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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 June 30, 2016.
“Execution on our growth strategies highlighted by strong performance in areas of targeted investment, particularly Public Finance and Fixed Income, delivered improved results on a more balanced business mix for the quarter,” said Andrew S. Duff, Chairman and CEO of Piper Jaffray. “A detailed review of our cost base, which has expanded due to growth investments, is underway in order to drive higher returns for our shareholders.”
Financial Highlights
Three Months Ended Percent Inc/(Dec) (Amounts in thousands, except per share data) June 30, Mar. 31, June 30, 2Q '16 2Q '16 2016 2016 2015 vs. 1Q '16 vs. 2Q '15 U.S. GAAP Net revenues $ 170,483 $ 153,556 $ 164,066 11.0%
3.9%
Compensation ratio 68.7 % 68.0 % 63.1 % Non-compensation ratio 27.5 % 29.7 % 21.1 % Pre-tax operating margin 3.8 % 2.2 % 15.8 % Net income $ 1,938 $ 2,437 $ 16,999 (20.5 )% (88.6 )% Earnings per diluted common share $ 0.12 $ 0.16 $ 1.08 (25.0 )% (88.9 )% As Adjusted(1) Net revenues $ 167,188 $ 152,207 $ 163,879 9.8%
2.0%
Compensation ratio 64.1 % 66.4 % 62.6 % Non-compensation ratio 23.1 % 23.0 % 19.5 % Pre-tax operating margin 12.9 % 10.6 % 17.8 % Net income $ 13,938 $ 10,609 $ 18,634 31.4%
(25.2 )% Earnings per diluted common share $ 0.88 $ 0.70 $ 1.19 25.7%
(26.1 )%(1)
A non-U.S. GAAP ("non-GAAP") measure. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see "Reconciliation of U.S. GAAP to Selected Summary Financial Information." We believe that presenting our results and measures on an adjusted basis in conjunction with U.S. GAAP measures provides the most meaningful basis for comparison of our operating results across periods.
(2)
A non-GAAP measure. See the "Additional Shareholder Information" section for an explanation of the calculation of this non-GAAP measure. We believe that the adjusted rolling 12 month return on average common shareholders' equity provides a meaningful measure of our return on the core operating results of the business.
Business Segment Results
The firm has two reportable business segments: Capital Markets and Asset Management. Consolidated net revenues and expenses are fully allocated to these two segments. The variance explanations for net revenues are consistent with those on both a U.S. GAAP and non-GAAP basis.
U.S. GAAP Results and Commentary
Capital Markets
The following table summarizes our Capital Markets business segment results on a U.S. GAAP basis for the periods presented:
Three Months Ended Percent Inc/(Dec) June 30, Mar. 31, June 30, 2Q '16 2Q '16 (Amounts in thousands) 2016 2016 2015 vs. 1Q '16 vs. 2Q '15 Net revenues $ 156,739 $ 141,649 $ 146,16410.7%
7.2%
Operating expenses $ 152,028 $ 138,855 $ 123,6879.5%
22.9%
Pre-tax operating income $ 4,711 $ 2,794 $ 22,47768.6%
(79.0 )% Pre-tax operating margin 3.0 % 2.0 % 15.4 %Asset Management
The following table summarizes our Asset Management business segment results on a U.S. GAAP basis for the periods presented:
Three Months Ended Percent Inc/(Dec) June 30, Mar. 31, June 30, 2Q '16 2Q '16 (Amounts in thousands) 2016 2016 2015 vs. 1Q '16 vs. 2Q '15 Net revenues $ 13,744 $ 11,907 $ 17,902 15.4% (23.2 )% Operating expenses $ 11,946 $ 11,259 $ 14,520 6.1% (17.7 )% Pre-tax operating income $ 1,798 $ 648 $ 3,382 177.5% (46.8 )% Pre-tax operating margin 13.1 % 5.4 % 18.9 %Non-GAAP Results and Commentary
Throughout this section of this press release we present financial measures that are not prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). The non-GAAP financial measures include adjustments to exclude (1) revenues and expenses related to noncontrolling interests, (2) amortization of intangible assets related to acquisitions, (3) compensation for acquisition-related agreements and (4) restructuring and acquisition integration costs. Management believes that presenting results and measures on this adjusted basis alongside U.S. GAAP measures provides the most meaningful basis for comparison of its operating results across periods. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see "Reconciliation of U.S. GAAP to Selected Summary Financial Information."
Capital Markets
The following table summarizes our Capital Markets business segment results on a non-GAAP basis for the periods presented:
Three Months Ended Percent Inc/(Dec) June 30, Mar. 31, June 30, 2Q '16 2Q '16 (Amounts in thousands) 2016 2016 2015 vs. 1Q '16 vs. 2Q '15 Adjusted net revenues $ 153,444 $ 140,300 $ 145,977 9.4% 5.1%
Adjusted operating expenses $ 135,106 $ 126,276 $ 121,651 7.0% 11.1%
Adjusted pre-tax operating income $ 18,338 $ 14,024 $ 24,326 30.8% (24.6 )% Adjusted pre-tax operating margin 12.0 % 10.0 % 16.7 %Asset Management
The following table summarizes our Asset Management business segment results on a non-GAAP basis for the periods presented:
Three Months Ended Percent Inc/(Dec) June 30, Mar. 31, June 30, 2Q '16 2Q '16 (Amounts in thousands) 2016 2016 2015 vs. 1Q '16 vs. 2Q '15 Adjusted net revenues $ 13,744 $ 11,907 $ 17,902 15.4% (23.2 )% Adjusted operating expenses $ 10,559 $ 9,863 $ 13,010 7.1% (18.8 )% Adjusted pre-tax operating income $ 3,185 $ 2,044 $ 4,892 55.8% (34.9 )% Adjusted pre-tax operating margin 23.2 % 17.2 % 27.3 % Adjusted segment pre-tax operating margin excluding investment income/(loss) * 17.5 % 23.4 % 30.2 %* Management believes that presenting adjusted segment pre-tax operating margin excluding investment income/(loss) provides the most meaningful basis for comparison of the operating results for the Asset Management segment across periods.
Other Matters
In the second quarter of 2016, we incurred $3.4 million of restructuring and integration charges. These charges principally resulted from costs to vacate redundant leased office space, contract termination fees and transaction costs related to our acquisition of Simmons.
During the second quarter of 2016, we repurchased $42.7 million, or 1,063,000 shares of our common stock, at an average price of $40.15 per share.
Additional Shareholder Information
For the Quarter Ended June 30, 2016 Mar. 31, 2016 June 30, 2015 Full time employees 1,299 1,283 1,100 Equity financings # of transactions 16 7 26 Capital raised $3.5 billion $1.2 billion $6.0 billion Municipal negotiated issuances # of transactions 192 129 226 Par value $5.0 billion $2.9 billion $4.6 billion Advisory transactions # of transactions 22 36 18 Aggregate deal value $2.4 billion $5.9 billion $4.2 billion Asset Management AUM $8.1 billion $7.5 billion $11.4 billion Common shareholders’ equity $775.0 million $805.2 million $789.6 million Number of common shares outstanding (in thousands) 12,425 13,268 13,904 Rolling 12 month return on average common shareholders’ equity * 2.8% 4.7% 7.5% Adjusted rolling 12 month return on average common shareholders’ equity † 6.7% 7.2% 8.5% Book value per share $62.38 $60.69 $ 56.79 Tangible book value per share ‡ $35.94 $35.69 $ 39.60 * Rolling 12 month return on average common shareholders' equity is computed by dividing net income applicable to Piper Jaffray Companies' for the last 12 months by average monthly common shareholders' equity. † Adjusted Rolling 12 month return on average common shareholders' equity is computed by dividing adjusted net income for the last 12 months by average monthly common shareholders' equity. For a detailed explanation of the components of adjusted net income, see "Reconciliation of U.S. GAAP to Selected Summary Financial Information." Management believes that the adjusted rolling 12 month return on average common shareholders' equity provides a meaningful measure of our return on the core operating results of the business. ‡ Tangible book value per share is computed by dividing tangible common shareholders’ equity by common shares outstanding. Tangible common shareholders’ equity equals total common shareholders’ equity less goodwill and identifiable intangible assets. Management believes that tangible book value per share is a meaningful measure of the tangible assets deployed in our business. Shareholders’ equity is the most directly comparable GAAP financial measure to tangible shareholders’ equity. The following is a reconciliation of shareholders’ equity to tangible shareholders’ equity: As of As of As of (Amounts in thousands) June 30, 2016 Mar. 31, 2016 June 30, 2015 Common shareholders’ equity $ 775,011 $ 805,180 $ 789,635 Deduct: goodwill and identifiable intangible assets 328,491 331,707 238,990 Tangible common shareholders’ equity $ 446,520 $ 473,473 $ 550,645Conference 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., Jul. 28 at 9 a.m. ET (8 a.m. CT). The earnings release will be available on or after Jul. 28 at the firm's Web site at www.piperjaffray.com. The call can be accessed via webcast or by dialing (888)810-0209 or (706)902-1361 (international) and referencing reservation #43558164. 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 Jul. 28 at the same Web address or by calling (855)859-2056 and referencing reservation #43558164.
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, Aberdeen, 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, capital markets and public finance transactions (including our performance in specific sectors and the outlook for future quarters), anticipated financial results generally (including expectations regarding our noncompensation expenses, compensation and benefits expense, compensation ratio, revenue levels, operating margins, earnings per share, effective tax rate, and return on equity), current deal pipelines (or backlogs), financial results for our asset management segment (including our performance in specific sectors, e.g. energy-based MLPs), the liquidity of fixed income markets and impact on our related inventory, our strategic priorities (including growth in public finance, asset management, and corporate advisory), the expected benefits of our expansion into the financial institutions and energy sectors, including the expected benefits of the integration of Simmons and Company International, River Branch Holdings LLC, and BMO Capital Markets GKST Inc. or other similar matters.
Forward-looking statements involve inherent risks and uncertainties, both known and unknown, and important factors could cause actual results to differ materially from those anticipated or discussed in the forward-looking statements. These risks, uncertainties and important factors include, but are not limited to, the following:
A further listing and description of these and other risks, uncertainties and important factors can be found in the sections titled “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015 and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2015, and updated in our subsequent reports filed with the SEC (available at our Web site at www.piperjaffray.com and at the SEC Web site at www.sec.gov).
Forward-looking statements speak only as of the date they are made, and readers are cautioned not to place undue reliance on them. We undertake no obligation to update them in light of new information or future events.
© 2016 Piper Jaffray Companies, 800 Nicollet Mall, Suite 1000, Minneapolis, Minnesota 55402-7020
Piper Jaffray Companies
Preliminary Results of Operations (U.S. GAAP – Unaudited)
Three Months Ended Percent Inc/(Dec) Six Months Ended June 30, Mar. 31, June 30, 2Q '16 2Q '16 June 30, June 30, Percent (Amounts in thousands, except per share data) 2016 2016 2015 vs. 1Q '16 vs. 2Q '15 2016 2015 Inc/(Dec) Revenues: Investment banking $ 97,414 $ 103,938 $ 106,069 (6.3 )% (8.2 )% $ 201,352 $ 193,146 4.2%
Institutional brokerage 48,185 32,049 36,661 50.3 31.4 80,234 72,697 10.4 Asset management 14,595 13,848 19,257 5.4 (24.2 ) 28,443 39,779 (28.5 ) Interest 7,922 8,829 11,422 (10.3 ) (30.6 ) 16,751 23,627 (29.1 ) Investment income/(loss) 8,276 937 (3,299 ) 783.2 (350.9 ) 9,213 9,292 (0.9 ) Total revenues 176,392 159,601 170,110 10.5 3.7 335,993 338,541 (0.8 ) Interest expense 5,909 6,045 6,044 (2.2 ) (2.2 ) 11,954 12,604 (5.2 ) Net revenues 170,483 153,556 164,066 11.0 3.9 324,039 325,937 (0.6 ) Non-interest expenses: Compensation and benefits 117,148 104,436 103,554 12.2 13.1 221,584 199,411 11.1 Outside services 10,184 8,451 8,885 20.5 14.6 18,635 17,069 9.2 Occupancy and equipment 8,850 7,718 6,983 14.7 26.7 16,568 13,766 20.4 Communications 7,294 7,330 5,088 (0.5 ) 43.4 14,624 11,416 28.1 Marketing and business development 9,171 7,004 7,239 30.9 26.7 16,175 14,221 13.7 Trade execution and clearance 1,916 1,762 1,977 8.7 (3.1 ) 3,678 3,974 (7.4 ) Restructuring and integration costs 3,433 6,773 — (49.3 ) N/M 10,206 — N/M Intangible asset amortization expense 4,094 3,296 1,773 24.2 130.9 7,390 3,546 108.4 Other operating expenses 1,884 3,344 2,708 (43.7 ) (30.4 ) 5,228 5,383 (2.9 ) Total non-interest expenses 163,974 150,114 138,207 9.2 18.6 314,088 268,786 16.9 Income before income tax expense 6,509 3,442 25,859 89.1 (74.8 ) 9,951 57,151 (82.6 ) Income tax expense 1,996 256 9,542 679.7 (79.1 ) 2,252 19,032 (88.2 ) Net income 4,513 3,186 16,317 41.7 (72.3 ) 7,699 38,119 (79.8 ) Net income/(loss) applicable to noncontrolling interests 2,575 749 (682 ) 243.8 (477.6 ) 3,324 4,148 (19.9 ) Net income applicable to Piper Jaffray Companies (a) $ 1,938 $ 2,437 $ 16,999 (20.5 )% (88.6 )% $ 4,375 $ 33,971 (87.1 )% Net income applicable to Piper Jaffray Companies’ common shareholders (a) $ 1,577 $ 2,124 $ 15,699 (25.8 )% (90.0 )% $ 3,685 $ 31,513 (88.3 )% Earnings per common share Basic $ 0.12 $ 0.16 $ 1.08 (25.0 )% (88.9 )% $ 0.28 $ 2.12 (86.8 )% Diluted $ 0.12 $ 0.16 $ 1.08 (25.0 )% (88.9 )% $ 0.28 $ 2.11 (86.7 )% Weighted average number of common shares outstanding Basic 12,927 13,160 14,487 (1.8 )% (10.8 )% 13,043 14,888 (12.4 )% Diluted 12,942 13,172 14,513 (1.7 )% (10.8 )% 13,056 14,920 (12.5 )%(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) Six Months Ended June 30, Mar. 31, June 30, 2Q '16 2Q '16 June 30, June 30, Percent (Dollars in thousands) 2016 2016 2015 vs. 1Q '16 vs. 2Q '15 2016 2015 Inc/(Dec) Capital Markets Investment banking Financing Equities $ 16,786 $ 6,566 $ 34,324 155.7%
(51.1 )% $ 23,352 $ 70,331 (66.8 )% Debt 33,325 15,972 27,648 108.6 20.5 49,297 48,636 1.4 Advisory services 48,112 81,629 44,020 (41.1 ) 9.3 129,741 74,518 74.1 Total investment banking 98,223 104,167 105,992 (5.7 ) (7.3 ) 202,390 193,485 4.6 Institutional sales and trading Equities 22,612 19,669 20,407 15.0 10.8 42,281 39,312 7.6 Fixed income 28,952 17,054 20,482 69.8 41.4 46,006 41,699 10.3 Total institutional sales and trading 51,564 36,723 40,889 40.4 26.1 88,287 81,011 9.0 Management and performance fees 1,794 965 621 85.9 188.9 2,759 2,028 36.0 Investment income 7,451 2,086 215 257.2 N/M 9,537 14,920 (36.1 ) Long-term financing expenses (2,293 ) (2,292 ) (1,553 ) — 47.6 (4,585 ) (3,113 ) 47.3 Net revenues 156,739 141,649 146,164 10.7 7.2 298,388 288,331 3.5 Operating expenses 152,028 138,855 123,687 9.5 22.9 290,883 239,890 21.3 Segment pre-tax operating income $ 4,711 $ 2,794 $ 22,477 68.6%
(79.0 )% $ 7,505 $ 48,441 (84.5 )% Segment pre-tax operating margin 3.0 % 2.0 % 15.4 % 2.5 % 16.8 % Asset Management Management and performance fees Management fees $ 12,801 $ 12,883 $ 18,436 (0.6 )% (30.6 )% $ 25,684 $ 37,543 (31.6 )% Performance fees — — 200 N/M (100.0 ) — 208 (100.0 ) Total management and performance fees 12,801 12,883 18,636 (0.6 ) (31.3 ) 25,684 37,751 (32.0 ) Investment income/(loss) 943 (976 ) (734 ) (196.6 ) (228.5 ) (33 ) (145 ) (77.2 ) Net revenues 13,744 11,907 17,902 15.4 (23.2 ) 25,651 37,606 (31.8 ) Operating expenses 11,946 11,259 14,520 6.1 (17.7 ) 23,205 28,896 (19.7 ) Segment pre-tax operating income $ 1,798 $ 648 $ 3,382 177.5%
(46.8 )% $ 2,446 $ 8,710 (71.9 )% Segment pre-tax operating margin 13.1 % 5.4 % 18.9 % 9.5 % 23.2 % Total Net revenues $ 170,483 $ 153,556 $ 164,066 11.0%
3.9%
$ 324,039 $ 325,937 (0.6 )% Operating expenses 163,974 150,114 138,207 9.2 18.6 314,088 268,786 16.9 Pre-tax operating income $ 6,509 $ 3,442 $ 25,859 89.1%
(74.8 )% $ 9,951 $ 57,151 (82.6 )% Pre-tax operating margin 3.8 % 2.2 % 15.8 % 3.1 % 17.5 %N/M — Not meaningful
Piper Jaffray Companies
Preliminary Selected Summary Financial Information (Non-GAAP – Unaudited) (1)
Three Months Ended Percent Inc/(Dec) Six Months Ended June 30, Mar. 31, June 30, 2Q '16 2Q '16 June 30, June 30, Percent (Amounts in thousands, except per share data) 2016 2016 2015 vs. 1Q '16 vs. 2Q '15 2016 2015 Inc/(Dec) Revenues: Investment banking $ 97,414 $ 103,938 $ 106,069 (6.3 )% (8.2 )% $ 201,352 $ 193,146 4.2%
Institutional brokerage 47,776 32,336 36,661 47.7 30.3 80,112 72,697 10.2 Asset management 14,595 13,848 19,257 5.4 (24.2 ) 28,443 39,779 (28.5 ) Interest 7,409 8,362 8,114 (11.4 ) (8.7 ) 15,771 17,359 (9.1 ) Investment income/(loss) 5,721 (412 ) (1,151 ) N/M (597.0 ) 5,309 7,301 (27.3 ) Total revenues 172,915 158,072 168,950 9.4 2.3 330,987 330,282 0.2 Interest expense 5,727 5,865 5,071 (2.4 ) 12.9 11,592 10,664 8.7 Adjusted net revenues (2) $ 167,188 $ 152,207 $ 163,879 9.8%
2.0%
$ 319,395 $ 319,618 (0.1 )% Non-interest expenses: Adjusted compensation and benefits (3) $ 107,086 $ 101,130 $ 102,650 5.9%
4.3%
$ 208,216 $ 197,256 5.6%
Ratio of adjusted compensation and benefits to adjusted net revenues 64.1 % 66.4 % 62.6 % 65.2 % 61.7 % Adjusted non-compensation expenses (4) $ 38,579 $ 35,009 $ 32,011 10.2%
20.5%
$ 73,588 $ 63,658 15.6%
Ratio of adjusted non-compensation expenses to adjusted net revenues 23.1 % 23.0 % 19.5 % 23.0 % 19.9 % Adjusted income: Adjusted income before adjusted income tax expense (5) $ 21,523 $ 16,068 $ 29,218 33.9%
(26.3 )% $ 37,591 $ 58,704 (36.0 )% Adjusted operating margin (6) 12.9 % 10.6 % 17.8 % 11.8 % 18.4 % Adjusted income tax expense (7) 7,585 5,459 10,584 38.9 (28.3 ) 13,044 21,251 (38.6 ) Adjusted net income (8) $ 13,938 $ 10,609 $ 18,634 31.4%
(25.2 )% $ 24,547 $ 37,453 (34.5 )% Effective tax rate (9) 35.2 % 34.0 % 36.2 % 34.7 % 36.2 % Adjusted net income applicable to Piper Jaffray Companies’ common shareholders (10) $ 11,349 $ 9,247 $ 17,209 22.7%
(34.1 )% $ 20,675 $ 34,743 (40.5 )% Adjusted earnings per diluted common share $ 0.88 $ 0.70 $ 1.19 25.7%
(26.1 )% $ 1.58 $ 2.33 (32.2 )% Weighted average number of common shares outstanding Diluted 12,942 13,172 14,513 (1.7 )% (10.8 )% 13,056 14,920 (12.5 )%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) Six Months Ended June 30, Mar. 31, June 30, 2Q '16 2Q '16 June 30, June 30, Percent (Dollars in thousands) 2016 2016 2015 vs. 1Q '16 vs. 2Q '15 2016 2015 Inc/(Dec) Capital Markets Investment banking Financing Equities $ 16,786 $ 6,566 $ 34,324 155.7%
(51.1 )% $ 23,352 $ 70,331 (66.8 )% Debt 33,325 15,972 27,648 108.6 20.5 49,297 48,636 1.4 Advisory services 48,112 81,629 44,020 (41.1 ) 9.3 129,741 74,518 74.1 Total investment banking 98,223 104,167 105,992 (5.7 ) (7.3 ) 202,390 193,485 4.6 Institutional sales and trading Equities 22,612 19,669 20,407 15.0 10.8 42,281 39,312 7.6 Fixed income 28,212 17,054 20,482 65.4 37.7 45,266 41,699 8.6 Total institutional sales and trading 50,824 36,723 40,889 38.4 24.3 87,547 81,011 8.1 Management and performance fees 1,794 965 621 85.9 188.9 2,759 2,028 36.0 Investment income 4,896 737 28 564.3 N/M 5,633 8,601 (34.5 ) Long-term financing expenses (2,293 ) (2,292 ) (1,553 ) — 47.6 (4,585 ) (3,113 ) 47.3 Adjusted net revenues (2) 153,444 140,300 145,977 9.4 5.1 293,744 282,012 4.2 Adjusted operating expenses (12) 135,106 126,276 121,651 7.0 11.1 261,382 235,252 11.1 Adjusted segment pre-tax operating income (5) $ 18,338 $ 14,024 $ 24,326 30.8%
(24.6 )% $ 32,362 $ 46,760 (30.8 )% Adjusted segment pre-tax operating margin (6) 12.0 % 10.0 % 16.7 % 11.0 % 16.6 % Asset Management Management and performance fees Management fees $ 12,801 $ 12,883 $ 18,436 (0.6 )% (30.6 )% $ 25,684 $ 37,543 (31.6 )% Performance fees — — 200 N/M (100.0 ) — 208 (100.0 ) Total management and performance fees 12,801 12,883 18,636 (0.6 ) (31.3 ) 25,684 37,751 (32.0 ) Investment income/(loss) 943 (976 ) (734 ) (196.6 ) (228.5 ) (33 ) (145 ) (77.2 ) Net revenues 13,744 11,907 17,902 15.4 (23.2 ) 25,651 37,606 (31.8 ) Adjusted operating expenses (13) 10,559 9,863 13,010 7.1 (18.8 ) 20,422 25,662 (20.4 ) Adjusted segment pre-tax operating income (13) $ 3,185 $ 2,044 $ 4,892 55.8%
(34.9 )% $ 5,229 $ 11,944 (56.2 )% Adjusted segment pre-tax operating margin (6) 23.2 % 17.2 % 27.3 % 20.4 % 31.8 % Adjusted segment pre-tax operating margin excluding investment income/(loss) * 17.5 % 23.4 % 30.2 % 20.5 % 32.0 % Total Adjusted net revenues (2) $ 167,188 $ 152,207 $ 163,879 9.8%
2.0%
$ 319,395 $ 319,618 (0.1 )% Adjusted operating expenses (12) 145,665 136,139 134,661 7.0 8.2 281,804 260,914 8.0 Adjusted pre-tax operating income (5) $ 21,523 $ 16,068 $ 29,218 33.9%
(26.3 )% $ 37,591 $ 58,704 (36.0 )% Adjusted pre-tax operating margin (6) 12.9 % 10.6 % 17.8 % 11.8 % 18.4 %This presentation includes non-GAAP measures. The non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see "Reconciliation of U.S. GAAP to Selected Summary Financial Information."
* Management believes that presenting adjusted segment pre-tax operating margin excluding investment income/(loss) provides the most meaningful basis for comparison of the operating results for the Asset Management segment across periods.
N/M — Not meaningful
Piper Jaffray Companies
Reconciliation of U.S. GAAP to Selected Summary Financial Information (1) (Unaudited)
Three Months Ended Six Months Ended June 30, Mar. 31, June 30, June 30, June 30, (Amounts in thousands, except per share data) 2016 2016 2015 2016 2015 Consolidated Net revenues: Net revenues – U.S. GAAP basis $ 170,483 $ 153,556 $ 164,066 $ 324,039 $ 325,937 Adjustments: Revenue related to noncontrolling interests (11) (3,295 ) (1,349 ) (187 ) (4,644 ) (6,319 ) Adjusted net revenues $ 167,188 $ 152,207 $ 163,879 $ 319,395 $ 319,618 Compensation and benefits: Compensation and benefits – U.S. GAAP basis $ 117,148 $ 104,436 $ 103,554 $ 221,584 $ 199,411 Adjustments:Compensation from acquisition-related agreements
(10,062 ) (3,306 ) (904 ) (13,368 ) (2,155 ) Adjusted compensation and benefits $ 107,086 $ 101,130 $ 102,650 $ 208,216 $ 197,256 Non-compensation expenses: Non-compensation expenses – U.S. GAAP basis $ 46,826 $ 45,678 $ 34,653 $ 92,504 $ 69,375 Adjustments: Non-compensation expenses related to noncontrolling interests (11) (720 ) (600 ) (869 ) (1,320 ) (2,171 ) Restructuring and integration costs (3,433 ) (6,773 ) — (10,206 ) — Amortization of intangible assets related to acquisitions (4,094 ) (3,296 ) (1,773 ) (7,390 ) (3,546 ) Adjusted non-compensation expenses $ 38,579 $ 35,009 $ 32,011 $ 73,588 $ 63,658 Income before income tax expense: Income before income tax expense – U.S. GAAP basis $ 6,509 $ 3,442 $ 25,859 $ 9,951 $ 57,151 Adjustments: Revenue related to noncontrolling interests (11) (3,295 ) (1,349 ) (187 ) (4,644 ) (6,319 ) Expenses related to noncontrolling interests (11) 720 600 869 1,320 2,171 Compensation from acquisition-related agreements 10,062 3,306 904 13,368 2,155 Restructuring and integration costs 3,433 6,773 — 10,206 — Amortization of intangible assets related to acquisitions 4,094 3,296 1,773 7,390 3,546 Adjusted income before adjusted income tax expense $ 21,523 $ 16,068 $ 29,218 $ 37,591 $ 58,704 Income tax expense: Income tax expense – U.S. GAAP basis $ 1,996 $ 256 $ 9,542 $ 2,252 $ 19,032 Tax effect of adjustments: Compensation from acquisition-related agreements 3,439 1,286 352 4,725 839 Restructuring and integration costs 557 2,635 — 3,192 — Amortization of intangible assets related to acquisitions 1,593 1,282 690 2,875 1,380 Adjusted income tax expense $ 7,585 $ 5,459 $ 10,584 $ 13,044 $ 21,251 Net income applicable to Piper Jaffray Companies: Net income applicable to Piper Jaffray Companies – U.S. GAAP basis $ 1,938 $ 2,437 $ 16,999 $ 4,375 $ 33,971 Adjustments: Compensation from acquisition-related agreements 6,623 2,020 552 8,643 1,316 Restructuring and integration costs 2,876 4,138 — 7,014 — Amortization of intangible assets related to acquisitions 2,501 2,014 1,083 4,515 2,166 Adjusted net income $ 13,938 $ 10,609 $ 18,634 $ 24,547 $ 37,453 Net income applicable to Piper Jaffray Companies' common shareholders: Net income applicable to Piper Jaffray Companies' common stockholders – U.S. GAAP basis $ 1,577 $ 2,124 $ 15,699 $ 3,685 $ 31,513 Adjustments: Compensation from acquisition-related agreements 5,393 1,761 510 7,280 1,221 Restructuring and integration costs 2,343 3,607 — 5,907 — Amortization of intangible assets related to acquisitions 2,036 1,755 1,000 3,803 2,009 Adjusted net income applicable to Piper Jaffray Companies' common stockholders $ 11,349 $ 9,247 $ 17,209 $ 20,675 $ 34,743 Earnings per diluted common share: Earnings per diluted common share – U.S. GAAP basis $ 0.12 $ 0.16 $ 1.08 $ 0.28 $ 2.11 Adjustments: Compensation from acquisition-related agreements 0.42 0.13 0.04 0.56 0.08 Restructuring and integration costs 0.18 0.27 — 0.45 — Amortization of intangible assets related to acquisitions 0.16 0.13 0.07 0.29 0.13 Adjusted earnings per diluted common share $ 0.88 $ 0.70 $ 1.19 $ 1.58 $ 2.33 Three Months Ended Six Months Ended June 30, Mar. 31, June 30, June 30, June 30, (Amounts in thousands, except per share data) 2016 2016 2015 2016 2015 Capital Markets Net revenues: Net revenues – U.S. GAAP basis $ 156,739 $ 141,649 $ 146,164 $ 298,388 $ 288,331 Adjustments: Revenue related to noncontrolling interests (11) (3,295 ) (1,349 ) (187 ) (4,644 ) (6,319 ) Adjusted net revenues $ 153,444 $ 140,300 $ 145,977 $ 293,744 $ 282,012 Operating expenses: Operating expenses – U.S. GAAP basis $ 152,028 $ 138,855 $ 123,687 $ 290,883 $ 239,890 Adjustments: Expenses related to noncontrolling interests (11) (720 ) (600 ) (869 ) (1,320 ) (2,171 ) Compensation from acquisition-related agreements (10,062 ) (3,306 ) (904 ) (13,368 ) (1,941 ) Restructuring and integration costs (3,433 ) (6,764 ) — (10,197 ) — Amortization of intangible assets related to acquisitions (2,707 ) (1,909 ) (263 ) (4,616 ) (526 ) Adjusted operating expenses $ 135,106 $ 126,276 $ 121,651 $ 261,382 $ 235,252 Segment pre-tax operating income: Segment pre-tax operating income – U.S. GAAP basis $ 4,711 $ 2,794 $ 22,477 $ 7,505 $ 48,441 Adjustments: Revenue related to noncontrolling interests (11) (3,295 ) (1,349 ) (187 ) (4,644 ) (6,319 ) Expenses related to noncontrolling interests (11) 720 600 869 1,320 2,171 Compensation from acquisition-related agreements 10,062 3,306 904 13,368 1,941 Restructuring and integration costs 3,433 6,764 — 10,197 — Amortization of intangible assets related to acquisitions 2,707 1,909 263 4,616 526 Adjusted segment pre-tax operating income $ 18,338 $ 14,024 $ 24,326 $ 32,362 $ 46,760 Asset Management Operating expenses: Operating expenses – U.S. GAAP basis $ 11,946 $ 11,259 $ 14,520 $ 23,205 $ 28,896 Adjustments: Compensation from acquisition-related agreements — — — — (214 ) Restructuring and integration costs — (9 ) — (9 ) — Amortization of intangible assets related to acquisitions (1,387 ) (1,387 ) (1,510 ) (2,774 ) (3,020 ) Adjusted operating expenses $ 10,559 $ 9,863 $ 13,010 $ 20,422 $ 25,662 Segment pre-tax operating income: Segment pre-tax operating income – U.S. GAAP basis $ 1,798 $ 648 $ 3,382 $ 2,446 $ 8,710 Adjustments: Compensation from acquisition-related agreements — — — — 214 Restructuring and integration costs — 9 — 9 — Amortization of intangible assets related to acquisitions 1,387 1,387 1,510 2,774 3,020 Adjusted segment pre-tax operating income $ 3,185 $ 2,044 $ 4,892 $ 5,229 $ 11,944This 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/20160728005288/en/
Piper Jaffray CompaniesInvestor Relations ContactTom Smith, 612-303-6336
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