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8-K - 8-K - PIPER JAFFRAY COMPANIESa2014q28kearningsrelease.htm
Exhibit 99

Piper Jaffray Companies Announces
2014 Second Quarter Results

MINNEAPOLIS – July 24, 2014 – Piper Jaffray Companies (NYSE: PJC) today announced its financial results for the quarter ended June 30, 2014.
Financial Highlights
Adjusted net income from continuing operations(1) was $20.5 million, or $1.25 per diluted common share(1), in the second quarter of 2014, compared to $5.6 million, or $0.32 per diluted common share, in the second quarter of 2013, and $20.0 million, or $1.24 per diluted common share, in the first quarter of 2014.
Adjusted net revenues from continuing operations(1) were $166.7 million in the second quarter of 2014, compared to $102.0 million and $161.5 million in the second quarter of 2013 and the first quarter of 2014, respectively.
Equity financing revenues of $44.1 million in the second quarter of 2014 and $79.4 million in the first half of 2014 were both records. Also, the firm generated record advisory services revenues of $79.4 million in the first half of 2014.
Adjusted pre-tax operating margin(1) was 19.2% in the second quarter of 2014, compared to 7.8% and 19.3% in the second quarter of 2013 and the first quarter of 2014, respectively.
Assets under management increased to $12.6 billion at June 30, 2014, compared to $10.2 billion in the year-ago period and $11.5 billion at the end of the first quarter of 2014.
Rolling 12 month return on average common shareholders' equity increased to 9.2% at June 30, 2014, compared to 6.0% at June 30, 2013. Our rolling 12 month return on average tangible common shareholders' equity(2) improved to 13.9% at June 30, 2014.
Book value per share increased 9.8% from June 30, 2013 to $52.54 a share at June 30, 2014.
 
 Three Months Ended
 
 Percent Inc/(Dec)
 
Six Months Ended
 
 
 
June 30,
 
Mar. 31,
 
June 30,
 
2Q '14
 
2Q '14
 
June 30,
 
June 30,
 
 Percent
(Amounts in thousands, except per share data)
2014
 
2014
 
2013
 
vs. 1Q '14
 
vs. 2Q '13
 
2014
 
2013
 
Inc/(Dec)
As Adjusted(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues
$
166,698

 
$
161,497

 
$
102,012

 
3.2
%
 
63.4
%
 
$
328,195

 
$
208,735

 
57.2
%
Net income from continuing operations
$
20,494

 
$
20,035

 
$
5,570

 
2.3
%
 
267.9
%
 
$
40,529

 
$
17,448

 
132.3
%
Earnings per diluted common share from continuing operations
$
1.25

 
$
1.24

 
$
0.32

 
0.8
%
 
290.6
%
 
$
2.49

 
$
1.00

 
149.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. GAAP
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues
$
170,031

 
$
168,133

 
$
99,772

 
1.1
%
 
70.4
%
 
$
338,164

 
$
209,305

 
61.6
%
Net income from continuing operations
$
18,213

 
$
17,748

 
$
4,359

 
2.6
%
 
317.8
%
 
$
35,961

 
$
15,026

 
139.3
%
Earnings per diluted common share from continuing operations
$
1.11

 
$
1.10

 
$
0.25

 
0.9
%
 
344.0
%
 
$
2.21

 
$
0.86

 
157.0
%
Earnings per diluted common share
$
1.11

 
$
1.10

 
$
0.15

 
0.9
%
 
640.0
%
 
$
2.21

 
$
0.73

 
202.7
%
Pre-tax operating margin from continuing operations
17.9
%
 
19.5
%
 
3.3
%
 
 
 
 
 
18.7
%
 
10.3
%
 
 

(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.
1



For the second quarter of 2014, on a U.S. GAAP basis, net revenues from continuing operations were $170.0 million, and net income from continuing operations was $18.2 million, or $1.11 per diluted common share. “We are pleased to report very strong results for the second quarter,” said Andrew S. Duff, Chief Executive Officer and Chairman, “Our Asset Management and Investment Banking businesses led the way with strong relative performance in favorable market conditions.”
 
Second Quarter Results from Continuing Operations – Non-GAAP Basis
Throughout the Adjusted Consolidated Results and Business Segment Results sections of this press release the firm presents 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, and (3) compensation for acquisition-related agreements. 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 Results
For the second quarter of 2014, adjusted net revenues were $166.7 million, up 63% compared to $102.0 million in the second quarter of 2013 due to higher equity financing and advisory services revenues. Adjusted net revenues increased 3% percent compared to the first quarter of 2014.

For the second quarter of 2014, adjusted compensation and benefits expenses were $101.7 million, up 57% compared to the second quarter of 2013 due to improved financial results. Adjusted compensation and benefits expenses increased 3% compared to the first quarter of 2014.

For the second quarter of 2014, adjusted compensation and benefits expenses were 61.0% of adjusted net revenues, compared to 63.4% and 61.4% for the second quarter of 2013 and the first quarter of 2014, respectively. The adjusted compensation ratio decreased compared to both periods due to an increased revenue base.

Adjusted non-compensation expenses were $33.0 million for the second quarter of 2014, up 13% and 6% compared to the year-ago period and the first quarter of 2014, respectively. Adjusted non-compensation expenses were higher compared to the second quarter of 2013 due to the incremental costs associated with the two acquisitions we closed in the third quarter of the prior year, and increased compared to both periods due to higher litigation-related expenses.



2



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 Hong Kong capital markets business, which we shut down in 2012, and FAMCO, an asset management subsidiary sold in the second quarter of 2013, are presented as discontinued operations for all periods presented.
 
Capital Markets
For the quarter, Capital Markets generated adjusted pre-tax operating income of $23.1 million, compared to $0.6 million and $24.1 million in the second quarter of 2013 and first quarter of 2014, respectively.

Adjusted net revenues were $144.7 million, up 72% and 2% compared to the year-ago period and the first quarter of 2014, respectively.
Equity financing revenues of $44.1 million increased 102% and 25% compared to the second quarter of 2013 and the first quarter of 2014, respectively. Revenues were favorable compared to both periods due to more completed transactions and higher revenue per transaction.
Debt financing revenues were $20.2 million, down 9% compared to the year-ago period due to fewer completed transactions, and up 49% compared to the first quarter of 2014 due to more completed transactions.
Advisory services revenues were $39.7 million, up 323% compared to the second quarter of 2013 and essentially flat compared to the first quarter of 2014. Revenues increased compared to the year-ago period due to more completed transactions and higher revenue per transaction.
Equity institutional brokerage revenues of $18.4 million decreased 14% compared to the second quarter of 2013 due to lower client trading volumes. Revenues decreased 24% compared to the first quarter of 2014 due to lower client trading volumes, and the absence of block trades during the quarter.
Fixed income institutional brokerage revenues were $21.1 million, up 155% compared to the second quarter of 2013 due to trading losses on inventory positions in the year-ago period. In the second quarter of 2013, the fixed income market experienced a rapid increase in interest rates, a widening of credit spreads, and a volatile trading environment. These market dynamics in the year-ago period negatively impacted our inventory values which were not fully mitigated by our hedging strategies. Revenues were down 17% compared to the first quarter of 2014 due to lower trading gains and lower client trading volume.
Management and performance fees earned from managing our alternative asset management funds were $1.4 million, compared to $0.6 million and $1.7 million in the year-ago period and the sequential quarter, respectively. The increase compared to the second quarter of 2013 was due to higher performance fees.
Adjusted investment income, which includes gains and losses on our investments in the merchant banking fund and the municipal bond fund that we manage for third-party investors, and other firm investments, was $1.7 million, compared to $2.4 million in the year-ago period and $3.7 million in the first quarter of 2014. The decrease compared to the second quarter of 2013 was due to lower gains on our merchant banking investments, partially offset by higher gains on our investment in the municipal bond fund that we manage for third-party investors. Adjusted investment income decreased compared to the sequential quarter due primarily to lower gains on our merchant banking investments.


3



Long-term financing expenses, which primarily represents interest paid on the firm's variable rate senior notes, were $1.7 million, down 9% compared to the second quarter of 2013 and essentially flat with the first quarter of 2014.
Adjusted operating expenses for the second quarter of 2014 were $121.7 million, up 46% compared to the second quarter of 2013. The increase primarily resulted from higher compensation expenses due to improved operating results and business expansion. Compared to the first quarter of 2014, adjusted operating expenses increased 3%.
Adjusted segment pre-tax operating margin was 15.9% compared to 0.7% in the year-ago period and 17.0% in the first quarter of 2014. Adjusted pre-tax operating margin improved compared to the second quarter of 2013 due to higher net revenues and decreased compared to the sequential quarter due to higher non-compensation costs.

Asset Management
For the quarter ended June 30, 2014, Asset Management generated adjusted pre-tax operating income of $8.9 million, up 20% and 26% compared to the second quarter of 2013 and the first quarter of 2014, respectively.

Net revenues were $22.0 million, up 22% and 12% compared to the second quarter of 2013 and the first quarter of 2014, respectively. The increase compared to both periods was due to higher management fees from increased assets under management (AUM) driven by market appreciation, and higher investment income.
Adjusted operating expenses for the current quarter were $13.0 million, up 24% compared to the year-ago period due to higher compensation and non-compensation expenses. Compared to the first quarter of 2014, adjusted operating expenses increased by 3%.
Adjusted segment pre-tax operating margin was 40.7%, compared to 41.4% in the year-ago period and 36.0% in the first quarter of 2014. Adjusted segment pre-tax operating margin declined relative to the second quarter of 2013 due to higher non-compensation expenses, and improved from the sequential quarter due to a lower compensation ratio driven by higher net revenues.
AUM was $12.6 billion at the end of the second quarter of 2014, compared to $10.2 billion in the year-ago period and $11.5 billion at the end of the first quarter of 2014. Increases in AUM have been driven primarily by market appreciation.





4



Additional Shareholder Information*
 
For the Quarter Ended
 
June 30, 2014
 
Mar. 31, 2014
 
June 30, 2013
Full time employees
999
 
1,015
 
918
Equity financings
 
 
 
 
 
# of transactions
33
 
30
 
22
Capital raised
$9.2 billion
 
$5.3 billion
 
$5.0 billion
Negotiated tax-exempt issuances
 
 
 
 
 
 # of transactions
112
 
57
 
143
Par value
$2.4 billion
 
$1.6 billion
 
$2.9 billion
Mergers & acquisitions
 
 
 
 
 
# of transactions
15
 
16
 
4
Aggregate deal value
$3.5 billion
 
$2.5 billion
 
$0.2 billion
Asset Management
 
 
 
 
 
AUM
$12.6 billion
 
$11.5 billion
 
$10.2 billion
Common shareholders’ equity
$787.8 million
 
$767.5 million
 
$729.9 million
Number of common shares outstanding (in thousands)
14,995
 
14,916
 
15,261
Rolling 12 month return on average common shareholders’ equity **
9.2%
 
7.2%
 
6.0%
Rolling 12 month return on average tangible common shareholders’ equity †
13.9%
 
10.9%
 
9.0%
Book value per share
$52.54
 
$51.45
 
$47.83
Tangible book value per share ‡
$36.06
 
$34.81
 
$32.44
*
Number of employees, transaction data, and AUM reflect continuing operations; other numbers reflect continuing and discontinued results.
**
Rolling 12 month return on average common shareholders' equity is computed by dividing net income applicable to Piper Jaffray Companies' for the last 12 months by average monthly common shareholders' equity.
†    Rolling 12 month return on average tangible common shareholders' equity is computed by dividing net income applicable to Piper Jaffray Companies' for the last 12 months by average monthly common shareholders' equity less average goodwill and identifiable intangible assets. Management believes that the rolling 12 month return on average tangible common shareholders' equity is a meaningful measure of our return on tangible assets deployed in the business. Average common shareholders’ equity is the most directly comparable GAAP financial measure to average tangible shareholders’ equity. The following is a reconciliation of average common shareholders’ equity to average tangible common shareholders’ equity:    
 
As of
 
As of
 
As of
(Amounts in thousands)
June 30, 2014
 
Mar. 31, 2014
 
June 30, 2013
Average common shareholders’ equity
$
740,280

 
$
732,386

 
$
730,477

Deduct: average goodwill and identifiable intangible assets
249,096

 
246,867

 
242,794

 
 
 
 
 
 
Average tangible common shareholders’ equity
$
491,184

 
$
485,519

 
$
487,683



5



‡    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, 2014
 
Mar. 31, 2014
 
June 30, 2013
Common shareholders’ equity
$
787,848

 
$
767,454

 
$
729,880

Deduct: goodwill and identifiable intangible assets
247,172

 
248,246

 
234,780

 
 
 
 
 
 
Tangible common shareholders’ equity
$
540,676

 
$
519,208

 
$
495,100


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 Thur., July 24 at 9 a.m. ET (8 a.m. CT). The earnings release will be available on or after July 24 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 #63714190. 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 July 24 at the same Web address or by calling (855)859-2056 and referencing reservation #63714190.

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

Investor Relations Contact
Tom Smith
Tel: 612 303-6336
 
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 market positioning of and prospects for our public finance business, the environment and prospects for capital markets and corporate advisory transactions (including our performance in specific sectors), anticipated financial results generally (including expectations regarding our non-compensation expenses, compensation and benefits expense, compensation ratio, revenue levels, operating margins, earnings per share, effective tax rate, and return on equity), current deal pipelines (or backlogs), our strategic priorities (including growth in public finance, asset management, and corporate advisory), 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:

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;


6



interest rate volatility, especially if the changes are rapid or severe, could negatively impact our fixed income institutional business; 
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;
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 there is a decline in macroeconomic conditions or the financial markets, or if the terms of any transactions are modified;
our stock price may fluctuate as a result of several factors, including but not limited to, changes in our revenues and operating results.

A further listing and description of these and other risks, uncertainties and important factors can be found in the sections titled “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2013 and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2013, and updated in our subsequent reports filed with the SEC (available at our Web site at www.piperjaffray.com and at the SEC Web site at www.sec.gov).

Forward-looking statements speak only as of the date they are made, and readers are cautioned not to place undue reliance on them. We undertake no obligation to update them in light of new information or future events.

© 2014 Piper Jaffray Companies, 800 Nicollet Mall, Suite 1000, Minneapolis, Minnesota 55402-7020
###


7


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 '14
 
2Q '14
 
June 30,
 
June 30,
 
Percent
(Amounts in thousands, except per share data)
2014
 
2014
 
2013
 
vs. 1Q '14
 
vs. 2Q '13
 
2014
 
2013
 
Inc/(Dec)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment banking
$
103,813

 
$
88,474

 
$
53,255

 
17.3
 %
 
94.9
 %
 
$
192,287

 
$
94,076

 
104.4
 %
Institutional brokerage
34,528

 
44,034

 
24,611

 
(21.6
)
 
40.3

 
78,562

 
64,758

 
21.3

Asset management
22,266

 
20,959

 
18,427

 
6.2

 
20.8

 
43,225

 
36,883

 
17.2

Interest
12,448

 
13,659

 
12,286

 
(8.9
)
 
1.3

 
26,107

 
23,109

 
13.0

Investment income/(loss)
2,921

 
6,768

 
(2,059
)
 
(56.8
)
 
N/M

 
9,689

 
3,006

 
222.3

Total revenues
175,976

 
173,894

 
106,520

 
1.2

 
65.2

 
349,870

 
221,832

 
57.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
5,945

 
5,761

 
6,748

 
3.2

 
(11.9
)
 
11,706

 
12,527

 
(6.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues
170,031

 
168,133

 
99,772

 
1.1

 
70.4

 
338,164

 
209,305

 
61.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation and benefits
103,076

 
100,489

 
65,000

 
2.6

 
58.6

 
203,565

 
131,105

 
55.3

Occupancy and equipment
7,061

 
6,778

 
6,543

 
4.2

 
7.9

 
13,839

 
12,360

 
12.0

Communications
5,432

 
5,955

 
5,030

 
(8.8
)
 
8.0

 
11,387

 
10,262

 
11.0

Floor brokerage and clearance
1,788

 
1,834

 
2,247

 
(2.5
)
 
(20.4
)
 
3,622

 
4,397

 
(17.6
)
Marketing and business development
6,709

 
6,251

 
5,957

 
7.3

 
12.6

 
12,960

 
10,937

 
18.5

Outside services
9,914

 
8,768

 
8,449

 
13.1

 
17.3

 
18,682

 
15,663

 
19.3

Intangible asset amortization expense
2,318

 
2,318

 
1,661

 

 
39.6

 
4,636

 
3,322

 
39.6

Other operating expenses
3,316

 
3,027

 
1,552

 
9.5

 
113.7

 
6,343

 
(242
)
 
N/M

Total non-interest expenses
139,614

 
135,420

 
96,439

 
3.1

 
44.8

 
275,034

 
187,804

 
46.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations before income tax expense
30,417

 
32,713

 
3,333

 
(7.0
)
 
812.6

 
63,130

 
21,501

 
193.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense
10,049

 
9,827

 
1,644

 
2.3

 
511.3

 
19,876

 
7,244

 
174.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
20,368

 
22,886

 
1,689

 
(11.0
)
 
N/M

 
43,254

 
14,257

 
203.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Discontinued operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss from discontinued operations, net of tax

 

 
(1,871
)
 
N/M

 
N/M

 

 
(2,392
)
 
N/M

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income/(loss)
20,368

 
22,886

 
(182
)
 
(11.0
)
 
N/M

 
43,254

 
11,865

 
264.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income/(loss) applicable to noncontrolling interests
2,155

 
5,138

 
(2,670
)
 
(58.1
)
 
N/M

 
7,293

 
(769
)
 
N/M

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income applicable to Piper Jaffray Companies (a)
$
18,213

 
$
17,748

 
$
2,488

 
2.6
 %
 
632.0
 %
 
$
35,961

 
$
12,634

 
184.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income applicable to Piper Jaffray Companies’ common shareholders (a)
$
16,717

 
$
16,089

 
$
2,266

 
3.9
 %
 
637.7
 %
 
$
32,806

 
$
11,333

 
189.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Continued on next page


8



 
Three Months Ended
 
Percent Inc/(Dec)
 
Six Months Ended
 
 
 
June 30,
 
Mar. 31,
 
June 30,
 
2Q '14
 
2Q '14
 
June 30,
 
June 30,
 
Percent
(Amounts in thousands, except per share data)
2014
 
2014
 
2013
 
vs. 1Q '14
 
vs. 2Q '13
 
2014
 
2013
 
Inc/(Dec)
Amounts applicable to Piper Jaffray Companies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income from continuing operations
$
18,213

 
$
17,748

 
$
4,359

 
2.6
 %
 
317.8
 %
 
$
35,961

 
$
15,026

 
139.3
 %
Net loss from discontinued operations

 

 
(1,871
)
 
N/M

 
N/M

 

 
(2,392
)
 
N/M

Net income applicable to Piper Jaffray Companies
$
18,213

 
$
17,748

 
$
2,488

 
2.6
 %
 
632.0
 %
 
$
35,961

 
$
12,634

 
184.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings/(loss) per basic common share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
$
1.12

 
$
1.10

 
$
0.25

 
1.8
 %
 
348.0
 %
 
$
2.22

 
$
0.86

 
158.1
 %
Loss from discontinued operations

 

 
(0.11
)
 
N/M

 
N/M

 

 
(0.14
)
 
N/M

Earnings per basic common share
$
1.12

 
$
1.10

 
$
0.15

 
1.8
 %
 
646.7
 %
 
$
2.22

 
$
0.73

 
204.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings/(loss) per diluted common share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
$
1.11

 
$
1.10

 
$
0.25

 
0.9
 %
 
344.0
 %
 
$
2.21

 
$
0.86

 
157.0
 %
Loss from discontinued operations

 

 
(0.11
)
 
N/M

 
N/M

 

 
(0.14
)
 
N/M

Earnings per diluted common share
$
1.11

 
$
1.10

 
$
0.15

 
0.9
 %
 
640.0
 %
 
$
2.21

 
$
0.73

 
202.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
14,958

 
14,612

 
15,621

 
2.4
 %
 
(4.2
)%
 
14,786

 
15,602

 
(5.2
)%
Diluted
15,013

 
14,657

 
15,626

 
2.4
 %
 
(3.9
)%
 
14,836

 
15,619

 
(5.0
)%
(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


9


Piper Jaffray Companies
Preliminary Segment Data from Continuing Operations (U.S. GAAP – Unaudited)
 
Three Months Ended
 
Percent Inc/(Dec)
 
Six Months Ended
 
 
 
June 30,
 
Mar. 31,
 
June 30,
 
2Q '14
 
2Q '14
 
June 30,
 
June 30,
 
Percent
(Dollars in thousands)
2014
 
2014
 
2013
 
vs. 1Q '14
 
vs. 2Q '13
 
2014
 
2013
 
Inc/(Dec)
Capital Markets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment banking
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financing
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equities
$
44,058

 
$
35,301

 
$
21,772

 
24.8
 %
 
102.4
 %
 
$
79,359

 
$
36,075

 
120.0
 %
Debt
20,174

 
13,539

 
22,131

 
49.0

 
(8.8
)
 
33,713

 
39,163

 
(13.9
)
Advisory services
39,695

 
39,728

 
9,394

 
(0.1
)
 
322.6

 
79,423

 
18,950

 
319.1

Total investment banking
103,927

 
88,568

 
53,297

 
17.3

 
95.0

 
192,495

 
94,188

 
104.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Institutional sales and trading
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equities
18,366

 
24,260

 
21,384

 
(24.3
)
 
(14.1
)
 
42,626

 
42,119

 
1.2

Fixed income
21,085

 
25,238

 
8,261

 
(16.5
)
 
155.2

 
46,323

 
32,649

 
41.9

Total institutional sales and trading
39,451

 
49,498

 
29,645

 
(20.3
)
 
33.1

 
88,949

 
74,768

 
19.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Management and performance fees
1,388

 
1,737

 
564

 
(20.1
)
 
146.1

 
3,125

 
1,583

 
97.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment income
4,998

 
10,378

 
184

 
(51.8
)
 
N/M

 
15,376

 
6,321

 
143.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term financing expenses
(1,705
)
 
(1,740
)
 
(1,872
)
 
(2.0
)
 
(8.9
)
 
(3,445
)
 
(3,821
)
 
(9.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues
148,059

 
148,441

 
81,818

 
(0.3
)
 
81.0

 
296,500

 
173,039

 
71.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
124,691

 
120,930

 
83,937

 
3.1

 
48.6

 
245,621

 
162,395

 
51.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment pre-tax operating income/(loss)
$
23,368

 
$
27,511

 
$
(2,119
)
 
(15.1
)%
 
N/M

 
$
50,879

 
$
10,644

 
378.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment pre-tax operating margin
15.8
%
 
18.5
%
 
(2.6
)%
 
 
 
 
 
17.2
%
 
6.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset Management
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Management and performance fees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Management fees
$
20,600

 
$
19,136

 
$
17,558

 
7.7
 %
 
17.3
 %
 
$
39,736

 
$
34,644

 
14.7
 %
Performance fees
278

 
86

 
305

 
223.3

 
(8.9
)
 
364

 
656

 
(44.5
)
Total management and performance fees
20,878

 
19,222

 
17,863

 
8.6

 
16.9

 
40,100

 
35,300

 
13.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment income
1,094

 
470

 
91

 
132.8

 
N/M

 
1,564

 
966

 
61.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues
21,972

 
19,692

 
17,954

 
11.6

 
22.4

 
41,664

 
36,266

 
14.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
14,923

 
14,490

 
12,502

 
3.0

 
19.4

 
29,413

 
25,409

 
15.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment pre-tax operating income
$
7,049

 
$
5,202

 
$
5,452

 
35.5
 %
 
29.3
 %
 
$
12,251

 
$
10,857

 
12.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment pre-tax operating margin
32.1
%
 
26.4
%
 
30.4
 %
 
 
 
 
 
29.4
%
 
29.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues
$
170,031

 
$
168,133

 
$
99,772

 
1.1
 %
 
70.4
 %
 
$
338,164

 
$
209,305

 
61.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
139,614

 
135,420

 
96,439

 
3.1

 
44.8

 
275,034

 
187,804

 
46.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax operating income
$
30,417

 
$
32,713

 
$
3,333

 
(7.0
)%
 
812.6
 %
 
$
63,130

 
$
21,501

 
193.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax operating margin
17.9
%
 
19.5
%
 
3.3
 %
 
 
 
 
 
18.7
%
 
10.3
%
 
 
Segment pre-tax operating income and segment pre-tax operation margin exclude the results of discontinued operations.


10


Piper Jaffray Companies
Preliminary Selected Summary Financial Information from Continuing Operations (Non-GAAP – Unaudited) (1)
 
Three Months Ended
 
Percent Inc/(Dec)
 
Six Months Ended
 
 
 
June 30,
 
Mar. 31,
 
June 30,
 
2Q '14
 
2Q '14
 
June 30,
 
June 30,
 
Percent
(Amounts in thousands, except per share data)
2014
 
2014
 
2013
 
vs. 1Q '14
 
vs. 2Q '13
 
2014
 
2013
 
Inc/(Dec)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment banking
$
103,813

 
$
88,474

 
$
53,255

 
17.3
 %
 
94.9
 %
 
$
192,287

 
$
94,076

 
104.4
 %
Institutional brokerage
34,528

 
44,034

 
24,611

 
(21.6
)
 
40.3

 
78,562

 
64,758

 
21.3

Asset management
22,266

 
20,959

 
18,427

 
6.2

 
20.8

 
43,225

 
36,883

 
17.2

Interest
9,451

 
10,356

 
10,019

 
(8.7
)
 
(5.7
)
 
19,807

 
19,287

 
2.7

Investment income
1,666

 
2,581

 
1,500

 
(35.5
)
 
11.1

 
4,247

 
4,712

 
(9.9
)
Total revenues
171,724

 
166,404

 
107,812

 
3.2

 
59.3

 
338,128

 
219,716

 
53.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
5,026

 
4,907

 
5,800

 
2.4

 
(13.3
)
 
9,933

 
10,981

 
(9.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted net revenues (2)
$
166,698

 
$
161,497

 
$
102,012

 
3.2
 %
 
63.4
 %
 
$
328,195

 
$
208,735

 
57.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest expenses:


 


 


 


 


 


 


 


Adjusted compensation and benefits (3)
$
101,660

 
$
99,200

 
$
64,679

 
2.5
 %
 
57.2
 %
 
$
200,860

 
$
130,463

 
54.0
 %
Ratio of adjusted compensation and benefits to adjusted net revenues
61.0
%
 
61.4
%
 
63.4
%
 
 
 
 
 
61.2
%
 
62.5
%
 
 
 
 
 
 
 
 
 


 


 
 
 
 
 


Adjusted non-compensation expenses (4)
$
33,042

 
$
31,115

 
$
29,348

 
6.2
 %
 
12.6
 %
 
$
64,157

 
$
52,038

 
23.3
 %
Ratio of adjusted non-compensation expenses to adjusted net revenues
19.8
%
 
19.3
%
 
28.8
%
 
 
 
 
 
19.5
%
 
24.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted income from continuing operations before adjusted income tax expense (5)
$
31,996

 
$
31,182

 
$
7,985

 
2.6
 %
 
300.7
 %
 
$
63,178

 
$
26,234

 
140.8
 %
Adjusted operating margin (6)
19.2
%
 
19.3
%
 
7.8
%
 
 
 
 
 
19.3
%
 
12.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted income tax expense (7)
11,502

 
11,147

 
2,415

 
3.2

 
376.3

 
22,649

 
8,786

 
157.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted net income from continuing operations (8)
$
20,494

 
$
20,035

 
$
5,570

 
2.3
 %
 
267.9
 %
 
$
40,529

 
$
17,448

 
132.3
 %
Effective tax rate (9)
35.9
%
 
35.7
%
 
30.2
%
 
 
 
 
 
35.8
%
 
33.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted net income from continuing operations applicable to Piper Jaffray Companies’ common shareholders (10)
$
18,811

 
$
18,162

 
$
5,073

 
3.6
 %
 
270.8
 %
 
$
36,973

 
$
15,652

 
136.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted earnings per diluted common share from continuing operations
$
1.25

 
$
1.24

 
$
0.32

 
0.8
 %
 
290.6
 %
 
$
2.49

 
$
1.00

 
149.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted
15,013

 
14,657

 
15,626

 
2.4
 %
 
(3.9
)%
 
14,836

 
15,619

 
(5.0
)%
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."


11


Piper Jaffray Companies
Preliminary Adjusted Segment Data from Continuing Operations (Non-GAAP – Unaudited)
 
Three Months Ended
 
Percent Inc/(Dec)
 
Six Months Ended
 
 
 
June 30,
 
Mar. 31,
 
June 30,
 
2Q '14
 
2Q '14
 
June 30,
 
June 30,
 
Percent
(Dollars in thousands)
2014
 
2014
 
2013
 
vs. 1Q '14
 
vs. 2Q '13
 
2014
 
2013
 
Inc/(Dec)
Capital Markets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment banking
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financing
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equities
$
44,058

 
$
35,301

 
$
21,772

 
24.8
 %
 
102.4
 %
 
$
79,359

 
$
36,075

 
120.0
 %
Debt
20,174

 
13,539

 
22,131

 
49.0

 
(8.8
)
 
33,713

 
39,163

 
(13.9
)
Advisory services
39,695

 
39,728

 
9,394

 
(0.1
)
 
322.6

 
79,423

 
18,950

 
319.1

Total investment banking
103,927

 
88,568

 
53,297

 
17.3

 
95.0

 
192,495

 
94,188

 
104.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Institutional sales and trading
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equities
18,366

 
24,260

 
21,384

 
(24.3
)
 
(14.1
)
 
42,626

 
42,119

 
1.2

Fixed income
21,085

 
25,238

 
8,261

 
(16.5
)
 
155.2

 
46,323

 
32,649

 
41.9

Total institutional sales and trading
39,451

 
49,498

 
29,645

 
(20.3
)
 
33.1

 
88,949

 
74,768

 
19.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Management and performance fees
1,388

 
1,737

 
564

 
(20.1
)
 
146.1

 
3,125

 
1,583

 
97.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment income
1,665

 
3,742

 
2,424

 
(55.5
)
 
(31.3
)
 
5,407

 
5,751

 
(6.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term financing expenses
(1,705
)
 
(1,740
)
 
(1,872
)
 
(2.0
)
 
(8.9
)
 
(3,445
)
 
(3,821
)