Piper Jaffray Companies (NYSE: PJC) today announced its
financial results for the quarter ended June 30, 2014.
Financial Highlights
- Adjusted net income from continuing
operations(1) was $20.5 million, or $1.25 per diluted common
share(1), in the second quarter of 2014, compared to $5.6 million,
or $0.32 per diluted common share, in the second quarter of 2013,
and $20.0 million, or $1.24 per diluted common share, in the first
quarter of 2014.
- Adjusted net revenues from continuing
operations(1) were $166.7 million in the second quarter of 2014,
compared to $102.0 million and $161.5 million in the second quarter
of 2013 and the first quarter of 2014, respectively.
- Equity financing revenues of $44.1
million in the second quarter of 2014 and $79.4 million in the
first half of 2014 were both records. Also, the firm generated
record advisory services revenues of $79.4 million in the first
half of 2014.
- Adjusted pre-tax operating margin(1)
was 19.2% in the second quarter of 2014, compared to 7.8% and 19.3%
in the second quarter of 2013 and the first quarter of 2014,
respectively.
- Assets under management increased to
$12.6 billion at June 30, 2014, compared to $10.2 billion in
the year-ago period and $11.5 billion at the end of the first
quarter of 2014.
- Rolling 12 month return on average
common shareholders' equity increased to 9.2% at June 30,
2014, compared to 6.0% at June 30, 2013. Our rolling 12 month
return on average tangible common shareholders' equity(2) improved
to 13.9% at June 30, 2014.
- Book value per share increased 9.8%
from June 30, 2013 to $52.54 a share at June 30,
2014.
Three Months Ended Percent Inc/(Dec)
Six Months Ended June 30,
Mar. 31, June 30, 2Q '14 2Q
'14 June 30, June 30, Percent
(Amounts in thousands, except per share data)
2014
2014 2013 vs. 1Q '14 vs. 2Q '13
2014 2013 Inc/(Dec) As
Adjusted(1) Net revenues
$ 166,698 $
161,497 $ 102,012 3.2% 63.4 %
$ 328,195 $ 208,735
57.2% Net income from continuing operations
$ 20,494
$ 20,035 $ 5,570 2.3% 267.9 %
$ 40,529 $ 17,448
132.3% Earnings per diluted common share from continuing operations
$ 1.25 $ 1.24 $ 0.32 0.8% 290.6 %
$
2.49 $ 1.00 149.0%
U.S. GAAP Net revenues
$ 170,031 $ 168,133 $ 99,772 1.1% 70.4 %
$
338,164 $ 209,305 61.6% Net income from continuing
operations
$ 18,213 $ 17,748 $ 4,359 2.6% 317.8 %
$ 35,961 $ 15,026 139.3% Earnings per diluted common
share from continuing operations
$ 1.11 $ 1.10 $ 0.25
0.9% 344.0 %
$ 2.21 $ 0.86 157.0% Earnings per
diluted common share
$ 1.11 $ 1.10 $ 0.15 0.9% 640.0
%
$ 2.21 $ 0.73 202.7% Pre-tax operating margin from
continuing operations
17.9 % 19.5 % 3.3 %
18.7
% 10.3 %
(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 second quarter of 2014, on a U.S. GAAP basis, net
revenues from continuing operations were $170.0 million, and net
income from continuing operations was $18.2 million, or $1.11 per
diluted common share. “We are pleased to report very strong results
for the second quarter,” said Andrew S. Duff, Chief Executive
Officer and Chairman, “Our Asset Management and Investment Banking
businesses led the way with strong relative performance in
favorable market conditions.”
Second Quarter Results from Continuing Operations – Non-GAAP
BasisThroughout the Adjusted Consolidated Results and Business
Segment Results sections of this press release the firm presents
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 ResultsFor the second quarter of
2014, adjusted net revenues were $166.7 million, up 63% compared to
$102.0 million in the second quarter of 2013 due to higher equity
financing and advisory services revenues. Adjusted net revenues
increased 3% percent compared to the first quarter of 2014.
For the second quarter of 2014, adjusted compensation and
benefits expenses were $101.7 million, up 57% compared to the
second quarter of 2013 due to improved financial results. Adjusted
compensation and benefits expenses increased 3% compared to the
first quarter of 2014.
For the second quarter of 2014, adjusted compensation and
benefits expenses were 61.0% of adjusted net revenues, compared to
63.4% and 61.4% for the second quarter of 2013 and the first
quarter of 2014, respectively. The adjusted compensation ratio
decreased compared to both periods due to an increased revenue
base.
Adjusted non-compensation expenses were $33.0 million for the
second quarter of 2014, up 13% and 6% compared to the year-ago
period and the first quarter of 2014, respectively. Adjusted
non-compensation expenses were higher compared to the second
quarter of 2013 due to the incremental costs associated with the
two acquisitions we closed in the third quarter of the prior year,
and increased compared to both periods due to higher
litigation-related expenses.
Business Segment ResultsThe firm has two reportable
business segments: Capital Markets and Asset Management.
Consolidated net revenues and expenses are fully allocated to these
two segments. The operating results of our Hong Kong capital
markets business, which we shut down in 2012, and FAMCO, an asset
management subsidiary sold in the second quarter of 2013, are
presented as discontinued operations for all periods presented.
Capital MarketsFor the quarter, Capital Markets generated
adjusted pre-tax operating income of $23.1 million, compared to
$0.6 million and $24.1 million in the second quarter of 2013 and
first quarter of 2014, respectively.
Adjusted net revenues were $144.7 million, up 72% and 2%
compared to the year-ago period and the first quarter of 2014,
respectively.
- Equity financing revenues of $44.1
million increased 102% and 25% compared to the second quarter of
2013 and the first quarter of 2014, respectively. Revenues were
favorable compared to both periods due to more completed
transactions and higher revenue per transaction.
- Debt financing revenues were $20.2
million, down 9% compared to the year-ago period due to fewer
completed transactions, and up 49% compared to the first quarter of
2014 due to more completed transactions.
- Advisory services revenues were $39.7
million, up 323% compared to the second quarter of 2013 and
essentially flat compared to the first quarter of 2014. Revenues
increased compared to the year-ago period due to more completed
transactions and higher revenue per transaction.
- Equity institutional brokerage revenues
of $18.4 million decreased 14% compared to the second quarter of
2013 due to lower client trading volumes. Revenues decreased 24%
compared to the first quarter of 2014 due to lower client trading
volumes, and the absence of block trades during the quarter.
- Fixed income institutional brokerage
revenues were $21.1 million, up 155% compared to the second quarter
of 2013 due to trading losses on inventory positions in the
year-ago period. In the second quarter of 2013, the fixed income
market experienced a rapid increase in interest rates, a widening
of credit spreads, and a volatile trading environment. These market
dynamics in the year-ago period negatively impacted our inventory
values which were not fully mitigated by our hedging strategies.
Revenues were down 17% compared to the first quarter of 2014 due to
lower trading gains and lower client trading volume.
- Management and performance fees earned
from managing our alternative asset management funds were $1.4
million, compared to $0.6 million and $1.7 million in the year-ago
period and the sequential quarter, respectively. The increase
compared to the second quarter of 2013 was due to higher
performance fees.
- Adjusted investment income, which
includes 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 $1.7
million, compared to $2.4 million in the year-ago period and $3.7
million in the first quarter of 2014. The decrease compared to the
second quarter of 2013 was due to lower gains on our merchant
banking investments, partially offset by higher gains on our
investment in the municipal bond fund that we manage for
third-party investors. Adjusted investment income decreased
compared to the sequential quarter due primarily to lower gains on
our merchant banking investments.
- Long-term financing expenses, which
primarily represents interest paid on the firm's variable rate
senior notes, were $1.7 million, down 9% compared to the second
quarter of 2013 and essentially flat with the first quarter of
2014.
- Adjusted operating expenses for the
second quarter of 2014 were $121.7 million, up 46% compared to the
second quarter of 2013. The increase primarily resulted from higher
compensation expenses due to improved operating results and
business expansion. Compared to the first quarter of 2014, adjusted
operating expenses increased 3%.
- Adjusted segment pre-tax operating
margin was 15.9% compared to 0.7% in the year-ago period and 17.0%
in the first quarter of 2014. Adjusted pre-tax operating margin
improved compared to the second quarter of 2013 due to higher net
revenues and decreased compared to the sequential quarter due to
higher non-compensation costs.
Asset ManagementFor the quarter ended June 30, 2014,
Asset Management generated adjusted pre-tax operating income of
$8.9 million, up 20% and 26% compared to the second quarter of 2013
and the first quarter of 2014, respectively.
Net revenues were $22.0 million, up 22% and 12% compared to the
second quarter of 2013 and the first quarter of 2014, respectively.
The increase compared to both periods was due to higher management
fees from increased assets under management (AUM) driven by market
appreciation, and higher investment income.
- Adjusted operating expenses for the
current quarter were $13.0 million, up 24% compared to the year-ago
period due to higher compensation and non-compensation expenses.
Compared to the first quarter of 2014, adjusted operating expenses
increased by 3%.
- Adjusted segment pre-tax operating
margin was 40.7%, compared to 41.4% in the year-ago period and
36.0% in the first quarter of 2014. Adjusted segment pre-tax
operating margin declined relative to the second quarter of 2013
due to higher non-compensation expenses, and improved from the
sequential quarter due to a lower compensation ratio driven by
higher net revenues.
- AUM was $12.6 billion at the end of the
second quarter of 2014, compared to $10.2 billion in the year-ago
period and $11.5 billion at the end of the first quarter of 2014.
Increases in AUM have been driven primarily by market
appreciation.
Additional Shareholder Information*
For the Quarter Ended June 30, 2014
Mar. 31, 2014 June 30, 2013 Full time
employees 999 1,015 918
Equity financings # of
transactions
33 30 22 Capital raised
$9.2 billion
$5.3 billion $5.0 billion
Negotiated tax-exempt issuances #
of transactions
112 57 143 Par value
$2.4 billion
$1.6 billion $2.9 billion
Mergers & acquisitions # of
transactions
15 16 4 Aggregate deal value
$3.5
billion $2.5 billion $0.2 billion
Asset Management AUM
$12.6 billion $11.5 billion $10.2 billion
Common
shareholders’ equity $787.8 million $767.5 million
$729.9 million
Number of common shares outstanding (in
thousands) 14,995 14,916 15,261
Rolling 12 month
return on average common shareholders’ equity ** 9.2%
7.2% 6.0%
Rolling 12 month return on average tangible common
shareholders’ equity † 13.9% 10.9% 9.0%
Book value
per share $52.54 $51.45 $47.83
Tangible book value
per share ‡ $36.06 $34.81 $32.44 * Number
of employees, transaction data, and AUM reflect continuing
operations; other numbers reflect continuing and discontinued
results. ** 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) June 30, 2014 Mar. 31, 2014
June 30, 2013 Average common shareholders’ equity $ 740,280 $
732,386 $ 730,477 Deduct: average goodwill and identifiable
intangible assets 249,096 246,867 242,794 Average tangible
common shareholders’ equity $ 491,184 $ 485,519 $ 487,683 ‡
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) June 30, 2014 Mar. 31, 2014 June 30, 2013 Common
shareholders’ equity $ 787,848 $ 767,454 $ 729,880 Deduct: goodwill
and identifiable intangible assets 247,172 248,246 234,780
Tangible common shareholders’ equity $ 540,676 $ 519,208 $ 495,100
Conference Call
Andrew S. Duff, chairman and chief executive officer, and Debbra
L. Schoneman, chief financial officer, will hold a conference call
to review the financial results Thur., July 24 at 9 a.m. ET (8 a.m.
CT). The earnings release will be available on or after July 24 at
the firm's Web site at www.piperjaffray.com. The call can be accessed via
webcast or by dialing (888)810-0209 or (706)902-1361
(international) and referencing reservation #63714190. Callers
should dial in at least 15 minutes prior to the call time. A replay
of the conference call will be available beginning at approximately
12 p.m. ET July 24 at the same Web address or by calling
(855)859-2056 and referencing reservation #63714190.
About Piper Jaffray
Piper Jaffray is an investment bank and asset management firm
serving clients in the U.S. and internationally. Proven advisory
teams combine deep industry, product and sector expertise with
ready access to capital. Founded in 1895, the firm is headquartered
in Minneapolis and has offices across the United States and in
London, Hong Kong and Zurich. 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 (including the outlook for equity markets and
the interest rate environment), the market positioning of and
prospects for our public finance business, the environment and
prospects for capital markets and corporate advisory transactions
(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), our strategic priorities (including growth
in public finance, asset management, and corporate advisory), 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;
- interest rate volatility, especially if
the changes are rapid or severe, could negatively impact our fixed
income institutional business;
- 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;
- 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;
- 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, 2013 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, 2013, 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.
© 2014 Piper Jaffray Companies, 800 Nicollet
Mall, Suite 1000, Minneapolis, Minnesota 55402-7020
Piper Jaffray Companies
Preliminary Results of Operations (U.S.
GAAP – Unaudited)
Three Months Ended Percent
Inc/(Dec) Six Months Ended June 30,
Mar. 31, June 30, 2Q '14 2Q
'14 June 30, June 30, Percent
(Amounts in thousands, except per share data)
2014
2014 2013 vs. 1Q '14 vs. 2Q '13
2014 2013 Inc/(Dec) Revenues:
Investment banking $ 103,813 $ 88,474 $ 53,255 17.3 % 94.9 % $
192,287 $ 94,076 104.4 % Institutional brokerage 34,528 44,034
24,611 (21.6 ) 40.3 78,562 64,758 21.3 Asset management 22,266
20,959 18,427 6.2 20.8 43,225 36,883 17.2 Interest 12,448 13,659
12,286 (8.9 ) 1.3 26,107 23,109 13.0 Investment income/(loss) 2,921
6,768 (2,059 ) (56.8 ) N/M 9,689 3,006
222.3
Total revenues
175,976 173,894 106,520 1.2 65.2 349,870 221,832 57.7
Interest expense 5,945 5,761 6,748 3.2
(11.9 ) 11,706 12,527 (6.6 ) Net revenues
170,031 168,133 99,772 1.1 70.4
338,164 209,305 61.6
Non-interest
expenses: Compensation and benefits 103,076 100,489 65,000 2.6
58.6 203,565 131,105 55.3 Occupancy and equipment 7,061 6,778 6,543
4.2 7.9 13,839 12,360 12.0 Communications 5,432 5,955 5,030 (8.8 )
8.0 11,387 10,262 11.0 Floor brokerage and clearance 1,788 1,834
2,247 (2.5 ) (20.4 ) 3,622 4,397 (17.6 ) Marketing and business
development 6,709 6,251 5,957 7.3 12.6 12,960 10,937 18.5 Outside
services 9,914 8,768 8,449 13.1 17.3 18,682 15,663 19.3 Intangible
asset amortization expense 2,318 2,318 1,661 — 39.6 4,636 3,322
39.6 Other operating expenses 3,316 3,027 1,552
9.5 113.7 6,343 (242 ) N/M Total
non-interest expenses 139,614 135,420 96,439
3.1 44.8 275,034 187,804 46.4
Income from continuing operations before income tax
expense 30,417 32,713 3,333 (7.0 ) 812.6 63,130 21,501 193.6
Income tax expense 10,049 9,827 1,644
2.3 511.3 19,876 7,244 174.4
Income from continuing operations 20,368 22,886 1,689
(11.0 ) N/M 43,254 14,257 203.4
Discontinued
operations: Loss from discontinued operations, net of tax —
— (1,871 ) N/M N/M — (2,392 ) N/M
Net income/(loss) 20,368 22,886 (182 ) (11.0 ) N/M 43,254
11,865 264.6 Net income/(loss) applicable to noncontrolling
interests 2,155 5,138 (2,670 ) (58.1 ) N/M 7,293
(769 ) N/M
Net income applicable to Piper Jaffray
Companies (a) $ 18,213 $ 17,748 $ 2,488
2.6 % 632.0 % $ 35,961 $ 12,634 184.6 %
Net
income applicable to Piper Jaffray Companies’ common shareholders
(a) $ 16,717 $ 16,089 $ 2,266 3.9 % 637.7
% $ 32,806 $ 11,333 189.5 %
Amounts
applicable to Piper Jaffray Companies Net income from
continuing operations $ 18,213 $ 17,748 $ 4,359 2.6 % 317.8 % $
35,961 $ 15,026 139.3 % Net loss from discontinued operations —
— (1,871 ) N/M N/M — (2,392 ) N/M Net income
applicable to Piper Jaffray Companies $ 18,213 $ 17,748 $ 2,488 2.6
% 632.0 % $ 35,961 $ 12,634 184.6 %
Earnings/(loss) per
basic common share Income from continuing operations $ 1.12 $
1.10 $ 0.25 1.8 % 348.0 % $ 2.22 $ 0.86 158.1 % Loss from
discontinued operations — — (0.11 ) N/M N/M —
(0.14 ) N/M Earnings per basic common share $ 1.12 $ 1.10 $ 0.15
1.8 % 646.7 % $ 2.22 $ 0.73 204.1 %
Earnings/(loss) per
diluted common share Income from continuing operations $ 1.11 $
1.10 $ 0.25 0.9 % 344.0 % $ 2.21 $ 0.86 157.0 % Loss from
discontinued operations — — (0.11 ) N/M N/M —
(0.14 ) N/M Earnings per diluted common share $ 1.11 $ 1.10 $ 0.15
0.9 % 640.0 % $ 2.21 $ 0.73 202.7 %
Weighted average
number of common shares outstanding Basic 14,958 14,612 15,621
2.4 % (4.2 )% 14,786 15,602 (5.2 )% Diluted 15,013 14,657 15,626
2.4 % (3.9 )% 14,836 15,619 (5.0 )%
(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
Piper Jaffray Companies
Preliminary Segment Data from
Continuing Operations (U.S. GAAP – Unaudited)
Three Months Ended Percent
Inc/(Dec) Six Months Ended June 30,
Mar. 31, June 30, 2Q '14 2Q
'14 June 30, June 30, Percent
(Dollars in thousands)
2014 2014 2013 vs.
1Q '14 vs. 2Q '13 2014 2013
Inc/(Dec) Capital Markets Investment banking
Financing Equities $ 44,058 $ 35,301 $ 21,772 24.8
%
102.4 % $ 79,359 $ 36,075 120.0 % Debt 20,174 13,539 22,131 49.0
(8.8 ) 33,713 39,163 (13.9 ) Advisory services 39,695 39,728
9,394 (0.1 ) 322.6 79,423 18,950
319.1 Total investment banking 103,927 88,568 53,297 17.3
95.0 192,495 94,188 104.4 Institutional sales and trading
Equities 18,366 24,260 21,384 (24.3 ) (14.1 ) 42,626 42,119 1.2
Fixed income 21,085 25,238 8,261 (16.5 ) 155.2
46,323 32,649 41.9 Total institutional
sales and trading 39,451 49,498 29,645 (20.3 ) 33.1 88,949 74,768
19.0 Management and performance fees 1,388 1,737 564 (20.1 )
146.1 3,125 1,583 97.4 Investment income 4,998 10,378 184
(51.8 ) N/M 15,376 6,321 143.3 Long-term financing expenses
(1,705 ) (1,740 ) (1,872 ) (2.0 ) (8.9 ) (3,445 ) (3,821 ) (9.8 )
Net revenues 148,059 148,441 81,818 (0.3 ) 81.0 296,500
173,039 71.3 Operating expenses 124,691 120,930
83,937 3.1 48.6 245,621 162,395
51.2 Segment pre-tax operating income/(loss) $
23,368 $ 27,511 $ (2,119 ) (15.1 )% N/M $ 50,879
$ 10,644 378.0 % Segment pre-tax operating
margin 15.8 % 18.5 % (2.6 )% 17.2 % 6.2 %
Asset
Management Management and performance fees Management fees $
20,600 $ 19,136 $ 17,558 7.7
%
17.3 % $ 39,736 $ 34,644 14.7 % Performance fees 278 86
305 223.3 (8.9 ) 364 656 (44.5 )
Total management and performance fees 20,878 19,222 17,863 8.6 16.9
40,100 35,300 13.6 Investment income 1,094 470
91 132.8 N/M 1,564 966 61.9
Net revenues 21,972 19,692 17,954 11.6 22.4 41,664 36,266
14.9 Operating expenses 14,923 14,490 12,502
3.0 19.4 29,413 25,409 15.8
Segment pre-tax operating income $ 7,049 $
5,202 $ 5,452 35.5
%
29.3 % $ 12,251 $ 10,857 12.8 % Segment
pre-tax operating margin 32.1 % 26.4 % 30.4 % 29.4 % 29.9 %
Total Net revenues $ 170,031 $ 168,133 $ 99,772 1.1
%
70.4 % $ 338,164 $ 209,305 61.6 % Operating expenses 139,614
135,420 96,439 3.1 44.8 275,034
187,804 46.4 Pre-tax operating income $
30,417 $ 32,713 $ 3,333 (7.0 )% 812.6 % $
63,130 $ 21,501 193.6 % Pre-tax operating
margin 17.9 % 19.5 % 3.3 % 18.7 % 10.3 %
Segment pre-tax operating income and segment pre-tax operation
margin exclude the results of discontinued operations.
Piper Jaffray Companies
Preliminary Selected Summary Financial
Information from Continuing Operations (Non-GAAP – Unaudited)
(1)
Three Months Ended Percent
Inc/(Dec) Six Months Ended June 30,
Mar. 31, June 30, 2Q '14 2Q
'14 June 30, June 30, Percent
(Amounts in thousands, except per share data)
2014
2014 2013 vs. 1Q '14 vs. 2Q '13
2014 2013 Inc/(Dec) Revenues:
Investment banking $ 103,813 $ 88,474 $ 53,255 17.3
%
94.9
%
$ 192,287 $ 94,076 104.4
%
Institutional brokerage 34,528 44,034 24,611 (21.6 ) 40.3 78,562
64,758 21.3 Asset management 22,266 20,959 18,427 6.2 20.8 43,225
36,883 17.2 Interest 9,451 10,356 10,019 (8.7 ) (5.7 ) 19,807
19,287 2.7 Investment income 1,666 2,581 1,500
(35.5 ) 11.1 4,247 4,712 (9.9 ) Total revenues
171,724 166,404 107,812 3.2 59.3 338,128 219,716 53.9
Interest expense 5,026 4,907 5,800 2.4
(13.3 ) 9,933 10,981 (9.5 ) Adjusted net
revenues (2) $ 166,698 $ 161,497 $ 102,012 3.2
%
63.4
%
$ 328,195 $ 208,735 57.2
%
Non-interest expenses: Adjusted compensation and
benefits (3) $ 101,660 $ 99,200 $ 64,679 2.5
%
57.2
%
$ 200,860 $ 130,463 54.0
%
Ratio of adjusted compensation and benefits to adjusted net
revenues 61.0 % 61.4 % 63.4 % 61.2 % 62.5 % Adjusted
non-compensation expenses (4) $ 33,042 $ 31,115 $
29,348 6.2
%
12.6
%
$ 64,157 $ 52,038 23.3
%
Ratio of adjusted non-compensation expenses to adjusted net
revenues 19.8 % 19.3 % 28.8 % 19.5 % 24.9 %
Adjusted
income: Adjusted income from continuing operations before
adjusted income tax expense (5) $ 31,996 $ 31,182 $
7,985 2.6
%
300.7
%
$ 63,178 $ 26,234 140.8
%
Adjusted operating margin (6) 19.2 % 19.3 % 7.8 % 19.3 % 12.6 %
Adjusted income tax expense (7) 11,502 11,147
2,415 3.2 376.3 22,649 8,786
157.8
Adjusted net income from continuing
operations (8) $ 20,494 $ 20,035 $ 5,570
2.3
%
267.9
%
$ 40,529 $ 17,448 132.3
%
Effective tax rate (9) 35.9 % 35.7 % 30.2 % 35.8 % 33.5 %
Adjusted net income from continuing operations applicable to
Piper Jaffray Companies’ common shareholders (10) $ 18,811
$ 18,162 $ 5,073 3.6
%
270.8
%
$ 36,973 $ 15,652 136.2
%
Adjusted earnings per diluted common share from
continuing operations $ 1.25 $ 1.24 $ 0.32
0.8
%
290.6
%
$ 2.49 $ 1.00 149.0
%
Weighted average number of common shares outstanding
Diluted 15,013 14,657 15,626 2.4
%
(3.9 )% 14,836 15,619 (5.0 )%
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."
Piper Jaffray Companies
Preliminary Adjusted Segment Data from
Continuing Operations (Non-GAAP – Unaudited)
Three Months Ended Percent
Inc/(Dec) Six Months Ended June 30,
Mar. 31, June 30, 2Q '14 2Q
'14 June 30, June 30, Percent
(Dollars in thousands)
2014 2014 2013 vs.
1Q '14 vs. 2Q '13 2014 2013
Inc/(Dec) Capital Markets Investment banking
Financing Equities $ 44,058 $ 35,301 $ 21,772 24.8
%
102.4
%
$ 79,359 $ 36,075 120.0
%
Debt 20,174 13,539 22,131 49.0 (8.8 ) 33,713 39,163 (13.9 )
Advisory services 39,695 39,728 9,394 (0.1 )
322.6 79,423 18,950 319.1 Total
investment banking 103,927 88,568 53,297 17.3 95.0 192,495 94,188
104.4 Institutional sales and trading Equities 18,366 24,260
21,384 (24.3 ) (14.1 ) 42,626 42,119 1.2 Fixed income 21,085
25,238 8,261 (16.5 ) 155.2 46,323
32,649 41.9 Total institutional sales and trading
39,451 49,498 29,645 (20.3 ) 33.1 88,949 74,768 19.0
Management and performance fees 1,388 1,737 564 (20.1 ) 146.1 3,125
1,583 97.4 Investment income 1,665 3,742 2,424 (55.5 ) (31.3
) 5,407 5,751 (6.0 ) Long-term financing expenses (1,705 )
(1,740 ) (1,872 ) (2.0 ) (8.9 ) (3,445 ) (3,821 ) (9.8 )
Adjusted net revenues (2) 144,726 141,805 84,058 2.1 72.2 286,531
172,469 66.1 Adjusted operating expenses (12) 121,675
117,721 83,507 3.4 45.7 239,396
161,056 48.6 Adjusted segment pre-tax
operating income (5) $ 23,051 $ 24,084 $ 551
(4.3 )% N/M $ 47,135 $ 11,413 313.0
%
Adjusted segment pre-tax operating margin (6) 15.9 % 17.0 %
0.7 % 16.5 % 6.6 %
Asset Management Management and
performance fees Management fees $ 20,600 $ 19,136 $ 17,558 7.7
%
17.3
%
$ 39,736 $ 34,644 14.7
%
Performance fees 278 86 305 223.3 (8.9
) 364 656 (44.5 ) Total management and performance
fees 20,878 19,222 17,863 8.6 16.9 40,100 35,300 13.6
Investment income 1,094 470 91 132.8
N/M 1,564 966 61.9 Net revenues 21,972
19,692 17,954 11.6 22.4 41,664 36,266 14.9 Adjusted
operating expenses (13) 13,027 12,594 10,520
3.4 23.8 25,621 21,445 19.5
Adjusted segment pre-tax operating income (13) $ 8,945
$ 7,098 $ 7,434 26.0
%
20.3
%
$ 16,043 $ 14,821 8.2
%
Adjusted segment pre-tax operating margin (6) 40.7 % 36.0 %
41.4 % 38.5 % 40.9 %
Total Adjusted net revenues (2)
$ 166,698 $ 161,497 $ 102,012 3.2
%
63.4
%
$ 328,195 $ 208,735 57.2
%
Adjusted operating expenses (12) 134,702 130,315
94,027 3.4 43.3 265,017 182,501
45.2 Adjusted pre-tax operating income (5) $
31,996 $ 31,182 $ 7,985 2.6
%
300.7
%
$ 63,178 $ 26,234 140.8
%
Adjusted pre-tax operating margin (6) 19.2 % 19.3 % 7.8 %
19.3 % 12.6 %
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."
Piper Jaffray Companies
Reconciliation of U.S. GAAP to Selected
Summary Financial Information (1) (Unaudited)
Three Months Ended Six Months Ended
June 30, Mar. 31, June 30,
June 30, June 30, (Amounts in thousands,
except per share data)
2014 2014 2013
2014 2013 Net revenues: Net revenues – U.S.
GAAP basis $ 170,031 $ 168,133 $ 99,772 $ 338,164 $ 209,305
Adjustments: Revenue related to noncontrolling interests (11)
(3,333 ) (6,636 ) 2,240 (9,969 ) (570 ) Adjusted net
revenues $ 166,698 $ 161,497 $ 102,012 $
328,195 $ 208,735
Compensation and
benefits: Compensation and benefits – U.S. GAAP basis $ 103,076
$ 100,489 $ 65,000 $ 203,565 $ 131,105 Adjustments:
Compensation from acquisition-related
agreements
(1,416 ) (1,289 ) (321 ) (2,705 ) (642 ) Adjusted compensation and
benefits $ 101,660 $ 99,200 $ 64,679 $ 200,860
$ 130,463
Non-compensation expenses:
Non-compensation expenses – U.S. GAAP basis $ 36,538 $ 34,931 $
31,439 $ 71,469 $ 56,699 Adjustments: Non-compensation expenses
related to noncontrolling interests (11) (1,178 ) (1,498 ) (430 )
(2,676 ) (1,339 ) Amortization of intangible assets related to
acquisitions (2,318 ) (2,318 ) (1,661 ) (4,636 ) (3,322 ) Adjusted
non-compensation expenses $ 33,042 $ 31,115 $ 29,348
$ 64,157 $ 52,038
Income from
continuing operations before income tax expense: Income from
continuing operations before income tax expense – U.S. GAAP basis $
30,417 $ 32,713 $ 3,333 $ 63,130 $ 21,501 Adjustments: Revenue
related to noncontrolling interests (11) (3,333 ) (6,636 ) 2,240
(9,969 ) (570 ) Expenses related to noncontrolling interests (11)
1,178 1,498 430 2,676 1,339 Compensation from acquisition-related
agreements 1,416 1,289 321 2,705 642 Amortization of intangible
assets related to acquisitions 2,318 2,318 1,661
4,636 3,322 Adjusted income from continuing
operations before adjusted income tax expense $ 31,996 $
31,182 $ 7,985 $ 63,178 $ 26,234
Income tax expense: Income tax expense – U.S. GAAP basis $
10,049 $ 9,827 $ 1,644 $ 19,876 $ 7,244 Tax effect of adjustments:
Compensation from acquisition-related agreements 551 501 125 1,052
250 Amortization of intangible assets related to acquisitions 902
819 646 1,721 1,292 Adjusted
income tax expense $ 11,502 $ 11,147 $ 2,415 $
22,649 $ 8,786
Net income from continuing
operations applicable to Piper Jaffray Companies: Net income
from continuing operations applicable to Piper Jaffray Companies –
U.S. GAAP basis $ 18,213 $ 17,748 $ 4,359 $ 35,961 $ 15,026
Adjustments: Compensation from acquisition-related agreements 865
788 196 1,653 392 Amortization of intangible assets related to
acquisitions 1,416 1,499 1,015 2,915
2,030 Adjusted net income from continuing operations $
20,494 $ 20,035 $ 5,570 $ 40,529 $
17,448
Net income from continuing operations
applicable to Piper Jaffray Companies' common shareholders: Net
income from continuing operations applicable to Piper Jaffray
Companies' common stockholders – U.S. GAAP basis $ 16,717 $ 16,089
$ 3,970 $ 32,806 $ 13,479 Adjustments: Compensation from
acquisition-related agreements 794 714 179 1,508 352 Amortization
of intangible assets related to acquisitions 1,300 1,359
924 2,659 1,821 Adjusted net income
from continuing operations applicable to Piper Jaffray Companies'
common stockholders $ 18,811 $ 18,162 $ 5,073
$ 36,973 $ 15,652
Earnings per diluted
common share from continuing operations: Earnings per diluted
common share – U.S. GAAP basis $ 1.11 $ 1.10 $ 0.25 $ 2.21 $ 0.86
Adjustments: Compensation from acquisition-related agreements 0.05
0.05 0.01 0.10 0.02 Amortization of intangible assets related to
acquisitions 0.09 0.09 0.06 0.18 0.12
Adjusted earnings per diluted common share from continuing
operations $ 1.25 $ 1.24 $ 0.32 $ 2.49
$ 1.00
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.
Piper Jaffray Companies
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 from
continuing operations 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 from continuing operations 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 from continuing operations 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.
Piper Jaffray CompaniesInvestor Relations Contact:Tom Smith,
612-303-6336
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