � Asset management
3,009 3,985 3,973 (24.5 ) (24.3 ) �
Other income/(loss)
(2,860 ) 1,457 (2,958 ) N/M (3.3 ) � � � � � Net revenues $ �
83,882 � $ � 59,410 $ � 95,747 � 41.2 � % (12.4 ) % � N/M - Not
meaningful �
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