Piper Jaffray Companies (NYSE:PJC) today announced its financial
results for the quarter and year ended December 31, 2015.
We achieved record revenues in 2015 led by
the strength of our Investment Banking franchise
Financial Highlights
- Adjusted net income(1) was $21.1
million, or $1.40 per diluted common share(1), in the fourth
quarter of 2015, compared to $14.7 million, or $0.90 per diluted
common share, in the fourth quarter of 2014, and $7.3 million, or
$0.48 per diluted common share, in the third quarter of 2015.
- Record adjusted net revenues(1) of
$195.1 million in the fourth quarter of 2015, compared to $148.4
million in both the fourth quarter of 2014 and the third quarter of
2015, respectively.
- Adjusted pre-tax operating margin(1)
was 17.2% in the fourth quarter of 2015, compared to 15.9% and 7.0%
in the fourth quarter of 2014 and the third quarter of 2015,
respectively.
- Our Capital Markets segment produced a
record $414.8 million of investment banking revenues for the year
ended December 31, 2015 driven by record advisory services and
debt financing revenues.
- Assets under management were $8.9
billion at December 31, 2015, compared to $11.5 billion in the
year-ago period and $9.4 billion at the end of the third quarter of
2015.
- Adjusted rolling 12 month return on
average common shareholders' equity(2) decreased to 8.1% at
December 31, 2015, compared to 9.2% at December 31, 2014.
On a GAAP basis our return on average common shareholders' equity
decreased to 6.4% at December 31, 2015, compared to 8.1% at
December 31, 2014.
- Book value per share increased 10% from
December 31, 2014 to $58.87 a share at December 31,
2015.
Three
Months Ended Percent Inc/(Dec) Twelve Months
Ended (Amounts in thousands,
Dec. 31,
Sept. 30, Dec. 31, 4Q '15
4Q '15 Dec. 31, Dec. 31,
Percent except per share data)
2015 2015
2014 vs. 3Q '15 vs. 4Q '14 2015
2014 Inc/(Dec) As Adjusted(1) Net
revenues
$ 195,096 $ 148,394 $ 148,394 31.5 % 31.5 %
$ 663,108 $ 632,439 4.8 % Net income
$
21,147 $ 7,250 $ 14,700 191.7 % 43.9 %
$
65,850 $ 72,114 (8.7 )% Earnings per diluted common share
$ 1.40 $ 0.48 $ 0.90 191.7 % 55.6 %
$
4.22 $ 4.42 (4.5 )% Pre-tax operating margin
17.2
% 7.0 % 15.9 %
15.5 % 18.0 %
U.S.
GAAP Net revenues
$ 197,364 $ 149,617 $ 150,548
31.9 % 31.1 %
$ 672,918 $ 648,138 3.8 % Net income
$ 13,273 $ 4,831 $ 12,543 174.7 % 5.8 %
$
52,075 $ 63,172 (17.6 )% Earnings per diluted common share
$ 0.88 $ 0.32 $ 0.77 175.0 % 14.3 %
$
3.34 $ 3.87 (13.7 )% Pre-tax operating margin
11.4
% 4.5 % 14.3 %
12.8 % 17.0 %
(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 an explanation of the
calculation of this non-GAAP measure. We believe that the adjusted
rolling 12 month return on average common shareholders' equity
provides a meaningful measure of our return on the core operating
results of the business.
For the fourth quarter of 2015, on a U.S. GAAP basis, net
revenues were $197.4 million, and net income was $13.3 million, or
$0.88 per diluted common share.
For the twelve months ended December 31, 2015, net revenues
on a U.S. GAAP basis were $672.9 million. Net income on a U.S. GAAP
basis was $52.1 million, or $3.34 per diluted common share, in
2015.
"We achieved record revenues and delivered solid results for our
shareholders in 2015, while actively investing in the business to
position us for continued growth and improved shareholder returns,"
said Andrew S. Duff, Chairman and Chief Executive Officer. "In
particular, our expansion into the Financial Institutions and the
Energy sectors represent significant milestones for the firm."
Fourth Quarter Results – Non-GAAP BasisThroughout the
Adjusted Consolidated Results and Business Segment Results sections
of this press release we present financial measures that are not
prepared in accordance with U.S. generally accepted accounting
principles ("U.S. GAAP"). The non-GAAP financial measures include
adjustments to exclude (1) revenues and expenses related to
noncontrolling interests, (2) amortization of intangible assets
related to acquisitions, (3) compensation for acquisition-related
agreements and (4) restructuring and acquisition integration costs.
Management believes that presenting results and measures on this
adjusted basis alongside 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 fourth quarter of
2015, adjusted net revenues were $195.1 million, up 32% compared to
$148.4 million in both the fourth quarter of 2014 and the third
quarter of 2015, respectively, due primarily to higher advisory
services and fixed income institutional brokerage revenues.
For the fourth quarter of 2015, adjusted compensation and
benefits expenses were $124.8 million, up 35% and 31% compared to
the fourth quarter of 2014 and the third quarter of 2015,
respectively. The increase for both periods was due to improved
financial results, as well as incremental compensation expenses
associated with the significant hiring to expand our financial
institutions group and our acquisitions of River Branch Holdings
LLC ("River Branch") and BMO Capital Markets GKST Inc. ("BMO
GKST"), which closed on September 30, 2015 and October 9,
2015, respectively.
For the fourth quarter of 2015, adjusted compensation and
benefits expenses were 64.0% of adjusted net revenues, compared to
62.4% and 64.3% for the fourth quarter of 2014 and the third
quarter of 2015, respectively. The adjusted compensation ratio
increased compared to the year-ago period due to compensation
expenses associated with the significant hiring in the current year
in our Capital Markets segment to expand our financial institutions
group.
Adjusted non-compensation expenses were $36.8 million for the
fourth quarter of 2015, up 14% compared to the year-ago period. The
increase compared to the fourth quarter of 2014 was due to higher
travel expenses resulting from increased business activity, as well
as the incremental costs associated with the acquisitions of River
Branch and BMO GKST. Adjusted non-compensation expenses were down
14% compared to the sequential quarter. Adjusted non-compensation
expenses were higher in the third quarter of 2015 due to a $9.8
million pre-tax charge resulting from a settlement of a legal
matter.
On an adjusted basis, our effective tax rate was 36.9% for the
fourth quarter of 2015, compared to 37.7% and 30.0% for the fourth
quarter of 2014 and the third quarter of 2015, respectively. The
reduced effective tax rate for the third quarter of 2015 was due to
the impact of tax-exempt interest income representing a larger
proportion of our pre-tax income.
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.
Capital MarketsFor the quarter, Capital Markets generated
adjusted pre-tax operating income of $31.0 million, compared to
$18.0 million and $10.5 million in the fourth quarter of 2014 and
the third quarter of 2015, respectively.
Adjusted net revenues were $181.1 million, up 40% and 33%
compared to the year-ago period and the third quarter of 2015,
respectively.
- Equity financing revenues of $19.8
million decreased 8% and 18% compared to the year-ago period and
the sequential quarter, respectively. Revenues decreased compared
to both periods due to fewer completed transactions, which was
partially offset by higher revenue per transaction.
- Debt financing revenues were $22.1
million, up 13% compared to the fourth quarter of 2014 due to more
completed transactions, and up 8% compared to the third quarter of
2015 due to higher revenue per transaction.
- Advisory services revenues from mergers
and acquisitions and equity private placement transactions were
$87.5 million, up 108% and 86% compared to the fourth quarter of
2014 and the sequential quarter, respectively. Revenues increased
compared to both periods due to higher revenue per
transaction.
- Equity institutional brokerage revenues
of $19.2 million decreased 16% compared to the year-ago period due
to lower client trading volumes. Revenues decreased 4% compared to
the third quarter of 2015.
- Adjusted fixed income institutional
brokerage revenues were $33.5 million, up 45% and 84% compared to
the fourth quarter of 2014 and the third quarter of 2015,
respectively, due to higher trading gains and the addition of fixed
income sales and trading professionals from the BMO GKST
acquisition.
- Management and performance fees earned
from managing our alternative asset management funds were $0.7
million, compared to $0.9 million and $1.9 million in the year-ago
period and the sequential quarter, respectively. The decrease
compared to the third quarter of 2015 was due to lower management
fees.
- Adjusted investment income, which
includes realized and unrealized gains and losses on investments in
our merchant banking fund and firm investments, was $0.8 million
for the quarter, compared to $1.3 million and $6.1 million in the
year-ago period and sequential quarter, respectively. In the third
quarter of 2015, we recorded higher gains on our merchant banking
firm investments.
- Long-term financing expenses, which
primarily represent interest paid on the firm's senior notes, were
$2.7 million, compared to $1.6 million and $1.7 million in the
year-ago period and sequential quarter, respectively. The increase
compared to both of the prior periods was due to a higher amount of
outstanding principal on the senior notes in the fourth quarter of
2015.
- Adjusted operating expenses for the
fourth quarter of 2015 were $150.1 million, up 34% and 19% compared
to the fourth quarter of 2014 and the third quarter of 2015,
respectively. The increase compared to both periods primarily
resulted from higher compensation expenses due to improved
operating results and business expansion.
- Adjusted segment pre-tax operating
margin was 17.1% compared to 13.9% in the year-ago period and 7.7%
in the third quarter of 2015. Adjusted pre-tax operating margin
improved compared to both periods due to higher net revenues. Also,
adjusted pre-tax operating margin was lower in the sequential
quarter due to a $9.8 million legal settlement.
Asset ManagementFor the quarter ended December 31,
2015, Asset Management generated adjusted pre-tax operating income
of $2.5 million, compared to adjusted pre-tax operating income of
$5.6 million in the fourth quarter of 2014 and an adjusted pre-tax
operating loss of $0.1 million in the third quarter of 2015.
Net revenues were $14.0 million, down 25% compared to the fourth
quarter of 2014 and up 17% compared to the third quarter of
2015.
- Management and performance fees of
$15.6 million decreased 20% and 9% compared to the fourth quarter
of 2014 and the third quarter of 2015, respectively. Revenues
decreased compared to both periods due to lower management fees
from decreased assets under management (AUM) driven primarily by
market depreciation.
- Investment losses on firm capital
invested in our strategies was $1.5 million for the current
quarter, compared with a loss of $0.6 million and $5.1 million in
the fourth quarter of 2014 and the third quarter of 2015,
respectively, driven by unrealized losses in MLP investments.
- Adjusted operating expenses for the
current quarter were $11.5 million, down 12% compared to the
year-ago period due to lower compensation and non-compensation
expenses. Compared to the third quarter of 2015, adjusted operating
expenses decreased 5% due to lower compensation expenses.
- Adjusted segment pre-tax operating
margin was 17.7%, compared to 29.9% in the fourth quarter of 2014
and a negative 1.2% in the third quarter of 2015. Excluding
investment losses on firm capital invested in our strategies,
adjusted segment pre-tax operating margin related to our core asset
management operations was 25.8% in the fourth quarter of 2015,
compared to 32.2% in the year-ago period and 29.1% in the
sequential quarter. Adjusted segment pre-tax operating margin
excluding investment losses declined relative to both periods
primarily due to lower management fees.
- AUM was $8.9 billion at the end of the
fourth quarter of 2015, compared to $11.5 billion in the year-ago
period and $9.4 billion at the end of the third quarter of 2015.
The decreases in AUM have been driven by market depreciation,
primarily from our MLP product offerings.
Full-Year 2015 Results – Non-GAAP Basis
Adjusted Consolidated ResultsIn 2015, adjusted EPS was
$4.22, compared to $4.42 in 2014. The decrease was due to a legal
settlement in 2015, as well as incremental expenses related to the
expansion of our Capital Markets financial institutions group.
Excluding the legal settlement of $9.8 million or $0.39 per share,
adjusted EPS would have been $4.61 per diluted common share(3), up
4% compared to 2014.
Adjusted net revenues were $663.1 million in 2015, up 5%
compared to $632.4 million in 2014. The increase was due primarily
to higher investment banking revenues, partially offset by lower
asset management revenues.
For 2015, adjusted compensation and benefits expenses were
$417.5 million, up 7% compared to 2014, due primarily to improved
financial performance. Adjusted compensation and benefits expenses
were 63.0% of adjusted net revenues in 2015, up from 61.6% in 2014,
due to a change in our mix of business and incremental compensation
expenses related to the expansion of our Capital Markets financial
institutions group.
Adjusted non-compensation expenses were $143.0 million in 2015,
up 11% compared to 2014. The increase was due to a $9.8 million
legal settlement in 2015 and higher expenses from increased
business activity, and incremental costs associated with the
acquisitions of River Branch and BMO GKST.
Business Segment Results
Capital MarketsFor 2015, Capital Markets generated
adjusted pre-tax operating income of $88.3 million, up 4% from
$84.9 million in 2014. Adjusted net revenues were $599.5 million in
2015, up 9% compared to $552.1 million in the prior year, driven by
strong debt financing, advisory services, and investment
income.
Adjusted operating expenses were $511.2 million in 2015, up 9%
compared to 2014, due to higher compensation expenses from
increased operating results and incremental compensation expense
related to expansion of financial institutions group, as well as
higher non-compensation expenses driven by a $9.8 million pre-tax
charge resulting from a settlement of a legal matter. Adjusted
segment pre-tax operating margin declined from 15.4% in 2014 to
14.7% in 2015.
(3)
Management believes that the presentation
of adjusted earnings per share excluding the legal settlement is a
better comparison of year-over-year results.
Asset ManagementFor 2015, Asset Management generated
adjusted pre-tax operating income of $14.3 million, down 50%
compared to $28.8 million in 2014. Net revenues were $63.6 million
in 2015, down 21% compared to 2014 due to lower management fees and
investment losses.
Adjusted operating expenses were $49.3 million in 2015, down 4%
compared to 2014. Adjusted segment pre-tax operating margin
declined from 35.8% in 2014 to 22.5% in 2015. Excluding investment
income/(loss) on firm capital invested in our strategies, adjusted
operating margin declined from 35.3% in 2014 to 29.9% in 2015, due
to lower revenues.
Other MattersDuring 2015, we returned $133.0 million of
capital to shareholders by repurchasing approximately 2,740,000
shares, at an average price of $48.50 per share, of which $118.5
million related to our share repurchase authorization. We have
$131.5 million remaining under this authorization, which expires on
September 30, 2017.
In 2015, we incurred $10.7 million of restructuring and
integration charges. These charges principally resulted from
severance benefits and transaction costs related to our
acquisitions of River Branch and BMO GKST.
On November 16, 2015, we entered into a definitive
agreement to acquire Simmons & Company International, a
Texas-based employee-owned investment bank and broker dealer
focused on the energy industry. The transaction is valued at
approximately $139.0 million, payable at closing, consisting of
$91.0 million in cash and $48.0 million of restricted stock. We
have committed an additional $21.0 million in cash and stock for
retention purposes. The transaction is expected to close in the
first quarter of 2016.
Additional Shareholder
Information
For the Quarter Ended Dec. 31, 2015
Sept. 30, 2015 Dec. 31,
2014 Full time employees 1,152 1,094 1,026
Equity financings # of transactions
12 22 17 Capital
raised
$1.9 billion $3.0 billion $2.7 billion
Municipal
negotiated issuances # of transactions
180 159 128 Par
value
$2.6 billion $3.3 billion $2.3 billion
Advisory
transactions # of transactions
25 23 24 Aggregate deal
value
$10.0 billion $7.0 billion $2.6 billion
Asset
Management AUM
$8.9 billion $9.4 billion $11.5 billion
Common shareholders’ equity $783.7 million $795.4
million $819.9 million
Number of common shares outstanding (in
thousands) 13,311 13,947 15,265
Rolling 12 month
return on average common shareholders’ equity * 6.4%
6.3% 8.1%
Adjusted rolling 12 month return on average common
shareholders’ equity † 8.1% 7.3% 9.2%
Book value per
share $58.87 $57.03 $53.71
Tangible book value per
share ‡ $40.20 $39.36 $37.82 * 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.
† Adjusted Rolling 12 month return on average common
shareholders' equity is computed by dividing adjusted net income
for the last 12 months by average monthly common shareholders'
equity. For a detailed explanation of the components of adjusted
net income, see "Reconciliation of U.S. GAAP to Selected Summary
Financial Information." Management believes that the adjusted
rolling 12 month return on average common shareholders' equity
provides a meaningful measure of our return on the core operating
results of the business. ‡ 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) Dec. 31, 2015 Sept.
30, 2015 Dec. 31, 2014 Common shareholders’ equity $ 783,659 $
795,385 $ 819,912 Deduct: goodwill and identifiable intangible
assets 248,506 246,362 242,536 Tangible
common shareholders’ equity $ 535,153 $ 549,023 $ 577,376
Additional Shareholder Information –
Continued
For the Year Ended Dec. 31, 2015
Dec. 31, 2014 Equity financings # of
transactions
95 90 Capital raised
$17.4 billion $20.5
billion
Municipal negotiated issuances # of transactions
707 485 Par value
$14.3 billion $9.5 billion
Advisory transactions # of transactions
82 91
Aggregate deal value
$23.0 billion $14.7 billion
Conference CallAndrew S. Duff, chairman and chief
executive officer, and Debbra L. Schoneman, chief financial
officer, will hold a conference call to review the financial
results on Thur., Feb. 4 at 9 a.m. ET (8 a.m. CT). The earnings
release will be available on or after Feb. 4 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
#22303402. 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 Feb. 4 at the same Web
address or by calling (855)859-2056 and referencing reservation
#22303402.
About Piper JaffrayPiper 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 StatementsThis
press release and the conference call to discuss the contents of
this press release contain forward-looking statements. Statements
that are not historical or current facts, including statements
about beliefs and expectations, are forward-looking statements and
are subject to significant risks and uncertainties that are
difficult to predict. These forward-looking statements cover, among
other things, statements made about general economic and market
conditions (including the outlook for equity markets and the
interest rate environment), the environment and prospects for
corporate advisory transactions and capital markets (including our
performance in specific sectors and the outlook for future
quarters), anticipated financial results generally (including
expectations regarding our noncompensation 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), financial results
for our asset management segment (including our performance in
specific sectors, e.g. energy-based MLPs),the liquidity of fixed
income markets and impact on our related inventory, our strategic
priorities (including growth in public finance, asset management,
and corporate advisory), potential acquisitions or strategic hires,
the expected benefits of our expansion into the financial
institutions and energy sectors, including the expected benefits of
the acquisition of Simmons and Company International and
integration of River Branch Holdings LLC and BMO Capital Markets
GKST Inc. or other similar matters.
Forward-looking statements involve inherent risks and
uncertainties, both known and unknown, and important factors could
cause actual results to differ materially from those anticipated or
discussed in the forward-looking statements. These risks,
uncertainties and important factors include, but are not limited
to, the following:
- market and economic conditions or
developments may be unfavorable, including in specific sectors in
which we operate, and these conditions or developments, such as
market fluctuations or volatility, may adversely affect our
business, revenue levels and profitability;
- net revenues from equity and debt
financings and corporate advisory engagements may vary materially
depending on the number, size, and timing of completed
transactions, and completed transactions do not generally provide
for subsequent engagements;
- the volume of anticipated investment
banking transactions as reflected in our deal pipelines (and the
net revenues we earn from such transactions) may differ from
expected results if there is a decline in macroeconomic conditions
or the financial markets, or if the terms of any transactions are
modified;
- asset management revenue may vary based
on investment performance and market and economic factors, and
these factors may impact certain sectors that are more heavily
weighted to our business, e.g. energy-based MLP funds;
- interest rate volatility, especially if
the changes are rapid or severe, could negatively impact our fixed
income institutional business and the negative impact could be
exaggerated by reduced liquidity in the fixed income markets;
- strategic trading activities comprise a
meaningful portion of our fixed income institutional brokerage
revenue, and results from these activities may be volatile and vary
significantly, including the possibility of incurring losses, on a
quarterly and annual basis;
- potential acquisitions targets or
strategic hires may not be available on reasonable terms or at all,
and we may not be able to effectively integrate any business or
groups of employees we acquire or hire, and the expected benefits
of any acquisitions or strategic hires, including that of Simmons
and Company International, River Branch Holdings LLC and BMO
Capital Markets GKST Inc., may take longer than anticipated to
achieve and may not be achieved in their entirety or at all;
- our stock price may fluctuate as a
result of several factors, including but not limited to, changes in
our revenues and operating results.
A further listing and description of these and other risks,
uncertainties and important factors can be found in the sections
titled “Risk Factors” in Part I, Item 1A of our Annual
Report on Form 10-K for the year ended December 31, 2014 and
“Management's Discussion and Analysis of Financial Condition and
Results of Operations” in Part II, Item 7 of our Annual
Report on Form 10-K for the year ended December 31, 2014, and
updated in our subsequent reports filed with the 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.
© 2016 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 Dec.
31, Sept. 30, Dec.
31, 4Q '15 4Q '15 Dec. 31,
Dec. 31, Percent (Amounts in thousands,
except per share data)
2015 2015 2014 vs.
3Q '15 vs. 4Q '14 2015 2014
Inc/(Dec) Revenues: Investment banking $ 129,332 $
91,640 $ 82,613 41.1 % 56.6 % $ 414,118 $ 369,811 12.0 %
Institutional brokerage 48,010 34,182 42,324 40.5 13.4 154,889
156,809 (1.2 ) Asset management 16,287 18,951 20,242 (14.1 ) (19.5
) 75,017 85,062 (11.8 ) Interest 8,802 9,128 11,781 (3.6 ) (25.3 )
41,557 48,716 (14.7 ) Investment income 613 831 434 (26.2 ) 41.2
10,736 12,813 (16.2 ) Total revenues 203,044 154,732
157,394 31.2 29.0 696,317
673,211 3.4 Interest expense 5,680
5,115 6,846 11.0 (17.0 ) 23,399 25,073
(6.7 ) Net revenues 197,364 149,617
150,548 31.9 31.1 672,918 648,138 3.8
Non-interest expenses: Compensation and
benefits 126,190 96,132 93,765 31.3 34.6 421,733 394,510 6.9
Outside services 9,833 9,316 9,218 5.5 6.7 36,218 37,055 (2.3 )
Occupancy and equipment 7,510 7,025 6,080 6.9 23.5 28,301 28,231
0.2 Communications 6,112 6,234 5,684 (2.0 ) 7.5 23,762 22,732 4.5
Marketing and business development 8,804 6,965 7,473 26.4 17.8
29,990 27,260 10.0 Trade execution and clearance 1,838 1,982 2,094
(7.3 ) (12.2 ) 7,794 7,621 2.3 Restructuring and integration costs
9,156 1,496 — 512.0 N/M 10,652 — N/M Intangible asset amortization
expense 2,343 1,773 2,318 32.1 1.1 7,662 9,272 (17.4 ) Other
operating expenses 3,094 11,906 2,427 (74.0 )
27.5 20,383 11,146 82.9 Total
non-interest expenses 174,880 142,829 129,059
22.4 35.5 586,495 537,827 9.0
Income before income tax expense 22,484 6,788 21,489
231.2 4.6 86,423 110,311 (21.7 ) Income tax expense
7,336 1,573 7,514 366.4 (2.4 ) 27,941
35,986 (22.4 )
Net income 15,148 5,215 13,975
190.5 8.4 58,482 74,325 (21.3 ) Net income applicable to
noncontrolling interests 1,875 384 1,432 388.3
30.9 6,407 11,153 (42.6 )
Net
income applicable to Piper Jaffray Companies (a) $ 13,273 $
4,831 $ 12,543 174.7 % 5.8 % $ 52,075 $ 63,172 (17.6 )%
Net income applicable to Piper Jaffray Companies’ common
shareholders (a) $ 12,147 $ 4,448 $ 11,700 173.1 % 3.8 % $
48,060 $ 58,141 (17.3 )%
Earnings per common share
Basic $ 0.88 $ 0.32 $ 0.77 175.0 % 14.3 % $ 3.34 $ 3.88 (13.9 )%
Diluted $ 0.88 $ 0.32 $ 0.77 175.0 % 14.3 % $ 3.34 $ 3.87 (13.7 )%
Weighted average number of common shares outstanding
Basic 13,775 13,938 15,241 (1.2 )% (9.6 )% 14,368 14,971 (4.0 )%
Diluted 13,782 13,952 15,293 (1.2 )% (9.9 )% 14,389 15,025 (4.2 )%
(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 (U.S. GAAP – Unaudited) Three
Months Ended Percent Inc/(Dec)
Twelve Months Ended Dec. 31,
Sept. 30, Dec. 31, 4Q
'15 4Q '15 Dec. 31,
Dec. 31, Percent (Dollars in thousands)
2015
2015 2014 vs. 3Q '15 vs. 4Q '14
2015 2014 Inc/(Dec) Capital Markets
Investment banking Financing Equities $ 19,847 $ 24,290 $ 21,474
(18.3 )% (7.6 )% $ 114,468 $ 109,706 4.3 % Debt 22,113 20,446
19,533 8.2 13.2 91,195 63,005 44.7 Advisory services 87,510
47,135 42,065 85.7 108.0
209,163 197,880 5.7 Total
investment banking 129,470 91,871 83,072 40.9 55.9 414,826 370,591
11.9 Institutional sales and trading Equities 19,246 20,026
22,874 (3.9 ) (15.9 ) 78,584 82,211 (4.4 ) Fixed income
34,347 18,259 23,140 88.1
48.4 94,305 92,200 2.3
Total institutional sales and trading 53,593 38,285 46,014 40.0
16.5 172,889 174,411 (0.9 ) Management and performance fees
716 1,898 886 (62.3 ) (19.2 ) 4,642 5,398 (14.0 ) Investment
income 2,274 7,274 3,446 (68.7 ) (34.0 ) 24,468 24,046 1.8
Long-term financing expenses (2,713 ) (1,668 )
(1,597 ) 62.6 69.9 (7,494 ) (6,655 )
12.6 Net revenues 183,340 137,660 131,821 33.2 39.1
609,331 567,791 7.3 Operating expenses 161,823
129,224 114,039 25.2 41.9
530,937 478,661 10.9
Segment pre-tax operating income $ 21,517 $ 8,436 $
17,782 155.1 % 21.0 % $ 78,394 $ 89,130 (12.0
)% Segment pre-tax operating margin 11.7 % 6.1 % 13.5 % 12.9
% 15.7 %
Asset Management Management and performance
fees Management fees $ 15,571 $ 17,053 $ 19,298 (8.7 )% (19.3 )% $
70,167 $ 78,772 (10.9 )% Performance fees — —
58 — (100.0 ) 208
892 (76.7 ) Total management and performance fees 15,571
17,053 19,356 (8.7 ) (19.6 ) 70,375 79,664 (11.7 )
Investment income/(loss) (1,547 ) (5,096 )
(629 ) (69.6 ) 145.9 (6,788 ) 683 N/M
Net revenues 14,024 11,957 18,727 17.3 (25.1 ) 63,587
80,347 (20.9 ) Operating expenses 13,057
13,605 15,020 (4.0 ) (13.1 )
55,558 59,166 (6.1 ) Segment pre-tax
operating income/(loss) $ 967 $ (1,648 ) $ 3,707 N/M
(73.9 )% $ 8,029 $ 21,181 (62.1 )%
Segment pre-tax operating margin 6.9 % (13.8 )% 19.8 % 12.6 % 26.4
%
Total Net revenues $ 197,364 $ 149,617 $ 150,548
31.9 % 31.1 % $ 672,918 $ 648,138 3.8 % Operating expenses
174,880 142,829 129,059
22.4 35.5 586,495 537,827
9.0 Pre-tax operating income $ 22,484 $ 6,788
$ 21,489 231.2 % 4.6 % $ 86,423 $ 110,311
(21.7 )% Pre-tax operating margin 11.4 % 4.5 % 14.3 %
12.8 % 17.0 %
N/M — Not meaningful
Piper Jaffray Companies Preliminary
Selected Summary Financial Information (Non-GAAP – Unaudited)
(1)
Three Months Ended Percent Inc/(Dec) Twelve Months
Ended Dec. 31, Sept. 30,
Dec. 31, 4Q '15 4Q '15
Dec. 31, Dec. 31, Percent
(Amounts in thousands, except per share data)
2015
2015 2014 vs. 3Q '15 vs. 4Q '14
2015 2014 Inc/(Dec) Revenues:
Investment banking $ 129,332 $ 91,640 $ 82,613 41.1 % 56.6 % $
414,118 $ 369,811 12.0 % Institutional brokerage 47,350 34,182
42,324 38.5 11.9 154,229 156,809 (1.6 ) Asset management 16,287
18,951 20,242 (14.1 ) (19.5 ) 75,017 85,062 (11.8 ) Interest 8,564
7,885 8,853 8.6 (3.3 ) 33,808 36,688 (7.8 ) Investment
income/(loss) (839 ) 631 125 N/M
N/M 7,093 5,231 35.6
Total revenues 200,694 153,289 154,157 30.9 30.2 684,265
653,601 4.7 Interest expense 5,598
4,895 5,763 14.4 (2.9 ) 21,157
21,162 — Adjusted net revenues
(2) $ 195,096 $ 148,394 $ 148,394 31.5 % 31.5
% $ 663,108 $ 632,439 4.8 %
Non-interest
expenses: Adjusted compensation and benefits (3) $ 124,802
$ 95,442 $ 92,552 30.8 % 34.8 % $ 417,500
$ 389,281 7.2 % Ratio of adjusted compensation and
benefits to adjusted net revenues 64.0 % 64.3 % 62.4 % 63.0 % 61.6
% Adjusted non-compensation expenses (4) $ 36,798 $
42,589 $ 32,254 (13.6 )% 14.1 % $ 143,045 $
129,499 10.5 % Ratio of adjusted non-compensation expenses
to adjusted net revenues 18.9 % 28.7 % 21.7 % 21.6 % 20.5 %
Adjusted income: Adjusted income before adjusted income tax
expense (5) $ 33,496 $ 10,363 $ 23,588 223.2 %
42.0 % $ 102,563 $ 113,659 (9.8 )% Adjusted operating
margin (6) 17.2 % 7.0 % 15.9 % 15.5 % 18.0 %
Adjusted
income tax expense (7) 12,349 3,113
8,888 296.7 38.9 36,713
41,545 (11.6 )
Adjusted net income (8)
$ 21,147 $ 7,250 $ 14,700 191.7 % 43.9 % $
65,850 $ 72,114 (8.7 )% Effective tax rate (9) 36.9 %
30.0 % 37.7 % 35.8 % 36.6 %
Adjusted net income
applicable to Piper Jaffray Companies’ common shareholders (10)
$ 19,354 $ 6,676 $ 13,712 189.9 % 41.1 % $
60,773 $ 66,371 (8.4 )%
Adjusted earnings
per diluted common share $ 1.40 $ 0.48 $ 0.90
191.7 % 55.6 % $ 4.22 $ 4.42 (4.5 )%
Weighted average number of common shares outstanding Diluted
13,782 13,952 15,293 (1.2 )% (9.9 )% 14,389 15,025 (4.2 )%
This presentation includes non-GAAP
measures. The non-GAAP measures are not meant to be considered in
isolation or as a substitute for the corresponding U.S. GAAP
measures, and should be read only in conjunction with our
consolidated financial statements prepared in accordance with U.S.
GAAP. For a detailed explanation of the adjustments made to the
corresponding U.S. GAAP measures, see "Reconciliation of U.S. GAAP
to Selected Summary Financial Information."
N/M — Not meaningful
Piper Jaffray Companies Preliminary
Adjusted Segment Data (Non-GAAP – Unaudited)
Three Months Ended Percent
Inc/(Dec) Twelve Months Ended
Dec. 31, Sept. 30,
Dec. 31, 4Q '15 4Q '15 Dec.
31, Dec. 31, Percent (Dollars in
thousands)
2015 2015 2014 vs. 3Q '15
vs. 4Q '14 2015 2014 Inc/(Dec)
Capital Markets Investment banking Financing Equities $
19,847 $ 24,290 $ 21,474 (18.3 )% (7.6 )% $ 114,468 $ 109,706 4.3 %
Debt 22,113 20,446 19,533 8.2 13.2 91,195 63,005 44.7 Advisory
services 87,510 47,135 42,065
85.7 108.0 209,163
197,880 5.7 Total investment banking 129,470 91,871
83,072 40.9 55.9 414,826 370,591 11.9 Institutional sales
and trading Equities 19,246 20,026 22,874 (3.9 ) (15.9 ) 78,584
82,211 (4.4 ) Fixed income 33,531 18,259
23,140 83.6 44.9 93,489
92,200 1.4 Total institutional sales
and trading 52,777 38,285 46,014 37.9 14.7 172,073 174,411 (1.3 )
Management and performance fees 716 1,898 886 (62.3 ) (19.2
) 4,642 5,398 (14.0 ) Investment income 822 6,051 1,292
(86.4 ) (36.4 ) 15,474 8,347 85.4 Long-term financing
expenses (2,713 ) (1,668 ) (1,597 ) 62.6
69.9 (7,494 ) (6,655 ) 12.6
Adjusted net revenues (2) 181,072 136,437 129,667 32.7 39.6
599,521 552,092 8.6 Adjusted operating expenses (12)
150,053 125,936 111,682 19.2
34.4 511,241 467,198 9.4
Adjusted segment pre-tax operating income (5) $
31,019 $ 10,501 $ 17,985 195.4 % 72.5 % $
88,280 $ 84,894 4.0 % Adjusted segment pre-tax
operating margin (6) 17.1 % 7.7 % 13.9 % 14.7 % 15.4 %
Asset Management Management and performance fees Management
fees $ 15,571 $ 17,053 $ 19,298 (8.7 )% (19.3 )% $ 70,167 $ 78,772
(10.9 )% Performance fees — — 58
— (100.0 ) 208 892 (76.7
) Total management and performance fees 15,571 17,053 19,356 (8.7 )
(19.6 ) 70,375 79,664 (11.7 ) Investment income/(loss)
(1,547 ) (5,096 ) (629 ) (69.6 ) 145.9
(6,788 ) 683 N/M Net revenues
14,024 11,957 18,727 17.3 (25.1 ) 63,587 80,347 (20.9 )
Adjusted operating expenses (13) 11,547 12,095
13,124 (4.5 ) (12.0 ) 49,304
51,582 (4.4 ) Adjusted segment pre-tax
operating income/(loss) (13) $ 2,477 $ (138 ) $ 5,603
N/M (55.8 )% $ 14,283 $ 28,765 (50.3 )%
Adjusted segment pre-tax operating margin (6) 17.7 % (1.2 )% 29.9 %
22.5 % 35.8 % Adjusted segment pre-tax operating margin
excluding investment income/(loss) * 25.8 % 29.1 % 32.2 % 29.9 %
35.3 %
Total Adjusted net revenues (2) $ 195,096 $
148,394 $ 148,394 31.5 % 31.5 % $ 663,108 $ 632,439 4.8 %
Adjusted operating expenses (12) 161,600
138,031 124,806 17.1 29.5
560,545 518,780 8.1
Adjusted pre-tax operating income (5)
$ 33,496 $ 10,363 $ 23,588 223.2 % 42.0 % $
102,563 $ 113,659 (9.8 )% Adjusted pre-tax
operating margin (6) 17.2 % 7.0 % 15.9 % 15.5 % 18.0 %
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."
* Management believes that presenting
adjusted segment pre-tax operating margin excluding investment
income/(loss) provides the most meaningful basis for comparison of
the operating results for the Asset Management segment across
periods.
N/M — Not meaningful
Piper Jaffray Companies Reconciliation of
U.S. GAAP to Selected Summary Financial Information (1)
(Unaudited) Three Months Ended
Twelve Months Ended Dec. 31,
Sept. 30, Dec. 31, Dec.
31, Dec. 31, (Amounts in thousands, except
per share data)
2015 2015 2014 2015
2014 Net revenues: Net revenues – U.S. GAAP basis $
197,364 $ 149,617 $ 150,548 $ 672,918 $ 648,138 Adjustments:
Revenue related to noncontrolling interests (11) (2,268 )
(1,223 ) (2,154 ) (9,810 ) (15,699 )
Adjusted net revenues $ 195,096 $ 148,394 $ 148,394
$ 663,108 $ 632,439
Compensation and
benefits: Compensation and benefits – U.S. GAAP basis $ 126,190
$ 96,132 $ 93,765 $ 421,733 $ 394,510 Adjustments: Compensation
from acquisition-related agreements (1,388 ) (690 )
(1,213 ) (4,233 ) (5,229 ) Adjusted
compensation and benefits $ 124,802 $ 95,442 $ 92,552
$ 417,500 $ 389,281
Non-compensation
expenses: Non-compensation expenses – U.S. GAAP basis $ 48,690
$ 46,697 $ 35,294 $ 164,762 $ 143,317 Adjustments: Non-compensation
expenses related to noncontrolling interests (11) (393 ) (839 )
(722 ) (3,403 ) (4,546 ) Restructuring and integration costs (9,156
) (1,496 ) — (10,652 ) — Amortization of intangible assets related
to acquisitions (2,343 ) (1,773 ) (2,318 )
(7,662 ) (9,272 ) Adjusted non-compensation expenses
$ 36,798 $ 42,589 $ 32,254 $ 143,045 $
129,499
Income before income tax expense:
Income before income tax expense – U.S. GAAP basis $ 22,484 $ 6,788
$ 21,489 $ 86,423 $ 110,311 Adjustments: Revenue related to
noncontrolling interests (11) (2,268 ) (1,223 ) (2,154 ) (9,810 )
(15,699 ) Expenses related to noncontrolling interests (11) 393 839
722 3,403 4,546 Compensation from acquisition-related agreements
1,388 690 1,213 4,233 5,229 Restructuring and integration costs
9,156 1,496 — 10,652 — Amortization of intangible assets related to
acquisitions 2,343 1,773 2,318
7,662 9,272 Adjusted income
before adjusted income tax expense $ 33,496 $ 10,363
$ 23,588 $ 102,563 $ 113,659
Income
tax expense: Income tax expense – U.S. GAAP basis $ 7,336 $
1,573 $ 7,514 $ 27,941 $ 35,986 Tax effect of adjustments:
Compensation from acquisition-related agreements 540 268 472 1,647
2,034 Restructuring and integration costs 3,562 582 — 4,144 —
Amortization of intangible assets related to acquisitions
911 690 902 2,981
3,525 Adjusted income tax expense $ 12,349 $
3,113 $ 8,888 $ 36,713 $ 41,545
Net income applicable to Piper Jaffray Companies: Net income
applicable to Piper Jaffray Companies – U.S. GAAP basis $ 13,273 $
4,831 $ 12,543 $ 52,075 $ 63,172 Adjustments: Compensation from
acquisition-related agreements 848 422 741 2,586 3,195
Restructuring and integration costs 5,594 914 — 6,508 —
Amortization of intangible assets related to acquisitions
1,432 1,083 1,416 4,681
5,747 Adjusted net income $ 21,147 $
7,250 $ 14,700 $ 65,850 $ 72,114
Net income applicable to Piper Jaffray Companies' common
shareholders: Net income applicable to Piper Jaffray Companies'
common stockholders – U.S. GAAP basis $ 12,147 $ 4,448 $ 11,700 $
48,060 $ 58,141 Adjustments: Compensation from acquisition-related
agreements 776 389 691 2,387 2,941 Restructuring and integration
costs 5,120 842 — 6,006 — Amortization of intangible assets related
to acquisitions 1,311 997 1,321
4,320 5,289 Adjusted net income
applicable to Piper Jaffray Companies' common stockholders $ 19,354
$ 6,676 $ 13,712 $ 60,773 $ 66,371
Earnings per diluted common share: Earnings
per diluted common share – U.S. GAAP basis $ 0.88 $ 0.32 $ 0.77 $
3.34 $ 3.87 Adjustments: Compensation from acquisition-related
agreements 0.06 0.03 0.05 0.17 0.20 Restructuring and integration
costs 0.37 0.06 — 0.42 — Amortization of intangible assets related
to acquisitions 0.10 0.07 0.09
0.30 0.35 Adjusted earnings per
diluted common share $ 1.40 $ 0.48 $ 0.90 $
4.22 $ 4.42
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 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 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 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 and (b) amortization of intangible
assets related to acquisitions.
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version on businesswire.com: http://www.businesswire.com/news/home/20160204005342/en/
Piper Jaffray CompaniesInvestor Relations:Tom
Smith, 612-303-6336
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