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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 |
Piper Jaffray Companies (NYSE: PJC) today announced its financial results for the quarter ended September 30, 2015.
During the quarter, we produced strong results across most of our operating businesses relative to markets which became challenging as the quarter progressed.
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 2015, on a U.S. GAAP basis, net revenues were $149.6 million, and net income was $4.8 million, or $0.32 per diluted common share.
"Our core businesses performed well during the quarter relative to markets that were volatile and challenging," said Andrew S. Duff, Chairman and Chief Executive Officer. "In particular, our advisory and capital raising businesses continued to produce strong results, somewhat offset by sharp declines in energy-related stocks which adversely impacted our asset management products and investments."
Third 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 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 2015, adjusted net revenues were $148.4 million, down 5% compared to $155.9 million in the third quarter of 2014. The decrease was due to lower advisory services and asset management revenues, partially offset by higher equity and debt financing revenues. Adjusted net revenues decreased 9% compared to the second quarter of 2015 due to lower equity and debt financing revenues, partially offset by higher advisory services revenues.
For the third quarter of 2015, adjusted compensation and benefits expenses of $95.4 million were essentially flat compared to the third quarter of 2014. Adjusted compensation and benefits expenses decreased 7% compared to the second quarter of 2015 due primarily to lower revenues.
For the third quarter of 2015, adjusted compensation and benefits expenses were 64.3% of adjusted net revenues, compared to 61.5% and 62.6% for the third quarter of 2014 and the second quarter of 2015, respectively. The adjusted compensation ratio increased compared to both the year-ago period and the sequential quarter due to compensation expenses associated with significant hiring in the current year in our Capital Markets segment to expand our financial institutions group.
Adjusted non-compensation expenses were $42.6 million for the third quarter of 2015, up 29% and 33% compared to the year-ago period and the second quarter of 2015, respectively. The increase compared to both periods was due to higher legal reserves resulting from settlement of a legal matter totaling $9.8 million on a pre-tax basis.
On an adjusted basis, our effective tax rate was 30.0% for the third quarter of 2015, compared to 37.2% and 36.2% for the third quarter of 2014 and the second quarter of 2015, respectively. The reduced effective tax rate for the third quarter of 2015 was due to the impact of tax-exempt interest income representing a larger proportion of our pre-tax income.
Business Segment ResultsThe firm has two reportable business segments: Capital Markets and Asset Management. Consolidated net revenues and expenses are fully allocated to these two segments.
Capital MarketsFor the quarter, Capital Markets generated adjusted pre-tax operating income of $10.5 million, compared to $19.8 million and $24.3 million in the third quarter of 2014 and the second quarter of 2015, respectively.
Adjusted net revenues were $136.4 million, up slightly compared to the year-ago period and down 7% compared to the second quarter of 2015.
Asset ManagementFor the quarter ended September 30, 2015, Asset Management generated an adjusted pre-tax operating loss of $0.1 million, compared to adjusted pre-tax operating income of $7.1 million and $4.9 million in the third quarter of 2014 and the second quarter of 2015, respectively.
Net revenues were $12.0 million, down 40% and 33% compared to the third quarter of 2014 and the second quarter of 2015, respectively. The decrease compared to both periods was due to lower management fees from decreased assets under management (AUM) driven by market depreciation. Also, investment losses on firm capital invested in our strategies was $5.1 million for the current quarter, compared with a loss of $0.3 million and $0.7 million in the third quarter of 2014 and the second quarter of 2015, respectively.
Other MattersOn September 30, 2015, we completed the purchase of the assets of River Branch Holdings LLC, an equity investment banking boutique focused on the financial institutions sector. The acquisition further strengthens our mergers and acquisitions leadership in the middle markets and adds investment banking resources dedicated to banks, thrifts, and depository institutions, building upon the recent expansion of our financial institutions group.
On October 9, 2015, we completed the acquisition of BMO Capital Markets GKST Inc., BMO's municipal bond sales, trading and origination business. This acquisition expands our fixed income institutional sales, trading and underwriting platforms. Additionally, it strengthens our strategic analytic and advisory capabilities, and supports our growing financial institutions group with their coverage of bank clients.
In the third quarter of 2015, we incurred $1.5 million of restructuring and integration charges. These charges principally resulted from severance benefits and transaction costs related to these acquisitions. Additionally, we expect to incur approximately $6.0 million to $7.0 million of restructuring and integration costs in the fourth quarter of 2015.
Additional Shareholder Information
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. † Rolling 12 month return on average tangible common shareholders' equity is computed by dividing net income applicable to Piper Jaffray Companies' for the last 12 months by average monthly common shareholders' equity less average goodwill and identifiable intangible assets. Management believes that the rolling 12 month return on average tangible common shareholders' equity is a meaningful measure of our return on tangible assets deployed in the business. Average common shareholders’ equity is the most directly comparable GAAP financial measure to average tangible shareholders’ equity. The following is a reconciliation of average common shareholders’ equity to average tangible common shareholders’ equity: As of As of As of (Amounts in thousands) 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 ‡ Tangible book value per share is computed by dividing tangible common shareholders’ equity by common shares outstanding. Tangible common shareholders’ equity equals total common shareholders’ equity less goodwill and identifiable intangible assets. Management believes that tangible book value per share is a meaningful measure of the tangible assets deployed in our business. Shareholders’ equity is the most directly comparable GAAP financial measure to tangible shareholders’ equity. The following is a reconciliation of shareholders’ equity to tangible shareholders’ equity: As of As of As of (Amounts in thousands) 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 $ 559,779Conference Call
Andrew S. Duff, chairman and chief executive officer, and Debbra L. Schoneman, chief financial officer, will hold a conference call to review the financial results on Thur., Oct. 29 at 9 a.m. ET (8 a.m. CT). The earnings release will be available on or after Oct. 29 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 #48306907. 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 Oct. 29 at the same Web address or by calling (855)859-2056 and referencing reservation #48306907.
About Piper Jaffray
Piper Jaffray is an investment bank and asset management firm serving clients in the U.S. and internationally. Proven advisory teams combine deep industry, product and sector expertise with ready access to capital. Founded in 1895, the firm is headquartered in Minneapolis and has offices across the United States and in London, Hong Kong and Zurich. www.piperjaffray.com
Cautionary Note Regarding Forward-Looking Statements
This press release and the conference call to discuss the contents of this press release contain forward-looking statements. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements and are subject to significant risks and uncertainties that are difficult to predict. These forward-looking statements cover, among other things, statements made about general economic and market conditions (including the outlook for equity markets and the interest rate environment), the environment and prospects for corporate advisory transactions and capital markets (including our performance in specific sectors and the outlook for the fourth quarter), anticipated financial results generally (including expectations regarding our noncompensation expenses, compensation and benefits expense, compensation ratio (including the impact of our expansion into the financial institutions sector), revenue levels, operating margins, earnings per share, effective tax rate, and return on equity), current deal pipelines (or backlogs), financial results for our asset management segment (including our performance in specific sectors, e.g. energy-based MLPs),the liquidity of fixed income markets and impact on our related inventory, our strategic priorities (including growth in public finance, asset management, and corporate advisory), potential acquisitions or strategic hires, the expected benefits of our expansion into the financial institutions sector within equity investment banking that includes the acquisition of River Branch Holdings LLC as well as the acquisition of 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:
A further listing and description of these and other risks, uncertainties and important factors can be found in the sections titled “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2014 and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2014, and updated in our subsequent reports filed with the SEC (available at our Web site at www.piperjaffray.com and at the SEC Web site at www.sec.gov).
Forward-looking statements speak only as of the date they are made, and readers are cautioned not to place undue reliance on them. We undertake no obligation to update them in light of new information or future events.
© 2015 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 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.
N/M — Not meaningful
Piper Jaffray Companies
Preliminary Segment Data (U.S. GAAP – Unaudited)
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 %N/M — Not meaningful
Piper Jaffray Companies
Preliminary Selected Summary Financial Information (Non-GAAP – Unaudited) (1)
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 )%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) 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 %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
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) 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 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 $ 3.52This 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 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/20151029005255/en/
Piper Jaffray CompaniesInvestor Relations ContactTom Smith, 612-303-6336
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