Piper Jaffray Companies Announces 2013 First Quarter Results
For the first quarter of 2013, net revenues from continuing operations
were
For the quarter ended
“We produced solid results this quarter led by our public finance, fixed
income and asset management businesses,” said
First Quarter Results from Continuing Operations
Consolidated Expenses
For the first quarter of 2013,
compensation and benefits expenses were
For the first quarter of 2013, compensation and benefits expenses were 60.4% of net revenues, compared to 60.6% and 62.0% for the first and fourth quarters of 2012, respectively.
Non-compensation expenses were
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
operating results of our
Capital Markets
For the quarter, Capital Markets generated
pre-tax operating income of
Net revenues were
-
Equity financing revenues of
$14.3 million decreased 38% and 21% compared to the first and fourth quarters of 2012, respectively. Revenues were down compared to both periods due to lower revenue per transaction. -
Fixed income financing revenues of
$17.0 million increased 15% compared to the year-ago period and decreased 17% compared to fourth quarter of 2012. Revenues were favorable compared to the year-ago period due to higher revenue per transaction, and lower compared to the fourth quarter of 2012 due to fewer completed transactions. -
Advisory services revenues were
$9.6 million , down 11% and 79% compared to the first and fourth quarters of 2012, respectively, due to fewer completed transactions. Advisory services revenues were very strong in the fourth quarter of 2012 as sellers were motivated to complete deals prior to year-end, which resulted in less activity in early 2013. -
Equity institutional brokerage revenues of
$20.7 million were in line with the first quarter of 2012 and up 3% compared to the fourth quarter of 2012. -
Fixed income institutional brokerage revenues were
$28.0 million , down slightly compared to the first quarter of 2012 and up 19% compared to the fourth quarter of 2012. Revenues were favorable compared to the fourth quarter of 2012 due to increased results from the firm’s strategic trading businesses and the expansion of our middle market sales group. -
Operating expenses for the first quarter were
$78.5 million , down 9% compared to the prior year quarter, primarily due to lower non-compensation expenses. Compared to the fourth quarter of 2012, operating expenses decreased 25% due to lower compensation and non-compensation expenses. - For the first quarter of 2013, the capital markets segment pre-tax operating margin was 14.0%, compared to 11.1% in the year-ago period, and a 15.6% operating margin in the fourth quarter of 2012. Pre-tax operating margin in the current quarter was higher compared to the year-ago period due to lower operating expenses, and less than the fourth quarter of 2012 due to lower revenues.
Asset Management
For the quarter ended
Net revenues were
-
Operating expenses for the current quarter were
$12.9 million , up 6% compared to the year-ago period and essentially flat with the fourth quarter of 2012. Segment pre-tax operating margin was 29.6%, compared to 26.9% in the year-ago period and 20.6% in the fourth quarter of 2012. Segment pre-tax margin improved relative to the comparable quarters due to higher revenues. -
Assets under management were
$10.2 billion in the first quarter of 2013, compared to$9.1 billion in the year-ago period and the fourth quarter of 2012. Compared to the sequential fourth quarter, the increase in AUM was attributable to the market appreciation of client assets.
Other Matters
In the first quarter of 2013, the firm
acquired
First Quarter Results from Discontinued Operations
Discontinued operations includes the operating results of our
For the quarter ended
|
Additional Shareholder Information* |
|||||||||
| For the Quarter Ended: | |||||||||
| Mar. 31, 2013 | Dec. 31, 2012 | Mar. 31, 2012 | |||||||
| Number of employees | 911 | 907 | 915 | ||||||
| Equity financings | |||||||||
| # of transactions | 17 | 16 | 22 | ||||||
| Capital raised | $6.2 billion | $1.5 billion | $3.4 billion | ||||||
| Tax-exempt issuance | |||||||||
| # of transactions | 152 | 154 | 139 | ||||||
| Par value | $2.5 billion | $2.1 billion | $2.3 billion | ||||||
| Mergers & acquisitions | |||||||||
| # of transactions | 3 | 22 | 5 | ||||||
| Aggregate deal value | $0.5 billion | $6.8 billion | $0.7 billion | ||||||
| Asset Management AUM | $10.2 billion |
$9.1 billion |
$9.1 billion | ||||||
| Common shareholders’ equity | $752.4 million | $733.3 million | $721.8 million | ||||||
| Annualized qtrly. return on avg. common shareholders’ equity ** | 5.5% |
6.5% |
1.6% |
||||||
| Book value per share: | $47.02 | $48.20 | $44.15 | ||||||
| Tangible book value per share(1): |
$32.10 |
$32.39 |
$28.75 |
||||||
| *Number of employees, transaction data, and AUM reflect continuing operations; other numbers reflect continuing and discontinued results. | |||||||||
| **Annualized return on average common shareholders’ equity is computed by dividing annualized net income by average monthly common shareholders’ equity. | |||||||||
Conference Call
About
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, the environment and
prospects for capital markets transactions (including corporate advisory
transactions), anticipated financial results from strategic trading
activities within fixed income institutional brokerage, the closing of
the sale of the FAMCO division of our asset management business,
anticipated financial results generally (including expectations
regarding our compensation ratio, revenue levels, operating margins,
earnings per share, and return on equity), current deal pipelines (or
backlogs), our strategic priorities (including growth in public finance,
asset management, and corporate advisory), or other similar matters.
These 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, including (1) market and economic conditions or developments
may be unfavorable, including in specific sectors in which we operate,
and these conditions or developments, such as market fluctuations or
volatility, may adversely affect our business, revenue levels and
profitability, (2) the volume of anticipated investment banking
transactions as reflected in our deal pipelines (and the net revenues we
earn from such transactions) may differ from expected results if any
transactions are delayed or not completed at all or if the terms of any
transactions are modified, (3) strategic trading activities comprise a
meaningful portion of our fixed income institutional brokerage revenue,
and results from these activities may be volatile and vary
significantly, including the possibility of incurring losses, on a
quarterly and annual basis, (4) our ability to manage expenses may be
limited by the fixed nature of certain expenses as well as the impact
from unanticipated expenses, (5) the sale of the FAMCO business may not
close, or could cause us to incur unforeseen expenses and have
disruptive effects on our business, (6) we may not be able to compete
successfully with other companies in the financial services industry,
which may impact our ability to achieve our growth priorities and
objectives, (7) our stock price may fluctuate as a result of several
factors, including but not limited to, changes in our revenues and
operating results, and (8) the other factors described under “Risk
Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the
year ended December 31, 2012 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, 2012, and
updated in our subsequent reports filed with the
© 2013
| Piper Jaffray Companies | ||||||||||||||||||||
| Preliminary Unaudited Results of Operations | ||||||||||||||||||||
| Three Months Ended | Percent Inc/(Dec) | |||||||||||||||||||
|
(Amounts in thousands, except per share data) |
Mar. 31, | Dec. 31, | Mar. 31, | 1Q '13 | 1Q '13 | |||||||||||||||
|
2013 |
2012 |
2012 |
vs. 4Q '12 |
vs. 1Q '12 |
||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Investment banking | $ | 40,362 | $ | 82,393 | $ | 48,085 | (51.0 | ) | % | (16.1 | ) | % | ||||||||
| Institutional brokerage | 43,260 | 38,017 | 44,080 | 13.8 | (1.9 | ) | ||||||||||||||
| Asset management | 18,211 | 16,516 | 16,533 | 10.3 | 10.1 | |||||||||||||||
| Interest | 13,363 | 13,102 | 11,146 | 2.0 | 19.9 | |||||||||||||||
| Other income/(loss) | 2,953 | (11 | ) | 28 | N/M | N/M | ||||||||||||||
| Total revenues | 118,149 | 150,017 | 119,872 | (21.2 | ) | (1.4 | ) | |||||||||||||
| Interest expense | 8,616 | 9,106 | 6,434 | (5.4 | ) | 33.9 | ||||||||||||||
| Net revenues | 109,533 | 140,911 | 113,438 | (22.3 | ) | (3.4 | ) | |||||||||||||
| Non-interest expenses: | ||||||||||||||||||||
| Compensation and benefits | 66,105 | 87,415 | 68,796 | (24.4 | ) | (3.9 | ) | |||||||||||||
| Occupancy and equipment | 5,817 | 6,783 | 6,862 | (14.2 | ) | (15.2 | ) | |||||||||||||
| Communications | 5,232 | 4,431 | 5,897 | 18.1 | (11.3 | ) | ||||||||||||||
| Floor brokerage and clearance | 2,150 | 2,120 | 2,107 | 1.4 | 2.0 | |||||||||||||||
| Marketing and business development | 4,980 | 4,926 | 4,878 | 1.1 | 2.1 | |||||||||||||||
| Outside services | 7,214 | 8,188 | 5,838 | (11.9 | ) | 23.6 | ||||||||||||||
| Intangible asset amortization expense | 1,661 | 1,736 | 1,736 | (4.3 | ) | (4.3 | ) | |||||||||||||
| Other operating expenses | (1,794 | ) | 2,530 | 2,102 | N/M | N/M | ||||||||||||||
| Total non-interest expenses | 91,365 | 118,129 | 98,216 | (22.7 | ) | (7.0 | ) | |||||||||||||
|
Income from continuing operations before income tax expense |
18,168 | 22,782 | 15,222 | (20.3 | ) | 19.4 | ||||||||||||||
| Income tax expense | 5,600 | 7,422 | 7,553 | (24.5 | ) | (25.9 | ) | |||||||||||||
| Income from continuing operations | 12,568 | 15,360 | 7,669 | (18.2 | ) | 63.9 | ||||||||||||||
| Discontinued operations: | ||||||||||||||||||||
| Loss from discontinued operations, net of tax | (521 | ) | (3,741 | ) | (3,303 | ) | (86.1 | ) | (84.2 | ) | ||||||||||
| Net income | 12,047 | 11,619 | 4,366 | 3.7 | 175.9 | |||||||||||||||
| Net income/(loss) applicable to noncontrolling interests | 1,901 | (205 | ) | 1,437 | N/M | 32.3 | ||||||||||||||
|
Net income applicable to Piper Jaffray Companies (1) |
$ | 10,146 | $ | 11,824 | $ | 2,929 | (14.2 | ) | % | 246.4 | % | |||||||||
|
|
||||||||||||||||||||
|
Net income applicable to Piper Jaffray Companies' common shareholders (1) |
$ | 8,966 | $ | 10,198 | $ | 2,480 | (12.1 | ) | % | 261.5 | % | |||||||||
| Amounts applicable to Piper Jaffray Companies | ||||||||||||||||||||
| Income from continuing operations | $ | 10,667 | $ | 15,565 | $ | 6,232 | (31.5 | ) | % | 71.2 | % | |||||||||
| Loss from discontinued operations, net of tax | (521 | ) | (3,741 | ) | (3,303 | ) | (86.1 | ) | (84.2 | ) | ||||||||||
| Net income applicable to Piper Jaffray Companies | $ | 10,146 | $ | 11,824 | $ | 2,929 | (14.2 | ) | % | 246.4 | % | |||||||||
| Earnings/(loss) per basic common share | ||||||||||||||||||||
| Income from continuing operations | $ | 0.60 | $ | 0.88 | $ | 0.33 | (31.8 | ) | % | 81.8 | % | |||||||||
| Loss from discontinued operations | (0.03 | ) | (0.21 | ) | (0.17 | ) | (85.7 | ) | (82.4 | ) | ||||||||||
| Earnings per basic common share | $ | 0.58 | $ | 0.67 | $ | 0.15 | (13.4 | ) | % | 286.7 | % | |||||||||
| Earnings/(loss) per diluted common share | ||||||||||||||||||||
| Income from continuing operations | $ | 0.60 | $ | 0.88 | $ | 0.33 | (31.8 | ) | % | 81.8 | % | |||||||||
| Loss from discontinued operations | (0.03 | ) | (0.21 | ) | (0.17 | ) | (85.7 | ) | (82.4 | ) | ||||||||||
| Earnings per diluted common share | $ | 0.57 | $ | 0.67 | $ | 0.15 | (14.9 | ) | % | 280.0 | % | |||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||||||
| Basic | 15,582 | 15,253 | 16,072 | 2.2 | % | (3.0 | ) | % | ||||||||||||
| Diluted | 15,610 | 15,256 | 16,072 | 2.3 | % | (2.9 | ) | % | ||||||||||||
| (1) 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 Unaudited Segment Data from Continuing Operations | ||||||||||||||||||||
| Three Months Ended | Percent Inc/(Dec) | |||||||||||||||||||
|
(Dollars in thousands) |
Mar. 31, | Dec. 31, | Mar. 31, | 1Q '13 | 1Q '13 | |||||||||||||||
| 2013 | 2012 | 2012 | vs. 4Q '12 | vs. 1Q '12 | ||||||||||||||||
| Capital Markets | ||||||||||||||||||||
| Investment banking | ||||||||||||||||||||
| Financing | ||||||||||||||||||||
| Equities | $ | 14,303 | $ | 18,039 | $ | 23,228 | (20.7 | ) | % | (38.4 | ) | % | ||||||||
| Debt | 17,032 | 20,504 | 14,769 | (16.9 | ) | 15.3 | ||||||||||||||
| Advisory services | 9,556 | 44,495 | 10,722 | (78.5 | ) | (10.9 | ) | |||||||||||||
| Total investment banking | 40,891 | 83,038 | 48,719 | (50.8 | ) | (16.1 | ) | |||||||||||||
| Institutional sales and trading | ||||||||||||||||||||
| Equities | 20,735 | 20,134 | 20,980 | 3.0 | (1.2 | ) | ||||||||||||||
| Fixed income | 28,043 | 23,480 | 28,463 | 19.4 | (1.5 | ) | ||||||||||||||
| Total institutional sales and trading | 48,778 | 43,614 | 49,443 | 11.8 | (1.3 | ) | ||||||||||||||
| Other income/(loss) | 1,540 | (2,144 | ) | (1,367 | ) | N/M | N/M | |||||||||||||
| Net revenues | 91,209 | 124,508 | 96,795 | (26.7 | ) | (5.8 | ) | |||||||||||||
| Operating expenses | 78,458 | 105,099 | 86,055 | (25.3 | ) | (8.8 | ) | |||||||||||||
| Segment pre-tax operating income | $ | 12,751 | $ | 19,409 | $ | 10,740 | (34.3 | ) | % | 18.7 | % | |||||||||
| Segment pre-tax operating margin | 14.0 | % | 15.6 | % | 11.1 | % | ||||||||||||||
| Asset Management | ||||||||||||||||||||
| Management and performance fees | ||||||||||||||||||||
| Management fees | $ | 17,098 | $ | 16,083 | $ | 15,849 | 6.3 | % | 7.9 | % | ||||||||||
| Performance fees | 351 | 121 | 424 | 190.1 | (17.2 | ) | ||||||||||||||
| Total management and performance fees | 17,449 | 16,204 | 16,273 | 7.7 | 7.2 | |||||||||||||||
| Other income | 875 | 199 | 370 | 339.7 | 136.5 | |||||||||||||||
| Net revenues | 18,324 | 16,403 | 16,643 | 11.7 | 10.1 | |||||||||||||||
| Operating expenses | 12,907 | 13,030 | 12,161 | (0.9 | ) | 6.1 | ||||||||||||||
| Segment pre-tax operating income | $ | 5,417 | $ | 3,373 | $ | 4,482 | 60.6 | % | 20.9 | % | ||||||||||
| Segment pre-tax operating margin | 29.6 | % | 20.6 | % | 26.9 | % | ||||||||||||||
| Total | ||||||||||||||||||||
| Net revenues | $ | 109,533 | $ | 140,911 | $ | 113,438 | (22.3 | ) | % | (3.4 | ) | % | ||||||||
| Operating expenses | 91,365 | 118,129 | 98,216 | (22.7 | ) | (7.0 | ) | |||||||||||||
| Total segment pre-tax operating income | $ | 18,168 | $ | 22,782 | $ | 15,222 | (20.3 | ) | % | 19.4 | % | |||||||||
| Pre-tax operating margin | 16.6 | % | 16.2 | % | 13.4 | % | ||||||||||||||
| N/M - Not meaningful | ||||||||||||||||||||
| Segment pre-tax operating income and segment pre-tax operating margin exclude the results of discontinued operations. | ||||||||||||||||||||
| FOOTNOTES | ||||||||||||||
| (1) | Tangible common shareholders' equity | |||||||||||||
| Tangible shareholders’ equity equals total shareholders’ equity less all goodwill and identifiable intangible assets. Tangible book value per share is computed by dividing tangible shareholders’ equity by common shares outstanding. Management believes that tangible book value per share is a more meaningful measure of our book value per share. 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) | Mar. 31, 2013 | Dec. 31, 2012 | Mar. 31, 2012 | |||||||||||
| Common shareholders' equity | $ | 752,434 | $ | 733,292 | $ | 721,779 | ||||||||
|
Deduct: goodwill and identifiable intangible assets |
238,819 | 240,480 | 251,739 | |||||||||||
| Tangible common shareholders' equity | $ | 513,615 | $ | 492,812 | $ | 470,040 | ||||||||
Source:
Piper Jaffray Companies
Tom Smith, 612-303-6336
Investor
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