Piper Jaffray Companies (NYSE:PJC) today announced its financial
results for the quarter ended March 31, 2016.
Financial Highlights
- On February 26, 2016, we completed
the acquisition of Simmons & Company International, which
continues to build on our strategy to grow our advisory
business.
- Adjusted net income(1) was $10.6
million, or $0.70 per diluted common share(1), in the first quarter
of 2016, compared to $18.8 million, or $1.14 per diluted common
share, in the first quarter of 2015, and $21.1 million, or $1.40
per diluted common share, in the fourth quarter of 2015.
- Adjusted net revenues(1) were $152.2
million in the first quarter of 2016, compared to $155.7 million
and $195.1 million in the first and fourth quarters of 2015,
respectively.
- Adjusted pre-tax operating margin(1)
was 10.6% in the first quarter of 2016, compared to 18.9% and 17.2%
in the first and fourth quarters of 2015, respectively.
- Assets under management were $7.5
billion at March 31, 2016, compared to $11.4 billion in the
year-ago period and $8.9 billion at the end of the fourth quarter
of 2015.
- Adjusted rolling 12 month return on
average common shareholders' equity(2) decreased to 7.2% at
March 31, 2016, compared to 8.8% at March 31, 2015. On a
GAAP basis our return on average common shareholders' equity
decreased to 4.7% at March 31, 2016, compared to 7.8% at
March 31, 2015.
- Book value per share increased 10% from
March 31, 2015 to $60.69 a share at March 31, 2016.
Three Months Ended Percent
Inc/(Dec) Mar. 31, Dec. 31,
Mar. 31, 1Q '16 1Q '16
(Amounts in thousands, except per share data)
2016
2015 2015 vs. 4Q '15 vs. 1Q '15 As
Adjusted(1) Net revenues
$ 152,207 $
195,096 $ 155,739 (22.0 )% (2.3 )% Net income
$
10,609 $ 21,147 $ 18,819 (49.8 )% (43.6 )% Earnings per
diluted common share
$ 0.70 $ 1.40 $ 1.14 (50.0 )%
(38.6 )% Pre-tax operating margin
10.6 % 17.2 % 18.9
%
U.S. GAAP Net revenues
$ 153,556 $
197,364 $ 161,871 (22.2 )% (5.1 )% Net income
$ 2,437
$ 13,273 $ 16,972 (81.6 )% (85.6 )% Earnings per diluted common
share
$ 0.16 $ 0.88 $ 1.03 (81.8 )% (84.5 )% Pre-tax
operating margin
2.2 % 11.4 % 19.3 %
For the first quarter of 2016, on a U.S. GAAP basis, net
revenues were $153.6 million, and net income was $2.4 million, or
$0.16 per diluted common share.
(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.
"Our Advisory business got off to an exceptional start this
year" said Andrew Duff, chairman and CEO of Piper Jaffray. "The
strength in Advisory was in contrast to the challenging markets
confronted by the industry in the first quarter."
First 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 first quarter of
2016, adjusted net revenues were $152.2 million, down 2% compared
to $155.7 million in the first quarter of 2015, as higher advisory
services revenues were more than offset by declines in equity
financing revenues, asset management revenues and investment gains.
Adjusted net revenues decreased 22% compared to $195.1 million in
the fourth quarter of 2015 due primarily to lower investment
banking revenues, as well as lower fixed income institutional
brokerage revenues.
For the first quarter of 2016, adjusted compensation and
benefits expenses were $101.1 million, up 7% compared to the first
quarter of 2015. The increase was due to incremental compensation
expenses associated with the significant hiring in 2015 to expand
our financial institutions group and our acquisitions of Simmons
& Company International ("Simmons"), BMO Capital Markets GKST
Inc. ("BMO GKST"), and River Branch Holdings LLC ("River Branch"),
which closed on February 26, 2016, October 9, 2015, and
September 30, 2015, respectively. Adjusted compensation and
benefits expenses decreased 19% compared to the fourth quarter of
2015 due to lower revenues.
For the first quarter of 2016, adjusted compensation and
benefits expenses were 66.4% of adjusted net revenues, compared to
60.7% and 64.0% for the first and fourth quarters of 2015,
respectively. The adjusted compensation ratio increased compared to
both periods due to a change in our mix of business. Also, the
compensation ratio was higher compared to the year-ago period due
to compensation expenses associated with the expansion of our
financial institutions group.
Adjusted non-compensation expenses were $35.0 million for the
first quarter of 2016, up 11% compared to the year-ago period due
to the incremental costs associated with the acquisitions of
Simmons, BMO GKST and River Branch. Adjusted non-compensation
expenses were down 5% compared to the sequential quarter due
primarily to lower travel expenses resulting from decreased
business activity.
On an adjusted basis, our effective tax rate was 34.0% for the
first quarter of 2016, compared to 36.2% and 36.9% for the first
and fourth quarters of 2015, 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.
Capital MarketsFor the quarter ended March 31, 2016,
Capital Markets generated adjusted pre-tax operating income of
$14.0 million, compared to $22.4 million and $31.0 million in the
first and fourth quarters of 2015, respectively.
Adjusted net revenues were $140.3 million, up 3% compared to the
year-ago period and down 23% from the fourth quarter of 2015.
- Equity financing revenues of $6.6
million decreased 82% and 67% compared to the year-ago period and
the sequential quarter, respectively. Revenues decreased compared
to both periods due to fewer completed transactions and lower
revenue per transaction.
- Debt financing revenues were $16.0
million, down 24% and 28% compared to the first quarter and fourth
quarters of 2015, respectively, due to fewer completed
transactions.
- Advisory services revenues from mergers
and acquisitions and private placement transactions were $81.6
million, up 168% compared to the first quarter of 2015 due to more
completed transactions and higher revenue per transaction. Revenues
decreased 7% compared to the fourth quarter of 2015 due to lower
revenue per transaction.
- Equity institutional brokerage revenues
of $19.7 million increased 4% and 2% compared to the year-ago
period and the fourth quarter of 2015, respectively.
- Adjusted fixed income institutional
brokerage revenues were $17.1 million, down 20% and 49% compared to
the first and fourth quarters of 2015, respectively, due to lower
trading gains.
- Management and performance fees earned
from managing our alternative asset management funds were $1.0
million, compared to $1.4 million and $0.7 million in the year-ago
period and the sequential quarter, respectively.
- Adjusted investment income, which
includes realized and unrealized gains and losses on investments in
our merchant banking fund and firm investments, was $0.7 million
for the quarter, compared to $8.6 million and $0.8 million in the
year-ago period and sequential quarter, respectively. In the first
quarter of 2015, we recorded higher gains on these
investments.
- Long-term financing expenses, which
primarily represent interest paid on the firm's senior notes, were
$2.3 million, compared to $1.6 million and $2.7 million in the
year-ago period and sequential quarter, respectively. The increase
compared to the first quarter of 2015 was due to a higher amount of
outstanding principal on the senior notes.
- Adjusted operating expenses for the
first quarter of 2016 were $126.3 million, up 11% compared to the
first quarter of 2015 due to higher compensation and
non-compensation expenses as a result of business expansion.
Adjusted operating expenses were down 16% compared to the fourth
quarter of 2015. The decrease primarily resulted from lower
compensation expenses due to a decline in operating results.
- Adjusted segment pre-tax operating
margin was 10.0% compared to 16.5% in the year-ago period and 17.1%
in the fourth quarter of 2015. Adjusted pre-tax operating margin
was lower compared to the first quarter of 2015 due to higher
compensation and non-compensation expenses, and lower compared to
the sequential quarter primarily due to lower net revenues.
Asset ManagementFor the quarter ended March 31,
2016, Asset Management generated adjusted pre-tax operating income
of $2.0 million, compared to $7.1 million and $2.5 million in the
first and fourth quarters of 2015, respectively.
Net revenues were $11.9 million, down 40% and 15% compared to
the first and fourth quarters of 2015, respectively.
- Management and performance fees of
$12.9 million decreased 33% and 17% compared to the year-ago period
and the sequential quarter of 2015, respectively. Revenues
decreased compared to both periods due to lower management fees
from decreased assets under management (AUM) driven by market
depreciation and net client outflows.
- Investment income/(loss) on firm
capital invested in our strategies was a loss of $1.0 million for
the current quarter, compared with income of $0.6 million in the
first quarter of 2015 and a loss of $1.5 million in the fourth
quarter of 2015.
- Adjusted operating expenses for the
current quarter were $9.9 million, down 22% and 15% compared to the
year-ago period and the fourth quarter of 2015, respectively, due
to lower compensation and non-compensation expenses.
- Adjusted segment pre-tax operating
margin was 17.2%, compared to 35.8% in the first quarter of 2015
and 17.7% in the fourth quarter of 2015. Excluding investment
income/losses on firm capital invested in our strategies, adjusted
segment pre-tax operating margin related to our core asset
management operations was 23.4% in the first quarter of 2016,
compared to 33.8% in the year-ago period and 25.8% in the
sequential quarter. Adjusted segment pre-tax operating margin
excluding investment income/losses declined relative to both
periods primarily due to lower management fees.
- AUM was $7.5 billion at the end of the
first quarter of 2016, compared to $11.4 billion in the year-ago
period and $8.9 billion at the end of the fourth quarter of 2015.
The decreases in AUM have been driven by market depreciation,
primarily from our MLP product offerings, and net client outflows
in our value equity product offerings.
Other MattersOn February 26, 2016, we completed our
previously announced acquisition of Simmons, a Texas-based
employee-owned investment bank and broker dealer focused on the
energy industry. The acquisition supports our strategy to expand
our investment banking business into the energy sector and grow our
advisory business.
In the first quarter of 2016, we incurred $6.8 million of
restructuring and integration charges. These charges principally
resulted from severance benefits, contract termination fees and
transaction costs related to our acquisition of Simmons.
In the first quarter of 2016, we granted $35.1 million, or
844,000 shares, of restricted stock to our employees as part of
their 2015 earned compensation at a weighted average grant date
fair value of $41.58 per share.
We issued approximately 1.2 million shares of restricted stock
valued at $49.3 million as equity consideration for Simmons. Nearly
all of these shares cliff vest after three years, and the employees
must fulfill service requirements in exchange for the rights to the
shares.
During the first quarter of 2016, we repurchased $19.5 million,
or 521,000 shares of our common stock, at an average price of
$37.32 per share.
Additional Shareholder
Information
For the Quarter Ended
Mar. 31,
Dec. 31,
Mar. 31,
2016 2015 2015 Full time employees
1,283 1,152 1,030
Equity financings # of transactions
7 12 35 Capital raised
$1.2 billion $1.9 billion $6.5
billion
Municipal negotiated issuances # of transactions
103 180 142 Par value
$2.6 billion $2.6 billion $3.7
billion
Advisory transactions # of transactions
36 25
16 Aggregate deal value
$5.9 billion $10.0 billion $1.8
billion
Asset Management AUM
$7.5 billion $8.9
billion $11.4 billion
Common shareholders’ equity $805.2
million $783.7 million $831.0 million
Number of common shares outstanding (in
thousands)
13,268 13,311 15,000
Rolling 12 month return on average
common shareholders’ equity * 4.7% 6.4% 7.8%
Adjusted
rolling 12 month return on average common shareholders’ equity
† 7.2% 8.1% 8.8%
Book value per share
$60.69 $58.87 $55.40
Tangible book value per share ‡
$35.69 $40.20 $39.35 * 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
Mar. 31,
Dec. 31,
Mar. 31,
(Amounts in thousands) 2016 2015 2015 Common shareholders’ equity $
805,180 $ 783,659 $ 830,951 Deduct: goodwill and identifiable
intangible assets 331,707 248,506 240,763
Tangible common shareholders’ equity $ 473,473 $ 535,153 $
590,188
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., Apr. 28 at 9 a.m. ET (8 a.m. CT). The earnings
release will be available on or after Apr. 28 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
#85616338. 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. 28 at the same Web
address or by calling (855)859-2056 and referencing reservation
#85616338.
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, Aberdeen, 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, capital markets and public finance transactions
(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), the expected
benefits of our expansion into the financial institutions and
energy sectors, including the expected benefits of the integration
of Simmons and Company International, 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 product trends favoring passive investment products, and
investment performance and market factors, with market factors
impacting 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;
- we may not be able to effectively
integrate any business or groups of employees we acquire or hire,
and the expected benefits (e.g. cost and revenue synergies) 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, 2015 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, 2015, 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)
Mar. 31, Dec. 31, Mar.
31, 1Q '16 1Q '16 (Amounts in
thousands, except per share data)
2016 2015
2015 vs. 4Q '15 vs. 1Q '15 Revenues:
Investment banking $ 103,938 $ 129,332 $ 87,077 (19.6 )% 19.4 %
Institutional brokerage 32,049 48,010 36,036 (33.2 ) (11.1 ) Asset
management 13,848 16,287 20,522 (15.0 ) (32.5 ) Interest 8,829
8,802 12,205 0.3 (27.7 ) Investment income 937 613
12,591 52.9 (92.6 ) Total revenues 159,601 203,044
168,431 (21.4 ) (5.2 ) Interest expense 6,045
5,680 6,560 6.4 (7.9 ) Net revenues
153,556 197,364 161,871 (22.2 ) (5.1 )
Non-interest expenses: Compensation and benefits 104,436
126,190 95,857 (17.2 ) 8.9 Outside services 8,451 9,833 8,184 (14.1
) 3.3 Occupancy and equipment 7,718 7,510 6,783 2.8 13.8
Communications 7,330 6,112 6,328 19.9 15.8 Marketing and business
development 7,004 8,804 6,982 (20.4 ) 0.3 Trade execution and
clearance 1,762 1,838 1,997 (4.1 ) (11.8 ) Restructuring and
integration costs 6,773 9,156 — (26.0 ) N/M Intangible asset
amortization expense 3,296 2,343 1,773 40.7 85.9 Other operating
expenses 3,344 3,094 2,675 8.1 25.0
Total non-interest expenses 150,114 174,880
130,579 (14.2 ) 15.0
Income before income
tax expense 3,442 22,484 31,292 (84.7 ) (89.0 ) Income
tax expense 256 7,336 9,490 (96.5 ) (97.3 )
Net income 3,186 15,148 21,802 (79.0 ) (85.4 )
Net income applicable to noncontrolling interests 749
1,875 4,830 (60.1 ) (84.5 )
Net income applicable
to Piper Jaffray Companies (a) $ 2,437 $ 13,273 $ 16,972 (81.6
)% (85.6 )%
Net income applicable to Piper Jaffray
Companies’ common shareholders (a) $ 2,124 $ 12,147 $ 15,810
(82.5 )% (86.6 )%
Earnings per common share Basic $
0.16 $ 0.88 $ 1.03 (81.8 )% (84.5 )% Diluted $ 0.16 $ 0.88 $ 1.03
(81.8 )% (84.5 )%
Weighted average number of common
shares outstanding Basic 13,160 13,775 15,294 (4.5 )% (14.0 )%
Diluted 13,172 13,782 15,332 (4.4 )% (14.1 )%
(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 (U.S. GAAP – Unaudited) Three
Months Ended Percent Inc/(Dec) Mar.
31, Dec. 31, Mar. 31,
1Q '16 1Q '16 (Dollars in thousands)
2016 2015 2015 vs. 4Q '15 vs. 1Q
'15 Capital Markets Investment banking Financing
Equities $ 6,566 $ 19,847 $ 36,007 (66.9 )% (81.8 )% Debt 15,972
22,113 20,988 (27.8 ) (23.9 ) Advisory services 81,629
87,510 30,498 (6.7 ) 167.7
Total investment banking 104,167 129,470 87,493 (19.5 ) 19.1
Institutional sales and trading Equities 19,669 19,246
18,905 2.2 4.0 Fixed income 17,054 34,347
21,217 (50.3 ) (19.6 ) Total institutional
sales and trading 36,723 53,593 40,122 (31.5 ) (8.5 )
Management and performance fees 965 716 1,407 34.8 (31.4 )
Investment income 2,086 2,274 14,705 (8.3 ) (85.8 )
Long-term financing expenses (2,292 ) (2,713 )
(1,560 ) (15.5 ) 46.9 Net revenues 141,649 183,340
142,167 (22.7 ) (0.4 ) Operating expenses 138,855
161,823 116,203 (14.2 ) 19.5
Segment pre-tax operating income $ 2,794 $
21,517 $ 25,964 (87.0 )% (89.2 )% Segment
pre-tax operating margin 2.0 % 11.7 % 18.3 %
Asset
Management Management and performance fees Management fees $
12,883 $ 15,571 $ 19,107 (17.3 )% (32.6 )% Performance fees
— — 8 — (100.0 ) Total
management and performance fees 12,883 15,571 19,115 (17.3 ) (32.6
) Investment income/(loss) (976 ) (1,547 )
589 (36.9 ) N/M Net revenues 11,907
14,024 19,704 (15.1 ) (39.6 ) Operating expenses
11,259 13,057 14,376 (13.8 )
(21.7 ) Segment pre-tax operating income $ 648 $ 967
$ 5,328 (33.0 )% (87.8 )% Segment pre-tax
operating margin 5.4 % 6.9 % 27.0 %
Total Net
revenues $ 153,556 $ 197,364 $ 161,871 (22.2 )% (5.1 )%
Operating expenses 150,114 174,880
130,579 (14.2 ) 15.0 Pre-tax operating
income $ 3,442 $ 22,484 $ 31,292 (84.7 )%
(89.0 )% Pre-tax operating margin 2.2 % 11.4 % 19.3 %
N/M — Not meaningful
Piper Jaffray Companies Preliminary
Selected Summary Financial Information (Non-GAAP – Unaudited)
(1) Three Months Ended
Percent Inc/(Dec) Mar. 31,
Dec. 31, Mar. 31, 1Q '16
1Q '16 (Amounts in thousands, except per share data)
2016 2015 2015 vs. 4Q '15 vs. 1Q
'15 Revenues: Investment banking $ 103,938 $ 129,332 $
87,077 (19.6 )% 19.4 % Institutional brokerage 32,336 47,350 36,036
(31.7 ) (10.3 ) Asset management 13,848 16,287 20,522 (15.0 ) (32.5
) Interest 8,362 8,564 9,245 (2.4 ) (9.6 ) Investment income/(loss)
(412 ) (839 ) 8,452 (50.9 ) N/M
Total revenues 158,072 200,694 161,332 (21.2 ) (2.0 )
Interest expense 5,865 5,598
5,593 4.8 4.9 Adjusted net revenues (2)
$ 152,207 $ 195,096 $ 155,739 (22.0 )% (2.3 )%
Non-interest expenses: Adjusted compensation and
benefits (3) $ 101,130 $ 124,802 $ 94,606
(19.0 )% 6.9 % Ratio of adjusted compensation and benefits to
adjusted net revenues 66.4 % 64.0 % 60.7 % Adjusted
non-compensation expenses (4) $ 35,009 $ 36,798 $
31,647 (4.9 )% 10.6 % Ratio of adjusted non-compensation
expenses to adjusted net revenues 23.0 % 18.9 % 20.3 %
Adjusted income: Adjusted income before adjusted income tax
expense (5) $ 16,068 $ 33,496 $ 29,486 (52.0
)% (45.5 )% Adjusted operating margin (6) 10.6 % 17.2 % 18.9 %
Adjusted income tax expense (7) 5,459
12,349 10,667 (55.8 ) (48.8 )
Adjusted net income (8) $ 10,609 $ 21,147 $
18,819 (49.8 )% (43.6 )% Effective tax rate (9) 34.0 % 36.9
% 36.2 %
Adjusted net income applicable to Piper Jaffray
Companies’ common shareholders (10) $ 9,247 $ 19,354
$ 17,531 (52.2 )% (47.3 )%
Adjusted
earnings per diluted common share $ 0.70 $ 1.40 $
1.14 (50.0 )% (38.6 )%
Weighted average number of
common shares outstanding Diluted 13,172 13,782 15,332 (4.4 )%
(14.1 )%
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."
N/M — Not meaningful
Piper Jaffray Companies Preliminary Adjusted
Segment Data (Non-GAAP – Unaudited)
Three Months Ended Percent Inc/(Dec)
Mar. 31, Dec. 31, Mar.
31, 1Q '16 1Q '16 (Dollars in
thousands)
2016 2015 2015 vs. 4Q '15
vs. 1Q '15 Capital Markets Investment banking
Financing Equities $ 6,566 $ 19,847 $ 36,007 (66.9 )% (81.8 )% Debt
15,972 22,113 20,988 (27.8 ) (23.9 ) Advisory services
81,629 87,510 30,498 (6.7 )
167.7 Total investment banking 104,167 129,470 87,493 (19.5
) 19.1 Institutional sales and trading Equities 19,669
19,246 18,905 2.2 4.0 Fixed income 17,054
33,531 21,217 (49.1 ) (19.6 ) Total
institutional sales and trading 36,723 52,777 40,122 (30.4 ) (8.5 )
Management and performance fees 965 716 1,407 34.8 (31.4 )
Investment income 737 822 8,573 (10.3 ) (91.4 )
Long-term financing expenses (2,292 ) (2,713 )
(1,560 ) (15.5 ) 46.9 Adjusted net revenues (2)
140,300 181,072 136,035 (22.5 ) 3.1 Adjusted operating
expenses (12) 126,276 150,053
113,601 (15.8 ) 11.2 Adjusted segment pre-tax
operating income (5) $ 14,024 $ 31,019 $ 22,434
(54.8 )% (37.5 )% Adjusted segment pre-tax operating
margin (6) 10.0 % 17.1 % 16.5 %
Asset Management
Management and performance fees Management fees $ 12,883 $ 15,571 $
19,107 (17.3 )% (32.6 )% Performance fees — —
8 — (100.0 ) Total management and
performance fees 12,883 15,571 19,115 (17.3 ) (32.6 )
Investment income/(loss) (976 ) (1,547 ) 589
(36.9 ) N/M Net revenues 11,907 14,024 19,704
(15.1 ) (39.6 ) Adjusted operating expenses (13)
9,863 11,547 12,652 (14.6 )
(22.0 ) Adjusted segment pre-tax operating income (13) $
2,044 $ 2,477 $ 7,052 (17.5 )% (71.0 )%
Adjusted segment pre-tax operating margin (6) 17.2 % 17.7 % 35.8 %
Adjusted segment pre-tax operating margin excluding
investment income/(loss) * 23.4 % 25.8 % 33.8 %
Total
Adjusted net revenues (2) $ 152,207 $ 195,096 $ 155,739 (22.0 )%
(2.3 )% Adjusted operating expenses (12) 136,139
161,600 126,253 (15.8 ) 7.8
Adjusted pre-tax operating income (5) $ 16,068
$ 33,496 $ 29,486 (52.0 )% (45.5 )% Adjusted
pre-tax operating margin (6) 10.6 % 17.2 % 18.9 %
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 Mar. 31,
Dec. 31, Mar. 31,
(Amounts in thousands, except per share data)
2016
2015 2015 Net revenues: Net revenues – U.S.
GAAP basis $ 153,556 $ 197,364 $ 161,871 Adjustments: Revenue
related to noncontrolling interests (11) (1,349 )
(2,268 ) (6,132 ) Adjusted net revenues $ 152,207 $
195,096 $ 155,739
Compensation and
benefits: Compensation and benefits – U.S. GAAP basis $ 104,436
$ 126,190 $ 95,857 Adjustments: Compensation from
acquisition-related agreements (3,306 ) (1,388 )
(1,251 ) Adjusted compensation and benefits $ 101,130
$ 124,802 $ 94,606
Non-compensation
expenses: Non-compensation expenses – U.S. GAAP basis $ 45,678
$ 48,690 $ 34,722 Adjustments: Non-compensation expenses related to
noncontrolling interests (11) (600 ) (393 ) (1,302 ) Restructuring
and integration costs (6,773 ) (9,156 ) — Amortization of
intangible assets related to acquisitions (3,296 )
(2,343 ) (1,773 ) Adjusted non-compensation expenses $
35,009 $ 36,798 $ 31,647
Income
before income tax expense: Income before income tax expense –
U.S. GAAP basis $ 3,442 $ 22,484 $ 31,292 Adjustments: Revenue
related to noncontrolling interests (11) (1,349 ) (2,268 ) (6,132 )
Expenses related to noncontrolling interests (11) 600 393 1,302
Compensation from acquisition-related agreements 3,306 1,388 1,251
Restructuring and integration costs 6,773 9,156 — Amortization of
intangible assets related to acquisitions 3,296
2,343 1,773 Adjusted income before
adjusted income tax expense $ 16,068 $ 33,496 $
29,486
Income tax expense: Income tax expense
– U.S. GAAP basis $ 256 $ 7,336 $ 9,490 Tax effect of adjustments:
Compensation from acquisition-related agreements 1,286 540 487
Restructuring and integration costs 2,635 3,562 — Amortization of
intangible assets related to acquisitions 1,282
911 690 Adjusted income tax expense $
5,459 $ 12,349 $ 10,667
Net income
applicable to Piper Jaffray Companies: Net income applicable to
Piper Jaffray Companies – U.S. GAAP basis $ 2,437 $ 13,273 $ 16,972
Adjustments: Compensation from acquisition-related agreements 2,020
848 764 Restructuring and integration costs 4,138 5,594 —
Amortization of intangible assets related to acquisitions
2,014 1,432 1,083 Adjusted net
income $ 10,609 $ 21,147 $ 18,819
Net income applicable to Piper Jaffray Companies' common
shareholders: Net income applicable to Piper Jaffray Companies'
common stockholders – U.S. GAAP basis $ 2,124 $ 12,147 $ 15,810
Adjustments: Compensation from acquisition-related agreements 1,761
776 712 Restructuring and integration costs 3,607 5,120 —
Amortization of intangible assets related to acquisitions
1,755 1,311 1,009 Adjusted net
income applicable to Piper Jaffray Companies' common stockholders $
9,247 $ 19,354 $ 17,531
Earnings per
diluted common share: Earnings per diluted common share – U.S.
GAAP basis $ 0.16 $ 0.88 $ 1.03 Adjustments: Compensation from
acquisition-related agreements 0.13 0.06 0.05 Restructuring and
integration costs 0.27 0.37 — Amortization of intangible assets
related to acquisitions 0.13 0.10
0.07 Adjusted earnings per diluted common share $
0.70 $ 1.40 $ 1.14
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160428005230/en/
Piper Jaffray CompaniesInvestor Relations:Tom
Smith, 612-303-6336
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