Piper Jaffray Companies (NYSE: PJC) today announced that for the
quarter ended Dec. 31, 2012, net income from continuing operations
was $15.6 million, or $0.88 per diluted common share. These results
compared to non-GAAP net income from continuing operations of $2.4
million (1) or $0.13 (1) per diluted common share, in the year-ago
period. The references to non-GAAP figures in the year-ago period
exclude the effects of a $118.4 million after tax goodwill
impairment charge. On a GAAP basis, net loss from continuing
operations in the year-ago period was $116.0 million, or $7.35 per
diluted common share. In the third quarter of 2012, net income from
continuing operations was $14.5 million, or $0.82 per diluted
common share.
For the fourth quarter of 2012, net revenues from continuing
operations were $140.9 million, compared to $93.1 million in the
fourth quarter of 2011, and $131.5 million in the third quarter of
2012.
For the quarter ended Dec. 31, 2012, net income, including
continuing and discontinued operations, was $11.8 million, or $0.67
per diluted common share, compared to non-GAAP net income of $2.1
million(2), or $0.11 (2) per diluted common share, in the year-ago
period, and $19.7 million, or $1.11 per diluted common share in the
third quarter of 2012. On a GAAP basis, net loss from continuing
and discontinued operations in the year-ago period was $116.4
million, or $7.38 per diluted common share. Discontinued operations
includes the operating results of the Hong Kong capital markets
business, which we have shut down, and FAMCO, a division of the
asset management segment. The firm is actively pursuing a sale of
the FAMCO business.
For the year ended Dec. 31, 2012, net income from continuing
operations was $47.1 million, or $2.58 per diluted common share,
compared to non-GAAP net income of $27.7 million(1), or $1.44 (1)
per diluted common share in the prior year (and a net loss of $90.8
million, or $5.79 per diluted common share in the prior year on a
GAAP basis). For 2012, net revenues from continuing operations were
$489.0 million up 13% compared to 2011, due to higher revenues
across our fixed income and advisory services businesses.
“We produced solid results for the quarter and the year despite
adverse market conditions facing several of our businesses,” said
Andrew S. Duff, chairman and chief executive officer. “Compared to
the prior quarter, strong performance in M&A and public
finance, and improved results in equities, more than offset weaker
results in our fixed income trading businesses, while our equity
capital raising and asset management businesses were flat
sequentially.”
Duff continued, “Our strategy served us well as we focused our
resources on our businesses where we are strongest, working to
generate higher margins and improving our return on equity. Key
execution steps in 2012 included adding resources in public
finance, fixed income and M&A, creating more flexibility with
our lenders, reducing costs, and exiting businesses that lacked
sustainability or did not contribute meaningfully to our results.
These efforts contributed to an improvement in ROE to 5.7%(6) in
2012 compared to 2.3%(6) in 2011.”
Fourth Quarter Results from Continuing Operations
Consolidated ExpensesFor the fourth quarter of 2012,
compensation and benefits expenses were $87.4 million, up 44% and
12% compared to the fourth quarter of 2011 and the third quarter of
2012, respectively, due to improved financial results.
For the fourth quarter of 2012, compensation and benefits
expenses were 62.0% of net revenues, compared to 65.2% for the
fourth quarter of 2011 and 59.4% for the third quarter of 2012. The
compensation ratio decreased compared to the fourth quarter of 2011
due to higher revenues, and increased compared to the third quarter
of 2012 primarily due to changes in our mix of revenues.
For the fourth quarter of 2012, non-compensation expenses were
$30.7 million, compared to non-GAAP non-compensation expenses of
$30.5 million(3) in the year-ago period, and $28.1 million in the
third quarter of 2012. In the year ago period, non-compensation
expenses on a GAAP basis were $150.8 million.
Business Segment ResultsThe 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 the Hong Kong capital
markets business, and FAMCO, a division of the asset management
segment, are presented as discontinued operations for all periods
presented.
Capital MarketsFor the quarter, Capital Markets generated
pre-tax operating income of $19.4 million, compared to a non-GAAP
pre-tax operating loss of $2.1 million(4) in the year-ago period
and pre-tax operating income of $20.6 million in the third quarter
of 2012. On a GAAP basis, with the goodwill impairment charge, this
segment generated a pre-tax operating loss of $122.4 million in the
year-ago period.
Net revenues were $124.5 million, up 61% and 8% compared to the
year-ago period and the third quarter of 2012, respectively.
- Equity financing revenues of $18.0
million increased 17% compared to the fourth quarter of 2011 and
were similar to the third quarter of 2012. Revenues were higher
compared to the year-ago period due to more completed
transactions.
- Fixed income financing revenues of
$20.5 million increased 35% and 24% compared to the fourth quarter
of 2011 and the third quarter of 2012, respectively. Revenues were
favorable compared to the year-ago period due to higher revenue per
transaction, and favorable compared to the third quarter of 2012
due to more completed transactions. We continue to gain market
share and expand our national footprint in the public finance
space.
- Advisory services revenues were a
record $44.5 million, up 139% and 173% compared to the fourth
quarter of 2011 and the third quarter of 2012, respectively.
Advisory services revenues were extremely strong in the current
quarter as sellers were motivated to complete deals prior to
year-end. In addition to favorable market conditions, recent
additions to our M&A team also contributed to our results.
- Equity institutional brokerage revenues
of $20.1 million were in line with the fourth quarter of 2011 and
up 12% compared to the third quarter of 2012.
- Fixed income institutional brokerage
revenues were $23.5 million up 112% compared to the fourth quarter
of 2011 and down 50% compared to the third quarter of 2012.
Revenues were favorable compared to the year-ago period due to more
favorable market conditions in the current quarter. Revenues were
lower compared to the third quarter of 2012 due to lower results in
our strategic trading activities, following an exceptionally strong
third quarter.
- Operating expenses were $105.1 million
for the fourth quarter of 2012, compared to non-GAAP operating
expenses of $79.4 million(5) in the prior year quarter ($199.7
million on a GAAP basis in the prior year quarter), and $94.7
million in the third quarter of 2012. Operating expenses increased
relative to the comparable quarters due to higher compensation
expense resulting from improved operating results.
- For the fourth quarter of 2012, the
segment pre-tax operating margin was 15.6%, compared to a negative
2.7%(4) on a non-GAAP basis in the year-ago period, and a 17.9%
operating margin in the third quarter of 2012. Pre-tax operating
margin in the current quarter was significantly higher compared to
the year-ago period due to higher revenues, and lower than the
third quarter of 2012 due to higher compensation expense driven by
the business mix for the quarter.
Asset ManagementFor the quarter ended Dec. 31, 2012,
asset management generated pre-tax operating income of $3.4
million, down 16% and 29%, compared to the fourth quarter of 2011
and the third quarter of 2012, respectively.
- Net revenues were $16.4 million, up 4%
and 1%, compared to the fourth quarter of 2011 and the third
quarter of 2012, respectively.
- Operating expenses for the current
quarter were $13.0 million, up 11% and 14%, compared to the
year-ago period, and the third quarter of 2012, respectively.
Segment pre-tax operating margin was 20.6%, compared to 25.6% in
the year-ago period, and 29.4% in the third quarter of 2012.
Segment pre-tax margin was lower relative to the comparable
quarters due to higher compensation expense within our asset
management division.
- Assets under management (AUM) were $9.1
billion in the fourth quarter of 2012, compared to $8.6 billion in
the year-ago period, and $9.2 billion in the third quarter of
2012.
Other MattersIn the fourth quarter of 2012, the firm
repurchased $4.7 million, or 158,332 shares, of its common stock at
an average price of $29.37 per share. The firm has $95.4 million
remaining on its share repurchase authorization, which expires on
Sept. 30, 2014.
Fourth Quarter Results from Discontinued Operations
Discontinued operations includes the operating results of the
Hong Kong capital markets business, which we have shut down, and
FAMCO, a division of the asset management segment. The firm is
actively pursuing a sale of the FAMCO business.
For the quarter ended Dec. 31, 2012, net loss from discontinued
operations was $3.7 million, or $0.21 per diluted common share,
compared to a net loss of $0.4 million in the fourth quarter of
2011, or $0.02 per diluted share, and net income of $5.2 million,
or $0.29 per diluted share, in the third quarter of 2012. Included
in the current quarter is a $3.4 million after-tax, non-cash
goodwill impairment charge related to FAMCO.
Full-Year 2012 Results from Continuing Operations
Consolidated ExpensesFor 2012, compensation and benefits
expenses were $296.9 million, up 12% compared to 2011, due to
improved financial performance. Compensation and benefits expenses
were 60.7% of net revenues, down from 61.3% in 2011.
For 2012, non-compensation expenses were $123.1 million compared
to $127.0 million(3) in 2011 on a non-GAAP basis (and $247.3
million on a GAAP basis).
Business Segment ResultsThe firm’s Hong Kong capital
markets and FAMCO businesses are presented as discontinued
operations for all periods presented.
Capital MarketsFor 2012, Capital Markets generated
pre-tax operating income of $52.5 million, compared to non-GAAP
pre-tax operating income of $25.0 million(4) in 2011 (and pre-tax
operating loss of $95.3 million on a GAAP basis). Net revenues were
$424.1 million, up 15% compared to 2011 due to higher revenues in
our fixed income and advisory businesses.
For 2012, operating expenses were $371.6 million, up 8% compared
to non-GAAP operating expenses for 2011 of $344.0 million (5) (and
$464.3 million on a GAAP basis). Segment pre-tax operating margin
improved to 12.4%, compared to a non-GAAP pre-tax operating margin
of 6.8%(4) in 2011. Pre-tax operating margin increased
significantly in 2012 due to operating leverage related to
increased revenues.
Asset ManagementFor 2012, asset management generated
pre-tax operating income of $16.5 million, up 9% compared to 2011.
Net revenues were $64.8 million, up 3% compared to 2011.
Operating expenses for the year were $48.3 million, up 1%
compared to 2011. Segment pre-tax operating margin was 25.5%, up
slightly from 2011.
Other MattersFor the full year 2012, the firm repurchased
$47.2 million, or 2.0 million shares, of its common stock, at an
average price of $23.22.
Additional Shareholder Information*
For the Quarter Ended:
As of Dec. 31, 2012 As of Sept. 30,
2012 As of Dec. 31, 2011 Number of
employees 907 901 919
Equity financings # of
transactions 16 14 10 Capital
raised $1.5 billion $2.5 billion
$2.7 billion Tax-exempt issuance # of
transactions 154 113 144 Par value
$2.1 billion $2.3 billion
$2.2 billion Mergers & acquisitions # of
transactions 22 6 11 Aggregate deal
value $6.8 billion $0.7 billion
$1.3 billion Asset Management AUM
$9.1 billion
$9.2 billion
$8.6 billion Common shareholders’ equity
$733.3 million $724.6 million
$718.4 million Annualized qtrly. return on avg. common
shareholders’ equity ** 6.5%
11.0%
1.1%(7)
Book value per share: $48.20
$47.58
$45.61 Tangible book value per
share(8):
$32.39
$31.30
$29.51
For the Year
Ended: As of Dec. 31, 2012 As of
Dec. 31, 2011 Equity financings # of transactions
67 60 Capital raised $9.1
billion*** $12.9 billion Tax-exempt
issuance # of transactions 568 520 Par
value $9.3 billion $6.9 billion
Mergers & acquisitions # of transactions
40 38 Aggregate deal value $10.2
billion $5.2 billion Asset Management AUM
$9.1 billion $8.6 billion Return on
avg. common shareholders’ equity(6) 5.7%
2.3%
*Number of employees, transaction data, and AUM reflect
continuing operations; other numbers reflect continuing and
discontinued results.
**Annualized return on average common shareholders’ equity is
computed by dividing annualized net income by average monthly
common shareholders’ equity.
***Due to size, Facebook IPO capital raised has been
excluded.
Conference CallAndrew S. Duff, chairman and chief
executive officer, and Debbra L. Schoneman, chief financial
officer, will hold a conference call to review the financial
results Wed., Jan. 30 at 9 a.m. ET (8 a.m. CT). The earnings
release will be available on or after Jan. 30 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 #85504834. 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 Jan. 30 at
the same Web address or by calling (855)859-2056 and referencing
reservation #85504834 .
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 and Zurich. www.piperjaffray.com
Cautionary Note Regarding Forward-Looking Statements
This press release and the conference call to discuss the
contents of this press release contain forward-looking statements.
Statements that are not historical or current facts, including
statements about beliefs and expectations, are forward-looking
statements and are subject to significant risks and uncertainties
that are difficult to predict. These forward-looking statements
cover, among other things, statements made about general economic
and market conditions, the environment and prospects for capital
markets transactions (including corporate advisory transactions),
anticipated financial results from strategic trading activities
within fixed income institutional brokerage, the sale of the FAMCO
division of our asset management business, anticipated financial
results generally (including expectations regarding our
compensation ratio, revenue levels, operating margins, earnings per
share, and return on equity), current deal pipelines (or backlogs),
our strategic priorities (including growth in public finance, asset
management, and corporate advisory), or other similar matters.
These statements involve inherent risks and uncertainties, both
known and unknown, and important factors could cause actual results
to differ materially from those anticipated or discussed in the
forward-looking statements, including (1) market and economic
conditions or developments may be unfavorable, including in
specific sectors in which we operate, and these conditions or
developments, such as market fluctuations or volatility, may
adversely affect our business, revenue levels and profitability,
(2) the volume of anticipated investment banking transactions
as reflected in our deal pipelines (and the net revenues we earn
from such transactions) may differ from expected results if any
transactions are delayed or not completed at all or if the terms of
any transactions are modified, (3) strategic trading
activities comprise a meaningful portion of our fixed income
institutional brokerage revenue, and results from these activities
may be volatile and vary significantly, including the possibility
of incurring losses, on a quarterly and annual basis, (4) our
ability to manage expenses may be limited by the fixed nature of
certain expenses as well as the impact from unanticipated expenses,
(5) the sale of the FAMCO business could cause us to incur
unforeseen expenses and have disruptive effects on our business,
(6) we may not be able to compete successfully with other
companies in the financial services industry, which may impact our
ability to achieve our growth priorities and objectives,
(7) our stock price may fluctuate as a result of several
factors, including but not limited to, changes in our revenues and
operating results, and (8) the other factors described under
“Risk Factors” in Part I, Item 1A of our Annual Report on
Form 10-K for the year ended December 31, 2011 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, 2011, 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.
© 2013 Piper Jaffray Companies, 800 Nicollet Mall, Suite 800,
Minneapolis, Minnesota 55402-7020
Piper Jaffray Companies
Preliminary Unaudited Results of Operations
Three Months Ended Percent Inc/(Dec) Twelve Months
Ended Dec. 31, Sept. 30, Dec. 31, 4Q
'12 4Q '12 Dec. 31, Dec. 31,
Percent (Amounts in thousands, except per share data)
2012 2012 2011 vs. 3Q '12 vs. 4Q
'11 2012 2011 Inc/(Dec) Revenues:
Investment banking $ 82,393 $ 51,083 $ 48,665 61.3 % 69.3 % $
230,929 $ 200,500 15.2 % Institutional brokerage 38,017 58,719
24,364 (35.3 ) 56.0 172,023 136,096 26.4 Asset management 16,516
16,136 15,519 2.4 6.4 65,215 63,307 3.0 Interest 13,102 12,457
13,034 5.2 0.5 48,844 55,440 (11.9 ) Other income/(loss) (11
) 235 (1,705 ) N/M (99.4 ) 1,231
8,313 (85.2 ) Total revenues 150,017 138,630 99,877
8.2 50.2 518,242 463,656 11.8 Interest expense 9,106
7,125 6,824 27.8 33.4
29,290 31,573 (7.2 ) Net
revenues 140,911 131,505 93,053
7.2 51.4 488,952 432,083
13.2
Non-interest expenses: Compensation and
benefits 87,415 78,070 60,632 12.0 44.2 296,882 265,015 12.0
Occupancy and equipment 6,783 6,057 6,579 12.0 3.1 26,454 28,430
(7.0 ) Communications 4,431 5,276 5,181 (16.0 ) (14.5 ) 20,543
22,121 (7.1 ) Floor brokerage and clearance 2,120 1,825 2,249 16.2
(5.7 ) 8,054 8,925 (9.8 ) Marketing and business development 4,926
4,259 5,917 15.7 (16.7 ) 19,908 22,640 (12.1 ) Outside services
8,188 6,747 7,098 21.4 15.4 27,998 27,570 1.6 Restructuring-related
expense - - - N/M N/M 3,642 - N/M Goodwill impairment - - 120,298
N/M N/M - 120,298 N/M Intangible asset amortization expense 1,736
1,736 1,814 - (4.3 ) 6,944 7,256 (4.3 ) Other operating expenses
2,530 2,183 1,661 15.9
52.3 9,516 10,017 (5.0 ) Total
non-interest expenses 118,129 106,153
211,429 11.3 (44.1 ) % 419,941
512,272 (18.0 )
Income/(loss) from continuing
operations before income tax expense/(benefit)
22,782 25,352 (118,376 ) (10.1 ) N/M 69,011 (80,189 ) N/M
Income tax expense/(benefit) 7,422 10,194
(2,989 ) (27.2 ) N/M 19,470
9,120 113.5
Income/(loss) from continuing
operations 15,360 15,158 (115,387 )
1.3 N/M 49,541 (89,309 ) N/M
Discontinued operations: Income/(loss) from
discontinued operations, net of tax (3,741 ) 5,171
(360 ) N/M N/M (5,807 ) (11,248
) (48.4 )
Net income/(loss) 11,619 20,329 (115,747 )
(42.8 ) N/M 43,734 (100,557 ) N/M Net income/(loss)
applicable to noncontrolling interests (205 ) 665
617 N/M N/M 2,466
1,463 68.6 %
Net income/(loss) applicable to Piper
Jaffray Companies (1)
$ 11,824 $ 19,664 $ (116,364 ) (39.9 ) % N/M $ 41,268
$ (102,020 ) N/M
Net income/(loss) applicable to Piper
Jaffray Companies' common shareholders (1)
$ 10,198 $ 16,840 $ (116,364 ) (39.4 ) % N/M $ 35,335
$ (102,020 ) N/M
Amounts applicable to
Piper Jaffray Companies Income/(loss) from continuing
operations $ 15,565 $ 14,493 $ (116,004 ) 7.4 % N/M $ 47,075 $
(90,772 ) N/M Income/(loss) from discontinued operations, net of
tax (3,741 ) 5,171 (360 ) N/M N/M
(5,807 ) (11,248 ) (48.4 ) % Net income/(loss)
applicable to Piper Jaffray Companies $ 11,824 $ 19,664 $ (116,364
) (39.9 ) % N/M $ 41,268 $ (102,020 ) N/M
Earnings/(loss)
per basic common share Income/(loss) from continuing operations
$ 0.88 $ 0.82 $ (7.35 ) 7.3 % N/M $ 2.58 $ (5.79 ) N/M
Income/(loss) from discontinued operations (0.21 )
0.29 (0.02 ) N/M N/M (0.32 )
(0.72 ) (55.4 ) % Earnings/(loss) per basic common share $ 0.67 $
1.11 $ (7.38 ) (39.6 ) % N/M $ 2.26 $ (6.51 ) N/M
Earnings/(loss) per diluted common share Income/(loss) from
continuing operations $ 0.88 $ 0.82 $ (7.35 ) 7.3 % N/M $ 2.58 $
(5.79 ) N/M Income/(loss) from discontinued operations (0.21
) 0.29 (0.02 ) N/M N/M (0.32 )
(0.72 ) (55.4 ) % Earnings/(loss) per diluted common share $
0.67 $ 1.11 $ (7.38 ) (2) (39.6 ) % N/M $ 2.26 $ (6.51 ) (2) N/M
Weighted average number of common shares outstanding
Basic 15,253 15,210 15,773 0.3 % (3.3 ) % 15,615 15,672 (0.4 ) %
Diluted 15,256 15,210 15,773 (2) 0.3 % (3.3 ) % 15,616 15,672 (2)
(0.4 ) %
(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.
(2) Earnings per diluted common share is calculated using the
basic weighted average number of common shares outstanding for
periods in which a loss is incurred.
N/M - Not meaningful
Piper Jaffray Companies Preliminary Unaudited Segment
Data from Continuing Operations
Three
Months Ended Percent Inc/(Dec) Twelve Months
Ended Dec. 31, Sept. 30, Dec. 31, 4Q
'12 4Q '12 Dec. 31, Dec. 31,
Percent (Dollars in thousands)
2012 2012
2011 vs. 3Q '12 vs. 4Q '11 2012
2011 Inc/(Dec) Capital Markets
Investment banking Financing Equities $ 18,039 $ 18,781 $ 15,479
(4.0 ) % 16.5 % $ 73,180 $ 74,161 (1.3 ) % Debt 20,504 16,573
15,210 23.7 34.8 74,102 54,565 35.8 Advisory services 44,495
16,317 18,610 172.7 139.1
86,165 74,373 15.9 Total
investment banking 83,038 51,671 49,299 60.7 68.4 233,447 203,099
14.9 Institutional sales and trading Equities 20,134 17,927
20,147 12.3 (0.1 ) 75,723 86,175 (12.1 ) Fixed income 23,480
46,690 11,097 (49.7 ) 111.6
119,253 77,017 54.8 Total
institutional sales and trading 43,614 64,617 31,244 (32.5 ) 39.6
194,976 163,192 19.5 Other income/(loss) (2,144 )
(1,039 ) (3,206 ) 106.4 (33.1 ) (4,285
) 2,746 N/M Net revenues 124,508
115,249 77,337 8.0 61.0 424,138 369,037 14.9 Non-interest
expenses Goodwill impairment - - 120,298 N/M N/M - 120,298 N/M
Operating expenses 105,099 94,671
79,436 11.0 32.3 371,628
344,036 8.0 Total non-interest expenses
105,099 94,671 199,734 11.0 (47.4 ) % 371,628 464,334 (20.0 ) %
Segment pre-tax operating income/(loss) $ 19,409 $
20,578 $ (122,397 ) (5.7 ) % N/M $ 52,510 $
(95,297 ) N/M Segment pre-tax operating margin
15.6%
17.9%
(158.3)%
12.4%
(25.8)%
Asset Management Management and
performance fees Management fees $ 16,083 $ 15,800 $ 14,914 1.8 %
7.8 % $ 63,296 $ 60,873 4.0 % Performance fees 121
22 499 450.0 (75.8 ) 785
2,245 (65.0 ) Total management and performance
fees 16,204 15,822 15,413 2.4 5.1 64,081 63,118 1.5 Other
income/(loss) 199 434 303
(54.1 ) (34.3 ) 733 (72 ) N/M
Net revenues 16,403 16,256 15,716 0.9 4.4 64,814 63,046 2.8
Operating expenses 13,030 11,482
11,695 13.5 11.4 48,313
47,938 0.8 Segment pre-tax operating income $
3,373 $ 4,774 $ 4,021 (29.3 ) % (16.1 ) % $
16,501 $ 15,108 9.2 % Segment pre-tax
operating margin
20.6%
29.4%
25.6%
25.5%
24.0%
Total Net revenues $ 140,911 $ 131,505
$ 93,053 7.2 % 51.4 % $ 488,952 $ 432,083 13.2 %
Non-interest expenses Goodwill impairment - - 120,298 N/M N/M -
120,298 N/M Operating expenses 118,129 106,153
91,131 11.3 29.6 419,941
391,974 7.1 Total non-interest expenses
118,129 106,153 211,429 11.3 (44.1 ) % 419,941 512,272 (18.0 ) %
Total segment pre-tax operating income/(loss) $ 22,782
$ 25,352 $ (118,376 ) (10.1 ) % N/M $ 69,011
$ (80,189 ) N/M Pre-tax operating margin
16.2%
19.3%
(127.2)%
14.1%
(18.6)%
N/M - Not meaningful Segment pre-tax operating income
and segment pre-tax operating margin exclude the results of
discontinued operations.
Piper Jaffray Companies
Preliminary Data from Discontinued Operations
Three Months Ended Percent Inc/(Dec)
Twelve Months Ended Dec. 31, Sept. 30, Dec.
31, 4Q '12 4Q '12 Dec. 31, Dec. 31,
Percent (Dollars in thousands)
2012 2012
2011 vs. 3Q '12 vs. 4Q '11 2012
2011 Inc/(Dec) Piper Jaffray Asia Net
revenues $ 10 $ 2,674 $ 4,479 (99.6 ) % (99.8 ) % $ 6,635 $ 15,996
(58.5 ) % Non-interest expenses Restructuring-related
expenses 478 11,057 - (95.7 ) N/M 11,535 - N/M Operating expenses
- 5,843 4,905 N/M
N/M 16,550 24,983 (33.8 ) Total
non-interest expenses 478 16,900
4,905 (97.2 ) (90.3 ) 28,085 24,983
12.4 Loss before income tax expense/(benefit)
(468 ) (14,226 ) (426 ) (96.7 ) 9.9 (21,450 ) (8,987 ) 138.7
Income tax expense/(benefit) (100 ) (21,029 )
41 (99.5 ) % N/M (21,069 ) 1,927
N/M Net income/(loss) $ (368 ) $ 6,803 $ (467
) N/M (21.2 ) % $ (381 ) $ (10,914 ) (96.5 ) %
FAMCO Net revenues $ 1,490 $ 1,453 $ 1,596 2.5 % (6.6
) % $ 5,718 $ 6,584 (13.2 ) % Non-interest expenses Goodwill
impairment 5,508 - - N/M N/M 5,508 - N/M Operating expenses
1,400 4,090 1,443 (65.8 ) (3.0 )
8,362 7,089 18.0 Total
non-interest expenses 6,908 4,090
1,443 68.9 378.7 % 13,870
7,089 95.7 %
Income/(loss) before income tax
expense/(benefit)
(5,418 ) (2,637 ) 153 105.5 N/M (8,152 ) (505 ) N/M Income
tax expense/(benefit) (2,045 ) (1,005 ) 46
103.5 N/M (2,726 ) (171 ) N/M
Net income/(loss) $ (3,373 ) $ (1,632 ) $ 107
106.7 % N/M $ (5,426 ) $ (334 ) N/M
Total Discontinued Operations Net revenues $
1,500 $ 4,127 $ 6,075 (63.7 ) % (75.3 ) % $ 12,353 $ 22,580 (45.3 )
% Non-interest expenses Restructuring-related expenses 478
11,057 - (95.7 ) N/M 11,535 - N/M Goodwill impairment 5,508 - - N/M
N/M 5,508 - N/M Operating expenses 1,400 9,933
6,348 (85.9 ) (77.9 ) 24,912
32,072 (22.3 ) Total non-interest expenses
7,386 20,990 6,348 (64.8 ) 16.4
% 41,955 32,072 30.8
Loss before income tax
expense/(benefit)
(5,886 ) (16,863 ) (273 ) (65.1 ) N/M (29,602 ) (9,492 ) 211.9
Income tax expense/(benefit) (2,145 ) (22,034
) 87 (90.3 ) % N/M (23,795 )
1,756 N/M Net income/(loss) $ (3,741 ) $ 5,171
$ (360 ) N/M N/M $ (5,807 ) $ (11,248 ) (48.4
) %
N/M - Not meaningful
FOOTNOTES This
press release includes the use of non-GAAP financial measures that
are not prepared in accordance with U.S. generally accepted
accounting principles. These non-GAAP financial measures should not
be considered a substitute for measures of financial performance
prepared in accordance with GAAP. These non-GAAP financial measures
have been used in this press release because management believes
they are useful to investors by providing greater transparency to
Piper Jaffray’s operating performance. The non-GAAP
financial measures used in footnotes 1 through 5 exclude the
effects of a goodwill impairment charge recognized in the fourth
quarter of 2011. (1)
Income/(loss) from continuing
operations and earnings per share Three Months Ended Twelve
Months Ended (Amounts in thousands, except per share data) Dec. 31,
2011 Dec. 31, 2011 Loss from continuing operations $ (116,004 ) $
(90,772 ) Adjustment to exclude the goodwill impairment charge, net
of income tax 118,448 118,448
Net income from continuing operations, excluding the goodwill
impairment charge $ 2,444 $ 27,676
Net income applicable to Piper Jaffray
Companies common shareholders, excluding the goodwill impairment
charge
$ 2,027 $ 22,593 Diluted earnings per
common share, excluding the goodwill impairment charge $ 0.13 $
1.44 Weighted average number of common shares outstanding -
diluted 15,773 15,685 (2)
Net income/(loss)
applicable to Piper Jaffray Companies and earnings per share
Three Months Ended Twelve Months Ended (Amounts in thousands,
except per share data) Dec. 31, 2011 Dec. 31, 2011 Net loss
applicable to Piper Jaffray Companies $ (116,364 ) $ (102,020 )
Adjustment to exclude the goodwill impairment charge, net of income
tax 118,448 118,448 Net income
applicable to Piper Jaffray Companies, excluding the goodwill
impairment charge $ 2,084 $ 16,428
Net income applicable to Piper Jaffray
Companies common shareholders, excluding the goodwill impairment
charge
$ 1,729 $ 13,411 Diluted earnings per
common share, excluding the goodwill impairment charge $ 0.11 $
0.86 Weighted average number of common shares outstanding -
diluted 15,773 15,685 (3)
Consolidated
non-compensation expenses from continuing operations Three
Months Ended Twelve Months Ended (Amounts in thousands) Dec. 31,
2011 Dec. 31, 2011 Non-compensation expenses $ 150,797 $ 247,257
Adjustment to exclude the goodwill impairment charge
(120,298 ) (120,298 ) Non-compensation expenses,
excluding the goodwill impairment charge $ 30,499 $ 126,959
(4)
Capital Markets pre-tax operating
income and pre-tax margin from continuing operations Three
Months Ended Twelve Months Ended (Amounts in thousands) Dec. 31,
2011 Dec. 31, 2011 Capital Markets pre-tax operating loss $
(122,397 ) $ (95,297 ) Adjustment to exclude the goodwill
impairment charge 120,298 120,298
Capital Markets pre-tax operating income/(loss), excluding
the goodwill impairment charge $ (2,099 ) $ 25,001
Capital Markets pre-tax operating margin (158.3 ) % (25.8 ) %
Capital Markets pre-tax operating margin, excluding the goodwill
impairment charge (2.7 ) % 6.8 % (5)
Capital
Markets operating expenses from continuing operations Three
Months Ended Twelve Months Ended (Amounts in thousands) Dec. 31,
2011 Dec. 31, 2011 Capital Markets operating expenses $ 199,734 $
464,334 Adjustment to exclude the goodwill impairment charge
(120,298 ) (120,298 ) Capital Markets operating
expenses, excluding the goodwill impairment charge $ 79,436
$ 344,036 (6)
Return on average adjusted
common shareholders' equity Adjusted common
shareholders’ equity equals total common shareholders’ equity,
including goodwill associated with acquisitions, less goodwill
resulting from the 1998 acquisition of our predecessor company,
Piper Jaffray Companies Inc., by U.S. Bancorp. Return on average
adjusted common shareholders’ equity is computed by dividing net
income by average monthly adjusted common shareholders’ equity.
Management believes that return on adjusted common shareholders’
equity is a meaningful measure of performance because it reflects
equity deployed in our businesses after our spin off from U.S.
Bancorp on December 31, 2003. The following table sets forth a
reconciliation of common shareholders’ equity to adjusted common
shareholders’ equity. Common shareholders’ equity is the most
directly comparable GAAP financial measure to adjusted common
shareholders’ equity. Average for the Average for the Year
Ended Year Ended Average for the Dec. 31, 2011, Dec. 31, 2011, Year
Ended Including the Goodwill Excluding the Goodwill (Amounts in
thousands) Dec. 31, 2012 Impairment Charge Impairment Charge Common
shareholders' equity $ 728,433 $ 825,483 $ 834,594 Deduct: goodwill
attributable to PJC Inc. acquisition by USB - 97,405
105,522 Adjusted common shareholders'
equity $ 728,433 $ 728,078 $ 729,072
Annualized net income applicable to Piper Jaffray Companies $
41,268 N/M $ 16,428 Annualized quarterly return on average
adjusted common shareholders' equity 5.7 % N/M 2.3 %
(7)
Annualized quarterly return on average adjusted common
shareholders' equity Management believes that the
annualized quarterly return on average adjusted common
shareholders' equity excluding the impact of the goodwill
impairment charge is a meaningful measure and aids comparison to
the other quarters presented. Average for the Average for
the Three Months Ended Three Months Ended Dec. 31, 2011, Dec. 31,
2011, Including the Goodwill Excluding the Goodwill (Amounts in
thousands) Impairment Charge Impairment Charge Common shareholders'
equity $ 808,079 $ 837,691 Deduct: goodwill attributable to PJC
Inc. acquisition by USB 79,141 105,522
Adjusted common shareholders' equity $ 728,938 $ 732,169
Annualized net income applicable to Piper Jaffray Companies
N/M $ 8,337 Annualized quarterly return on average adjusted
common shareholders' equity N/M 1.1 % N/M - Not meaningful
(8)
Tangible common shareholders' equity
Tangible shareholders’ equity equals total shareholders’
equity less all goodwill and identifiable intangible assets.
Tangible book value per share is computed by dividing tangible
shareholders’ equity by common shares outstanding. Management
believes that tangible book value per share is a more meaningful
measure of our book value per share. Shareholders’ equity is the
most directly comparable GAAP financial measure to tangible
shareholders’ equity. The following is a reconciliation of
shareholders’ equity to tangible shareholders’ equity: As of
As of As of (Amounts in thousands) Dec. 31, 2012 Sept. 30, 2012
Dec. 31, 2011 Common shareholders' equity $ 733,292 $ 724,616 $
718,391 Deduct: goodwill and identifiable intangible assets
240,480 247,905 253,656 Tangible
common shareholders' equity $ 492,812 $ 476,711 $ 464,735
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