Piper Jaffray Companies (NYSE: PJC) today announced its
financial results for the quarter ended March 31, 2014.
Financial Highlights
- Adjusted net income from continuing
operations(1) was $20.0 million, or $1.24 per diluted common
share(1), in the first quarter of 2014, compared to $11.9 million,
or $0.67 per diluted common share, in the first quarter of 2013,
and $30.5 million, or $1.91 per diluted common share, in the fourth
quarter of 2013.
- Adjusted net revenues from continuing
operations(1) were $161.5 million in the first quarter of 2014,
compared to $106.7 million and $182.6 million in the first and
fourth quarters of 2013, respectively.
- Adjusted pre-tax operating margin(1)
was 19.3% in the first quarter of 2014, compared to 17.1% and 23.1%
in the first and fourth quarters of 2013, respectively.
- Assets under management were $11.5
billion at March 31, 2014, compared to $10.2 billion in the
year-ago period and $11.2 billion at the end of the fourth quarter
of 2013.
- Rolling 12 month return on average
common shareholders' equity increased to 7.2% at March 31,
2014, compared to 6.7% at March 31, 2013. Our rolling 12 month
return on average tangible common shareholders' equity(2) improved
to 10.9% at March 31, 2014.
- Book value per share increased 9.4%
from March 31, 2013 to $51.45 a share at March 31,
2014.
Three Months Ended Percent Inc/(Dec)
Mar. 31, Dec. 31, Mar. 31, 1Q
'14 1Q '14 (Amounts in thousands, except per
share data)
2014 2013 2013 vs. 4Q '13
vs. 1Q '13 As Adjusted(1) Net revenues
$ 161,497 $ 182,643 $ 106,723 (11.6 )% 51.3 % Net
income from continuing operations
$ 20,035 $ 30,453 $
11,878 (34.2 )% 68.7 % Earnings per diluted common share from
continuing operations
$ 1.24 $ 1.91 $ 0.67 (35.0 )%
84.3 %
U.S. GAAP Net revenues
$ 168,133
$ 187,576 $ 109,533 (10.4 )% 53.5 % Net income from continuing
operations
$ 17,748 $ 27,952 $ 10,667 (36.5 )% 66.4 %
Earnings per diluted common share from continuing operations
$ 1.10 $ 1.75 $ 0.60 (37.1 )% 83.3 % Earnings per
diluted common share
$ 1.10 $ 1.70 $ 0.57 (35.3 )%
93.0 % Pre-tax operating margin from continuing operations
19.5 % 22.4 % 16.6 % (1) A non-U.S.
GAAP ("non-GAAP") measure. For a detailed explanation of the
adjustments made to the corresponding U.S. GAAP measures, see
"Reconciliation of U.S. GAAP to Selected Summary Financial
Information." We believe that presenting our results and measures
on an adjusted basis in conjunction with U.S. GAAP measures
provides the most meaningful basis for comparison of our operating
results across periods. (2) A non-GAAP measure. See the "Additional
Shareholder Information" section for a detailed explanation of the
adjustment made to the corresponding U.S. GAAP measure. We believe
that the rolling 12 month return on average tangible common
shareholders' equity is a meaningful measure of our return on
tangible assets deployed in the business.
For the first quarter of 2014, on a U.S. GAAP basis, net
revenues from continuing operations were $168.1 million, and net
income from continuing operations was $17.7 million, or $1.10 per
diluted common share.
“We began the year with very strong results,” said Andrew S.
Duff, chairman and chief executive officer. "Our equity capital
raising and M&A businesses, in particular, continued the
momentum they built through 2013 to drive our results."
First Quarter Results from Continuing Operations – Non-GAAP
Basis
Throughout 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, (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 Results
For the first quarter of 2014, adjusted net revenues were $161.5
million, up 51% compared to $106.7 million in the first quarter of
2013 due to higher equity financing and advisory services revenues.
Adjusted net revenues decreased 12% percent compared to the fourth
quarter of 2013 due to lower asset management revenues and lower
investment income.
For the first quarter of 2014, adjusted compensation and
benefits expenses were $99.2 million, up 51% compared to the first
quarter of 2013 due to improved financial results. Adjusted
compensation and benefits expenses decreased 10% compared to the
fourth quarter of 2013.
For the first quarter of 2014, adjusted compensation and
benefits expenses were 61.4% of adjusted net revenues, compared to
61.6% and 60.6% for the first and fourth quarters of 2013,
respectively.
Adjusted non-compensation expenses were $31.1 million for the
first quarter of 2014, up 37% and 4% compared to the year-ago
period and the fourth quarter of 2013, respectively. Adjusted
non-compensation expenses were higher compared to the first quarter
of 2013 due to the receipt of insurance proceeds for the
reimbursement of prior legal settlements received during that
quarter and the incremental costs associated with the two
acquisitions we closed in the third quarter of the prior year.
Business Segment Results
The firm has two reportable business segments: Capital Markets
and Asset Management. Consolidated net revenues and expenses are
fully allocated to these two segments. 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 Markets
For the quarter, Capital Markets generated adjusted pre-tax
operating income of $24.1 million, compared to $10.9 million and
$31.1 million in the first and fourth quarters of 2013,
respectively.
Adjusted net revenues were $141.8 million, up 60% compared to
the year-ago period and down 9% compared to the fourth quarter of
2013.
- Equity financing revenues of $35.3
million increased 147% and 3% compared to the first and fourth
quarters of 2013, respectively. Revenues increased compared to the
year-ago period due to more completed transactions and higher
revenue per transaction.
- Debt financing revenues were $13.5
million, down 21% and 39% compared to the year-ago period and the
fourth quarter of 2013, respectively, due to fewer completed
transactions.
- Advisory services revenues were $39.7
million, up 316% and 13% compared to the first and fourth quarters
of 2013. Revenues were favorable compared to both periods due to
more completed transactions.
- Equity institutional brokerage revenues
of $24.3 million increased 17% compared to the first quarter of
2013 due to higher client trading volumes. Revenues decreased 7%
compared to the fourth quarter of 2013 due to lower gains from our
equity strategic trading activities, which we began in the second
half of 2013.
- Fixed income institutional brokerage
revenues were $25.2 million, up 4% compared to the first quarter of
2013 and down 5% from the fourth quarter of 2013.
- Management and performance fees earned
from managing our alternative asset management funds were $1.7
million, up 71% and 43% compared to the year-ago period and the
sequential quarter, respectively. The increase compared to the
first quarter of 2013 was driven by higher assets under management
(AUM) from net client inflows as well as higher performance fees.
The increase compared to the fourth quarter of 2013 was due to
higher performance fees.
- Adjusted investment income, which
includes gains and losses on our merchant banking and firm
investments, was $3.7 million, compared to $3.3 million in the
year-ago period and $11.3 million in the fourth quarter of 2013.
The decrease compared to the sequential quarter was due primarily
to lower gains on our merchant banking investments.
- Long-term financing expenses, which
represent interest paid on the firm's variable rate senior notes,
were $1.7 million, down 11% compared to the first quarter of 2013
and essentially flat with the fourth quarter of 2013.
- Adjusted operating expenses for the
first quarter of 2014 were $117.7 million, up 52% compared to the
first quarter of 2013. The increase resulted from higher
compensation expenses due to improved operating results and
business expansion, as well as higher non-compensation expenses.
Adjusted non-compensation expenses were lower in the year-ago
period due to the receipt of insurance proceeds for the
reimbursement of prior legal settlements and the incremental costs
associated with the acquisitions we made mid last year. Compared to
the fourth quarter of 2013, adjusted operating expenses decreased
5% due to lower compensation expenses.
- Adjusted segment pre-tax operating
margin was 17.0% compared to 12.3% in the year-ago period and 20.1%
in the fourth quarter of 2013. Adjusted pre-tax operating margin
improved compared to the first quarter of 2013 due to higher net
revenues and decreased compared to the sequential quarter due to
lower net revenues, a higher compensation ratio and higher
non-compensation costs.
Asset Management
For the quarter ended March 31, 2014, Asset Management
generated adjusted pre-tax operating income of $7.1 million, down
4% and 36% compared to the first and fourth quarters of 2013,
respectively.
Net revenues were $19.7 million, up 8% compared to the first
quarter of 2013 due to higher management fees from increased AUM
driven by market appreciation. Net revenues decreased 29% compared
to the fourth quarter of 2013 due to lower performance fees and
lower investment income. The majority of performance fees are
recorded in the fourth quarter if earned.
- Adjusted operating expenses for the
current quarter were $12.6 million, up 15% compared to the year-ago
period due to higher compensation and non-compensation expenses.
Compared to the fourth quarter of 2013, adjusted operating expenses
decreased 24% due to lower compensation expenses.
- Adjusted segment pre-tax operating
margin was 36.0%, compared to 40.3% in the year-ago period and
39.8% in the fourth quarter of 2013. Adjusted segment pre-tax
operating margin declined relative to both periods due to higher
non-compensation expenses.
- Assets under management were $11.5
billion at the end of the first quarter of 2014, compared to $10.2
billion in the year-ago period and $11.2 billion at the end of the
fourth quarter of 2013. Increases in AUM have been driven primarily
by market appreciation.
Additional Shareholder Information*
For the Quarter Ended Mar. 31, 2014
Dec. 31, 2013 Mar. 31, 2013 Full time
employees 1,015 1,026 911
Equity financings # of
transactions
30 26 17 Capital raised
$5.3 billion
$3.8 billion $6.2 billion
Negotiated tax-exempt issuances #
of transactions
57 97 112 Par value
$1.6 billion $1.8
billion $2.0 billion
Mergers & acquisitions # of
transactions
16 13 3 Aggregate deal value
$1.5
billion $1.3 billion $0.5 billion
Asset Management AUM
$11.5 billion $11.2 billion $10.2 billion
Common
shareholders’ equity $767.5 million $734.7 million
$752.4 million
Number of common shares outstanding (in
thousands) 14,916 14,383 16,001
Rolling 12 month
return on average common shareholders’ equity ** 7.2%
6.2% 6.7%
Rolling 12 month return on average tangible common
shareholders’ equity † 10.9% 9.3% 10.1%
Book value
per share $51.45 $51.08 $47.02
Tangible book value
per share ‡ $34.81 $33.66 $32.10 * 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) Mar. 31, 2014 Dec. 31, 2013
Mar. 31, 2013 Average common shareholders’ equity $ 732,386 $
728,187 $ 726,767 Deduct: average goodwill and identifiable
intangible assets 246,867 244,770 246,250
Average tangible common shareholders’ equity $ 485,519 $
483,417 $ 480,517 ‡ 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: As of As of As of
(Amounts in thousands) Mar. 31, 2014 Dec. 31, 2013
Mar. 31, 2013 Common shareholders’ equity $ 767,454 $ 734,676 $
752,434 Deduct: goodwill and identifiable intangible assets 248,246
250,564 238,819 Tangible common shareholders’
equity $ 519,208 $ 484,112 $ 513,615
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., Apr. 24 at 9 a.m. ET (8 a.m.
CT). The earnings release will be available on or after Apr. 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 #20062743. 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 Apr. 24 at the same Web address or by calling
(855)859-2056 and referencing reservation #20062743.
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 (including with respect
to refinancing activity), 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) Mar.
31, Dec. 31, Mar. 31, 1Q '14
1Q '14 (Amounts in thousands, except per share data)
2014 2013 2013 vs. 4Q '13 vs. 1Q
'13 Revenues: Investment banking $ 88,474 $ 91,639 $
40,821 (3.5 )% 116.7
%
Institutional brokerage 44,034 46,572 40,147 (5.4 ) 9.7 Asset
management 20,959 27,461 18,456 (23.7 ) 13.6 Interest 13,659 14,940
10,823 (8.6 )
26.2
Investment income 6,768 13,281 5,065 (49.0 )
33.6 Total revenues 173,894 193,893 115,312 (10.3 ) 50.8
Interest expense 5,761 6,317 5,779 (8.8
) (0.3 ) Net revenues 168,133 187,576 109,533
(10.4 ) 53.5
Non-interest expenses:
Compensation and benefits 100,489 111,933 66,105 (10.2 ) 52.0
Occupancy and equipment 6,778 6,624 5,817 2.3 16.5 Communications
5,955 5,391 5,232 10.5 13.8 Floor brokerage and clearance 1,834
1,764 2,150 4.0 (14.7 ) Marketing and business development 5,526
5,219 4,980 5.9 11.0 Outside services 9,493 9,237 7,214 2.8 31.6
Restructuring and integration costs — 866 — N/M N/M Intangible
asset amortization expense 2,318 1,772 1,661 30.8 39.6 Other
operating expenses 3,027 2,718 (1,794 ) 11.4
N/M Total non-interest expenses 135,420 145,524
91,365 (6.9 ) 48.2
Income from
continuing operations before income tax expense 32,713 42,052
18,168 (22.2 ) 80.1 Income tax expense 9,827 10,260
5,600 (4.2 ) 75.5
Income from
continuing operations 22,886 31,792 12,568 (28.0 ) 82.1
Discontinued operations: Loss from discontinued operations,
net of tax — (818 ) (521 ) N/M N/M
Net income 22,886 30,974 12,047 (26.1 ) 90.0 Net
income applicable to noncontrolling interests 5,138 3,840
1,901 33.8 170.3
Net income
applicable to Piper Jaffray Companies (a) $ 17,748 $
27,134 $ 10,146 (34.6 )% 74.9
%
Net income applicable to Piper Jaffray Companies’ common
shareholders (a) $ 16,089 $ 24,445 $ 8,966
(34.2 )% 79.4
%
Amounts applicable to Piper Jaffray Companies Net
income from continuing operations $ 17,748 $ 27,952 $ 10,667 (36.5
)% 66.4
%
Net loss from discontinued operations — (818 ) (521 ) N/M
N/M Net income applicable to Piper Jaffray Companies
$ 17,748 $ 27,134 $ 10,146 (34.6 )% 74.9
%
Earnings/(loss) per basic common share Income from
continuing operations $ 1.10 $ 1.75 $ 0.60 (37.1 )% 83.3
%
Loss from discontinued operations — (0.05 ) (0.03 ) N/M
N/M Earnings per basic common share $ 1.10 $ 1.70 $
0.58 (35.3 )% 89.7
%
Earnings/(loss) per diluted common share Income from
continuing operations $ 1.10 $ 1.75 $ 0.60 (37.1 )% 83.3
%
Loss from discontinued operations — (0.05 ) (0.03 ) N/M
N/M Earnings per diluted common share $ 1.10 $ 1.70 $
0.57 (35.3 )% 93.0
%
Weighted average number of common shares outstanding
Basic 14,612 14,378 15,582 1.6
%
(6.2 )% Diluted 14,657 14,397 15,610 1.8
%
(6.1 )% (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) Mar.
31, Dec. 31, Mar. 31, 1Q '14
1Q '14 (Dollars in thousands)
2014 2013
2013 vs. 4Q '13 vs. 1Q '13 Capital
Markets Investment banking Financing Equities $ 35,301 $ 34,139
$ 14,303 3.4
%
146.8
%
Debt 13,539 22,313 17,032 (39.3 ) (20.5 ) Advisory services 39,728
35,255 9,556 12.7 315.7 Total
investment banking 88,568 91,707 40,891 (3.4 ) 116.6
Institutional sales and trading Equities 24,260 26,092 20,735 (7.0
) 17.0 Fixed income 25,238 26,543 24,388 (4.9
) 3.5 Total institutional sales and trading 49,498 52,635
45,123 (6.0 ) 9.7 Management and performance fees 1,737
1,214 1,019 43.1 70.5 Investment income 10,378 16,191 6,137
(35.9 ) 69.1 Long-term financing expenses (1,740 ) (1,802 )
(1,949 ) (3.4 ) (10.7 ) Net revenues 148,441 159,945 91,221
(7.2 ) 62.7 Operating expenses 120,930 126,930
78,458 (4.7 ) 54.1 Segment pre-tax operating
income $ 27,511 $ 33,015 $ 12,763 (16.7 )%
115.6
%
Segment pre-tax operating margin 18.5
%
20.6
%
14.0
%
Asset Management Management and performance fees
Management fees $ 19,136 $ 19,123 $ 17,086 0.1
%
12.0
%
Performance fees 86 7,124 351 (98.8 ) (75.5 )
Total management and performance fees 19,222 26,247 17,437 (26.8 )
10.2 Investment income 470 1,384 875
(66.0 ) (46.3 ) Net revenues 19,692 27,631 18,312 (28.7 )
7.5 Operating expenses 14,490 18,594 12,907
(22.1 ) 12.3 Segment pre-tax operating income
$ 5,202 $ 9,037 $ 5,405 (42.4 )% (3.8 )%
Segment pre-tax operating margin 26.4
%
32.7
%
29.5
%
Total Net revenues $ 168,133 $ 187,576 $ 109,533
(10.4 )% 53.5
%
Operating expenses 135,420 145,524 91,365
(6.9 ) 48.2 Pre-tax operating income $ 32,713
$ 42,052 $ 18,168 (22.2 )% 80.1
%
Pre-tax operating margin 19.5
%
22.4
%
16.6
%
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) Mar.
31, Dec. 31, Mar. 31, 1Q '14
1Q '14 (Amounts in thousands, except per share data)
2014 2013 2013 vs. 4Q '13 vs. 1Q
'13 Revenues: Investment banking $ 88,474 $ 91,639 $
40,821 (3.5 )% 116.7
%
Institutional brokerage 44,034 46,572 40,147 (5.4 ) 9.7 Asset
management 20,959 27,461 18,456 (23.7 ) 13.6 Interest 10,356 11,400
9,268 (9.2 ) 11.7 Investment income 2,581 10,956
3,212 (76.4 ) (19.6 ) Total revenues 166,404 188,028 111,904
(11.5 ) 48.7 Interest expense 4,907 5,385
5,181 (8.9 ) (5.3 ) Adjusted net revenues (2) $
161,497 $ 182,643 $ 106,723 (11.6 )% 51.3
%
Non-interest expenses: Adjusted compensation and
benefits (3) $ 99,200 $ 110,652 $ 65,784 (10.3
)% 50.8
%
Ratio of adjusted compensation and benefits to adjusted net
revenues 61.4
%
60.6
%
61.6
%
Adjusted non-compensation expenses (4) $ 31,115 $
29,860 $ 22,690 4.2
%
37.1
%
Ratio of adjusted non-compensation expenses to adjusted net
revenues 19.3
%
16.3
%
21.3
%
Adjusted income: Adjusted income from continuing
operations before adjusted income tax expense (5) $ 31,182 $
42,131 $ 18,249 (26.0 )% 70.9
%
Adjusted operating margin (6) 19.3
%
23.1
%
17.1
%
Adjusted income tax expense (7) 11,147 11,678
6,371 (4.5 ) 75.0
Adjusted net
income from continuing operations (8) $ 20,035 $ 30,453
$ 11,878 (34.2 )% 68.7
%
Effective tax rate (9) 35.7
%
27.7
%
34.9
%
Adjusted net income from continuing operations applicable
to Piper Jaffray Companies’ common shareholders (10) $ 18,162
$ 27,435 $ 10,496 (33.8 )% 73.0
%
Adjusted earnings per diluted common share from
continuing operations $ 1.24 $ 1.91 $ 0.67
(35.0 )% 84.3
%
Weighted average number of common shares outstanding
Diluted 14,657 14,397 15,610 1.8
%
(6.1 )%
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) Mar.
31, Dec. 31, Mar. 31, 1Q '14
1Q '14 (Dollars in thousands)
2014 2013
2013 vs. 4Q '13 vs. 1Q '13 Capital
Markets Investment banking Financing Equities $ 35,301 $ 34,139
$ 14,303 3.4
%
146.8
%
Debt 13,539 22,313 17,032 (39.3 ) (20.5 ) Advisory services 39,728
35,255 9,556 12.7 315.7 Total
investment banking 88,568 91,707 40,891 (3.4 ) 116.6
Institutional sales and trading Equities 24,260 26,092 20,735 (7.0
) 17.0 Fixed income 25,238 26,543 24,388 (4.9
) 3.5 Total institutional sales and trading 49,498 52,635
45,123 (6.0 ) 9.7 Management and performance fees 1,737
1,214 1,019 43.1 70.5 Investment income 3,742 11,258 3,327
(66.8 ) 12.5 Long-term financing expenses (1,740 ) (1,802 )
(1,949 ) (3.4 ) (10.7 ) Adjusted net revenues (2) 141,805
155,012 88,411 (8.5 ) 60.4 Adjusted operating expenses (12)
117,721 123,884 77,549 (5.0 ) 51.8
Adjusted segment pre-tax operating income (5) $ 24,084
$ 31,128 $ 10,862 (22.6 )% 121.7
%
Adjusted segment pre-tax operating margin (6) 17.0
%
20.1
%
12.3
%
Asset Management Management and performance fees
Management fees $ 19,136 $ 19,123 $ 17,086 0.1
%
12.0
%
Performance fees 86 7,124 351 (98.8 ) (75.5 )
Total management and performance fees 19,222 26,247 17,437 (26.8 )
10.2 Investment income 470 1,384 875
(66.0 ) (46.3 ) Net revenues 19,692 27,631 18,312 (28.7 )
7.5 Adjusted operating expenses (13) 12,594 16,628
10,925 (24.3 ) 15.3 Adjusted segment
pre-tax operating income (13) $ 7,098 $ 11,003 $
7,387 (35.5 )% (3.9 )% Adjusted segment pre-tax
operating margin (6) 36.0
%
39.8
%
40.3
%
Total Adjusted net revenues (2) $ 161,497 $ 182,643 $
106,723 (11.6 )% 51.3
%
Adjusted operating expenses (12) 130,315 140,512
88,474 (7.3 ) 47.3 Adjusted pre-tax
operating income (5) $ 31,182 $ 42,131 $ 18,249
(26.0 )% 70.9
%
Adjusted pre-tax operating margin (6) 19.3
%
23.1
%
17.1
%
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 Mar. 31, Dec.
31, Mar. 31, (Amounts in thousands, except per
share data)
2014 2013 2013 Net
revenues: Net revenues – U.S. GAAP basis $ 168,133 $ 187,576 $
109,533 Adjustments: Revenue related to noncontrolling interests
(11) (6,636 ) (4,933 ) (2,810 ) Adjusted net revenues $ 161,497
$ 182,643 $ 106,723
Compensation and
benefits: Compensation and benefits – U.S. GAAP basis $ 100,489
$ 111,933 $ 66,105 Adjustments: Compensation from
acquisition-related agreements (1,289 ) (1,281 ) (321 ) Adjusted
compensation and benefits $ 99,200 $ 110,652 $ 65,784
Non-compensation expenses: Non-compensation
expenses – U.S. GAAP basis $ 34,931 $ 33,591 $ 25,260 Adjustments:
Non-compensation expenses related to noncontrolling interests (11)
(1,498 ) (1,093 ) (909 ) Restructuring and integration costs — (866
) — Amortization of intangible assets related to acquisitions
(2,318 ) (1,772 ) (1,661 ) Adjusted non-compensation expenses $
31,115 $ 29,860 $ 22,690
Income from
continuing operations before income tax expense: Income from
continuing operations before income tax expense – U.S. GAAP basis $
32,713 $ 42,052 $ 18,168 Adjustments: Revenue related to
noncontrolling interests (11) (6,636 ) (4,933 ) (2,810 ) Expenses
related to noncontrolling interests (11) 1,498 1,093 909
Compensation from acquisition-related agreements 1,289 1,281 321
Restructuring and integration costs — 866 — Amortization of
intangible assets related to acquisitions 2,318 1,772
1,661 Adjusted income from continuing operations before
adjusted income tax expense $ 31,182 $ 42,131 $
18,249
Income tax expense: Income tax expense
– U.S. GAAP basis $ 9,827 $ 10,260 $ 5,600 Tax effect of
adjustments: Compensation from acquisition-related agreements 501
498 125 Restructuring and integration costs — 337 — Amortization of
intangible assets related to acquisitions 819 583 646
Adjusted income tax expense $ 11,147 $ 11,678
$ 6,371
Net income from continuing operations
applicable to Piper Jaffray Companies: Net income from
continuing operations applicable to Piper Jaffray Companies – U.S.
GAAP basis $ 17,748 $ 27,952 $ 10,667 Adjustments: Compensation
from acquisition-related agreements 788 783 196 Restructuring and
integration costs — 529 — Amortization of intangible assets related
to acquisitions 1,499 1,189 1,015 Adjusted net
income from continuing operations $ 20,035 $ 30,453 $
11,878
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 $ 16,089 $ 25,182
$ 9,426 Adjustments: Compensation from acquisition-related
agreements 714 705 173 Restructuring and integration costs — 477 —
Amortization of intangible assets related to acquisitions 1,359
1,071 897 Adjusted net income from continuing
operations applicable to Piper Jaffray Companies' common
stockholders $ 18,162 $ 27,435 $ 10,496
Earnings per diluted common share from continuing
operations: U.S. GAAP basis $ 1.10 $ 1.75 $ 0.60 Adjustments:
Compensation from acquisition-related agreements 0.05 0.05 0.01
Restructuring and integration costs — 0.03 — Amortization of
intangible assets related to acquisitions 0.09 0.07
0.06 Non-U.S. GAAP basis, as adjusted $ 1.24 $ 1.91
$ 0.67
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 CompaniesNotes 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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