October 16, 2013 | ||||
Date of report (Date of earliest event reported) |
PIPER JAFFRAY COMPANIES | ||||
(Exact Name of Registrant as Specified in its Charter) |
Delaware | 1-31720 | 30-0168701 | ||||||
(State of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||
800 Nicollet Mall, Suite 1000 | ||||||||
Minneapolis, Minnesota | 55402 | |||||||
(Address of Principal Executive Offices) | (Zip Code) | |||||||
(612) 303-6000 | ||||||||
(Registrant’s Telephone Number, Including Area Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(d) | Exhibit |
PIPER JAFFRAY COMPANIES | ||||
Date: | October 16, 2013 | By | /s/ Debbra L. Schoneman | |
Debbra L. Schoneman | ||||
Chief Financial Officer |
No. | Description | Manner of Filing | ||
99 | Press Release dated October 16, 2013 | Filed Electronically |
Piper Jaffray Companies, 800 Nicollet Mall, Minneapolis, MN 55402-7020 | ||
C O N T A C T | ||
Tom Smith | ||
Investor Relations | ||
Tel: 612 303-6336 |
• | Equity financing revenues of $30.0 million increased 60% and 38% compared to the third quarter of 2012 and the second quarter of 2013, respectively. Revenues were up compared to both periods due to more completed transactions. |
• | Fixed income financing revenues of $12.8 million were down 23% and 42% compared to the year-ago period and second quarter of 2013, respectively. Revenues were unfavorable compared to both periods due to fewer completed transactions. |
• | Advisory services revenues were $20.2 million, up 24% and 115% compared to the third quarter of 2012 and the second quarter of 2013, respectively, due to more completed transactions. |
• | Equity institutional brokerage revenues of $23.0 million increased 28% and 7% compared to the third quarter of 2012 and the second quarter of 2013, respectively. Revenues increased compared to both periods due to improved trading performance. |
• | Fixed income institutional brokerage revenues were $20.4 million, down 56% compared to the third quarter of 2012. Results from the firm's strategic trading business, particularly in the mortgage-backed securities strategy, were lower in the current quarter compared to the robust year-ago period. Fixed income institutional brokerage rebounded significantly in the current quarter compared to revenues of $5.0 million in the second quarter of 2013 as we overcame the rate shocks we experienced late in the second quarter of 2013. |
• | Operating expenses for the third quarter were $103.9 million, up 10% compared to the prior year quarter, due to higher non-compensation expenses. Operating expenses increased 24% compared to the second quarter of 2013, resulting from higher compensation expenses due to improved operating results as well as higher non-compensation expenses. The non-compensation expenses were higher primarily due to $5.0 million of restructuring and intangible amortization expenses related to our recent acquisitions of Seattle-Northwest and Edgeview. |
• | Segment pre-tax operating margin was 5.8% compared to 17.9% in the year-ago period and a negative 2.6% in the second quarter of 2013. Pre-tax operating margin in the current quarter was lower compared to the year-ago period due to lower net revenues and higher non-compensation expenses. Pre-tax operating margin improved compared to the sequential quarter due to higher net revenues, offset in part by higher non-compensation expenses. |
• | Operating expenses for the current quarter were $12.3 million, up 8% compared to the year-ago period and down slightly compared with the second quarter of 2013. Segment pre-tax operating margin was 31.6%, compared to 29.4% in the year-ago period and 30.4% in the second quarter of 2013. Segment pre-tax margin improved relative to both periods due to higher net revenues. |
• | Assets under management were $10.6 billion at the end of the third quarter of 2013, compared to $9.2 billion in the year-ago period and $10.2 billion at the end of the second quarter of 2013. Increases in AUM have been driven by market appreciation. |
For the Quarter Ended: | ||||||
Sept. 30, 2013 | June 30, 2013 | Sept. 30, 2012 | ||||
Full time employees | 1,002 | 918 | 903 | |||
Equity financings | ||||||
# of transactions | 28 | 22 | 14 | |||
Capital raised | $4.8 billion | $5.0 billion | $2.5 billion | |||
Negotiated tax-exempt issuances | ||||||
# of transactions | 61 | 143 | 76 | |||
Par value | $1.3 billion | $2.9 billion | $1.6 billion | |||
Mergers & acquisitions | ||||||
# of transactions | 11 | 4 | 6 | |||
Aggregate deal value | $1.0 billion | $0.2 billion | $0.7 billion | |||
Asset Management | ||||||
AUM | $10.6 billion | $10.2 billion | $9.2 billion | |||
Common shareholders’ equity | $707.4 million | $729.9 million | $724.6 million | |||
Annualized quarterly return on common shareholders’ equity** | 3.0% | 1.3% | 11.0% | |||
Book value per share: | $49.11 | $47.83 | $47.58 | |||
Tangible book value per share(1): | $31.56 | $32.44 | $31.30 |
• | 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; |
• | further interest rate volatility, especially if the changes continue to be rapid or severe, could continue to 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; |
• | the expected benefits of the Seattle-Northwest and Edgeview transactions may take longer than anticipated to achieve and may not be achieved in their entirety or at all, and will depend upon our integration of the companies proving successful; and |
• | our stock price may fluctuate as a result of several factors, including but not limited to, changes in our revenues and operating results. |
Three Months Ended | Percent Inc/(Dec) | Nine Months Ended | ||||||||||||||||||||||||||
Sept. 30, | June 30, | Sept. 30, | 3Q '13 | 3Q '13 | Sept. 30, | Sept. 30, | Percent | |||||||||||||||||||||
(Amounts in thousands, except per share data) | 2013 | 2013 | 2012 | vs. 2Q '13 | vs. 3Q '12 | 2013 | 2012 | Inc/(Dec) | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Investment banking | $ | 62,373 | $ | 52,846 | $ | 51,083 | 18.0 | % | 22.1 | % | $ | 155,581 | $ | 148,536 | 4.7 | % | ||||||||||||
Institutional brokerage | 37,218 | 20,560 | 58,719 | 81.0 | (36.6 | ) | 101,038 | 134,006 | (24.6 | ) | ||||||||||||||||||
Asset management | 18,309 | 18,031 | 16,136 | 1.5 | 13.5 | 54,551 | 48,699 | 12.0 | ||||||||||||||||||||
Interest | 16,259 | 14,360 | 12,457 | 13.2 | 30.5 | 43,982 | 35,742 | 23.1 | ||||||||||||||||||||
Other income | 4,679 | 3,310 | 235 | 41.4 | N/M | 10,942 | 1,242 | 781.0 | ||||||||||||||||||||
Total revenues | 138,838 | 109,107 | 138,630 | 27.2 | 0.2 | 366,094 | 368,225 | (0.6 | ) | |||||||||||||||||||
Interest expense | 10,524 | 9,335 | 7,125 | 12.7 | 47.7 | 28,475 | 20,184 | 41.1 | ||||||||||||||||||||
Net revenues | 128,314 | 99,772 | 131,505 | 28.6 | (2.4 | ) | 337,619 | 348,041 | (3.0 | ) | ||||||||||||||||||
Non-interest expenses: | ||||||||||||||||||||||||||||
Compensation and benefits | 79,426 | 65,000 | 78,070 | 22.2 | 1.7 | 210,531 | 209,467 | 0.5 | ||||||||||||||||||||
Occupancy and equipment | 6,509 | 6,543 | 6,057 | (0.5 | ) | 7.5 | 18,869 | 19,671 | (4.1 | ) | ||||||||||||||||||
Communications | 5,778 | 5,030 | 5,276 | 14.9 | 9.5 | 16,040 | 16,112 | (0.4 | ) | |||||||||||||||||||
Floor brokerage and clearance | 2,109 | 2,247 | 1,825 | (6.1 | ) | 15.6 | 6,506 | 5,934 | 9.6 | |||||||||||||||||||
Marketing and business development | 5,447 | 5,957 | 4,259 | (8.6 | ) | 27.9 | 16,384 | 14,982 | 9.4 | |||||||||||||||||||
Outside services | 8,082 | 8,449 | 6,747 | (4.3 | ) | 19.8 | 23,745 | 19,810 | 19.9 | |||||||||||||||||||
Restructuring and integration costs | 3,823 | — | — | N/M | N/M | 3,823 | 3,642 | 5.0 | ||||||||||||||||||||
Intangible asset amortization expense | 2,899 | 1,661 | 1,736 | 74.5 | 67.0 | 6,221 | 5,208 | 19.5 | ||||||||||||||||||||
Other operating expenses | 2,181 | 1,552 | 2,183 | 40.5 | (0.1 | ) | 1,939 | 6,986 | (72.2 | ) | ||||||||||||||||||
Total non-interest expenses | 116,254 | 96,439 | 106,153 | 20.5 | 9.5 | 304,058 | 301,812 | 0.7 | ||||||||||||||||||||
Income from continuing operations before income tax expense | 12,060 | 3,333 | 25,352 | 261.8 | (52.4 | ) | 33,561 | 46,229 | (27.4 | ) | ||||||||||||||||||
Income tax expense | 2,886 | 1,644 | 10,194 | 75.5 | (71.7 | ) | 10,130 | 12,048 | (15.9 | ) | ||||||||||||||||||
Income from continuing operations | 9,174 | 1,689 | 15,158 | 443.2 | (39.5 | ) | 23,431 | 34,181 | (31.5 | ) | ||||||||||||||||||
Discontinued operations: | ||||||||||||||||||||||||||||
Income/(loss) from discontinued operations, net of tax | (1,529 | ) | (1,871 | ) | 5,171 | (18.3 | ) | N/M | (3,921 | ) | (2,066 | ) | 89.8 | |||||||||||||||
Net income/(loss) | 7,645 | (182 | ) | 20,329 | N/M | (62.4 | ) | 19,510 | 32,115 | (39.2 | ) | |||||||||||||||||
Net income/(loss) applicable to noncontrolling interests | 2,323 | (2,670 | ) | 665 | N/M | 249.3 | 1,554 | 2,671 | (41.8 | ) | ||||||||||||||||||
Net income applicable to Piper Jaffray Companies (1) | $ | 5,322 | $ | 2,488 | $ | 19,664 | 113.9 | % | (72.9 | )% | $ | 17,956 | $ | 29,444 | (39.0 | )% | ||||||||||||
Net income applicable to Piper Jaffray Companies’ common shareholders (1) | $ | 4,826 | $ | 2,266 | $ | 16,840 | 113.0 | % | (71.3 | )% | $ | 16,163 | $ | 25,151 | (35.7 | )% | ||||||||||||
Amounts applicable to Piper Jaffray Companies | ||||||||||||||||||||||||||||
Net income from continuing operations | $ | 6,851 | $ | 4,359 | $ | 14,493 | 57.2 | % | (52.7 | )% | $ | 21,877 | $ | 31,510 | (30.6 | )% | ||||||||||||
Net income/(loss) from discontinued operations | (1,529 | ) | (1,871 | ) | 5,171 | (18.3 | ) | N/M | (3,921 | ) | (2,066 | ) | 89.8 | |||||||||||||||
Net income applicable to Piper Jaffray Companies | $ | 5,322 | $ | 2,488 | $ | 19,664 | 113.9 | % | (72.9 | )% | $ | 17,956 | $ | 29,444 | (39.0 | )% | ||||||||||||
Earnings/(loss) per basic common share | ||||||||||||||||||||||||||||
Income from continuing operations | $ | 0.42 | $ | 0.25 | $ | 0.82 | 68.0 | % | (48.8 | )% | $ | 1.29 | $ | 1.71 | (24.6 | )% | ||||||||||||
Income/(loss) from discontinued operations | (0.09 | ) | (0.11 | ) | 0.29 | (18.2 | ) | N/M | (0.23 | ) | (0.11 | ) | 109.1 | |||||||||||||||
Earnings per basic common share | $ | 0.33 | $ | 0.15 | $ | 1.11 | 120.0 | % | (70.3 | )% | $ | 1.06 | $ | 1.60 | (33.8 | )% | ||||||||||||
Earnings/(loss) per diluted common share | ||||||||||||||||||||||||||||
Income from continuing operations | $ | 0.42 | $ | 0.25 | $ | 0.82 | 68.0 | % | (48.8 | )% | $ | 1.29 | $ | 1.71 | (24.6 | )% | ||||||||||||
Income/(loss) from discontinued operations | (0.09 | ) | (0.11 | ) | 0.29 | (18.2 | ) | N/M | (0.23 | ) | (0.11 | ) | 109.1 | |||||||||||||||
Earnings per diluted common share | $ | 0.33 | $ | 0.15 | $ | 1.11 | 120.0 | % | (70.3 | )% | $ | 1.06 | $ | 1.60 | (33.8 | )% | ||||||||||||
Weighted average number of common shares outstanding | ||||||||||||||||||||||||||||
Basic | 14,621 | 15,621 | 15,210 | (6.4 | )% | (3.9 | )% | 15,271 | 15,736 | (3.0 | )% | |||||||||||||||||
Diluted | 14,626 | 15,626 | 15,210 | (6.4 | )% | (3.8 | )% | 15,284 | 15,736 | (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. |
Three Months Ended | Percent Inc/(Dec) | Nine Months Ended | ||||||||||||||||||||||||||
Sept. 30, | June 30, | Sept. 30, | 3Q '13 | 3Q '13 | Sept. 30, | Sept. 30, | Percent | |||||||||||||||||||||
(Dollars in thousands) | 2013 | 2013 | 2012 | vs. 2Q '13 | vs. 3Q '12 | 2013 | 2012 | Inc/(Dec) | ||||||||||||||||||||
Capital Markets | ||||||||||||||||||||||||||||
Investment banking | ||||||||||||||||||||||||||||
Financing | ||||||||||||||||||||||||||||
Equities | $ | 30,010 | $ | 21,772 | $ | 18,781 | 37.8 | % | 59.8 | % | $ | 66,085 | $ | 55,141 | 19.8 | % | ||||||||||||
Debt | 12,808 | 22,131 | 16,573 | (42.1 | ) | (22.7 | ) | 51,971 | 53,598 | (3.0 | ) | |||||||||||||||||
Advisory services | 20,215 | 9,409 | 16,317 | 114.8 | 23.9 | 39,180 | 41,670 | (6.0 | ) | |||||||||||||||||||
Total investment banking | 63,033 | 53,312 | 51,671 | 18.2 | 22.0 | 157,236 | 150,409 | 4.5 | ||||||||||||||||||||
Institutional sales and trading | ||||||||||||||||||||||||||||
Equities | 22,960 | 21,392 | 17,927 | 7.3 | 28.1 | 65,087 | 55,589 | 17.1 | ||||||||||||||||||||
Fixed income | 20,437 | 4,959 | 46,690 | 312.1 | (56.2 | ) | 53,439 | 95,773 | (44.2 | ) | ||||||||||||||||||
Total institutional sales and trading | 43,397 | 26,351 | 64,617 | 64.7 | (32.8 | ) | 118,526 | 151,362 | (21.7 | ) | ||||||||||||||||||
Other income/(loss) | 3,833 | 2,146 | (1,039 | ) | 78.6 | N/M | 7,519 | (2,141 | ) | N/M | ||||||||||||||||||
Net revenues | 110,263 | 81,809 | 115,249 | 34.8 | (4.3 | ) | 283,281 | 299,630 | (5.5 | ) | ||||||||||||||||||
Operating expenses | 103,906 | 83,937 | 94,671 | 23.8 | 9.8 | 266,301 | 266,529 | (0.1 | ) | |||||||||||||||||||
Segment pre-tax operating income/(loss) | $ | 6,357 | $ | (2,128 | ) | $ | 20,578 | N/M | (69.1 | )% | $ | 16,980 | $ | 33,101 | (48.7 | )% | ||||||||||||
Segment pre-tax operating margin | 5.8 | % | (2.6 | )% | 17.9 | % | 6.0 | % | 11.0 | % | ||||||||||||||||||
Asset Management | ||||||||||||||||||||||||||||
Management and performance fees | ||||||||||||||||||||||||||||
Management fees | $ | 17,547 | $ | 17,567 | $ | 15,800 | (0.1 | )% | 11.1 | % | $ | 52,212 | $ | 47,213 | 10.6 | % | ||||||||||||
Performance fees | 60 | 305 | 22 | (80.3 | ) | 172.7 | 716 | 664 | 7.8 | |||||||||||||||||||
Total management and performance fees | 17,607 | 17,872 | 15,822 | (1.5 | ) | 11.3 | 52,928 | 47,877 | 10.5 | |||||||||||||||||||
Other income | 444 | 91 | 434 | 387.9 | 2.3 | 1,410 | 534 | 164.0 | ||||||||||||||||||||
Net revenues | 18,051 | 17,963 | 16,256 | 0.5 | 11.0 | 54,338 | 48,411 | 12.2 | ||||||||||||||||||||
Operating expenses | 12,348 | 12,502 | 11,482 | (1.2 | ) | 7.5 | 37,757 | 35,283 | 7.0 | |||||||||||||||||||
Segment pre-tax operating income | $ | 5,703 | $ | 5,461 | $ | 4,774 | 4.4 | % | 19.5 | % | $ | 16,581 | $ | 13,128 | 26.3 | % | ||||||||||||
Segment pre-tax operating margin | 31.6 | % | 30.4 | % | 29.4 | % | 30.5 | % | 27.1 | % | ||||||||||||||||||
Total | ||||||||||||||||||||||||||||
Net revenues | $ | 128,314 | $ | 99,772 | $ | 131,505 | 28.6 | % | (2.4 | )% | $ | 337,619 | $ | 348,041 | (3.0 | )% | ||||||||||||
Operating expenses | 116,254 | 96,439 | 106,153 | 20.5 | 9.5 | 304,058 | 301,812 | 0.7 | ||||||||||||||||||||
Pre-tax operating income | $ | 12,060 | $ | 3,333 | $ | 25,352 | 261.8 | % | (52.4 | )% | $ | 33,561 | $ | 46,229 | (27.4 | )% | ||||||||||||
Pre-tax operating margin | 9.4 | % | 3.3 | % | 19.3 | % | 9.9 | % | 13.3 | % |
(1) | Tangible common shareholders’ equity |
As of | As of | As of | |||||||||
(Amounts in thousands) | Mar. 31, Sept. 30, 2013 | June 30, 2013 | Sept. 30, 2012 | ||||||||
Common shareholders’ equity | $ | 707,365 | $ | 729,880 | $ | 724,616 | |||||
Deduct: goodwill and identifiable intangible assets | 252,761 | 234,780 | 247,905 | ||||||||
Tangible common shareholders’ equity | $ | 454,604 | $ | 495,100 | $ | 476,711 |
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