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Title of Each Class | Trading Symbol | Name of Each Exchange On Which Registered |
(d) | Exhibit |
PIPER SANDLER COMPANIES | ||||
Date: | January 31, 2020 | By | /s/ Timothy L. Carter | |
Timothy L. Carter | ||||
Chief Financial Officer |
Fourth Quarter 2019 Results | Full Year 2019 Results | ||||||||||||||||||||||||||
U.S. GAAP | Adjusted (1) | U.S. GAAP | Adjusted (1) | ||||||||||||||||||||||||
(Dollars in millions, except per share data) | Q4 | vs. | vs. | Q4 | vs. | vs. | vs. | vs. | |||||||||||||||||||
2019 | Q3-19 | Q4-18 | 2019 | Q3-19 | Q4-18 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Net revenues | $ | 278.9 | 39 | % | 30 | % | $ | 276.4 | 36 | % | 29 | % | $ | 834.6 | 13 | % | $ | 823.8 | 12 | % | |||||||
Net income applicable to Piper Sandler Companies | $ | 38.7 | -11 | % | 113 | % | $ | 41.5 | 76 | % | 45 | % | $ | 111.7 | 96 | % | $ | 106.2 | 21 | % | |||||||
Earnings per diluted common share | $ | 2.70 | -10 | % | 123 | % | $ | 2.89 | 76 | % | 52 | % | $ | 7.69 | 107 | % | $ | 7.36 | 29 | % |
FINANCIAL & BUSINESS HIGHLIGHTS |
• | Record net revenues for the quarter and full year were driven by strong, broad-based contributions across all of our businesses. |
• | Advisory services and equity financing combined generated record revenues of $545 million for 2019, representing the third consecutive year with combined revenues of over $500 million, demonstrating the consistency of our investment banking platform. |
• | Our focus on growing advisory services has led to strong market share gains. For 2019, advisory revenues of $441 million represent a 12% increase compared to 2018, and a 111% increase over the last five years. |
• | Fixed income brokerage revenues of $95 million increased 40% compared to 2018, reflecting strong execution in improved markets. |
• | Record earnings from continuing operations for the current quarter and full year were driven by record revenue levels and strong operating discipline, illustrating the leverage in our business. |
• | U.S. GAAP pre-tax operating margin of 19.3% for the fourth quarter of 2019 and 14.3% for the full year. |
• | Adjusted pre-tax operating margin of 20.4% for the fourth quarter of 2019 and 16.6% for the full year. |
STRATEGIC UPDATES |
• | Piper Jaffray Companies and Sandler O'Neill + Partners, L.P. merged on January 3, 2020, to become Piper Sandler Companies. The financial results of Sandler O'Neill will be incorporated in our 2020 financial results beginning from the date of merger. |
• | The combination is expected to add $300 million of annual revenues to our platform. |
• | Together, Piper Sandler is one of the broadest and most capable full-service investment banking platforms on the street, with 122 investment banking managing directors across multiple market-leading industry franchises. |
• | We completed the acquisition of Weeden & Co., L.P. on August 2, 2019, which builds a market-leading equities business by combining the expanded trading product offerings and account coverage of Weeden & Co. with our strong research franchise. |
• | We exited our traditional asset management business through the sale of Advisory Research, Inc. in September 2019, as it no longer fit with our strategic vision. |
CAPITAL |
• | Declared a special cash dividend of $0.75 per share and a quarterly cash dividend of $0.375 per share, both to be paid on March 13, 2020 to shareholders of record as of March 2, 2020. |
• | Raised $175 million of cash in a debt private placement on October 15, 2019. |
• | During 2019, we returned an aggregate of $86.2 million to shareholders through dividends and share repurchases. |
• | Paid an aggregate of $35.6 million, or $2.51 per share, to shareholders through quarterly dividends and the annual special dividend, which represents a 3.4% dividend yield based on the average closing price of $74.68 per share during 2019. |
• | Repurchased approximately 702,000 shares of common stock, or $50.6 million, at an average price of $72.09 per share. |
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
(Dollars in thousands, except earnings per share) | Dec. 31, | Sept. 30, | Dec. 31, | % Change vs. | Dec. 31, | Dec. 31, | % | |||||||||||||||||||||
2019 | 2019 | 2018 | Q3-19 | Q4-18 | 2019 | 2018 | Change | |||||||||||||||||||||
Net revenues | ||||||||||||||||||||||||||||
Advisory services | $ | 143,809 | $ | 106,769 | $ | 128,050 | 35 | % | 12 | % | $ | 440,695 | $ | 394,133 | 12 | % | ||||||||||||
Equity financing | 43,415 | 21,837 | 22,304 | 99 | % | 95 | % | 104,563 | 122,172 | -14 | % | |||||||||||||||||
Debt financing | 31,452 | 22,963 | 27,789 | 37 | % | 13 | % | 85,701 | 73,262 | 17 | % | |||||||||||||||||
Investment banking | 218,676 | 151,569 | 178,143 | 44 | % | 23 | % | 630,959 | 589,567 | 7 | % | |||||||||||||||||
Equity brokerage | 32,183 | 25,120 | 22,526 | 28 | % | 43 | % | 88,792 | 77,477 | 15 | % | |||||||||||||||||
Fixed income brokerage | 25,391 | 25,769 | 14,691 | -1 | % | 73 | % | 94,922 | 67,784 | 40 | % | |||||||||||||||||
Institutional brokerage | 57,574 | 50,889 | 37,217 | 13 | % | 55 | % | 183,714 | 145,261 | 26 | % | |||||||||||||||||
Investment income/(loss) | 4,768 | (1,375 | ) | (139 | ) | N/M | N/M | 23,093 | 11,918 | 94 | % | |||||||||||||||||
Other financing expenses | (2,147 | ) | (348 | ) | (442 | ) | 517 | % | 386 | % | (3,200 | ) | (5,793 | ) | -45 | % | ||||||||||||
Net revenues | $ | 278,871 | $ | 200,735 | $ | 214,779 | 39 | % | 30 | % | $ | 834,566 | $ | 740,953 | 13 | % | ||||||||||||
Operating expenses | ||||||||||||||||||||||||||||
Compensation and benefits | $ | 169,619 | $ | 126,868 | $ | 137,527 | 34 | % | 23 | % | $ | 516,090 | $ | 488,487 | 6 | % | ||||||||||||
Non-compensation expenses | 55,370 | 52,832 | 45,558 | 5 | % | 22 | % | 199,497 | 179,977 | 11 | % | |||||||||||||||||
Operating expenses | $ | 224,989 | $ | 179,700 | $ | 183,085 | 25 | % | 23 | % | $ | 715,587 | $ | 668,464 | 7 | % | ||||||||||||
Pre-tax operating income from continuing operations | $ | 53,882 | $ | 21,035 | $ | 31,694 | 156 | % | 70 | % | $ | 118,979 | $ | 72,489 | 64 | % | ||||||||||||
Ratios and margin | ||||||||||||||||||||||||||||
Compensation ratio | 60.8 | % | 63.2 | % | 64.0 | % | 61.8 | % | 65.9 | % | ||||||||||||||||||
Non-compensation ratio | 19.9 | % | 26.3 | % | 21.2 | % | 23.9 | % | 24.3 | % | ||||||||||||||||||
Pre-tax operating margin | 19.3 | % | 10.5 | % | 14.8 | % | 14.3 | % | 9.8 | % | ||||||||||||||||||
Amounts applicable to Piper Sandler Companies | ||||||||||||||||||||||||||||
Net income from continuing operations | $ | 38,658 | $ | 17,165 | $ | 18,532 | 125 | % | 109 | % | $ | 87,939 | $ | 55,649 | 58 | % | ||||||||||||
Net income/(loss) from discontinued operations | — | 26,077 | (348 | ) | N/M | N/M | 23,772 | 1,387 | N/M | |||||||||||||||||||
Net income | $ | 38,658 | $ | 43,242 | $ | 18,184 | -11 | % | 113 | % | $ | 111,711 | $ | 57,036 | 96 | % | ||||||||||||
Earnings per diluted common share | ||||||||||||||||||||||||||||
Income from continuing operations | $ | 2.70 | $ | 1.20 | $ | 1.23 | 125 | % | 120 | % | $ | 6.05 | $ | 3.63 | 67 | % | ||||||||||||
Income/(loss) from discontinued operations | — | 1.82 | (0.02 | ) | N/M | N/M | 1.65 | 0.09 | N/M | |||||||||||||||||||
Earnings per diluted common share | $ | 2.70 | $ | 3.01 | $ | 1.21 | -10 | % | 123 | % | $ | 7.69 | $ | 3.72 | 107 | % |
• | Advisory services revenues of $143.8 million reflect the strongest fourth quarter on record and were driven by strong performances across multiple industry groups. Revenues for the fourth quarter of 2019 increased 35% sequentially driven by more completed transactions. Revenues increased 12% compared to the year-ago quarter driven by an increase in median fees. |
• | Equity financing revenues of $43.4 million for the fourth quarter of 2019 reflect a decade high and a strong finish to the year driven by solid execution of our pipeline in a market conducive to capital raising transactions. Revenues increased 99% compared to the sequential quarter and 95% compared to the fourth quarter of 2018 due to an increase in the number of completed deals. |
• | Debt financing revenues of $31.5 million for the fourth quarter of 2019 increased 37% compared to the sequential quarter and 13% compared to the year-ago quarter. Markets were favorable during the fourth quarter of 2019, as increased refunding activity resulting from lower interest rates drove an increase in issuance volumes. |
• | Equity institutional brokerage revenues of $32.2 million for the fourth quarter of 2019 increased 28% compared to the sequential quarter and 43% compared to the year-ago quarter. Revenues for the fourth quarter of 2019 reflect the first full quarter of Weeden & Co. on our platform. |
• | Fixed income institutional brokerage revenues of $25.4 million for the fourth quarter of 2019 were flat sequentially and increased 73% compared to the prior-year quarter. Revenues for the fourth quarter of 2019 were driven by strong client activity within our taxable products and reflect continued strong performance. In addition, municipal markets improved compared to the fourth quarter of 2018. |
• | Investment income of $4.8 million for the fourth quarter of 2019 and $23.1 million for the year includes amounts attributable to noncontrolling interests. Investment income primarily relates to our merchant banking portfolio. |
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | Dec. 31, | Sept. 30, | Dec. 31, | % Change vs. | Dec. 31, | Dec. 31, | % | |||||||||||||||||||||
2019 | 2019 | 2018 | Q3-19 | Q4-18 | 2019 | 2018 | Change | |||||||||||||||||||||
Adjusted net revenues | ||||||||||||||||||||||||||||
Advisory services | $ | 143,809 | $ | 106,769 | $ | 128,050 | 35 | % | 12 | % | $ | 440,695 | $ | 394,133 | 12 | % | ||||||||||||
Equity financing | 43,415 | 21,837 | 22,304 | 99 | % | 95 | % | 104,563 | 122,172 | -14 | % | |||||||||||||||||
Debt financing | 31,452 | 22,963 | 27,789 | 37 | % | 13 | % | 85,701 | 73,262 | 17 | % | |||||||||||||||||
Investment banking | 218,676 | 151,569 | 178,143 | 44 | % | 23 | % | 630,959 | 589,567 | 7 | % | |||||||||||||||||
Equity brokerage | 32,183 | 25,120 | 22,526 | 28 | % | 43 | % | 88,792 | 77,477 | 15 | % | |||||||||||||||||
Fixed income brokerage | 25,391 | 25,769 | 14,691 | -1 | % | 73 | % | 94,922 | 67,784 | 40 | % | |||||||||||||||||
Institutional brokerage | 57,574 | 50,889 | 37,217 | 13 | % | 55 | % | 183,714 | 145,261 | 26 | % | |||||||||||||||||
Investment income/(loss) | 2,273 | 403 | (1,403 | ) | 464 | % | N/M | 12,324 | 8,297 | 49 | % | |||||||||||||||||
Other financing expenses | (2,147 | ) | (348 | ) | (442 | ) | 517 | % | 386 | % | (3,200 | ) | (5,793 | ) | -45 | % | ||||||||||||
Adjusted net revenues | $ | 276,376 | $ | 202,513 | $ | 213,515 | 36 | % | 29 | % | $ | 823,797 | $ | 737,332 | 12 | % | ||||||||||||
Adjusted operating expenses | ||||||||||||||||||||||||||||
Adjusted compensation and benefits | $ | 169,187 | $ | 125,798 | $ | 131,736 | 34 | % | 28 | % | $ | 510,952 | $ | 459,241 | 11 | % | ||||||||||||
Adjusted non-compensation expenses | 50,905 | 44,391 | 42,973 | 15 | % | 18 | % | 176,458 | 169,609 | 4 | % | |||||||||||||||||
Adjusted operating expenses | $ | 220,092 | $ | 170,189 | $ | 174,709 | 29 | % | 26 | % | $ | 687,410 | $ | 628,850 | 9 | % | ||||||||||||
Adjusted pre-tax operating income | $ | 56,284 | $ | 32,324 | $ | 38,806 | 74 | % | 45 | % | $ | 136,387 | $ | 108,482 | 26 | % | ||||||||||||
Adjusted ratios and margin | ||||||||||||||||||||||||||||
Adjusted compensation ratio | 61.2 | % | 62.1 | % | 61.7 | % | 62.0 | % | 62.3 | % | ||||||||||||||||||
Adjusted non-compensation ratio | 18.4 | % | 21.9 | % | 20.1 | % | 21.4 | % | 23.0 | % | ||||||||||||||||||
Adjusted pre-tax operating margin | 20.4 | % | 16.0 | % | 18.2 | % | 16.6 | % | 14.7 | % | ||||||||||||||||||
Adjusted amounts applicable to Piper Sandler Companies | ||||||||||||||||||||||||||||
Adjusted net income | $ | 41,504 | $ | 23,524 | $ | 28,580 | 76 | % | 45 | % | $ | 106,197 | $ | 87,412 | 21 | % | ||||||||||||
Adjusted earnings per diluted common share | $ | 2.89 | $ | 1.64 | $ | 1.90 | 76 | % | 52 | % | $ | 7.36 | $ | 5.72 | 29 | % |
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
(Dollars in billions) | Dec. 31, | Sept. 30, | Dec. 31, | % Change vs. | Dec. 31, | Dec. 31, | % | |||||||||||||||||||||
2019 | 2019 | 2018 | Q3-19 | Q4-18 | 2019 | 2018 | Change | |||||||||||||||||||||
Advisory services | ||||||||||||||||||||||||||||
Aggregate transaction value | $ | 8.0 | $ | 9.3 | $ | 10.3 | -14 | % | -22 | % | $ | 34.0 | $ | 28.9 | 18 | % | ||||||||||||
Total transactions | 59 | 38 | 52 | 55 | % | 13 | % | 178 | 170 | 5 | % | |||||||||||||||||
Equity financing | ||||||||||||||||||||||||||||
Total transactions | 25 | 15 | 15 | 67 | % | 67 | % | 74 | 85 | -13 | % | |||||||||||||||||
Bookrun transactions | 19 | 9 | 12 | 111 | % | 58 | % | 50 | 58 | -14 | % | |||||||||||||||||
Municipal negotiated issues | ||||||||||||||||||||||||||||
Aggregate par value | $ | 4.6 | $ | 2.8 | $ | 3.4 | 64 | % | 35 | % | $ | 12.2 | $ | 11.5 | 6 | % | ||||||||||||
Total issues | 211 | 134 | 134 | 57 | % | 57 | % | 563 | 438 | 29 | % |
• | Class A Notes – $50 million aggregate principal amount, bear interest at a rate of 4.74%, and mature in two years. |
• | Class B Notes – $125 million aggregate principal amount, bear interest at a rate of 5.20%, and mature in four years. |
Dec. 31, | Sept. 30, | Dec. 31, | |||||||||
2019 | 2019 | 2018 | |||||||||
Human Capital | |||||||||||
Full-time employees | 1,541* | 1,263 | 1,197 | ||||||||
Investment banking managing directors | 122* | 90 | 90 | ||||||||
Shareholder Information** | |||||||||||
Common shareholders’ equity (in millions) | $ | 731.3 | $ | 696.7 | $ | 677.4 | |||||
Common shares outstanding (in millions) | 13.7 | 13.7 | 13.0 | ||||||||
Restricted shares outstanding (in millions) | 0.7 | 0.7 | 1.6 | ||||||||
Total shares outstanding (in millions) | 14.4 | 14.4 | 14.6 | ||||||||
Return on average common shareholders’ equity – rolling 12 month *** | 13.0 | % | 10.1 | % | 8.1 | % | |||||
Adjusted return on average common shareholders’ equity – rolling 12 month † | 15.7 | % | 13.9 | % | 12.7 | % |
* | Amount is as of January 3, 2020 in order to include full-time employees from Sandler O'Neill who joined our platform as a result of the closing of the merger. Management believes that presenting the number of employees on a combined basis provides a better illustration of our go-forward workforce. |
** | Amounts included in shareholder information reflect continuing and discontinued results. |
*** | Rolling 12 month return on average common shareholders' equity is computed by dividing net income from continuing operations applicable to Piper Sandler Companies' for the last 12 months by average monthly common shareholders' equity. |
† | Adjusted rolling 12 month return on average common shareholders' equity, a non-GAAP measure, 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. |
• | revenues from corporate advisory (i.e., M&A) engagements and equity and debt financings may vary materially depending on the number, size, and timing of completed transactions, and completed transactions do not generally provide for subsequent engagements; |
• | the expected benefits of our recent acquisitions of Sandler O'Neill and Weeden & Co. may take longer than anticipated to achieve or may not be achieved in their entirety or at all, and will in part depend on our ability to retain and hire key personnel, and the costs or difficulties relating to the combination of the businesses may be greater than expected and may adversely affect our results of operations; |
• | 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; |
• | the volume of anticipated transactions – including corporate advisory (i.e., M&A), equity financing, and debt financing – and the corresponding revenues from the transactions may vary from quarter to quarter significantly, particularly if there is a decline in macroeconomic conditions or the financial markets; |
• | interest rate volatility, especially if the changes are rapid or severe, could negatively impact our fixed income institutional business and the negative impact could be exaggerated by reduced liquidity in the fixed income markets; 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) | Twelve Months Ended | ||||||||||||||||||||||||||
(Amounts in thousands, except per share data) | Dec. 31, | Sept. 30, | Dec. 31, | 4Q '19 | 4Q '19 | Dec. 31, | Dec. 31, | Percent | ||||||||||||||||||||
2019 | 2019 | 2018 | vs. 3Q '19 | vs. 4Q '18 | 2019 | 2018 | Inc/(Dec) | |||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Investment banking | $ | 218,400 | $ | 151,192 | $ | 177,775 | 44.5 | % | 22.9 | % | $ | 629,392 | $ | 588,978 | 6.9 | % | ||||||||||||
Institutional brokerage | 53,908 | 46,814 | 32,163 | 15.2 | 67.6 | 167,891 | 124,738 | 34.6 | ||||||||||||||||||||
Interest | 5,830 | 6,481 | 7,566 | (10.0 | ) | (22.9 | ) | 26,741 | 32,749 | (18.3 | ) | |||||||||||||||||
Investment income/(loss) | 4,653 | (1,575 | ) | (316 | ) | N/M | N/M | 22,275 | 11,039 | 101.8 | ||||||||||||||||||
Total revenues | 282,791 | 202,912 | 217,188 | 39.4 | 30.2 | 846,299 | 757,504 | 11.7 | ||||||||||||||||||||
Interest expense | 3,920 | 2,177 | 2,409 | 80.1 | 62.7 | 11,733 | 16,551 | (29.1 | ) | |||||||||||||||||||
Net revenues | 278,871 | 200,735 | 214,779 | 38.9 | 29.8 | 834,566 | 740,953 | 12.6 | ||||||||||||||||||||
Non-interest expenses: | ||||||||||||||||||||||||||||
Compensation and benefits | 169,619 | 126,868 | 137,527 | 33.7 | 23.3 | 516,090 | 488,487 | 5.7 | ||||||||||||||||||||
Outside services | 11,320 | 7,842 | 10,158 | 44.4 | 11.4 | 36,184 | 36,528 | (0.9 | ) | |||||||||||||||||||
Occupancy and equipment | 10,427 | 9,594 | 8,837 | 8.7 | 18.0 | 36,795 | 34,194 | 7.6 | ||||||||||||||||||||
Communications | 8,161 | 7,885 | 6,777 | 3.5 | 20.4 | 30,760 | 28,656 | 7.3 | ||||||||||||||||||||
Marketing and business development | 7,425 | 6,528 | 7,260 | 13.7 | 2.3 | 28,780 | 26,936 | 6.8 | ||||||||||||||||||||
Deal-related expenses | 7,983 | 6,387 | 6,232 | 25.0 | 28.1 | 25,823 | 25,120 | 2.8 | ||||||||||||||||||||
Trade execution and clearance | 3,593 | 3,770 | 1,774 | (4.7 | ) | 102.5 | 10,186 | 8,014 | 27.1 | |||||||||||||||||||
Restructuring and integration costs | 1,783 | 6,143 | — | (71.0 | ) | N/M | 14,321 | 3,498 | 309.4 | |||||||||||||||||||
Intangible asset amortization | 1,563 | 1,229 | 1,215 | 27.2 | 28.6 | 4,298 | 4,858 | (11.5 | ) | |||||||||||||||||||
Other operating expenses | 3,115 | 3,454 | 3,305 | (9.8 | ) | (5.7 | ) | 12,350 | 12,173 | 1.5 | ||||||||||||||||||
Total non-interest expenses | 224,989 | 179,700 | 183,085 | 25.2 | 22.9 | 715,587 | 668,464 | 7.0 | ||||||||||||||||||||
Income from continuing operations before income tax expense | 53,882 | 21,035 | 31,694 | 156.2 | 70.0 | 118,979 | 72,489 | 64.1 | ||||||||||||||||||||
Income tax expense | 13,848 | 6,717 | 13,097 | 106.2 | 5.7 | 24,577 | 18,046 | 36.2 | ||||||||||||||||||||
Income from continuing operations | 40,034 | 14,318 | 18,597 | 179.6 | 115.3 | 94,402 | 54,443 | 73.4 | ||||||||||||||||||||
Discontinued operations: | ||||||||||||||||||||||||||||
Income/(loss) from discontinued operations, net of tax | — | 26,077 | (348 | ) | N/M | N/M | 23,772 | 1,387 | N/M | |||||||||||||||||||
Net income | 40,034 | 40,395 | 18,249 | (0.9 | ) | 119.4 | 118,174 | 55,830 | 111.7 | |||||||||||||||||||
Net income/(loss) applicable to noncontrolling interests | 1,376 | (2,847 | ) | 65 | N/M | N/M | 6,463 | (1,206 | ) | N/M | ||||||||||||||||||
Net income applicable to Piper Sandler Companies (a) | $ | 38,658 | $ | 43,242 | $ | 18,184 | (10.6 | )% | 112.6 | % | $ | 111,711 | $ | 57,036 | 95.9 | % | ||||||||||||
Net income applicable to Piper Sandler Companies’ common shareholders (a) | $ | 38,006 | $ | 42,442 | $ | 16,164 | (10.5 | )% | 135.1 | % | $ | 107,200 | $ | 49,993 | 114.4 | % | ||||||||||||
Continued on the next page |
Three Months Ended | Percent Inc/(Dec) | Twelve Months Ended | ||||||||||||||||||||||||||
(Amounts in thousands, except per share data) | Dec. 31, | Sept. 30, | Dec. 31, | 4Q '19 | 4Q '19 | Dec. 31, | Dec. 31, | Percent | ||||||||||||||||||||
2019 | 2019 | 2018 | vs. 3Q '19 | vs. 4Q '18 | 2019 | 2018 | Inc/(Dec) | |||||||||||||||||||||
Amounts applicable to Piper Sandler Companies | ||||||||||||||||||||||||||||
Net income from continuing operations | $ | 38,658 | $ | 17,165 | $ | 18,532 | 125.2 | % | 108.6 | % | $ | 87,939 | $ | 55,649 | 58.0 | % | ||||||||||||
Net income/(loss) from discontinued operations | — | 26,077 | (348 | ) | N/M | N/M | 23,772 | 1,387 | N/M | |||||||||||||||||||
Net income applicable to Piper Sandler Companies | $ | 38,658 | $ | 43,242 | $ | 18,184 | (10.6 | )% | 112.6 | % | $ | 111,711 | $ | 57,036 | 95.9 | % | ||||||||||||
Earnings per basic common share | ||||||||||||||||||||||||||||
Income from continuing operations | $ | 2.77 | $ | 1.23 | $ | 1.25 | 125.2 | % | 121.6 | % | $ | 6.21 | $ | 3.68 | 68.8 | % | ||||||||||||
Income/(loss) from discontinued operations | — | 1.87 | (0.02 | ) | N/M | N/M | 1.69 | 0.09 | N/M | |||||||||||||||||||
Earnings per basic common share | $ | 2.77 | $ | 3.09 | $ | 1.22 | (10.4 | )% | 127.0 | % | $ | 7.90 | $ | 3.78 | 109.0 | % | ||||||||||||
Earnings per diluted common share | ||||||||||||||||||||||||||||
Income from continuing operations | $ | 2.70 | $ | 1.20 | $ | 1.23 | 125.0 | % | 119.5 | % | $ | 6.05 | $ | 3.63 | 66.7 | % | ||||||||||||
Income/(loss) from discontinued operations | — | 1.82 | (0.02 | ) | N/M | N/M | 1.65 | 0.09 | N/M | |||||||||||||||||||
Earnings per diluted common share | $ | 2.70 | $ | 3.01 | $ | 1.21 | (10.3 | )% | 123.1 | % | $ | 7.69 | $ | 3.72 | 106.7 | % | ||||||||||||
Dividends declared per common share | $ | 0.38 | $ | 0.38 | $ | 0.38 | — | % | — | % | $ | 2.51 | (b) | $ | 3.12 | (c) | (19.6 | )% | ||||||||||
Weighted average number of common shares outstanding | ||||||||||||||||||||||||||||
Basic | 13,714 | 13,708 | 13,191 | — | % | 4.0 | % | 13,555 | 13,234 | 2.4 | % | |||||||||||||||||
Diluted | 14,100 | 14,085 | 13,367 | 0.1 | % | 5.5 | % | 13,937 | 13,425 | 3.8 | % |
(a) | Piper Sandler Companies calculates earnings per common share using the two-class method, which requires the allocation of distributed and undistributed earnings to participating securities. No allocation of undistributed earnings is made for periods in which a loss is incurred, or for periods in which cash dividends exceed net income resulting in an undistributed loss. Distributed earnings (e.g., dividends) are allocated to participating securities. Participating securities include the Company’s unvested restricted shares for restricted stock awards granted prior to 2019. |
(b) | Includes the declaration of a special cash dividend of $1.01 per share and four quarterly cash dividends totaling $1.50 per share on the Company's common stock for the twelve months ended December 31, 2019. |
(c) | Includes the declaration of a special cash dividend of $1.62 per share and four quarterly cash dividends totaling $1.50 per share on the Company's common stock for the twelve months ended December 31, 2018. |
Three Months Ended | Percent Inc/(Dec) | Twelve Months Ended | ||||||||||||||||||||||||||
Dec. 31, | Sept. 30, | Dec. 31, | 4Q '19 | 4Q '19 | Dec. 31, | Dec. 31, | Percent | |||||||||||||||||||||
(Amounts in thousands, except per share data) | 2019 | 2019 | 2018 | vs. 3Q '19 | vs. 4Q '18 | 2019 | 2018 | Inc/(Dec) | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Investment banking | $ | 218,400 | $ | 151,192 | $ | 177,775 | 44.5 | % | 22.9 | % | $ | 629,392 | $ | 588,978 | 6.9 | % | ||||||||||||
Institutional brokerage | 53,908 | 46,814 | 32,163 | 15.2 | 67.6 | 167,891 | 124,738 | 34.6 | ||||||||||||||||||||
Interest | 5,830 | 6,481 | 7,566 | (10.0 | ) | (22.9 | ) | 26,741 | 32,749 | (18.3 | ) | |||||||||||||||||
Investment income/(loss) | 2,158 | 203 | (1,580 | ) | 963.1 | N/M | 11,506 | 7,418 | 55.1 | |||||||||||||||||||
Total revenues | 280,296 | 204,690 | 215,924 | 36.9 | 29.8 | 835,530 | 753,883 | 10.8 | ||||||||||||||||||||
Interest expense | 3,920 | 2,177 | 2,409 | 80.1 | 62.7 | 11,733 | 16,551 | (29.1 | ) | |||||||||||||||||||
Adjusted net revenues (2) | $ | 276,376 | $ | 202,513 | $ | 213,515 | 36.5 | % | 29.4 | % | $ | 823,797 | $ | 737,332 | 11.7 | % | ||||||||||||
Non-interest expenses: | ||||||||||||||||||||||||||||
Adjusted compensation and benefits (3) | $ | 169,187 | $ | 125,798 | $ | 131,736 | 34.5 | % | 28.4 | % | $ | 510,952 | $ | 459,241 | 11.3 | % | ||||||||||||
Ratio of adjusted compensation and benefits to adjusted net revenues | 61.2 | % | 62.1 | % | 61.7 | % | 62.0 | % | 62.3 | % | ||||||||||||||||||
Adjusted non-compensation expenses (4) | $ | 50,905 | $ | 44,391 | $ | 42,973 | 14.7 | % | 18.5 | % | $ | 176,458 | $ | 169,609 | 4.0 | % | ||||||||||||
Ratio of adjusted non-compensation expenses to adjusted net revenues | 18.4 | % | 21.9 | % | 20.1 | % | 21.4 | % | 23.0 | % | ||||||||||||||||||
Adjusted income: | ||||||||||||||||||||||||||||
Adjusted income before adjusted income tax expense (5) | $ | 56,284 | $ | 32,324 | $ | 38,806 | 74.1 | % | 45.0 | % | $ | 136,387 | $ | 108,482 | 25.7 | % | ||||||||||||
Adjusted operating margin (6) | 20.4 | % | 16.0 | % | 18.2 | % | 16.6 | % | 14.7 | % | ||||||||||||||||||
Adjusted income tax expense (7) | 14,780 | 8,800 | 10,226 | 68.0 | 44.5 | 30,190 | 21,070 | 43.3 | ||||||||||||||||||||
Adjusted net income (8) | $ | 41,504 | $ | 23,524 | $ | 28,580 | 76.4 | % | 45.2 | % | $ | 106,197 | $ | 87,412 | 21.5 | % | ||||||||||||
Effective tax rate (9) | 26.3 | % | 27.2 | % | 26.4 | % | 22.1 | % | 19.4 | % | ||||||||||||||||||
Adjusted net income applicable to Piper Sandler Companies’ common shareholders (10) | $ | 40,801 | $ | 23,097 | $ | 25,422 | 76.7 | % | 60.5 | % | $ | 102,523 | $ | 76,832 | 33.4 | % | ||||||||||||
Adjusted earnings per diluted common share | $ | 2.89 | $ | 1.64 | $ | 1.90 | 76.2 | % | 52.1 | % | $ | 7.36 | $ | 5.72 | 28.7 | % | ||||||||||||
Weighted average number of common shares outstanding | ||||||||||||||||||||||||||||
Diluted | 14,100 | 14,085 | 13,367 | 0.1 | % | 5.5 | % | 13,937 | 13,425 | 3.8 | % |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
Dec. 31, | Sept. 30, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||||||
(Amounts in thousands, except per share data) | 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
Net revenues: | |||||||||||||||||||
Net revenues – U.S. GAAP basis | $ | 278,871 | $ | 200,735 | $ | 214,779 | $ | 834,566 | $ | 740,953 | |||||||||
Adjustments: | |||||||||||||||||||
Revenue related to noncontrolling interests (11) | (2,495 | ) | 1,778 | (1,264 | ) | (10,769 | ) | (3,621 | ) | ||||||||||
Adjusted net revenues | $ | 276,376 | $ | 202,513 | $ | 213,515 | $ | 823,797 | $ | 737,332 | |||||||||
Compensation and benefits: | |||||||||||||||||||
Compensation and benefits – U.S. GAAP basis | $ | 169,619 | $ | 126,868 | $ | 137,527 | $ | 516,090 | $ | 488,487 | |||||||||
Adjustments: | |||||||||||||||||||
Compensation from acquisition-related agreements | (432 | ) | (1,070 | ) | (5,791 | ) | (5,138 | ) | (29,246 | ) | |||||||||
Adjusted compensation and benefits | $ | 169,187 | $ | 125,798 | $ | 131,736 | $ | 510,952 | $ | 459,241 | |||||||||
Non-compensation expenses: | |||||||||||||||||||
Non-compensation expenses – U.S. GAAP basis | $ | 55,370 | $ | 52,832 | $ | 45,558 | $ | 199,497 | $ | 179,977 | |||||||||
Adjustments: | |||||||||||||||||||
Non-compensation expenses related to noncontrolling interests (11) | (1,119 | ) | (1,069 | ) | (1,199 | ) | (4,306 | ) | (4,827 | ) | |||||||||
Acquisition-related restructuring and integration costs | (1,783 | ) | (6,143 | ) | — | (14,321 | ) | — | |||||||||||
Amortization of intangible assets related to acquisitions | (1,563 | ) | (1,229 | ) | (1,215 | ) | (4,298 | ) | (4,858 | ) | |||||||||
Non-compensation expenses from acquisition-related agreements | — | — | (171 | ) | (114 | ) | (683 | ) | |||||||||||
Adjusted non-compensation expenses | $ | 50,905 | $ | 44,391 | $ | 42,973 | $ | 176,458 | $ | 169,609 | |||||||||
Income from continuing operations before income tax expense: | |||||||||||||||||||
Income from continuing operations before income tax expense – U.S. GAAP basis | $ | 53,882 | $ | 21,035 | $ | 31,694 | $ | 118,979 | $ | 72,489 | |||||||||
Adjustments: | |||||||||||||||||||
Revenue related to noncontrolling interests (11) | (2,495 | ) | 1,778 | (1,264 | ) | (10,769 | ) | (3,621 | ) | ||||||||||
Non-compensation expenses related to noncontrolling interests (11) | 1,119 | 1,069 | 1,199 | 4,306 | 4,827 | ||||||||||||||
Compensation from acquisition-related agreements | 432 | 1,070 | 5,791 | 5,138 | 29,246 | ||||||||||||||
Acquisition-related restructuring and integration costs | 1,783 | 6,143 | — | 14,321 | — | ||||||||||||||
Amortization of intangible assets related to acquisitions | 1,563 | 1,229 | 1,215 | 4,298 | 4,858 | ||||||||||||||
Non-compensation expenses from acquisition-related agreements | — | — | 171 | 114 | 683 | ||||||||||||||
Adjusted income before adjusted income tax expense | $ | 56,284 | $ | 32,324 | $ | 38,806 | $ | 136,387 | $ | 108,482 | |||||||||
Income tax expense: | |||||||||||||||||||
Income tax expense – U.S. GAAP basis | $ | 13,848 | $ | 6,717 | $ | 13,097 | $ | 24,577 | $ | 18,046 | |||||||||
Tax effect of adjustments: | |||||||||||||||||||
Compensation from acquisition-related agreements | 107 | 259 | 1,436 | 1,014 | 7,254 | ||||||||||||||
Acquisition-related restructuring and integration costs | 442 | 1,523 | — | 3,551 | — | ||||||||||||||
Amortization of intangible assets related to acquisitions | 383 | 301 | 301 | 1,048 | 1,203 | ||||||||||||||
Non-compensation expenses from acquisition-related agreements | — | — | 42 | — | 169 | ||||||||||||||
Impact of the Tax Cuts and Jobs Act legislation | — | — | — | — | (952 | ) | |||||||||||||
Impact of deferred tax asset valuation allowance | — | — | (4,650 | ) | — | (4,650 | ) | ||||||||||||
Adjusted income tax expense | $ | 14,780 | $ | 8,800 | $ | 10,226 | $ | 30,190 | $ | 21,070 | |||||||||
Continued on next page |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
Dec. 31, | Sept. 30, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||||||
(Amounts in thousands, except per share data) | 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
Net income applicable to Piper Sandler Companies: | |||||||||||||||||||
Net income applicable to Piper Sandler Companies – U.S. GAAP basis | $ | 38,658 | $ | 43,242 | $ | 18,184 | $ | 111,711 | $ | 57,036 | |||||||||
Adjustment to exclude net income/(loss) from discontinued operations | — | 26,077 | (348 | ) | 23,772 | 1,387 | |||||||||||||
Net income from continuing operations | $ | 38,658 | $ | 17,165 | $ | 18,532 | $ | 87,939 | $ | 55,649 | |||||||||
Adjustments: | |||||||||||||||||||
Compensation from acquisition-related agreements | 325 | 811 | 4,355 | 4,124 | 21,992 | ||||||||||||||
Acquisition-related restructuring and integration costs | 1,341 | 4,620 | — | 10,770 | — | ||||||||||||||
Amortization of intangible assets related to acquisitions | 1,180 | 928 | 914 | 3,250 | 3,655 | ||||||||||||||
Non-compensation expenses from acquisition-related agreements | — | — | 129 | 114 | 514 | ||||||||||||||
Impact of the Tax Cuts and Jobs Act legislation | — | — | — | — | 952 | ||||||||||||||
Impact of deferred tax asset valuation allowance | — | — | 4,650 | — | 4,650 | ||||||||||||||
Adjusted net income | $ | 41,504 | $ | 23,524 | $ | 28,580 | $ | 106,197 | $ | 87,412 | |||||||||
Net income applicable to Piper Sandler Companies' common shareholders: | |||||||||||||||||||
Net income applicable to Piper Sandler Companies' common shareholders – U.S. GAAP basis | $ | 38,006 | $ | 42,442 | $ | 16,164 | $ | 107,200 | $ | 49,993 | |||||||||
Adjustment to exclude net income/(loss) from discontinued operations | — | 25,583 | (311 | ) | 22,928 | 1,217 | |||||||||||||
Net income from continuing operations | $ | 38,006 | $ | 16,859 | $ | 16,475 | $ | 84,272 | $ | 48,776 | |||||||||
Adjustment related to participating shares (10) | — | — | — | 625 | 40 | ||||||||||||||
38,006 | 16,859 | 16,475 | 84,897 | 48,816 | |||||||||||||||
Adjustments: | |||||||||||||||||||
Compensation from acquisition-related agreements | 319 | 796 | 3,879 | 3,981 | 19,428 | ||||||||||||||
Acquisition-related restructuring and integration costs | 1,316 | 4,531 | — | 10,397 | — | ||||||||||||||
Amortization of intangible assets related to acquisitions | 1,160 | 911 | 817 | 3,138 | 3,212 | ||||||||||||||
Non-compensation expenses from acquisition-related agreements | — | — | 115 | 110 | 452 | ||||||||||||||
Impact of the Tax Cuts and Jobs Act legislation | — | — | — | — | 837 | ||||||||||||||
Impact of deferred tax asset valuation allowance | — | — | 4,136 | — | 4,087 | ||||||||||||||
Adjusted net income applicable to Piper Sandler Companies' common shareholders | $ | 40,801 | $ | 23,097 | $ | 25,422 | $ | 102,523 | $ | 76,832 | |||||||||
Earnings per diluted common share: | |||||||||||||||||||
Earnings per diluted common share – U.S. GAAP basis | $ | 2.70 | $ | 3.01 | $ | 1.21 | $ | 7.69 | $ | 3.72 | |||||||||
Adjustment to exclude net income/(loss) from discontinued operations | — | 1.82 | (0.02 | ) | 1.65 | 0.09 | |||||||||||||
Income from continuing operations | $ | 2.70 | $ | 1.20 | $ | 1.23 | $ | 6.05 | $ | 3.63 | |||||||||
Adjustment related to participating shares (10) | — | — | — | 0.04 | — | ||||||||||||||
2.70 | 1.20 | 1.23 | 6.09 | 3.63 | |||||||||||||||
Adjustments: | |||||||||||||||||||
Compensation from acquisition-related agreements | 0.02 | 0.06 | 0.29 | 0.29 | 1.44 | ||||||||||||||
Acquisition-related restructuring and integration costs | 0.08 | 0.32 | — | 0.75 | — | ||||||||||||||
Amortization of intangible assets related to acquisitions | 0.08 | 0.06 | 0.06 | 0.23 | 0.24 | ||||||||||||||
Non-compensation expenses from acquisition-related agreements | — | — | 0.01 | 0.01 | 0.04 | ||||||||||||||
Impact of the Tax Cuts and Jobs Act legislation | — | — | — | — | 0.06 | ||||||||||||||
Impact of deferred tax asset valuation allowance | — | — | 0.31 | — | 0.31 | ||||||||||||||
Adjusted earnings per diluted common share | $ | 2.89 | $ | 1.64 | $ | 1.90 | $ | 7.36 | $ | 5.72 |
(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) acquisition-related restructuring and integration costs, (c) amortization of intangible assets related to acquisitions and (d) non-compensation expenses from acquisition-related agreements. |
(5) | A non-GAAP measure which excludes (a) revenues and expenses related to noncontrolling interests (see (11) below), (b) compensation and non-compensation expenses from acquisition-related agreements, (c) acquisition-related 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 and non-compensation expenses from acquisition-related agreements, (b) acquisition-related restructuring and integration costs and (c) amortization of intangible assets related to acquisitions. This also excludes the impact of a one-time remeasurement of deferred tax assets due to a lower federal corporate tax rate resulting from the enactment of the Tax Cuts and Jobs Act, as well as the impact of a deferred tax valuation allowance. |
(8) | A non-GAAP measure which represents net income earned by the Company excluding (a) compensation and non-compensation expenses from acquisition-related agreements, (b) acquisition-related restructuring and integration costs, (c) amortization of intangible assets related to acquisitions, (d) the impact of the enactment of the Tax Cuts and Jobs Act, (e) the impact of a deferred tax valuation allowance and (f) the income tax expense allocated to the adjustments. |
(9) | 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) | A non-GAAP measure for which the adjustment related to participating shares excludes the impact of the annual special cash dividend paid in the first quarter. |
(11) | Noncontrolling interests include revenue and expenses from consolidated alternative asset management entities that are not attributable, either directly or indirectly, to Piper Sandler Companies. |
Three Months Ended | Twelve Months | |||||||||||||||||||
(Amounts in thousands) | Mar. 31, | June 30, | Sept. 30, | Dec. 31, | Ended | |||||||||||||||
2019 | 2019 | 2019 | 2019 | Dec. 31, 2019 | ||||||||||||||||
Net revenues | $ | 9,290 | $ | 9,317 | $ | 7,939 | $ | — | $ | 26,546 | ||||||||||
Operating expenses | 8,139 | 7,382 | 7,068 | — | 22,589 | |||||||||||||||
Intangible asset amortization and impairment | 1,359 | 4,106 | (1) | — | — | 5,465 | (1) | |||||||||||||
Restructuring costs | — | 696 | 9,572 | — | 10,268 | |||||||||||||||
Total non-interest expenses | 9,498 | 12,184 | 16,640 | — | 38,322 | |||||||||||||||
Loss from discontinued operations before income tax benefit | (208 | ) | (2,867 | ) | (8,701 | ) | — | (11,776 | ) | |||||||||||
Income tax benefit | (69 | ) | (701 | ) | (1,752 | ) | — | (2,522 | ) | |||||||||||
Net loss from discontinued operations before gain on sale | (139 | ) | (2,166 | ) | (6,949 | ) | — | (9,254 | ) | |||||||||||
Gain on sale, net of tax | — | — | 33,026 | — | 33,026 | |||||||||||||||
Net income/(loss) from discontinued operations | $ | (139 | ) | $ | (2,166 | ) | $ | 26,077 | $ | — | $ | 23,772 |
(1) | Includes $2.9 million of intangible asset impairment related to the ARI trade name. |
Three Months Ended | Twelve Months | |||||||||||||||||||
(Amounts in thousands) | Mar. 31, | June 30, | Sept. 30, | Dec. 31, | Ended | |||||||||||||||
2018 | 2018 | 2018 | 2018 | Dec. 31, 2018 | ||||||||||||||||
Net revenues | $ | 11,199 | $ | 11,121 | $ | 11,576 | $ | 9,593 | $ | 43,489 | ||||||||||
Operating expenses | 9,882 | 9,077 | 8,327 | 7,941 | 35,227 | |||||||||||||||
Intangible asset amortization | 1,401 | 1,400 | 1,401 | 1,400 | 5,602 | |||||||||||||||
Restructuring costs | — | 272 | — | — | 272 | |||||||||||||||
Total non-interest expenses | 11,283 | 10,749 | 9,728 | 9,341 | 41,101 | |||||||||||||||
Income/(loss) from discontinued operations before income tax expense/(benefit) | (84 | ) | 372 | 1,848 | 252 | 2,388 | ||||||||||||||
Income tax expense/(benefit) | (69 | ) | 8 | 462 | 600 | 1,001 | ||||||||||||||
Net income/(loss) from discontinued operations | $ | (15 | ) | $ | 364 | $ | 1,386 | $ | (348 | ) | $ | 1,387 |
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Cover Page Document |
Jan. 31, 2020 |
---|---|
Cover page. | |
Document Type | 8-K |
Document Period End Date | Jan. 31, 2020 |
Entity Registrant Name | PIPER SANDLER COMPANIES |
Entity Incorporation, State or Country Code | DE |
Entity File Number | 1-31720 |
Entity Tax Identification Number | 30-0168701 |
Entity Address, Address Line One | 800 Nicollet Mall, Suite 900 |
Entity Address, City or Town | Minneapolis |
Entity Address, State or Province | MN |
Entity Address, Postal Zip Code | 55402 |
City Area Code | (612) |
Local Phone Number | 303-6000 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Title of 12(b) Security | Common Stock, par value $0.01 per share |
Trading Symbol | PIPR |
Security Exchange Name | NYSE |
Entity Emerging Growth Company | false |
Entity Central Index Key | 0001230245 |
Amendment Flag | false |
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