Press Room

News Releases

 

MINNEAPOLIS--(BUSINESS WIRE)--Feb. 4, 2016-- Piper Jaffray Companies (NYSE:PJC) today announced its financial results for the quarter and year ended December 31, 2015.

We achieved record revenues in 2015 led by the strength of our Investment Banking franchise

Financial Highlights

               
Three Months Ended Percent Inc/(Dec) Twelve Months Ended
(Amounts in thousands, Dec. 31,     Sept. 30,     Dec. 31, 4Q '15     4Q '15 Dec. 31,     Dec. 31, Percent
except per share data) 2015 2015 2014 vs. 3Q '15 vs. 4Q '14 2015 2014 Inc/(Dec)
As Adjusted(1)
Net revenues $ 195,096 $ 148,394 $ 148,394 31.5 % 31.5 % $ 663,108 $ 632,439 4.8 %
Net income $ 21,147 $ 7,250 $ 14,700 191.7 % 43.9 % $ 65,850 $ 72,114 (8.7 )%
Earnings per diluted common share $ 1.40 $ 0.48 $ 0.90 191.7 % 55.6 % $ 4.22 $ 4.42 (4.5 )%
Pre-tax operating margin 17.2 % 7.0 % 15.9 % 15.5 % 18.0 %
 
U.S. GAAP
Net revenues $ 197,364 $ 149,617 $ 150,548 31.9 % 31.1 % $ 672,918 $ 648,138 3.8 %
Net income $ 13,273 $ 4,831 $ 12,543 174.7 % 5.8 % $ 52,075 $ 63,172 (17.6 )%
Earnings per diluted common share $ 0.88 $ 0.32 $ 0.77 175.0 % 14.3 % $ 3.34 $ 3.87 (13.7 )%
Pre-tax operating margin 11.4 % 4.5 % 14.3 % 12.8 % 17.0 %
     
   

(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.

 

For the fourth quarter of 2015, on a U.S. GAAP basis, net revenues were $197.4 million, and net income was $13.3 million, or $0.88 per diluted common share.

For the twelve months ended December 31, 2015, net revenues on a U.S. GAAP basis were $672.9 million. Net income on a U.S. GAAP basis was $52.1 million, or $3.34 per diluted common share, in 2015.

"We achieved record revenues and delivered solid results for our shareholders in 2015, while actively investing in the business to position us for continued growth and improved shareholder returns," said Andrew S. Duff, Chairman and Chief Executive Officer. "In particular, our expansion into the Financial Institutions and the Energy sectors represent significant milestones for the firm."

Fourth Quarter Results – Non-GAAP Basis
Throughout the Adjusted Consolidated Results and Business Segment Results sections of this press release we present financial measures that are not prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). The non-GAAP financial measures include adjustments to exclude (1) revenues and expenses related to noncontrolling interests, (2) amortization of intangible assets related to acquisitions, (3) compensation for acquisition-related agreements and (4) restructuring and acquisition integration costs. Management believes that presenting results and measures on this adjusted basis alongside U.S. GAAP measures provides the most meaningful basis for comparison of its operating results across periods. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see "Reconciliation of U.S. GAAP to Selected Summary Financial Information."

Adjusted Consolidated Results
For the fourth quarter of 2015, adjusted net revenues were $195.1 million, up 32% compared to $148.4 million in both the fourth quarter of 2014 and the third quarter of 2015, respectively, due primarily to higher advisory services and fixed income institutional brokerage revenues.

For the fourth quarter of 2015, adjusted compensation and benefits expenses were $124.8 million, up 35% and 31% compared to the fourth quarter of 2014 and the third quarter of 2015, respectively. The increase for both periods was due to improved financial results, as well as incremental compensation expenses associated with the significant hiring to expand our financial institutions group and our acquisitions of River Branch Holdings LLC ("River Branch") and BMO Capital Markets GKST Inc. ("BMO GKST"), which closed on September 30, 2015 and October 9, 2015, respectively.

For the fourth quarter of 2015, adjusted compensation and benefits expenses were 64.0% of adjusted net revenues, compared to 62.4% and 64.3% for the fourth quarter of 2014 and the third quarter of 2015, respectively. The adjusted compensation ratio increased compared to the year-ago period due to compensation expenses associated with the significant hiring in the current year in our Capital Markets segment to expand our financial institutions group.

Adjusted non-compensation expenses were $36.8 million for the fourth quarter of 2015, up 14% compared to the year-ago period. The increase compared to the fourth quarter of 2014 was due to higher travel expenses resulting from increased business activity, as well as the incremental costs associated with the acquisitions of River Branch and BMO GKST. Adjusted non-compensation expenses were down 14% compared to the sequential quarter. Adjusted non-compensation expenses were higher in the third quarter of 2015 due to a $9.8 million pre-tax charge resulting from a settlement of a legal matter.

On an adjusted basis, our effective tax rate was 36.9% for the fourth quarter of 2015, compared to 37.7% and 30.0% for the fourth quarter of 2014 and the third 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 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.

Capital Markets
For the quarter, Capital Markets generated adjusted pre-tax operating income of $31.0 million, compared to $18.0 million and $10.5 million in the fourth quarter of 2014 and the third quarter of 2015, respectively.

Adjusted net revenues were $181.1 million, up 40% and 33% compared to the year-ago period and the third quarter of 2015, respectively.

Asset Management
For the quarter ended December 31, 2015, Asset Management generated adjusted pre-tax operating income of $2.5 million, compared to adjusted pre-tax operating income of $5.6 million in the fourth quarter of 2014 and an adjusted pre-tax operating loss of $0.1 million in the third quarter of 2015.

Net revenues were $14.0 million, down 25% compared to the fourth quarter of 2014 and up 17% compared to the third quarter of 2015.

Full-Year 2015 Results – Non-GAAP Basis

Adjusted Consolidated Results
In 2015, adjusted EPS was $4.22, compared to $4.42 in 2014. The decrease was due to a legal settlement in 2015, as well as incremental expenses related to the expansion of our Capital Markets financial institutions group. Excluding the legal settlement of $9.8 million or $0.39 per share, adjusted EPS would have been $4.61 per diluted common share(3), up 4% compared to 2014.

Adjusted net revenues were $663.1 million in 2015, up 5% compared to $632.4 million in 2014. The increase was due primarily to higher investment banking revenues, partially offset by lower asset management revenues.

For 2015, adjusted compensation and benefits expenses were $417.5 million, up 7% compared to 2014, due primarily to improved financial performance. Adjusted compensation and benefits expenses were 63.0% of adjusted net revenues in 2015, up from 61.6% in 2014, due to a change in our mix of business and incremental compensation expenses related to the expansion of our Capital Markets financial institutions group.

Adjusted non-compensation expenses were $143.0 million in 2015, up 11% compared to 2014. The increase was due to a $9.8 million legal settlement in 2015 and higher expenses from increased business activity, and incremental costs associated with the acquisitions of River Branch and BMO GKST.

Business Segment Results

Capital Markets
For 2015, Capital Markets generated adjusted pre-tax operating income of $88.3 million, up 4% from $84.9 million in 2014. Adjusted net revenues were $599.5 million in 2015, up 9% compared to $552.1 million in the prior year, driven by strong debt financing, advisory services, and investment income.

Adjusted operating expenses were $511.2 million in 2015, up 9% compared to 2014, due to higher compensation expenses from increased operating results and incremental compensation expense related to expansion of financial institutions group, as well as higher non-compensation expenses driven by a $9.8 million pre-tax charge resulting from a settlement of a legal matter. Adjusted segment pre-tax operating margin declined from 15.4% in 2014 to 14.7% in 2015.

     
   

(3)

Management believes that the presentation of adjusted earnings per share excluding the legal settlement is a better comparison of year-over-year results.

 

Asset Management
For 2015, Asset Management generated adjusted pre-tax operating income of $14.3 million, down 50% compared to $28.8 million in 2014. Net revenues were $63.6 million in 2015, down 21% compared to 2014 due to lower management fees and investment losses.

Adjusted operating expenses were $49.3 million in 2015, down 4% compared to 2014. Adjusted segment pre-tax operating margin declined from 35.8% in 2014 to 22.5% in 2015. Excluding investment income/(loss) on firm capital invested in our strategies, adjusted operating margin declined from 35.3% in 2014 to 29.9% in 2015, due to lower revenues.

Other Matters
During 2015, we returned $133.0 million of capital to shareholders by repurchasing approximately 2,740,000 shares, at an average price of $48.50 per share, of which $118.5 million related to our share repurchase authorization. We have $131.5 million remaining under this authorization, which expires on September 30, 2017.

In 2015, we incurred $10.7 million of restructuring and integration charges. These charges principally resulted from severance benefits and transaction costs related to our acquisitions of River Branch and BMO GKST.

On November 16, 2015, we entered into a definitive agreement to acquire Simmons & Company International, a Texas-based employee-owned investment bank and broker dealer focused on the energy industry. The transaction is valued at approximately $139.0 million, payable at closing, consisting of $91.0 million in cash and $48.0 million of restricted stock. We have committed an additional $21.0 million in cash and stock for retention purposes. The transaction is expected to close in the first quarter of 2016.

 

Additional Shareholder Information

   
For the Quarter Ended
Dec. 31, 2015     Sept. 30, 2015     Dec. 31, 2014
Full time employees 1,152 1,094 1,026
Equity financings
# of transactions 12 22 17
Capital raised $1.9 billion $3.0 billion $2.7 billion
Municipal negotiated issuances
# of transactions 180 159 128
Par value $2.6 billion $3.3 billion $2.3 billion
Advisory transactions
# of transactions 25 23 24
Aggregate deal value $10.0 billion $7.0 billion $2.6 billion
Asset Management
AUM $8.9 billion $9.4 billion $11.5 billion
Common shareholders’ equity $783.7 million $795.4 million $819.9 million
Number of common shares outstanding (in thousands) 13,311 13,947 15,265
Rolling 12 month return on average common shareholders’ equity * 6.4% 6.3% 8.1%
Adjusted rolling 12 month return on average common shareholders’ equity † 8.1% 7.3% 9.2%
Book value per share $58.87 $57.03 $53.71
Tangible book value per share ‡ $40.20 $39.36 $37.82
 
*   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) Dec. 31, 2015 Sept. 30, 2015 Dec. 31, 2014
Common shareholders’ equity $ 783,659 $ 795,385 $ 819,912
Deduct: goodwill and identifiable intangible assets   248,506   246,362   242,536
 
Tangible common shareholders’ equity $ 535,153 $ 549,023 $ 577,376
 
 

Additional Shareholder Information – Continued

   
For the Year Ended
Dec. 31, 2015     Dec. 31, 2014
Equity financings
# of transactions 95 90
Capital raised $17.4 billion $20.5 billion
Municipal negotiated issuances
# of transactions 707 485
Par value $14.3 billion $9.5 billion
Advisory transactions
# of transactions 82 91
Aggregate deal value $23.0 billion $14.7 billion
 

Conference 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., Feb. 4 at 9 a.m. ET (8 a.m. CT). The earnings release will be available on or after Feb. 4 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 #22303402. 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 Feb. 4 at the same Web address or by calling (855)859-2056 and referencing reservation #22303402.

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 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), potential acquisitions or strategic hires, the expected benefits of our expansion into the financial institutions and energy sectors, including the expected benefits of the acquisition of Simmons and Company International and integration of 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, 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.

© 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)     Twelve Months Ended    
Dec. 31,     Sept. 30,     Dec. 31, 4Q '15     4Q '15 Dec. 31,     Dec. 31, Percent
(Amounts in thousands, except per share data) 2015 2015 2014 vs. 3Q '15 vs. 4Q '14 2015 2014 Inc/(Dec)
Revenues:
Investment banking $ 129,332 $ 91,640 $ 82,613 41.1 % 56.6 % $ 414,118 $ 369,811 12.0 %
Institutional brokerage 48,010 34,182 42,324 40.5 13.4 154,889 156,809 (1.2 )
Asset management 16,287 18,951 20,242 (14.1 ) (19.5 ) 75,017 85,062 (11.8 )
Interest 8,802 9,128 11,781 (3.6 ) (25.3 ) 41,557 48,716 (14.7 )
Investment income 613 831 434 (26.2 ) 41.2 10,736 12,813 (16.2 )
Total revenues   203,044   154,732   157,394 31.2   29.0     696,317   673,211 3.4  
 
Interest expense   5,680   5,115   6,846 11.0   (17.0 )   23,399   25,073 (6.7 )
 
Net revenues   197,364   149,617   150,548 31.9   31.1     672,918   648,138 3.8  
 
Non-interest expenses:
Compensation and benefits 126,190 96,132 93,765 31.3 34.6 421,733 394,510 6.9
Outside services 9,833 9,316 9,218 5.5 6.7 36,218 37,055 (2.3 )
Occupancy and equipment 7,510 7,025 6,080 6.9 23.5 28,301 28,231 0.2
Communications 6,112 6,234 5,684 (2.0 ) 7.5 23,762 22,732 4.5
Marketing and business development 8,804 6,965 7,473 26.4 17.8 29,990 27,260 10.0
Trade execution and clearance 1,838 1,982 2,094 (7.3 ) (12.2 ) 7,794 7,621 2.3
Restructuring and integration costs 9,156 1,496 512.0 N/M 10,652 N/M
Intangible asset amortization expense 2,343 1,773 2,318 32.1 1.1 7,662 9,272 (17.4 )
Other operating expenses   3,094   11,906   2,427 (74.0 ) 27.5     20,383   11,146 82.9  
Total non-interest expenses   174,880   142,829   129,059 22.4   35.5     586,495   537,827 9.0  
 
Income before income tax expense 22,484 6,788 21,489 231.2 4.6 86,423 110,311 (21.7 )
 
Income tax expense   7,336   1,573   7,514 366.4   (2.4 )   27,941   35,986 (22.4 )
 
Net income 15,148 5,215 13,975 190.5 8.4 58,482 74,325 (21.3 )
 
Net income applicable to noncontrolling interests   1,875   384   1,432 388.3   30.9     6,407   11,153 (42.6 )
 
Net income applicable to Piper Jaffray Companies (a) $ 13,273 $ 4,831 $ 12,543 174.7 % 5.8 % $ 52,075 $ 63,172 (17.6 )%
 
Net income applicable to Piper Jaffray Companies’ common shareholders (a) $ 12,147 $ 4,448 $ 11,700 173.1 % 3.8 % $ 48,060 $ 58,141 (17.3 )%
 
Earnings per common share
Basic $ 0.88 $ 0.32 $ 0.77 175.0 % 14.3 % $ 3.34 $ 3.88 (13.9 )%
Diluted $ 0.88 $ 0.32 $ 0.77 175.0 % 14.3 % $ 3.34 $ 3.87 (13.7 )%
 
Weighted average number of common shares outstanding
Basic 13,775 13,938 15,241 (1.2 )% (9.6 )% 14,368 14,971 (4.0 )%
Diluted 13,782 13,952 15,293 (1.2 )% (9.9 )% 14,389 15,025 (4.2 )%
 

(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)     Twelve Months Ended    
Dec. 31,     Sept. 30,     Dec. 31, 4Q '15     4Q '15 Dec. 31,     Dec. 31, Percent
(Dollars in thousands) 2015 2015 2014 vs. 3Q '15 vs. 4Q '14 2015 2014 Inc/(Dec)
Capital Markets
Investment banking
Financing
Equities $ 19,847 $ 24,290 $ 21,474 (18.3 )% (7.6 )% $ 114,468 $ 109,706 4.3 %
Debt 22,113 20,446 19,533 8.2 13.2 91,195 63,005 44.7
Advisory services   87,510     47,135     42,065   85.7   108.0     209,163     197,880   5.7  
Total investment banking 129,470 91,871 83,072 40.9 55.9 414,826 370,591 11.9
 
Institutional sales and trading
Equities 19,246 20,026 22,874 (3.9 ) (15.9 ) 78,584 82,211 (4.4 )
Fixed income   34,347     18,259     23,140   88.1   48.4     94,305     92,200   2.3  
Total institutional sales and trading 53,593 38,285 46,014 40.0 16.5 172,889 174,411 (0.9 )
 
Management and performance fees 716 1,898 886 (62.3 ) (19.2 ) 4,642 5,398 (14.0 )
 
Investment income 2,274 7,274 3,446 (68.7 ) (34.0 ) 24,468 24,046 1.8
 
Long-term financing expenses   (2,713 )   (1,668 )   (1,597 ) 62.6   69.9     (7,494 )   (6,655 ) 12.6  
 
Net revenues 183,340 137,660 131,821 33.2 39.1 609,331 567,791 7.3
 
Operating expenses   161,823     129,224     114,039   25.2   41.9     530,937     478,661   10.9  
 
Segment pre-tax operating income $ 21,517   $ 8,436   $ 17,782   155.1 % 21.0 % $ 78,394   $ 89,130   (12.0 )%
 
Segment pre-tax operating margin 11.7 % 6.1 % 13.5 % 12.9 % 15.7 %
 
Asset Management
Management and performance fees
Management fees $ 15,571 $ 17,053 $ 19,298 (8.7 )% (19.3 )% $ 70,167 $ 78,772 (10.9 )%
Performance fees           58     (100.0 )   208     892   (76.7 )
Total management and performance fees 15,571 17,053 19,356 (8.7 ) (19.6 ) 70,375 79,664 (11.7 )
 
Investment income/(loss)   (1,547 )   (5,096 )   (629 ) (69.6 ) 145.9     (6,788 )   683   N/M  
 
Net revenues 14,024 11,957 18,727 17.3 (25.1 ) 63,587 80,347 (20.9 )
 
Operating expenses   13,057     13,605     15,020   (4.0 ) (13.1 )   55,558     59,166   (6.1 )
 
Segment pre-tax operating income/(loss) $ 967   $ (1,648 ) $ 3,707   N/M   (73.9 )% $ 8,029   $ 21,181   (62.1 )%
 
Segment pre-tax operating margin 6.9 % (13.8 )% 19.8 % 12.6 % 26.4 %
 
Total
Net revenues $ 197,364 $ 149,617 $ 150,548 31.9 % 31.1 % $ 672,918 $ 648,138 3.8 %
 
Operating expenses   174,880     142,829     129,059   22.4   35.5     586,495     537,827   9.0  
 
Pre-tax operating income $ 22,484   $ 6,788   $ 21,489   231.2 % 4.6 % $ 86,423   $ 110,311   (21.7 )%
 
Pre-tax operating margin 11.4 % 4.5 % 14.3 % 12.8 % 17.0 %
 

N/M — Not meaningful

 
 
Piper Jaffray Companies
Preliminary Selected Summary Financial Information (Non-GAAP – Unaudited) (1)
               
Three Months Ended Percent Inc/(Dec) Twelve Months Ended
Dec. 31,     Sept. 30,     Dec. 31, 4Q '15     4Q '15 Dec. 31,     Dec. 31, Percent
(Amounts in thousands, except per share data) 2015 2015 2014 vs. 3Q '15 vs. 4Q '14 2015 2014 Inc/(Dec)
Revenues:
Investment banking $ 129,332 $ 91,640 $ 82,613 41.1 % 56.6 % $ 414,118 $ 369,811 12.0 %
Institutional brokerage 47,350 34,182 42,324 38.5 11.9 154,229 156,809 (1.6 )
Asset management 16,287 18,951 20,242 (14.1 ) (19.5 ) 75,017 85,062 (11.8 )
Interest 8,564 7,885 8,853 8.6 (3.3 ) 33,808 36,688 (7.8 )
Investment income/(loss)   (839 )   631     125   N/M   N/M     7,093     5,231   35.6  
Total revenues 200,694 153,289 154,157 30.9 30.2 684,265 653,601 4.7
 
Interest expense   5,598     4,895     5,763   14.4   (2.9 )   21,157     21,162    
 
Adjusted net revenues (2) $ 195,096   $ 148,394   $ 148,394   31.5 % 31.5 % $ 663,108   $ 632,439   4.8 %
 
Non-interest expenses:
Adjusted compensation and benefits (3) $ 124,802   $ 95,442   $ 92,552   30.8 % 34.8 % $ 417,500   $ 389,281   7.2 %
Ratio of adjusted compensation and benefits to adjusted net revenues 64.0 % 64.3 % 62.4 % 63.0 % 61.6 %
 
Adjusted non-compensation expenses (4) $ 36,798   $ 42,589   $ 32,254   (13.6 )% 14.1 % $ 143,045   $ 129,499   10.5 %
Ratio of adjusted non-compensation expenses to adjusted net revenues 18.9 % 28.7 % 21.7 % 21.6 % 20.5 %
 
Adjusted income:
Adjusted income before adjusted income tax expense (5) $ 33,496   $ 10,363   $ 23,588   223.2 % 42.0 % $ 102,563   $ 113,659   (9.8 )%
Adjusted operating margin (6) 17.2 % 7.0 % 15.9 % 15.5 % 18.0 %
 
Adjusted income tax expense (7)   12,349     3,113     8,888   296.7   38.9     36,713     41,545   (11.6 )
 
Adjusted net income (8) $ 21,147   $ 7,250   $ 14,700   191.7 % 43.9 % $ 65,850   $ 72,114   (8.7 )%
Effective tax rate (9) 36.9 % 30.0 % 37.7 % 35.8 % 36.6 %
 
Adjusted net income applicable to Piper Jaffray Companies’ common shareholders (10) $ 19,354   $ 6,676   $ 13,712   189.9 % 41.1 % $ 60,773   $ 66,371   (8.4 )%
 
Adjusted earnings per diluted common share $ 1.40   $ 0.48   $ 0.90   191.7 % 55.6 % $ 4.22   $ 4.42   (4.5 )%
 
Weighted average number of common shares outstanding
Diluted 13,782 13,952 15,293 (1.2 )% (9.9 )% 14,389 15,025 (4.2 )%
 

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)     Twelve Months Ended    
Dec. 31,     Sept. 30,     Dec. 31, 4Q '15     4Q '15 Dec. 31,     Dec. 31, Percent
(Dollars in thousands) 2015 2015 2014 vs. 3Q '15 vs. 4Q '14 2015 2014 Inc/(Dec)
Capital Markets
Investment banking
Financing
Equities $ 19,847 $ 24,290 $ 21,474 (18.3 )% (7.6 )% $ 114,468 $ 109,706 4.3 %
Debt 22,113 20,446 19,533 8.2 13.2 91,195 63,005 44.7
Advisory services   87,510     47,135     42,065   85.7   108.0     209,163     197,880   5.7  
Total investment banking 129,470 91,871 83,072 40.9 55.9 414,826 370,591 11.9
 
Institutional sales and trading
Equities 19,246 20,026 22,874 (3.9 ) (15.9 ) 78,584 82,211 (4.4 )
Fixed income   33,531     18,259     23,140   83.6   44.9     93,489     92,200   1.4  
Total institutional sales and trading 52,777 38,285 46,014 37.9 14.7 172,073 174,411 (1.3 )
 
Management and performance fees 716 1,898 886 (62.3 ) (19.2 ) 4,642 5,398 (14.0 )
 
Investment income 822 6,051 1,292 (86.4 ) (36.4 ) 15,474 8,347 85.4
 
Long-term financing expenses   (2,713 )   (1,668 )   (1,597 ) 62.6   69.9     (7,494 )   (6,655 ) 12.6  
 
Adjusted net revenues (2) 181,072 136,437 129,667 32.7 39.6 599,521 552,092 8.6
 
Adjusted operating expenses (12)   150,053     125,936     111,682   19.2   34.4     511,241     467,198   9.4  
 
Adjusted segment pre-tax operating income (5) $ 31,019   $ 10,501   $ 17,985   195.4 % 72.5 % $ 88,280   $ 84,894   4.0 %
 
Adjusted segment pre-tax operating margin (6) 17.1 % 7.7 % 13.9 % 14.7 % 15.4 %
 
Asset Management
Management and performance fees
Management fees $ 15,571 $ 17,053 $ 19,298 (8.7 )% (19.3 )% $ 70,167 $ 78,772 (10.9 )%
Performance fees           58     (100.0 )   208     892   (76.7 )
Total management and performance fees 15,571 17,053 19,356 (8.7 ) (19.6 ) 70,375 79,664 (11.7 )
 
Investment income/(loss)   (1,547 )   (5,096 )   (629 ) (69.6 ) 145.9     (6,788 )   683   N/M  
 
Net revenues 14,024 11,957 18,727 17.3 (25.1 ) 63,587 80,347 (20.9 )
 
Adjusted operating expenses (13)   11,547     12,095     13,124   (4.5 ) (12.0 )   49,304     51,582   (4.4 )
 
Adjusted segment pre-tax operating income/(loss) (13) $ 2,477   $ (138 ) $ 5,603   N/M   (55.8 )% $ 14,283   $ 28,765   (50.3 )%
 
Adjusted segment pre-tax operating margin (6) 17.7 % (1.2 )% 29.9 % 22.5 % 35.8 %
 
Adjusted segment pre-tax operating margin excluding investment income/(loss) * 25.8 % 29.1 % 32.2 % 29.9 % 35.3 %
 
Total
Adjusted net revenues (2) $ 195,096 $ 148,394 $ 148,394 31.5 % 31.5 % $ 663,108 $ 632,439 4.8 %
 
Adjusted operating expenses (12)   161,600     138,031     124,806   17.1   29.5     560,545     518,780   8.1  
 

Adjusted pre-tax operating income (5)

$ 33,496   $ 10,363   $ 23,588   223.2 % 42.0 % $ 102,563   $ 113,659   (9.8 )%
 
Adjusted pre-tax operating margin (6) 17.2 % 7.0 % 15.9 % 15.5 % 18.0 %
 

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     Twelve Months Ended
Dec. 31,     Sept. 30,     Dec. 31, Dec. 31,     Dec. 31,
(Amounts in thousands, except per share data) 2015 2015 2014 2015 2014
Net revenues:
Net revenues – U.S. GAAP basis $ 197,364 $ 149,617 $ 150,548 $ 672,918 $ 648,138
Adjustments:
Revenue related to noncontrolling interests (11)   (2,268 )   (1,223 )   (2,154 )   (9,810 )   (15,699 )
Adjusted net revenues $ 195,096   $ 148,394   $ 148,394   $ 663,108   $ 632,439  
 
Compensation and benefits:
Compensation and benefits – U.S. GAAP basis $ 126,190 $ 96,132 $ 93,765 $ 421,733 $ 394,510
Adjustments:
Compensation from acquisition-related agreements   (1,388 )   (690 )   (1,213 )   (4,233 )   (5,229 )
Adjusted compensation and benefits $ 124,802   $ 95,442   $ 92,552   $ 417,500   $ 389,281  
 
Non-compensation expenses:
Non-compensation expenses – U.S. GAAP basis $ 48,690 $ 46,697 $ 35,294 $ 164,762 $ 143,317
Adjustments:
Non-compensation expenses related to noncontrolling interests (11) (393 ) (839 ) (722 ) (3,403 ) (4,546 )
Restructuring and integration costs (9,156 ) (1,496 ) (10,652 )
Amortization of intangible assets related to acquisitions   (2,343 )   (1,773 )   (2,318 )   (7,662 )   (9,272 )
Adjusted non-compensation expenses $ 36,798   $ 42,589   $ 32,254   $ 143,045   $ 129,499  
 
Income before income tax expense:
Income before income tax expense – U.S. GAAP basis $ 22,484 $ 6,788 $ 21,489 $ 86,423 $ 110,311
Adjustments:
Revenue related to noncontrolling interests (11) (2,268 ) (1,223 ) (2,154 ) (9,810 ) (15,699 )
Expenses related to noncontrolling interests (11) 393 839 722 3,403 4,546
Compensation from acquisition-related agreements 1,388 690 1,213 4,233 5,229
Restructuring and integration costs 9,156 1,496 10,652
Amortization of intangible assets related to acquisitions   2,343     1,773     2,318     7,662     9,272  
Adjusted income before adjusted income tax expense $ 33,496   $ 10,363   $ 23,588   $ 102,563   $ 113,659  
 
Income tax expense:
Income tax expense – U.S. GAAP basis $ 7,336 $ 1,573 $ 7,514 $ 27,941 $ 35,986
Tax effect of adjustments:
Compensation from acquisition-related agreements 540 268 472 1,647 2,034
Restructuring and integration costs 3,562 582 4,144
Amortization of intangible assets related to acquisitions   911     690     902     2,981     3,525  
Adjusted income tax expense $ 12,349   $ 3,113   $ 8,888   $ 36,713   $ 41,545  
 
Net income applicable to Piper Jaffray Companies:
Net income applicable to Piper Jaffray Companies – U.S. GAAP basis $ 13,273 $ 4,831 $ 12,543 $ 52,075 $ 63,172
Adjustments:
Compensation from acquisition-related agreements 848 422 741 2,586 3,195
Restructuring and integration costs 5,594 914 6,508
Amortization of intangible assets related to acquisitions   1,432     1,083     1,416     4,681     5,747  
Adjusted net income $ 21,147   $ 7,250   $ 14,700   $ 65,850   $ 72,114  
 
Net income applicable to Piper Jaffray Companies' common shareholders:
Net income applicable to Piper Jaffray Companies' common stockholders – U.S. GAAP basis $ 12,147 $ 4,448 $ 11,700 $ 48,060 $ 58,141
Adjustments:
Compensation from acquisition-related agreements 776 389 691 2,387 2,941
Restructuring and integration costs 5,120 842 6,006
Amortization of intangible assets related to acquisitions   1,311     997     1,321     4,320     5,289  
Adjusted net income applicable to Piper Jaffray Companies' common stockholders $ 19,354   $ 6,676   $ 13,712   $ 60,773   $ 66,371  
 
Earnings per diluted common share:
Earnings per diluted common share – U.S. GAAP basis $ 0.88 $ 0.32 $ 0.77 $ 3.34 $ 3.87
Adjustments:
Compensation from acquisition-related agreements 0.06 0.03 0.05 0.17 0.20
Restructuring and integration costs 0.37 0.06 0.42
Amortization of intangible assets related to acquisitions   0.10     0.07     0.09     0.30     0.35  
Adjusted earnings per diluted common share $ 1.40   $ 0.48   $ 0.90   $ 4.22   $ 4.42  
 

This presentation includes non-GAAP measures. The non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP.

 

Piper Jaffray 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.

Source: Piper Jaffray Companies

Piper Jaffray Companies
Investor Relations:
Tom Smith, 612-303-6336