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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Piper Jaffray Companies | NYSE:PJC | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 79.62 | 0 | 01:00:00 |
October 29, 2015 | ||||
Date of report (Date of earliest event reported) |
PIPER JAFFRAY COMPANIES | ||||
(Exact Name of Registrant as Specified in its Charter) |
Delaware | 1-31720 | 30-0168701 | ||||||
(State of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||
800 Nicollet Mall, Suite 1000 | ||||||||
Minneapolis, Minnesota | 55402 | |||||||
(Address of Principal Executive Offices) | (Zip Code) | |||||||
(612) 303-6000 | ||||||||
(Registrant’s Telephone Number, Including Area Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(d) | Exhibit |
PIPER JAFFRAY COMPANIES | ||||
Date: | October 29, 2015 | By | /s/ Debbra L. Schoneman | |
Debbra L. Schoneman | ||||
Chief Financial Officer |
No. | Description | Manner of Filing | ||
99 | Press Release dated 10/29/2015 | Filed Electronically |
• | Adjusted net income(1) was $7.3 million, or $0.48 per diluted common share(1), in the third quarter of 2015, compared to $16.9 million, or $1.03 per diluted common share, in the third quarter of 2014, and $18.6 million, or $1.19 per diluted common share, in the second quarter of 2015. |
• | Excluding a $9.8 million legal settlement, adjusted net income would have been $13.2 million, or $0.87 per diluted common share, in the third quarter of 2015. |
• | Adjusted net revenues(1) were $148.4 million in the third quarter of 2015, compared to $155.9 million and $163.9 million in the third quarter of 2014 and the second quarter of 2015, respectively. |
• | Adjusted pre-tax operating margin(1) was 7.0% in the third quarter of 2015, compared to 17.3% and 17.8% in the third quarter of 2014 and the second quarter of 2015, respectively. |
• | Assets under management were $9.4 billion at September 30, 2015, compared to $12.2 billion in the year-ago period and $11.4 billion at the end of the second quarter of 2015. |
• | Rolling 12 month return on average common shareholders' equity decreased to 6.3% at September 30, 2015, compared to 10.2% at September 30, 2014. Our rolling 12 month return on average tangible common shareholders' equity(2) decreased to 9.0% at September 30, 2015, compared to 15.2% at September 30, 2014. |
• | Book value per share increased 7% from September 30, 2014 to $57.03 a share at September 30, 2015. |
Three Months Ended | Percent Inc/(Dec) | Nine Months Ended | ||||||||||||||||||||||||||
(Amounts in thousands, | Sept. 30, | June 30, | Sept. 30, | 3Q '15 | 3Q '15 | Sept. 30, | Sept. 30, | Percent | ||||||||||||||||||||
except per share data) | 2015 | 2015 | 2014 | vs. 2Q '15 | vs. 3Q '14 | 2015 | 2014 | Inc/(Dec) | ||||||||||||||||||||
As Adjusted(1) | ||||||||||||||||||||||||||||
Net revenues | $ | 148,394 | $ | 163,879 | $ | 155,850 | (9.4 | )% | (4.8 | )% | $ | 468,012 | $ | 484,045 | (3.3 | )% | ||||||||||||
Net income | $ | 7,250 | $ | 18,634 | $ | 16,885 | (61.1 | )% | (57.1 | )% | $ | 44,703 | $ | 57,414 | (22.1 | )% | ||||||||||||
Earnings per diluted common share | $ | 0.48 | $ | 1.19 | $ | 1.03 | (59.7 | )% | (53.4 | )% | $ | 2.83 | $ | 3.52 | (19.6 | )% | ||||||||||||
Pre-tax operating margin | 7.0 | % | 17.8 | % | 17.3 | % | 14.8 | % | 18.6 | % | ||||||||||||||||||
U.S. GAAP | ||||||||||||||||||||||||||||
Net revenues | $ | 149,617 | $ | 164,066 | $ | 159,426 | (8.8 | )% | (6.2 | )% | $ | 475,554 | $ | 497,590 | (4.4 | )% | ||||||||||||
Net income | $ | 4,831 | $ | 16,999 | $ | 14,668 | (71.6 | )% | (67.1 | )% | $ | 38,802 | $ | 50,629 | (23.4 | )% | ||||||||||||
Earnings per diluted common share | $ | 0.32 | $ | 1.08 | $ | 0.90 | (70.4 | )% | (64.4 | )% | $ | 2.46 | $ | 3.11 | (20.9 | )% | ||||||||||||
Pre-tax operating margin | 4.5 | % | 15.8 | % | 16.1 | % | 13.4 | % | 17.9 | % |
(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. |
• | Equity financing revenues of $24.4 million increased 71% compared to the year-ago period due to more completed transactions and higher revenue per transaction. Revenues decreased 32% compared to the sequential quarter due to fewer completed transactions and lower revenue per transaction. |
• | Debt financing revenues were $20.5 million, up 42% compared to the third quarter of 2014 due to more completed transactions, and down 32% compared to a very strong second quarter of 2015 due to fewer completed transactions. |
• | Advisory services revenues were $47.0 million, down 29% compared to the robust third quarter of 2014 due to lower revenue per transaction. Revenues increased 17% compared to the sequential quarter due to more completed transactions. |
• | Equity institutional brokerage revenues of $20.0 million increased 20% compared to the year-ago period due to higher client trading volumes. Revenues decreased 2% compared to the second quarter of 2015. |
• | Fixed income institutional brokerage revenues were $18.3 million, down 20% compared to the third quarter of 2014 due to lower trading gains. Revenues declined 11% compared to the sequential quarter due to lower sales credits and reduced trading gains. |
• | Management and performance fees earned from managing our alternative asset management funds were $1.9 million, compared to $1.4 million and $0.6 million in the year-ago period and the sequential quarter, respectively. The increase compared to the second quarter of 2015 was due to higher management fees. |
• | Adjusted investment income, which includes realized and unrealized gains and losses on our investments in the merchant banking fund and the municipal bond fund that we manage for third party investors, and other firm investments, was $6.1 million for the quarter, compared to $1.6 million in the year-ago period. Adjusted investment income was not significant in the second quarter of 2015. In the third quarter of 2015, we recorded higher gains on our merchant banking firm investments compared to both of the prior periods. |
• | Long-term financing expenses, which primarily represent interest paid on the firm's variable rate senior notes, were $1.7 million, compared to $1.6 million in both the year-ago period and the sequential quarter, respectively. |
• | Adjusted operating expenses for the third quarter of 2015 were $125.9 million, up 9% and 4% compared to the third quarter of 2014 and the second quarter of 2015, respectively. The increase compared to both periods was due to higher legal reserves. |
• | Adjusted segment pre-tax operating margin was 7.7% compared to 14.6% in the year-ago period and 16.7% in the second quarter of 2015. Adjusted pre-tax operating margin declined compared to both periods due to higher non-compensation costs resulting from a legal settlement, as well as additional expenses associated with our financial institutions group expansion. |
• | Adjusted operating expenses for the current quarter were $12.1 million, down 6% and 7% compared to the year-ago period and the second quarter of 2015, respectively, due to lower compensation expenses. |
• | Adjusted segment pre-tax operating margin was a negative 1.2%, compared to 35.7% in the third quarter of 2014 and 27.3% in the second quarter of 2015. Adjusted segment pre-tax operating margin declined relative to both periods primarily due to investment losses and lower management fees. |
• | AUM was $9.4 billion at the end of the third quarter of 2015, compared to $12.2 billion in the year-ago period and $11.4 billion at the end of the second quarter of 2015. The decreases in AUM have been driven by market depreciation, primarily from our MLP product offerings. |
For the Quarter Ended | |||||
Sept. 30, 2015 | June 30, 2015 | Sept 30, 2014 | |||
Full time employees | 1,094 | 1,100 | 1,029 | ||
Equity financings | |||||
# of transactions | 22 | 27 | 15 | ||
Capital raised | $3.0 billion | $6.1 billion | $3.5 billion | ||
Negotiated tax-exempt issuances | |||||
# of transactions | 104 | 155 | 85 | ||
Par value | $2.3 billion | $3.9 billion | $1.8 billion | ||
Mergers & acquisitions | |||||
# of transactions | 21 | 14 | 22 | ||
Aggregate deal value | $6.9 billion | $3.5 billion | $4.7 billion | ||
Asset Management | |||||
AUM | $9.4 billion | $11.4 billion | $12.2 billion | ||
Common shareholders’ equity | $795.4 million | $789.6 million | $804.6 million | ||
Number of common shares outstanding (in thousands) | 13,947 | 13,904 | 15,109 | ||
Rolling 12 month return on average common shareholders’ equity * | 6.3% | 7.5% | 10.2% | ||
Rolling 12 month return on average tangible common shareholders’ equity † | 9.0% | 10.8% | 15.2% | ||
Book value per share | $57.03 | $56.79 | $53.26 | ||
Tangible book value per share ‡ | $39.36 | $39.60 | $37.05 |
* | 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. |
As of | As of | As of | |||||||||
(Amounts in thousands) | Sept. 30, 2015 | June 30, 2015 | Sept. 30, 2014 | ||||||||
Average common shareholders’ equity | $ | 811,643 | $ | 811,208 | $ | 759,971 | |||||
Deduct: average goodwill and identifiable intangible assets | 241,545 | 242,824 | 248,568 | ||||||||
Average tangible common shareholders’ equity | $ | 570,098 | $ | 568,384 | $ | 511,403 |
As of | As of | As of | |||||||||
(Amounts in thousands) | Sept. 30, 2015 | June 30, 2015 | Sept. 30, 2014 | ||||||||
Common shareholders’ equity | $ | 795,385 | $ | 789,635 | $ | 804,633 | |||||
Deduct: goodwill and identifiable intangible assets | 246,362 | 238,990 | 244,854 | ||||||||
Tangible common shareholders’ equity | $ | 549,023 | $ | 550,645 | $ | 559,779 |
• | 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 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. |
Three Months Ended | Percent Inc/(Dec) | Nine Months Ended | ||||||||||||||||||||||||||
Sept. 30, | June 30, | Sept. 30, | 3Q '15 | 3Q '15 | Sept. 30, | Sept. 30, | Percent | |||||||||||||||||||||
(Amounts in thousands, except per share data) | 2015 | 2015 | 2014 | vs. 2Q '15 | vs. 3Q '14 | 2015 | 2014 | Inc/(Dec) | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Investment banking | $ | 91,640 | $ | 106,069 | $ | 94,911 | (13.6 | )% | (3.4 | )% | $ | 284,786 | $ | 287,198 | (0.8 | )% | ||||||||||||
Institutional brokerage | 34,182 | 36,661 | 35,923 | (6.8 | ) | (4.8 | ) | 106,879 | 114,485 | (6.6 | ) | |||||||||||||||||
Asset management | 18,951 | 19,257 | 21,595 | (1.6 | ) | (12.2 | ) | 58,730 | 64,820 | (9.4 | ) | |||||||||||||||||
Interest | 9,128 | 11,422 | 10,828 | (20.1 | ) | (15.7 | ) | 32,755 | 36,935 | (11.3 | ) | |||||||||||||||||
Investment income/(loss) | 831 | (3,299 | ) | 2,690 | N/M | (69.1 | ) | 10,123 | 12,379 | (18.2 | ) | |||||||||||||||||
Total revenues | 154,732 | 170,110 | 165,947 | (9.0 | ) | (6.8 | ) | 493,273 | 515,817 | (4.4 | ) | |||||||||||||||||
Interest expense | 5,115 | 6,044 | 6,521 | (15.4 | ) | (21.6 | ) | 17,719 | 18,227 | (2.8 | ) | |||||||||||||||||
Net revenues | 149,617 | 164,066 | 159,426 | (8.8 | ) | (6.2 | ) | 475,554 | 497,590 | (4.4 | ) | |||||||||||||||||
Non-interest expenses: | ||||||||||||||||||||||||||||
Compensation and benefits | 96,132 | 103,554 | 97,180 | (7.2 | ) | (1.1 | ) | 295,543 | 300,745 | (1.7 | ) | |||||||||||||||||
Outside services | 9,316 | 8,885 | 9,155 | 4.9 | 1.8 | 26,385 | 27,837 | (5.2 | ) | |||||||||||||||||||
Occupancy and equipment | 7,025 | 6,983 | 8,312 | 0.6 | (15.5 | ) | 20,791 | 22,151 | (6.1 | ) | ||||||||||||||||||
Communications | 6,234 | 5,088 | 5,661 | 22.5 | 10.1 | 17,650 | 17,048 | 3.5 | ||||||||||||||||||||
Marketing and business development | 6,965 | 7,239 | 6,827 | (3.8 | ) | 2.0 | 21,186 | 19,787 | 7.1 | |||||||||||||||||||
Trade execution and clearance | 1,982 | 1,977 | 1,905 | 0.3 | 4.0 | 5,956 | 5,527 | 7.8 | ||||||||||||||||||||
Restructuring and integration costs | 1,496 | — | — | N/M | N/M | 1,496 | — | N/M | ||||||||||||||||||||
Intangible asset amortization expense | 1,773 | 1,773 | 2,318 | — | (23.5 | ) | 5,319 | 6,954 | (23.5 | ) | ||||||||||||||||||
Other operating expenses | 11,906 | 2,708 | 2,376 | 339.7 | 401.1 | 17,289 | 8,719 | 98.3 | ||||||||||||||||||||
Total non-interest expenses | 142,829 | 138,207 | 133,734 | 3.3 | 6.8 | 411,615 | 408,768 | 0.7 | ||||||||||||||||||||
Income before income tax expense | 6,788 | 25,859 | 25,692 | (73.7 | ) | (73.6 | ) | 63,939 | 88,822 | (28.0 | ) | |||||||||||||||||
Income tax expense | 1,573 | 9,542 | 8,596 | (83.5 | ) | (81.7 | ) | 20,605 | 28,472 | (27.6 | ) | |||||||||||||||||
Net income | 5,215 | 16,317 | 17,096 | (68.0 | ) | (69.5 | ) | 43,334 | 60,350 | (28.2 | ) | |||||||||||||||||
Net income/(loss) applicable to noncontrolling interests | 384 | (682 | ) | 2,428 | N/M | (84.2 | ) | 4,532 | 9,721 | (53.4 | ) | |||||||||||||||||
Net income applicable to Piper Jaffray Companies (a) | $ | 4,831 | $ | 16,999 | $ | 14,668 | (71.6 | )% | (67.1 | )% | $ | 38,802 | $ | 50,629 | (23.4 | )% | ||||||||||||
Net income applicable to Piper Jaffray Companies’ common shareholders (a) | $ | 4,448 | $ | 15,699 | $ | 13,552 | (71.7 | )% | (67.2 | )% | $ | 35,908 | $ | 46,386 | (22.6 | )% | ||||||||||||
Earnings per common share | ||||||||||||||||||||||||||||
Basic | $ | 0.32 | $ | 1.08 | $ | 0.90 | (70.4 | )% | (64.4 | )% | $ | 2.46 | $ | 3.12 | (21.2 | )% | ||||||||||||
Diluted | $ | 0.32 | $ | 1.08 | $ | 0.90 | (70.4 | )% | (64.4 | )% | $ | 2.46 | $ | 3.11 | (20.9 | )% | ||||||||||||
Weighted average number of common shares outstanding | ||||||||||||||||||||||||||||
Basic | 13,938 | 14,487 | 15,066 | (3.8 | )% | (7.5 | )% | 14,568 | 14,880 | (2.1 | )% | |||||||||||||||||
Diluted | 13,952 | 14,513 | 15,129 | (3.9 | )% | (7.8 | )% | 14,594 | 14,934 | (2.3 | )% |
(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. |
Three Months Ended | Percent Inc/(Dec) | Nine Months Ended | ||||||||||||||||||||||||||
Sept. 30, | June 30, | Sept. 30, | 3Q '15 | 3Q '15 | Sept. 30, | Sept. 30, | Percent | |||||||||||||||||||||
(Dollars in thousands) | 2015 | 2015 | 2014 | vs. 2Q '15 | vs. 3Q '14 | 2015 | 2014 | Inc/(Dec) | ||||||||||||||||||||
Capital Markets | ||||||||||||||||||||||||||||
Investment banking | ||||||||||||||||||||||||||||
Financing | ||||||||||||||||||||||||||||
Equities | $ | 24,437 | $ | 35,755 | $ | 14,269 | (31.7 | )% | 71.3 | % | $ | 96,681 | $ | 93,628 | 3.3 | % | ||||||||||||
Debt | 20,476 | 30,098 | 14,435 | (32.0 | ) | 41.8 | 72,312 | 48,148 | 50.2 | |||||||||||||||||||
Advisory services | 46,958 | 40,139 | 66,320 | 17.0 | (29.2 | ) | 116,363 | 145,743 | (20.2 | ) | ||||||||||||||||||
Total investment banking | 91,871 | 105,992 | 95,024 | (13.3 | ) | (3.3 | ) | 285,356 | 287,519 | (0.8 | ) | |||||||||||||||||
Institutional sales and trading | ||||||||||||||||||||||||||||
Equities | 20,026 | 20,407 | 16,711 | (1.9 | ) | 19.8 | 59,338 | 59,337 | — | |||||||||||||||||||
Fixed income | 18,259 | 20,482 | 22,737 | (10.9 | ) | (19.7 | ) | 59,958 | 69,060 | (13.2 | ) | |||||||||||||||||
Total institutional sales and trading | 38,285 | 40,889 | 39,448 | (6.4 | ) | (2.9 | ) | 119,296 | 128,397 | (7.1 | ) | |||||||||||||||||
Management and performance fees | 1,898 | 621 | 1,387 | 205.6 | 36.8 | 3,926 | 4,512 | (13.0 | ) | |||||||||||||||||||
Investment income | 7,274 | 215 | 5,224 | N/M | 39.2 | 22,194 | 20,600 | 7.7 | ||||||||||||||||||||
Long-term financing expenses | (1,668 | ) | (1,553 | ) | (1,613 | ) | 7.4 | 3.4 | (4,781 | ) | (5,058 | ) | (5.5 | ) | ||||||||||||||
Net revenues | 137,660 | 146,164 | 139,470 | (5.8 | ) | (1.3 | ) | 425,991 | 435,970 | (2.3 | ) | |||||||||||||||||
Operating expenses | 129,224 | 123,687 | 119,001 | 4.5 | 8.6 | 369,114 | 364,622 | 1.2 | ||||||||||||||||||||
Segment pre-tax operating income | $ | 8,436 | $ | 22,477 | $ | 20,469 | (62.5 | )% | (58.8 | )% | $ | 56,877 | $ | 71,348 | (20.3 | )% | ||||||||||||
Segment pre-tax operating margin | 6.1 | % | 15.4 | % | 14.7 | % | 13.4 | % | 16.4 | % | ||||||||||||||||||
Asset Management | ||||||||||||||||||||||||||||
Management and performance fees | ||||||||||||||||||||||||||||
Management fees | $ | 17,053 | $ | 18,436 | $ | 19,738 | (7.5 | )% | (13.6 | )% | $ | 54,596 | $ | 59,474 | (8.2 | )% | ||||||||||||
Performance fees | — | 200 | 470 | N/M | N/M | 208 | 834 | (75.1 | ) | |||||||||||||||||||
Total management and performance fees | 17,053 | 18,636 | 20,208 | (8.5 | ) | (15.6 | ) | 54,804 | 60,308 | (9.1 | ) | |||||||||||||||||
Investment income/(loss) | (5,096 | ) | (734 | ) | (252 | ) | 594.3 | N/M | (5,241 | ) | 1,312 | N/M | ||||||||||||||||
Net revenues | 11,957 | 17,902 | 19,956 | (33.2 | ) | (40.1 | ) | 49,563 | 61,620 | (19.6 | ) | |||||||||||||||||
Operating expenses | 13,605 | 14,520 | 14,733 | (6.3 | ) | (7.7 | ) | 42,501 | 44,146 | (3.7 | ) | |||||||||||||||||
Segment pre-tax operating income/(loss) | $ | (1,648 | ) | $ | 3,382 | $ | 5,223 | N/M | N/M | $ | 7,062 | $ | 17,474 | (59.6 | )% | |||||||||||||
Segment pre-tax operating margin | (13.8 | )% | 18.9 | % | 26.2 | % | 14.2 | % | 28.4 | % | ||||||||||||||||||
Total | ||||||||||||||||||||||||||||
Net revenues | $ | 149,617 | $ | 164,066 | $ | 159,426 | (8.8 | )% | (6.2 | )% | $ | 475,554 | $ | 497,590 | (4.4 | )% | ||||||||||||
Operating expenses | 142,829 | 138,207 | 133,734 | 3.3 | 6.8 | 411,615 | 408,768 | 0.7 | ||||||||||||||||||||
Pre-tax operating income | $ | 6,788 | $ | 25,859 | $ | 25,692 | (73.7 | )% | (73.6 | )% | $ | 63,939 | $ | 88,822 | (28.0 | )% | ||||||||||||
Pre-tax operating margin | 4.5 | % | 15.8 | % | 16.1 | % | 13.4 | % | 17.9 | % |
Three Months Ended | Percent Inc/(Dec) | Nine Months Ended | ||||||||||||||||||||||||||
Sept. 30, | June 30, | Sept. 30, | 3Q '15 | 3Q '15 | Sept. 30, | Sept. 30, | Percent | |||||||||||||||||||||
(Amounts in thousands, except per share data) | 2015 | 2015 | 2014 | vs. 2Q '15 | vs. 3Q '14 | 2015 | 2014 | Inc/(Dec) | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Investment banking | $ | 91,640 | $ | 106,069 | $ | 94,911 | (13.6 | )% | (3.4 | )% | $ | 284,786 | $ | 287,198 | (0.8 | )% | ||||||||||||
Institutional brokerage | 34,182 | 36,661 | 35,923 | (6.8 | ) | (4.8 | ) | 106,879 | 114,485 | (6.6 | ) | |||||||||||||||||
Asset management | 18,951 | 19,257 | 21,595 | (1.6 | ) | (12.2 | ) | 58,730 | 64,820 | (9.4 | ) | |||||||||||||||||
Interest | 7,885 | 8,114 | 8,028 | (2.8 | ) | (1.8 | ) | 25,244 | 27,835 | (9.3 | ) | |||||||||||||||||
Investment income/(loss) | 631 | (1,151 | ) | 859 | N/M | (26.5 | ) | 7,932 | 5,106 | 55.3 | ||||||||||||||||||
Total revenues | 153,289 | 168,950 | 161,316 | (9.3 | ) | (5.0 | ) | 483,571 | 499,444 | (3.2 | ) | |||||||||||||||||
Interest expense | 4,895 | 5,071 | 5,466 | (3.5 | ) | (10.4 | ) | 15,559 | 15,399 | 1.0 | ||||||||||||||||||
Adjusted net revenues (2) | $ | 148,394 | $ | 163,879 | $ | 155,850 | (9.4 | )% | (4.8 | )% | $ | 468,012 | $ | 484,045 | (3.3 | )% | ||||||||||||
Non-interest expenses: | ||||||||||||||||||||||||||||
Adjusted compensation and benefits (3) | $ | 95,442 | $ | 102,650 | $ | 95,869 | (7.0 | )% | (0.4 | )% | $ | 292,698 | $ | 296,729 | (1.4 | )% | ||||||||||||
Ratio of adjusted compensation and benefits to adjusted net revenues | 64.3 | % | 62.6 | % | 61.5 | % | 62.5 | % | 61.3 | % | ||||||||||||||||||
Adjusted non-compensation expenses (4) | $ | 42,589 | $ | 32,011 | $ | 33,088 | 33.0 | % | 28.7 | % | $ | 106,247 | $ | 97,245 | 9.3 | % | ||||||||||||
Ratio of adjusted non-compensation expenses to adjusted net revenues | 28.7 | % | 19.5 | % | 21.2 | % | 22.7 | % | 20.1 | % | ||||||||||||||||||
Adjusted income: | ||||||||||||||||||||||||||||
Adjusted income before adjusted income tax expense (5) | $ | 10,363 | $ | 29,218 | $ | 26,893 | (64.5 | )% | (61.5 | )% | $ | 69,067 | $ | 90,071 | (23.3 | )% | ||||||||||||
Adjusted operating margin (6) | 7.0 | % | 17.8 | % | 17.3 | % | 14.8 | % | 18.6 | % | ||||||||||||||||||
Adjusted income tax expense (7) | 3,113 | 10,584 | 10,008 | (70.6 | ) | (68.9 | ) | 24,364 | 32,657 | (25.4 | ) | |||||||||||||||||
Adjusted net income (8) | $ | 7,250 | $ | 18,634 | $ | 16,885 | (61.1 | )% | (57.1 | )% | $ | 44,703 | $ | 57,414 | (22.1 | )% | ||||||||||||
Effective tax rate (9) | 30.0 | % | 36.2 | % | 37.2 | % | 35.3 | % | 36.3 | % | ||||||||||||||||||
Adjusted net income applicable to Piper Jaffray Companies’ common shareholders (10) | $ | 6,676 | $ | 17,209 | $ | 15,600 | (61.2 | )% | (57.2 | )% | $ | 41,369 | $ | 52,602 | (21.4 | )% | ||||||||||||
Adjusted earnings per diluted common share | $ | 0.48 | $ | 1.19 | $ | 1.03 | (59.7 | )% | (53.4 | )% | $ | 2.83 | $ | 3.52 | (19.6 | )% | ||||||||||||
Weighted average number of common shares outstanding | ||||||||||||||||||||||||||||
Diluted | 13,952 | 14,513 | 15,129 | (3.9 | )% | (7.8 | )% | 14,594 | 14,934 | (2.3 | )% |
Three Months Ended | Percent Inc/(Dec) | Nine Months Ended | ||||||||||||||||||||||||||
Sept. 30, | June 30, | Sept. 30, | 3Q '15 | 3Q '15 | Sept. 30, | Sept. 30, | Percent | |||||||||||||||||||||
(Dollars in thousands) | 2015 | 2015 | 2014 | vs. 2Q '15 | vs. 3Q '14 | 2015 | 2014 | Inc/(Dec) | ||||||||||||||||||||
Capital Markets | ||||||||||||||||||||||||||||
Investment banking | ||||||||||||||||||||||||||||
Financing | ||||||||||||||||||||||||||||
Equities | $ | 24,437 | $ | 35,755 | $ | 14,269 | (31.7 | )% | 71.3 | % | $ | 96,681 | $ | 93,628 | 3.3 | % | ||||||||||||
Debt | 20,476 | 30,098 | 14,435 | (32.0 | ) | 41.8 | 72,312 | 48,148 | 50.2 | |||||||||||||||||||
Advisory services | 46,958 | 40,139 | 66,320 | 17.0 | (29.2 | ) | 116,363 | 145,743 | (20.2 | ) | ||||||||||||||||||
Total investment banking | 91,871 | 105,992 | 95,024 | (13.3 | ) | (3.3 | ) | 285,356 | 287,519 | (0.8 | ) | |||||||||||||||||
Institutional sales and trading | ||||||||||||||||||||||||||||
Equities | 20,026 | 20,407 | 16,711 | (1.9 | ) | 19.8 | 59,338 | 59,337 | — | |||||||||||||||||||
Fixed income | 18,259 | 20,482 | 22,737 | (10.9 | ) | (19.7 | ) | 59,958 | 69,060 | (13.2 | ) | |||||||||||||||||
Total institutional sales and trading | 38,285 | 40,889 | 39,448 | (6.4 | ) | (2.9 | ) | 119,296 | 128,397 | (7.1 | ) | |||||||||||||||||
Management and performance fees | 1,898 | 621 | 1,387 | 205.6 | 36.8 | 3,926 | 4,512 | (13.0 | ) | |||||||||||||||||||
Investment income | 6,051 | 28 | 1,648 | N/M | 267.2 | 14,652 | 7,055 | 107.7 | ||||||||||||||||||||
Long-term financing expenses | (1,668 | ) | (1,553 | ) | (1,613 | ) | 7.4 | 3.4 | (4,781 | ) | (5,058 | ) | (5.5 | ) | ||||||||||||||
Adjusted net revenues (2) | 136,437 | 145,977 | 135,894 | (6.5 | ) | 0.4 | 418,449 | 422,425 | (0.9 | ) | ||||||||||||||||||
Adjusted operating expenses (12) | 125,936 | 121,651 | 116,120 | 3.5 | 8.5 | 361,188 | 355,516 | 1.6 | ||||||||||||||||||||
Adjusted segment pre-tax operating income (5) | $ | 10,501 | $ | 24,326 | $ | 19,774 | (56.8 | )% | (46.9 | )% | $ | 57,261 | $ | 66,909 | (14.4 | )% | ||||||||||||
Adjusted segment pre-tax operating margin (6) | 7.7 | % | 16.7 | % | 14.6 | % | 13.7 | % | 15.8 | % | ||||||||||||||||||
Asset Management | ||||||||||||||||||||||||||||
Management and performance fees | ||||||||||||||||||||||||||||
Management fees | $ | 17,053 | $ | 18,436 | $ | 19,738 | (7.5 | )% | (13.6 | )% | $ | 54,596 | $ | 59,474 | (8.2 | )% | ||||||||||||
Performance fees | — | 200 | 470 | N/M | N/M | 208 | 834 | (75.1 | ) | |||||||||||||||||||
Total management and performance fees | 17,053 | 18,636 | 20,208 | (8.5 | ) | (15.6 | ) | 54,804 | 60,308 | (9.1 | ) | |||||||||||||||||
Investment income/(loss) | (5,096 | ) | (734 | ) | (252 | ) | 594.3 | N/M | (5,241 | ) | 1,312 | N/M | ||||||||||||||||
Net revenues | 11,957 | 17,902 | 19,956 | (33.2 | ) | (40.1 | ) | 49,563 | 61,620 | (19.6 | ) | |||||||||||||||||
Adjusted operating expenses (13) | 12,095 | 13,010 | 12,837 | (7.0 | ) | (5.8 | ) | 37,757 | 38,458 | (1.8 | ) | |||||||||||||||||
Adjusted segment pre-tax operating income/(loss) (13) | $ | (138 | ) | $ | 4,892 | $ | 7,119 | N/M | N/M | $ | 11,806 | $ | 23,162 | (49.0 | )% | |||||||||||||
Adjusted segment pre-tax operating margin (6) | (1.2 | )% | 27.3 | % | 35.7 | % | 23.8 | % | 37.6 | % | ||||||||||||||||||
Total | ||||||||||||||||||||||||||||
Adjusted net revenues (2) | $ | 148,394 | $ | 163,879 | $ | 155,850 | (9.4 | )% | (4.8 | )% | $ | 468,012 | $ | 484,045 | (3.3 | )% | ||||||||||||
Adjusted operating expenses (12) | 138,031 | 134,661 | 128,957 | 2.5 | 7.0 | 398,945 | 393,974 | 1.3 | ||||||||||||||||||||
Adjusted pre-tax operating income (5) | $ | 10,363 | $ | 29,218 | $ | 26,893 | (64.5 | )% | (61.5 | )% | $ | 69,067 | $ | 90,071 | (23.3 | )% | ||||||||||||
Adjusted pre-tax operating margin (6) | 7.0 | % | 17.8 | % | 17.3 | % | 14.8 | % | 18.6 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||
Sept. 30, | June 30, | Sept. 30, | Sept. 30, | Sept. 30, | |||||||||||||||
(Amounts in thousands, except per share data) | 2015 | 2015 | 2014 | 2015 | 2014 | ||||||||||||||
Net revenues: | |||||||||||||||||||
Net revenues – U.S. GAAP basis | $ | 149,617 | $ | 164,066 | $ | 159,426 | $ | 475,554 | $ | 497,590 | |||||||||
Adjustments: | |||||||||||||||||||
Revenue related to noncontrolling interests (11) | (1,223 | ) | (187 | ) | (3,576 | ) | (7,542 | ) | (13,545 | ) | |||||||||
Adjusted net revenues | $ | 148,394 | $ | 163,879 | $ | 155,850 | $ | 468,012 | $ | 484,045 | |||||||||
Compensation and benefits: | |||||||||||||||||||
Compensation and benefits – U.S. GAAP basis | $ | 96,132 | $ | 103,554 | $ | 97,180 | $ | 295,543 | $ | 300,745 | |||||||||
Adjustments: | |||||||||||||||||||
Compensation from acquisition-related agreements | (690 | ) | (904 | ) | (1,311 | ) | (2,845 | ) | (4,016 | ) | |||||||||
Adjusted compensation and benefits | $ | 95,442 | $ | 102,650 | $ | 95,869 | $ | 292,698 | $ | 296,729 | |||||||||
Non-compensation expenses: | |||||||||||||||||||
Non-compensation expenses – U.S. GAAP basis | $ | 46,697 | $ | 34,653 | $ | 36,554 | $ | 116,072 | $ | 108,023 | |||||||||
Adjustments: | |||||||||||||||||||
Non-compensation expenses related to noncontrolling interests (11) | (839 | ) | (869 | ) | (1,148 | ) | (3,010 | ) | (3,824 | ) | |||||||||
Restructuring and integration costs | (1,496 | ) | — | — | (1,496 | ) | — | ||||||||||||
Amortization of intangible assets related to acquisitions | (1,773 | ) | (1,773 | ) | (2,318 | ) | (5,319 | ) | (6,954 | ) | |||||||||
Adjusted non-compensation expenses | $ | 42,589 | $ | 32,011 | $ | 33,088 | $ | 106,247 | $ | 97,245 | |||||||||
Income before income tax expense: | |||||||||||||||||||
Income before income tax expense – U.S. GAAP basis | $ | 6,788 | $ | 25,859 | $ | 25,692 | $ | 63,939 | $ | 88,822 | |||||||||
Adjustments: | |||||||||||||||||||
Revenue related to noncontrolling interests (11) | (1,223 | ) | (187 | ) | (3,576 | ) | (7,542 | ) | (13,545 | ) | |||||||||
Expenses related to noncontrolling interests (11) | 839 | 869 | 1,148 | 3,010 | 3,824 | ||||||||||||||
Compensation from acquisition-related agreements | 690 | 904 | 1,311 | 2,845 | 4,016 | ||||||||||||||
Restructuring and integration costs | 1,496 | — | — | 1,496 | — | ||||||||||||||
Amortization of intangible assets related to acquisitions | 1,773 | 1,773 | 2,318 | 5,319 | 6,954 | ||||||||||||||
Adjusted income before adjusted income tax expense | $ | 10,363 | $ | 29,218 | $ | 26,893 | $ | 69,067 | $ | 90,071 | |||||||||
Income tax expense: | |||||||||||||||||||
Income tax expense – U.S. GAAP basis | $ | 1,573 | $ | 9,542 | $ | 8,596 | $ | 20,605 | $ | 28,472 | |||||||||
Tax effect of adjustments: | |||||||||||||||||||
Compensation from acquisition-related agreements | 268 | 352 | 510 | 1,107 | 1,562 | ||||||||||||||
Restructuring and integration costs | 582 | — | — | 582 | — | ||||||||||||||
Amortization of intangible assets related to acquisitions | 690 | 690 | 902 | 2,070 | 2,623 | ||||||||||||||
Adjusted income tax expense | $ | 3,113 | $ | 10,584 | $ | 10,008 | $ | 24,364 | $ | 32,657 | |||||||||
Net income applicable to Piper Jaffray Companies: | |||||||||||||||||||
Net income applicable to Piper Jaffray Companies – U.S. GAAP basis | $ | 4,831 | $ | 16,999 | $ | 14,668 | $ | 38,802 | $ | 50,629 | |||||||||
Adjustments: | |||||||||||||||||||
Compensation from acquisition-related agreements | 422 | 552 | 801 | 1,738 | 2,454 | ||||||||||||||
Restructuring and integration costs | 914 | — | — | 914 | — | ||||||||||||||
Amortization of intangible assets related to acquisitions | 1,083 | 1,083 | 1,416 | 3,249 | 4,331 | ||||||||||||||
Adjusted net income | $ | 7,250 | $ | 18,634 | $ | 16,885 | $ | 44,703 | $ | 57,414 | |||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
Sept. 30, | June 30, | Sept. 30, | Sept. 30, | Sept. 30, | |||||||||||||||
(Amounts in thousands, except per share data) | 2015 | 2015 | 2014 | 2015 | 2014 | ||||||||||||||
Net income applicable to Piper Jaffray Companies' common shareholders: | |||||||||||||||||||
Net income applicable to Piper Jaffray Companies' common stockholders – U.S. GAAP basis | $ | 4,448 | $ | 15,699 | $ | 13,552 | $ | 35,908 | $ | 46,386 | |||||||||
Adjustments: | |||||||||||||||||||
Compensation from acquisition-related agreements | 389 | 510 | 740 | 1,608 | 2,248 | ||||||||||||||
Restructuring and integration costs | 842 | — | — | 846 | — | ||||||||||||||
Amortization of intangible assets related to acquisitions | 997 | 1,000 | 1,308 | 3,007 | 3,968 | ||||||||||||||
Adjusted net income applicable to Piper Jaffray Companies' common stockholders | $ | 6,676 | $ | 17,209 | $ | 15,600 | $ | 41,369 | $ | 52,602 | |||||||||
Earnings per diluted common share: | |||||||||||||||||||
Earnings per diluted common share – U.S. GAAP basis | $ | 0.32 | $ | 1.08 | $ | 0.90 | $ | 2.46 | $ | 3.11 | |||||||||
Adjustments: | |||||||||||||||||||
Compensation from acquisition-related agreements | 0.03 | 0.04 | 0.05 | 0.11 | 0.15 | ||||||||||||||
Restructuring and integration costs | 0.06 | — | — | 0.06 | — | ||||||||||||||
Amortization of intangible assets related to acquisitions | 0.07 | 0.07 | 0.09 | 0.21 | 0.27 | ||||||||||||||
Adjusted earnings per diluted common share | $ | 0.48 | $ | 1.19 | $ | 1.03 | $ | 2.83 | $ | 3.52 |
(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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