PIPR - Earnings call transcript Q4 2017

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Operator

Good morning and welcome to the Piper Jaffray Companies' conference call to discuss the financial results for the fourth quarter and full year of 2017.

During the question-and-answer session, securities industry professionals may ask questions of management. The Company has asked that I remind you that statements on this call that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements that involve inherent risks and uncertainties. Factors that could cause actual results to differ materially from those anticipated are identified in the Company's earnings release and reports on file with the SEC, which are available on the Company's Web-site at www.piperjaffray.com and on the SEC Web-site at www.sec.gov. This call will also include statements regarding certain non-GAAP financial measures. Company's non-GAAP issued most financial measure. the reconciliation for comparable to these of measures refer earnings today release a GAAP Please to the earnings Relations the Web-site The at available the or Web-site. of Company's Investor SEC the is release page on

is call to like call. over recorded. And Chad begin your Abraham. Mr. this to reminder, now, the turn a being As may call Mr. I'd Abraham, you

Chad Abraham

me This our and morning thanks and host Good new the Carter, for Tim joining call. call. to earnings first is the CFO, to our everyone

So on we are the call very excited to today. be

We of well. calls, as are especially excited is an to who earnings report today our us fourth record consecutive Deb old year with doing revenues. pro at is Schoneman,

and to markets to then call and over through detail. the go and will So few Deb minutes business I hand Tim financials a take in the more to the discuss

is results. however and made have we've number the our past even years firm them open have our skills unique questions. We long-term a I of firm. all produced up thank the to line The want meaningful the the advantage. left and is at to important commitment. a support. Maybe their record front record we and Jaffray contributions we have over testament added is few more Piper that will call very to professionals the to the the of professionals few competitive firm, both significant partners revenue we of levels The on culture believe for for then across dedication The

has These the driver growth this an serve we home area Piper their trajectory best capital. as business right. professionals reflect getting business This and five-fold improve to We acquisitions. this variable like cost that With for as been has and advisory $XXX employees the both more on is years. big XXXX, in The continuity focus strategic of grown dramatic past and Our our with revenue a on advisory The accomplished possible investment doubled sheet believe been making has over revenue. the to business. that remixing return growth use approached our million it out we the played of revenue And the structure. teams main $XXX broad-based. of constant last our business it toward clients' million and than been for in doesn't million capital pretty results $XXX we exceeded revenue. interests, year. firm We more and we overall and a hire are our $XXX We for of over as the required of several revenue XXXX, the In through intended. since This million comprehensive profitability has has some jumps in our balance revenue. this focus business we year our for business P&L effort and XXXX. has would attributes the the through over We this advisory Jaffray investment

the with Simmons and hiring a acquisition. of and acquisition small exposure, energy industry through terms added FIG In we aggressive

added sub-verticals also practices. franchises We healthcare and and strengthened IT and like our living certain biotech like healthy consumer,

capturing capabilities doubt banking across products, look groups debt our share consumer provided in at XXXX. are of very capital our advisory, in significant each in in in record past particularly on our and advisory expand enhancing team business. foundation advisory no we grown addition we gains where teams, supplemented with our to markets debt clients and When our contributing product added team, area. for position. by we advice supplemented competitive by range This advisory energy constructive few markets. over had there's the expansion the capabilities, this We transactions really look today the provide market XXXX. healthcare, This Our and years, of we years These and platform, to our revenue executed the solid we new its can diversified with have

of growth could trajectory, of growth slow and inherently basis. the a significantly is Given the on somewhat. vary slope pace quarterly our lumpy Advisory can

that our invest to confident expect million is we good market $XXX beyond a We million in all solid or a and a look can I and the north that year to it over next today $XXX business across the a will business per am we years. platform sub-verticals build continue reasonably as of we in groups. add take strengthen of to industry few

$XXX raising raising capital market capital troughed and year, a strong better in XXXX much a very of equity million business market Our half improved first for significantly the then. equity of had in The generating since revenue has environment.

the team Our the way XXXX in as was active most for biotech in capital sector led for segment us raising. that market again the

one to only synergy Our book-run in to history. discuss to the XXXX. to in over completed I Simmons from our represents Simmons the had revenue acquisition energy transactions combination. XXXX, our important now Deb We eight our will call also an book-run Prior the arising team strong its rest businesses. transaction results. of in contributed This hand

Deb Schoneman

QX, a experienced year record December. will finance arising surge We of strong the participated which advance by was from public both of in in refundings late new market law, issuance this finance. and a the year. the be issue in for in exempt drove best activity on QX passed tax tax We quarter wave a a eliminated, the XXXX. Public Under for in Chad. changes activity as of pending heels refunding the federal results Thanks spurred year in recorded tax new the XXXX us bill of that

a new XXXX several half segment XXXX. off will and issuance slow we market will as over market start be maintain of meaningfully our the of are some was get the about pulled market after the and in expect past of demand market. will we XXXX. the the prominent Refundings issuance down expect position we we in at However, represent confident We that years into XXXX overall forward this activity to of will of the in this think be surge the end lower XXXX

Moving our had a market a relative very on to brokerage equities to condition. good tough businesses, year

to For was a market as create compared about levels decline down Historically, XX% gains clients. led us to value to communicate to market volatility are bring the low X% our in again activity. once ways believe of the volume. share and available we business of to continued year, we our find subdued We

year, this on might the European be our more is discussion. market of the regulation, industry the II has For major is potential and that U.S. a severe. gradual impact much of the of Since a MiFID the impact topic less on been expectation

closely the possible to While we income area quarter new the influx that monitor of in best the for clients will munis. our the quarter swamped on challenging main The highest of market of this dislocations late XXXX This finished the focus a of providing issues Fixed market note service. with quality price huge high for to reporting situation, absorb. continues was the year. our be created some

very rates to dislocation. posture for interest able the the remained take curve. Customer Given the for our of the were deep of flat trading light advantage market, to to and contributed activity quarter. yield given the strong low results our adopt a most of year knowledge This muni we

strategies to market market passive throughout we trend asset the headwinds year. not from The Our shift management predominant face to was trend. managers infamous persistent the business were to and active continued in

Outflows offset of Our domestic Value decline exit year-end over products to value management Japan partially by assets profits was to the portion in our of new the performance firm. about Tim our contributed in the down A to detail. financial business Dividend contribute XX%. mid-year. the continues product. product the under will now were large international the I Global result the to cap to discuss and overall small decline call decision greater assets, also associated in The with inflows turn to our of

Tim Carter

Thanks Deb.

specifically remarks As We will last just behind be for on my the focused quarter's non-GAAP our record finished quarter very with slightly adjusted results. noted, year context, revenue levels. strong the unless

of $XXX in year the record shows in the of the For put numbers. which the to made generated we've shift progress up out revenues million. advisory, just some Chad we

advisory over contributed of from versus we leverage growth overall increased XX%. advisory increase coming increase revenue to lower XXXX. up a our impacts a a model seeing which in XXXX, of positive the total record in translated a Since revenue advisory on the resulted much revenue into ratio. With as on much XX% on our business We coming the year, for our of non-comp non-comps operating are were over was for fixed XX% up These an expected. XXX of better results XXXX. XX% improvement XXXX. lower we For from EPS operating on $X.XX places adjusted revenues the half advisory, of year in in to was infrastructure, produced our Revenue point operating This only shareholders income return demands XX% was XX% X% really growth. for attributed basis margin,

Our X% adjusted about in XXXX. a over versus return for equity year on XX% was little the

the strong year. impacting operating on As for in earnings, favorably addition were other couple the very ROE a adjusted mentioned last our call, quarter's to there of items

the award First attributable to will that from awards. the year stock impact vesting earnings employee of taxes with employee benefit worth to on positive vesting It's stock tax of was impact associated mentioning the vary the year.

asset non-cash reduction shortly. which the write-offs capital equity by items, equity a ROE tax related year. impact still improvement to If represents address we In reported of favorable reduced reduction our the deferred QX will our two on impacted second these of our reduction the be this and year. our as I have to prior exceeds The will in continue a to non-cash significant over they ROE adjusted write-offs cost was we our in QX goodwill ROE exclude base. and assets, permanently these

in Now, of like release. I the some discuss other earnings items would the to

increase compensation and comp may A year and you above guidance. structure changed total looks Based performance-based PSUs for was the and executives the grants time-based on feedback mix investors, our higher As for remix for the or executives our know, portion the prior our the awards. elevated comp driver of quarter in from comp senior ratio. reduce senior our the for of we to ratio the

of revised of this all of our The look net in awarded leadership Given to comp change as be comp, provisions the in is early awards. we part for will expensed XXXX PSU retirement stock effect restricted were XXXX members PSUs, team grants, magnitude our like XXXX. that more which a the the remixing to of

of timing XX Given basis this by quarter entire points. the and change the the impact in year approval, about full by points Board QX. ratio in basis comp of about captured XXX increased the This the was

relatively Going a revenue around ratio available will mix in forward depending XX% opportunities us. tight we be comp revenue, investment believe total range on to and our

quarter the of conferences the quarter the million for range million $XX travel per attributable is legal about of exceeded high have expenses to and $XX variance additional non-comp communicated Our we to $XX and professional million fees. end The previously. and increased

non-comp averaged $XX well quarter non-comp our year, target range. a to within going target are we For little per of million the in expenses reaffirming quarter, million over $XX the range business, $XX million our Despite comfortable the growth forward. per

Next, I to of address items. tax couple would a related like

quarter First, third the to in in $XX the million $XX million we previewed was result expected law assets. federal our our of a for write-off deferred new tax tax filing to Form XX-Q that

results. Our range came shows GAAP of $XX tax additional a up the as million. high around end From in this P&L write-off expense perspective, at our DTA the in at

write-off. adjusted results exclude Our this of impact the

Looking at XX%. rate the new The was some our law it federal rate percentage by reduced XX% we tax this, XX in will going XX% removed to tax to Offsetting the range. expense deductions. forward, believe points be

deductions will XX% impact lower fewer net and in range. the us finish the of up with We XX% the taxes the I plus here rate puts expect state to dividend.

year, more recommended in impact business Form portion greater the our gives the capital dividend advisory. our change of a and in disclosed to filed Under based dividend. less increased our will dividends approved flexibility for each ratio us our the year on new the The be paid to on largely we policy, made year's for approved. Board X-K a the calculated will based year. to due the earnings. business ratio favorable advisory Since to payout payout through we have dividend will of make-whole Board, pay the be adjusted already of We earnings which return management this shareholders November, already payment As the model on by the the a from change coming policy, dividend which we a quarterly

amount would $X.XX, that for EPS the of out XXXX, would XX% the For per on XXXX reported adjusted earnings. our determined Board of we $X.XX pay dividend total adjusted Based share.

with This of We regular have be on $X.XX business quarter so approved share. would $X.XXXX quarterly per remind will March the from dividend dividends, of a in conjunction per February like quarterly special year in increase XXXX share of be dividend to quarterly $X.XX of everyone close as to XX% paid dividend on record in per will the make-whole to already that XXth XXXX. shareholders paid our dividend the for share to the share I Board first $X.XXXX XX. per of the level regular our beginning our also

Chad Abraham

Tim. Operator, for we'd like line to Thanks up the open questions.

Operator

Devin have question Ryan [Operator a of Instructions] with JMP the You Securities. from line

Devin Ryan

are had business on today. Maybe of some here and you the advisory I building getting revenues clearly and great out the you're the starting there, they mean to that just business commentary where some success

still could slow, obviously that is heard growth I there that but And comment so, suggests the pace growth. of the

just had year or it this anything just that in a or the in that seeing have growth for such is that otherwise some think step-up trying to of in I'm case just after put that trying to another anything the of after think pipeline that big you backup there perspective, we of you're such suggest kind else? decent I'm So is base is just trying your and about about year, big still XXXX. level there year a would digesting to I'm all together modeling growth

Chad Abraham

that. address I'll

What to a in shows I couple seen continually building is, to in I really advisory every advisory growth that it's going we've is platform. and to that up going or all we the think believe time in growth growth. a quarter every do of that big fashion. show say adding is that's think, platform up I obviously the show for evident the us And on would we we're the there do and such focused years continued not last significant in year. quarter We whether particular growth, believe over up were linear

Devin Ryan

and first it, okay. you. so maybe And just to investment half were up great any the, saw industry amount pretty Thank from banking, and so the the we pull-forward understand kind year, activity of dramatically, just of trying of financing little be or think what Got the another of maybe one, and volumes sense which softer of also reform how at debt regains and how all? first of the could out first then quarter this we drivers business half is play a how kind or should the about where would impacted tax bit maybe maybe it if that momentum, that the longer term,

Deb Schoneman

a rates sort question in time forward. the like of the moderate at it's terms decline refundings bill, at time. just end of than exempt long-term period out the was really will day in Devin, and the tax have lot of ranging ultimately And impact called. deals a I around feel the XXXX And in out long of advanced look an have clearly a there on to even in XX there's XX in large that tax elimination ability But interest from of the the refundings your probably that stayed end guess billion of to anywhere over prospective more pull-forward the I and be low think marketplace from the of that market. lower billion I as a range into the more XXXX was you as that pulled has higher. and been for are There

to So won't a period advanced be just be it's refundings the done. time able really where

about and think quite a it's the basis. talked what the to I year, pull up to I on out unknown. impacted is think plays evident. be first likely But pretty unknown. the overall, by that forward, I year-over-year the how lot means going plays there's how quarter is questions you that just for If think throughout meaningfully out of is And year really that be is Clearly, about you over think issuance a and XXXX, that

Devin Ryan

Okay, a tax should contemplating was the any to that And just the I how modeling all that you that stock-based of could is a sense more based change suspect question, maybe provided, of prior on stock is? benefit rate price big GAAP on the here, last comp? so, right. a And you. guidance that where if accounting receive one so be from Thank

Tim Carter

dependent prior on our but at Devin, that likely timing stock related to on price based are benefit we and piece awards. guidance additional is this around most we a the not is We'll will on awards. it of number Yes, the in will those in we that issue when filing, It actually see providing XXXX the stock disclose QX based the that in see to XX-K that point. any specific of

Devin Ryan

I'll We'll back to see in guys. okay. it, Got the Thanks get it. queue.

Operator

with is Your Dai Ann of next line from question the KBW.

Ann Dai

joined what bit was could I just this the sectors earlier what the I if missed drove largest how strength Sorry to relates were call give this, and quarter color that little a contributors advisory year? this I late, but us hoping on some you

Chad Abraham

throughout the consumer, strength of and interesting particular QX in different energy a had It's in in with pockets year healthcare very we strong and quarter. had we've

Ann Dai

a as business, business for on a you type what a debt Okay, couple your just just we become level give higher perfect. platform of from scale and years? what the regarding commentary a see can And see perspective opportunity within advisory market over sense follow-up your next might you us of the so that there

Chad Abraham

to has business bankers, on, great have and been platform provide a advisory the investment great couple as The we for that to more continue. There advisory alternative offer really is we've really had we for be significant placements, need and relationships around so of are to business we've good can for years focus us. of is and a financed, capital debt and grown M&A we us, a opportunity that opportunity those that our of on build and work more Yes, large think whole an bunch a there a saw there's frankly we that lenders pretty and sources deals we can unique clients.

pretty good that things to going growth for our expect we capital and be with So, look debt to continue engine. a forward product markets

Ann Dai

for it Thank me. you. That's Okay.

Operator

further no are There questions.

Chad Abraham

Okay, execution have and is strategy the working we Clearly our thank in is solid. place you.

product footprint We can look while we revenue where in be that our industry costs. are investment we opportunities strategy to to with our add opportunities seeking open our the are expand We actively consolidating line to would broaden and as also eliminating offerings. platform

many Our across emergence of continuing market the results entire businesses team evidence to produce forward for look as leader strength a of great the our shareholders. our to is here. of We

Finally, gratitude some leaves XX to the close shoes great past Duff We to CEO entire everyone hand of of retired and to our and certainly steady have day. the like role the big of in who with today, in on call before a Andrew us at Board Thanks working XXXX. us for end fill. over years the look He our as a express XXXX. we behalf we'd organization, Andrew his with to Chairman forward guided as

Operator

This concludes today's call. conference

You may disconnect. now

Piper Sandler Companies (PIPR) 1 Feb 182017 Q4 Earnings call transcript