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Share Name | Share Symbol | Market | Type |
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Piper Jaffray Companies | NYSE:PJC | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 79.62 | 0 | 01:00:00 |
Piper Jaffray Companies (NYSE: PJC) today announced its financial results for the quarter ended September 30, 2014.
Financial Highlights
(1) A non-U.S. GAAP ("non-GAAP") measure. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see "Reconciliation of U.S. GAAP to Selected Summary Financial Information." We believe that presenting our results and measures on an adjusted basis in conjunction with U.S. GAAP measures provides the most meaningful basis for comparison of our operating results across periods.
(2) A non-GAAP measure. See the "Additional Shareholder Information" section for a detailed explanation of the adjustment made to the corresponding U.S. GAAP measure. We believe that the rolling 12 month return on average tangible common shareholders' equity is a meaningful measure of our return on tangible assets deployed in the business.
For the third quarter of 2014, on a U.S. GAAP basis, net revenues from continuing operations were $159.4 million, and net income from continuing operations was $14.7 million, or $0.90 per diluted common share.
“Our results for the third quarter continue to build on our strong performance throughout the year,” said Andrew S. Duff, Chief Executive Officer and Chairman, “Record revenues in our Advisory business reflect the investments we have made in this business over the past several years and solid progress by our Investment Banking teams.”
Third Quarter Results from Continuing Operations – 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 an adjusted basis in conjunction with U.S. GAAP measures provides the most meaningful basis for comparison of its operating results across periods. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see "Reconciliation of U.S. GAAP to Selected Summary Financial Information."
Adjusted Consolidated ResultsFor the third quarter of 2014, adjusted net revenues were $155.9 million, up 25% compared to $125.0 million in the third quarter of 2013 due primarily to higher advisory services revenues. Adjusted net revenues decreased 7% compared to the second quarter of 2014 due to lower equity and debt financing revenues, partially offset by higher advisory services revenues.
For the third quarter of 2014, adjusted compensation and benefits expenses were $95.9 million, up 22% compared to the third quarter of 2013 due to improved financial results. Adjusted compensation and benefits expenses decreased 6% compared to the second quarter of 2014.
For the third quarter of 2014, adjusted compensation and benefits expenses were 61.5% of adjusted net revenues, compared to 62.7% and 61.0% for the third quarter of 2013 and the second quarter of 2014, respectively. The adjusted compensation ratio decreased compared to the year-ago period due to an increased revenue base.
Adjusted non-compensation expenses were $33.1 million for the third quarter of 2014, up 14% compared to the year-ago period and essentially flat compared to the second quarter of 2014. Adjusted non-compensation expenses were higher compared to the third quarter of 2013 due primarily to one- time incremental occupancy costs related to our office space in New York City, higher third party marketing fees associated with our asset management business, and higher professional fees.
Business Segment ResultsThe firm has two reportable business segments: Capital Markets and Asset Management. Consolidated net revenues and expenses are fully allocated to these two segments. The operating results of our Hong Kong capital markets business, which we shut down in 2012, and FAMCO, an asset management subsidiary sold in the second quarter of 2013, are presented as discontinued operations for all periods presented.
Capital MarketsFor the quarter, Capital Markets generated adjusted pre-tax operating income of $19.8 million, compared to $9.8 million and $23.1 million in the third quarter of 2013 and the second quarter of 2014, respectively.
Adjusted net revenues were $135.9 million, up 27% compared to the year-ago period and down 6% from the second quarter of 2014.
Asset ManagementFor the quarter ended September 30, 2014, Asset Management generated adjusted pre-tax operating income of $7.1 million, compared to $7.7 million and $8.9 million in the third quarter of 2013 and the second quarter of 2014, respectively.
Net revenues were $20.0 million, up 11% compared to the third quarter of 2013 and down 9% compared to the second quarter of 2014. The increase compared to the year-ago period was due to higher management fees from increased assets under management (AUM) driven by net market appreciation. Net revenues declined compared to the sequential quarter due to lower investment income, and lower management fees from decreased AUM.
Additional Shareholder Information*
For the Quarter Ended Sept. 30, 2014 June 30, 2014 Sept. 30, 2013 Full time employees 1,029 999 1,002 Equity financings # of transactions 15 33 27 Capital raised $3.5 billion $9.2 billion $4.8 billion Negotiated tax-exempt issuances # of transactions 85 112 61 Par value $1.8 billion $2.4 billion $1.3 billion Mergers & acquisitions # of transactions 22 16 11 Aggregate deal value $4.7 billion $3.7 billion $1.2 billion Asset Management AUM $12.2 billion $12.6 billion $10.6 billion Common shareholders’ equity $804.6 million $787.8 million $707.4 million Number of common shares outstanding (in thousands) 15,109 14,995 14,404 Rolling 12 month return on average common shareholders’ equity ** 10.2% 9.2% 4.1% Rolling 12 month return on average tangible common shareholders’ equity † 15.2% 13.9% 6.1% Book value per share $53.26 $52.54 $49.11 Tangible book value per share ‡ $37.05 $36.06 $31.56 * Number of employees, transaction data, and AUM reflect continuing operations; other numbers reflect continuing and discontinued results. ** Rolling 12 month return on average common shareholders' equity is computed by dividing net income applicable to Piper Jaffray Companies' for the last 12 months by average monthly common shareholders' equity.† Rolling 12 month return on average tangible common shareholders' equity is computed by dividing net income applicable to Piper Jaffray Companies' for the last 12 months by average monthly common shareholders' equity less average goodwill and identifiable intangible assets. Management believes that the rolling 12 month return on average tangible common shareholders' equity is a meaningful measure of our return on tangible assets deployed in the business. Average common shareholders’ equity is the most directly comparable GAAP financial measure to average tangible shareholders’ equity. The following is a reconciliation of average common shareholders’ equity to average tangible common shareholders’ equity:
(Amounts in thousands) As of As of As of Sept. 30, 2014 June 30, 2014 Sept. 30, 2013 Average common shareholders’ equity $ 759,971 $ 740,280 $ 730,347 Deduct: average goodwill and identifiable intangible assets 248,568 249,096 243,884 Average tangible common shareholders’ equity $ 511,403 $ 491,184 $ 486,463‡ 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:
(Amounts in thousands) As of As of As of Sept. 30, 2014 June 30, 2014 Sept. 30, 2013 Common shareholders’ equity $ 804,633 $ 787,848 $ 707,365 Deduct: goodwill and identifiable intangible assets 244,854 247,172 252,761 Tangible common shareholders’ equity $ 559,779 $ 540,676 $ 454,604Conference 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., October 23 at 9 a.m. ET (8 a.m. CT). The earnings release will be available on or after October 23 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 #10199975. 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 October 23 at the same Web address or by calling (855)859-2056 and referencing reservation #10199975.
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), anticipated financial results generally (including expectations regarding our non-compensation expenses, compensation and benefits expense, compensation ratio, revenue levels, operating margins, earnings per share, effective tax rate, and return on equity), current deal pipelines (or backlogs), our strategic priorities (including growth in public finance, asset management, and corporate advisory), the market positioning of and prospects for our public finance business, 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:
A further listing and description of these and other risks, uncertainties and important factors can be found in the sections titled “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2013 and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2013, and updated in our subsequent reports filed with the SEC (available at our Web site at www.piperjaffray.com and at the SEC Web site at www.sec.gov).
Forward-looking statements speak only as of the date they are made, and readers are cautioned not to place undue reliance on them. We undertake no obligation to update them in light of new information or future events.
© 2014 Piper Jaffray Companies, 800 Nicollet Mall, Suite 1000, Minneapolis, Minnesota 55402-7020
Piper Jaffray Companies Preliminary Results of Operations (U.S. GAAP – Unaudited) Three Months Ended Percent Inc/(Dec) Nine Months Ended (Amounts in thousands, except per share data) Sept. 30, June 30, Sept. 30, 3Q '14 3Q '14 Sept. 30, Sept. 30, Percent 2014 2014 2013 vs. 2Q '14 vs. 3Q '13 2014 2013 Inc/(Dec) Revenues: Investment banking $ 94,911 $ 103,813 $ 62,848 (8.6 )% 51.0 % $ 287,198 $ 156,924 83.0 % Institutional brokerage 35,923 34,528 35,318 4.0 1.7 114,485 100,076 14.4 Asset management 21,595 22,266 18,701 (3.0 ) 15.5 64,820 55,584 16.6 Interest 10,828 12,448 12,360 (13.0 ) (12.4 ) 36,935 35,469 4.1 Investment income 2,690 2,921 5,279 (7.9 ) (49.0 ) 12,379 8,285 49.4 Total revenues 165,947 175,976 134,506 (5.7 ) 23.4 515,817 356,338 44.8 Interest expense 6,521 5,945 6,192 9.7 5.3 18,227 18,719 (2.6 ) Net revenues 159,426 170,031 128,314 (6.2 ) 24.2 497,590 337,619 47.4 Non-interest expenses: Compensation and benefits 97,180 103,076 79,426 (5.7 ) 22.4 300,745 210,531 42.9 Occupancy and equipment 8,312 7,061 6,509 17.7 27.7 22,151 18,869 17.4 Communications 5,661 5,432 5,778 4.2 (2.0 ) 17,048 16,040 6.3 Floor brokerage and clearance 1,905 1,788 2,109 6.5 (9.7 ) 5,527 6,506 (15.0 ) Marketing and business development 6,827 6,709 5,447 1.8 25.3 19,787 16,384 20.8 Outside services 9,155 9,914 8,082 (7.7 ) 13.3 27,837 23,745 17.2 Restructuring and integration costs — — 3,823 N/M N/M — 3,823 N/M Intangible asset amortization expense 2,318 2,318 2,899 — (20.0 ) 6,954 6,221 11.8 Other operating expenses 2,376 3,316 2,181 (28.3 ) 8.9 8,719 1,939 349.7 Total non-interest expenses 133,734 139,614 116,254 (4.2 ) 15.0 408,768 304,058 34.4 Income from continuing operations before income tax expense 25,692 30,417 12,060 (15.5 ) 113.0 88,822 33,561 164.7 Income tax expense 8,596 10,049 2,886 (14.5 ) 197.9 28,472 10,130 181.1 Income from continuing operations 17,096 20,368 9,174 (16.1 ) 86.4 60,350 23,431 157.6 Discontinued operations: Loss from discontinued operations, net of tax — — (1,529 ) N/M N/M — (3,921 ) N/M Net income 17,096 20,368 7,645 (16.1 ) 123.6 60,350 19,510 209.3 Net income applicable to noncontrolling interests 2,428 2,155 2,323 12.7 4.5 9,721 1,554 525.5 Net income applicable to Piper Jaffray Companies (a) $ 14,668 $ 18,213 $ 5,322 (19.5 )% 175.6 % $ 50,629 $ 17,956 182.0 % Net income applicable to Piper Jaffray Companies’ common shareholders (a) $ 13,552 $ 16,717 $ 4,826 (18.9 )% 180.8 % $ 46,386 $ 16,163 187.0 % Amounts applicable to Piper Jaffray Companies Net income from continuing operations $ 14,668 $ 18,213 $ 6,851 (19.5 )% 114.1 % $ 50,629 $ 21,877 131.4 % Net loss from discontinued operations — — (1,529 ) N/M N/M — (3,921 ) N/M Net income applicable to Piper Jaffray Companies $ 14,668 $ 18,213 $ 5,322 (19.5 )% 175.6 % $ 50,629 $ 17,956 182.0 % Earnings/(loss) per basic common share Income from continuing operations $ 0.90 $ 1.12 $ 0.42 (19.6 )% 114.3 % $ 3.12 $ 1.29 141.9 % Loss from discontinued operations — — (0.09 ) N/M N/M — (0.23 ) N/M Earnings per basic common share $ 0.90 $ 1.12 $ 0.33 (19.6 )% 172.7 % $ 3.12 $ 1.06 194.3 % Earnings/(loss) per diluted common share Income from continuing operations $ 0.90 $ 1.11 $ 0.42 (18.9 )% 114.3 % $ 3.11 $ 1.29 141.1 % Loss from discontinued operations — — (0.09 ) N/M N/M — (0.23 ) N/M Earnings per diluted common share $ 0.90 $ 1.11 $ 0.33 (18.9 )% 172.7 % $ 3.11 $ 1.06 193.4 % Weighted average number of common shares outstanding Basic 15,066 14,958 14,621 0.7 % 3.0 % 14,880 15,271 (2.6 )% Diluted 15,129 15,013 14,626 0.8 % 3.4 % 14,934 15,284 (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.
N/M — Not meaningful
Piper Jaffray Companies Preliminary Segment Data from Continuing Operations (U.S. GAAP – Unaudited) Three Months Ended Percent Inc/(Dec) Nine Months Ended (Dollars in thousands) Sept. 30, June 30, Sept. 30, 3Q '14 3Q '14 Sept. 30, Sept. 30, Percent 2014 2014 2013 vs. 2Q '14 vs. 3Q '13 2014 2013 Inc/(Dec) Capital Markets Investment banking Financing Equities $ 14,269 $ 44,058 $ 30,010 (67.6 )% (52.5 )% $ 93,628 $ 66,085 41.7 % Debt 14,435 20,174 12,808 (28.4 ) 12.7 48,148 51,971 (7.4 ) Advisory services 66,320 39,695 20,215 67.1 228.1 145,743 39,165 272.1 Total investment banking 95,024 103,927 63,033 (8.6 ) 50.8 287,519 157,221 82.9 Institutional sales and trading Equities 16,711 18,366 22,958 (9.0 ) (27.2 ) 59,337 65,077 (8.8 ) Fixed income 22,737 21,085 17,083 7.8 33.1 69,060 49,732 38.9 Total institutional sales and trading 39,448 39,451 40,041 — (1.5 ) 128,397 114,809 11.8 Management and performance fees 1,387 1,388 1,094 (0.1 ) 26.8 4,512 2,677 68.5 Investment income 5,224 4,998 7,892 4.5 (33.8 ) 20,600 14,213 44.9 Long-term financing expenses (1,613 ) (1,705 ) (1,797 ) (5.4 ) (10.2 ) (5,058 ) (5,618 ) (10.0 ) Net revenues 139,470 148,059 110,263 (5.8 ) 26.5 435,970 283,302 53.9 Operating expenses 119,001 124,691 103,906 (4.6 ) 14.5 364,622 266,301 36.9 Segment pre-tax operating income $ 20,469 $ 23,368 $ 6,357 (12.4 )% 222.0 $ 71,348 $ 17,001 319.7 % Segment pre-tax operating margin 14.7 % 15.8 % 5.8 % 16.4 % 6.0 % Asset Management Management and performance fees Management fees $ 19,738 $ 20,600 $ 17,547 (4.2 )% 12.5 % $ 59,474 $ 52,191 14.0 % Performance fees 470 278 60 69.1 683.3 834 716 16.5 Total management and performance fees 20,208 20,878 17,607 (3.2 ) 14.8 60,308 52,907 14.0 Investment income/(loss) (252 ) 1,094 444 N/M N/M 1,312 1,410 (7.0 ) Net revenues 19,956 21,972 18,051 (9.2 ) 10.6 61,620 54,317 13.4 Operating expenses 14,733 14,923 12,348 (1.3 ) 19.3 44,146 37,757 16.9 Segment pre-tax operating income $ 5,223 $ 7,049 $ 5,703 (25.9 )% (8.4 )% $ 17,474 $ 16,560 5.5 % Segment pre-tax operating margin 26.2 % 32.1 % 31.6 % 28.4 % 30.5 % Total Net revenues $ 159,426 $ 170,031 $ 128,314 (6.2 )% 24.2 % $ 497,590 $ 337,619 47.4 % Operating expenses 133,734 139,614 116,254 (4.2 ) 15.0 408,768 304,058 34.4 Pre-tax operating income $ 25,692 $ 30,417 $ 12,060 (15.5 )% 113.0 % $ 88,822 $ 33,561 164.7 % Pre-tax operating margin 16.1 % 17.9 % 9.4 % 17.9 % 9.9 %Segment pre-tax operating income and segment pre-tax operation margin exclude the results of discontinued operations.
Piper Jaffray Companies Preliminary Selected Summary Financial Information from Continuing Operations (Non-GAAP – Unaudited) (1) Three Months Ended Percent Inc/(Dec) Nine Months Ended (Amounts in thousands, except per share data) Sept. 30, June 30, Sept. 30, 3Q '14 3Q '14 Sept. 30, Sept. 30, Percent 2014 2014 2013 vs. 2Q '14 vs. 3Q '13 2014 2013 Inc/(Dec) Revenues: Investment banking $ 94,911 $ 103,813 $ 62,848 (8.6 )% 51.0 % $ 287,198 $ 156,924 83.0 % Institutional brokerage 35,923 34,528 35,318 4.0 1.7 114,485 100,076 14.4 Asset management 21,595 22,266 18,701 (3.0 ) 15.5 64,820 55,584 16.6 Interest 8,028 9,451 9,605 (15.1 ) (16.4 ) 27,835 28,892 (3.7 ) Investment income 859 1,666 3,872 (48.4 ) (77.8 ) 5,106 8,584 (40.5 ) Total revenues 161,316 171,724 130,344 (6.1 ) 23.8 499,444 350,060 42.7 Interest expense 5,466 5,026 5,321 8.8 2.7 15,399 16,302 (5.5 ) Adjusted net revenues (2) $ 155,850 $ 166,698 $ 125,023 (6.5 )% 24.7 % $ 484,045 $ 333,758 45.0 % Non-interest expenses: Adjusted compensation and benefits (3) $ 95,869 $ 101,660 $ 78,445 (5.7 )% 22.2 % $ 296,729 $ 208,908 42.0 % Ratio of adjusted compensation and benefits to adjusted net revenues 61.5 % 61.0 % 62.7 % 61.3 % 62.6 % Adjusted non-compensation expenses (4) $ 33,088 $ 33,042 $ 29,138 0.1 % 13.6 % $ 97,245 $ 81,176 19.8 % Ratio of adjusted non-compensation expenses to adjusted net revenues 21.2 % 19.8 % 23.3 % 20.1 % 24.3 % Adjusted income: Adjusted income from continuing operations before adjusted income tax expense (5) $ 26,893 $ 31,996 $ 17,440 (15.9 )% 54.2 % $ 90,071 $ 43,674 106.2 % Adjusted operating margin (6) 17.3 % 19.2 % 13.9 % 18.6 % 13.1 % Adjusted income tax expense (7) 10,008 11,502 5,794 (13.0 ) 72.7 32,657 14,580 124.0 Adjusted net income from continuing operations (8) $ 16,885 $ 20,494 $ 11,646 (17.6 )% 45.0 % $ 57,414 $ 29,094 97.3 % Effective tax rate (9) 37.2 % 35.9 % 33.2 % 36.3 % 33.4 % Adjusted net income from continuing operations applicable to Piper Jaffray Companies’ common shareholders (10) $ 15,600 $ 18,811 $ 10,561 (17.1 )% 47.7 % $ 52,602 $ 26,189 100.9 % Adjusted earnings per diluted common share from continuing operations $ 1.03 $ 1.25 $ 0.72 (17.6 )% 43.1 % $ 3.52 $ 1.71 105.8 % Weighted average number of common shares outstanding Diluted 15,129 15,013 14,626 0.8 % 3.4 % 14,934 15,284 (2.3 )%This presentation includes non-GAAP measures. The non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see "Reconciliation of U.S. GAAP to Selected Summary Financial Information."
Piper Jaffray Companies Preliminary Adjusted Segment Data from Continuing Operations (Non-GAAP – Unaudited) Three Months Ended Percent Inc/(Dec) Nine Months Ended(Dollars in thousands)
Sept. 30, June 30, Sept. 30, 3Q '14 3Q '14 Sept. 30, Sept. 30, Percent 2014 2014 2013 vs. 2Q '14 vs. 3Q '13 2014 2013 Inc/(Dec) Capital Markets Investment banking Financing Equities $ 14,269 $ 44,058 $ 30,010 (67.6 )% (52.5 )% $ 93,628 $ 66,085 41.7 % Debt 14,435 20,174 12,808 (28.4 ) 12.7 48,148 51,971 (7.4 ) Advisory services 66,320 39,695 20,215 67.1 228.1 145,743 39,165 272.1 Total investment banking 95,024 103,927 63,033 (8.6 ) 50.8 287,519 157,221 82.9 Institutional sales and trading Equities 16,711 18,366 22,958 (9.0 ) (27.2 ) 59,337 65,077 (8.8 ) Fixed income 22,737 21,085 17,083 7.8 33.1 69,060 49,732 38.9 Total institutional sales and trading 39,448 39,451 40,041 — (1.5 ) 128,397 114,809 11.8 Management and performance fees 1,387 1,388 1,094 (0.1 ) 26.8 4,512 2,677 68.5 Investment income 1,648 1,665 4,601 (1.0 ) (64.2 ) 7,055 10,352 (31.8 ) Long-term financing expenses (1,613 ) (1,705 ) (1,797 ) (5.4 ) (10.2 ) (5,058 ) (5,618 ) (10.0 ) Adjusted net revenues (2) 135,894 144,726 106,972 (6.1 ) 27.0 422,425 279,441 51.2 Adjusted operating expenses (12) 116,120 121,675 97,217 (4.6 ) 19.4 355,516 258,273 37.7 Adjusted segment pre-tax operating income (5) $ 19,774 $ 23,051 $ 9,755 (14.2 )% 102.7 $ 66,909 $ 21,168 216.1 % Adjusted segment pre-tax operating margin (6) 14.6 % 15.9 % 9.1 % 15.8 % 7.6 % Asset Management Management and performance fees Management fees $ 19,738 $ 20,600 $ 17,547 (4.2 )% 12.5 % $ 59,474 $ 52,191 14.0 % Performance fees 470 278 60 69.1 683.3 834 716 16.5 Total management and performance fees 20,208 20,878 17,607 (3.2 ) 14.8 60,308 52,907 14.0 Investment income/(loss) (252 ) 1,094 444 N/M N/M 1,312 1,410 (7.0 ) Net revenues 19,956 21,972 18,051 (9.2 ) 10.6 61,620 54,317 13.4 Adjusted operating expenses (13) 12,837 13,027 10,366 (1.5 ) 23.8 38,458 31,811 20.9 Adjusted segment pre-tax operating income (13) $ 7,119 $ 8,945 $ 7,685 (20.4 )% (7.4 )% $ 23,162 $ 22,506 2.9 % Adjusted segment pre-tax operating margin (6) 35.7 % 40.7 % 42.6 % 37.6 % 41.4 % Total Adjusted net revenues (2) $ 155,850 $ 166,698 $ 125,023 (6.5 )% 24.7 % $ 484,045 $ 333,758 45.0 % Adjusted operating expenses (12) 128,957 134,702 107,583 (4.3 ) 19.9 393,974 290,084 35.8 Adjusted pre-tax operating income (5) $ 26,893 $ 31,996 $ 17,440 (15.9 )% 54.2 % $ 90,071 $ 43,674 106.2 % Adjusted pre-tax operating margin (6) 17.3 % 19.2 % 13.9 % 18.6 % 13.1 %This presentation includes non-GAAP measures. The non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see "Reconciliation of U.S. GAAP to Selected Summary Financial Information."
Piper Jaffray Companies Reconciliation of U.S. GAAP to Selected Summary Financial Information (1) (Unaudited) Three Months Ended Nine Months Ended Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30, (Amounts in thousands, except per share data) 2014 2014 2013 2014 2013 Net revenues: Net revenues – U.S. GAAP basis $ 159,426 $ 170,031 $ 128,314 $ 497,590 $ 337,619 Adjustments: Revenue related to noncontrolling interests (11) (3,576 ) (3,333 ) (3,291 ) (13,545 ) (3,861 ) Adjusted net revenues $ 155,850 $ 166,698 $ 125,023 $ 484,045 $ 333,758 Compensation and benefits: Compensation and benefits – U.S. GAAP basis $ 97,180 $ 103,076 $ 79,426 $ 300,745 $ 210,531 Adjustments: Compensation from acquisition-related agreements (1,311 ) (1,416 ) (981 ) (4,016 ) (1,623 ) Adjusted compensation and benefits $ 95,869 $ 101,660 $ 78,445 $ 296,729 $ 208,908 Non-compensation expenses: Non-compensation expenses – U.S. GAAP basis $ 36,554 $ 36,538 $ 36,828 $ 108,023 $ 93,527 Adjustments: Non-compensation expenses related to noncontrolling interests (11) (1,148 ) (1,178 ) (968 ) (3,824 ) (2,307 ) Restructuring and integration costs — — (3,823 ) — (3,823 ) Amortization of intangible assets related to acquisitions (2,318 ) (2,318 ) (2,899 ) (6,954 ) (6,221 ) Adjusted non-compensation expenses $ 33,088 $ 33,042 $ 29,138 $ 97,245 $ 81,176 Income from continuing operations before income tax expense: Income from continuing operations before income tax expense – U.S. GAAP basis $ 25,692 $ 30,417 $ 12,060 $ 88,822 $ 33,561 Adjustments: Revenue related to noncontrolling interests (11) (3,576 ) (3,333 ) (3,291 ) (13,545 ) (3,861 ) Expenses related to noncontrolling interests (11) 1,148 1,178 968 3,824 2,307 Compensation from acquisition-related agreements 1,311 1,416 981 4,016 1,623 Restructuring and integration costs — — 3,823 — 3,823 Amortization of intangible assets related to acquisitions 2,318 2,318 2,899 6,954 6,221 Adjusted income from continuing operations before adjusted income tax expense $ 26,893 $ 31,996 $ 17,440 $ 90,071 $ 43,674 Income tax expense: Income tax expense – U.S. GAAP basis $ 8,596 $ 10,049 $ 2,886 $ 28,472 $ 10,130 Tax effect of adjustments: Compensation from acquisition-related agreements 510 551 382 1,562 632 Restructuring and integration costs — — 1,487 — 1,487 Amortization of intangible assets related to acquisitions 902 902 1,039 2,623 2,331 Adjusted income tax expense $ 10,008 $ 11,502 $ 5,794 $ 32,657 $ 14,580 Net income from continuing operations applicable to Piper Jaffray Companies: Net income from continuing operations applicable to Piper Jaffray Companies – U.S. GAAP basis $ 14,668 $ 18,213 $ 6,851 $ 50,629 $ 21,877 Adjustments: Compensation from acquisition-related agreements 801 865 599 2,454 991 Restructuring and integration costs — — 2,336 — 2,336 Amortization of intangible assets related to acquisitions 1,416 1,416 1,860 4,331 3,890 Adjusted net income from continuing operations $ 16,885 $ 20,494 $ 11,646 $ 57,414 $ 29,094 Net income from continuing operations applicable to Piper Jaffray Companies' common shareholders: Net income from continuing operations applicable to Piper Jaffray Companies' common stockholders – U.S. GAAP basis $ 13,552 $ 16,717 $ 6,213 $ 46,386 $ 19,692 Adjustments: Compensation from acquisition-related agreements 740 794 543 2,248 892 Restructuring and integration costs — — 2,118 — 2,103 Amortization of intangible assets related to acquisitions 1,308 1,300 1,687 3,968 3,502 Adjusted net income from continuing operations applicable to Piper Jaffray Companies' common stockholders $ 15,600 $ 18,811 $ 10,561 $ 52,602 $ 26,189 Earnings per diluted common share from continuing operations: Earnings per diluted common share – U.S. GAAP basis $ 0.90 $ 1.11 $ 0.42 $ 3.11 $ 1.29 Adjustments: Compensation from acquisition-related agreements 0.05 0.05 0.04 0.15 0.06 Restructuring and integration costs — — 0.14 — 0.14 Amortization of intangible assets related to acquisitions 0.09 0.09 0.12 0.27 0.23 Adjusted earnings per diluted common share from continuing operations $ 1.03 $ 1.25 $ 0.72 $ 3.52 $ 1.71This presentation includes non-GAAP measures. The non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP.
Piper Jaffray Companies Notes to Non-GAAP Financial Schedules (1) Selected Summary Financial Information are non-GAAP measures. Management believes that presenting results and measures on an adjusted basis in conjunction with U.S. GAAP measures provides the most meaningful basis for comparison of its operating results across periods. (2) A non-GAAP measure which excludes revenues related to noncontrolling interests (see (11) below). (3) A non-GAAP measure which excludes compensation expense from acquisition-related agreements. (4) A non-GAAP measure which excludes (a) non-compensation expenses related to noncontrolling interests (see (11) below), (b) restructuring and integration costs and (c) amortization of intangible assets related to acquisitions. (5) A non-GAAP measure which excludes (a) revenues and expenses related to noncontrolling interests (see (11) below), (b) compensation from acquisition-related agreements, (c) restructuring and integration costs and (d) amortization of intangible assets related to acquisitions. (6) A non-GAAP measure which represents adjusted income from continuing operations before adjusted income tax expense as a percentage of adjusted net revenues. (7) A non-GAAP measure which excludes the income tax benefit from (a) compensation from acquisition-related agreements, (b) restructuring and integration costs and (c) amortization of intangible assets related to acquisitions. (8) A non-GAAP measure which represents net income from continuing operations earned by the Company excluding (a) compensation expense from acquisition-related agreements, (b) restructuring and integration costs, (c) amortization of intangible assets related to acquisitions and (d) the income tax expense/(benefit) allocated to the adjustments. (9) Effective tax rate is a non-GAAP measure which is computed based on a quotient, the numerator of which is adjusted income tax expense and the denominator of which is adjusted income from continuing operations before adjusted income tax expense. (10) Piper Jaffray Companies calculates earnings per common share using the two-class method, which requires the allocation of consolidated adjusted net income between common shareholders and participating security holders, which in the case of Piper Jaffray Companies, represents unvested stock with dividend rights. (11) Noncontrolling interests include revenue and expenses from consolidated alternative asset management entities that are not attributable, either directly or indirectly, to Piper Jaffray Companies. (12) A non-GAAP measure which excludes (a) expenses related to noncontrolling interests (see (11) above), (b) compensation from acquisition-related agreements, (c) restructuring and integration costs and (d) amortization of intangible assets related to acquisitions. (13) A non-GAAP measure which excludes (a) compensation from acquisition-related agreements and (b) amortization of intangible assets related to acquisitions.
Piper JaffrayInvestor Relations ContactTom Smith, 612-303-6336
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