Piper Jaffray Companies (NYSE: PJC) today announced its
financial results for the quarter ended December 31, 2013.
Financial Highlights
- Adjusted net income from continuing
operations(1) was $30.5 million, or $1.91 per diluted common
share(1), in the fourth quarter of 2013, compared to $16.8 million,
or $0.95 per diluted common share, in the fourth quarter of 2012,
and $11.6 million, or $0.72 per diluted common share, in the third
quarter of 2013.
- Record adjusted net revenues from
continuing operations(1) of $182.6 million in the fourth quarter of
2013. Adjusted net revenues were $140.6 million and $125.0 million
in the fourth quarter of 2012 and the third quarter of 2013,
respectively.
- Adjusted pre-tax operating margin(1)
was 23.1% in the fourth quarter of 2013, compared to 17.8% and
13.9% in the fourth quarter of 2012 and the third quarter of 2013,
respectively.
- Assets under management were $11.2
billion at December 31, 2013, compared to $9.1 billion in the
year-ago period and $10.6 billion at the end of the third quarter
of 2013.
- We returned $55.9 million of capital to
shareholders during 2013 by repurchasing 1,720,000 shares,
representing 11% of our outstanding common stock at an average
price of $32.52 per share.
- Book value per share increased 6.0%
from December 31, 2012 to $51.08 a share at December 31,
2013.
Three Months Ended Percent
Inc/(Dec) Twelve Months Ended
(Amounts in thousands, except per share
data)
Dec. 31, Sept. 30, Dec. 31,
4Q '13 4Q '13 Dec. 31, Dec.
31, Percent 2013 2013 2012 vs.
3Q '13 vs. 4Q '12 2013 2012
Inc/(Dec) As Adjusted(1) Net revenues
$
182,643 $ 125,023 $ 140,605 46.1% 29.9%
$
516,401 $ 484,778 6.5% Net income from continuing operations
$ 30,453 $ 11,646 $ 16,822 161.5% 81.0%
$
59,547 $ 54,328 9.6% Earnings per diluted common share from
continuing operations
$ 1.91 $ 0.72 $ 0.95 163.9%
100.4%
$ 3.56 $ 2.98 19.5%
U.S. GAAP
Net revenues
$ 187,576 $ 128,314 $ 140,911 46.2%
33.1%
$ 525,195 $ 488,952 7.4% Net income from
continuing operations
$ 27,952 $ 6,851 $ 15,565
308.0% 79.6%
$ 49,829 $ 47,075 5.9% Earnings per
diluted common share from continuing operations
$
1.75 $ 0.42 $ 0.88 316.7% 98.9%
$ 2.98 $ 2.58
15.5% Earnings per diluted common share
$ 1.70 $ 0.33
$ 0.67 415.2% 153.7%
$ 2.70 $ 2.26 19.5% Pre-tax
operating margin from continuing operations
22.4 %
9.4 % 16.2 %
14.4 % 14.1 %
(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.
For the fourth quarter of 2013, net revenues from continuing
operations on a U.S. GAAP basis were $187.6 million. Net income
from continuing operations on a U.S. GAAP basis was $28.0 million,
or $1.75 per diluted common share, for the quarter ended
December 31, 2013.
For the twelve months ended December 31, 2013, net revenues
from continuing operations on a U.S. GAAP basis were $525.2
million. Net income from continuing operations on a U.S. GAAP basis
was $49.8 million, or $2.98 per diluted common share, in 2013. For
a reconciliation of our U.S. GAAP results to the adjusted results,
see "Reconciliation of U.S. GAAP to Selected Summary Financial
Information."
“We finished the year very strong generating sequential
improvement across all areas of the company,” said Andrew S. Duff,
chairman and chief executive officer. “As a result, we produced our
best quarterly revenue since we went public in 2004. Our Equity and
Asset Management businesses led the way, supported by our Fixed
Income activities which rebounded from difficult market conditions
in mid-year.”
Duff continued, “We executed effectively on our strategy, which
focuses our resources on our strongest, highest margin businesses.
For the year, our Revenues, Net Income and most importantly, ROE,
improved over 2012. Key execution steps included expanding our
resources in public finance and M&A primarily through
acquisitions, and significant additions to our Fixed Income
business.”
Fourth Quarter Results from Continuing Operations – Non-GAAP
Basis
Throughout the Adjusted Consolidated Expenses 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, (3)
compensation for acquisition-related agreements, and (4)
restructuring and acquisition integration costs. 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 ExpensesFor the fourth quarter of
2013, adjusted compensation and benefits expenses were $110.7
million, up 27% and 41% compared to the fourth quarter of 2012 and
the third quarter of 2013, respectively, due to improved financial
results.
For the fourth quarter of 2013, adjusted compensation and
benefits expenses were 60.6% of adjusted net revenues, compared to
61.9% and 62.7% for the fourth quarter of 2012 and the third
quarter of 2013, respectively. The adjusted compensation ratio
decreased compared to both periods due to an increased revenue
base.
Adjusted non-compensation expenses were $29.9 million for the
fourth quarter of 2013, up 5% and 3% compared to the year-ago
period and the third quarter of 2013, respectively.
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, 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 $31.1 million, compared to
$19.6 million and $9.8 million in the fourth quarter of 2012 and
the third quarter of 2013, respectively.
Adjusted net revenues were $155.0 million, up 25% and 45%
compared to the year-ago period and the third quarter of 2013,
respectively.
- Equity financing revenues of $34.1
million increased 89% compared to the fourth quarter of 2012 due to
more completed transactions and higher revenue per transaction.
Revenues increased 14% compared to the sequential quarter due to
higher revenue per transaction.
- Fixed income financing revenues were
$22.3 million, up 9% compared to the year-ago period due to higher
revenue per transaction. Revenues increased 74% compared to the
third quarter of 2013 due to more completed transactions and higher
revenue per transaction.
- Advisory services revenues were $35.3
million, down 21% compared to the fourth quarter of 2012 and up 74%
compared to the third quarter of 2013. Revenues were unfavorable
compared to the year-ago period due to fewer completed transactions
as sellers were motivated to complete transactions during 2012 due
to pending tax increases. Revenues increased compared to the third
quarter of 2013 due to higher revenue per transaction.
- Equity institutional brokerage revenues
of $26.1 million increased 30% and 14% compared to the fourth
quarter of 2012 and the third quarter of 2013, respectively, due to
improved trading performance. Also, revenues improved compared to
both periods due to higher gains from our equity strategic trading
activities, which we began in the second half of 2013 to leverage
the firm's intellectual capital and diversify our strategic trading
efforts.
- Fixed income institutional brokerage
revenues were $26.5 million, up 18% and 55% compared to the fourth
quarter of 2012 and the third quarter of 2013, respectively, due to
an improved secondary fixed income trading environment. Revenues
also increased compared to the third quarter of 2013 as results
from the firm's fixed income strategic trading businesses improved
compared to the sequential quarter.
- Management and performance fees earned
from managing our alternative asset management funds were $1.2
million, up 113% and 11% compared to the year-ago period and the
sequential quarter, respectively. The increase compared to the
fourth quarter of 2012 was primarily driven by higher assets under
management (AUM) from net client inflows.
- Adjusted investment income, which
includes gains and losses on our merchant banking and firm
investments, was $11.3 million compared to $0.9 million in the
year-ago period and $4.6 million in the sequential quarter.
Adjusted revenues increased compared to both periods due primarily
to higher gains on our merchant banking investments.
- Long-term financing expenses, which
represent interest paid on the firm's variable rate senior notes
and syndicated bank facility, were $1.8 million, down 37% compared
to the fourth quarter of 2012. The decrease was due to additional
costs recognized in the fourth quarter of 2012 upon prepayment of
the syndicated bank facility. Long-term financing expenses were
flat compared to the third quarter of 2013.
- Adjusted operating expenses for the
fourth quarter were $123.9 million, up 18% and 27% compared to the
prior year quarter and the third quarter of 2013, resulting from
higher compensation expenses due to improved operating results and
business expansion.
- Adjusted segment pre-tax operating
margin was 20.1% compared to 15.8% in the year-ago period and 9.1%
in the third quarter of 2013. Adjusted pre-tax operating margin
improved compared to both periods due to leverage on our
non-compensation expenses from higher adjusted net revenues.
Asset ManagementFor the quarter ended December 31,
2013, Asset Management generated adjusted pre-tax operating income
of $11.0 million, up 103% and 43% compared to the fourth quarter of
2012 and the third quarter of 2013, respectively.
Net revenues were $27.6 million, an increase of 69% and 53%
compared to the fourth quarter of 2012 and the third quarter of
2013, respectively, due to higher management and performance fees.
Performance fees, the majority of which are recorded in the fourth
quarter if earned, were $7.1 million in the current quarter,
compared to $0.1 million in the year-ago period and the third
quarter of 2013. Net revenues also increased compared to both
periods due to higher management fees from increased AUM due to
market appreciation.
- Adjusted operating expenses for the
current quarter were $16.6 million, up 52% and 60% compared to the
year-ago period and the third quarter of 2013, respectively, due to
higher compensation expenses.
- Adjusted segment pre-tax operating
margin was 39.8%, compared to 33.0% in the year-ago period and
42.6% in the third quarter of 2013. Adjusted segment pre-tax margin
improved relative to the prior year quarter due to higher adjusted
net revenues, and decreased relative to the sequential quarter due
to higher compensation expenses.
- Assets under management were $11.2
billion at the end of the fourth quarter of 2013, compared to $9.1
billion in the year-ago period and $10.6 billion at the end of the
third quarter of 2013. Increases in AUM have been driven by market
appreciation.
Other Matters
In the fourth quarter of 2013, we reversed the full amount of
our U.K. subsidiary's deferred tax asset valuation allowance
resulting in a $4.0 million, or $0.25 per diluted common share, tax
benefit to our results of operations for the quarter.
Fourth Quarter Results from Discontinued Operations – U.S.
GAAP Basis
Discontinued operations include the results of our Hong Kong
capital markets business, which we shut down in 2012, and FAMCO, an
asset management subsidiary we sold in the second quarter of
2013.
For the quarter ended December 31, 2013, the net loss from
discontinued operations was $0.8 million, or $0.05 per diluted
common share. The net loss was driven by remaining costs related to
the sale of FAMCO and the liquidation of our Hong Kong
subsidiaries. The net loss from discontinued operations was $3.7
million, or $0.21 per diluted common share, in the year-ago period
and a net loss of $1.5 million, or $0.09 per diluted common share,
in the third quarter of 2013.
Full-Year 2013 Results from Continuing Operations – Non-GAAP
Basis
Adjusted Consolidated ExpensesFor 2013, adjusted
compensation and benefits expenses were $319.6 million, up 8%
compared to 2012, due to improved financial performance. Adjusted
compensation and benefits expenses were 61.9% of adjusted net
revenues, up from 61.0% in 2012 primarily due to changes in our mix
of revenues.
Adjusted non-compensation expenses were $111.0 million in 2013,
consistent with the prior year.
Business Segment ResultsCapital MarketsFor 2013,
Capital Markets generated adjusted pre-tax operating income of
$52.3 million, consistent with $53.6 million in 2012. Adjusted net
revenues were $434.5 million in 2013, up 3% compared to $420.0
million in the prior year.
Adjusted operating expenses were $382.2 million in 2013, up 4%
compared to 2012. Adjusted segment pre-tax operating margin was
12.0%, down slightly from 2012.
Asset ManagementFor 2013, Asset Management generated
adjusted pre-tax operating income of $33.5 million, up 35% compared
to 2012. Net revenues were $81.9 million in 2013, up 27% compared
to 2012 due to higher management and performance fees.
Adjusted operating expenses were $48.4 million in 2013, up 21%
compared to 2012, due to higher compensation expenses. Adjusted
segment pre-tax operating margin was 40.9% compared to 38.3% in
2012. The increase in adjusted segment pre-tax operating margin in
2013 resulted from improved operating results which were driven by
higher net revenues.
Other Matters
During 2013, the firm returned $55.9 million of capital to
shareholders by repurchasing approximately 1,720,000 shares, or 11%
of our outstanding common stock, at an average price of $32.52 per
share. The firm has $39.5 million remaining on its share repurchase
authorization, which expires on September 30, 2014.
In 2013, the firm acquired $15.5 million, or approximately
387,000 shares, related to employee obligations on the vesting of
equity awards.
Additional Shareholder Information*
For the Quarter Ended Dec. 31, 2013
Sept. 30, 2013 Dec. 31,
2012 Full time employees 1,026 1,002 907
Equity financings # of transactions
26 27 16 Capital
raised
$3.8 billion $4.8 billion $1.5 billion
Negotiated
tax-exempt issuances # of transactions
97 61 121 Par
value
$1.8 billion $1.3 billion $1.6 billion
Mergers
& acquisitions # of transactions
13 11 22 Aggregate
deal value
$1.3 billion $1.0 billion $6.8 billion
Asset
Management AUM
$11.2 billion $10.6 billion $9.1 billion
Common shareholders’ equity $734.7 million $707.4
million $733.3 million
Rolling 12 month return on average common
shareholders’ equity ** 6.2% 4.1% 5.7%
Rolling 12
month return on average tangible common shareholders’ equity †
9.3% 6.1% 8.7%
Book value per share $51.08
$49.11 $48.20
Tangible book value per share ‡ $33.66
$31.56 $32.39
* 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 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) Dec. 31, 2013 Sept. 30, 2013 Dec. 31, 2012
Average common shareholders’ equity $ 728,187 $ 730,348 $ 721,131
Deduct: average goodwill and identifiable intangible assets 244,770
243,883 249,398 Average tangible common
shareholders’ equity $ 483,417 $ 486,465 $ 471,733
‡ Tangible book value per share is computed by dividing tangible
shareholders’ equity by common shares outstanding. Tangible
shareholders’ equity equals total 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:
(Amounts in thousands)
As of As of As of Dec. 31, 2013 Sept. 30, 2013 Dec. 31, 2012 Common
shareholders’ equity $ 734,676 $ 707,365 $ 733,292 Deduct: goodwill
and identifiable intangible assets 250,564 252,761
240,480 Tangible common shareholders’ equity $
484,112 $ 454,604 $ 492,812
Additional Shareholder Information* – Continued
For the Year Ended Dec. 31, 2013
Dec. 31, 2012 Equity financings # of
transactions
92 67 Capital raised
$19.9 billion $9.1
billion ^
Negotiated tax-exempt issuances # of transactions
413 444 Par value
$7.9 billion $7.3 billion
Mergers & acquisitions # of transactions
31 40
Aggregate deal value
$2.9 billion $10.2 billion
* Number of employees, transaction data, and AUM reflect
continuing operations; other numbers reflect continuing and
discontinued results.
^ Due to size, Facebook IPO capital raised has been
excluded.
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 Wed., Jan. 29 at 9 a.m. ET (8 a.m.
CT). The earnings release will be available on or after Jan. 29 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 #31229398. 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 Jan. 29 at the same Web address or by calling
(855)859-2056 and referencing reservation #31229398.
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 interest rate environment and
outlook for equity markets), 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), our integration of
Seattle-Northwest Securities Corporation and Edgeview Partners,
L.P., the anticipated benefits from our hiring of an investment
banking team from Partnership Capital Growth and other hires in our
fixed income institutional brokerage business, expected additional
costs relating to the sale of FAMCO and the liquidation of our Hong
Kong business, anticipated financial results generally (including
expectations regarding our non-compensation expenses, compensation
ratio, revenue levels, operating margins, earnings per share, 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;
- further interest rate volatility,
especially if the changes are rapid or severe, could continue to
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;
- the expected benefits of the
Seattle-Northwest and Edgeview acquisitions and any hires that we
make, including the hiring of a team as was done in the case of
Partnership Capital Growth, may take longer than anticipated to
achieve and may not be achieved in their entirety or at all, and
will depend upon our integration of the companies and performance
of new hires proving successful; 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, 2012 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, 2012, 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) Twelve Months Ended
(Amounts in thousands, except per share
data)
Dec. 31, Sept. 30, Dec. 31,
4Q '13 4Q '13 Dec. 31, Dec.
31, Percent 2013 2013 2012 vs.
3Q '13
vs. 4Q '12
2013 2012 Inc/(Dec) Revenues:
Investment banking
$ 91,639 $ 62,848 $ 82,887 45.8 %
10.6 % $ 248,563 $ 232,958 6.7 % Institutional brokerage
46,572 35,318 37,369 31.9 % 24.6 % 146,648 166,642 (12.0
)
%
Asset management
27,461 18,701 16,761 46.8 % 63.8 % 83,045
65,699 26.4 % Interest
14,940 12,360 10,395 20.9 % 43.7 %
50,409 37,845 33.2 % Investment income/(loss)
13,281
5,279 (248 ) 151.6 % N/M
21,566 4,903 339.9 % Total revenues
193,893 134,506 147,164 44.2 % 31.8 % 550,231 508,047 8.3 %
Interest expense
6,317 6,192
6,253 2.0 % 1.0 % 25,036
19,095 31.1 % Net revenues
187,576 128,314 140,911
46.2 % 33.1 % 525,195
488,952 7.4 %
Non-interest expenses:
Compensation and benefits
111,933 79,426 87,415 40.9 % 28.0
% 322,464 296,882 8.6 % Occupancy and equipment
6,624 6,509
6,783 1.8 % (2.3
)
%
25,493 26,454 (3.6
)
%
Communications
5,391 5,778 4,431 (6.7
)
%
21.7
% 21,431 20,543 4.3 % Floor brokerage and clearance
1,764
2,109 2,120 (16.4
)
%
(16.8
)
%
8,270 8,054 2.7 % Marketing and business development
5,219
5,447 4,926 (4.2
)
%
5.9 % 21,603 19,908 8.5 % Outside services
9,237 8,082 8,188
14.3 % 12.8 % 32,982 27,998 17.8 % Restructuring and integration
costs
866 3,823 — (77.3
)
%
N/M 4,689 3,642 28.7 % Intangible asset amortization expense
1,772 2,899 1,736 (38.9
)
%
2.1 % 7,993 6,944 15.1 % Other operating expenses
2,718 2,181 2,530 24.6
% 7.4 % 4,657 9,516 (51.1
)
%
Total non-interest expenses
145,524
116,254 118,129 25.2 % 23.2
% 449,582 419,941 7.1 %
Income from continuing operations before income tax
expense 42,052 12,060 22,782 248.7 % 84.6 % 75,613
69,011 9.6 % Income tax expense
10,260
2,886 7,422 255.5 % 38.2
% 20,390 19,470 4.7 %
Income from continuing operations 31,792 9,174 15,360
246.5 % 107.0 % 55,223 49,541 11.5 %
Discontinued
operations: Loss from discontinued operations, net of tax
(818 ) (1,529 ) (3,741 ) (46.5
)
%
(78.1
)
%
(4,739
) (5,807 )
(18.4
)
%
Net income 30,974 7,645 11,619 305.2 % 166.6 %
50,484 43,734 15.4 % Net income/(loss) applicable to
noncontrolling interests
3,840 2,323
(205 ) 65.3 % N/M 5,394
2,466 118.7 %
Net income applicable to
Piper Jaffray Companies (a) $ 27,134 $
5,322 $ 11,824 409.8 % 129.5 % $ 45,090
$ 41,268 9.3 %
Net income applicable
to Piper Jaffray Companies’ common shareholders (a) $
24,445 $ 4,826 $ 10,198 406.5 %
139.7 % $ 40,596 $ 35,335 14.9 %
Amounts applicable to Piper Jaffray Companies Net income
from continuing operations
$ 27,952 $ 6,851 $ 15,565
308.0 % 79.6 % $ 49,829 $ 47,075 5.9 % Net loss from discontinued
operations
(818 ) (1,529 )
(3,741 ) (46.5
)
%
(78.1
)
%
(4,739 ) (5,807 ) (18.4
)
%
Net income applicable to Piper Jaffray Companies
$
27,134 $ 5,322 $ 11,824 409.8 % 129.5 % $ 45,090 $ 41,268
9.3 %
Earnings/(loss) per basic common share Income
from continuing operations
$ 1.75 $ 0.42 $ 0.88 316.7
% 98.9 % $ 2.98 $ 2.58 15.5 % Loss from discontinued operations
(0.05 ) (0.09 ) (0.21 ) (44.4
)
%
(76.2
)
%
(0.28 ) (0.32 ) (12.5
)
%
Earnings per basic common share
$ 1.70 $ 0.33 $ 0.67
415.2 % 153.7 % $ 2.70 $ 2.26 19.5 %
Earnings/(loss) per
diluted common share Income from continuing operations
$
1.75 $ 0.42 $ 0.88 316.7 % 98.9 % $ 2.98 $ 2.58 15.5 % Loss
from discontinued operations
(0.05 )
(0.09 ) (0.21 ) (44.4
)
%
(76.2
)
%
(0.28 ) (0.32 ) (12.5
)
%
Earnings per diluted common share
$ 1.70 $ 0.33 $
0.67 415.2 % 153.7 % $ 2.70 $ 2.26 19.5 %
Weighted
average number of common shares outstanding Basic
14,378
14,621 15,253 (1.7
)
%
(5.7
)
%
15,046 15,615 (3.6
)
%
Diluted
14,397 14,626 15,256 (1.6
)
%
(5.6
)
%
15,061 15,616 (3.6
)
%
(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
Piper Jaffray Companies
Preliminary Segment Data from Continuing Operations (U.S. GAAP –
Unaudited)
Three Months Ended Percent Inc/(Dec) Twelve
Months Ended (Dollars in thousands)
Dec. 31,
Sept. 30, Dec. 31, 4Q '13 4Q
'13 Dec. 31, Dec. 31, Percent
2013 2013 2012 vs. 3Q '13 vs. 4Q
'12 2013 2012 Inc/(Dec) Capital
Markets Investment banking Financing Equities
$
34,139 $ 30,010 $ 18,039 13.8 % 89.3 %
$
100,224 $ 73,180 37.0 % Debt
22,313 12,808 20,504
74.2 % 8.8 %
74,284 74,102 0.2 % Advisory services
35,255 20,215 44,495 74.4
% (20.8
)
%
74,420 86,165 (13.6
)
%
Total investment banking
91,707 63,033 83,038 45.5 % 10.4 %
248,928 233,447 6.6 % Institutional sales and trading
Equities
26,092 22,958 20,134 13.7 % 29.6 %
91,169
75,723 20.4 % Fixed income
26,543
17,083 22,413 55.4 % 18.4 %
76,275 111,492 (31.6
)
%
Total institutional sales and trading
52,635 40,041 42,547
31.5 % 23.7 %
167,444 187,215 (10.6
)
%
Management and performance fees
1,214 1,094 571 11.0
% 112.6 %
3,891 1,678 131.9 % Investment income
16,191 7,892 1,237 105.2 % N/M
30,404 9,840 209.0 %
Long-term financing expenses
(1,802 )
(1,797 ) (2,871 ) 0.3 % (37.2
)
%
(7,420 ) (7,982 ) (7.0
)
%
Net revenues
159,945 110,263 124,522 45.1 % 28.4 %
443,247 424,198 4.5 % Operating expenses
126,930 103,906 105,099
22.2 % 20.8 %
393,231
371,628 5.8 % Segment pre-tax operating income
$ 33,015 $ 6,357 $ 19,423 419.3
% 70.0 %
$ 50,016 $ 52,570
(4.9
)
%
Segment pre-tax operating margin
20.6 % 5.8 %
15.6 %
11.3 % 12.4 %
Asset Management
Management and performance fees Management fees
$
19,123 $ 17,547 $ 16,069 9.0 % 19.0 %
$ 71,314
$ 63,236 12.8 % Performance fees
7,124
60 121 N/M N/M
7,840
785 898.7 % Total management and performance
fees
26,247 17,607 16,190 49.1 % 62.1 %
79,154 64,021
23.6 % Investment income
1,384
444 199 211.7 % 595.5 %
2,794 733 281.2 % Net
revenues
27,631 18,051 16,389 53.1 % 68.6 %
81,948
64,754 26.6 % Operating expenses
18,594
12,348 13,030 50.6 % 42.7
%
56,351 48,313 16.6 %
Segment pre-tax operating income
$ 9,037
$ 5,703 $ 3,359 58.5 % 169.0 %
$ 25,597 $ 16,441 55.7 %
Segment pre-tax operating margin
32.7 % 31.6 % 20.5 %
31.2 % 25.4 %
Total Net revenues
$ 187,576 $ 128,314 $ 140,911 46.2 % 33.1 %
$
525,195 $ 488,952 7.4 % Operating expenses
145,524 116,254 118,129
25.2 % 23.2 %
449,582
419,941 7.1 % Pre-tax operating income
$ 42,052 $ 12,060 $ 22,782 248.7
% 84.6 %
$ 75,613 $ 69,011
9.6 % Pre-tax operating margin
22.4
% 9.4 % 16.2 %
14.4 % 14.1 % N/M
— Not meaningful
Segment pre-tax operating income and
segment pre-tax operating 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) Twelve Months Ended
(Amounts in thousands, except per share
data)
Dec. 31, Sept. 30, Dec. 31, 4Q '13
4Q '13 Dec. 31, Dec. 31, Percent
2013 2013 2012 vs. 3Q '13 vs. 4Q
'12 2013 2012 Inc/(Dec) Revenues:
Investment banking $ 91,639 $ 62,848 $ 82,887 45.8 % 10.6 % $
248,563 $ 232,958 6.7 % Institutional brokerage 46,572 35,318
37,369 31.9 % 24.6 % 146,648 166,642 (12.0
)
%
Asset management 27,461 18,701 16,761 46.8 % 63.8 % 83,045 65,699
26.4 % Interest 11,400 9,605 9,497 18.7 % 20.0 % 40,292 35,097 14.8
% Investment income 10,956 3,872
63 183.0 % N/M 19,540 2,697
624.5 % Total revenues 188,028 130,344 146,577 44.3 %
28.3 % 538,088 503,093 7.0 % Interest expense 5,385
5,321 5,972 1.2 % (9.8
)
%
21,687 18,315 18.4 %
Adjusted net revenues (2) $ 182,643 $ 125,023 $
140,605 46.1 % 29.9 % $ 516,401 $
484,778 6.5 %
Non-interest expenses:
Adjusted compensation and benefits (3) $ 110,652 $ 78,445
$ 87,094 41.1 % 27.0 % $ 319,560
$ 295,598 8.1 % Ratio of adjusted compensation and
benefits to adjusted net revenues 60.6 % 62.7 % 61.9 % 61.9 % 61.0
% Adjusted non-compensation expenses (4) $ 29,860 $
29,138 $ 28,467 2.5 % 4.9 % $ 111,036
$ 110,765 0.2 % Ratio of adjusted
non-compensation expenses to adjusted net revenues 16.3 % 23.3 %
20.2 % 21.5 % 22.8 %
Adjusted income: Adjusted income
from continuing operations before adjusted income tax expense (5) $
42,131 $ 17,440 $ 25,044 141.6 % 68.2
% $ 85,805 $ 78,415 9.4 % Adjusted
operating margin (6) 23.1 % 13.9 % 17.8 % 16.6 % 16.2 %
Adjusted income tax expense (7) 11,678
5,794 8,222 101.6 % 42.0 %
26,258 24,087 9.0 %
Adjusted net income from continuing operations (8) $ 30,453
$ 11,646 $ 16,822 161.5 % 81.0 %
$ 59,547 $ 54,328 9.6 % Effective tax rate (9)
27.7 % 33.2 % 32.8 % 30.6 % 30.7 %
Adjusted net income
from continuing operations applicable to Piper Jaffray Companies’
common shareholders (10) $ 27,435 $ 10,561 $
14,509 159.8 % 89.1 % $ 53,612 $ 46,517
15.3 %
Adjusted earnings per diluted common
share from continuing operations $ 1.91 $ 0.72 $
0.95 163.9 % 100.4 % $ 3.56 $ 2.98
19.5 %
Weighted average number of common
shares outstanding Diluted 14,397 14,626 15,256 (1.6
)
%
(5.6
)
%
15,061 15,616
(3.6
)
%
N/M — Not meaningful 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) Twelve Months Ended
(Dollars in thousands)
Dec. 31, Sept. 30, Dec. 31,
4Q '13 4Q '13 Dec. 31, Dec.
31, Percent 2013 2013 2012 vs.
3Q '13 vs. 4Q '12 2013 2012
Inc/(Dec) Capital Markets Investment banking
Financing Equities
$ 34,139 $ 30,010 $ 18,039 13.8
% 89.3 %
$ 100,224 $ 73,180 37.0 % Debt
22,313 12,808 20,504 74.2 % 8.8 %
74,284 74,102 0.2 %
Advisory services
35,255 20,215
44,495 74.4 % (20.8
)
%
74,420 86,165 (13.6
)
%
Total investment banking
91,707 63,033 83,038 45.5 % 10.4 %
248,928 233,447 6.6 % Institutional sales and trading
Equities
26,092 22,958 20,134 13.7 % 29.6 %
91,169
75,723 20.4 % Fixed income
26,543
17,083 22,413 55.4 % 18.4 %
76,275 111,492 (31.6
)
%
Total institutional sales and trading
52,635 40,041 42,547
31.5 % 23.7 %
167,444 187,215 (10.6
)
%
Management and performance fees
1,214 1,094 571 11.0
% 112.6 %
3,891 1,678 131.9 % Investment income
11,258 4,601 931 144.7 % N/M
21,610 5,666 281.4 %
Long-term financing expenses
(1,802 )
(1,797 ) (2,871 ) 0.3 % (37.2
)
%
(7,420 ) (7,982 ) (7.0
)
%
Adjusted net revenues (2)
155,012 106,972 124,216
44.9 % 24.8 %
434,453 420,024 3.4 % Adjusted
operating expenses (12)
123,884 97,217
104,588 27.4 % 18.4 %
382,157 366,408 4.3 %
Adjusted segment pre-tax operating income (5)
$
31,128 $ 9,755 $ 19,628 219.1 %
58.6 %
$ 52,296 $ 53,616 (2.5
)
%
Adjusted segment pre-tax operating margin (6)
20.1
% 9.1 % 15.8 %
12.0 % 12.8 %
Asset
Management Management and performance fees Management fees
$ 19,123 $ 17,547 $ 16,069 9.0 % 19.0 %
$
71,314 $ 63,236 12.8 % Performance fees
7,124
60 121 N/M N/M
7,840 785 898.7 % Total
management and performance fees
26,247 17,607 16,190 49.1 %
62.1 %
79,154 64,021 23.6 % Investment income
1,384 444 199 211.7
% 595.5 %
2,794 733
281.2 % Net revenues
27,631 18,051
16,389 53.1 % 68.6 %
81,948 64,754 26.6 % Adjusted
operating expenses (13)
16,628 10,366
10,973 60.4 % 51.5 %
48,439 39,955 21.2 %
Adjusted segment pre-tax operating income (13)
$
11,003 $ 7,685 $ 5,416 43.2 %
103.2 %
$ 33,509 $ 24,799 35.1
% Adjusted segment pre-tax operating margin (6)
39.8 % 42.6 % 33.0 %
40.9 % 38.3 %
Total Adjusted net revenues (2)
$
182,643 $ 125,023 $ 140,605 46.1 % 29.9 %
$
516,401 $ 484,778 6.5 % Adjusted operating expenses
(12)
140,512 107,583
115,561 30.6 % 21.6 %
430,596
406,363 6.0 % Adjusted pre-tax
operating income (5)
$ 42,131 $ 17,440
$ 25,044 141.6 % 68.2 %
$ 85,805
$ 78,415 9.4 % Adjusted pre-tax
operating margin (6)
23.1 % 13.9 % 17.8 %
16.6
% 16.2 % N/M — Not meaningful 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 Twelve Months Ended
(Amounts in thousands, except per share
data)
Dec. 31, Sept. 30, Dec. 31,
Dec. 31, Dec. 31, 2013 2013
2012 2013 2012 Net revenues: Net
revenues – U.S. GAAP basis $ 187,576 $ 128,314 $ 140,911 $ 525,195
$ 488,952 Adjustments: Revenue related to noncontrolling interests
(11) (4,933 ) (3,291 ) (306 ) (8,794 )
(4,174 ) Adjusted net revenues $ 182,643 $ 125,023
$ 140,605 $ 516,401 $ 484,778
Compensation and benefits: Compensation and benefits – U.S.
GAAP basis $ 111,933 $ 79,426 $ 87,415 $ 322,464 $ 296,882
Adjustments: Compensation from acquisition-related agreements
(1,281 ) (981 ) (321 ) (2,904 )
(1,284 ) Adjusted compensation and benefits $ 110,652 $
78,445 $ 87,094 $ 319,560 $ 295,598
Non-compensation expenses: Non-compensation expenses
– U.S. GAAP basis $ 33,591 $ 36,828 $ 30,714 $ 127,118 $ 123,059
Adjustments: Non-compensation expenses related to noncontrolling
interests (11) (1,093 ) (968 ) (511 ) (3,400 ) (1,708 )
Restructuring and integration costs (866 ) (3,823 ) — (4,689 )
(3,642 ) Amortization of intangible assets related to acquisitions
(1,772 ) (2,899 ) (1,736 ) (7,993 )
(6,944 ) Adjusted non-compensation expenses $ 29,860
$ 29,138 $ 28,467 $ 111,036 $ 110,765
Income from continuing operations before income tax
expense: Income from continuing operations before income tax
expense – U.S. GAAP basis $ 42,052 $ 12,060 $ 22,782 $ 75,613 $
69,011 Adjustments: Revenue related to noncontrolling interests
(11) (4,933 ) (3,291 ) (306 ) (8,794 ) (4,174 ) Expenses related to
noncontrolling interests (11) 1,093 968 511 3,400 1,708
Compensation from acquisition-related agreements 1,281 981 321
2,904 1,284 Restructuring and integration costs 866 3,823 — 4,689
3,642 Amortization of intangible assets related to acquisitions
1,772 2,899 1,736
7,993 6,944 Adjusted income from continuing
operations before adjusted income tax expense $ 42,131 $
17,440 $ 25,044 $ 85,805 $ 78,415
Income tax expense: Income tax expense – U.S. GAAP
basis $ 10,260 $ 2,886 $ 7,422 $ 20,390 $ 19,470 Tax effect of
adjustments: Compensation from acquisition-related agreements 498
382 125 1,130 499 Restructuring and integration costs 337 1,487 —
1,824 1,417 Amortization of intangible assets related to
acquisitions 583 1,039 675
2,914 2,701 Adjusted income tax
expense $ 11,678 $ 5,794 $ 8,222 $ 26,258
$ 24,087
Net income from continuing
operations applicable to Piper Jaffray Companies: Net income
from continuing operations applicable to Piper Jaffray Companies –
U.S. GAAP basis $ 27,952 $ 6,851 $ 15,565 $ 49,829 $ 47,075
Adjustments: Compensation from acquisition-related agreements 783
599 196 1,774 785 Restructuring and integration costs 529 2,336 —
2,865 2,225 Amortization of intangible assets related to
acquisitions 1,189 1,860 1,061
5,079 4,243 Adjusted net income
from continuing operations $ 30,453 $ 11,646 $ 16,822
$ 59,547 $ 54,328
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 $
25,182
$
6,213
$
13,425
$
44,863
$
40,307
Adjustments: Compensation from acquisition-related agreements
705
543
169
1,597
672
Restructuring and integration costs 477
2,118
—
2,579
1,905 Amortization of intangible assets related to acquisitions
1,071 1,687
915
4,573
3,633
Adjusted net income from continuing operations applicable to
Piper Jaffray Companies' common stockholders $
27,435
$
10,561
$
14,509
$
53,612
$
46,517
Earnings per diluted common share from continuing
operations: U.S. GAAP basis $ 1.75 $ 0.42 $ 0.88 $ 2.98 $ 2.58
Adjustments: Compensation from acquisition-related agreements 0.05
0.04 0.01 0.11 0.04 Restructuring and integration costs 0.03 0.14 —
0.17 0.12 Amortization of intangible assets related to acquisitions
0.07 0.12 0.06
0.30 0.23 Non-U.S. GAAP basis, as adjusted $
1.91 $ 0.72 $ 0.95 $ 3.56 $ 2.98
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), (b) restructuring and
integration costs and (c) 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, (c)
restructuring and integration costs and (d) 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, (b) restructuring and integration costs and (c)
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) restructuring and
integration costs, (c) amortization of intangible assets related to
acquisitions and (d) 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, (c)
restructuring and integration costs and (d) amortization of
intangible assets related to acquisitions. (13) A non-GAAP
measure which excludes (a) compensation from acquisition-related
agreements, (b) restructuring and integration costs and (c)
amortization of intangible assets related to acquisitions.
Piper Jaffray CompaniesInvestor Relations
ContactTom Smith, 612-303-6336
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